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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
July 2, 1998
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(Date of earliest event reported)
Enterprise Federal Bancorp, Inc.
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(Exact name of registrant as specified in its charter)
Ohio 0-24694 31-1396726
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
7810 Tylersville Square Drive, West Chester, Ohio 45069
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(Address of principal executive offices) (Zip Code)
(513) 755-4600
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address and former fiscal year, if changed since
last report)
Exhibit Index appears on page 3.
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Item 5. Other Events
On July 2, 1998, Enterprise Federal Bancorp, Inc. (the "Company"),
entered into an Agreement and Plan of Reorganization ("Agreement") by and among
the Company, Enterprise Federal Savings Bank, a federally-chartered savings bank
and wholly-owned subsidiary of the Company (the "Bank"), Security Savings
Holding Company, Inc., an Ohio corporation ("Security"), and Security Savings
Association, an Ohio chartered savings association and wholly-owned subsidiary
of Security (the "Association"), which provides for the Company's acquisition of
all of the issued and outstanding common stock, par value $10.00 per share, of
Security (the "Security Common Stock"). Under the terms of the Agreement and in
accordance with a Plan of Merger (Exhibit B to the Agreement) by and between
EFBI Acquisition Corp., an interim Ohio corporation ("Interim") which is a
wholly-owned subsidiary of the Company, and Security, Interim shall be merged
with and into Security (the "Merger") and Security shall be the surviving
corporation. Simultaneously with or as soon as practicable after the Merger,
Security, as the surviving corporation of the Merger, shall be liquidated into
the Company in accordance with an Agreement and Plan of Merger and Liquidation
(Exhibit C to the Agreement). Upon consummation of the Merger, it is
contemplated that the Association will be merged with and into the Bank with the
Bank as the surviving entity.
Pursuant to the Agreement, upon the effective date of the Merger
("Effective Date"), each share of Security Common Stock (other than those as to
which Security stockholders properly perfect their dissenters' rights under Ohio
law and shares held by Security, the Company or the Bank other than in a
fiduciary capacity) will be converted into the right to receive from the Company
$834.77 in cash (the "Merger Consideration").
Consummation of the Merger is subject to the prior receipt of all
necessary regulatory or governmental approvals and consents, the necessary
approval of stockholders of Security at a special meeting to be called, and
certain closing conditions. The Agreement, including Exhibits B and C thereto,
is attached hereto as an exhibit and incorporated herein by reference and made a
part hereof to the same extent as if set forth herein in full. The above summary
does not purport to be complete and is subject to and qualified in its entirety
by reference to the Agreement and the exhibits thereto.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
The following exhibits are filed with this report:
<TABLE>
<CAPTION>
Exhibit Number Description
- -------------- --------------
<S> <C>
2 Agreement and Plan of
Reorganization, dated as of July 2,
1998 (including Exhibits B and C
thereto)
20 Press Release issued on July 6,
1998 with respect to the
Agreement
</TABLE>
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ENTERPRISE FEDERAL BANCORP, INC.
Date: July 27, 1998 By: /s/ Thomas J. Noe
------------------
Thomas J. Noe
Vice President and
Chief Financial Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Description
- -------------- -------------
<S> <C>
2 Agreement and Plan of
Reorganization, dated as of July 2,
1998 (including Exhibits B and C
thereto)
20 Press Release issued on July 6,
1998 with respect to the
Agreement
</TABLE>
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AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of July 2, 1998
("Agreement"), between Enterprise Federal Bancorp, Inc. ("Bancorp"), an Ohio
corporation and Enterprise Federal Savings Bank (the "Bank"), a federally
chartered savings bank and a wholly-owned subsidiary of Bancorp and Security
Savings Holding Company, Inc. ("Security"), an Ohio corporation and Security
Savings Association (the "Association"), an Ohio chartered savings
association and wholly-owned subsidiary of Security.
WITNESSETH:
WHEREAS, the Boards of Directors of Bancorp, the Bank, Security and the
Association have determined that it is in the best interests of their respective
companies and their shareholders to consummate the business combination
transactions provided for herein; and
WHEREAS, the parties desire to provide for certain undertakings,
conditions, representations, warranties and covenants in connection with the
transactions contemplated hereby; and
WHEREAS, as a condition and inducement to the willingness of Bancorp to
enter into this Agreement, certain directors and stockholders of Security are
concurrently entering into a Stockholder Agreement with Bancorp and the Bank
(the "Stockholder Agreement"), in substantially the form attached hereto as
Exhibit A, pursuant to which, among other things, such stockholders agree to
vote their shares of Security Common Stock (as defined below) in favor of this
Agreement and the transactions contemplated hereby.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, representations, warranties and agreements herein contained, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
1.01. The Merger. Subject to the terms and conditions of this Agreement
and subject to and in accordance with an Agreement of Merger between Security
and an Ohio-chartered corporation and wholly-owned subsidiary of Bancorp
("Interim") to be formed in connection with the transactions contemplated
hereby, a copy of which is attached hereto as Exhibit B (the "Agreement of
Merger") at the Effective Time (as defined in Section 1.05 hereof), Interim
shall be merged with and into Security in accordance with Title 17, Chapter 1701
of the Ohio General Corporation Law ("OGCL") (the "Merger"), with Security as
the surviving corporation (hereinafter sometimes called the "Surviving
Corporation"). Simultaneously with or as soon as practicable after the Merger,
the
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Surviving Corporation shall be merged with and liquidated into Bancorp (the
"Liquidation") in accordance with an Agreement and Plan of Merger and
Liquidation, a copy of which is attached hereto as Exhibit C.
1.02 Effect of the Merger. As of the Effective Time, the Surviving
Corporation shall be considered the same business and corporate entity as each
of Security and Interim and thereupon and thereafter, all the property, rights,
powers and franchises of each of Security and Interim shall vest in the
Surviving Corporation and the Surviving Corporation shall be subject to and be
deemed to have assumed all of the debts, liabilities, obligations and duties of
each of Security and Interim and shall have succeeded to all of each of their
relationships, fiduciary or otherwise, as fully and to the same extent as if
such property rights, privileges, powers, franchises, debts, obligations, duties
and relationships had been originally acquired, incurred or entered into by the
Surviving Corporation. In addition, any reference to either of Security and
Interim in any contract or document, whether executed or taking effect before or
after the Effective Time, shall be considered a reference to the Surviving
Corporation if not inconsistent with the other provisions of the contract or
document; and any pending action or other judicial proceeding to which either of
Security and Interim is a party, shall not be deemed to have abated or to have
discontinued by reason of the Merger, but may be prosecuted to final judgment,
order or decree in the same manner as if the Merger had not been made; or the
Surviving Corporation may be substituted as a party to such action or
proceeding, and any judgment, order or decree may be rendered for or against it
that might have been rendered for or against either of Security and Interim if
the Merger had not occurred. At the Effective Time, the directors and officers
of the Surviving Corporation shall be the persons designated in Section 1.04.
Following consummation of the Liquidation, Bancorp shall cause the Association
to merge with and into the Bank, with the Bank as the resulting institution.
1.03 Articles of Incorporation, Code of Regulations and Bylaws. As of
the Effective Time, the Articles of Incorporation, Code of Regulations and
Bylaws of Security shall be the Articles of Incorporation, Code of Regulations
and Bylaws of the Surviving Corporation until otherwise amended as provided by
law.
1.04. Directors and Officers. As of the Effective Time, the directors
and officers of Interim shall become the directors and officers of the Surviving
Corporation.
1.05. Effective Time. The Merger shall become effective upon the
occurrence of the filing of a Certificate of Merger with the Secretary of State
of Ohio, unless a later date and time is specified as the effective time in such
Certificate of Merger ("Effective Time"). A closing (the "Closing") shall take
place immediately prior to the Effective Time at 10:00 a.m., on the fifth
business day following the receipt of all necessary regulatory or governmental
approvals and consents and the expiration of all statutory waiting periods in
respect thereof and the satisfaction or waiver, to the extent permitted
hereunder, of the conditions to the consummation of the Merger specified in
Article V of this Agreement (other than the delivery of certificates and other
instruments and documents to be delivered at the Closing), at the offices of
Bancorp in West Chester, Ohio or at such other place, at such other time, or on
such other date as the parties may mutually agree upon. At the Closing, there
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shall be delivered to Bancorp, the Bank,
Security and the Association the certificates and other documents required to be
delivered under Article V hereof.
1.06 Modification of Structure. Notwithstanding any provision of this
Agreement to the contrary, Bancorp, with the prior written consent of Security,
which shall not be unreasonably withheld, may elect, subject to the filing of
all necessary applications and the receipt of all required regulatory approvals,
to modify the structure of the transactions contemplated hereby so long as (i)
there are no material adverse federal income tax consequences to the
stockholders of Bancorp as a result of such modification, (ii) the consideration
to be paid to holders of Security Common Stock (as defined below) under this
Agreement is not thereby changed in kind or reduced in amount solely because of
such modification and (iii) such modification will not be likely to materially
delay or jeopardize receipt of any required regulatory approvals or impair or
prevent the satisfaction of any conditions to the Closing.
1.07 Conversion of Security Common Stock. As of the Effective Time,
each share of common stock, par value $10.00 per share, of Security (the
"Security Common Stock"), issued and outstanding immediately prior to the
Effective Time (other than shares as to which dissenters' rights have been
asserted and duly perfected in accordance with Ohio law (the "Security
Dissenting Shares") and shares held by Security (including treasury shares) or
Bancorp or the Bank other than in a fiduciary capacity) shall, by virtue of the
Merger and without any action on the part of the holder thereof, be cancelled
and by operation of law be converted into and represent the right to receive
from Bancorp, $834.77 in cash (the "Merger Consideration"). The aggregate
consideration to be paid for the conversion of all outstanding shares of
Security Common Stock is hereinafter referred to as the "Aggregate Merger
Consideration." (The Aggregate Merger Consideration shall be reduced by any
Remedial Cost, hereinafter defined).
1.08 Exchange Procedures
(a) As of the Effective Time, Bancorp shall deposit in trust with an
exchange agent designated by Bancorp (the "Exchange Agent") cash in an amount
equal to the Aggregate Merger Consideration. No later than three business days
following the Effective Time, Bancorp shall cause the Exchange Agent to mail or
make available to each holder of record of a certificate or certificates which
immediately prior to the Effective Time represented issued and outstanding
shares of Security Common Stock a notice and letter of transmittal (which shall
specify that delivery shall be effected and risk of loss and title to the
certificates theretofore representing shares of Security Common Stock shall pass
only upon proper delivery of such certificates to the Exchange Agent) advising
such holder of the effectiveness of the Merger and the procedure for
surrendering to the Exchange Agent such certificate or certificates which
immediately prior to the Effective Time represented issued and outstanding
shares of Security Common Stock in exchange for the consideration set forth in
Section 1.07 hereof deliverable in respect thereof pursuant to this Agreement.
Within five business days following receipt of surrendered certificates and a
properly completed letter of transmittal, the Exchange Agent shall deliver the
Merger Consideration to each former Security shareholder. The Exchange Agent
shall accept such certificates upon compliance with such reasonable terms and
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conditions as the Exchange Agent may impose to effect an orderly exchange
thereof in accordance with normal exchange practices.
(b) Each outstanding certificate which prior to the Effective Time
represented Security Common Stock (other than Security Dissenting Shares) and
which is not surrendered to the Exchange Agent in accordance with the procedures
provided for herein shall, except as otherwise herein provided, until duly
surrendered to the Exchange Agent be deemed to evidence the right to receive the
Merger Consideration. After the Effective Time, there shall be no further
transfer on the records of Security of certificates representing shares of
Security Common Stock and if such certificates are presented to Security for
transfer, they shall be cancelled against delivery of the Merger Consideration
as hereinabove provided.
(c) Bancorp shall not be obligated to deliver the Merger Consideration
to which a holder of Security Common Stock would otherwise be entitled as a
result of the Merger until such holder surrenders the certificate or
certificates representing the shares of Security Common Stock for exchange as
provided in this Section 1.08, or, in lieu thereof, an appropriate affidavit of
loss and indemnity agreement and/or a bond as may be required in each case by
Bancorp. If payment of the Merger Consideration is to be made in a name other
than that in which the certificate evidencing Security Common Stock surrendered
in exchange therefor is registered, it shall be a condition of the issuance
thereof that the certificate so surrendered shall be properly endorsed or
accompanied by an executed form of assignment separate from the certificate and
otherwise in proper form for transfer and that the person requesting such
payment pay to the Exchange Agent in advance, any transfer or other tax required
by reason of the payment in any name other than that of the registered holder of
the certificate surrendered or otherwise establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not payable.
(d) Any portion of the Merger Consideration delivered to the Exchange
Agent by Bancorp pursuant to Section 1.07 that remains unclaimed by the
shareholders of Security for six months after the Effective Time (as well as any
proceeds from any investment thereof) shall be delivered by the Exchange Agent
to Bancorp. Any shareholders of Security who have not exchanged their shares of
Security Common Stock for the Merger Consideration in accordance with this
Agreement shall thereafter look only to Bancorp for the consideration
deliverable in respect of each share of Security Common Stock such shareholder
holds as determined pursuant to this Agreement without any interest thereon. If
outstanding certificates for shares of Security Common Stock are not surrendered
or the payment for them is not claimed prior to the date on which payment of the
Merger Consideration would otherwise escheat to or become the property of any
governmental unit or agency, the unclaimed items shall, to the extent permitted
by abandoned property and any other applicable law, become the property of
Bancorp (and to the extent not in its possession shall be delivered to it), free
and clear of all claims or interest of any person previously entitled to such
property. Neither the Exchange Agent nor any party to this Agreement shall be
liable to any holder of stock represented by any certificate for any
consideration paid to a public official pursuant to applicable abandoned
property, escheat or similar laws. Bancorp and the Exchange Agent shall be
entitled to rely upon the stock transfer books of Security to establish the
identity of those persons entitled to receive the Merger Consideration specified
in this Agreement, which books shall be conclusive with respect
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thereto. In the event of a dispute with respect to ownership of stock
represented by any certificate, Bancorp and the Exchange Agent shall be entitled
to deposit any consideration represented thereby in escrow with an independent
third party and thereafter be relieved with respect to any claims thereto.
1.09 Withholding Rights. Bancorp (through the Exchange Agent, if
applicable) shall be entitled to deduct and withhold from any amounts otherwise
payable pursuant to this Agreement to any holder of shares of Security Common
Stock such amounts as Bancorp is required under the Internal Revenue Code of
1986, as amended ("Code") or any provision of state, local or foreign tax law to
deduct and withhold with respect to the making of such payment. Any amounts so
withheld shall be treated for all purposes of this Agreement as having been paid
to the holder of Security Common Stock in respect of which such deduction and
withholding was made by Bancorp.
1.10 Dissenting Shares.
(a) Each outstanding share of Security Common Stock the holder
of which has perfected his right to dissent under the OGCL and has not
effectively withdrawn or lost such rights as of the Effective Time shall not be
converted into or represent a right to receive the Merger Consideration, and the
holder thereof shall be entitled only to such rights as are granted by the OGCL.
Security shall give Bancorp prompt notice upon receipt by Security of any such
written demands for payment of the fair value of such shares of Security Common
Stock and of withdrawals of such demands and any other instruments provided
pursuant to the OGCL (any shareholder duly making such demand being hereinafter
called a "Dissenting Security Shareholder"). Any payments made in respect of
Security Dissenting Shares shall be made by Bancorp. If any Dissenting Security
Shareholder shall effectively withdraw or lose (through failure to perfect or
otherwise) his right to such payment at or prior to the Effective Time, such
holder's shares of Security Common Stock shall be converted into a right to
receive the Merger Consideration in accordance with the applicable provisions of
this Agreement.
(b) No holder of Bancorp common stock, $.01 par value per
share ("Bancorp Common Stock") shall be entitled to relief as a dissenting
shareholder pursuant to Section 1701.85 of the OGCL or otherwise.
1.11 Additional Actions. If at any time after the Effective Time the
Surviving Corporation shall consider that any further assignments or assurances
in law or any other acts are necessary or desirable to (i) vest, perfect or
confirm, of record or otherwise, in the Surviving Corporation its rights, title
or interest in, to or under any of the rights, properties or assets of Security
acquired or to be acquired by the Surviving Corporation as a result of, or in
connection with, the Merger, or (ii) otherwise carry out the purposes of this
Agreement, Security and its proper officers and directors shall be deemed to
have granted to the Surviving Corporation an irrevocable power of attorney to
execute and deliver all such proper deeds, assignments and assurances in law and
to do all acts necessary or proper to vest, perfect or confirm title to and
possession of such rights, properties or assets in the Surviving Corporation and
otherwise to carry out the purposes of this Agreement; and the proper officers
and directors of the Surviving Corporation are fully authorized in the name of
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Security or otherwise to take any and all such action.
1.12. Interim Shares. Each outstanding share of common stock of
Interim, $1.00 par value per share ("Interim Common Stock"), on the Effective
Time shall be converted automatically and without any action on the part of the
holder thereof into an equal number of shares of the Surviving Corporation,
which shall constitute all of the outstanding common stock of the Surviving
Corporation.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SECURITY
AND THE ASSOCIATION
References to "Security Disclosure Schedules" shall mean all of the
disclosure schedules required by this Article II, dated as of the date hereof
and referenced to the specific sections and subsections of Article II of this
Agreement, which have been delivered by Security to Bancorp. Security and the
Association hereby represent and warrant to Bancorp and the Bank as follows as
of the date hereof:
2.01. Corporate Organization.
(a) Security is a corporation duly organized, validly existing and in
good standing under the laws of Ohio. Security has the corporate power and
authority to own or lease all of its properties and assets and to carry on its
business as it is now being conducted and is duly licensed or qualified to do
business and is in good standing in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed, qualified or in good standing would
not have a material adverse effect on the business, operations, assets or
financial condition of Security. Security is registered as a thrift holding
company under the Home Owners' Loan Act ("HOLA"). Security Disclosure Schedule
2.01(a) sets forth true and complete copies of the Articles of Incorporation,
Code of Regulations and Bylaws of Security as in effect on the date hereof.
(b) The only direct or indirect subsidiaries of Security are the
Association and Security Service Corporation ("Service"). The Association (i) is
duly organized, validly existing and in good standing under the laws of Ohio
(ii) has the corporate power and authority to own or lease all of its properties
and assets, and (iii) is duly licensed or qualified to do business and is in
good standing in each jurisdiction in which the nature of the business conducted
by it or the character or location of the properties and assets owned or leased
by it makes such licensing or qualification necessary, except where the failure
to be so licensed, qualified or in good standing would not have a material
adverse effect on the business, operations, assets or financial condition of
Security and the Association taken as a whole. Security and the Association each
have satisfied in all material respects all commitments, financial or otherwise,
as may have been agreed upon with their state and/or federal thrift regulatory
agencies. Other than the Association and Service (which is currently inactive),
Security does not own
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or control, directly or indirectly, greater than a 5% equity interest in any
corporation, company, association, partnership, joint venture or other entity.
Except as set forth in Security Disclosure Schedule 2.01(b), Security does not
own or control, directly or indirectly, greater than a 5% equity interest in any
corporation, company, association, partnership, joint venture or other entity.
2.02. Capitalization. The authorized capital stock of Security consists
of 200,000 shares of Security Common Stock, of which 15,633 are issued and
outstanding as of the date hereof, and no shares of preferred stock. All issued
and outstanding shares of capital stock of Security have been duly authorized
and validly issued and are fully paid, nonassessable and free of preemptive
rights. Security does not have and is not bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the transfer, purchase or issuance of any shares of
capital stock of Security or any securities representing the right to purchase
or otherwise receive any shares of such capital stock or any securities
convertible into or representing the right to purchase or subscribe for any such
stock.
2.03. Authority; No Violation.
(a) Subject to the adoption of this Agreement and the Agreement of
Merger by the stockholders of Security, Security and the Association have full
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby in accordance with the terms
hereof. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly approved by
Security's Boards of Directors of Security and the Association. Except for the
adoption by Security's stockholders of this Agreement and the Agreement of
Merger and the approval by Security's board of directors of the Agreement of
Merger, no other corporate proceedings on the part of Security or the
Association are necessary to consummate the Merger. This Agreement has been duly
and validly executed and delivered by Security and the Association and
constitutes the valid and binding obligation of Security and the Association,
enforceable against them in accordance with and subject to its terms, except as
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally, and except that the
availability of equitable remedies (including, without limitation, specific
performance) is within the discretion of the appropriate court.
(b) Subject to the adoption of this Agreement and the Agreement of
Merger by the stockholders of Security, Security has full corporate power and
authority to execute and deliver the Agreement of Merger and to consummate the
transactions contemplated thereby in accordance with the terms thereof. The
execution and delivery of the Agreement of Merger by Security and the
consummation of the transactions contemplated thereby have been duly and validly
approved by the Board of Directors of Security, and no other corporate
proceedings on the part of Security are necessary to consummate the transactions
so contemplated. The Agreement of Merger, upon its execution and delivery by
Security, concurrently with the execution and delivery of this Agreement, will
constitute a valid and binding obligation of Security, enforceable against it in
accordance with and subject to its terms, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally, and except that the availability
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of equitable remedies (including, without limitation, specific performance) is
within the direction of the appropriate court.
(c) None of the execution and delivery of this Agreement by Security
and the Association, the execution and delivery of the Agreement of Merger by
Security, the consummation by Security and the Association of the transactions
contemplated hereby in accordance with the terms hereof, the consummation by
Security of the transactions contemplated by the Agreement of Merger in
accordance with the terms thereof, compliance by Security and the Association
with any of the terms or provisions hereof or compliance by Security with any
terms or provisions of the Agreement of Merger, will (i) violate any provision
of the Articles of Incorporation, Code of Regulations or Bylaws of Security or
the Association, (ii) assuming that the consents and approvals set forth below
are duly obtained, violate any statute, code, ordinance, rule, regulation,
judgment, order, writ, decree or injunction applicable to Security or the
Association or any of their respective properties or assets, or (iii) except as
disclosed in Security Disclosure Schedule 2.03(c), violate, conflict with,
result in a breach of any provisions of, constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a default) under,
result in the termination of, accelerate the performance required by, or result
in the creation of any lien, security interest, charge or other encumbrance upon
any of the properties or assets of Security or the Association under any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument or obligation to which
Security or the Association is a party, or by which any of their respective
properties or assets may be bound or affected, except, with respect to (ii) and
(iii) above, such as individually or in the aggregate will not have a material
adverse effect on the business, operations, assets or financial condition of
Security and the Association taken as a whole and which will not prevent or
delay the consummation of the transactions contemplated hereby. Except as set
forth in Security Disclosure Schedule 2.03(c) and for consents and approvals of
or filings or registrations with or notices to the OTS, the Superintendent of
Financial Institutions ("Superintendent"), the Secretary of State of the State
of Ohio and the stockholders of Security, no consents or approvals of or filings
or registrations with or notices to any federal, state, municipal or other
governmental or regulatory commission, board, agency, or non-governmental third
party are required on behalf of Security in connection with (a) the execution
and delivery of this Agreement by Security and the Association or the execution
and delivery of the Agreement of Merger by Security, and (b) the completion by
Security and the Association of the transactions contemplated hereby or the
completion by Security of the transactions contemplated by the Agreement of
Merger.
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2.04. Financial Statements.
(a) Security has previously delivered to Bancorp copies of the
consolidated statements of financial condition of Security as of December 31,
1997 and 1996 and the related consolidated statements of earnings, shareholders'
equity and cash flows for the years ended December 31, 1997, 1996 and 1995, in
each case accompanied by the audit report of Grant Thornton LLP, independent
public accountants, as well as the unaudited consolidated statement of financial
condition of Security as of March 31, 1998 and the related unaudited
consolidated statement of earnings, shareholders' equity and cash flows for the
three months ended March 31, 1998 and 1997. The consolidated statements of
financial condition of Security referred to herein (including the related notes,
where applicable) fairly present the consolidated financial condition of
Security as of the respective dates set forth therein, and the related
consolidated statements of earnings, shareholders' equity and cash flows
(including the related notes, where applicable) fairly present the results of
the consolidated earnings, shareholders' equity and cash flows of Security for
the respective periods or as of the respective dates set forth therein (it being
understood that Security's interim financial statements are not audited and are
not prepared with all related notes but reflect all adjustments which are, in
the opinion of Security, necessary for a fair presentation of such financial
statements).
(b) Each of the financial statements referred to in this Section 2.04
(including the related notes, where applicable) has been prepared in accordance
with generally accepted accounting principles consistently applied during the
periods involved. The books and records of Security are being maintained in
material compliance with applicable legal and accounting requirements.
(c) Except to the extent reflected, disclosed or reserved against in
the consolidated financial statements referred to in the first sentence of
Section 2.04(a) or the notes thereto, and except for liabilities incurred since
March 31, 1998 in the ordinary course of business and consistent with past
practice, Security does not have any obligation or liability, whether absolute,
accrued, contingent or otherwise, material to the business, operations, assets
or financial condition of Security and the Association taken as a whole.
2.05. Absence of Certain Changes or Events.
(a) There has not been any material adverse change in the business,
operations, prospects, assets or financial condition of Security and the
Association taken as a whole since March 31, 1998 and to the best knowledge of
Security and the Association, no fact or condition exists which Security or the
Association believes will cause such a material adverse change in the future.
(b) Except as set forth in Security Disclosure Schedule 2.05(a),
Security has not taken or permitted any of the actions set forth in Section 4.02
hereof between March 31, 1998 and the date hereof.
2.06. Legal Proceedings. Except as disclosed in Security Disclosure
Schedule 2.06, neither Security nor the Association is a party to any, and there
are no pending or, to the best knowledge of
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Security and the Association, threatened legal, administrative, arbitration or
other proceedings, claims, actions or governmental investigations of any nature
against Security or the Association, except such proceedings, claims, actions or
governmental investigations which in the good faith judgment of Security and the
Association will not have a material adverse effect on the business, operations,
assets or financial condition of Security and the Association taken as a whole.
Neither Security nor the Association is a party to any order, judgment or decree
which materially adversely affects the business, operations, assets or financial
condition of Security and the Association taken as a whole.
2.07. Taxes and Tax Returns.
(a) Security and the Association have duly filed (and until the
Effective Time will so file) all returns, declarations, reports, information
returns and statements ("Returns") required to be filed or sent by or with
respect to them in respect of any Taxes (as hereinafter defined), and has duly
paid (and until the Effective Time will so pay) all Taxes due and payable other
than Taxes or other charges which (i) are being contested in good faith (and
disclosed in writing to Bancorp) and (ii) have not finally been determined.
Security has established (and until the Effective Time will establish) on its
books and records reserves that are adequate for the payment of all Taxes not
yet due and payable, whether or not disputed, accrued or applicable. Except as
set forth in Security Disclosure Schedule 2.07(a), (i) the federal income tax
returns of Security have been examined by the Internal Revenue Service ("IRS")
(or are closed to examination due to the expiration of the applicable statute of
limitations), and (ii) the Ohio income tax returns of Security have been
examined by applicable authorities (or are closed to examination due to the
expiration of the statute of limitations), and in the case of both (i) and (ii)
no deficiencies were asserted as a result of such examinations which have not
been resolved and paid in full. There are no audits or other administrative or
court proceedings presently pending nor any other disputes pending, or claims
asserted for, Taxes or assessments upon Security, nor has Security given any
currently outstanding waivers or comparable consents regarding the application
of the statute of limitations with respect to any Taxes or Returns.
(b) Except as set forth in Security Disclosure Schedule 2.07(b),
Security (i) has not requested any extension of time within which to file any
Return which Return has not since been filed, (ii) is not a party to any
agreement providing for the allocation or sharing of Taxes, (iii) is not
required to include in income any adjustment pursuant to Section 481(a) of the
Code, by reason of a voluntary change in accounting method initiated by Security
(nor does Security have any knowledge that the IRS has proposed any such
adjustment or change of accounting method), or (iv) has not filed a consent
pursuant to Section 341(f) of the Code or agreed to have Section 341(f)(2) of
the Code apply.
(c) For purposes of this Agreement, "Taxes" shall mean all taxes,
charges, fees, levies or other assessments, including, without limitation, all
net income, gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, withholding, payroll, employment (including
withholding, payroll and employment taxes required to be withheld with respect
to income paid to employees), excise, estimated, severance, stamp, occupation,
property or other taxes, customs duties, fees, assessments or charges of any
kind whatsoever, together with any interest and any penalties,
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additions to tax or additional amounts imposed by any taxing authority (domestic
or foreign) upon Security.
2.08. Employee Benefit Plans.
(a) Each employee benefit plan currently maintained by Security or the
Association or arrangement of Security or the Association which is an "employee
benefit plan" within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), is listed in Security
Disclosure Schedule 2.08(a) ("Security Plans"). Security has previously
furnished to Bancorp true and complete copies of each of the Security Plans
together with (i) the most recent actuarial and financial reports prepared with
respect to any qualified Security Plans, (ii) the most recent annual reports
filed with any government agency, and (iii) all rulings and determination
letters and any open requests for rulings or letters that pertain to any
qualified Security Plans.
(b) Each Security Plan has been operated in compliance in all material
respects with the applicable provisions of ERISA, the Code, all regulations,
rulings and announcements promulgated or issued thereunder, and all other
applicable governmental laws and regulations.
(c) Neither Security nor the Association participates in or has
incurred any liability under Section 4201 of ERISA for a complete or partial
withdrawal from a multi-employer plan (as such term is defined in ERISA).
(d) None of Security, the Association or, to the best knowledge of
Security and the Association, any trustee, fiduciary or administrator of an
Security Plan or any trust created thereunder, has engaged in a "prohibited
transaction," as such term is defined in Section 4975 of the Code, which could
subject Security, or, to the best knowledge of Security and the Association, any
trustee, fiduciary or administrator thereof, to the tax or penalty on prohibited
transactions imposed by said Section 4975.
(e) No Security Plan or any trust created thereunder has been
terminated since 1982.
(f) No Security Plan or any trust created thereunder has incurred any
"accumulated funding deficiency," as such term is defined in Section 302 of
ERISA.
(g) Each of the Security Plans which is intended to be a qualified plan
within the meaning of Section 401(a) of the Code has been determined by the IRS
to be so qualified, and Security is not aware of any fact or circumstance which
would adversely affect the qualified status of any such Plan.
2.09. Regulatory Reports. Security and the Association have duly filed
with the OTS in correct form the monthly, quarterly and annual reports required
to be filed under applicable laws and regulations, and Security has delivered or
made available to Bancorp accurate and complete copies of such reports. Security
Disclosure Schedule 2.09 lists all examinations of Security or the Association
conducted by the applicable regulatory authorities since January 1, 1992 and the
dates
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of any responses thereto submitted by Security or the Association. In connection
with the most recent examinations of Security or the Association by the
applicable regulatory authorities, neither Security nor the Association was
required to correct or change any action, procedure or proceeding which Security
or the Association believes has not been now corrected or changed as required.
2.10. Compliance with Applicable Law.
(a) Security and the Association have all permits, licenses,
certificates of authority, orders and approvals of, and have made all filings,
applications and registrations with, federal, state, local and foreign
governmental or regulatory bodies that are required in order to permit them to
carry on their respective businesses as they are presently being conducted and
the absence of which could have a material adverse effect on the business,
operations, assets or financial condition of Security and the Association taken
as a whole; all such permits, licenses, certificates of authority, orders and
approvals are in full force and effect; and to the best knowledge of Security
and the Association, no suspension or cancellation of any of the same is
threatened.
(b) Neither Security nor the Association is in violation of its
Articles of Incorporation, Code of Regulation or Bylaws, or of any applicable
federal, state or local law or ordinance or any order, rule or regulation of any
federal, state, local or other governmental agency or body (including, without
limitation, all banking, securities, municipal securities, safety, health,
zoning, anti- discrimination, antitrust, and wage and hour laws, ordinances,
orders, rules and regulations), or in default with respect to any order, writ,
injunction or decree of any court, or in default under any order, license,
regulation or demand of any governmental agency, any of which violations or
defaults could have a material adverse effect on the business, operations,
assets or financial condition of Security and the Association taken as a whole,
and neither Security nor the Association has received any notice or
communication from any federal, state or local governmental authority asserting
that Security or the Association is in violation of any of the foregoing which
could have a material adverse effect on the business, operations, assets or
financial condition of Security and the Association taken as a whole. Neither
Security nor the Association is subject to any regulatory or supervisory cease
and desist order, agreement, written directive, memorandum of understanding or
written commitment (other than those of general applicability to all savings
associations issued by governmental authorities), and has not received any
written communication requesting that it enter into any of the foregoing.
2.11. Deposit Insurance and Other Regulatory Matters.
(a) The deposit accounts of the Association are insured by the Savings
Association Insurance Fund administered by the FDIC to the maximum extent
permitted by the Federal Deposit Insurance Act, as amended ("FDIA"), and the
Association has paid all premiums and assessments required by the FDIA and the
regulations thereunder.
(b) The Association is a member in good standing of the Federal Home
Loan Bank ("FHLB") of Cincinnati and owns the requisite amount of stock in the
FHLB of Cincinnati.
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(c) The Association is a "qualified thrift lender," as such term is
defined in the HOLA and the regulations thereunder.
(d) The Association has at all times qualified as a "domestic building
and loan association," as such term is defined in Section 7701(a)(19) of the
Code, for purposes of Section 593 of the Code.
2.12. Certain Contracts.
(a) Except as disclosed in Security Disclosure Schedule 2.12(a),
neither Security nor the Association is a party to, is bound or affected by,
receives, or is obligated to pay benefits under, (i) any agreement, arrangement
or commitment, including without limitation, any agreement, indenture or other
instrument relating to the borrowing of money by Security or the Association or
the guarantee by Security or the Association of any obligation, (ii) any
agreement, arrangement or commitment relating to the employment of a consultant
or the employment, election or retention in office of any present or former
director or officer of Security or the Association, (iii) any contract,
agreement or understanding with a labor union, (iv) any agreement, arrangement
or understanding pursuant to which any payment (whether of severance pay or
otherwise) became or may become due to any director, officer or employee of
Security or the Association upon execution of this Agreement and the Agreement
of Merger or upon or following consummation of the transactions contemplated by
this Agreement or the Agreement of Merger (either alone or in connection with
the occurrence of any additional acts or events), (v) any agreement, arrangement
or understanding to which Security or the Association is a party or by which any
of the same is bound which limits the freedom of Security or the Association to
compete in any line of business or with any person, or (vi) any other agreement,
arrangement or understanding to which Security or the Association is a party and
which is material to the business, operations, assets or financial condition of
Security and the Association taken as a whole (excluding loan agreements or
agreements relating to deposit accounts), in each of the foregoing cases whether
written or oral.
(b) Neither Security nor the Association is in default or in
non-compliance under any contract, agreement, commitment, arrangement, lease,
insurance policy or other instrument to which it is a party or by which its
assets, business or operations may be bound or affected, whether entered into in
the ordinary course of business or otherwise and whether written or oral, which
default or non-compliance would have a material adverse effect on the business,
operations, assets or financial condition of Security and the Association taken
as a whole or the transactions contemplated hereby, and there has not occurred
any event that with the lapse of time or the giving of notice, or both, would
constitute such a default or non-compliance.
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2.13. Properties and Insurance.
(a) All real and personal property owned by Security or the Association
or presently used by them in their respective businesses is in adequate
condition (ordinary wear and tear excepted) and is sufficient to carry on the
business of Security and the Association in the ordinary course of business
consistent with their past practices. Security and the Association have good
and, as to owned real property, marketable title to all material assets and
properties, whether real or personal, tangible or intangible, reflected in
Security's consolidated statement of financial condition as of March 31, 1998,
or owned and acquired subsequent thereto (except to the extent that such assets
and properties have been disposed of for fair value in the ordinary course of
business since March 31, 1998), subject to no encumbrances, liens, mortgages,
security interests or pledges, except (i) those items that secure liabilities
that are reflected in said consolidated statement of financial condition or the
notes thereto or have been incurred in the ordinary course of business after the
date of such consolidated statement of financial condition, (ii) statutory liens
for amounts not yet delinquent or which are being contested in good faith, (iii)
such encumbrances, liens, mortgages, security interests, pledges and title
imperfections that are not in the aggregate material to the business,
operations, assets or financial condition of Security and the Association taken
as a whole, and (iv) with respect to owned real property, title imperfections
noted in title reports prior to the date hereof. Security and the Association as
lessees have the right under valid and subsisting leases to occupy, use, possess
and control all property leased by them in all material respects as presently
occupied, used, possessed and controlled by Security and the Association and the
consummation of the transactions contemplated hereby and by the Agreement of
Merger will not affect any such right. Security Disclosure Schedule 2.13(a) sets
forth an accurate listing of each lease pursuant to which Security or the
Association act as lessor or lessee, including the expiration date and the terms
of any renewal options which relate to the same.
(b) The business operations and all insurable properties and assets of
Security and the Association are insured for its benefit against all risks
which, in the reasonable judgment of the management of Security and the
Association, should be insured against, in each case under valid, binding and
enforceable policies or bonds issued by insurers of recognized responsibility,
in such amounts with such deductibles and against such risks and losses as are
in the opinion of the management of Security and the Association adequate for
the business engaged in by Security and the Association. As of the date hereof,
neither Security nor the Association has received any notice of cancellation or
notice of a material amendment of any such insurance policy or bond or is in
default under such policy or bond, no coverage thereunder is being disputed and
all material claims thereunder have been filed in a timely fashion.
2.14. Environmental Matters. For purposes of this Agreement, the following
terms shall have the indicated meaning:
"Environmental Law" means any federal, state or local law, statute,
ordinance, rule, regulation, code, license, permit, authorization, approval,
consent, order, judgment, decree, injunction or agreement with any governmental
entity relating to (1) the protection, preservation or restoration
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of the environment (including, without limitation, air, water vapor, surface
water, groundwater, drinking water supply, surface soil, subsurface soil, plant
and animal life or any other natural resource), and/or (2) the use, storage,
recycling, treatment, generation, transportation, processing, handling,
labeling, production, release or disposal of Hazardous Substances. The term
Environmental Law includes without limitation (1) the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C.
ss.9601, et seq; the Resource Conservation and Recovery Act, as amended, 42
U.S.C. ss.6901, et seq; the Clean Air Act, as amended, 42 U.S.C. ss.7401, et
seq; the Federal Water Pollution Control Act, as amended, 33 U.S.C. ss.1251, et
seq; the Toxic Substances Control Act, as amended, 15 U.S.C. ss.9601, et seq;
the Emergency Planning and Community Right to Know Act, 42 U.S.C. ss.11001, et
seq; the Safe Drinking Water Act, 42 U.S.C. ss.300f, et seq; and all comparable
state and local laws, and (2) any common law (including without limitation
common law that may impose strict liability) that may impose liability or
obligations for injuries or damages due to, or threatened as a result of, the
presence of or exposure to any Hazardous Substance.
"Hazardous Substance" means any substance presently listed, defined,
designated or classified as hazardous, toxic, radioactive or dangerous, or
otherwise regulated, under any Environmental Law, whether by type or by
quantity, including any regulated material containing any such substance as a
component. Hazardous Substances include without limitation petroleum (including
crude oil or any fraction thereof), asbestos, radioactive material, and
polychlorinated biphenyls.
"Loan Portfolio Properties and Other Properties Owned" means those
properties owned, leased or operated by Security or the Association or those
properties which serve as collateral for loans owned by Security or the
Association.
(a) To the actual knowledge of Security and the Association, neither
Security nor the Association has been and are not in violation of or liable
under any Environmental Law, except as set forth in Security Disclosure Schedule
2.14(a).
(b) To the actual knowledge of Security and the Association, none of
the Loan Portfolio Properties and Other Properties Owned by Security or the
Association has been or is in violation of or liable under any Environmental
Law, except as set forth in Security Disclosure Schedule 2.14(b).
(c) To the actual knowledge of Security and the Association, there are
no actions, suits, demands, notices, claims, investigations or proceedings
pending or threatened relating to the liability of the Loan Portfolio Properties
and Other Properties Owned by Security or the Association under any
Environmental Law, including without limitation any notices, demand letters or
requests for information from any federal or state environmental agency relating
to any such liabilities under or violations of Environmental Law, except such
which would not have or result in a material adverse effect on the business,
operations, assets or financial condition of Security and the Association taken
as a whole.
2.15. Allowance for Loan Losses and Real Estate Owned. The allowance
for loan losses reflected on Security's consolidated statements of financial
condition included in the consolidated financial statements referred to in
Section 2.04 hereof is in the opinion of Security's management,
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adequate in all material respects as of their respective dates under the
requirements of generally accepted accounting principles to provide for
reasonably anticipated losses on outstanding loans net of recoveries. The real
estate owned reflected on the consolidated statements of financial condition
included in the consolidated financial statements referred to in Section 2.04
hereof is carried at the lower of cost or fair value, or the lower of cost or
net realizable value, as required by generally accepted accounting principles.
2.16. Minute Books. Since January 1, 1994, the minute books of Security
and the Association contain complete and accurate records of all meetings and
other corporate action held or taken by their Boards of Directors (including
committees of its Board of Directors) and stockholders.
2.17. Broker Fees. Except as set forth in Security Disclosure Schedule
2.17, none of Security, the Association or any of the respective directors or
officers of such companies has employed any consultant, broker or finder or
incurred any liability for any consultant's, broker's or finder's fees or
commissions in connection with any of the transactions contemplated by this
Agreement.
2.18. Disclosures. No representation or warranty contained in Article
II of this Agreement, and no statement contained in the Security Disclosure
Schedules, contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements herein or therein not
misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BANCORP AND THE BANK
References to "Bancorp Disclosure Schedules" shall mean all of the
disclosure schedules required by this Article III, dated as of the date hereof
and referenced to the specific sections and subsections of Article III of this
Agreement, which have been delivered by Bancorp to Security. Bancorp and the
Bank hereby represent and warrant to Security and the Association as follows as
of the date hereof:
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3.01. Corporate Organization.
(a) Bancorp is a corporation duly organized, validly existing and in
good standing under the laws of the State of Ohio. Bancorp has the corporate
power and authority to own or lease all of its properties and assets and to
carry on its business as it is now being conducted and is duly licensed or
qualified to do business and is in good standing in each jurisdiction in which
the nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed, qualified
or in good standing would not have a material adverse effect on the business,
operations, assets or financial condition of Bancorp and the Bank taken as a
whole. Bancorp is registered as a thrift holding company under the HOLA. Bancorp
Disclosure Schedule 3.01(a) sets forth true and complete copies of the Articles
of Incorporation or other governing instrument and Bylaws of Bancorp and the
Bank as in effect on the date hereof.
(b) The only direct or indirect active subsidiary of Bancorp is the
Bank. The Bank (i) is duly organized, validly existing and in good standing
under the laws of the United States of America, (ii) has the corporate power and
authority to own or lease all of its properties and assets and to conduct its
business as it is now being conducted, and (iii) is duly licensed or qualified
to do business and is in good standing in each jurisdiction in which the nature
of the business conducted by it or the character or location of the properties
and assets owned or leased by it makes such licensing or qualification
necessary, except where the failure to be so licensed, qualified or in good
standing would not have a material adverse effect on the business, operations,
assets or financial condition of Bancorp and the Bank taken as a whole. Bancorp
and the Bank are in good standing with their appropriate federal thrift
regulatory agencies, and each has satisfied in all material respects all
commitments, financial or otherwise, as may have been agreed upon with such
thrift regulatory agencies. Other than the Bank and Mid-Miami Service Corp.
(which is currently inactive), Bancorp does not own or control, directly or
indirectly, greater than a 5% equity interest in any corporation, company,
association, partnership, joint venture or other entity.
(c) Interim will be at the Effective Time an interim stock corporation
duly organized, validly existing and in good standing under the laws of the
State of Ohio. Interim will not engage in any business other than in connection
with the transactions contemplated by this Agreement and the Agreement of Merger
and Interim will have no material obligations or liabilities other than its
obligations hereunder.
3.02. Capitalization. The authorized capital stock of Bancorp consists
of 4,000,000 shares of Bancorp Common Stock, of which 2,210,996 are issued and
outstanding as of the date hereof, and 1,000,000 shares of preferred stock, no
par value, of which no shares are issued and outstanding as of the date hereof.
All issued and outstanding shares of capital stock of Bancorp, and all issued
and outstanding shares of capital stock of the Bank, have been duly authorized
and validly issued and are fully paid, nonassessable and free of preemptive
rights. All of the outstanding shares of capital stock of the Bank are owned by
Bancorp free and clear of any liens, encumbrances, charges, restrictions or
rights of third parties of any kind whatsoever. Except for options to purchase
226,860 shares of
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Bancorp Common Stock which have been granted pursuant to Bancorp's 1994 Stock
Option Plan (or options granted by Bancorp pursuant thereto after the date
hereof), and except for unvested awards for 55,537 shares of Bancorp Common
Stock (which are included in the number of issued and outstanding shares) which
have been granted pursuant to Bancorp's Recognition and Retention Plan and Trust
(or awards granted by Bancorp pursuant thereto after the date hereof), neither
Bancorp nor the Bank has or is bound by any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character calling for the
transfer, purchase or issuance of any shares of capital stock of Bancorp or the
Bank or any securities representing the right to purchase or otherwise receive
any shares of such capital stock or any securities convertible into or
representing the right to purchase or subscribe for any such stock.
3.03. Authority; No Violation.
(a) Bancorp and the Bank have full corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby in accordance with the terms hereof. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly approved by the Board of Directors of Bancorp
and the Bank, and no other corporate proceedings on the part of Bancorp or the
Bank are necessary to consummate the transactions so contemplated. This
Agreement has been duly and validly executed and delivered by Bancorp and the
Bank and constitutes a valid and binding obligation of Bancorp, enforceable
against them in accordance with and subject to its terms, except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally, and except that the availability of
equitable remedies (including, without limitation, specific performance) is
within the discretion of the appropriate court.
(b) Interim has full corporate power and authority to execute and
deliver the Agreement of Merger and to consummate the transactions contemplated
thereby in accordance with the terms thereof. The execution and delivery of the
Agreement of Merger by Interim and the consummation of the transactions
contemplated thereby have been duly and validly approved by the Board of
Directors of Interim and by Bancorp as the sole stockholder of Interim, and no
other corporate proceedings on the part of Interim are necessary to consummate
the transactions so contemplated. The Agreement of Merger, upon its execution
and delivery by Interim concurrently with the execution and delivery of the
Agreement, will constitute a valid and binding obligation of Interim,
enforceable against it in accordance with and subject to its terms, except as
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally, and except that the
availability of equitable remedies (including, without limitation, specific
performance) is within the direction of the appropriate court.
(c) None of the execution and delivery of this Agreement by Bancorp and
the Bank, the execution and delivery of the Agreement of Merger by Interim, the
consummation by Bancorp and the Bank of the transactions contemplated hereby in
accordance with the terms hereof, the consummation by Interim of the
transactions contemplated by the Agreement of Merger, compliance by Bancorp or
the Bank with any of terms or provisions hereof or compliance by Interim with
any
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terms or provisions of the Agreement of Merger, will (i) violate any provision
of the Articles of Incorporation or other governing instrument or Bylaws of
Bancorp, the Bank or Interim, (ii) assuming that the consents and approvals set
forth below are duly obtained, violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to Bancorp,
the Bank or Interim or any of their respective properties or assets, or (iii)
violate, conflict with, result in a breach of any provisions of, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of, accelerate the
performance required by, or result in the creation of any lien, security
interest, charge or other encumbrance upon any of the respective properties or
assets of Bancorp, the Bank or Interim under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which Bancorp, the Bank or
Interim is a party, or by which any of their respective properties or assets may
be bound or affected, except, with respect to (ii) and (iii) above, such as
individually or in the aggregate will not have a material adverse effect on the
business, operations, assets or financial condition of Bancorp and the Bank
taken as a whole and which will not prevent or delay the consummation of the
transactions contemplated hereby. Except for consents and approvals of or
filings or registrations with or notices to the Secretary of State of the State
of Ohio, the Superintendent and the OTS, no consents or approvals of or filings
or registrations with or notices to any federal, state, municipal or other
governmental or regulatory commission, board, agency or non-governmental third
party are required on behalf of Bancorp, the Bank and Interim in connection with
(a) the execution and delivery of this Agreement by Bancorp and the Bank or the
execution and delivery of the Agreement of Merger by Interim and (b) the
completion by Bancorp and the Bank of the transactions contemplated hereby or
the completion by Interim of the transactions contemplated by the Agreement of
Merger.
3.04. Financial Statements.
(a) Bancorp has previously delivered to Security copies of the
consolidated statements of financial condition of Bancorp as of September 30,
1997 and 1996, and the related consolidated statements of earnings,
stockholders' equity and cash flows for the years ended September 30, 1997, 1996
and 1995, in each case accompanied by the audit report of Grant Thornton LLP,
independent public accountants, as well as the unaudited consolidated statement
of financial condition of Bancorp as of March 31, 1998 and the related unaudited
consolidated statements of earnings, stockholders' equity and cash flows for the
six months ended March 31, 1998 and 1997. The consolidated statements of
financial condition of Bancorp referred to herein (including the related notes,
where applicable) fairly present or will fairly present, as the case may be, the
consolidated financial condition of Bancorp as of the respective dates set forth
therein, and the related consolidated statements of earnings, stockholders'
equity and cash flows (including the related notes, where applicable) fairly
present or will fairly present, as the case may be, the results of the
consolidated earnings, stockholders' equity and cash flows of Bancorp for the
respective periods or as of the respective dates set forth therein (it being
understood that Bancorp's interim financial statements are not audited and are
not prepared with all related notes but reflect all adjustments which are, in
the opinion of Bancorp, necessary for a fair presentation of such financial
statements).
(b) Each of the financial statements referred to in this Section 3.04
(including the related notes, where applicable) has been or will be, as the case
may be, prepared in accordance with
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generally accepted accounting principles consistently applied during the periods
involved. The books and records of Bancorp and the Bank are being maintained in
material compliance with applicable legal and accounting requirements and
reflect only actual transactions.
(c) Except to the extent reflected, disclosed or reserved against in
the consolidated financial statements referred to in the first sentence of this
Section 3.04 or the notes thereto or liabilities incurred since March 31, 1998
in the ordinary course of business and consistent with past practice, neither
Bancorp nor the Bank has any obligation or liability, whether absolute, accrued,
contingent or otherwise, material to the business, operations, assets or
financial condition of Bancorp and the Bank taken as a whole.
3.05 Ability to Pay Merger Consideration. Bancorp will have available
to it as of the Effective Time sufficient cash to pay the Aggregate Merger
Consideration to stockholders of Security as set forth in Section 1.07.
3.06 Absence of Certain Changes or Events. There has not been any
material adverse change in the business, operations, prospects, assets or
financial condition of Bancorp and the Bank taken as a whole since March 31,
1998 and to the best knowledge of Bancorp and the Bank, no fact or condition
exists which Bancorp or the Bank believes will cause such a material adverse
change in the future.
3.07. Legal Proceedings. Neither Bancorp nor the Bank is a party to
any, and there are no pending or, to the best knowledge of Bancorp and the Bank,
threatened legal, administrative, arbitration or other proceedings, claims,
actions or governmental investigations of any nature against Bancorp or the
Bank, except such proceedings, claims actions or governmental investigations
which in the good faith judgment of Bancorp and the Bank will not have a
material adverse effect on the business, operations, assets or financial
condition of Bancorp and the Bank taken as a whole. Neither Bancorp nor the Bank
is a party to any order, judgment or decree which materially adversely affects
the business, operations, assets or financial condition of Bancorp and the Bank
taken as a whole.
3.08. Broker Fees. Except as set forth in Bancorp Disclosure Schedule
3.08, neither Bancorp nor the Bank, nor any of their respective directors or
officers, has employed any consultant, broker or finder or incurred any
liability for any consultant's, broker's or finder's fees or commissions in
connection with any of the transactions contemplated by this Agreement.
3.09. Disclosures. No representation or warranty contained in Article
III of this Agreement, and no statement contained in the Bancorp Disclosure
Schedules, contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements herein or therein not
misleading.
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ARTICLE IV
COVENANTS OF THE PARTIES
4.01. Conduct of the Business of Security and the Association. During
the period from the date hereof to the Effective Time, Security and the
Association shall conduct their respective businesses and engage in transactions
permitted hereunder or only in the ordinary course and consistent with past
practice, except with the prior written consent of Bancorp, which consent shall
not be unreasonably withheld. Security and the Association shall use their best
efforts to (i) preserve their business organization intact, (ii) keep available
for themselves, Bancorp and the Bank the present services of the employees of
Security and the Association, and (iii) preserve for themselves, Bancorp and the
Bank the goodwill of their customers and others with whom business relationships
exist.
4.02. Negative Covenants. Security agrees that from the date hereof to
the Effective Time, except as otherwise approved by Bancorp in writing or as
permitted or required by this Agreement, Security will not and Security will not
permit the Association to:
(i) amend or change any provision of its Articles of Incorporation,
Code of Regulations or Bylaws;
(ii) change the number of shares of its authorized or issued capital
stock or issue or grant any option, warrant, call, commitment, subscription,
award, right to purchase or agreement of any character relating to the
authorized or issued capital stock of Security, or any securities convertible
into shares of such capital stock, or split, combine or reclassify any shares of
its capital stock, or redeem or otherwise acquire any shares of such capital
stock;
(iii) declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
the capital stock of Security;
(iv) Except as set forth in Security Disclosure Schedule 4.02, grant
any severance or termination pay (other than pursuant to binding contracts,
plans, or policies of Security or the Association in effect on the date hereof
and disclosed to Bancorp on Security Disclosure Schedule 2.13(a)) to, or enter
into or amend any employment, consulting or compensation agreement with, any of
its directors, officers or employees; or award any increase in compensation or
benefits to its directors, officers or employees, except, in the case of
non-officer employees, such as may be granted in the ordinary course of business
and consistent with past practices and policies;
(v) enter into or modify (except as may be required by applicable law
or as may be required by Section 4.12 hereof, with the prior written consent of
Bancorp, which shall not be unreasonably withheld) any pension, retirement,
stock option, stock purchase, stock grant, stock appreciation right, savings,
profit sharing, deferred compensation, consulting, bonus, group insurance or
other employee benefit, incentive or welfare contract, plan or arrangement, or
any trust agreement
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related thereto, in respect of any of its directors, officers or employees; or
make any contributions to any defined contribution plan or any defined benefit
pension or retirement plan other than (i) in the ordinary course of business
consistent with past practice; or (ii) as set forth in Security Disclosure
Schedule 4.02;
(vi) sell or dispose of any material assets other than in the ordinary
course of business consistent with past practices and policies, or acquire in
any manner whatsoever (other than to realize upon collateral for a defaulted
loan) any business or entity;
(vii) enter into any new capital commitments or make any capital
expenditures other than pursuant to binding commitments existing on the date
hereof, other than expenditures necessary to maintain existing assets in good
repair and other than as set forth in Security Disclosure Schedule 4.02(vii);
(viii) file any applications or make any contract with respect to
branching or site location or relocation;
(ix) make any material change in its accounting methods or practices,
other than changes required by generally accepted accounting principles, or
change any of its methods of reporting income and deductions for federal income
tax purposes, except as required by changes in laws or regulations;
(x) change its lending, investment, deposit or asset and liability
management or other banking policies in any material respect except as may be
required by applicable law;
(xi) engage in any transaction with an "affiliated person" or
"affiliate," in each case as defined in 12 C.F.R. Section 561.5 and 12 C.F.R.
Section 563.41, respectively;
(xii) enter into any futures contract, option or other agreement or
take any other action for purposes of hedging the exposure of its
interest-earning assets and interest-bearing liabilities to changes in market
rates of interest;
(xiii) incur any liability for borrowed money except extensions of
credit from the FHLB of Cincinnati (in which no single transaction shall exceed
$2,000,000) in the ordinary course of business, or place upon or permit any lien
or encumbrance upon any of its properties or assets, except liens of the type
permitted in the exceptions to Section 2.14(a).
(xiv) take any action that would result in any of its representations
and warranties contained in Article II of this Agreement not being true and
correct in any material respect at the Effective Time; or
(xv) agree to do any of the foregoing.
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4.03. No Solicitation. Security and the Association shall not, and
Security and the Association shall not authorize or permit any of their
directors, officers or employees or any investment banker, financial advisor,
attorney, accountant or other representative of Security and the Association to,
directly or indirectly, encourage or solicit or hold discussions or negotiations
with, or provide any information to, any person, entity or group (other than
Bancorp and the Bank) concerning any merger, sale of substantial assets or
liabilities not in the ordinary course of business, sale of shares of capital
stock or similar transactions involving Security or the Association (an
"Acquisition Transaction"); provided, however, that Security and the Association
may provide information in connection with an unsolicited possible Acquisition
Transaction if the Board of Directors of Security, after reviewing the written
legal advice of its counsel, determines in good faith that the failure to
furnish information in response to such unsolicited inquiries is likely to be
deemed to constitute a breach of their fiduciary duties under applicable Ohio
law. Security shall promptly communicate to Bancorp the terms of any proposal
which it may receive in respect of any such Acquisition Transaction and shall
provide Bancorp with copies of (i) any written legal advice provided to the
Board of Directors of Security, (ii) all such written inquiries or proposals and
(iii) an accurate and complete written synopsis of all such oral inquiries or
proposals.
4.04. Current Information. During the period from the date hereof to
the Effective Time, each party will cause one or more of its designated
representatives to confer from time to time, as either party may reasonably
request, with representatives of the other party regarding its business,
operations, prospects, assets and financial condition and matters relating to
the completion of the transactions contemplated hereby. Within 25 days after the
end of each month, each party shall provide the other party with a consolidated
statement of financial condition and a consolidated statement of earnings,
without related notes, for such month prepared in accordance with generally
accepted accounting principles.
4.05. Access to Properties and Records; Confidentiality.
(a) Security and the Association shall permit Bancorp and its
representatives reasonable access to its properties and shall disclose and make
available to Bancorp all books, papers and records relating to the assets, stock
ownership, properties, operations, obligations and liabilities of Security and
the Association, including, but not limited to, all books of account (including
the general ledger), tax records, minute books of directors' and stockholders'
meetings, organizational documents, bylaws, material contracts and agreements,
filings with any regulatory authority, accountants' work papers, litigation
files, plans affecting employees, and any other business activities or prospects
in which Bancorp may have a reasonable interest. Security and the Association
shall not be required to provide access to or to disclose information where such
access or disclosure would violate or prejudice the rights of any customer or
would contravene any law, rule, regulation, order or judgment. Security and the
Association will use its best efforts to obtain waivers of any such restriction
and in any event make appropriate substitute disclosure arrangements under
circumstances in which the restrictions of the preceding sentence apply.
Security and the Association shall make its directors, officers, employees and
agents and authorized representatives (including counsel and independent public
accountants) available to confer with Bancorp and its representatives, provided
that such access shall
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be reasonably related to the transactions contemplated hereby and not unduly
interfere with normal operations.
(b) All information furnished previously in connection with the
transactions contemplated by this Agreement or pursuant hereto shall be treated
as the sole property of the party furnishing the information until consummation
of the Merger and, if such Merger shall not occur, the party receiving the
information shall, at the request of the party which furnished such information,
either return to the party which furnished such information or destroy all
documents or other materials containing, reflecting or referring to such
information; shall use its best effort to keep confidential all such
information; shall use such information only for the purpose of consummating the
transactions contemplated by this Agreement; and shall not directly or
indirectly use such information for any competitive or commercial purposes. The
obligation to keep such information confidential shall continue for three years
from the date the proposed Merger is abandoned but shall not apply to (i) any
information which (A) the party receiving the information can establish by
convincing evidence was already in its possession prior to the disclosure
thereof to it by the party furnishing the information; (B) was then generally
known to the public; (C) became known to the public through no fault of the
party receiving the information; or (D) was disclosed to the party receiving the
information by a third party not bound by an obligation of confidentiality; or
(ii) disclosures pursuant to a legal requirement or in accordance with an order
of a court of competent jurisdiction.
(c) From the date hereof until the earlier of the Effective Time or the
termination of this Agreement in accordance with the terms hereof, Security
shall invite one person (to be designated by Bancorp) to attend all meetings of
the Boards of Directors of Security and the Association; provided, however, that
Security and the Association may excuse the representative of Bancorp from any
discussion of an Acquisition Transaction or any other matter in which Security
and Bancorp may have conflicting interests.
4.06. Regulatory Matters.
(a) Bancorp and the Bank agree that they will make all filings required
to be filed by Bancorp or the Bank to obtain the permits, consents, approvals
and authorizations of all third parties and governmental bodies required to
consummate the transactions contemplated by this Agreement within 30 days after
the execution of this Agreement by each of the parties hereto, subject to the
timely receipt of information, if any, which Security and the Association may be
required to provide with respect to such filings. Each of Security, the
Association, Bancorp and the Bank shall cooperate with each other and use their
best efforts to prepare all necessary documentation to effect all necessary
filings and to obtain all necessary permits, consents, approvals and
authorizations of all third parties and governmental bodies necessary to
consummate the transactions contemplated by this Agreement as soon as
practicable. The parties shall each have the right to review and approve in
advance all information relating to the other, as the case may be, and any of
their respective subsidiaries, which appears in any filing made with, or written
material submitted to, any third party or governmental body in connection with
the transactions contemplated by this Agreement.
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(b) Each of the parties will furnish each other with all information
concerning themselves, their directors, officers and stockholders and such other
matters as may be necessary or advisable in connection with any statement or
application made by or on behalf of them to any governmental body in connection
with the Merger and the other transactions, applications or filings contemplated
by this Agreement.
(c) Each of the parties will promptly furnish each other with copies of
written communications received by them from, or delivered by any of the
foregoing to, any governmental body in connection with the Merger and the other
transactions, applications or filings contemplated by this Agreement.
4.07. Approval of Stockholders. Unless the Board of Directors of
Security determines based on the written legal advice of Vorys, Sater, Seymour
and Pease LLP that such recommendation is likely to be deemed to constitute a
breach of their fiduciary duties under applicable Ohio law, Security will (a)
take all steps necessary to duly call, give notice of, convene and hold a
meeting of its stockholders as soon as reasonably practicable for the purposes
of securing the adoption of such stockholders of this Agreement and the
Agreement of Merger, (b) recommend to its stockholders the adoption of this
Agreement and the Agreement of Merger and the transactions contemplated hereby
and thereby, and use its best efforts to obtain, as promptly as practicable,
such approvals, and (c) cooperate and consult with Bancorp and the Bank with
respect to the foregoing matters.
4.08. Further Assurances. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use its best efforts to take, or
cause to be taken, all reasonable action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
satisfy the conditions to closing contained herein and to consummate and make
effective the transactions contemplated by this Agreement and the Agreement of
Merger. In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement, the proper
officers and directors of each party to this Agreement shall take all such
necessary action. Nothing in this section shall be construed to require any
party to participate in any threatened or actual legal, administrative or other
proceedings (other than proceedings, actions or investigations to which it is a
party or subject or threatened to be made a party or subject) in connection with
consummation of the transactions contemplated by this Agreement unless such
party shall consent in advance and in writing to such participation and the
other party agrees to reimburse and indemnify such party for and against any and
all costs and damages related thereto.
4.09. Disclosure Supplements. From time to time prior to the Effective
Time, each party will promptly supplement or amend its respective Disclosure
Schedules delivered pursuant hereto with respect to any matter hereafter arising
which, if existing, occurring or known as of the date hereof, would have been
required to be set forth or described in such Schedules or which is necessary to
correct any information in such Schedules which has been rendered inaccurate
thereby. No supplement or amendment to such Schedules shall have any effect for
the purpose of determining satisfaction of the conditions set forth in Article V
or the compliance by Security and the Association with the covenants set forth
in Section 4.01 hereof.
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4.10. Public Announcements. The parties hereto shall approve in advance
the substance of and cooperate with each other in the development and
distribution of all news releases and other public disclosures with respect to
this Agreement or any of the transactions contemplated hereby, except as may be
otherwise required by law or regulation and as to which the parties releasing
such information have used their best efforts to discuss with the other parties
in advance.
4.11. Failure to Fulfill Conditions. In the event that either of the
parties hereto determines that a condition to its respective obligations to
consummate the transactions contemplated hereby cannot be fulfilled on or prior
to December 31, 1998 and that it will not waive that condition, it will promptly
notify the other party. Bancorp and Security will promptly inform the other of
any facts applicable to them, or their respective directors or officers, that
would be likely to prevent or materially delay approval of the Merger by any
governmental authority or which would otherwise prevent or materially delay
completion of the Merger.
4.12. Certain Post-Merger Agreements.
The parties hereto agree to the following arrangements following the
Effective Time:
(a) Boards of Directors of Bancorp and the Bank. Effective as of the
Effective Time, the number of directors of both Bancorp and the Bank shall be
increased by one, and Bancorp and the Bank shall appoint Peter A. Hecktor, as a
director of each of Bancorp and the Bank to serve until the next annual meeting
of stockholders of Bancorp, at which time such person will be nominated for
election as a director for a two-year term. If such director nominee is elected
by Bancorp's stockholders as a director of Bancorp for a two-year term, then
Bancorp as the sole stockholder of the Bank shall also elect such person as a
director of the Bank for a term of two years.
(b) Advisory Board of Directors. The directors of Security as of the
Effective Time, with the exception of Peter A. Hecktor, shall be requested by
Bancorp to serve as an Advisory Board for a one year term and, subject to review
on the annual anniversary date of the Effective Time, shall be re-appointed to
an additional one-year term to such advisory board. Each of such persons shall
be paid an Advisory Board fee of $1,500 per quarterly meeting.
(c) Officers and Employees of Security and the Association. Within
ninety (90) days of the date hereof, Bancorp and the Bank shall use their
reasonable best efforts to inform the employees of Security and the Association
of the likelihood of such employees having continued employment with the Bank
following the Effective Time and, where appropriate, shall use their reasonable
best efforts to interview the employees of Security or the Association to
determine if there are mutually beneficial employment opportunities available at
the Bank. The Bank shall give any full-time employee who is terminated within
one year from the Effective Time, except for those individuals terminated for
cause, 26 weeks of severance pay. In addition, Peter A. Hecktor will remain an
employee of the Bank through March 31, 2000 at his current salary.
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(d) Employee Benefit Plans. Subject to the provisions of this Section
4.12, all employees of Security or the Association immediately prior to the
Effective Time who are employed by the Association, Bancorp or the Bank
immediately following the Effective Time ("Transferred Employees") will be
covered by the employee benefit plans of Bancorp and the Bank on substantially
the same basis as any employee of Bancorp and the Bank in a comparable position.
Notwithstanding the foregoing, Bancorp and the Bank may determine to continue
any of the Security benefit plans for Transferred Employees in lieu of offering
participation in the Employers' benefit plans providing similar benefits (e.g.,
medical and hospitalization benefits), to terminate any of Security's benefit
plans, or to merge any such benefit plans with the Employers' benefit plans,
provided the result is the provision of benefits to Transferred Employees that
are substantially similar to the benefits provided to the employees of Bancorp
and the Bank generally. Service to Security or the Association by a Transferred
Employee prior to the Effective Time shall be recognized as service to Bancorp
or the Bank for purposes of eligibility to participate under the sick leave
policies, paid vacation policies, and medical, long-term disability and life
insurance plans of Bancorp and the Bank. In addition, for purposes of
determining eligibility to participate in and the vesting of benefits (but not
for purposes of benefit accrual) under Bancorp's Employee Stock Ownership Plan
and defined benefit plan, Bancorp shall recognize years of service with Security
and the Association. Bancorp and the Bank agree that any pre-existing condition,
limitation or exclusion in its medical, long-term disability and life insurance
plans shall not apply to Transferred Employees or their covered dependents who
are covered under a medical or hospitalization indemnity plan maintained by
Security and the Association on the Effective Time and who then change coverage
to the medical or hospitalization indemnity health plan of Bancorp and the Bank
at the time such Transferred Employees are first given the option to enroll.
(e) Indemnification. From and after the Effective Time through the
third anniversary of the Effective Time, Bancorp shall indemnify and hold
harmless each present and former director, officer and employee of Security and
the Association determined as of the Effective Time (the "Indemnified Parties")
against any costs or expenses (including reasonable attorneys' fees), judgments,
fines, losses, claims, damages or liabilities (collectively, "Costs") incurred
in connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, arising out of matters
existing or occurring at or prior to the Effective Time, whether asserted or
claimed prior to, at or after the Effective Time (collectively, "Claims"), to
the fullest extent to which such Indemnified Parties were entitled under Ohio
law, the Articles of Incorporation, Code of Regulations, Constitution or other
governing instrument and Bylaws of Security or the Association as in effect on
the date hereof.
Any Indemnified Party wishing to claim indemnification under this
Section 4.12(e), upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify Bancorp, but the failure to so notify shall
not relieve Bancorp of any liability it may have to such Indemnified Party if
such failure does not materially prejudice Bancorp. In the event of any such
claim, action, suit, proceeding or investigation (whether arising before or
after the Effective Time), (i) Bancorp shall have the right to assume the
defense thereof and Bancorp shall not be liable to such Indemnified Parties for
any legal expenses of other counsel or any other expenses subsequently incurred
by such Indemnified Parties in connection with the defense thereof, except that
if Bancorp elects not to
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assume such defense or counsel for the Indemnified Parties advises that there
are issues which raise conflicts of interest between Bancorp and the Indemnified
Parties, the Indemnified Parties may retain counsel which is reasonably
satisfactory to Bancorp, and Bancorp shall pay, promptly as statements therefor
are received, the reasonable fees and expenses of such counsel for the
Indemnified Parties (which may not exceed one firm in any jurisdiction unless
the use of one counsel for such Indemnified Parties would present such counsel
with a conflict of interest), (ii) the Indemnified Parties will cooperate in the
defense of any such matter, and (iii) Bancorp shall not be liable for any
settlement effected without its prior written consent, which consent shall not
be withheld unreasonably.
In the event that Bancorp or any of its respective successors or
assigns (i) consolidates with or merges into any other person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers all or substantially all of its properties and assets
to any person, then, and in each such case, the successors and assigns of such
entity shall assume the obligations set forth in this Section 4.12(e), which
obligations are expressly intended to be for the irrevocable benefit of, and
shall be enforceable by, each of the Indemnified Parties.
(f) Insurance. Bancorp and the Bank shall maintain a directors' and
officers' liability insurance policy covering the Indemnified Parties Costs in
connection with any Claims for a period of three (3) years after the Effective
Time.
4.13. Securities Portfolio. Security and the Association will, to the
extent reasonable, consult with Bancorp and the Bank regarding purchases and
sales of investment and mortgage-backed securities.
4.14 Environmental Audit. As soon as possible after the date hereof,
Security shall permit Bancorp, at its sole election to cause a "phase II
environmental audit" and such other tests, investigations and analyses to be
performed as it deems necessary to assess the potential exposure, if any, under
any environmental law at Security's Batavia, Ohio branch office. The expense of
any such environmental audit shall be the sole responsibility of Security.
Bancorp shall use its best efforts to cause any such environmental audit to be
completed within 45 days of the date hereof, and shall provide an estimated cost
("Remedial Cost") of a comprehensive cleanup plan (the "Cleanup Plan") for the
removal of any underground tanks or any such Hazardous Substance and any other
remedial action required under applicable Environmental Laws.
ARTICLE V
CLOSING CONDITIONS
5.01. Conditions to the Parties' Obligations Under This Agreement. The
respective obligations of the parties under this Agreement shall be subject to
the fulfillment at or prior to the Effective Time of the following conditions:
(a) All necessary regulatory, governmental or third party approvals,
waivers, clearances, authorizations and consents (including without limitation
the requisite approval of the OTS required to consummate the transactions
contemplated hereby) shall have been obtained without any term or condition
which would materially impair the value of Security and the Association to
Bancorp and the Bank or materially adversely affect the terms of the Merger as
they relate to the shareholders of Security; all conditions required to be
satisfied prior to the Effective Time by the terms of such
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approvals and consents shall have been satisfied; and all waiting periods in
respect thereof shall have expired.
(b) All corporate action necessary to authorize the execution and
delivery of this Agreement and the Agreement of Merger and consummation of the
transactions contemplated hereby and thereby shall have been duly and validly
taken by Bancorp, the Bank, Security and the Association, including adoption by
the requisite vote of the stockholders of Security of this Agreement and the
Agreement of Merger.
(c) No order, judgment or decree shall be outstanding against a party
hereto or a third party that would have the effect of preventing completion of
the Merger; no suit, action or other proceeding shall be pending or threatened
by any governmental body in which it is sought to restrain or prohibit the
Merger; and no suit, action or other proceeding shall be pending before any
court or governmental agency in which it is sought to restrain or prohibit the
Merger or obtain other substantial monetary or other relief against one or more
of the parties hereto in connection with this Agreement and which Bancorp, the
Bank, Security or the Association determines in good faith, based upon the
advice of their respective counsel, makes it inadvisable to proceed with the
Merger because any such suit, action or proceeding has a significant potential
to be resolved in such a way as to deprive the party electing not to proceed of
any of the material benefits to it of the Merger.
5.02. Conditions to the Obligations of Bancorp and the Bank Under This
Agreement. The obligations of Bancorp and the Bank under this Agreement shall be
further subject to the satisfaction, at or prior to the Effective Time, of the
following conditions, any one or more of which may be waived by Bancorp and the
Bank:
(a) Each of the obligations of Security and the Association required to
be performed by them at or prior to the Closing pursuant to the terms of this
Agreement shall have been duly performed and complied with in all material
respects and the representations and warranties of Security and the Association
contained in this Agreement shall have been true and correct as of the date
hereof and as of the Effective Time as though made at and as of the Effective
Time, except (i) as to any representation or warranty which specifically relates
to an earlier date, or (ii) where the facts which caused the failure of any
representation or warranty to be so true and correct would not, either
individually or in the aggregate, constitute a material adverse change in the
business, operations, assets or financial condition of Security and the
Association taken as a whole, and Bancorp and the Bank shall have received a
certificate to that effect signed by the President and Chief Executive Officer
of Security and the Association.
(b) Holders of Security Common Stock who dissent from the Merger
pursuant to Section 1701.84 of the OGCL by meeting the requirements set forth in
Section 1701.85 of the OGCL shall not hold more than 10% of the Security Common
Stock issued and outstanding immediately prior to the Effective Time.
(c) Security and the Association shall have furnished Bancorp and the
Bank with such certificates of its officers or others and such other documents
to evidence fulfillment of the conditions set forth in this Section 5.02 as
Bancorp and the Bank may reasonably request.
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(d) All shares of common stock of Security Savings Association owned by
Brian J. Critchell, Robert J. Haas, Roberta A. Hair, Peter A. Hecktor and G.
Stewart Proctor shall be converted, on a one for one basis, into shares of
Security Common Stock.
5.03. Conditions to the Obligations of Security and the Association
Under this Agreement. The obligations of Security and the Association under this
Agreement shall be further subject to the satisfaction, at or prior to the
Effective Time, of the following conditions, any one or more of which may be
waived by Security and the Association:
(a) Each of the obligations of Bancorp and the Bank required to be
performed by them at or prior to the Closing pursuant to the terms of this
Agreement shall have been duly performed and complied with in all material
respects and the representations and warranties of Bancorp and the Bank
contained in this Agreement shall have been true and correct as of the date
hereof and as of the Effective Time as though made at and as of the Effective
Time, except (i) as to any representation or warranty which specifically relates
to an earlier date or (ii) where the facts which caused the failure of any
representation or warranty to be so true and correct would not, either
individually or in the aggregate, constitute a material adverse change in the
business, operations, assets or financial condition of Bancorp and the Bank
taken as a whole, and Security and the Association shall have received a
certificate to that effect signed by the President and Chief Executive Officer
of Bancorp and the Bank.
(b) Bancorp and the Bank shall have furnished Security and the
Association with such certificates of its officers or others and such other
documents to evidence fulfillment of the conditions set forth in this Section
5.03 as Security and the Association may reasonably request.
ARTICLE VI
TERMINATION, AMENDMENT AND WAIVER, ETC.
6.01. Termination. This Agreement may be terminated at any time prior
to the Effective Time, whether before or after approval of this Agreement and
the Agreement of Merger by the stockholders of Security:
(a) by mutual written consent of the parties hereto;
(b) by Bancorp, the Bank, Security or the Association (i) if the
Effective Time shall not have occurred on or prior to December 31, 1998 or (ii)
if a vote of the stockholders of Security is taken and such stockholders fail to
approve this Agreement and the Agreement of Merger at the meeting of
stockholders (or any adjournment thereof) of Security contemplated by Section
4.07 hereof; unless the failure of such occurrence shall be due to the failure
of the party seeking to terminate this Agreement to perform or observe its
agreements set forth herein to be performed or observed by such party at or
before the Effective Time;
(c) by Bancorp or Security upon written notice to the other 30 or more
days after the date upon which any application for a regulatory or governmental
approval necessary to consummate the Merger and the other transactions
contemplated hereby shall have been denied or withdrawn at the request or
recommendation of the applicable regulatory agency or governmental authority,
unless
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within such 30-day period a petition for rehearing or an amended application is
filed or noticed, or 30 or more days after any petition for rehearing or amended
application is denied;
(d) by Bancorp or the Bank in writing if Security or the Association
has, or by Security or the Association in writing if Bancorp or the Bank has,
breached (i) any covenant or undertaking contained herein or in the Agreement of
Merger, or (ii) any representation or warranty contained herein, which breach
would have a material adverse effect on the business, operations, assets or
financial condition of Security and the Association taken as a whole or Bancorp
and the Bank taken as a whole, or upon the consummation of the transactions
contemplated hereby, in any case if such breach has not been cured by the
earlier of 30 days after the date on which written notice of such breach is
given to the party committing such breach or the Effective Time;
(e) by Bancorp or Security in writing, if any of the applications for
prior approval referred to in Section 4.06 hereof are denied or are approved
contingent upon the satisfaction of any condition or requirement which, in the
reasonable opinion of the Board of Directors of Bancorp or Security as
applicable, would materially impair the value of Security and the Association
taken as a whole to Bancorp, or would materially adversely affect the terms of
the Merger as they relate to the shareholders of Security and the time period
for appeals and requests for reconsideration has run; and
(f) by Security if the Remedial Cost for actions described in the
Cleanup Plan exceeds $100,000.
6.02. Effect of Termination. In the event of termination of this
Agreement by Bancorp, the Bank, Security or the Association as provided above,
this Agreement shall forthwith become void (other than Sections 4.05(b) and 7.01
hereof, which shall remain in full force and effect) and there shall be no
further liability on the part of the parties or their respective officers or
directors except for the liability of the parties under Sections 4.05(b) and
7.01 hereof and except for liability for any breach of this Agreement.
6.03. Amendment, Extension and Waiver. Subject to applicable law, at
any time prior to the consummation of the Merger, whether before or after
approval thereof by the stockholders of Security, the parties may (a) amend this
Agreement and the Agreement of Merger, (b) extend the time for the performance
of any of the obligations or other acts of the other parties hereto, (c) waive
any inaccuracies in the representations and warranties contained herein or in
any document delivered pursuant hereto, or (d) waive compliance with any of the
agreements or conditions contained herein; provided, however, that after any
approval of the Merger by the stockholders of Security, there may not be,
without further approval of such stockholders, any amendment or waiver of this
Agreement or the Agreement of Merger which modifies the amount of the Merger
Consideration to be delivered to stockholders of Security. This Agreement and
the Agreement of Merger may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto. Any agreement on the part of a
party hereto to any extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party, but such waiver or failure
to insist on strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
31
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ARTICLE VII
MISCELLANEOUS
7.01. Expenses.
(a) Whether or not the transactions provided for herein are
consummated, each party to this Agreement will pay its respective expenses
incurred in connection with the preparation and performance of its obligations
under this Agreement, including legal, accounting and investment banking fees
and expenses, filing fees and printing expenses, except as set forth below.
(b) Notwithstanding any provision in this Agreement to the contrary, in
the event that any of the parties shall willfully default in its obligations
hereunder, the nondefaulting party may pursue any remedy available at law or in
equity to enforce its rights and shall be paid by the willfully defaulting party
the greater of (i) $150,000 and (ii) the amount of all damages, costs and
expenses, including without limitation legal, accounting and investment banking
fees and expenses, incurred or suffered by the non-defaulting party in
connection herewith or in the enforcement of its rights hereunder if such
non-defaulting party prevails.
(c) Security shall pay Bancorp, and Bancorp shall be entitled to
payment of, a fee equal to $400,000 (the "Fee") upon the occurrence of a
Purchase Event (as defined herein) so long as the Purchase Event occurs prior to
a Fee Termination Event (as defined herein). Such payment shall be made to
Bancorp in immediately available funds within five business days after the
occurrence of a Purchase Event. A Fee Termination Event shall be the first to
occur of the following: (i) the Effective Time or (ii) termination of this
Agreement in accordance with the terms hereof prior to the occurrence of a
Purchase Event (other than a termination of this Agreement by Bancorp pursuant
to Section 6.01(d) hereof as a result of a willful breach of any representation,
warranty, covenant or agreement of Security and the Association).
(d) The term "Purchase Event" shall mean any of the following events or
transactions occurring after the date hereof:
(i) Security or the Association shall have entered into an
agreement to engage in an Acquisition Transaction (as defined below)
with any person (the term "person" for purposes of this Agreement
having the meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of
the Securities Exchange Act of 1934 and the rules and regulations
thereunder) other than Bancorp or any affiliate of Bancorp (the term
"affiliate" for purposes of this Agreement having the meaning assigned
thereto in Rule 405 under the Securities Act of 1933) or the Board of
Directors of Security shall have recommended that the shareholders of
Security approve or accept any Acquisition Transaction with any person
other than Bancorp or any affiliate of Bancorp. For purposes of this
Agreement, "Acquisition Transaction" shall mean (x) a merger or
consolidation, or any similar transaction, involving Security or the
Association, (y) a purchase, lease or other acquisition of all or
substantially all of the assets of Security or the Association, or (z)
a purchase or other acquisition (including by way of
32
<PAGE>
merger, consolidation, share exchange or otherwise) of securities
representing 25% or more of the voting power of Security or the
Association;
(ii) After a bona fide written proposal is made by any person
other than Bancorp or any affiliate of Bancorp to Security, the
Association or Security's shareholders to engage in an Acquisition
Transaction, (A) Security or the Association shall have breached any
covenant or obligation contained in this Agreement and such breach
would entitle Bancorp to terminate this Agreement or (B) the holders of
the Security Common Stock shall not have approved this Agreement and
the Agreement of Merger at the meeting of such shareholders held for
the purpose of voting on this Agreement and the Agreement of Merger,
such meeting shall not have been held or shall have been cancelled
prior to termination of this Agreement or (C) the Board of Directors of
Security shall have withdrawn or modified in a manner adverse to
Bancorp the recommendation of the Board of Directors of Security with
respect to this Agreement and the Agreement of Merger.
If more than one occurrence constituting a Purchase Event under this
Section arises, then all such occurrences shall give rise to only one Purchase
Event.
(e) Security shall give written notice to Bancorp within 24 hours of
the occurrence of a Purchase Event known to Security; however, the giving of
such notice by Security shall not be a condition to the right of Bancorp to
obtain the Fee.
(f) Payment of the Fee shall be in lieu of, and not in addition to, the
payment of damages pursuant to Section 7.01(b) of this Agreement.
7.02. Survival. The respective representations, warranties and
covenants of the parties to this Agreement shall not survive the Effective Time
but shall terminate as of the Effective Time, except for the provisions of
Section 4.12 hereof.
7.03. Notices. All notices or other communications hereunder shall be
in writing and shall be deemed given if delivered personally, sent by overnight
express or mailed by prepaid registered or certified mail (return receipt
requested) or by cable, telegram or telex addressed as follows:
(a) If to Bancorp, to:
Enterprise Federal Bancorp, Inc.
7810 Tylersville Square Drive
West Chester, Ohio 45069
Attn: Otto L. Keeton
Copy to:
Elias, Matz, Tiernan and Herrick L.L.P.
734 15th Street, N.W.
Washington, D.C. 20005
Attn: Kevin M. Houlihan, Esq.
33
<PAGE>
(b) If to Security, to:
Security Savings Holding Company, Inc.
928 Lila Avenue
Milford, Ohio 45150
Attn: Roberta A. Hair
Copy to:
Vorys, Sater, Seymour and Pease
Suite 2100, Atrium Two
221 East Fourth Street
Cincinnati, Ohio 45201
Attn: Terri Reyering Abare
or such other address as shall be furnished in writing by any party, and any
such notice or communication shall be deemed to have been given as of the date
so mailed.
7.04. Parties in Interest. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns; provided, however, that neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any party hereto
without the prior written consent of the other party and, except as otherwise
expressly provided herein, that nothing in this Agreement is intended to confer,
expressly or by implication, upon any other person any rights or remedies under
or by reason of this Agreement.
7.05. Complete Agreement. This Agreement and the Agreement of Merger,
including the documents and other writings referred to herein or therein or
delivered pursuant hereto or thereto, contain the entire agreement and
understanding of the parties with respect to their subject matter and shall
supersede all prior agreements and understandings between the parties, both
written and oral, with respect to such subject matter. There are no
restrictions, agreements, promises, representations, warranties, covenants or
undertakings between the parties other than those expressly set forth herein or
therein.
7.06. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
each of which shall be deemed an original.
7.07. Governing Law. This Agreement shall be governed by the laws of
the State of Ohio, without giving effect to the principles of conflicts of laws
thereof.
7.08. Headings. The Article and Section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
34
<PAGE>
IN WITNESS WHEREOF, Bancorp, the Bank, Security and the Association
have caused this Agreement to be executed by their duly authorized officers as
of the day and year first above written.
ENTERPRISE FEDERAL BANCORP, INC.
Attest:
/s/ Michael R. Meister By: /s/ Otto L. Keeton
________________________ _______________________
Michael R. Meister Otto L. Keeton
Vice President and Chief President and Chief Executive Officer
Operating Officer
ENTERPRISE FEDERAL SAVINGS BANK
Attest:
/s/ Michael R. Meister By: /s/ Otto L. Keeton
______________________ ______________________
Michael R. Meister Otto L. Keeton
Vice President and Chief President and Chief Executive Officer
Operating Officer
SECURITY SAVINGS HOLDING COMPANY, INC.
Attest:
_______________________ By: /s/ Roberta A. Hair
____________________________
Name: Roberta A. Hair
Title: Chairman and Vice President
SECURITY SAVINGS ASSOCIATION
Attest:
___________________________ By: /s/ Roberta A. Hair
_____________________________
Name: Roberta A. Hair
Title: Chairman and Vice President
35
<PAGE>
EXHIBIT B
PLAN OF MERGER OF EFBI ACQUISITION CORP.
INTO
SECURITY SAVINGS HOLDING COMPANY, INC.
PLAN OF MERGER, dated as of July 2, 1998, by and between EFBI Acquisition
Corp. ("Interim"), an Ohio corporation formed by Enterprise Federal Bancorp,
Inc. ("Company"), an Ohio corporation, solely to facilitate the transactions
contemplated by the Reorganization Agreement, defined below, and Security
Savings Holding Company, Inc. ("Security"), an Ohio corporation. Interim and
Security are hereinafter sometimes collectively referred to as the "Merging
Corporations."
This Plan of Merger is being entered into pursuant to an Agreement and
Plan of Merger and Reorganization, dated as of July 2, 1998 (the "Reorganization
Agreement") by and among the Company, Enterprise Federal Savings Bank (the
"Bank"), Security and Security Savings Association (the "Association").
In consideration of the premises, and the mutual covenants and
agreements herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Except as otherwise provided herein, the capitalized terms set forth
below shall have the following meanings:
1.1 "Effective Time" shall mean the time at which the Merger
contemplated by this Plan of Merger becomes effective as provided in Section
1.01 of the Reorganization Agreement.
1.2 "Interim Common Stock" shall mean the common stock, par value $1.00
per share, of Interim owned by the Company.
1.3 "Security Common Stock" shall mean the common stock, par value
$10.00 per share, of Security.
1.4 The "Merger" shall refer to the merger of Interim with and into
Security as provided in Section 2.1 of this Plan of Merger.
1.5 "Surviving Corporation" shall refer to Security as the surviving
corporation of the Merger.
B-1
<PAGE>
ARTICLE II
TERMS OF THE MERGER
2.1 The Merger. Subject to the terms and conditions set forth in the
Reorganization Agreement, at the Effective Time, Interim shall be merged with
and into Security pursuant and subject to the Ohio General Corporation Law
("OGCL"). Security shall be the Surviving Corporation of the Merger and shall
continue to be governed by the laws of the State of Ohio. At the Effective Time,
the Surviving Corporation shall be considered the same business and corporate
entity as each of the Merging Corporations and thereupon and thereafter, all the
property, rights, powers, and franchises of each of the Merging Corporations
shall vest in the Surviving Corporation and the Surviving Corporation shall be
subject to and be deemed to have assumed all of the debts, liabilities,
obligations and duties of each of the Merging Corporations and shall have
succeeded to all of each of their relationships, fiduciary or otherwise, as
fully and to the same extent as if such property, rights, privileges, powers,
franchises, debts, obligations, duties and relationships had been originally
acquired, incurred or entered into by the Surviving Corporation. In addition,
any reference to either of the Merging Corporations in any contract or document,
whether executed or taking effect before or after the Effective Time, shall be
considered a reference to the Surviving Corporation if not inconsistent with the
other provisions of the contract or document; and any pending action or other
judicial proceeding to which either of the Merging Corporations is a party,
shall not be deemed to have abated or to have discontinued by reason of the
Merger, but may be prosecuted to final judgment, order or decree in the same
manner as if the Merger had not been made; or the Surviving Corporation may be
substituted as a party to such action or proceeding, and any judgment, order or
decree may be rendered for or against it that might have been rendered for or
against either of the Merging Corporations if the Merger had not occurred.
2.2 Articles of Incorporation, Code of Regulations and Bylaws. As of
the Effective Time, the Articles of Incorporation, Code of Regulations and
Bylaws of Security shall be the Articles of Incorporation, Code of Regulations
and Bylaws of the Surviving Corporation until otherwise amended as provided by
law.
2.3 Directors and Officers of the Surviving Corporation. The directors
and officers of Interim shall become the directors and officers of the Surviving
Corporation as of the Effective Time, each to hold office in accordance with the
Articles of Incorporation, Code of Regulations and Bylaws of the Surviving
Corporation.
ARTICLE III
CONVERSION OF SHARES
3.1 Conversion of Security Common Stock.
As of the Effective Time, each share of Security Common Stock issued
and outstanding immediately prior to the Effective Time (other than shares as to
which dissenters' rights have been asserted and duly perfected in accordance
with Ohio law ("Dissenting Shares") and shares held by Security (including
treasury shares) or the Company or the Bank other than in a fiduciary capacity)
shall, by virtue of the Merger and without any action on the part of the holder
thereof, be converted
B-2
<PAGE>
into the right to receive $834.77 in cash (such amount hereinafter referred to
as the "Merger Consideration").
3.2 Exchange of Shares.
(a) As of the Effective Date, the Company shall deposit in trust with
Registrar and Transfer Company ("Exchange Agent") cash in an amount equal to the
maximum aggregate Merger Consideration.
(b) As soon as practicable after the Effective Time but no later than
three business days after the Effective Time, the Exchange Agent will send to
each holder of record of a certificate or certificates (other than holders of
Dissenting Shares) which, immediately prior to the Effective Time represented
outstanding shares of Security Common Stock ("Certificates"), a notice and a
letter of transmittal for use in exchanging such Certificates for the Merger
Consideration. The letter of transmittal shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
proper delivery of the Certificates to the Exchange Agent. Within five business
days following receipt of a Certificate for exchange and cancellation to the
Exchange Agent, together with such letter of transmittal, duly executed, the
holder of such Certificate shall be entitled to promptly receive in exchange
therefor the Merger Consideration as provided in Section 3.1 hereof and the
Certificates so surrendered shall be canceled. The Exchange Agent shall not be
obligated to deliver or cause to be delivered to any holder of Security Common
Stock the Merger Consideration to which such holder of Security Common Stock
would otherwise be entitled until such holder surrenders the Certificate for
exchange or, in lieu thereof, an appropriate Affidavit of Loss and Indemnity
Agreement and/or a bond as may be required in each case by the Company. Neither
the Exchange Agent nor any party hereto shall be liable to any holder of
Certificates for any amount paid to a public official pursuant to any applicable
abandoned property, escheat or similar law. Except as required by law, no
interest shall be payable with respect to the Merger Consideration payable for
the outstanding shares of Security Common Stock.
(c) After the Effective Time, there shall be no transfers on the stock
transfer books of Security of the shares of Security Common Stock which were
outstanding immediately prior to the Effective Time and, if any Certificates
representing such shares are presented for transfer to Security, they shall be
cancelled and exchanged for the Merger Consideration.
(d) If payment of the Merger Consideration pursuant to Section 3.1
hereof for shares of Security Common Stock is to be made in a name other than
that in which the Certificate surrendered in exchange therefor is registered, it
shall be a condition of such payment that the Certificate so surrendered shall
be properly endorsed (or accompanied by an appropriate instrument of transfer)
and otherwise in proper form for transfer, and that the person requesting such
payment shall pay to the Company in advance any transfer or other taxes required
by reason of the payment to a person other than the registered holder of the
Certificate surrendered, or required for any other reason, or shall establish to
the satisfaction of the Company that such tax has been paid or is not payable.
(e) Any portion of the Merger Consideration delivered to the Exchange
Agent pursuant to this Section 3.2 that remains unclaimed by the stockholders of
Security six (6) months after the Effective Time (as well as proceeds from any
investment thereof) shall be returned to the Company. Any stockholder of
Security who had not exchanged his shares of Security Common Stock for the
Merger Consideration in accordance with the Reorganization Agreement prior to
that time shall thereafter look to the Company for payment of the Merger
Consideration in respect of such shares
B-3
<PAGE>
without any interest thereon.
3.3 Dissenting Shares. Dissenting Shares owned by each holder thereof
who has not exchanged his Certificates for the Merger Consideration or otherwise
has not effectively withdrawn or lost his dissenter's rights as of the Effective
Time, shall not be converted into or represent the right to receive the Merger
Consideration pursuant to Section 3.1 hereof and shall be entitled only to such
rights as are available to such holder pursuant to the applicable provisions of
the OGCL. Each holder of Dissenting Shares shall be entitled to receive the
value of such Dissenting Shares held by him in accordance with the applicable
provisions of the OGCL, provided such holder complies with the procedures
contemplated by and set forth in the applicable provisions of the OGCL. If any
holder of Dissenting Shares shall effectively withdraw or lose his dissenter's
rights under the applicable provisions of the OGCL, such Dissenting Shares shall
be converted into the right to receive the Merger Consideration in accordance
with the provisions of Section 3.1 hereof.
3.4 Interim Common Stock. Each share of Interim Common Stock which is
issued and outstanding immediately prior to the Effective Time shall be
converted automatically and without any action on the part of the holder thereof
into an equal number of issued and outstanding shares of Common Stock of the
Surviving Corporation.
ARTICLE IV
MISCELLANEOUS
4.1 Conditions Precedent. The respective obligations of each party
under this Plan of Merger shall be subject to the satisfaction, or waiver by the
party permitted to do so, of the conditions set forth in Article V of the
Reorganization Agreement.
4.2 Termination. This Plan of Merger shall be terminated upon the
termination of the Reorganization Agreement in accordance with Article VI
thereof.
4.3 Amendments. To the extent permitted by law and the Reorganization
Agreement, this Plan of Merger may be amended by a subsequent writing signed by
all of the parties hereto upon the approval of the Board of Directors of each of
the parties hereto.
4.4 Successors. This Plan of Merger shall be binding on the successors
of Interim and Security.
B-4
<PAGE>
IN WITNESS WHEREOF, Interim and Security have caused this Plan of
Merger to be executed by their duly authorized officers and their corporate
seals to be hereunto affixed as of the date first above written.
EFBI ACQUISITION CORP.
Attest:
/s/ Michael R. Meister By: /s/ Otto L. Keeton
_______________________ _______________________
Michael R. Meister Otto L. Keeton
Vice President and Chief President and Chief Executive Officer
Operating Officer
SECURITY SAVINGS HOLDING COMPANY, INC.
Attest:
By: /s/ Roberta A. Hair
_________________________
Roberta A. Hair
Chairman and Vice President
B-5
<PAGE>
EXHIBIT C
FORM OF
AGREEMENT AND PLAN OF MERGER AND LIQUIDATION OF
SECURITY SAVINGS HOLDING COMPANY, INC.
BY ENTERPRISE FEDERAL BANCORP, INC.
AGREEMENT AND PLAN OF MERGER AND LIQUIDATION agreed to this __ day of
June 1998, between Enterprise Federal Bancorp, Inc., an Ohio corporation
("Company"), and Security Savings Holding Company, Inc., an Ohio corporation
("Security").
WHEREAS, the Company owns all of the issued and outstanding capital
stock of Security; and
WHEREAS, the Company wishes to approve, authorize, and consent to (i)
the merger of Security with and into the Company pursuant to the General
Corporation Law of the State of Ohio ("OGCL") and (ii) the voluntary liquidation
of Security in accordance with Section 332 of the Internal Revenue Code of 1986,
as amended ("Code") and pursuant to an Agreement and Plan of Merger and
Reorganization, dated as of July 2, 1998; and
WHEREAS, EFBI Acquisition Corp., an Ohio corporation and former
subsidiary of the Company, previously has merged with and into Security.
NOW, THEREFORE, the parties hereto agree as follows:
1. The Company approves, authorizes, and consents to the merger and liquidation
of Security.
2. Following the consummation of this Agreement and Plan of Merger and
Liquidation, Security shall be liquidated in accordance with the provisions of
Section 332 of the Internal Revenue Code of 1986, as amended.
3. The officers of Security are authorized and directed to distribute
Security's assets (subject to its liabilities) within one year in cancellation
of its stock to the Company, as owner of all of its issued and outstanding
stock.
4. The officers of Security are further authorized and directed to take
all appropriate and necessary actions to liquidate Security in accordance with
the Code.
C-1
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement and
Plan of Merger and Liquidation to be executed by their respective duly
authorized officers as of the day and year first above written.
ENTERPRISE FEDERAL BANCORP, INC.
Attest:
/s/ Michael R. Meister By: /s/ Otto L. Keeton
______________________ _____________________
Michael R. Meister Otto L. Keeton
Vice President and Chief President and Chief Executive Officer
Operating Officer
SECURITY SAVINGS HOLDING COMPANY, INC.
Attest:
By: /s/ Roberta A. Hair
_________________________ ________________________
Roberta A. Hair
Chairman and Vice President
C-2
<PAGE>
ENTERPRISE FEDERAL BANCORP, INC. AND
SECURITY SAVINGS HOLDING COMPANY, INC.
SIGN DEFINITIVE MERGER AGREEMENT
West Chester, Ohio--July 6, 1998--Enterprise Federal Bancorp Inc.
(NASDAQ:EFBI) and Security Savings Holding Company Inc. jointly announced today
the signing of a definitive agreement for the acquisition of Security by
Enterprise.
Enterprise Federal Bancorp, Inc., the holding company for Enterprise
Federal Savings Bank, is headquartered in West Chester and operates seven
branch offices in Hamilton, Butler and Warren counties, Ohio. Security
Savings Holding Company Inc. is the holding company for Security Savings
Association and operates three offices in the Clermont County communities
of Milford, Day Heights and Batavia.
The merger, which will be accounted for under the purchase method, is
expected to be completed in the fourth quarter pending Security shareholder
approval, regulatory approval and other customary conditions of closing.
The aggregate purchase price was $13 million, while other terms of the
transaction were not disclosed.
At June 30, 1998, Security had total assets of $75 million, deposits of $64
million and shareholders' equity of $8 million.
At June 30, 1998, Enterprise had total assets of $408 million, deposits of
$203 million and shareholders' equity of $36 million.
Otto L. Keeton, President and Chief Executive Officer of Enterprise,
stated, "We are very pleased to announce this merger with Security. We are
excited about this opportunity to expand our branch office network into the
neighboring communities of Clermont County. We look forward to welcoming the
Security customers and employees. This acquisition, which we expect to be
immediately accretive to earnings, also continues our efforts to leverage
Enterprise's capital, improve its return on equity and increase shareholder
value."
Roberta A. Hair, Vice President of Security, stated, "We believe that
this transaction will benefit our shareholders, customers and employees. Our
customers can expect additional banking products and services and our
employees can grow and prosper as part of a larger company."
CONTACT:
Enterprise Federal Bancorp Inc., West Chester
Otto L. Keeton, (513) 755-4600
or
Security Savings Holding Company Inc., Cincinnati
Roberta A. Hair, (513) 272-0080
