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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 21, 1999
THE BANK OF KENTUCKY FINANCIAL CORPORATION
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(Exact name of registrant as specified in its charter)
KENTUCKY 0-25960 61-1256535
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(State or other jurisdiction of (Commission File No.) (IRS Employer I.D. No.)
incorporation)
1065 Burlington Pike, Florence, Kentucky 41042
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (606) 371-2340
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Item 5. Other Events.
On December 21, 1999, The Bank of Kentucky Financial Corporation, a
Kentucky corporation ("BKFC"); The Bank of Kentucky, Inc., a state bank
incorporated under the laws of Kentucky ("Bank"); Fort Thomas Financial
Corporation, an Ohio corporation ("FTFC"); and Fort Thomas Savings Bank, FSB, a
federal savings bank incorporated under the laws of the United States ("FSB"),
entered into an Agreement and Plan of Reorganization, a copy of which is
attached hereto as Exhibit 2 (the "Agreement"). The Agreement provides for the
merger of FTFC with and into BKFC (the "BKFC Merger") and the immediately
subsequent merger of FSB with and into the Bank (the "Bank Merger"). The
following summary of some of the material terms and conditions of the Agreement
is qualified in its entirety by reference to Exhibit 2.
In accordance with the terms and subject to the conditions of the
Agreement, each of the outstanding shares of FTFC will be cancelled and
extinguished on the effective date of the BKFC Merger in consideration and in
exchange for .5645 share of BKFC (the "Exchange Rate"). On December 21, 1999,
there were 1,474,321 shares of FTFC issued and outstanding. At the effective
time of the BKFC Merger, certain outstanding options to acquire FTFC shares will
be cancelled and extinguished and, in substitution and exchange therefor, the
holders thereof shall be entitled to receive a certain number of BKFC shares.
In accordance with the terms and subject to the conditions of the
Agreement, each of the outstanding shares of FSB will be cancelled and
extinguished on the effective date of the Bank Merger. On December 21, 1999,
there were 100 shares of FSB issued and outstanding and held of record by FTFC.
The consummation of the BKFC Merger and the Bank Merger is subject to a
number of conditions, including, but not limited to, the approval of the
appropriate regulatory agencies and the approval of the requisite number of
shareholders of FTFC and FSB. The Agreement may be terminated by the Board of
Directors of FTFC or BKFC in the event that certain representations or
warranties made by the parties in the Agreement are not true in any material
respect or in the event certain conditions contained in the Agreement are not
fulfilled, including the failure of the BKFC Merger to be consummated on or
before September 30, 2000.
Item 7. Financial Statements and Exhibits.
(a) and (b). Not applicable.
(c) Exhibits.
See Index to Exhibits.
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SIGNATURES
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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.
THE BANK OF KENTUCKY
FINANCIAL CORPORATION
By: /s/ Robert W. Zapp
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Robert W. Zapp, President
Date: December 29, 1999
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INDEX TO EXHIBITS
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Exhibit Number Description
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2 Agreement and Plan of Reorganization, dated December 21, 1999, by
and among The Bank of Kentucky Financial Corporation, The Bank of
Kentucky, Inc., Fort Thomas Financial Corporation and Fort Thomas
Savings Bank, FSB
99 News Release of The Bank of Kentucky Financial Corporation dated
December 21, 1999
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Exhibit 2
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (hereinafter referred to as
the "AGREEMENT"), made and entered into this 21st day of December, 1999, by and
among The Bank of Kentucky Financial Corporation, a bank holding company
incorporated under the laws of Kentucky (hereinafter referred to as "BKFC"); The
Bank of Kentucky, Inc., a state bank incorporated under the laws of Kentucky
(hereinafter referred to as the "BANK"); Fort Thomas Financial Corporation, a
savings and loan holding company incorporated under the laws of Ohio
(hereinafter referred to as "FTFC"); and Fort Thomas Savings Bank, FSB, a
federal savings bank incorporated under the laws of the United States
(hereinafter referred to as "FSB");
WITNESSETH:
WHEREAS, the authorized capital of BKFC consists of 15,000,000 shares
of stock, each without par value, 5,286,575 of which are issued and outstanding;
WHEREAS, the authorized capital of the BANK consists of 500,000 shares
of stock, $5.00 par value per share, 100 of which are issued and outstanding and
are owned of record by BKFC;
WHEREAS, the authorized capital of FTFC consists of 4,000,000 common
shares, par value $.01 per share, 1,573,775 of which are issued and 1,474,321 of
which are outstanding, and 1,000,000 preferred shares, par value $.01 per share,
none of which is issued or outstanding;
WHEREAS, the authorized capital of FSB consists of 10,000,000 shares of
common stock, $.01 par value per share, 100 of which are issued and outstanding
and held of record by FTFC; and
WHEREAS, the Boards of Directors of BKFC, the BANK, FTFC and FSB
believe that the merger of FTFC with and into BKFC and the subsequent merger of
FSB with and into the BANK are in the best interests of each of them and their
shareholders;
NOW THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, BKFC, the BANK, FTFC and FSB,
each intending to be legally bound, hereby agree as follows:
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ARTICLE ONE
THE MERGER
SECTION 1.01. MERGER OF FTFC AND BKFC. (a) In accordance with the terms
and subject to the conditions of this AGREEMENT, Chapter 1701 of the Ohio
Revised Code (hereinafter referred to as the "ORC") and Chapter 271B of the
Kentucky Revised Statutes (hereinafter referred to as the "KRS"), FTFC shall
merge with and into BKFC at the BKFC EFFECTIVE TIME (hereinafter defined); BKFC
shall be the continuing, surviving and resulting corporation in the merger of
FTFC with and into BKFC (hereinafter referred to as the "BKFC MERGER SURVIVOR");
BKFC shall continue to exist as a bank holding company incorporated under the
laws of Kentucky; and BKFC shall be the only one of BKFC and FTFC to continue
its separate corporate existence after the BKFC EFFECTIVE TIME.
(b) The name of the BKFC MERGER SURVIVOR in the merger of FTFC
with and into BKFC (hereinafter referred to as the "BKFC MERGER") shall be "The
Bank of Kentucky Financial Corporation" and the principal office and the
registered office of the BKFC MERGER SURVIVOR shall be located at 1065
Burlington Pike, Florence, Kentucky 41042.
(c) The purposes for which the BKFC MERGER SURVIVOR shall be
formed shall be identical to the purposes for which BKFC was formed.
(d) The authorized capital of the BKFC MERGER SURVIVOR shall
consist of 15,000,000 shares of stock, each without par value.
(e) The Articles of Incorporation of BKFC, as amended, shall
be the Articles of Incorporation, as amended, of the BKFC MERGER SURVIVOR until
amended in accordance with law.
(f) The Bylaws of BKFC at the BKFC EFFECTIVE TIME shall be the
Bylaws of the BKFC MERGER SURVIVOR until amended in accordance with law.
(g) After the BKFC EFFECTIVE TIME, the persons identified on
the schedule attached hereto as Exhibit A shall be the officers and directors of
the BKFC MERGER SURVIVOR, each to hold office in accordance with applicable law
and regulations.
(h) At and after the BKFC EFFECTIVE TIME, the BKFC MERGER
SURVIVOR consents to be sued and served with process in the State of Ohio and
irrevocably appoints the Secretary of State of Ohio as its agent to accept
service of process in any proceeding in the State of Ohio to enforce against the
BKFC MERGER SURVIVOR any obligation of FTFC or to enforce the rights of any
DISSENTING SHAREHOLDER (hereinafter defined).
(i) Robert W. Zapp, whose address is 1065 Burlington Pike,
Florence, Kentucky 41042, a natural person and resident of Boone County,
Kentucky, the county in which the registered office of the BKFC MERGER SURVIVOR
is to be located, shall be the statutory
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agent in Kentucky upon whom any process, notice or demand against FTFC, BKFC or
the BKFC MERGER SURVIVOR may be served.
SECTION 1.02. MERGER OF FSB AND THE BANK. (a) In accordance with the
terms and subject to the conditions of this AGREEMENT, Chapter 271B of the KRS
and Section 552.13 of the Regulations of the Office of Thrift Supervision
(hereinafter referred to as the "OTS"), FSB shall merge with and into the BANK
at the BANK EFFECTIVE TIME (hereinafter defined); the BANK shall be the
continuing, surviving and resulting corporation in the merger of FSB with and
into the BANK (hereinafter referred to as the "BANK MERGER SURVIVOR"); the BANK
shall continue to exist as a state bank incorporated under the laws of Kentucky;
and the BANK shall be the only one of FSB and the BANK to continue its separate
corporate existence after the BANK EFFECTIVE TIME.
(b) The name of the BANK MERGER SURVIVOR in the merger of FSB
with and into the BANK (hereinafter referred to as the "BANK MERGER") shall be
"The Bank of Kentucky, Inc."
(c) The purposes for which the BANK MERGER SURVIVOR shall be
formed shall be identical to the purposes for which the BANK was formed.
(d) The authorized capital of the BANK MERGER SURVIVOR shall
consist of 500,000 shares of stock, $5.00 par value per share.
(e) The Articles of Incorporation and Bylaws of the BANK, as
in effect immediately before the BANK EFFECTIVE TIME, shall be the Articles of
Incorporation and Bylaws of the BANK MERGER SURVIVOR after the BANK EFFECTIVE
TIME until amended in accordance with law.
(f) After the BANK EFFECTIVE TIME, the persons identified on
the schedule attached hereto as Exhibit B shall be the officers and directors of
the BANK MERGER SURVIVOR, each to hold office in accordance with applicable law
and regulations.
(g) After the BANK EFFECTIVE TIME, the offices of the BANK and
FSB at the locations listed on the schedule attached hereto as Exhibit C shall
be the offices of the BANK MERGER SURVIVOR.
(h) Robert W. Zapp, whose address is 1065 Burlington Pike,
Florence, Kentucky 41042, a natural person and resident of Boone County, the
county in which the registered office of the BANK MERGER SURVIVOR is to be
located, shall be the statutory agent in Kentucky upon whom any process, notice
or demand against FSB, the BANK or the BANK MERGER SURVIVOR may be served.
SECTION 1.03. CLOSING AND EFFECTIVE TIMES. (a) The closing of the
transactions contemplated by this AGREEMENT (hereinafter referred to as the
"CLOSING") shall take place at a time and on a date selected mutually by BKFC
and FTFC following the satisfaction or
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waiver of the last of the conditions set forth in Article Seven of this
AGREEMENT to be satisfied or waived.
(b) On the day of the CLOSING, BKFC and FTFC shall cause (i)
Articles of Merger in respect of the BKFC MERGER to be filed with the Secretary
of State of the Commonwealth of Kentucky in accordance with Section 271B.11-050
of the KRS and (ii) a Certificate of Merger in respect of the BKFC MERGER to be
filed with the Secretary of State of the State of Ohio in accordance with
Chapter 1701 of the ORC. The BKFC MERGER shall become effective at 11:58 p.m. on
the date of such filings or on such later date as may be set forth in such
Articles of Merger and Certificate of Merger (herein referred to as the "BKFC
EFFECTIVE TIME").
(c) On the day of the CLOSING, the BANK and FSB shall cause
Articles of Merger in respect of the BANK MERGER to be filed with the Secretary
of State of the Commonwealth of Kentucky in accordance with Section 271B.11-050
of the KRS. The BANK MERGER shall become effective at 11:59 p.m. on the date of
such filing or on such later date as may be set forth in such Articles of Merger
(herein referred to as the "BANK EFFECTIVE TIME").
SECTION 1.04. STRUCTURE. In the event that BKFC elects in its sole
discretion to change the structure of the BANK MERGER in a manner by which FSB
will be merged with an interim federal savings bank formed by BKFC as a wholly
owned subsidiary of BKFC and will survive such merger, FTFC and FSB shall enter
into an amendment of this AGREEMENT with BKFC and the BANK to provide for such
change in structure.
ARTICLE TWO
CONVERSION AND CANCELLATION OF
SHARES IN THE BKFC MERGER AND THE BANK MERGER
SECTION 2.01. CONVERSION AND CANCELLATION OF SHARES. (a) At the BKFC
EFFECTIVE TIME and as a result of the BKFC MERGER, automatically and without
further act of BKFC, FTFC or the holders of FTFC common shares or BKFC shares of
stock, the following shall occur:
(i) Each outstanding FTFC common share shall be cancelled
and extinguished and, in substitution and exchange
therefor, the holders thereof shall be entitled,
subject to and upon compliance with Section 2.02 of
this AGREEMENT, to receive .5645 share of BKFC stock
(hereinafter referred to as the "EXCHANGE RATE");
provided, however, that in the event of the payment
by BKFC of any stock dividends, stock splits or
distributions in, or combinations or subdivisions of,
BKFC shares of stock between the date of this
AGREEMENT and the BKFC EFFECTIVE TIME, the EXCHANGE
RATE shall be adjusted appropriately;
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(ii) Each of the options to purchase 21,406 FTFC common
shares at an exercise price of $6.91 per share which
was granted pursuant to the STOCK OPTION PLANS
(hereinafter defined) and which does not vest until
January 29, 2001 (hereinafter collectively referred
to as the "$6.91 UNVESTED OPTIONS"), shall be
canceled and extinguished and, in substitution and
exchange therefor, the holders thereof shall be
entitled, subject to and upon compliance with Section
2.02 of this AGREEMENT, to receive from BKFC an
option to purchase for $12.24 per share a number of
BKFC shares of stock equal to the product of (I) the
number of FTFC common shares subject to the $6.91
UNVESTED OPTIONS of each such holder, multiplied by
(II) the EXCHANGE RATE; provided, however, that each
such option shall be granted by BKFC subject to the
terms and upon the conditions of a stock option
agreement in the form of the Stock Option Award
Agreement attached hereto as Exhibit D (hereinafter
referred to as the "STOCK OPTION AWARD AGREEMENT");
(iii) Each of the options to purchase 1,264 FTFC common
shares at an exercise price of $12.82 per share which
was granted pursuant to the STOCK OPTION PLANS
(hereinafter defined) and which vests on and after
January 29, 2001 (hereinafter collectively referred
to as the "$12.82 UNVESTED OPTIONS"), shall be
canceled and extinguished and, in substitution and
exchange therefor, the holders thereof shall be
entitled, subject to and upon compliance with Section
2.02 of this AGREEMENT, to receive from BKFC an
option to purchase for $22.71 per share a number of
BKFC shares of stock equal to the product of (I) the
number of FTFC common shares subject to the portion
of the $12.82 UNVESTED OPTIONS which vests on January
29, 2001 of each such holder, multiplied by (II) the
EXCHANGE RATE; provided, however, that each such
option shall be granted by BKFC subject to the terms
and upon the conditions of a STOCK OPTION AWARD
AGREEMENT;
(iv) Each issued FTFC common share which is not
outstanding and which is held in the FTFC treasury
shall be cancelled and extinguished; and
(v) The outstanding shares of stock of BKFC before the
BKFC EFFECTIVE TIME shall remain issued and
outstanding after the BKFC EFFECTIVE TIME as shares
of stock of the BKFC MERGER SURVIVOR.
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(b) At the BANK EFFECTIVE TIME and as a result of the BANK
MERGER, automatically and without further act of the BANK, FSB, BKFC or FTFC,
(i) each share of common stock of FSB shall be cancelled and extinguished and
(ii) the shares of stock of the BANK issued and outstanding immediately before
the BANK EFFECTIVE TIME shall be and constitute the issued and outstanding
shares of the BANK MERGER SURVIVOR immediately after the BANK EFFECTIVE TIME.
SECTION 2.02. SHARE CERTIFICATES IN THE BKFC MERGER AND THE BANK
MERGER. (a) As soon as practicable after the BKFC EFFECTIVE TIME, BKFC shall
mail to each holder of record of FTFC common shares a form letter of transmittal
and instructions for use in effecting the surrender for exchange of the
certificates evidencing the FTFC common shares cancelled and extinguished as a
result of the BKFC MERGER (hereinafter referred to collectively as the
"CERTIFICATES" and individually as the "CERTIFICATE"). Upon surrender of a
CERTIFICATE for cancellation, together with such letter of transmittal, duly
executed, the holder of such CERTIFICATE shall be entitled to receive in
exchange therefor a certificate evidencing the BKFC shares of stock to which the
holder is entitled in accordance with the provisions of this AGREEMENT, and the
CERTIFICATE so surrendered shall thereafter be cancelled forthwith.
(b) In the event that any holder of FTFC common shares
cancelled and extinguished in accordance with this AGREEMENT is unable to
deliver the CERTIFICATE which evidences such shares of the holder, BKFC, in the
absence of actual notice that any shares theretofore evidenced by any such
CERTIFICATE have been acquired by a bona fide purchaser, shall deliver to such
holder the amount to which such holder is entitled in accordance with the
provisions of this AGREEMENT upon the presentation of all of the following:
(i) Evidence to the reasonable satisfaction of BKFC
that any such CERTIFICATE has been lost, wrongfully
taken or destroyed;
(ii) Such security or indemnity as may be reasonably
requested by BKFC to indemnify and hold BKFC
harmless; and
(iii) Evidence to the reasonable satisfaction of BKFC
that such person is the owner of the shares
theretofore represented by each CERTIFICATE claimed
by him to be lost, wrongfully taken or destroyed and
that he is the person who would be entitled to
present each such CERTIFICATE for exchange pursuant
to this AGREEMENT.
(c) In the event that the issuance of BKFC shares of stock or
payment in lieu of fractional shares in accordance with this AGREEMENT is to be
made to a person other than the person in whose name the CERTIFICATE surrendered
is registered, the CERTIFICATE so surrendered shall be properly endorsed or
otherwise in proper form for transfer and the person requesting such issuance or
payment shall pay any transfer or other taxes required by reason of the issuance
or payment to a person other than the registered holder of the CERTIFICATE
surrendered or establish to the satisfaction of BKFC that such tax has been paid
or is not
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applicable. Until surrendered in accordance with the provisions of this Section
2.02, each CERTIFICATE shall represent for all purposes the right to receive the
number of whole BKFC shares of stock and cash in lieu of fractional shares as
determined pursuant to this AGREEMENT.
(d) No dividends or other distributions declared after the
BKFC EFFECTIVE TIME with respect to BKFC shares of stock and payable to the
holders of record thereof after the BKFC EFFECTIVE TIME shall be paid to the
holder of any unsurrendered CERTIFICATE until the holder thereof shall surrender
such CERTIFICATE. Subject to the effect, if any, of applicable law, after the
subsequent surrender and exchange of a CERTIFICATE, the record holder thereof
shall be entitled to receive any such dividends or other distributions, without
any interest thereon, which theretofore had become payable with respect to BKFC
shares of stock represented by such CERTIFICATE.
(e) Each holder of a $6.91 UNVESTED OPTION and each holder of
a $12.82 UNVESTED OPTION (hereafter referred to collectively as the "UNVESTED
OPTIONS") shall surrender to BKFC at the BKFC EFFECTIVE TIME the agreement(s) in
respect of such UNVESTED OPTION and shall enter into a STOCK OPTION AWARD
AGREEMENT with BKFC.
(f) No certificates or scrip representing fractional shares of
BKFC shares of stock shall be issued upon the surrender for exchange of
CERTIFICATES and no option to purchase fractional shares of BKFC stock shall be
issued upon cancellation of UNVESTED OPTIONS. No dividend or distribution with
respect to BKFC shares of stock shall be payable on or with respect to any such
fractional shares and such fractional shares shall not entitle the owner thereof
to vote or to any other rights of a BKFC shareholder. In lieu of any such
fractional share, BKFC shall pay to each former holder of FTFC common shares or
UNVESTED OPTIONS who otherwise would be entitled to receive a fraction of a BKFC
share of stock, or option in respect thereof, an amount in cash equal to the
product of (i) the market price of a share of stock of BKFC on the day of the
BKFC EFFECTIVE TIME, multiplied by (ii) such fraction.
(g) As soon as practicable after the BANK EFFECTIVE TIME, the
certificate(s) evidencing the FSB shares of common stock cancelled and
extinguished as a result of the BANK MERGER shall be surrendered to BKFC for
cancellation. At and after the BANK EFFECTIVE TIME, the certificate(s)
evidencing the outstanding shares of stock of the BANK before the BANK EFFECTIVE
TIME shall evidence the outstanding shares of stock of the BANK MERGER SURVIVOR
after the BANK EFFECTIVE TIME.
SECTION 2.03. COMPLIANCE WITH SECTION 2.02. No BKFC shares of stock or
payment in lieu of fractional shares shall be delivered by BKFC to any former
holder of FTFC common shares in accordance with this AGREEMENT until any such
holder shall have complied with paragraphs (a) through (e) of Section 2.02 of
this AGREEMENT.
SECTION 2.04. PAYMENT IN SATISFACTION OF RIGHTS. All payments made upon
the surrender of CERTIFICATES pursuant to this Article Two shall be deemed to
have been made in full satisfaction of all rights pertaining to the shares
evidenced by such CERTIFICATES.
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SECTION 2.05. NO FURTHER REGISTRATION OF TRANSFER. After the BKFC
EFFECTIVE TIME, there shall be no further registration of transfer of FTFC
common shares on the stock transfer books of FTFC. In the event that, after the
BKFC EFFECTIVE TIME, CERTIFICATES evidencing such shares are presented for
transfer, they shall be cancelled and exchanged as provided in this Article Two.
SECTION 2.06. DISSENTING SHARES. Notwithstanding anything in this
AGREEMENT to the contrary, the FTFC common shares which are outstanding
immediately before the BKFC EFFECTIVE TIME and which are held by shareholders
who shall not have voted such shares in favor of this AGREEMENT, who shall have
delivered to BKFC or FTFC a written demand for appraisal of such shares in the
manner provided in Section 1701.85 of the ORC and who shall have otherwise
complied fully with all of the requirements of Section 1701.85 of the ORC shall
not be converted into or be exchangeable for the right to receive the
consideration provided in this AGREEMENT; provided, however, that (a) each of
such shares (herein referred to as the "DISSENTING SHARES") shall nevertheless
be cancelled and extinguished in accordance with this AGREEMENT; (b) the holder
of DISSENTING SHARES, upon full compliance with the requirements of Section
1701.85 of the ORC, shall be entitled to payment of the appraised value of such
shares in accordance with the provisions of Section 1701.85 of the ORC; and (c)
in the event (i) any holder of DISSENTING SHARES shall subsequently withdraw
such holder's demand for appraisal of such shares within sixty days after the
BKFC EFFECTIVE TIME or shall fail to establish such holder's entitlement to
appraisal rights in accordance with Section 1701.85 of the ORC, or (ii) any
holder of DISSENTING SHARES has not filed a petition demanding a determination
of the value of such shares within the period provided in Section 1701.85 of the
ORC, such holder shall forfeit the right to appraisal of such shares and such
shares shall thereupon be deemed to have been converted into and to have become
exchangeable for the right to receive the consideration provided in this
AGREEMENT.
SECTION 2.07. SEPARATE EXISTENCE. (a) At and after the BKFC EFFECTIVE
TIME, the separate existence of FTFC shall cease; provided, however, that
whenever a conveyance, assignment, transfer, deed or other instrument or act is
necessary to vest property or rights in the BKFC MERGER SURVIVOR, the officers
of BKFC and FTFC shall execute, acknowledge and deliver such instruments and do
such acts.
(b) At and after the BANK EFFECTIVE TIME, the separate
existence of FSB shall cease; provided, however, that whenever a conveyance,
assignment, transfer, deed or other instrument or act is necessary to vest
property or rights in the BANK MERGER SURVIVOR, the officers of the BANK and FSB
shall execute, acknowledge and deliver such instruments and do such acts.
SECTION 2.08. PROPERTY. (a) At and after the BKFC EFFECTIVE TIME, all
of the assets and property of every kind and character, real, personal and
mixed, tangible and intangible, chooses in action, rights and credits owned by
BKFC and FTFC at the BKFC EFFECTIVE TIME, or which would inure to any of them,
shall immediately, by operation of law and without any conveyance or transfer
and without any further act or deed, be vested in and become the property of the
BKFC MERGER SURVIVOR, which shall have, hold and enjoy the same in its
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own right as fully and to the same extent as the same were possessed, held and
enjoyed by BKFC and FTFC before the BKFC EFFECTIVE TIME. The BKFC MERGER
SURVIVOR shall be deemed to be and shall be a continuation of the entity and
identity of BKFC. All of the rights and obligations of BKFC or FTFC shall not
revert or in any way be impaired by reason of the BKFC MERGER. Any claim
existing, or action or proceeding pending, by or against either BKFC or FTFC,
may be prosecuted to judgment with right of appeal as if the BKFC MERGER had not
taken place or the BKFC MERGER SURVIVOR may be substituted in its place.
(b) At and after the BANK EFFECTIVE TIME, all of the assets
and property of every kind and character, real, personal and mixed, tangible and
intangible, chooses in action, rights and credits owned by BANK and FSB at the
BANK EFFECTIVE TIME, or which would inure to any of them, shall immediately, by
operation of law and without any conveyance or transfer and without any further
act or deed, be vested in and become the property of the BANK MERGER SURVIVOR,
which shall have, hold and enjoy the same in its own right as fully and to the
same extent as the same were possessed, held and enjoyed by the BANK and FSB
before the BANK EFFECTIVE TIME. The BANK MERGER SURVIVOR shall be deemed to be
and shall be a continuation of the entity and identity of the BANK. All of the
rights and obligations of the BANK or FSB shall not revert or in any way be
impaired by reason of the BANK MERGER. Any claim existing, or action or
proceeding pending, by or against either the BANK or FSB, may be prosecuted to
judgment with right of appeal as if the BANK MERGER had not taken place or the
BANK MERGER SURVIVOR may be substituted in its place.
SECTION 2.09. CREDITOR'S RIGHTS. (a) At and after the BKFC EFFECTIVE
TIME, all the rights of creditors of each of BKFC and FTFC shall be preserved
unimpaired, and all liens upon the property of BKFC and FTFC shall be preserved
unimpaired on only the property affected by any such lien immediately before the
BKFC EFFECTIVE TIME.
(b) At and after the BANK EFFECTIVE TIME, all the rights of
creditors of each of the BANK and FSB shall be preserved unimpaired, and all
liens upon the property of the BANK and FSB shall be preserved unimpaired on
only the property affected by any such lien immediately before the BANK
EFFECTIVE TIME.
SECTION 2.10. DEPOSITS. (a) At the BANK EFFECTIVE TIME and as a result
of the BANK MERGER, each FSB savings deposit or other account then existing
shall, automatically and without further act of the BANK or FSB or the holder
thereof, be cancelled and extinguished. In substitution and exchange for each
FSB passbook savings deposit so cancelled and extinguished, the holder thereof
shall automatically receive from the BANK MERGER SURVIVOR a passbook savings
account with a beginning balance equal in dollar amount to the dollar amount of
the FSB passbook savings deposit account so cancelled and extinguished and
otherwise on the same terms as other passbook savings accounts accepted by the
BANK at the BANK EFFECTIVE TIME. In substitution for each FSB savings deposit,
other than a passbook savings deposit, so cancelled and extinguished, the holder
thereof shall automatically receive from the BANK MERGER SURVIVOR a savings
account with a beginning balance equal in dollar amount to the dollar amount of
the FSB savings deposit account so cancelled and
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extinguished and otherwise having the same terms as the FSB savings deposit so
cancelled and extinguished.
(b) The holder of each FSB savings deposit or other account
cancelled and extinguished in accordance with Section 2.10(a) of this AGREEMENT
shall forthwith be entered on the records of the BANK MERGER SURVIVOR as the
holder of an appropriate savings deposit or other account in an amount
determined as provided in Section 2.10(a) and, until Section 2.10(c) of this
AGREEMENT shall have been complied with, each passbook, certificate of deposit
or other document issued by FSB and evidencing a valid and binding FSB savings
deposit or other document shall be deemed, for all purposes, to evidence a
savings deposit or other like account of the BANK MERGER SURVIVOR.
(c) Each person who, as a result of the BANK MERGER, holds a
passbook, certificate of deposit or other document issued by FSB which
theretofore evidenced a FSB savings deposit or other account shall surrender
each such passbook, certificate or other document to the BANK MERGER SURVIVOR.
Upon such surrender, the BANK MERGER SURVIVOR shall deliver in substitution
therefor an account book or other document evidencing the savings deposit or
other account received by such person in accordance with Section 2.10(c) of this
AGREEMENT.
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES OF FTFC AND FSB
FTFC and FSB jointly and severally represent and warrant to BKFC and
the BANK that each of the following is true and accurate in all material
respects:
SECTION 3.01. ORGANIZATION AND STANDING. (a) FTFC is a corporation duly
organized, validly existing and in good standing under the laws of Ohio; is duly
registered with the OTS as a savings and loan holding company; and has the
corporate power and authority to own or hold under lease all of its properties
and assets and to conduct its business and operations as presently conducted.
Except as set forth in Section 3.01(a) of the schedule delivered by FTFC to BKFC
on December 20, 1999 (hereinafter referred to as the "DISCLOSURE SCHEDULE"),
FTFC is in compliance in all material respects with all applicable local, state
or federal laws and regulations, including, without limitation, the regulations
of the Securities and Exchange Commission (hereinafter referred to as the
"SEC"), the OTS and the Federal Deposit Insurance Corporation (hereinafter
referred to as the "FDIC"). Except for the ownership of the outstanding shares
of FSB, FTFC is not engaged in any business and does not own any real or other
personal property.
(b) FSB is a federal savings bank duly organized, validly
existing and in good standing under the laws of the United States; has the
corporate power and authority to own or hold under lease all of its properties
and assets and to conduct its business and operations as presently conducted;
and is a member of the Federal Home Loan Bank of Cincinnati (hereinafter
referred to as the "FHLB of Cincinnati"). The savings accounts and deposits of
FTFC are insured up to applicable limits by the FDIC. Except as set forth in
Section 3.01(b) of the
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DISCLOSURE SCHEDULE, FSB is in compliance in all material respects with all
applicable local, state or federal laws and regulations, including, without
limitation, the regulations of the OTS and the FDIC.
SECTION 3.02. QUALIFICATION. Each of FTFC and FSB is either duly
qualified to do business and in good standing in each jurisdiction in which such
qualification is required or the failure to so qualify would not have a material
adverse effect on the business of either of FTFC or FSB.
SECTION 3.03. AUTHORITY. (a) Subject to the approval of this AGREEMENT
and the transactions contemplated hereby, including the BKFC MERGER and the BANK
MERGER, by the OTS, by FTFC, as the sole shareholder of FSB, and by the
requisite vote of the FTFC shareholders, (i) each of FTFC and FSB has all of the
requisite corporate power and authority to enter into this AGREEMENT and to
perform all of its obligations hereunder; (ii) the execution and delivery of
this AGREEMENT and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action by each of FTFC and FSB;
and (iii) this AGREEMENT is the valid and binding agreement of each of FTFC and
FSB, enforceable against each of FTFC and FSB in accordance with its terms, (I)
subject to applicable bankruptcy, insolvency, reorganization and moratorium laws
and other laws of general applicability affecting the enforcement of creditors'
rights generally and the effect of rules of law governing specific performance,
injunctive relief and other equitable remedies on the enforceability of such
documents and (II) except to the extent such enforceability may be limited by
laws relating to safety and soundness of insured depository institutions as set
forth in 12 U.S.C. ss. 1818(b) or by the appointment of a conservator by the
FDIC. This AGREEMENT has been duly executed and delivered by each of FTFC and
FSB.
SECTION 3.04. GOVERNING DOCUMENTS. FTFC and FSB have delivered to BKFC
true and accurate copies of the Articles of Incorporation and Code of
Regulations of FTFC and the Charter and Bylaws of FSB and have granted BKFC
access to all records of all meetings and other corporate actions by the
shareholders, Boards of Directors and Committees of the Boards of Directors of
FTFC and FSB. The minute books of FTFC and FSB contain, in all material
respects, complete and accurate records of all meetings and other corporate
actions of the FTFC and FSB shareholders, Boards of Directors and Committees of
the Boards of Directors.
SECTION 3.05. NO CONFLICTS. The execution and delivery of this
AGREEMENT and the consummation of the transactions contemplated hereby,
including the BKFC MERGER and the BANK MERGER, will not, (a) subject to the
approval of this AGREEMENT and the BKFC MERGER by FTFC, as the sole shareholder
of FSB, and by the requisite vote of the FTFC shareholders, conflict with or
violate any provision of or result in the breach of any provision of the
Articles of Incorporation or Code of Regulations of FTFC or the Charter or
Bylaws of FSB; (b) conflict with or violate any provision of or result in the
breach or the acceleration of or entitle any party to accelerate (whether upon
or after the giving of notice of lapse of time or both) any obligation under, or
otherwise materially affect the terms of, any mortgage, lien, lease, agreement,
license, instrument, order, arbitration award, judgment or decree to which
either FTFC or FSB is a party or by which FTFC, FSB or their property or assets
is bound; (c) require
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the consent of any party to any agreement or commitment to which either FTFC or
FSB is a party or by which FTFC, FSB or their property or assets is bound, the
failure to obtain which could, individually or in the aggregate with all the
other failures to obtain required consents, have a material adverse effect on
the business, operations or financial condition of FTFC and FSB, taken as a
whole; (d) result in the creation or imposition of any lien, charge, pledge,
security interest or other encumbrance upon any property or assets of either
FTFC or FSB or give rise to any meritorious cause of action against either FTFC
or FSB; or, (e) subject to the approval of this AGREEMENT by the OTS, by FTFC,
as the sole shareholder of FSB, and by the requisite vote of the FTFC
shareholders, violate or conflict with any applicable law, ordinance, rule or
regulation, including, without limitation, the rules and regulations of the OTS
and the FDIC.
SECTION 3.06. CONSENTS. No consent, approval, order or authorization
of, or registration, declaration or filing with, any governmental authority is
required by FTFC or FSB in connection with the execution and delivery of this
AGREEMENT by FTFC or FSB or the consummation by FTFC or FSB of the transactions
contemplated hereby, including the BKFC MERGER and the BANK MERGER, except for
filings, authorizations, consents or approvals required by the SEC, the OTS and
the Ohio Secretary of State.
SECTION 3.07. FTFC AND FSB SHARES. (a) (i) The authorized capital of
FTFC consists of 4,000,000 common shares, $.01 par value per share, 1,573,775 of
which are issued and 1,474,321 of which are outstanding and held of record by
approximately 650 shareholders, and 1,000,000 preferred shares, $.01 par value
per share, none of which is issued or outstanding. All of the issued and
outstanding common shares of FTFC are duly authorized, validly issued, fully
paid and nonassessable; were issued in full compliance with all applicable laws
and regulations; and were not issued in violation of the preemptive right of any
depositor of FSB or shareholder of FTFC. FTFC has no outstanding class of
capital stock other than such common shares.
(ii) Except for the options to purchase for $6.91 per share
an aggregate of 107,016 common shares of FTFC granted to two FSB employees and
to four FTFC directors and options to purchase for $12.82 an aggregate of 3,148
common shares of FTFC granted to four FTTC directors in accordance with the 1996
FTFC Key Employee Stock Compensation Program and the 1996 FTFC Directors Stock
Option Plan (hereinafter referred to as the "STOCK OPTION PLANS"), there are no
outstanding subscription rights, options, conversion rights, warrants or other
agreements, plans or commitments of any nature whatsoever (either firm or
conditional) obligating FTFC (I) to issue, deliver or sell, cause to be issued,
delivered or sold, or restricting FTFC from selling any additional FTFC common
shares or any FTFC preferred shares, or (II) to grant, extend or enter into any
such agreement, plan or commitment. The STOCK OPTION PLANS were approved by the
holders of the requisite majority of outstanding common shares of FTFC on
January 29, 1996, and have not been amended since the date of such approval. Of
the options to purchase an aggregate of 110,164 common shares of FTFC granted
under the terms and subject to the conditions of the STOCK OPTION PLANS, options
to purchase 65,460 are vested on the date hereof and are exercisable in
accordance with the terms and subject to the conditions of the STOCK OPTION
PLANS; options to purchase 22,034 will vest on January 29, 2000, and will
thereafter be exercisable in accordance with the terms and subject to the
conditions of the STOCK OPTION PLANS; options to purchase 22,038 will vest
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on January 29, 2001, and will not be exercisable in accordance with the terms
and subject to the conditions of the STOCK OPTION PLANS until January 29, 2001;
and options to purchase 632 will vest on January 29, 2002, and will not be
exercisable in accordance with the terms and subject to the conditions of the
STOCK OPTION PLANS until January 29, 2002. Options to purchase 47,214 FTFC are
reserved for issuance under the STOCK OPTION PLANS and have not been granted.
Except as set forth in this Section 3.07, no stock appreciation rights or other
grants or awards have been issued, granted or awarded under the STOCK OPTION
PLANS.
(iii) The 1996 FTFC Management Recognition Plan for
Officers and Trust Agreement and the 1996 FTFC Management Recognition Plan for
Directors and Trust Agreement (hereinafter referred to as the "MRPs"), were
approved by the holders of the requisite majority of outstanding common shares
of FTFC on January 29, 1996, and have not been amended since the date of such
approval. In accordance with the terms of the MRPs, an aggregate of 62,951
common shares of FTFC was purchased in open market transactions by the trustees
of the MRPs between February 23, and May 23, 1996. Of such 62,951 common shares,
an aggregate of 44,068 common shares of FTFC has been awarded to two FSB
employees and to four FTFC directors (hereinafter collectively referred to as
the "MRP PARTICIPANTS"), 26,182 of which have vested and have been distributed
to the MRP PARTICIPANTS; 8,814 of which are scheduled to vest on January 29,
2000, immediately after which they will be distributed to the MRP PARTICIPANTS;
8,814 of which are scheduled to vest on January 29, 2001; and 252 of which are
scheduled to vest on January 29, 2002. In the event the BKFC EFFECTIVE TIME
occurs before January 29, 2001, none of the MRP PARTICIPANTS, nor any other
person or entity, will have any right to receive, or any claim in respect of,
the 8,814 common shares of FTFC which are scheduled to vest under the MRPs on
January 29, 2001, or any earnings thereon, or the 252 common shares of FTFC
which are scheduled to vest under the MRPs on January 29, 2002, or any earnings
thereon. Awards in respect of 18,885 FTFC common shares owned of record by the
MRPs have not been made and none of the MRP PARTICIPANTS have any right to
receive, or any claim in respect of, any or all of such 18,885 common shares or
any earnings thereon.
(iv) The FTFC Employee Stock Ownership Plan (hereinafter
referred to as the "ESOP") owns of record 122,098 common shares of FTFC, 83,430
of which have been allocated to the accounts of ESOP participants and 38,668 of
which are unallocated. The outstanding balance of the loan obtained by the ESOP
from FTFC to purchase the FTFC common shares owned of record by the ESOP equaled
$387,000 on the date hereof.
(b) The authorized capital of FSB consists of 10,000,000
common shares, $.01 par value per share, 100 of which are issued and outstanding
and held of record by FTFC, and 5,000,000 preferred shares, $.01 par value per
share, none of which is issued or outstanding. All of the outstanding common
shares of FSB are duly authorized, validly issued, fully paid and nonassessable;
were issued in full compliance with all applicable laws and regulations; and
were not issued in violation of the preemptive right of any depositor or
shareholder of FSB. FSB has no outstanding class of capital stock other than
such common shares. There are no outstanding subscription rights, options,
conversion rights, warrants or other agreements or commitments of any nature
whatsoever (either firm or conditional) obligating FSB (i) to issue, deliver or
sell,
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cause to be issued, delivered or sold, or restricting FSB from selling any
additional FSB shares, or (ii) to grant, extend or enter into any such agreement
or commitment.
SECTION 3.08. FINANCIAL STATEMENTS. (a) The consolidated statements of
financial condition as of September 30, 1999 and 1998, of FTFC and the related
consolidated statements of income, shareholders' equity and cash flows for each
of the three years then ended, examined and reported upon by VonLehman &
Company, Inc., certified public accountants, complete copies of which have
previously been delivered to BKFC (hereinafter referred to as the "AUDITED
FINANCIALS"), have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis and fairly present the
consolidated financial position of FTFC at such dates and the consolidated
results of its operations and cash flows for such periods. FTFC has delivered to
BKFC all of the correspondence from VonLehman & Company, Inc., to FTFC, FSB or
their Boards of Directors or management, relating to or in respect of the
examinations and reports of VonLehman & Company, Inc., on the consolidated
financial statements of FTFC as of and for the years ended September 30, 1999,
1998 and 1997, including, but not limited to all correspondence and other
documentation in respect of management, policies and internal controls.
(b) The unaudited balance sheet as of November 30, 1999, of
FTFC and the related unaudited income statement for the two months then ended,
complete copies of which have previously been delivered to BKFC (hereinafter
referred to as the "INTERIM FINANCIALS"), fairly present the financial position
of FTFC at such date and the results of its operations for such period and have
been prepared in accordance with generally accepted accounting principles as
applicable to condensed consolidated financial statements and as applied on a
consistent basis with the AUDITED FINANCIALS. All adjustments which are
necessary for a fair statement of the INTERIM FINANCIALS have been made.
(c) The Thrift Financial Reports of FSB for the three-month
periods ended March 31, June 30 and September 30, 1999, together with the
schedules and supplements attached thereto, each as filed with the OTS and
copies of which were previously delivered to BKFC by FTFC (hereinafter referred
to as the "TFRs"), have been prepared in accordance with accounting practices
permitted by the OTS applied on a consistent basis, are true, complete and
correct in all material respects and fairly present the financial position of
FSB at such dates.
(d) Except as disclosed in the INTERIM FINANCIALS, the TFRs
and Section 3.08(d) of the DISCLOSURE SCHEDULE, as of November 30, 1999, FTFC
had no liabilities or obligations material to the financial condition of FTFC,
whether accrued, absolute, contingent or otherwise, and whether due or to become
due.
(e) The AUDITED FINANCIALS, the INTERIM FINANCIALS and the
TFRs did not, as of the dates thereof, contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
information contained therein, in light of the circumstances under which they
were made, not misleading.
SECTION 3.09. CONDUCT OF BUSINESSES. Since September 30, 1999, each of
FTFC and FSB has conducted its businesses only in the ordinary and usual course,
there have been no
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material adverse changes in the financial condition, assets, liabilities,
obligations, properties or business of FTFC or FSB and, except as set forth in
any of the AUDITED FINANCIALS, the INTERIM FINANCIALS, the TFRs or Section 3.09
of the DISCLOSURE SCHEDULE, neither FTFC nor FSB has:
(a) Authorized the creation or issuance of, issued, sold
or disposed of, or created any obligation to issue,
sell or dispose of, any stock, notes, bonds or other
securities or any obligation convertible into or
exchangeable for, any shares of its capital stock;
(b) Except for a per share dividend in the amount of
$.0625 declared on September 20, 1999, and paid on
October 15, 1999, declared, set aside, paid or made
any dividend or other distributions on its capital
stock or directly or indirectly redeemed, purchased
or acquired any shares or entered into any agreement
in respect of the foregoing;
(c) Effected any stock split, recapitalization,
combination, exchange of shares, readjustment or
other reclassification;
(d) Amended the Articles of Incorporation or Code of
Regulations of FTFC or the Charter or Bylaws of FSB;
(e) Purchased, sold, assigned or transferred any material
tangible asset or any material patent, trademark,
trade name, copyright, license, franchise, design or
other intangible asset or property;
(f) Mortgaged, pledged or granted or suffered to exist
any lien or other encumbrance or charge on any assets
or properties, tangible or intangible, except for
liens for taxes not yet due and payable and such
other liens, encumbrances or charges which do not
materially adversely affect its financial position;
(g) Waived any rights of material value or cancelled any
material debts or claims;
(h) Incurred any material obligation or liability
(absolute or contingent), including, without
limitation, any tax liability or any liability for
borrowings from the FHLB of Cincinnati, or paid any
material liability or obligation (absolute or
contingent) other than liabilities and obligations
incurred in the ordinary course of business;
(i) Experienced any material change in the amount or
general composition of its deposit liabilities or its
loan portfolio;
(j) Entered into or amended any employment contract with
any of its officers, increased the compensation
payable to any officer or director or any
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relative of any such officer or director, or become
obligated to increase any such compensation, adopted
or amended in any material respect any employee
benefit plans, severance plan or collective
bargaining agreement or made any awards or
distributions under any employee benefit plans;
(k) Incurred any damage, destruction or similar loss, not
covered by insurance, materially affecting its
businesses or properties;
(l) Acquired any stock or other equity interest in any
corporation, partnership, trust, joint venture or
other entity;
(m) Made any (i) material investment (except investments
made in the ordinary course of business) or (ii)
material capital expenditure or commitment for any
material addition to property, plant or equipment;
(n) Taken or permitted any action which would prevent
BKFC from accounting for the BKFC MERGER as a
"pooling of interests";
(o) Authorized or permitted (i) any allocation by the
ESOP of any FTFC common shares to the accounts of
participants, (ii) any award under the MRPs of FTFC
common shares to any person or (iii) any issuance
under the STOCK OPTION PLANS of any options, or stock
appreciation rights; or
(p) Agreed, whether in writing or otherwise, to take any
action described in this Section 3.09.
SECTION 3.10. PROPERTIES. (a) A description of all personal property
and fixed assets owned by each of FTFC and FSB is set forth in Section 3.10(a)
of the DISCLOSURE SCHEDULE (hereinafter referred to as the "PERSONAL PROPERTY").
All PERSONAL PROPERTY has been maintained in good working order, ordinary wear
and tear excepted. Either FTFC or FSB owns and has good title to all of the
PERSONAL PROPERTY, free and clear of any mortgage, lien, pledge, charge, claim,
conditional sales or other agreement, lease, right or encumbrance, except (i) as
set forth in Section 3.10(a) of the DISCLOSURE SCHEDULE, (ii) to the extent
stated or reserved against in the AUDITED FINANCIALS or the INTERIM FINANCIALS
and (iii) such other exceptions which are not material in character or amount
and do not materially detract from the value of or interfere with the use of the
properties or assets subject thereto or affected thereby.
(b) The documentation (hereinafter referred to as "LOAN
DOCUMENTATION") governing or relating to the loan and credit-related assets
(hereinafter referred to as the "LOAN ASSETS") included within the loan
portfolio of either FTFC or FSB is legally sufficient in all material respects
for the purposes intended thereby and creates enforceable rights in favor of
either FTFC or FSB in accordance with the terms of such LOAN DOCUMENTATION,
subject to applicable bankruptcy, insolvency, reorganization and moratorium laws
and other laws of general applicability affecting the enforcement of creditors'
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rights generally, and the effect of rules of law governing specific performance,
injunctive relief and other equitable remedies on the enforceability of such
documents. The LOAN DOCUMENTATION is in compliance in all material respects
with, and each of the loans included within the loan portfolio of either FTFC or
FSB has been processed, closed and administered in conformance with, all
applicable federal consumer protection statutes and regulations, including
without limitation, the Truth in Lending Act, the Equal Credit Opportunity Act
and the Real Estate Settlement Procedures Act. Except as set forth in Section
3.10(b) of the DISCLOSURE SCHEDULE, to the best knowledge of FTFC, no debtor
under any of the LOAN DOCUMENTATION has asserted any claim or defense with
respect to the subject matter thereof.
(c) A description of each parcel of real property owned by
either FTFC or FSB is set forth in Section 3.10(c) of the DISCLOSURE SCHEDULE
(hereinafter referred to individually as a "PARCEL" and collectively as the
"REAL PROPERTIES"). Either FTFC or FSB is the owner of each PARCEL in fee simple
and has good and marketable title to each such PARCEL, free of any liens,
claims, charges, encumbrances or security interests of any kind, except (i) as
set forth in Section 3.10(c) of the DISCLOSURE SCHEDULE, (ii) liens for real
estate taxes and assessments not yet delinquent and (iii) utility, access and
other easements, rights of way, restrictions and exceptions which have been
disclosed to either FTFC or FSB in writing, none of which impair the REAL
PROPERTIES for the use and business being conducted thereon.
(d) Except as set forth in Section 3.10(d) of the DISCLOSURE
SCHEDULE, no party leasing any of the REAL PROPERTIES from either FTFC or FSB is
in material default with respect to any of its obligations (including payment
obligations) under the governing lease. Neither FTFC nor FSB has received
notification from any governmental entity within the two year period immediately
preceding the date hereof of contemplated improvements to the REAL PROPERTIES or
surrounding area or community by public authority, the costs of which are to be
assessed as special taxes against the REAL PROPERTIES in the future.
(e) A description of all real property leased by either FTFC
or FSB is set forth in Section 3.10(e) of the DISCLOSURE SCHEDULE (hereinafter
referred to as the "LEASED REAL PROPERTY"). True and correct copies of all
leases in respect of the LEASED REAL PROPERTY (hereinafter referred to as the
"REAL PROPERTY LEASES") and all attachments, amendments and addendums thereto
have been delivered to BKFC. Except as set forth in Section 3.10(e) of the
DISCLOSURE SCHEDULE, the REAL PROPERTY LEASES create, in accordance with their
terms, valid, binding and assignable leasehold interests of either FTFC or FSB
in all of the LEASED REAL PROPERTY, free and clear of all liens, claims,
charges, encumbrances or security interests of any kind. Each of FTFC and FSB
has complied in all material respects with all of the provisions of the REAL
PROPERTY LEASES required on its part to be complied with and is not in default
with respect to any of its obligations (including payment obligations) under any
of the REAL PROPERTY LEASES.
(f) A description of all personal property leased by either
FTFC or FSB is set forth in Section 3.10(f) of the DISCLOSURE SCHEDULE
(hereinafter referred to as the
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"LEASED PERSONAL PROPERTY"). True and correct copies of the leases in respect of
the LEASED PERSONAL PROPERTY (hereinafter referred to as the "PERSONAL PROPERTY
LEASES") and all attachments, amendments and addendums thereto have been
delivered to BKFC. Except as set forth in Section 3.10(f) of the DISCLOSURE
SCHEDULE, the PERSONAL PROPERTY LEASES create, in accordance with their terms,
valid, binding and assignable leasehold interests of either FTFC or FSB in all
of the LEASED PERSONAL PROPERTY, free and clear of all liens, claims, charges,
encumbrances or security interests of any kind. Each of FTFC and FSB has
complied in all material respects with all of the provisions under the PERSONAL
PROPERTY LEASES required on its part to be complied with and is not in default
with respect to any of its obligations (including payment obligations) under any
of the PERSONAL PROPERTY LEASES.
(g) Section 3.10(g) of the DISCLOSURE SCHEDULE contains a
complete list of all contracts (hereinafter referred to as the "LOAN SALE
CONTRACTS") pursuant to which either FTFC or FSB has sold loans to third party
investors at any time within the last twenty-four months. Except as otherwise
set forth in Section 3.10(g) of the DISCLOSURE SCHEDULE, (i) no purchaser under
any LOAN SALE CONTRACT has requested, or notified either FTFC or FSB that it may
be requesting, that either FTFC or FSB repurchase any loan pursuant to the terms
of the LOAN SALE CONTRACT and (ii) no facts exist that would require either FTFC
or FSB to repurchase any loans previously sold under any LOAN SALE CONTRACT.
SECTION 3.11. ALLOWANCE FOR LOAN LOSSES. Except as set forth in Section
3.11 of the DISCLOSURE SCHEDULE, there is no loan which was made by either FTFC
or FSB and which is reflected as an asset of either FTFC or FSB on the AUDITED
FINANCIALS or the INTERIM FINANCIALS that (i) is sixty (60) days or more
delinquent or (ii) has been classified by examiners (regulatory or internal) as
"Substandard," "Doubtful" or "Loss." The allowance for loan losses as reflected
on the AUDITED FINANCIALS and the INTERIM FINANCIALS is, in the opinion of
FTFC's management, 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.
SECTION 3.12. INVESTMENTS. (a) Section 3.12(a) of the DISCLOSURE
SCHEDULE contains (i) a true, accurate and complete list of all investments,
other than investments in the LOAN ASSETS and REAL PROPERTIES, owned by either
FTFC or FSB (hereinafter referred to as the "INVESTMENTS") as of the date
hereof, the name of the registered holder thereof, the location of the
certificates therefor or other evidence thereof and any stock powers or other
authority for transfer granted with respect thereto and (ii) a true, accurate
and complete list of the names of each bank or other depository in which either
FTFC or FSB has an account or safe deposit box, including, without limitation,
accounts with the FHLB of Cincinnati, and the names of all persons authorized to
draw thereon or to have access thereto. Except as set forth in Section 3.12(a)
of the DISCLOSURE SCHEDULE, the INVESTMENTS, other than any such investments
disposed of in the ordinary course of business prior to the date hereof, are
owned by either FTFC or FSB, free and clear of all liens, pledges, claims,
security interests, encumbrances, charges or restrictions of any kind and may be
freely disposed of by either FTFC or FSB at any
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time. Neither FTFC nor FSB is a party to nor has any interest in any repurchase
agreement, reverse repurchase agreement, collateralized mortgage obligation or
any other derivative security.
(b) Except as set forth in Section 3.12(b) of the DISCLOSURE
SCHEDULE, neither FTFC nor FSB owns of record or beneficially the outstanding
shares of, or any equity interest in, any corporation or other business entity.
Without limiting the generality of the foregoing sentence, neither FTFC nor FSB
owns or otherwise controls any subsidiary, other than FTFC's ownership of FSB.
SECTION 3.13. REPORTS AND RECORDS. (a) Each of FTFC and FSB has filed
all reports and maintained all records required to be filed or maintained by it
under various rules and regulations of the SEC, the OTS and the FDIC. All such
documents and reports complied in all material respects with applicable
requirements of law and regulations in effect at the time of filing such
documents and contained in all material respects the information required to be
stated therein. None of such documents, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(b) FTFC has delivered to BKFC copies of the following
documents, each of which has been filed with the SEC (hereinafter referred to as
the "FTFC SEC FILINGS"):
(i) The FTFC Annual Reports on Form 10-K for the
fiscal years ended September 30, 1998 and 1997;
(ii) The Annual Reports to Shareholders for the
fiscal years ended September 30, 1998 and 1997;
(iii) The Proxy Statements for use in connection with
the 1998 and 1997 Annual Meetings of Shareholders;
and
(iv) The Quarterly Reports on Form 10-Q for the
quarters ended December 31, 1998 and March 31 and
June 30, 1999.
The FTFC SEC FILINGS did not, as of the dates on which such reports were filed
with the SEC, contain any untrue statement of a material fact or omit any
material fact required to be stated therein or necessary to make the statements
contained therein, in light of the circumstances under which they were made, not
misleading.
SECTION 3.14. TAXES. Except as set forth in Section 3.14 of the
DISCLOSURE SCHEDULE, each of FTFC and FSB has duly and timely filed all federal,
state, county and local income, profits, franchise, excise, sales, customs,
property, use, occupation, withholding, social security and other tax and
information returns and reports required to have been filed by each of FTFC and
FSB through the date hereof, and has paid or accrued all taxes and duties (and
all interest and penalties with respect thereto) due or claimed to be due.
Neither FTFC nor FSB has any liability for any taxes or duties (or interest or
penalties with respect thereto) of any nature whatsoever and there is no basis
for any additional material claims or assessments, other than
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with respect to liabilities for taxes and duties which are reflected in the
INTERIM FINANCIALS or which may have accrued since September 30, 1999, in the
ordinary course of business. The federal income tax returns of each of FTFC and
FSB for all taxable years through and including the year ended September 30,
1995, have been examined by the federal tax authorities or the applicable
statute of limitations has expired in respect thereof. No proposed additional
taxes, interest or penalties have been asserted by applicable taxing authorities
with respect to such years or later years, except for claims which have been
fully reserved for in the AUDITED FINANCIALS and the INTERIM FINANCIALS. True
copies of the federal, state and local income tax returns of each of FTFC and
FSB for each of the two (2) tax years ended September 30, 1998 and 1997 have
been delivered to BKFC.
SECTION 3.15. MATERIAL CONTRACTS. (a) Except as set forth in Section
3.15(a) of the DISCLOSURE SCHEDULE, neither FTFC nor FSB is a party to or bound
by any written or oral (i) contract or commitment for capital expenditures in
excess of $5,000 for any one project or $10,000 in the aggregate; (ii) contract
or commitment made in the ordinary course of business for the purchase of
materials or supplies or for the performance of services involving payments to
or by either FTFC or FSB of an amount exceeding $5,000 in the aggregate or
extending for more than six (6) months from the date hereof; (iii) contract or
option for the purchase of any property, real or personal; (iv) letter of credit
or indemnity calling for payment, upon the conditions stated therein, of more
than $10,000; (v) guarantee agreement; (vi) instrument granting any person
authority to transact business on behalf of either FTFC or FSB; (vii) contracts
or commitments relating to outstanding loans and/or commitments to make loans
(including unfunded commitments and lines of credit) to any one person or entity
(together with "affiliates" of such person or entity) in excess of $50,000 in
the aggregate; (viii) employment, management, consulting, deferred compensation,
severance or other similar contract with any director, officer or employee of
either FTFC or FSB; (ix) note, debenture or loan agreement pursuant to which
either FTFC or FSB has incurred indebtedness, other than deposit liabilities and
advances from the FHLB of Cincinnati; (x) loan participation agreement; (xi)
loan servicing agreement; (xii) contract or commitment relating to a real estate
development project consisting of the development of more than one single family
dwelling; (xiii) commitment to make any acquisition, development or construction
loan; (xiv) commitment or agreement to do any of the foregoing; or (xv) other
contract, agreement or commitment made outside the ordinary course of business
(contracts set forth in Section 3.15 of the DISCLOSURE SCHEDULE are hereinafter
collectively referred to as the "CONTRACTS"). FTFC previously delivered to BKFC
(i) all of the CONTRACTS and (ii) all form lending agreements and deposit forms
used by either FTFC or FSB in the ordinary course of business.
(b) Neither FTFC nor FSB is in material default under any of
the contracts or agreements to which either is a party and no claim of such
default by any party has been made or is now threatened. There does not exist
any event which, with notice or the passing of time or both, would constitute a
material default under, or would excuse performance by any party thereto from,
any contract or agreement to which either FTFC or FSB is a party.
SECTION 3.16. INSURANCE. All material properties and operations of each
of FTFC and FSB are adequately insured for its benefit. The performance by the
officers and employees of
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each of FTFC and FSB of their duties is bonded in such amounts and against such
risks as are usually insured against or bonded by entities similarly situated,
under valid and enforceable policies of insurance or bonds issued by insurers or
bonding companies of recognized responsibility, financial or otherwise.
SECTION 3.17. ACTIONS AND SUITS. (a) Except as set forth in Section
3.17(a) of the DISCLOSURE SCHEDULE, there are no actions, suits or proceedings
or investigations pending or, to the knowledge of FTFC, threatened against or
affecting the business, operations or financial condition of either FTFC or FSB
in any court or before any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, and neither
FTFC or FSB has any knowledge of any basis for any such action, suit, proceeding
or investigation. Except as set forth in Section 3.17 of the DISCLOSURE
SCHEDULE, neither FTFC nor FSB is in default in respect of any judgment, order,
writ, injunction or decree of any court or any federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality.
(b) Except as set forth in Section 3.17(b) of the DISCLOSURE
SCHEDULE, there are no actions, suits or proceedings instigated, commenced or
contemplated by FTFC or FSB against any person or entity, including, but not
limited to, foreclosure actions, suits or proceedings or other actions, suits or
proceedings to enforce the rights of FTFC or FSB in collateral which secure
loans made by FTFC or FSB or otherwise to collect the outstanding balance of
loans made by FTFC or FSB.
SECTION 3.18. PERMITS AND LICENSES. Each of FTFC and FSB has all
material permits, licenses, orders and approvals of all federal, state or local
governmental or regulatory bodies required for FSB to conduct its business as
presently conducted, and all such material permits, licenses, orders and
approvals are in full force and effect, without the threat of suspension or
cancellation. None of such permits, licenses, orders or approvals will be
adversely affected by the consummation of the transactions contemplated by this
AGREEMENT.
SECTION 3.19. EMPLOYEE BENEFIT PLANS; ERISA. (a) Section 3.19 of the
DISCLOSURE SCHEDULE contains a true and complete list of all qualified pension
or profit-sharing plans, deferred compensation, consulting, bonus, group
insurance plans or agreements and all other incentive, welfare or employee
benefit plans or agreements maintained for the benefit of employees or former
employees of either FTFC or FSB (hereinafter collectively referred to as the
"PLANS"). Copies of such PLANS, together with copies of (i) the most recent
actuarial and financial reports prepared with respect to any qualified plans,
(ii) the most recent annual reports filed with any governmental agency and (iii)
all rulings and determination letters and any open requests for rulings or
letters that pertain to any qualified plan, have been delivered to BKFC.
(b) Each PLAN which constitutes an "employee pension plan," as
defined in Section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended (hereinafter referred to as "ERISA"), is and has been administered in
material compliance with its governing documents and the applicable provisions
of ERISA and any such employee pension plan which
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is intended to be qualified under the provisions of Section 401(a) of the
Internal Revenue Code of 1986, as amended (hereinafter referred to as the
"CODE"), is and has been administered in material compliance with the applicable
provisions of the CODE.
(c) Each PLAN which constitutes an "employee welfare benefit
plan," as defined in Section 3(1) of ERISA, is and has been administered in
material compliance with its governing documents and the applicable provisions
of ERISA and each PLAN which constitutes a "group health plan," as defined in
Section 5000(b)(1) of the CODE, is and has been administered in material
compliance with the continuation of coverage provisions contained in Section
4980B of the CODE.
(d) Each PLAN which is not an "employee benefit plan," as
defined in Section 3(3) of ERISA, is and has been administered in material
compliance with its governing documents and with any and all state or federal
laws applicable to such PLAN.
(e) The market value of assets under each "employee pension
plan" (as defined above) which is subject to the provisions of Title IV of
ERISA, equals or exceeds the present value of all vested and nonvested
liabilities thereunder determined in accordance with Pension Benefit Guaranty
Corporation methods, factors and assumptions applicable to an employee pension
plan terminating on the date for determination.
(f) FTFC does not maintain any PLAN which provides
post-retirement medical, dental or life insurance benefits to any former
employee of either FTFC or FSB nor is FTFC obligated to provide any such benefit
to any current employee upon his or her retirement.
(g) Neither FTFC nor FSB participates in, or has ever been
obligated to contribute to, any multiemployer plan as such term is defined in
Section 3(37) of ERISA.
(h) Neither FTFC, FSB nor any PLAN maintained by either FTFC
or FSB, nor any fiduciary of any such PLAN, has incurred any material liability
to the Pension Benefit Guaranty Corporation, the United States Department of
Labor or to the Internal Revenue Service (hereinafter referred to as the "IRS")
with respect to a PLAN.
(i) No prohibited transaction (which shall mean any
transaction prohibited by Section 406 of ERISA and not exempt under Section 408
of ERISA) has occurred with respect to any "employee benefit plan" (as defined
above) maintained by either FTFC or FSB (i) which would result in the
imposition, directly or indirectly, of an excise tax under Section 4975 of the
CODE or (ii) the correction of which would have a material adverse effect on the
financial condition, results of operations or business of FTFC.
(j) Each employee pension plan (as defined above) which is
intended to be an employee stock ownership plan, as defined in Section
4975(e)(7) of the CODE, is and has been administered in substantial compliance
with the applicable provisions of Sections 4975 and 409 of the CODE and the
regulations promulgated by the IRS thereunder; and, any outstanding loan to
which any such employee stock ownership plan is a party constitutes an "exempt
loan," as described in Section 54.4975-7 of the regulations promulgated by the
IRS.
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SECTION 3.20. ENVIRONMENTAL PROTECTION. (a) Except as set forth in
Section 3.20 of the DISCLOSURE SCHEDULE, (i) each of FTFC, FSB and the FTFC
PROPERTY (hereinafter defined) is, and has been at all times, in material
compliance with all applicable ENVIRONMENTAL LAWS (hereinafter defined); (ii) no
investigations, inquiries, orders, hearings, actions or other proceedings by or
before any court or governmental agency have been issued, are pending or, to the
knowledge of FTFC or FSB, threatened against either FTFC or FSB or in connection
with the FTFC PROPERTY; (iii) no claims have been made or, to the knowledge of
FTFC or FSB, threatened at any time against either FTFC or FSB or in connection
with the FTFC PROPERTY relating to actual or alleged violation of any
ENVIRONMENTAL LAW or relating to damage, contribution, cost recovery,
compensation, loss or injury resulting from any HAZARDOUS SUBSTANCE (hereinafter
defined) and no past or present actions, activities, conditions, events or
incidents, including, without limitation, the release, emission, discharge or
disposal of, or exposure to, any HAZARDOUS SUBSTANCE have occurred that could
reasonably form the basis of any such claims against either FTFC or FSB or in
connection with the FTFC PROPERTY; (iv) no HAZARDOUS SUBSTANCES have been
integrated into any FTFC PROPERTY or any component thereof in violation of
ENVIRONMENTAL LAWS, or which will in the future require remediation during
renovation or demolition, or in such quantities and manner as may or do pose a
threat to human health; (v) no portion of any FTFC PROPERTY is located within
2000 feet of (I) a release of HAZARDOUS SUBSTANCES which has been reported or is
required to be reported under any ENVIRONMENTAL LAW or (II) the location of any
site used, in the past or presently, for the disposal of any HAZARDOUS
SUBSTANCES; (vi) the FTFC PROPERTY has not been used for the storage, disposal
or treatment of HAZARDOUS SUBSTANCES, has not been contaminated by HAZARDOUS
SUBSTANCES, nor has been used for the storage or use of any underground or
aboveground storage tanks; and (vii) material permits, registrations and other
authorizations necessary for either FTFC or FSB or the FTFC PROPERTY to operate
in material compliance with all ENVIRONMENTAL LAWS are currently in force and
are identified in Section 3.20 of the DISCLOSURE SCHEDULE.
(b) Section 3.20 of the DISCLOSURE SCHEDULE sets forth an
accurate and complete list of all outstanding loans of either FTFC or FSB as to
which the borrower has submitted to either FTFC or FSB, the borrower or another
person is required to submit, or which either FTFC or FSB otherwise has in its
possession, any environmental audits, site assessments, analyses, studies or
surveys of environmental conditions on any matter. FTFC has made available to
BKFC all such documents.
(c) As used in Sections 3.20 and 4.17:
(i) "FTFC PROPERTY" means all real and personal
property now or previously owned, leased, occupied or
managed by either FTFC or FSB or any person or entity
whose liability for any matter has or may have been
related or assumed by FTFC either contractually or by
operation of law.
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(ii) "ENVIRONMENTAL LAWS" means all federal, state,
local and other laws, regulations, rules, standards,
ordinances, orders, decrees, and judgments relating
to pollution, the environment, occupational health
and safety, or the protection of human health, all as
may be from time to time amended.
(iii) "HAZARDOUS SUBSTANCES" means any and all
substances or materials which are classified or
considered to be hazardous or toxic to human health
or the environment under any applicable ENVIRONMENTAL
LAWS and shall include, without limitation, any
"hazardous substances" as defined in Section 101(14)
of CERCLA (42 USC Section 9601(14)) or regulations
promulgated thereunder, any "toxic and hazardous
substances" as defined in 29 CFR Part 1910, petroleum
and its byproducts, asbestos, polychlorinated
biphenyls, nuclear fuel or materials, lead and
lead-containing substances, and urea-formaldehyde.
SECTION 3.21. EMPLOYMENT MATTERS. (a) Each of FTFC and FSB is in
compliance with all federal, state or other applicable laws respecting
employment and employment practices, terms and conditions of employment and
wages and hours, including, but not limited to, Title VII of the Civil Rights
Act of 1964 (as amended by the Equal Employment Opportunity Act of 1972), the
Civil Rights Act of 1991, the Age Discrimination in Employment Act of 1967, the
Employee Retirement Income Security Act, 29 U.S.C. sections 1001 et seq., 42
U.S.C. sections. 1981, the Older Workers Benefit Protection Act, the Americans
with Disabilities Act and the Fair Labor Standards Act; and has not and is not
engaged in any unfair labor practice, except where such failure to comply would
not have, or such practice would not have, a material adverse effect on the
financial condition, results of operations or business of either FTFC or FSB. No
unfair labor practice complaint against either FTFC or FSB is pending before any
governmental agency or court and there is no labor strike, dispute, slowdown or
stoppage actually pending or, to the knowledge of either FTFC or FSB, threatened
against or involving either FTFC or FSB. No representation question exists in
respect of the employees of either FTFC or FSB and no labor grievance which
might have a material adverse effect upon either FTFC or FSB or the conduct of
its businesses is pending or, to the knowledge of FTFC, threatened. No
arbitration proceeding arising out of or under any collective bargaining
agreement is pending and no claim therefore has been asserted against either
FTFC or FSB. No collective bargaining agreement is currently being negotiated by
either FTFC or FSB. Neither FTFC nor FSB has experienced any material labor
difficulty during the last three years.
(b) Section 3.21(b) of the DISCLOSURE SCHEDULE sets forth each
of the Employment Agreements between either FTFC or FSB and employees of FTFC
and FSB (hereafter referred to as the "EMPLOYMENT AGREEMENTS").
SECTION 3.22. UNTRUE STATEMENTS AND OMISSIONS. The certificates,
statements and other information furnished to BKFC in writing by or on behalf of
either FTFC or FSB in connection with the transactions contemplated hereby,
including, but not limited to, disclosures
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and information set forth in the DISCLOSURE SCHEDULE, do not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
SECTION 3.23. PROXY MATERIALS. None of the information relating to FTFC
or FSB included in any proxy statement which is to be mailed to the shareholders
of FTFC in connection with any meeting of shareholders convened in accordance
with Section 6.04 of this AGREEMENT (hereinafter referred to as the "PROXY
STATEMENT") will, at the time the PROXY STATEMENT is mailed or at the time of
the meeting of shareholders to which the PROXY STATEMENT relates, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary in order to make the statements therein not false or misleading, or at
the time of the meeting of shareholders to which the PROXY STATEMENT relates,
necessary to correct any statement which has become false or misleading.
SECTION 3.24. BROKERS. All negotiations relating to this AGREEMENT and
the transactions contemplated hereby have been carried on without the
intervention of any person, other than Charles Webb & Company, a division of
Keefe, Bruyette & Woods, Inc. (hereinafter referred to as "WEBB"), acting on
behalf of FTFC or FSB in such manner as to give rise to any valid claim against
FTFC or FSB for any broker's or finder's fee or similar compensation. The fee
and related compensation payable to WEBB for services related to this AGREEMENT
and the transactions contemplated hereby is approximately 1% of the BKFC MERGER
value, plus $25,000.
SECTION 3.25. YEAR 2000. (a) All devices, systems, machinery,
information technology, computer software and hardware, and other date sensitive
technology owned or leased by either FTFC or FSB (hereinafter referred to as the
"FSB Systems") necessary for either FTFC or FSB to carry on its business as
presently conducted and as contemplated to be conducted in the future either (i)
are Year 2000 Compliant (hereinafter defined) or (ii) will be Year 2000
Compliant within a period of time calculated to result in no material disruption
of any of the business operations of either FTFC or FSB. For purposes of this
Section 3.25, "Year 2000 Compliant" means that the FSB Systems are designed to
be used prior to, during and after the Gregorian calendar year 2000 A.D. and
will operate during each such time period without error relating to date data,
specifically including any error relating to, or the product of, date data which
represents or references different centuries or more than one century.
(b) Each of FTFC and FSB has (i) undertaken a detailed
inventory, review and assessment of all areas within its business and operations
that could be adversely affected by the failure of either FTFC or FSB to be Year
2000 Compliant on a timely basis; (ii) developed a detailed plan and time line
for becoming Year 2000 Compliant on a timely basis; and (iii) to date,
implemented that plan in accordance with that timetable in all material
respects.
(c) Each of FTFC and FSB has made inquiry of each of its key
suppliers, vendors and customers and has obtained confirmations from all such
persons as to whether such persons have initiated programs to become Year 2000
Compliant and on the basis of such confirmations, FTFC reasonably believes that
all such persons will be or try to become so
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compliant or make other suitable arrangements so as not to likely cause a
material disruption of business.
SECTION 3.26. PERMISSIBLE ACTIVITIES. FTFC is not engaged in any
activity, either directly or indirectly through FSB or through other equity
investments, which is not permitted for a bank holding company or its
subsidiaries.
ARTICLE FOUR
REPRESENTATIONS AND WARRANTIES OF BKFC AND THE BANK
BKFC and the BANK represent and warrant to FTFC and FSB that each of
the following is true and accurate in all material respects:
SECTION 4.01. ORGANIZATION AND STANDING. (a) BKFC is a corporation duly
organized, validly existing and in good standing under the laws of Kentucky; is
duly registered with the Board of Governors of the Federal Reserve System
(hereinafter referred to as the "FRB") as a bank holding company; and has the
corporate power and authority to conduct its business and operations as
presently conducted. BKFC is in compliance in all material respects with all
applicable local, state or federal laws and regulations, including, without
limitation, the regulations of the SEC, the FRB and the FDIC.
(b) The BANK is a state bank duly organized, validly existing
and in good standing under the laws of Kentucky and has the corporate power and
authority to own or hold under lease all of its properties and assets and to
conduct its business and operations as presently conducted. The savings accounts
and deposits of the BANK are insured up to applicable limits by the FDIC. The
BANK is in compliance in all material respects with all applicable local, state
or federal laws and regulations, including, without limitation, the regulations
of the Commonwealth of Kentucky and the FDIC.
SECTION 4.02. QUALIFICATION. Each of BKFC and the BANK is either duly
qualified to do business and in good standing in each jurisdiction in which such
qualification is required or the failure to so qualify would not have a material
adverse effect on the business of BKFC or the BANK.
SECTION 4.03. AUTHORITY. Subject to the approval of this AGREEMENT and
the transactions contemplated hereby, including the BANK MERGER, by the FRB, the
OTS and the Department of Financial Institutions of the State of Kentucky
(hereafter referred to as the "DEPARTMENT"), (a) each of BKFC and the BANK has
all requisite corporate power and authority to enter into this AGREEMENT and to
perform its obligations hereunder; (b) the execution and delivery of this
AGREEMENT and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action by each of BKFC and the BANK;
and (c) this AGREEMENT is a valid and binding agreement of each of BKFC and the
BANK, enforceable against it in accordance with its terms, (i) subject to
applicable bankruptcy, insolvency, reorganization and moratorium laws and other
laws of general applicability affecting the enforcement of creditors' rights
generally, and the effect of rules of
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law governing specific performance, injunctive relief and other equitable
remedies on the enforceability of such documents and (ii) except to the extent
such enforceability may be limited by laws relating to safety and soundness of
insured depository institutions as set forth in 12 U.S.C. sections 1818(b) or
by the appointment of a conservator by the FDIC. This AGREEMENT has been duly
executed and delivered by each of BKFC and the BANK.
SECTION 4.04. GOVERNING DOCUMENTS. BKFC has delivered to FTFC true and
accurate copies of the Articles of Incorporation, as amended, and Bylaws of BKFC
and the Articles of Incorporation and the Bylaws of the BANK and has granted
FTFC access to all records of all meetings and other corporate actions occurring
before the BKFC EFFECTIVE TIME by the shareholders, Boards of Directors and
Committees of the Boards of Directors of BKFC and the BANK. The minute books of
BKFC and the BANK contain, in all material respects, complete and accurate
records of all meetings and other corporate actions of shareholders, Boards of
Directors and Committees of the Boards of Directors.
SECTION 4.05. NO CONFLICTS. The execution and delivery of this
AGREEMENT and, subject to the approval of the BANK MERGER by the FRB, the OTS
and the DEPARTMENT, the consummation of the transactions contemplated hereby
will not (a) conflict with or violate any provision of or result in the breach
of any provision of the Articles of Incorporation, as amended, or Bylaws of BKFC
or the Articles of Incorporation or Bylaws of the BANK; (b) conflict with or
violate any provision of or result in the breach or the acceleration of or
entitle any party to accelerate (whether upon or after the giving of notice of
lapse of time or both) any obligation under, or otherwise materially affect the
terms of, any mortgage, lien, lease, agreement, license, instrument, order,
arbitration award, judgment or decree to which either BKFC or the BANK is a
party or by which either BKFC or the BANK or their property or assets is bound;
(c) require the consent of any party to any agreement or commitment to which
either BKFC or the BANK is a party or by which either BKFC or the BANK or their
property or assets is bound, the failure to obtain which could, individually or
in the aggregate with all the other failures to obtain required consents, have a
material adverse effect on the business, operations or financial condition of
BKFC and the BANK, taken as a whole; (d) result in the creation or imposition of
any lien, charge, pledge, security interest or other encumbrance upon any
property or assets of either BKFC or the BANK or give rise to any meritorious
cause of action against either BKFC or the BANK; or (e) violate or conflict with
any applicable law, ordinance, rule or regulation, including, without
limitation, the rules and regulations of the FRB, OTS, or the FDIC.
SECTION 4.06. CONSENTS. No consent, approval, order or authorization
of, or registration, declaration or filing with, any governmental authority is
required in connection with the execution and delivery of this AGREEMENT by
either BKFC or the BANK or the consummation by either BKFC or the BANK of the
transactions contemplated hereby, except for filings, authorizations, consents
or approvals required by the SEC, FRB, the OTS, the Ohio Secretary of State, the
Secretary of State of Kentucky and the DEPARTMENT.
SECTION 4.07. AUTHORIZED CAPITAL OF BKFC. As of the date hereof, the
authorized capital of BKFC consists of (a) 15,000,000 common shares, without par
value, 5,286,575 of which are issued and outstanding and 113,565 of which are
reserved for issuance upon exercise
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of outstanding stock options (hereinafter referred to as the "BKFC OPTIONS").
All of the outstanding common shares of BKFC are duly authorized, validly
issued, fully paid and nonassessable; were issued in full compliance with all
applicable laws; and were not issued in violation of the preemptive right of any
shareholder of BKFC. BKFC has no outstanding class of capital stock other than
such common shares. Except for the BKFC OPTIONS and as disclosed in writing on
the date of this AGREEMENT to FTFC (hereinafter referred to as the "BKFC
LETTER"), there are no outstanding subscription rights, options, conversion
rights, warrants or other agreements or commitments of any nature whatsoever
(either firm or conditional) obligating BKFC to issue, deliver or sell, cause to
be issued, delivered or sold, or restricting BKFC from selling any additional
BKFC shares, or obligating BKFC to grant, extend or enter into any such
agreement or commitment.
SECTION 4.08. FINANCIAL STATEMENTS. (a) The consolidated statements of
financial condition as of December 31, 1998 and 1997, of BKFC and the related
consolidated statements of income, shareholders' equity and cash flows for each
of the three years then ended, examined and reported upon by Crowe Chizek &
Company, LLP, certified public accountants, complete copies of which have
previously been delivered to FTFC (hereinafter referred to as the "BKFC AUDITED
FINANCIALS"), have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis and fairly present the
financial position of BKFC at such dates and the results of its operations and
cash flows for such periods.
(b) The consolidated statement of financial condition as of
September 30, 1999, of BKFC and the related consolidated statements of income,
shareholders' equity and cash flows for the nine months then ended, complete
copies of which have previously been delivered to FTFC (hereinafter referred to
as the "BKFC INTERIM FINANCIALS"), fairly present the financial position of BKFC
at such date and the results of its operations and cash flows for such period
and have been prepared in accordance with generally accepted accounting
principles as applicable to condensed consolidated financial statements and as
applied on a consistent basis with the BKFC AUDITED FINANCIALS. All adjustments
which are necessary for a fair statement of the BKFC INTERIM FINANCIALS have
been made.
(c) The Call Reports of the Bank for the three month periods
ended March 31, June 30 and September 30, 1999, together with the schedules and
supplements attached thereto, each as filed with the FDIC and copies of which
were previously delivered to FTFC by BKFC (hereinafter referred to as the "CALL
REPORTS"), have been prepared in accordance with accounting practices permitted
by the FDIC applied on a consistent basis, are true, complete and correct in all
material respects and fairly present the financial position of the BANK at such
dates.
(d) Except as disclosed in the BKFC INTERIM FINANCIALS and the
CALL REPORTS, as of September 30, 1999, BKFC had no liabilities or obligations
material to the financial condition of the BANK and BKFC taken as a whole,
whether accrued, absolute, contingent or otherwise, and whether due or to become
due.
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(e) The BKFC AUDITED FINANCIALS and the BKFC INTERIM
FINANCIALS, did not, as of the dates thereof, contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
information contained therein, in light of the circumstances under which they
were made, not misleading.
SECTION 4.09. CONDUCT OF BUSINESS. Except as disclosed in the BKFC
LETTER, since September 30, 1999, BKFC and the BANK have conducted their
business only in the ordinary and usual course and there have been no material
adverse changes in the financial condition, assets, liabilities, obligations,
properties or business of BKFC and the BANK.
SECTION 4.10. REPORTS AND RECORDS. (a) Each of BKFC and the BANK has
filed all reports and maintained all records required to be filed or maintained
by them under various rules and regulations of the SEC, FRB, FDIC and the
DEPARTMENT. All such documents and reports complied in all material respects
with applicable requirements of law and regulations in effect at the time of the
filing of such documents and contained in all material respects the information
required to be stated therein. None of such documents, when filed, contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(b) BKFC has delivered to FTFC copies of the following
documents, each of which has been filed with the SEC (hereinafter referred to as
the "BKFC SEC FILINGS"):
(i) The BKFC Annual Reports on Form 10-K for the
fiscal years ended December 31, 1998, 1997 and 1996;
(ii) The Annual Reports to Shareholders for the
fiscal years ended December 31, 1998, 1997 and 1996;
(iii) The Proxy Statements for use in connection with
the 1998, 1997 and 1996 Annual Meetings of
Shareholders; and
(iv) The Quarterly Reports on Form 10-Q for the
quarters ended December 31, 1998 and March 31, June
30 and September 30, 1999.
The BKFC SEC FILINGS did not, as of the dates on which such reports were filed
with the SEC, contain any untrue statement of a material fact or omit any
material fact required to be stated therein or necessary to make the statements
contained therein, in light of the circumstances under which they were made, not
misleading.
SECTION 4.11. ACTIONS AND SUITS. Except as set forth in the BKFC SEC
FILINGS and in the BKFC LETTER, there are no material actions, suits or
proceedings or investigations pending or, to the knowledge of BKFC, threatened
against or affecting the business, operations or financial condition of BKFC and
the BANK in any court or before any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality
and
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management of BKFC has no knowledge of any basis for any such action, suit,
proceeding or investigation. Except as set forth in the BKFC SEC FILINGS and the
BKFC LETTER, BKFC and the BANK are not in default in respect of any judgment,
order, writ, injunction or decree of any court or any federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality.
SECTION 4.12. PERMITS AND LICENSES. Each of BKFC and the BANK has all
material permits, licenses, orders and approvals of all federal, state or local
governmental or regulatory bodies required for them to conduct their business as
presently conducted and all such material permits, licenses, orders and
approvals are in full force and effect, without the threat of suspension or
cancellation. None of such permits, licenses, orders or approvals will be
adversely affected by the consummation of the transactions contemplated by this
AGREEMENT.
SECTION 4.13. TAXES. Except as set forth in the BKFC SEC FILINGS and
the BKFC LETTER, each of BKFC and the BANK has duly and timely filed all
federal, state, county and local income, profits, franchise, excise, sales,
customs, property, use, occupation, withholding, social security and other tax
and information returns and reports required to have been filed by each of BKFC
and the BANK through the date hereof, and has paid or accrued all taxes and
duties (and all interest and penalties with respect thereto) due or claimed to
be due. Neither BKFC nor the BANK has any liability for any taxes or duties (or
interest or penalties with respect thereto) of any nature whatsoever and there
is no basis for any additional material claims or assessments, other than with
respect to liabilities for taxes and duties which are reflected in the BKFC
INTERIM FINANCIALS or which may have accrued since September 30, 1999, in the
ordinary course of business. The federal income tax returns of each of BKFC and
the BANK for all taxable years through and including the year ended September
30, 1995, have been examined by the federal tax authorities or the applicable
statute of limitations has expired in respect thereof. No proposed additional
taxes, interest or penalties have been asserted by applicable taxing authorities
with respect to such years or later years, except for claims which have been
fully reserved for in the AUDITED FINANCIALS and the BKFC INTERIM FINANCIALS.
SECTION 4.14. INSURANCE. All material properties and operations of each
of BKFC and the BANK are adequately insured for its benefit. The performance by
the officers and employees of each of BKFC and the BANK of their duties is
bonded in such amounts and against such risks as are usually insured against or
bonded by entities similarly situated, under valid and enforceable policies of
insurance or bonds issued by insurers or bonding companies of recognized
responsibility, financial or otherwise.
SECTION 4.15. UNTRUE STATEMENTS AND OMISSIONS. The certificates,
statements and other information furnished to BKFC in writing by or on behalf of
either BKFC or the BANK in connection with the transactions contemplated hereby,
including, but not limited to, disclosures and information set forth in the BKFC
LETTER, do not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
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SECTION 4.16 YEAR 2000. (a) All devices, systems, machinery,
information technology, computer software and hardware, and other date sensitive
technology owned or leased by either BKFC or the BANK (hereinafter referred to
as the "BANK Systems") necessary for either BKFC or the BANK to carry on its
business as presently conducted and as contemplated to be conducted in the
future either (i) are Year 2000 Compliant or (ii) will be Year 2000 Compliant
within a period of time calculated to result in no material disruption of any of
the business operations of either BKFC or the BANK. For purposes of this Section
4.16, "Year 2000 Compliant" means that the BANK Systems are designed to be used
prior to, during and after the Gregorian calendar year 2000 A.D. and will
operate during each such time period without error relating to date data,
specifically including any error relating to, or the product of, date data which
represents or references different centuries or more than one century.
(b) Each of BKFC and the BANK has (i) undertaken a detailed
inventory, review and assessment of all areas within its business and operations
that could be adversely affected by the failure of either BKFC or the BANK to be
Year 2000 Compliant on a timely basis; (ii) developed a detailed plan and time
line for becoming Year 2000 Compliant on a timely basis; and (iii) to date,
implemented that plan in accordance with that timetable in all material
respects.
(c) Each of BKFC and the BANK has made inquiry of each of its
key suppliers, vendors and customers and has obtained confirmations from all
such persons as to whether such persons have initiated programs to become Year
2000 Compliant and on the basis of such confirmations, BKFC reasonably believes
that all such persons will be or try to become so compliant or make other
suitable arrangements so as not to likely cause a material disruption of
business.
SECTION 4.17 ENVIRONMENTAL PROTECTION. (a) Except as set forth in the
BKFC LETTER, (i) each of BKFC, the BANK and the BKFC PROPERTY (hereinafter
defined) is, and has been at all times, in material compliance with all
applicable ENVIRONMENTAL LAWS; (ii) no investigations, inquiries, orders,
hearings, actions or other proceedings by or before any court or governmental
agency have been issued, are pending or, to the knowledge of BKFC or the BANK,
threatened against either BKFC or the BANK or in connection with the BKFC
PROPERTY; (iii) no claims have been made or, to the knowledge of BKFC or the
BANK, threatened at any time against either BKFC or the BANK or in connection
with the BKFC PROPERTY relating to actual or alleged violation of any
ENVIRONMENTAL LAW or relating to damage, contribution, cost recovery,
compensation, loss or injury resulting from any HAZARDOUS SUBSTANCE and no past
or present actions, activities, conditions, events or incidents, including,
without limitation, the release, emission, discharge or disposal of, or exposure
to, any HAZARDOUS SUBSTANCE have occurred that could reasonably form the basis
of any such claims against either BKFC or the BANK or in connection with the
BKFC PROPERTY; (iv) no HAZARDOUS SUBSTANCES have been integrated into any BKFC
PROPERTY or any component thereof in violation of ENVIRONMENTAL LAWS, or which
will in the future require remediation during renovation or demolition, or in
such quantities and manner as may or do pose a threat to human health; (v) no
portion of any BKFC PROPERTY is located within 2000 feet of (I) a release of
HAZARDOUS SUBSTANCES which has been
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reported or is required to be reported under any ENVIRONMENTAL LAW or (II) the
location of any site used, in the past or presently, for the disposal of any
HAZARDOUS SUBSTANCES; (vi) except as set forth in the BKFC LETTER, the BKFC
PROPERTY has not been used for the storage, disposal or treatment of HAZARDOUS
SUBSTANCES, has not been contaminated by HAZARDOUS SUBSTANCES, nor has been used
for the storage or use of any underground or aboveground storage tanks; and
(vii) material permits, registrations and other authorizations necessary for
either BKFC or the BANK or the BKFC PROPERTY to operate in material compliance
with all ENVIRONMENTAL LAWS are currently in force.
(b) As used in this Section 4.17, "BKFC PROPERTY" means all
real and personal property now or previously owned, leased, occupied or managed
by either BKFC or the BANK or any person or entity whose liability for any
matter has or may have been related or assumed by BKFC either contractually or
by operation of law.
ARTICLE FIVE
COVENANTS
SECTION 5.01. CONDUCT OF BUSINESSES. From the date of this AGREEMENT
until the BKFC EFFECTIVE TIME, FTFC and FSB:
(a) Except with the prior written consent of BKFC, will
conduct their businesses only in the ordinary course, in
accordance with past practices and policies and in compliance
with all applicable statutes, rules and regulations;
(b) Without the prior written consent of BKFC, will not:
(i) Authorize the creation or issuance of, issue, sell or
dispose of, or create any obligation to issue, sell or
dispose of, any stock, notes, bonds or other securities
of which either FTFC or FSB is the issuer (including,
without limitation, the grant of options or stock
appreciation rights under the STOCK OPTION PLANS or the
award of common shares under the MRPs), or any
obligations convertible into or exchangeable for, any
shares of its capital stock;
(ii) Declare, set aside, pay or make any dividend or
other distribution on capital stock, or directly or
indirectly redeem, purchase or otherwise acquire any
shares or enter into any agreement in respect to the
foregoing;
(iii) Effect any stock split, recapitalization,
combination, exchange of shares, readjustment or
other reclassification;
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(iv) Amend the Articles of Incorporation or Code of
Regulations of FTFC or Charter or Bylaws of FSB;
(v) Purchase, sell, assign or transfer any material
tangible asset or any material patent, trademark,
trade name, copyright, license, franchise, design or
other intangible assets or property;
(vi) Make or commit to make any loan(s) (including
unfunded commitments and lines of credit) to any one
person or entity (together with "affiliates" of such
person or entity) in excess of $200,000 in the
aggregate or in excess of a 90% loan-to-value ratio;
(vii) Mortgage, pledge or grant or suffer to exist
any lien or other encumbrance or charge on any assets
or properties, tangible or intangible, except for
liens for taxes not yet delinquent, assets pledged as
collateral to secure borrowings from the FHLB of
Cincinnati and such other liens, encumbrances or
charges which do not materially or adversely affect
its financial position;
(viii) Waive any rights of material value or cancel any
material debts or claims;
(ix) Incur any material obligation or liability
(absolute or contingent), including, without
limitation, any tax liability, or pay any material
liability or obligation (absolute or contingent),
other than liabilities and obligations incurred in
the ordinary course of business and borrowings from
the FHLB of Cincinnati;
(x) Threaten, commence or pursue any legal actions,
suits or proceedings in respect of the business,
operations or loans of FTFC or FSB;
(xi) Cause any material adverse change in the amount
or general composition of its deposit liabilities or
its loan portfolio;
(xii) Enter into or amend any employment contract
with any of its officers, increase the compensation
payable to any officer or director or any relative of
any such officer or director, or be obligated to
increase any such compensation, adopt or amend in any
material respect any employee benefit plans,
severance plan or collective bargaining agreement or
make awards or distributions under any employee
benefit plans not consistent with past practice or
custom;
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(xiii) Acquire any stock or other equity interest in
any corporation, partnership, trust, joint venture or
other entity;
(xiv) Make any (I) material investment (except in the
ordinary course of business) or (II) material capital
expenditure or commitment for any material addition
to property, plant, or equipment;
(xv) Except as set forth in Section 6.12 of this
AGREEMENT, permit the allocation by the ESOP of any
FTFC common shares to the accounts of participants;
or
(xvi) Agree, whether in writing or otherwise, to take
any action described in this Section 5.01.
SECTION 5.02. ACQUISITION PROPOSALS. FTFC and FSB shall not, and shall
cause the officers, directors, employees and other agents of FTFC and FSB not
to, directly or indirectly, take any action to solicit, initiate, engage or
negotiate any proposals or offers from any person or entity, other than BKFC, or
discuss or negotiate with any such person or entity, other than BKFC, any
acquisition or purchase of all or a material amount of the assets of, any equity
securities of, or any merger, consolidation or business combination with, FTFC
or FSB (hereinafter collectively referred to as "ACQUISITION TRANSACTIONS");
provided, however, that nothing contained in this Section 5.02 shall prohibit
FTFC or FSB from furnishing information to, or entering into discussions or
negotiations with, any person or entity which makes an unsolicited proposal of
an ACQUISITION TRANSACTION if and to the extent that (a) the Board of Directors
of FTFC, after consultation with and based upon the written advice of counsel,
determines in good faith that such action is required to fulfill its fiduciary
duties to the shareholders of FTFC under applicable law and (b) before
furnishing such information to, or entering into discussions or negotiations
with, such person or entity, FTFC provides immediate written notice to BKFC of
such action.
SECTION 5.03. ACCOUNTING POLICIES. Before the BKFC EFFECTIVE TIME and
at the request of BKFC, FTFC and FSB shall promptly establish and take such
reserves and accruals to conform the loan, accrual and reserve policies of FTFC
and FSB to the policies of BKFC and the BANK; shall promptly establish and take
such accruals, reserves and charges in order to implement such policies in
respect of excess facilities and equipment capacity, severance costs, litigation
matters, write-off or write-down of various assets and other appropriate
accounting adjustments; and shall promptly recognize for financial accounting
purposes such expenses of the BKFC MERGER and restructuring charges related to
or to be incurred in connection with the BKFC MERGER, to the extent permitted by
law and consistent with generally accepted accounting principles.
SECTION 5.04. FTFC OPTIONS. Neither FTFC nor FSB shall amend the STOCK
OPTION PLANS, nor accelerate the vesting of any options granted under the STOCK
OPTION PLANS. FTFC shall cause the holders of all of the options which have been
granted under the STOCK OPTION PLANS and which have vested on or before the BKFC
EFFECTIVE TIME in
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accordance with the terms thereof to exercise such options before the BKFC
EFFECTIVE TIME in accordance with the terms thereof.
SECTION 5.05. MRPS SHARES. Neither FTFC nor FSB shall amend the MRPs,
nor accelerate the vesting of any awards made under the MRPs. Immediately before
the EFFECTIVE TIME, FTFC shall cause the Trustees of the MRPs to transfer to
FTFC all right, title and interest in and to (a) the 18,885 common shares of
FTFC which are owned of record by such Trustees and which have not been awarded
under the MRPs (hereinafter referred to as "UNAWARDED MRP SHARES") and (b) the
9,066 common shares of FTFC which are owned of record by such Trustees and which
have been awarded to MRP PARTICIPANTS, but in which the MRP PARTICIPANTS will
not have a vested interest, or any other right to receive or a claim in respect
of (hereinafter referred to as "UNVESTED MRP SHARES"). All dividends paid on
UNAWARDED MRP SHARES and UNVESTED MRP SHARES shall be paid to FTFC upon
termination of the MRP.
SECTION 5.06. TREASURY SHARES. On or before the BKFC EFFECTIVE TIME,
FTFC shall cause the Board of Directors of FTFC to retire the 127,405 Treasury
shares of FTFC, including the 27,951 common shares transferred to FTFC in
accordance with Section 5.05 of this AGREEMENT, and to restore such shares to
the status of authorized but unissued FTFC common shares.
SECTION 5.07. AMENDMENTS. Neither FTFC nor FSB shall amend any of the
PLANS, including, but not limited to, the ESOP.
ARTICLE SIX
FURTHER AGREEMENTS
SECTION 6.01. APPLICATION FOR APPROVAL OF MERGER. As soon as
practicable after the date of this AGREEMENT, FTFC and BKFC shall submit to the
FRB, the OTS and the DEPARTMENT such documents as are required by the FRB, the
OTS and the DEPARTMENT to be filed in connection with or related to the BKFC
MERGER and the BANK MERGER.
SECTION 6.02. REGISTRATION STATEMENT. (a) BKFC shall, as soon as
reasonably practicable, prepare in accordance with the Securities Act of 1933,
as amended (hereinafter referred to as the "ACT"), and file with the SEC a
Registration Statement in respect of the BKFC shares of stock to be issued to
the holders of FTFC common shares in accordance with ARTICLE TWO of this
AGREEMENT (hereinafter referred to as the "REGISTRATION STATEMENT"), and shall
use all reasonable efforts to have the REGISTRATION STATEMENT, as amended,
declared effective by the SEC as promptly as practicable.
(b) The information included in the REGISTRATION STATEMENT in
respect of BKFC and the BANK will not, at the time the REGISTRATION STATEMENT
becomes effective, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading.
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(c) Within five days before the effective date of the
REGISTRATION STATEMENT and within five days before the CLOSING, FTFC shall cause
its certified independent accountants to issue to BKFC, and BKFC shall cause its
certified independent accountants to issue to FTFC, a letter in form and
substance satisfactory to FTFC and BKFC and in relation to the audited and
unaudited financial and statistical information set forth in the REGISTRATION
STATEMENT.
SECTION 6.03. AFFILIATES COMPLIANCE WITH THE SECURITIES ACT. (a) Within
30 days after the date of this AGREEMENT, FTFC shall identify to BKFC all
persons whom FTFC reasonably believes to be "affiliates," as defined in
paragraphs (c) and (d) of Rule 145 under the ACT (hereinafter referred to as the
"AFFILIATES"). Thereafter and until the BKFC EFFECTIVE TIME, FTFC shall identify
to BKFC each additional person whom it reasonably believes to have thereafter
become its AFFILIATE.
(b) FTFC shall cause each person who is identified as an
AFFILIATE to deliver to BKFC before the BKFC EFFECTIVE DATE a written agreement
in the form of the written agreement attached hereto as Exhibit E in which such
AFFILIATE confirms that the BKFC shares of stock received by such AFFILIATE in
the MERGER shall not be transferable until the expiration of the time period
specified in Section 201.01 of the Codification of Financial Reporting Policies
of the SEC.
SECTION 6.04. SPECIAL MEETING OF SHAREHOLDERS. (a) FTFC shall take all
steps necessary to duly call, give notice of, convene and hold a meeting of its
shareholders for the purpose of voting upon the AGREEMENT and the transactions
contemplated hereby, including the BKFC MERGER. FTFC shall use its reasonable
efforts to hold such meetings as soon as practicable following the effective
date of the REGISTRATION STATEMENT. The Board of Directors of FTFC shall (i)
recommend to the shareholders in the PROXY STATEMENT the approval of this
AGREEMENT and the transactions contemplated hereby, including the BKFC MERGER,
and the other matters to be submitted to the shareholders in connection
therewith, except to the extent that the Board of Directors of FTFC, after
consultation with and based upon the written advice of counsel, determines in
good faith that such recommendation would breach its fiduciary duties to the
shareholders of FTFC under applicable law, and (ii) use their reasonable efforts
to obtain the necessary approvals by the shareholders of this AGREEMENT, any
amendments hereto, and the transactions contemplated hereby, including the BKFC
MERGER.
(b) Immediately after the approval of this AGREEMENT by the
requisite vote of the FTFC shareholders, FTFC shall approve this AGREEMENT and
the transactions contemplated hereby, including the BANK MERGER, as the sole
shareholder of FSB.
SECTION 6.05. ACCESS. Until the BKFC EFFECTIVE TIME, FTFC shall afford
to BKFC, and BKFC shall afford to FTFC, and to their respective officers and
representatives (including, without limitation, counsel, financial advisers and
independent accountants), reasonable access to their properties, personnel,
books, records and affairs. Each party shall furnish the other party with such
additional financial and operating data and other information as to its
businesses and properties as may be reasonably requested. Such access shall
include, but
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shall not be limited to, (i) permitting verification, by audit or otherwise, of
any representation or warranty made hereunder; (ii) authorizing release of any
information (including the work papers of such independent auditors) and
financial consultants; (iii) consistent with applicable regulations or
procedures, furnishing regular and special examination reports since the date of
this AGREEMENT to the BKFC EFFECTIVE TIME; and (iv) delivering copies of all
documents or reports or correspondence filed and any correspondence with any
federal regulatory or supervisory agency from the date of this AGREEMENT until
the BKFC EFFECTIVE TIME.
SECTION 6.06. CONFIDENTIALITY. FTFC and BKFC shall hold confidential
any information obtained hereunder which is not otherwise public knowledge or
ascertainable from public information and all non-public documents (including
copies thereof) obtained hereunder by either party from the other party shall be
returned to such party.
SECTION 6.07. PRESS RELEASES. BKFC and FTFC shall consult with each
other before issuing any press release or otherwise making any public statements
with respect to the BKFC MERGER or the BANK MERGER and shall not issue any such
press release or make any such public statement without obtaining the prior
consent of the other party, except as may be required by law or by obligations
pursuant to any listing agreement with any national securities association.
SECTION 6.08. COSTS, EXPENSES AND FEES. (a) Subject to paragraph (b) of
this Section 6.08, whether or not the BKFC MERGER is consummated, all costs and
expenses incurred in connection with this AGREEMENT, the PROXY STATEMENT, the
REGISTRATION STATEMENT and the transactions contemplated hereby shall be paid by
the party incurring such costs and expenses.
(b) In the event that FTFC accepts in any manner an
ACQUISITION TRANSACTION at any time before June 30, 2001, FTFC shall pay to BKFC
a fee of $900,000 in immediately available federal funds upon the execution of
any agreement in respect of an ACQUISITION TRANSACTION.
SECTION 6.09. REASONABLE EFFORTS. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use all reasonable efforts
to take, or cause to be taken, all action, and to do or cause to be done all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this AGREEMENT.
SECTION 6.10. NOTIFICATION OF EVENTS. At all times from the date of
this AGREEMENT until the EFFECTIVE TIME, each party shall promptly notify the
other in writing of any adverse business conditions threatening its normal
business operations or of the occurrence of any event or the failure of any
event to occur which might result in a breach of or a failure to comply with any
representation, warranty, covenant, condition or agreement contained in this
AGREEMENT or of the commencement of any action, suit, proceeding, or
investigation against it.
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SECTION 6.11. LIQUIDATION ACCOUNT. The BANK MERGER shall have no effect
upon the FSB Liquidation Account which shall be assumed by the BANK at the BANK
EFFECTIVE TIME in accordance with 12 C.F.R. sections 563b.3(j).
SECTION 6.12. ESOP TERMINATION. At or before the BKFC EFFECTIVE TIME,
FTFC and FSB shall terminate the ESOP and shall file an Application for
Determination with the IRS regarding tax qualification upon termination. No
additional contribution shall be made to the ESOP by FTFC, FSB or BKFC, except
as necessary to make the minimum required payment under the current exempt loan
(hereinafter referred to as the "LOAN") between the ESOP and FTFC; provided,
however, that any such contribution shall be deductible by FTFC and FSB under
Section 404 of the CODE and the allocations of such contribution shall otherwise
be in compliance with Section 415 of the CODE. All common shares of FTFC held by
the Trustee of the ESOP at the BKFC EFFECTIVE TIME shall be exchanged by the
Trustee for the number of BKFC shares of stock in accordance with this
AGREEMENT. The Trustee for the ESOP shall dispose of shares held in the suspense
account of the ESOP for the purpose of retiring the LOAN. Any shares and other
assets remaining in the suspense account following repayment of the LOAN in full
shall be available for allocation and distribution as promptly as possible to
participants (as defined in the ESOP) in accordance with Section 4.3 of the ESOP
and applicable law. It is the intent of the parties that the ESOP be terminated
and distributions made concurrently with the BKFC EFFECTIVE TIME to the extent
possible.
SECTION 6.13. 401(K) PLAN TERMINATION. FTFC and FSB shall take all
steps necessary to terminate FTFC's 401(k) Plan before the BKFC EFFECTIVE TIME
and to file an Application for Determination with the Internal Revenue Service
(the "IRS") regarding tax qualification upon termination.
SECTION 6.14. WITHDRAWAL FROM RETIREMENT FUND. At or before the BKFC
EFFECTIVE TIME, FTFC and FSB shall take all steps necessary to withdraw from the
Financial Institutions Retirement Fund (hereinafter referred to as the
"RETIREMENT FUND"). Such withdrawal shall occur in accordance with the
applicable provisions of Article XII of the Regulations governing the
Comprehensive Retirement Program (hereinafter referred to as the "REGULATIONS"),
pursuant to the provisions of Article XII, Section 1, Paragraph (6) of the
REGULATIONS, applicable to a withdrawal without the establishment of a
"successor plan." FTFC and FSB shall file all forms and documents necessary to
carry out such withdrawal from the RETIREMENT FUND prior to the BKFC EFFECTIVE
TIME, including, but not limited to, any filings required to be made with the
sponsor of the RETIREMENT FUND and with the IRS.
SECTION 6.15. ADVISORY BOARD. At or before the BKFC EFFECTIVE TIME,
BKFC shall form an Advisory Board consisting of the current members of the Board
of Directors of FTFC and the Vice President and Secretary of FTFC (hereinafter
referred to as the "ADVISORY BOARD"). The ADVISORY BOARD shall advise BKFC after
the BKFC EFFECTIVE TIME on issues affecting the merger of the businesses of FTFC
with BKFC and on other matters related to the operation of the business of FTFC.
The members of the ADVISORY BOARD shall serve for a two-year term and shall be
paid a fee for services in the amount of $8,000 for each such year.
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SECTION 6.16. CONSULTING AGREEMENT. At or before the BKFC EFFECTIVE
TIME, Larry N. Hatfield and J. Michael Lonnemann shall each enter into a
two-year Consulting Agreement with BKFC in the form of the Consulting Agreement
attached hereto as Exhibit F.
SECTION 6.17 INDEMNIFICATION AND INSURANCE. (a) Indemnification. For a
period of three years after the BKFC EFFECTIVE TIME, BKFC shall indemnify
persons who served as directors and officers of FTFC on or before the BKFC
EFFECTIVE TIME to the fullest extent permitted under the Articles of
Incorporation and Bylaws of BKFC and applicable provisions of Kentucky law. Any
such indemnification shall be made by BKFC only as authorized in a specific case
upon a determination by BKFC's Board of Directors that the applicable standard
of conduct under the Articles of Incorporation and Bylaws of BKFC and applicable
provisions of Kentucky law has been met and that such indemnification is
permissible under applicable law. As a condition to receiving such
indemnification, the party claiming indemnification shall assign to BKFC, by
separate writing, all right, title and interest in and to the proceeds of the
claiming party's applicable insurance coverage, if any, including insurance
maintained or provided by FTFC, FSB or BKFC, to the extent of such indemnity. No
person shall be entitled to such indemnification who shall (a) fail to cooperate
in the defense and investigation of any claims as to which indemnification may
be made, (b) make, or who shall be a general partner, executive officer,
director, trustee, beneficiary or person in control of any partnership,
corporation, trust or other enterprise that shall make, any claim against FTFC,
FSB, BKFC or the BANK or any stockholder, director, officer, employee, or agent
of any thereof, in any action, suit or proceeding arising out of or in
connection with this AGREEMENT, the transactions contemplated hereby or the
conduct of the business of FTFC, FSB, BKFC or the BANK or (iii) fail to deliver
such notices as may be required under any applicable directors and officers
liability insurance policy to preserve any possible claims of which the claiming
party is aware.
(b) Insurance. At or before the EFFECTIVE TIME, BKFC shall
include the directors and executive officers of FTFC as persons covered under
the current Directors and Officers' Liability Insurance Policy of BKFC.
SECTION 6.18. DEFERRED COMPENSATION AGREEMENTS. BKFC and the BANK agree
to honor the terms of the Deferred Compensation Agreements (hereinafter referred
to as the "DEFERRED COMPENSATION AGREEMENTS") entered into by and between Larry
Hatfield, J. Michael Lonnemann, Robert Grimm, Harold Luersen, Donald Beckmeyer
and Steven McLane (hereinafter referred to collectively as the "DEFERRED
COMPENSATION PARTICIPANTS") and FSB, dated November 1, 1992 and as amended on
December 20, 1999.
SECTION 6.19. EMPLOYMENT AGREEMENTS. At the BKFC EFFECTIVE TIME, Larry
N. Hatfield, J. Michael Lonnemann and Cynthia R. Towhey shall receive the
payments and benefits due such individuals for termination in the event of a
change of control of FTFC provided by the EMPLOYMENT AGREEMENTS.
SECTION 6.20 EMPLOYEE BENEFIT PLANS. All employees of FTFC and FSB
immediately prior to the BKFC EFFECTIVE TIME who are employed by BKFC or the
BANK (hereinafter
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referred to collectively as the "EMPLOYERS") immediately following the BKFC
EFFECTIVE TIME (hereinafter referred to as the "TRANSFERRED EMPLOYEES") will be
covered by the EMPLOYERS' employee benefit plans (hereinafter referred to as the
"EMPLOYEE BENEFIT PLANS") on substantially the same basis as any employee of the
EMPLOYERS in a comparable position. Notwithstanding the foregoing, BKFC and the
BANK may determine to continue any of the FTFC or FSB benefit plans for
TRANSFERRED EMPLOYEES in lieu of offering participation in the EMPLOYEE BENEFIT
PLANS providing similar benefits (e.g., medical and hospitalization benefits),
to terminate any of FTFC's or FSB's benefit plans, or to merge any such benefit
plans with the EMPLOYEE BENEFIT PLANS, provided the result is the provision of
benefits to TRANSFERRED EMPLOYEES that are substantially similar to the benefits
provided to the EMPLOYERS' employees generally. Service to FTFC or FSB by a
TRANSFERRED EMPLOYEE prior to the EFFECTIVE TIME shall be recognized as service
to the EMPLOYERS for purposes of eligibility to participate under the EMPLOYERS'
sick leave policies, paid vacation policies and medical, long-term disability
and life insurance plans. BKFC 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 FTFC or FSB on the BKFC EFFECTIVE TIME and who then change
coverage to the EMPLOYERS' medical or hospitalization indemnity health plan at
the time such TRANSFERRED EMPLOYEES are first given the option to enroll.
Nothing contained in this Section 6.20 shall prohibit the EMPLOYERS from
modifying or terminating any of the EMPLOYEE BENEFIT PLANS after the BKFC
EFFECTIVE TIME, nor shall anything contained in this Section 6.20 require the
EMPLOYERS to continue the employment of any employee of FTFC or FSB after the
BKFC EFFECTIVE TIME.
ARTICLE SEVEN
CLOSING MATTERS
SECTION 7.01. CONDITIONS TO OBLIGATIONS OF BKFC, THE BANK, FTFC AND
FSB. Notwithstanding any other provision of this AGREEMENT, the obligations of
BKFC, the BANK, FTFC and FSB to effect the BKFC MERGER and the BANK MERGER shall
be subject to the fulfillment of each of the following conditions:
(a) This AGREEMENT shall have been validly adopted by the
affirmative vote of the holders of at least the number of
outstanding FTFC shares required under Ohio law and the FTFC
Articles of Incorporation to adopt such agreements;
(b) All permits, approvals, consents, authorizations,
exemptions or waivers of any federal or state governmental
body or agency necessary or appropriate for consummation of
the BKFC MERGER and the BANK MERGER shall have been obtained;
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(c) All waivers, consents and approval of every person, in
addition to those required under subsections (a) and (b) of
this Section 7.01, necessary or appropriate for the
consummation of the BKFC MERGER and the BANK MERGER shall have
been obtained;
(d) FTFC shall have received a written opinion of WEBB, dated
the date of this AGREEMENT and the PROXY STATEMENT, to the
effect that the EXCHANGE RATE is fair to the holders of the
FTFC common shares from a financial point of view;
(e) There shall not be in effect an order or decision of a court
of competent jurisdiction which prevents or materially delays
the consummation of the BKFC MERGER or the BANK MERGER;
(f) There shall not be in effect any federal or state law, rule or
regulation which prevents or materially delays consummation of
the BKFC MERGER and the BANK MERGER;
(g) BKFC and FTFC shall have received an opinion of counsel to
the effect that the BKFC MERGER, when consummated in
accordance with the terms hereof, will constitute a
reorganization within the meaning of Section 368(a) of the
CODE; and
(h) The REGISTRATION STATEMENT (including any post-effective
amendment thereto) shall be effective under the ACT and no
proceeding shall be pending or, to the knowledge of BKFC,
threatened by the SEC to suspend the effectiveness of the
REGISTRATION STATEMENT.
SECTION 7.02. CONDITIONS TO OBLIGATIONS OF BKFC AND THE BANK. In
addition to the conditions contained in Section 7.01 of this AGREEMENT, the
obligations of BKFC and the BANK to effect the BKFC MERGER and the BANK MERGER
shall also be subject to the fulfillment of each of the following conditions:
(a) The representations and warranties of each of FTFC and FSB
contained in Article Three of this AGREEMENT shall be true in
all material respects at and as of the date hereof and at and
as of the BKFC EFFECTIVE TIME as if made at and as of such
time;
(b) Each of FTFC and FSB shall have duly performed and
complied in all material respects with all agreements,
covenants and conditions required by this AGREEMENT to be
performed or complied with by it before or at the BKFC
EFFECTIVE TIME;
(c) There shall not have been a material adverse change in the
financial condition, assets, liabilities, obligations,
properties or business of FTFC and FSB, taken as a whole,
after the date of this AGREEMENT, except
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changes resulting from action taken by FTFC or FSB pursuant to
Section 5.03 of this AGREEMENT;
(d) The consolidated shareholders' equity of FTFC at the BKFC
EFFECTIVE TIME and as calculated in accordance with generally
accepted accounting principles shall not be less than
$14,000,000, exclusive of up to $450,000 in expenses
recognized by FTFC in connection with the BKFC MERGER and
exclusive of reserves, accruals and charges taken or
established by FTFC or FSB at the request of BKFC in
accordance with Section 5.03 of this AGREEMENT;
(e) Neither FTFC nor FSB shall have incurred any damage,
destruction or similar loss, not covered by insurance,
materially affecting its businesses or properties;
(f) The holders of not more than 5% of the FTFC common shares
shall have delivered a written demand for appraisal of such
shares in the manner provided in Section 2.06 of this
AGREEMENT;
(g) Each of FTFC and FSB shall have delivered to BKFC a
certificate dated the BKFC EFFECTIVE TIME and signed by the
President and Treasurer of FTFC and FSB to the effect set
forth in subsections (a), (b), (c), (d), (e) and (f) of this
Section 7.02;
(h) Each of FTFC and FSB shall have obtained all consents,
authorizations or approvals of, or exemptions or waivers by,
any federal or state governmental body or agency required to
be obtained by it in connection with the BKFC MERGER or the
BANK MERGER or the taking of any action contemplated hereby;
(i) There shall not be any action or proceeding commenced by
or before any court or governmental agency or authority in the
United States, or threatened by any governmental agency or
authority in the United States, that challenges or seeks to
prevent or delay the consummation of the BKFC MERGER or the
BKFC MERGER or seeks to impose material limitations on the
ability of BKFC to exercise full rights of ownership of the
assets or business of FTFC or FSB;
(j) There shall not have been proposed, nor shall there be in
effect, any federal or state law, rule, regulation, order or
statement of policy that, in the reasonable judgment of BKFC,
would: (i) prevent or delay the consummation of the BKFC
MERGER or the BANK MERGER or interfere with the reasonable
operation of the business of FTFC or FSB, (ii) materially
adversely affect the ability of BKFC or the BANK to enjoy the
economic or other benefits of the BKFC MERGER or the BANK
MERGER; or (iii) impose any material adverse condition,
limitation or
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requirement on BKFC or the BANK in connection with the BKFC
MERGER or the BANK MERGER;
(k) BKFC shall have received the final written opinion of
Crowe Chizek & Company, LLP, that the BKFC MERGER will qualify
for the pooling of interests method of accounting;
(l) FTFC and FSB shall have obtained all consents to, or
authorizations or approvals of, the transactions contemplated
by this AGREEMENT of any party to any contract, obligation,
lease or other agreement to which FTFC and FSB is a party and
which requires such consent, authorization or approval;
(m) All of the holders of vested options granted under the
STOCK OPTION PLANS shall have exercised such options in
accordance with the terms thereof;
(n) Each holder of UNVESTED OPTIONS shall have executed and
delivered a STOCK OPTION AWARD AGREEMENT to BKFC;
(o) The ESOP shall have been terminated;
(p) The maximum aggregate amount payable by FTFC, FSB, BKFC or
the BANK to the employees of FTFC or FSB in connection with
the consummation of the transactions contemplated by this
AGREEMENT pursuant to the EMPLOYMENT AGREEMENTS is $1,211,124;
(q) FSB and each DEFERRED COMPENSATION PARTICIPANT shall have
executed and delivered to BKFC or the BANK an amendment to
each of the DEFERRED COMPENSATION AGREEMENTS; and
(r) FTFC shall have signed such affidavits, receipts,
certificates or other evidence required by Section 1701.79(f)
of the Ohio Revised Code.
SECTION 7.03. CONDITIONS TO OBLIGATIONS OF FTFC AND FSB. In addition to
the conditions contained in Section 7.01 of this AGREEMENT, the obligation of
FTFC and FSB to effect the BKFC MERGER and the BANK MERGER shall also be subject
to the fulfillment of each of the following conditions:
(a) The representations and warranties of BKFC and the BANK
contained in Article Four of this AGREEMENT shall be true in
all material respects at and as of the date hereof and as of
the BKFC EFFECTIVE TIME as if made at and as of such time,
except to the extent that such representations and warranties
are made as of a specific date;
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(b) Each of BKFC and the BANK shall have duly performed and
complied in all material respects with all agreements,
covenants and conditions required by this AGREEMENT to be
performed or complied with by them before or at the BKFC
EFFECTIVE TIME;
(c) There shall not have been a material adverse change in the
financial condition, assets, liabilities, obligations,
properties, business or prospects of BKFC or the BANK after
the date of this AGREEMENT;
(d) BKFC shall have delivered to FTFC a certificate dated the
BKFC EFFECTIVE TIME and signed by the Chairman and the
President of BKFC to the effect set forth in subsections (a),
(b) and (c) of this Section 7.03;
(e) BKFC and the BANK shall have obtained all consents,
authorizations or approvals of, or exemptions or waivers by
any federal or state governmental body or agency required to
be obtained by it in connection with the BKFC MERGER and the
BANK MERGER or the taking of any action contemplated thereby;
(f) Neither BKFC nor the BANK shall have incurred any damage,
destruction or similar loss, not covered by insurance,
materials affecting its business or properties; and
(g) There shall not be any action or proceeding commenced by
or before any court or governmental agency or authority in the
United States, or threatened by any governmental agency or
authority in the United States, that challenges or seeks to
prevent or delay the consummation of the BKFC MERGER or the
BANK MERGER.
ARTICLE EIGHT
TERMINATION
SECTION 8.01. TERMINATION. This AGREEMENT may be terminated at any time
prior to the BKFC EFFECTIVE TIME, whether before or after approval by the
shareholders of FTFC:
(a) By mutual consent of the Boards of Directors of FTFC, FSB,
BKFC and the BANK; or
(b) By the Board of Directors of FTFC or BKFC if:
(i) The BKFC MERGER shall not have been consummated
on or before September 30, 2000; or
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(ii) Any event occurs which, in the reasonable
opinion of either Board, would preclude satisfaction
of any of the conditions set forth in Section 7.01 of
this AGREEMENT; or
(c) By the Board of Directors of BKFC if any event occurs
which, in the reasonable opinion of such Board, would preclude
compliance with any of the conditions set forth in Section
7.02 of this AGREEMENT; or
(d) By the Board of Directors of FTFC if any event occurs
which, in the reasonable opinion of such Board, would preclude
compliance with any of the conditions set forth in Section
7.03 of this AGREEMENT.
SECTION 8.02. WRITTEN NOTICE OF TERMINATION. In order to terminate this
AGREEMENT pursuant to Section 8.01 of this AGREEMENT, the party so acting shall
give written notice of such termination to the other party. This AGREEMENT shall
terminate on the date such notice is given.
SECTION 8.03. EFFECT OF TERMINATION. In the event of the termination of
this AGREEMENT, the provisions of this AGREEMENT shall become void and have no
effect; provided, however, that (a) the provisions set forth in Sections 6.06,
6.07 and 6.08 of this AGREEMENT shall survive such termination and shall remain
in full force and effect and (b) a termination of this AGREEMENT shall not
affect the liability of any party for an uncured and material breach of any term
or condition of this AGREEMENT.
SECTION 8.04. AMENDMENT. This AGREEMENT may only be amended by the
unanimous consent of FTFC, FSB, BKFC and the BANK by action taken by their
respective Boards of Directors, at any time before or after approval of this
AGREEMENT by the shareholders of FTFC, but after such approval no amendment
shall be made which materially and adversely affects the rights of such
shareholders without the further approval of such shareholders. This AGREEMENT
may not be amended except by an instrument in writing signed on behalf of each
of the parties hereto.
SECTION 8.05. WAIVER. Any term or provision of this AGREEMENT (other
than the requirement for shareholder approval) may be waived in writing at any
time by the party which is, or whose shareholders are, entitled to the benefits
thereof.
ARTICLE NINE
MISCELLANEOUS
SECTION 9.01. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations, warranties and covenants in this AGREEMENT shall expire on, and
be terminated and extinguished at, the BKFC EFFECTIVE TIME, other than covenants
which by their terms are to survive or be performed after the BKFC EFFECTIVE
TIME; provided, however, that no such
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representations, warranties or covenants shall be deemed to be terminated or
extinguished so as to deprive BKFC or the BANK (or any director, officer or
controlling person thereof) of any defense in law or equity which otherwise
would be available against the claims of any person, including, without
limitation, any shareholder or former shareholder of either BKFC or FTFC.
SECTION 9.02. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally or mailed
by registered or certified mail (return receipt requested) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
If addressed to BKFC or the BANK:
Robert W. Zapp
President
The Bank of Kentucky Financial Corporation
1065 Burlington Pike
Florence, Kentucky 41042
with a copy to:
Wilbert L. Ziegler
Ziegler & Schneider, P.S.C.
541 Buttermilk Pike
Suite 500
Covington, Kentucky 41047
If addressed to FTFC or FSB:
Larry N. Hatfield
President
Fort Thomas Financial Corporation
25 North Fort Thomas Avenue
Fort Thomas, Kentucky 41075
With a copy to:
Kevin M. Houlihan
Elias, Matz, Tiernan & Herrick LLP
734 15th Street, N.W.
Washington, D.C. 20005
SECTION 9.03. ENTIRE AGREEMENT. This AGREEMENT (including the exhibits,
documents and instruments referred to herein or therein) (a) constitutes the
entire agreement and supersedes all other prior agreements and understandings,
both written and oral, among the parties, or any of them, with respect to the
subject matter hereof; (b) is not intended to and shall
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not confer any rights or remedies hereunder upon any person other than BKFC or
FTFC; (c) shall not be assigned by operation of law or otherwise; and (d) shall
be governed in all respects, including validity, interpretation and effect, by
the laws of the State of Ohio.
SECTION 9.04. EXECUTION IN COUNTERPARTS. This AGREEMENT may be executed
in two or more counterparts which together shall constitute a single AGREEMENT.
SECTION 9.05. HEADINGS. The headings of articles and sections herein
are for convenience of reference only, do not constitute a part of this
AGREEMENT and shall not be deemed to limit or affect any of the provisions
hereof.
IN WITNESS WHEREOF, BKFC, the BANK, FTFC and FSB have caused this
AGREEMENT to be executed by their duly authorized officers as of the day and
year first above written.
Attest: The Bank of Kentucky Financial Corporation
By /s/ Robert W. Zapp
---------------------------------------
/s/ Robert Fulkerson its President and CEO
----------------------------
Attest: The Bank of Kentucky, Inc.
By /s/ Robert W. Zapp
---------------------------------------
/s/ Robert Fulkerson its President and CEO
----------------------------
Attest: Fort Thomas Financial Corporation
By /s/ Larry N. Hatfield
---------------------------------------
/s/J. Michael Lonnemann its President
----------------------------
Attest: Fort Thomas Savings Bank, FSB
By /s/ Larry N. Hatfield
---------------------------------------
/s/J. Michael Lonnemann its President
----------------------------
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ACKNOWLEDGMENT
STATE OF KENTUCKY )
) SS:
COUNTY OF CAMPBELL )
BE IT REMEMBERED that on this 21st day of December, 1999, personally
came before me, a Notary Public in and for the State and County aforesaid,
Robert W. Zapp, President of The Bank of Kentucky Financial Corporation, a
savings and loan holding company incorporated under the laws of Kentucky, and
duly executed the Agreement and Plan of Reorganization before me and
acknowledged the same to be his act and deed and the act and deed of said
Corporation and that the facts therein are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 21st day
of December, 1999.
/s/ Peggy Talbot
---------------------------
Notary Public
BE IT REMEMBERED that on this 21st day of December, 1999, personally
came before me, a Notary Public in and for the State and County aforesaid,
Robert W. Zapp, President of The Bank of Kentucky, Inc., a state bank
incorporated under the laws of Kentucky, and duly executed the Agreement and
Plan of Reorganization before me and acknowledged the same to be his act and
deed and the act and deed of said Corporation and that the facts therein are
true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 21st day
of December, 1999.
/s/ Peggy Talbot
---------------------------
Notary Public
BE IT REMEMBERED that on this 21st day of December, 1999, personally
came before me, a Notary Public in and for the State and County aforesaid, Larry
N. Hatfield, President of Fort Thomas Financial Corporation, a savings and loan
holding company incorporated under the laws of Ohio, and duly executed the
Agreement and Plan of Reorganization before me and acknowledged the same to be
his act and deed and the act and deed of said Corporation and that the facts
therein are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 21st day
of December, 1999.
/s/ Peggy Talbot
---------------------------
Notary Public
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BE IT REMEMBERED that on this 21st day of December, 1999, personally
came before me, a Notary Public in and for the State and County aforesaid, Larry
N. Hatfield, President of Fort Thomas Savings Bank, FSB, a federal savings bank
incorporated under the laws of the United States of America, and duly executed
the Agreement and Plan of Reorganization before me and acknowledged the same to
be his act and deed and the act and deed of said Corporation and that the facts
therein are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this 21st day
of December, 1999.
/s/ Peggy Talbot
---------------------------
Notary Public
49
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Exhibit 99
PRESS RELEASE FOR IMMEDIATE RELEASE
---------------------
Contact: The Bank of Kentucky Financial Corporation
Robert W. Zapp, President and CEO
Telephone: (606) 282-2805
Contact: Fort Thomas Financial Corporation'
Larry N. Hatfield, President and CEO
Telephone: (606) 441-3302
FORT THOMAS FINANCIAL CORPORATION TO BE ACQUIRED
BY THE BANK OF KENTUCKY FINANCIAL CORPORATION
FLORENCE AND FORT THOMAS, KENTUCKY, December 21, 1999 - The Bank of Kentucky
Financial Corporation (Bulletin Board: BKYF - "The Bank of Kentucky") announced
today that it has reached a definitive agreement to acquire Fort Thomas
Financial Corporation (Nasdaq: FTSB - "Fort Thomas"), the parent company of Fort
Thomas Savings Bank, F.S.B., in a tax-free, stock-for-stock exchange valued
today at approximately $27.5 million.
Fort Thomas shareholders will receive $.5645 shares of Bank of Kentucky common
stock for each share of Fort Thomas common stock. For illustrative purposes,
based upon the past month's average closing price of $32.00, the value to Fort
Thomas shareholders would be $18.06 per share. With a fixed exchange ratio, this
value is subject to change with Bank of Kentucky's market value. The acquisition
is anticipated to be accounted for as a pooling of interests transaction and is
expected to contribute positively to The Bank of Kentucky's earnings per share
immediately.
Fort Thomas serves Campbell County, Kentucky through two full-service offices
located in Fort Thomas and Alexandria, Kentucky. As of September 30, 1999, Fort
Thomas had total assets of $100 million deposits of $71 million and
stockholders' equity of $13.7 million.
The Bank of Kentucky, a state-chartered commercial bank headquartered in
Florence, Kentucky, serves Boone, Kenton, and Grant Counties in Kentucky with 11
full service offices and 19 ATM's. At and for the nine months ended September
30, 1999, the organization had $303 million in assets and generated an
annualized return on equity and return on assets of 17.0% and 1.53%,
respectively.
Robert W. Zapp, the President and Chief Executive Officer of The Bank of
Kentucky stated, "We are extremely pleased to have reached agreement to acquire
Fort Thomas Savings Bank, an organization formed in 1910 and faithfully serving
the Fort Thomas and surrounding communities. We have had a goal of significantly
expanding our activities into the adjacent Campbell County market and the merger
with Fort Thomas will be a terrific step in that direction."
Larry N. Hatfield, the President and Chief Executive Officer of Fort Thomas,
noted that, "We are very pleased to be taking this step toward realizing
enhanced shareholder value. The Bank of Kentucky has been recognized as one of
the premier community banks in the state and country. As part of a community
bank sharing many of the customer-driven ideals as ourselves, the employees of
Fort Thomas will continue providing the same quality service our customers have
grown accustomed to receiving. Further, we look forward to increasing the types
of services available to both individuals and businesses in our community with
the broader selection of products and services offered by The Bank of Kentucky."
The transaction value is equivalent to approximately 2.01 times the fully
diluted tangible book value of Fort Thomas at September 30, 1999, and
approximately 27 times the latest twelve months earnings. The closing of the
transaction is contingent upon, among other things, appropriate regulatory
approvals, as well as approval by Fort Thomas shareholders.
Statements contained in this press release that are not historical facts may
constitute forward-looking statements (within the meaning of Section 21E of the
Securities Exchange Act of 1934, as amended) which involve significant risks and
uncertainties. The Companies intend such forward-looking statements to be
covered in the Private Securities Litigation Reform Act of 1995, and are
including this statement for purposes of invoking these safe harbor provisions.
The Companies' ability to predict results or the actual effect of future plans
or strategies is inherently uncertain and involves a number of risks and
uncertainties. The fact that there are various risks and uncertainties should be
considered in evaluating forward-looking statements and undue reliance should
not be placed on such statements.
