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EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
UNITED COMMUNITY FINANCIAL CORP. AND THE HOME SAVINGS AND LOAN COMPANY
AND
INDUSTRIAL BANCORP, INC. AND THE INDUSTRIAL SAVINGS AND LOAN ASSOCIATION
DATED AS OF DECEMBER 9, 2000
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AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS.............................................................................1
ARTICLE II THE MERGER..............................................................................6
2.1 The Corporate Merger and Subsequent Events..............................................6
2.2 Effective Time; Closing.................................................................6
2.3 Treatment of Capital Stock..............................................................6
2.4 Shareholder Rights; Stock Transfers.....................................................7
2.5 Options and Restricted Stock............................................................7
2.6 Exchange Procedures.....................................................................7
2.7 Dissenting Shares.......................................................................9
2.8 Additional Actions......................................................................9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER...............................................10
3.1 Capital Structure......................................................................10
3.2 Organization, Standing and Authority of Seller.........................................10
3.3 Ownership of Seller Subsidiaries.......................................................11
3.4 Organization, Standing and Authority of Seller Subsidiaries............................11
3.5 authorized and Effective Agreement.....................................................11
3.6 Securities Documents and Regulatory Reports............................................13
3.7 Financial Statements...................................................................13
3.8 Material Adverse Change................................................................14
3.9 Environmental Matters..................................................................14
3.10 Tax Matters............................................................................14
3.11 Legal Proceedings......................................................................15
3.12 Compliance with Laws...................................................................15
3.13 Certain Information....................................................................16
3.14 Employee Benefit Plans.................................................................16
3.15 Certain Contracts......................................................................17
3.16 Brokers and Finders....................................................................18
3.17 Insurance..............................................................................18
3.18 Properties.............................................................................19
3.19 Labor..................................................................................19
3.20 Allowance for Loan Losses..............................................................19
3.21 Year 2000 Compliant....................................................................19
3.22 Material Interests of Certain Persons..................................................20
3.23 Fairness Opinion.......................................................................20
3.24 Disclosures 20
3.25 No Undisclosed Liabilities.............................................................20
3.26 Loan Portfolio.........................................................................20
3.27 Investment Portfolio...................................................................21
3.28 Interest Rate Risk Management Instruments..............................................21
3.29 Interim Events.........................................................................21
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER................................................21
4.1 Organization, Standing and Authority of Buyer..........................................22
4.2 Ownership of Buyer Subsidiaries........................................................22
4.3 Organization, Standing and Authority of Buyer Subsidiaries.............................22
4.4 Authorized and Effective Agreement.....................................................22
4.5 Securities Documents and Regulatory Reports............................................23
4.6 Financial Statements...................................................................24
4.7 Material Adverse Change................................................................24
4.8 Legal Proceedings......................................................................25
4.9 Certain Information....................................................................25
4.10 Disclosures ...........................................................................25
4.11 Financial Resources....................................................................25
ARTICLE V COVENANTS..............................................................................25
5.1 Reasonable Best Efforts................................................................25
5.2 Shareholder Meeting....................................................................26
5.3 Regulatory Matters.....................................................................26
5.4 Investigation and Confidentiality......................................................27
5.5 Press Releases.........................................................................28
5.6 Business of the Parties................................................................28
5.7 Certain Actions........................................................................31
5.8 Current Information....................................................................32
5.9 Indemnification; Insurance.............................................................32
5.10 Transaction Expenses of Seller.........................................................33
5.11 Employees and Employee Benefit Plans...................................................33
5.12 Company Merger.........................................................................35
5.13 Bank Merger............................................................................35
5.14 Organization of Merger Sub.............................................................35
5.15 Conforming Entries.....................................................................35
5.16 Integration of Policies................................................................36
5.17 Disclosure Supplements.................................................................36
5.18 Failure to Fulfill Conditions..........................................................36
5.19 Environmental Reports..................................................................36
ARTICLE VI CONDITIONS PRECEDENT...................................................................37
6.1 Conditions Precedent - Buyer and Seller................................................37
6.2 Conditions Precedent - Seller..........................................................38
6.3 Conditions Precedent - Buyer...........................................................39
ARTICLE VII TERMINATION, WAIVER AND AMENDMENT......................................................40
7.1 Termination............................................................................40
7.2 Effect of Termination..................................................................41
7.3 Survival of Representations, Warranties and Covenants..................................42
7.4 Waiver.................................................................................42
7.5 Amendment or Supplement................................................................43
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ARTICLE VII MISCELLANEOUS..........................................................................43
8.1 Entire Agreement.......................................................................43
8.2 No Assignment..........................................................................43
8.3 Notices................................................................................43
8.4 Alternative Structure..................................................................44
8.5 Interpretation.........................................................................45
8.6 Counterparts...........................................................................45
8.7 Governing Law..........................................................................45
8.8 Severability...........................................................................45
8.9 Standard of Materiality................................................................45
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AGREEMENT AND PLAN OF MERGER
WHEREAS, the Boards of Directors of Buyer and Buyer Bank and Seller and
Seller Bank (all terms as defined in Article I hereof) have determined to
consummate certain business combination transactions subject to the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of such inducements and of the mutual
covenants and agreements contained herein, the Parties hereby agree as follows:
ARTICLE I
DEFINITIONS
The following terms shall have the meanings ascribed to them for all
purposes of this Agreement.
"Agreement" shall mean this Agreement and Plan of Merger dated as of
December 9, 2000 between Buyer, Buyer Bank, Seller and Seller Bank.
"Bank Merger" shall mean the contemplated merger of Seller Bank into
Buyer Bank, with Buyer Bank surviving.
"Buyer" shall mean United Community Financial Corp., an Ohio
corporation.
"Buyer Bank" shall mean The Home Savings and Loan Company of
Youngstown, Ohio, an Ohio-chartered stock savings and loan association and
wholly owned subsidiary of Buyer.
"Buyer Financial Statements" shall mean (i) the consolidated balance
sheets (including related notes and schedules, if any) of Buyer as of December
31, 1999 and 1998 and the consolidated income statements and statements of
changes in equity and cash flows (including related notes and schedules, if any)
of Buyer for each of the two years ended December 31, 1999 and 1998, as filed by
Buyer in its Securities Documents, and (ii) the consolidated balance sheets
(including related notes and schedules, if any) of Buyer and the consolidated
income statements and statements of changes in equity and cash flows (including
related notes and schedules, if any) of Buyer included in Securities Documents
filed by Buyer with respect to the periods ended subsequent to December 31,
1999.
"Certificate" shall mean any certificate which prior to the Effective
Time represented shares of Seller Common Stock
"Certificate of Merger" shall mean the certificate of merger to be
filed with the Ohio Secretary of State with respect to the Corporate Merger.
"Closing" shall mean the closing of the Corporate Merger at a time and
place reasonably selected by Buyer following the satisfaction or waiver of all
conditions to the Corporate Merger.
"Closing Date" shall mean the date on which the Closing occurs.
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"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company Merger" shall mean the contemplated Merger of the Surviving
Corporation into Buyer, with Buyer surviving.
"Corporate Merger" shall mean the merger of Merger Sub into Seller,
with Seller surviving.
"CRA" shall mean the Community Reinvestment Act.
"Dissenting Shares" shall mean any shares of Seller Common Stock whose
holder seeks relief as a dissenting shareholder under Section 1701.85 of the
OGCL.
"Division" shall mean the Division of Financial Institutions of the
Department of Commerce of the State of Ohio.
"DOJ" shall mean the United States Department of Justice.
"Effective Time" shall mean the time of the filing of the Certificate
of Merger, or such later time as may be specified in the Certificate of Merger.
"Environmental Claim" shall mean any written notice from any
Governmental Entity or third party alleging potential liability (including
potential liability for investigatory costs, cleanup costs, governmental
response costs, natural resources damages, property damages, personal injuries
or penalties) arising out of, based on, or resulting from the presence, or
release into the environment, of any Materials of Environmental Concern.
"Environmental Laws" shall mean any federal, state or local law,
statute, ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, order, judgment, decree, injunction or agreement with any
Governmental Entity relating to (i) the protection, preservation or restoration
of the environment (including air, water vapor, surface water, groundwater,
drinking water supply, surface soil, subsurface soil, plant and animal life or
any other natural resource), and/or (ii) the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling, production, release
or disposal of Materials of Environment Concern. The term Environmental Law
includes (i) the Comprehensive Environmental Response, Compensation and
Liability Act, as amended, 42 U.S.C. ss.9601, ET SEQ; the Resource Conservation
and Recovery Act, as amended, 42 U.S.C. ss.6901, ET SEQ; the Clean Air Act, as
amended, 42 U.S.C. ss.7401, ET SEQ; the Federal Water Pollution Control Act, as
amended, 33 U.S.C. ss.1251, ET SEQ; the Toxic Substances Control Act, as
amended, 15 U.S.C. ss.9601, ET SEQ; the Emergency Planning and Community Right
to Know Act, 42 U.S.C. ss.1101, et seq; the Safe Drinking Water Act, 42 U.S.C.
ss.300f, ET SEQ; and all comparable state and local laws, and (ii) any common
law (including common law that may impose strict liability) that may impose
liability or obligations for injuries or damages due to, or threatened as a
result of, the presence of or exposure to any Materials of Environmental
Concern.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
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"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exchange Agent" shall mean an exchange agent designated by Buyer, who
shall be reasonably acceptable to Seller.
"FDIA" shall mean the Federal Deposit Insurance Act, as amended.
"FDIC" shall mean the Federal Deposit Insurance Corporation or any
successor thereto.
"FHLB" shall mean the Federal Home Loan Bank of Cincinnati.
"GAAP" shall mean generally accepted accounting principles.
"Governmental Entity" shall mean any federal or state court,
administrative agency or commission or other governmental authority or
instrumentality.
"HOLA" shall mean the Home Owners' Loan Act, as amended.
"include" shall mean "include without limitation."
"Insider Loans" shall mean loans from Seller or any Seller Subsidiary
to any executive officer or director of Seller, any Seller Subsidiary or any
associate or related interest of any such person.
"IRS" shall mean the Internal Revenue Service or any successor thereto.
"Material Adverse Effect" shall mean, with respect to any Party, any
effect that is material and adverse to the financial condition, results of
operations or business of that Party and its Subsidiaries taken as whole, or
that materially impairs the ability of any Party to consummate the Merger,
provided, however, that Material Adverse Effect shall not be deemed to include
the impact of (a) changes in laws and regulations or interpretations thereof
that are generally applicable to the banking or savings industries, (b) changes
in GAAP that are generally applicable to the banking or savings industries, (c)
expenses incurred in connection with the transactions contemplated hereby, (d)
actions or omissions of a party (or any of its Subsidiaries) taken with the
prior informed written consent of the other party or parties in contemplation of
the transactions contemplated hereby, or (e) changes attributable to or
resulting from changes in general economic conditions, including changes in the
prevailing level of interest rates.
"Materials of Environmental Concern" shall mean pollutants,
contaminants, wastes, toxic substances, petroleum and petroleum products and any
other materials regulated under Environmental Laws.
"Merger" shall mean the Corporate Merger, the Company Merger and the
Bank Merger.
"Merger Sub" shall mean an Ohio corporation to be organized as a
subsidiary of Buyer.
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"Merger Sub Common Stock" shall mean the common stock of Merger Sub.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"OTS" shall mean the Office of Thrift Supervision.
"OGCL" shall mean the State of Ohio General Corporation Law, as
amended.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor thereto.
"Parties" shall mean Buyer, Seller, Buyer Bank and Seller Bank.
"Per Share Merger Consideration" shall mean $20.375 in cash without
interest for each share of Seller Common Stock.
"Plan of Corporate Merger" shall mean the form of Plan of Merger by and
between Seller and Merger Sub attached as Exhibit A to this Agreement.
"Previously Disclosed" shall mean disclosed in a disclosure schedule
delivered on or prior to the date hereof by the disclosing Party to the other
Party specifically referring to the appropriate section of this Agreement and
describing in reasonable detail the matters contained therein.
"Proxy Statement" shall mean the proxy statement to be delivered to
shareholders of Seller in connection with the solicitation of their approval of
this Agreement and the transactions contemplated hereby.
"Rights" shall mean warrants, options, rights, convertible securities
and other arrangements or commitments which obligate an entity to issue or
dispose of any of its capital stock or other ownership interests.
"SAIF" shall mean the Savings Association Insurance Fund administered
by the FDIC or any successor thereto.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securities Documents" shall mean all reports, offering circulars,
proxy statements, registration statements and all similar documents filed, or
required to be filed, pursuant to the Securities Laws.
"Securities Laws" shall mean the Securities Act; the Exchange Act; and
the rules and regulations of the SEC promulgated thereunder.
"Seller" shall mean Industrial Bancorp, Inc., an Ohio corporation.
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"Seller Bank" shall mean The Industrial Savings and Loan Association,
an Ohio-chartered savings and loan association and wholly owned subsidiary of
Seller.
"Seller Common Stock" shall mean the common stock of Seller.
"Seller Employee Plans" shall mean all stock option, employee stock
purchase and stock bonus plans, qualified pension or profit-sharing plans, any
deferred compensation, consultant, bonus or group insurance contract or any
other incentive, health and welfare or employee benefit plan or agreement
maintained for the benefit of employees or former employees of Seller, or any
Seller Subsidiary, whether written or oral.
"Seller ESOP" shall mean the employee stock ownership plan of Seller,
as in effect as of the date hereof.
"Seller Financial Statements" shall mean (i) the consolidated
statements of financial condition (including related notes and schedules, if
any) of Seller as of December 31, 1999 and 1998 and the consolidated statements
of income, shareholders' equity and cash flows (including related notes and
schedules, if any) of Seller for each of the three years ended December 31,
1999, 1998 and 1997 as filed by Seller in its Securities Documents, and (ii) the
consolidated statements of financial condition of Seller (including related
notes and schedules, if any) and the consolidated statements of income,
shareholders' equity and cash flows (including related notes and schedules, if
any) of Seller included in the Securities Documents filed by Seller with respect
to the periods ended subsequent to December 31, 1999.
"Seller Options" shall mean options to purchase shares of Seller Common
Stock issued pursuant to Seller's Stock Option Plan.
"Seller Restricted Stock" shall mean Seller Common Stock subject to
restrictions pursuant to Seller's Management Recognition Plan.
"Seller's Management Recognition Plan" shall mean Seller Bank's
Management Recognition Plan and Trust Agreement dated May 1, 1996, as amended.
"Seller's Stock Option Plan" shall mean the Seller's 1996 Stock Option
and Incentive Plan dated May 1, 1996, as amended.
"Subsidiary" and "Significant Subsidiary" shall have the meanings set
forth in Rule 1-02 of Regulation S-X of the SEC.
"Surviving Corporation" shall mean Seller after the Corporate Merger.
"Surviving Corporation Common Stock" shall mean the shares of common
stock of the Surviving Corporation.
"Year 2000 Compliant" shall mean that all hardware, firmware, software
and computer systems completely and accurately address, produce, store and
calculate data involving dates
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beginning with January 1, 2000 and do not produce abnormally ending or incorrect
results involving such dates as used in any forward or regression dated based
functions.
ARTICLE II
THE MERGER
2.1 THE CORPORATE MERGER AND SUBSEQUENT EVENTS
(a) Subject to the terms and conditions of this Agreement, at the
Effective Time, Merger Sub shall be merged into Seller in accordance with the
provisions of Section 1701.78 of the OGCL and the Plan of Corporate Merger,
attached hereto as Exhibit A, and the separate corporate existence of Merger Sub
shall cease. Seller shall be the Surviving Corporation of the Corporate Merger,
and shall continue its corporate existence under the laws of the State of Ohio.
The name of the Surviving Corporation shall be as stated in the Articles of
Incorporation of Seller immediately prior to the Effective Time. Immediately
following the Corporate Merger, Buyer shall cause the Company Merger and the
Bank Merger to be completed.
(b) The Articles of Incorporation and Code of Regulations of Seller as
in effect immediately prior to the Effective Time shall be the Articles of
Incorporation and Code of Regulations of the Surviving Corporation.
(c) The directors and officers of Merger Sub immediately prior to the
Effective Time shall be the directors and officers of the Surviving Corporation.
2.2 EFFECTIVE TIME; CLOSING
The Corporate Merger shall become effective at the Effective Time. The
Certificate of Merger shall be filed as soon after the Closing as is
practicable.
2.3 Treatment of Capital Stock
Subject to the provisions of this Agreement, at the Effective Time,
automatically by virtue of the Corporate Merger and without any action on the
part of any shareholder:
(a) each outstanding share of Merger Sub Common Stock shall
automatically convert into a share of Surviving Corporation Common Stock;
(b) each share of Buyer's common stock shall continue unchanged as the
same share of Buyer's common stock; and
(c) each share of Seller Common Stock issued and outstanding
immediately prior to the Effective Time (other than Dissenting Shares) shall, by
virtue of the Corporate Merger and without any action of any kind by any person
or entity, be converted into the right to receive the Per Share Merger
Consideration; provided, however, that each share of Seller Common Stock which
is owned beneficially or of record by Seller (including treasury shares) or
Buyer or any of their respective Subsidiaries (other than shares held in a
fiduciary capacity for the benefit of third
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parties or as a result of debts previously contracted) shall be canceled and
retired without consideration or conversion.
2.4 SHAREHOLDER RIGHTS; STOCK TRANSFERS
At the Effective Time, holders of Seller Common Stock shall cease to be
and shall have no rights as shareholders of Seller, other than to receive the
Per Share Merger Consideration for each share of Seller Common Stock held. After
the Effective Time, there shall be no transfers on the stock transfer books of
Seller or the Surviving Corporation of shares of Seller Common Stock and if
Certificates are presented for transfer after the Effective Time, they shall be
delivered to Buyer or the Exchange Agent for cancellation against delivery of
the Per Share Merger Consideration. No interest shall be paid on the Per Share
Merger Consideration.
2.5 OPTIONS AND RESTRICTED STOCK
At the Effective Time, each outstanding Seller Option shall be
converted into the right to receive a cash payment from the Seller equal to the
difference between $20.375 and the exercise price per share of such Seller
Option then exercisable, less applicable federal and state tax withholding
obligations of the Seller. At the Effective Time, each holder of an unvested
share of Seller Restricted Stock under the Seller's Management Recognition Plan
shall be entitled to receive a cash payment from the Seller or Seller Bank equal
to $20.375 for each such share of Seller Restricted Stock, less applicable
federal and state tax withholding obligations of the Seller.
2.6 EXCHANGE PROCEDURES
(a) No later than five business days following the Effective Time,
Buyer shall cause the Exchange Agent to mail or make available to each holder of
record of any Certificate a notice and letter of transmittal disclosing the
effectiveness of the Corporate Merger and the procedure for exchanging
Certificates for the Per Share Merger Consideration. Such letter of transmittal
shall specify that delivery shall be effected and risk of loss and title shall
pass only upon proper delivery of Certificates to the Exchange Agent.
(b) At the Effective Time, Buyer shall make available to the Exchange
Agent an amount of cash sufficient to make payments of the Per Share Merger
Consideration for each outstanding share of Seller Common Stock.
(c) Each holder of any outstanding Certificate (other than holders of
Dissenting Shares) who surrenders such Certificate to the Exchange Agent will,
upon acceptance thereof by the Exchange Agent, be entitled to the Per Share
Merger Consideration for each share represented by such Certificate. The
Exchange Agent shall accept Certificates upon compliance with such reasonable
terms and conditions as the Exchange Agent may impose to effect an orderly
exchange in accordance with normal exchange practices. Each outstanding
Certificate which is not surrendered to the Exchange Agent shall, except as
otherwise herein provided, evidence ownership of only the right to receive the
Per Share Merger Consideration for each share represented by such Certificate.
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(d) The Exchange Agent shall not be obligated to deliver the Per Share
Merger Consideration until the holder surrenders a Certificate as provided in
this Section 2.6, or, in default thereof, an appropriate affidavit of loss and
indemnity agreement and/or a bond as may be required in each case by the
Exchange Agent. If any check is to be issued in a name other than that in which
the Certificate is registered, it shall be a condition of the issuance thereof
that the Certificate so surrendered shall be properly endorsed or accompanied by
an executed form of assignment separate from the Certificate and otherwise in
proper form for transfer and that the person requesting such exchange pay to the
Exchange Agent any transfer or other tax required by reason of the issuance of a
check in any name other than that of the registered holder of the certificate
surrendered or otherwise establish to the satisfaction of the Exchange Agent
that such tax has been paid or is not payable.
(e) Any portion of the cash delivered to the Exchange Agent by Buyer
pursuant to Section 2.6(b) that remains unclaimed by the shareholders of Seller
for one year after the Closing Date shall be delivered by the Exchange Agent to
Buyer. Any shareholders of Seller who have not theretofore complied with Section
2.6(c) shall thereafter look only to Buyer for the Merger Consideration. If
outstanding Certificates are not surrendered or the payment for them is not
claimed prior to the date on which such payment would otherwise escheat to or
become the property of any Governmental Entity, the unclaimed items shall, to
the extent permitted by abandoned property and any other applicable law, become
the property of Buyer (and to the extent not in its possession shall be
delivered to it), free and clear of all claims or interest of any person
previously entitled to such property. Neither the Exchange Agent nor any party
to this Agreement shall be liable to any holder of Seller Common Stock
represented by any Certificate for any consideration paid to a public official
pursuant to applicable abandoned property, escheat or similar laws. Buyer and
the Exchange Agent shall be entitled to rely upon the stock transfer books of
Seller to establish the identity of those persons entitled to receive the Per
Share Merger Consideration, which books shall be conclusive with respect
thereto. In the event of a dispute with respect to ownership of Seller Common
Stock represented by any Certificate, Buyer and the Exchange Agent shall be
entitled to deposit any Per Share Merger Consideration represented thereby in
escrow with an independent third party and thereafter be relieved with respect
to any claims thereto.
(f) Buyer shall be entitled to deduct and withhold from consideration
otherwise payable pursuant to this Agreement to any holder of Certificates, such
amounts as it is required to deduct and withhold with respect to the making of
such payment under the Code, or any provision of state, local or foreign tax
law. To the extent that amounts are so withheld by Buyer, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the Certificates in respect of which such deduction and withholding
was made.
2.7 Dissenting Shares
(a) Any holders of Dissenting Shares shall be entitled to payment for
such shares only to the extent permitted by and in accordance with the
provisions of the OGCL; provided, however, that if, in accordance with the OGCL,
any holder of Dissenting Shares shall forfeit such right to payment of the fair
value of such shares, such shares shall thereupon be deemed to have been
converted into and to have become exchangeable for, as of the Effective Time,
the right to receive the Per Share Merger Consideration. Dissenting Shares shall
not, after the Effective
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Time, be entitled to vote for any purpose or receive any dividends or other
distributions and shall be entitled only to such rights as are afforded in
respect of Dissenting Shares pursuant to the OGCL.
(b) Seller shall give Buyer (i) prompt notice of any written objections
to the Corporate Merger and any written demands for the payment of the fair
value of any shares, withdrawals of such demands, and any other instruments
served pursuant to the OGCL received by Seller and (ii) the opportunity to
participate in all negotiations and proceedings with respect to such demands
under the OGCL. Seller shall not voluntarily make any payment with respect to
any demands for payment of fair value and shall not, except with the prior
written consent of Buyer, settle or offer to settle any such demands.
2.8 ADDITIONAL ACTIONS
If, at any time after the Effective Time, Buyer or Buyer Bank shall
consider that any further assignments or assurances in law or any other acts are
necessary or desirable to (i) vest, perfect or confirm, of record or otherwise,
in Buyer or Buyer Bank their respective right, title or interest in, to or under
any of the rights, properties or assets of Seller or Seller Bank acquired or to
be acquired by Buyer or Buyer Bank as a result of, or in connection with, the
Merger, or (ii) otherwise carry out the purposes of this Agreement, Seller or
Seller Bank and their respective proper officers and directors shall be deemed
to have granted to Buyer or Buyer Bank an irrevocable power of attorney to
execute and deliver all such proper deeds, assignments and assurances in law and
to do all acts necessary or proper to vest, perfect or confirm title to and
possession of such rights, properties or assets in Buyer or Buyer Bank and
otherwise to carry out the purposes of this Agreement; and the proper officers
and directors of Buyer and Buyer Bank are fully authorized in the name of Seller
or Seller Bank or otherwise to take any and all such action.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER AND SELLER BANK
Seller, and Seller Bank where appropriate, represent and warrant to
Buyer as follows, except as Previously Disclosed:
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3.1 CAPITAL STRUCTURE
The authorized capital stock of Seller consists of 10,000,000 shares of
Seller Common Stock. There are no other shares of stock of Seller authorized or
outstanding. As of the date hereof, 4,333,883 shares of Seller Common Stock are
outstanding (including 49,132 shares of Seller Restricted Stock held by Seller's
Management Recognition Plan) and 1,220,617 shares of Seller Common Stock are
held in treasury. All outstanding shares of Seller Common Stock have been duly
authorized and validly issued and are fully paid and nonassessable, and none of
the outstanding shares of Seller Common Stock has been issued in violation of
the preemptive rights of any person, firm or entity. Except for (i) Seller
Options to acquire not more than 369,485 shares of Seller Common Stock as of the
date hereof, a schedule of which has been Previously Disclosed, and (ii) 49,132
unvested shares of Seller Restricted Stock as of the date hereof, a schedule of
which has been Previously Disclosed, there are no Rights authorized, issued or
outstanding with respect to the capital stock of Seller as of the date hereof.
3.2 ORGANIZATION, STANDING AND AUTHORITY OF SELLER
Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of Ohio, with full corporate power and
authority to own or lease all of its properties and assets and to carry on its
business as now conducted, and Seller is duly licensed or qualified to do
business and is in good standing in each jurisdiction in which its ownership or
leasing of property or the conduct of its business requires such licensing or
qualification. Seller is a savings and loan holding company under the HOLA and
subject to the regulation and supervision by the OTS and the Division. Seller
has heretofore delivered to Buyer true and complete copies of the Articles of
Incorporation and Code of Regulations of Seller as in effect as of the date
hereof.
3.3 OWNERSHIP OF SELLER SUBSIDIARIES
Seller has Previously Disclosed the name, jurisdiction of incorporation
and percentage ownership of each direct or indirect Seller Subsidiary, and
Seller Bank is its only Significant Subsidiary. Except for (x) capital stock of
Seller Subsidiaries, (y) securities and other interests held in a fiduciary
capacity and beneficially owned by third parties or taken in consideration of
debts previously contracted and (z) securities and other interests which are
Previously Disclosed, Seller does not own or have the right to acquire, directly
or indirectly, any outstanding capital stock or other voting securities or
ownership interests of any corporation, bank, savings association, partnership,
joint venture or other organization, other than investment securities
representing not more than 5% of any entity. The outstanding shares of capital
stock or other ownership interests of each Seller Subsidiary have been duly
authorized and validly issued, are fully paid and nonassessable, and are owned
by Seller free and clear of all liens, claims, encumbrances, charges, pledges,
restrictions or rights of third parties of any kind whatsoever. No rights are
authorized, issued or outstanding with respect to the capital stock or other
ownership interests of Seller Subsidiaries and there are no agreements,
understandings or commitments relating to the right of Seller to vote or to
dispose of such capital stock or other ownership interests.
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3.4 ORGANIZATION, STANDING AND AUTHORITY OF SELLER SUBSIDIARIES
Each of the Seller Subsidiaries is a savings association, corporation
or partnership duly organized, validly existing and in good standing under the
laws of the jurisdiction in which it is organized with full power and authority
to own or lease all of its properties and assets and to carry on its business as
now conducted, and each of the Seller Subsidiaries is duly licensed or qualified
to do business and is in good standing in each jurisdiction in which its
ownership or leasing of property or the conduct of its business requires such
licensing or qualification, except to the extent that failure to be licensed or
qualified would not have a Material Adverse Effect. The deposit accounts of
Seller Bank are insured by the SAIF to the maximum extent permitted by the FDIA
and Seller Bank has paid all deposit insurance premiums and assessments required
by the FDIA and the regulations thereunder. Seller has heretofore delivered to
Buyer true and complete copies of the Articles of Incorporation, as amended and
restated, and Constitution of Seller Bank as in effect as of the date hereof.
3.5 AUTHORIZED AND EFFECTIVE AGREEMENT
(a) Seller has all requisite power and authority to enter into this
Agreement and (subject to receipt of all necessary governmental approvals and
the approval of Seller's shareholders of this Agreement) to perform all of its
respective obligations hereunder. The execution and delivery of this Agreement
and the completion of the transactions contemplated hereby have been approved by
the Boards of Directors of Seller and Seller Bank and duly authorized and
approved by all necessary corporate action in respect thereof on the part of
Seller and Seller Bank, except for the approval of this Agreement by Seller's
shareholders and Seller as the sole shareholder of Seller Bank. This Agreement
has been duly and validly executed and delivered by Seller and Seller Bank and,
assuming due authorization, execution and delivery by Buyer and Buyer Bank,
constitutes a legal, valid and binding obligation of Seller and Seller Bank,
enforceable against Seller and Seller Bank in accordance with its terms,
subject, as to enforceability, to bankruptcy, insolvency and other laws of
general applicability relating to or affecting creditors' rights and to general
equity principles, and 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.
(b) Neither the execution and delivery of this Agreement nor completion
of the transactions contemplated hereby, nor compliance by Seller with any of
the provisions hereof (i) does or will conflict with or result in a breach of
any provisions of the Articles of Incorporation or Code of Regulations of Seller
or the equivalent documents of any Seller Subsidiary, (ii) violate, conflict
with or result in a breach of any term, condition or provision of, or constitute
a default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or give rise to any right of termination,
cancellation or acceleration with respect to, or result in the creation of any
lien, charge or encumbrance upon any property or asset of Seller or any Seller
Subsidiary pursuant to, any material note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument or obligation to which
Seller or any Seller Subsidiary is a party, or by which any of their respective
properties or assets may be bound or affected, or (iii) subject to receipt of
all required governmental and shareholder approvals, violates any order, writ,
injunction, decree, statute, rule or regulation applicable to Seller or any
Seller Subsidiary.
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(c) To the best knowledge of Seller, except for (i) the filing of
applications and notices with and the approvals of the OTS and the Division,
(ii) the filing and clearance of the Proxy Statement relating to the meeting of
shareholders of Seller to be held pursuant to Section 5.2 hereof with the SEC,
(iii) the adoption of this Agreement and the approval of the Merger by the
requisite vote of the shareholders of Seller and Seller Bank, (iv) the filing of
the Certificate of Merger with the Secretary of State of Ohio in connection with
the Corporate Merger, (v) the filing of certificate of merger with the Secretary
of State of Ohio in connection with Company Merger; (vi) the filing of a
certificate of merger with the Division and the Secretary of State of Ohio in
connection with the Bank Merger, and (vii) review of the Merger by the DOJ under
federal antitrust laws, no consents or approvals of or filings or registrations
with any Governmental Entity or with any third party are necessary on the part
of Seller or Seller Bank in connection with (x) the execution and delivery by
Seller of this Agreement, or (y) the completion of the Merger.
(d) Except as Previously Disclosed, as of the date hereof, neither
Seller nor Seller Bank is aware of any reasons relating to Seller or Seller Bank
(including CRA compliance) why all consents and approvals shall not be procured
from all Governmental Entities having jurisdiction over the Merger as shall be
necessary for the completion of the Merger and the continuation by Buyer after
the Effective Time of the business of each of Seller and Seller Bank,
respectively, as such business is carried on immediately prior to the Effective
Time, free of any conditions or requirements which could materially impair the
value of Seller or Seller Bank to Buyer.
3.6 SECURITIES DOCUMENTS AND REGULATORY REPORTS
(a) Since January 1, 1997, Seller has timely filed with the SEC and the
NASD all Securities Documents required by the Securities Laws and such
Securities Documents complied in all material respects with the Securities Laws
and did not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(b) Since January 1, 1997, each of Seller and Seller Bank has duly
filed with the OTS and any other applicable federal or state banking authority,
as the case may be, the reports required to be filed under applicable laws and
regulations and such reports were in all material respects complete and accurate
and in compliance with the requirements of applicable laws and regulations. In
connection with the most recent examinations of Seller and Seller Bank by the
OTS and the Division, neither Seller nor Seller Bank was required to correct or
change any action, procedure or proceeding which Seller or Seller Bank believes
has not been corrected or changed as required.
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3.7 FINANCIAL STATEMENTS
(a) Seller has previously delivered or made available to Buyer accurate
and complete copies of the Seller Financial Statements, which are accompanied by
the audit reports of Crowe, Chizek and Company, LLP, independent certified
public accountants with respect to Seller. The Seller Financial Statements, as
well as the Seller Financial Statements to be delivered pursuant to Section 5.8
hereof, fairly present or will fairly present, as the case may be, the
consolidated financial condition of Seller as of the respective dates set forth
therein, and the consolidated income, changes in shareholders' equity and cash
flows of Seller for the respective periods or as of the respective dates set
forth therein.
(b) Each of the Seller Financial Statements referred to in Section
3.7(a) has been or will be, as the case may be, prepared in accordance with GAAP
consistently applied during the periods involved, except as stated therein. The
audits of Seller have been conducted in all material respects in accordance with
generally accepted auditing standards. The books and records of Seller and the
Seller Subsidiaries are being maintained in compliance with applicable legal and
accounting requirements, and such books and records accurately reflect all
dealings and transactions in respect of the business, assets, liabilities and
affairs of Seller and its Subsidiaries.
(c) Except and to the extent (i) reflected, disclosed or provided for
in the Seller Financial Statements, (ii) of liabilities since incurred in the
ordinary course of business and (iii) of liabilities incurred in connection with
completion of the transactions contemplated by this Agreement, neither Seller
nor any Seller Subsidiary has any liabilities, whether absolute, accrued,
contingent or otherwise.
3.8 MATERIAL ADVERSE CHANGE
Since December 31, 1999 or as Previously Disclosed, (i) Seller and its
Subsidiaries have conducted their respective businesses in the ordinary and
usual course (excluding the incurrence of expenses in connection with this
Agreement and the transactions contemplated hereby) and (ii) no event has
occurred or circumstance arisen that, in the aggregate, has had or is reasonably
likely to have a Material Adverse Effect on Seller.
3.9 ENVIRONMENTAL MATTERS
(a) To the best of Seller's knowledge, Seller and its Subsidiaries are
in compliance with all Environmental Laws. Neither Seller nor any Seller
Subsidiary has received any communication alleging that Seller or any Seller
Subsidiary is not in such compliance and, to the best knowledge of Seller, there
are no present circumstances that would prevent or interfere with the
continuation of such compliance.
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(b) To the best of Seller's knowledge, none of the properties owned,
leased or operated by Seller or a Seller Subsidiary has been or is in violation
of or liable under any Environmental Law.
(c) To the best of Seller's knowledge, there are no past or present
actions, activities, circumstances, conditions, events or incidents that could
reasonably form the basis of any Environmental Claim or other claim or action or
governmental investigation that could result in the imposition of any liability
arising under any Environmental Law against Seller or a Seller Subsidiary or
against any person or entity whose liability for any Environmental Claim Seller
or a Seller Subsidiary has or may have retained or assumed either contractually
or by operation of law.
(d) Except in the ordinary course of its loan underwriting activities,
and except as Previously Disclosed, Seller has not conducted any environmental
studies during the past five years with respect to any properties owned by it or
a Seller Subsidiary as of the date hereof.
3.10 TAX MATTERS
(a) Seller and its Subsidiaries have timely filed all federal, state
and local (and, if applicable, foreign) income, franchise, bank, excise, real
property, personal property and other tax returns required by applicable law to
be filed by them (including estimated tax returns, income tax returns,
information returns and withholding and employment tax returns) and have paid,
or where payment is not required to have been made, have set up an adequate
reserve or accrual for the payment of, all taxes required to be paid in respect
of the periods covered by such returns and, as of the Effective Time, will have
paid, or where payment is not required to have been made, will have set up an
adequate reserve or accrual for the payment of, all material taxes for any
subsequent periods ending on or prior to the Effective Time. Neither Seller nor
any Seller Subsidiary will have any material liability for any such taxes in
excess of the amounts so paid or reserves or accruals so established.
(b) All federal, state and local (and, if applicable, foreign) income,
franchise, bank, excise, real property, personal property and other tax returns
filed by Seller and its Subsidiaries are complete and accurate in all material
respects. Neither Seller nor any Seller Subsidiary is delinquent in the payment
of any tax, assessment or governmental charge or has requested any extension of
time within which to file any tax returns in respect of any fiscal year or
portion thereof. The federal, state and local income tax returns of Seller and
its Subsidiaries have been audited by the applicable tax authorities for all
periods ended through December 31, 1996 (or are closed to examination due to the
expiration of the applicable statute of limitations) and no deficiencies for any
tax, assessment or governmental charge have been proposed, asserted or assessed
(tentatively or otherwise) against Seller or any Subsidiary as a result of such
audits or otherwise which have not been settled and paid. There are currently no
agreements in effect with respect to Seller or any Seller Subsidiary to extend
the period of limitations for the assessment or collection of any tax. As of the
date hereof, no audit, examination or deficiency or refund litigation with
respect to any such return is pending or, to the best of Seller's knowledge,
threatened.
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(c) Neither Seller nor any Seller Subsidiary (i) is a party to any
agreement providing for the allocation or sharing of taxes other than the
agreement between Seller and Seller Bank Previously Disclosed, (ii) is required
to include in income any adjustment pursuant to Section 481(a) of the Code by
reason of a voluntary change in accounting method initiated by Seller or any
Seller Subsidiary (nor does Seller have any knowledge that the IRS has proposed
any such adjustment or change of accounting method) or (iii) has filed a consent
pursuant to Section 341(f) of the Code or agreed to have Section 341(f)(2) of
the Code apply.
3.11 LEGAL PROCEEDINGS
Except as Previously Disclosed, there are no actions, suits, claims,
governmental investigations or proceedings instituted, pending or, to the best
knowledge of Seller, that are threatened against Seller or any of its
Subsidiaries or against any asset, interest or right of Seller or any of its
Subsidiaries, or, to the knowledge of Seller against any officer, director or
employee of any of them. Neither Seller nor any Seller Subsidiary is a party to
any order, judgment or decree that would have a Material Adverse Effect.
3.12 COMPLIANCE WITH LAWS
(a) Each of Seller and the Seller Subsidiaries has all permits,
licenses, certificates of authority, orders and approvals of, and has made all
filings, applications and registrations with, all Governmental Entities that are
required in order to permit it to carry on its business as it is presently being
conducted; all such permits, licenses, certificates of authority, orders and
approvals are in full force and effect and will not be adversely affected by
virtue of the completion of the Merger; and to the best knowledge of Seller, no
suspension or cancellation of any of the same is threatened.
(b) Except as Previously Disclosed, neither Seller nor any Seller
Subsidiary is in violation of its respective Articles of Incorporation, Charter,
Code of Regulations or Bylaws, or of any applicable federal, state or local law
or ordinance or any order, rule or regulation of any Governmental Entity
(including all banking (including all regulatory capital requirements),
truth-in-lending, usury, fair credit reporting, consumer protection, securities,
safety, health, anti-discrimination, antitrust, and wage and hour laws,
ordinances, orders, rules and regulations), or in default with respect to any
order, writ, injunction or decree of any court, or in default under any order,
license, regulation or demand of any Governmental Entity; and neither Seller nor
any Seller Subsidiary has received any notice or communication from any
Governmental Entity asserting that Seller or any Seller Subsidiary is in
violation of any of the foregoing. Neither Seller nor any Seller Subsidiary is
subject to any regulatory or supervisory cease and desist order, agreement,
written directive, memorandum of understanding or written commitment (other than
those of general applicability to savings associations or holding companies
thereof issued by Governmental Entities), and neither of them has received any
written communication requesting that it enter into any of the foregoing.
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3.13 CERTAIN INFORMATION
None of the information relating to Seller and its Subsidiaries in the
Proxy Statement, as of the date such Proxy Statement is mailed to shareholders
of Seller and up to and including the date of the meeting of shareholders to
which such Proxy Statement relates, will 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, provided that information as of a later date shall be deemed to
modify information as of an earlier date.
3.14 EMPLOYEE BENEFIT PLANS
(a) Seller has Previously Disclosed all Seller Employee Plans and has
heretofore delivered to Buyer accurate and complete copies of each (including
amendments and agreements relating thereto) together with, in the case of
tax-qualified plans, (i) the most recent financial reports prepared with respect
thereto, (ii) the most recent annual reports filed with any Governmental Entity
with respect thereto, and (iii) all rulings and determination letters and any
open requests for rulings or letters that pertain thereto.
(b) Neither Seller nor any Seller Subsidiary has maintained a defined
benefit pension plan, as defined in ERISA ss.3(35), since 1995, and any such
defined pension plans maintained before that date have been terminated and
liquidated in compliance with procedures imposed by the Code and ERISA. Seller
has furnished Buyer with applicable letters from the IRS and the PBGC.
(c) Neither Seller nor any Seller Subsidiary participates in or has
incurred any liability under Section 4201 of ERISA for a complete or partial
withdrawal from a multi-employer plan (as such term is defined in ERISA).
(d) A favorable determination letter has been issued by the IRS with
respect to each Seller Defined Benefit Plan or Seller Employee Plans, including
Seller ESOP, which is intended to qualify under Section 401 of the Code to the
effect that such Seller Defined Benefit Plan and Seller Employee Plans,
including Seller ESOP, included all applicable provisions required by ERISA and
the Code to be included in the plan and trust documents and that the trust
associated with such Seller Employee Plans, including Seller ESOP, is tax exempt
under Section 501 of the Code. No such letter has been revoked or, to the best
of Seller's knowledge, is threatened to be revoked, and Seller does not know of
any ground on which such revocation would likely occur . Neither Seller nor any
Seller Subsidiary has any liability under any such Seller Employee Plans,
including Seller ESOP, that is not reflected in the Seller Financial Statements,
other than liabilities incurred in the ordinary course of business in connection
therewith subsequent to the date thereof.
(e) No transaction prohibited by Section 406 of ERISA (and not exempt
under Section 408 of ERISA or Section 4975 of the Code) has occurred with
respect to any Seller Employee Plan which would result in the imposition,
directly or indirectly, of an excise tax under Section 4975 of the Code or
otherwise have a Material Adverse Effect on Seller.
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(f) Full payment has been made (or proper accruals have been
established) of all contributions which are required for periods prior to the
date hereof, and full payment will be so made (or proper accruals will be so
established) of all contributions which are required for periods after the date
hereof and prior to the Effective Time, under the terms of each Seller Employee
Plan or ERISA.
(g) The Seller Employee Plans have been operated in compliance in all
material respects with the applicable provisions of ERISA, the Code, all
regulations, rulings and announcements promulgated or issued thereunder and all
other applicable governmental laws and regulations. All contributions required
to be made to Seller Employee Plans at the date hereof have been made, and all
contributions required to be made to Seller Employee Plans as of the Effective
Time will have been made as of such date.
(h) There are no pending or, to the best knowledge of Seller,
threatened claims (other than routine claims for benefits) by, on behalf of or
against any of Seller Employee Plans or any trust related thereto or any
fiduciary thereof.
(i) Neither Seller nor any Seller Subsidiary has made any payments, or
is or has been a party to any agreement or any Seller Employee Plan, that under
any circumstances could obligate it or its successor to make payments or deemed
payments, that (i) are not or will not be deductible because of Sections 162(m)
or 280G of the Code or (ii) require Buyer or any Buyer Subsidiary to record any
charge or expense therefor (or any tax gross-up payments) for financial
reporting purposes on a post-acquisition basis.
3.15 CERTAIN CONTRACTS
(a) Except as Previously Disclosed, neither Seller nor any Seller
Subsidiary is a party to, is bound or affected by, receives, or is obligated to
pay, benefits under (i) any agreement, arrangement or commitment, including any
agreement, indenture or other instrument, relating to the borrowing of money by
Seller or a Seller Subsidiary (other than in the case of Seller Bank deposits,
FHLB advances, federal funds purchased and securities sold under agreements to
repurchase in the ordinary course of business) or the guarantee by Seller or a
Seller Subsidiary of any obligation, other than by Seller Bank in the ordinary
course of its banking business, (ii) any agreement, arrangement or commitment
relating to the employment of a consultant or the employment, election or
retention in office of any present or former director, officer or employee of
Seller or a Seller Subsidiary, (iii) any agreement, arrangement or understanding
(other than as set forth in this Agreement) pursuant to which any payment
(whether of severance pay or otherwise) became or may become due to any
director, officer or employee of Seller or a Seller Subsidiary upon execution of
this Agreement or upon or following completion of the transactions contemplated
by this Agreement (either alone or in connection with the occurrence of any
additional acts or events); (iv) any agreement, arrangement or understanding
pursuant to which Seller or a Seller Subsidiary is obligated to indemnify any
director, officer, employee or agent of Seller or a Seller Subsidiary, other
than as set forth in Seller Employee Plans and in the Articles of Incorporation,
Code of Regulations, Bylaws or other governing documents of Seller and its
Subsidiaries; (v) any agreement, arrangement or understanding to which Seller or
a Seller Subsidiary is a party or by which any of the same is bound which limits
the freedom of Seller or a Seller Subsidiary to compete in any line of business
or with any person; (vi) any assistance
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agreement, supervisory agreement, memorandum of understanding, consent order,
cease and desist order or condition of any regulatory order or decree with or by
the OTS, the FDIC, the Division, or any other regulatory agency (other than
those of general applicability to savings associations or holding companies
thereof issued by Governmental Entities); or (vii) any agreement, arrangement or
understanding which would be required to be filed as an exhibit to Seller's
Annual Report on Form 10-K under the Exchange Act and which has not been so
filed.
(b) Neither Seller nor any Seller Subsidiary is in default or in
non-compliance under any contract, agreement, commitment, arrangement, lease,
insurance policy or other instrument to which it is a party or by which its
assets, business or operations may be bound or affected, whether entered into in
the ordinary course of business or otherwise and whether written or oral, and
there has not occurred any event that with the lapse of time or the giving of
notice, or both, would constitute such a default or non-compliance.
3.16 BROKERS AND FINDERS
Except for the agreement with Trident Securities, a division of
McDonald Investments ("Trident"), neither Seller nor any Seller Subsidiary nor
any of their respective directors, officers or employees, has employed any
broker or finder or incurred any liability for any broker or finder fees or
commissions in connection with the transactions contemplated hereby.
3.17 INSURANCE
Each of Seller and its Subsidiaries is insured for reasonable amounts
with financially sound and reputable insurance companies against such risks as
companies engaged in a similar business would, in accordance with good business
practice, customarily be insured and has maintained all insurance required by
applicable laws and regulations.
3.18 PROPERTIES
All real and personal property owned by Seller or its Subsidiaries or
presently used by any of them in its respective business is in good condition
(ordinary wear and tear excepted) and is sufficient to carry on the business of
Seller and its Subsidiaries in the ordinary course of business consistent with
their past practices. Seller has good and marketable title free and clear of all
liens, encumbrances, charges, defaults or equities (other than equities of
redemption under applicable foreclosure laws) to all of its properties and
assets, real and personal, except (i) liens for current taxes not yet due or
payable, (ii) pledges to secure deposits and other liens incurred in the
ordinary course of its banking business, (iii) such imperfections of title,
easements and encumbrances, if any, as are de minimis in character, amount or
extent and (iv) as reflected in the Seller Financial Statements. All real and
personal property which is material to Seller's business on a consolidated basis
and leased or licensed by Seller or a Subsidiary is held pursuant to leases or
licenses which are valid and enforceable in accordance with their respective
terms and, except as Previously Disclosed, such leases will not terminate or
lapse prior to the Effective Time. To the
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best knowledge of Seller, all improved real property owned by Seller or its
Subsidiaries is in compliance with all applicable zoning laws.
3.19 LABOR
No work stoppage involving Seller or a Seller Subsidiary is pending or,
to the best knowledge of Seller, threatened. Neither Seller nor a Seller
Subsidiary is involved in or, to the best knowledge of Seller, threatened with
or affected by, any labor dispute, arbitration, lawsuit or administrative
proceeding involving the employees of Seller or a Subsidiary. Employees of
Seller and Seller Subsidiaries are not represented by any labor union nor are
any collective bargaining agreements otherwise in effect with respect to such
employees, and to the best of Seller's knowledge, there have been no efforts to
unionize or organize any employees of Seller or any Seller Subsidiaries during
the past five years.
3.20 ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses reflected on Seller's consolidated
statement of financial condition included in the Seller Financial Statements is,
and will be in the case of subsequently delivered Seller Financial Statements,
in the opinion of Seller's management, adequate in all material respects as of
their respective dates under the requirements of GAAP to provide for reasonably
anticipated losses on outstanding loans, net of recoveries. The real estate
owned reflected in the Seller Financial Statements is, and will be in the case
of subsequently delivered Seller Financial Statements, carried at the lower of
cost or fair value, less estimated costs to sell, as required by GAAP.
3.21 YEAR 2000 COMPLIANT
All hardware, firmware, software and computer systems of Seller and its
Subsidiaries are Year 2000 Compliant.
3.22 MATERIAL INTERESTS OF CERTAIN PERSONS
(a) Except as Previously Disclosed, no officer or director of Seller,
any Seller Subsidiary or any "associate" (as such term is defined in Rule 14a-1
under the Exchange Act) or related interest of any such person has any material
interest in any material contract or property (real or personal, tangible or
intangible), used in, or pertaining to, the business of Seller or any Subsidiary
of Seller.
(b) Except as Previously Disclosed, there are no Insider Loans as of
the date hereof.
3.23 FAIRNESS OPINION
Seller has received an oral opinion of Trident and expects to receive a
written opinion from Trident on or before December 12, 2000 both to the effect
that, as of the date hereof, the Per Share Merger Consideration to be received
by shareholders of Seller pursuant to this Agreement is fair, from a financial
point of view, to such shareholders.
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3.24 DISCLOSURES
None of the representations and warranties of Seller or any of the
written information or documents furnished or to be furnished by Seller to Buyer
in connection with or pursuant to this Agreement or the completion of the
transactions contemplated hereby, when considered as a whole, contains or will
contain any untrue statement of a material fact, or omits or will omit to state
any material fact required to be stated or necessary to make any such
information or document, in light of the circumstances, not misleading.
3.25 NO UNDISCLOSED LIABILITIES
Seller and its Subsidiaries do not have any liability, whether known or
unknown, whether asserted or unasserted, whether absolute or contingent, whether
accrued or unaccrued, whether liquidated or unliquidated, and whether due or to
become due, including any liability for taxes (and there is no past or present
fact, situation, circumstance, condition or other basis for any present or
future action, suit or proceeding, hearing, charge, complaint, claim or demand
against Seller or its Subsidiaries giving rise to any such liability) required
in accordance with generally accepted accounting principles to be reflected in
an audited consolidated balance sheet of Seller, except and to the extent (i)
reflected, disclosed or provided for in the Seller Financial Statements, (ii) of
liabilities since incurred in the ordinary course of business and (iii) of
liabilities incurred in connection with completion of the transactions
contemplated by this Agreement.
3.26 LOAN PORTFOLIO
(i) All loans and discounts shown on the Seller Financial Statements or
which were entered into after the date of the most recent balance sheet included
in the Seller Financial Statements were and shall be made for good, valuable and
adequate consideration in the ordinary course of the business of Seller and its
Subsidiaries, in accordance with sound banking practices, and are not subject to
any known defenses, set-offs or counter-claims, including any such as are
afforded by usury or truth in lending laws, except as may be provided by
bankruptcy, solvency or similar laws or by general principles of equity, (ii)
the notes or other evidence of indebtedness evidencing such loans and all forms
of pledges, mortgages and other collateral documents and security agreements are
valid, true and genuine and what they purport to be, and (iii) except as
Previously Disclosed, Seller and its Subsidiaries have complied and shall prior
to the Effective Time comply with all laws and regulations relating to such
loans.
3.27 INVESTMENT PORTFOLIO
All investment securities held by Seller or its Subsidiaries, as
reflected in the consolidated balance sheets of Seller included in the Seller
Financial Statements, are carried in accordance with GAAP, specifically
including but not limited to, Financial Accounting Standard 115.
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3.28 INTEREST RATE RISK MANAGEMENT INSTRUMENTS
Seller has Previously Disclosed all interest rate swaps, caps, floors,
option agreements or other interest rate risk management arrangements or
agreements. All such arrangements and agreements were entered into in the
ordinary course of business and in accordance with prudent banking practice and
applicable rules, regulations and policies and with counter parties believed to
be financially responsible at the time and are legal, valid and binding
obligations of Seller or one of its Subsidiaries in force in accordance with
their terms (subject to the provisions of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or similar laws effecting the
enforceability of creditors rights generally from time to time and effect, and
equitable principles relating to the granting of specific performance and other
equitable remedies as a matter of judicial discretion), and are in full force
and effect. Seller and its Subsidiaries have duly performed all of their
obligations thereunder to the extent that such obligations to perform have
accrued; and, to Seller's knowledge, there are no breaches, violations or
defaults or allegations or assertions of such by any party thereunder.
3.29 INTERIM EVENTS
Since December 31, 1999, except as Previously Disclosed, neither Seller
nor its Subsidiaries have paid or declared any dividend or made any other
distribution to shareholders or taken any action which if taken after the date
hereof would require the prior written consent of Buyer pursuant to Section 5.6
hereof.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER AND BUYER BANK
Buyer and Buyer Bank, where appropriate, represent and warrant to
Seller as follows, except as Previously Disclosed:
4.1 ORGANIZATION, STANDING AND AUTHORITY OF BUYER
Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the State of Ohio, with full corporate power and
authority to own or lease all of its properties and assets and to carry on its
business as now conducted, and Buyer is duly licensed or qualified to do
business and is in good standing in each jurisdiction in which its ownership or
leasing of property or the conduct of its business requires such licensing or
qualification, except where the failure to be so licensed or qualified would not
have a Material Adverse Effect. Buyer is a savings and loan holding company
under the HOLA and subject to the regulation and supervision of the OTS and the
Division. Buyer has heretofore delivered to Seller true and complete copies of
the Articles of Incorporation and Code of Regulations of Buyer as in effect as
of the date hereof.
4.2 OWNERSHIP OF BUYER SUBSIDIARIES
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Buyer has Previously Disclosed the name, jurisdiction of incorporation
and percentage ownership of each direct or indirect Buyer Subsidiary and
identified Buyer Bank as its only Significant Subsidiary. The outstanding shares
of capital stock or other ownership interests of each Buyer Subsidiary have been
duly authorized and validly issued, are fully paid and nonassessable, and are
directly owned by Buyer free and clear of all liens, claims, encumbrances,
charges, pledges, restrictions or rights of third parties of any kind
whatsoever.
4.3 ORGANIZATION, STANDING AND AUTHORITY OF BUYER SUBSIDIARIES
Each of the Buyer Subsidiaries is a savings association, corporation or
partnership duly organized, validly existing and in good standing under the laws
of the jurisdiction in which it is organized, with full power and authority to
own or lease all of its properties and assets and to carry on its business as
now conducted, and each of the Buyer Subsidiaries is duly licensed or qualified
to do business and is in good standing in each jurisdiction in which its
ownership or leasing of property or the conduct of its business requires such
licensing or qualification. The deposit accounts of Buyer Bank are insured by
the FDIC to the maximum extent permitted by the FDIA and Buyer Bank has paid all
deposit insurance premiums and assessments required by the FDIA and the
regulations thereunder. Buyer has heretofore delivered to Seller true and
complete copies of the Articles of Incorporation and Code of Regulations of
Buyer Bank as in effect as of the date hereof.
4.4 AUTHORIZED AND EFFECTIVE AGREEMENT
(a) Buyer has all requisite power and authority to enter into this
Agreement and (subject to receipt of all necessary governmental approvals) to
perform all of its respective obligations hereunder. The execution and delivery
of this Agreement and the completion of the transactions contemplated hereby
have been deemed advisable by the Boards of Directors of Buyer and Buyer Bank
and duly authorized and approved by all necessary corporate action in respect
thereof on the part of Buyer and Buyer Bank. This Agreement has been duly and
validly executed and delivered by Buyer and, assuming due authorization,
execution and delivery by Seller and Seller Bank, constitutes a legal, valid and
binding obligation of Buyer and Buyer Bank, enforceable against Buyer and Buyer
Bank in accordance with its terms, subject, as to enforceability, to bankruptcy,
insolvency and other laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
(b) Neither the execution and delivery of this Agreement nor
completion of the transactions contemplated hereby, nor compliance by Buyer with
any of the provisions hereof (i) does or will conflict with or result in a
breach of any provisions of the Articles of Incorporation or Code of Regulations
of Buyer or the equivalent documents of any Buyer Subsidiary, (ii) violate,
conflict with or result in a breach of any term, condition or provision of, or
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or give rise to any right of termination,
cancellation or acceleration with respect to, or result in the creation of any
lien, charge or encumbrance upon any property or asset of Buyer or any Buyer
Subsidiary pursuant to, any material note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument or obligation to which
Buyer or any Buyer Subsidiary is a party, or by which any of their respective
properties or assets may be bound or affected, or (iii) subject to
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receipt of all required governmental approvals, violates any order, writ,
injunction, decree, statute, rule or regulation applicable to Buyer or any Buyer
Subsidiary.
(c) To the best knowledge of Buyer, except for (i) the filing of
applications and notices with and the approvals of the OTS and the Division,
(ii) the filing of the Certificate of Merger with the Secretary of State of Ohio
in connection with the Corporate Merger, (iii) the filing of a Certificate of
Merger with the Secretary of State of Ohio in connection with the Company
Merger, (iv) the filing of a certificate of merger with the Division and the
Secretary of State of Ohio in connection with the Bank Merger, and (v) review of
the Merger by the DOJ under federal antitrust laws, no consents or approvals of
or filings or registrations with any Governmental Entity or with any third party
are necessary on the part of Buyer, Merger Sub or Buyer Bank in connection with
(x) the execution and delivery by Buyer of this Agreement, and the completion of
the transactions contemplated hereby, or (y) the Merger.
(d) As of the date hereof, neither Buyer nor Buyer Bank is aware of any
reasons relating to Buyer or Buyer Bank (including CRA compliance) why all
consents and approvals shall not be procured from all Governmental Entities
having jurisdiction over the Merger as shall be necessary for completion of the
Merger and continuation by Buyer after the Effective Time of the business of
each of Seller and Seller Bank, respectively, as such business is carried on
immediately prior to the Effective Time, free of any conditions or requirements
which could impair the value of Seller or Seller Bank to Buyer.
4.5 SECURITIES DOCUMENTS AND REGULATORY REPORTS
(a) Since February 1998, Buyer has timely filed with the SEC and the
NASD all Securities Documents required by the Securities Laws and such
Securities Documents complied in all material respects with the Securities Laws
and did not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
(b) Each of Buyer and Buyer Bank has since January 1, 1997, duly filed
with the OTS and the Division and any other applicable federal or state banking
authority, as the case may be, the reports required to be filed under applicable
laws and regulations and such reports were in all material respects complete and
accurate and in compliance with the requirements of applicable laws and
regulations. In connection with the most recent examinations of Buyer and Buyer
Bank by the OTS, FDIC, and Division, neither Buyer nor Buyer Bank was required
to correct or change any action, procedure or proceeding which Buyer or Buyer
Bank believes has not been corrected or changed as required.
4.6 FINANCIAL STATEMENTS
(a) Buyer has previously delivered or made available to Seller
accurate and complete copies of the Buyer Financial Statements, which are
accompanied by the audit reports of Deloitte & Touche, LLP, independent
certified public accountants with respect to Buyer. The Buyer Financial
Statements, as well as the Buyer Financial Statements to be delivered pursuant
to Section 5.8 hereof, fairly present and will fairly present, as the case may
be, the consolidated
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financial condition of Buyer as of the respective dates set forth therein, and
the consolidated income, changes in equity and cash flows of Buyer for the
respective periods or as of the respective dates set forth therein.
(b) Each of the Buyer Financial Statements referred to in Section
4.4(a) has been or will be, as the case may be, prepared in accordance with GAAP
consistently applied during the periods involved, except as stated therein. The
audits of Buyer have been conducted in accordance with generally accepted
auditing standards. The books and records of Buyer and the Buyer Subsidiaries
are being maintained in compliance with applicable legal and accounting
requirements, and all such books and records accurately reflect all dealings and
transactions in respect of the business, assets, liabilities and affairs of
Buyer and its Subsidiaries.
(c) Except to the extent (i) reflected, disclosed or provided for in
the Buyer Financial Statements, (ii) of liabilities since incurred in the
ordinary course of business and (iii) of liabilities incurred in connection with
completion of the transaction contemplated by this Agreement, neither Buyer nor
any Buyer Subsidiary has any liabilities, whether absolute, accrued, contingent
or otherwise.
4.7 MATERIAL ADVERSE CHANGE
Since December 31, 1999, (i) Buyer and its Subsidiaries have conducted
their respective businesses in the ordinary and usual course (excluding the
incurrence of expenses in connection with this Agreement and the transactions
contemplated hereby) and (ii) no event has occurred or circumstance arisen that,
in the aggregate, has had or is reasonably likely to have a Material Adverse
Effect on Buyer.
4.8 LEGAL PROCEEDINGS
Except as Previously Disclosed, there are no actions, suits, claims,
governmental investigations or proceedings instituted, pending or, to the best
knowledge of Buyer, that are threatened against Buyer or any of its Subsidiaries
or against any asset, interest or right of Buyer or any of its Subsidiaries, or,
to the knowledge of Buyer, against any officer, director or employee of any of
them. Neither Buyer nor any Buyer Subsidiary is a party to any order, judgment
or decree that would have a Material Adverse Effect.
4.9 CERTAIN INFORMATION
None of the information relating to Buyer and its Subsidiaries supplied
or to be supplied by them for inclusion in the Proxy Statement, as of the date
such Proxy Statement is mailed to shareholders of Seller and up to and including
the date of the meeting of shareholders to which such Proxy Statement relates,
will 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, provided that information as of a
later date shall be deemed to modify information as of an earlier date.
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4.10 DISCLOSURES
None of the representations and warranties of Buyer or any of the
written information or documents furnished or to be furnished by Buyer to Seller
in connection with or pursuant to this Agreement or the completion of the
transactions contemplated hereby, when considered as a whole, contains or will
contain any untrue statement of a material fact, or omits or will omit to state
any material fact required to be stated or necessary to make any such
information or document, in light of the circumstances, not misleading.
4.11 FINANCIAL RESOURCES
Buyer and Buyer Bank have the financial wherewithal to perform their
respective obligations under this Agreement. Buyer and Buyer Bank are, and will
be immediately following the Merger, in material compliance with all applicable
capital, debt and financial and non-financial regulations of state and federal
banking agencies having jurisdiction over them.
ARTICLE V
COVENANTS
5.1 REASONABLE BEST EFFORTS
Subject to the terms and conditions of this Agreement, each of Seller
and Seller Bank and Buyer and Buyer Bank (i) shall use its reasonable best
efforts in good faith to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary or advisable under applicable laws and
regulations so as to permit and otherwise enable completion of the Merger as
promptly as reasonably practicable, and (ii) shall cooperate fully with each
other to that end.
5.2 SHAREHOLDER MEETING
Seller shall take all action necessary to prepare and file the Proxy
Statement within 45 days of the date of this Agreement and to properly call and
convene a meeting of its shareholders as soon as practicable after the date
hereof to consider and vote upon this Agreement and the transactions
contemplated hereby. Subject to the receipt of an updated fairness opinion from
Trident as of a date reasonably proximate to the date of the Proxy Statement,
the Board of Directors of Seller will recommend that the shareholders of Seller
approve this Agreement and the transactions contemplated hereby, provided that
the Board of Directors of Seller may fail to make such recommendation, or
withdraw, modify or change any such recommendation, if such Board of Directors,
after having consulted with and considered the advice of outside counsel, has
determined that the making of such recommendation, or the failure to withdraw,
modify or change such recommendation, would constitute a breach of the fiduciary
duties of such directors under applicable law.
5.3 REGULATORY MATTERS
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(a) Buyer shall promptly cooperate with Seller in the preparation and
filing of the Proxy Statement relating to the meeting of shareholders of Seller
to be held pursuant to Section 5.2 of this Agreement. Seller shall use its
reasonable best efforts to have the Proxy Statement approved for mailing in
definitive form as promptly as practicable and thereafter Seller shall promptly
mail to its shareholders the Proxy Statement.
(b) The parties hereto shall cooperate with each other and use their
reasonable best efforts to promptly prepare and file within 45 days after the
date hereof or as soon thereafter as is reasonably practicable, all necessary
documentation, to effect all applications, notices, petitions and filings, and
to obtain as promptly as practicable all permits, consents, approvals and
authorizations of all Governmental Entities and third parties which are
necessary or advisable to consummate the transactions contemplated by this
Agreement. Buyer and Seller shall have the right to review in advance, and to
the extent practicable each will consult with the other on, in each case subject
to applicable laws relating to the exchange of information, all the information
which appears in any filing made with or written materials submitted to any
third party or any Governmental Entity in connection with the transactions
contemplated by this Agreement. In exercising the foregoing right, each of the
parties hereto shall act reasonably and as promptly as practicable. The parties
hereto agree that they will consult with each other with respect to the
obtaining of all permits, consents, approvals and authorizations of all third
parties and Governmental Entities necessary or advisable to consummate the
transactions contemplated by this Agreement and each party will keep the other
apprised of the status of matters relating to completion of the transactions
contemplated herein. The parties hereto agree that they will use their
reasonable best efforts to cause the Closing Date to occur by June 30, 2001.
(c) Buyer and Seller shall, upon request, furnish each other with all
information concerning themselves, their respective Subsidiaries, directors and
officers, the shareholders of Seller and such other matters as may be reasonably
necessary or advisable in connection with any statement, filing, notice or
application made by or on behalf of Buyer, Buyer Bank, Merger Sub, Seller or
Seller Bank to any Governmental Entity in connection with the transactions
contemplated hereby.
(d) Buyer and Seller shall promptly furnish each other with copies of
written communications received by Buyer or Seller, as the case may be, or any
of their respective Subsidiaries from, or delivered by any of the foregoing to,
any Governmental Entity in respect of the transactions contemplated hereby.
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5.4 INVESTIGATION AND CONFIDENTIALITY
(a) The Seller shall permit the Buyer and its representatives
reasonable access to its properties and personnel, and shall disclose and make
available to the Buyer, upon the Buyer's reasonable request, all books, papers
and records relating to the assets, stock ownership, properties, operations,
obligations and liabilities of Seller and Seller Subsidiaries, including, but
not limited to, all books of account (including the general ledger), tax
records, minute books of meetings of boards of directors (and any committees
thereof) and shareholders, organizational documents, bylaws, material contracts
and agreements, filings with any regulatory authority, accountants' work papers,
litigation files, loan files, plans affecting employees, and any other business
activities or prospects in which the Buyer may have a reasonable interest,
provided that such access and any such reasonable request shall be reasonably
related to the transactions contemplated hereby and, in the reasonable opinion
of the Seller providing such access, not unduly interfere with normal operations
or constitute a waiver of the attorney-client privilege. The Seller and its
Subsidiaries shall make their respective directors, officers, employees and
agents and authorized representatives (including counsel and independent public
accountants) available to confer with the Buyer and its representatives,
provided that such access shall be reasonably related to the transactions
contemplated hereby and shall not unduly interfere with normal operations.
Representatives of Buyer or Buyer Bank shall be given notice of and shall be
entitled to attend meetings of the Boards of Directors of Seller and Seller Bank
after the date hereof, provided, that the Chairman of such meetings shall be
entitled to exclude such representatives of Buyer or Buyer Bank from discussions
at such meetings, if the Board of Directors determines, consistent with the
exercise of its fiduciary duties, that it is in the best interests of Seller and
its shareholder to exclude such representatives.
(b) All information furnished previously in connection with the
transactions contemplated by this Agreement or pursuant hereto shall be treated
as the sole property of the party furnishing the information until completion of
the Merger and, if the Merger shall not occur, the party receiving the
information shall either destroy or return to the party which furnished such
information all documents or other materials containing, reflecting or referring
to such information, shall use its best efforts to keep confidential all such
information, and shall not directly or indirectly use such information for any
competitive or other commercial purposes. The obligation to keep such
information confidential shall continue for five years from the date the
proposed transactions are abandoned but shall not apply to (i) any information
which (x) the party receiving the information can establish was already in its
possession prior to the disclosure thereof by the party furnishing the
information; (y) was then generally known to the public; or (z) became known to
the public through no fault of the party receiving the information; or (ii)
disclosures pursuant to a legal requirement or in accordance with an order of a
court of competent jurisdiction, provided that the party which is the subject of
any such legal requirement or order shall use its best efforts to give the other
party at least ten business days prior notice thereof.
5.5 PRESS RELEASES
Each of the Parties agrees it will not issue any press release related
to this Agreement or the Merger, without first consulting with the other parties
hereto as to the form and substance of public disclosures which may relate to
the Merger, provided, however, that nothing contained
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herein shall prohibit any party, following notification to the other parties,
from making any disclosure which is required by law or regulation.
5.6 BUSINESS OF THE PARTIES
(a) During the period from the date of this Agreement and continuing
until the Effective Time, except as expressly contemplated or permitted by this
Agreement or with the prior written consent of Buyer, which consent shall not be
unreasonably withheld, Seller and its Subsidiaries shall carry on their
respective businesses in the ordinary course consistent with past practice.
During such period, Seller also will use all reasonable efforts to (x) preserve
its business organization and that of Seller Bank intact, (y) keep available to
itself and Buyer the present services of the employees of Seller and Seller Bank
and (z) preserve for itself and Buyer the goodwill of the customers of Seller
and Seller Bank and others with whom business relationships exist. Without
limiting the generality of the foregoing, except with the prior written consent
of Buyer, which consent shall not be unreasonably withheld or as expressly
contemplated in Section 5.17, or any other section of this Agreement, between
the date hereof and the Effective Time, Seller shall not, and shall cause each
Seller Subsidiary not to:
(i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of Seller Common Stock, except for regular
quarterly cash dividends at a rate per share of Seller Common Stock not
in excess of $0.19 per share to be paid in accordance with past
practice; provided, however, that nothing contained herein shall be
deemed to affect the ability of a Subsidiary to pay dividends on its
capital stock to Seller;
(ii) issue any shares of its capital stock, other than upon
exercise of Seller Options referred to in Section 3.1 hereof; issue,
grant, modify or authorize any Rights; purchase any shares of Seller
Common Stock; or effect any recapitalization, reclassification, stock
dividend, stock split or like change in capitalization;
(iii) amend its Articles of Incorporation, Code of
Regulations, Bylaws or similar organizational documents, unless such
amendment shall be necessary to complete the Merger; impose, or suffer
the imposition, on any share of stock or other ownership interest held
by Seller in a Subsidiary of any lien, charge or encumbrance or permit
any such lien, charge or encumbrance to exist; or waive or release any
material right or cancel or compromise any material debt or claim;
(iv) increase the rate of compensation of any of its
directors, officers or employees, or pay or agree to pay any bonus or
severance to, or provide any other new employee benefit or incentive
to, any of its directors, officers or employees other than in the
ordinary course of business and in accordance with past practice, or
enter into or amend any employment or consulting agreement or extend
the term of or renew any existing employment or consulting agreement
including, without limitation, existing employment agreements with
David Windau, Stephan Beal and David Ball; ); provided, however, that
Seller may pay to eligible employees any
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amounts Previously Disclosed that Seller or Seller Bank has expensed in
the Seller Financial Statements for accrued but unused vacation through
December 31, 2000;
(v) enter into or, except as may be required by law and for
amendments contemplated by Section 5.11 hereof, modify any Seller
Employee Plan or other employee benefit, incentive or welfare contract,
plan or arrangement, or any trust agreement related thereto, in respect
of any of its directors, officers or employees provided, however, that
Seller or Seller Bank may amend the Seller Option Plan and the Seller
Management Recognition Plan to permit the acceleration of vesting of
awards under such plans in connection with the Merger; provided,
further, however, that Seller or Seller Bank may not make contributions
to the Seller ESOP (other than as required by law or regulation or in a
manner and amount accrued prior to the Effective Time and consistent
with past practices);
(vi) originate or purchase any loan in excess of $275,000 with
respect to loans secured by one- to four-family properties and in
excess of $500,000 with respect to loans secured by commercial
properties;
(vii) enter into (w) any transaction, agreement, arrangement
or commitment not made in the ordinary course of business, (x) any
agreement, indenture or other instrument relating to the borrowing of
money by Seller or a Seller Subsidiary or guarantee by Seller or any
Seller Subsidiary of any such obligation, except in the case of Seller
Bank for deposits, FHLB advances, federal funds purchased and
securities sold under agreements to repurchase in the ordinary course
of business consistent with past practice, (y) any agreement,
arrangement or commitment relating to the employment of an employee or
consultant, or amend any such existing agreement, arrangement or
commitment, provided that Seller and Seller Bank may employ an employee
in the ordinary course of business if the employment of such employee
is terminable by Seller or Seller Bank at will without liability, other
than as required by law; or (z) any contract, agreement or
understanding with a labor union;
(viii) change its method of accounting in effect for the year
ended December 31, 1999, except as required by changes in laws or
regulations or GAAP, or change any of its methods of reporting income
and deductions for federal income tax purposes from those employed in
the preparation of its federal income tax return for such year, except
as required by changes in laws or regulations;
(ix) except as Previously Disclosed, make any capital
expenditures in excess of $10,000 individually or $25,000 in the
aggregate, other than (a) in the ordinary course of business, (b) in
connection with the transactions contemplated by this Agreement, (c)
pursuant to binding commitments that have been Previously Disclosed and
are existing on the date hereof, and (d) expenditures necessary to
maintain existing assets in good repair; or, except as Previously
Disclosed, enter into any new lease or lease renewal of real property
or any new lease or lease renewal of personal property providing for
annual payments exceeding $5,000;
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(x) file any applications or make any contract with respect to
branching or site location or relocation;
(xi) acquire in any manner whatsoever (other than to realize
upon collateral for a defaulted loan) control over or any equity
interest in any business or entity;
(xii) enter or agree to enter into any agreement or
arrangement granting any preferential right to purchase any of its
assets or rights or requiring the consent of any party to the transfer
and assignment of any such assets or rights;
(xiii) except as necessitated in the reasonable opinion of
Seller due to changes in interest rates, and in accordance with safe
and sound banking practices, change or modify in any material respect
any of its lending or investment policies, except to the extent
required by law or an applicable regulatory authority;
(xiv) except as necessitated in the reasonable opinion of
Seller due to changes in interest rates, and in accordance with safe
and sound banking practices, enter into any futures contract, option
contract, interest rate caps, interest rate floors, interest rate
exchange agreement or other agreement for purposes of hedging the
exposure of its interest-earning assets and interest-bearing
liabilities to changes in market rates of interest;
(xv) take any action that would result in any of the
representations and warranties of Seller contained in this Agreement
not to be true and correct in any material respect at the Effective
Time or that would cause any of the conditions of Sections 6.1 or 6.3
hereof not to be satisfied;
(xvi) take any action that would materially impede or delay
the completion of the Merger or the ability of Buyer or Seller to
perform its covenants and agreements under this Agreement; or
(xvii) materially increase or decrease the rate of interest
paid on time deposits, or on certificates of deposit, except in a
manner and pursuant to policies consistent with past practices or to
reflect changes in market interest rates; or
(xviii) agree to do any of the foregoing.
(b) Seller shall promptly notify Buyer in writing of the occurrence of
any matter or event known to and directly involving Seller, which would not
include any changes in conditions that affect the banking industry generally,
that would have, either individually or in the aggregate, a Material Adverse
Effect on Seller.
(c) Except with the prior written consent of Seller or as expressly
contemplated hereby, between the date hereof and the Effective Time, Buyer shall
not, and shall cause each Buyer Subsidiary not to:
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(i) take any action that would result in any of the
representations and warranties of Buyer contained in this Agreement not
to be true and correct in any material respect at the Effective Time or
that would cause any of the conditions of Sections 6.1 or 6.2 hereof
not to be satisfied;
(ii) take any action that would materially impede or delay the
completion of the Merger or the ability of Buyer or Seller to perform
its covenants and agreements under this Agreement; or
(iii) agree to do any of the foregoing.
5.7 CERTAIN ACTIONS
Seller shall not, and shall cause each Seller Subsidiary not to,
solicit or encourage inquiries or proposals with respect to, furnish any
information relating to, or participate in any negotiations or discussions
concerning, any acquisition, purchase of all or a substantial portion of the
assets of, or any equity interest in, Seller or a Subsidiary (other than with
Buyer or an affiliate thereof), provided, however, that the Board of Directors
of Seller may furnish such information or participate in such negotiations or
discussions if such Board of Directors, after having consulted with and
considered the advice of outside counsel, has determined that the failure to do
the same may constitute a breach of fiduciary duties of such directors under
applicable law. Seller will promptly inform Buyer orally and in writing of any
such request for information or of any such negotiations or discussions, as well
as instruct its and its Subsidiaries' directors, officers, representatives and
agents to refrain from taking any action prohibited by this Section 5.7.
5.8 CURRENT INFORMATION
During the period from the date hereof to the Effective Time, Seller
shall, upon the request of Buyer, cause one or more of its designated
representatives to confer on a monthly or more frequent basis with
representatives of Buyer regarding Seller's financial condition, operations and
business and matters relating to the completion of the transactions contemplated
hereby. As soon as reasonably available, but in no event more than two business
days after filing, Seller will deliver to Buyer all reports filed by it under
the Exchange Act subsequent to the date hereof. Seller also will deliver to
Buyer each call report or similar report filed by it with the OTS or the
Division concurrently with the filing of such call report. Within 20 days after
the end of each month, Seller will deliver to Buyer an unaudited consolidated
balance sheet and an unaudited consolidated statement of income, without related
notes, for such month prepared in accordance with GAAP.
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5.9 INDEMNIFICATION; INSURANCE
(a) From and after the Effective Time, Buyer agrees for a period of
three years, to indemnify and hold harmless the past and present directors and
officers of Seller and its Subsidiaries (the "Indemnified Parties") for all acts
or omissions occurring at or prior to the Effective Time to the same extent such
persons are indemnified and held harmless under the respective Articles of
Incorporation, Constitution, Code of Regulations or Bylaws of Seller and its
Subsidiaries in the form in effect at the date of this Agreement. Without
limiting the foregoing, all limitations of liability existing in favor of the
Indemnified Parties in the Articles of Incorporation, Constitution, Code of
Regulations or Bylaws of Seller or any Seller Subsidiary as of the date hereof,
to the extent permissible under applicable law as of the date hereof, arising
out of matters existing or occurring at or prior to the Effective Time, shall
survive the Merger and shall continue in full force and effect.
(b) In the event that Buyer or any of its respective successors or
assigns (i) consolidates with or merges into any other person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers all or substantially all of its properties and assets
to any person, then, and in each such case the successors and assigns of such
entity shall assume the obligations set forth in this Section 5.9, which
obligations are expressly intended to be for the irrevocable benefit of, and
shall be enforceable by, each director and officer covered hereby.
(c) Buyer shall add a rider, to be effective at the Effective Time, to
its existing directors' and officers' liability insurance policy, or obtain
"tail coverage" under the existing directors' and officers' liability insurance
policy maintained by Seller at the Effective Time, covering the acts and
omissions of the officers and directors of Seller and Seller Bank occurring
prior to the Effective Time, and shall continue such coverage for a period of
three years after the Effective Time.
5.10 TRANSACTION EXPENSES OF SELLER
(a) For planning purposes, the Seller (as Previously Disclosed) has
provided Buyer with its estimated budget of transaction-related expenses
reasonably anticipated to be payable by the Seller in connection with the
Agreement based on facts and circumstances then currently known, including the
fees and expenses of counsel, accountants, investment bankers and other
professionals. The Seller shall promptly notify the Buyer if or when it
determines that it will expect to exceed its budget.
(b) Promptly after the execution of this Agreement, the Seller shall
ask all of its attorneys and other professionals to render current and correct
invoices for all unbilled time and disbursements within 30 days. The Seller
shall accrue and/or pay all of such amounts as soon as possible.
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(c) The Seller shall cause its professionals to render monthly invoices
within 30 days after the end of each month. The Seller shall advise the Buyer
monthly of all out-of-pocket expenses which the Seller has incurred in
connection with the Agreement.
(d) The Seller, in reasonable consultation with the Buyer, shall make
all arrangements with respect to the printing and mailing of the Proxy
Statement.
5.11 EMPLOYEES AND EMPLOYEE BENEFIT PLANS
(a) Employees of Seller or Seller Bank who remain employed by Buyer or
Buyer Bank will be eligible to participate in the Buyer's employee stock
ownership plan on January 1, 2003, or such earlier date required by Section
410(b)(6)(C) of the Code and applicable regulations ("Entry Date"), with credit
for years of service with Seller or any of its Subsidiaries for the purpose of
eligibility and vesting on and after the Entry Date (but not for the purpose of
accrual of benefits or allocation of employer contributions). Employees of
Seller or Seller Bank who remain employed by Buyer or Buyer Bank will be
eligible to participate in the Buyer's benefit plans, other than the Buyer's
employee stock ownership plan, on the earliest date permitted by such plan, with
credit for years of service with Seller or any of its Subsidiaries for the
purpose of eligibility and vesting (but not for the purpose of accrual of
benefits or allocation of employer contributions). Buyer shall use its best
efforts to cause any and all pre-existing condition limitations (to the extent
such limitations did not apply to a pre-existing condition under any Seller
Employee Plan) and eligibility waiting periods under group health plans to be
waived with respect to such participants and their eligible dependents.
(b) Buyer agrees to cause Buyer Bank to offer employment to Mr. David
M. Windau as an officer and a director of Buyer Bank and Mr. Stephan Beal as an
officer of Buyer Bank. Buyer will offer Mr. Windau an employment agreement in
the form attached hereto as Exhibit 5.11(b)-1 and will offer Mr. Beal an
employment agreement in the form attached hereto as Exhibit 5.11(b)-2.
(c) In the sole discretion of Buyer or a Buyer Subsidiary, as
applicable, payments made by it in full and complete satisfaction of obligations
of Seller or Seller Bank under any Seller Employee Plan or under Section 5.11(c)
shall be subject to the recipient's delivery to Buyer or a Buyer Subsidiary, as
applicable, of (i) a written acknowledgment signed by such recipient that the
payment or payments and benefits to be made to him or her is in full and
complete satisfaction of all liabilities and obligations thereunder of Seller,
Seller Bank, Buyer or any Buyer Subsidiary, and each of their respective
affiliates, directors, officers, employees and agents, and (ii) a release by
such recipient of all such parties from further liability in connection with the
particular Seller Employee Plan or this Agreement, as applicable.
(d) Subject to the Code and relevant regulations, (i) as soon as
practicable after the date of this Agreement, Seller will terminate its ESOP as
of the Effective Time contingent on completion of the transaction contemplated
in this Agreement, (ii) as soon as practicable Seller will submit an application
to the IRS requesting a determination letter to the effect that termination of
the ESOP as of the Effective Time (and subsequent liquidation of its assets)
will not adversely affect compliance of the ESOP with Section 401(a) of the Code
or the qualification
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of the ESOP's trust under Section 501(a) of the Code and (iii) as of the
Effective Time, or as soon as practicable thereafter, (A) the loan to the Seller
ESOP shall be repaid in full with the cash consideration received from Buyer for
the unallocated shares of Seller Common Stock held in the Seller ESOP and (B)
that remaining cash consideration will be allocated to participants' accounts as
provided in the ESOP, as amended. After the Effective Time, and while the
determination letter application described in Section 5.11(d)(ii) is pending,
the current administrator of the Seller ESOP, or another administrator selected
by Buyer (subject to consultation with Seller ESOP's then current trustee),
shall continue to administer the Seller ESOP subsequent to the Effective Time,
and the current Trustee of the Seller ESOP, or such other trustee(s) selected by
Buyer (subject to consultation with Seller ESOP's then current trustee) or the
administrators, shall continue to be the Trustee subsequent to the Effective
Time. The Parties agree that the Seller ESOP shall be amended to the extent
necessary to receive a favorable determination letter from the IRS as to the tax
qualified status of the Seller ESOP upon its termination under Section 401(a)
and 4975(e)(7) of the Code (the "Final Determination Letter"). Promptly
following the receipt of the Final Determination Letter, distributions of the
account balances under the Seller ESOP shall be made to the ESOP Participants.
From and after the date hereof, in anticipation of such termination and
distribution, Buyer and Seller prior to the Effective Time, and Buyer after the
Effective Time, shall use their best efforts to obtain the favorable Final
Determination Letter. In the event that Buyer and Seller, prior to the Effective
Time, and Buyer after the Effective Time, reasonably determine that the Seller
ESOP cannot obtain a favorable Final Determination Letter, or that the amounts
held therein cannot be applied, allocated or distributed without causing the
Seller ESOP to lose its tax qualified status, Seller prior to the Effective Time
and Buyer after the Effective Time shall take such action as they may reasonably
determine is necessary to preserve the tax status of the ESOP and its trust, the
tax characterization of distributions to ESOP Participants and the liquidation
of the ESOP's trust. All ESOP Participants shall fully vest and have a
nonforfeitable interest in their accounts under the Seller ESOP determined as of
the termination date.
5.12 COMPANY MERGER
Buyer and Seller shall take all necessary and appropriate actions to
make it possible for the Company Merger to be authorized, agreed to, and
accomplished immediately after the Corporate Merger, or at such other time as
may be determined by Buyer in its sole discretion.
5.13 BANK MERGER
Buyer and Seller shall take, and shall cause their Subsidiaries to
take, all necessary and appropriate actions to make it possible for the Bank
Merger to be authorized, agreed to, and accomplished immediately after the
Company Merger, or at such other time thereafter as may be determined by Buyer
in its sole discretion.
5.14 ORGANIZATION OF MERGER SUB
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Buyer shall cause Merger Sub to be organized under the OGCL as soon as
practicable hereafter. Following the organization, the Board of Directors of
Merger Sub shall approve this Agreement and the Plan of Corporate Merger and the
transactions contemplated hereby, whereupon Merger Sub shall become a party to,
and be bound by, this Agreement, and Buyer shall approve this Agreement in its
capacity as the sole stockholder of Merger Sub.
5.15 CONFORMING ENTRIES
(a) Seller recognizes that Buyer may have adopted different loan,
accrual and reserve policies (including loan classifications and levels of
reserves for possible loan losses). Subject to applicable laws, from and after
the date of this Agreement to the Effective Time, Seller and Buyer shall consult
and cooperate with each other with respect to conforming the loan, accrual and
reserve policies of Seller and the Seller Subsidiaries to those policies of
Buyer, as specified in each case in writing to Seller, based upon such
consultation and subject to the conditions in Section 5.15(c) below.
(b) Subject to applicable laws and regulations, Seller and Buyer shall
consult and cooperate with each other with respect to determining, as specified
in a written notice from Buyer to Seller, based upon such consultation and
subject to the conditions in Section 5.15(c) below, the amount and the timing
for recognizing for financial accounting purposes Seller's expenses of the
Merger and the restructuring charges relating to or to be incurred in connection
with the Merger.
(c) Subject to applicable laws and regulations, Seller shall (i)
establish and take such reserves and accruals at such time as Buyer shall
reasonably request to conform Seller's loan, accrual and reserve policies to
Buyer's policies, and (ii) establish and take such accruals, reserves and
charges in order to implement such policies and to recognize for financial
accounting purposes such expenses of the Merger and restructuring charges
related to or to be incurred in connection with the Merger, in each case at such
times as are reasonably requested by Buyer; provided, however, that on the date
such reserves, accruals and charges are to be taken, Buyer shall certify to
Seller that all conditions to Buyer's obligation to consummate the Merger set
forth in Sections 6.1 and 6.3 hereof (other than the delivery of certificates,
opinions and other instruments and documents to be delivered at the Closing or
otherwise to be dated at the Effective Time, the delivery of which shall
continue to be conditions to Buyer's obligation to consummate the Merger) have
been satisfied or waived; and provided, further, that Seller shall not be
required to take any such action that is not consistent with GAAP and regulatory
accounting principles.
(d) No reserves, accruals or charges taken in accordance with this
Section 5.15 may be a basis to assert a violation of a breach of a
representation, warranty or covenant of Seller herein.
5.16 INTEGRATION OF POLICIES
During the period from the date hereof to the Effective Time, Seller
and Seller Bank shall, and shall cause their directors, officers and employees
to, and shall make all reasonable efforts to cause their respective data
processing service providers to, cooperate and assist Buyer in connection with
preparation for an electronic and systematic conversion of all applicable data
regarding Seller to Buyer's system of electronic data processing; provided,
however, that no such conversion shall occur until the Effective Time. In
furtherance of the foregoing, Seller shall make
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reasonable arrangements during normal business hours to permit representatives
of Buyer to train Seller and Seller Bank employees in Buyer's system of
electronic data processing.
5.17 DISCLOSURE SUPPLEMENTS
From time to time prior to the Effective Time, each party shall
promptly supplement or amend any materials Previously Disclosed and delivered to
the other party pursuant hereto with respect to any matter hereafter arising
which, if existing, occurring or known at the date of this Agreement, would have
been required to be set forth or described in materials Previously Disclosed to
the other party or which is necessary to correct any information in such
materials which has been rendered materially inaccurate thereby; no such
supplement or amendment to such materials shall be deemed to have modified the
representations, warranties and covenants of the parties for the purpose of
determining whether the conditions set forth in Article VI hereof have been
satisfied.
5.18 FAILURE TO FULFILL CONDITIONS
In the event that either of the Parties hereto determines that a
condition to its respective obligations to consummate the transactions
contemplated may not be fulfilled on or prior to the termination of this
Agreement, it will promptly notify the other party. Each Party will promptly
inform the other Party of any facts applicable to it that would be likely to
prevent or materially delay approval of the Merger by any Governmental Entity or
third party or which would otherwise prevent or materially delay completion of
such transactions.
5.19 ENVIRONMENTAL REPORTS
Seller shall have furnished to Buyer before the date of this Agreement
any environmental reports related to any property owned or being used by Seller.
Buyer, at its sole discretion, may obtain, as soon as reasonably practical, but
not later than 45 days after the date hereof (or within ten days after the
acquisition or lease of any real property acquired or leased after the date
hereof), a report of a phase one environmental investigation on real property
owned or leased by Seller or its Subsidiaries (but excluding space in office or
retail and similar establishments leased by Seller or its subsidiaries for
automatic teller machines or bank branch facilities or other office uses where
the space leased comprises less than 20% of the total space leased to all
tenants of such property). If required by the phase one investigation in Buyer's
reasonable opinion, Seller shall provide to Buyer, within 40 days of the receipt
by Seller of the request of Buyer therefor, a report of a phase two
investigation on properties requiring such additional study. Buyer shall have 5
business days from the receipt of any such phase two investigation report to
notify Seller of any dissatisfaction with the contents of such report. Should
the cost of taking all remedial or other corrective actions and measures (i)
required by applicable law or reasonably likely to be required by applicable
law, or (ii) recommended or suggested by such report or reports or prudent in
light of serious life, health or safety concerns, in the aggregate, exceed the
sum of $250,000 but be less than $1,000,000 as reasonably estimated by an
environmental expert retained for such purpose by Buyer and reasonably
acceptable to Seller, or if the cost of such actions and measures cannot be so
reasonably estimated by such expert to be $250,000 or less with any reasonable
degree of certainty, then the Per Share Merger Consideration shall be reduced by
an amount equal to (a) the estimated cost of such remedial or corrective actions
divided by (b) the sum of (i) the number of
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issued and outstanding Seller Common Shares (excluding treasury shares) and (ii)
the Seller Options. If such remedial or other corrective actions and measures
are or can reasonably be estimated by such environmental expert to be less than
$250,000, then Buyer shall be obligated to consummate the Merger, subject to the
satisfaction of all other conditions to closing set forth herein, without a
reduction in the Per Share Merger Consideration. If such remedial or other
corrective actions and measures are or can reasonably be estimated by such
environmental expert to be in excess of $1,000,000, then Buyer or Seller, upon
providing not less than 10 business days' notice to the other party, shall have
the right to terminate this Agreement pursuant to Section 7.1 hereof. The costs
of the phase one and phase two investigations, if any, shall be borne by Buyer.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 CONDITIONS PRECEDENT - BUYER AND SELLER
The respective obligations of Buyer and Buyer Bank and Seller and
Seller Bank to effect the transactions contemplated hereby shall be subject to
satisfaction of the following conditions at or prior to the Effective Time.
(a) All corporate action necessary to authorize the execution and
delivery of this Agreement and completion of the Corporate Merger shall have
been duly and validly taken by Buyer, Buyer Bank, Merger Sub and Seller and
Seller Bank, including adoption of this Agreement by the requisite vote of the
shareholders of Seller and Seller as the sole shareholder of Seller Bank.
(b) All approvals and consents from any Governmental Entity the
approval or consent of which is required for the completion of the Corporate
Merger shall have been received and all statutory waiting periods in respect
thereof shall have expired; and Buyer, Buyer Bank, Seller and Seller Bank shall
have procured all other approvals, consents and waivers of each person (other
than the Governmental Entities referred to above) whose approval, consent or
waiver is necessary to the completion of the Corporate Merger and the failure of
which to obtain would have the effects set forth in the following proviso
clause; provided, however, that no approval or consent referred to in this
Section 6.1(b) shall be deemed to have been received if it shall include any
nonstandard condition or requirement that, in the aggregate, would so materially
reduce the economic or business benefits of the transactions contemplated by
this Agreement to Buyer that had such condition or requirement been known,
Buyer, in its reasonable judgment, would not have entered into this Agreement.
(c) None of Buyer, Buyer Bank, Merger Sub, Seller or Seller Bank shall
be subject to any statute, rule, regulation, injunction or other order or decree
which shall have been enacted, entered, promulgated or enforced by any
governmental or judicial authority which prohibits, restricts or makes illegal
completion of the Corporate Merger.
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(d) No proceeding initiated by any Governmental Entity seeking an
order, injunction or decree issued by any court or agency of competent
jurisdiction or other legal restraint or prohibition preventing the completion
of the Corporate Merger shall be pending.
6.2 CONDITIONS PRECEDENT - SELLER
The obligations of Seller to effect the transactions contemplated
hereby shall be subject to satisfaction of the following conditions at or prior
to the Effective Time unless waived by Seller pursuant to Section 7.4 hereof.
(a) The representations and warranties of Buyer set forth in Article IV
hereof shall be true and correct in all material respects as of the date of this
Agreement and as of the Closing Date as though made on and as of the Closing
Date, or on the date when made in the case of a representation and warranty
which specifically relates to an earlier date.
(b) Buyer shall have performed in all material respects all obligations
and complied with all covenants required to be performed and complied with by it
pursuant to this Agreement on or prior to the Effective Time.
(c) Buyer shall have delivered to Seller a certificate, dated the date
of the Closing and signed by its President and Chief Executive Officer and by
its Chief Financial Officer, to the effect that the conditions set forth in
Sections 6.2(a) and 6.2(b) have been satisfied.
(d) Buyer shall have furnished Seller with such certificates of its
officers or others and such other documents to evidence fulfillment of the
conditions set forth in Sections 6.1 and 6.2 as such conditions relate to Buyer
as Seller may reasonably request.
6.3 CONDITIONS PRECEDENT - BUYER
The obligations of Buyer to effect the transactions contemplated hereby
shall be subject to satisfaction of the following conditions at or prior to the
Effective Time unless waived by Buyer pursuant to Section 7.4 hereof.
(a) The representations and warranties of Seller set forth in Article
III hereof shall be true and correct in all material respects as of the date of
this Agreement and as of the Closing Date as though made on and as of the
Closing Date, or on the date when made in the case of a representation and
warranty which specifically relates to an earlier date.
(b) Seller shall have performed in all material respects all
obligations and complied with all covenants required to be performed and
complied with by it pursuant to this Agreement on or prior to the Effective
Time.
(c) Seller and Seller Bank each shall have delivered to Buyer a
certificate, dated the date of the Closing and signed by their respective
Presidents and by its Chief Financial Officers, to the effect that the
conditions set forth in Sections 6.3(a) and 6.3(b) have been satisfied.
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(d) Seller shall have furnished Buyer with such certificates of its
officers or others and such other documents to evidence fulfillment of the
conditions set forth in Sections 6.1 and 6.3 as such conditions relate to Seller
as Buyer may reasonably request.
(e) No more than 10% of the outstanding shares of Seller Common Stock
shall be Dissenting Shares.
(f) Seller shall have provided Buyer with an accounting of all merger
related expenses incurred by it through the Closing Date, including a good faith
estimate of such expenses incurred but as to which invoices have not been
submitted as of the Closing Date.
(g) Buyer Bank shall have entered into the employment agreements with
Messrs. Windau and Beal specified in Section 5.11(b) hereof.
(h) The Merger will not adversely affect Buyer's status as a unitary
savings and loan holding company or its powers and permissible activities under
the HOLA and the Ohio Revised Code. The Merger will not adversely affect the
Buyer Bank or other Buyer Subsidiaries with respect to their powers and
permissible activities under the HOLA and the Ohio Revised Code.
ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT
7.1 TERMINATION
This Agreement may be terminated:
(a) at any time on or prior to the Effective Time, by the mutual
consent in writing of the parties hereto;
(b) at any time on or prior to the Effective Time, by Buyer in writing
if Seller has, or by Seller in writing if Buyer has, breached any covenant or
undertaking contained herein or any representation or warranty contained herein,
unless such breach has been cured within 30 days after written notice of such
breach;
(c) at any time, by either Buyer or Seller in writing, (i) if any
application for prior approval of a Governmental Entity which is necessary to
consummate the Corporate Merger is denied or withdrawn at the request or
recommendation of the Governmental Entity which must grant such approval, unless
within the 25-day period following any such denial or withdrawal a petition for
rehearing or an amended application has been filed with the applicable
Governmental Entity, provided, however, that no party shall have the right to
terminate this Agreement pursuant
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to this Section 7(c)(i) if such denial or request or recommendation for
withdrawal shall be due to the failure of the party seeking to terminate this
Agreement to perform or observe the covenants and agreements of such party set
forth herein, or (ii) if any Governmental Entity of competent jurisdiction shall
have issued a final nonappealable order enjoining or otherwise prohibiting the
completion of the Corporate Merger;
(d) at any time, by either Buyer or Seller in writing, if the
shareholders of Seller do not approve this Agreement after a vote taken thereon
at a meeting duly called for such purpose (or at any adjournment thereof) unless
the failure of such occurrence shall be due to the failure of the party seeking
to terminate to perform or observe in any material respect its agreements set
forth herein to be performed or observed by such party at or before the
Effective Time; and
(e) by either Buyer or Seller in writing if the Effective Time has not
occurred by the close of business on July 31, 2001, provided that this right to
terminate shall not be available to any party whose failure to perform such
party's obligations under this Agreement has been the cause of, or resulted in,
the failure of the Corporate Merger to be consummated by such date.
(f) by Buyer or Seller to the extent provided by Section 5.19, by
giving timely written notice thereof to the other party.
For purposes of this Section 7.1, termination by Buyer also shall be
deemed to be termination on behalf of the Merger Sub.
7.2 EFFECT OF TERMINATION
(a) Except as set forth below, each of the Parties shall bear
and pay all costs and expenses incurred by it or on its behalf in connection
with the transactions contemplated hereunder including fees and expenses of its
own financial consultants, investment bankers, accountants and counsel, provided
that notwithstanding anything to the contrary contained in this Agreement,
neither Buyer nor Seller shall be released from any liabilities or damages
arising out of its willful breach of any provision of this Agreement.
(b) Seller and Seller Bank hereby agree that if this Agreement
is terminated as a result of a willful breach by Seller or Seller Bank, except
pursuant to Section 7.2(c) below, then Seller or Seller Bank shall promptly (and
in any event within ten (10) business days after such termination) pay all
reasonable expenses of Buyer and Buyer Bank in an amount not to exceed $500,000.
Buyer hereby agrees that if this Agreement is terminated as a result of a
willful breach by Buyer, then Buyer or Buyer Bank shall promptly (and in any
event within ten (10) business days after such termination) pay all reasonable
Expenses of Seller and Seller Bank in an amount not to exceed $500,000. For
purposes of this Section 7.2(b), the "Expenses" of a party shall include all
reasonable out-of-pocket expenses of that party (including all fees and expenses
of counsel, accountants, financial advisors, experts and consultants to that
party) incurred by it or on its behalf in connection with the consummation of
the transaction contemplated by this Agreement.
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(c) If this Agreement is terminated by the Buyer or Seller in
accordance with Section 7.1(d) and prior to such termination a Termination
Event, as defined in paragraph (d) of this Section 7.2, shall have occurred, the
Seller will upon demand pay to Buyer or Buyer Bank in immediately available
funds $4,000,000, inclusive of any other amounts that may otherwise be due and
payable in accordance with Section 7.2 hereunder; provided however, no such
payment shall be due or payable hereunder prior to the Seller and/or the Seller
Bank entering into a written definitive agreement with a third party with
respect to a Takeover Proposal or closing a transaction pursuant to a Takeover
Proposal. "Takeover Proposal" shall mean any proposal, other than as
contemplated by this Agreement, for a merger or other business combination
involving the Seller or any Seller Subsidiary or for the acquisition of a
twenty-five percent (25%) or greater equity interest in Seller or any Seller
Subsidiary, or for the purchase, lease or other acquisition of a substantial
portion of the assets of Seller or any Seller Subsidiary (other than loans or
securities sold in the ordinary course of business).
(d) For purposes of this Agreement, a Termination Event shall mean
either of the following:
(i) The Seller or any Seller Subsidiary, without having
received Buyer's prior written consent, shall have entered into a written
agreement to engage in a Takeover Proposal with any person (the term "person"
for purposes of this Agreement having the meaning assigned thereto in Sections
3(a)(9) and 13(d)(3) of the Exchange Act, and the rules and regulations
thereunder) other than Buyer or any affiliate of Buyer (the term "affiliate" for
purposes of this Agreement having the meaning assigned thereto in Rule 405 under
the Securities Act) or the Board of Directors of the Seller shall have
recommended that the shareholders of the Seller approve or accept any Takeover
Proposal with any person other than Buyer or any affiliate of Buyer; or
(ii) After a bona fide written proposal is made by any person
other than Buyer or any affiliate of Buyer to the Seller or its shareholders to
engage in a Takeover Proposal and is publicly disclosed, either (A) the Seller
shall have breached any covenant or obligation contained in this Agreement and
such breach would entitle Buyer to terminate this Agreement, or (B) the holders
of Seller Common Stock shall not have approved this Agreement at the Seller's
shareholder meeting described in Section 5.2 of this Agreement, a proxy
statement has not been mailed to the holders of Seller Common Stock as a result
of the Board of Directors' exercise of its fiduciary duties as set forth in
Section 5.2 of this Agreement, such shareholder meeting shall not have been held
in a timely manner or shall have been postponed, delayed or enjoined prior to
termination of this Agreement except as a result of a judicial or administrative
proceeding or the Seller's Board of Directors shall have (i) withdrawn or
modified in a manner materially adverse to Buyer the recommendation of the
Seller's Board of Directors with respect to this Agreement, or announced or
disclosed to any third party its intention to do so or (ii) failed to recommend,
in the case of a tender offer or exchange offer for the Seller Common Stock,
against acceptance of such tender offer or exchange offer to its shareholders or
takes no position with respect to acceptance of such tender offer or exchange
offer by its stockholders.
(e) In the event that this Agreement is terminated pursuant to Section
7.1 hereof, this Agreement shall become void and have no effect, except that (i)
the provisions relating to confidentiality set forth in Section 5.4(b) and this
Section 7.2, shall survive any such
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termination and (ii) a termination pursuant to Section 7.1(b), (c), (d), or (e)
shall not relieve the breaching party from any liability or damages arising out
of its willful breach of any provision of this Agreement giving rise to such
termination.
7.3 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
All representations, warranties and covenants in this Agreement or in
any instrument delivered pursuant hereto or thereto shall expire on, and be
terminated and extinguished at, the Effective Time other than covenants that by
their terms are to be performed after the Effective Time (including the
covenants set forth in Sections 2.6 and 2.8, hereof), provided that no such
representations, warranties or covenants shall be deemed to be terminated or
extinguished so as to deprive Buyer or Seller (or any director, officer or
controlling person of either thereof) of any defense at law or in equity which
otherwise would be available against the claims of any person, including any
shareholder or former shareholder of either Buyer or Seller.
7.4 WAIVER
Each party hereto, by written instrument signed by an executive officer
of such party, may at any time (whether before or after approval of this
Agreement by the shareholders of Seller) extend the time for the performance of
any of the obligations or other acts of the other party hereto and may waive (i)
any inaccuracies of the other party in the representations or warranties
contained in this Agreement or any document delivered pursuant hereto, (ii)
compliance with any of the covenants, undertakings or agreements of the other
party, (iii) to the extent permitted by law, satisfaction of any of the
conditions precedent to its obligations contained herein or (iv) the performance
by the other party of any of its obligations set forth herein, provided that any
such waiver granted, or any amendment or supplement pursuant to Section 7.5
hereof executed after shareholders of Seller have approved this Agreement, shall
not modify either the amount or form of the consideration to be provided hereby
to the holders of Seller Common Stock upon completion of the Corporate Merger or
otherwise materially adversely affect such shareholders without the approval of
the shareholders who would be so affected.
7.5 AMENDMENT OR SUPPLEMENT
This Agreement may be amended or supplemented at any time by mutual
agreement of the Parties hereto, subject to the proviso to Section 7.4 hereof.
Any such amendment or supplement must be in writing and authorized by or under
the direction of the Board of Directors of each of the Parties hereto.
ARTICLE VIII
MISCELLANEOUS
8.1 ENTIRE AGREEMENT
This Agreement contains the entire agreement among the Parties with
respect to the transactions contemplated hereby and supersedes all prior
arrangements or understandings with respect thereto, written or oral, other than
documents referred to herein and therein. The terms and
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conditions of this Agreement shall inure to the benefit of and be binding upon
the Parties hereto and their respective successors. Nothing in this Agreement,
expressed or implied, is intended to confer upon any party, other than the
Parties hereto, and their respective successors, any rights, remedies,
obligations or liabilities.
8.2 NO ASSIGNMENT
None of the Parties hereto may assign any of its rights or obligations
under this Agreement to any other person.
8.3 NOTICES
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered personally, telecopied
(with confirmation) or sent by overnight mail service or by registered or
certified mail (return receipt requested), postage prepaid, addressed as
follows:
If to Buyer:
United Community Financial Corp.
275 Federal Plaza West
Youngstown, Ohio 44503
Attn: Douglas M. McKay,
Chairman of the Board and Chief Executive Officer
Facsimile (330) 742-0532
With a required copy to:
Thomas C. Blank
Werner & Blank
7205 West Central Avenue
Toledo, Ohio 43617
Facsimile: (419) 841-8380
If to Seller:
Industrial Bancorp, Inc.
211 N. Sandusky Street
Bellevue, Ohio 44811
Attn: David M. Windau, President
Facsimile (419) 483-5916
With a required copy to:
Terri Reyering Abare
Vorys, Sater, Seymour and Pease LLP
221 East Fourth Street
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Suite 2100, Atrium Two
Cincinnati, Ohio 45202
Facsimile: (513) 723-4056
8.4 ALTERNATIVE STRUCTURE
Notwithstanding any provision of this Agreement to the contrary, Buyer
may, with the written consent of Seller, which shall not be unreasonably
withheld, at any time modify the structure of the acquisition of Seller set
forth herein, provided that (i) the consideration to be paid to the holders of
Seller Common Stock is not thereby changed in kind or reduced in amount as a
result of such modification and (ii) such modification will not materially delay
the closing or jeopardize or delay the receipt of any required approvals of
Governmental Entities or any other condition to the obligations of Buyer set
forth in Sections 6.1 and 6.3 hereof.
8.5 INTERPRETATION
The captions contained in this Agreement are for reference purposes
only and are not part of this Agreement.
8.6 COUNTERPARTS
This Agreement may be executed in any number of counterparts, and each
such counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.
8.7 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the State of Ohio applicable to agreements made and entirely to be
performed within such jurisdiction.
8.8 SEVERABILITY
Any term, provision, covenant or restriction contained in this
Agreement held to be invalid, void or unenforceable, shall be ineffective to the
extent of such invalidity, voidness or unenforceability, but neither the
remaining terms, provisions, covenants or restrictions contained in this
Agreement nor the validity or enforceability thereof in any other jurisdiction
shall be affected or impaired thereby. Any term, provision, covenant or
restriction contained in this Agreement that is so found to be so broad as to be
unenforceable shall be interpreted to be as broad as is enforceable.
8.9 STANDARD OF MATERIALITY
No representation or warranty shall be deemed untrue or incorrect, and
no Party shall be deemed to have breached a representation or warranty, as a
consequence of the existence of any fact, event or circumstance unless such
fact, event or circumstance, individually or taken together
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with all other facts, events or circumstances inconsistent with any
representation or warranty has had or is reasonably likely to have a Material
Adverse Effect on the Party making such representation or warranty.
{SIGNATURES ON FOLLOWING PAGE}
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in counterparts by their duly authorized officers and their corporate
seal to be hereunto affixed and attested by their officers thereunto duly
authorized, all as of December 9, 2000.
INDUSTRIAL BANCORP, INC.
Attest:
/s/ David W. Ball
---------------------------------
Secretary By: /s/ David M. Windau
-----------------------------
David M. Windau
President
UNITED COMMUNITY FINANCIAL CORP.
Attest:
/s/ Donald J. Varner
---------------------------------
Secretary By: /s/ Douglas M. McKay
-----------------------------
Douglas M. McKay
President
THE INDUSTRIAL SAVINGS AND LOAN
ASSOCIATION
Attest:
/s/ David W. Ball
---------------------------------
Secretary By: /s/ David M. Windau
-----------------------------
David M. Windau
President
THE HOME SAVINGS AND LOAN COMPANY
Attest:
/s/ Donald J. Varner
---------------------------------
Secretary By: /s/ Douglas M. McKay
-----------------------------
Douglas M. McKay
Chairman of the Board and
Chief Executive Officer
46
