EXHIBIT 2 (b)
PEOPLES BANCORP INC. ANNUAL REPORT ON FORM 10-K
FOR FISCAL YEAR ENDED DECEMBER 31, 1996
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
by
PEOPLES BANCORP INC.
and
RUSSELL FEDERAL SAVINGS BANK
August 19, 1996
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION (this
"Agreement"), dated August 19, 1996, is by Peoples Bancorp Inc.,
an Ohio corporation ("Acquiror") and Russell Federal Savings
Bank, a federally chartered savings bank ("Target Bank").
A. Acquiror and Target Bank wish to provide for the terms and
conditions of the following described business transaction in
which an inactive transitory subsidiary to be formed by Acquiror
and incorporated under the laws of the United States
("Acquisition Subsidiary") will be merged with and into Target
Bank. The separate existence of Acquisition Subsidiary shall
cease ("Merger") and as a result of the Merger, Target Bank will
become a wholly-owned subsidiary of the Acquiror.
B. For federal income tax purposes, it is intended that the
Merger be deemed a purchase of all of the outstanding capital
stock of Target Bank by Acquiror.
C. For accounting purposes, it is intended that the Merger shall
be accounted for as a purchase.
D. The parties hereto desire to make certain representations,
warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
E. Concurrently with the execution and delivery of this
Agreement, and as a condition and material inducement to
Acquiror's willingness to enter into this Agreement, each of the
directors of Target Bank has entered into a shareholder
agreement (each a "Shareholder Agreement") in the form attached
hereto as Exhibit A.
Accordingly, and in consideration of the representations,
warranties, covenants, agreements and conditions herein
contained, the parties hereto agree as follows:
ARTICLE ONE
TERMS OF THE MERGER AND CLOSING
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Section 1.01. Formation of Acquisition Subsidiary.
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Acquiror shall organize Acquisition Subsidiary, a federally
chartered stock form savings bank as a wholly-owned subsidiary
of Acquiror and shall cause the interim Acquisition Subsidiary
to fulfill the obligations of the Acquisition Subsidiary under
this Agreement.
Section 1.02. Merger Surviving Corporation and Resulting Institution.
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Subject to the terms and conditions of this Agreement, and
pursuant to the provisions of the Home Owners' Loan Act ("HOLA")
and the rules and regulations promulgated thereunder (the
"Thrift Regulations"), at the Effective Time (as hereinafter
defined), Acquisition Subsidiary shall be merged with and into
Target Bank pursuant to the terms and conditions set forth
herein and pursuant to a Plan of Merger attached hereto as
Exhibit B ("Plan of Merger") which shall be executed by
Acquiror, Acquisition Subsidiary, and Target Bank prior to or at
the Closing (as defined in Section 1.05 below). Upon
consummation of the Merger, the separate existence of
Acquisition Subsidiary shall cease and Target Bank shall
continue as the surviving corporation. The name of Target Bank,
as the surviving corporation, shall by virtue of the Merger
remain "Russell Federal Savings Bank." From and after the
consummation of the Merger, Target Bank, as the surviving
corporation, shall possess all assets and property of every
description, and every interest in the assets and property,
wherever located, and the rights, privileges, immunities,
powers, franchises and authority, of a public as well as a
private nature, of Target Bank and Acquisition Subsidiary, and
all obligations belonging or due to each of them.
Section 1.03. Effective Time of the Merger.
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As soon as practicable after each of the conditions set forth in
Article Six hereof have been satisfied or waived, Target Bank
and Acquisition Subsidiary shall file or cause to be filed
Articles of Combination with the Office of Thrift Supervision
(the "OTS"), which shall be in the form required by and executed
in accordance with the applicable provisions of the HOLA and the
Thrift Regulations. The Merger shall become effective at the
time the Articles of Combination for the Merger are endorsed by
the Secretary of the OTS pursuant to the Thrift Regulations (the
"Effective Time").
Section 1.04. Merger.
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(a) (i) Each common share of Target Bank, $.01 par value per
share (the "Target Bank Common"), issued and outstanding
immediately prior to the Effective Time (except for Dissenting
Shares, as defined in Section 1.04(b) below) shall, by virtue of
the Merger (but subject to the provisions of Section 8.06
hereof) and without any action on the part of the holder thereof
be converted to a right to receive $19.41 per share in cash (the
"Per Share Merger Consideration") from Acquiror, without any
interest thereon from the Effective Time until the time of payment.
The holders of certificates representing shares of Target Bank
Common shall cease to have any rights as stockholders of Target
Bank, except such rights, if any, as they may have pursuant to
the HOLA. Except as provided below with respect to Dissenting
Shares (as defined below), until certificates representing
shares of Target Bank Common are surrendered for exchange, each
such certificate shall, after the Effective Time, represent for
all purposes only the right to receive the Per Share Merger
Consideration for the number of shares represented by such
certificate.
(ii) Each share of Acquisition Subsidiary capital stock issued
and outstanding or held in treasury immediately prior to the
Effective Time shall be converted into a share of Target Bank
Common at the Effective Time.
(b) Dissenting Shares. Any shares of Target Bank Common held by
a stockholder who demands payment of the fair value of his or
her Target Bank Common pursuant to, and in compliance with,
title 12 of the Code of Federal Regulations, Section 552.15,
shall thereafter neither be entitled to vote such stock for any
purpose nor be entitled to the payment of dividends or other
distributions thereon (except dividends or other distributions
payable to, or a vote to be taken by stockholders of record at a
date which is on, or prior to, the effective date of the
Merger); provided, however, that if any stockholder becomes
unentitled to appraisal and payment of the appraised value with
respect to his or her Target Bank Common and accepts or is
deemed to have accepted the terms offered by this Agreement,
such stockholder shall thereupon be entitled to vote and receive
the Per Share Merger Consideration.
(c) Exchange of Target Bank Common.
(i) As soon as practicable after the Effective Time, holders
of record of certificates formerly representing shares of Target
Bank Common (the "Certificates") shall be instructed to tender
such Certificates to Acquiror, or, at the election of the
Acquiror, to an exchange agent designated by Acquiror (the
"Exchange Agent"), pursuant to a letter of transmittal that
Acquiror shall deliver or cause to be delivered to such holders.
Such letter of transmittal shall specify that risk of loss and
title to Certificates shall pass only upon delivery of such
Certificates as specified in the letter of transmittal.
(ii) After the Effective Time, each holder of a
Certificate that surrenders such Certificate to Acquiror or, at
the election of Acquiror, to the Exchange Agent, will, upon
acceptance thereof by Acquiror or the Exchange Agent, be
entitled to receive in exchange therefor the Per Share Merger
Consideration for the number of shares represented by such
Certificate, which shall be paid promptly (but in no event later
than five business days) after acceptance of such Certificate.
(iii) Acquiror or, at the election of Acquiror, the Exchange
Agent shall accept Certificates upon compliance with such
reasonable terms and conditions as Acquiror or the Exchange
Agent may impose to effect an orderly exchange thereof in
accordance with customary exchange practices. Certificates
shall be appropriately endorsed or accompanied by such
instruments of transfer as Acquiror or the Exchange Agent may
require.
(iv) Each outstanding Certificate shall, until duly
surrendered to Acquiror or the Exchange Agent, be deemed to
evidence the right to receive the Per Share Merger Consideration
for the number of shares represented by such Certificate.
(v) After the Effective Time, holders of Certificates shall
cease to have rights with respect to the Target Bank Common
previously represented by such Certificates, and their sole
rights shall be to exchange such Certificates for the Per Share
Merger Consideration for the number of shares represented by
such Certificate. After the Effective Time, there shall be no
further transfer on the records of Target Bank of Certificates,
and if any Certificates are presented to Target Bank for
transfer, they shall be canceled in exchange for the Per Share
Merger Consideration for the number of shares represented by
such Certificates. Acquiror shall not be obligated to deliver
the Per Share Merger Consideration to any former holder of
Target Bank Common until such holder surrenders the Certificates
as provided herein. Neither the Exchange Agent nor any party to
this Agreement nor any affiliate thereof shall be liable to any
holder of Target Bank Common represented by any Certificate for
any consideration paid to a public official pursuant to
applicable abandoned property, escheat or similar laws. Target
Bank and the Exchange Agent shall be entitled to rely upon the
stock transfer books of Target Bank 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
stock represented by any Certificate, Acquiror and the Exchange
Agent shall be entitled to deposit any consideration in respect
thereof in escrow with an independent third party and thereafter
be relieved with respect to any claims thereto.
(vi) If the Per Share Merger Consideration is to be issued to a
person other than a person in whose name a surrendered
Certificate is registered, it shall be a condition of issuance
that the surrendered Certificate shall be properly endorsed or
otherwise in proper form for transfer and that the person
requesting such issuance shall pay to Acquiror or the Exchange
Agent any required transfer or other taxes or establish to the
satisfaction of the Acquiror or the Exchange Agent that such tax
has been paid or is not applicable.
(vii) In the event any Certificate shall have been lost, stolen
or destroyed, the owner of such lost, stolen or destroyed
Certificate shall deliver to Acquiror or the Exchange Agent an
affidavit stating such fact, in form reasonably satisfactory to
Acquiror, and, at Acquiror's discretion, a bond in such
reasonable sum as Acquiror or the Exchange Agent may direct as
indemnity against any claim that may be made against Acquiror or
Target Bank or its successor or any other party with respect to
the Certificate alleged to have been lost, stolen or destroyed.
Upon such delivery, the owner shall have the right to receive
the Per Share Merger Consideration with respect to the shares
represented by the lost, stolen or destroyed Certificate.
(d) Stock Options. Acquiror shall assume the obligations of
Target Bank under the Target Bank Stock Option Plan in the
following manner:
(i) At the Effective Time, by virtue of the Merger and without
any action on the part of any holder of any option, each option
granted by Target Bank to purchase shares of Target Bank Common
which is outstanding prior to the date of this Agreement and
unexercised immediately prior to the Effective Time (each a
"Target Bank Option") shall continue outstanding as an option (a
"Substitute Option") to purchase common shares of Acquiror, no
par value, ("Acquiror Common") in an amount and at an exercise
price determined as provided below and otherwise subject to the
terms of the Target Bank Stock Option Plan under which they were
issued and the agreements evidencing grants thereunder:
(A) The number of shares of Acquiror Common to be subject
to a Substitute Option shall be equal to the product of the number of
shares of Target Bank Common subject to the original option and
the Exchange Ratio (as defined below), provided that any
fractional shares of Acquiror Common resulting from such
multiplication shall be rounded to the nearest whole share;
(B) The exercise price per share of Acquiror Common under
the Substitute Option shall be equal to the exercise price per share
of Target Bank Common under the original option divided by the
Exchange Ratio, provided that such exercise prices shall be
rounded down to the nearest whole cent; and
(C) The terms of each Target Bank Option shall, in accordance
with its terms, be subject to further adjustment as appropriate
to reflect any stock split, stock dividend, recapitalization or
other similar transaction subsequent to the Effective Time.
(ii) The term "Exchange Ratio" shall mean the Per Share Merger
Consideration divided by the Average Price (as defined below)
for Acquiror Common.
(iii) The term "Average Price" shall mean the average closing
prices for a share of Acquiror Common on the NASDAQ National
Market System reported for the ten (10) consecutive trading days
ending on the fifth trading day immediately prior to the date of
the Effective Time.
(e) Charter and Bylaws of the Resulting Institution. The
Charter and Bylaws of the Acquisition Subsidiary, as in effect
immediately prior to the Effective Time, shall, without any
change, be the charter and bylaws of Target Bank, as the
resulting institution of the Merger, until either is thereafter
amended in accordance with applicable law.
(f) Directors and Officers of the Resulting Institution. The
directors and officers of the Target Bank, as the resulting
institution of the Merger, shall be those persons listed in
Exhibit D to this Agreement. Such directors shall continue in
office until their successors are duly elected and qualified or
otherwise duly selected.
(g) Offices of the Resulting Institution. The offices of Target
Bank, as the resulting institution of the Merger, shall be the
offices of Target Bank as listed in Exhibit C to this Agreement.
Section 1.05. Closing.
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Subject to the provisions of this Agreement, the closing of the
Merger (the "Closing") shall take place as soon as practicable,
but not later than ten (10) days after satisfaction of the
conditions to Closing as set forth in Sections 6.01(d) and
6.02(d) hereof; provided, if such conditions to Closing are not
satisfied prior to December 1, 1996, then the Closing shall not
occur prior to January 2, 1997, effective January 1, 1997, and
if such conditions are not satisfied prior to June 1, 1997, then
the Closing shall not occur prior to July 1, 1997. Subject to
the foregoing, the date, time and location of the Closing shall
be as designated in writing by Acquiror to Target Bank. The
date on which the Closing actually occurs is herein referred to
as the "Closing Date." Time is of the essence for Closing.
Section 1.06. Actions At Closing.
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(a) At the Closing, Target Bank shall deliver to Acquiror:
(i) a certificate signed by an appropriate officer of
Target Bank stating to the best of his knowledge that all of the
conditions set forth in Sections 6.01(a), (b), (c), (d), (f),
(g) and (h) of this Agreement (but, as to Section 6.01(d),
relating only to approvals which Target Bank is required by law
to obtain) have been satisfied or waived as provided therein;
(ii) a certified copy of the resolutions of Target Bank's
Board of Directors and stockholders, as required for valid
approval of the execution of this Agreement and the Plan of
Merger; the Plan of Merger, executed by Target Bank; and
Articles of Combination for the Merger, executed by Target Bank
and in proper form for filing with the OTS;
(iii) a certificate of the OTS with a recent date, as to the
corporate existence of Target Bank, and a certificate of the
Federal Deposit Insurance Corporation ("FDIC"), dated a recent
date, as to the existence of deposit insurance of Target Bank;
(iv) a legal opinion from counsel for Target Bank, in form
reasonably acceptable to Acquiror's counsel, opining with
respect to the matters listed on Exhibit E hereto.
(b) At the Closing, Acquiror shall deliver to Target Bank:
(i) a certificate signed by an appropriate officer of
Acquiror stating, to the best of his knowledge, that all of the
conditions set forth in Sections 6.02(a), (b), (c) and (d) of
this Agreement (but, as to Section 6.02(d), excluding the
approval of Target Bank's Board of Directors and stockholders)
have been satisfied;
(ii) a certified copy of the resolutions of Acquiror's Board of
Directors authorizing the execution of this Agreement and the
consummation of the transactions contemplated hereby;
(iii) a certified copy of the resolutions of Acquisition
Subsidiary's Board of Directors and sole stockholder,
authorizing the execution of the Plan of Merger and the
consummation of the transactions contemplated hereby and
thereby; the Plan of Merger, executed by Acquisition Subsidiary;
and Articles of Combination for the Merger, executed by
Acquisition Subsidiary and in proper form for filing with the
OTS; and
(iv) a legal opinion from counsel for Acquiror, in form
reasonably acceptable to Target Bank's counsel, opining with
respect to the matters listed on Exhibit F hereto.
Section 1.07. Russell Federal Savings Bank.
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(a) Acquiror intends to maintains the Target Bank as a wholly
owned subsidiary for a period of at least three (3) years after
the Effective Time; provided, however, it may cause the
immediate merger of Target Bank with another of its operating
financial institutions or otherwise alter the organizational
status of the Target Bank.
(b) During the period in which Acquiror maintains Target Bank as
a wholly owned federal savings bank subsidiary, it shall operate
Target Bank under the name "Russell Federal Savings Bank" with
such name being the most prominent name on any sign, advertising
or letterhead used by Target Bank.
ARTICLE TWO
REPRESENTATIONS AND WARRANTIES OF TARGET BANK
Target Bank hereby makes the following representations and warranties:
Section 2.01. Organization and Capital Stock.
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(a) Target Bank is a federal stock savings bank organized under
Section 5 of the Home Owners' Loan Act and is duly organized and
validly existing under the laws of the United States, with full
corporate power and all necessary governmental authorizations to
own all of its properties and assets, to incur all of its
liabilities and to carry on its business as presently conducted.
The minute books contain complete and accurate records of all
meetings and other corporate actions of its Board of Directors
and stockholders, including committees of Board of Directors.
Attached as Section 2.01(a) of that certain confidential writing
delivered by Target Bank to Acquiror concurrently with the
delivery and execution of this Agreement (the "Disclosure
Schedule") are copies of the federal stock charter certified by
the OTS and bylaws of Target Bank, including all amendments.
(b) The authorized capital stock of Target Bank consists of
5,500,000 shares of Target Bank Common, par value $ .01 per
share, of which, as of the date hereof, 476,493 shares are
issued and outstanding, and 500,000 serial preferred shares,
none of which are issued and outstanding. Additionally, Target
Bank has reserved 47,649 shares of Target Bank Common for
issuance under a Stock Option Plan, of which 19,056 shares have
been awarded pursuant to Target Bank Stock Options. All of the
issued and outstanding shares of Target Bank Common are duly and
validly issued and outstanding and are fully paid and
non-assessable. None of the outstanding shares of Target Bank
Common have been issued in violation of any preemptive rights of
the current or past stockholders of Target Bank. Each
Certificate representing shares of Target Bank Common issued by
Target Bank in replacement of any certificate therefore issued
by it which was claimed by the record holder thereof to have
been lost, stolen or destroyed, if any, was issued by Target
Bank only upon receipt of an affidavit of lost stock certificate
and a bond sufficient to indemnify Target Bank against any claim
that may be made against it on account of the alleged loss,
theft or destruction of any such certificate or the issuance of
such replacement Certificate.
(c) The deposits of Target Bank are insured up to maximum
limits by the Savings Association Insurance Fund ("SAIF") of the
FDIC. Target Bank is a member of the Federal Home Loan Bank of
Cincinnati ("FHLB Cincinnati"). Target Bank is a "domestic
building and loan association" as defined in Section 7701(a)(19)
of the Internal Revenue Code of 1986, as amended (the "Code")
and a "qualified thrift lender" as defined in 12 U.S.C. Section
1467a(m) and the Thrift Regulations.
(d) Except as set forth in Section 2.01(b) of this
Agreement or as otherwise described in this Agreement, there are
no shares of capital stock or other equity securities of Target
Bank outstanding and no outstanding options, warrants, rights to
subscribe for, calls, or commitments of any character whatsoever
relating to, or securities or rights convertible in or
exchangeable for, shares of the capital stock of Target Bank, or
contracts, commitments, understandings or arrangements by which
Target Bank is or may be obligated to issue additional shares of
its capital stock or options, warrants or rights to purchase or
acquire any additional shares of its capital stock.
Section 2.02. Authorization; No Defaults.
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(a) The Board of Directors of Target Bank has, by all
appropriate action, approved this Agreement and authorized the
execution and delivery hereof on its behalf by its duly
authorized officers and the performance by Target Bank of its
respective obligations hereunder.
(b) This Agreement has been duly and validly executed and
delivered by Target Bank and constitutes a legal, valid and
binding obligation of Target Bank, enforceable in accordance
with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, receivership,
conservatorship, moratorium or other laws affecting creditors
rights generally or the rights of creditors of savings
institutions the accounts of which are insured by the FDIC or
laws relating to the safety and soundness of insured financial
institutions and by judicial discretion in applying principles
of equity. Target Bank is not in default under or in violation
of any provision of its federal stock charter or bylaws, or any
promissory note, indenture or any evidence of indebtedness or
security therefor, lease, contract, purchase or other commitment
or any other agreement of Target Bank, except for defaults and
violations which have not resulted in a Material Adverse Change
(as defined in Section 2.05(a) hereof) with respect to Target
Bank. No other corporate proceeding of Target Bank is required
for approval of this Agreement and the Merger or the performance
of Target Bank's obligations under this Agreement other than
adoption of this Agreement, the Amendment (as defined in Section
4.03(i) hereof) and the Plan of Merger by the holders of at
least the Minimum Portion of the outstanding shares of Target
Bank Common required under the laws of the United States for
approval of the Merger (the "Minimum Portion"). Except for the
requisite approvals of the OTS ("Regulatory Approvals"), and
filings with the OTS, including a request for a waiver of the
provisions of 12 C.F.R. Section 563b.3(i) and registration as savings
and loan holding company on OTS Form H-(b) 10, or as discussed
in Section 2.02(b) of the Disclosure Schedule, no notice to,
filing with, authorization by, or consent or approval of, any
federal or state regulatory authority or other third party is
necessary for the execution and delivery of this Agreement or
consummation of the Merger by Target Bank.
(c) Neither the execution and delivery of this Agreement nor the
consummation of the Merger, nor compliance by Target Bank with
the provisions of this Agreement will:
(i) subject to the approval of the Amendment by the
shareholders of Target Bank as defined in Section 4.03 herein,
conflict with or result in a breach of the federal stock charter
or bylaws of Target Bank;
(ii) result in a breach or termination of, or accelerate the
performance required by, any material note, bond, mortgage,
lease, agreement or other material instrument to which Target
Bank is a party or may be bound; or
(iii) subject to Regulatory Approval, violate any judgment,
ruling, order, writ, injunction, decree, statute, rule or
regulation applicable to Target Bank.
Section 2.03. Subsidiaries; Equity Interests.
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The term "subsidiary" means an organization or entity which is
consolidated with a party to this Agreement for financial
reporting purposes. Target Bank has one subsidiary, the
Articles of Incorporation of which are attached to Section 2.03
of the Disclosure Schedule. Except as set forth in Section 2.03
of the Disclosure Schedule, and except for shares of stock of
the FHLB Cincinnati owned by Target Bank, neither Target Bank
nor its subsidiary owns, beneficially or otherwise, any shares
of Equity Securities (as defined below) or similar interests of
any corporation, bank, business trust association or similar
organization. "Equity Securities" of an issuer means capital
stock or other equity securities of such issuer, options,
warrants, scrip, rights to subscribe to, calls or commitments of
any character whatsoever relating to, or securities or rights
convertible into, shares of any capital stock or other equity
securities of such issuer, or contracts, commitments,
understandings or arrangements by which such issuer is or may
become bound to issue additional shares of its capital stock or
other equity securities of such issuer, or options, warrants,
scrip or rights to purchase, acquire, subscribe to, calls on or
commitments for any shares of its capital stock or other equity
securities. Neither Target Bank nor its subsidiary is a party
to any partnership or joint venture.
Section 2.04. Financial Information.
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The consolidated balance sheets of Target Bank as of June 30,
1995, 1994, and 1993, and related statements of income, changes
in stockholders' equity and cash flows for each of the three
fiscal years then ended, together with the notes thereto, and
the unaudited consolidated balance sheet of Target Bank as of
March 31, 1996, and the related unaudited income statement and
statement of changes in stockholders' equity and cash flows for
the nine (9) months then ended, all of which are included in
Section 2.04 of the Disclosure Schedule (together, the "Target
Bank Financial Statements"), have been prepared in accordance
with generally accepted accounting principles applied on a
consistent basis ("GAAP") except as disclosed therein and fairly
present in all material respects the financial position and the
results of operations, changes in stockholders' equity and cash
flows of Target Bank as of the dates and for the periods
indicated (subject, in the case of interim financial statements,
to normal recurring year-end adjustments, none of which are
material, and the absence of footnotes). The books and records
of Target Bank have been and are being maintained in accordance
with applicable legal and accounting requirements. Target Bank
is not aware of any event or circumstances, or series of events
or circumstances, which is reasonably likely to result in a
Material Adverse Change (as defined in Section 2.05(a)).
Section 2.05. Absence of Changes.
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(a) The term "Material Adverse Change" shall mean a material
adverse change in the consolidated financial condition, results
of operations, assets or business of an entity; provided that
the term "Material Adverse Change" shall exclude the effects
resulting from or attributable to:
(i) a change with respect to, or effect on, resulting from a
change in law, rule, regulation, generally accepted accounting
principles or regulatory accounting principles, including, but
not limited to, a change that would require the bad debt reserve
of a thrift institution to be restored to income;
(ii) changes affecting depository institutions generally
including, without limitation, changes in general economic
conditions and changes in prevailing interest and deposit rates;
(iii) any special assessment levied as part of an assessment
against financial institutions which are insured by the SAIF; or
(iv) in the case of Target Bank only, any adjustments
implemented pursuant to Section 4.05 hereof;
(v) changes resulting from or attributable to expenses
incurred in connection with the transactions contemplated by
this Agreement and the Merger. Since March 31, 1996, to the
date hereof, Target Bank has not experienced or suffered a
Material Adverse Change.
(b) Since June 30, 1995, Target Bank has not, except as set
forth in Section 2.05 of the Disclosure Schedule,
(i) issued or sold any corporate debt securities;
(ii) declared or set aside or paid any dividend or other
distribution in respect of its capital stock (or other ownership
interests) other than its regular semi-annual dividend of $0.25
per share;
(iii) incurred any material obligation or liability (absolute
or contingent), except obligations or liabilities incurred in
the ordinary course of business;
(iv) mortgaged, pledged or subjected to lien or encumbrance
(other than statutory liens for taxes not yet delinquent and
landlord liens) any of its assets or properties except pledges
to secure government deposits, FHLB Cincinnati advances and in
connection with repurchase or reverse repurchase agreements;
(v) discharged or satisfied any lien or encumbrance or paid any
obligation or liability (absolute or contingent), other than
current liabilities included in Target Bank's balance sheet as
of June 30, 1995, and liabilities incurred since the date
thereof in the ordinary course of business;
(vi) sold, exchanged or otherwise disposed of any of its assets
other than in the ordinary course of business;
(vii) made or modified any general wage or salary increase
other than in the ordinary course of business consistent with
past practices, entered into or modified any employment contract
with any officer or salaried employee or instituted, modified or
changed the contribution level to, any employee welfare, bonus,
stock option, profit sharing, retirement or similar plan or
arrangement;
(viii) suffered any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting its
business, property or assets or waived any rights of value that
are material in the aggregate, considering its business taken as
a whole;
(ix) entered, or agreed to enter, into any agreement or
arrangement granting any preferential right to purchase any of
its assets, properties or rights or requiring the consent of any
party to the transfer and assignment of any such assets,
properties or rights; or
(x) entered into any transaction outside the ordinary course of
business, or sold or otherwise disposed of any of its securities.
Section 2.06. Regulatory Enforcement Matters.
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Target Bank is not subject to, or has received any notice or
advice that it is not in substantial compliance with any statute
or regulation, or that it is or may become subject to any order,
agreement or memorandum of understanding with any federal or
state agency charged with the supervision or regulation of
savings banks or savings associations or engaged in the
insurance of deposits or any other governmental agency having
supervisory or regulatory authority with respect to Target Bank,
and Target Bank has received no notice from any governmental
authority threatening to revoke any license, franchise, permit
or governmental authorization.
Section 2.07. Tax Matters.
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(a) Target Bank has filed all federal, state and local tax
returns and reports due with respect to any of its employees,
depositors, borrowers, operations, business and properties in a
timely fashion, including applicable extensions, and has paid or
made provision for all amounts due or claimed to be due. All
such returns and reports fairly reflect the information required
to be presented therein. All provisions for accrued but unpaid
taxes contained in the Target Bank Financial Statements were
made in accordance with GAAP and provide for anticipated tax
liabilities including interest and penalties. Except as set
forth in section 2.07(a) of the Disclosure Schedule, there are
no federal, state or local tax returns or reports not filed
which would be due but for an extension of time for filing
having been granted.
(b) Target Bank has not executed or filed with the Internal
Revenue Service ("IRS") or any state or local tax authority any
agreement extending the period for assessment and collection of
any tax, nor is Target Bank a party to any action or proceeding
by any governmental authority for assessment or collection of
taxes, except tax liens or levies against customers of Target
Bank. There is no outstanding assessment or claim for
collection of taxes against Target Bank. Target Bank has not,
except as disclosed in Section 2.07(b) of the Disclosure
Schedule, received any notice of deficiency, proposed deficiency
or assessment from the IRS or any other governmental agency,
with respect to any federal, state or local taxes. No tax
return of Target Bank is currently the subject of any audit by
the IRS or any other governmental agency. No material
deficiencies have been asserted in connection with the tax
returns of Target Bank and Target Bank has no reason to believe
that any deficiency would be asserted relating thereto. Target
Bank has never been a member of an "affiliated group of
corporations" (within the meaning of the Code) filing
consolidated returns, and Target Bank is not a party to any
tax-sharing agreement.
Section 2.08. Litigation.
- --------------------------
Except as disclosed in Section 2.08 of the Disclosure Schedule,
there is no material litigation, claim or other proceeding
pending or, to the knowledge of Target Bank, threatened, against
Target Bank, or any of its respective directors or officers, or
to which the property of Target Bank is or would be subject.
Target Bank has taken all requisite action (including without
limitation the making of claims and the giving of notices)
pursuant to its directors and officers liability insurance
policy or policies in order to preserve all rights thereunder
with respect to all matters (other than matters arising in
connection with this Agreement and the transactions contemplated
hereby) occurring prior to the Effective Time that are known to
Target Bank. Each matter as to which Target Bank has given
notice to the insurer under a directors and officers liability
policy is described in Section 2.08 of the Disclosure Schedule.
Section 2.09. Employment and Severance Agreements.
- ---------------------------------------------------
Except as disclosed in Section 2.09 of the Disclosure Schedule,
Target Bank is not a party to or bound by any agreement or
policy for the employment, retention or engagement of any
officer, employee, agent, consultant or other person or entity,
any employment or severance agreement or policy, or agreement,
policy or arrangement to provide post-retirement,
post-termination or change-of-control benefits, by acceleration
or otherwise, to any current or former officer, employee or
director. A true, accurate and complete copy of each such
agreement, policy and arrangement is included in Section 2.09 of
the Disclosure Schedule.
Section 2.10. Reports.
- -----------------------
Target Bank has filed all reports and statements, together with
any amendments required to be made with respect thereto, that it
was required to file with:
(i) the OTS,
(ii) the FDIC,
(iii) any applicable state securities or banking or savings and
loan authorities, and
(iv) any other governmental authority with jurisdiction over
Target Bank, except as may be disclosed in Section 2.10 of the
Disclosure Schedule or, to the extent that any report or
statement has not been filed, such failure will not have a
material adverse effect on Target Bank's regulatory compliance
status.
As of their respective dates, each of such reports and
documents, as amended, if applicable, including the financial
statements, exhibits and schedules thereto, complied in all
material respects with the relevant statutes, rules and
regulations enforced or promulgated by the regulatory authority
with which they were filed, and did not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading.
Section 2.11. Investment Portfolio.
- ------------------------------------
All United States Treasury securities, obligations of other
United States Government agencies and corporations, obligations
of states and political subdivisions of the United States and
other investment securities held by Target Bank are carried in
the aggregate at no more than cost adjusted for amortization of
premiums and accretion of discounts, except as otherwise
required by FAS No. 115 and which adjustments are disclosed in
Section 2.11 of the Disclosure Schedule.
Section 2.12. Loan Portfolio
- -----------------------------
Except as may be disclosed in Section 2.12 of the Disclosure
Schedule:
(i) all loans shown on the Target Bank Financial Statements
at June 30, 1995, or which were entered into after June 30, 1995,
but before the Effective Time, were and will be made for good,
valuable and adequate consideration in the ordinary course of
the business of Target Bank, in accordance with sound banking
practices, and are not subject to any known defenses, set-offs
or counterclaims, including without limitation any such as are
afforded by usury or truth in lending laws, except as may be
provided by bankruptcy, insolvency or similar laws or by general
principles of equity;
(ii) to the knowledge of Target Bank, the notes or other
evidences of indebtedness evidencing such loans and all forms of
pledges, mortgages and other collateral documents and security
agreements are and will be what they purport to be and
enforceable in all material respects in accordance with their
terms, subject to bankruptcy, insolvency, fraudulent conveyance
and other laws of general applicability relating to or affecting
creditors, rights and to general equity principles; and
(iii) Target Bank has complied with all laws and regulations
relating to such loans, or to the extent there has not been such
compliance, such failure to comply will not materially interfere
with the collection of such loans in the aggregate or impair any
such loan with a dollar amount as would represent a Material
Adverse Change as defined in Section 2.05 herein.
Section 2.13. Employee Matters and ERISA.
- ------------------------------------------
(a) Target Bank has not entered into any collective bargaining
agreement with any labor organization with respect to any group
of employees of Target Bank and to the knowledge of Target Bank
there is no present effort nor existing proposal to attempt to
unionize any group of employees of Target Bank.
(b) Except as may be disclosed in Section 2.13(b) of the
Disclosure Schedule:
(i) Target Bank is and has been in material compliance with all
applicable laws respecting employment and employment practices,
terms and conditions of employment and wages and hours,
including, without limitation, any such laws respecting
employment discrimination and occupational safety and health
requirements, and Target Bank is not engaged in any unfair labor
practice;
(ii) There are no unfair labor practice charges or other
complaints by any employee or former employee of Target Bank
pending before any governmental agency and there are no
administrative charges or court complaints against Target Bank
concerning alleged employment discrimination or other employment
related matters pending or threatened before the U.S. Equal
Employment Opportunity Commission or any state or federal court
or agency;
(iii) There is no labor dispute, strike, slowdown or stoppage
actually pending or, to the knowledge of Target Bank, threatened
against or directly affecting Target Bank; and
(iv) Target Bank has not experienced any work stoppage or other
labor difficulty.
(c) Except as may be disclosed in Section 2.13(c) of the
Disclosure Schedule, Target Bank does not maintain, contribute
to or participate in or has any liability under any employee
benefit plans, as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or
any nonqualified employee benefit plans or deferred
compensation, bonus, stock or incentive plans, or other employee
benefit or fringe benefit programs for the benefit of former or
current directors or employees of Target Bank (the "Employee
Plans"). No present or former director, employee or fiduciary
of Target Bank has been charged with breaching or, to the
knowledge of Target Bank, has breached a fiduciary duty under
any of the Employee Plans. Except as may be disclosed in
Section 2.13(c) of the Disclosure Schedule, Target Bank does not
participate in, nor has it participated in, nor has it any
present or future obligation or liability under, any
multi-employer plan (as defined at Section 3(37) of ERISA).
Except as may be disclosed in Section 2.13(c) of the Disclosure
Schedule, Target Bank does not maintain, contribute to, or
participate in, any plan that provides health, major medical,
disability or life insurance benefits to former employees of
Target Bank except as provided in Section 4980B of the Code.
(d) Except as set forth in Section 2.13(d) of the Disclosure
Schedule, Target Bank does not maintain, and has not maintained
during the past ten (10) years, any Employee Plans subject to
Title IV of ERISA or Section 412 of the Code. No reportable
event (as defined in Section 4043 of ERISA) has occurred with
respect to any Employee Plans as to which a notice would be
required to be filed with the Pension Benefit Guaranty
Corporation. No claim is pending, and Target Bank has not
received notice of any threatened or imminent claim with respect
to any Employee Plan (other than a routine claim for benefits
for which plan administrative review procedures have not been
exhausted) for which Target Bank would be liable after June 30,
1995, except as set forth in Section 2.13(d) of the Disclosure
Schedule. Target Bank does not have any liabilities for excise
taxes under Sections 4971, 4975, 4976, 4977, 4979 or 4980B of
the Code or for a fine under Section 502 of ERISA with respect
to any Employee Plan. All Employee Plans have been operated,
administered and maintained in all material respects in
accordance with the terms thereof and in material compliance
with the requirements of all applicable laws, including, without
limitation, ERISA and the Code to the extent applicable.
Section 2.14. Title to Properties; Insurance; Personal Property.
- -----------------------------------------------------------------
(a) Target Bank has marketable title, insurable at standard
rates, free and clear of all liens, charges and encumbrances
(except taxes which are a lien but not yet payable, liens,
charges or encumbrances explicitly reflected in the Target Bank
Financial Statements and easements, rights-of-way, and other
restrictions which are not material to the current use, value or
marketability of the property and further excepting in the case
of Real Estate Owned ("REO"), as such real estate is internally
classified on the books of Target Bank, rights of redemption
under applicable law) to all real properties reflected on the
Target Bank Financial Statements and acquired subsequent to the
date hereof other than real properties sold for fair value since
the date thereof. All leasehold interests held by Target Bank
in real estate are held pursuant to lease agreements which are
valid and enforceable in accordance with their terms subject to
bankruptcy, insolvency, fraudulent conveyance and other laws of
general applicability relating to or affecting creditors rights
and to general equity principles. All such owned real
properties comply in all material respects with all known
applicable private agreements, and, to the knowledge of Target
Bank, all zoning requirements and other governmental laws and
regulations relating thereto and there are no condemnation
proceedings pending or, to the knowledge of Target Bank,
threatened with respect to such properties. Target Bank has
valid title or other rights under licenses to all material
intangible personal or intellectual property used in its
business, free and clear of any claim, defense or right of any
other person or entity which is material to such property,
subject only to rights of the licensors pursuant to applicable
license agreements, which rights do not materially adversely
interfere with the current use of such property.
(b) All material insurable properties owned or held by Target
Bank are insured in amounts deemed adequate by the senior
management of Target Bank and against fire and other risks
insured against by extended coverage and public liability
insurance. Target Bank has delivered to Acquiror as part of
Section 2.14(b) of the Disclosure Schedule true, accurate and
complete copies of all insurance policies and fidelity bonds of
Target Bank. There are no outstanding claims alone or in the
aggregate in excess of Ten Thousand Dollars ($10,000) with
respect to Target Bank under such bonds and insurance policies,
and Target Bank is not aware of any acts of dishonesty or losses
which would form the basis of a material claim under such bonds
or insurance coverage. Each such policy is in full force and
effect, with all premiums due thereon having been paid as and
when due. Target Bank has not been notified that its fidelity or
insurance coverage will not be renewed by the carrier on
substantially the same terms as the existing coverage.
(c) All of the personal property reflected in the Target Bank
Financial Statements as being owned by Target Bank (other than
items disposed of since such date) is owned free and clear of
any lien, encumbrance, right of first refusal, options or other
restrictions, and all such personal property, other than items
with nominal book value, is in good condition and repair
(ordinary wear and tear excepted) and is sufficient to carry on
the business of Target Bank as it is presently conducted.
Section 2.15. Environmental Matters.
- -------------------------------------
(a) As used in this Agreement, "Environmental Laws" means all
local, state and federal environmental, health and safety laws
and regulations as in effect from time to time in all
jurisdictions in which Target Bank has done business or owned or
leased property, including, without limitation, the Federal
Resource Conservation and Recovery Act, the Federal
Comprehensive Environmental Response, Compensation and Liability
Act ("CERCLA"), the Federal Clean Water Act, the Federal Clean
Air Act, and the Federal Occupational Safety and Health Act.
For purposes of this Agreement, "Hazardous Substances" means:
(i) any "hazardous substance" as defined in Section 101(14) of
CERCLA or regulations promulgated thereunder;
(ii) any "solid waste," "hazardous waste," or "infectious
waste," as such terms are defined in any Environmental Law;
(iii) asbestos, urea formaldehyde, polychlorinated biphenyls
("PCBs"), nuclear fuel or material, chemical waste, radioactive
material, explosives, known carcinogens, petroleum products and
by-products, and other dangerous, toxic or hazardous pollutants,
contaminants, chemicals, materials or substances listed or
identified in, or regulated by, any Environmental Law; and
(iv) any additional substances or materials which are
classified or considered to be hazardous or toxic under any
Environmental Law.
For purposes of this Section 2.15, "knowledge" means the actual
knowledge of the current senior executive officers of Target
Bank, without any duty to make inquiry into the books and
records of Target Bank.
(b) To the knowledge of Target Bank neither the conduct nor
operation of Target Bank nor any condition of any property ever
owned (including, without limitation, REO), leased or operated
by it ("Real Property") during the time of such ownership, lease
or operation materially violates or materially violated any
Environmental Laws and no condition or event has occurred during
the time of such ownership, lease or operation with respect to
any of them or any such property that, with notice or the
passage of time, or both, would constitute a material violation
of Environmental Laws or obligate (or potentially obligate)
Target Bank to remedy, stabilize, neutralize or otherwise alter
the environmental condition of any such property. Target Bank
has not received during the last five (5) years any notice from
any person or entity that Target Bank or the operation of any
facilities or any property ever owned (including, without
limitation, REO), leased or operated by Target Bank are or were
in violation of any Environmental Laws or that Target Bank is
responsible (or potentially responsible) for the cleanup of any
pollutants, contaminants, or hazardous or toxic wastes,
substances or materials at, on or beneath any such property.
(c) Target Bank has not received notice or has no knowledge that
any property in which Target Bank has a current security
interest, lien or other encumbrance violates or violated
Environmental Laws in any material respect.
(d) To the knowledge of Target Bank, Target Bank has not caused
any Hazardous Substances to be integrated into the Real
Properties or any component thereof in such manner or quantity
as may reasonably be expected to or in fact would pose an
unlawful threat to human health or materially and adversely
affect the value of any such Real Properties. To the knowledge
of Target Bank, none of the Real Properties has been used by
Target Bank for the storage or disposal of Hazardous Substances,
except as permitted under Environmental Laws. To the knowledge
of Target Bank, Target Bank has no interest, direct or indirect,
in property owned by a third party which is or has been
contaminated by Hazardous Substances, except as permitted under
Environmental Laws. To the knowledge of Target Bank, no
property which is subject to such a security interest is or has
been so contaminated except as permitted under Environmental
Laws, except as set forth in Section 2.15(d) of the Disclosure
Schedule. To the knowledge of Target Bank, no Real Property
contains or formerly contained underground storage tanks.
(e) With respect to each of the Real Properties in which Target
Bank has held or currently holds indicia of ownership to protect
a security interest in the facility (as such terms are defined
in 42 U.S.C. Section 9601 et seq.), Target Bank has not, to its
knowledge, "participated in the management of the facility" or
otherwise acted in a manner such that Target Bank would lose its
statutory exemption from liability under Section 101(20)(A) of
CERCLA and as further defined in the currently vacated
Environmental Protection Agency's Final Rule on Lender
Liability, 40 C.P.R. Part 300 Subpart L, S 300.1100, 57 FR
18343, April 29, 1992.
Section 2.16. Compliance with Laws.
- ------------------------------------
Target Bank has all licenses, franchises, permits and other
governmental authorizations that are legally required to enable
it to conduct its business in all material respects and such
business has been and is being conducted in compliance in all
material respects with all applicable laws and regulations.
Section 2.17. Brokerage.
- -------------------------
Except for the amounts payable to Capital Resources Group, Inc.,
as disclosed in Section 2.17 of the Disclosure Schedule, there
are no claims or agreements for brokerage commissions, finders,
fees, or similar compensation in connection with the
transactions contemplated by this Agreement payable by Target
Bank.
Section 2.18. Undisclosed Liabilities.
- ---------------------------------------
Except for:
(i) liabilities and obligations fully reflected, disclosed or
provided for in the Target Bank Financial Statements as of March
31, 1996 (including related notes),
(ii) liabilities and obligations incurred since March 31, 1996,
in the ordinary course of business or related to the transaction
contemplated by this Agreement, and
(iii) as set forth in Section 2.18 of the Disclosure Schedule,
Target Bank has no liabilities or obligations, whether absolute,
known or unknown, accrued or unaccrued, contingent or otherwise,
(and there is no asserted or unasserted claim against Target
Bank giving rise to any such liabilities or obligations)
material to the financial condition of Target Bank. For
purposes of this Section 2.18, the term "liabilities" includes
without limitation liabilities as a guarantor and liabilities
for taxes in each case material to the condition of Target Bank.
Section 2.19. Statements True and Correct.
- -------------------------------------------
None of the information supplied or to be supplied by Target
Bank for inclusion in:
(i) the Proxy Statement (as defined in Section 4.03 hereof), and
(ii) any document to be filed with any regulatory authority in
connection with the transactions contemplated hereby,
will, at the respective times such documents are filed, and,
with respect to the Proxy Statement, when first mailed to the
stockholders of Target Bank, be false or misleading with respect
to any material fact, or omit to state any material fact
necessary in order to make the statements therein not
misleading, or, in the case of the Proxy Statement or any
amendment thereof or supplement thereto, at the time of the
Stockholders' Meeting (as defined in Section 4.03 hereof), be
false or misleading with respect to any material fact, or omit
to state any material fact necessary to correct any statement in
any earlier communication with respect to the solicitation of
any proxy for the Stockholders' Meeting. All documents that
Target Bank is responsible for filing with any regulatory
authority in connection with the transactions contemplated
hereby will comply as to form in all material respects with the
provisions of applicable law and the applicable rules and
regulations thereunder.
Section 2.20. Material Contracts.
- ----------------------------------
(a) Section 2.20 of the Disclosure Schedule contains a complete
and correct list of all written or oral agreements, leases, and
other obligations and commitments of the following types, to
which Target Bank is a party, or by which any of its property is
bound, or which has been authorized by Target Bank, except for
those which are listed or described in other Sections of the
Disclosure Schedule.
(i) Promissory note, guaranty, mortgage, security agreement or
other evidence of indebtedness owed by Target Bank for borrowed
funds in an amount in excess of Twenty Five Thousand Dollars
($25,000);
(ii) Partnership or joint venture agreements;
(iii) Employee Plans;
(iv) Insurance contracts or policies;
(v) Agreement or commitment for sale or purchase (otherwise
than in the ordinary course of business) of any asset or assets
of more than Twenty Five Thousand Dollars ($25,000);
(vi) Agreements or commitments for any single capital
expenditure in excess of Five Thousand Dollars ($5,000) or
capital expenditures in excess of Ten Thousand Dollars ($10,000)
in the aggregate;
(vii) Agreement or other document creating a monetary lien or
security interest in excess of Twenty Five Thousand Dollars
($25,000) or other encumbrance relating to any real or personal
property owned, rented, or leased by Target Bank;
(viii) Lease of, commitment to lease and any other agreements
relating to the lease or rental of, real or personal property by
the Target Bank involving an annual payment in excess of Ten
Thousand Dollars ($10,000);
(ix) Any direct or indirect loan or guaranty of a loan to any
director, officer, or 5% stockholder of Target Bank or a spouse
or child of such person, or any partnership, corporation, or
other entity in which any such director, officer, or stockholder
or a spouse or child of such person holds (directly or
indirectly) an interest of ten percent (10%) or more; and
(x) All other material contracts and commitments not made in
the ordinary course of business;
(b) Concurrently with its delivery of the Disclosure Schedule,
Target Bank will deliver complete and correct copies of all
written agreements, leases, policies and commitments listed in
the Disclosure Schedule, together with all amendments thereto,
and a complete and correct written description of all oral
agreements listed in Section 2.20 of the Disclosure Schedule.
Section 2.21. No Sensitive Transactions.
- -----------------------------------------
Neither Target Bank nor any employee or agent of Target Bank or
any stockholder (beneficial or otherwise) of Target Bank has
used funds or other assets of Target Bank directly or indirectly
for:
(a) illegal contributions, gifts, entertainment or other
expenses related to political activities,
(b) payments to or for the benefit of any governmental official
or employee, other than payments required or permitted by law,
(c) illegal payments to or for the benefit of any person, firm,
corporation or other entity, or any officer, employee, agent or
representative thereof, or
(d) the establishment or maintenance of a secret or unrecorded
fund. In addition, no employee or agent of Target Bank has
taken any act or omitted to take any act that, to the knowledge
of Target Bank, would cause a violation of federal currency
reporting laws (except as set forth in Section 2.21 of the
Disclosure Schedule).
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
------------------------------------------
Acquiror hereby makes the following representations and warranties:
Section 3.01. Organization and Capital Stock.
- ----------------------------------------------
(a) Acquiror is a corporation duly incorporated, validly
existing, and in good standing under the laws of the State of
Ohio with full corporate power and authority to carry on its
business as it is now being conducted.
(b) At the Effective Time, Acquisition Subsidiary shall be a
stock savings bank duly organized and validly existing under the
laws of the United States with full corporate power and
authority to carry on its business and perform its obligations
under this Agreement and the Plan of Merger.
Section 3.02. Authorization.
- -----------------------------
(a) The Board of Directors of Acquiror has, by all appropriate
action, approved this Agreement and the Merger and authorized
the execution and delivery hereof on its behalf by its duly
authorized officers and the performance of its obligations
hereunder. Except for approval of the Merger and the Plan of
Merger by the Board of Directors and the sole stockholder of
Acquisition Subsidiary (which shall be obtained upon the
formation of Acquisition Subsidiary as provided herein), no
other corporate proceeding is required for the approval by
Acquiror of this Agreement or the Merger or the performance by
Acquiror or Acquisition Subsidiary of their obligations under
this Agreement or the Plan of Merger.
(b) This Agreement has been duly and validly executed and
delivered by Acquiror and constitutes a legal, valid and binding
obligation of Acquiror, enforceable against Acquiror in
accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, receivership,
conservatorship, moratorium or other laws affecting creditors
rights generally and by judicial discretion in applying
principles of equity. Acquiror and each of its significant
subsidiaries (as defined in Section 3.03 of this Agreement) are
not in default under or in violation of any provision of its
respective certificate or articles of incorporation, charter,
bylaws, or any promissory note, indenture or any evidence of
indebtedness or security therefor, lease, contract, purchase or
other commitment or any other agreement of any of them which is
material to Acquiror, except for defaults and violations which
will not have a material adverse effect on the ability of
Acquiror to consummate the transaction contemplated by this
Agreement. Except for the Regulatory Approvals and related
filings, no notice to, filing with, authorization by, or consent
or approval of, any federal or state regulatory authority or
third party is necessary for the execution and delivery of this
Agreement by Acquiror or consummation of the Merger by Acquiror
or Acquisition Subsidiary.
(c) Neither the execution and delivery of this Agreement or the
Plan of Merger nor the consummation of the Merger, nor
compliance by Acquiror with the provisions of this Agreement and
the Plan of Merger, will:
(i) conflict with or result in a breach of Acquiror's Articles
of Incorporation or code of regulations; or
(ii) violate any judgment, ruling, order, writ, injunction,
decree, statute, rule or regulation applicable to Acquiror.
(d) Prior to the Effective Time,
(i) the Board of Directors of Acquisition Subsidiary shall
have, by all appropriate action, approved the Plan of Merger and
the Merger and authorized the execution and delivery thereof on
its behalf by its duly authorized officers and the performance
of its obligations thereunder;
(ii) Acquiror, as the sole shareholder of Acquisition
Subsidiary, shall have adopted the Plan of Merger; and
(iii) the Plan of Merger shall have been duly and validly
executed and delivered by Acquisition Subsidiary and shall
constitute a legal, valid and binding obligation of Acquisition
Subsidiary, enforceable against Acquisition Subsidiary in
accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, receivership,
conservatorship, moratorium or other laws affecting creditors
rights generally and by judicial discretion in applying
principles of equity.
(e) Neither the execution and delivery of the Plan of Merger nor
the consummation of the Merger, nor compliance by Acquisition
Subsidiary with the provisions of this Agreement and the Plan of
Merger, will:
(i) conflict with or result in a breach of the Acquisition
Subsidiary's charter or by-laws or;
(ii) violate any judgment, ruling, order, writ, injunction,
decree, statute, rule or regulation applicable to Acquisition
Subsidiary.
Section 3.03. Subsidiaries.
- ----------------------------
Each of Acquiror's significant subsidiaries (as such term is
defined under regulations promulgated by the Securities and
Exchange Commission ("SEC")) is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power to own its respective
properties and assets, to incur its respective liabilities and
to carry on its business as now being conducted. All of the
outstanding shares of capital stock of each significant
subsidiary of Acquiror are owned by Acquiror, directly or
indirectly, free and clear of any material liens, encumbrances,
or security interests of third parties. All of the issued and
outstanding shares of each significant subsidiary are duly and
validly issued and outstanding and are fully paid and
nonassessable.
Section 3.04. Financial Information.
- -------------------------------------
The consolidated balance sheets of Acquiror and its subsidiaries
as of December 31, 1995, and the related unaudited consolidated
income statement and statement of changes in stockholders'
equity and cash flows for each of the three (3) years then
ended, together with the notes thereto, and the unaudited
balance sheet of Acquiror as of March 31, 1996, and the related
unaudited consolidated income statement and statements of change
in stockholders' equity and cash flows for the three (3) months
then ended included in Acquiror's Quarterly Report on Form 10-Q
for the quarter then ended, as currently on file with the SEC
(together, the "Acquiror Financial Statements"), have been
prepared in accordance with GAAP except as disclosed therein and
fairly present in all material respects the consolidated
financial position and the consolidated results of operations,
changes in stockholders, equity and cash flows of Acquiror and
its consolidated subsidiaries as of the dates and for the
periods indicated (subject to normal, recurring year-end
adjustments, none of which is material, and the absence of
footnotes).
Section 3.05. Absence of Changes.
- ----------------------------------
Since December 31, 1995, to the date hereof, Acquiror, on a
consolidated basis, has not experienced or suffered a Material
Adverse Change or entered into any contract, agreement or
understanding which would adversely affect its ability to
perform its obligations under this Agreement.
Section 3.06. Litigation.
- --------------------------
There is no litigation, claim or other proceeding pending or, to
the knowledge of Acquiror, threatened, against Acquiror or any
of its significant subsidiaries, or to which the property of
Acquiror or any of its significant subsidiaries is or would be
subject which, if adversely determined, would have a material
adverse effect on the business of Acquiror and its subsidiaries
taken as a whole or adversely affect Acquiror's ability to
perform its obligations under this Agreement.
Section 3.07. Compliance With Laws.
- ------------------------------------
Acquiror and its significant subsidiaries have all licenses,
franchises, permits and other government authorizations that are
legally required to enable them to conduct their respective
businesses in all material respects and are in compliance in all
material respects with all applicable laws and regulations.
Section 3.08. Statements True and Correct.
- -------------------------------------------
None of the information supplied or to be supplied by Acquiror
for inclusion in:
(i) the Proxy Statement and
(ii) any document to be filed with any regulatory authority in
connection with the transactions contemplated hereby,
will, at the respective times such documents are filed, and,
with respect to the Proxy Statement, when first mailed to the
stockholders of Target Bank, be false or misleading with respect
to any material fact, or omit to state any material fact
necessary in order to make the statements therein not
misleading, or, in the case of the Proxy Statement or any
amendment thereof or supplement thereto, at the time of the
Stockholders' Meeting, be false or misleading with respect to
any material fact, or omit to state any material fact necessary
to correct any statement in any earlier communication with
respect to the solicitation of any proxy for the Stockholders'
Meeting. All documents that Acquiror is responsible for filing
with the OTS or any other regulatory authority in connection
with the transactions contemplated hereby will comply as to form
in all material respects with the provisions of applicable law
and any rules and regulations thereunder.
Section 3.09. Undisclosed Liabilities.
- ---------------------------------------
Acquiror has no liabilities or obligations, whether absolute,
known or unknown, accrued or unaccrued, contingent or otherwise
(and there is no asserted or unasserted claim against Acquiror
giving rise to any such liabilities or obligations) that could
adversely affect its ability to consummate the transactions
contemplated by this Agreement. For purposes of this Section
3.09, the term "liabilities" includes without limitation
liabilities as guarantor and liabilities for taxes in each case
material to the condition of Acquiror.
Section 3.10. Regulatory Enforcement Matters.
- ----------------------------------------------
Neither Acquiror nor any of its significant subsidiaries is
subject to or has received any notice or advice that it is not
in substantial compliance with any statute or regulation, or
that it is or may become subject to any order, agreement or
memorandum of understanding with any federal or state agency
charged with the supervision or regulation of savings banks,
savings associations or holding companies of savings banks or
savings associations or engaged in the insurance of deposits or
any other governmental agency having supervisory or regulatory
authority with respect to Acquiror or any of its significant
subsidiaries, and neither Acquiror nor any of its significant
subsidiaries has received any notice from any governmental
authority threatening to revoke any license, franchise, permit
or governmental authorization.
Section 3.11. Tax Matters.
- ---------------------------
(a) Each of Acquiror and its significant subsidiaries has filed
all federal, state and local tax returns and reports due with
respect to any of its employees, depositors, borrowers,
operations, businesses or properties in a timely fashion and has
paid or made provision for all amounts due or claimed to be due.
All such returns and reports fairly reflect the information
required to be presented therein. All provisions for accrued
but unpaid taxes contained in Acquiror's Financial Statements
were made in accordance with GAAP and do not fail to provide for
anticipated tax liabilities including interest and penalties.
There are no federal, state or local tax returns or reports not
filed which would be due but for an extension of time for filing
having been granted.
(b) Neither Acquiror nor any of its significant subsidiaries has
executed or filed with the IRS or any state or local tax
authority any agreement extending the period for assessment and
collection of any tax, nor is Acquiror or any of its significant
subsidiaries a party to any action or proceeding by any
governmental authority for assessment or collection of taxes,
except tax liens or levies against it customers. There is no
outstanding assessment or claim for collection of taxes against
Acquiror or any of its significant subsidiaries. Neither
Acquiror nor any of its significant subsidiaries has received
any notice of deficiency, proposed deficiency or assessment from
the IRS or any other governmental agency, with respect to any
federal, state or local taxes. No tax return of Acquiror or any
of its significant subsidiaries is currently the subject of any
audit by the IRS or any other governmental agency. No material
deficiencies have been asserted in connection with the tax
return of Acquiror or any of its significant subsidiaries and
Acquiror has no reason to believe that any deficiency would be
asserted relating thereto.
Section 3.12. Reports.
- -----------------------
Since January 1, 1993, each of Acquiror and its significant
subsidiaries has filed all reports and statement, together with
any amendments required to be made with respect thereto, that it
was required to file with:
(i) the Federal Reserve Board,
(ii) the FDIC,
(iii) any applicable state or federal securities or banking or
savings and loan authorities and
(iv) any other government authority with jurisdiction over
Acquiror.
As of their respective dates, each of such reports and
documents, including the financial statement, exhibits and
schedules thereto, complied in all material respects with the
relevant statutes, rules and regulations enforced or promulgated
by the regulatory authority with which they were filed, and did
not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
Section 3.13. Availability of funds.
- -------------------------------------
Acquiror has on the date hereof, and will have at the Effective
Time, the financial capacity to consummate the transactions
contemplated hereby.
ARTICLE FOUR
AGREEMENTS OF TARGET BANK
-------------------------
Section 4.01. Business in Ordinary Course.
- -------------------------------------------
(a) Target Bank shall not declare or pay any dividend or make
any other distribution with respect to their capital stock or
ownership interests whether in cash, stock or other property,
after the date of this Agreement except:
(i) payment by Target Bank of its regular semi-annual cash
dividend on or about June 30, 1996 in the amount of $.25 per
share of Target Bank Common and
(ii) if closing does not occur by December 31, 1996, then
Target Bank may declare and pay an additional regular
semi-annual dividend in the amount of $.25 per share of Target
Bank Common and
(iii) if closing does not occur by June 30, 1997, then Target
Bank may pay an additional regular semi-annual dividend in the
amount of $.25 per share of Target Bank Common.
(b) Target Bank shall continue to carry on, after the date
hereof, its business and the discharge or incurrence of
obligations and liabilities, only in the usual, regular and
ordinary course of business, as heretofore conducted, and by way
of amplification and not limitation, Target Bank will not,
without the prior written consent of Acquiror acting through its
Chief Executive Officer or such other officer as Acquiror may
specify in a written notice to Target Bank; provided in the case
of subsections (vi), (vii), (viii), (ix), (xiii) and (xviii)
below, such consent shall not be unreasonably withheld or
delayed.
(i) issue any Target Bank Common except pursuant to Target Bank
Stock Options issued prior to June 30, 1995, or other capital
stock or any options, warrants, or other rights to subscribe for
or purchase Target Bank Common or any other capital stock or any
securities convertible into or exchangeable for any capital
stock;
(ii) directly or indirectly redeem, purchase or otherwise
acquire any Target Bank Common or any other capital stock or
ownership interests of Target Bank;
(iii) effect a reclassification, recapitalization, split-up,
exchange of shares, readjustment or other similar change in or
to any capital stock or otherwise reorganize or recapitalize;
(iv) except as provided in Section 4.03 hereof, change its
charter or bylaws;
(v) except as otherwise provided in this Agreement, enter into
or modify any employment agreement, or severance agreement or
plan; or grant any increase in the compensation payable or to
become payable to any director, officer or employee, except for
increases in salaries consistent with Target Bank's past
practices; grant any stock options; or, except as required by
law, pay or agree to pay any bonus, adopt or make any change in
any bonus, insurance, pension, or other Employee Plan, other
than the Target Bank ESOP, as defined in Section 5.06, as
hereinafter provided in the Agreement, payment or arrangement
made to, for or with any director, officer or employee, except
for payments of and changes in salaries and bonuses consistent
with Target Bank's past practices, or promote any persons
employed as of the date hereof or hire any new employees;
(vi) except for FHLB Cincinnati advances, the aggregate amount
of which at any time shall not exceed One Million Dollars
($1,000,000.00) and deposit-taking in the ordinary course of its
business, borrow or agree to borrow any funds, including but not
limited to repurchase transactions, or indirectly guarantee or
agree to guarantee any obligations of others;
(vii) make or commit to make any new loan or letter of credit or
any new or additional discretionary advance under any existing
line of credit, in a principal amount in excess of one Hundred
Thousand Dollars ($100,000) or that would increase the aggregate
credit outstanding to any one borrower (or group of affiliated
borrowers) to more than One Hundred Thousand Dollars ($100,000)
(excluding for this purpose any accrued interest or overdrafts);
provided, however, that Target Bank may make one-to-four family
residential mortgage loans that conform to Target Bank's
mortgage lending policies as of the date hereof in principal
amounts of up to Two Hundred Fifty Thousand Dollars ($250,000);
(viii) establish any new lending programs or make any changes
in its policies concerning which persons may approve loans;
(ix) enter into any securities transaction for its own account
or purchase or otherwise acquire any investment security for its
own account other than U.S. Treasury obligations and deposits in
an overnight account at the FHLB Cincinnati or securities issued
or guaranteed by the Government National Mortgage Association,
the Federal National Mortgage Association or the Federal Home
Loan Mortgage Corporation;
(x) increase or decrease the rate of interest paid on time
deposits or on certificates of deposit, except in a manner and
pursuant to policies consistent with past practices in relation
to rates prevailing in Target Bank's market;
(xi) enter into any agreement, contract or commitment out of
the ordinary course of business or having a term in excess of
three (3) months and involving an expenditure in excess of Five
Thousand Dollars ($5,000) other than letters of credit, loan
agreements, deposit agreements, other lending, credit and
deposit agreements and documents made in the ordinary course of
business and as otherwise contemplated by this Agreement;
(xii) except in the ordinary course of business, place on any
of its assets or properties any mortgage, pledge, lien, charge,
or other encumbrance;
(xiii) cancel or accelerate any material indebtedness owing to
Target Bank or any claims which Target Bank may possess or waive
any rights of material value;
(xiv) sell or otherwise dispose of any real property or any
material amount of any tangible or intangible personal property
other than:
(A) properties acquired in foreclosure or otherwise
in the ordinary collection of indebtedness owed to Target Bank,
(B) student loans, or
(C) fixed rate loans which are held for sale upon
origination and sold within sixty (60) days thereafter;
(xv) foreclose upon or otherwise take title to or possession or
control of any real property without first obtaining a Phase One
environmental report thereon which indicates that the property
is free of pollutants, contaminants or hazardous or toxic waste
materials; provided, however, that Target Bank shall not be
required to obtain such a report with respect to single family,
non-agricultural residential property of one acre or less to be
foreclosed upon unless it has reason to believe that such
property might contain any such pollutants, contamination, or
waste materials;
(xvi) voluntarily commit any act or omission which will cause a
breach of any material agreement, contract or commitment;
(xvii) violate any law, statute, rule, governmental regulation,
or order, which violation might have a material adverse effect
on Target Bank's business, financial condition, or earnings, or
(xviii) purchase any real or personal property or make any
other capital expenditure where the amount paid or committed
therefor is in excess of Five Thousand Dollars ($5,000).
(c) Target Bank shall promptly notify Acquiror in writing of the
occurrence of any matter or event known to and directly
involving Target Bank (except matters or events including but
not limited to any changes in conditions that affect the thrift
industry generally) that is materially adverse to the business,
operation, properties, assets, or condition (financial or
otherwise) of Target Bank.
(d) Unless and until this Agreement shall have been properly
terminated by a party pursuant to Article Seven hereof and
except as provided below in this Section 4.01(d), Target Bank
shall:
(i) not, directly or indirectly, through any of its officers,
directors, agents, stockholders or affiliates, solicit,
encourage or initiate any negotiations or discussions with
respect to inquiries, offers, or proposals relating to the
possible sale or other disposition of shares of its capital
stock by its stockholders or the possible sale or other
disposition (except in the ordinary course of business) of a
substantial portion of its assets to, or merger or consolidation
with, any other person,
(ii) not disclose to any person (other than regulatory
officials) any information not customarily disclosed publicly or
provide access to its properties, books, or records or otherwise
assist or encourage any person in connection with any of the
foregoing, and
(iii) give Acquiror prompt notice of any such inquiries,
offers, or proposals.
The foregoing shall not apply, however, to the consideration and
facilitation of any inquiry, offer, or proposal not solicited
after the date hereof by Target Bank or any of its officers,
directors, stockholders, agents or affiliates which relates to
the possible sale or other disposition of Target Bank Common by
stockholders or the possible sale or other disposition of all or
substantially all of Target Bank's assets to, or merger or
consolidation with, another corporation or association (an
"Unsolicited Acquisition Proposal") if and to the extent that
the Board of Directors of Target Bank reasonably determines in
good faith after consultation with its financial advisor and
counsel to Target Bank that failure to consider such Unsolicited
Acquisition Proposal could reasonably be expected to constitute
a breach of its fiduciary duties to the stockholders of Target
Bank, provided, however, that Target Bank shall give Acquiror
prompt notice of such Unsolicited Acquisition Proposal and keep
Acquiror promptly informed regarding the substance thereof and
the response of the Board of Directors of Target Bank thereto.
(e) Target Bank shall permit representatives of Acquiror to
attend each meeting of its respective board of directors and
executive committee, and shall give reasonable prior notice of
all such meetings to Acquiror; provided, however, the
representatives of Acquiror may be excluded from portions of
such meetings where sensitive matters (including but not limited
to an Unsolicited Acquisition Proposal and discussions with
legal counsel with respect to transactions contemplated by this
Agreement) are being discussed or voted upon.
(f) Target Bank shall provide to Acquiror such reports on
litigation involving Target Bank as Acquiror shall reasonably
request, provided that Target Bank shall not be required to
divulge information to the extent that, in the good faith
opinion of its counsel, by doing so, it would waive the
attorney-client privilege.
(g) Target Bank will use reasonable efforts to prevent the
decline in its level of deposits and in its mortgage loan
portfolio in a manner consistent with the safe and sound
operations the Target Bank and the terms of this Agreement.
(h) Target Bank shall provide at its expense to Acquiror a Phase
One environmental report on each parcel of real estate it owns,
including REO. In the event this Agreement is terminated for
any reason, Acquiror shall reimburse Target Bank for its
out-of-pocket expenses incurred with respect to such
environmental reports.
(i) Target Bank shall, on the business day immediately prior to
the Effective Time, renew the severance agreements listed on
Disclosure Schedule 2.09 for a period of two (2) years from the
Effective Time, substantially in the form attached hereto as
Exhibit G, and shall give notice under said severance agreement
that the agreements shall not renew beyond the current term.
Section 4.02. Breaches.
- ------------------------
In the event that Target Bank has knowledge of the occurrence,
or impending or threatened occurrence, of any event or condition
which would cause or constitute a breach by it (or would have
caused or constituted a breach had such event occurred or been
known prior to the date hereof) of any representations or
agreements contained or referred to herein, it shall give prompt
written notice thereof to Acquiror and use its best efforts to
prevent or promptly remedy the same.
Section 4.03. Submission to Stockholders.
- ------------------------------------------
Target Bank shall cause to be duly called and held, on a timely
basis, a special meeting of its stockholders for submission of:
(i) the amendment of the federal stock charter of Target Bank
to remove Section 8 thereof (the "Amendment"),
(ii) this Agreement, and
(iii) the Plan of Merger for adoption by such stockholders as
required by applicable law (the "Stockholders' Meeting").
Subject to receipt by Target Bank of all information concerning
Acquiror and its significant subsidiaries as Target Bank may
reasonably request, Target Bank shall prepare a Proxy Statement
(the "Proxy Statement"), and after providing Acquiror and
Acquiror's counsel reasonable opportunity to comment on the
Proxy Statement, Target Bank shall file it with the OTS and,
upon clearance by the OTS, deliver it to its stockholders. The
Board of Directors of Target Bank shall recommend to its
stockholders the adoption of this Agreement and Plan of Merger
and use its best efforts to obtain such stockholder approval;
provided, however, that if the Board of Directors of Target Bank
shall have reasonably determined in good faith (after
consultation with its counsel) that such recommendation is
reasonably likely to constitute a breach of its fiduciary duties
to the stockholders of Target Bank, then the Board of Directors
of Target Bank shall not be obligated to recommend to its
stockholders adoption of this Agreement, the Amendment, and the
Plan of Merger.
Section 4.04. Consents to Contracts and Leases.
- ------------------------------------------------
Target Bank shall use reasonable efforts to obtain all necessary
consents with respect to all interests of Target Bank in any
material leases, licenses, contracts, instruments and rights
which require the consent of another person for their transfer
or assumption pursuant to the Merger, if any.
Section 4.05. Conformance Accounting and Reserve Policies;
Restructuring Expenses.
- -----------------------------------------------------------
After the receipt of all approvals set forth in Section 6.01(d)
of this Agreement, and provided that at such time all of the
conditions to closing set forth in Sections 6.01(a), (b), (c),
(f), (g) and (h) of this Agreement have been satisfied, to the
extent they are capable of being satisfied as of such time, and
further provided that no basis for termination of this Agreement
by either party pursuant to Article Seven of this Agreement is
then extant, and in no event earlier than thirty (30) days prior
to the Effective Time, at the request of Acquiror, Target Bank
shall, on or before or effective as of the date specified by
Acquiror, establish and take such reserves and accruals as
Acquiror reasonably shall request to conform Target Bank's
accrual, reserve and other accounting policies to Acquiror's
policies. Notwithstanding the foregoing, Target Bank shall not
be required to take any action under this Section 4.05 which it
believes, based on a written opinion of independent counsel,
will constitute a breach of its fiduciary duties, or, based on a
written opinion of its independent public accountant, will
constitute a violation of GAAP.
Section 4.06. Consummation of Agreement.
- -----------------------------------------
Target Bank shall use its best efforts to perform and fulfill
all conditions and obligations to be performed or fulfilled
under this Agreement by it and each of its subsidiaries and to
effect the Merger in accordance with the terms and provisions
hereof. Target Bank shall furnish to Acquiror in a timely
manner all information, data and documents in the possession of
Target Bank requested by Acquiror as may be required to obtain
the Regulatory Approvals or other necessary approvals of the
Merger and shall otherwise cooperate fully with Acquiror to
carry out the purpose and intent of this Agreement.
Section 4.07. Access to Information.
- -------------------------------------
Target Bank shall permit Acquiror reasonable access to its
properties in a manner which will avoid undue disruption or
interference with normal operations and shall disclose and make
available to Acquiror all books, documents, papers and records
relating to assets, stock, ownership, properties, operations,
obligations and liabilities, including but not limited to all
books of account (including the general ledger), tax records,
minute books of directors, and stockholders' meetings,
organizational documents, material contracts and agreements,
loan files, filings with any regulatory authority, accountants'
work papers, litigation files, plans affecting employees, and
any other business activities or prospects in which Acquiror may
have a reasonable and legitimate interest in furtherance of the
transactions contemplated by this Agreement; provided, however,
that nothing in this Section 4.02 shall entitle Acquiror to
access to minutes and other documents or instruments relating to
Unsolicited Acquisition Proposals. Acquiror will hold any such
information which is nonpublic in confidence in accordance with
the provisions of Section 8.01 hereof.
Section 4.08. Subsequent Disclosure Schedule.
- ----------------------------------------------
If subsequent to the date of this Agreement and prior to the
Effective Time, an event occurs which renders untrue any
representation or warranty of Target Bank made at the date of
this Agreement (a "Trigger Event"), Target Bank shall promptly
deliver to Acquiror a supplement to the Disclosure Schedule (a
"Subsequent Disclosure Schedule"), which shall contain a
detailed description of any and all such matters. A Subsequent
Disclosure Schedule shall be delivered by Target Bank to
Acquiror within two (2) business days after Target Bank learns
of the Trigger Event but in no event later than before the
Closing. The submission of a Subsequent Disclosure Schedule and
the matters therein contained shall not constitute a default or
breach by Target Bank of any of its representations and
warranties under this Agreement; provided, however, that all
matters therein disclosed together with all other events,
circumstances and occurrences may be taken into account by
Acquiror in determining whether Target Bank has experienced a
Material Adverse Change; provided, further, however, that this
Section 4.08 is not intended to permit Target Bank to alter or
amend its representations and warranties as made herein
(including the Disclosure Schedule) as of the date of this
Agreement, and any Subsequent Disclosure Schedule shall not cure
the inaccuracy thereof as of the date of this Agreement for any
purpose under this Agreement.
Section 4.09. Target Bank's Merger Expenses.
- ---------------------------------------------
The costs incurred by Target Bank for fees and expenses of third
parties in connection with this Agreement and the Merger,
including without limitation fees and expenses of investment
bankers, accountants and attorneys, shall not exceed Two Hundred
Seventy-Five Thousand Dollars ($275,000.00), except in the event
of unforeseen regulatory requirements solely relating to
regulatory approvals required for consummation.
ARTICLE FIVE
AGREEMENTS OF ACQUIROR
----------------------
Section 5.01. Regulatory Approvals and Proxy Statement.
- --------------------------------------------------------
Acquiror shall use its best efforts to file within sixty (60)
days after the date hereof all applications for the Regulatory
Approvals required in order to consummate the Merger. Acquiror
shall keep Target Bank reasonably informed as to the status of
such applications and make available to Target Bank copies of
such applications as filed and any supplementary filed
materials. Acquiror shall timely provide all information
reasonably requested by Target Bank for inclusion in the Proxy
Statement and shall fully cooperate with Target Bank in the
preparation of the Proxy Statement.
Section 5.02. Breach.
- ----------------------
In the event that Acquiror has knowledge of the occurrence, or
impending or threatened occurrence, of any event or condition
which would cause or constitute a breach (or would have caused
or constituted a breach had such event occurred or been known
prior to the date hereof) of any of its representations or
agreements contained or referred to herein, it shall give prompt
written notice thereof to Target Bank and use its best efforts
to prevent or promptly remedy the same.
Section 5.03. Consummation of Agreement.
- -----------------------------------------
Acquiror shall use its best efforts to perform and fulfill all
conditions and obligations to be performed or fulfilled by it
under this Agreement and to effect the Merger in accordance with
the terms and conditions of this Agreement.
Section 5.04. Directors' and Officers' Liability Insurance and
Indemnification.
- ---------------------------------------------------------------
From the Effective Time and continuing thereafter, the current
officers and directors of Target Bank shall be indemnified and
provided directors' and officers' liability insurance by the
Acquiror, expense thereof may be allocated to Target Bank, for
their acts and omissions occurring prior to the Effective Time
exactly as is provided on the date of this Agreement in the Code
of Regulations, Article Five, of the Acquiror and with the
Acquiror's existing directors' and officers' liability insurance
policy as of the date of this Agreement, each of which may be
changed, altered, modified or discontinued in good faith without
discrimination to the officers and directors of Target Bank.
Section 5.05. Employee Benefit and Related Matters.
- ----------------------------------------------------
All employees of Target Bank immediately prior to the Effective
Time shall remain employees of Target Bank at the Effective Time
and, with respect to employees who are not currently covered by
a written employment agreement with the Target Bank, shall be
employed by Target Bank as at-will employees at the same salary
they are receiving from Target Bank. Any employee who is
currently covered by a written employment agreement will
continue his or her employment as an at-will employee in
accordance with the terms of such written agreement. Acquiror
does not intend to impose job eliminations at Target Bank as a
result of the Merger. The medical plans maintained by Target
Bank prior to the Effective Time shall remain in effect until
such time as the plans are terminated and substitution therefore
is made of substantially equivalent or superior plans, if any,
maintained by the Acquiror for the benefit of employees of the
Acquiror and its subsidiaries. At such time of substitution,
employees of Target Bank shall be given the opportunity to
participate in Acquiror's health insurance plan, with no waiting
period, with no pre-existing condition exclusion and shall
receive credit for deductible co-payment requirements already
satisfied during Target Bank's current medical plan year.
Included in Acquiror's health plan is coverage for the treatment
of cancer. Employees of Target Bank shall be given credit for
years of service with Target Bank for the calculation of
vacation and sick time. Target Bank shall become a plan sponsor
of a 401(k) Plan and a defined benefit pension plan maintained
by the Acquiror for the benefit of its and its subsidiary
employees within ninety (90) days after the Effective Time and
the employees of Target Bank immediately prior to Effective Time
who continue as employees of Target Bank shall be given credit
for years of service to Target Bank for purposes of vesting and
participation (but not accrual of benefits under the defined
benefit pension plan); provided, however, no such participation
in any Acquiror qualified plan shall occur until such time as
participation in the Target Bank's employee stock ownership plan
ceases. In all other respects, employees of the Target Bank
subsequent to the Effective Time shall be subject to all the
rules, regulations and policies of the Acquiror's personnel
policies as promulgated from time to time.
Section 5.06. Target Bank's Employee Stock Ownership Plan.
- -----------------------------------------------------------
(a) Prior to the Effective Time and without any requirement to
make application to the Key District Office of the IRS in
Cincinnati (the "Key District Office"), Target Bank may amend
Target Bank's employee stock ownership plan (the "Target Bank
ESOP") to provide for:
(i) full vesting of benefits by participants,
(ii) elimination of any requirement for a participant to be
employed as of the last day of the year to receive an employer
contribution, other annual additions or allocations, and
(iii) to provide for monthly contributions, in the case of
clauses (i) and (ii), effective as of the Effective Time, and in
the case of clause (iii), at any time prior to the Effective
Time.
(b) From and after the date of this Agreement, Target Bank shall
make no further contributions to the Target Bank ESOP, except in
an amount to pay any permitted required installment payment on
Target Bank ESOP loan. From and after the date of this
Agreement and prior to the Effective Time, Target Bank and its
representatives, with the full cooperation of Acquiror, shall
use their best efforts to:
(i) submit to the Key District Office an Application of
Determination upon Termination relating to Target Bank ESOP
which discloses the proposed allocation of the cash remaining in
the suspense account (after the repayment of Target Bank ESOP
loan) without regard to Section 415 of the Code; and
(ii) maintain the status of Target Bank ESOP as a plan
qualified under Section 401(a) and 4975 of the Code. At the
Effective Time or as soon thereafter as is practicable and
permissible under the Code, Target Bank and Acquiror shall cause
Target Bank ESOP loan to be repaid with cash proceeds from the
sale of Target Bank Common received by Target Bank ESOP with
respect to unallocated shares of Target Bank Common. If the Key
District Office issues a favorable determination letter with
respect to the repayment of Target Bank ESOP loan and proposed
allocation of the remaining suspense account to participants,
Acquiror and Target Bank shall, as soon thereafter as
practicable,
(A) cause the Target Bank ESOP to repay the Target
Bank ESOP loan and make the proposed allocation to participants in
accordance with such favorable determination letter,
(B) terminate the Target Bank ESOP and the associated
trust (the "ESOP Trust") and
(C) distribute Target Bank ESOP benefits to the Target Bank
ESOP participants pursuant to the terms of the Target Bank ESOP.
(c) In the event that, following the Effective Time, the
employment of any Target Bank ESOP participant who was employed
by Target Bank is involuntarily terminated without cause by
Target Bank, such participant (or his or her beneficiary or
beneficiaries) shall receive a cash bonus from Target Bank as
soon as practicable after the date on which the final allocation
of earnings from the suspense account is made, equal to the
amount such participant would have received if he or she had
continued to be a participant in the Target Bank ESOP, at his or
her then-current annualized compensation as such term is defined
in the Target Bank ESOP, through the date of the termination of
the ESOP Trust; provided, however, that neither Acquiror nor
Target Bank shall be obligated to make any such cash payment
under any circumstances in which such payments are not or will
not be deductible because of Section 280G of the Code.
If the Key District Office determines that it will not issue a
favorable determination letter with respect to the proposed
allocation, then the Target Bank ESOP loan shall nevertheless be
repaid. The maximum allocation of earnings shall then be made
to participant accounts on a plan termination basis consistent
with the limitations under Section 415 of the Code, any
remaining cash received by Target Bank ESOP attributable to
unallocated shares of Target Bank Common shall remain in the
suspense account, and, to the extent that such cash can be
allocated to the accounts of participants without violation the
limitations of Section 415 of the Code, the cash shall be
allocated in the current Plan Year in which the Effective Time
occurs and during the next ensuing Plan Year to those
participants in Target Bank ESOP as of the Effective Time to the
maximum extent permitted by Section 415 of the Code and provided
that the continued maintenance of the Target Bank ESOP shall not
adversely affect the tax-qualified status of the Target Bank
ESOP. At the expiration of said subsequent Plan Year, the
Target Bank ESOP Trust shall be terminated with any amounts then
remaining in the suspense account, if any, being transferred to
another qualified plan of Acquiror.
Section 5.07. Recognition and Retention Plan.
- -----------------------------------------------
(a) The existing Target Bank Recognition and Retention Plan (the
"RRP") and grants of awards made on or prior to June 30, 1996,
as listed in the Disclosure Schedule in an amount not to exceed
8,568 shares of Target Bank Common will be honored by Acquiror
in accordance with the terms of said plan and grants of awards
and Thrift Regulations. No awards granted subsequent to June
30, 1996, shall be valid in any respect.
To the extent such awards have not vested prior to the Effective
Time, the Per Share Merger Consideration of each RRP award shall
be deposited by Acquiror in an account at The Peoples Banking
and Trust Company, Marietta, Ohio, an Ohio banking corporation,
bearing interest at market rates. The cash and a pro rata
portion of the interest earned on such cash shall be distributed
to grantees in a manner consistent with the vesting of each RRP
award.
(b) Immediately after the Effective Time, the RRP shall be
amended by Acquiror to provide that, in the event that, the
employment of any recipient of an RRP award who was employed by
Target Bank is involuntarily terminated without cause by Target
Bank, such recipient's unvested RRP award shall become fully
vested; provided, however, that neither Acquiror nor Target Bank
shall be obligated to make any such cash payment under any
circumstances in which such payments are not or will not be
deductible because of Section 280G of the Code or are prohibited
under any other applicable law or regulation.
Section 5.08. Board of Directors of Target Bank; Advisory Directors.
- ---------------------------------------------------------------------
(a) The Acquiror shall elect the persons listed on Exhibit D
hereto to be Directors of Target Bank for the terms set forth
therein. The Directors listed on Exhibit D, which shall include
all of the Directors of Target Bank immediately prior to the
Effective Time, shall hold such positions for at least three (3)
years and shall receive board fees equal to the greater of the
fees received by them during the year prior to the Effective
Time or the fees received by Directors of Target Bank who were
not directors of Target Bank prior to the Effective Time.
(b) At the Effective Time, Acquiror will form a Russell,
Kentucky Advisory Board which will be maintained, subject to
Thrift Regulations and OTS directives, by Acquiror at least
through December 31, 2005. Each person who is a director of
Target Bank of the date of this Agreement who does not retain
such position through December 31, 2005, shall, at the time he
or she no longer is a director of Target Bank, be entitled to
immediately become a member of the Russell, Kentucky Advisory
Board for a term extending through December 31, 2005. In
addition, each person named in Section 5.08 of the Disclosure
Schedule whose employment is involuntarily terminated by Target
Bank or the Acquiror after the Effective Time without cause
shall be entitled on the date of such termination to become a
member of the Russell, Kentucky Advisory Board for a term
extending through December 31, 2005. The Russell, Kentucky
Advisory Board shall meet at least once every six months at such
time selected and designated by the Acquiror and each member of
the Russell, Kentucky Advisory Board shall receive compensation
of $100.00 per meeting attended.
Section 5.09. Registration.
- ----------------------------
Within ten (10) business days after the Effective Time,
Acquiror shall file with the SEC and any required state agency
an appropriate registration statement with respect to the shares
of Acquiror common to be subject to the Target Bank Stock Option
Plan and shall use reasonable efforts to maintain the
effectiveness of such registration statement or statements for
so long as such options remain outstanding.
ARTICLE SIX
CONDITIONS PRECEDENT TO THE MERGER
----------------------------------
Section 6.01. Conditions to Acquiror's Obligations.
- ----------------------------------------------------
Acquiror's obligations under this Agreement are conditioned upon
Acquiror's receiving, concurrently with the execution and
delivery of this Agreement by Target Bank, a Shareholder
Agreement in the form attached as Exhibit A executed by each of
the directors of Target Bank who is a shareholder of Target
Bank. Each such agreement shall be dated as of the date of this
Agreement. Failure of Target Bank to deliver any of such
agreements shall be a material breach of this Agreement.
Acquiror's obligations to effect the Merger shall be subject to
the satisfaction (or waiver by Acquiror) prior to or on the
Closing Date of the following conditions:
(a) The representations and warranties made by Target Bank in
this Agreement shall be true in all material respects on and as
of the Closing Date but as updated by any Subsequent Disclosure
Schedule with the same effect as though such representations and
warranties had been made or given on and as of the Closing Date,
and for purposes of satisfying this closing condition relative
to the truth as of the date of this Agreement of any
representations of Target Bank that contains a knowledge
qualification, such knowledge qualification may be disregarded
by Acquiror;
(b) Target Bank shall have performed and complied in all
material respects with all obligations and agreements required
to be performed by them prior to the Closing Date under this
Agreement;
(c) No temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition (an
"Injunction") preventing the consummation of the Merger shall be
in effect, nor shall there be pending any proceeding by any
governmental agency or other person seeking any of the
foregoing; and there shall not be any action taken, or any
statute, rule, regulation or order enacted, promulgated,
entered, enforced or deemed applicable to the Merger which makes
the consummation of the Merger illegal;
(d) All Regulatory Approvals and other necessary consents,
authorizations and other approvals required by law for
consummation of the Merger shall have been obtained without the
imposition of any conditions that Acquiror determines to be
unduly burdensome, and all waiting periods required by law shall
have expired;
(e) Acquiror shall have received all documents required to be
received from Target Bank on or prior to the Closing Date, all
in form and substance reasonably satisfactory to Acquiror;
(f) Target Bank shall not have experienced a Material Adverse
Change, including but not limited to items contained in any
Subsequent Disclosure Schedule;
(g) Immediately prior to the Effective Time, the holders of no
more than ten percent (10%) of the outstanding Target Bank
Common shall qualify as Dissenting Shareholders; and
(h) Immediately prior to the Effective Time, the amount of the
total equity capital of Target Bank shall not be less than the
total equity capital of Target Bank as reported in its Quarterly
Report on Form 10-Q for the quarter ended March 31, 1996;
provided, however, that for purposes of such calculations, any
special exclusions contemplated by the definition of Material
Adverse Change, conforming reserves and accruals contemplated by
Section 4.05 shall not be taken into account in the costs of the
Phase One audits in Section 4.01(h) and the merger expenses in
Section 4.09.
Section 6.02. Conditions to Target Bank's Obligations.
- -------------------------------------------------------
Target Bank's obligations under this Agreement are conditioned
upon its receipt, concurrently with the execution and delivery
of this Agreement by Target Bank, of a written opinion from
Capital Resources Group, Inc. that the Per Share Merger
Consideration to be received by the holders of Target Bank
Common in the Merger is fair from a financial point of view.
Target Bank's obligation to effect the Merger shall be subject
to the satisfaction (or waiver by Target Bank) prior to or on
the Closing Date of the following conditions:
(a) The representations and warranties made by Acquiror in this
Agreement shall be true in all material respects on and as of
the Closing Date with the same effect as though such
representations and warranties had been made or given on the
Closing Date and for purposes of satisfying this closing
condition relative to the truth as of the date of this Agreement
of any representations of Acquiror that contains a knowledge
qualification, such knowledge qualification may be disregarded
by Target Bank;
(b) Acquiror shall have performed and complied in all material
respects with all of its obligations and agreements hereunder
required to be performed prior to the Closing Date under this
Agreement;
(c) No Injunction preventing the consummation of the Merger
shall be in effect, nor shall there be pending any proceeding by
any thrift regulatory authority or other governmental agency
seeking to prevent or delay the Merger; and there shall not be
any action taken, or any statute, rule, regulation or order
enacted, entered, enforced or deemed applicable to the Merger
which makes the consummation of the Merger illegal;
(d) All Regulatory Approvals and other necessary consents,
authorizations and other approvals, including the requisite
approval of this Agreement, the Amendment and the Plan of Merger
by the stockholders of Target Bank, required by law for
consummation of the Merger shall have been obtained and all
waiting periods required by law shall have expired;
(e) Target Bank shall have received all documents required to be
received from Acquiror on or prior to the Closing Date, all in
form and substance reasonably satisfactory to Target Bank.
ARTICLE SEVEN
TERMINATION OR ABANDONMENT
--------------------------
Section 7.01. Mutual Agreement.
- --------------------------------
This Agreement may be terminated by the mutual written agreement
of the parties at any time prior to the Closing Date, regardless
of whether approval of this Agreement, the Amendment and the
Plan of Merger by the stockholders of Target Bank shall have
been previously obtained.
Section 7.02. Breach of Agreement.
- -----------------------------------
In the event that there is a material breach of any of the
representations and warranties or agreements of Acquiror or
Target Bank, and such breach is not cured within ten (10) days
after notice to cure such breach is given by the non-breaching
party or, if such breach is not capable of being cured within
ten (10) days, steps are not initiated within ten (10) days to
effect a cure, then the nonbreaching party, regardless of
whether stockholder approval of this Agreement, the Amendment
and the Plan of Merger shall have been previously obtained by
Target Bank, may terminate and cancel this Agreement by
providing written notice of such action to the other party
hereto.
Section 7.03. Failure of Conditions.
- -------------------------------------
In the event any of the conditions to the obligations of:
(i) Acquiror set forth in Sections 6.01 or
(ii) Target Bank set forth in Section 6.02
are not satisfied or waived on or prior to the Closing Date, and
if any applicable cure period provided in Section 7.02 has
lapsed, then Acquiror (in the case of conditions to its
obligations) or Target Bank (in the case of conditions to its
obligations) may, regardless of whether approval of this
Agreement and the Plan of Merger by the stockholders of Target
Bank shall have been previously obtained, terminate and cancel
this Agreement by delivery of written notice of such action to
the other party on such date.
Section 7.04. Denial of Regulatory Approval.
- ---------------------------------------------
If any regulatory application filed pursuant to Section 5.01
should be finally denied or disapproved by the respective
regulatory authority, then this Agreement may be terminated by
any party to this Agreement. It is understood, however, that a
reasonable request for additional information from or
undertaking by Acquiror, as a condition for approval, shall not
be deemed to be a denial or disapproval so long as Acquiror
diligently provides the requested information or undertaking.
Section 7.05. Failure of Stockholders to Adopt.
- ------------------------------------------------
(a) If Target Bank's Board of Directors is excused, pursuant to
Section 4.03 of this Agreement, from its obligation to recommend
that Target Bank's stockholders adopt this Agreement, the
Amendment and the Plan of Merger, to present this Agreement, the
Amendment and the Plan of Merger to them for adoption or to hold
the Stockholders Meeting for such purpose, Acquiror or Target
Bank may terminate this Agreement.
(b) In the event that at the Stockholders' Meeting, Target
Bank's Board of Directors fails to recommend that Target Bank's
shareholders adopt, and the holders of at least the Minimum
Portion of the outstanding shares of Target Bank Common do not
adopt, this Agreement, the Amendment and the Plan of Merger,
Acquiror may terminate this Agreement.
(c) In the event that at the Stockholders' Meeting, the holders
of at least the Minimum Portion of the outstanding shares of
Target Bank Common do not adopt this Agreement, the Amendment
and the Plan of Merger and Target Bank's Board of Directors have
recommended that Target Bank's stockholders adopt this Agreement
and the Plan of Merger, Acquiror or Target Bank may terminate
this Agreement.
Section 7.06. Regulatory Enforcement Matters.
- ----------------------------------------------
In the event that Target Bank shall become a party or subject to
any written agreement, memorandum of understanding, cease and
desist order, imposition of civil money penalties or other
regulatory enforcement action or proceeding with or by any
federal or state agency charged with the supervision or
regulation of savings banks or savings associations after the
date of this Agreement, which is reasonably determined by
Acquiror to be significant to Target Bank's business, operations
or financial condition, then Acquiror may terminate this
Agreement.
Section 7.07. Automatic Termination.
- -------------------------------------
If the Closing Date does not occur on or prior to the expiration
of twelve (12) months from the date of execution of this
Agreement, then this Agreement may be terminated by either party
by giving written notice to the other; provided, however, that a
party who is then in breach of any of its representations,
warranties, covenants or agreements under this Agreement in any
material respect may not exercise such right of termination;
provided further that if the non-breaching party has not
notified the breaching party that it is seeking specific
performance, either party terminate this Agreement.
Section 7.08. Termination Fee.
- -------------------------------
In the event of termination of this Agreement pursuant to
Section 7.05(a) or (b) in consideration of Acquiror's costs and
expenses in connection with this Agreement and the transactions
contemplated hereby, its agreements hereunder, its expenditure
of significant management time and staff resources, its
forbearance from consideration and pursuit of other business
alternatives, its loss of a unique and valuable business
opportunity, and the added value to any person acquiring assets
or securities of Target Bank or combining with Target Bank
resulting from Target Bank's dealings with Acquiror and
Acquiror's agreement to proceed with the Merger on the terms and
conditions set forth herein, Target Bank shall pay Three Hundred
Thousand Dollars ($300,000) to Acquiror as an agreed-upon
termination fee, in immediately available funds within two (2)
business days after the occurrence of such event. If Target
Bank timely satisfies its obligations under this Section 7.08,
it shall have no liability under Sections 8.05 and 8.06 of this
Agreement, nor shall it be liable for specific performance or
injunctive relief under Section 8.15 of this Agreement.
ARTICLE EIGHT
GENERAL
-------
Section 8.01. Confidential Information.
- ----------------------------------------
The parties acknowledge the confidential and proprietary nature
of the information as hereinafter described which has heretofore
been exchanged and which will be received from each other
hereunder ("Information") and agree to hold and keep the same
confidential. Such Information will include any and all
financial, technical, commercial, marketing, customer or other
information concerning the business, operations and affairs of a
party that may be provided to the other, irrespective of the
form of the communications, by such party's employees or agents.
Such Information shall not include information which is or
becomes generally available to the public other than as a result
of a disclosure by a party or its representatives in violation
of this Agreement. The parties agree that the Information will
be used solely for the purposes contemplated by this Agreement
and that such Information will not be disclosed to any person
other than employees and agents of a party who are directly
involved in evaluating the transaction. The Information shall
not be used in any way detrimental to a party, including use
directly or indirectly in the conduct of the other party's
business or any business or enterprise in which such party may
have an interest, now or in the future, and whether or not now
in competition with such other party.
Section 8.02. Publicity.
- -------------------------
Acquiror and Target Bank shall cooperate with each other in the
development and distribution of all news releases and other
public disclosures concerning this Agreement and the Merger and
shall not issue any news release or make any other public
disclosure without prior review by the other, unless such may be
required by law or upon the written advice of counsel.
Section 8.03. Return of Documents.
- -----------------------------------
Upon termination of this Agreement prior to the Effective Time,
each party shall deliver to the other originals and all copies
of all Information made available to such party and will not
retain any copies, extracts or other reproductions in whole or
in part of such Information.
Section 8.04. Notice.
- ----------------------
Any notice or other communication shall be in writing and shall
be deemed to have been given or made on the date of delivery, in
the case of hand delivery, or three (3) business days after
deposit in the United States Registered Mail, postage prepaid,
or upon receipt if transmitted by facsimile telecopy or any
other means, addressed (in any case) as follows:
(a) if to Acquiror:
Robert E. Evans, President and Chief Executive Officer
PEOPLES BANCORP INC.
138 Putnam Street
Marietta, Ohio 45750
with a copy to:
Charles R. Hunsaker
General Counsel
PEOPLES BANCORP INC.
138 Putnam Street
Marietta, Ohio 45750
and
(b) if to Target Bank:
with a copy to:
Kip A. Weisman, P.C.
SILVER, FREEDMAN & TAFF, L.L.P.
110 New York Avenue, N.W. Suite 700
Washington, DC 20005
or to such other address as any party may from time to time
designate by notice to the others.
Section 8.05. Liabilities
- --------------------------
In the event that this Agreement is terminated pursuant to the
provisions of Article Seven hereof, no party hereto shall have
any liability to any other party for costs, expenses, damages or
otherwise, except as provided in Section 7.08 and as hereinafter
set forth in this Section 8.05 and Section 8.06 below. In the
event that this Agreement is terminated pursuant to Section 7.02
on account of an intentional breach of any of the
representations and warranties or of any of the covenants or
agreements set forth herein, then Target Bank, shall pay to
Acquiror, or Acquiror, in the case of a breach by Acquiror,
shall pay to Target Bank in immediately available funds, the sum
of Six Hundred Thousand Dollars ($600,000) as agreed-upon
liquidated damages, within two (2) business days after receipt
of a demand therefor from the party entitled to such damages.
For purposes of the foregoing, in no event shall a breach of a
representation and warranty be deemed "intentional" if no member
of the board of directors and no senior officer of Target Bank,
or Acquiror, as the case may be, knew or should have known that
such representation and warranty was not true and correct.
Section 8.06. Expenses.
- ------------------------
Each of the parties shall bear its own costs, fees and expenses
incurred in connection with this Agreement and the transactions
contemplated hereby provided that, in the event that the costs
incurred by Target Bank for fees and expenses of third parties
as provided in Section 4.09 of this Agreement exceed the amount
set forth in Section 4.09, the excess amount divided by the
number of outstanding shares of Target Bank Common shall reduce
the Per Share Merger Consideration. Nothing herein shall limit
the right of the non-breaching party to seek and receive all
relief and damages to which it may be entitled on account of a
non-intentional breach, including without limitation reasonable
expenses incurred to obtain such relief or damages.
Section 8.07. Nonsurvival of Representations and Warranties.
- -------------------------------------------------------------
Except as provided in this Section 8.07, no representation,
warranty, covenant or agreement contained in this Agreement
shall survive the Effective Time or the earlier termination of
this Agreement. The agreements set forth in Sections 1.04(c)
and (f) and 5.04, 5.05, 5.06, 5.07 and 5.09 shall survive the
Effective Time and the agreements set forth in Sections 7.08,
8.01, 8.03, 8.05 and 8.06 hereof shall survive the earlier
termination of this Agreement.
Section 8.08. Entire Agreement.
- --------------------------------
This Agreement constitutes the entire agreement among the
parties and supersedes and cancels any and all prior
discussions, negotiations, undertakings and agreement between
the parties relating to the subject matter hereof.
Section 8.09. Headings and Captions.
- -------------------------------------
The captions of Articles and Sections hereof are for convenience
only and shall not control or affect the meaning or construction
of any of the provisions of this Agreement.
Section 8.10. Waiver, Amendment or Modification.
- -------------------------------------------------
The conditions of this Agreement which may be waived may be
waived only by written notice by the party waiving such
condition to the other party or parties. The failure of any
party at any time or times to require performance of any
provision hereof shall in no manner affect the right at a later
time to enforce the same. This Agreement may be amended or
modified by a written document duly approved by the boards of
directors of the parties, whether before or after approval of
this Agreement by the stockholders of Target Bank, provided that
any amendment or modification after such stockholder approval
shall not decrease the Per Share Merger Consideration without
the approval thereof of the stockholders of Target Bank by at
least the Minimum Portion.
Section 8.11. Rules of Construction.
- -------------------------------------
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(c) "or" is not exclusive; and
(d) words in the singular may include the plural and in the
plural include the singular.
Section 8.12. Counterparts.
- ----------------------------
This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original and all of which shall be
deemed one and the same instrument.
Section 8.13. Successors and Assigns.
- --------------------------------------
This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns.
Except as provided in Sections 1.04(b), (c) and (f), 5.04 and
5.05, there shall be no-third party beneficiaries hereof.
Section 8.14. Governing Law; Assignment.
- -----------------------------------------
This Agreement shall be governed by the laws of the State of
Ohio and applicable federal laws and regulations. This
Agreement may not be assigned by either of the parties hereto.
Section 8.15. Specific Performance and Injunctive Relief.
- ----------------------------------------------------------
Each party to this Agreement recognizes that, if it fails to
perform, observe or discharge any of its obligations under this
Agreement, remedies at law may not provide adequate relief to
the other party or parties. Therefore, each party is hereby
authorized to demand specific performance of this Agreement, and
is entitled to temporary and permanent injunctive relief, in a
court of competent jurisdiction at any time when any other party
fails to comply with any of the provisions of this Agreement
applicable to it, in addition to any other remedy which may be
available in law or equity, except that a party that is paid a
termination fee pursuant to Section 7.08 or liquidated damages
pursuant to Section 8.05 hereof shall not be entitled to demand
specific performance. To the extent permitted by applicable
law, each party hereby irrevocably waives any defense that it
might have based on the adequacy of a remedy at law which might
be asserted as a bar to such remedy of specific performance or
injunctive relief.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
PEOPLES BANCORP INC.
Attest:
/s/ CHARLES R. HUNSAKER BY /s/ ROBERT E. EVANS
Charles R. Hunsaker Robert E. Evans
RUSSELL FEDERAL SAVINGS BANK
/s/ SHIRLEY A. MENSHOUSE BY /s/ CHARLES M. DANIELS
Shirley A. Menshouse Charles M. Daniels