SHARE EXCHANGE AGREEMENT
AMONG
CENTRAL BANCSHARES, INC.,
PIONEER FINANCIAL CORPORATION AND
PIONEER FEDERAL SAVINGS BANK
SHARE EXCHANGE AGREEMENT
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This is a Share Exchange Agreement (this "Agreement") dated
May 7, 1998, among (a) Central Bancshares, Inc. ("Central"), a
Kentucky corporation, (b) Pioneer Financial Corporation
("Pioneer"), a Kentucky corporation, and (c) Pioneer Federal
Savings Bank (the "Bank"), a federally chartered savings bank
wholly owned by Pioneer with its principal office in Winchester,
Kentucky. William M. Cress, Carl C. Norton, Janet White Prewitt,
Robert G. Strode, Thomas D. Muncie, Andrew James Ryan, Nancy M.
Lawwill, and Wayne M. Martin, all of the directors of Pioneer
(collectively referred to herein as the "Pioneer Directors" or
the "Board of Directors of Pioneer") join in this Agreement for
the limited purposes set forth in Sections 6.02 and 9.10.
SECTION 1
THE EXCHANGE
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1.01 PLAN OF EXCHANGE. Upon the terms and conditions set
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forth in this Agreement, the Plan of Share Exchange in the form
attached hereto as Annex 1.01 (the "Plan of Exchange") and the
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Kentucky Business Corporation Act (the "Act"), Central shall
acquire all the outstanding shares of Pioneer in a statutory
share exchange (the "Exchange"). The form of Plan of Exchange is
incorporated by this reference into, and made part of, this
Agreement.
1.02 PIONEER CAPITAL STOCK. The authorized capital stock of
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the Pioneer consists solely of 500,000 shares of common stock, of
a par value of $1.00 per share ("Pioneer Common Stock"), of which
208,233 shares are issued and outstanding.
1.03 BANK CAPITAL STOCK. The authorized capital stock of
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the Bank consists solely of 299,000 shares of common stock, of a
par value of $1.00 per share ("Bank Common Stock"), of which
5,000 shares are issued and outstanding and owned by Pioneer.
1.04 EXCHANGE CONSIDERATION. Except as modified pursuant to
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Section 1.05 below, at the Effective Time (as defined in Section
2.02), each share of Pioneer Common Stock issued and outstanding,
except for shares ("Dissenting Shares") with respect to which the
holder has properly perfected the holder's rights to dissent
under Subtitle 13, Chapter 271B of Kentucky Revised Statutes (KRS
271B.13-010 to .13-310) (the "Dissenters' Rights Statute"), shall
be acquired by Central and shall automatically be converted into
and exchanged for the right to receive a cash payment of $98.50,
without interest, for a total exchange consideration for all
shares of Pioneer Common Stock issued and outstanding at the
Effective Time of not more than $20,510,950 (the "Exchange
Consideration").
1.05 MODIFICATION OF EXCHANGE CONSIDERATION. In the event,
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as of the Closing Date (as defined in Section 2.01), (i) the
aggregate fees and expenses of Investment Bank Services,
Incorporated ("IBS") and Stites & Harbison incurred by Pioneer in
connection with the transactions contemplated hereunder, exceed
$370,800, then the Exchange Consideration shall be reduced by a
cash amount equal to such excess.
SECTION 2
THE CLOSING AND THE EFFECTIVE TIME
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2.01 THE CLOSING. A "Closing" shall take place at the
offices of Brown, Todd & Heyburn PLLC, 2700 Lexington Financial
Center, Lexington, Kentucky, at a time and date mutually agreed
to by Central and Pioneer, which time and date shall not be later
than ten (10) business days after the first day on which all of
the conditions set forth in Section 7.01 of the Agreement are
satisfied or waived in writing or at such other time and date as
Pioneer and Central may agree to in writing (the "Closing Date").
At the Closing, (a) Central, Pioneer, and the Bank shall each
provide to the other such proof or indication of satisfaction of
the conditions set forth in Section 7 as the other may have
reasonably requested; (b) the certificates, letters, and opinions
required by Section 7 shall be delivered; (c) the parties shall
execute Articles of Share Exchange appropriate for filing with
the Secretary of State of the Commonwealth of Kentucky; and (d)
Central, Pioneer, and the Bank shall execute and deliver to the
others all other instruments and assurances, and do all things,
reasonably necessary and proper to effect the Exchange and other
transactions contemplated hereby.
2.02 THE EFFECTIVE TIME. Central shall deliver the Articles
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of Share Exchange to the Secretary of State of the Commonwealth
of Kentucky for filing as promptly as possible following the
Closing. The Exchange shall be effective at 11:59:59 P.M.,
Lexington, Kentucky, time on the date Articles of Share Exchange
are filed with the Secretary of State of the Commonwealth of
Kentucky (the "Effective Time").
SECTION 3
BASIC TERMS OF THE EXCHANGE
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3.01 STATUTORY SHARE EXCHANGE. As provided by Section
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271B.11-060(2) of the Act, at the Effective Time:
(a) Each outstanding share of Pioneer Common Stock
shall, IPSO FACTO, and without any action on the part of holder
thereof, be exchanged for the right to receive the Exchange
Consideration as provided in the Plan of Exchange and the former
holders of the outstanding shares of Pioneer Common Stock shall
be entitled only to the exchange rights provided in the Articles
of Share Exchange or the Dissenters' Rights Statute; and
(b) Central shall acquire and be issued a number of
shares of Pioneer Common Stock equal to the number of shares of
Pioneer Common Stock that was outstanding immediately prior to
the Effective Time, which shares of Pioneer Common Stock so
acquired by Central shall constitute all of the issued and
outstanding Pioneer Common Stock at the Effective Time.
3.02 SURRENDER OF CERTIFICATES.
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(a) As soon as practicable after the Effective Time,
Pioneer Federal Savings Bank, Winchester, Kentucky, as exchange
agent (the "Exchange Agent"), shall deliver to each former holder
of Pioneer Common Stock (except holders of Dissenting Shares),
who has validly surrendered to the Exchange Agent the certificate
or certificates formerly representing such holder's shares of
Pioneer Common Stock together with a letter of transmittal in the
customary form and other documentation that reasonably may be
required by Central or the Exchange Agent, a check for an amount
equal to the product of the Exchange Consideration and the number
of shares of Pioneer Common Stock represented by the certificate
or certificates so surrendered. Central agrees to make available
to the Exchange Agent immediately prior to Closing an amount of
cash sufficient to cause payment of the Exchange Consideration to
be made for any certificates formerly representing shares of
Pioneer Common Stock surrendered for payment in accordance with
this Section 3.02. No interest shall accrue or be paid with
respect to the Exchange Consideration. As soon as practicable
(but no more than five (5) business days) after the Effective
Time, Central will cause the Exchange Agent to mail to each
record holder of Pioneer Common Stock at the Effective Time a
form of letter of transmittal which, among other matters, shall
specify how surrender of the stock certificates shall be
effected. There shall be no obligation to deliver the Exchange
Consideration in respect of any shares of Pioneer Common Stock
until (and then only to the extent that) the holder thereof
validly surrenders its certificate or certificates representing
the shares of Pioneer Common Stock for exchange as provided in
this Section 3.02, or, in lieu thereof, delivers to the Exchange
Agent an appropriate affidavit of loss and an indemnity agreement
and/or bond as may be required in any such case by Central in its
reasonable discretion (which discretion Central may delegate to
the Exchange Agent). If any payment for shares of Pioneer Common
Stock is to be made in a name other than that in which the
certificate for Pioneer Common Stock surrendered for exchange is
registered, it shall be a condition to the payment that the
certificate so surrendered shall be properly endorsed or
otherwise in proper form for transfer, that all signatures shall
be guaranteed by a member firm of any national securities
exchange in the United States or the National Association of
Securities Dealers, Inc., or by a commercial bank or trust
company having an office in the United States, and that the
person requesting the payment shall either (i) pay to the
Exchange Agent any transfer or other taxes required by reason of
the payment to a person other than the registered holder of the
certificate surrendered or (ii) establish to the satisfaction of
the Exchange Agent that such taxes have been paid or are not
payable. From and after the Effective Time, there shall be no
transfers on the stock transfer books of Pioneer of any shares of
Pioneer Common Stock outstanding immediately prior to the
Effective Time.
3.03 NO FURTHER RIGHTS. At and after the Effective Time,
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each holder of a certificate that represented shares of Pioneer
Common Stock immediately prior to the Effective Time shall cease
to have any rights as a shareholder of the Pioneer, except for
the right to surrender such Certificate in exchange for the
payment provided pursuant to Section 3.01 or to perfect his
rights under the Dissenters' Rights Statute.
3.04 CLOSING OF TRANSFER BOOKS. The stock transfer books of
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Pioneer shall be closed at the close of business on the business
day immediately preceding the date of the Closing. Central shall
be entitled to rely upon the stock transfer books of Pioneer to
establish the identity of those persons entitled to receive the
consideration specified in this Agreement for their shares of
Pioneer Common Stock, which books shall be conclusive as to the
record ownership of such shares. In the event of a dispute with
respect to the ownership of any such shares, Central shall be
entitled to deposit any consideration represented thereby in
escrow with the Clark County, Kentucky Circuit Court and
thereafter be relieved with respect to any claims to such
consideration.
3.05 PIONEER'S ARTICLES OF INCORPORATION AND BYLAWS. The
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Exchange shall not amend, alter or otherwise affect Pioneer's
Articles of Incorporation or Bylaws, both as amended and in
effect at the Effective Time.
3.06 PIONEER'S BOARD OF DIRECTORS AND OFFICERS. At the
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Effective Time, the directors of Pioneer and the Bank immediately
prior to the Effective Time shall all resign and the persons
designated by Central shall become the directors of Pioneer, each
such director to hold office, subject to the applicable
provisions of Pioneer's Articles of Incorporation and Bylaws,
until the next annual meeting of Pioneer's shareholders and until
his successor is elected and qualifies. At the Effective Time,
all the officers of Pioneer immediately prior to the Effective
Time shall likewise resign and the persons designated by Central
shall become the officers of Pioneer, each such officers to serve
at the pleasure of the Pioneer's new Board of Directors.
Following the Effective Time, the officers of the Bank shall
serve at the pleasure of the Bank's new Board of Directors as
designated by Central.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF PIONEER AND THE BANK
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Except as set forth in the Disclosure Letter delivered by
Pioneer and the Bank to Central concurrently herewith, Pioneer
represents and warrants to Central each of the following with
respect to both Pioneer and the Bank and the Bank represents and
warrants each of the following only to the extent such
representations and warranties relate to the Bank:
4.01 ORGANIZATION AND QUALIFICATION. Pioneer is a Kentucky
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corporation, duly organized, validly existing and in good
standing under the laws of the Commonwealth of Kentucky. The
Bank is a federally chartered savings bank, duly organized,
validly existing and in good standing under the laws of the
United States. The Bank and Pioneer have all requisite
corporate power and authority to own and lease their property and
to conduct their businesses as they are now being conducted.
Neither the character of the property owned or leased by Pioneer
or the Bank, nor the nature of the activities conducted by
Pioneer or the Bank makes necessary qualification by Pioneer or
the Bank as a foreign association in any jurisdiction. The Bank
is a member in good standing of the Federal Home Loan Bank of
Cincinnati (the "FHLB") and all eligible accounts of deposit in
the Bank are insured by the Savings Association Insurance Fund
("SAIF"), as administered by the Federal Deposit Insurance
Corporation ("FDIC"), to the fullest extent permitted by law.
Pioneer is a duly registered Savings and Loan Holding Company,
and in good standing under the Home Owners' Loan Act.
4.02 AUTHORIZATION. Pioneer and the Bank have the full
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right, corporate power and authority to enter into, execute,
deliver and perform, subject to approval by Pioneer's
shareholders, their obligations under this Agreement. Except for
the approval by the shareholders of Pioneer, the execution,
delivery and performance of this Agreement by Pioneer and the
Bank has been duly authorized and approved by all requisite
corporate action. The Board of Directors of Pioneer has
unanimously adopted this Agreement and the Plan of Exchange.
This Agreement constitutes a valid and legally binding obligation
of Pioneer and the Bank. Neither Pioneer nor the Bank has a
legal obligation, absolute or contingent, to any other
individual, firm, partnership, corporation or other entity
("Person") (i) to sell any substantial part of its assets, or to
sell any of its assets, except in the ordinary course of
business; (ii) to effect any merger, share exchange,
consolidation or other reorganization; (iii) to enter into any
agreement with respect thereto or (iv) to take any other similar
action inconsistent with the transactions contemplated by this
Agreement. Neither the execution, delivery, or performance of
this Agreement, nor the consummation of the transactions
contemplated hereby will: (a) violate, conflict with, or result
in a breach of any provision of the Articles of Incorporation or
Charter, as appropriate, or the Bylaws of Pioneer or the Bank; or
(b) (i) materially violate, conflict with, or result in a breach
of any provision of, (ii) constitute a default (or an event
which, with notice or lapse of time or both, would constitute a
material default) under, (iii) result in the termination of or
accelerate the performance required by, or (iv) result in the
creation of any lien, security interest, charge or encumbrance
upon any of the properties or material assets of Pioneer or the
Bank under any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, deed of trust, lease, license,
agreement or other instrument or obligation which binds Pioneer
or the Bank or any assets of Pioneer or the Bank which violation,
conflict, breach, default, termination or acceleration of
performance, lien, security interest, charge or encumbrance would
have a material adverse effect on Pioneer and the Bank, taken as
a whole; or (c) subject to receipt of governmental approvals
required to consummate the transactions contemplated by this
Agreement, violate any order, writ, injunction, decree, statute,
rule or regulation of any governmental body applicable to Pioneer
or the Bank or any assets of Pioneer or the Bank, the violation
of which is, either separately or in the aggregate, material to
the financial condition or properties of Pioneer or the Bank.
4.03 SUBSIDIARIES. Other than Pioneer's interest in the
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Bank, neither Pioneer nor the Bank has ever owned an interest
greater than or equal to five percent (5%) of the equity or
voting securities of any class of any Person.
4.04 CAPITAL STOCK. All of the statements concerning the
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capital stock of Pioneer and the Bank set forth in Sections 1.02
and 1.03 are true. All of the outstanding capital stock of
Pioneer and the Bank has been validly issued, fully paid and is
nonassessable. None of the outstanding shares of Pioneer Common
Stock or Bank Common Stock have been issued in violation of the
preemptive rights of any person. Pioneer owns, legally and
beneficially, all issued and outstanding shares of capital stock
of the Bank; such stock is registered in the name of Pioneer, and
Pioneer has, and at the Effective Time shall have, good and
marketable title to such stock, free and clear of all pledges,
liens, charges, encumbrances, security interests, claims, under-
takings, rights of first refusal, options or other restrictions
of any nature whatsoever. Other than the Pioneer Federal Savings
Bank Employee Stock Ownership Plan (the " Pioneer ESOP") and this
Agreement, there are no outstanding options, warrants, contracts,
or commitments to which Pioneer or the Bank are parties entitling
any Person to purchase or otherwise acquire from Pioneer or the
Bank any shares of capital stock of Pioneer or the Bank or any
securities convertible into or exchangeable for any of shares of
the capital stock of Pioneer or the Bank. Neither Pioneer nor
the Bank has any obligation of any nature whatsoever with respect
to any unissued shares or shares which have been acquired,
redeemed or converted. All Pioneer Common Stock allocable under
the Pioneer ESOP has been allocated. Neither Pioneer nor the
Bank has any outstanding contractual obligation to repurchase,
redeem or otherwise acquire any of their outstanding shares. A
current, complete and accurate list of the shareholders of
Pioneer indicating the name, address (city and state only) and
number of shares held of record for each shareholder has been
delivered to Central. Since December 31, 1996, neither Pioneer
nor the Bank has:
(a) directly or indirectly redeemed, purchased or oth-
erwise acquired any of its shares;
(b) declared, set aside or paid any dividend or other
distribution in respect of any of its shares; or
(c) issued or granted any right or option (other than
this Agreement and the ESOP) to purchase or otherwise acquire any
of their shares.
4.05 CORPORATE DOCUMENTS, BOOKS, RECORDS AND PERMITS.
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Pioneer has delivered to Central true and complete copies of its
Articles of Incorporation and the Charter of the Bank , and of
its Bylaws and the Bylaws of the Bank, as amended (certified as
of the date hereof by the Secretary of Pioneer and the Bank, as
appropriate). All of the foregoing and all of the corporate
minutes and stock transfer records of the Bank are current,
complete and correct in all material respects. Each of Pioneer
and the Bank possesses all licenses, franchises, approvals,
certificates, permits and other governmental authorizations
necessary for the continued conduct of its business without
material interference or interruption.
4.06 FINANCIAL STATEMENTS. Pioneer has delivered to Central
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true and complete copies of (i) the audited consolidated
statement of financial condition and the related statements of
income, retained earnings and cash flows of Pioneer for the year
ended September 30, 1995 (the "1995 Pioneer Financial
Statements"); (ii) the audited consolidated statement of
financial condition and the related statements of income,
retained earnings and cash flows of Pioneer for the year ended
September 30, 1996 (the "1996 Pioneer Financial Statements"); and
(iii) the audited consolidated balance sheet and the related
consolidated statements of income, stockholders' equity and cash
flows of Pioneer for the year ended September 30, 1997 (the "1997
Pioneer Financial Statements"). The 1995, 1996 and 1997 Pioneer
Financial Statements have been audited by Miller, Mayer, Sullivan
& Stevens LLP, certified public accountants. Pioneer has
delivered, or for periods not yet complete as of the date of this
Agreement, shall deliver in accordance with Section 6.10, for the
monthly and quarterly periods ending during the period beginning
on October 1, 1997, and ending on the last day of the month next
preceding the month in which the Effective Time occurs, true and
complete copies of the quarterly and monthly unaudited balance
sheets and related statements of income, stockholders' equity and
cash flows of Pioneer (collectively, the "Pioneer Unaudited
Financial Statements"). The 1995, 1996, and 1997 Pioneer
Financial Statements, and the Pioneer Unaudited Financial
Statements (collectively, the "Pioneer Financial Statements")
have been or, as the context requires, shall have been prepared
in conformity with generally accepted accounting principles
applied on a basis consistent with prior years. The Pioneer
Financial Statements present, or, as the context requires, shall
present, fairly the financial position of the Bank and Pioneer as
of their respective dates and the results of the operations of
the Bank and Pioneer for the respective periods covered thereby
in conformity with generally accepted accounting principles
applied on a consistent basis; in compliance as to form in all
material respects with the applicable requirements of the
Securities Act of 1933, as amended (the "Securities Act") and the
applicable published rules and regulations of the Securities and
Exchange Commission (the "SEC") thereunder. All loans, discounts
and financing leases reflected on Pioneer Financial Statements
have been, or, as the context requires, shall have been (a) made
for good, valuable and adequate consideration in the ordinary
course of business of the Bank, (b) evidenced by notes or other
evidences of indebtedness which are true, genuine and what they
purport to be, and (c) adequately reserved against in an amount
sufficient in the reasonable opinion of management to provide for
all losses reasonably anticipated in the ordinary course of busi-
ness as of the date thereof based on information available as of
their respective dates under generally accepted accounting
principles. Neither Pioneer nor the Bank has or will have, nor
are any of their assets subject to, nor will any of their assets
be subject to, any liability, commitment, indebtedness or
obligation (of any kind whatsoever, whether absolute, accrued,
contingent, matured or unmatured) which (a) is material and not
reflected and adequately reserved against in the 1997 Pioneer
Financial Statements, or (b) has been or shall be incurred subse-
quent to the date of the 1997 Pioneer Financial Statements other
than those incurred in the ordinary course of business and not in
violation of any provision of this Agreement.
4.07 SEC DOCUMENTS. All other reports, registration
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statements, definitive proxy statements or information statements
filed or to be filed by Pioneer subsequent to December 31, 1995
under the Securities Act, or under Sections 13(a), 13(c), 14 and
15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (collectively, the "Pioneer SEC Documents"), with
the SEC (i) complied or will comply in all material respects as
to form with the applicable requirements under the Securities Act
or the Exchange Act, as the case may be, and (ii) did not and
will not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading; and
each of the balance sheets contained in or incorporated by
reference into any such SEC Document (including the related notes
and schedules thereto) fairly presents and will fairly present
the financial position of Pioneer as of its date, and each of the
statements of income and changes in stockholders' equity and cash
flows or equivalent statements in such SEC Documents (including
any related notes and schedules thereto) fairly presents and will
fairly present the results of operations, changes in
stockholders' equity and changes in cash flows, as the case may
be, of Pioneer for the periods to which they relate, in each
case, in accordance with generally accepted accounting principles
consistently applied during the periods involved.
4.08 REGULATORY REPORTS. Except to the extent prohibited by
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law, Pioneer has delivered to Central true and complete copies of
all financial and/or condition reports ("OTS Reports") of the
Bank as filed with the Office of Thrift Supervision (the "OTS")
(a) for each year-end since September 30, 1994, (b) for each
calendar quarter since December 31, 1996, and (c) reports,
applications and other documents which either the Bank or Pioneer
has filed with the OTS, FDIC, FHLB, the Board of Governors of the
Federal Reserve System (the "Federal Reserve"), and/or the SEC
since December 31, 1994.
4.09 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since September
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30, 1997, there have been no events or conditions of any
character (whether actual or, to the best knowledge of Pioneer
and the Bank, threatened) pertaining to the financial condition,
businesses or assets of Pioneer or the Bank, separately or in the
aggregate, that have materially adversely affected, or can
reasonably be expected to affect materially and adversely,
Pioneer's and the Bank's financial condition, businesses or
assets taken as a whole, or to cause either of their businesses
to be carried on materially less profitably than prior to this
Agreement. Since September 30, 1997, neither Pioneer nor the
Bank has:
(a) borrowed any money, incurred any liability or
obligation, or lent any money or pledged any of its credit in
connection with any aspect of any of its business other than in
the ordinary course of business;
(b) mortgaged or otherwise subjected to any liens,
encumbrances or other liabilities any of its assets or business,
other than in the ordinary course of business;
(c) sold, assigned or transferred any of its assets or
business other than in the ordinary course of business;
(d) suffered any damage, destruction or loss, whether
or not covered by insurance, materially and adversely affecting
the financial condition, business or assets;
(e) made or suffered any amendments, termination of or
default under any contract, agreement, license or other instru-
ment which materially and adversely affects the financial
condition, business or assets;
(f) received notice or had knowledge that any material
labor trouble exists among any of its employees or that any
group, organization or union has tried to organize any of its
employees;
(g) received notice or had knowledge that any of its
substantial credit or deposit customers has terminated or intends
to terminate its relationship, which termination would have a
materially adverse effect on its earnings;
(h) received any notice asserting or threatening to
assert that either is in material violation of any statute, law,
regulation or order applicable to the business or assets of
either of them, which violation would have a materially adverse
effect on their financial condition taken as a whole, if true;
(i) failed to operate its business in the ordinary
course so as to preserve the business organization intact, and to
preserve the goodwill of its customers and others with whom it
has business relations;
(j) incurred any material extraordinary losses or,
except in accordance with customary banking or mortgage servicing
practices, waived any material rights in connection with any
aspect of its business, whether or not in the ordinary course of
business;
(k) canceled any material debts owed to either of
them; or any material claims, or paid any noncurrent, material
obligations or liabilities;
(l) made any capital expenditure or capital additions
or betterments, including any such expenditure, addition or
betterment effected through a capital lease, exceeding
$10,000.00;
(m) paid or agreed to pay, conditionally or otherwise,
any bonus, extra compensation, pension or severance pay to any of
its present or former (i) directors, (ii) officers, or (iii) em-
ployees who are being compensated on an annual basis at a rate
exceeding $20,000 per year; or increased by an amount in excess
of five percent (5%) any of their compensation (including sala-
ries, fees, bonuses, profit sharing, incentive, pension, retire-
ment or other similar payments);
(n) renewed, amended, become bound by or entered into
any agreement, contract, commitment or transaction other than in
the ordinary course of business;
(o) changed any accounting practice followed or
employed in preparing the Pioneer Financial Statements;
(p) made any loans, given any discounts or entered
into any financing leases which have not been (i) made for good,
valuable and adequate consideration in the ordinary course of
business, (ii) evidenced by notes or other forms of indebtedness
which are true, genuine and what they purport to be, and (iii)
adequately reserved against in an aggregate amount sufficient in
the opinion of management to provide for all charge-offs
reasonably anticipated in the ordinary course of business; or
(q) entered into any agreement, contract or commitment
applicable as of the date hereof to do any of the foregoing.
4.10 TAXES. Pioneer and the Bank (i) have timely filed all
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federal, state, foreign and local income, franchise, excise,
sales, intangibles, real and personal property, employment and
other tax returns, tax information returns and reports required
to be filed; (ii) have paid, or made adequate provision in the
opinion of management for the payment of, all taxes, interest
payments and penalties (whether or not reflected in returns as
filed) due and payable (and/or accruable for all periods ending
on or before the date of this Agreement) to any city, county,
state, foreign country, the United States or any other taxing
authority; and (iii) are not delinquent in the payment of any tax
or governmental charge of any nature. The federal income tax
returns of Pioneer and the Bank have been examined by and settled
with the Internal Revenue Service, or the statute of limitations
with respect to such years has expired for all years through
September 30, 1994, and no audit, examination or investigation is
presently being conducted or is threatened by any taxing
authority. No unpaid tax deficiencies or additional liabilities
of any sort have been proposed by any governmental representative
with respect to Pioneer or the Bank. No agreements for the
extension of time for the assessment of any amounts of tax have
been entered into by or on behalf of Pioneer or the Bank.
Pioneer and the Bank have withheld (and timely paid to the
appropriate governmental entity) proper and accurate amounts from
their employees for all periods in material compliance with all
tax withholding provisions (including, without limitation,
income, social security and employment tax withholding for all
forms of compensation) of applicable federal, state, foreign and
local laws. Pioneer and the Bank have delivered to Central true
and correct copies of all federal and state income tax returns
filed by any of them for all tax periods commencing after
September 30, 1994.
4.11 TITLE TO ASSETS. On September 30, 1997, Pioneer and
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the Bank had and, except with respect to assets disposed of for
adequate consideration in the ordinary course of business since
September 30, 1997, now have, good and marketable title to all
properties and assets reflected on the 1997 Pioneer Financial
Statements, free and clear of all mortgages, liens, pledges,
easements, restrictions, encroachments, governmental regulations,
security interests, charges or encumbrances of any nature, except
as disclosed in the 1997 Pioneer Financial Statements and for:
(a) the mortgages and encumbrances which secure
indebtedness which is properly reflected on the Pioneer Financial
Statements;
(b) liens for taxes accrued but not yet payable;
(c) liens arising as a matter of law in the ordinary
course of business as to which there is no known default; and
(d) such imperfections of title and encumbrances, if
any, as do not materially detract from the value or interfere
with the present use or sale of any of their properties and
assets.
Section 4.11 of the Disclosure Letter lists all leases, other
than "financing leases," of personal property to which Pioneer
and/or the Bank is a party. Pioneer has delivered to Central
true and correct copies of all leases referred to in Section 4.11
of the Disclosure Letter, together with all amendments and
modifications thereof. With respect to each lease of personal
property to which Pioneer and/or the Bank is a party, except for
leases in which either Pioneer or the Bank is lessor entered into
as a "financing lease,":
(a) such lease is in full force and effect in
accordance with its terms;
(b) all rents and additional rents due to date have
been paid;
(c) the lessee under each of the leases has been in
peaceable possession since the commencement of the original term
of the lease; and
(d) no event of default, or event, occurrence,
condition or act, which with the giving of notice, the lapse of
time or the happening of any further event, occurrence, condition
or act would become a material default under such lease, exists.
With respect to any real property owned in fee by Pioneer or the
Bank, which real property is set forth on Section 4.11 of the
Disclosure Letter, Pioneer and the Bank further represent and
warrant to Central as follows:
(a) all work to be performed by Pioneer or the Bank
with respect to all improvements to the property owned by either
of them has been fully completed and paid for by them;
(b) all permits and certificates with respect to con-
struction of improvements on the property owned by Pioneer or the
Bank have been obtained and the property has been properly zoned
for use and occupancy as a banking or other business facility;
and
(c) all improvements to the property have been made in
accordance with plans and specifications approved by Pioneer or
the Bank, as appropriate, copies of which will be delivered to
Central upon request.
4.12 ENVIRONMENTAL HAZARDS. Neither Pioneer nor the Bank
---------------------
has (i) used, stored, manufactured, or suffered to exist
(collectively, "Utilized") any hazardous or toxic substance,
material or constituent (collectively, a "Hazardous Substance")
within the meaning of any applicable federal, state or local law
or regulation pertaining to environmental or chemical hazards or
pollution (collectively, the "Environmental Laws"), including,
without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C.
Sec. 9601 et seq., and any regulations promulgated thereunder, on, in
or under any of their property, whether currently or previously
owned or leased by Pioneer or the Bank, or (ii) transported or
disposed, or caused or permitted any Person to transport or
dispose, of any Hazardous Substance, in each case ((i) and (ii)
above), other than in material compliance with all Environmental
Laws and other than at the locations identified on the Disclosure
Letter. To the best of Pioneer's and the Bank's knowledge, no
other Person has Utilized Hazardous Substances at any time on, in
or under any of Pioneer's or the Bank's property, whether
currently or previously owned or leased by either of them.
Neither Pioneer nor the Bank is subject to any asserted or
unasserted liabilities, nor are any of the properties of Pioneer
or the Bank, whether currently or previously owned or leased by
Pioneer or the Bank, subject to any asserted or unasserted lien,
under any of the Environmental Laws. Neither Pioneer nor the
Bank has ever materially violated any of the Environmental Laws,
and each of them is presently in compliance in all material
respects with all Environmental Laws. Without limiting the
generality of the foregoing, no asbestos, PCBs or other Hazardous
Substance or any petroleum product or constituents thereof is
present on, in or under any of the property of Pioneer or the
Bank, whether currently or previously owned or leased. To the
best of Pioneer's and the Bank's knowledge, no loans of any of
Pioneer or the Bank are secured by property where any Hazardous
Substances have ever been Utilized in material violation of
Environmental Laws, and none of the borrowers of Pioneer or the
Bank have materially violated any of the Environmental Laws or
have any of their property subject to a lien under any of the
Environmental Laws. Neither Pioneer nor the Bank has ever
permitted any property currently or previously owned or leased by
either of them to be used as a landfill or dump site. There are
no underground storage tanks or underground pipelines located on
any property owned or leased by Pioneer or the Bank. No under-
ground storage tanks have ever been located on any property
currently or previously owned or leased by either of them.
4.13 LITIGATION, PENDING PROCEEDINGS AND COMPLIANCE WITH
---------------------------------------------------
LAWS. For purposes of this Agreement, "Claims" shall mean all
- ----
material claims of any kind or actions, suits, proceedings,
arbitrations or investigations asserted by or against either
Pioneer or the Bank, whether actual or threatened, against or
affecting Pioneer Common Stock, the common capital stock of the
Bank or Bank's business, prospects, conditions (financial or
otherwise) or assets or against any officer, director or employee
of the Bank (where such Claims against any officer, director or
employee of Pioneer or the Bank arise or might arise in
connection with actions taken or omitted or alleged to have been
taken or omitted by such officer, director or employee in his or
her capacity as an officer, director or employee). Section 4.13
of the Disclosure Letter sets forth all Claims, including a
summary of the basis and background of all Claims. There are no
Claims (a) which would prevent the performance of this Agreement
or any of the transactions contemplated hereby or declare the
same unlawful or cause the rescission thereof, (b) which would
prevent the transfer of good and marketable title of Pioneer
Common Stock free and clear of all encumbrances, or (c) which
would materially and adversely affect or impair the business or
condition, financial or otherwise, or the earnings of Pioneer and
the Bank taken as a whole. Pioneer and the Bank have complied
with and are not in any default in any material respect under
(and have not been charged with, nor are threatened with or under
investigation with respect to, any charge concerning any material
violation of any provision of) any material federal, state or
local law, regulation, ordinance, rule or order (whether
executive, judicial, legislative or administrative) or any order,
writ, injunction or decree of any court, agency or instru-
mentality. There are no material uncured violations or
violations with respect to which material refunds or restitution
may be required cited in any report concerning Pioneer or the
Bank as a result of examination by any regulatory authority.
4.14 REGULATORY COMPLIANCE. Neither Pioneer nor the Bank
---------------------
has ever been a party to (a) any enforcement action instituted
by, or (b) any memorandum of understanding or cease and desist
order with, any federal or state regulatory agency, and no such
action, memorandum or order has been threatened, and neither
Pioneer nor the Bank has received any report of examination from
any federal or state regulatory agency which requires that
Pioneer or the Bank address any problem or take any action which
has not already been addressed or taken in a manner satisfactory
to the regulatory agency.
4.15 EMPLOYEE RELATIONS. Neither Pioneer nor the Bank (a)
------------------
is a party to, or negotiating, and have no obligations under, any
agreement, collective bargaining or otherwise, with any party
relating to the compensation or working conditions of any
employees' of Pioneer or the Bank; (b) is obligated under any
agreement to recognize or bargain with any labor organization or
union on behalf of their employees; or (c) has been charged or
threatened with a charge of any unfair labor practice. There are
no existing or threatened labor strikes, slowdowns, disputes,
grievances or disturbances affecting or which might affect
operations at, or deliveries from or into, any facility of
Pioneer or the Bank. No work stoppage against Pioneer or the
Bank or its business is pending or threatened, and no such work
stoppage has ever occurred. Neither Pioneer nor the Bank has
committed any act or failed to take any required action with
respect to any of its employees which has resulted or which may
result in a material violation of ERISA (as that term is defined
in Section 4.16 below), or similar legislation as it affects any
employee benefit or welfare plan of Pioneer or the Bank; the
Immigration Reform and Control Act of 1986; the National Labor
Relations Act, as amended; Title VII of the Civil Rights Act of
1964, as amended; the Occupational Safety and Health Act;
Executive Order 11246; the Fair Labor Standards Act; the
Rehabilitation Act of 1973; and all regulations under such Acts,
and all other federal, state and local laws, regulations and
executive orders relating to the employment of labor, including
any provisions thereof relating to wages, hours, collective
bargaining, the payment of Social Security and similar taxes,
unemployment and workmens' compensation laws, any labor relations
laws, or any governmental regulations promulgated thereunder, as
the same affect relationships or obligations of Pioneer and the
Bank with respect to any of the their employees, and which will
or reasonably could result in any material liability, penalty,
fine or the like being imposed upon Pioneer or the Bank. Neither
Pioneer nor the Bank is liable for any arrearage of wages or
taxes or penalties for failure to comply with any of the
foregoing, and there are no proceedings before any court,
governmental agency, instrumentality or arbitrator relating to
such matters, including any unfair labor practice claims, either
pending or threatened.
4.16 EMPLOYEE BENEFIT PLANS.
----------------------
(a) For purposes of this Section 4.16, the term "em-
ployee benefit plan(s)" shall have the meaning ascribed to it in
Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and the regulations promulgated
thereunder, and the term "employee pension benefit plan(s)" shall
have the meaning ascribed to it in Section 3(2) of ERISA.
(b) Section 4.16 of the Disclosure Letter sets forth a
complete list of all employee benefit plans, policies and
practices (whether or not subject to ERISA) applicable to
employees of Pioneer and the Bank, including, without limitation,
plans, funds or programs providing medical, surgical or hospital
care or benefits; benefits in the event of sickness, accident,
disability, death or unemployment; vacation benefits;
apprenticeship or other training programs; day care centers;
scholarship funds; prepaid legal services; benefits described in
Section 302(c) of the Labor Management Relations Act; retirement
income; income deferral for periods extending to the termination
of covered employment or beyond; severance pay arrangements; and
supplemental retirement income payments which take into account
increases in the cost of living. Each employee benefit plan,
policy or practice which is funded through a policy of insurance
is indicated by the word "insured" placed by the listing of the
plan on Section 4.16 of the Disclosure Letter.
(c) True and complete copies of all (i) employee bene-
fit plans and related trust agreements; (ii) policies and prac-
tices; (iii) summary plan descriptions; (iv) most recent alloca-
tion or actuarial reports prepared for each employee pension ben-
efit plan; (v) insurance policies; and (vi) communications to or
from the Internal Revenue Service (the "IRS") (including the most
recent Form 5500 filed with the IRS and the most recent determi-
nation letter received from the IRS), the Pension Benefit Guar-
anty Corporation (the "PBGC") or the United States Department of
Labor and other governmental filings with respect to the employee
benefit plans have been delivered by Pioneer to Central.
(d) Except as specifically provided in the documents
described in this Section 4.16 and delivered to Central, or as
otherwise described on Section 4.16 of the Disclosure Letter,
there are no amendments, modifications, extensions, changes in
benefits or benefit structures, or other alterations which are
currently in effect or which Pioneer or the Bank have undertaken
to become effective in the future to any of the employee benefit
plans, policies or practices.
(e) Each employee benefit plan has been executed,
managed and administered in material compliance with the
applicable provisions of ERISA, the Code, and the regulations
promulgated thereunder, and all other applicable laws. Neither
Pioneer nor the Bank has knowledge of any fact which would
adversely affect the qualified status of any of the employee
benefit plans, or of any threatened or pending claim against any
of the employee benefit plans or their fiduciaries by any
participant, beneficiary or government agency.
(f) Pioneer and the Bank have fully complied with the
notice and continuation requirements of Sections 601 through 608
of ERISA and the proposed regulations thereunder. All reports,
statements, returns and other information required to be
furnished or filed with respect to the employee benefit plans
have been timely furnished, filed or both in accordance with
Sections 101 through 105 of ERISA and Sections 6057 through 6059
of the Code, and they are true, correct and complete in all
material respects. Records with respect to the employee benefit
plans have been maintained in material compliance with Section
107 of ERISA. Neither Pioneer, the Bank nor any other fiduciary
(as that term is defined in Section 3(21) of ERISA) with respect
to any of the employee benefit plans has any material liability
for any breach of any fiduciary duties under Sections 404, 405 or
409 of ERISA.
(g) Neither Pioneer nor the Bank has, with respect to
any of the employee benefit plans, nor has any administrator of
any of the employee benefit plans, the related trusts or any
trustee thereof, engaged in any prohibited transaction which
would subject Pioneer, the Bank, any of the employee benefit
plans, any administrator or trustee or any party dealing with any
of the employee benefit plans or any such trusts, to a tax or
penalty on prohibited transactions imposed by ERISA, Section 4975
of the Code, or to any other liability under ERISA.
(h) All employee pension benefit plans maintained by
or covering employees of Pioneer and the Bank which are intended
to be qualified under Section 401(a) or 403(a) of the Code, and
the related trusts which are intended to be exempt under Section
501(a) of the Code, are, and have been since adoption, so quali-
fied, and are identified on Section 4.15 of the Disclosure Letter
as "qualified plans," and the date of the most recent
determination letter from the IRS confirming the qualification of
each such plan is set out on Section 4.16 of the Disclosure
Letter.
(i) Except as set forth on Section 4.16 of the
Disclosure Letter, none of the employee pension benefit plans nor
any of the related trusts has been terminated. There are no
employee pension benefit plans subject to Section 302 of ERISA or
Section 412 of the Code.
(j) None of the employee pension benefit plans is, and
Pioneer and the Bank have never contributed to, a "multiemployer
plan," as that term is defined in Section 3(37) of ERISA (as
particularly amended by The Multiemployer Pension Plan Amendments
Act of 1980).
(k) Pioneer and the Bank have provided to Central the
information reasonably necessary to determine the accounting
treatment which may be accorded any of the retiree welfare bene-
fits currently in force under proposed Financial Accounting
Standards Board guidelines.
(l) Any trust or fund maintained by or contributed to
by Pioneer, the Bank or its employees to fund an employee benefit
plan (other than an employee pension benefit plan) is qualified
as an exempt organization under Section 501(c)(9) of the Code and
the regulations thereunder as a Voluntary Employee's Benefit
Association (a "VEBA"). Any "welfare benefit fund" within the
meaning of Section 419(a) of the Code (including, but not limited
to, any VEBA), provided by or pursuant to a plan of Pioneer or
the Bank has been maintained in accordance with Section 419 of
the Code and no contributions have been made to such a fund in
excess of the "qualified costs" of the benefits provided for a
taxable year (within the meaning of Section 419(b) of the Code),
except as set forth on Section 4.16 of the Disclosure Letter.
4.17 INSURANCE POLICIES. Pioneer and the Bank maintain
------------------
insurance policies and bonds in force in such amounts and against
such liabilities and hazards as customarily are maintained by
similar businesses of comparable size. Neither Pioneer nor the
Bank is liable for any material, retroactive premium adjustments.
All policies are valid, enforceable and in full force and effect,
and neither Pioneer nor the Bank has received any notice of
premium increases or cancellations. Neither Pioneer nor the Bank
knows of any grounds for or any consideration of any such premium
increase or cancellation notice or other indication of premium
increases or cancellations, with respect to any of their
insurance policies or bonds. All notices of cancellation
received by either Pioneer or the Bank and all claims made by
Pioneer or the Bank under their respective insurance policies and
bonds since December 31, 1995, or made prior thereto but
remaining unresolved, are described on Section 4.17 of the
Disclosure Letter. Neither Pioneer nor the Bank has failed to
make a timely claim or file a timely notice with respect to any
matter giving rise to a material claim or potential material
claim under their insurance policies and bonds.
4.18 AGREEMENTS. As of the date of this Agreement, neither
----------
Pioneer nor the Bank is a party to:
(a) any collective bargaining agreement; any employ-
ment agreement, contract, or commitment; or any bonus plan or
commission;
(b) any loan or other agreement pursuant to which
Pioneer or the Bank has borrowed money or any obligation of
guaranty or indemnification arising from any agreement, contract
or commitment which involves, singularly or in the aggregate, a
potential material liability, except letters of credit entered
into in the ordinary course of business;
(c) any agreement, contract or commitment which is
either outside of the ordinary course of business or which is or
may be materially adverse to the business, financial condition or
earnings of Pioneer and the Bank taken as a whole;
(d) any agreement, contract or commitment containing
any covenant materially limiting the freedom of either Pioneer or
the Bank to engage in any line of business in any geographic area
or to compete with any Person;
(e) any agreement, contract, or commitment relating to
capital expenditures and involving future payments which,
together with future payments under all other agreements, con-
tracts or commitments relating to the same capital project,
exceed $10,000.00;
(f) any agreement, contract or commitment relating to
the acquisition of substantially all of the assets, shares or
capital stock of any business enterprise, except agreements,
contracts or commitments in which assets, shares or capital stock
are security for a loan or similar obligation created in the
ordinary course of business;
(g) any agreement, contract or commitment (other than
for 1 to 4 family residential loans made in the ordinary course
of business), which involves payments, consideration or obli-
gations in the aggregate of $5,000.00 or more per agreement, con-
tract or commitment, which (i) will not be performed within 30
days or less, or (ii) cannot be terminated within 30 days or less
without payment of a penalty of more than $1,000.00.
Neither Pioneer nor the Bank has breached, nor is there any
pending or threatened claim that either Pioneer or the Bank has
materially breached any of the terms or conditions of (a) any
agreement, contract or commitment set forth in the Disclosure
Letter delivered to Central pursuant to this Agreement or (b) any
other agreement, contract or commitment, the breach of which
singularly or in the aggregate could result in the imposition of
damages in a material amount.
4.19 BROKERS' OR FINDERS' FEES. Other than the fee payable
-------------------------
by Pioneer to IBS pursuant to a letter agreement dated October 3,
1997, no agent, broker or other Person acting on behalf of
Pioneer or the Bank or under either of their authority is or
shall be entitled to any commission, broker's or finder's fee
from Central, Pioneer or the Bank in connection with any of the
transactions contemplated by this Agreement.
4.20 POTENTIAL COMPETING INTERESTS. To the best of
-----------------------------
Pioneer's and the Bank's knowledge, no shareholder of Pioneer who
owns more than one percent (1%) of the outstanding shares of
Pioneer Common Stock, nor any director, officer or employee of
either Pioneer or the Bank, nor any member of any such person's
family, have any direct or indirect (1% or more) interest in any
Person which competes or conflicts with, or is engaged in any
business of the kind being conducted by, either Pioneer or the
Bank or which does business or engages in commerce with, or
provides goods or services to, either Pioneer or the Bank.
Neither Pioneer nor the Bank uses any real or personal property
in which any shareholder of Pioneer or any director, officer or
employee of either Pioneer or the Bank, or any member of any such
person's family, have a direct or indirect (1% or more) interest.
4.21 EKH STOCK REPURCHASE. Pioneer has redeemed all shares
--------------------
of Pioneer Common Stock formerly owned by persons identified as
the EKH Group in a Stock Redemption Agreement dated June 17,
1996, among Pioneer, the Bank and the EKH Group, and received
complete releases of any and all possible claims EKH Group may
have or have had against Pioneer or the Bank.
4.22 PROXY STATEMENT. The Proxy Statement, at the date of
---------------
mailing to shareholders of Pioneer and at the time of the meeting
of such shareholders to be held in connection with the Exchange,
will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
provided that Pioneer makes no representation as to the accuracy
of any information provided by Central for inclusion in the Proxy
Statement. The Proxy Statement will comply as to form in all
material respects with the provisions of the Exchange Act and the
rules and regulations thereunder.
4.23 ACCURACY OF STATEMENTS.
----------------------
(a) Neither this Agreement, the Disclosure Letter, nor
any annex, schedule or document delivered as or in connection
with an annex or schedule furnished or to be furnished by Pioneer
or the Bank to Central in connection with this Agreement or any
of the transactions contemplated hereby contains or shall contain
an untrue statement of a material fact or omits or shall omit to
state a material fact necessary to make the statements contained
herein or therein, in light of the circumstances in which they
are made, not misleading.
(b) None of the information supplied by Pioneer or the
Bank for inclusion in the Proxy Statement will, at the date of
mailing to stockholders of Pioneer and at the time of the meeting
of the stockholders of Pioneer to be held in connection with the
Exchange, contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading. The Proxy Statement (except for
such portions thereof that relate only to Central) will comply as
to form in all material respects with the provisions of the
Exchange Act, and the rules and regulations thereunder.
SECTION 5
REPRESENTATIONS AND WARRANTIES OF CENTRAL
-----------------------------------------
Central represents and warrants to Pioneer as follows:
5.01 ORGANIZATION AND QUALIFICATION. Central is a Kentucky
------------------------------
corporation duly organized and validly existing under the laws of
the Commonwealth of Kentucky, has paid all fees due and owing to
the Office of the Kentucky Secretary of State, has delivered to
that office its most recent annual report as required by the
Kentucky Business Corporation Act, and has not filed articles of
dissolution with the Office of the Kentucky Secretary of State.
Central has all requisite corporate power and authority to own
and lease their property and to carry on their businesses as they
are now being conducted. Central is duly registered as a bank
holding company under the Bank Holding Company Act of 1956, as
amended.
5.02 AUTHORIZATION. Central has the full right, corporate
-------------
power and authority to enter into, execute, deliver and perform
its obligations under this Agreement. The execution, delivery
and performance of this Agreement by Central have been duly
authorized and approved by all requisite corporate action and no
other corporate acts or proceedings on the part of Central are
necessary to authorize this Agreement or the transactions contem-
plated hereby. This Agreement constitutes the valid and legally
binding obligation of Central. Neither the execution, delivery,
or performance of this Agreement, nor the consummation of the
transactions contemplated hereby will: (a) violate, conflict
with, or result in a breach of any provision of the Articles of
Incorporation or the Bylaws of Central Subsidiary; (b)(i)
materially violate, conflict with, or result in a breach of any
provision of, (ii) constitute a material default (or an event
which, with notice or lapse of time or both, would constitute a
material default) under, (iii) result in the termination of or
accelerate the performance required by, or (iv) result in the
creation of any lien, security interest, charge or encumbrance
upon any of the material properties or material assets of Central
under any of the terms, conditions or provisions of any material
note, bond, mortgage, indenture, deed of trust, lease, license,
agreement or other instrument or obligation which binds Central
or any material assets of Central, which violation, conflict,
breach, default, termination or acceleration of performance,
lien, security interest, charge or encumbrance would have a
material adverse effect on Central and its subsidiaries, taken as
a whole; or (c) subject to the receipt of governmental approvals
required to consummate the transactions contemplated by this
Agreement, violate any order, writ, injunction, decree, statute,
rule or regulation of any governmental body applicable to
Central.
5.03 REGULATORY COMPLIANCE. Neither Central nor any of its
---------------------
subsidiaries are currently a party to any enforcement action
instituted by, or any memorandum of understanding, formal agree-
ment, or cease and desist order with, any federal or state
regulatory agency, and no such action, memorandum, agreement or
order has been threatened against Central or any of its
subsidiaries. Neither Central nor any of its subsidiaries have
received any report of examination from any federal or state
regulatory agency which requires Central or any of its
subsidiaries to address any significant problem or take any
significant action which has not already been addressed or taken
in a manner satisfactory to the regulatory agency.
5.04 ACCURACY OF STATEMENTS.
----------------------
(a) Neither this Agreement nor any annex, schedule or
document delivered as or in connection with an annex or schedule
furnished or to be furnished by Central to Pioneer in connection
with this Agreement or any of the transactions contemplated
hereby contains or shall contain an untrue statement of a
material fact or omits or shall omit to state a material fact
necessary to make the statements contained herein or therein, in
light of the circumstances in which they are made, not
misleading.
(b) None of the information supplied by Central for
inclusion in the Proxy Statement will, at the date of mailing to
stockholders of Pioneer and at the time of the meeting of the
stockholders of Pioneer to be held in connection with the
Exchange, contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading.
5.05 BROKERS' OR FINDERS' FEES. No agent, broker or other
-------------------------
Person acting on behalf of Central or under its authority is or
shall be entitled to any commission, broker's or finder's fee
from Central, Pioneer or the Bank in connection with any of the
transactions contemplated by this Agreement.
SECTION 6
COVENANTS AND CONDUCT OF THE PARTIES
------------------------------------
Each of the parties to this Agreement shall comply with
their respective covenants in this Section 6 from the date hereof
through the Closing Date:
6.01 INVESTIGATIONS. Pioneer and the Bank shall give
--------------
Central and its employees, accountants, attorneys and other
authorized representatives full access during all reasonable
times to all their premises, properties, books and records
(including without limitation, all corporate minutes and stock
transfer records), and furnish Central with such financial and
operating data, analyses and other information of any kind
respecting their business and properties as Central shall from
time to time request. Any investigation shall be conducted in a
manner which does not unreasonably interfere with the operation
of Pioneer's or the Bank's business. In the event of termination
of this Agreement, Central shall, upon request, return to Pioneer
all documents, work papers and other material (and all copies
thereof) obtained from Pioneer and the Bank in connection with
the transactions contemplated hereby. Central shall use its best
efforts to cause its employees, accountants, attorneys and other
authorized representatives, to hold in strict confidence all data
and information obtained by it from Pioneer (unless such data or
information is or becomes readily ascertainable from public or
published information or trade sources); and Central shall not,
and shall use its best efforts to ensure that such employees,
accountants, attorneys and other authorized representatives do
not, disclose such information to others; provided, that Central
may file or otherwise submit such data and information to any
regulatory authority in connection with obtaining regulatory
approval to facilitate or consummate the transactions
contemplated by this Agreement without any liability to Pioneer
or the Bank from Central.
6.02 SHAREHOLDER AND DIRECTOR APPROVALS. The Board of
----------------------------------
Directors of Pioneer has unanimously adopted and determined
advisable and shall submit to Pioneer's shareholder(s) for
approval of this Agreement and the Plan of Exchange at a meeting
of shareholders duly called for those purposes by Pioneer's Board
of Directors. Pioneer and the Pioneer Directors shall take any
all action necessary, in accordance with applicable law and
Pioneers Articles of Incorporation and Bylaws, to convene a
meeting Pioneer's shareholders as promptly as practicable for the
purpose of considering and voting upon this Agreement and the
Plan of Exchange; provided, however, the meeting of shareholders
of Pioneer shall take place on a date at least twenty-one
business days following the mailing of a notice of such meeting
accompanied by the Proxy Statement. The notice and Proxy
Statement distributed in connection with the shareholder approval
and adoption of this Agreement and the Plan of Exchange shall
comply with Pioneer's Articles of Incorporation and Bylaws and
with all applicable corporate and securities laws. Unless incon-
sistent with its fiduciary responsibilities, the Board of
Directors of Pioneer shall recommend to the shareholders of
Pioneer that all such shareholders vote for approval and adoption
of this Agreement and the Plan of Exchange, and each Pioneer
Director shall use his best efforts to obtain such shareholder
approval. The Disclosure Letter sets forth the names of each
Pioneer Director together with the number of shares of Pioneer
Common Stock held by each of them as of the date of this
Agreement. Each of the Pioneer Directors (a) shall continue to
own and shall not assign, transfer, or otherwise dispose of, or
in any way further encumber, his or her shares of Pioneer Common
Stock except as contemplated by this Agreement and shall at all
times from the record date for the aforesaid shareholders'
meeting, through such meeting, have the full right, power and
authority to vote his shares of Pioneer Common Stock free of
restrictions, arrangements or limitations thereon, (b) shall,
unless inconsistent with his fiduciary duties, in his or her
capacity as a shareholder of Pioneer, vote all of the shares of
Pioneer Common Stock listed on the Disclosure Letter in favor of
approval of the Plan of Exchange (or, upon request of Central,
shall promptly grant a revocable proxy to Central to vote all of
his or her shares of Pioneer Common Stock in favor of approval of
the Plan of Exchange), and (d) shall take any and all other
shareholder action necessary to accomplish the transactions
contemplated by this Agreement.
6.03 CONSENTS. Pioneer and Central shall each use its best
--------
efforts to procure upon reasonable terms and conditions all con-
sents and approvals, completion of all filings, all registrations
and certificates, and satisfaction of all other requirements pre-
scribed by law which are necessary for the consummation of the
Exchange.
6.04 CONDUCT OF BUSINESS IN THE ORDINARY COURSE. Pioneer
------------------------------------------
and the Bank shall conduct their business only in the ordinary
course. By way of amplification and not limitation, except as
otherwise provided herein, neither the Bank nor Pioneer shall
without the prior written consent of Central, which consent shall
not be unreasonably withheld:
(a) issue or cause to be issued any shares of capital
stock or any options, warrants, or other rights to subscribe for
or purchase any shares of capital stock or any securities
convertible into or exchangeable for shares of capital stock of
Pioneer or the Bank;
(b) declare, set aside, or pay any dividend or
distribution (whether in cash, shares or otherwise) with respect
to the shares of capital stock of Pioneer or the Bank and none
shall be provided for in Pioneer's Disclosure Letter;
(c) except for the payment of directors' fees of
$400.00 per regularly scheduled monthly meeting and $25.00 for
each committee meeting attended, make any payment to any of
Pioneer's or the Bank's directors;
(d) directly or indirectly redeem, purchase, or other-
wise acquire any shares or capital stock;
(e) effect a split, reverse split, reclassification,
or other change of any shares of capital stock, or other reorga-
nization or recapitalization;
(f) amend the Charter or Articles of Incorporation, as
appropriate, or Bylaws of Pioneer or the Bank;
(g) except in the ordinary course of business or as
provided in Section 6.04(g) of the Pioneer Disclosure Letter,
consistent with past practice and upon prior consultation with
Central, increase the compensation payable or to become payable
to any of their directors, officers or employees (including any
salary, bonus, insurance, pension, or other benefit plan, payment
or arrangement made to, for or with any of such officers or
employees) regardless of whether such increase was authorized
prior to the execution of this Agreement;
(h) except in the ordinary course of business, borrow
or agree to borrow any amount of funds or incur any obligation or
liability, or directly or indirectly guarantee or agree to
guarantee any obligations of others except letters of credit
entered into in the ordinary course of business;
(i) except with respect to (a) any agreement, contract
or commitment that (when taken together with any other
agreements, contracts or commitments from the same vendor or its
affiliates) involves less than $10,000.00, or (b) the making of a
loan or a commitment therefor, enter into any agreement, contract
or commitment, which, if entered into before the date of this
Agreement, would be required to be listed in a schedule delivered
to Central pursuant to the terms of, or in connection with, this
Agreement, or which would modify, amend or terminate any
agreement required to be listed in any such schedules;
(j) except in the ordinary course of business, place
or suffer to exist on any of the assets or properties of Pioneer
or the Bank any mortgage, pledge, lien, charge, or other encum-
brance;
(k) cancel, unless paid in full, any material
indebtedness owing to Pioneer or the Bank or any claims which
Pioneer or the Bank may possess, or waive any material rights of
substantial value or discharge or satisfy any material noncurrent
liabilities;
(l) sell or otherwise dispose of a substantial part of
any of Pioneer's or the Bank's assets, or sell or agree to sell
any of their assets except in the ordinary course of business;
(m) commit any act or omit to do any act which would
cause a material breach of any material agreement, contract or
commitment which is listed in a schedule delivered to Central
pursuant to the terms of, or in connection with, this Agreement,
or which would have an adverse effect on the business, financial
condition, or earnings of Pioneer and the Bank taken as a whole;
(n) violate any law, statute, rule, governmental regu-
lation, order, or undertaking which violation might have an
adverse effect on the business, financial condition, or earnings
of the Pioneer or the Bank;
(o) fail to maintain Pioneer's or the Bank's books,
accounts and records in the usual manner on a basis consistent
with that heretofore employed except for changes required by
generally accepted accounting principles or by the OTS, FDIC or
any other state or federal agency having jurisdiction over
Pioneer or the Bank;
(p) fail to charge off on Pioneer's or the Bank's
books loan or other losses in accordance with generally accepted
accounting principles and the pertinent regulations and policies
of the OTS, FDIC and other savings bank regulatory authorities
with jurisdiction concerning the write-off of loans and other
losses;
(q) fail to pay, or to make adequate provisions for
the payment of, all taxes (current or deferred), interest pay-
ments and penalties (whether or not reflected in any returns as
filed) due and payable (and/or accruable for all periods prior to
the Closing Date, including that portion of their fiscal year
prior to and including the Closing Date) to any city, county,
state, foreign country, the United States, or any other taxing
authority;
(r) except in the ordinary course of business and
subject to Section 6.06 of this Agreement, sell or dispose of any
bonds, shares of capital stock or other investment securities;
(s) establish, or apply for permission to establish,
any banking or business office facility not in use on the date of
this Agreement;
(t) issue any letters of credit other than in the
ordinary course of business or voluntarily increase in a material
amount any contingent liabilities whether under letters of credit
or otherwise; or
(u) make any loans, give any discounts or enter into
any financing leases which are not (i) made for good, valuable
and adequate consideration in the ordinary course of business,
(ii) evidenced by notes or other forms of indebtedness which are
true, genuine and what they purport to be, and (iii) in the
aggregate together with the loan portfolio of Pioneer and the
Bank, adequately reserved against, in accordance with generally
accepted accounting principles, in an amount, in the aggregate,
sufficient in the opinion of management to provide for all
charge-offs reasonably anticipated in the ordinary course of
business.
6.05 RESERVES. The Pioneer Unaudited Financial Statements
--------
shall reflect a monthly charge-off, based on a review of the
current status of the loan portfolio, in accordance with
generally accepted accounting principles and the pertinent
regulations and policies of the OTS, FDIC and other regulatory
authorities concerning the write-off of loans. Immediately prior
to the Effective Time, Pioneer shall establish such additional
provisions for loan losses as may be necessary in the sole
determination of Central to conform Pioneer's and the Bank's loan
allowance practices and methods to those of Central (as such
practices and methods are to be applied to the Bank from and
after the Effective Time).
6.06 PRESERVATION OF BUSINESS AND INVESTMENT DECISIONS.
-------------------------------------------------
Pioneer and the Bank shall use their best efforts to preserve the
possession and control of all of their respective assets, to
preserve the goodwill of their respective customers and others
with whom they have business relations, and to do nothing
knowingly to impair the ability to keep and preserve its
respective businesses existing on the date of this Agreement.
Without in any way limiting the foregoing, neither Pioneer nor
the Bank shall make any significant investment decision,
including, without limitation, engaging in any interest rate
swaps, futures or options transactions, or purchases or sales of
any marketable securities other than overnight Federal Reserve
Funds, U.S. Treasury securities of a term of one year or less,
without first consulting with the Chief Financial Officer of
Central or her designee.
6.07 NOTIFICATION OF MATERIAL CHANGES AND LITIGATION.
-----------------------------------------------
Pioneer shall provide Central with prompt written notice,
accompanied by a detailed description and analysis, (a) of any
material adverse change or, to the best of their knowledge,
potentially material adverse change in the condition, earnings or
businesses of Pioneer or the Bank, (b) of any event or condition
of any character (whether actual or threatened) materially and
adversely affecting or that has a substantial possibility of
materially and adversely affecting, any of their financial
conditions, earnings, businesses or assets, and (c) of all
claims, regulatory proceedings and litigation (whether actual or
threatened and whether or not material) against or possibly
involving Pioneer or the Bank or (where such actual or threatened
claims, regulatory proceedings or litigation arise in connection
with actions taken or alleged to be taken by any officer,
employee or director in his or her capacity as an officer,
employee or director) any officer, employee or director of
Pioneer or the Bank. Such adverse or potentially adverse
material changes or such claims, proceedings or litigation shall
include, without limitation, any adverse or potentially adverse
material change in or any litigation arising in connection with
any item or matter reported on any schedule, annex or document
delivered by Pioneer or the Bank to Central in connection with
this Agreement.
6.08 COOPERATION. Pioneer and Central shall each cooperate,
-----------
and Pioneer and Central shall cause their subsidiary(is) to
cooperate, fully, completely and promptly with the other in
connection with satisfying all conditions set forth in this
Agreement and effecting the transactions contemplated by this
Agreement.
6.09 REGULATORY FILINGS. Each party will cooperate with the
------------------
other in the preparation and filing of and will use its best
efforts to prepare and file within 30 days of the date hereof,
all applications, notices and/or other documents required to be
filed to obtain the regulatory approvals and consents required
from the Federal Reserve, OTS, FDIC, Federal Trade Commission
("FTC"), United States Department of Justice ("DOJ"), and any
other applicable state or federal authority for the consummation
of the Exchange. Prior to filing any such application or notice,
each party shall provide the other with the opportunity to review
and comment on such application or other document. Except to the
extent prohibited by law, from the date of this Agreement until
the Closing Date, Pioneer and the Bank shall deliver to Central
contemporaneously with their filing a copy of all applications,
reports and other documents hereafter filed with the SEC, the
FTC, the DOJ, the Federal Reserve, the KDFI, the FDIC, the OTS,
the FHLB, or the Kentucky Secretary of State, and all "comment"
letters and other correspondence from any of the foregoing
regulatory agencies in connection with such filings promptly
after receipt thereof.
6.10 PIONEER FINANCIAL STATEMENTS AND SEC REPORTS. Pioneer
--------------------------------------------
shall deliver to Central as soon as they become available but in
any event promptly, the Pioneer Unaudited Financial Statements.
Pioneer shall deliver to Central, promptly after filing, a copy
of all reports and other documents filed by Pioneer with the SEC.
6.11 DISCUSSION WITH OTHER PURCHASERS. Except to the extent
--------------------------------
the fulfillment of the Pioneer Directors' fiduciary duties
clearly requires such action, Pioneer, the Bank, and the Pioneer
Directors shall and shall cause Pioneer's and the Bank's
executive officers not, to solicit, authorize the solicitation
of, or enter into any discussions with any third party (a "Third
Party"), (a) to purchase any shares of the capital common stock
or any option or warrant to purchase shares of the capital common
stock of Pioneer or the Bank or any securities convertible into
the capital common stock of Pioneer or the Bank or any other
equity security of either of them; (b) to make a tender or
exchange offer for any shares of the capital common stock of
Pioneer or the Bank or any other equity security of Pioneer or
the Bank, (c) to purchase, lease or otherwise acquire all or a
substantial portion of the assets of Pioneer or the Bank; or (d)
to merge, consolidate or otherwise combine with Pioneer or the
Bank (a "Third Party Sale").
6.12 PUBLICITY. Except as required by legal process or by
operation of applicable law or as provided below, neither
Pioneer, the Bank nor Central shall disclose or publish, and each
of Pioneer, the Bank and Central shall use their best efforts to
cause their officers and employees and the officers and employees
of their affiliates to not disclose or publish, any information
concerning this Agreement or the transactions contemplated by
this Agreement. Only Pioneer and Central may make public
announcements regarding this Agreement and the transactions
contemplated herein and each shall have an opportunity to review
any public announcement prior to its release by the other.
6.13 PROXY STATEMENT. As promptly as practicable after the
---------------
date hereof, Pioneer shall prepare the Proxy Statement to be
mailed to the shareholders of Pioneer in connection with the
Exchange. Central and Pioneer shall cooperate with each other in
order to facilitate the preparation, filing and clearance of the
Proxy Statement under the Securities Laws. Each of Central and
Pioneer will promptly advise the other if it determines that any
information furnished by it to the other specifically for use in
the Proxy Statement included therein, is or becomes false or
misleading in any material respect. In no event shall either
party hereto be liable for, and each party shall indemnify and
hold the other harmless from, any untrue statement of a material
fact or omission to state a material fact in the Proxy Statement
made in reliance upon, and in conformity with, written
information concerning the other party furnished by such other
party specifically for use in the Proxy Statement.
6.14 MERGER OF BANK. Pioneer and the Bank covenant and
--------------
agree that they will take any and all actions requested by
Central to merge the Bank into and with Central Bank, FSB, and
shall provide to Central any and all information needed to file a
merger application with the OTS; provided, however, that merger
shall not be effective until after the Effective Time.
6.15 YEAR 2000 COMPLIANCE. Pioneer and the Bank shall take
--------------------
any and all actions reasonably requested by banking regulators to
insure that Pioneer and the Bank are in compliance with all
applicable regulations of banking and other governmental
authorities with respect to the operation of the Pioneer's and
the Bank's computer and data systems on or after January 1, 2000
and will advise Central of the status of, and provide Central
copies of any correspondence to or from banking regulators
related to, the foregoing matters.
6.16 FHLB ACCOUNTS. Pioneer and the Bank acknowledge that
-------------
the Bank's reconciliation of the FHLB Demand General Ledger
Account (the "FHLB Demand Account") reflects a number of
outstanding reconciling items. Pioneer and the Bank further
acknowledge that the Bank's FHLB Advance General Ledger Account
(the "FHLB Advance Account") does not reconcile to FHLB records.
Pioneer and the Bank covenant to take any and all actions
necessary to (i) (1) clear (i.e., determine the nature of the
----
item and appropriate disposition) of all current reconciling
items as promptly as practicable following the date hereof, and
(2) maintain the reconciliations in good order, with no
reconciling items older than 60 days, through the Closing Date;
and (ii) reconcile and clear any outstanding items necessary to
resolve the outage in the FHLB Advance Account. Pioneer and the
Bank further agree to maintain a log reflecting all journal
entries necessary to clear outstanding items. From the date
hereof through the Closing, Central shall have the right upon
reasonable notice to supervise and/or review the progress of the
Bank in connection with the clearing of the FHLB Demand Account
and the FHLB Advance Account.
6.17 LIQUIDATION ACCOUNT. Immediately after the Effective
-------------------
Time, Central agrees to cause the Bank to maintain the
liquidation account of Bank established pursuant to 12 C.F.R.
Part 563b.3(f).
SECTION 7
CONDITIONS OF EXCHANGE
----------------------
7.01 CONDITIONS TO OBLIGATIONS. The obligations of Pioneer
-------------------------
and Central to consummate the Exchange shall be subject to the
satisfaction of the following conditions on or before the Closing
Date:
(a) SHAREHOLDER APPROVAL. This Agreement and the Plan
--------------------
of Exchange shall have been approved by the shareholders of
Pioneer.
(b) REGULATORY APPROVAL. The Federal Reserve and the
-------------------
OTS shall each, upon application duly made, have given its
approval to the Exchange and the transactions contemplated
hereby, and all mandatory and statutory waiting periods shall
have expired. Central and Pioneer shall have obtained all
appropriate orders, consents, approvals and clearances in form
and substance determined in good faith to be reasonably satisfac-
tory to all of them, from all regulatory agencies and other
governmental authorities whose order, consent, approval, absence
of disapproval, or clearance is required by law for the
consummation of the transactions contemplated by this Agreement,
and the terms of all requisite orders, consents, approvals and
clearances shall permit the effectuation of the Exchange.
Central and Pioneer shall have made all appropriate filings with
the FTC and DOJ under the Hart Scott Rodino Antitrust
Improvements Act, as amended.
(c) NO PROCEEDINGS.
--------------
(i) (A) No action or proceeding shall have been
instituted before a court or other governmental body by any gov-
ernmental agency or public authority or other Person to restrain
or prohibit the transactions contemplated by this Agreement or to
obtain damages or other relief in connection with the execution
of this Agreement or the consummation of the transactions contem-
plated hereby; and
(B) No governmental agency shall have noti-
fied any of Central, Pioneer or the Bank to the effect that
consummation of the transactions contemplated by this Agreement
would constitute a violation of any law and that it intends to
commence proceedings to restrain consummation of the Exchange;
(ii) Provided, however, that (a) the occurrence of
an event described in clause (i)(A) or (i)(B) of this subsection
shall not be deemed to create a failure of a condition pursuant
to this Section 7.01, unless the Board of Directors of Pioneer or
Central shall have determined, and given written notice to the
other of its determination that the occurrence of the event makes
consummation of the Exchange unwise in its opinion, and (b) if
any action or proceeding described in clause (i)(A) of this
subsection has been concluded, with an outcome which would not
result in damages, restrain, prohibit or declare illegal the
consummation of the transactions contemplated by this Agreement,
then the action or proceeding shall not be deemed to create a
failure of a condition pursuant to this subsection 7.01(c).
(d) FAIRNESS OPINION. Pioneer shall have received an
----------------
opinion from Professional Bank Services, Inc., dated as of a date
no later than the date of the Proxy Statement mailed to Pioneer
shareholders in connection with the Exchange and not subsequently
withdrawn prior to the vote of Pioneer shareholders on the Plan
of Exchange, to the effect that the Exchange is fair to Pioneer's
shareholders from a financial point of view.
7.02 CONDITIONS TO OBLIGATIONS OF CENTRAL. The obligations
------------------------------------
of Central to effect the Exchange shall be subject to the sat-
isfaction of the following conditions, in addition to those set
forth in Section 7.01, on or before the Closing Date:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. The
-----------------------------------------
representations and warranties of Pioneer and the Bank herein
contained shall be true in all material respects as stated
herein, both when made and with the same effect as though made
again as of the Closing Date except to the extent of changes
permitted by the terms of this Agreement or except for breaches
of representations or warranties which would not have a material
adverse effect on the business, financial condition or operations
of Pioneer and the Bank taken as a whole. Pioneer, the Bank, and
the Pioneer Directors shall have performed all obligations and
complied with all covenants required by this Agreement to be per-
formed or complied with by each of them prior to the Closing Date
or except for failures to perform or comply which would not have
a material adverse effect on the business, financial condition or
operations of Pioneer and the Bank taken as a whole. In
addition, Pioneer shall have delivered to Central its certificate
dated as of the Closing Date and signed by its President and by
its Assistant Secretary, to the effect that, except as disclosed
in the certificate, they do not know of any failure or material
breach of any representation, warranty, or covenant made by
Pioneer, the Bank or the Pioneer Directors or of any conditions
to Central's obligations to effect the Exchange.
(b) NO MATERIAL ADVERSE CHANGE. There shall not have
--------------------------
occurred any material adverse change since September 30, 1997, in
the financial condition, business, assets, or results of opera-
tions of Pioneer or the Bank.
(c) OPINION OF COUNSEL. Central shall have received
------------------
from Stites & Harbison an opinion dated as of the Closing Date in
form and substance reasonably satisfactory to Central and to the
effect attached hereto in Annex 7.02(c).
-------------
(d) STATUTORY REQUIREMENTS. All statutory require-
----------------------
ments for the valid consummation by Central of the transactions
contemplated by this Agreement shall have been fulfilled; all
authorizations, consents and approvals of all federal, state,
local and foreign governmental agencies and authorities required
to be obtained in order to permit consummation by Central of the
transactions contemplated by this Agreement and to permit the
business presently carried on by Pioneer and the Bank to continue
unimpaired in all material respects immediately following the
Effective Time shall have been obtained.
(e) ENVIRONMENTAL MATTERS. Notwithstanding any
---------------------
representations or warranties of Pioneer or the Bank or any
liability or unasserted liability under the Environmental Laws
listed on the Disclosure Letter, neither Pioneer nor the Bank,
nor any of their assets shall be subject to any liability under
the Environmental Laws that would have a material adverse effect
on the financial condition of Pioneer and the Bank taken as a
whole.
(f) RESIGNATIONS AND RELEASES OF OFFICERS. Central
-------------------------------------
shall have received executed releases and resignations from the
officers of the Bank and Pioneer designated by Central prior to
the Closing providing that as a condition to such officers
receiving the closing bonuses described in Pioneer's Disclosure
Letter that such officers release Pioneer, the Bank and Central
from all claims arising out of their employment by Pioneer and/or
the Bank and that such officers resign effective at the Effective
Time from all positions they then hold with Pioneer and the Bank.
The foregoing releases and resignations shall be in form and
substance reasonably satisfactory to Central.
(g) EMPLOYMENT AND NONCOMPETITION AGREEMENTS. Carl
----------------------------------------
C. Norton shall have executed and delivered an Amendment No. 1 to
Employment Agreement dated as of the Closing Date, and Janet W.
Prewitt shall have executed and delivered a Noncompetition
Agreement dated as of the Closing Date, in each case, in
substantially the forms attached hereto as Annex 7.02(g).
-------------
(h) LIQUIDATION ACCOUNT. Central shall have received
-------------------
written confirmation from the OTS is a form reasonably
satisfactory to Central's counsel to the effect that the Exchange
shall not cause or constitute a complete liquidation within the
meaning of 12 C.F.R. Part 563b.3(f)(3).
(i) NORTON SETTLEMENT. Central shall have received
-----------------
signed releases from Tom Norton, George Norton and their children
in substantially the form attached hereto as Annex 7.02(i).
-------------
7.03 CONDITIONS TO OBLIGATIONS OF PIONEER. The obligations
------------------------------------
of Pioneer to effect the Exchange shall be subject to the
satisfaction of the following conditions, in addition to those
set forth in Section 7.01, on or before the Closing Date:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. The
-----------------------------------------
representations and warranties of Central herein contained shall
be true and correct in all material respects as stated herein,
both when made and with the same effect as though made again as
of the Closing Date except to the extent of changes permitted by
the terms of this Agreement or except for breaches of
representations or warranties which would not have a material
adverse effect on the consummation of the transactions
contemplated herein. Central shall have performed all
obligations and complied with all covenants required by this
Agreement to be performed or complied with by Central prior to
the Closing Date. In addition, Central shall have delivered to
Pioneer its certificate dated as of the Closing Date and signed
by its Chief Executive Officer and by its Assistant Secretary, to
the effect that, except as disclosed in the certificate, they do
not know of any failure or material breach of any representation,
warranty, or covenant made by Central or of any conditions to
Pioneer's obligation to effect the Exchange.
(b) OPINION OF COUNSEL FOR CENTRAL. Pioneer shall
------------------------------
have received an opinion dated as of the Closing Date from Brown,
Todd & Heyburn PLLC, counsel for Central, in form and substance
reasonably satisfactory to Pioneer to the effect attached hereto
in Annex 7.03(b).
-------------
(c) STATUTORY REQUIREMENTS. All statutory require-
----------------------
ments for the valid consummation by Pioneer and the Bank of the
transactions contemplated by this Agreement shall have been
fulfilled; all authorizations, consents and approvals of all
federal, state, local, and foreign governmental agencies and
authorities required to be obtained in order to permit
consummation by Pioneer and the Bank of the transactions
contemplated by this Agreement shall have been obtained.
SECTION 8
TERMINATION OF AGREEMENT
------------------------
(a) This Agreement may be terminated at any time
before the Effective Time:
(i) MUTUAL CONSENT. By Central and Pioneer, if
--------------
for any reason consummation of the transactions contemplated by
this Agreement is inadvisable in the opinions of both Central and
Pioneer.
(ii) CONDITIONS TO CENTRAL'S OBLIGATIONS NOT MET.
-------------------------------------------
By Central, upon written notice to Pioneer, if by September 30,
1998, any of the conditions set forth in Sections 7.01 or 7.02
shall have not been satisfied or, if appropriate, waived.
(iii) CONDITIONS TO PIONEER OR THE BANK OBLIGATIONS
---------------------------------------------
NOT MET. By Pioneer, upon written notice to Central, if by
- -------
September 30, 1998, any of the conditions set forth in Sections
7.01 or 7.03 shall not have been satisfied or, if appropriate,
waived.
(iv) TERMINATION DATE. By either Central or
----------------
Pioneer if, without fault of the terminating party, the Exchange
shall not have been consummated by September 30, 1998.
(b) EFFECT OF TERMINATION. Upon rightful termination
---------------------
of this Agreement by either Central or Pioneer pursuant to this
Section 8, except for this Section 8 and Sections 4.19, 9.03, and
9.09 and that certain confidentiality letter between the parties
dated January 27, 1998 (the "Confidentiality Agreement"), which
shall survive to the fullest extent permitted by law, this Agree-
ment shall be void and of no further effect, and there shall be
no liability by reason of this Agreement, or the termination
thereof on the part of Central, Pioneer or the Bank or the
respective directors, officers, employees, agents or shareholders
of any of them, unless such rightful termination results from a
party's intentional or reckless misrepresentation or intentional
or reckless breach of any covenant or representation or warranty
contained herein. In such event the terminating party shall have
all remedies available to it at law or in equity.
SECTION 9
MISCELLANEOUS
-------------
9.01 DELIVERIES AND NOTICES. Any deliveries, notices or
----------------------
other communications required or permitted hereunder shall be
deemed to have been duly made or given (i) if delivered in per-
son, or (ii) if sent by registered mail, return receipt
requested, postage prepaid, and addressed as follows:
(a) If to Pioneer:
Pioneer Financial Corporation
25 East Hickman Street
P.O. Box 597
Winchester, Kentucky 40391
Attn: Janet White Prewitt, Chairman
Carl C. Norton, President & C.E.O.
with a copy to:
Stites & Harbison
250 West Main Street, Suite 250
Lexington, Kentucky 40507
Attn: Walter R. Byrne, Jr.
(b) If to Central:
Central Bancshares, Inc.
300 West Vine Street
P.O. Box 1360
Lexington, Kentucky 40507
Attn: Luther Deaton, Jr., President
with copy to:
Brown, Todd & Heyburn PLLC
2700 Lexington Financial Center
Lexington, Kentucky 40507-1749
Attn: Paul E. Sullivan
or if sent to such substituted address as Pioneer or Central has
given to the other in writing.
9.02 WAIVERS. No waivers or failure to insist upon strict
-------
compliance with any obligation, covenant, agreement or condition
of this Agreement shall operate as a waiver of, or an estoppel
with respect to, any subsequent or other failure.
9.03 EXPENSES. Except as otherwise provided below, each
--------
party shall assume and pay its own legal, accounting and other
expenses incurred in connection with the transactions
contemplated by this Agreement.
9.04 HEADINGS, COUNTERPARTS, AND PRONOUNS. The headings in
------------------------------------
this Agreement have been included solely for ease of reference
and shall not be considered in the interpretation or construction
of this Agreement. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
Wherever from the context it appears appropriate, pronouns stated
in the masculine, feminine or neuter in this Agreement shall
include the masculine, feminine and neuter.
9.05 ANNEXES AND SCHEDULES. The annexes and Disclosure
---------------------
Letter to this Agreement are incorporated herein by this
reference and expressly made a part hereof.
9.06 ENTIRE AGREEMENT. Except for the Confidentiality
----------------
Agreement, all prior negotiations and agreements, by and between
Central and Pioneer are superseded by this Agreement, and there
are no representations, warranties, understandings or agreements
between the parties other than those expressly set forth herein
or in an annex or Disclosure Letter delivered or to be delivered
in connection herewith.
9.07 GOVERNING LAW. This Agreement shall be governed by,
-------------
and construed and interpreted in accordance with, the laws of the
Commonwealth of Kentucky.
9.08 DISCLOSURE. To the extent Pioneer or any executive
----------
officer or director of Pioneer is approached by any Third Party
with respect to any of the transactions referenced in subsections
(a)-(d) of Section 6.11 of this Agreement or to the extent
fiduciary duty clearly requires the directors of Pioneer to enter
into discussions with a Third Party regarding the foregoing
("Required Discussions"), Pioneer shall disclose to Central
immediately that it, its executive officers or directors were
contacted or have entered into discussions and the continuing
details related thereto.
9.09 TERMINATION FEE. In the event that, as a result of a
---------------
breach of Section 6.11 of this Agreement or the Required
Discussions, at any time prior to the termination of this
Agreement Pioneer's Board of Directors fails to recommend that
Pioneer's shareholders vote in favor of this Agreement and the
Plan of Exchange or any of the Pioneer Directors fail to vote
their shares of Pioneer Common Stock in favor of this Agreement
and Plan of Exchange, then Pioneer shall promptly pay Central a
termination fee of $500,000.00.
9.10 PIONEER DIRECTORS. The Board of Directors of Pioneer
-----------------
join in this Agreement solely in order to make the covenants
referred to or provided to be done and performed by them under
Section 6.02 of this Agreement. Each Pioneer Director
acknowledges that, in consideration for making such covenants and
performing such tasks, he or she shall benefit from a smooth and
orderly transition in the ownership and control of Pioneer.
9.11 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
---------------------------------------------
representations and warranties contained in this Agreement by any
party hereto or set forth in any certificate or instrument
delivered by or on behalf of the parties hereto pursuant to this
Agreement shall expire at the Effective Time.
9.12 TERMINATION OF PIONEER ESOP. Notwithstanding any other
---------------------------
provision herein which may appear to the contrary, the parties
acknowledge that the Pioneer ESOP may be required under
applicable law to remain in existence and operation for some
period after the Effective Time. Central shall cause the Pioneer
ESOP to be terminated for the benefit of the Pioneer ESOP
participants as soon as practicable after the Effective Time and
in a manner consistent with applicable law and regulations.
IN WITNESS WHEREOF, Pioneer, the Bank and Central have
executed and delivered multiple originals of this Agreement on
the date set forth in the preamble hereto.
CENTRAL BANCSHARES, INC. PIONEER FINANCIAL CORPORATION
By /s/ Luther Deaton, Jr. By /s/ Janet W. Prewitt
---------------------------- ----------------------------
Luther Deaton, Jr.,
President & CEO Title: Chairman
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Attested by /s/ Gary Coyle Attested by /s/ Carl C. Norton
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Gary Coyle, Secretary
Title: President
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PIONEER FEDERAL SAVINGS BANK
By /s/ Janet W. Prewitt
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Title: Chairman
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Attested by /s/ Carl C. Norton
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Title: President
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* * * * *
The undersigned directors join in this Agreement for the
purposes set forth in Section 9.10.
WILLIAM M. CRESS /s/ William M. Cress
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CARL C. NORTON /s/ Carl C. Norton
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JANET W. PREWITT /s/ Janet W. Prewitt
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ROBERT G. STRODE /s/ Robert G. Strode
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THOMAS D. MUNCIE /s/ Thomas D. Muncie
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ANDREW JAMES RYAN /s/ Andrew James Ryan
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NANCY M. LAWWILL /s/ Nancy M. Lawwill
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WAYNE M. MARTIN /s/ Wayne M. Martin
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ANNEXES
1.01 Plan of Share Exchange
7.02(c) Opinion of Counsel for Pioneer and the Bank
7.02(g) Amendment No. 1 to Norton Employment Agreement and
Prewitt Noncompetition Agreement
7.02(i) Norton Release Agreements
7.03(b) Opinion of Counsel for Central
ANNEX 1.01
PLAN OF SHARE EXCHANGE
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ANNEX 1.01
PLAN OF SHARE EXCHANGE
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1. Names. The name of the corporation whose shares shall
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be acquired is Pioneer Financial Corporation (the "Pioneer"). The
name of the acquiring corporation is Central Bancshares, Inc.
(the "Central").
2. Terms and Conditions. The terms and conditions of the
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exchange (the "Exchange") are set forth in this Plan of Share
Exchange and in a Share Exchange Agreement dated May 7, 1998,
between Central and Pioneer, and joined in by Pioneer's directors
(the "Agreement").
3. Pioneer Capital Stock. The authorized capital stock of
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the Pioneer consists solely of 500,000 shares of common stock, of
a par value of $1.00 per share ("Pioneer Common Stock"), of which
208,233 shares are issued and outstanding.
4. Manner and Basis of Exchanging Shares. The manner and
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basis of exchanging the shares of Pioneer Common Stock for cash,
as set forth in the Agreement, are as follows:
(a) As provided by Section 271B.11-060(2) of the
Kentucky Business Corporation Act (the "Act"), and except as may
be modified in accordance with Section 1.05 of the Agreement,
when the Exchange takes effect at the Effective Time (as defined
below):
(i) Each outstanding share of Pioneer
Common Stock shall, IPSO FACTO, and without
any action on the part of the holder thereof,
be exchanged for the right to receive $98.50
in cash, without interest (the "Exchange
Consideration") and the former holders of the
shares of Pioneer Common Stock shall be
entitled only to the exchange rights provided
in this Plan of Share Exchange and the
Agreement or to their rights under Subtitle
13, Chapter 271B of Kentucky Revised Statutes
(KRS 271B.13-010 to .13-310) (the
"Dissenters' Rights Statute"); and
(ii) Central shall acquire and be issued
a number of shares of Pioneer Common Stock
equal to the number of shares of Pioneer
Common Stock that was outstanding immediately
prior to the Effective Time, which shares of
Pioneer Common Stock so acquired by Central
shall constitute all of the issued and
outstanding Pioneer Common Stock at the
Effective Time.
(b) As soon as practicable after the Effective Time,
Pioneer Federal Savings Bank, Winchester, Kentucky, as exchange
agent (the "Exchange Agent"), shall deliver to each holder of
Pioneer Common Stock (except holders of Dissenting Shares, as
defined below) converted into the right to receive the Exchange
Consideration pursuant to paragraph 4(a)(i) above, who has
validly surrendered to the Exchange Agent the certificate or
certificates representing such shares of Pioneer Common Stock
together with a letter of transmittal in the customary form and
other documentation that reasonably may be required by Central or
the Exchange Agent, a check for an amount equal to the product of
the Exchange Consideration and the number of shares of Pioneer
Common Stock represented by the certificate or certificates so
surrendered.
(c) At and after the Effective Time, each holder of a
Certificate that represented shares of Pioneer Common Stock
immediately before the Effective Time shall cease to have any
rights as a shareholder of the Pioneer, except for the right to
surrender such Certificate in exchange for the payment provided
pursuant to paragraph 4(a)(i) above or to perfect his rights
under the Dissenters' Rights Statute.
5. Dissenters' Rights.
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(a) Notwithstanding any provision contained herein or
in the Agreement to the contrary, shares of Pioneer Common Stock
held by a holder who has demanded and perfected his demand for
payment in accordance with Dissenters' Rights Statute and as of
the Effective Time has not effectively withdrawn or lost his
right to such payment ("Dissenting Shares") shall not be
exchanged for a right to the Exchange Consideration for each
Dissenting Share, but the holder thereof shall only be entitled
to such rights as are granted by Dissenters' Rights Statute.
(b) Notwithstanding the provisions of subsection (a)
of this paragraph 5, if any holder of shares of Pioneer Common
Stock who demands payment under the Dissenters' Rights Statute
shall effectively withdraw or lose (through failure to perfect or
otherwise) his right to such payment, then as of the Effective
Time or the occurrence of such event, whichever last occurs, each
of such holder's shares of Pioneer Common Stock shall
automatically be exchanged for only the right to receive the
Exchange Consideration from Central as otherwise provided herein.
6. Effective Time. Central shall deliver the Articles of
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Exchange to the Secretary of State of the Commonwealth of
Kentucky for filing as promptly as possible following the
Closing. The Exchange shall be effective at 11:59:59 P.M.,
Lexington, Kentucky, time on the date Articles of Share Exchange
are filed with the Secretary of State of the Commonwealth of
Kentucky (the "Effective Time").
7. Directors and Officers. At the Effective Time, the
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directors of Pioneer immediately prior to the Effective Time
shall all resign and the persons designated by Central shall
become the directors of Pioneer, each such director to hold
office, subject to the applicable provisions of Pioneer's
Articles of Incorporation and Bylaws, until the next annual
meeting of Pioneer's shareholders and until his successor is
elected and qualifies. At the Effective Time, all the officers of
Pioneer immediately prior to the Effective Time shall likewise
resign and the persons designated by Central shall become the
officers of Pioneer, each such officers to serve at the pleasure
of the Pioneer's new Board of Directors.
8. Articles and Bylaws. The Exchange shall not amend,
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alter or otherwise affect the Pioneer's Articles of Incorporation
or Bylaws, both as amended and in effect at the Effective Time.
ANNEX 7.02(c)
OPINION OF COUNSEL FOR PIONEER AND THE BANK
ANNEX 7.02(g)
AMENDMENT NO. 1 TO NORTON EMPLOYMENT AGREEMENT AND PREWITT
NONCOMPETITION AGREEMENT
ANNEX 7.02(i)
NORTON RELEASE AGREEMENTS