EXHIBIT 2
---------
AGREEMENT AND PLAN OF MERGER
dated as of
August 2, 2004
by and among
PARK NATIONAL CORPORATION
and
PARK MERGER CORP.
and
FIRST FEDERAL BANCORP, INC.
TABLE OF CONTENTS
Page
ARTICLE ONE -- THE MERGER 2
1.01. Merger; Surviving Corporation 2
1.02. Effective Time 2
1.03. Effects of the Merger 2
ARTICLE TWO -- CONVERSION OF SHARES; SURRENDER OF CERTIFICATES 3
2.01. Conversion of First Federal Shares 3
2.02. Surrender of Certificates 3
2.03. Merger Corp. Shares 6
ARTICLE THREE -- REPRESENTATIONS AND WARRANTIES OF FIRST FEDERAL 7
3.01. Corporate Status 7
3.02. Capitalization of First Federal 8
3.03. First Federal Subsidiaries 10
3.04. Corporate Proceedings 10
3.05. Authorized and Effective Agreement 11
3.06. Financial Statements of First Federal 11
3.07. Absence of Undisclosed Liabilities 12
3.08. Absence of Changes 12
3.09. Loan Documentation 13
3.10. Allowance for Loan Losses 13
3.11. Reports and Records 13
3.12. Taxes 14
3.13. Property and Title 15
3.14. Legal Proceedings 16
3.15. Regulatory Matters 16
3.16. No Conflict 16
3.17. Brokers, Finders and Others 17
3.18. Employment Agreements 17
3.19. Employee Benefit Plans 17
3.20. Compliance with Laws 21
3.21 Insurance 22
3.22. Governmental and Third-Party Proceedings 22
3.23. Contracts 23
3.24. Environmental Matters 23
3.25. Takeover Laws 25
3.26. Risk Management Instruments 25
3.27. Repurchase Agreements 25
3.28. Investment Securities 25
3.29. SEC Filings 26
3.30. Fiduciary Responsibilities 26
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3.31. Intellectual Property 26
3.32. First Federal Books and Records 27
3.33. CRA Compliance 28
3.34. Ownership of Park Shares 28
3.35. Fairness Opinion 28
ARTICLE FOUR -- REPRESENTATIONS AND WARRANTIES OF PARK AND
MERGER CORP. 28
4.01. Corporate Status 28
4.02. Corporate Proceedings 29
4.03. Authorized and Effective Agreement 29
4.04. No Conflict 29
4.05. SEC Filings 30
4.06. Brokers, Finders and Others 30
4.07. Governmental and Third-Party Proceedings 30
4.08. Financial Ability to Perform; Compliance with Regulations 30
4.09. Ownership of First Federal Shares 30
4.10. Absence of Changes 31
4.11. Takeover Law 31
ARTICLE FIVE -- FURTHER COVENANTS OF FIRST FEDERAL 31
5.01. Operation of Business 31
5.02. Notification 37
5.03. Acquisition Proposal 37
5.04. Delivery of Information 38
5.05. Takeover Laws 38
5.06. Merger of Subsidiaries 38
5.07. Accounting Policies 38
ARTICLE SIX -- FURTHER COVENANTS OF PARK 39
6.01. Access to Information 39
6.02. Employees; Employee Benefits 39
6.03. Notification 41
6.04. Officers' and Directors' Indemnification 41
6.05. Century Board of Directors 42
ARTICLE SEVEN -- FURTHER OBLIGATIONS OF THE PARTIES 43
7.01. Necessary Further Action 43
7.02. Press Releases 43
7.03. Proxy Statement; First Federal Meeting 43
7.04. Regulatory Applications 44
7.05. Confidentiality 45
7.06. No Conflicting Actions 45
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ARTICLE EIGHT -- CONDITIONS PRECEDENT TO THE OBLIGATIONS OF
THE PARTIES 46
8.01. Conditions to the Obligations of Park and Merger Corp. 46
8.02. Conditions to the Obligations of First Federal 47
8.03. Mutual Conditions 48
ARTICLE NINE -- CLOSING 49
9.01. Closing 49
9.02. Closing Deliveries Required of Park and Merger Corp. 49
9.03. Closing Deliveries Required of First Federal 49
ARTICLE TEN -- NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES
AND COVENANTS 50
10.01. Non-Survival of Representations, Warranties and Covenants 50
ARTICLE ELEVEN -- TERMINATION 50
11.01. Termination 50
11.02. Effect of Termination 52
ARTICLE TWELVE -- MISCELLANEOUS 53
12.01. Notices 53
12.02. Counterparts 53
12.03. Entire Agreement 53
12.04. Successors and Assigns 53
12.05. Captions 54
12.06. Governing Law 54
12.07. Payment of Fees and Expenses 54
12.08. Amendment 54
12.09. Waiver 54
12.10. Disclosure Schedule 54
12.11. No Third Party Rights 55
12.12. Waiver of Jury Trial 55
12.13. Severability 55
iii
GLOSSARY OF DEFINED TERMS
The following terms, when used in this Agreement, have the meanings
ascribed to them in the corresponding Sections of this Agreement listed
below:
"Acquisition Proposal" -- Section 5.03
"Agreement" -- Preamble
"BHCA" -- Section 4.01
"CERCLA" -- Section 3.24
"CRA" -- Section 3.20(a)
"Cash Amount" -- Section 2.01(a)
"Century" -- Preamble
"Closing" -- Section 9.01
"Closing Date" -- Section 9.01
"Code" -- Section 3.12
"Compensation and Benefit Plans" -- Section 3.19(a)
"Constituent Corporations -- Preamble
"Consultants" -- Section 3.19(a)
"Continuing Employees" -- Section 6.02(a)
"Costs" -- Section 6.04(a)
"DOL" -- Section 3.19(a)
"Directors" -- Section 3.19(a)
"ERISA" -- Section 3.19(a)
"ERISA Affiliate" -- Section 3.19(c)
"ERISA Affiliate Plan" -- Section 3.19(c)
"Effective Time" -- Section 1.02
"Employees" -- Section 3.19(a)
"Environmental Law" -- Section 3.24
"Exchange Act" -- Section 3.19(b)
"Exchange Agent" -- Section 2.02(a)
"Exchange Fund" -- Section 2.02(a)
"FDIC" -- Section 3.01(b)
"FFSB" -- Preamble
"FHLB" -- Section 3.01(b)
"First Federal" -- Preamble
"First Federal Balance Sheet Date" -- Section 3.06
"First Federal Certificates" -- Section 2.02(a)
"First Federal Disclosure Schedule" -- Preamble
"First Federal Dissenting Share" -- Section 2.02(i)
"First Federal Financial Statements" -- Section 3.06
"First Federal Meeting" -- Section 3.04(b)
"First Federal Real Estate Collateral" -- Section 3.24(b)
"First Federal Real Properties" -- Section 3.13
"First Federal Shares" -- Preamble
"First Federal Stock Option Plans" -- Section 3.02(a)
"First Federal Stock Options" -- Section 3.02(a)
"First Federal Subsidiaries" -- Section 3.01(b)
"First Federal's Financial Advisors" -- Section 3.17
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"GAAP" -- Section 3.06
"Governmental Authority" -- Section 3.16
"HOLA" -- Section 3.01(a)
"Hazardous Substances" -- Section 3.24
"IRS" -- Section 3.12
"Indemnified Party" -- Section 6.04(a)
"Information" -- Section 7.05
"Intellectual Property" -- Section 3.31
"knowledge" -- Section 3.08
"Loan Assets" -- Section 3.09
"Loan Documentation" -- Section 3.09
"material" -- Section 3.01(c)
"material adverse effect" -- Section 3.01(c)
"Merger" -- Preamble
"Merger Consideration" -- Section 2.01(a)
"Merger Corp." -- Preamble
"Merger Corp. Shares" -- Section 2.03
"OGCL" -- Section 1.01
"OTS" -- Section 3.01(b)
"Officers" -- Section 3.19(a)
"Ohio Secretary of State" -- Section 1.02
"Outside First Federal Director" -- Section 6.05
"PBGC" -- Section 3.19(c)
"PCBs" -- Section 3.24
"Park" -- Preamble
"Pension Plan" -- Section 3.19(b)
"Proxy Statement" -- Section 7.03(a)
"Regulatory Authorities" -- Section 3.15
"SEC" -- Section 3.03
"Securities Act" -- Section 3.19(b)
"Subsidiary" -- Section 3.03
"Surviving Corporation" -- Section 1.01
"Takeover Laws" -- Section 3.25
"Tax" -- Section 3.12
"Tax Returns" -- Section 3.12
"Updated First Federal Disclosure Schedule" -- Section 5.02
v
AGREEMENT AND PLAN OF MERGER
----------------------------
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of
August 2, 2004, is made and entered into by and among Park National
Corporation, an Ohio corporation ("Park"); Park Merger Corp., an Ohio
corporation ("Merger Corp."); and First Federal Bancorp, Inc., an Ohio
corporation ("First Federal") (Merger Corp. and First Federal are sometimes
hereinafter collectively referred to as the "Constituent Corporations").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of First Federal, Merger Corp. and
Park have each determined that it is in the best interests of their
respective corporations and shareholders for Merger Corp. to merge with and
into First Federal (the "Merger"), and immediately thereafter for the
surviving corporation to merge with and into Park, upon the terms and
subject to the conditions set forth in and pursuant to the terms of this
Agreement; and
WHEREAS, the Boards of Directors of First Federal, Merger Corp. and
Park have each approved this Agreement and the consummation of the
transactions contemplated hereby; and
WHEREAS, as a result of the Merger, in accordance with the terms of
this Agreement, Merger Corp. will cease to have a separate corporate
existence, Park will acquire all of the issued and outstanding shares of
First Federal as the surviving corporation and shareholders of First
Federal will receive from Park in exchange for each common share, without
par value, of First Federal (the "First Federal Shares"), an amount in cash
calculated in accordance with the terms of this Agreement; and
WHEREAS, promptly following the merger of the surviving corporation
in the Merger with and into Park, First Federal Savings Bank of Eastern
Ohio, a stock federal savings bank now wholly owned by First Federal
("FFSB"), will merge with and into Century National Bank, a national
banking association wholly owned by Park ("Century"); and
WHEREAS, First Federal has previously provided to Park a schedule
disclosing additional information about First Federal (the "First Federal
Disclosure Schedule");
NOW, THEREFORE, in consideration of the premises and the respective
representations, warranties, covenants, agreements and conditions
hereinafter set forth, First Federal, Merger Corp. and Park, intending to
be legally bound hereby, agree as follows:
1
ARTICLE ONE
THE MERGER
1.01. Merger; Surviving Corporation
Upon the terms and subject to the conditions of this Agreement, at
the Effective Time (as defined in Section 1.02), Merger Corp. shall merge
with and into First Federal in accordance with the General Corporation Law
of the State of Ohio (the "OGCL"). First Federal shall be the continuing
and surviving corporation in the Merger, shall continue to exist under the
laws of the State of Ohio, and shall be the only one of the Constituent
Corporations to continue its separate corporate existence after the
Effective Time. As used in this Agreement, the term "Surviving
Corporation" refers to First Federal immediately after the Effective Time.
As a result of the Merger, the outstanding shares of capital stock and the
treasury shares of the Constituent Corporations shall be converted in the
manner provided in Article Two.
1.02. Effective Time
The Merger shall become effective upon the later of: (a) the filing
of the appropriate certificate of merger with the Secretary of State of the
State of Ohio (the "Ohio Secretary of State") or (b) such time thereafter
as is agreed to in writing by Park, Merger Corp. and First Federal and so
provided in the certificate of merger. The date and time at which the
Merger shall become effective is referred to in this Agreement as the
"Effective Time."
1.03. Effects of the Merger
At the Effective Time:
(a) the articles of incorporation, as amended, of First Federal as
in effect immediately prior to the Effective Time shall be the
articles of incorporation of the Surviving Corporation;
(b) the amended and restated code of regulations of First Federal
as in effect immediately prior to the Effective Time shall be
the regulations of the Surviving Corporation, except that the
number of directors of the Surviving Corporation shall be three
and each such individual shall serve as a director of the
Surviving Corporation for a term expiring at the next annual
meeting of the shareholders of the Surviving Corporation to be
held after the Effective Time;
(c) the directors of the Surviving Corporation shall be the
directors of Merger Corp. immediately prior to the Effective
Time;
(d) each individual who is an officer of Merger Corp. immediately
prior to the Effective Time shall be an officer of the
Surviving Corporation holding the same office as held with
Merger Corp. immediately prior to the Effective Time and no
other individual shall be an officer of the Surviving
Corporation after the Effective Time; and
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(e) the Merger shall have the effects prescribed in the OGCL.
ARTICLE TWO
CONVERSION OF SHARES; SURRENDER OF CERTIFICATES
2.01. Conversion of First Federal Shares
At the Effective Time, by virtue of the Merger and without any action
on the part of the holder thereof:
(a) Purchase Price. Subject to Section 2.02, each First Federal
Share issued and outstanding immediately prior to the Effective
Time (except for First Federal Dissenting Shares) shall be
converted into the right to receive in cash $13.25 (the "Cash
Amount"). The "Merger Consideration" shall be equal to the
product of:
(i) $13.25; and
(ii) the number of First Federal Shares issued and outstanding
immediately prior to the Effective Time.
(b) Cancellation of Shares. After the Effective Time, all such
First Federal Shares shall no longer be outstanding and each
certificate previously representing any First Federal Shares
shall be surrendered for the Cash Amount in consideration
therefor in accordance with Section 2.02, without interest.
(c) Stock Options. All First Federal Stock Options outstanding
immediately before the Effective Time shall be cancelled and
extinguished and converted into the right to receive an amount
of cash equal to the product of (i) (A) $13.25 minus (B) the
exercise price of the First Federal Stock Option, multiplied by
(ii) the number of First Federal Shares subject to the
unexercised portion of such First Federal Stock Option.
2.02. Surrender of Certificates
(a) Exchange Agent. At or prior to the Effective Time, Park shall
deposit, or shall cause to be deposited, with The First-Knox
National Bank of Mount Vernon (the "Exchange Agent"), for the
benefit of the holders of certificates which immediately prior
to the Effective Time evidenced First Federal Shares (the
"First Federal Certificates"), for exchange in accordance with
this Article Two, cash in the amount of the Merger
Consideration calculated in accordance with Section 2.01 (such
cash being hereinafter referred to as the "Exchange Fund")
payable pursuant to Section 2.01 in substitution and exchange
for such First Federal Shares.
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(b) Surrender Procedures. As soon as reasonably practicable after
the Effective Time, Park shall cause the Exchange Agent to mail
to each holder of record of First Federal Shares immediately
prior to the Effective Time, (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss
and title to the First Federal Certificates shall pass, only
upon delivery of such First Federal Certificates to the
Exchange Agent, and which shall be in such form and have such
other provisions as Park may reasonably specify) and (ii)
instructions for use in effecting the surrender of the First
Federal Certificates in exchange for the Cash Amount. Upon
surrender by such holder of a First Federal Certificate or
Certificates evidencing all First Federal Shares standing in
such holder's name for cancellation to the Exchange Agent
together with such letter of transmittal, duly executed, the
holder of such First Federal Certificate or Certificates shall
be entitled to receive in exchange therefor the Cash Amount by
a check, which such holder has the right to receive in respect
of the First Federal Certificate or Certificates surrendered
pursuant to the provisions of this Article Two (after taking
into account all First Federal Shares then held by such
holder), and the First Federal Certificate or Certificates so
surrendered shall forthwith be canceled. Park shall cause the
Exchange Agent to mail the exchange check by U.S. mail, postage
prepaid, within seven days following receipt of all required
documentation. In the event of a transfer of ownership of
First Federal Shares which is not registered in the transfer
records of First Federal, a check in respect of the Cash Amount
may be issued to a transferee if the First Federal Certificate
representing such First Federal Shares is presented to the
Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and by evidence that any
applicable share transfer taxes have been paid. Until
surrendered as contemplated by this Section 2.02, each First
Federal Certificate shall be deemed at any time after the
Effective Time for all corporate purposes (except as provided
in Section 2.02(c)) to represent only the right to receive upon
such surrender the Cash Amount as contemplated by this Section
2.02, without interest.
(c) No Further Ownership Rights in First Federal Shares. The Cash
Amount paid pursuant to this Section 2.02 shall be deemed to
have been issued in full satisfaction of all rights pertaining
to such First Federal Shares, subject, however, to the
Surviving Corporation's obligation to pay any dividends or make
any other distributions with a record date prior to the
Effective Time which may have been declared or made by First
Federal on such First Federal Shares in accordance with the
terms of this Agreement on or prior to the Effective Time and
which remain unpaid at the Effective Time. If, after the
Effective Time, First Federal Certificates are presented to
Park for any reason, they shall be canceled and exchanged as
provided in this Article Two.
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(d) Termination of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to the shareholders of First
Federal for six months after the Effective Time shall be
delivered to Park, upon demand, and any shareholders of First
Federal who have not theretofore complied with this Article Two
shall thereafter look only to Park for payment of their claim
for the Cash Amount, in each case without interest.
(e) No Liability. None of Park, First Federal, the Exchange Agent
or the Surviving Corporation shall be liable to any former
holder of First Federal Shares for cash delivered to a public
official pursuant to any applicable abandoned property, escheat
or similar law.
(f) Share Transfer Books. Unless otherwise required by Section
1701.85 of the OGCL, after the Effective Time there shall be no
further registration of transfers on the share transfer books
of the Surviving Corporation of the First Federal Shares which
were outstanding immediately prior to the Effective Time.
(g) Lost Certificates. If there shall be delivered to the Exchange
Agent by any person who is unable to produce any First Federal
Certificate for First Federal Shares for surrender to the
Exchange Agent in accordance with this Section 2.02:
(i) Evidence to the satisfaction of the Surviving Corporation
or Park that such First Federal Certificate has been
lost, wrongfully taken or destroyed;
(ii) Such security or indemnity as may be requested by the
Surviving Corporation or Park to save them harmless
(which may include the requirement to obtain a third
party bond or surety); and
(iii) Evidence to the satisfaction of the Surviving Corporation
or Park that such person was the owner of the First
Federal Shares theretofore represented by each such First
Federal Certificate claimed by such person to be lost,
wrongfully taken or destroyed and that such person is the
person who would be entitled to present such First
Federal Certificate for exchange pursuant to this
Agreement;
then the Exchange Agent, in the absence of actual notice to it
that any First Federal Shares theretofore represented by any
such First Federal Certificate have been acquired by a bona
fide purchaser, shall deliver to such person the Cash Amount
that such person would have been entitled to receive upon
surrender of each such lost, wrongfully taken or destroyed
First Federal Certificate.
(h) Waiver. The Surviving Corporation or Park may from time to
time, in the case of one or more persons, waive one or more of
the rights provided to it
5
in this Article Two to withhold certain payments, deliveries
and distributions; and no such waiver shall constitute a waiver
of the Surviving Corporation's rights thereafter to withhold
any such payment, delivery or distribution in the case of any
person.
(i) First Federal Shareholders' Dissenters' Rights. Anything
contained in this Agreement or elsewhere to the contrary
notwithstanding, if any holder of an outstanding First Federal
Share shall properly exercise dissenters' rights with respect
thereto in accordance with Section 1701.85 of the OGCL (a
"First Federal Dissenting Share"), then:
(i) Each such First Federal Dissenting Share shall
nevertheless be deemed to be extinguished at the
Effective Time as provided elsewhere in this Agreement;
and
(ii) Each person perfecting such dissenters' rights shall
thereafter have only such rights (and shall have such
obligations) as are provided in Section 1701.85 of the
OGCL, and neither Park nor the Surviving Corporation
shall be required to deliver any cash payments to such
person in substitution for each such First Federal
Dissenting Share in accordance with this Agreement;
provided, however, that, if any such person shall have
failed to perfect or shall withdraw or lose such holder's
rights under Division (D) of Section 1701.85 of the OGCL,
each such holder's First Federal Dissenting Shares shall
thereupon be deemed to have been converted as of the
Effective Time into the right to receive the Cash Amount,
without any interest thereon, pursuant to Section 2.01.
No holder of First Federal Dissenting Shares shall be entitled
to submit a letter of transmittal, and any letter of
transmittal submitted by a holder of First Federal Dissenting
Shares shall be invalid.
2.03. Merger Corp. Shares
Each common share of Merger Corp. ("Merger Corp. Shares") issued and
outstanding immediately prior to the Effective Time shall be converted into
and thereafter evidence one common share, without par value, of the
Surviving Corporation.
6
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES OF FIRST FEDERAL
First Federal represents and warrants to Park that each of the
following statements is true and accurate:
3.01. Corporate Status
(a) First Federal is an Ohio corporation and a unitary savings and
loan holding company registered under the Home Owners' Loan
Act, as amended (the "HOLA"). First Federal is duly organized,
validly existing and in good standing under the laws of the
State of Ohio and has the full corporate power and authority to
own its property, to carry on its business as presently
conducted, and to enter into and, subject to the required
adoption of this Agreement by the First Federal shareholders
and the obtaining of appropriate approvals of Governmental
Authorities and Regulatory Authorities, perform its obligations
under this Agreement and consummate the transactions
contemplated by this Agreement. First Federal is not qualified
to do business in any other jurisdiction or required to be so
qualified to do business in any other jurisdiction except where
the failure to be so qualified individually or in the aggregate
would not reasonably be expected to have a material adverse
effect on First Federal. True and complete copies of the
articles of incorporation and amended and restated code of
regulations of First Federal, in each case as amended to the
date of this Agreement, have been delivered to Park by First
Federal in Section 3.01(a) of the First Federal Disclosure
Schedule.
(b) FFSB, Firstfedco Agency, Inc. ("Firstfedco") and MCT
Development Corporation ("MCT" and collectively with FFSB and
Firstfedco, the "First Federal Subsidiaries") are the only
Subsidiaries (as that term is defined in Section 3.03 below) of
First Federal. FFSB is a stock federal savings bank, is a
member of the Federal Home Loan Bank (the "FHLB") of Cincinnati
and is subject to regulation by the Office of Thrift
Supervision (the "OTS") and the Federal Deposit Insurance
Corporation (the "FDIC"). FFSB is duly organized, validly
existing and in good standing under the laws of the United
States of America and has full corporate power and authority to
own its property and to carry on its business as presently
conducted. Each of Firstfedco and MCT is an Ohio corporation;
is duly organized, validly existing and in good standing under
the laws of the State of Ohio; and has full corporate power and
authority to own its property and to carry on its business as
presently conducted. No First Federal Subsidiary has taken
action to qualify to do business in any other jurisdiction or
is required to be qualified to do business in any other
jurisdiction, except where the failure to be so qualified would
not reasonably be expected to have a material adverse effect on
such First Federal Subsidiary. Copies of the articles of
incorporation, code of regulations, charter and bylaws of each
First Federal Subsidiary and all
7
amendments thereto have been delivered to Park in Section
3.01(b) of the First Federal Disclosure Schedule.
(c) As used in this Agreement, (i) any reference to any event,
change, effect, development, circumstance or occurrence being
"material" with respect to any entity means an event, change,
effect, development, circumstance or occurrence that is or is
reasonably likely to be material in relation to the financial
condition, properties, assets, liabilities, businesses or
results of operations of such entity and its subsidiaries taken
as a whole, and (ii) the term "material adverse effect" means,
with respect to any entity, an event, change, effect,
development, circumstance or occurrence that, individually or
together with any other event, change, effect, development,
circumstance or occurrence, (A) has or would be reasonably
likely to have a material adverse effect on the business,
condition (financial or otherwise), capitalization, assets
(tangible or intangible), liabilities (accrued, contingent or
otherwise), operations, regulatory affairs, financial
performance or prospects of such entity and its subsidiaries,
taken as a whole, or (B) materially impairs the ability of such
entity to perform its obligations under this Agreement or to
consummate the Merger and the other transactions contemplated
by this Agreement; provided that "material adverse effect"
shall not be deemed to include the impact of (1) actions and
omissions of Park or Merger Corp., on the one hand, or First
Federal, on the other, taken with the prior written consent of
the other in contemplation of the transactions contemplated
hereby; (2) the direct effects of compliance with this
Agreement on the operating performance or financial condition
of the parties, including expenses incurred by the parties in
consummating the transactions contemplated by this Agreement,
any modifications or changes to valuation policies and
practices in connection with the Merger to the extent requested
by Park, and restructuring charges requested by Park and taken
in connection with the Merger; (3) changes after the date of
this Agreement in banking and similar laws of general
applicability or interpretations thereof by any Regulatory
Authority or Governmental Authority; or (4) changes after the
date hereof affecting depository institutions generally,
including changes in general economic conditions or prevailing
interest or deposit rates (except to the extent that such
changes affect Park and its Subsidiaries or First Federal and
the First Federal Subsidiaries, as the case may be, in a manner
disproportionate to the effect on depository institutions
generally).
3.02. Capitalization of First Federal
(a) The authorized capital of First Federal consists solely of (i)
9,000,000 First Federal Shares, of which 3,286,221 First
Federal Shares are issued and outstanding and 17,179 First
Federal Shares are held in treasury by First Federal; and (ii)
1,000,000 preferred shares, $100 par value, none of which is
issued. All outstanding First Federal Shares have been duly
authorized and are validly issued, fully paid and non-
assessable, and were
8
not issued in violation of the preemptive rights of any person.
All First Federal Shares issued have been issued in compliance
with all applicable federal and state securities laws. As of
the date of this Agreement, 335,925 First Federal Shares were
reserved for issuance upon the exercise of outstanding stock
options (the "First Federal Stock Options") granted under the
First Federal Bancorp, Inc. 1992 Stock Option Plan for Officers
and Key Employees, the First Federal Bancorp, Inc. 1992 Stock
Option Plan for Non-Employee Directors, the First Federal
Bancorp, Inc. 1994 Stock Option Plan for Officers and Key
Employees, the First Federal Bancorp, Inc. 1994 Stock Option
Plan for Non-Employee Directors, the First Federal Bancorp,
Inc. 1997 Performance Stock Option Plan for Senior Executive
Officers and Outside Directors and the First Federal Bancorp,
Inc. 2002 Stock Option and Incentive Plan (collectively, the
"First Federal Stock Option Plans"). First Federal has
furnished to Park, as part of Section 3.02(a) of the First
Federal Disclosure Schedule, a true, complete and correct copy
of each of the First Federal Stock Option Plans, and a list of
all participants in each of the First Federal Stock Option
Plans as of the date of this Agreement, which list identifies
the number of First Federal Shares subject to First Federal
Stock Options held by each such participant, the exercise price
of each such First Federal Stock Option and the dates each such
First Federal Stock Option was granted, becomes exercisable and
expires.
(b) As of the date of this Agreement, except for this Agreement and
the First Federal Stock Options, there are no options,
warrants, calls, rights, commitments or agreements of any
character to which First Federal is a party or by which it is
bound, obligating First Federal to issue, deliver or sell, or
cause to be issued, delivered or sold, any additional First
Federal Shares or obligating First Federal to grant, extend or
enter into any such option, warrant, call, right, commitment or
agreement. As of the date of this Agreement, there are no
outstanding contractual obligations of First Federal to
repurchase, redeem or otherwise acquire any First Federal
Shares except for such obligations arising under the First
Federal Stock Option Plans.
(c) Except as disclosed in Section 3.02(c) of the First Federal
Disclosure Schedule, since September 30, 2003, First Federal
has not (i) issued or permitted to be issued any First Federal
Shares, or securities exercisable for or convertible into
First Federal Shares, other than upon exercise of the First
Federal Stock Options granted prior to the date hereof under
the First Federal Stock Option Plans; (ii) repurchased,
redeemed or otherwise acquired, directly or indirectly through
any Subsidiary or otherwise, any First Federal Shares; or (iii)
declared, set aside, made or paid to the shareholders of First
Federal dividends or other distributions on or in respect of
the outstanding First Federal Shares.
9
(d) As of the date of this Agreement, there are no bonds,
debentures, notes or other indebtedness of First Federal, and
no securities or other instruments or obligations of First
Federal, the value of which is in any way based upon or derived
from any capital or voting stock of First Federal, having the
right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which
First Federal shareholders may vote are issued or outstanding.
3.03. First Federal Subsidiaries
The First Federal Subsidiaries are the only Subsidiaries of First
Federal. First Federal owns beneficially and of record all of the issued
and outstanding equity securities of FFSB and FFSB owns beneficially and of
record all of the issued and outstanding equity securities of each of
Firstfedco and MCT. There are no options, warrants, calls, rights,
commitments or agreements of any character to which First Federal or any
First Federal Subsidiary is a party or by which any of them is bound
obligating any First Federal Subsidiary to issue, deliver or sell, or cause
to be issued, delivered or sold, any additional equity securities of any
First Federal Subsidiary (other than to First Federal or FFSB), or
obligating First Federal or any First Federal Subsidiary to grant, extend
or enter into any such option, warrant, call, right, commitment or
agreement. There are no contracts, commitments, understandings or
arrangements relating to First Federal's or FFSB's rights to vote or to
dispose of the equity securities of any First Federal Subsidiary which it
owns and all of the equity securities of the First Federal Subsidiaries
held by First Federal or FFSB are fully paid and non-assessable and are
owned by First Federal or FFSB free and clear of any charge, mortgage,
pledge, security interest, hypothecation, restriction, claim, option, lien,
encumbrance or interest of any persons whatsoever. Except as disclosed in
Section 3.03 of the First Federal Disclosure Schedule, First Federal does
not own of record or beneficially, directly or indirectly, any equity
securities or similar interests of any person, or any interest in a
partnership or joint venture of any kind, other than the First Federal
Subsidiaries.
For purposes of this Agreement, "Subsidiary" has the meaning ascribed
to such term in Rule 1-02 of Regulation S-X promulgated by the Securities
and Exchange Commission (the "SEC").
3.04. Corporate Proceedings
(a) This Agreement has been (i) duly executed and delivered by duly
authorized officers of First Federal and (ii) approved by the
board of directors of First Federal.
(b) The board of directors of First Federal has duly adopted
resolutions (i) declaring that it is in the best interests of
First Federal's shareholders that First Federal enter into this
Agreement and consummate the Merger on the terms and subject to
the conditions set forth in this Agreement, (ii) confirming the
intention on the date of such adoption to recommend the
adoption of this Agreement by the shareholders of First Federal
and (iii) directing the President to call a Special Meeting of
Shareholders for
10
the purpose of considering and acting upon a proposal to
approve and adopt the Merger Agreement (the "First Federal
Meeting"), which resolutions have not been subsequently
rescinded, modified or withdrawn in any way as of the date of
execution of this Agreement and which will not be subsequently
rescinded, modified or withdrawn in any way prior to the
Closing Date, except that the resolutions set forth in clauses
(b)(i) and (ii) above may be rescinded if and to the extent
that the board of directors of First Federal reasonably
determines in good faith after consultation with First
Federal's Financial Advisors and upon written advice of counsel
to First Federal that consummation of the transactions
contemplated by this Agreement could reasonably be expected to
constitute a breach of the board of directors' fiduciary duties
to the shareholders of First Federal.
(c) Subject to the adoption of this Agreement by the First Federal
shareholders (by a majority of the outstanding First Federal
Shares, unless the board of directors of First Federal
recommends against the adoption of this Agreement, in which
case, by 75% of the outstanding First Federal Shares) and to
the filing of all requisite applications with Regulatory
Authorities and the receipt of all requisite approvals by
Governmental Authorities and Regulatory Authorities, First
Federal has all requisite corporate power and authority to
enter into this Agreement and to perform all of its obligations
hereunder.
3.05. Authorized and Effective Agreement
Assuming the due authorization, execution and delivery by Park and
Merger Corp., this Agreement constitutes the legal, valid and binding
obligation of First Federal, enforceable against First Federal in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance
and other similar laws relating to or affecting the enforcement of
creditors' rights generally, by general equitable principles (regardless of
whether enforceability is considered in a proceeding in equity or at law)
and by an implied covenant of good faith and fair dealing. First Federal
has the right, power, authority and capacity to execute and deliver this
Agreement and, subject to the required adoption of this Agreement by the
First Federal shareholders, the obtaining of appropriate approvals by
Regulatory Authorities and Governmental Authorities and the expiration of
applicable regulatory waiting periods, to perform its obligations under
this Agreement.
3.06. Financial Statements of First Federal
(a) The audited consolidated financial statements of First Federal
consisting of consolidated balance sheets as of September 30, 2003 and
2002, and the related consolidated statements of income, stockholders'
equity and cash flows for the years ended September 30, 2003, 2002 and
2001, including the related notes and the report thereon of BKD LLP and (b)
the unaudited consolidated balance sheet as of March 31, 2004 (the "First
Federal Balance Sheet Date") and the related unaudited consolidated
statements of income and cash flows for the three months and six months
ended March 31, 2004, of First Federal (collectively, all of such
11
consolidated financial statements are referred to as the "First Federal
Financial Statements"), copies of which are included in Annual Reports on
Form 10-KSB and Quarterly Reports on Form 10-QSB filed by First Federal
with the SEC, comply as to form in all material respects with applicable
accounting requirements and have been prepared in accordance with United
States generally accepted accounting principles ("GAAP") applied on a
consistent basis during the periods involved (except as may be indicated in
the notes thereto) and present fairly, in all material respects, the
consolidated financial condition of First Federal as of the dates thereof
and its consolidated results of operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal year-
end audit adjustments which are not expected to be, individually or in the
aggregate, materially adverse to First Federal in the absence of full
footnotes).
3.07. Absence of Undisclosed Liabilities
Except as set forth in the First Federal Financial Statements or in
Section 3.07 of the First Federal Disclosure Schedule and except as arising
under this Agreement, neither First Federal nor any First Federal
Subsidiary has any debts, liabilities, guarantees or obligations (whether
accrued, absolute, contingent or otherwise) as of the date hereof, other
than debts, liabilities, guarantees and obligations which, individually or
in the aggregate, do not exceed $10,000. Except as set forth in Section
3.07 of the First Federal Disclosure Schedule, all debts, liabilities,
guarantees and obligations of First Federal and the First Federal
Subsidiaries incurred since the First Federal Balance Sheet Date have been
incurred in the ordinary course of business and are usual and normal in
amount both individually and in the aggregate.
3.08. Absence of Changes
Except (a) as otherwise publicly disclosed in press releases issued
by First Federal, or (b) as set forth in Section 3.08 of the First Federal
Disclosure Schedule, since the First Federal Balance Sheet Date: (i) there
has not been any material adverse change in the business, operations,
assets or financial condition of First Federal and the First Federal
Subsidiaries taken as a whole and, to the knowledge of First Federal, no
fact or condition exists which First Federal believes will cause a material
adverse effect in the future; and (ii) First Federal has not taken or
permitted any of the actions described in Section 5.01(b) of this
Agreement. For purposes of this Agreement, an individual will be deemed to
have "knowledge" of a particular fact or other matter if:
(x) such individual is actually aware of such fact or other matter;
or
(y) a prudent individual would be expected to discover or otherwise
become aware of such fact or other matter in the course of
conducting a reasonably comprehensive investigation concerning
the existence of such fact or other matter.
First Federal or Park will be deemed to have "knowledge" of a particular
fact or other matter if any individual who is serving as a director or
executive officer of such corporation or of a Subsidiary of such
corporation, has, or at any time had, knowledge of such fact or other
matter.
12
3.09. Loan Documentation
The documentation ("Loan Documentation") governing or relating to the
loan and credit-related assets ("Loan Assets") included in the loan
portfolio of each First Federal Subsidiary is legally sufficient for the
purposes intended thereby and creates enforceable rights of such First
Federal Subsidiary in accordance with the terms of such Loan Documentation,
subject to applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance and other similar laws relating to or affecting the
enforcement of creditors' rights generally, by general equitable principles
(regardless of whether enforceability is considered in a proceeding in
equity or at law) and by an implied covenant of good faith and fair
dealing, except to the extent such enforceability may be limited by laws
relating to safety and soundness of insured depository institutions as set
forth in 12 U.S.C. [SECTION] 1818(b) or by appointment of a conservator by
the FDIC, and except for such insufficiencies as would not reasonably be
expected to have a material adverse effect on First Federal and the First
Federal Subsidiaries taken as a whole. Except as set forth in Section 3.09
of the First Federal Disclosure Schedule, no debtor under any of the Loan
Documentation has asserted any claim or defense with respect to the subject
matter thereof. Except as set forth in Section 3.09 of the First Federal
Disclosure Schedule, none of the First Federal Subsidiaries is a party to a
loan, including any loan guaranty, with any director, executive officer or
5% shareholder of First Federal or any First Federal Subsidiary, or any
person, corporation or enterprise controlling, controlled by or under
common control with either First Federal or any First Federal Subsidiary.
To the knowledge of First Federal and FFSB, all loans and extensions of
credit that have been made by a First Federal Subsidiary comply with
applicable regulatory limitations and procedures.
3.10. Allowance for Loan Losses
Except as set forth in Section 3.10 of the First Federal Disclosure
Schedule, there is no loan which was made by any First Federal Subsidiary
and which is reflected as an asset of First Federal or any First Federal
Subsidiary on the First Federal Financial Statements that (a)(i) is 90 days
or more delinquent, (ii) has been classified by examiners (regulatory or
internal) as "Substandard," "Doubtful" or "Loss" or (iii) has been
designated by management of First Federal or such First Federal Subsidiary
as "special mention," and (b) the default by the borrower under which would
reasonably be expected to have a material adverse effect on First Federal
or FFSB. The allowance for loan losses reflected on the First Federal
Financial Statements was, as of each respective date, determined in
accordance with GAAP and in accordance with all rules and regulations
applicable to First Federal and the First Federal Subsidiaries and was
adequate as of the respective date thereof to provide for reasonably
anticipated losses on outstanding loans, except for such failures and
inadequacies that would not reasonably be expected to have a material
adverse effect on First Federal or FFSB.
3.11. Reports and Records
First Federal and the First Federal Subsidiaries have filed all
reports and maintained all books and records required to be filed or
maintained by them under the rules and regulations of the OTS, the FHLB of
Cincinnati, the FDIC and the SEC, except for such reports and records the
failure to file or maintain which would not reasonably be expected to have
a material adverse effect on First Federal. The books and records of First
Federal and the First
13
Federal Subsidiaries have been fully, properly and accurately maintained in
all material respects and have been maintained in accordance with sound
business practices and the requirements of Section 13(b)(2) of the Exchange
Act, there are no material inaccuracies or discrepancies of any kind
contained or reflected therein, and they fairly reflect the substance of
events and transactions included therein. All such documents and reports
complied in all material respects with other applicable requirements of law
and rules and regulations in effect at the time such documents and reports
were filed and contained in all material respects the information required
to be stated therein.
3.12. Taxes
Except as set forth in Section 3.12 of the First Federal Disclosure
Schedule, First Federal and the First Federal Subsidiaries have timely
filed all returns, statements, reports and forms (including, without
limitation, elections, declarations, disclosures, schedules, estimates and
information returns) (collectively, the "Tax Returns") with respect to all
federal, state, local and foreign income, gross income, gross receipts,
gains, premium, sales, use, ad valorem, transfer, franchise, profits,
withholding, payroll, employment, excise, severance, stamp, occupancy,
license, lease, environmental, customs, duties, property, windfall profits
and all other taxes (including, without limitation, any interest, penalties
or additions to tax with respect thereto, individually a "Tax," and
collectively, "Taxes") required to be filed with the appropriate tax
authority. Such Tax Returns were true, correct and complete in all
material respects. First Federal and the First Federal Subsidiaries have
paid and discharged all Taxes due (whether reflected on such Tax Returns or
otherwise), other than such Taxes that are adequately reserved as shown on
the First Federal Financial Statements (excluding any reserve for deferred
Taxes established to reflect timing differences between book and Tax
income) or have arisen in the ordinary course of business since the First
Federal Balance Sheet Date. Except as set forth in Section 3.12 of the
First Federal Disclosure Schedule, neither the Internal Revenue Service
(the "IRS") nor any other taxing agency or authority, domestic or foreign,
has asserted, is now asserting or, to the knowledge of First Federal, is
threatening to assert against First Federal or any First Federal Subsidiary
any deficiency or claim for additional Taxes. There are no unexpired
waivers by First Federal or any First Federal Subsidiary of any statute of
limitations with respect to Taxes. No extension of time within which to
file any Tax Return (for a period with respect to which the statute of
limitations has not expired) has been filed, or has been requested or
granted. The accruals and reserves for Taxes reflected in the First
Federal Financial Statements (excluding any reserve for deferred Taxes
established to reflect timing differences between book and Tax income) are
adequate for the periods covered. First Federal and the First Federal
Subsidiaries have withheld or collected and paid over to the appropriate
Governmental Authorities or are properly holding for such payment all Taxes
required by law to be withheld or collected. There are no liens for Taxes
upon the assets of First Federal or any First Federal Subsidiary, other
than liens for current Taxes not yet due and payable. Neither First
Federal nor any First Federal Subsidiary has agreed to make, or is required
to make, any adjustment under Section 481(a) of the Internal Revenue Code
of 1986, as amended (the "Code"). Except as set forth in Section 3.12 of
the First Federal Disclosure Schedule, neither First Federal nor any First
Federal Subsidiary is a party to any agreement, contract, arrangement or
plan that has resulted, or could result, individually or in the aggregate,
in the payment of "excess parachute payments" within the meaning of Section
280G of the Code. Neither First Federal nor any First Federal Subsidiary
has ever been a member of an affiliated group of corporations, within the
meaning of
14
Section 1504 of the Code, other than an affiliated group of which First
Federal is or was the common parent corporation. Neither First Federal nor
any First Federal Subsidiary has any liability for the Taxes of any other
person or entity under Treasury Department Regulation Section 1.1502-6 (or
any similar provision of state, local or foreign law), as a transferee or
successor, by contract or otherwise. None of the assets of First Federal
or any First Federal Subsidiary is property which First Federal or the
First Federal Subsidiary is required to treat as being owned by any other
person pursuant to the so-called "safe harbor lease" provisions of former
Section 168(f)(8) of the Code. None of the assets of First Federal or any
First Federal Subsidiary directly or indirectly secures any debt the
interest on which is tax-exempt under Section 103(a) of the Code. None of
the assets of First Federal or any First Federal Subsidiary is "tax-exempt
use property" within the meaning of Section 168(h) of the Code. Neither
First Federal nor any First Federal Subsidiary is, and none have been, a
United States real property holding corporation (as defined in Section
897(c)(2) of the Code) during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code. No Tax is required to be withheld pursuant
to Section 1445 of the Code as a result of the transactions contemplated by
this Agreement. Neither First Federal nor any First Federal Subsidiary is
a party to any joint venture, partnership or other entity, agreement or
contract that could be treated as a partnership for federal income tax
purposes. First Federal has not made, nor is it bound by, any election
under Section 197 of the Code. Neither First Federal nor any First Federal
Subsidiary has any excess loss account (as defined in Treasury Department
Regulation Section 1.1502-19) with respect to the stock of any First
Federal Subsidiary. First Federal has disclosed on its federal income Tax
Returns all positions taken therein that could give rise to a substantial
understatement of federal income tax within the meaning of Section 6662 of
the Code.
3.13. Property and Title
Section 3.13 of the First Federal Disclosure Schedule lists and
describes all real property, and any leasehold interest in real property,
owned or held by First Federal or any First Federal Subsidiary and used in
the business of First Federal or any First Federal Subsidiary
(collectively, the "First Federal Real Properties"). True and complete
copies of all leases of First Federal Real Properties to which First
Federal or any First Federal Subsidiary is a party have been provided to
Park in Section 3.13 of the First Federal Disclosure Schedule. Such
leasehold interests have not been assigned or subleased. All First Federal
Real Properties which are owned by First Federal or any First Federal
Subsidiary are free and clear of all mortgages, liens, security interests,
defects, encumbrances, easements, restrictions, reservations, conditions,
covenants, agreements, encroachments, rights of way and zoning laws, except
(a) those set forth in Section 3.13 of the First Federal Disclosure
Schedule; (b) easements, restrictions, reservations, conditions, covenants,
rights of way, zoning laws and other defects and irregularities in title
and encumbrances which do not materially impair the use thereof for the
purposes for which they are held; and (c) liens for current Taxes not yet
due and payable. First Federal and the First Federal Subsidiaries own, and
are in rightful possession of, and have good title to, all of the other
assets indicated in the First Federal Financial Statements as being owned
by First Federal or any First Federal Subsidiary, free and clear of any
charge, mortgage, pledge, security interest, hypothecation, restriction,
claim, option, lien, encumbrance or interest of any persons whatsoever
except (x) those described in the Section 3.13 of the First Federal
Disclosure Schedule and (y) those assets disposed of in the ordinary course
of business consistent with past practices. All of the assets of First
Federal and the First Federal Subsidiaries are in good operating condition,
15
except for normal maintenance and routine repairs, and are reasonably
adequate to continue to conduct the respective businesses of First Federal
and the First Federal Subsidiaries as such businesses are presently being
conducted.
3.14. Legal Proceedings
Except as set forth in Section 3.14 of the First Federal Disclosure
Schedule, there are no actions, suits, proceedings, claims or
investigations pending or appealable or, to the knowledge of First Federal
and the First Federal Subsidiaries, threatened in any court, before any
governmental agency or instrumentality or in any arbitration proceeding
against or by First Federal or any First Federal Subsidiary.
3.15. Regulatory Matters
None of First Federal, the First Federal Subsidiaries and their
respective properties is a party to or subject to any order, judgment,
decree, agreement, memorandum of understanding or similar arrangement with,
or a commitment letter or similar submission to, or extraordinary
supervisory letter from, any court or federal or state governmental agency
or authority, including any such agency or authority charged with the
supervision or regulation of financial institutions (or their holding
companies) or issuers of securities or engaged in the insurance of deposits
(including, without limitation, the OTS, the FHLB of Cincinnati, the FDIC
and the SEC) or the supervision or regulation of First Federal or FFSB
(collectively, the "Regulatory Authorities"). Neither First Federal nor
any First Federal Subsidiary has been advised by any Regulatory Authority
that such Regulatory Authority is contemplating issuing or requesting (or
is considering the appropriateness of issuing or requesting) any such
order, judgment, decree, agreement, memorandum of understanding or similar
arrangement, commitment letter, supervisory letter or similar submission.
3.16. No Conflict
Except as set forth in Section 3.16 of the First Federal Disclosure
Schedule, subject to the required adoption of this Agreement by the
shareholders of First Federal, receipt of the required approvals of
Governmental Authorities and Regulatory Authorities and expiration of
applicable regulatory waiting periods, the execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated hereby, by First Federal do not and will not (a) conflict
with, or result in a violation of, or result in the breach of or a default
(or which with notice or lapse of time would result in a default) under,
any provision of: (i) any federal, state or local law, regulation,
ordinance, order, rule or administrative ruling of any administrative
agency or commission or other federal, state or local governmental
authority or instrumentality (each, a "Governmental Authority") applicable
to First Federal or any First Federal Subsidiary or any of their respective
properties; (ii) the articles of incorporation or amended and restated code
of regulations of First Federal or the governing instruments of any First
Federal Subsidiary; (iii) any material agreement, indenture or instrument
to which First Federal or any First Federal Subsidiary is a party or by
which any of them or of their respective properties or assets may be bound;
or (iv) any order, judgment, writ, injunction or decree of any court,
arbitration panel or any Governmental Authority applicable to First Federal
or any First Federal Subsidiary; (b) result in the creation or acceleration
of any security interest, mortgage,
16
option, claim, lien, charge or encumbrance upon or interest in any property
of First Federal or any First Federal Subsidiary, except to the extent that
such creation or acceleration will not have a material adverse effect on
First Federal; or (c) violate the terms or conditions of, or result in the
cancellation, modification, revocation or suspension of, any material
license, approval, certificate, permit or authorization held by First
Federal or any First Federal Subsidiary.
3.17. Brokers, Finders and Others
Except for the fees paid or payable to Keefe, Bruyette & Woods, Inc.
("First Federal's Financial Advisors"), there are no fees or commissions of
any sort whatsoever claimed by, or payable by, First Federal or any First
Federal Subsidiary to, any broker, finder, intermediary, attorney,
accountant or any other similar person in connection with effecting this
Agreement or the transactions contemplated hereby, except for ordinary and
customary legal and accounting fees.
3.18. Employment Agreements
Except as disclosed in Section 3.18 of the First Federal Disclosure
Schedule, neither First Federal nor any First Federal Subsidiary is a party
to any employment, change in control, severance or consulting agreement not
terminable at will or obligated to pay any severance bonus or other
compensation as a result of the Merger. Neither First Federal nor any
First Federal Subsidiary is a party to, bound by or negotiating, any
collective bargaining agreement, nor are any of their respective employees
represented by any labor union or similar organization. First Federal and
the First Federal Subsidiaries are in compliance in all material respects
with all applicable laws respecting employment and employment practices,
terms and conditions of employment and wages and hours, and neither First
Federal nor any First Federal Subsidiary has engaged in any unfair labor
practice, other than practices that individually or in the aggregate would
not reasonably be expected to have a material adverse effect on First
Federal.
3.19. Employee Benefit Plans
(a) Section 3.19(a) of the First Federal Disclosure Schedule
contains a complete and accurate list of all bonus, incentive,
deferred compensation, pension (including, without limitation,
Pension Plans as defined below), retirement, profit-sharing,
thrift, savings, employee stock ownership, stock bonus, stock
purchase, restricted stock, stock option, severance, welfare
(including, without limitation, "welfare plans" within the
meaning of Section 3(1) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), fringe benefit
plans, employment or severance agreements and all similar
practices, policies and arrangements maintained or contributed
to (currently or within the last six years), other than those
described in Department of Labor ("DOL") Reg.
[SECTION][SECTION] 2510.3-1(b) through (k), 2510.3-2(d),
2510.3-3(b), by (i) First Federal or any First Federal
Subsidiary and in which any employee or former employee (the
"Employees"), consultant or former consultant (the
"Consultants"), officer or former officer (the "Officers"), or
director or former director
17
(the "Directors") of First Federal or any First Federal
Subsidiary participates or to which any such Employees,
Consultants, Officers or Directors are parties or (ii) any
ERISA Affiliate (as defined below) (collectively, the
"Compensation and Benefit Plans"). Neither First Federal nor
any First Federal Subsidiary has any commitment to create any
additional Compensation and Benefit Plan or to modify or change
any existing Compensation and Benefit Plan, except to the
extent required by applicable law.
(b) Except as described in Section 3.19(b) of the First Federal
Disclosure Schedule, each Compensation and Benefit Plan has
been operated and administered in all material respects in
accordance with its terms and with applicable law, including,
but not limited to, ERISA, the Code, the Securities Act of
1933, as amended (the "Securities Act"), the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), the Age
Discrimination in Employment Act, or any regulations or rules
promulgated thereunder, and all filings, disclosures and
notices required by ERISA, the Code, the Securities Act, the
Exchange Act, the Age Discrimination in Employment Act and any
other applicable law have been timely made. Each Compensation
and Benefit Plan which is an "employee pension benefit plan"
within the meaning of Section 3(2) of ERISA (a "Pension Plan")
and which is intended to be qualified under Section 401(a) of
the Code has received a favorable determination letter
(including a determination that the related trust under such
Compensation and Benefit Plan is exempt from tax under Section
501(a) of the Code) from the IRS and First Federal is not aware
of any circumstances likely to result in revocation of any such
favorable determination letter. There is no material pending
or, to the knowledge of First Federal, threatened, legal
action, suit or claim relating to the Compensation and Benefit
Plans other than routine claims for benefits thereunder.
Neither First Federal nor any First Federal Subsidiary has,
directly or indirectly, engaged in a transaction, or omitted to
take any action, with respect to any Compensation and Benefit
Plan that would reasonably be expected to subject First Federal
or any First Federal Subsidiary to a tax or penalty imposed by
either Section 4975 of the Code or Section 502 of ERISA.
(c) No liability (other than for payment of premiums to the Pension
Benefit Guaranty Corporation ("PBGC") which have been made or
will be made on a timely basis) under Title IV of ERISA has
been or is expected to be incurred by First Federal or any
First Federal Subsidiary with respect to any ongoing, frozen or
terminated "single-employer plan," within the meaning of
Section 4001(a)(15) of ERISA, currently or formerly maintained
by either of them, or any single-employer plan of any entity
(an "ERISA Affiliate Plan") which is considered one employer
with First Federal under Section 4001(a)(14) of ERISA or
Section 414(b), (c) or (m) of the Code (an "ERISA Affiliate").
None of First Federal, any First Federal Subsidiary or any
ERISA Affiliate has contributed, or has been
18
obligated to contribute, to a multiemployer plan under Subtitle
E of Title IV of ERISA (as defined in ERISA Sections 3(37)(A)
and 4001(a)(3)) at any time since September 26, 1980. No
notice of a "reportable event", within the meaning of Section
4043 of ERISA, for which the 30-day reporting requirement has
not been waived, has been required to be filed for any
Compensation and Benefit Plan or by any ERISA Affiliate Plan
within the 12-month period ending on the date hereof, and no
such notice will be required to be filed as a result of the
transactions contemplated by this Agreement. The PBGC has not
instituted proceedings to terminate any Pension Plan or ERISA
Affiliate Plan and, to First Federal's knowledge, no condition
exists that presents a material risk that such proceedings will
be instituted. There is no pending investigation or
enforcement action by the PBGC, the DOL, the IRS or any other
Governmental Authority with respect to any Compensation and
Benefit Plan. Under each Pension Plan and ERISA Affiliate
Plan, as of the date of the most recent actuarial valuation
performed prior to the date of this Agreement, the actuarially
determined present value of all "benefit liabilities", within
the meaning of Section 4001(a)(16) of ERISA (as determined on
the basis of the actuarial assumptions contained in such
actuarial valuation of such Pension Plan or ERISA Affiliate
Plan), did not exceed the then current value of the assets of
such Pension Plan or ERISA Affiliate Plan and since such date
there has been neither an adverse change in the financial
condition of such Pension Plan or ERISA Affiliate Plan nor any
amendment or other change to such Pension Plan or ERISA
Affiliate Plan that would increase the amount of benefits
thereunder which reasonably could be expected to change such
result.
(d) All contributions required to be made under the terms of any
Compensation and Benefit Plan or ERISA Affiliate Plan have been
timely made or have been reflected on the First Federal
Financial Statements. Neither any Pension Plan nor any ERISA
Affiliate Plan has an "accumulated funding deficiency" (whether
or not waived) within the meaning of Section 412 of the Code or
Section 302 of ERISA and all required payments to the PBGC with
respect to each Pension Plan or ERISA Affiliate Plan have been
made on or before their due dates. None of First Federal, any
First Federal Subsidiary and/or any ERISA Affiliate (i) has
provided, or would reasonably be expected to be required to
provide, security to any Pension Plan or to any ERISA Affiliate
Plan pursuant to Section 401(a)(29) of the Code and (ii) has
taken any action, or omitted to take any action, that has
resulted, or would reasonably be expected to result, in the
imposition of a lien under Section 412(n) of the Code or
pursuant to ERISA.
(e) Except as disclosed in Section 3.19(e) of the First Federal
Disclosure Schedule, neither First Federal nor any First
Federal Subsidiary has any obligations to provide retiree
health or retiree life insurance or other retiree death
benefits under any Compensation and Benefit Plan, other
19
than benefits mandated by Section 4980B of the Code. Except as
disclosed in Section 3.19(e) of the First Federal Disclosure
Schedule, there has been no communication to Employees by First
Federal or any First Federal Subsidiary that would reasonably
be expected to promise or guarantee such Employees retiree
health or retiree life insurance or other retiree death
benefits on a permanent basis.
(f) First Federal and the First Federal Subsidiaries do not
maintain any Compensation and Benefit Plans covering foreign
Employees.
(g) With respect to each Compensation and Benefit Plan, if
applicable, First Federal has provided or made available to
Park, true and complete copies of: (i) the most recently
restated version of each plan document and all subsequent
amendments thereto; (ii) the most recently restated version of
each trust instrument and insurance contract and all subsequent
amendments thereto; (iii) the two most recent annual returns
(Forms 5500) and financial statements; (iv) the most recently
restated summary plan descriptions and all subsequent summaries
of material modifications; (v) forms filed with the PBGC within
the twelve consecutive months ending immediately before the
date hereof (other than for premium payments); (vi) the most
recent determination letter issued by the IRS with respect to
each Compensation and Benefit Plan that is intended to comply
with Code [SECTION] 401(a); (vii) any Form 5310, Form 5310A,
Form 5300 or Form 5330 filed with the IRS within the twenty-
four consecutive months ending immediately before the date
hereof; and (viii) the most recent nondiscrimination tests
performed under ERISA and the Code (including but not limited
to Code Section 401(k) and 401(m) tests).
(h) Except as disclosed in Section 3.19(h) of the First Federal
Disclosure Schedule, the consummation of the transactions
contemplated by this Agreement would not, directly or
indirectly (including, without limitation, as a result of any
termination of employment prior to or following the Effective
Time), reasonably be expected to (i) entitle any Employee,
Officer, Consultant or Director to any payment (including
severance pay or similar compensation) or any increase in
compensation, (ii) result in the vesting or acceleration of any
benefits under any Compensation and Benefit Plan, except as
required by law or (iii) result in any material increase in
benefits payable under any Compensation and Benefit Plan.
(i) Except as disclosed on Section 3.19(i) of the First Federal
Disclosure Schedule, neither First Federal nor any First
Federal Subsidiary maintains any compensation plans, programs
or arrangements the payments under which would not reasonably
be expected to be deductible as a result of the limitations
under Section 162(m) of the Code and the regulations issued
thereunder.
20
(j) Except as disclosed on Section 3.19(j) of the First Federal
Disclosure Schedule, as a result, directly or indirectly, of
the transactions contemplated by this Agreement (including,
without limitation, as a result of any termination of
employment prior to or following the Effective Time), none of
First Federal, Park or the Surviving Corporation, or any of
their respective Subsidiaries will be obligated to make a
payment that would be characterized as an "excess parachute
payment" to an individual who is a "disqualified individual"
(as such terms are defined in Section 280G of the Code) of
First Federal on a consolidated basis, regardless of whether
such payment is reasonable compensation for personal services
performed or to be performed in the future.
3.20. Compliance with Laws
Except with respect to Environmental Laws and Taxes, each of First
Federal and the First Federal Subsidiaries:
(a) has been and is in compliance with all applicable federal,
state, local and foreign statutes, laws, regulations,
ordinances, rules, judgments, orders or decrees applicable
thereto or to the employees conducting such business,
including, without limitation, the Equal Credit Opportunity
Act, as amended, the Fair Housing Act, as amended, the Federal
Community Reinvestment Act, as amended ("CRA"), the Home
Mortgage Disclosure Act, as amended, and all other applicable
fair lending laws and other laws relating to discriminatory
business practices, except for failures to be in compliance
which, individually or in the aggregate, have not had or would
not reasonably be expected to have a material adverse effect on
First Federal and the First Federal Subsidiaries taken as a
whole. First Federal and the First Federal Subsidiaries have
taken all actions necessary to be in compliance with applicable
privacy regulations under the Gramm-Leach-Bliley Act of 1999
and any other laws relating to privacy practices;
(b) has all permits, licenses, authorizations, orders and approvals
of, and has made all filings, applications and registrations
with, all Governmental Authorities and Regulatory Authorities
that are required in order to permit it to own or lease its
properties and to conduct its business as presently conducted,
except where the failure to obtain any of the foregoing or to
make any such filing, application or registration has not had
or would not reasonably be expected to have a material adverse
effect on First Federal or any First Federal Subsidiary; and
all such permits, licenses, certificates of authority, orders
and approvals are in full force and effect and no suspension or
cancellation of any of them has been threatened in writing; and
(c) has received no written notification or communication from any
Governmental Authority or Regulatory Authority, (i) asserting
that First Federal or any First Federal Subsidiary is not in
compliance with any of
21
the statutes, regulations or ordinances which such Governmental
Authority or Regulatory Authority enforces, except as set forth
in examination reports of the Regulatory Authorities; or (ii)
threatening to revoke any license, franchise, permit or
governmental authorization, which has not been resolved to the
satisfaction of the Governmental Authority or Regulatory
Authority that sent such notification or communication. There
is no event which has occurred that, to the knowledge of First
Federal, would reasonably be expected to result in the
revocation of any such license, franchise, permit or
governmental authorization.
3.21 Insurance
(a) Section 3.21 of the First Federal Disclosure Schedule lists all
of the insurance policies, binders or bonds maintained by First
Federal or any First Federal Subsidiary and a description of
all claims filed by First Federal and the First Federal
Subsidiaries against the insurers of First Federal and the
First Federal Subsidiaries since October 1, 2000. First
Federal and the First Federal Subsidiaries are insured with
reputable insurers against such risks and in such amounts as
the management of First Federal and the First Federal
Subsidiaries reasonably have determined to be prudent in
accordance with industry practices. All such insurance
policies are in full force and effect, neither First Federal
nor any First Federal Subsidiary is in material default
thereunder and all claims thereunder have been filed in due and
timely fashion.
(b) The savings accounts and deposits of FFSB are insured up to
applicable limits by the FDIC in accordance with the Federal
Deposit Insurance Act, and FFSB has paid all assessments and
filed all reports required by the Federal Deposit Insurance
Act.
3.22. Governmental and Third-Party Proceedings
Except as set forth in Section 3.22 of the First Federal Disclosure
Schedule, no consent, approval, authorization of, or registration,
declaration or filing with, any court, Governmental Authority, Regulatory
Authority or any other third party is required to be made or obtained by
First Federal or any First Federal Subsidiary in connection with the
execution, delivery or performance by First Federal of this Agreement or
the consummation by First Federal of the transactions contemplated hereby,
except for: (a) filings of applications and notices, as applicable, with
and the approval of certain federal banking authorities; (b) the filing of
the appropriate certificate of merger with the Ohio Secretary of State
pursuant to the OGCL; and (c) the adoption of this Agreement by the First
Federal shareholders. As of the date hereof, First Federal is not aware of
any reason why the approvals set forth in Section 8.03(b) will not be
received without the imposition of a condition, restriction or requirement
of the type described in Section 8.03(b).
22
3.23. Contracts
Section 3.23 of the First Federal Disclosure Schedule sets forth a
true and complete list of all contracts, agreements, commitments,
arrangements or other instruments in existence as of the date of this
Agreement (other than those which have been performed completely and those
related to loans made by First Federal or any First Federal Subsidiary,
deposits in any First Federal Subsidiary, investment securities held by
First Federal or any First Federal Subsidiary, borrowings by First Federal
or any First Federal Subsidiary or contracts listed or referenced elsewhere
in the First Federal Disclosure Schedule): (a) which involve the payment
by or to First Federal or any First Federal Subsidiary of more than $25,000
in connection with the purchase of property or goods or the performance of
services; or (b) which are not in the ordinary course of their respective
businesses. True, complete and correct copies of all such contracts have
been delivered to Park. Neither First Federal nor any First Federal
Subsidiary, nor, to the knowledge of First Federal, any other party
thereto, is in default under any such contract, agreement, commitment,
arrangement or other instrument to which it is a party, by which its
respective assets, business or operations may be bound or affected in any
way, or under which it or its respective assets, business or operations
receive benefits, and there has not occurred any event that, with the lapse
of time or the giving of notice or both, would constitute such a default.
3.24. Environmental Matters
Except as otherwise disclosed in Section 3.24 of the First Federal
Disclosure Schedule:
(a) First Federal and the First Federal Subsidiaries are and have
been at all times in compliance in all material respects with
all applicable Environmental Laws, and, to the knowledge of
First Federal, neither First Federal nor any First Federal
Subsidiary has engaged in any activity in violation of any
applicable Environmental Law;
(b)(i) to the knowledge of First Federal, no investigations,
inquiries, orders, hearings, actions or other proceedings by or
before any court, Governmental Authority or Regulatory
Authority are pending or have been threatened in writing in
connection with any activities of First Federal or any First
Federal Subsidiary or any First Federal Real Properties or
improvements thereon, and (ii) to the knowledge of First
Federal, no investigations, inquiries, orders, hearings,
actions or other proceedings by or before any court,
Governmental Authority or Regulatory Authority are pending or
threatened in writing in connection with any real properties in
respect of which any First Federal Subsidiary has foreclosed or
holds a mortgage or mortgages (hereinafter referred to as the
"First Federal Real Estate Collateral");
(c) to the knowledge of First Federal, no claims are pending or
threatened in writing by any third party against First Federal
or any First Federal Subsidiary, or with respect to the First
Federal Real Properties or
23
improvements thereon, or the First Federal Real Estate
Collateral or improvements thereon, relating to damage,
contribution, cost recovery, compensation, loss, injunctive
relief, remediation or injury resulting from any Hazardous
Substance which have not been resolved to the satisfaction of
the parties involved;
(d) no Hazardous Substances have been integrated into the First
Federal Real Properties or improvements thereon or any
component thereof, or, to the knowledge of First Federal, the
First Federal Real Estate Collateral or improvements thereon or
any component thereof in such manner or quantity as (i) may
reasonably be expected to or in fact would pose a threat to
human health or (ii) would reasonably be expect to have a
material adverse effect on First Federal;
(e) to the knowledge of First Federal, no portion of the First
Federal Real Properties or improvements thereon, or the First
Federal Real Estate Collateral or improvements thereon is
located within 500 feet of (i) a release of Hazardous
Substances which has been reported or is required to be
reported under any Environmental Law or (ii) the location of
any site used, in the past or presently, for the disposal of
any Hazardous Substance; and
(f) neither First Federal nor any First Federal Subsidiary has
knowledge that (i) any of the First Federal Real Properties or
improvements thereon or the First Federal Real Estate
Collateral or improvements thereon has been used for the
treatment, storage or disposal of Hazardous Substances or has
been contaminated by Hazardous Substances, (ii) any of the
business operations of First Federal or any First Federal
Subsidiary have contaminated lands, waters or other property of
others with Hazardous Substances, except routine, office-
generated solid waste, or (iii) any of the First Federal Real
Properties or improvements thereon, or the First Federal Real
Estate Collateral or improvements thereon have in the past or
presently contain underground storage tanks, friable asbestos
materials or PCB-containing equipment.
For purposes of this Agreement, (a) "Environmental Law" means the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA"); the Resource Conservation and Recovery Act of
1976, as amended; the Hazardous Materials Transportation Act, as amended;
the Toxic Substances Control Act, as amended; the Federal Water Pollution
Control Act, as amended; the Safe Drinking Water Act, as amended; the Clean
Air Act, as amended; the Occupational Safety and Health Act of 1970, as
amended; the Hazardous & Solid Waste Amendments Act of 1984, as amended;
the Superfund Amendments and Reauthorization Act of 1986, as amended; the
regulations promulgated thereunder, and any other federal, state, county,
municipal, local or other statute, law, ordinance or regulation which may
relate to or deal with human health or the environment, as of the date of
this Agreement; and (b) "Hazardous Substances" means, at any time: (i) any
"hazardous substance" as defined in [SECTION]101(14) of CERCLA or
regulations promulgated thereunder; (ii) any "solid waste,"
24
"hazardous waste," or "infectious waste," as such terms are defined in any
other Environmental Law as of the date of this Agreement; and (iii) friable
asbestos, urea-formaldehyde, polychlorinated biphenyls ("PCBs"), nuclear
fuel or material, chemical waste, radioactive material, explosives, known
carcinogens, petroleum products and by-products, and other dangerous, toxic
or hazardous pollutants, contaminants, chemicals, materials or substances
listed or identified in, or regulated by, any Environmental Law.
3.25. Takeover Laws
Unless Park is an "interested shareholder" within the meaning of OGCL
Chapter 1704, no action is required to be taken by First Federal in order
to comply with any "moratorium", "control share", "fair price", "affiliate
transaction", "business combination" or other anti-takeover laws or
regulations of Ohio (collectively, "Takeover Laws") with respect to this
Agreement and the transactions contemplated hereby.
3.26. Risk Management Instruments
None of First Federal nor the First Federal Subsidiaries has any
material interest rate swaps, caps, floors, option agreements, futures and
forward contracts or other similar risk management arrangements, whether
entered into for First Federal's own account, or for the account of any
First Federal Subsidiary or any of their respective customers. Neither
First Federal nor any First Federal Subsidiary, nor to First Federal's
knowledge any other party thereto, is in breach of any of its obligations
under any interest rate swap, cap, floor, option agreement, futures or
forward contract or other similar risk management arrangement as to which
First Federal or a First Federal Subsidiary has any interest.
3.27. Repurchase Agreements
None of First Federal nor any First Federal Subsidiary has purchased
securities subject to an agreement to resell.
3.28. Investment Securities
Except as disclosed in Section 3.28 of the First Federal Disclosure
Schedule, each of First Federal and the First Federal Subsidiaries has good
title to all securities held by it (except securities sold under repurchase
agreement or held in any fiduciary or agency capacity), free and clear of
any charge, mortgage, pledge, security interest, hypothecation,
restriction, claim, option, lien, encumbrance or interest of any person or
persons whatsoever, except to the extent such securities are pledged in the
ordinary course of business consistent with prudent banking practices to
secure the obligations of First Federal or any First Federal Subsidiary or
as collateral for public funds. Such securities are valued on the books of
First Federal and the First Federal Subsidiaries in accordance with GAAP.
25
3.29. SEC Filings
The First Federal Shares are registered with the SEC pursuant to
Section 12(g) of the Exchange Act. First Federal has filed all reports and
proxy statements required to be filed by it with the SEC pursuant to the
Exchange Act. All such filings, at the time of filing, complied in all
material respects as to form and included all exhibits required to be filed
under the applicable rules of the SEC. None of such documents, when filed,
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
3.30. Fiduciary Responsibilities
To First Federal's knowledge, during the applicable statute of
limitations period, (a) each First Federal Subsidiary has properly
administered all accounts (if any) for which it acts as a fiduciary or
agent, including, but not limited to, accounts for which it serves as a
trustee, agent, custodian, personal representative, guardian or conservator
in accordance with the terms of the governing documents and applicable
state and federal law and regulation and common law, and (b) neither any
First Federal Subsidiary nor any Director, Officer or Employee of any First
Federal Subsidiary acting on behalf of such First Federal Subsidiary has
committed any breach of trust with respect to any such fiduciary or agency
account and the accountings of each such fiduciary or agency account are
true and correct and accurately reflect the assets of such fiduciary or
agency account. Neither First Federal nor any First Federal Subsidiary has
acted as an investor advisor. To the knowledge of First Federal, there is
no investigation or inquiry by any Regulatory Authority pending or
threatened against or affecting any First Federal Subsidiary relating to
the compliance by such First Federal Subsidiary with sound fiduciary
principles and applicable regulations.
3.31. Intellectual Property
Except as set forth in Section 3.31 of the First Federal Disclosure
Schedule, (a) First Federal and the First Federal Subsidiaries own, or have
all rights necessary to use (in each case, free and clear of any liens,
obligations for royalties or transfer restrictions, except for licenses for
commonly available software and licenses to use interfaces or data that are
contained in services agreements), all Intellectual Property (as defined
below) used in or necessary for the conduct of their respective businesses
as currently conducted, except to the extent that such failure to own or
have all rights necessary to use would not reasonably be expected to have a
material adverse effect on First Federal; (b) with respect to each item of
Intellectual Property owned or used by First Federal or any First Federal
Subsidiary immediately prior to the Effective Time: (i) such item is not,
to First Federal's knowledge, subject to any outstanding injunction,
judgment, order, decree, ruling, or charge to which First Federal or any
First Federal Subsidiary is a party; (ii) to First Federal's knowledge, no
action, suit, proceeding, hearing, investigation, charge, complaint, claim
or demand to which First Federal or any First Federal Subsidiary is a party
or of which First Federal or any First Federal Subsidiary has knowledge is
pending, or, to the knowledge of First Federal or any First Federal
Subsidiary, is threatened, claimed or asserted
26
which challenges the legality, validity, enforceability, use or ownership
of such item; and (iii) neither First Federal nor any First Federal
Subsidiary has agreed to indemnify any person for or against any
interference, infringement, misappropriation or other conflict with respect
to such item, excluding agreements to indemnify under licenses for commonly
available software and pertaining to licenses to use interfaces or data
that are contained in services agreements; and (c) to First Federal's
knowledge, no Intellectual Property owned by First Federal or any First
Federal Subsidiary is being used or enforced in a manner that would result
in the abandonment, cancellation or unenforceability of such Intellectual
Property.
To the extent that any Intellectual Property is held by First Federal
or any First Federal Subsidiary pursuant to any license, sublicense,
agreement or permission (excluding licenses for commonly available software
and licenses to use interfaces or data that are contained in services
agreements): (A) such license, sublicense, agreement or permission covering
the item is legal, valid, binding, enforceable and in full force and
effect; and (B) to First Federal's knowledge, no event has occurred which
with notice or lapse of time would constitute a breach or default or permit
termination, modification or acceleration thereunder.
With respect to all Intellectual Property of First Federal or any
First Federal Subsidiary which constitutes trade secrets: First Federal
and the First Federal Subsidiaries have taken all reasonable security
precautions to prevent disclosure or misuse of the item.
To First Federal's knowledge, neither First Federal nor any First
Federal Subsidiary has interfered with, infringed upon, misappropriated or
otherwise violated any Intellectual Property rights of third parties, and
none of the Directors, Officers or Employees of First Federal or any First
Federal Subsidiary has received since October 1, 2000, any written charge,
complaint, claim, demand or notice alleging any such interference,
infringement, misappropriation or violation (including without limitation
any claim that First Federal and the First Federal Subsidiaries must
license or refrain from using any Intellectual Property right of any
party).
Neither First Federal nor FFSB has granted any material license or
other permission to any third party to use any of its Intellectual
Property.
For purposes of this Agreement, "Intellectual Property" shall mean
trademarks and service marks, the goodwill associated with the foregoing
and registrations in any jurisdiction of, and applications in any
jurisdiction to register, the foregoing, including any extension,
modification or renewal of any such registration or application; inventions
and discoveries that may be patentable, in any jurisdiction; patents,
applications for patents (including, without limitation, divisions,
continuations, continuations in part and renewal applications), and any
renewals, extensions or reissues thereof, in any jurisdiction; trade
secrets; copyrightable works; and registrations or applications for
registration of copyrights in any jurisdiction, and any renewals or
extensions thereof.
3.32. First Federal Books and Records
True and complete copies of all documents listed in the First Federal
Disclosure Schedule have been made available or provided to Park. The
books of account, stock record
27
books and other financial and corporate records of First Federal and the
First Federal Subsidiaries, all of which have been made available to Park,
are complete and correct in all material respects, except for portions of
records of various meetings that relate specifically to the consideration
of the transactions contemplated by this Agreement.
3.33. CRA Compliance
Neither First Federal nor any First Federal Subsidiary has received
any notice of non-compliance with the applicable provisions of CRA and the
regulations promulgated thereunder, and FFSB has received a CRA rating of
satisfactory or better from the OTS as a result of its most recent CRA
examination. Neither First Federal nor any First Federal Subsidiary knows
of any fact or circumstance or set of facts or circumstances which would be
reasonably likely to cause First Federal or any First Federal Subsidiary to
receive any notice of non-compliance with such provisions or cause the CRA
rating of First Federal or FFSB to fall below satisfactory.
3.34. Ownership of Park Shares
As of the date hereof, except as otherwise disclosed in Section 3.34
of the First Federal Disclosure Schedule, neither First Federal nor any
First Federal Subsidiary nor, to the knowledge of First Federal, any of
their affiliates or associates (as such terms are defined under the
Exchange Act), (a) beneficially owns, directly or indirectly, any shares of
Park or (b) is a party to any agreement, arrangement or understanding for
the purpose of acquiring, holding, voting or disposing of any shares of
Park.
3.35. Fairness Opinion
The board of directors of First Federal has received the opinion of
First Federal's Financial Advisors dated the date of this Agreement to the
effect that the consideration to be received by the First Federal
shareholders in the Merger is fair, from a financial point of view, to the
First Federal shareholders, and such opinion has not been withdrawn or
modified.
ARTICLE FOUR
REPRESENTATIONS AND WARRANTIES OF PARK AND MERGER CORP.
Each of Park and Merger Corp. hereby represents and warrants to First
Federal that:
4.01. Corporate Status
Park is an Ohio corporation and a bank holding company registered
under the Bank Holding Company Act of 1956, as amended ("BHCA"). Merger
Corp. is an Ohio corporation. Each of Park and Merger Corp. is duly
organized, validly existing and in good standing under the laws of the
State of Ohio and has the full corporate power and authority to own its
property, to carry on its business as presently conducted and to enter into
and, subject to the obtaining of appropriate approvals of Governmental
Authorities and Regulatory Authorities,
28
perform its obligations under this Agreement and consummate the
transactions contemplated by this Agreement.
4.02. Corporate Proceedings
All corporate proceedings of Park and Merger Corp. necessary to
authorize the execution, delivery and performance of this Agreement, and
the consummation of the transactions contemplated by this Agreement, have
been duly and validly taken. This Agreement has been duly executed and
delivered by duly authorized officers of each of Park and Merger Corp.
4.03. Authorized and Effective Agreement
Assuming the due authorization, execution and delivery by First
Federal, this Agreement constitutes the legal, valid and binding obligation
of each of Park and Merger Corp., enforceable against them in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance and other
similar laws relating to or affecting the enforcement of creditors' rights
generally, by general equitable principles (regardless of whether
enforceability is considered in a proceeding in equity or at law) and by an
implied covenant of good faith and fair dealing. Each of Park and Merger
Corp. has the right, power, authority and capacity to execute and deliver
this Agreement and, subject to the obtaining of appropriate approvals by
Governmental Authorities and Regulatory Authorities and the expiration of
applicable regulatory waiting periods, to perform their obligations under
this Agreement.
4.04. No Conflict
Subject to the receipt of the required approvals of Governmental
Authorities and Regulatory Authorities and the expiration of applicable
regulatory waiting periods, the execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated hereby, by
Park and Merger Corp. do not and will not (a) conflict with, or result in a
violation of, or result in the breach of or a default (or which with notice
or lapse of time would result in a default) under, any provision of: (i)
any federal, state or local law, regulation, ordinance, order, rule or
administrative ruling of any Governmental Authority applicable to Park or
Merger Corp. or any of their respective properties; (ii) the articles of
incorporation or code of regulations of Park or Merger Corp.; (iii) any
material agreement, indenture or instrument to which Park or Merger Corp.
is a party or by which either or them or their respective properties or
assets may be bound; or (iv) any order, judgment, writ, injunction or
decree of any court, arbitration panel or any Governmental Authority
applicable to Park or Merger Corp.; (b) result in the creation or
acceleration of any security interest, mortgage, option, claim, lien,
charge or encumbrance upon or interest in any property of Park or Merger
Corp., except to the extent that such creation or acceleration will not
have a material adverse effect on Park; or (c) violate the terms or
conditions of, or result in the cancellation, modification, revocation or
suspension of, any material license, approval, certificate, permit or
authorization held by Park or Merger Corp.
29
4.05. SEC Filings
Park has filed all reports and proxy materials required to be filed
by it with the SEC pursuant to the Exchange Act. All such filings, at the
time of filing, complied in all material respects as to form and included
all exhibits required to be filed under the applicable rules of the SEC.
None of such documents, when filed, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
4.06. Brokers, Finders and Others
There are no fees or commissions of any sort whatsoever claimed by,
or payable by Park or Merger Corp. to, any broker, finder, intermediary,
attorney, accountant or any other similar person in connection with
effecting this Agreement or the transactions contemplated hereby, except
for ordinary and customary legal and accounting fees.
4.07. Governmental and Third-Party Proceedings
No consent, approval, authorization of, or registration, declaration
or filing with, any court, Governmental Authority, Regulatory Authority or
any other third party is required to be made or obtained by Park or Merger
Corp. in connection with the execution, delivery or performance by Park or
Merger Corp. of this Agreement or the consummation by Park or Merger Corp.
of the transactions contemplated hereby, except for: (a) filings of
applications or notices, as applicable, with and the approval of certain
federal banking authorities; and (b) the filing of the appropriate
certificate of merger with the Ohio Secretary of State pursuant to the
OGCL. As of the date hereof, Park and Merger Corp. are not aware of any
reason why the approvals set forth in Section 8.03(b) will not be received
without the imposition of a condition, restriction or requirement of the
type described in Section 8.03(b).
4.08. Financial Ability to Perform; Compliance with Regulations
Park and Merger Corp. have the financial wherewithal to perform their
respective obligations under this Agreement. To Park's knowledge, Park and
Merger Corp. are, and will be immediately following the transactions
contemplated by this Agreement, in compliance with all applicable capital,
debt, financial and non-financial regulations of federal and state banking
agencies having primary regulatory jurisdiction over them, except where
failure to comply would not have a material adverse effect on Park.
4.09. Ownership of First Federal Shares
As of the date hereof, neither Park nor Merger Corp., nor to the
knowledge of Park or any of Park's affiliates or associates (as such terms
are defined under the Exchange Act), (a) beneficially owns, directly or
indirectly, any First Federal Shares or (b) is a party to any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting
or disposing of any First Federal Shares.
30
4.10. Absence of Changes
Except as otherwise publicly disclosed in press releases issued by
Park before the date of this Agreement, since March 31, 2004, there has not
been any material adverse change in the business, operations, assets or
financial condition of Park and, to the knowledge of Park, no fact or
condition exists that Park believes will cause such a material adverse
change before the Closing.
4.11. Takeover Laws
Park has taken all action necessary to be taken by Park in order to
comply with any applicable Takeover Laws in connection with this Agreement
and the transactions contemplated hereby.
ARTICLE FIVE
FURTHER COVENANTS OF FIRST FEDERAL
5.01. Operation of Business
First Federal covenants to Park that, throughout the period from the
date of this Agreement to and including the Closing:
(a) Conduct of Business. First Federal's business, and the
business of the First Federal Subsidiaries, will be conducted
only in the ordinary and usual course consistent with past
practice. Without the written consent of Park, First Federal
will not, and will cause the First Federal Subsidiaries not to,
take any action that would be inconsistent with any
representation or warranty of First Federal set forth in this
Agreement or which would cause a breach of any such
representation or warranty if made at or immediately following
such action, except as may be required by applicable law or
regulation;
(b) Changes in Business and Capital Structure. Except as provided
for by this Agreement, set forth in the First Federal
Disclosure Letter or as otherwise approved expressly in writing
by Park, First Federal will not, and will cause the First
Federal Subsidiaries not to:
(i) sell, transfer, mortgage, pledge or subject to any lien
or otherwise encumber any of the assets of First Federal
or any First Federal Subsidiary, tangible or intangible,
except in the ordinary course of business for full and
fair consideration actually received;
(ii) make any capital expenditure or capital additions or
improvements which individually exceed $5,000 or exceed
$10,000 in the aggregate;
31
(iii) become bound by or enter into any material contract,
commitment or transaction which is other than in the
ordinary course of its business or which is not
terminable by First Federal or the relevant First Federal
Subsidiary without penalty or which would impair the
ability of First Federal to perform its obligations under
this Agreement or prevent or materially delay the consum-
mation of the transactions contemplated by this
Agreement;
(iv) declare, pay or set aside for payment any dividends or
make any distributions on First Federal Shares other than
quarterly cash dividends in an amount not to exceed $.06
per First Federal Share and consistent with First
Federal's historical dividend payment practices;
(v) purchase, redeem, retire or otherwise acquire any of its
capital shares;
(vi) issue, or grant any option or right to acquire, any of
its capital shares other than the issuance of First
Federal Shares pursuant to the exercise of First Federal
Stock Options outstanding as of the date of this
Agreement;
(vii) effect, directly or indirectly, any share split,
recapitalization, combination, exchange of shares,
readjustment or other reclassification;
(viii) amend or propose to amend any of the governing documents
of First Federal or any First Federal Subsidiary except
as otherwise expressly contemplated by this Agreement;
(ix) acquire any real property or all or any portion of the
assets, business, deposits or properties of any other
entity other than in the ordinary and usual course of
business consistent with past practice (A) by way of
foreclosures or (B) by acquisitions of control in a bona
fide fiduciary capacity or in satisfaction of debts
previously contracted in good faith;
(x) enter into, establish, adopt or amend any pension,
retirement, stock option, stock purchase, savings,
profit-sharing, deferred compensation, consulting,
bonus, group insurance or other employee benefit,
incentive or welfare contract, plan or arrangement, or
any trust agreement (or similar arrangement) related
thereto, in respect of any Director, Officer, Consultant
or Employee of First Federal or any First Federal
Subsidiary, or take any action to accelerate the vesting
or exercisability of stock options, restricted stock or
other compensation or benefits payable thereunder;
provided, however, that First Federal or a First Federal
Subsidiary may (A) take such
32
actions in order to satisfy either applicable law or
contractual obligations, including those arising under
its benefit plans, existing as of the date hereof and
disclosed in the First Federal Disclosure Schedule, or
regular annual renewals of insurance contracts; (B)
terminate its defined contribution retirement plan at any
time before the Effective Time, with benefit
distributions deferred until the IRS issues a favorable
determination with respect to the terminating plan's tax-
qualified status upon termination and with First Federal
(or the relevant First Federal Subsidiary) and Park to
cooperate in good faith to apply for such approval and to
agree upon associated plan termination amendments that
shall, among other things, provide for the application of
all assets of a terminating plan for its participants,
and allow plan participants not only to receive lump-sum
distributions of their benefits but also to transfer
those benefits to a qualified retirement plan maintained
by Park; and (C) terminate any of its welfare benefit
plans at any time before the Effective Time;
(xi) hire any full-time employee, other than replacement
employees for positions then existing, announce or pay
any general wage or salary increase or bonus, or enter
into or amend or renew any employment, consulting,
severance or similar agreements or arrangements with any
Officer, Director or Employee of First Federal or any
First Federal Subsidiary, except, in each case, for
changes that are required by applicable law, to satisfy
contractual obligations existing as of the date hereof
that are disclosed in the First Federal Disclosure
Schedule, or to pay pre-announced compensation set forth
in the First Federal Disclosure Schedule;
(xii) except for amounts as may be obtained with the right of
prepayment at any time without penalty or premium,
borrowings on an overnight or daily basis, and deposit
taking in the ordinary course of its business, borrow or
agree to borrow any funds, including but not limited to
repurchase transactions, or indirectly guarantee or agree
to guarantee any obligations of others;
(xiii) enter into or terminate any contract, other than a loan
or deposit contract, requiring the payment or receipt of
$25,000 or more in any 12-month period or $50,000 in the
aggregate or amend or modify in any material respect any
of its existing material contracts, except as set forth
in the First Federal Disclosure Schedule;
(xiv) implement or adopt any change in its accounting
principles, practices or methods, other than as may be
required by GAAP;
33
(xv) waive or cancel any right of material value or material
debts, except in the ordinary course of business
consistent with past practices;
(xvi) make or change any Tax election or Tax accounting method,
file any federal income Tax Return or any amended Tax
Return, settle any Tax claim or assessment or consent to
the extension or waiver of any statute of limitations
with respect to Taxes;
(xvii) originate or issue a commitment to originate (A) any
loan secured by one- to four-family residential real
estate in a principal amount of $350,000 or more, (B) any
loan secured by nonresidential real estate that causes
the aggregate amount outstanding to a single borrower to
equal $350,000 or more or (C) any other loan in a
principal amount of $50,000 or more;
(xviii) establish any new lending programs or make any changes
in its policies concerning which persons may approve
loans;
(xix) enter into any securities transactions for its own
account or purchase or otherwise acquire any investment
security for its own account, other than investments in
money-market funds and investments in securities
permissible by law to secure public funds as such
investments need to be made in the ordinary course of
securing such deposits;
(xx) enter into any interest rate swaps or derivative or hedge
contracts;
(xxi) increase or decrease the rate of interest paid on time
deposits or certificates of deposits, except in a manner
and consistent with past practices in relation to rates
prevailing in the relevant First Federal Subsidiary's
market;
(xxii) foreclose upon or otherwise take title to or possession
or control of any real property without first obtaining a
Phase I environmental report thereon which indicates that
the property is free of pollutants, contaminants or
hazardous or toxic waste materials including asbestos and
petroleum products; provided, however, that the relevant
First Federal Subsidiary shall not be required to obtain
such a report with respect to single-family, non-
agriculture residential property of one acre or less to
be foreclosed upon unless it has reason to believe such
property may contain any such pollutants, contaminants,
waste materials including asbestos or petroleum products;
(xxiii) take any action that would result in (A) any of its
representations or warranties contained in this Agreement
being or becoming untrue in any material respect at any
time at or prior to the
34
Effective Time, (B) any of the conditions to the Merger
set forth in Article Eight not being satisfied or (C) a
violation of any provision of this Agreement except, in
each case, as may be required by applicable law or
regulation;
(xxiv) cause any material adverse change in the amount or
general composition of deposit liabilities other than in
the ordinary course of business;
(xxv) make any material investment other than in the ordinary
course of business; or
(xxvi) enter into any agreement to do any of the foregoing.
(c) Maintenance of Property. First Federal and the First Federal
Subsidiaries will use their commercially reasonable efforts to
maintain and keep their respective properties and facilities in
their present condition and working order, ordinary wear and
tear excepted.
(d) Performance of Obligations. First Federal and the First
Federal Subsidiaries will perform all of their respective
obligations under all material agreements relating to or
affecting their respective properties, rights and businesses.
(e) Maintenance of Business Organization. First Federal will, and
will cause the First Federal Subsidiaries to, use their
commercially reasonable efforts to maintain and preserve their
respective business organizations intact; to retain present key
Employees; and to maintain the respective relationships of
customers, suppliers and others having business relationships
with them. First Federal will not, and will cause the First
Federal Subsidiaries not to, take any action or omit to take
any action which would terminate or enable any Employee of
First Federal or any First Federal Subsidiary to terminate such
Employee's employment or employment agreement without cause and
continue thereafter to receive compensation.
(f) Insurance. First Federal and the First Federal Subsidiaries
will maintain insurance coverage with reputable insurers, which
in respect of amounts, premiums, types and risks insured, were
maintained by them at the First Federal Balance Sheet Date, and
upon the renewal or termination of such insurance, First
Federal and the First Federal Subsidiaries will use their
commercially reasonable efforts to renew or replace such
insurance coverage with reputable insurers, in respect of the
amounts, premiums, types and risks insured or maintained by
them at the First Federal Balance Sheet Date.
(g) Access to Information. Following the public announcement of
this Agreement made jointly by First Federal and Park, First
Federal will, and will cause the First Federal Subsidiaries,
to: (i) take all action reasonably
35
necessary to afford to Park and to its officers, employees,
attorneys, accountants and other advisors and representatives
reasonable and prompt access during normal business hours and
any other mutually agreeable times during the period prior to
the Effective Time or the termination of this Agreement to all
of their respective properties, and, to the extent First
Federal or any First Federal Subsidiary has or may provide such
access, to First Federal Real Estate Collateral (including for
purposes of inspection and investigation for soil and
groundwater tests), books, records, Tax Returns and reports,
financial statements, contracts and commitments, and any work
papers relating to any of the foregoing; (ii) furnish to Park
any and all documents, copies of documents, and information (A)
concerning compliance and/or noncompliance with Environmental
Laws and with respect to the past, present or suspected future
presence of Hazardous Substances on the First Federal Real
Properties and First Federal Real Estate Collateral, including
but not limited to environmental audit and Phase I
environmental reports, and (B) concerning First Federal's and
the First Federal Subsidiaries' affairs as Park may reasonably
request; (iii) afford full access to Park to First Federal's
and the First Federal Subsidiaries' Officers, Directors,
Employees and agents in order that Park may have full
opportunity to make such investigation as it shall desire to
make of the business and affairs of First Federal and the First
Federal Subsidiaries; and (iv) authorize Park's representatives
to inquire of Government Authorities, and inspect the files of
those Governmental Authorities, with respect to the
environmental conditions on and about the First Federal Real
Properties and First Federal Real Estate Collateral.
During the period from the date of this Agreement to the
Effective Time, First Federal will promptly furnish Park with
copies of all monthly and other interim financial statements
produced in the ordinary course of business as the same will
become available. Notwithstanding any other provisions of this
Section 5.01(g), (x) neither Park nor any of its subsidiaries
or officers, employees, attorneys, accountants, other advisors
or representatives shall unreasonably interfere with the
business operations of First Federal or any of the First
Federal Subsidiaries; (y) First Federal and the First Federal
Subsidiaries may, in their reasonable discretion, limit the
access of Park to the Employees of First Federal and the First
Federal Subsidiaries whose work product First Federal
reasonably wishes to keep confidential, provided that, in any
event, Century or another bank Subsidiary of Park may conduct
such interviews of the Employees of First Federal and the First
Federal Subsidiaries as are reasonable, necessary and
appropriate under all applicable laws to allow Century or such
other bank Subsidiary of Park to determine whether to offer
employment to any of such Employees; and (z) First Federal
shall not provide access to minutes of meetings or portions of
minutes and other records that relate specifically to the
consideration of the transactions contemplated by this
Agreement.
36
(h) Payment of Taxes. First Federal will, and will cause the First
Federal Subsidiaries to, timely file all Tax Returns required
to be filed on or before the Effective Time, and accrue for and
pay any Tax shown on such Tax Returns to be due.
(i) Risk Management. Except as required by applicable law or
regulation or by the OTS or the FDIC, neither First Federal nor
any First Federal Subsidiary will (i) implement or adopt any
material change in its interest rate risk management and other
risk management policies, procedures or practices; (ii) fail to
follow its existing policies or practices with respect to
managing its exposure to interest rate and other risks; or
(iii) fail to use commercially reasonable means to avoid any
material increase in its aggregate exposure to interest rate
risk.
(j) Exercise of First Federal Stock Options. First Federal will
take the action reasonably necessary to enable each holder of
unexercised First Federal Stock Options under the First Federal
Stock Option Plans to exercise such First Federal Stock Options
before the Effective Time.
5.02. Notification
Between the date of this Agreement and the Closing Date, First
Federal will promptly notify Park in writing if First Federal becomes aware
of any fact or condition that (a) causes or constitutes a breach of any of
First Federal's representations and warranties or (b) would (except as
expressly contemplated by this Agreement) cause or constitute a breach of
any such representation or warranty had such representation or warranty
been made as of the time of occurrence or discovery of such fact or
condition. Should any such fact or condition require any change in the
First Federal Disclosure Schedule, First Federal will promptly deliver to
Park a supplement to the First Federal Disclosure Schedule specifying such
change ("Updated First Federal Disclosure Schedule"); provided, however,
that the disclosure of such change in the Updated First Federal Disclosure
Schedule shall not be deemed to constitute a cure of any breach of any
representation or warranty made pursuant to this Agreement unless consented
to in writing by Park. During the same period, First Federal will promptly
notify Park of (i) the occurrence of any uncured breach of any of the
covenants of First Federal contained in this Agreement, (ii) the occurrence
of any event that may make the satisfaction of the conditions in this
Agreement impossible or unlikely or (iii) the occurrence of any event that
is reasonably likely, individually or taken with all other facts, events or
circumstances known to First Federal, to result in a material adverse
effect with respect to First Federal. In addition, if at any time prior to
the Effective Time, any event or circumstance relating to First Federal or
any of its Officers or Directors should be discovered which should be set
forth in a supplement to the Proxy Statement, First Federal shall promptly
inform Park.
5.03. Acquisition Proposal
From and after the date hereof, First Federal will not, directly or
indirectly, through any of its Officers, Directors, Employees, agents or
advisors solicit, initiate or knowingly encourage, including by means of
furnishing information, any proposals, offers or
37
inquiries from any person or entity, or discuss or negotiate with any such
person or entity, regarding any acquisition or purchase of 20% or more of
the outstanding shares of any class of voting securities, or 20% or more of
the assets or deposits of, First Federal or any First Federal Subsidiary,
or any merger, tender or exchange offer, consolidation or business
combination involving, First Federal or any First Federal Subsidiary
(collectively, "Acquisition Proposals"). The foregoing sentence shall not
apply, however, to the consideration, negotiation and consummation of an
Acquisition Proposal not solicited or initiated by First Federal or any
First Federal Subsidiary or any of their respective Officers, Directors,
agents or affiliates if, and to the extent that, the board of directors of
First Federal determines in good faith after consultation with First
Federal's Financial Advisors and upon written advice of legal counsel to
First Federal that failure to consider such Acquisition Proposal could
reasonably be expected to constitute a breach of its fiduciary duties to
the First Federal shareholders under Ohio law; provided, however, that
First Federal shall give Park prompt notice of any such Acquisition
Proposal and keep Park promptly informed regarding the substance thereof
and the response of the First Federal board of directors thereto. First
Federal shall immediately cease and cause to be terminated any activities,
discussions or negotiations conducted prior to the date of this Agreement
with any parties other than Park with respect to any Acquisition Proposal
and shall use its reasonable best efforts to enforce any confidentiality or
similar agreement relating to an Acquisition Proposal.
5.04. Delivery of Information
First Federal shall furnish to Park promptly after such documents are
available (a) all reports, proxy statements or other communications by
First Federal to its shareholders generally and (b) all press releases
relating to any transactions.
5.05. Takeover Laws
First Federal shall take all necessary steps to (a) comply with (or
continue to comply with) the requirements of any applicable Takeover Law
and provisions under its articles of incorporation and amended and restated
code of regulations, as applicable, by action of the board of directors of
First Federal or otherwise, and (b) assist in any challenge by Park to the
validity, or applicability to the Merger, of any Takeover Law.
5.06. Merger of Subsidiaries
In the event that Park shall request, First Federal shall take such
actions, and shall cause FFSB to take such actions, as may reasonably be
required in order to effect, at or after the Effective Time, the merger of
FFSB with and into Century; provided, however, that such merger shall not
take effect until after (a) the Merger and (b) the merger of the Surviving
Corporation with and into Park.
5.07. Accounting Policies
After the shareholders of First Federal have approved the Merger and
after the receipt of necessary regulatory approvals, on or before the
Effective Time and at the request of Park, First Federal shall cause the
First Federal Subsidiaries to promptly (a) establish and take such reserves
and accruals to conform the First Federal Subsidiaries' loan, accrual and
reserve policies to Century's policies; (b) establish and take such
accruals, reserves and charges in order
38
to implement such policies in respect of excess facilities and equipment
capacity, severance costs, litigation matters, write-off or writedown of
various assets and other appropriate accounting adjustments; and (c)
recognize for financial accounting purposes such expenses of the Merger and
restructuring charges related to or to be incurred in connection with the
Merger, to the extent permitted by law and consistent with GAAP and the
fiduciary duties of the Officers and Directors of First Federal and the
First Federal Subsidiaries; provided, however, that neither First Federal
nor any First Federal Subsidiary shall be obligated to make any such
changes or adjustments until the satisfaction of all unwaived conditions
set forth in Sections 8.02 and 8.03, and further provided that no basis for
termination of this Agreement by any party pursuant to Article Eleven is
then extent.
ARTICLE SIX
FURTHER COVENANTS OF PARK
6.01. Access to Information
Park shall furnish to First Federal promptly after such documents are
available (a) all reports, proxy statements or other communications by
Park to its shareholders generally and (b) all press releases relating to
any transactions.
6.02. Employees; Employee Benefits
(a) All Employees of First Federal or any First Federal Subsidiary
as of the date of this Agreement who are actively employed at the Effective
Time and who are offered employment by Century or another bank Subsidiary
of Park ("Continuing Employees") at the Effective Time and who are not
currently covered by a written employment or severance agreement with First
Federal or any First Federal Subsidiary, shall be employed as at will
employees of Century or such other bank Subsidiary of Park. Continuing
Employees will be eligible to participate in Park's benefit plans on the
earliest date permitted by each such plan, with credit for years of
service, for purposes of eligibility and vesting (but not for the purpose
of accrual of benefits or the allocation of employer contributions), with
(i) First Federal or the relevant First Federal Subsidiary and, (ii) to the
extent credit would have been given by First Federal or the relevant First
Federal Subsidiary for years of service with a predecessor (including any
business organization acquired by First Federal or the relevant First
Federal Subsidiary), years of service with a predecessor of First Federal
or the relevant First Federal Subsidiary. Park shall use its best efforts
to cause any and all pre-existing condition limitations (to the extent such
limitation did not apply to a pre-existing condition under First Federal's
or any First Federal Subsidiary's equivalent plan) and eligibility waiting
period under group health plans with respect to Continuing Employees and
their eligible dependents to be waived. Immediately prior to the Effective
Time, Continuing Employees will be paid in cash for any accrued and unused
sick leave and vacation to which such Continuing Employees are entitled
under First Federal's or the relevant First Federal Subsidiary's relevant
policies, and, following the Effective Time, such Continuing Employees will
be subject to Park's policies with respect to sick leave and vacation.
Employees of First Federal or any First Federal Subsidiary who are actively
employed at the Effective Time and who have loans from First Federal or a
First Federal Subsidiary on which the interest rate is reduced while the
Employee continues to be employed by First Federal or the relevant First
Federal Subsidiary shall from and after the Effective Time and until the
repayment
39
of such loans, whether such Employees of First Federal or any First Federal
Subsidiary are terminated or become Continuing Employees, receive the
reduction in the interest rate on such loans which is equivalent to the
reduction in interest rate received by employees of Century on loans which
they have with Century; provided, however, that if (i) at any time after
the Effective Time, a Continuing Employee voluntarily terminates his or her
employment with Century or the other bank Subsidiary of Park employing the
Continuing Employee or (ii) a Continuing Employee's employment is
terminated for cause, such Continuing Employee will no longer receive the
interest rate reduction provided for in this sentence from and after the
date of termination of employment. The foregoing covenants shall survive
the Merger, and Park shall before the Effective Time adopt resolutions that
amend its tax-qualified retirement plans to provide for the First Federal
or the relevant First Federal Subsidiary service credits referenced herein.
(b) Any Employee of First Federal or any First Federal Subsidiary
immediately before the Effective Time who is not currently covered by a
written employment or severance agreement with First Federal or a First
Federal Subsidiary and who is not offered employment by Century or another
bank Subsidiary of Park immediately at the Effective Time on terms and
conditions substantially comparable to the terms and conditions of the
employee's employment by First Federal or a First Federal Subsidiary and at
an office located within 50 miles of the main office of FFSB shall receive:
(i) a severance payment equal to the product of one week of the Employee's
then current salary multiplied by the number of total years of service as
an Employee of First Federal or a First Federal Subsidiary; (ii) payment
for vacation and sick time that is unused and accrued consistent with the
terms of First Federal's or the relevant First Federal Subsidiary's
vacation and sick pay policies in effect on the date of this Agreement;
(iii) outplacement consultation services for a period of six months
following the Effective Time; and (iv) any other benefits or payments to
which the Employee is entitled under the terms of any Compensation and
Benefit Plan or under FFSB's Employee Handbook or as otherwise protected or
required by law.
(c) Messrs. J. William Plummer and Larry W. Snode and Ms. Connie
Ayres LaPlante will be treated as having been terminated for other than
Just Cause (as defined in their current employment agreements) at the
Effective Time and shall receive (i) the severance and other payments and
benefits contemplated by Section 4(a)(ii) of their current employment
agreements, (ii) payment for vacation and sick pay that are unused and
accrued consistent with the terms of First Federal's or the relevant First
Federal Subsidiary's vacation and sick pay policies in effect on the date
of this Agreement and (iii) any other benefits or payments to which they
are entitled under the terms of any Compensation and Benefit Plan or under
FFSB's Employee Handbook or as otherwise protected or required by law..
Any Employee of First Federal or any First Federal Subsidiary entitled to a
payment under this Section 6.02(c) shall be entitled to elect to defer
receipt of such payment until January 1, 2005. Park shall also honor the
Agreement Not to Compete among First Federal, FFSB and J. William Plummer
dated May 19, 2004.
(d) Prior to the Effective Time, Messrs. Thomas N. Sulens and Jack
W. Imes will each be offered a new employment agreement with Century or
another bank Subsidiary of Park to be effective as of the Effective Time,
which new employment agreement will replace and supersede his current
employment agreement and will contain substantially the same terms and
40
conditions as are provided under his current employment agreement with
FFSB, provided that the term of the new employment agreement will end on
the second anniversary of the Closing Date. In the event that Mr. Sulens
or Mr. Imes does not enter into a new employment agreement with Century or
another bank Subsidiary as contemplated by the foregoing sentence, he will
continue to be employed under the terms of his current employment agreement
for the remaining term of such agreement.
(e) Park shall also cause continuation coverage in accordance with
Section 4980B of the Code to be available to all eligible employees (and,
if applicable, their eligible dependents) of First Federal and/or the First
Federal Subsidiaries who were covered under a First Federal or First
Federal Subsidiary group health plan and who cease to be employees of First
Federal or any First Federal Subsidiary as of the Effective Time, and all
former eligible employees (and, if applicable, their eligible dependents)
who are receiving or are eligible to receive, upon election, such
continuation coverage under a First Federal or First Federal Subsidiary
group health plan as of the Effective Time.
(f) If amounts payable or available to any Employee of First Federal
or any First Federal Subsidiary under this Agreement or on account of
events associated with the effect of this Agreement are to be reduced under
the Employee's current employment agreement to avoid penalties under
Sections 280G and 4999 of the Internal Revenue Code, the Employee will be
entitled to elect the payment, benefit or benefits (or combination of
payments, benefit or benefits) against which the reduction will be applied
and Park, Century and all Park Subsidiaries will be bound by that election.
This election will be based on information provided by Park and
calculations performed, at Park's expense, by Crowe Chizek and Company LLP,
or such other independent accounting or compensation consulting company
selected by Park, subject to review by the Employee, and must be made, in
writing, no later than 30 days after the date the information and
calculations described in this sentence are provided to the Employee.
(g) The covenants in this Section 6.02 shall survive the Merger.
6.03. Notification
Between the date of this Agreement and the Closing Date, Park will
promptly notify First Federal in writing if Park becomes aware of any fact
or condition that (a) causes or constitutes a breach of any of the
representations and warranties of Park and Merger Corp. or (b) would
(except as expressly contemplated by this Agreement) cause or constitute a
breach of any such representation or warranty had such representation or
warranty been made as of the time of occurrence or discovery of such fact
or condition. During the same period, Park will promptly notify First
Federal of (i) the occurrence of any material incurred breach of any of the
covenants of Park or Merger Corp. contained in this Agreement, (ii) the
occurrence of any event that may make the satisfaction of the conditions in
this Agreement impossible or unlikely or (iii) the occurrence of any event
or circumstance relating to Park or any of its officers or directors which
is required by applicable law or regulation to be set forth in a supplement
to the Proxy Statement.
6.04. Officers' and Directors' Indemnification
41
(a) For a period of three years after the Effective Time, Park
shall, to the fullest extent permitted by applicable law, and consistent
with the terms and conditions of the articles of incorporation and amended
and restated code of regulations of First Federal or the governing
documents of the relevant First Federal Subsidiary, indemnify, defend and
hold harmless, and provide advancement of expenses to, each individual who
is a current or former Director or Officer of First Federal or any First
Federal Subsidiary (each, an "Indemnified Party") against all costs or
expenses (including reasonable attorneys' fees), judgments, fines, losses,
claims, damages or liabilities (collectively, "Costs") incurred in
connection with any claim, action, suit, proceeding or investigation,
whether civil, criminal, administrative or investigative, arising out of
actions or omissions of such Director or Officer in the course of his or
her duties as a Director or Officer of First Federal or any First Federal
Subsidiary occurring prior to the Effective Time; provided that Park shall
not be obligated to indemnify a Director or Officer for acts or omissions
of such Director or Officer that were beyond the scope of the duties of
such Director or Officer as a Director or Officer of First Federal or any
First Federal Subsidiary. Any determination required to be made with
respect to whether an Indemnified Party's conduct complies with the
standards set forth under applicable law for indemnification shall be made
by the court in which the claim, action, suit or proceeding was brought or
by independent counsel (which shall not be counsel that provides material
services to Park) selected by Park and reasonably acceptable to such
Indemnified Party. As a condition to receiving such indemnification, the
Indemnified Party shall assign to Park, by separate writing, all right,
title and interest in and to the proceeds of the Indemnified Party's
applicable insurance coverage, if any, including insurance maintained or
provided by Park, First Federal or the relevant First Federal Subsidiary to
the extent of such indemnity. No Indemnified Party shall be entitled to
such indemnification with respect to a claim (i) if such Indemnified Party
fails to cooperate in the defense and investigation of such claim as to
which indemnification may be made, (ii) made by such Indemnified Party
against Park, any Subsidiary of Park, First Federal or any First Federal
Subsidiary arising out of or in connection with this Agreement, the
transactions contemplated hereby or the conduct of the business of Park,
the Subsidiary of Park, First Federal or any First Federal Subsidiary, or
(iii) if such person fails to deliver such notices as may be required under
any applicable directors' and officers' liability insurance policy to
preserve any possible claims of which the Indemnified Party is aware, to
the extent such failure results in the denial of payment under such policy.
(b) Park shall designate one of the following two alternatives for
providing directors' and officers' liability coverage for the Directors and
Officers of First Federal and the First Federal Subsidiaries: (i) First
Federal shall obtain extended reporting or "tail" coverage for three years
under the director and officer liability policy currently maintained by
First Federal and the First Federal Subsidiaries or (ii) subject to First
Federal and the First Federal Subsidiaries providing all requested
information and representations to Park's directors' and officers'
liability insurance carrier, Park shall add a rider, to be effective at the
Effective Time, to Park's existing directors' and officers' liability
insurance policy covering the acts and omissions of the Officers and
Directors of First Federal and the First Federal Subsidiaries occurring
prior to the Effective Time and to continue such rider for a period of
three years.
6.05. Century Board of Directors
42
Park agrees to take all action, consistent with applicable laws and
regulations, necessary to appoint each of the directors of First Federal
who is not, currently or at the Effective Time, an Employee of either First
Federal or any First Federal Subsidiary (an "Outside First Federal
Director"), to the board of directors of Century, effective as of the
Effective Time.
ARTICLE SEVEN
FURTHER OBLIGATIONS OF THE PARTIES
7.01. Cooperative and Necessary Further Action
Subject to the terms and conditions of this Agreement, each of First
Federal, Merger Corp. and Park agrees to use its reasonable best efforts in
good faith to satisfy all conditions to this Agreement and to cause the
consummation of the transactions contemplated by this Agreement, and to
take, or cause to be taken, all necessary actions and to execute all
additional documents, agreements and instruments that may be reasonably
required, in the opinion of counsel for First Federal and counsel for Park,
to satisfy all legal requirements of the State of Ohio and of the United
States, so that this Agreement and the transactions contemplated hereby
will become effective as promptly as practicable.
7.02. Press Releases
Each of Park, Merger Corp. and First Federal shall not make any press
release or other public announcement concerning the transactions
contemplated by this Agreement without the consent of the other party
hereto as to the form and contents of such press release or public
announcement, except to the extent that such press release or public
announcement may be required by law or the rules of the American Stock
Exchange or The Nasdaq Stock Market to be made before such consent can be
obtained.
7.03. Proxy Statement; First Federal Meeting
(a) As promptly as reasonably practical following the date hereof,
First Federal shall prepare, in consultation with Park and with
Park's cooperation, and file with the SEC mutually acceptable
proxy materials (including all amendments or supplements
thereto, the "Proxy Statement") relating to the matters to be
submitted to the First Federal shareholders at the First
Federal Meeting. First Federal shall promptly notify Park upon
the receipt of any comments from the SEC or its staff or any
request from the SEC or its staff for amendments or supplements
to the Proxy Statement and shall promptly provide Park with
copies of all correspondence between First Federal and its
representatives, on the one hand, and the SEC and its staff, on
the other hand. Notwithstanding the foregoing, prior to filing
or mailing the Proxy Statement (or any amendment or supplement
thereto), or responding to any comments of the SEC with respect
thereto, First Federal (i) shall provide Park with a reasonable
opportunity to review and comment on such document or response,
(ii) shall include in such document or response all comments
reasonably proposed by Park, and (iii) shall not file or mail
such document
43
or respond to the SEC prior to receiving Park's approval, which
approval shall not be unreasonably withheld or delayed.
(b) Each of First Federal and Park agrees, as to itself and its
Subsidiaries, that none of the information to be supplied by it
for inclusion or incorporation by reference in the Proxy
Statement and any amendment or supplement thereto will, as of
the date such Proxy Statement is mailed to shareholders of
First Federal and up to and including the date of the First
Federal Meeting, 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.
All information about First Federal and the First Federal
Subsidiaries included in the Proxy Statement will be deemed to
have been supplied by First Federal. All information about
Park and its Subsidiaries included in the Proxy Statement will
be deemed to have been supplied by Park.
(c) Each of First Federal and Park agrees, if it shall become aware
prior to the Effective Time of any information furnished by it
that would cause any of the statements in the Proxy Statement
to be false or misleading with respect to any material fact, or
to omit to state any material fact necessary to make the
statements therein not false or misleading, to promptly inform
the other party thereof and to cooperate in taking the
necessary steps to correct the Proxy Statement.
(d) First Federal shall, as promptly as practicable following the
date of this Agreement, establish a record date for, duly call,
give notice of, convene and hold the First Federal Meeting,
regardless of whether the board of directors of First Federal
determines at any time that this Agreement or the Merger is no
longer advisable or recommends that the shareholders of First
Federal reject this Agreement or the Merger. The First Federal
board of directors shall recommend to its shareholders that
they adopt this Agreement, and shall include such
recommendation in the Proxy Statement, unless the board of
directors of First Federal reasonably determines in good faith
after consultation with First Federal's Financial Advisors and
upon written advice of counsel to First Federal that such a
recommendation would constitute a breach of its fiduciary
duties to the shareholders of First Federal.
7.04. Regulatory Applications
Park and First Federal and their respective Subsidiaries shall
cooperate and use their respective reasonable best efforts to prepare all
documentation, to timely effect all filings not later than 30 days after
the date of this Agreement and to obtain all permits, consents, approvals
and authorizations of all third parties and Governmental Authorities and
Regulatory Authorities necessary to consummate the transactions
contemplated by this Agreement. Each of Park and First Federal shall
provide all information required from them in order to enable the
44
other to make necessary filings. Such information shall be delivered
within five business days of a written request for such information. Each
of Park and First Federal shall have the right to review in advance, and to
the extent practicable, each will consult with the other, in each case
subject to applicable laws relating to the exchange of information, with
respect to, and shall be provided in advance so as to reasonably exercise
its right to review in advance, all material written information submitted
to any third party or any Governmental Authority or Regulatory Authority in
connection with the transactions contemplated by this Agreement. In
exercising the foregoing right, each of the parties hereto agrees to act
reasonably and as promptly as practicable. Each party hereto agrees that
it will consult with the other party hereto with respect to the obtaining
of all material permits, consents, approvals and authorizations of all
third parties and Governmental Authorities and Regulatory Authorities
necessary or advisable to consummate the transactions contemplated by this
Agreement and each party will keep the other apprised of the status of
material matters relating to completion of the transactions contemplated
hereby. Each party agrees, upon request, to furnish the other party with
all information concerning itself, its Subsidiaries, directors, officers
and shareholders and such other matters as may be reasonably necessary or
advisable in connection with any filing, notice or application made by or
on behalf of such other party or of its Subsidiary to any third party or
Governmental or Regulatory Authority.
7.05. Confidentiality
The parties to this Agreement acknowledge the confidential and
proprietary nature of the information as hereinafter described which has
heretofore been exchanged and which will be received from each other
hereunder (the "Information") and agree to hold and keep the same
confidential. Such Information will include any and all financial,
technical, commercial, marketing, customer or other information concerning
the business, operations and affairs of a party that may be provided to the
other, irrespective of the form of the communications, by such party's
employees or agents. Such Information shall not include information that
is or becomes generally available to the public other than as a result of a
disclosure by a party or its representatives in violation of this
Agreement, or Information which is required to be furnished or used in
connection with legal proceedings. The parties agree that the Information
will be used solely for the purposes contemplated by this Agreement and
that such Information will not be disclosed to any person other than
employees and agents of a party who are directly involved in evaluating the
transaction. The Information shall not be used in any way detrimental to a
party, including use directly or indirectly in the conduct of the other
party's business or enterprise in which such party may have an interest,
now or in the future, and whether or not now in competition with such other
party. Upon the written request of the disclosing party, upon termination
of this Agreement, the other parties will promptly return or destroy
Information in their possession and certify to the disclosing party that
the party has done so.
7.06. No Conflicting Actions
Park shall not enter into any agreement or transaction, undertake any
obligation, indebtedness or liability, or take any acts or actions that are
reasonably likely to materially impair or preclude Park's ability to obtain
the Governmental Authority or Regulatory Authority
45
to consummate the transactions contemplated by this Agreement without the
imposition of a condition, restriction or requirement of the type described
in Section 8.03(b).
ARTICLE EIGHT
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PARTIES
8.01. Conditions to the Obligations of Park and Merger Corp
The obligations of Park and Merger Corp. under this Agreement shall
be subject to the satisfaction, or written waiver by Park and Merger Corp.
prior to the Closing Date, of each of the following conditions precedent:
(a) The representations and warranties of First Federal set forth
in this Agreement (without giving effect to any material
adverse effect, materiality or similar qualifiers) shall be
true and correct in all material respects as of the date of
this Agreement and as of the Closing Date as though such
representations and warranties were also made as of the Closing
Date, except (i) that those representations and warranties
which by their terms speak as of a specific date shall be true
and correct as of such date; and (ii) where the failure to be
so true and correct would not, individually or in the
aggregate, have or be reasonably likely to have a material
adverse effect on First Federal or any First Federal
Subsidiary; and Park and Merger Corp. shall have received a
certificate, dated the Closing Date, signed on behalf of First
Federal by the chief executive officer and the chief financial
officer of First Federal to such effect.
(b) First Federal shall have performed in all material respects all
of its covenants and obligations under this Agreement to be
performed by it on or prior to the Closing Date, including
those relating to the Closing and the closing deliveries
required by Section 9.03 of this Agreement; and Park and Merger
Corp. shall have received a certificate, dated the Closing
Date, signed on behalf of First Federal by the chief executive
officer and the chief financial officer of First Federal to
such effect.
(c) First Federal shall have obtained the consent or approval of
each person (other than Governmental Authorities and Regulatory
Authorities) whose consent or approval shall be required in
connection with the transactions contemplated hereby under any
loan or credit agreement, note, mortgage, indenture, lease,
license or other agreement or instrument, except those for
which failure to obtain such consents and approvals would not,
individually or in the aggregate, have a material adverse
effect, after the Effective Time, on the Surviving Corporation,
Merger Corp. or Park.
(d) The consolidated net income of First Federal, excluding any
merger related expenses (including, without limitation,
payments under employment contracts, severance agreements,
investment banking fees and legal and accounting fees), for the
period from April 1, 2004 through
46
the month-end immediately preceding the Closing Date shall be
not less than $400,000.
8.02. Conditions to the Obligations of First Federal
The obligations of First Federal under this Agreement shall be
subject to satisfaction, or written waiver by First Federal prior to the
Closing Date, of each of the following conditions precedent:
(a) The representations and warranties of Park and Merger Corp. set
forth in this Agreement (without giving effect to any material
adverse effect, materiality or similar qualifiers) shall be
true and correct in all material respects as of the date of
this Agreement and as of the Closing Date as though such
representations and warranties were also made as of the Closing
Date, except that (i) representations and warranties which by
their terms speak as of a specific date shall be true and
correct as of such date; and (ii) where the failure to be so
true and correct would not, individually or in the aggregate,
have or be reasonably likely to have a material adverse effect
on Park and its Subsidiaries; and First Federal shall have
received a certificate, dated the Closing Date, signed on
behalf of Park and Merger Corp. by the chief executive officer
and the chief financial officer of each of Park and Merger
Corp. to such effect.
(b) Each of Park and Merger Corp. shall have performed in all
material respects all of their covenants and obligations under
this Agreement to be performed by them on or prior to the
Closing Date, including those related to the Closing and the
closing deliveries required by Section 9.02 of this Agreement;
and First Federal shall have received a certificate, dated the
Closing Date, signed on behalf of Park and Merger Corp. by the
chief executive officer and the chief financial officer of each
of Park and Merger Corp. to such effect.
(c) Park and Merger Corp. shall have obtained the consent or
approval of each person (other than Governmental Authorities
and Regulatory Authorities) whose consent or approval shall be
required in connection with the transactions contemplated
hereby under any loan or credit agreement, note, mortgage,
indenture, lease, license or other agreement or instrument,
except those for which failure to obtain such consents and
approvals would not, individually or in the aggregate, have a
material adverse effect, after the Effective Time, on Park.
(d) First Federal shall have received from First Federal's
Financial Advisors an opinion reasonably acceptable to First
Federal dated as of the date of the Proxy Statement to the
effect that the consideration to be received by the holders of
the First Federal Shares in the Merger is fair to the holders
of the First Federal Shares from a financial point of view.
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8.03. Mutual Conditions
The obligations of First Federal, Park and Merger Corp. under this
Agreement shall be subject to the satisfaction, or written waiver by First
Federal, Park and Merger Corp. prior to the Closing Date, of each of the
following conditions precedent:
(a) The shareholders of First Federal shall have duly adopted this
Agreement by the required vote.
(b) All approvals of Governmental Authorities and Regulatory
Authorities required to consummate the transactions
contemplated by this Agreement shall have been obtained and
shall remain in full force and effect and all statutory waiting
periods in respect thereof shall have expired and no such
approvals or statute, rule or order shall contain any
conditions, restrictions or requirements which Park reasonably
determines would either before or after the Effective Time (i)
have a material adverse effect on Park and its Subsidiaries
taken as a whole after giving effect to the consummation of the
Merger; or (ii) prevent Park from realizing the major portion
of the economic benefits of the Merger and the transactions
contemplated thereby which Park currently anticipates
obtaining.
(c) No temporary restraining order, preliminary or permanent
injunction or other order issued by a court of competent
jurisdiction or other legal restraint or prohibition preventing
the consummation of the Merger shall be in effect. No
Governmental Authority or Regulatory Authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced,
deemed applicable, threatened, commenced a proceeding with
respect to or entered any statute, rule, regulation, judgment,
decree, injunction or other order prohibiting consummation of
the transactions contemplated by this Agreement or making the
Merger illegal.
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ARTICLE NINE
CLOSING
9.01. Closing
The closing of the transactions contemplated by this Agreement (the
"Closing") shall be held at the offices of Park, 50 North Third Street,
Newark, Ohio 43055, (a) on a date and at a time mutually agreeable to the
parties, which date shall not be earlier than the third business day to
occur after the last of the conditions set forth in Article Eight shall
have been satisfied or waived in accordance with the terms of this
Agreement (excluding conditions that, by their terms, cannot be satisfied
until the Closing Date) or later than the last business day of the month in
which such third business day occurs, provided no such election shall cause
the Closing to occur on a date after that specified in Section 11.01(b)(i)
of this Agreement or after the date or dates on which any Governmental
Authority or Regulatory Authority approval or any extension thereof
expires; or (b) such other date to which the parties agree in writing. The
date of the Closing is sometimes herein called the "Closing Date."
9.02. Closing Deliveries Required of Park and Merger Corp
At the Closing, Park and Merger Corp. shall cause all of the
following to be delivered to First Federal:
(a) A certificate of merger duly executed by Merger Corp. in
accordance with Section 1701.81 of the OGCL and in appropriate
form for filing with the Ohio Secretary of State.
(b) The certificates of Park and Merger Corp. contemplated by
Section 8.02(a) and (b) of this Agreement.
(c) Copies of all resolutions adopted by the directors of Park and
Merger Corp. and by the shareholders of Merger Corp. approving
and adopting this Agreement and authorizing the consummation of
the transactions described herein, accompanied by a certificate
of the secretary or the assistant secretary of Park and Merger
Corp., dated as of the Closing Date, and certifying (i) the
date and manner of adoption of each such resolution; and (ii)
that each such resolution is in full force and effect, without
amendment or repeal, as of the Closing Date.
9.03. Closing Deliveries Required of First Federal
At the Closing, First Federal shall cause all of the following to be
delivered to Park:
(a) A certificate of merger duly executed by First Federal in
accordance with Section 1701.81 of the OGCL and in appropriate
form for filing with the Ohio Secretary of State.
49
(b) The certificates of First Federal contemplated by Sections
8.01(a) and (b) of this Agreement.
(c) Copies of all resolutions adopted by the directors and the
shareholders of First Federal approving and adopting this
Agreement and authorizing the consummation of the transactions
described herein, accompanied by a certificate of the secretary
or the assistant secretary of First Federal, dated as of the
Closing Date, and certifying (i) the date and manner of the
adoption of each such resolution; and (ii) that each such
resolution is in full force and effect, without amendment or
repeal, as of the Closing Date.
(d) A statement issued by First Federal pursuant to Treasury
Department Regulation Section 1.897-2(h), in a form reasonably
acceptable to Park, dated not more than 30 days prior to the
Closing Date, certifying that the First Federal Shares are not
a U.S. real property interest.
ARTICLE TEN
NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
10.01. Non-Survival of Representations, Warranties and Covenants
The representations, warranties and covenants of Park, Merger Corp.
and First Federal set forth in this Agreement, or in any document delivered
pursuant to the terms hereof or in connection with the transactions
contemplated hereby, shall not survive the Closing and the consummation of
the transactions referred to herein, other than covenants which by their
terms are to survive or be performed after the Effective Time (including,
without limitation, those set forth in Article Six, this Article Ten,
Article Eleven and Article Twelve); except that no such representations,
warranties or covenants shall be deemed to be terminated or extinguished so
as to deprive Park or First Federal (or any director, officer or
controlling person thereof) of any defense in law or equity which otherwise
would be available against the claims of any person, including, without
limitation, any shareholder or former shareholder of either First Federal
or Park.
ARTICLE ELEVEN
TERMINATION
11.01. Termination
This Agreement may be terminated, and the Merger may be abandoned, at
any time prior to the Effective Time, whether prior to or after this
Agreement has been adopted by the shareholders of First Federal:
(a) By mutual written agreement of First Federal, Merger Corp. and
Park duly authorized by action taken by or on behalf of their
respective boards of directors;
50
(b) By either First Federal or Park and Merger Corp., duly
authorized by action taken by or on behalf of their respective
boards of directors, upon written notification to the non-
terminating party by the terminating party, if:
(i) at any time after June 30, 2005, the Merger shall not
have been consummated on or prior to such date and such
failure to consummate the Merger is not caused by a
breach of this Agreement by the terminating party; or
(ii) any event occurs which, in the reasonable opinion of
either Park and Merger Corp. or First Federal, would
preclude satisfaction of any of the conditions set forth
in Section 8.03 of this Agreement;
(c) By Park and Merger Corp., duly authorized by action taken by or
on behalf of their boards of directors, by providing written
notice to First Federal, if:
(i) prior to the Closing Date, any representation and
warranty of First Federal shall have become untrue such
that the condition set forth at Section 8.01(a) would not
be satisfied and which breach has not been cured within
30 days following receipt by First Federal of written
notice of breach or is incapable of being cured during
such time period; or
(ii) First Federal shall have failed to comply in any material
respect with any covenant or agreement on the part of
First Federal contained in this Agreement required to be
complied with prior to the date of such termination,
which failure to comply shall not have been cured within
30 days following receipt by First Federal of written
notice of such failure to comply or is incapable of being
cured during such time period.
(d) By First Federal, duly authorized by action taken by or on
behalf of its board of directors, by providing written notice
to Park and Merger Corp.:
(i) if, prior to the Closing Date, any representation and
warranty of Park or Merger Corp. shall have become untrue
such that the condition set forth at Section 8.02(a)
would not be satisfied and which breach has not been
cured within 30 days following receipt by Park and Merger
Corp. of written notice of breach or is incapable of
being cured during such time period;
(ii) if Park or Merger Corp. shall have failed to comply in
any material respect with any covenant or agreement on
the part of Park or Merger Corp. contained in this
Agreement required to be complied with prior to the date
of such termination, which failure to comply shall not
have been cured within 30 days following receipt by Park
51
and Merger Corp. of written notice of such failure to
comply or is incapable of being cured during such time
period; or
(iii) if an Acquisition Proposal has been made, provided First
Federal made the determination as set forth in Section
5.03 and complied with its obligations under Section
5.03, and provided further that First Federal's ability
to terminate pursuant to this subsection (d)(iii) is
conditioned upon the payment by First Federal to Park of
any amounts owed by First Federal to Park pursuant to
Section 11.02(b).
11.02. Effect of Termination
(a) If this Agreement is validly terminated by either First Federal
or Park pursuant to Section 11.01, this Agreement will
forthwith become null and void and there will be no liability
or obligation on the part of either First Federal or Park,
except (i) that the provisions of Sections 5.03, 7.04, 7.07 and
12.07 and this Section 11.02 will continue to apply following
any such termination, (ii) that nothing contained herein shall
relieve any party hereto from liability for breach of its
representations, warranties, covenants or agreements contained
in this Agreement and (iii) as provided in paragraph (b) below.
(b) In the event that any person or group shall have made an
Acquisition Proposal prior to termination, and (i) after
receipt of such Acquisition Proposal this Agreement is
terminated by the First Federal board of directors or the
shareholders of First Federal fail to approve the Merger and
(ii) within one year thereafter any Acquisition Proposal is
accepted by the First Federal board of directors or an
Acquisition Proposal is consummated, then First Federal shall
pay to Park, by wire transfer of same day funds, within two
business days thereafter, a termination fee of $1,920,000.
After such payment, neither Park nor Merger Corp. shall have
any further right to payment from First Federal or any First
Federal Subsidiary in connection with this Agreement.
(c) In the event any action, suit, proceeding or claim is commenced
or asserted by a party against another party and/or any
director or officer of such other party relating, directly or
indirectly, to this Agreement, it is expressly agreed that no
party shall be entitled to obtain any punitive, exemplary,
treble or consequential damages of any type under any
circumstances in connection with such action, suit, proceeding
or claim, regardless of whether such damages may be available
under law, the parties hereby waiving their rights, if any, to
recover any such damages in connection with any such action,
suit, proceeding or claim.
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ARTICLE TWELVE
MISCELLANEOUS
12.01. Notices
All notices, requests, demands and other communications required or
permitted to be given under this Agreement shall be given in writing and
shall be deemed to have been duly given (a) on the date of delivery if
delivered by hand or by telecopy or telefacsimile, upon confirmation of
receipt, (b) on the first business day following the date of dispatch if
delivered by a recognized next-day courier service, or (c) on the third
business day following the date of mailing if sent by certified mail,
postage prepaid, return receipt requested. All notices thereunder shall be
delivered to the following addresses:
If to First Federal, to:
First Federal Bancorp, Inc.
505 Market Street
Zanesville, Ohio 43701
Attn: J. William Plummer, President and Chief Executive Officer
Facsimile Number: (740) 453-9257
If to Park or Merger Corp., to:
Park National Corporation
50 North Third Street
Newark, Ohio 43055
Attn: C. Daniel DeLawder, President and Chief Executive Officer
Facsimile Number: (740) 349-3765
Any party to this Agreement may, by notice given in accordance with this
Section 12.01, designate a new address for notices, requests, demands and
other communications to such party.
12.02. Counterparts
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be a duplicate original, but all of which taken
together shall be deemed to constitute a single instrument.
12.03. Entire Agreement
This Agreement (including the exhibits, documents and instruments
referred to herein) constitutes the entire agreement, and supersedes all
prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter of this Agreement.
12.04. Successors and Assigns
This Agreement shall inure to the benefit of and be binding upon the
respective successors and assigns (including successive, as well as
immediate, successors and assigns) of
53
the parties hereto. This Agreement may not be assigned by any party hereto
without the prior written consent of the other parties.
12.05. Captions
The captions contained in this Agreement are included only for
convenience of reference and do not define, limit, explain or modify this
Agreement or its interpretation, construction or meaning and are in no way
to be construed as part of this Agreement.
12.06. Governing Law
This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Ohio without giving effect to principles of
conflicts or choice of laws (except to the extent that mandatory provisions
of federal law are applicable).
12.07. Payment of Fees and Expenses
Except as otherwise agreed in writing, each party hereto shall pay
all of its own costs and expenses, including legal and accounting fees, and
all expenses relating to its performance of, and compliance with, its
undertakings herein. All fees to be paid to Governmental Authorities and
Regulatory Authorities in connection with the transactions contemplated by
this Agreement shall be borne by Park.
12.08. Amendment
From time to time and at any time prior to the Effective Time, this
Agreement may be amended only by an agreement in writing executed in the
same manner as this Agreement, after authorization of such action by the
boards of directors of each of the Constituent Corporations and Park;
except that after the First Federal Meeting, this Agreement may not be
amended if it would violate the OGCL.
12.09. Waiver
The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any
party in exercising any right, power or privilege under this Agreement or
the documents referred to in this Agreement will operate as a waiver of
such right, power or privilege, and no single or partial exercise of any
such right, power or privilege will preclude any other or further exercise
of such right, power or privilege or the exercise of any other right, power
or privilege.
12.10. Disclosure Schedule
In the event of any inconsistency between the statements in the body
of this Agreement and those in the First Federal Disclosure Schedule (other
than an exception expressly set forth in the First Federal Disclosure
Schedule with respect to a specifically identified representation or
warranty), the statements in the body of this Agreement will control.
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12.11. No Third-Party Rights
Except as specifically set forth herein, nothing expressed or
referred to in this Agreement will be construed to give any person other
than the parties to this Agreement any legal or equitable right, remedy or
claim under or with respect to this Agreement or any provision of this
Agreement. This Agreement and all of its provisions and conditions are for
the sole and exclusive benefit of the parties to this Agreement and their
successors and assigns.
12.12. Waiver of Jury Trial
Each of the parties hereto irrevocably waives any and all right to
trial by jury in any legal proceeding arising out of or related to this
Agreement or the transactions contemplated hereby.
12.13. Severability
If any provision of this Agreement is held invalid or unenforceable
by any court of competent jurisdiction, the other provisions of this
Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain
in full force and effect to the extent not held invalid or unenforceable.
[Remainder of page intentionally left blank; signatures on following page]
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IN WITNESS WHEREOF, this Agreement and Plan of Merger has been
executed on behalf of Park, Merger Corp. and First Federal to be effective
as of the date set forth in the first paragraph above.
ATTEST: PARK NATIONAL CORPORATION
/s/ Brenda L. Kutan By: /s/ C. Daniel DeLawder
- ------------------------------ -------------------------------
Printed Name: C. Daniel DeLawder
---------------------
Title: President
----------------------------
ATTEST: PARK MERGER CORP.
/s/ Brenda L. Kutan By: /s/ C. Daniel DeLawder
- ------------------------------ -------------------------------
Printed Name: C. Daniel DeLawder
---------------------
Title: President
----------------------------
ATTEST: FIRST FEDERAL BANCORP, INC.
/s/ Ward D. Coffman, III By: /s/ J. William Plummer
- ------------------------------ -------------------------------
Printed Name: J. William Plummer
---------------------
Title: President/CEO
----------------------------
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