Exhibit 99.7
AGREEMENT AND PLAN OF MERGER
BETWEEN
MERCHANTS BANCORP, INC. AND MBI MERGER SUB, INC.
THIS AGREEMENT AND PLAN OF MERGER (the "Merger Agreement"), dated as of December
12, 2005, is hereby entered into by and between MBI Merger Sub, Inc., an Ohio
corporation ("Merger Sub"), and Merchants Bancorp, Inc., an Ohio corporation
("MBI").
RECITALS
Merger Sub is a corporation duly organized, validly existing and in good
standing under the laws of the State of Ohio. As of the date hereof, the
authorized capital stock of Merger Sub consists of 100 shares of Common Stock,
no par value ("Merger Sub Common Stock"), of which 100 shares are issued and
outstanding. MBI is a corporation duly organized and validly existing under the
laws of the State of Ohio. As of the date hereof, the authorized capital stock
of MBI consists of 4,500,000 shares of common stock, no par value ("MBI Common
Stock"), of which 2,666,650 shares are presently issued and outstanding. The
respective Boards of Directors of MBI and Merger Sub deem the Merger Agreement
advisable and in the best interests of each such corporation and their
respective shareholders. The respective Boards of Directors of MBI and Merger
Sub, by resolutions duly adopted, have approved the Merger Agreement and have
each recommended that the Merger Agreement be approved by their respective
shareholders and have each directed that this Merger Agreement be submitted for
approval by their respective shareholders. Shareholders of MBI and shareholders
of Merger Sub are each entitled to vote to approve the Merger Agreement. The
number of shares of MBI Common Stock and the number of shares of Merger Sub
Common Stock are not subject to change before the Effective Time (as hereinafter
defined). Therefore, in consideration of the premises and the mutual covenants
and agreements herein contained, the parties hereto hereby covenant and agree as
follows:
ARTICLE I
THE MERGER
1.1 THE MERGER. Subject to the terms and conditions of this Merger Agreement,
and in accordance with the Ohio Revised Code (the "Revised Code"), at the
Effective Time (as defined in Section 1.2), Merger Sub shall merge (the
"Merger") with and into MBI, and MBI shall survive the Merger and shall continue
its corporate existence under the laws of the State of Ohio. Upon consummation
of the Merger, the separate corporate existence of Merger Sub shall terminate
and the name of the Surviving Corporation shall be "Merchants Bancorp, Inc."
1.2 EFFECTIVE TIME. As soon as is reasonably practicable after the date hereof,
after approval of this Merger Agreement by the shareholders of the constituent
corporations and after the receipt of all
required regulatory approvals and the expiration of any statutory waiting
periods, a Certificate of Merger meeting the requirements of Section 1701.81 of
the Revised Code shall be filed with the Ohio Office of the Secretary of State
for approval. The Merger shall become effective ("the Effective Time") when the
Certificate of Merger has been accepted for filing by the Ohio Office of the
Secretary of State or as otherwise specified in the Certificate of Merger.
1.3 EFFECTS OF THE MERGER. At and after the Effective Time, the Merger shall
have the effects set forth in the Revised Code.
1.4 TREATMENT OF MBI COMMON STOCK; CONVERSION OF MERGER SUB COMMON STOCK.
(a) At the Effective Time, by virtue of the Merger and without any further
action on the part of any Record Holder (as hereinafter defined), the following
shall occur:
(1) Each issued and outstanding share of MBI Common Stock owned by a
First Tier Record Holder (as hereinafter defined) shall be converted into the
right to receive cash from the Surviving Corporation in the amount of $23.00 per
share (the "Cash Consideration"), without interest thereon, upon the surrender
to the Surviving Corporation of their certificates formerly representing shares
of MBI Common Stock. Except as otherwise provided in this Section 1.4, First
Tier Record Holders shall cease to have any rights as shareholders of MBI or the
Surviving Corporation, other than such rights, if any, as they may have pursuant
to the Revised Code.
(2) Each issued and outstanding share of MBI Common Stock owned by a
Second Tier Record Holder (as hereinafter defined) who has submitted a Proper
Election (as hereinafter defined) to the Company shall be converted in
accordance with said Proper Election. Second Tier Record Holders that have not
made a Proper Election shall be deemed to have elected to receive the Cash
Consideration in exchange for all shares held at the Effective Time. To the
extent any Second Tier Record Holder has elected, or who otherwise would be
deemed to have elected, the Cash Consideration, such Record Holder shall cease
to have any rights as shareholders of MBI or the Surviving Corporation with
respect to such shares of MBI Common Stock for which the election to receive the
Cash Consideration was made (or deemed to have been made), except such rights,
if any, as such Record Holders may have pursuant to the Revised Code; their sole
and exclusive right with respect to such shares of MBI Common Stock being to
receive the Cash Consideration, without interest thereon, upon surrender to the
Surviving Corporation of their certificates formerly representing shares of MBI
Common Stock. To the extent any Second Tier Record Holder has made a Proper
Election to receive shares of Series A Preferred Stock, such Record Holder shall
cease to have any rights as holders of MBI Common Stock with respect to such
shares of MBI Common Stock for which the election to receive shares of Series A
Preferred Stock was made, except such rights, if any, as they may have pursuant
to the Revised Code; their sole and exclusive right with respect to such shares
of MBI Common Stock being to receive shares of Series A Preferred Stock upon the
surrender to the Surviving Corporation of their certificates formerly
representing shares of MBI Common Stock. Any Second Tier Record Holder making a
Proper Election to receive shares of Series A Preferred Stock shall receive one
share of Series A Preferred Stock for each share of MBI Common Stock held
thereby with respect to which the election to receive shares of Series A
Preferred Stock has been made.
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(3) Each issued and outstanding share of MBI Common Stock owned by a
Third Tier Record Holder (as hereinafter defined) shall remain issued and
outstanding as a share of common stock of the Surviving Corporation without
change. In no event shall any Third Tier Record Holder be entitled to receive
either the Cash Consideration or shares of Series A Preferred Stock with respect
to the shares of MBI Common Stock held thereby.
(b) At the Effective Time, by virtue of the Merger and without any action
on the part of the holder of any Merger Sub Common Stock, each issued share of
Merger Sub Common Stock shall be converted into the right to receive cash from
the Surviving Corporation in the amount of $1.00 per share, and the holders of
certificates representing such shares shall cease to have any rights as
shareholders of Merger Sub or the Surviving Corporation except such rights, if
any, as they may have pursuant to the Revised Code, and, except as aforesaid,
their sole right shall be the right to receive cash as aforesaid, without
interest, upon surrender to the Surviving Corporation of their certificates
which theretofore represented shares of Merger Sub Common Stock.
1.5 DISSENTERS' RIGHTS. All Record Holders shall be entitled to all rights and
privileges allotted to dissenting shareholders under Section 1701.85 of the
Revised Code. To exercise such rights, a dissenting shareholder shall be
required to adhere to all of the procedures provided under Section 1701.85 of
the Revised Code.
1.6 CERTAIN TERMS.
(a) The term "First Tier Record Holder" shall mean a Record Holder of MBI
Common Stock who holds of record as of the Record Date One Hundred (100) or
fewer shares of MBI Common Stock.
(b) The term "Second Tier Record Holder" shall mean a Record Holder of MBI
Common Stock who holds of record as of the Record Date greater than One Hundred
(100) and fewer than One Thousand Five Hundred (1,500) shares of MBI Common
Stock.
(c) The term "Third Tier Record Holder" shall mean a Record Holder of MBI
Common Stock who holds of record as of the Record Date One Thousand Five Hundred
(1,500) or more shares of MBI Common Stock.
(d) The term "Record Holder" shall mean any record holder or holders of MBI
Common Stock who on the Record Date would be deemed, pursuant to Rule 12g-5-1
under the Securities Exchange Act of 1934 and related interpretive guidance
issued by the Securities and Exchange Commission, to be a single "person" for
purposes of determining the number of record shareholders of MBI.
(e) The term "Proper Election" shall mean a properly completed election by
a Second Tier Record Holder on a form provided to Second Tier Record Holders by
the Company to allow them to elect to receive in exchange for shares of MBI
Common Stock held at the Effective Time: (1) the per share Cash Consideration;
(2) shares of Series A Preferred Stock; or (3) a combination of Cash
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Consideration and Series A Preferred Stock. Any election to receive a
combination of Cash Consideration and Series A Preferred Stock must be made with
respect to whole shares of MBI Common Stock, and no election can be made which
would result in the issuance of a fractional share of Series A Preferred Stock.
For an election to be a Proper Election, it shall be received by the Company by
no later than the date of the special meeting of the shareholders to be held for
the purpose of considering the proposed Merger (the "Special Meeting"). Second
Tier Record Holders shall be entitled to change their election, provided any
such change is provided on the proper form and received by the Company no later
than the date of the Special Meeting. Any Second Tier Record Holder that is a
brokerage, bank or similar entity holding securities on behalf of multiple
beneficial holders may make an election on behalf of each such beneficial owner.
(f) The term "Record Date" shall mean the certain date fixed by resolution
of the Company's Board of Directors, which date shall be used to determine the
following: (1) the Record Holders entitled to vote on the proposed Merger; and
(2) the Record Holders to be classified as First Tier, Second Tier, and Third
Tier Record Holders.
(g) the term "Merger Consideration" shall mean either the Cash
Consideration or shares of Series A Preferred Stock, as the case may be.
1.7 RESOLUTION OF ISSUES. MBI (along with any other person or entity to which it
may delegate or assign any responsibility or task with respect thereto) shall
have full discretion and exclusive authority (subject to its right and power to
so delegate or assign such authority) to (i) make such inquiries, whether of any
MBI shareholder(s) or otherwise, as it may deem appropriate for purposes of this
Article I and (ii) resolve and determine in its sole discretion, all
ambiguities, questions of fact and interpretive and other matters relating to
this Article I, including, without limitation, any questions as to the number of
shares held by any Record Holder immediately as of the Record Date. All
determinations by MBI under this Article I shall be final and binding on all
parties, and no person or entity shall have any recourse against MBI or any
other person or entity with respect thereto.
For purposes of this Article I, MBI may in its sole discretion, but shall
not have any obligation to do so, (i) presume that any shares of MBI Common
Stock held in a discrete account are held by a person distinct from any other
person, notwithstanding that the registered Record Holder of a separate discrete
account has the same or a similar name as the Holder of a separate discrete
account; and (ii) aggregate the shares held by any person or persons that MBI
determines to constitute a single Record Holder for purposes of determining the
number of shares held by such Holder.
1.8 ARTICLES OF INCORPORATION. The Articles of Incorporation of MBI in effect as
of the Effective Time shall be the Articles of Incorporation of the Surviving
Corporation after the Merger until thereafter amended in accordance with
applicable law.
1.9 BYLAWS. The Bylaws of MBI in effect as of the Effective Time shall be the
Bylaws of the Surviving Corporation after the Merger until thereafter amended in
accordance with applicable law.
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1.10 BOARD OF DIRECTORS OF SURVIVING CORPORATION. The directors of MBI
immediately prior to the Effective Time shall be, from and after the Effective
Time, the directors of the Surviving Corporation until their respective
successors shall have been elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the Surviving
Corporation's Articles of Incorporation and Bylaws.
1.11 OFFICERS. The officers of MBI immediately prior to the Effective Time shall
be, from and after the Effective Time, the officers of the Surviving Corporation
until their respective successors have been duly elected or appointed and
qualified or until their earlier death, resignation or removal in accordance
with the Surviving Corporation's Articles of Incorporation and Bylaws.
ARTICLE II
MBI COMMON STOCK CERTIFICATES
2.1 CERTIFICATES HELD BY THIRD TIER RECORD HOLDERS. From and after the Effective
Time, all certificates representing shares of MBI Common Stock held by any Third
Tier Record Holder shall be deemed to evidence the same number of shares of
Common Stock of MBI, as the Surviving Corporation, which they theretofore
represented.
2.2 CERTIFICATES HELD BY FIRST AND SECOND TIER RECORD HOLDERS. From and after
the Effective Time and until presented to the Surviving Corporation, all
certificates which prior to the Effective Time represented shares of MBI Common
Stock that are held by any First or Second Tier Record Holder shall only
evidence the right to receive the Merger Consideration as hereinabove provided.
Upon presentation to the Surviving Corporation by a First or Second Tier Record
Holder of such certificates formerly representing shares of MBI Common Stock,
the Merger Consideration shall be paid in accordance with the provisions
contained in Article I of this Merger Agreement. No interest shall be payable on
any Cash Consideration distributable pursuant to this Merger Agreement.
ARTICLE III
GENERAL PROVISIONS
3.1 TERMINATION. Notwithstanding anything herein to the contrary, the Board of
Directors of Merger Sub or the Board of Directors of MBI at any time prior to
the filing of the Certificate of Merger with the Ohio Office of the Secretary of
State may terminate this Merger Agreement. This Merger Agreement shall be
automatically terminated if (i) the Shareholders of MBI fail to approve the
Merger and the Merger Agreement at a special meeting of shareholders of MBI to
be held on such date as shall be determined by the Board of Directors of MBI; or
(ii) any regulatory or other agency (if any) which must approve the Merger, has
not approved the Merger prior to December 31, 2005. If terminated as provided in
this Section 3.1, this Merger Agreement shall forthwith become wholly void and
of no further force and effect.
3.2 COUNTERPARTS. This Merger Agreement may be executed in counterparts, all of
which shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each of the parties and delivered to the
other parties, it being understood that all parties need not sign the same
counterpart.
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3.3 GOVERNING LAW. This Merger Agreement shall be governed and construed in
accordance with the laws of the State of Ohio, without regard to any applicable
conflicts of law.
3.4 AMENDMENT. Subject to compliance with applicable law, this Merger Agreement
may be amended by the parties hereto, by action taken or authorized by their
respective Boards of Directors, at any time before or after approval of the
matters presented in connection with the Merger by the shareholders of Merger
Sub or MBI; provided, however, that after any approval of the transactions
contemplated by this Merger Agreement by the respective shareholders of Merger
Sub or MBI, there may not be, without further approval of such shareholders, any
amendment of this Merger Agreement which (i) alters or changes the amount or the
form of the consideration to be delivered to the holders of Merger Sub Common
Stock or MBI Common Stock hereunder other than as contemplated by this Merger
Agreement, (ii) alters or changes any term of the Articles of Incorporation of
the Surviving Corporation, or (iii) adversely affects the holder of any class or
series of stock of any of the constituent corporations. This Merger Agreement
may not be amended except by an instrument in writing signed on behalf of each
of the parties hereto.
IN WITNESS WHEREOF, Merger Sub and MBI have caused this Merger Agreement to be
executed by their respective duly authorized officers as of the date first above
written.
MBI MERGER SUB, INC. MERCHANTS BANCORP, INC.
By: /s/ Paul W. Pence, Jr. By: /s/ Paul W. Pence, Jr.
--------------------------------- ------------------------------------
President & CEO President & CEO
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