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AFFILIATION AGREEMENT
This Affiliation Agreement ("Affiliation Agreement") dated as of September 25,
1998 is entered into by and between FIFTH THIRD BANCORP, a corporation organized
and existing under the corporation laws of the State of Ohio with its principal
office located in Cincinnati, Hamilton County, Ohio ("Fifth Third"), and
ENTERPRISE FEDERAL BANCORP, INC., a corporation organized and existing under the
corporation laws of the State of Ohio, with its principal office located in West
Chester, Hamilton County, Ohio ("Enterprise").
W I T N E S S E T H :
WHEREAS, Fifth Third is a registered bank holding company under the Bank Holding
Company Act of 1956, as amended, and Enterprise is a unitary savings and loan
holding company under Section 10 of the Home Owners Loan Act, as amended
("HOLA"), and Fifth Third and Enterprise desire to effect a merger under the
authority and provisions of the corporation laws of the State of Ohio pursuant
to which at the Effective Time (as herein defined in Section IX) Enterprise will
be merged into Fifth Third, with Fifth Third to be and become the surviving
corporation (the "Merger");
WHEREAS, Enterprise owns all of the outstanding stock of Enterprise Federal
Savings Bank ("Thrift Subsidiary") which, at the Effective Time, will be merged
with and into Fifth Third's wholly-owned subsidiary The Fifth Third Bank ("Fifth
Third Bank") with Fifth Third Bank to become the surviving corporation (the
"Subsidiary Merger"); and,
WHEREAS, under the terms of this Agreement each of the issued and outstanding
shares of the Common Stock, $.01 par value per share, of Enterprise ("Enterprise
Common Stock") which are issued and outstanding (excluding treasury shares and
shares as to which dissenters' rights have been asserted and duly perfected in
accordance with Section 1701.85 of the Ohio General Corporate Law
("OGCL")("Dissenting Shares")) immediately prior to the Effective Time will at
the Effective Time be canceled and extinguished and in substitution therefor
such Enterprise shares will, at the Effective Time, be converted into shares of
the Common Stock, without par value, of Fifth Third ("Fifth Third Common
Stock"), all as more fully provided in this Agreement;
WHEREAS, the parties to this Agreement intend that the Merger qualify as a
"reorganization" within the meaning of Section 368(a)(1)(A) and related
provisions of the Internal Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the mutual covenants herein contained, Fifth
Third and Enterprise, agree together as follows:
I. MODE OF EFFECTUATING CONVERSION OF SHARES
A. Upon the terms and conditions set forth in this Agreement, Enterprise
shall be merged into Fifth Third.
B. At the Effective Time all of the shares of Fifth Third Common Stock that
are issued and outstanding or held by Fifth Third as treasury shares
immediately prior to the Effective Time will remain unchanged and will remain
outstanding or as treasury shares, as the case may be, of the
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Surviving Corporation. Any stock options, subscription rights, warrants or other
securities outstanding immediately prior to the Effective Time, entitling the
holders to subscribe for purchase of any shares of the capital stock of any
class of Fifth Third, and any securities outstanding at such time that are
convertible into shares of the capital stock of any class of Fifth Third will
remain unchanged and will remain outstanding, with the holders thereof entitled
to subscribe for, purchase or convert their securities into the number of shares
of the class of capital stock of Fifth Third to which they are entitled under
the terms of the governing documents.
C. 1. At the Effective Time, each of the shares of the Enterprise Common
Stock (excluding treasury shares and Dissenting Shares) will, when the Merger
becomes effective, be converted by virtue of the Merger and without further
action, into .68516 shares of Fifth Third Common Stock (the "Exchange Ratio"),
subject to adjustment as provided in Section I.F. below. All issued and
outstanding shares of the Preferred Stock of Enterprise, if any, shall be
canceled at the Effective Time. At the Effective Time, all shares of Enterprise
Common Stock held in treasury will be canceled and terminated and will not be
converted into shares of Fifth Third Common Stock.
2. At the Effective Time, each award, option, or other right to purchase
or acquire shares of Enterprise Common Stock pursuant to stock options
("Enterprise Rights") granted by Enterprise under the 1994 Stock Option Plan
("Stock Plan"), which are outstanding at the Effective Time, whether or not
exercisable, shall be converted into and become options with respect to Fifth
Third Common Stock, and Fifth Third shall assume each Enterprise Right, in
accordance with the terms of the Stock Plan and stock option agreement by which
it is evidenced, except from and after the Effective Time, (i) Fifth Third and
its Compensation Committee shall be substituted for the Committee of
Enterprise's Board of Directors (including, if applicable, the entire Board of
Directors of Enterprise) administering such Stock Plan, (ii) each Enterprise
Right assumed by Fifth Third may be exercised solely for shares of Fifth Third
Common Stock, (iii) the number of shares of Fifth Third Common Stock subject to
such Enterprise Right shall be equal to the number of shares of Enterprise
Common Stock subject to such Enterprise Right immediately prior to the Effective
Time multiplied by the Exchange Ratio, however, such number of Enterprise Rights
shall not exceed 226,860 shares in the aggregate, which amount equals the number
of Enterprise Rights in existence prior to August 1, 1998, and (iv) the per
share exercise price under each such Enterprise Right shall be adjusted by
dividing the per share exercise price under each such Enterprise Right by the
Exchange Ratio and rounding up to the nearest four decimal places.
Notwithstanding, the provisions of clause (iii) of the preceding sentence, Fifth
Third shall not be obligated to issue any fraction of a share of Fifth Third
Common Stock upon exercise of Enterprise Rights and any fraction of a share of
Fifth Third Common Stock that otherwise would be subject to a converted
Enterprise Right shall represent the right to receive a cash payment equal to
the product of such fraction and the difference between the market value of one
share of Fifth Third Common Stock and the adjusted per share exercise price of
such Enterprise Right. The market value of one share of Fifth Third Common Stock
shall be the last sale price of Fifth Third Common Stock on the NASD National
Market (as reported by The Wall Street Journal, or if not reported thereby, any
other authoritative source selected by Fifth Third) on the last trading day
preceding the Effective Time. In addition, notwithstanding the foregoing, each
Enterprise Right which is an "incentive stock option" shall be adjusted as
required by Section 424 of the Code so as not to constitute a modification,
extension, or
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renewal of the option, within the meaning of Section 424(h) of the Code. Fifth
Third agrees to take all reasonable steps which are necessary to effectuate the
foregoing provisions of this Section.
3. The grants pursuant to the Stock Plan shall continue in effect on the
terms and conditions (subject to the adjustments required by Section I.C.2 after
giving effect to the Merger), and Fifth Third shall take all reasonable steps to
comply with the terms of the Stock Plan to ensure, the extent reasonably
required by, and subject to the provisions of, the Stock Plan, the Enterprise
Rights which qualified as incentive stock options prior to the Effective Time
continue to qualify as incentive stock options after the Effective Time. At or
prior to the Effective Time, Fifth Third shall take all corporate action
necessary to reserve for issuance sufficient shares of Fifth Third Common Stock
for delivery upon exercise of Enterprise Rights assumed by it in accordance with
this Section. Within 60 days after the Effective Time, Fifth Third shall file a
registration statement on Form S-3 or Form S-8, as the case may be (or any
successor or appropriate forms), with respect to shares of Fifth Third Common
Stock subject to the Enterprise Rights assumed by Fifth Third in accordance with
this Section and shall use its reasonable efforts to maintain the effectiveness
of such registration statements and maintain the current status of the
prospectus or prospectuses contained therein), as well as comply with any
applicable state securities or "blue sky" laws, for so long as such options
remain outstanding.
D. At the Effective Time, all of the shares of Enterprise Common Stock,
whether issued or unissued (including treasury shares), will be canceled and
extinguished and the holders of certificates for shares thereof shall cease to
have any rights as shareholders of Enterprise, except as aforesaid, their sole
rights as shareholders shall pertain to the Fifth Third Common Stock and cash
in lieu of fractional shares, if any (as described in the immediately
succeeding paragraph), into which their Enterprise Common Stock shall have been
converted by virtue of the Merger.
E. After the Effective Time, each holder of a certificate or certificates for
shares of Enterprise Common Stock, upon surrender of the same duly transmitted
to Fifth Third Trust Department, as Exchange Agent (or in lieu of surrendering
such certificates in the case of lost, stolen, destroyed or mislaid
certificates, upon execution of such documentation as may be reasonably required
by Fifth Third), shall be entitled to receive in exchange therefor a certificate
or certificates representing the number of whole shares of Fifth Third Common
Stock into which such holder's shares of Enterprise Common Stock shall have been
converted by the Merger pursuant to the Exchange Ratio, plus a cash payment for
any fraction of a share to which the holder is entitled, in lieu of such
fraction of a share. Within seven (7) business days after the Effective Time,
the Exchange Agent will send a notice and transmittal form to each Enterprise
shareholder of record at the Effective Time advising such shareholder of the
effectiveness of the Merger and the procedures for surrendering to the Exchange
Agent outstanding certificates formerly evidencing Enterprise Common Stock in
exchange for new certificates of Fifth Third Common Stock. Until so surrendered,
each outstanding certificate that prior to the Effective Time represented shares
of Enterprise Common Stock (other than Dissenting Shares) shall be deemed for
all corporate purposes to evidence ownership of the number of full shares of
Fifth Third Common Stock into which the same shall have been converted;
provided, however, that dividends or distributions otherwise payable with
respect to shares of Fifth Third Common Stock into which Enterprise Common Stock
shall have been so converted shall be paid with respect to such shares only
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when the certificate or certificates evidencing shares of Enterprise Common
Stock shall have been so surrendered (or in lieu of surrendering such
certificates in the case of lost, stolen, destroyed or mislaid certificates,
upon execution of such documentation as may be reasonably required by Fifth
Third) and thereupon any such dividends and distributions shall be paid, without
interest, to the holder entitled thereto subject however to the operation of any
applicable escheat or similar laws relating to unclaimed funds.
F. The Exchange Ratio referred to in Paragraph C of this Article I shall be
adjusted so as to give the Enterprise shareholders the economic benefit of any
stock dividends, reclassifications, recapitalizations, split-ups, exchanges of
shares, distributions or combinations or subdivisions of Fifth Third Common
Stock effected between the date of this Agreement and the Effective Time. In the
event between the date of this Agreement and the Effective Time, Fifth Third has
engaged in either the distribution of any of its assets (other than a cash
dividend), or caused the distribution of capital stock in a company which holds
any asset(s) previously held by Fifth Third or in any affiliate thereof, to the
Fifth Third shareholders, then the Exchange Ratio shall be increased in such
amount so that the equivalent fair market value of such transaction shall also
be distributed to the Enterprise shareholders, as of the Effective Time.
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G. When all necessary documents have been filed and recorded in accordance
with the laws of the State of Ohio, and the Merger becomes effective, the
separate existence of Enterprise shall cease and Enterprise shall be merged
into Fifth Third (which will be the "Surviving Corporation"), and which shall
continue its corporate existence under the laws of the State of Ohio under the
name "Fifth Third Bancorp".
H. The Second Amended Articles of Incorporation, as amended, of Fifth Third
of record with the Secretary of State of Ohio as of the Effective Time shall be
the Articles of Incorporation of the Surviving Corporation, until further
amended as provided by law.
I. The Directors of Fifth Third who are in office at the Effective Time
shall be the directors of the Surviving Corporation, each of whom shall
continue to serve as a Director for the term for which he was elected, subject
to the Regulations of the Surviving Corporation and in accordance with law. The
officers of Fifth Third who are in office at the time the Merger becomes
effective shall be the officers of the Surviving Corporation, subject to the
Regulations of the Surviving Corporation and in accordance with law.
J. The Regulations of Fifth Third at the Effective Time shall be the
Regulations of the Surviving Corporation, until amended as provided therein and
in accordance with law.
K. At the Effective Time, the effect of the Merger shall be as provided by
the applicable provisions of the OGCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time: the separate existence
of Enterprise shall cease; Fifth Third shall possess all assets and property of
every description, and every interest therein, wherever located, and the
rights, privileges, immunities, powers, franchises and authority, of a public
as well as a private nature, of each of Fifth Third and Enterprise, and all
obligations owing by or due each of Fifth Third and Enterprise shall be vested
in, and become the obligations of, Fifth Third, without further act or deed,
including, without limitation, any liability to Dissenting Shareholders under
Sections 1701.84 and 1701.85 of the OGCL; and all rights of creditors of each
Fifth Third and Enterprise shall be preserved unimpaired, and all liens upon
the property of each of Fifth Third and Enterprise shall be preserved
unimpaired, on only the property affected by such liens immediately prior to
the Effective Time.
L. From time to time as and when requested by the Surviving Corporation, or
by its successors or assigns, the officers and Directors of Enterprise in
office at the Effective Time shall execute and deliver such instruments and
shall take or causes to be taken such further or other action as shall be
necessary in order to vest or perfect in the Surviving Corporation or to
confirm of record or otherwise, title to, and possession of, all the assets,
property, interests, rights, privileges, immunities, powers, franchises and
authority of Enterprise and otherwise to carry out the purposes of this
Agreement.
M. This Agreement shall be filed (only if necessary) and recorded along with
Articles or a Certificate of Merger in accordance with the requirements of the
OGCL. This Agreement shall not be filed with the Secretary of the State of Ohio
until, but shall be filed promptly after, all of the conditions
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precedent to consummating the Merger as contained in Article VI of this
Agreement shall have been fully met or effectively waived.
N. The Merger is intended to be a reorganization within the meaning of
Section 368(a) of the Code, and the Agreement is intended to be a "plan of
reorganization" within the meaning of the regulations promulgated under the
Code and for purposes of Section 354 and 361 of the Code.
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O. 1. Each outstanding share of Enterprise Common Stock the holder of which
has perfected his right to dissent under the OGCL and has not effectively
withdrawn or lost such rights as of the Effective Time shall not be converted
into or represent a right to receive Fifth Third Common Stock, and the holder
thereof shall be entitled only to such rights as are granted by the OGCL.
Enterprise shall give Fifth Third prompt notice upon receipt by Enterprise of
any such written demands for payment of the fair value of such shares of
Enterprise Common Stock and of withdrawals of such demands and any other
instruments provided pursuant to the OGCL (any shareholder duly making such
demands being hereinafter called a "Dissenting Shareholder"). Any payments made
in respect of Dissenting Shares shall be made by the Surviving Corporation or
Fifth Third. If any Dissenting Shareholders shall effectively withdraw or lose
(through failure to perfect or otherwise) his right to such payment, such
holder's shares of Enterprise Common Stock shall be converted into a right to
receive Fifth Third Common Stock in accordance with the applicable provisions
of this Agreement.
2. No holder of Fifth Third Common Stock shall be entitled to relief as
dissenting shareholder pursuant to Section 1701.85 of the OGCL or otherwise.
II. REPRESENTATIONS AND WARRANTIES OF ENTERPRISE.
Enterprise represents and warrants to Fifth Third that as of the date hereof or
as of the indicated date, as appropriate, and except as otherwise disclosed in
Schedule 1 hereto delivered by Enterprise to Fifth Third in connection with the
execution of this Agreement by Fifth Third:
A. Enterprise (i) is duly incorporated, validly existing and in good
standing as a corporation under the corporation laws of the State of Ohio and
is a registered unitary savings and loan holding company under the HOLA; (ii)
is duly authorized to conduct the business in which it is engaged; (iii) has
4,000,000 shares, $.01 par value per share, of Enterprise Common Stock and
1,000,000 shares, no par value per share, of Preferred Stock ("Enterprise
Preferred Stock") authorized pursuant to its Articles of Incorporation, which
are the total number of shares Enterprise is authorized to have outstanding;
(iv) has no outstanding securities of any kind, nor any outstanding options,
warrants or other rights entitling another person to acquire any securities of
Enterprise of any kind, other than (a) 2,210,996 shares of Enterprise Common
Stock, which presently are authorized, duly issued and outstanding and fully
paid and non-assessable, and (b) options to purchase a total of 226,860 shares
of Enterprise Common Stock which were granted to and are currently held by the
employees, officers and Directors of Enterprise and/or Thrift Subsidiary; and
(v) owns of record and beneficially free and clear of all liens and
encumbrances, all of the 100 outstanding shares of the capital stock of the
Thrift Subsidiary, $.01 par value per share. Enterprise has no direct or
indirect active subsidiaries other than Thrift Subsidiary.
B. Thrift Subsidiary is duly incorporated, validly existing and in good
standing as a Federal Savings Bank under the laws of the United States, and has
all the requisite power and authority to conduct the banking business as now
conducted by it; and Thrift Subsidiary does not have any outstanding securities
of any kind, nor any outstanding options, warrants or other rights entitling
another person to acquire any securities of any of the Thrift Subsidiary of any
kind, other than 100 shares of the capital stock, $.01 par value per share, of
the Thrift Subsidiary owned of record and beneficially by Enterprise.
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C. Enterprise has previously furnished to Fifth Third its audited,
consolidated balance sheets, statements of operations, statements of
stockholders' equity and cash flows as at September 30, 1997, and for the year
then ended, together with the opinions of its independent certified public
accountants associated therewith. Enterprise also has previously furnished to
Fifth Third the Thrift Financial Reports as filed with OTS of the Thrift
Subsidiary as at September 30, 1995, 1996 and 1997, for the years then ended.
Enterprise also has furnished to Fifth Third (i) its unaudited, consolidated
financial statements as at June 30, 1998, and for the three months and nine
months then ended, and (ii) the Thrift Financial Reports as filed with the OTS
of the Thrift Subsidiary for the quarter ended June 30, 1998. Such consolidated
financial statements of Enterprise fairly present the consolidated financial
condition of Enterprise as of the date thereof, and for the years or periods
covered thereby in conformity with generally accepted accounting principles
("GAAP"), consistently applied (except as stated therein and except for the
omission of notes to unaudited statements and year-end adjustments to interim
results). There are no material liabilities, obligations or indebtedness of
Enterprise or the Thrift Subsidiary required to be disclosed in the financial
statements so furnished other than the liabilities, obligations or indebtedness
disclosed in such financial statements (including footnotes). Enterprise shall
continue to furnish such financial information for subsequent monthly and
quarterly periods to Fifth Third as soon as practicable until the Closing Date.
In the event that the Closing Date does not occur before June 30, 1999,
Enterprise shall furnish Fifth Third with its audited or unaudited,
consolidated financial statements as at September 30, 1998, December 31, 1998
and March 31, 1999 and for the period then ended as soon as they are reasonably
available.
D. Enterprise and the Thrift Subsidiary have good and marketable title to
all of the material properties and assets reflected in its separate statement
of financial condition as at June 30, 1998, and which are still owned by each
and each has good and marketable title to all material properties and assets
acquired by it after such date and still owned by it, subject to (i) any liens
and encumbrances that do not materially adversely impair the use of the
property, (ii) statutory liens for taxes not yet due and payable, and (iii)
minor defects and irregularities in title that do not materially adversely
impair the use of the property.
E. Except as disclosed in Schedule 1 and for events relating to the business
environment in general: (i) since June 30, 1998, to the date hereof there have
been no material adverse changes in the financial condition, operations or
business of Enterprise and the Thrift Subsidiary on a consolidated basis; (ii)
Enterprise is not aware of any events which have occurred since June 30, 1998 to
the date hereof or which as of the date hereof are reasonably certain to occur
in the future and which reasonably can be expected to result in any material
adverse change in the financial condition, operations or business of Enterprise
and the Thrift Subsidiary on a consolidated basis, excluding in each instance
matters (which shall include but not be limited to changes in general economic
condition, changes in interest rates, changes in laws or regulations or changes
in GAAP) of general application to the thrift or banking industry; and (iii)
since June 30, 1998, to the date hereof there have been no material changes in
the methods of business operations of Enterprise and the Thrift Subsidiary.
F. Except as disclosed in Schedule 1, there are no actions, suits,
proceedings, investigations or assessments of any kind pending, or to the best
knowledge of Enterprise, threatened against Enterprise
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or the Thrift Subsidiary which reasonably can be expected to result in any
material adverse change in the financial condition, operations or business of
Enterprise and the Thrift Subsidiary on a consolidated basis.
G. Except as disclosed in Schedule 1, since June 30, 1998, to the date
hereof Enterprise and the Thrift Subsidiary each has been operated in the
ordinary course of business, has not made any changes in its respective capital
or corporate structures and has not provided any increases in employee salaries
or benefits other than in the ordinary course of business. Except as disclosed
in Schedule 1, since June 30, 1998, to the date hereof Enterprise has not
declared or paid any dividends nor made any distributions of any other kind to
its shareholders.
H. Except as disclosed in Schedule 1, Enterprise and the Thrift Subsidiary
have timely filed all federal, state and local tax returns required to be filed
(after giving effect to all extensions) by them, respectively, and have paid or
provided for all tax liabilities shown to be due thereon or which have been
assessed against them, respectively. All tax returns filed by Enterprise or the
Thrift Subsidiary through the date hereof constitute complete and accurate
representations of the tax liabilities of Enterprise and the Thrift Subsidiary
for such years and accurately set forth all items (to the extent required to be
included or reflected in such returns) relevant to its future tax liabilities,
including the tax basis of its properties and assets in all material respects.
Neither Enterprise nor the Thrift Subsidiary is currently under audit nor have
either of them been contacted for an audit. Neither Enterprise nor the Thrift
Subsidiary is engaged in any appeal proceeding in connection with any return.
I. Except as disclosed in Schedule 1, neither Enterprise nor the Thrift
Subsidiary is a party to (i) any written employment contracts or written
contracts of any other kind with any of its officers, Directors or employees or
(ii) any material contract, lease or agreement of any other kind which is not
assignable as a result of the merger provided for herein without the consent of
another party, except for contracts, leases or agreements which do not have
terms extending beyond six months from the date of this Agreement or contracts,
leases or agreements (excluding contracts, leases and agreements pursuant to
which credit has been extended by the Thrift Subsidiary) which do not require
the annual expenditure of more than $15,000.00 thereunder.
J. Except as disclosed in Schedule 1, since June 30, 1998, to the date
hereof the Thrift Subsidiary has not incurred any unusual or extraordinary loan
losses which are material to Enterprise and the Thrift Subsidiary on a
consolidated basis; to the best knowledge of Enterprise and in light of the
Thrift Subsidiary's historical loan loss experience and its management's
analysis of the quality and performance of its loan portfolio, as of June 30,
1998, its reserve for loan losses was, in the opinion of Enterprise, adequate
to absorb all known and reasonably anticipated losses as of such date.
K. Except as disclosed in Schedule 1, neither Enterprise nor the Thrift
Subsidiary has, directly or indirectly, dealt with any broker or finder in
connection with this transaction and neither has incurred or will incur any
obligation for any broker's or finder's fee or commission in connection with the
transactions provided for in this Agreement.
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L. 1. The Directors of Enterprise, by resolution adopted by the unanimous
vote of all Directors present at a meeting duly called and held in accordance
with applicable law, have duly approved this Agreement, and have directed that
this Agreement be submitted to a vote of Enterprise's shareholders at the
annual or a special meeting of the shareholders to be called for that purpose,
all in accordance with and as required by law and in accordance with the
Articles of Incorporation and Code of Regulations of Enterprise.
2. Enterprise has the corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder subject to certain required
regulatory and shareholder approvals. The Agreement, when executed and
delivered, will have been duly authorized and will constitute a valid and
binding obligation of Enterprise, enforceable in accordance with its terms,
except to the extent that (i) enforceability thereof may be limited by
insolvency, reorganization, liquidation, bankruptcy, readjustment of debt or
other laws of general application relating to or affecting the enforcement of
creditors' rights generally and (ii) the availability of certain remedies may be
precluded by general principles of equity, subject, however, to the receipt of
requisite regulatory approvals and the approval of Enterprise's shareholders.
3. Except as disclosed in Schedule 1, neither the execution of the
Agreement, nor the consummation of the transactions contemplated hereby, (i)
conflicts with, results in a breach of, violates or constitutes a default
under, Enterprise's Articles of Incorporation or Code of Regulations or, to the
best knowledge of Enterprise, any federal, state or local law, statute,
ordinance, rule, regulation or court or administrative order, or any agreement,
arrangement, or commitment, to which Enterprise or the Thrift Subsidiary is
subject or bound; (ii) to the best knowledge of Enterprise, results in the
creation of or gives any person the right to create any material lien, charge,
encumbrance, or security agreement or any other material rights of others or
other material adverse interest upon any material right, property or asset
belonging to Enterprise or the Thrift Subsidiary; (iii) conflicts with, results
in a breach of, violates or constitutes a default under, terminates or gives
any person the right to terminate, amend, abandon, or refuse to perform any
material agreement, arrangement or commitment to which Enterprise or the Thrift
Subsidiary is a party or by which Enterprise's or the Thrift Subsidiary's
rights, properties or assets are subject or bound; or (iv) to the best
knowledge of Enterprise, accelerates or modifies, or gives any party thereto
the right to accelerate or modify, the time within which, or the terms
according to which, Enterprise or the Thrift Subsidiary is to perform any
duties or obligations or receive any rights or benefits under any material
agreements, arrangements or commitments. For purposes of subparagraphs (iii)
and (iv) immediately preceding, material agreements, arrangements or
commitments exclude agreements, arrangements or commitments having a term
expiring less than six months from the date of this Agreement or which do not
require the expenditure of more than $15,000 (but shall include all agreements,
arrangements or commitments pursuant to which credit has been extended by the
Thrift Subsidiary).
M. Complete and accurate copies of the (i) Articles of Incorporation and
Code of Regulations of Enterprise and (ii) the Charter and Bylaws of the Thrift
Subsidiary in force as of the date hereof have been delivered to Fifth Third.
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N. Except as disclosed in Schedule 1, neither Enterprise nor the Thrift
Subsidiary has engaged in any activity or omitted to take any action which, in
any material way, has resulted or could result in the violation of (i) any
local, state or federal law (including without limitation the Bank Secrecy Act,
the Community Reinvestment Act, applicable consumer protection and disclosure
laws and regulations, including without limitation, Truth in Lending, Truth in
Savings and similar disclosure laws and regulations, and equal employment and
employment discrimination laws and regulations) or (ii) any regulation, order,
injunction or decree of any court or governmental body, the violation of either
of which could reasonably be expected to have a material adverse effect on the
financial condition of Enterprise and the Thrift Subsidiary. To the best
knowledge of Enterprise and except as disclosed in Schedule 1, the Thrift
Subsidiary possesses all licenses, franchises, permits and other governmental
authorizations necessary for the continued conduct of its business without
material interference or interruption.
O. Neither this Agreement nor the Agreement of Merger nor any report,
statement, list, certificate or other information furnished by Enterprise or
the Thrift Subsidiary to Fifth Third or its agents in connection with this
Agreement or any of the transactions contemplated hereby (including, without
limitation, any information which has been or shall be supplied with respect to
their business operations and financial condition for inclusion in the proxy
statement/prospectus and registration statement relating to the merger)
contains or shall contain (or, in the case of information relating to the proxy
statement/prospectus, at the time it is mailed, in the case of the registration
statement, at the time it becomes effective and in the case of the proxy
statement/prospectus and the registration statement, at the time the annual or
special meeting of shareholders of Enterprise is held to consider the adoption
of this Agreement) an untrue statement of material fact or omits or shall omit
to state a material fact necessary to make the statements contained herein or
therein, in light of the circumstances in which they are made, not misleading.
P. Except as disclosed in Schedule 1, there are no actions, proceedings or
investigations pending before any environmental regulatory body, with respect to
or, to the best knowledge of Enterprise, threatened against or affecting
Enterprise or the Thrift Subsidiary in respect to any "facility" owned, leased
or operated by either of them (but excluding any "facility" as to which sole
interest of Enterprise or the Thrift Subsidiary is that of a lienholder or
mortgagee, but including any "facility" to which title has been taken pursuant
to mortgage foreclosure or similar proceedings and including any "facility" in
which Enterprise or the Thrift Subsidiary ever participated in the financial
management of such facility to a degree sufficient to influence, or have the
ability to influence, the facility's treatment of hazardous waste) under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended ("CERCLA"), or under any Federal, state, local or municipal statute,
ordinance or regulation in respect thereof, in connection with any release of
any toxic or "hazardous substance", pollutant or contaminant into the
"environment" which, if adversely determined, (a) would require the payment by
Enterprise or the Thrift Subsidiary and/or require Enterprise or the Thrift
Subsidiary to incur expenses of more than $15,000 (whether or not covered by
insurance) or (b) would otherwise have a material adverse effect on Enterprise
or the Thrift Subsidiary, nor are there any such actions or proceedings or
investigations in which Enterprise or the Thrift Subsidiary is a plaintiff or
complainant. Neither Enterprise nor the Thrift Subsidiary is liable in any
material respect under any applicable law for any
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release by either of them or, to the best knowledge of Enterprise, for any
release by any other "person" of a hazardous substance caused by the spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping or disposing of hazardous wastes or other chemical substances,
pollutants or contaminants into the environment, nor is Enterprise or the Thrift
Subsidiary liable for any material costs (as a result of the acts or omissions
of Enterprise or the Thrift Subsidiary or, to the best knowledge of Enterprise,
as a result of the acts or omissions of any other "person") of any remedial
action including, without limitation, costs arising out of security fencing,
alternative water supplies, temporary evacuation and housing and other emergency
assistance undertaken by any environmental regulatory body having jurisdiction
over Enterprise or the Thrift Subsidiary to prevent or minimize any actual or
threatened release by Enterprise or the Thrift Subsidiary of any hazardous
wastes or other chemical substances, pollutants and contaminants into the
environment which would endanger the public health or the environment. All terms
contained in quotation marks in this paragraph and the paragraph immediately
following shall have the meaning ascribed to such terms, and defined in, CERCLA.
Except as disclosed in Schedule 1, to the best knowledge of Enterprise each
"facility" owned, leased or operated by Enterprise or the Thrift Subsidiary (but
excluding any "facility" as to which the sole interest of Enterprise or the
Thrift Subsidiary is that of a lienholder or mortgagee, but including any
"facility" to which title has been taken pursuant to mortgage foreclosure or
similar proceedings and including any "facility" in which Enterprise or the
Thrift Subsidiary ever participated in the financial management of such facility
to a degree sufficient to influence, or have the ability to influence, the
facility's treatment of hazardous waste) is, in all material respects, in
compliance with all applicable Federal, state, local or municipal statutes,
ordinances, laws and regulations and all orders, rulings or other decisions of
any court, administrative agency or other governmental authority relating to the
protection of the environment, except to the extent a failure to comply would
not have a material adverse effect on the business, operations and financial
condition of Enterprise and the Thrift Subsidiary taken as a whole.
Q. 1. Benefit Plans. Schedule 1 lists the name and a short description of
each Benefit Plan (as herein defined), together with an indication of its
funding status (e.g., trust, insured or general company assets). For purposes
hereof, the term "Benefit Plan" shall mean any plan, program, arrangement or
system of employee or director benefits maintained by Enterprise or the Thrift
Subsidiary for the benefit of employees, former employees or Directors of
Enterprise or the Thrift Subsidiary and shall include (a) any qualified
retirement plan such as a pension, profit sharing, stock bonus plan or employee
stock ownership plan ("ESOP"), (b) any plan, program or arrangement providing
deferred compensation, bonus deferral or incentive benefits, whether funded
through trust or otherwise, and (c) any welfare plan, program or policy
providing vacation, severance, salary continuation, supplemental unemployment,
disability, life, health coverage, retiree health, Voluntary Employees'
Beneficiary Association, medical expense reimbursement or dependent care
assistance benefits, in any such foregoing case without regard to whether the
Benefit Plan constitutes an employee benefit plan under Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or the
number of employees covered under such Benefit Plan.
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2. Plan Documents, Reports and Filings. Except as disclosed on Schedule
1, Enterprise or the Thrift Subsidiary has provided true, complete and correct
copies of all plan documents, if any, comprising each Benefit Plan, together
with, when applicable, (a) the most recent summary plan description, (b) the
most recent actuarial and financial reports and the most recent annual reports
filed with any governmental agency and (c) all Internal Revenue Service ("IRS")
or other governmental agency rulings and determination letters or any open
requests for IRS rulings or letters with respect to Benefit Plans.
3. Qualified Retirement Plan Compliance. With respect to each Benefit
Plan which is an employee pension benefit plan (as defined in section 3(2) of
ERISA) other than any such plan that meets the "top-hat" exception under
section 201(1) of ERISA (a "Qualified Benefit Plan"), except as disclosed on
Schedule 1: (a) the IRS has issued a determination letter which determined that
such Qualified Benefit Plan (as amended by any and all amendments except for
the First and Second Amendments to the ESOP and any amendments to the defined
benefit plan) satisfied the requirements of section 401(a) of the Code, as
amended by all of the laws referred to in Section 1 of Revenue Procedure 93-39,
such determination letter has not been revoked or threatened to be revoked by
the IRS, and the scope of such determination letter is complete and does not
exclude consideration of any of the requirements or matters referred to in
sections 4.02 through 4.04 of Revenue Procedure 93-39; (b) to the best
knowledge of Enterprise, such Qualified Benefit Plan is in material compliance
with all qualification requirements of Section 401(a) of the Code; (c) to the
best knowledge of Enterprise, such Qualified Benefit Plan is in substantial
compliance with all notice, reporting and disclosure requirements of ERISA and
the Code; (d) any Qualified Benefit Plan which is an ESOP as defined in Section
4975(e)(7) of the Code (an "ESOP Qualified Benefit Plan") is in material
compliance with the applicable qualification requirements of Section 409 of the
Code; (e) any previously terminated Qualified Benefit Plan was terminated in
material compliance with the requirements of ERISA and the Code, has received a
favorable determination letter therefor, and the liabilities of such Qualified
Benefit Plan and the requirements of the Pension Benefit Guaranty Corporation
("PBGC") were fully satisfied; and (f) any and all amendments to the Qualified
Benefit Plans not covered by an IRS determination letter do not adversely
affect the qualified and tax exempt status of such plans.
4. Welfare Plan Compliance. With respect to each Benefit Plan which is an
employee welfare benefit plan (as defined in Section 3(1) of ERISA) (a "Welfare
Benefit Plan"), except as noted on Schedule 1: (a) such Welfare Benefit Plan, if
it is intended to provide favorable tax benefits to plan participants, has been,
to the best knowledge of Enterprise, in compliance with applicable Code
provisions; (b) such Welfare Benefit Plan has been, to the best knowledge of
Enterprise, operated in substantial compliance with all applicable notice,
reporting and disclosure requirements of ERISA and the Code; and (c) such
Welfare Benefit Plan, if a group health plan subject to the requirements of
Section 4980B of the Code ("COBRA"), has been, to the best knowledge of
Enterprise, operated in substantial compliance with such COBRA requirements.
5. Prohibited Transactions. To the best knowledge of Enterprise, no
prohibited transaction under Section 406 of ERISA and not exempt under Section
408 of ERISA has occurred with respect to any Benefit Plan which would result,
with respect to any person, in (a) the imposition, directly or
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indirectly, of a material excise tax under Section 4975 of the Code or (b)
material fiduciary liability under Section 409 of ERISA.
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6. Lawsuits or Claims. Except as disclosed in Schedule 1, no material
actions, suits or claims (other than routine claims of benefits) are pending or,
to the best knowledge of Enterprise, threatened against any Benefit Plan or
against Enterprise or the Thrift Subsidiary with respect to any Benefit Plan.
7. Disclosure of Unfunded Liabilities. All material Unfunded Liabilities
with respect to each Benefit Plan have been recorded and disclosed on the most
recent financial statement of Enterprise and the Thrift Subsidiary or, if not,
in Schedule 1. For purposes hereof, the term "Unfunded Liabilities" shall mean
any amounts properly accrued to date under generally accepted accounting
principles in effect as of the date of this Agreement (GAAP), or amounts not
yet accrued for GAAP purposes but for which an obligation (which has legally
accrued and cannot legally be eliminated and which is subject to reasonable
estimate) exists for payment in the future which is attributable to any Benefit
Plan, including but not limited to (a) severance pay benefits, (b) deferred
compensation or unpaid bonuses, (c) any liabilities on account of the change in
control which will result from this Agreement, including any potential 20%
excise tax under Section 4999 of the Code relating to excess parachute payments
under Section 280G of the Code, (d) any unpaid pension contributions for the
current plan year or any accumulated funding deficiency under Section 412 of
the Code and related penalties under Section 4971 of the Code, including unpaid
pension contributions or funding deficiencies owed by members of a controlled
group of corporations which includes Enterprise or the Thrift Subsidiary and
for which Enterprise or the Thrift Subsidiary is liable under applicable law,
(e) any authorized but unpaid profit sharing contributions or contributions
under Section 401(k) and Section 401(m) of the Code, (f) retiree health benefit
coverage and (g) unpaid premiums for contributions required under any group
health plan to maintain such plan's coverage through the Effective Time.
8. Defined Benefit Pension Plan Liabilities. Enterprise and the Thrift
Subsidiary (or any pension plan maintained by any of them) have not incurred any
material liability to the PBGC or the IRS with respect to any Benefit Plan which
is a defined benefit pension plan, except for the payment of PBGC premiums
pursuant to Section 4007 of ERISA, all of which if due prior to the date of this
Agreement have been fully paid, and no PBGC reportable event under Section 4043
of ERISA has occurred with respect to any such pension plan. Except as otherwise
disclosed in Schedule 1, the benefit liabilities, as defined in Section
4001(a)(16) of ERISA, of each Benefit Plan subject to Title IV of ERISA, using
the actuarial assumptions that would be used by the PBGC in the event of
termination of such plan, do not exceed the fair market value of the assets of
such plan. Neither Enterprise, the Thrift Subsidiary nor any controlled group
member of Enterprise or the Thrift Subsidiary participates in, or has incurred
any liability under Sections 4201, 4063 or 4064 of ERISA for a complete or
partial withdrawal from a multiple employer plan or a multi-employer plan (as
defined in Section 3(37) of ERISA).
9. Independent Trustee. Enterprise and the Thrift Subsidiaries (a) have
not incurred any asserted or, to the best knowledge of Enterprise, unasserted
material liability for breach of duties assumed in connection with acting as an
independent trustee of any employee pension plan (as defined in Section 3(2) of
ERISA) which is intended to be qualified under Section 401(a) of the Code and
which is maintained by an employer unrelated in ownership to Enterprise or the
Thrift Subsidiary, (b) have not
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authorized nor knowingly participated in a material prohibited transaction under
Section 406 of ERISA and not exempt under Section 408 of ERISA and (c) have not
received notice of any material actions, suits or claims (other than routine
claims for benefits) pending or threatened against the unrelated employer or
against them.
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10. Retiree Benefits. Except as listed on Schedule 1 and identified as
"Retiree Liability", Enterprise and Thrift Subsidiary have no obligation to
provide medical benefits, or life insurance benefits to or with respect to
retirees, former employees or any of their relatives.
11. Right to Amend and Terminate. Except as listed on Schedule 1,
Enterprise or Thrift Subsidiary has all power and authority necessary to amend
or terminate eaich Benefit Plan without incurring any material penalty or
liability provided that, in the case of an employee pension benefit plan (as
defined in section 3(2) of ERISA), benefits accrued as of the date of amendment
or termination are not reduced.
12. SERP Liability. Enterprise represents that its Board of Directors has
approved an unfunded Supplemental Employee Retirement Plan (the "SERP").
Enterprise represents that it has or will cancel the SERP prior to the Effective
Time and that it will not make any distributions therefrom to any of its
employees or the employees of the Thrift Subsidiary.
13. Material. For purposes of this Paragraph Q as a whole, the term
"material" in connection with a liability shall mean a liability or loss, taxes,
penalties, interest and related legal fees in the total amount of $15,000 or
more, with such determination being made on the basis of the aggregate affected
participants of a Benefit Plan and not with respect to any single participant.
R. The investment portfolios of Enterprise and the Thrift Subsidiary consist
of securities in marketable form. Except as disclosed in Schedule 1, since June
30, 1998 to the date hereof neither Enterprise nor the Thrift Subsidiary has
incurred any unusual or extraordinary losses in the aggregate value of its
investment portfolio, and, except for matters of general application to the
thrift or banking industry (including, but not limited to, changes in laws or
regulations or generally accepted accounting principles) or for events relating
to the business environment in general, including market fluctuations and
changes in interest rates, Enterprise is not aware of any events which are
reasonably certain to occur in the future and which reasonably can be expected
to result in any material adverse change in the quality or performance of
Enterprise's and the Thrift Subsidiary's investment portfolio on a consolidated
basis.
S. Except as disclosed in Schedule 1, there are no actions, suits, claims,
proceedings, investigations or assessments of any kind pending, or to the best
knowledge of Enterprise, threatened against any of the Directors or officers of
Enterprise or the Thrift Subsidiary in their capacities as such, and no Director
or officer of Enterprise or the Thrift Subsidiary currently is being indemnified
or seeking to be indemnified by either Enterprise or the Thrift Subsidiary
pursuant to applicable law or Enterprise's Articles of Incorporation or Code of
Regulations or the Thrift Subsidiary's Charter or Bylaws.
T. All representations and warranties contained in this Section II shall
expire at the Effective Time, and, thereafter, neither Enterprise nor the
Thrift Subsidiary nor any officer or director of either of them shall have any
liability or obligations with respect thereto.
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V. There is no "business combination," "moratorium," "control share," or
other state anti-takeover statute or regulation or any agreement to which
Enterprise is a party which (i) prohibits or restricts Enterprise's ability to
perform its obligations under this Agreement, or its ability to consummate the
transactions contemplated hereby, (ii) would have the effect of invalidating or
voiding this Agreement, or any provisions hereof, or (iii) would subject Fifth
Third to any impediment or condition in connection with the exercise of any of
its rights under this Agreement.
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W. All interest rate swaps, caps, floors and option agreements and other
interest rate risk management arrangements, whether entered into for
Enterprise's own account, or for the account of one or more of its subsidiaries
or their customers, were entered into (i) in accordance with prudent banking
practices and all material applicable laws, rules, regulations and regulatory
policies and (ii) with counter-parties reasonably believed to be financially
responsible at the time; and each of them constitutes the valid and legally
binding obligation of it or one of its subsidiaries, enforceable in accordance
with its terms (except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
similar laws of general applicability relating to or affecting creditors' rights
or by general equity principles), and are in full force and effect (except to
the extent that they have been fully performed or terminated) in all respects
material to Enterprise. Neither Enterprise nor its subsidiaries, nor to its
knowledge any other party thereto is in breach of any of its obligations under
any such agreement or arrangement which breach will have material adverse effect
on the business, operations or financial condition of Enterprise on a
consolidated basis.
III. REPRESENTATIONS AND WARRANTIES OF FIFTH THIRD
Fifth Third represents and warrants to Enterprise that as of the date hereof or
as of the indicated date, as appropriate:
A. Fifth Third is duly incorporated, validly existing and in good standing
as a corporation under the corporation laws of the State of Ohio, is a
registered bank holding company under the Bank Holding Company Act of 1956, as
amended, and is duly authorized to conduct the business in which it is engaged,
and The Fifth Third Bank is duly incorporated, validly existing and in good
standing as a corporation under the laws of the State of Ohio and is duly
authorized to conduct the business in which it is engaged. The outstanding
shares of capital stock or other ownership interests of each direct,
significant subsidiary have been duly authorized and validly issued, are fully
paid and non-assessable, and are directly owned by Fifth Third free and clear
of all liens ad encumbrances. All of such subsidiaries are duly authorized to
conduct business in which they are engaged, unless such failure to obtain or
maintain such authorization will not have a material adverse effect on Fifth
Third, as a whole.
B. Pursuant to Fifth Third's Second Amended Articles of Incorporation, as
amended, the total number of shares of capital stock it is authorized to have
outstanding is 300,500,000 of which 300,000,000 shares are Fifth Third Common
Stock and 500,000 shares are classified as Preferred Stock without par value. As
of the close of business on July 31, 1998, 266,516,245 shares of Fifth Third
Common Stock were issued and outstanding and 1,379,594 shares were held in its
treasury. As of the date of this Agreement, no shares of its Preferred Stock
have been issued. Fifth Third does not have outstanding any stock options,
subscription rights, warrants or other securities entitling the holders to
subscribe for or purchase any shares of its capital stock other than options
granted and to be granted to employees and Directors under its stock option
plans. At July 31, 1998, 14,147,556 shares of Fifth Third Common Stock were
reserved for issuance in connection with outstanding options granted under its
stock option plans and 11,252,259 shares were reserved for issuance under
options to be granted in the future.
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C. All shares of Fifth Third Common Stock to be received by the shareholders
of Enterprise as a result of the merger pursuant to the terms of this Agreement
shall be, upon transfer or issuance, validly issued, fully paid and
non-assessable, and will not, upon such transfer or issuance, be subject to the
preemptive rights of any shareholder of Fifth Third.
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D. Fifth Third has furnished to Enterprise its audited consolidated financial
statements as at December 31, 1997, December 31, 1996 and December 31, 1995 and
for the respective years then ended together with the opinions of its
independent public accountants associated therewith. Fifth Third has also
furnished to Enterprise its unaudited, consolidated financial statements as at
June 30, 1998 and for the three and six month periods then ended. Such
consolidated financial statements fairly present the consolidated financial
condition of Fifth Third as of their respective dates and for the respective
periods covered thereby in conformity with GAAP consistently followed throughout
the periods covered thereby. Neither Fifth Third nor any significant
subsidiaries of Fifth Third have any material liabilities, obligations or
indebtedness required to be disclosed in such financial statements other than
the liabilities, obligations and indebtedness disclosed in such financial
statements (including footnotes). Fifth Third will furnish to Enterprise its
unaudited consolidated financial statements as at September 30, 1998 and for the
nine (9) months then ended a soon as such statements are publicly available, and
shall continue to furnish information for subsequent calendar quarter periods to
Enterprise as soon as such becomes publicly available until the Closing Date.
E. Except for events relating to the business environment in general: (i)
since June 30, 1998, to the date hereof there have been no material adverse
changes in the consolidated financial condition, operations or business of
Fifth Third; (ii) the chief executive officer and the chief financial officer
of Fifth Third are not aware of any events which have occurred since June 30,
1998, or which are reasonably certain to occur in the future and which
reasonably can be expected to result in any material adverse change in the
consolidated financial condition, operations or business of Fifth Third; and
(iii) since June 30, 1998, to the date hereof there have been no material
changes in the methods of business operations of Fifth Third and its
subsidiaries.
F. 1. The Executive Committee of the Board of Directors of Fifth Third, by
resolution adopted by the members present at a meeting duly called and held, at
which meeting a quorum was at all times present and acting, has approved this
Agreement, including reserving for issuance to Enterprise shareholders in
accordance with this Agreement, a sufficient number of shares of Fifth Third
Common Stock. Approval and adoption of this Agreement by the shareholders of
Fifth Third is not required under Ohio law, the regulations of the NASDAQ NMS or
under the Second Amended Articles of Incorporation, as amended, or Code of
Regulations of Fifth Third.
2. Fifth Third has corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder subject to certain
required regulatory approvals. This Agreement, when executed and delivered,
will have been duly authorized and will the constitute a valid and binding
obligation of Fifth Third, enforceable in accordance with its terms, except to
the extent that (i) enforceability thereof may be limited by insolvency,
reorganization, liquidation, bankruptcy, readjustment of debt or other laws of
general application relating to or affecting the enforcement of creditors'
rights generally and (ii) the availability of certain remedies may be precluded
by general principles of equity, subject, however, to the receipt of requisite
regulatory approvals.
3. Neither the execution of this Agreement nor the consummation of the
transactions contemplated hereby, does or will (i) conflict with, result in a
breach of, violate or constitute a default,
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under Fifth Third's Second Amended Articles of Incorporation, as amended, or
Code of Regulations or, to the best knowledge of its chief executive officer and
chief financial officer, any federal, foreign, state or local law, statute,
ordinance, rule, regulation or court or administrative order, or any agreement,
arrangement, or commitment to which Fifth Third is subject or bound; (ii) to the
best knowledge of the chief executive officer and chief financial officer of
Fifth Third, result in the creation of or give any person the right to create
any material lien, charge, encumbrance, security agreement or any other material
rights of others or other material adverse interest upon any material right,
property or asset belonging to Fifth Third or any of its subsidiaries other than
such rights as may be given the shareholders of Enterprise pursuant to the
provisions of Sections 1701.84 and 1701.85 of the Ohio Revised Code; (iii)
terminate or give any person the right to terminate, amend, abandon, or refuse
to perform any material agreement, arrangement or commitment to which Fifth
Third is a party or by which Fifth Third's rights, properties or assets are
subject or bound; or (iv) accelerate or modify, or give any party thereto the
right to accelerate or modify, the time within which, or the terms according to
which, Fifth Third is to perform any duties or obligations or receive any rights
or benefits under any material agreement, arrangements or commitments.
G. Complete and accurate copies of (i) the Second Amended Articles of
Incorporation, as amended, and (ii) the Code of Regulations of Fifth Third in
force as of the date hereof have been delivered to Enterprise.
H. To the best knowledge of the chief executive officer and chief financial
officer of Fifth Third, neither Fifth Third nor any of its subsidiaries has
knowingly engaged in any activity or omitted to take any action which, in any
material way, has resulted or could result in the violation of (i) any local,
state or federal law or (ii) any regulation, order, injunction or decree of any
court or governmental body, the violation of either or which could reasonably be
expected to have a material adverse effect on the financial condition Fifth
Third and its subsidiaries taken as a whole. To the best knowledge of the chief
executive officer and chief financial officer of Fifth Third, Fifth Third and
its subsidiaries possess all licenses, franchise, permits and other governmental
authorizations necessary for the continued conduct of their businesses without
material interference or interruption.
I. 1. To the best knowledge of the chief executive officer and chief
financial officer of Fifth Third, neither this Agreement nor any report,
statement, list, certificate or other information furnished or to be furnished
by Fifth Third to Enterprise or its agents in connection with this Agreement or
any of the transactions contemplated hereby (including, without limitation, any
information which has been or shall be supplied with respect to its business
operations and financial condition for inclusion in the proxy
statement/prospectus and registration statement relating to the merger)
contains or shall contain (in the case of information relating to the proxy
statement/prospectus, at the time it is mailed, and, in the case of the
registration statement, at the time it becomes effective and, in the case of
the proxy statement/prospectus and the registration statement, at the time the
annual or special meeting of shareholders of Enterprise is held to consider the
adoption of this Agreement) an untrue statement of a material fact or omits or
shall omit to state a material fact necessary to make the statements contained
herein or therein, in light of the circumstances in which they are made, not
misleading.
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2. Fifth Third has furnished to Enterprise or its agents true and complete
copies (including all exhibits and all documents incorporated by reference) of
the following documents as filed by Fifth Third with the SEC:
a. Fifth Third's Annual Report on Form 10-K for the year ended
December 31, 1997, and reports on Form 10-Q for the quarters ended
March 31 and June 30, 1998;
b. any Current Report on Form 8-K with respect to any event
occurring after June 30, 1998 and prior to the date of this
Agreement;
c. any report filed by Fifth Third to amend or modify any of the
reports described above; and
d. all proxy statements prepared in connection with meetings of
Fifth Third's shareholders held or to be held subsequent to June 30,
1998.
The information set forth in the documents described in this subsection 2
(including all exhibits thereto and all documents incorporated therein by
reference) did not, as of the dates on which such reports were filed with the
SEC, (a) contain any untrue statement of a material fact, (b) omit any material
fact required to be stated therein or necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading, or (c) omit any material exhibit required to be filed therewith.
Prior to the date hereof no event has occurred subsequent to June 30, 1998 which
Fifth Third is required to describe in a Current Report on Form 8-K other than
the Current Reports heretofore furnished by Fifth Third to Enterprise. Fifth
Third timely shall furnish Enterprise with copies of all reports filed by Fifth
Third with the SEC subsequent to the date of this Agreement and until the
Closing Date.
J. There are no actions, suits, proceedings, investigations or assessments of
any kind pending or, to the best knowledge of the chief executive officer and
chief financial officer of Fifth Third, threatened against Fifth Third or any
Fifth Third subsidiary, which reasonably can be expected to result in any
material adverse change in the consolidated financial condition, operations or
business of Fifth Third.
K. Since June 30, 1998 to the date hereof, none of Fifth Third's banking
subsidiaries and thrift subsidiaries has incurred any unusual or extraordinary
loan losses which would be material to Fifth Third on a consolidated basis; and
to the best knowledge of the chief executive officer and chief financial officer
of Fifth Third, and in the light of any banking or thrift subsidiary's
historical loan loss experience and their managements' analysis of the quality
and performance of their respective loan portfolios, as of June 30, 1998, their
consolidated reserves for loan losses are adequate to absorb all known and
reasonably anticipated losses as of such date.
L. Fifth Third and its subsidiaries have filed all federal, state and local tax
returns required to be filed (after giving effect to all extensions) by them,
respectively, and have paid or provided for all tax liabilities shown to be due
thereon or which have been assessed against them, respectively.
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M. Fifth Third has not, directly or indirectly, dealt with any broker or
finder in connection with this transaction and has not incurred and will not
incur any obligation for any broker's or finder's fee or commission in
connection with the transactions provided for in this Agreement.
N. Fifth Third has no unfunded liabilities with respect to any Benefit Plan
(as such term is defined in subparagraph Q.1. of Section II hereof, but applied
to Fifth Third, its subsidiaries and affiliates) that are material, either
individually or in the aggregate, to Fifth Third on a consolidated basis and
that have not been recorded and disclosed as required by GAAP in the most
recent year-end, audited financial statements of Fifth Third supplied to
Enterprise pursuant to Paragraph D of Section III hereof.
O. The investment portfolios of Fifth Third and its subsidiaries and
affiliates consist of securities in marketable form. Since June 30, 1998, to
the date hereof Fifth Third and its affiliates, on a consolidated basis, have
not incurred any unusual or extraordinary losses in their respective investment
portfolios, and, except for events relating to the business environment in
general, including market fluctuations, the management of Fifth third is not
aware of any events which are reasonably certain to occur in the future and
which reasonably can be expected to result in any material adverse change in
the quality or performance of the investment portfolios of Fifth Third and its
affiliates on a consolidated basis.
P. As of the date hereof, Fifth Third is not aware of the existence of any
factor that would materially delay or materially hinder issuance of any of the
required regulatory approvals necessary to consummate the Merger or the other
transactions contemplated hereby.
Q. All representations and warranties contained in this Section III shall
expire at the Effective Time, and thereafter, neither Fifth Third nor any
officer or Director of Fifth Third shall have any further liability or
obligation with respect thereto, except for any misrepresentations, breaches of
warranties or violations of covenants that were made with intent to defraud.
IV. OBLIGATIONS OF ENTERPRISE BETWEEN THE DATE OF THIS AGREEMENT AND THE
EFFECTIVE TIME.
A. Enterprise, in consultation with Fifth Third, will take all actions
necessary to call and hold its annual or a special meeting of its shareholders
as soon as practicable after the Fifth Third registration statement relating to
this transaction has been declared effective by the Securities and Exchange
Commission (the "SEC") and under all applicable state securities laws for the
purpose of approving and adopting this Agreement and any other documents or
actions necessary to the consummation of the Merger provided for herein
pursuant to law. The Board of Directors of Enterprise intends to inform the
shareholders of Enterprise in the proxy materials relating to the annual or
special meeting that all Directors of Enterprise presently intend to vote all
shares of Enterprise Common Stock which they own of record in favor of
approving this Agreement and any such other necessary documents or actions, and
all Directors will recommend approval of this Agreement to the other
shareholders of Enterprise, subject only to such Directors' fiduciary
obligations.
B. (i) Consistent with GAAP, Enterprise agrees that on or before the
Effective Time based on a review of the Thrift Subsidiary's loan losses,
current classified assets and commercial, multi-family
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and residential mortgage loans and investment portfolio, Enterprise will work
with Fifth Third with the goal of establishing collection procedures, internal
valuation reviews, credit policies and practices and general valuation
allowances which are consistent with the guidelines used within the Fifth Third
holding company system, provided that no adjustment to general valuation
allowances or reserves shall be made until immediately prior to the Effective
Time and all conditions precedent to the obligations of the parties hereto have
either been satisfied or waived as confirmed by such parties in writing. Fifth
Third shall provide such assistance and direction to Enterprise as is necessary
in conforming to such policies, practices, procedures and asset dispositions
which are mutually agreeable between the date of this Agreement until the
Effective Time; and (ii) from the date of this Agreement until the Effective
Time, Enterprise and the Thrift Subsidiary each will be operated in the ordinary
course of business, and neither of them will, without the prior written consent
of Fifth Third, which consent shall not be unreasonably withheld: make any
changes in its capital or corporate structures; issue any additional shares of
its Common Stock other than pursuant to the exercise of options granted prior to
the date hereof; issue any other equity securities, other than pursuant to the
exercise of options granted prior to the date hereof; or, issue as borrower any
long term debt or convertible or other securities of any kind, or right to
acquire any of its securities; make any material changes in its method of
business operations; make, enter into any agreement to make, or become obligated
to make, any capital expenditures in excess of $15,000; make, enter into or
renew any agreement for services to be provided to Enterprise or the Thrift
Subsidiary or permit the automatic renewal of any such agreement, except any
agreement for services having a term of not more than three months or requiring
the expenditure of not more than $15,000 (for this purpose the phrase "permit
the automatic renewal" includes the failure to send a notice of termination of
such contract if such failure would constitute a renewal), and, except as
disclosed in Schedule 1; open for business any branch office which has been
approved by the appropriate regulatory authorities but not yet opened or apply
to the appropriate regulatory authorities to establish a new branch office or
expand any existing branch office; acquire, become obligated to acquire, or
enter into any agreement to acquire, any banking or non-banking company or any
branch offices of any such companies, other than such Agreements existing on the
date hereof and disclosed to Fifth Third; declare or pay any cash dividends on
its own stock other than normal and customary cash dividends per quarter paid in
such amounts and at such times as Enterprise historically has done on its Common
Stock, provided this covenant shall only apply to Enterprise; pay any stock
dividends or make any other distributions on its stock other than cash dividends
as described in the immediately preceding clause; change or otherwise amend any
Benefit Plans other than as required by law or as contemplated herein; and
provide any increases in employee salaries or benefits other than in the
ordinary course of business. Enterprise agrees that it will not sell or
otherwise dispose of or encumber any of the shares of the capital stock of the
Thrift Subsidiary which are now owned by it other than in connection with a loan
from Fifth Third to Enterprise.
C. Except as required by applicable law or regulation, except for actions taken
with the consent of Fifth Third, Enterprise and the Thrift Subsidiary shall not
(a) implement or adopt any material change in their interest rate risk
management policies, procedures, or practices; (b) fail to follow its existing
policies or practices with respect to managing their exposure to interest rate
risk; or (c) fail to use commercially reasonable means to avoid any material
increase in their aggregate exposure to interest rate risk.
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D. Not later that the 15th day prior to the mailing of Enterprise's proxy
statement with respect to the Merger, Enterprise shall deliver to Fifth Third a
list of each person that, to the best of its knowledge, is or is reasonably
likely to be, as of the date of the annual or special meeting called to approve
the Merger, deemed an "affiliate" of it as that term is used in Rule 145 under
the Securities Act of 1933, as amended, or SEC Accounting Series Releases 130
and 135 (the "Enterprise Affiliates"). Enterprise shall use its best efforts to
cause each Enterprise Affiliate to execute and deliver to Fifth Third on or
before the mailing of such proxy statement an agreement in the form of Appendix
D hereto.
V. COOPERATION AND OTHER OBLIGATIONS AND OTHER COVENANTS
A. Fifth Third will prepare and cause to be filed at its expense such
applications and other documents with the Board of Governors of the Federal
Reserve System, the Federal Deposit Insurance Corporation, the Ohio Division of
Banks, the Office of Thrift Supervision, and any other governmental agencies as
are required to secure the requisite approval of such agencies to the
consummation of the transactions provided for in this Agreement, and the parties
shall cooperate in the preparation of an appropriate registration statement,
including the prospectus, proxy statement, and such other documents necessary to
comply with all federal and state securities laws relating to the registration
and issuance of the shares of Fifth Third Common Stock to be issued to the
shareholders of Enterprise in this transaction (the expenses thereof, other than
accounting, legal, investment banking, financial consulting and associated
expenses of Enterprise and its affiliates, to be paid by Fifth Third), and any
other laws applicable to the transactions provided for in this Agreement. Fifth
Third shall use all reasonable efforts to file all such applications within
ninety (90) days of the date of this Agreement and to secure all such approvals.
Enterprise agrees that it will, as promptly as practicable after request and at
its own expense, provide Fifth Third with all information and documents
concerning Enterprise and Thrift Subsidiary, as shall be required in connection
with preparing such applications, registration statements and other documents
and in connection with securing such approvals. Prior to filing any such
applications or other documents with the applicable governmental agencies, Fifth
Third shall provide copies thereof to Enterprise. Fifth Third agrees that it
will, as promptly as practicable after request and at its own expense, provide
Enterprise with all information and documents concerning Fifth Third and its
subsidiaries as shall be required in connection with preparing such
applications, registration statements and other documents which are to be
prepared and filed by Enterprise and in connection with approvals required to be
obtained by Enterprise hereunder. Prior to filing any such applications,
statements or other documents with the applicable governmental agency,
Enterprise shall provide, at least five (5) days prior to the filing date,
copies thereof to Fifth Third.
B. Each of the parties hereto agrees to use its best efforts and to
cooperate with the other party in all reasonable respects in order to carry out
and consummate the transactions contemplated by this Agreement at the earliest
practicable time including, without limitation, the filing of applications,
notices and other documents with, and obtaining approval from, appropriate
governmental regulatory agencies.
C. Enterprise agrees to permit Fifth Third, its officers, employees,
accountants, agents and attorneys, and Fifth Third agrees to permit Enterprise,
its officers, employees, accountants, agents and attorneys, to have reasonable
access during business hours to their respective books, records and
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properties, and those of the Thrift Subsidiary and The Fifth Third Bank as well,
for the purpose of making a detailed examination, or updating and amplifying
prior examinations, of the financial condition, assets, liabilities, legal
compliance, affairs and the conduct of the business of Enterprise and the Thrift
Subsidiary or Fifth Third or The Fifth Third Bank, as the case may be, prior to
the Effective Time, and also to permit the monitoring of the foregoing on an
ongoing basis (such rights of examination and monitoring to be subject to the
confidentiality obligations set forth in such Paragraph VII.D. hereof);
provided, however, that any such examination by Fifth Third or Enterprise shall
not relieve Fifth Third or Enterprise from any responsibility or liability for
any material misrepresentation or material breach of warranty hereunder
discovered in the course of or subsequently to such examination and prior to the
Effective Time.
D. If all options have not been exercised prior to the Effective Time, such
options shall be converted to options to purchase Fifth Third Common Stock based
on the exchange ratio with the option exercise price adjusted accordingly to
take into account the change in the number of options.
E. (1) Enterprise shall develop a written description and timetable which
shall be provided to and approved by Fifth Third and its counsel, setting forth
all actions necessary to: (i) make contributions to the Enterprise Federal
Employee Stock Ownership Plan ("ESOP") and/or to have the ESOP sell unallocated
shares under the ESOP to fully repay the ESOP's existing loan, all in
compliance with the applicable requirements of ERISA and the Internal Revenue
Code, including Code Sections 415 (as interpreted by the IRS in Private Letter
Rulings 9648054 and 9426048) and 404; (ii) amend the ESOP to authorize the sale
of unallocated shares to repay the loan, to provide for the allocation of gain
on the sale of unallocated shares in a manner that complies with the position
of the IRS in Private Letter Rulings 9648054 and 9426048 and to make such other
changes as may be necessary to implement the termination; (iii) terminate the
ESOP; and (iv) submit the ESOP to the Internal Revenue Service for a
determination letter that the ESOP, as so amended and terminated, continues to
be a qualified retirement plan and employee stock ownership plan under Sections
401(a) and 4975(e)(7) of the Code. Upon development and approval by Fifth Third
of said written description and timetable, Enterprise shall take such actions
as described therein as are approved by Fifth Third. Distribution of the shares
and any other assets of the ESOP shall (i) not occur until after the receipt of
the foregoing IRS determination letter and (ii) occur prior to the Effective
Time only with the express written consent of Fifth Third, which shall not be
unreasonably withheld. In connection with the development of the written
description and timetables referred to above and resolution of the ESOP, the
parties agree they intend that, to the extent not prohibited by applicable law,
the ESOP shall be maintained through the date of its final termination for the
exclusive benefit of individuals who had become ESOP participants on or before
the Effective Time.
(2) Except as provided in (1) above, if requested by Fifth Third,
Enterprise or Thrift Subsidiary shall take all actions necessary to freeze the
Qualified Benefit Plans as of a date not later than the Effective Time such that
no further contributions (including employee 401(k) contributions) shall be made
under the Qualified Benefit Plans.
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(3) If Fifth Third so requests, Enterprise or the Thrift Subsidiary shall
develop a plan and timetable for terminating any or all of the Qualified Benefit
Plans other than the ESOP, and, with the advance written approval of Fifth
Third, shall proceed with the implementation of said termination plan and
timetable.
(4) Except as provided in (1) above, Enterprise and Thrift Subsidiary,
without the advance written consent of Fifth Third shall not (1) adopt any
amendments to the Qualified Benefit Plans after the date of this Agreement; or
(2) make any distributions from the Qualified Benefit Plans after the date of
this Agreement, other than distributions in the normal administration of the
Qualified Benefit Plans; or (3) make any contributions to the Qualified Benefit
Plans (except 401(k) employee contributions) after the date of this Agreement;
or (4) take any action reducing or restricting the availability of FECO or
surplus under the defined benefit plan.
(5) Enterprise or Thrift Subsidiary shall provide to Fifth Third at least
sixty (60) days prior to the Effective Time, documentation reasonably
satisfactory to Fifth Third demonstrating that the requirements of Sections 404,
412, 415, 416, 401(k) and (m) of the Code have been satisfied by all of its
Qualified Benefit Plans.
(6) With respect to any Benefit Plan that provides for vesting of
benefits, there shall be no discretionary acceleration of vesting without Fifth
Third's consent whether or not such discretionary acceleration of vesting is
provided under the terms of the Benefit Plan; provided that a Benefit Plan which
pursuant to its terms provides for an acceleration of vesting upon a change of
control of Enterprise shall not be deemed to involve a discretionary
acceleration of vesting and vesting thereunder shall accelerate as of the
Effective Time.
(7) Each participant in the Enterprise Recognition and Retention Plan
("RRP") not fully vested will, in accordance with the terms of the RRP, become
fully vested in plan share awards thereunder and any dividends previously paid
with respect to such plan shares as of the Effective Time. As soon as
practicable after the execution of this Agreement, Enterprise and Fifth Third
will cooperate to cause the RRP to be amended and other action taken, in a
manner reasonably acceptable to Enterprise and Fifth Third, to provide that the
RRP will terminate upon the Effective Time; provided, however, that (i) any
distribution of shares under the RRP will be effected in accordance with the
requirements, if any, of federal and state securities laws and regulations, and
(ii) all distributions from the RRP after the Effective Time shall be in shares
of Fifth Third Common Stock. No action shall be taken that would adversely
affect the rights of plan participants who hold outstanding grants or awards of
shares of Enterprise Common Stock, whether before or after the Effective Time.
As of August 1, 1998, the total number of shares awarded under the RRP was
90,744. No further grants or awards have been or shall be made under the RRP
after August 1, 1998.
VI. CONDITIONS PRECEDENT TO CLOSING.
A. Conditions to the Obligations of Each of the Parties:
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The obligation of each of the parties hereto to consummate the transactions
provided for herein is subject to the fulfillment on or prior to the Effective
Time of each of the following conditions:
1. The shareholders of Enterprise shall have duly approved and adopted
this Agreement in accordance with and as required by law and in accordance with
its Articles of Incorporation and Code of Regulations.
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2. All necessary governmental and regulatory orders, consents, clearances
and approvals and requirements shall have been secured and satisfied for the
consummation of such transactions, including without limitation, those of the
Federal Reserve System, the Ohio Division of Banks, the Office of Thrift
Supervision and the Federal Deposit Insurance Corporation to the extent
required.
3. Prior to or at the Effective Time, no material investigation by any
state or federal agency shall have been threatened or instituted seeking to
enjoin or prohibit, or enjoining or prohibiting, the transactions contemplated
hereby and no material governmental action or proceeding shall have been
threatened or instituted before any court or government body or authority,
seeking to enjoin or prohibit, or enjoining or prohibiting, the transactions
contemplated hereby other than investigations, actions and proceedings which
have been withdrawn prior to or at the Effective Time without material adverse
effect to Fifth Third or Enterprise and other than regularly-scheduled
regulatory examinations.
4. Any waiting period mandated by law in respect of the final approval by
any applicable Federal regulator(s) of the transaction contemplated herein shall
have expired.
B. Conditions to the Obligations of Fifth Third:
The obligation of Fifth Third to consummate the transactions provided for herein
is subject to the fulfillment at or prior to the Effective Time of each of the
following conditions unless waived by Fifth Third in a writing delivered to
Enterprise which specifically refers to the condition or conditions being
waived:
1. All of the representations and warranties of Enterprise set forth in
Section II of this Agreement shall be true and correct in all material respects
as of the date of this Agreement and at and as of the Closing Date (as
hereinafter defined) as if each such representation and warranty was given on
and as of the Closing Date, except for any such representations and warranties
made as of a specified date, which shall be true and correct in all material
respects as of such date.
2. Enterprise shall have performed all of the obligations required of it
under the terms of this Agreement in all material respects.
3. Elias, Matz, Tiernan & Herrick L.L.P., counsel for Enterprise and the
Thrift Subsidiary, shall have delivered an opinion addressed to Fifth Third in
substantially the form appended hereto as Appendix A.
4. The aggregate amount of consolidated shareholders' equity (including
Common Stock, Additional Paid-In Capital and Retained Earnings and excluding
Treasury Stock) of Enterprise immediately prior to the Effective Time, as shown
by and reflected in its books and records of accounts on a consolidated basis in
accordance with GAAP, consistently applied, shall not be less than $37,000,000.
For purposes of this subparagraph 4 to Section VI.B., (A) any expenses or
accruals after the date hereof relating to (i) the adjustments contemplated by
Section IV.B.(i) herein, (ii) termination or funding of any of Enterprise's or
the Thrift Subsidiary's Benefit Plans, as contemplated herein, (iii)
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expenses associated with the Merger or (iv) market value adjustments to the
investment portfolio of Enterprise and the Thrift Subsidiary shall be excluded
for purposes of calculation of Enterprise's shareholders' equity as contemplated
herein prior to the Effective Time.
5. Fifth Third's independent certified public accountants shall have
reviewed the unaudited consolidated financial statements of Enterprise as at the
end of the month immediately preceding the Effective Time, as well as the
unaudited separate financial statements of the Thrift Subsidiary as of the same
date, performed such other auditing procedures as may be requested by Fifth
Third and reported in good faith that they are not aware of any material
modifications which would have a material adverse effect on the financial
condition of Enterprise or the Thrift Subsidiary that should be made in order
for such financial statements to (i) be in conformity with GAAP, consistently
applied, excluding the presentation of footnotes, and (ii) accurately state the
financial condition and results of operations of Enterprise and the Thrift
Subsidiary.
6. The receipt of a certificate from Enterprise and the Thrift Subsidiary,
executed by the chief executive officer and chief financial officer of each,
dated the Closing Date, certifying to their best knowledge and belief that: (i)
all of the representations and warranties set forth in Section II hereof were
true and correct as of the date of this Agreement and as of the Closing Date in
all material respects, except for any such representations and warranties made
as of a specified date, which shall be true and correct in all material respects
as of such date; and (ii) it has met and fully complied in all material
respects with all of the obligations required of it under the terms of this
Agreement.
7. The total issued and outstanding shares of Enterprise Common Stock
shall not exceed 2,437,856 shares including all options to purchase Enterprise
Common Stock. Attached hereto on Schedule 1 is a list of all options to acquire
Enterprise Common Stock, the holders thereof, the dates of issuance, the vesting
schedules and the price per share of such options.
8. (a) In consideration of the consummation of this transaction, the
Directors of Enterprise, with exception of Steven Wilson, shall execute and
deliver to Fifth Third an agreement by which the Directors shall agree for a
period of two (2) years after the Effective Time to refrain from directly or
indirectly, whether for their own account or for the account of any other
person, firm, corporation, or other business organization, (i) in the states of
Ohio, Kentucky, Indiana, Florida or Arizona, engage in providing Banking
Services (as defined below) on behalf of any other business organization who is
a competitor of Fifth Third, (ii) provide Banking Services to any Client (as
defined below), (iii) make any statement or take any actions that may interfere
with Fifth Third's or any Affiliate's business relationships with any Client,
(iv) contact either directly or indirectly any Client or otherwise induce or
attempt to induce any Client to enter into any business relationship with any
person or firm other than Fifth Third or an Affiliate relating to Banking
Services of any type, (v) endeavor or entice away from Fifth Third any person
who the Director has actual knowledge that such person is, or was at any time
during the period the Director was employed by Fifth Third or during the
Restricted Period, employed by or associated with Fifth Third as an executive,
officer, employee, manager, salesperson, consultant, independent contractor,
representative or other agent, or (vi) take any actions that may interfere with
Fifth Third's property rights in lists of Clients or otherwise diminish the
value of such lists to Fifth Third.
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Notwithstanding any provision contained in this Section 8, the restrictions
contained herein shall not be applicable to any activity of the Director or any
activity of his or her spouse which existed at the time of this Agreement and
which was disclosed by the Director to Fifth Third, and may be waived by Fifth
Third with respect to one or more Directors in writing at any time and from time
to time in Fifth Third's sole discretion after receipt of a written request from
any Director
(b) The term "Restricted Period" shall mean the period beginning on the
Effective Date and ending two years thereafter.
(c) The term "Banking Services" shall mean retail or commercial deposit or
lending business, asset management and all other services which are customarily
provided by banks or which are otherwise provided by Fifth Third or its
affiliates.
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(d) For all purposes of this Agreement, the term "Client" shall mean all
persons or entities who are or were clients of Fifth Third at the date of
termination of employment or at any time during the two year period prior to the
date of termination of the Director's term, any potential clients who to the
Director's actual knowledge, have been identified and contacted by a
representative of Fifth Third. The term "Client" shall not include any member of
the Employee's immediate family, as defined under Rule 16a-1 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") or any trust of which the
Employee or any member of his immediate family (as defined in Rule 16a-1 of the
Exchange Act) is a trustee or beneficiary.
9. The transaction contemplated by the Purchase and Assumption Agreement,
dated June 16, 1998, between Enterprise and Cornerstone Savings Association
(the "Cornerstone Agreement"), shall have been satisfactorily consummated in
accordance with the terms thereof. Enterprise shall have delivered to Fifth
Third copies of the executed versions of the Cornerstone Agreement and all
exhibits, schedules and amendments thereto. In addition, Enterprise shall
deliver to Fifth Third all regulatory filings and all approvals or denials of
such regulatory bodies with authority to approve such transaction. Enterprise
shall not amend the terms of the Cornerstone Agreement without the prior
written consent of Fifth Third.
10. The transaction contemplated by the Agreement and Plan of Reorganization,
dated as of July 2, 1998, among Enterprise, the Thrift Subsidiary and Security
Savings Holding Company, Inc. and Security Savings Association (the "Security
Savings Agreement"), shall have been satisfactorily consummated in accordance
with the terms thereof. Enterprise shall have delivered to Fifth Third copies of
the executed versions of the Security Savings Agreement and all exhibits,
schedules and amendments thereto. In addition, Enterprise shall deliver to Fifth
Third all regulatory filings and all approvals or denials of such regulatory
bodies with authority to approve such transaction. Enterprise shall not amend
the terms of the Security Savings Agreement without the prior written consent of
Fifth Third.
C. Conditions to the Obligations of Enterprise:
The obligation of Enterprise to consummate the transactions provided for herein
and in the Agreement of Merger is subject to the fulfillment at or prior to the
Effective Time of each of the following conditions unless waived by Enterprise
in a writing delivered to Fifth Third which specifically refers to the condition
or conditions being waived:
1. All of the representations and warranties of Fifth Third set forth in
Section III of this Agreement shall be true and correct in all material respects
as of the date of this Agreement and at and as of the Closing Date as if each
such representation and warranty was given on and as of the Closing Date, except
for any such representations and warranties made as of a specified date, which
shall be true and correct in all material respects as of such date.
2. Fifth Third shall have performed all of the obligations required of it
under the terms of this Agreement and the Agreement of Merger in all material
respects.
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3. Paul L. Reynolds, counsel for Fifth Third, shall have delivered an
opinion addressed to Enterprise in substantially the form appended hereto as
Appendix B.
4. The receipt of a certificate from Fifth Third, executed by its chief
executive officer and chief financial officer, dated the Closing Date,
certifying to their best knowledge and belief that: (i) all of the
representations and warranties set forth in Section III were true and correct as
of the date of this Agreement and as of the Closing Date, except for any such
representations and warranties made as of a specified date, which shall be true
and correct in all material respects as of such date; and, (ii) Fifth Third has
met and fully complied in all material respects with all of the obligations
required of it under the terms of this Agreement.
5. Fifth Third shall have registered its shares of Common Stock to be
issued to the Enterprise shareholders hereunder with the SEC pursuant to the
Securities Act of 1933, as amended, and with all applicable state securities
authorities. The registration statement with respect thereto shall have been
declared effective by the SEC and all applicable state securities authorities
and no stop order shall have been issued. The shares of Fifth Third Common Stock
to be issued to the Enterprise shareholders hereunder shall have been authorized
for trading on the NASDAQ NMS upon official notice of issuance.
6. Fifth Third's Trust Department, as the Exchange Agent, will acknowledge
in writing to Enterprise that it is in receipt of (i) certificates representing
a whole number of shares of Fifth Third Common Stock to be issued to the
shareholders of Enterprise pursuant to this Agreement, and (ii) sufficient cash
to be paid to the Enterprise shareholders for fractional shares.
VII. ADDITIONAL COVENANTS
A. The Thrift Subsidiary shall be merged with and into Fifth Third Bank, to
be effective on the Effective Time. The parties hereto agree to cooperate with
one another to effect such merger. Upon consummation of any merger of the Thrift
Subsidiary, the separate corporate existence of the Thrift Subsidiary shall
cease by operation of law.
B. 1. Fifth Third shall consider employing at Fifth Third or other Fifth
Third subsidiaries or affiliates as many of the Enterprise and Thrift Subsidiary
employees who desire employment within the Fifth Third holding company system as
possible, to the extent of available positions and consistent with Fifth Third's
standard staffing levels and personnel policies; provided that such continuing
employees will not be subject to any exclusion or penalty for pre-existing
conditions that were covered under the Thrift Subsidiary's medical plan
immediately prior to the Effective Time or any waiting period relating to
coverage under Fifth Third's medical plan.
2. Those employees of Enterprise and the Thrift Subsidiary who do not have
an employment or severance agreement and who are not to be employed by Fifth
Third or who are terminated or voluntarily resign after being notified that, as
a condition of employment, such employee must work at a location more than
thirty (30) miles from such employee's former location of
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employment or that such employee's salary will be decreased, in any case and in
both cases, within thirty (30) days after the Effective Time, and who sign and
deliver a termination and release agreement in the form attached as Appendix C
hereto, shall be entitled to severance pay equal to, in the case of officers and
all other exempt employees of Enterprise or the Thrift Subsidiary, two (2) weeks
of pay for each year of service up to a maximum of sixteen (16) weeks pay with a
minimum of two (2) weeks of pay; and in the case of all other employees two (2)
weeks of pay for each year of service up to a maximum of twelve (12) weeks pay
for these purposes and a minimum of two (2) weeks of pay; if there has been a
break in an employee's period of employment, the prior period shall be added to
the current period of employment. Fifth Third shall provide sufficient
notification to Enterprise of those employees it will not be hiring in order
that such employees terminated by Enterprise can be given appropriate notice of
termination in advance of the effectiveness thereof. Nothing contained in this
Paragraph VII.B.2 shall be construed or interpreted to limit or modify in any
way Fifth Third's at will employment policy.
3. Any officer of Enterprise or the Thrift Subsidiary who has an
employment or severance agreement with Enterprise or the Thrift Subsidiary as
of September 1, 1998 (each a "Contract Officer") shall receive as of the
Effective Time, the severance or termination payments provided for in their
respective employment agreements ("Contract Payments") (provided that the
Contract Payments owed under employment agreements which are defined as "base
salary and bonuses under employee benefit plans" shall be limited to be based
upon base salary and cash bonus payments actually paid to the employee and
shall not include ESOP distributions, profit sharing distributions, share
allocations on account of an RRP (as defined herein), automobile lease payment
reimbursements and other distributions of stock or retirement benefits paid to
the employee) and shall not receive any severance payments from Enterprise and
Fifth Third in connection with the Merger, pursuant to Section VII. B.2. As a
condition to receiving their Contract Payments each Contract Officer shall sign
and deliver to Fifth Third a termination and release agreement. All such
agreements shall be in the form attached hereto as Appendix C. Notwithstanding
the foregoing or any other provision of this Agreement, in no event shall any
Contract Officer receive any payment that would be considered an "Excess
Parachute Payment" pursuant to Section 280(G) of the Code.
C. (i) From and after the Effective Time, Fifth Third shall assume the
obligations of Enterprise and Thrift Subsidiary arising under applicable Ohio
and Federal law in existence as of the date hereof or as amended prior to the
Effective Time and under the Enterprise Articles of Incorporation and Code of
Regulations or Thrift Subsidiary Charter or Bylaws as in effect on the date
hereof to indemnify, defend and hold harmless each person who is now, or has
been at any time prior to the date hereof or who become, prior to the Effective
Time, an officer or director of Enterprise, Thrift Subsidiary, or any of their
subsidiaries (the "Indemnified Parties") against losses, claims, damages,
costs, expenses (including reasonable attorneys' fees), liabilities or
judgments or amounts that are paid in settlement (which settlement shall
require the prior written consent of Fifth Third) of or in connection with any
claim, action, suit, proceeding or investigation (a "Claim") in which an
Indemnified Party is, or is threatened to be made, a party or a witness based
in whole or in part on or arising in whole or in part out of the fact that such
person is or was a director or officer of Enterprise or the Thrift Subsidiary
if such Claim pertains to any matter or fact arising, existing or occurring
prior to the Effective Time (including, without limitation, the merger and the
transactions contemplated by this Agreement), regardless of
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whether such Claim is asserted or claimed prior to, at or after the Effective
Time. Fifth Third shall pay expenses in advance of the final disposition of any
such action or proceeding to each Indemnified Party to the full extent permitted
by law and under the Enterprise Articles of Incorporation or Code of Regulations
or Thrift Subsidiary's Charter or Bylaws. Fifth Third's assumption of the
indemnification obligations of Enterprise, Thrift Subsidiary or any of their
subsidiaries as provided herein shall continue for a period of three years after
the Effective Time or, in the case of claims asserted prior to the third
anniversary of the Effective Time until such matters are finally resolved. Any
Indemnified Party wishing to claim indemnification under this provision, upon
learning of any Claim shall notify Fifth Third (but the failure to so notify
Fifth Third shall not relieve Fifth Third from any liability which Fifth Third
may have under this section except to the extent Fifth Third is materially
prejudiced thereby). Notwithstanding the foregoing, the Indemnified Parties as a
group may retain only one law firm to represent them with respect to each matter
under this section unless there is, under applicable standards of professional
conduct, a conflict on any one significant issue between the positions of any
two or more Indemnified parties.
(ii) From and after the Effective Time, the directors, officers and
employees of Enterprise and its subsidiaries who become directors, officers or
employees of Fifth Third or any of its subsidiaries, except for the
indemnification rights set forth in subparagraph (i) above, shall have
indemnification rights with prospective application only. The prospective
indemnification rights shall consist of such rights to which directors, officers
or employees of Fifth Third or the subsidiary by which such person is employed
are entitled under the provisions of the Articles of Incorporation of Fifth
Third or similar governing documents of Fifth Third or its applicable
subsidiaries, as in effect from time to time after the Effective Time, as
applicable, and provisions of applicable law as in effect from time to time
after the Effective Time.
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(iii) The obligations of Fifth Third provided under this Section VII.C.
are intended to benefit, and be enforceable against Fifth Third directly by,
the Indemnified Parties, and shall be binding on all respective successors of
Fifth Third.
(iv) Fifth Third shall also purchase and keep in force for a three (3)
year period, a policy of directors' and officers' liability insurance to
provide coverage for acts or omissions of the type currently covered by
Enterprise's existing directors' and officers' liability insurance for acts or
omissions occurring on or prior to the Effective Time, but only to the extent
such insurance may be purchased or kept in full force on commercially
reasonable terms taking into account the cost thereof and the benefits provided
thereby. It is agreed that such costs shall be commercially reasonable so long
as they do not exceed 150% of the annual costs currently paid for such coverage
by Enterprise.
D. Fifth Third will not disclose to others, shall not use in respect of its
(or any of its subsidiaries) business operations, and will hold in confidence
any non-public, confidential information disclosed to it by Enterprise
concerning Enterprise or the Thrift Subsidiary. Enterprise will not disclose to
others, shall not use in respect of its (or any of its subsidiaries) business
operations, and will hold in confidence any non-public, confidential
information disclosed to it concerning Fifth Third or any of its affiliates. In
the event the Merger is not completed, all non-public financial statements,
documents and materials, and all copies thereof, shall be returned to
Enterprise or Fifth Third, as the case may be, and shall not be used by Fifth
Third or Enterprise, as the case may be, in any way detrimental to Enterprise
or Fifth Third.
E. All notices under this Agreement or under the Agreement of Merger shall
be in wiring and shall be sufficient in all respects if delivered in person or
mailed by certified mail, return receipt requested, with postage prepaid and
addressed, if to Enterprise to Mr. Otto L. Keeton, Enterprise Federal Bancorp,
Inc., 7810 Tylersville Square Drive, West Chester, Ohio 45069 with a copy to
Kevin Houlihan, Esq., Elias, Matz, Tiernan & Herrick L.L.P.,12th Floor,734 15th
Street, N.W., Washington, D.C. 20005; if to Fifth Third, to Mr. George A.
Schaefer, Jr., President and Chief Executive Officer, Fifth Third Bancorp, 38
Fountain Square Plaza, Cincinnati, Ohio 45263, with a copy to Paul L. Reynolds,
Esq., Senior Vice President and General Counsel, Fifth Third Bank, Legal
Division, 38 Fountain Square Plaza, 2nd Floor, Cincinnati, Ohio 45263. Such
notices shall be deemed to be received when delivered in person or when
deposited in the mail by certified mail, return receipt requested with postage
prepaid.
F. This Agreement, together with the written instruments specifically
referred to herein and such other written agreements delivered by Fifth Third
or Enterprise to each other pursuant hereto constitute the entire agreement
between the parties with regard to the transactions contemplated herein and
supersede any prior agreements, whether oral or in writing. This Agreement may
be hereafter amended only by a written instrument executed by each of the
parties pursuant to Section X hereof.
G. During the period from the date of this Agreement to the Effective Time,
except with the prior approval of Fifth Third, Enterprise shall not, and shall
not permit its representatives to, directly or indirectly, subject to the
exercise by the Directors of Enterprise of their fiduciary duties, initiate,
solicit, negotiate with, encourage discussions with, provide information to, or
agree to a transaction with, any
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corporation, partnership, person or other entity or group concerning any merger
of either Enterprise or the Thrift Subsidiary or any sale of substantial assets,
sale of shares of capital stock (or securities convertible or exchangeable into
or otherwise evidencing, or any agreement or instrument evidencing, the right to
acquire capital stock) or similar transaction involving Enterprise or the Thrift
Subsidiary (any such transaction being referred to herein as an "Acquisition
Transaction"). Subject to the exercise by the Directors of Enterprise of their
fiduciary duties, Enterprise promptly shall communicate to Fifth Third the terms
of any proposal which it may receive in respect of an Acquisition Transaction
and any request by or indication of interest on the part of any third party with
respect to initiation of any Acquisition Transaction or discussions with respect
thereto.
H. Fifth Third and Enterprise shall each indemnify and hold the other
harmless for any claim, liability or expense (including reasonable attorneys'
fees) arising from a misstatement or omission in the applications submitted to
regulatory agencies for approval of the transaction contemplated by this
Agreement relating to the indemnifying party which is based or made in reliance
upon any representation, warranty, or covenant of such party in this Agreement
or any certification, document, or other information furnished or to be
furnished by such party pursuant to this Agreement. From and after Closing
Date, this subsection shall be of no further force or effect.
I. Enterprise and the Thrift Subsidiary shall to continue operate under their
existing agreement with Midwest Payment Systems, Inc. ("MPS") by which MPS
performs all electronic funds transfer ("EFT") and related services and by which
Enterprise and the Thrift Subsidiary participate in the Jeanie(R) system. Such
Agreement provides that MPS will be the exclusive provider of such services to
Enterprise and the Thrift Subsidiary.
J. Fifth Third and Enterprise shall agree with each other as to the form and
substance of any press release related to this Agreement or the transactions
contemplated hereby and thereby, and shall consult with each other as to the
form and substance of other public disclosures related thereto, provided,
however, that nothing contained herein shall prohibit either party from making
any disclosure which its counsel deems required by law, and provided, further,
however, that Fifth Third shall not be required to incorporate any comments from
Enterprise into such releases or public filings unless determined to be
appropriate by Fifth Third in good faith.
K. Each party hereto shall bear and pay all costs and expenses incurred by
it in connection with the transactions contemplated by this Agreement,
including, without limitation, fees, costs and expenses of its own financial
consultants, investment bankers, accountants and counsel, without reduction or
modification in the number of shares of Fifth Third Common Stock to be issued
hereunder. The expenses of printing and mailing the prospectus/proxy statement
shall be paid by Fifth Third.
L. 1. Between the date hereof and the Closing Date, Enterprise shall
promptly advise Fifth Third in writing of any fact that, if existing or known
at the date hereof, would have been required to be set forth or disclosed in or
pursuant to this Agreement or of any fact that, if existing or known at the
date hereof, would have made any of the representations contained herein untrue
to any material extent, and which in each case, would be likely to have a
material adverse effect on Enterprise and its subsidiaries,
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taken as a whole, provided, however, that no such information so disclosed to
Fifth Third shall be deemed an exception to any representation, warranty or
covenant made by Enterprise unless Fifth Third, in its sole discretion, agrees
in writing to accept such exception.
2. Between the date hereof and the Closing Date, Fifth Third shall
promptly advise Enterprise in writing of any fact that, if existing or known at
the date hereof, would have been required to be set forth or disclosed in or
pursuant to this Agreement or of any fact that, if existing or known at the
date hereof, would have made any of the representations contained herein untrue
to any material extent, and which in each case, would be likely to have a
material adverse effect on Enterprise and its subsidiaries, taken as a whole,
provided, however, that no such information so disclosed to Enterprise shall be
deemed an exception to any representation, warranty or covenant made by Fifth
Third unless Enterprise, in its sole discretion, agrees in writing to accept
such exception.
VIII. TERMINATION
A. This Agreement may be terminated at any time prior to the Effective Time
by written notice delivered by Fifth Third to Enterprise or by Enterprise to
Fifth Third in the following instances:
1. By Fifth Third or Enterprise, if there has been to the extent
contemplated in Section VI.B.1. and 2. and Section VI.C.1. and 2. herein, a
material misrepresentation, a material breach of warranty or a material failure
to comply with any covenant on the part of the other party with respect to the
representations, warranties, and covenants set forth herein and such
misrepresentations, breach or failure to comply has not been cured (if capable
of cure) within thirty (30) days after receipt of written notice, provided, the
party in default shall have no right to terminate for its own default.
2. By Fifth Third or Enterprise, in each case taken as a whole, if the
business or assets or financial condition of the other party shall have
materially and adversely changed from that in existence at June 30, 1998, other
than any such change attributable to or resulting from any change in law,
regulation or GAAP, changes in interest rates, economic, financial or market
conditions affecting the banking or thrift industry generally or changes that
may occur as a consequence of actions or inactions that either party hereto is
expressly obligated to take under this Agreement.
3. By Fifth Third or Enterprise, if the merger transaction contemplated
herein has not been consummated by June 30, 1999, provided the terminating party
is not in material breach or default of any representations, warranty or
covenant contained herein on the date of such termination.
4. By the mutual written consent of Fifth Third and Enterprise.
5. By Fifth Third if any event occurs which renders impossible of
satisfaction in any material respect one or more of the conditions to the
obligations of Fifth Third to effect the Merger set forth in Sections VI.A. and
B. herein and non-compliance is not waived by Fifth Third.
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6. By Enterprise if any event occurs which renders impossible of
satisfaction in any material respect one or more of the conditions of the
obligations of Enterprise to effect the Merger as set forth in Sections VI.A.
and C. herein and non-compliance is not waived by Enterprise.
B. If Enterprise shareholders, acting at a meeting held for the purpose of
voting upon this Agreement and the Agreement of Merger, fail to approve such
agreements in the manner required by law, then this Agreement and the Agreement
of Merger shall be deemed to be automatically terminated, provided that
Enterprise must be in compliance with Article IV Section A hereof.
C. Upon termination as provided in this Section, this Agreement and the
Agreement of Merger, except for the provisions of Paragraphs D, H, J and K of
Section VII hereof shall be void and of no further force or effect, and, except
as provided in Paragraph H of Section VII hereof, neither party hereto not in
material breach or default of its representations, warranties and covenants
hereunder shall have any liability of any kind to the other party including but
not limited to liability for expenses incurred by the other party in connection
with this transaction; provided that no such termination shall relieve a
breaching party from liability for any uncured willful breach of a covenant,
undertaking, representation or warranty giving rise to such termination.
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IX. CLOSING AND EFFECTIVE TIME
The consummation of the transactions contemplated by this Agreement shall take
place at a closing to be held at the offices of Fifth Third in Cincinnati, Ohio
on a Friday which is as soon as is reasonably possible following the date that
all of the conditions precedent to closing set forth in Section VI hereof,
including the waiting period required by any banking or bank holding company
regulatory agency after its approval of the Merger is issued before the
transaction may be consummated, have been fully met or effectively waived (the
"Closing Date"). Pursuant to the filing of articles or a certificate of merger
(which shall be acceptable to Enterprise and Fifth Third) with the Secretary of
the State of Ohio in accordance with law and this Agreement, the Merger provided
for herein shall become effective at the close of business on said day (the
"Effective Time"). By mutual agreement of the parties, the closing may be held
at any other time or place or on any other date and the effectiveness of the
Merger (and the Effective Time) may be changed by such mutual agreement. None of
the representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time, except for agreements of the parties which by their terms are intended to
be performed after the Effective Time.
X. AMENDMENT
This Agreement may be amended, modified or supplemented by the written agreement
of Enterprise and Fifth Third upon the authorization of each company's
respective Board of Directors at any time before or after approval of the Merger
and this Agreement by the shareholders of Enterprise, but after any such
approval by the shareholders of Enterprise no amendment shall be made (without
further shareholder approval) which changes in any manner adverse to such
shareholders the consideration to be provided to such shareholders pursuant to
this Agreement and the Agreement of Merger.
XI. GENERAL
This Agreement was made in the State of Ohio and shall be interpreted under the
laws of the United States and the State of Ohio. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns but except as
specifically set forth herein none of the provisions hereof shall be binding
upon and inure to the benefit of any other person, firm or corporation
whomsoever. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned or transferred by operation of law or
otherwise by any party hereto without the prior written consent of the other
party hereto; provided, however, that the merger or consolidation of Fifth Third
shall not be deemed an assignment hereunder if Fifth Third is the surviving
corporation in such merger or consolidation and Fifth Third Common Stock shall
thereafter continue to be publicly traded and issuable to Enterprise
shareholders pursuant to the terms of this Agreement.
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XII. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original for all purposes but such counterparts taken
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Affiliation Agreement
as of the date hereinabove set forth.
FIFTH THIRD BANCORP
(SEAL) By: /s/ ROBERT P. NIEHAUS
----------------------------------
Robert P. Niehaus
Executive Vice President
Attest: /s/ PAUL L. REYNOLDS
----------------------------------
Paul L. Reynolds
Assistant Secretary
ENTERPRISE FEDERAL BANCORP, INC.
(SEAL) By: /s/ OTTO L. KEETON
----------------------------------
Name: Otto L. Keeton
Title: President
Attest: /s/ THOMAS J. NOE
---------------------------------
Name: Thomas J. Noe
Title: Chief Financial Officer
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APPENDIX A
[Substantive Provisions of Legal Opinion to be provided by
______________________ may be issued in ABA Opinion Accord format]
_________, 1998
Fifth Third Bancorp
38 Fountain Square Plaza
Cincinnati, Ohio 45263
Gentlemen:
[Introductory Paragraph to be included]
We are of the opinion that:
1. Enterprise Federal Bancorp, Inc. ("Enterprise") is duly incorporated,
validly existing and in good standing as a corporation under the corporate
laws of the State of Ohio and has all the requisite corporate power and
authority to consummate the Merger.
2. Enterprise is a registered savings and loan holding company under the Home
Owners' Loan Act, 12 U.S.C. Sections 1467a et seq., as amended, and has
all requisite corporate power and authority to conduct the business in
which it is engaged as such business is described in Enterprise's Annual
Report on Form 10-K for the year ended June 30, 1998.
3. Enterprise Federal Savings Bank ("Thrift Subsidiary") is duly incorporated
and validly existing as a federal savings bank organized and existing
under the laws of the United Sates and has all the requisite corporate
power and authority to conduct the savings bank business in which it is
engaged as such business is described in Enterprise's Annual Report on
Form 10-K for the year ended June 30, 1998.
4. The Affiliation Agreement and the Merger have been duly approved and
adopted by the Board of Directors and shareholders of Enterprise as
required by law and by the Articles of Incorporation and Code of
Regulations of Enterprise.
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5. The Affiliation Agreement has been duly executed and delivered by
Enterprise and (assuming due approval and execution thereof by Fifth
Third) constitutes the valid and binding obligation of Enterprise
enforceable against Enterprise in accordance with their respective
terms, except to the extent that (i) enforceability thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance of other laws relating to or from time to time
affecting the enforcement of creditors' rights generally or the rights
of creditors of savings and loan holding companies, the accounts of
whose subsidiaries are insured by the Federal Deposit Insurance
Corporation and (ii) the availability of certain remedies may be
precluded by general principles of equity.
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6. The execution, delivery and performance of the Affiliation Agreement does
not violate (i) the Articles of Incorporation or Code of Regulations of
Enterprise, or (ii) the Federal Stock Charter or Bylaws of Thrift
Subsidiary.
7. All issued and outstanding shares of the capital stock of Enterprise have
been duly authorized and validly issued (assuming the receipt of proper
consideration therefor) and are nonassessable. To our actual knowledge,
Enterprise owns of record all of the ____ outstanding shares of the
capital stock of Thrift Subsidiary.
8. To our actual knowledge, all approvals required to be obtained by
Enterprise or Thrift Subsidiary in connection with the Merger provided for
in the Affiliation Agreement have been obtained from the appropriate
regulatory authorities.
Very truly yours,
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APPENDIX B
Paul L. Reynolds
Counsel
______________, 1998
Enterprise Federal Bancorp, Inc.
7810 Tylersville Square Drive
West Chester, Ohio 45069
Gentlemen:
The undersigned has acted as counsel to Fifth Third Bancorp in connection with
the transactions provided for in the Affiliation Agreement dated as of
___________________, 1998, ("Affiliation Agreement") by and between Fifth Third
Bancorp ("Fifth Third") and Enterprise Federal Bancorp, Inc. ("Enterprise").
This opinion is rendered to you pursuant to paragraph 3 of Section VI.C. of the
Affiliation Agreement.
I have examined and are familiar with originals or copies, certified or
otherwise, identified to our satisfaction, of such statutes, regulations,
documents, corporate records, and certificates of public officials and corporate
officers as we have deemed necessary for the purposes of this opinion, including
but not limited to the following: (a) the Second Amended Articles of
Incorporation of Fifth Third, as amended; (b) the Code of Regulations, as
amended, of Fifth Third; and, (c) the record of all actions taken by the Board
of Directors and Executive Committee of the Board of Directors of Fifth Third in
connection with any matters covered by this opinion.
I have made such examination of Ohio and Federal law as I deem relevant for the
purposes of this opinion, but I have not made any review of the laws of any
state other than Ohio. Accordingly, I express no opinion as to the laws of any
state or jurisdiction other than the United States of America and the State of
Ohio.
Based upon and subject to the foregoing, I am of the opinion that:
1. Fifth Third is duly incorporated, validly existing and in good standing as
a corporation under the laws of Ohio, and has all the requisite power and
authority to consummate the transactions provided for in the Affiliation
Agreement and the Agreement of Merger. Fifth Third is a registered bank
holding company under the Bank Holding
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Company Act of 1956, as amended, 12 U.S.C. Section 1841 et seq., and has
all requisite corporate power and authority to conduct the business in
which it is engaged and as now conducted by it.
2. The Affiliation Agreement and the transactions provided for therein have
been duly approved by the Directors of Fifth Third, and no action is
required to be taken by the shareholders of Fifth Third to authorize,
approve or adopt the Affiliation Agreement or the transactions provided
for therein.
3. The Affiliation Agreement has been duly executed and delivered by Fifth
Third and constitutes the valid and binding obligation of Fifth Third
enforceable against Fifth Third in accordance with its respective
terms, except to the extent that (i) enforceability thereof may be
limited by bankruptcy, insolvency, moratorium, fraudulent conveyance or
other laws relating to or from time to time affecting the enforcement
of creditors' rights generally or the rights of creditors of bank
holding companies, the accounts of whose subsidiaries are insured by
the Federal Deposit Insurance Corporation and (ii) the availability of
certain remedies may be precluded by general principles of equity.
4. Fifth Third has taken all necessary and required corporate action to
authorize the issuance or transfer of the shares of its Common Stock to
be received by holders of the Common Stock of Enterprise as a result of
the merger of Enterprise with and into Fifth Third and, when so issued
or transferred, such shares will be legally and validly issued and
outstanding, fully paid and nonassessable and will not upon such
transfer or issuance be subject to the preemptive rights of any
shareholder of Fifth Third, and such shares have been registered under
the Securities Act of 1933, as amended.
5. The registration statement filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, Registration
No. ________ (the "Registration Statement"), by Fifth Third to register
the shares of Common Stock of Fifth Third being offered to the
shareholders of Enterprise in the merger provided for in the
Affiliation Agreement and the Agreement of Merger has been declared
effective and no stop order has been issued and no proceeding for the
purpose has been initiated or, to my best knowledge, contemplated or
threatened by the Securities and Exchange Commission.
6. The Registration Statement and the Proxy Statement/Prospectus included
therein at the time it became effective complied as to form with the
Securities Act of 1993, as amended, and the rules and regulations
thereunder.
7. All necessary approvals for the transactions provided for in the
Affiliation Agreement and the Agreement of Merger have been obtained from
the appropriate regulatory authorities.
Very truly yours,
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FIFTH THIRD BANCORP
Paul L. Reynolds
Counsel
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APPENDIX C
SEPARATION AGREEMENT AND
GENERAL RELEASE OF ALL CLAIMS
[Form for Employees 40 and over]
In consideration of the mutual covenants contained herein, the sufficiency of
which are hereby acknowledged, _______________________ ("you") and Fifth Third
Bank, including its officers, directors and predecessor, Enterprise Federal
Bancorp, Inc. and its subsidiaries and affiliates (collectively, "Fifth Third")
agree as follows:
Your job assignments are eliminated as of ________, 199__. As a severance
package, you are being offered _____________________________.
If you choose this, your written acceptance of this Agreement must be returned
to _____________ no later than 8:00 a.m. on _________________________ ,199__. If
you observe these conditions and sign this Agreement, the terms and conditions
hereof become effective seven days after you sign this Agreement because you
have a right to revoke your consent during the seven day period after signing.
You are advised to consult with personal counsel of your choice before acting on
this Agreement.
If you choose this, you also agree to fully cooperate with Fifth Third and its
customers through the date that your job will be eliminated as described above.
If you fail to cooperate to Fifth Third's satisfaction as reasonably determined
by Fifth Third, you will be deemed to have voluntarily resigned your position,
and the waiver and releases in favor of Fifth Third in this Agreement shall
remain in full force and effect.
As additional consideration for receipt of the severance package, you, on your
behalf and on behalf of your heirs, executors, successors, and assigns hereby
release Fifth Third, as well as all of its officers, directors, executives,
managers and employees, from any and all debts, claims, demands, rights,
actions, causes of action, suits, or damages, whatsoever and of every kind of
nature, whether known or unknown (collectively the "Claims"), against Fifth
Third and the others released herein, which relate to or arose from your
separation from Fifth Third as contemplated herein except to the extent such
Claims cannot under applicable law be released. You also covenant not to sue or
file or cause to be filed in any complaint with any federal, state or local
agency or in any court against Fifth Third, or the others released herein,
regarding any matter related to your separation from employment with Fifth
Third, including but not limited to any Claims which you may have under Federal
Law or any similar Ohio law, with respect to such separation, except to the
extent such Claims cannot under applicable law be released.
You agree that apart from your discussions with your personal counsel and your
immediate family, whom you will ask not to divulge the terms of this Agreement,
you will not disclose, publicize or discuss either the terms of this Agreement
or your employment with and termination from Fifth Third with anyone within or
outside of Fifth Third unless required by subpoena or any other legal
compulsion,
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and you will give immediate notice to Fifth Third of the receipt of
any subpoena or other legal document which might call upon you to disclose
either any of the contents of this Agreement or your employment with and
termination from Fifth Third.
You represent and warrant that you have returned to Fifth Third the original and
any copies of all keys, Fifth Third identification cards, charge cards,
equipment, papers, reports, memorandum or other items of Fifth Third property on
__________, 199__. You acknowledge that Fifth Third has returned to you all
items of your personal property.
You and Fifth Third recognize and agree that nothing in this Agreement
constitutes an admission of liability or wrongdoing by you or by Fifth Third or
any of the others released herein.
Signed this ___ day of ____________, 199___.
Witnessed and accepted:
ACCEPTED AND AGREED TO: THE FIFTH THIRD BANK
- ------------------------------
(NAME) BY:
-----------------------------
DATE:
-----------------------------
Effective Date:_______, 199_ Effective Date: ___________, 199__
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SEPARATION AGREEMENT AND
GENERAL RELEASE OF ALL CLAIMS
[Form for Employees under 40]
In consideration of the mutual covenants contained herein, the sufficiency of
which are hereby acknowledged, __________________ ("you") and Fifth Third Bank,
including its officers, directors and predecessor, Enterprise Federal Bancorp,
Inc. and its subsidiaries and affiliates, (collectively, "Fifth Third") agree as
follows:
Your job assignments are eliminated as of ________, 199__. As a severance
package, you are being offered _________________________________.
If you choose this, your written acceptance of this Agreement must be returned
to _____________ no later than 8:00 a.m. on _________________________ ,199__.
If you choose this, you also agree to fully cooperate with Fifth Third and its
customers through the date that your job will be eliminated as described above.
If you fail to cooperate to Fifth Third's satisfaction as reasonably determined
by Fifth Third, you will be deemed to have voluntarily resigned your position,
and the waiver and releases in favor of Fifth Third in this Agreement shall
remain in full force and effect.
As additional consideration for receipt of the severance package, you, on your
behalf and on behalf of your heirs, executors, successors, and assigns hereby
release Fifth Third, as well as all of its officers, directors, executives,
managers and employees, from any and all debts, claims, demands, rights,
actions, causes of action, suits, or damages, whatsoever and of every kind of
nature, whether known or unknown (collectively the "Claims"), against Fifth
Third and the others released herein, which relate to or arose from your
separation from Fifth Third as contemplated herein except to the extent such
Claims cannot under applicable law be released. You also covenant not to sue or
file or cause to be filed in any complaint with any federal, state or local
agency or in any court against Fifth Third, or the others released herein,
regarding any matter related to your separation from employment with Fifth
Third, including but not limited to any Claims which you may have under Federal
Law or any similar Ohio law, with respect to such separation, except to the
extent such Claims cannot under applicable law be released.
You agree that apart from your discussions with your personal counsel and your
immediate family, whom you will ask not to divulge the terms of this Agreement,
you will not disclose, publicize or discuss either the terms of this Agreement
or your employment with and termination from Fifth Third with anyone within or
outside of Fifth Third unless required by subpoena or any other legal
compulsion, and you will give immediate notice to Fifth Third of the receipt of
any subpoena or other legal document which might call upon you to disclose
either any of the contents of this Agreement or your employment with and
termination from Fifth Third.
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You represent and warrant that you have returned to Fifth Third the original and
any copies of all keys, Fifth Third identification cards, charge cards,
equipment, papers, reports, memorandum or other items of Fifth Third property on
__________, 199__. You acknowledge that Fifth Third has returned to you all
items of your personal property.
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You and Fifth Third recognize and agree that nothing in this Agreement
constitutes an admission of liability or wrongdoing by you or by Fifth Third or
any of the others released herein.
Signed this ___ day of ____________, 199___.
Witnessed and accepted:
ACCEPTED AND AGREED TO:
FIFTH THIRD BANK
- ------------------------------
(NAME) BY:
------------------------------
DATE:
------------------------------
Effective Date: ________ , 199_ Effective Date: ___________, 199_
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APPENDIX D
_______________, 1998
Fifth Third Bancorp
38 Fountain Square Plaza
Cincinnati, Ohio 45263
Ladies and Gentlemen:
I have been advised that I may be deemed to be, but do not admit that I
am, an "affiliate" of Enterprise Federal Bancorp, Inc., an Ohio corporation
("Enterprise") as that term is defined in Rule 145 promulgated by the Securities
and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended
(the "Securities Act"), and/or in SEC Accounting Series Releases 130 and 135. I
understand that pursuant to the terms of the Affiliation Agreement dated as of
September 25, 1998 (the "Affiliation Agreement"), by and between Enterprise and
Fifth Third Bancorp, an Ohio corporation ("Fifth Third"), Enterprise plans to
merge with and into Fifth Third (the "Merger").
I further understand that as a result of the Merger, I may receive shares
of common stock, no par value per share, of Fifth Third ("Fifth Third Stock")
(i) in exchange for shares of common stock, par value $.01 per share, of
Enterprise ("Enterprise Stock") or (ii) as a result of the exercise of options
or other securities or obligations convertible into or exercisable or
exchangeable for, or giving me the right to subscribe for or acquire, capital
stock of Fifth Third or Enterprise.
I have carefully read this letter and reviewed the Affiliation Agreement
and discussed their requirements and other applicable limitations upon my
ability to sell, transfer, or otherwise dispose of Fifth Third Stock and
Enterprise Stock, to the extent I felt necessary, with my counsel or counsel for
Enterprise.
I represent, warrant and covenant with and to Fifth Third that in the
event I receive any Fifth Third Stock as a result of the Merger:
1. I shall not make any sale, transfer, or other disposition of such Fifth
Third Stock unless (a) such sale, transfer or other disposition has been
registered under the Securities Act, (b) such sale, transfer or other
disposition is made in conformity with the provisions of
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Rule 145 under the Securities Act (as such rule may be amended from time
to time), or (c) in the opinion of counsel in form and substance
reasonably satisfactory to Fifth Third, or under a "no-action" letter
obtained by me from the staff of the SEC, such sale, transfer or other
disposition will not violate or is otherwise exempt from registration
under the Securities Act.
2. I understand that Fifth Third is under no obligation to register the sale,
transfer or other disposition of shares of Fifth Third Stock by me or on
my behalf under the Securities Act or to take any other action necessary
in order to make compliance with an exemption from such registration
available.
3. I understand that stop transfer instructions will be given to Fifth
Third's transfer agent with respect to the shares of Fifth Third Stock
issued to me as a result of the Merger and that there will be placed on
the certificates for such shares, or any substitutions therefor, a legend
stating in substance:
"The shares represented by this certificate were issued in a
transaction to which Rule 145 promulgated under the Securities Act
applies. The shares represented by this certificate may be
transferred only in accordance with the terms of a letter agreement
between the registered holder hereof and Fifth Third, a copy of
which agreement is on file at the principal offices of Fifth Third."
4. I understand that, unless transfer by me of the Fifth Third Stock issued
to me as a result of the Merger has been registered under the Securities
Act or such transfer is made in conformity with the provisions of Rule
145(d) under the Securities Act, Fifth Third reserves the right, in its
sole discretion, to place the following legend on the certificates issued
to my transferee:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933 and were acquired from a person who
received such shares in a transaction to which Rule 145 under the
Securities Act of 1933 applies. The shares have been acquired by the
holder not with a view to, or for resale in connection with, any
distribution thereof within the meaning of the Securities Act of
1933 and may not be offered, sold, pledged or otherwise transferred
except in accordance with an exemption from the registration
requirements of the Securities Act of 1933."
It is understood and agreed that the legends set forth in paragraphs (3)
and (4) above shall be removed by delivery of substitute certificates without
such legend if I shall have delivered to Fifth Third (a) a copy of a "no action"
letter from the staff of the SEC, or an opinion of counsel in form and substance
reasonably satisfactory to Fifth Third, to the effect that such legend is not
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required for purposes of the Act, or (b) evidence or representations
satisfactory to Fifth Third that the Fifth Third Stock represented by such
certificates is being or has been sold in conformity with the provisions of Rule
145(d).
I further represent, warrant and covenant with and to Fifth Third that I
will not sell, transfer or otherwise dispose of, or reduce my risk relative to,
any shares of Enterprise Stock or Fifth Third Stock (whether or not acquired by
me in the Merger) during the period commencing 30 days prior to the effective
date of the Merger and ending at such time as Fifth Third notifies me that
results covering at least 30 days of combined operations of Enterprise and Fifth
Third after the Merger have been published by Fifth Third. I understand that
Fifth Third is not obligated to publish such combined financial results except
in accordance with its normal financial reporting practice.
I further understand and agree that this letter agreement shall apply to
all shares of Enterprise Stock and Fifth Third Stock that I am deemed to
beneficially own pursuant to applicable federal securities laws.
I also understand that the Merger is intended to be treated as a "pooling
of interests" for accounting purposes, and I agree that if Enterprise or Fifth
Third advises me in writing that additional restrictions apply to my ability to
sell, transfer, or otherwise dispose of Enterprise Stock or Fifth Third Stock in
order for Fifth Third to be entitled to use the pooling of interests accounting
method, I will abide by such restrictions.
Very truly yours,
By
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Name
--------------------------
Accepted this ____ day of _______________, 1998
FIFTH THIRD BANCORP
By:
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Name:
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Title:
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