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AMENDED AND RESTATED AGREEMENT OF AFFILIATION AND MERGER
THIS AMENDED AND RESTATED AGREEMENT OF AFFILIATION AND MERGER
("Agreement"), dated as of this 12th day of March, 1998, by and among BLUE
RIVER BANCSHARES, INC. ("Blue River"), SHELBY COUNTY BANCORP ("Shelby County")
and SHELBY COUNTY SAVINGS BANK, FSB ("SCSB"), being parties to a certain
Agreement of Affiliation and Merger dated as of February 5, 1998 (the "Prior
Agreement"), agree to amend and restate the Prior Agreement in its entirety to
read as follows:
W I T N E S S E T H:
WHEREAS, Blue River is an Indiana corporation with its principal
office located in Shelbyville, Shelby County, Indiana; and
WHEREAS, Shelby County is an Indiana corporation registered as a
savings and loan holding company under the Home Owners' Loan Act, as amended
("HOLA"), with its principal office located in Shelbyville, Shelby County,
Indiana; and
WHEREAS, SCSB is a federally chartered savings bank and a wholly-owned
subsidiary of Shelby County with its principal office located in Shelbyville,
Shelby County, Indiana; and
WHEREAS, a majority of the Board of Directors of Blue River and a
majority of the Board of Directors of Shelby County have approved this
Agreement, have authorized its execution and delivery, and have designated this
Agreement as a plan of merger.
NOW, THEREFORE, in consideration of the foregoing premises, the
representations, warranties, covenants and mutual obligations herein contained
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Blue River, Shelby County and SCSB hereby agree as
follows:
SECTION 1
THE MERGER
1.01. General Description. Upon the terms and subject to the
conditions of this Agreement, Shelby County shall be merged into Blue River
("Merger"). Blue River shall survive the Merger ("Surviving Corporation") and
shall continue its corporate existence under the laws of the State of Indiana
and pursuant to the provisions of and with the effect provided in the Indiana
Business Corporation Law, as amended. Upon consummation of the Merger, SCSB
shall be a wholly-owned subsidiary of Blue River.
1.02 Name and Offices. The name of the Surviving Corporation shall
be "Blue River Bancshares, Inc." Its principal office shall be located at 29
East Washington Street, Shelbyville, Indiana 46176.
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1.03 Directors and Officers. (a) Surviving Corporation. The Board
of Directors of the Surviving Corporation, until such time as their respective
successors have been elected and have qualified, shall consist of the directors
of Blue River serving immediately prior to the Effective Time (as hereinafter
defined). The officers of the Surviving Corporation shall consist of the
officers of Blue River serving immediately prior to the Effective Time until
the Board of Directors of the Surviving Corporation shall elect new or
successor officers.
(b) SCSB. The Board of Directors of SCSB following the Effective
Time, until such time as their respective successors have been elected and
qualified, shall consist of those persons who are serving as directors of Blue
River immediately prior to the Effective Time. The officers of SCSB serving
immediately prior to the Effective Time shall be the officers of SCSB following
the Effective Time until the Board of Directors of SCSB shall elect new or
successor officers. In addition, as of the Effective Time, Rodney L.
Meyerholtz shall resign as President and Chief Executive Office of SCSB, and
Robert C. Reed shall be elected as the President and Chief Executive Officer of
SCSB and shall serve in such positions until such time as his successor has
been duly elected and qualified.
(c) Term of Office. All directors and officers of the Surviving
Corporation and SCSB shall serve for a term and otherwise be subject to the
qualification and other requirements for directors and officers of the
Surviving Corporation and SCSB, respectively, as set forth in their respective
Articles of Incorporation, Charter or By-Laws in effect from time to time.
1.04 Capital Structure. The capital of the Surviving Corporation
shall not be less than the capital of Blue River immediately prior to the
Effective Time. The issued and outstanding shares of common stock of Blue
River immediately prior to the Effective Time shall remain issued and
outstanding following the Effective Time.
1.05 Articles of Incorporation; Charter and By-Laws. The Articles
of Incorporation and By-Laws of Blue River in existence at the Effective Time
shall be the Articles of Incorporation and By-Laws of the Surviving Corporation
following the Effective Time until such Articles of Incorporation and By-Laws
shall be amended as provided by applicable law. The Charter and By-Laws of
SCSB in existence at the Effective Time shall be the Charter and By-Laws of
SCSB following the Effective Time until such time as such Charter and By-Laws
shall be amended as provided by applicable law.
1.06 Effect of Merger. The effect of the Merger upon consummation
thereof shall be as set forth in Indiana Code Section 23-1-40-6, as amended.
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SECTION 2
MANNER AND BASIS
OF CONVERSION OF STOCK
2.01. Conversion of Shelby County Common Stock. Upon and by virtue
of the Merger becoming effective at the Effective Time, each issued and
outstanding share of Shelby County Common Stock shall be converted into the
right to receive a cash amount equal to Fifty-Eight Dollars ($58.00)
("Conversion Price").
2.02. Distribution of Cash. (a) Promptly but not more than fifteen
(15) days following the Effective Time, the conversion agent designated by Blue
River with the prior approval of Shelby County which approval shall not be
unreasonably withheld ("Conversion Agent") shall mail to each Shelby County
shareholder a letter of transmittal providing instructions as to the
transmittal to Blue River of certificates formerly representing shares of
Shelby County Common Stock and the payment of cash in exchange therefor
pursuant to the terms of this Agreement.
(b) Following the Effective Time, the Conversion Agent, on behalf
of Blue River, shall distribute the cash payment, without interest, required by
Section 2.01 hereof to each holder of Shelby County Common Stock of record at
the Effective Time within twenty (20) business days following receipt by the
Conversion Agent of the shareholder's certificate(s) formerly representing such
shareholder's shares of Shelby County Common Stock together with a properly
completed and executed letter of transmittal, all in form and substance
reasonably satisfactory to the Surviving Corporation.
(c) Following the Effective Time, stock certificates formerly
representing Shelby County Common Stock held by shareholders of Shelby County
shall be deemed to evidence only the right to receive cash, without interest
thereon, pursuant to Section 2.01 hereof.
(d) Blue River shall be entitled to rely upon the stock transfer
books and records of Shelby County to establish the persons entitled to receive
the cash payment pursuant to this Agreement, which books, in the absence of
actual knowledge by Blue River of any adverse claim thereto, shall be
conclusive with respect to the ownership of shares of Shelby County Common
Stock.
(e) With respect to any certificate for shares of Shelby County
Common Stock which has been lost, stolen or destroyed, Blue River shall be
authorized to pay the cash amount required by Section 2.01 hereof to the
registered owner of such certificate upon Blue River's receipt of an agreement
to indemnify Blue River against loss from such lost, stolen or destroyed
certificate, an affidavit of lost, stolen or destroyed stock certificate and,
if necessary in Blue River's reasonable discretion, a bond, all in form and
substance reasonably satisfactory to Blue River, and upon compliance by the
shareholder of Shelby County with all other reasonable requirements of Blue
River in connection with lost, stolen or destroyed stock certificates.
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SECTION 3
DISSENTING SHAREHOLDERS
Shareholders of Shelby County who properly exercise and perfect
statutory dissenters' rights shall have the rights accorded to dissenting
shareholders under Chapter 23-1-44 of the Indiana Code, as amended.
SECTION 4
REPRESENTATIONS AND WARRANTIES
OF SHELBY COUNTY AND SCSB
Each of Shelby County and SCSB hereby represents and warrants to Blue
River with respect to itself, the other, The Shelby Group, Inc. ("Shelby
Group") and First Tier One Corporation ("First Tier") as follows as of February
5, 1998:
4.01. Organization and Authority. (a) Shelby County is a
corporation duly organized and validly existing under the laws of the State of
Indiana and is a savings and loan holding company under the HOLA. Shelby
County has full power and authority (corporate and otherwise) to own and lease
its properties as presently owned and leased and to conduct its business in the
manner and by the means utilized as of the date hereof. Shelby County has no
direct subsidiaries and owns directly no voting stock or equity securities of
any corporation, partnership, association or other entity, other than all of
the issued and outstanding common stock of SCSB. The Shelby County Common
Stock is the only class of Shelby County stock and is registered pursuant to
Section 12 of the Securities Exchange Act of 1934, as amended ("1934 Act").
(b) SCSB is a federally chartered savings bank duly organized and
validly existing under the laws of the United States of America. SCSB has full
power and authority (corporate and otherwise) to own and lease its properties
as presently owned and leased and to conduct its business in the manner and by
the means utilized as of the date hereof. Except for shares of common stock of
the Federal Home Loan Bank of Indianapolis, Shelby Group and First Tier and
except as provided in the Disclosure Schedule, SCSB has no subsidiaries and
owns no voting stock or equity securities of, or any interest in, any
corporation, partnership, association or other entity. SCSB is subject to
primary federal regulatory supervision and examination by the Office of Thrift
Supervision ("OTS").
(c) Shelby Group is an Indiana corporation duly organized and
validly existing under the laws of the State of Indiana. Shelby Group has full
power and authority (corporate and otherwise) to own and lease its properties
as presently owned and leased and to conduct its business in the manner and by
the means utilized as of the date hereof. SCSB owns all of the issued and
outstanding shares of capital stock of Shelby Group. Shelby Group has no
subsidiaries and owns no voting stock or equity securities of or any interest
in, any corporation, partnership, association or other entity.
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(d) First Tier is an Indiana corporation duly organized and
validly existing under the laws of the State of Indiana. First Tier has full
power and authority (corporate and otherwise) to own and lease its properties
as presently owned and leased and to conduct its business in the manner and by
the means utilized as of the date hereof. SCSB owns all of the issued and
outstanding shares of capital stock of First Tier. First Tier has no
subsidiaries and owns no voting stock or equity securities of or any interest
in, any corporation, partnership, association or other entity. Shelby Group
and First Tier are sometimes hereinafter referred to collectively as the
"Subsidiaries."
4.02. Authorization. (a) Each of Shelby County and SCSB has the
requisite corporate power and authority to enter into this Agreement and to
perform its obligations hereunder, subject to the fulfillment of the conditions
precedent set forth in Section 8.02 hereof. This Agreement and its execution
and delivery by Shelby County and SCSB have been duly authorized and approved
by the Board of Directors of Shelby County and SCSB, respectively. This
Agreement constitutes a valid and binding obligation of Shelby County and SCSB
and is enforceable in accordance with its terms, except to the extent limited
by general principles of equity and public policy and by bankruptcy,
insolvency, fraudulent transfer, reorganization, liquidation, moratorium,
readjustment of debt or other laws of general application relating to or
affecting the enforcement of creditors' rights.
(b) Neither the execution of this Agreement nor consummation of
the Merger (i) conflicts with or violates Shelby County's Articles of
Incorporation or By-Laws or SCSB's Charter or By-Laws; (ii) conflicts with or
violates any local, state, federal or foreign law, statute, ordinance, rule or
regulation (provided that the approvals of or filings with applicable
government regulatory agencies or authorities required for consummation of the
Merger are obtained) or any court or administrative judgment, order,
injunction, writ or decree; (iii) conflicts with, results in a breach of or
constitutes a default under any note, bond, indenture, mortgage, deed of trust,
license, lease, contract, agreement, arrangement, commitment or other
instrument to which Shelby County, SCSB or either of the Subsidiaries is a
party or by which SCSB, Shelby County or either of the Subsidiaries is subject
or bound and which is material to Shelby County or SCSB, whether individually
or on a consolidated basis, or Shelby Group or First Tier on a consolidated
basis with Shelby County; (iv) results in the creation of or gives any person,
corporation or entity the right to create any material lien, charge, claim,
encumbrance or security interest, or results in the creation of any other
material rights or claims of any other party or any other material adverse
interest, upon any right, property or asset of Shelby County, SCSB or either of
the Subsidiaries; or (v) terminates or gives any person, corporation or entity
the right to terminate, accelerate, amend, modify or refuse to perform under
any note, bond, indenture, mortgage, deed of trust, license, lease, contract,
agreement, arrangement, commitment or other instrument to which Shelby County,
SCSB or either of the Subsidiaries is bound or with respect to which Shelby
County, SCSB or either of the Subsidiaries is to perform any duties or
obligations or receive any rights or benefits.
(c) Other than in connection or in compliance with the provisions
of the applicable federal and state banking, thrift, securities and corporation
statutes, all as amended, and the rules and regulations promulgated thereunder,
no notice to, filing with, exemption by or consent, authorization
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or approval of any governmental agency or body is necessary for the
consummation of the Merger by Shelby County and SCSB, respectively.
4.03. Capitalization. (a) The authorized capital stock of Shelby
County consists, and at the Effective Time will consist, of (i) 5,000,000
shares of common stock, no par value per share, 175,950 of which shares are
validly issued and outstanding, which number of issued and outstanding shares
of Shelby County Common Stock is subject to increase to a total of 189,750
shares pursuant to the exercise of options (collectively, the "Stock Options")
granted under the Shelby County Bancorp Stock Option Plan ("Stock Option Plan")
to purchase an aggregate of 13,800 shares of Shelby County Common Stock (the
shares of common stock outstanding on the date of this Agreement and the shares
of common stock to be issued pursuant to the exercise of the Stock Options are
referred to in this Agreement as the "Shelby County Common Stock") and (ii)
2,000,000 shares of "blank check" preferred stock, none of which shares are
issued or outstanding. The shares of Shelby County Common Stock presently
issued and outstanding have been (and with respect to the shares of common
stock of Shelby County to be issued upon exercise of the Stock Options shall
be) duly and validly authorized by all necessary corporate action of Shelby
County, are (and with respect to the shares of common stock of Shelby County to
be issued upon exercise of the Stock Options shall be) validly issued, fully
paid and nonassessable and have not been (and with respect to the shares of
common stock of Shelby County to be issued upon exercise of the Stock Options
shall not be) issued in violation of any pre-emptive rights of any present or
former Shelby County shareholders. Shelby County has no capital stock
authorized, issued or outstanding other than as described in this Section
4.03(a) and has no intention or obligation to authorize or issue any other
capital stock, or any additional shares of Shelby County Common Stock, except
for 13,800 shares of Shelby County Common Stock pursuant to the exercise of the
Stock Options. As of September 30, 1997, Shelby County had total shareholders'
equity of $7,171,322, which consisted of common stock of $1,358,123, retained
earnings of $5,187,531, and unrealized appreciation on investment securities
available for sale of $625,668. A description of the terms, relative rights,
preferences and limitations of the Shelby County Common Stock is contained in
the Articles of Incorporation of Shelby County, a copy of which is set forth in
the Disclosure Schedule pursuant to Section 4.04 hereof (for purposes of this
Agreement, "Disclosure Schedule" shall mean the schedules referencing the
applicable provisions of this Section 4 which are signed by the Chairman and
the President of Shelby County and SCSB solely in their respective officer
capacities and are attached hereto and made a part of this Agreement).
(b) The authorized capital stock of SCSB consists, and at the
Effective Time will consist, of 1,000 shares of common stock, $.01 par value
per share, all of which shares are validly outstanding and issued to Shelby
County (such issued and outstanding shares of common stock are referred to in
this Agreement as the "SCSB Common Stock"). Such issued and outstanding shares
of SCSB Common Stock have been duly and validly authorized by all necessary
corporate action of SCSB, are validly issued, fully paid and non-assessable and
have not been issued in violation of any pre-emptive rights of any present or
former SCSB shareholders. All of the issued and outstanding shares of SCSB
Common Stock are owned by Shelby County free and clear of all liens, pledges,
charges, claims, encumbrances, restrictions, security interests, options and
pre-emptive rights and of all other rights or claims of any other person,
corporation or entity with respect thereto.
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SCSB has no capital stock authorized, issued or outstanding other than as
described in this Section 4.03(b) and has no intention or obligation to
authorize or issue any other capital stock or any additional shares of SCSB
Common Stock. As of September 30, 1997, SCSB had total assets of $89,544,152,
total liabilities of $83,325,632 and total capital of $6,218,520, which capital
consisted of common stock of $10, capital surplus of $1,154,295, undivided
profits of $4,438,547, and unrealized appreciation on investment securities
available for sale of $625,668.
(c) The authorized capital stock of Shelby Group consists, and at
the Effective Time will consist, of 1,000 shares of common stock, no par value
per share, 1,000 of which shares are outstanding and validly issued to SCSB
(such issued and outstanding shares of common stock are referred to in this
Agreement as the "Shelby Group Common Stock"). The shares of Shelby Group
Common Stock have been duly and validly authorized by all necessary corporate
action of Shelby Group, are validly issued, fully paid and non-assessable and
have not been issued in violation of any pre-emptive rights of any present or
former shareholders of Shelby Group. All of the shares of Shelby Group Common
Stock are owned by SCSB free and clear of all liens, pledges, charges, claims,
encumbrances, restrictions, security interests, options and pre-emptive rights
and of all other rights or claims of any other person, corporation or entity
with respect thereto. Shelby Group has no capital stock authorized, issued or
outstanding other than as described in this Section 4.03(c) and has no
intention or obligation to authorize or issue any other capital stock or any
additional shares of Shelby Group Common Stock. As of September 30, 1997,
Shelby Group had total assets of $10,001, total liabilities of $- 0- and total
capital of $10,001, which capital consisted of common stock of $100,000,
capital surplus of $-0-, and undivided profits of ($89,999).
(d) The authorized capital stock of First Tier consists, and at
the Effective Time will consist, of 1,000 shares of common stock, no par value
per share, 1,000 of which shares are outstanding and validly issued to Shelby
County (such issued and outstanding shares of common stock are referred to in
this Agreement as the "First Tier Common Stock"). The shares of First Tier
Common Stock have been duly and validly authorized by all necessary corporate
action of First Tier, are validly issued, fully paid and non-assessable and
have not been issued in violation of any pre-emptive rights of any present or
former shareholders of First Tier. All of the shares of First Tier Common
Stock are owned by Shelby County free and clear of all liens, pledges, charges,
claims, encumbrances, restrictions, security interests, options and pre-emptive
rights and of all other rights or claims of any other person, corporation or
entity with respect thereto. First Tier has no capital stock authorized,
issued or outstanding other than as described in this Section 4.03(d) and has
no intention or obligation to authorize or issue any other capital stock or any
additional shares of First Tier Common Stock. As of September 30, 1997, First
Tier had total assets of $63,384, total liabilities of $35 and total capital of
$63,349, which capital consisted of common stock of $15,000, capital surplus of
$-0-, and undivided profits of $48,349.
(e) Except for options to purchase 13,800 shares of Shelby County
Common Stock under the Stock Option Plan, there are no options, warrants,
commitments, calls, puts, agreements, understandings, arrangements or
subscription rights relating to any capital stock, or any securities
convertible into or representing the right to purchase or otherwise acquire any
capital stock or debt securities of Shelby County by which Shelby County is or
may become bound. Shelby County does
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not have any contractual or other obligation to repurchase, redeem or otherwise
acquire any of its issued and outstanding shares of Shelby County Common Stock.
Set forth in the Disclosure Schedule is a true, accurate and complete (i) copy
of an incentive stock option agreement and a non-qualified stock option
agreement that are identical in all material respects to the presently
outstanding stock option agreements (except as to the number of shares subject
to the option, the purchase price per share and the duration of the option),
(ii) copy of the Stock Option Plan and (iii) a list of all optionees, including
the number of shares subject to each Stock Option.
(f) There are no options, warrants, commitments, calls, puts,
agreements, understandings, arrangements or subscription rights relating to the
capital stock, or any securities convertible into or representing the right to
purchase or otherwise acquire the capital stock or any debt securities, of the
Subsidiaries by which either of the Subsidiaries are or may become bound. The
Subsidiaries do not have any contractual or other obligation to repurchase,
redeem or otherwise acquire any of their respective outstanding shares of
capital stock.
(g) Except as set forth in the Disclosure Schedule, Shelby County
has no knowledge of any person who beneficially owns 5% or more of the issued
and outstanding shares of Shelby County Common Stock.
4.04. Organizational Documents. The Articles of Incorporation and
By-Laws of Shelby County, Shelby Group and First Tier and the Charter and
By-Laws of SCSB, representing true, accurate and complete copies of such
corporate documents of Shelby County, SCSB, Shelby Group and First Tier,
respectively, in effect as of the date of this Agreement, have been delivered
to Blue River and are included in the Disclosure Schedule.
4.05. Compliance with Law. (a) Neither Shelby County, SCSB nor
either of the Subsidiaries has engaged in any activity or has taken or omitted
to take any action which has resulted in the violation of any local, state,
federal or foreign law, statute, regulation, rule, ordinance, order,
restriction or requirement nor is it in violation of any order, injunction,
judgment, writ or decree of any court or government agency or body, the
violation of which could have a material adverse effect on the financial
condition, results of operations, business, assets or capital of Shelby County
and SCSB, whether individually or on a consolidated basis, or Shelby Group or
First Tier on a consolidated basis with Shelby County. Shelby County, SCSB and
each of the Subsidiaries possess and hold all licenses, franchises, permits,
certificates and other authorizations necessary for the continued conduct of
their respective businesses without interference or interruption, and such
licenses, franchises, permits, certificates and authorizations held by Shelby
County are transferable to the Surviving Corporation at the Effective Time
without any restrictions or limitations thereon or the need to obtain any
consents of government agencies or other third parties other than as set forth
in this Agreement.
(b) All agreements, understandings and commitments with, and all
orders and directives of, all government regulatory agencies or authorities
with respect to the financial condition, results of operations, business,
assets or capital of Shelby County, SCSB or either of the Subsidiaries which
presently are binding upon or require action by, or at any time during the last
five (5) years have
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been binding upon or have required action by, Shelby County, SCSB or either of
the Subsidiaries, including, without limitation, all correspondence,
communications and commitments related thereto, are set forth in the Disclosure
Schedule. There are no uncured violations, or violations with respect to which
refunds or restitutions may be required, cited in any examination report
provided to Shelby County, SCSB or either of the Subsidiaries as a result of an
examination by any regulatory agency or body or set forth in any accountant's,
auditor's or other report to Shelby County, SCSB or either of the Subsidiaries.
(c) All of the existing offices and branches of SCSB have been
legally authorized and established in accordance with all applicable federal,
state and local laws, statutes, rules, regulations, ordinances, orders,
restrictions and requirements. SCSB does not have any approved but unopened
offices or branches.
(d) Shelby County and SCSB and their respective properties
(including those held by either of them in a fiduciary capacity) are in
compliance in all material respects with all applicable provisions of the
Americans With Disabilities Act ("ADA"), and no action under the ADA against
Shelby County, SCSB or any of their respective properties has been initiated
or, to Shelby County's and SCSB's best knowledge, threatened. Neither Shelby
County nor SCSB are required to comply with the Family and Medical Leave Act.
4.06. Accuracy of Statements Made and Materials Provided to Blue
River. (a) No representation, warranty or other statement made, or any
information provided, by Shelby County, SCSB or either of the Subsidiaries in
this Agreement or in the Disclosure Schedule (and any update thereto) and no
written report, statement, list, materials or other written information which
has previously been or which shall be provided subsequent to the date hereof by
Shelby County, SCSB or either of the Subsidiaries or any of their attorneys,
accountants or agents to Blue River or any of its attorneys, accountants or
agents in connection with this Agreement, the Merger, Blue River's due
diligence investigation or confidential review of Shelby County, SCSB and the
Subsidiaries or otherwise, including, without limitation, any written
information with respect to Shelby County's, SCSB's and the Subsidiaries'
business, capital, assets, financial condition, results of operations, and
directors and officers for inclusion in the Registration Statement (as defined
in Section 7.02 hereof), the Prospectus (as defined in Section 7.02 hereof) and
the Proxy Statement (as defined in Section 6.01 hereof), contains or shall
contain (with respect to information relating to the Registration Statement at
the time it is declared effective, with respect to information relating to the
Prospectus at the time it is first delivered to prospective investors and with
respect to information relating to the Proxy Statement at the time it is mailed
to Shelby County shareholders) any untrue or misleading 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 false or misleading.
(b) All materials or information provided by Shelby County, SCSB
or either of the Subsidiaries to Blue River for use by Blue River in any filing
with any state or federal bank or thrift regulatory agency or authority shall
not, at the time such filings are made, contain any untrue or misleading
statement of material fact or shall omit to state a material fact necessary to
make the
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statements contained therein, in light of the circumstances in which they are
made, not false or misleading.
4.07. Litigation and Pending Proceedings. (a) Except as set forth
in the Disclosure Schedule, there are no claims, actions, suits, proceedings,
arbitrations, mediations or investigations pending or, to the best knowledge of
Shelby County, SCSB and the Subsidiaries after due inquiry, threatened in any
court or before any government agency or authority, arbitration panel, mediator
or otherwise (nor does Shelby County, SCSB or either of the Subsidiaries have
any knowledge of a basis for any claim, action, suit, proceeding, litigation,
arbitration, mediation or investigation) against, by or affecting Shelby
County, SCSB or either of the Subsidiaries which could have a material adverse
effect on the financial condition, results of operations, business, assets or
capital of Shelby County or SCSB, whether individually or on a consolidated
basis, or Shelby Group or First Tier on a consolidated basis with Shelby
County, or which would prevent the performance of this Agreement, declare the
same unlawful or cause the rescission hereof.
(b) Neither Shelby County, SCSB nor either of the Subsidiaries is
(i) subject to any outstanding judgment, order, writ, injunction or decree of
any court, arbitration panel or governmental agency or authority, (ii)
presently charged with or under governmental investigation with respect to any
actual or alleged violations of any law, statute, rule, regulation or
ordinance, or (iii) the subject of any pending or, to the best knowledge of
Shelby County, SCSB and the Subsidiaries, threatened proceeding by any
government regulatory agency or authority having jurisdiction over their
respective businesses, properties or operations.
4.08. Financial Statements and Reports. Shelby County previously
has delivered to Blue River copies of the following financial statements and
reports, including the notes thereto, of Shelby County, SCSB and the
Subsidiaries (collectively, the "Shelby County Financial Statements"):
(a) Consolidated statements of financial condition as of September
30, 1996 and 1997 and the related statements of earnings and statements of
changes in shareholders' equity of Shelby County as of and for the fiscal years
ended September 30, 1995, 1996 and 1997; and
(b) Consolidated statements of cash flows of Shelby County for the
fiscal years ended September 30, 1995, 1996 and 1997.
The Shelby County Financial Statements are true, accurate and complete
in all material respects and present fairly the consolidated financial
positions of Shelby County, SCSB and the Subsidiaries as of and at the dates
shown and the consolidated results of operations for the periods covered
thereby. The Shelby County Financial Statements described in clauses (a) and
(b) above have been audited by KPMG Peat Marwick and have been prepared in
conformance with generally accepted accounting principles applied on a
consistent basis. The Shelby County Financial Statements do not include any
assets, liabilities or obligations or omit to state any assets, liabilities or
obligations, absolute or contingent, or any other facts, which inclusion or
omission would render any of the Shelby County Financial Statements false,
misleading or inaccurate in any material respect as of the respective dates
thereof.
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4.09. Properties, Contracts, Employees and Other Agreements. (a)
Set forth in the Disclosure Schedule is a true, accurate and complete copy and,
when applicable, a list or description of the following:
(i) A brief description and the location of all real
property owned by Shelby County, SCSB and each of
the Subsidiaries and the principal buildings and
structures located thereon, together with a legal
description of such real property, and each lease of
real property to which Shelby County, SCSB or either
of the Subsidiaries is a party (excluding any
exhibits thereto which are not material),
identifying the parties thereto, the annual rental
payable, the expiration date of the lease and a
brief description of the property covered;
(ii) All loan or credit agreements and promissory notes
relating to money borrowed by Shelby County, SCSB
and the Subsidiaries, all land, conditional sales or
installment sales contracts or other title retention
agreements and all agreements for the purchase of
federal funds to which Shelby County, SCSB or either
of the Subsidiaries is a party;
(iii) All agreements, contracts, leases, licenses, lines
of credit, understandings, commitments or
obligations of Shelby County, SCSB or either of the
Subsidiaries which individually or in the aggregate:
(A) involve payment or receipt by Shelby County,
SCSB or either of the Subsidiaries (other
than as disbursements of loan proceeds to
customers or loan payments by customers) of
more than $10,000 during any twelve (12)
month period;
(B) involve payments based on profits of Shelby
County, SCSB or either of the Subsidiaries;
(C) relate to the purchase of goods, products,
supplies or services in excess of $5,000;
(D) were not made in the ordinary course of
business; or
(E) may not be terminated without penalty within
one (1) year from the date of this Agreement;
and
(iv) The name and current annual salary of each director,
officer and employee of Shelby County, SCSB or
either of the Subsidiaries whose current annual
salary and bonus or incentive compensation from
Shelby County, SCSB or either of the Subsidiaries is
in excess of $25,000, and the profit sharing and
other form of compensation (other than salary) paid
or payable by Shelby
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County, SCSB or either of the Subsidiaries to or for
the benefit of each such person for the fiscal years
ended September 30, 1996 and 1997.
(b) SCSB has, prior to the date of this Agreement, provided or
given access to Blue River to the files and documentation of all of its
borrowers, or persons or entities that are or may become obligated to SCSB
under a letter of credit, line of credit, loan transaction, loan agreement,
promissory note or other commitment of SCSB, in excess of $10,000 individually
or in the aggregate, whether in principal, interest or otherwise, and including
all guarantors of such indebtedness.
(c) To the best knowledge of Shelby County, SCSB and the
Subsidiaries, each of the agreements, contracts, commitments, leases,
instruments and documents set forth in the Disclosure Schedule relating to this
Section 4.09 is valid and enforceable in accordance with its terms. Shelby
County, SCSB and the Subsidiaries are and, to their best knowledge, all other
parties thereto are in compliance with the provisions thereof, and Shelby
County, SCSB and the Subsidiaries are not and, to their best knowledge, no
other party thereto is in default in the performance, observance or fulfillment
of any material obligation, covenant or provision contained therein. None of
the foregoing requires the consent of any party to its assignment in connection
with the Merger.
4.10. Absence of Undisclosed Liabilities. Except as provided in the
Shelby County Financial Statements, except for accounts payable incurred and
unfunded loan commitments made to customers in the ordinary course of business,
except for additional borrowings from the Federal Home Loan Bank of
Indianapolis not to exceed $22.5 Million incurred in the ordinary course of
business between the date hereof and the Effective Time, neither Shelby County,
SCSB nor either of the Subsidiaries has any obligation, agreement, contract,
commitment, liability, lease or license which exceeds $5,000 individually or in
the aggregate, or any obligation, agreement, contract, commitment, liability,
lease or license made outside of the ordinary course of business.
4.11. Title to and Condition of Assets. (a) Shelby County, SCSB or
either of the Subsidiaries, as the case may be, has good and marketable title
in fee simple absolute to all real property (including, without limitation, all
real property used as bank premises and all other real estate owned) which is
reflected in the Shelby County Financial Statements as of September 30, 1997;
good and marketable title to all personal property reflected in the Shelby
County Financial Statements as of September 30, 1997, other than personal
property disposed of in the ordinary course of business since September 30,
1997; good and marketable title to or right to use by valid and enforceable
lease or contract all other properties and assets (whether real or personal,
tangible or intangible) which Shelby County, SCSB or either of the Subsidiaries
purports to own or which Shelby County, SCSB or either of the Subsidiaries uses
in their respective businesses; and good and marketable title to, or right to
use by the terms of a valid and enforceable lease or commitment all other
property and assets acquired and not disposed of or leased, as the case may be,
since September 30, 1997. All of such properties and assets owned by Shelby
County, SCSB and the Subsidiaries are owned free and clear of all land or
conditional sales contracts, mortgages, encumbrances, liens, pledges,
restrictions, security interests, charges, claims or rights of third parties of
any nature except (i) as set forth in the Disclosure Schedule; (ii) as
specifically noted in
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reasonable detail in the Shelby County Financial Statements; (iii) statutory
liens for taxes not yet delinquent or being contested in good faith by
appropriate proceedings; (iv) pledges or liens required to be granted in
connection with the acceptance of government deposits or granted in connection
with repurchase or reverse repurchase agreements; and (v) easements,
encumbrances and liens of record, minor imperfections of title, building or use
restrictions, variations and other limitations which are not substantial in
amounts, do not materially detract from the value or materially interfere with
the present or contemplated use of any of the properties subject thereto or
otherwise materially impair the use thereof for the purposes for which they are
held or used. All real property owned or leased by Shelby County, SCSB and the
Subsidiaries is in material compliance with all applicable zoning and land use
laws.
(b) To the best of their respective knowledge, Shelby County, SCSB
and each of the Subsidiaries have conducted their respective businesses in
compliance with all federal, state, county and municipal laws, statutes,
regulations, rules, ordinances, orders, directives, restrictions and
requirements relating to, without limitation, responsible property transfer,
underground storage tanks, petroleum products, air pollutants, water
pollutants, storm water or process waste water or otherwise relating to the
environment or toxic or hazardous substances or to the manufacturing,
recycling, handling, processing, distribution, use, generation, treatment,
storage, disposal or transport of any hazardous or toxic substances or
petroleum products (including polychlorinated biphenyls, whether contained or
uncontained, and asbestos-containing materials, whether friable or not),
including, without limitation, the Federal Solid Waste Disposal Act, the
Hazardous and Solid Waste Amendments, the Federal Clean Air Act, the Federal
Clean Water Act, the Occupational Health and Safety Act, the Federal Resource
Conservation and Recovery Act, the Toxic Substances Control Act, the Federal
Comprehensive Environmental Response, Compensation and Liability Act of 1980
and the Superfund Amendments and Reauthorization Act of 1986, all as amended,
and all regulations of the Environmental Protection Agency, the Nuclear
Regulatory Agency, the Army Corp of Engineers, the Department of Interior, the
United States Fish and Wildlife Service and any state department of natural
resources or state environmental protection agency now or at any time hereafter
in effect (collectively, "Environmental Laws"). There are no pending or, to
the best knowledge of Shelby County, SCSB and the Subsidiaries threatened
claims, actions or proceedings by any local municipality, sewage district or
other federal, state or local governmental agency or authority or any other
party against Shelby County, SCSB or either of the Subsidiaries with respect to
any of the Environmental Laws and, except as set forth in the Disclosure
Schedule, to the best of Shelby County's, SCSB's and the Subsidiaries'
knowledge, there is no basis or grounds for any such claim, action or
proceeding. Except as set forth in the Disclosure Schedule, to the best of
Shelby County's, SCSB's and the Subsidiaries' knowledge, no environmental
clearances or other governmental environmental approvals are required for the
conduct of Shelby County's, SCSB's or either of the Subsidiaries' business or
consummation of the Merger. Except as set forth in the Disclosure Schedule, to
the best of Shelby County's, SCSB's and the Subsidiaries' knowledge, neither
Shelby County, SCSB nor either of the Subsidiaries is the owner, and has not
been in the chain of title or the operator or lessee, of any property on which
any substances have been used, stored, deposited, treated, recycled or disposed
of, which substances if known to be present on, at or under such property would
require clean-up, removal or any other remedial action under any of the
Environmental Laws.
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(c) Neither Shelby County, SCSB nor either of the Subsidiaries (i)
is in default in any respect under any agreements pursuant to which it leases
real or personal property, (ii) has knowledge of any default under such
agreements by any party thereto and (iii) has knowledge of any event which,
with notice or lapse of time or both, would constitute a default or a breach
thereof.
4.12. Loans and Investments. (a) Except as set forth in the
Disclosure Schedule, SCSB has no loan in excess of $5,000 that has been
classified by regulatory examiners or management of SCSB as "Substandard,"
"Doubtful" or "Loss" or in excess of $5,000 that has been identified by
accountants or auditors (internal or external) as having a significant risk of
uncollectability. The most recent loan watch list of SCSB and a list of all
loans in excess of $5,000 that SCSB has determined to be ninety (90) days or
more past due with respect to principal or interest payments or has placed on
nonaccrual status are set forth in the Disclosure Schedule.
(b) All loans reflected in the Shelby County Financial Statements
as of September 30, 1997 and which have been made, extended, renewed,
restructured, approved, amended or acquired since September 30, 1997 (i) have
been made for good, valuable and adequate consideration in the ordinary course
of business; (ii) to the best of SCSB's knowledge, constitute the legal, valid
and binding obligation of the obligor and any guarantor named therein, except
to the extent limited by general principles of equity and public policy or by
bankruptcy, insolvency, fraudulent transfer, reorganization, liquidation,
moratorium, readjustment of debt or other laws of general application relative
to or affecting the enforcement of creditors' rights; (iii) are evidenced by
notes, instruments or other evidences of indebtedness which are true, genuine
and what they purport to be; and (iv) are secured, to the extent that SCSB has
a security interest in collateral or a mortgage securing such loans, by
perfected security interests or recorded mortgages naming SCSB as the secured
party or mortgagee.
(c) The reserves, the allowance for possible loan and lease losses
and the carrying value for real estate owned which are shown on the Shelby
County Financial Statements are adequate in all respects under the requirements
of generally accepted accounting principles applied on a consistent basis to
provide for possible losses on items for which reserves were made, on loans and
leases outstanding and real estate owned as of the respective dates. To the
best knowledge of SCSB, the aggregate loan balances outstanding as of September
30, 1997, in excess of the reserve for loan losses as of such date, are
collectible in accordance with their respective terms.
(d) Shelby County and SCSB have complied in all material respects
with all laws, statutes, rules, regulations and other legal requirements
relating to its loans such that any failure to so comply will not interfere
with the collection of any loan or provide to any borrower any right, claim or
action against Shelby County or SCSB. Except as set forth in the Disclosure
Schedule, to the best of Shelby County's and SCSB's knowledge, no property in
which SCSB has an interest as collateral to secure a loan or that is held as an
asset of any trust violates any of the Environmental Laws or obligates Shelby
County or SCSB, or the owner or operator of such property, to remediate, treat
or otherwise alter the environmental condition of such property.
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(e) None of the investments reflected in the Shelby County
Financial Statements as of and for the year ended September 30, 1997 and none
of the investments made by Shelby County, SCSB or either of the Subsidiaries
since September 30, 1997 are subject to any restriction, whether contractual or
statutory, which materially impairs the ability of Shelby County, SCSB or
either of the Subsidiaries to dispose freely of such investment at any time.
Neither Shelby County, SCSB nor either of the Subsidiaries is a party to any
repurchase agreements with respect to securities. All investment securities
and other investments of SCSB are carried on its books in accordance with
generally accepted accounting principals applied on a consistent basis.
(f) Set forth in the Disclosure Schedule is a true, accurate and
complete list of all loans in which SCSB has any participation interest or
which have been made with or through another financial institution on a
recourse basis against SCSB.
(g) The aggregate amount of SCSB's indebtedness to the Federal
Home Loan Bank of Indianapolis does not exceed $22.5 Million.
4.13. Anti-takeover Provisions. Neither Shelby County, SCSB nor
either of the Subsidiaries has a shareholder rights plan or any other plan,
program, agreement or arrangement involving, restricting, prohibiting or
discouraging a change in control, merger or other combination of Shelby County,
SCSB or either of the Subsidiaries or which may be considered an anti-takeover
mechanism, except for (i) the Rights Plan Agreement, dated April 17, 1995
("Rights Agreement"), between Shelby County and Bank One, Indianapolis, NA, as
Rights Agent, (ii) the provisions in the Articles of Incorporation and By-Laws
of Shelby County, (iii) the Stock Option Plan, (iv) the Employment Agreements
(as hereinafter defined), and (v) the employment agreement between Rodney L.
Meyerholtz and SCSB dated October 17, 1991 ("Meyerholtz Agreement").
4.14. Employee Benefit Plans. (a) With respect to the employee
benefit plans, as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), whether written or oral, sponsored
or otherwise maintained by Shelby County or SCSB; in which Shelby County, SCSB
or either of the Subsidiaries participates as a participating employer; to
which Shelby County, SCSB or either of the Subsidiaries contributes; with
respect to which Shelby County, SCSB or either of the Subsidiaries acts as
administrator, trustee or fiduciary, whether written or oral; and including any
such plans which have been terminated, merged into another plan, frozen or
discontinued (collectively, the "Shelby County Plans"): (i) all such Shelby
County Plans have, on a continuous basis since their adoption, been maintained
in compliance in all materials respects with the requirements prescribed by all
applicable statutes, orders and governmental rules or regulations, including,
without limitation, ERISA, the Code, and the Department of Labor ("Department")
and the Treasury Regulations promulgated thereunder; (ii) all Shelby County
Plans intended to constitute tax-qualified plans under the Code have complied,
in form and in operation, since their adoption, or, with respect to form, have
been timely amended to comply, in all material respects, with all applicable
requirements of the Code and the Treasury Regulations promulgated thereunder,
and favorable determination letters with respect to the Tax Reform Act of 1986
have been timely received from the Internal Revenue Service ("Service") with
respect to each such Shelby County Plan stating that each, in its current form
(or at the time of its disposition if it has been
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terminated, merged or discontinued), is qualified under and satisfies all
applicable provisions of the Code and Treasury Regulations; (iii) no Shelby
County Plan (or its related trust) holds any Shelby County Common Stock or any
stock of a related or affiliated person or entity, except as provided in the
Disclosure Schedule; (iv) neither Shelby County, SCSB nor either of the
Subsidiaries has liability to the Department or the Service with respect to any
Shelby County Plan; (v) neither Shelby County, SCSB nor either of the
Subsidiaries has engaged in any transaction that may subject Shelby County,
SCSB, either of the Subsidiaries or any Shelby County Plan to a civil penalty
imposed by Section 502 of ERISA; (vi) no prohibited transaction (as defined in
Section 406 of ERISA and as defined in Section 4975(c) of the Code) has
occurred with respect to any Shelby County Plan; (vii) each Shelby County Plan
subject to ERISA or intended to be qualified under Section 401(a) of the Code
has been and, if applicable, is being operated in accordance with the
applicable provisions of ERISA and the Code and the Department and Treasury
Regulations promulgated thereunder; (viii) to the best of Shelby County's,
SCSB's and the Subsidiaries' knowledge, no participant or beneficiary or non-
participating employee has been denied any benefit due or to become due under
any Shelby County Plan or has been misled as to his or her rights under any
Shelby County Plan; (ix) all obligations required to be performed by Shelby
County, SCSB or either of the Subsidiaries under any provision of a Shelby
County Plan have been performed by it and it is not in default under or in
violation of any provision of a Shelby County Plan; (x) no event has occurred
which would constitute grounds for an enforcement action by any party under
Part 5 of Title I of ERISA under any Shelby County Plan; (xi) there are no
actions, suits, proceedings or claims pending (other than routine claims for
benefits) or, to the best knowledge of Shelby County, SCSB and the
Subsidiaries, threatened against Shelby County, SCSB, either of the
Subsidiaries, any Shelby County Plan or the assets of any Shelby County Plan;
and (xii) with respect to any Shelby County Plan sponsored, participated in or
contributed to by Shelby County, SCSB or either of the Subsidiaries or with
respect to which Shelby County, SCSB or either of the Subsidiaries is
responsible for complying with the reporting and disclosure requirements of
ERISA or the Code, there has been no violation of the reporting and disclosure
requirements imposed either under ERISA or the Code for which a penalty has
been or may be imposed.
(b) With regard to any Shelby County Plan intended to be a
tax-qualified plan under Section 401(a) of the Code, to the best knowledge of
Shelby County, SCSB and the Subsidiaries, no director, officer, employee or
agent of Shelby County, SCSB or either of the Subsidiaries has engaged in any
action or failed to act in such a manner that, as a result of such action or
failure to act, the Service could revoke or deny that plan's qualification
under the Code or the exemption under Section 501(a) of the Code for any trust
or annuity contract related to such Plan.
(c) Shelby County, SCSB and the Subsidiaries have provided to Blue
River in the Disclosure Schedule true, accurate and complete copies and, in the
case of any plan or program which has not been reduced to writing, a complete
summary, of all of the following: (i) pension, retirement, profit-sharing,
savings, stock purchase, stock bonus, stock ownership, stock option and stock
appreciation or depreciation right plans and agreements and all amendments
thereto (except that, with respect to the stock option agreements between
Shelby County and certain employees and directors of Shelby County, SCSB and
the Subsidiaries with respect to the Stock Options, only a true, accurate and
complete copy of an incentive stock option agreement and a non-qualified stock
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option agreement that are identical in all material respects to the remaining
outstanding stock option agreements have been included in the Disclosure
Schedule); (ii) all employment, deferred compensation (whether funded or
unfunded), salary continuation, consulting, bonus, severance and collective
bargaining agreements, arrangements or understandings; (iii) all executive and
other incentive compensation plans and programs; (iv) all group insurance and
health contracts, policies or plans; and (v) all other incentive, welfare or
employee benefit plans, understandings, arrangements or agreements, maintained
or sponsored, participated in, or contributed to by Shelby County, SCSB or
either of the Subsidiaries for their current or former directors, officers or
employees. All of the foregoing have been, since their inception, drafted,
implemented, administered and, where applicable, amended or terminated in
accordance with their terms and with applicable law.
(d) No current or former director, officer or employee of Shelby
County, SCSB or either of the Subsidiaries is entitled to any benefit under any
welfare benefit plans (as defined in Section 3(1) of ERISA) after termination
of employment with Shelby County, SCSB or either of the Subsidiaries, except
that such individuals may be entitled to continue their group health care
coverage pursuant to Section 4980B of the Code if they pay the cost of such
coverage pursuant to the applicable requirements of the Code with respect
thereto.
(e) With respect to any group health plan (as defined in Section
607(1) of ERISA) sponsored or maintained by Shelby County, SCSB or either of
the Subsidiaries, in which Shelby County, SCSB or either of the Subsidiaries
participates as a participating employer or to which Shelby County, SCSB or
either of the Subsidiaries contributes, to the best knowledge of Shelby County,
SCSB and the Subsidiaries, no director, officer, employee or agent of Shelby
County, SCSB or either of the Subsidiaries has engaged in any action or failed
to act in such a manner that, as a result of such action or failure to act,
would cause a tax to be imposed upon Shelby County, SCSB or either of the
Subsidiaries under Section 4980B(a) of the Code. With respect to all such
plans, all applicable provisions of Section 4980B of the Code and Section 601
of ERISA have been complied with in all material respects by Shelby County,
SCSB and the Subsidiaries.
(f) Except as otherwise provided in the Disclosure Schedule, there
are no collective bargaining, employment, management, consulting, deferred
compensation, reimbursement, indemnity, retirement, early retirement, severance
or similar plans or agreements, commitments or understandings, or any employee
welfare, benefit or retirement plan or agreement, binding upon Shelby County,
SCSB or either of the Subsidiaries and no such agreement, commitment,
understanding or plan is under discussion or negotiation by management with any
employee or group of employees, any member of management or any other person.
4.15. Obligations to Employees. Except as otherwise provided in the
Disclosure Schedule, all accrued obligations and liabilities of Shelby County,
SCSB, the Subsidiaries and the Shelby County Plans, whether arising by
operation of law, by contract or by past custom, for payments to trusts or
other funds, to any government agency or authority or to any present or former
director, officer, employee or agent of Shelby County, SCSB or either of the
Subsidiaries (or his heirs, legatees or legal representatives) have been and
are being paid to the extent required by applicable
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law or by the plan, trust, contract or past custom or practice, and adequate
accruals and reserves for such payments have been and are being made by Shelby
County, SCSB and the Subsidiaries in accordance with generally accepted
accounting principles and applicable law applied on a consistent basis and
actuarial methods with respect to the following: (a) withholding taxes,
unemployment compensation or social security benefits; (b) all pension, profit-
sharing, savings, stock purchase, stock bonus, stock ownership, stock option
and stock appreciation rights plans and agreements; (c) all employment,
deferred compensation (whether funded or unfunded), salary continuation,
consulting, retirement, early retirement, severance, reimbursement or bonus
plans or agreements; (d) all executive and other incentive compensation plans,
programs or agreements; (e) all group insurance and health contracts and
policies; and (f) all other incentive, welfare, retirement or employee benefit
plans or agreements maintained, sponsored, participated in, or contributed to
by Shelby County, SCSB or either of the Subsidiaries for their current or
former directors, officers, employees and agents, including, without
limitation, all liabilities and obligations to the Shelby County Plans. All
obligations and liabilities of Shelby County, SCSB and the Subsidiaries,
whether arising by operation of law, by contract or by past custom or practice,
for all other forms of compensation which are or may be payable to their
current or former directors, officers, employees or agents have been and are
being paid to the extent required by applicable law or by the plan or contract,
and adequate accruals and reserves for payment therefor have been and are being
made by Shelby County, SCSB and the Subsidiaries in accordance with generally
accepted accounting and principles applied on a consistent basis. Except as
otherwise provided in the Disclosure Schedule, all accruals and reserves
referred to in this Section 4.15 are correctly and accurately reflected and
accounted for in all material respects in the Shelby County Financial
Statements and the books, statements and records of Shelby County, SCSB and the
Subsidiaries.
SCSB is not and has not engaged in any unfair labor practice within
the meaning of the National Labor Relations Act, as amended, and there is no
proceeding or investigation pending or threatened against it with respect
thereto. There are no, and during the last five (5) years have not been any,
formal, informal or internal charges or complaints of, or any proceedings or
lawsuits pending or threatened involving, discrimination or harassment, nor is
there any investigation pending or threatened before the Equal Employment
Opportunity Commission or any other federal, state or local agency or authority
involving SCSB or any of its present or former directors, employees or agents.
Except to set forth in the Disclosure Schedule, neither the execution
and delivery of this Agreement nor the consummation of any of the transactions
contemplated hereby, will (a) result in any payment (including, without
limitation, severance, unemployment compensation or golden parachute payment)
becoming due to any director or employee of Shelby County or SCSB from either
of such entities; (b) increase any benefit otherwise payable under any of the
Shelby County Plans or any other plan of program relating to directors or
employees of Shelby County or SCSB; or (c) result in the acceleration in the
time of payment of any benefit or amount owed to any present or former director
or employee of Shelby County or SCSB.
4.16. Taxes, Returns and Reports. Shelby County, SCSB and the
Subsidiaries have (a) duly filed all federal, state, local and foreign tax
returns of every type and kind required to be
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filed, and each such return is true, accurate and complete in all material
respects; (b) paid all taxes, assessments and other governmental charges due or
claimed to be due upon each of them or any of their income, properties or
assets; and (c) not requested an extension of time for any such payments (which
extension is still in force). Except for taxes not yet due and payable, the
reserve for taxes in the Shelby County Financial Statements as of September 30,
1997 is adequate to cover all of Shelby County's, SCSB's and the Subsidiaries'
tax liabilities (including, without limitation, income taxes and franchise
fees) that may become payable in future periods with respect to any
transactions consummated prior to September 30, 1997. Neither Shelby County,
SCSB nor either of the Subsidiaries has, or will have, any liability for taxes
of any nature for or with respect to the operation of their respective
businesses, including the business of any subsidiary, or ownership of their
assets, including the assets of any subsidiary, from the date hereof up to and
including the Effective Time, except to the extent set forth in the Subsequent
Shelby County Financial Statements (as hereinafter defined). Neither Shelby
County, SCSB nor either of the Subsidiaries is currently under audit by any
state or federal taxing authority. No federal, state or local tax returns of
Shelby County, SCSB or either of the Subsidiaries have been audited by any
taxing authority during the past five (5) years.
4.17. Deposit Insurance. The deposits of SCSB are insured by the
Federal Deposit Insurance Corporation in accordance with the Federal Deposit
Insurance Corporation Act, as amended, and SCSB has paid or properly reserved
or accrued for all current premiums and assessments with respect to such
deposit insurance.
4.18. Insurance. Set forth in the Disclosure Schedule is a list and
brief description of all policies of insurance (including, without limitation,
blanket bond, directors' and officers' liability insurance, property and
casualty insurance, group health or hospitalization insurance and insurance
providing benefits for employees) owned or held by Shelby County, SCSB or
either of the Subsidiaries on the date hereof or with respect to which Shelby
County, SCSB or either of the Subsidiaries pays any premiums. Each such policy
is in full force and effect, all premiums due thereon have been paid when due,
and a true, accurate and complete copy thereof has been made available to Blue
River prior to the date hereof.
4.19. Books and Records. The books and records of Shelby County,
SCSB and the Subsidiaries are in all material respects complete and correct and
accurately reflect the basis for the respective financial condition, results of
operations, business, assets and capital of Shelby County, SCSB and the
Subsidiaries set forth in the Shelby County Financial Statements.
4.20. Broker's, Finder's or Other Fees. Except for the reasonable
fees of Shelby County's attorneys, accountants and investment bankers and the
printing and mailing costs relating to the proxy statement pertaining to the
Merger, all of which will be paid by Shelby County prior to the Effective Time,
no agent, broker or other person acting on behalf of Shelby County, SCSB or
either of the Subsidiaries or acting under any authority of Shelby County, SCSB
or either of the Subsidiaries is or shall be entitled to any commission,
broker's or finder's fee or any other form of compensation or payment from any
of the parties hereto relating to this Agreement or the Merger. A true,
accurate and complete copy of Shelby County's agreements with its attorneys,
accountants,
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investment banker or other advisors relative to their respective fees in
connection with the Merger is set forth in the Disclosure Schedule.
4.21. Interim Events. Except as otherwise permitted hereunder,
since September 30, 1997, neither Shelby County, SCSB nor either of the
Subsidiaries has:
(a) Suffered any changes having a material adverse effect on its
financial condition, results of operations, assets, capital or business;
(b) Suffered any material damage, destruction or loss to any of
its properties not fully-covered by insurance;
(c) Declared, distributed or paid any dividend or other
distribution to its shareholders, except for payment of dividends as permitted
by Section 6.03(a)(iii) hereof and except for 13,800 shares of Shelby County
Common Stock issued pursuant to the exercise of the Stock Options;
(d) Repurchased, redeemed or otherwise acquired shares of its
capital stock, issued any shares of its capital stock or stock appreciation
rights or sold or agreed to issue or sell (except for 13,800 shares of Shelby
County Common Stock issued pursuant to the exercise of the Stock Options) any
shares of its capital stock or any right or option to purchase or acquire any
such stock or any security convertible into such stock or taken any action to
reclassify, recapitalize or split up its stock;
(e) Granted or agreed to grant any increase in benefits payable or
to become payable under any pension, retirement, profit-sharing, savings,
bonus, deferred compensation, stock or option plan or agreement; any employee
welfare or benefit plan or arrangement; or any other agreement, commitment or
understanding, to present or former employees, officers or directors of Shelby
County, SCSB or either of the Subsidiaries;
(f) Increased the salary, compensation or fees of any director,
officer or employee, except for normal increases in the ordinary course of
business and in accordance with past practices, entered into any employment
contract, indemnity agreement or any other agreement or understanding with any
officer or employee or installed any employee benefit plan;
(g) Leased, sold or otherwise disposed of any of its assets except
in the ordinary course of business or leased, purchased or otherwise acquired
from third parties any assets except in the ordinary course of business;
(h) Merged, consolidated or sold shares of capital stock of SCSB;
except for the Merger, agreed or committed to merge, consolidate, combine or
affiliate with or into any third party; agreed or committed to sell the
substantial assets or any shares of capital stock of Shelby County, SCSB or
either of the Subsidiaries; or except pursuant to foreclosure actions and
mortgages, liens or security interests securing loans, acquired or agreed to
acquire any securities, equity interest, assets or business of any third party;
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(i) Incurred, assumed or guaranteed any obligation or liability
(fixed or contingent) (including borrowings in the ordinary course of business
from the Federal Home Loan Bank of Indianapolis not exceeding $22.5 Million)
other than obligations and liabilities incurred in the ordinary course of
business;
(j) Mortgaged, pledged or subjected to a lien, security interest,
option or other encumbrance any of its assets, except for tax and other liens
which arise by operation of law and with respect to which payment is not past
due and except for pledges or lien: (i) required to be granted in connection
with acceptance by SCSB of government deposits; or (ii) granted in connection
with repurchase or reverse repurchase agreements; or (iii) otherwise incurred
in the ordinary course of the conduct of its business;
(k) Canceled, released or compromised any loan, debt, obligation,
claim or receivable other than in the ordinary course of business;
(l) Entered into or made any loan or other transaction, contract
or commitment other than in the ordinary course of business;
(m) Agreed to enter into any transaction for the borrowing or
lending of monies, funds or securities, other than in the ordinary course of
its lending business; or
(n) Conducted its business in any manner other than substantially
as it was being conducted on September 30, 1997.
4.22. Regulatory Filings. Shelby County, SCSB and the Subsidiaries
have filed and will continue to file in a timely manner all filings and reports
with all federal and state regulatory agencies and authorities as required by
applicable law. All such filings with federal and state regulatory agencies
were true, accurate and complete in all respects as of the dates of the filings
and were prepared in conformity with generally accepted accounting principles
applied on a consistent basis and applicable law, and no such filing contained
any untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements, at the time and in light of the
circumstances under which they were made, not false or misleading.
4.23. Contracts. Neither Shelby County, SCSB nor either of the
Subsidiaries is in default under or in breach of or, to the best knowledge of
Shelby County, SCSB and the Subsidiaries, alleged to be in default under or in
breach of, any loan or credit agreement, security agreement, bond, indenture,
mortgage, license, contract, lease, commitment or any other instrument or
obligation, which breach or default could have a material adverse effect on the
financial condition, results of operation, business, assets or capital of
Shelby County or SCSB, whether individually or on a consolidated basis, or
Shelby Group or First Tier on a consolidated basis with Shelby County.
4.24. No Third Party Options. Except as provided in the Disclosure
Schedule with respect to the options to purchase 13,800 shares of Shelby County
Common Stock under the Stock Option Plan, there are no agreements, options,
commitments or rights with, of or to any third party to
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acquire any shares of capital stock or assets of Shelby County, SCSB or either
of the Subsidiaries which are binding upon Shelby County, SCSB or either of the
Subsidiaries.
4.25. Disclosure Schedule and Documents. All written data,
documents, materials and information referred to in this Agreement and
delivered by Shelby County, SCSB or either of the Subsidiaries pursuant to or
in connection with the Disclosure Schedule are true, accurate and complete in
all material respects as of the date hereof and, with respect to such items
delivered subsequent to the date hereof or with any update to the Disclosure
Schedule, will be true, accurate and complete in all material respects on the
date of delivery thereof.
4.26. Indemnification Agreements. (a) Neither Shelby County, SCSB
nor either of the Subsidiaries is a party to any indemnification, indemnity or
reimbursement agreement, contract, commitment or understanding to indemnify any
present or former director, officer, employee, shareholder or agent against
liability or hold the same harmless from liability, other than as expressly
provided in the Articles of Incorporation or By-Laws of Shelby County, Shelby
Group or First Tier or the Charter or By-Laws of SCSB.
(b) No claims have been made against or filed with Shelby County,
SCSB or either of the Subsidiaries nor has, to the best knowledge of Shelby
County, SCSB and the Subsidiaries after due inquiry, any claims been threatened
against Shelby County, SCSB or either of the Subsidiaries, for indemnification
against liability or for reimbursement of any costs or expenses incurred in
connection with any legal or regulatory proceeding by any present or former
director, officer, shareholder, employee or agent of either Shelby County, SCSB
or either of the Subsidiaries.
4.27. Representations and Warranties at the Effective Time. All
representations and warranties of Shelby County and SCSB contained herein shall
be true, accurate and complete in all material respects on and as of the
Effective Time as though made or given at such time, except as otherwise
expressly contemplated by this Agreement.
4.28. Nonsurvival of Representations and Warranties. The
representations and warranties of Shelby County and SCSB contained in this
Agreement shall expire upon the earlier of the Effective Time or the
termination of this Agreement pursuant to Section 9 hereof (except that any
claim of misrepresentation or breach of a warranty may be brought following any
such termination), and thereafter Shelby County, SCSB and the Subsidiaries and
all directors, officers and employees thereof shall have no further liability
with respect thereto, except for fraud or intentional and knowing participation
in the making of untrue, inaccurate or misleading statements in such
representations and warranties. Nothing in the foregoing shall result in the
termination of any of the covenants provided for in this Agreement that shall
by their terms survive the Effective Time.
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SECTION 5
REPRESENTATIONS AND WARRANTIES OF BLUE RIVER
Blue River represents and warrants to Shelby County and SCSB as
follows as of the date hereof and at all times that this Agreement shall be in
effect:
5.01. Organization and Authority. Blue River is a corporation duly
organized and validly existing under the laws of the State of Indiana and has
full power and authority (corporate and otherwise) to own and lease its
properties as presently owned and leased and to conduct its business in the
manner and by the means utilized as of the date hereof.
5.02. Authorization. (a) Blue River has the requisite corporate
power and authority to enter into this Agreement and to carry out its
obligations hereunder subject to the fulfillment of the conditions precedent
set forth in Section 8.01 hereof. This Agreement and its execution and
delivery by Blue River have been duly authorized and approved by the Board of
Directors of Blue River. This Agreement constitutes a valid and binding
obligation of Blue River and is enforceable in accordance with its terms,
except to the extent limited by general principles of equity and public policy
and by bankruptcy, insolvency, fraudulent transfer, reorganization,
liquidation, moratorium, readjustment of debt or other laws of general
application relating to or affecting the enforcement of creditors' rights.
(b) Neither the execution of this Agreement nor consummation of
the Merger (i) conflicts with or violates Blue River's Articles of
Incorporation or By-Laws; (ii) conflicts with or violates any local, state,
federal or foreign law, statute, ordinance, rule or regulation (provided that
the approvals of or filings with applicable government regulatory agencies or
authorities required for consummation of the Merger are obtained) or any court
or administrative judgment, order, injunction, writ or decree; (iii) conflicts
with, results in a breach of or constitutes a default under any note, bond,
indenture, mortgage, deed of trust, license, contract, lease, agreement,
arrangement, commitment or other instrument to which Blue River is a party or
by which Blue River is subject or bound; (iv) results in the creation of or
gives any person, corporation or entity the right to create any lien, charge,
claim, encumbrance or security interest, or results in the creation of any
other rights or claims of any other party or any other adverse interest, upon
any right, property or asset of Blue River; or (v) terminates or gives any
person, corporation or entity the right to terminate, accelerate, amend, modify
or refuse to perform under any note, bond, indenture, mortgage, deed of trust,
license, lease, contract, agreement, arrangement, commitment or other
instrument to which Blue River is bound or with respect to which Blue River is
to perform any duties or obligations or receive any rights or benefits.
(c) Other than in connection or in compliance with the provisions
of applicable federal and state banking, thrift, securities and corporation
statutes, all as amended, and the rules and regulations promulgated thereunder,
no notice to, filing with, exemption by or consent, authorization or approval
of any governmental agency or body is necessary for consummation by Blue River
of the Merger.
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5.03. Organizational Documents. The Articles of Incorporation and
By-Laws of Blue River in effect as of the date of this Agreement have been
delivered to Shelby County and represent true, accurate and complete copies of
such corporate documents of Blue River in effect as of the date of this
Agreement.
5.04. Compliance With Law. Blue River has not engaged in any
activity or has taken or omitted to take any action which has resulted or could
result in the violation of any local, state, federal or foreign law, statute,
rule, regulation, ordinance, order, restriction or requirement or of any order,
injunction, judgment, writ or decree of any court or government agency or body,
the violation of which could have a material adverse effect on the financial
condition, results of operations, business, assets or capitalization of Blue
River.
5.05. Litigation and Pending Proceedings. (a) There are no claims,
actions, suits, proceedings, investigations, arbitrations or mediations pending
or, to the best knowledge of Blue River after due inquiry, threatened in any
court or before any government agency or authority, arbitration panel or
otherwise (nor does Blue River have any knowledge of a basis for any claim,
action, suit, proceeding, litigation, investigation, arbitration or mediation)
against, by or affecting Blue River which could have a material adverse effect
on the financial condition, results of operations, business, assets or
capitalization of Blue River, or which would prevent the performance of this
Agreement, declare the same unlawful or cause the rescission hereof.
(b) Blue River is not (i) subject to any outstanding judgment,
order, writ, injunction or decree of any court, arbitration panel or
governmental agency or authority having a material adverse effect on its
business, assets, capitalization, financial condition or results of operations
on a consolidated basis, (ii) presently charged with or under governmental
investigation with respect to any actual or alleged violations of any law,
statute, rule, regulation or ordinance, or (iii) the subject of any pending or,
to the best knowledge of Blue River, threatened proceeding by any government
regulatory agency or authority having jurisdiction over its business,
properties or operations.
5.06. Representations and Warranties at the Effective Time. All
representations and warranties of Blue River contained herein shall be true,
accurate and complete in all material respects on and as of the Effective Time
as though made or given at such time.
5.07. Nonsurvival of Representations and Warranties. The
representations and warranties of Blue River contained in this Agreement shall
expire upon the earlier of the Effective Time or the termination of this
Agreement pursuant to Section 9 hereof (except that any claim of
misrepresentation or breach of warranty may be brought following any such
termination), and thereafter, Blue River and all directors, officers and
employees of Blue River shall have no further liability with respect thereto,
except for fraud or intentional and knowing participation in the making of
untrue, inaccurate or misleading statements in such representations and
warranties. Nothing in the foregoing shall result in the termination of any
covenants provided for herein that shall by their terms survive the Effective
Time.
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SECTION 6
COVENANTS OF SHELBY COUNTY AND SCSB
Shelby County and SCSB covenant and agree with Blue River, and SCSB
covenants and agrees with Blue River to cause Shelby Group and First Tier to
act, as follows:
6.01. Shareholder Approval. Shelby County shall submit this
Agreement and the Merger to its shareholders for approval at a meeting to be
called and held in accordance with applicable law and the Articles of
Incorporation and By- Laws of Shelby County on a date mutually acceptable to
Shelby County and Blue River. Shelby County shall use its reasonable efforts
to hold such meeting of shareholders no later than sixty (60) days following
the date of this Agreement. In connection with such meeting of shareholders of
Shelby County, (a) Shelby County shall deliver to its shareholders a proxy
statement relating to the Merger ("Proxy Statement") which shall include a copy
of this Agreement and all other information required to be provided to
shareholders of Shelby County in accordance with applicable law; and (b) the
Board of Directors of Shelby County shall recommend, by at least a majority
vote, to Shelby County's shareholders that such shareholders approve this
Agreement and the Merger and shall solicit proxies in favor of this Agreement
from such shareholders (unless, in the written opinion of counsel for Shelby
County, the fiduciary duties of such Board might reasonably be found to
prohibit such a recommendation, in which event the individual members of the
Board of Directors shall nevertheless remain personally obligated to vote in
favor of this Agreement and the Merger pursuant to their personal undertakings
set forth elsewhere in this Agreement).
Shelby County shall use its reasonable efforts to cause Trident
Financial Corporation ("Trident") to issue, no later than the date of the Proxy
Statement, Trident's written opinion ("Fairness Opinion") stating that the
Conversion Price is fair to the shareholders of Shelby County from a financial
point of view. Shelby County shall attach a copy of Trident's fairness opinion
to the proxy statement to be delivered to Shelby County's shareholders in
connection with the meeting of shareholders referenced in this Section 6.01.
6.02. Other Approvals and Actions. (a) Shelby County and SCSB shall
proceed expeditiously, cooperate fully and use their reasonable efforts to
assist Blue River in procuring, upon terms and conditions reasonably acceptable
to Blue River, all consents, authorizations, approvals, registrations and
certificates, in completing all filings and applications and in satisfying all
other requirements prescribed by law which are necessary for the IPO (as
defined in Section 7.02 hereof) and the consummation of the Merger on the terms
and conditions provided in this Agreement.
(b) Shelby County and SCSB shall take all necessary steps to (i)
terminate the Stock Option Plan as of the Effective Time such that, among other
things, the Stock Options will terminate or lapse if not exercised prior to the
Effective Time and (ii) assist Blue River in the disposition of the SCSB
Retirement Plan (as hereinafter defined), in accordance with Section 7.03
hereof. Shelby County shall pay all costs and expenses associated with the
disposition of such plans, to the extent incurred prior to the Effective Time.
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(c) Shelby County shall take all necessary steps to redeem the
rights granted pursuant to the Rights Agreement at or prior to the Effective
Time at an aggregate cost not to exceed Twenty Thousand Dollars ($20,000).
(d) In advance of filing the Proxy Statement with the Securities
and Exchange Commission ("SEC"), Shelby County shall provide to Blue River and
its counsel with a copy of the Proxy Statement and provide them an opportunity
to comment thereon.
6.03. Conduct of Business. (a) On and after the date of this
Agreement and until the Effective Time or until this Agreement shall be
terminated as herein provided, neither Shelby County, SCSB nor either of the
Subsidiaries shall, without the prior written consent of Blue River:
(i) make any changes in its capital stock accounts
(including, without limitation, any stock split,
stock dividend, recapitalization or
reclassification);
(ii) authorize a class of securities, issue or grant, or
authorize the issuance or grant of, securities or
options other than or in addition to the presently
issued and outstanding shares of Shelby County
Common Stock, SCSB Common Stock, Shelby Group Common
Stock or First Tier Common Stock set forth in
Section 4.03 hereof and other than the presently
outstanding options to purchase an aggregate of
13,800 shares of Shelby County Common Stock;
(iii) distribute or pay any dividends on its shares of
common stock, or make any other distribution to its
shareholders, except that Shelby County may pay to
its shareholders its normal and customary quarterly
cash dividend in an amount not to exceed twelve and
one-half cents ($0.125) per share of Shelby County
Common Stock for each such dividend until the
Effective Time and except that SCSB may pay cash
dividends to Shelby County in the ordinary course of
business in accordance with past practices for
payment of reasonable and necessary business and
operating expenses of Shelby County;
(iv) redeem any of its outstanding shares of common
stock;
(v) merge, combine or consolidate or effect a share
exchange with or sell substantially all of its
assets or any of its securities to any other person,
corporation or entity or enter into any similar
transaction not in the ordinary course of business;
(vi) assume any liabilities of any bank or savings and
loan holding company, bank, savings association,
corporation or other entity, except in the ordinary
course of business;
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(vii) except in the ordinary course of business in
accordance with sound banking practices (and, with
respect to loan transactions or commitments, letters
of credit and deposit accounts, only on terms and
conditions which are not materially more favorable
than those available to the borrower or customer
from competitive sources in transactions in the
ordinary course of business) make any loan, payment
or disbursement; issue any loan commitment, letter
of credit or line of credit; accept any deposit;
enter into any lease, contract, agreement
understanding or arrangement; amend, modify or
terminate, or forgive or grant any waiver or
concession under, any loan, debt or obligation owed
to Shelby County or SCSB; or guaranty any debt or
obligation of any third party;
(viii) except for acquisitions or dispositions in the
ordinary course of business, acquire or dispose of
any property or asset in excess of $5,000
individually or $10,000 in the aggregate;
(ix) except for the pledge of securities to secure public
funds deposits or except for additional borrowings
in the ordinary course of business from the Federal
Home Loan Bank of Indianapolis not to exceed $22.5
Million in the aggregate, subject any of its
properties or assets to a mortgage, lien, claim,
charge, option, restriction, security interest or
encumbrance;
(x) promote to a new position or increase the rate of
compensation (except for promotions and compensation
increases in the ordinary course of business and in
accordance with past practices and established
employment policies), or enter into any agreement to
promote to a new position or increase the rate of
compensation, of any director, officer or employee
of Shelby County, SCSB or either of the
Subsidiaries;
(xi) execute, create, institute, modify, amend or
terminate (except with respect to any amendments to
the Shelby County Plans required by law, rule or
regulation, except with respect to the amendments to
the Stock Option Plan as described in Section
6.02(b)(i) hereof, except with respect to the
termination of the SCSB Retirement Plan as described
in Section 6.02(b)(ii) hereof and as contemplated by
Section 7.03 hereof, except with respect to the
amendments to the Employment Agreements and the
Meyerholtz Agreement as contemplated by Section 6.11
hereof and except with respect to the Termination
Agreement (as hereinafter defined)) any pension,
retirement, savings, stock purchase, stock bonus,
stock ownership, stock option, stock appreciation or
depreciation right or profit sharing plans of Shelby
County or SCSB; any employment, deferred
compensation, consulting, bonus or collective
bargaining agreement; any group insurance or health
contract or policy; or any other incentive,
retirement or employee welfare or pension benefit
plan, agreement or understanding for current or
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former directors, officers or employees of Shelby
County, SCSB or either of the Subsidiaries; or
change the level of benefits or payments under any
of the foregoing or increase or decrease any
severance or termination of pay benefits or any
other fringe or employee benefits other than as
required by law or regulatory authorities;
(xii) make any filing concerning the amendments to or
disposition of the Shelby County Plans as provided
in Section 7.03 hereof to any employee of Shelby
County, SCSB or either of the Subsidiaries or any
third party, including any regulatory authority;
(xiii) modify, amend or institute new employment policies
or practices (other than in the ordinary course of
business consistent with past practices) or enter
into, renew or extend any employment, indemnity,
reimbursement, consulting, compensation or severance
agreements with respect to any present or former
directors, officers or employees of Shelby County,
SCSB or either of the Subsidiaries;
(xiv) hire or employ any new or additional employees of
Shelby County, SCSB or either of the Subsidiaries,
except those which are reasonably necessary for the
proper operation of Shelby County's, SCSB's or
either of the Subsidiaries' business;
(xv) amend, modify or restate Shelby County's, Shelby
Group's or First Tier's Articles of Incorporation or
By-Laws or SCSB's Charter or By-Laws from those in
effect on the date of this Agreement and as
delivered to Blue River hereunder;
(xvi) give, dispose of, sell, convey or transfer; assign,
hypothecate, pledge or encumber; or grant a security
interest in or option or right to acquire any shares
of capital stock of Shelby County, SCSB, Shelby
Group or First Tier or substantially all of the
assets of Shelby County, SCSB, Shelby Group or First
Tier, or enter into any agreement or commitment
relative to the foregoing;
(xvii) fail to continue to make additions to in accordance
with past practices and to otherwise maintain in all
respects SCSB's reserve for loan and lease losses,
or any other reserve account, in accordance with
safe, sound and prudent banking practices and in
accordance with generally accepted accounting
principles applied on a consistent basis;
(xviii) fail to accrue, pay, discharge and satisfy all
accounts payable, debts, liabilities, obligations
and expenses incurred in the regular and ordinary
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course of business as such payables, debts,
liabilities, obligations and expenses become due;
(xix) issue, or authorize the issuance of, any securities
convertible into or exchangeable for Shelby County
Common Stock, SCSB Common Stock, Shelby Group Common
Stock or First Tier Common Stock;
(xx) except for accounts payable and similar liabilities
and obligations incurred in the ordinary course of
business, for the payment, discharge or satisfaction
in the ordinary course of business of liabilities
reflected in the Shelby County Financial Statements
or the Subsequent Shelby County Financial Statements
and for additional borrowings in the ordinary course
of business from the Federal Home Loan Bank of
Indianapolis not to exceed $22.5 Million, borrow any
money or incur any indebtedness, including, without
limitation, through the issuance of debentures, or
incur any liability or obligation (whether absolute,
accrued, contingent or otherwise), in an aggregate
amount exceeding $5,000, other than legal,
accounting, and investment banker fees and proxy
printing and mailing costs relating to the Merger or
the operation of Shelby County's and SCSB's
business;
(xxi) open, close, move or, in any material respect,
expand, renovate, alter or change any of its offices
or branches;
(xxii) pay or commit to pay any management, consulting,
professional or other similar type of fees, except
for the reasonable fees paid to Shelby County's and
SCSB's existing attorneys and accountants for work
done in the ordinary course of Shelby County's and
SCSB's business and the reasonable fees paid to
Shelby County's attorneys, accountants, investment
banker and other advisors with respect to the Merger
which shall not exceed in the aggregate the amount
of fees set forth in the agreements or other
arrangements disclosed in the Disclosure Schedule;
(xxiii) enter into any contract, agreement, lease,
commitment, understanding, arrangement or
transaction or incur any liability or obligation
(other than as contemplated by Section 6.03(a)(vii)
hereof) requiring payments by Shelby County, SCSB or
either of the Subsidiaries which exceed $5,000,
whether individually or in the aggregate, or that is
not in the ordinary course of business;
(xxiv) elect or appoint any director or officer of Shelby
County, SCSB or either of the Subsidiaries in
addition to or other than Jack Disser and those
persons who were directors or officers of Shelby
County, SCSB or either of the Subsidiaries on the
date of the Agreement;
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(xxv) execute, create, institute, modify, amend or
terminate any shareholders rights plan (including
the Rights Agreement), poison pill or any other
anti-takeover plan, device, mechanism or arrangement
involving, restricting, prohibiting or discouraging
a change in control, merger, sale or other
combination of Shelby County, SCSB or either of the
Subsidiaries or which may be considered an
anti-takeover mechanism (except with respect to the
amendments to the Stock Option Plan as contemplated
by Section 6.02(b)(i) hereof and except with respect
to the amendments to the Employment Agreements and
the Meyerholtz Agreement as contemplated by Section
6.11 hereof and except with respect to the
Termination Agreement);
(xxvi) redeem the rights granted pursuant to the Rights
Agreement (except as provided by Section 6.02(c)
hereof and Section 5(d) of the Stock Option
Agreement ("Lock-up Agreement") dated of even date
herewith by and between Blue River and Shelby
County);
(xxvii) make or modify, or commit to make or modify, any
30-year fixed rate mortgage loan that will have an
annual interest rate which is less than the Federal
National Mortgage Association (Fannie Mae) posted
yields on 30-year mortgage commitments (priced at
par) for delivery within 30 days, as published in
the "Money Rates" section of The Wall Street Journal
(Midwest Edition) on the most recent date (which The
Wall Street Journal (Midwest Edition) is published)
preceding the date which SCSB makes or commits to
make any such 30-year fixed rate mortgage loan;
(xxviii) violate any law, statute, rule, regulation,
directive or other legal requirement in any material
respect; or
(xxviv) enter into any contract, agreement, commitment or
understanding with respect to any of the foregoing
specified in this Section 6.03(a).
(b) Shelby County, SCSB and each of the Subsidiaries shall
maintain, or cause to be maintained, in full force and effect, insurance on its
assets, properties and operations, fidelity coverage and directors' and
officers' liability insurance on its directors, officers and employees in such
amounts and with regard to such liabilities and hazards as are currently
insured by Shelby County, SCSB and the Subsidiaries as of the date of this
Agreement.
(c) Shelby County, SCSB and each of the Subsidiaries shall cause
its attorneys, accountants and other professionals and advisors and all other
parties doing business with Shelby County, SCSB or any of the Subsidiaries to
bill or invoice for goods or services provided no less frequently than monthly.
6.04. Preservation of Business. On and after the date of this
Agreement and until the Effective Time or until this Agreement is terminated as
herein provided, each of Shelby County,
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SCSB and each of the Subsidiaries shall (a) carry on its business diligently,
substantially in the manner as is presently being conducted and in the ordinary
course of business; (b) use its reasonable efforts to preserve its business
organization intact, keep available the services of the present officers and
employees and preserve its present relationships with customers and persons
having business dealings with it; (c) maintain all of the properties and assets
that it owns or utilizes in good operating condition and repair, reasonable
wear and tear excepted, and maintain insurance upon such properties and assets
in amounts and kinds comparable to that in effect on the date of this
Agreement; (d) maintain its books, records and accounts in the usual, regular
and ordinary manner, on a basis consistent with prior years and in compliance
with all material respects with all statutes, laws, rules and regulations
applicable to it and to the conduct of its business; and (e) not do or fail to
do anything which will cause a material breach of, or material default in, any
contract, agreement, commitment, obligation, understanding, arrangement, lease
or license to which it is a party or by which it is or may be subject or bound.
6.05. Other Negotiations. (a) Subject to Section 6.05(b) hereof,
on and after the date of this Agreement and until the Effective Time or until
this Agreement is terminated as herein provided, Shelby County, SCSB and each
of the Subsidiaries (except with the prior written approval of Blue River)
shall not, nor shall they permit or authorize their respective directors,
officers, employees, agents or representatives to, directly or indirectly,
initiate, solicit, facilitate, encourage or engage in discussions or
negotiations with, or provide information to, any corporation, association,
partnership, limited liability company, person or other entity or group
concerning any merger, consolidation, share exchange, combination, affiliation,
purchase or sale of substantial assets, sale of shares of common 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 relating to Shelby County, SCSB or either of the
Subsidiaries or to which Shelby County, SCSB or either of the Subsidiaries may
become a party (all such transactions are hereinafter referred to as
"Acquisition Transactions"). Shelby County, SCSB and the Subsidiaries shall
promptly communicate to Blue River the terms of any proposal or offer which
either of them may receive with respect to an Acquisition Transaction and any
request by or indication of interest on the part of any third party with
respect to the initiation of any Acquisition Transaction or discussions with
respect thereto.
(b) On and after the date of this Agreement and until the
Effective Time or until this Agreement is terminated as herein provided, Shelby
County may engage, and may permit and authorize its directors, officers,
employees, agents or representatives to engage in discussions or negotiations
with or provide information to any corporation, association, partnership,
limited liability company, person or other entity or group concerning an
unsolicited offer by such third party with respect to an Acquisition
Transaction only with the prior written approval of Blue River, which approval
shall be provided to Shelby County promptly upon receipt by Blue River of a
letter from Shelby County signed by at least a majority of its Board of
Directors then in office indicating that Shelby County has received an
unsolicited offer regarding an Acquisition Transaction which the Board of
Directors of Shelby County (i) considers, in the exercise of its fiduciary
duties as a Board, to be substantially superior, taking into account all
relevant factors, to the then current offer of Blue River pursuant to this
Agreement and (ii) concludes, after consultation with its counsel, that its
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fiduciary duties as a Board require it to consider (based upon a written
opinion of Shelby County's legal counsel advising the Board to consider) and,
in light of such duties, take such other actions with respect to such
unsolicited offer as may be necessary or appropriate; and such approval may, in
all other instances, be provided to Shelby County when and if Blue River shall,
in its sole discretion, determine. This Section 6.05 shall not authorize
Shelby County, SCSB or either of the Subsidiaries or any of their directors,
officers, employees, agents or representatives to solicit or initiate any
discussions or negotiations relative to an Acquisition Transaction with a third
party.
6.06. Press Releases. Except as required by law, neither Shelby
County, SCSB nor either of the Subsidiaries shall issue any press releases or
make any other public announcements or disclosures relating to the Merger
without the prior consent of Blue River, which consent shall not be
unreasonably withheld.
6.07. Disclosure Schedule Update. Shelby County shall promptly
supplement, amend and update, upon the occurrence of any change prior to the
Effective Time, and as of the Effective Time, the Disclosure Schedule with
respect to any agreements, documents, matters or events hereafter arising
which, if in existence or having occurred as of the date of this Agreement,
would have been required to be set forth or described in the Disclosure
Schedule or this Agreement and including, without limitation, any fact which,
if existing or known as of the date hereof, would have made any of the
representations or warranties of Shelby County or SCSB contained herein
materially incorrect, untrue or misleading.
6.08. Information, Access Thereto, Confidentiality. Blue River and
its attorneys, accountants, representatives, advisors and agents shall, at all
times during normal business hours prior to the Effective Time, have full and
continuing access to the properties, facilities, operations, books and records
of Shelby County, SCSB and the Subsidiaries. Blue River and its attorneys,
accountants, representatives, advisors and agents may, prior to the Effective
Time, make or cause to be made such reasonable investigation (including,
without limitation, any environmental review study, survey or assessment of
Shelby County's, SCSB's or any Subsidiary's real properties) of the operations,
books, records and properties of Shelby County, SCSB and the Subsidiaries and
of their financial and legal condition as deemed necessary or advisable to
familiarize themselves with such operations, books, records, properties and
other matters; provided, however, that such access or investigation shall not
interfere unnecessarily with the normal operations of Shelby County, SCSB or
either of the Subsidiaries; and provided further, that if Blue River elects to
conduct or have conducted on its behalf an environmental review, study, survey
or assessment to verify the representations and warranties given by Shelby
County, SCSB and the Subsidiaries with respect to the environmental matters
specified in Section 4.11(b) hereof, all reports and findings related to such
environmental review, study, survey or assessment shall be shall be disclosed
to Shelby County, SCSB and the Subsidiaries within fifteen (15) days of the
date of such report or finding. Upon request, Shelby County, SCSB and the
Subsidiaries shall furnish Blue River, or its attorneys, accountants,
representatives, advisors or agents, Shelby County's attorneys' responses to
external auditors requests for information, management letters received from
its external auditors and such financial, loan and operating data and other
information reasonably requested by Blue River which has been or is developed
by Shelby County, SCSB or either of the Subsidiaries or their auditors,
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accountants or attorneys (provided with respect to attorneys, such disclosure
would not result in the waiver by Shelby County, SCSB or either of the
Subsidiaries of any claim of attorney-client privilege), and will permit Blue
River and its respective representatives or agents to discuss such information
directly with any individual or firm performing auditing or accounting
functions for Shelby County, SCSB or either of the Subsidiaries, and such
auditors and accountants shall be directed to furnish copies of any reports or
financial information as developed to Blue River or its auditors or
accountants. No investigation or review by Blue River (whether conducted
before or after the date hereof) shall affect the representations and
warranties made by Shelby County or SCSB herein or the information contained in
any document provided hereunder, and Blue River shall be entitled to rely on
such representations, warranties and documents notwithstanding any such
investigation or review. Any confidential information or trade secrets
received by Blue River or its representatives or agents in the course of such
examination shall be treated confidentially, and any correspondence, memoranda,
records, copies, documents and electronic or other media of any kind containing
such confidential information or trade secrets or both shall be destroyed by
Blue River or, at Shelby County's request, returned to Shelby County in the
event this Agreement is terminated as provided in Section 9 hereof. This
Section 6.08 shall not require the disclosure of any information to Blue River
which would be prohibited by law.
6.09. Subsequent Shelby County Financial Statements. As soon as
available after the date of this Agreement, Shelby County shall deliver to Blue
River the monthly unaudited consolidated balance sheets and income statements
of Shelby County prepared for its internal use, Shelby County's Forms 10-Q for
each quarterly period and Form 10-K for each fiscal year completed prior to the
Effective Time and all other financial reports or statements, including the
notes thereto, submitted to regulatory authorities after the date hereof, to
the extent permitted by law (collectively, "Subsequent Shelby County Financial
Statements"). The Subsequent Shelby County Financial Statements shall be
prepared on a basis consistent with past accounting practices and generally
accepted accounting principles applied on a consistent basis and shall present
fairly the financial condition and results of operations as of the dates and
for the periods presented. The Subsequent Shelby County Financial Statements
will not include any assets, liabilities or obligations or omit to state any
assets, liabilities or obligations, absolute or contingent, or any other facts,
which inclusion or omission would render such financial statements inaccurate,
incomplete or misleading in any material respect.
6.10. Employee Benefits. Neither the terms of Section 7.03 hereof
(except as otherwise expressly provided therein) nor the provision of any
employee benefits by Blue River or any of its subsidiaries to employees of
Shelby County, SCSB and the Subsidiaries shall (i) create any employment
contract, agreement or understanding with or employment rights for, or
constitute a commitment or obligation of employment to, any of the officers or
employees of Shelby County, SCSB and the Subsidiaries or (ii) except as
expressly provided in this Agreement, prohibit or restrict Blue River or its
subsidiaries, whether before or after the Effective Time, from changing,
amending or terminating any employee benefits provided to its employees from
time to time.
6.11. Employment Agreements. Prior to the Effective Time, SCSB
shall use all reasonable efforts to cause the employment agreements between
SCSB and each of Ronald L. Lanter, Joyce
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E. Ford and Rita Sturgill (each in the form set forth in the Disclosure
Schedule) (collectively referred to herein as the "Employment Agreements") to
be amended, all in form and substance reasonably satisfactory to Blue River,
such that (i) the requirement that each participate in a stock option plan
shall be deleted and all references as to title other than the title of Vice
President shall be deleted, (ii) each will receive employee benefits in
accordance with Blue River's employee benefit plans instead of SCSB's plans and
(iii) the term of each of the Employment Agreements shall end one (1) year from
the Effective Time. Other than the foregoing amendments, the Employment
Agreements shall not be amended or modified in any respect, and none of the
respective terms of the Employment Agreements shall be extended or renewed. On
the date hereof, SCSB and Rodney L. Meyerholtz shall enter into an agreement
relating to the Meyerholtz Agreement ("Termination Agreement") to the effect
that the Meyerholtz Agreement shall be terminated as of the Effective Time upon
the terms and conditions specified in the Termination Agreement. Other than as
set forth in the Termination Agreement, the Meyerholtz Agreement shall not be
changed, amended or modified in any respect and the term thereof shall not be
extended or renewed without the prior written consent of Blue River, SCSB and
Mr. Meyerholtz.
6.12. Certain Actions. Neither Shelby County, SCSB nor either of
the Subsidiaries shall intentionally or knowingly take, cause to be taken or
fail to take any action which will cause or result in a misrepresentation or a
breach of a covenant or warranty of this Agreement that will give Blue River
the right to terminate this Agreement pursuant to Section 9.01(b) hereof or
which will result in a condition precedent to consummation of the Merger not to
be satisfied or fulfilled.
6.13. Restructure. Shelby County and SCSB understand, acknowledge
and agree that Blue River, in its sole discretion, may change the structure of
the transactions contemplated by this Agreement; provided, however, that any
such change in structure shall not affect the Conversion Price or the
consideration to be paid hereunder to the shareholders of Shelby County or
cause the consummation of the Merger to be delayed. Shelby County and SCSB
shall execute and deliver such amendments, agreements and instruments and take
such further actions as Blue River may reasonably request in connection with
any such restructure of the transactions contemplated by this Agreement.
SECTION 7
COVENANTS OF BLUE RIVER
Blue River covenants and agrees with Shelby County as follows:
7.01. Approvals. (a) Blue River shall have primary responsibility
for the preparation, filing and cost of all filings and applications required
for consummation of the Merger, except for the Proxy Statement. Blue River
shall file all such applications as soon as practicable after the execution of
this Agreement. Blue River shall provide to Shelby County's counsel copies of
all applications filed and copies of all material written communications with
all state and federal bank regulatory agencies relating to such applications.
Blue River shall proceed expeditiously, cooperate fully and use its best
efforts to procure, upon terms and conditions reasonably acceptable to Blue
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River, all consents, authorizations, approvals, registrations and certificates,
to complete all filings and applications and to satisfy all other requirements
prescribed by law which are necessary for consummation of the Merger on the
terms and conditions provided in this Agreement at the earliest possible
reasonable date, except as set forth in Section 6.01 hereof.
(b) Blue River shall submit this Agreement to its shareholders for
approval at a meeting to be called and held in accordance with applicable law
and the Articles of Incorporation and By-Laws of Blue River at a date
reasonably in advance of the Effective Time and the Board of Directors of Blue
River shall recommend, by at least a majority vote, to Blue River's
shareholders that such shareholders approve this Agreement and the Merger.
7.02. SEC Registration. Blue River shall file with the SEC as soon
as practicable after the execution of this Agreement a Registration Statement
on an appropriate form under the 1933 Act covering the shares of Blue River
common stock to be sold in its initial public offering ("IPO"). Such
Registration Statement and any amendments and supplements thereto are referred
to in this Agreement as the "Registration Statement." The Registration
Statement shall include a prospectus ("Prospectus") relating to the shares of
Blue River common stock to be sold in the IPO. In advance of filing the
Registration Statement and all other filings described in Section 7.01 hereof,
Blue River shall provide Shelby County and its counsel with a copy of the
Registration Statement and each such other filing and provide an opportunity to
comment thereon.
7.03. Blue River Benefit Plans. (a) General. Blue River will make
available to the employees of SCSB who continue as employees of SCSB after the
Effective Time such employee benefits as the Board of Directors of Blue River
may determine to provide to employees from time to time. Until such time as
the employees of SCSB become eligible to participate in or eligible to be
covered by Blue River's employee pension benefit plans or employee welfare
benefit plans, employees of SCSB who would otherwise be eligible to participate
in or be covered by the employee pension benefit and employee welfare benefit
plans of Blue River under the terms thereof shall remain participants in or
covered by the employee pension benefit plans and employees welfare benefit
plans of Shelby County in existence at the Effective Time, subject to the terms
of such plans, to the extent provided by such plans of Shelby County.
Notwithstanding the foregoing or anything herein to the contrary, Blue River
shall not be obligated to provide any employee benefit plans to employees of
SCSB following the Merger who meet the applicable eligible requirements except
for the Blue River Profit Sharing Plan (as hereinafter defined) and group
health and hospitalization insurance.
(b) Eligibility and Vesting. Years of service, as defined in the
applicable Blue River employee welfare or pension benefit plan, with SCSB prior
to the Effective Time shall be credited to each employee of SCSB eligible for
coverage under Section 7.03(a) hereof for purposes of (i) eligibility under
Blue River's employee welfare benefit plans; and (ii) eligibility and vesting,
but not for purposes of benefit accrual or contributions, under the Blue River
Employees' Savings and Profit Sharing Plan ("Blue River Profit Sharing Plan").
The employees of SCSB shall become covered by Blue River's employee pension and
welfare benefit plans at such time(s) as shall be specified by Blue River in
its sole discretion, subject to Section 7.03(a) hereof. The service credit
provided by
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this Section 7.03(b) will become effective for a plan on the date Blue River
specifies pursuant to the preceding sentence. Those officers and employees of
SCSB who otherwise meet the eligibility requirements of the designated plan,
based upon their age and years of service for SCSB and Blue River, shall become
participants thereunder on the entry date which coincides with or next follows
the specified date. Those officers and employees of SCSB who do not meet the
eligibility requirements of the designated plan on such date shall become
participants thereunder on the first plan entry date which coincides with or
next follows the date on which such eligibility requirements are satisfied.
(c) Financial Institutions Retirement Fund. The accrual of
participants' benefits under SCSB's Financial Institutions Retirement Fund
("SCSB Retirement Plan") shall be frozen effective as of December 31st of the
year in which the Effective Time occurs, and all accrued benefits of
participants in the SCSB Retirement Plan shall thereupon become fully vested.
To the extent permitted by the SCSB Retirement Plan and applicable law, the
accrued benefit of each participant in the SCSB Retirement Plan shall be held
and remain under the SCSB Retirement Plan and shall be payable at the time(s)
and in the forms provided for under that plan. Blue River shall be responsible
for the withdrawal of SCSB from the SCSB Retirement Plan and for making any
required or appropriate application to the Service for a determination letter
to the effect that such withdrawal does not adversely affect the tax-qualified
status of such plan and for providing any notices to the Pension Benefit
Guaranty Corporation or other governmental entity regarding the withdrawal.
SCSB shall make contributions to the SCSB Retirement Plan through the date of
such withdrawal only to the extent required to maintain the plan's
tax-qualified status and avoid any federal income taxes or penalties
attributable to the plan's funding status.
7.04. Press Releases. Except as required by law, Blue River shall
not issue any press releases or make any other public announcements or
disclosures relating primarily to Shelby County, SCSB or either of the
Subsidiaries with respect to the Merger without the prior consent of Shelby
County, which consent shall not be unreasonably withheld.
7.05. Information, Access Thereto, Confidentiality. Shelby County
and its attorneys, accountants, representatives, advisors and agents shall, at
all times during normal business hours prior to the Effective Time, have full
and continuing access to the facilities, operations, books, records and
properties of Blue River. Shelby County and its attorneys, accountants,
representatives, advisors and agents may, prior to the Effective Time, make or
cause to be made such reasonable investigation of the operations, books,
records and properties of Blue River and of its financial and legal condition
as Shelby County shall deem reasonable necessary or advisable to familiarize
itself with such books, records, properties and other matters; provided,
however, that such access or investigation shall not interfere unnecessarily
with the normal operations of Blue River. No investigation or review by Shelby
County (whether conducted before or after the date hereof) shall affect the
representations and warranties made by Blue River or the information contained
in any document provided herein, and Shelby County shall be entitled to rely on
such representations, warranties and documents notwithstanding any such
investigation or review. Any confidential information or trade secrets
received by Shelby County or its respective employees or agents in the course
of such examination shall be treated confidentially, and any correspondence,
memoranda,
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records, copies, documents and electronic or other media of any kind containing
such confidential information or trade secrets or both shall be destroyed by
Shelby County or, at Blue River's request, returned to Blue River in the event
this Agreement is terminated as provided in Section 9 hereof. This Section
7.05 shall not require the disclosure of any information to Shelby County which
would be prohibited by law.
7.06. Employment Agreements. Following the Effective Time, Blue
River agrees to cause SCSB to assume all obligations under the Employment
Agreements, as amended pursuant to Section 6.11 hereof, except as may be
otherwise required by law or any government agency or authority.
7.07. Indemnification. Blue River shall cause SCSB to keep the
indemnification provisions in SCSB's Charter in effect on the date hereof in
full force and effect for a period of not less than two (2) years following the
Effective Time.
7.08. Termination Fee. (a) Blue River hereby acknowledges and
agrees that Shelby County and SCSB have committed and will commit substantial
time, effort, resources and expenses in pursuing the Merger. Blue River
further agrees that it shall pay to Shelby County a termination fee in the
amount the amount of One Hundred Thousand Dollars ($100,000) in immediately
available funds ("Termination Fee"), in the event that Shelby County terminates
this Agreement pursuant to Section 9.01(c)(i), 9.01(c)(ii), 9.01(c)(iii) or
9.01(c)(iv) hereof.
(b) The Termination Fee shall be immediately paid to Shelby
County upon the termination of this Agreement by Shelby County pursuant to
Section 9.01(c) hereof. If the Termination Fee is not immediately paid as
provided, then Shelby County shall be entitled to recover interest at the
highest prime rate set forth in The Wall Street Journal (Midwest Edition) under
the section entitled "Money Rates" on the unpaid amount of the Termination Fee
from the time the Termination Fee is due until paid-in-full, together with all
costs of collection thereof, including reasonable attorneys' fees and expenses.
(c) Blue River, Shelby County and SCSB hereby acknowledge and
agree that the Termination Fee shall compensate Shelby County and SCSB for (i)
certain expenses incurred for attorneys, accountants, financial advisors and
consultants of Shelby County and SCSB in developing the Merger and drafting
this Agreement, (ii) Shelby County and SCSB's management time and expense in
investigating, analyzing, developing and pursuing the Merger, and (iii)
expenses relating to Shelby County and SCSB's due diligence efforts. Blue
River further acknowledges and agrees that the amount of the Termination Fee is
fair, reasonable and not a penalty and that its obligation to pay the
Termination Fee shall survive any termination of this Agreement by Shelby
County or SCSB.
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SECTION 8
CONDITIONS PRECEDENT TO THE TRANSACTION
8.01. Blue River. The obligation of Blue River to consummate the
Merger is subject to the satisfaction and fulfillment of each of the following
conditions on or prior to the Effective Time, unless waived in writing by Blue
River:
(a) Representations and Warranties at Effective Time. Each of the
representations and warranties of Shelby County and SCSB contained in this
Agreement shall be true, accurate and correct in all material respects at and
as of the Effective Time as though such representations and warranties had been
made or given on and as of the Effective Time.
(b) Covenants. Each of the covenants and agreements of Shelby
County and SCSB shall have been fulfilled or complied with from the date of
this Agreement through and as of the Effective Time.
(c) Deliveries at Closing. Blue River shall have received from
Shelby County and SCSB at the Closing (as hereinafter defined) the items and
documents, in form and content reasonably satisfactory to Blue River, set forth
in Section 11.02(b) hereof.
(d) Stock Offering. Blue River shall have (i) registered under
the 1933 Act its shares of common stock to be sold in the IPO; (ii) caused each
registration statement with respect to the shares to be issued in the IPO to
have been declared effective by the SEC, and the SEC shall not have issued or
threatened to issue a stop order with respect to each such registration
statement; (iii) received all state securities or Blue Sky approvals,
authorizations and/or exemptions with respect to the shares to be sold in the
IPO; (iv) executed with Roney & Co. or any other investment banking firm, an
underwriting agreement with respect to the shares to be sold in the IPO; and
(v) sold at least 1 million shares of common stock of Blue River in the IPO.
(e) Regulatory Approvals. All appropriate orders, consents,
approvals and clearances from all regulatory agencies and governmental
authorities whose orders, consents, approvals or clearances are required by law
for consummation of the Merger shall have been obtained on terms and conditions
reasonably satisfactory to Blue River.
(f) Shareholder Approvals. The shareholders of Blue River and
Shelby County shall have approved and adopted this Agreement as required by
applicable law and their respective Articles of Incorporation.
(g) Officers' Certificate. Shelby County shall have delivered to
Blue River a certificate signed by its Chairman or President and its Secretary,
dated as of the Effective Time, certifying that (i) all the representations and
warranties of Shelby County and SCSB are true, accurate and correct in all
material respects on and as of the Effective Time; (ii) all the covenants of
Shelby County and SCSB have been complied with from the date of this Agreement
through and as of the Effective
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Time; and (iii) Shelby County and SCSB has satisfied and fully complied with
all conditions necessary to make this Agreement effective as to it.
(h) Shareholders' Equity. As of the last day of the month
immediately preceding the Effective Time, the shareholders' equity of Shelby
County on a consolidated basis shall be at least Six Million Nine Hundred
Thousand Dollars ($6,900,000) as reflected on Shelby County's financial
statements as of such date and as determined in accordance with generally
accepted accounting principles applied in a consistent basis. Such amount of
shareholders' equity shall be calculated after all liability accruals and
payments have been made for all legal, accounting, investment banking,
environmental and other professional or advisors' fees of Shelby County and
SCSB and all expenses of Shelby County and SCSB relating to the Merger incurred
as of and through the date of such financial statements.
8.02. Shelby County. The obligations of Shelby County and SCSB to
consummate the Merger is subject to the satisfaction and fulfillment of each of
the following conditions on or prior to the Effective Time, unless waived in
writing by Shelby County:
(a) Representations and Warranties at Effective Time. Each of the
representations and warranties of Blue River contained in this Agreement shall
be true, accurate and correct in all material respects on and as of the
Effective Time as though such representations and warranties had been made or
given at and as of the Effective Time.
(b) Covenants. Each of the covenants and agreements of Blue River
shall have been fulfilled or complied with from the date of this Agreement
through and as of the Effective Time.
(c) Deliveries at Closing. Shelby County and SCSB shall have
received from Blue River at the Closing the items and documents, in form and
content reasonably satisfactory to Shelby County, listed in Section 11.02(a)
hereof.
(d) Regulatory Approvals. All appropriate orders, consents,
approvals and clearances from all regulatory agencies and governmental
authorities whose orders, consents, approvals or clearances are required by law
for consummation of the Merger shall have been obtained.
(e) Shareholder Approvals. The shareholders of Blue River and
Shelby County shall have approved and adopted this Agreement as required by
applicable law and their respective Articles of Incorporation.
(f) Fairness Opinion. Shelby County shall have received the
Fairness Opinion by the date of the Proxy Statement. The obligations of Shelby
County and SCSB to consummate the Merger are not subject to or conditioned upon
any update to, supplement to or bring-down of the Fairness Opinion or the
issuance of another opinion stating that the Conversion Price is fair to the
shareholders of Shelby County from a financial point of view.
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(g) Officers' Certificate. Blue River shall have delivered to
Shelby County and SCSB a certificate signed by its Chairman or President and
its Secretary, dated as of the Effective Time, certifying that (i) all the
representations and warranties of Blue River are true, accurate and correct in
all material respects on and as of the Effective Time; (ii) all the covenants
of Blue River have been complied with from the date of this Agreement through
and as of the Effective Time; and (iii) Blue River has satisfied and fully
complied with all conditions necessary to make this Agreement effective as to
it.
SECTION 9
TERMINATION OF MERGER
9.01. Manner of Termination. This Agreement and the Merger may be
terminated at any time prior to the Effective Time by written notice delivered
by Blue River to Shelby County, or by Shelby County to Blue River, as follows:
(a) By Blue River or Shelby County, if:
(i) the Merger contemplated by this Agreement has not
been consummated by August 31, 1998; provided,
however, that Blue River may extend such date for up
to sixty (60) days, solely for the purpose of
obtaining regulatory approvals contemplated by
Section 8.01(e) hereof and Section 8.02(d) hereof; or
(ii) the respective Boards of Directors of Blue River,
Shelby County and SCSB mutually agree to terminate
this Agreement.
(b) By Blue River, if:
(i) any item, event or information set forth in any
supplement, amendment or update to the Disclosure
Schedule has had or would be expected to have, in the
reasonable discretion of Blue River, a material
adverse effect on the business, prospects, assets,
capitalization, financial condition or results of
operations of Shelby County or SCSB, whether
individually or on a consolidated basis, or Shelby
Group or First Tier on a consolidated basis with
Shelby County; or
(ii) there has been a misrepresentation or a breach of any
warranty by or on the part of Shelby County or SCSB
in their representations and warranties set forth in
this Agreement which has had or would be expected to
have, in the reasonable discretion of Blue River, a
material adverse effect on the business, prospects,
assets, capitalization, financial condition or
results of operations of Shelby County or SCSB,
whether individually or on a consolidated basis, or
Shelby Group or First Tier on a consolidated basis
with Shelby County;
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provided, however, that in the event of any
inaccuracy in the representations and warranties
contained in Section 4.03 hereof relative to the
number of issued and outstanding shares of Shelby
County Common Stock, SCSB Common Stock, Shelby Group
Common Stock or First Tier Common Stock, then Blue
River shall have the absolute right in its discretion
to terminate this Agreement without regard to the
materiality of any such inaccuracy; or
(iii) there has been a material breach of or a failure to
comply in all material respects with any covenant set
forth in this Agreement by or on the part of Shelby
County or SCSB; provided, however, that the covenants
set forth in Sections 6.01, 6.02, 6.03(a)(i), (ii),
(iii), (iv), (v), (vi), (vii), (ix), (xi), (xv),
(xvi), (xix), (xxi), (xxii), (xxiv), (xxv), (xxvi)
and (xvii), 6.05, 6.07 and 6.11 shall be fully
complied with by Shelby County and SCSB without
regard to materiality, except for any materiality
qualification set forth in such Sections; or
(iv) Blue River shall reasonably determine that the Merger
has become inadvisable or impracticable by reason of
commencement or threat of any claim, litigation or
proceeding against Blue River, Shelby County, SCSB,
Shelby Group, or First Tier or any director or
officer of any of such entities (A) relating to this
Agreement or the Merger or (B) which is likely to
have a material adverse effect on the business,
prospects, assets, capitalization, financial
condition or results of operations of Shelby County
or SCSB, whether individually or on a consolidated
basis, or Shelby Group or First Tier on a
consolidated basis with Shelby County, or of Blue
River; or
(v) there has been a material adverse change in the
business, prospects, assets, capitalization,
financial condition or results of operations of
Shelby County or SCSB, whether individually or on a
consolidated basis, or Shelby Group or First Tier on
a consolidated basis with Shelby County, at any time
as compared to that in existence as of September 30,
1997; or
(vi) Trident has not issued, by the date of the Proxy
Statement, its written opinion stating that the
Conversion Price is fair to the shareholders of
Shelby County from a financial point of view.
(c) By Shelby County, if:
(i) there has been a misrepresentation or a breach of any
warranty by or on the part of Blue River in its
representations and warranties set forth in this
Agreement which has had or would be expected to have,
in the reasonable discretion of Shelby County, a
material adverse effect on the business, assets,
capitalization, financial condition or results of
operation of Blue River; or
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(ii) there has been a breach of or failure to comply with
any covenant set forth in this Agreement by or on the
part of Blue River; or
(iii) Blue River does not receive, by February 20, 1998, a
letter of intent or other similar document from Roney
& Co. regarding its intent to act as the principal
underwriter in the IPO; or
(iv) Roney & Co. withdraws or terminates its letter of
intent or other similar document relating to the IPO
(except in connection with the execution of an
underwriting agreement); provided, however, that
before Shelby County may exercise its right to
terminate this Agreement pursuant to this Section
9.01(c)(iv), Blue River shall have thirty (30) days
from the date of such withdrawal to obtain a letter
of intent or similar document from another investment
banker with respect to the intent of such other
investment banker to act as the principal underwriter
in the IPO.
9.02. Effect of Termination. Upon termination by written notice,
this Agreement shall be of no further force or effect, and there shall be no
further obligations or restrictions on future activities on the part of Blue
River, Shelby County, SCSB and their respective directors, officers, employees,
agents and shareholders, except as provided in compliance with the
confidentiality provisions of this Agreement set forth in Section 6.08 and
Section 7.05 hereof, for the payment of the Termination Fee as provided by
Section 7.08 hereof and for the payment of expenses set forth in Section 12.09
hereof; provided, however, the damages of Shelby County and SCSB relating to
this Agreement and the Merger shall be limited solely to the Termination Fee;
provided, further, if such termination was the result of an intentional breach
by Shelby County or SCSB of any representation, warranty, covenant or other
provision in this Agreement, or an intentional act or omission by Shelby County
or SCSB which resulted in any representation, warranty, covenant or other
provision in this Agreement to be breached, Shelby County and SCSB shall be
liable to Blue River for damages and all costs and expenses incurred in
connection with the preparation, negotiation and execution of this Agreement,
including, but not limited to, reasonable attorneys' fees and disbursements,
reasonable fees and disbursements of accountants and tax advisors, and
reasonable fees and costs of environmental consultants. In the event that this
Agreement is terminated pursuant to this Section 9, the parties hereto each
agree that Roney & Co. and any other investment banking firm engaged by Blue
River shall have no liability relating to the failure of Blue River to fulfill
the conditions contemplated by Section 8.01(d) hereof.
SECTION 10
EFFECTIVE TIME OF THE MERGER
Upon the terms and subject to the conditions specified in this
Agreement, the Merger shall become effective at the time specified in the
Articles of Merger of Shelby County with and into Blue River as filed with the
Indiana Secretary of State ("Effective Time"). The Effective Time shall occur
not later than the last business day of the month following (a) the fulfillment
of all conditions
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precedent to the Merger set forth in Section 8 hereof, and (b) the expiration
of all waiting periods in connection with the regulatory applications filed for
the approval of the Merger.
SECTION 11
CLOSING
11.01. Closing Date and Place. So long as all conditions precedent
set forth in Section 8 have been satisfied and fulfilled, the closing of the
Merger ("Closing") shall take place on the Effective Time at the offices of
Krieg DeVault Alexander & Capehart in Indianapolis, Indiana.
11.02. Deliveries. (a) At the Closing, Blue River shall deliver to
Shelby County the following:
(i) an opinion of its counsel dated as of the Effective
Time and substantially in the form set forth in
Exhibit A attached hereto;
(ii) the officers' certificate contemplated by Section
8.02(g) hereof;
(iii) copies of all approvals by government regulatory
agencies necessary to consummate the Merger;
(iv) copies of the resolutions of the Board of Directors
of Blue River and the shareholders of Blue River, if
necessary, certified by the President or Secretary of
Blue River, relative to the approval of this
Agreement and the Merger; and
(v) such other documents as Shelby County or its legal
counsel may reasonably request.
(b) At the Closing, Shelby County shall deliver to Blue River the
following:
(i) an opinion of its counsel dated as of the Effective
Time and substantially in the form set forth in
Exhibit B attached hereto;
(ii) the officers' certificate contemplated by Section
8.01(g) hereof;
(iii) a list of Shelby County's shareholders as of the
Effective Time certified by the President and
Secretary of Shelby County;
(iv) copies of the resolutions adopted by the Board of
Directors and shareholders of Shelby County,
certified by its Chairman or President and Secretary,
relative to the approval of this Agreement and the
Merger;
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(v) copies of resolutions adopted by the Board of
Directors and sole shareholder of SCSB, certified by
its Chairman or President and Secretary, relative to
the approval of this Agreement; and
(vi) such other documents as Blue River or its legal
counsel may reasonably request.
SECTION 12
MISCELLANEOUS
12.01. Effective Agreement. This Agreement shall be binding upon and
inure to the benefit of the respective parties hereto and their respective
successors and assigns; provided, however, that this Agreement may not be
assigned by any party hereto without the prior written consent of the other
parties hereto. The representations, warranties, covenants and agreements
contained in this Agreement are for the sole benefit of the parties hereto and
their successors and assigns, and they shall not be construed as conferring any
rights on any other persons.
12.02. Waiver; Amendment. (a) Blue River or Shelby County may by an
instrument in writing: (i) extend the time for the performance of or otherwise
amend any of the covenants, conditions or agreements of the other parties to
this Agreement (other than SCSB with respect to Shelby County); (ii) waive any
inaccuracies in the representations or warranties of the other parties
contained in this Agreement or in any document delivered pursuant hereto or
thereto (other than SCSB with respect to Shelby County); (iii) waive the
performance by the other parties (other than SCSB with respect to Shelby
County) of any of the covenants or agreements to be performed by it or them
under this Agreement; or (iv) waive the satisfaction or fulfillment of any
condition, the nonsatisfaction or nonfulfillment of which is a condition to the
right of the party so waiving to consummate the Merger. The waiver by any
party hereto of a breach of or noncompliance with any provision of this
Agreement shall not operate or be construed as a continuing waiver or a waiver
of any other or subsequent breach or noncompliance hereunder.
(b) This Agreement may be amended, modified or supplemented only
by a written agreement executed by the parties hereto and, if such amendment,
modification or supplement occurs after the approval of the Agreement by the
shareholders of Shelby County, only in a manner that will not materially and
adversely affect the rights of Shelby County's shareholders hereunder without
obtaining their approval thereof.
12.03. Notices. All notices, requests and other communications
hereunder shall be in writing (which shall include telecopier communication)
and shall be deemed to have been duly given if delivered by hand and receipted
for, sent by certified United States Mail, return receipt requested, first
class postage pre-paid, delivered by overnight express receipted delivery
service or telecopied if confirmed immediately thereafter by also mailing a
copy of such notice, request or other communication by certified United States
Mail, return receipt requested, with First Class postage prepaid as follows:
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If to Blue River: with a copy to (which shall not
constitute notice):
Blue River Bancshares, Inc. Krieg DeVault Alexander & Capehart
ATTN: Robert C. Reed, President ATTN: Nicholas J. Chulos, Esq.
113 South Harrison Street One Indiana Square, Suite 2800
Shelbyville, Indiana 46176 Indianapolis, Indiana 46204-2017
Telephone: (317) 392-7700 Telephone: (317) 238-6224
Telecopier: (317) 398-7004 Telecopier: (317) 636-1507
If to Shelby County or SCSB: with a copy to (which shall not
constitute notice):
Shelby County Bancorp Bose McKinney & Evans
ATTN: James M. Robison, Chairman ATTN: David A. Butcher, Esq.
29 East Washington Street 2700 First Indiana Building
P. O. Box 438 135 South Pennsylvania Street
Shelbyville, Indiana 46176 Indianapolis, Indiana 46204
Telephone: (317) 398-9721 Telephone: (317) 684-5000
Telecopier: (317) 835-0306 Telecopier: (317) 684-5173
or such substituted address or person as any of them given to the other in
writing. All such notices, requests or other communications shall be
effective: (a) if delivered by hand, when delivered; (b) if mailed in the
manner provided herein, three (3) business days after deposit with the United
States Postal Service; (c) if delivered by overnight express delivery service,
on the next business day after deposit with such service; and (d) if by
telecopier, on the next business day if also confirmed by mail in the manner
provided herein.
12.04. Headings. The headings in this Agreement have been inserted
solely for ease of reference and should not be considered in the interpretation
or construction of this Agreement.
12.05. Severability. In case any one or more of the provisions
contained herein shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement, but this Agreement
shall be construed as if such invalid, illegal or unenforceable provision or
provisions had never been contained herein.
12.06. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but such counterparts shall
together constitute one and the same instrument.
12.07. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Indiana and applicable
federal laws.
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12.08. Entire Agreement. This Agreement supersedes all other prior
or contemporaneous understandings, commitments, representations, negotiations
or agreements, whether oral or written, between or among the parties hereto
relating to the Merger and the matters contemplated herein (including, but not
limited to, the Prior Agreement and the Memorandum dated December 5, 1997 from
Blue River to the Board of Directors of Shelby County and SCSB) and constitutes
the entire agreement among the parties hereto relating to the subject matter
hereof, except with respect to the Confidentiality Agreement dated December 9,
1997 by and between Blue River and Shelby County, the Lock-up Agreement, the
Termination Agreement and the Disclosure Schedule delivered with the Prior
Agreement, each of which shall remain in full force and effect. The parties
hereto agree that each party and its counsel reviewed and revised this
Agreement and that the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of this Agreement or any amendments or exhibits hereto.
12.09. Expenses. The parties hereto shall each pay their respective
expenses incidental to the Merger.
12.10. Certain References. Whenever in this Agreement a singular
word is used, it also shall include the plural wherever required by the context
and vice-versa. Except expressly stated otherwise, all references in this
Agreement to periods of days shall be construed to refer to calendar, not
business, days. The term "business day" shall mean any day except Saturday and
Sunday when SCSB, is open for the transaction of business.
12.11. Disclosure Schedule. The Disclosure Schedule attached hereto
is intended to be and hereby is specifically made a part of this Agreement, and
the information contained in the Disclosure Schedule shall be deemed to be
representations and warranties of Shelby County and SCSB.
* * *
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IN WITNESS WHEREOF, Blue River, Shelby County and SCSB have entered
into, executed and delivered this Agreement as of the day and year first above
written.
BLUE RIVER BANCSHARES, INC.
By: /s/ ROBERT C. REED
-----------------------------------
Robert C. Reed, President
ATTEST:
By: /s/ D. WARREN ROBINSON
---------------------------------
D. Warren Robison, Secretary
SHELBY COUNTY BANCORP
By: /s/ JAMES M. ROBISON
-----------------------------------
James M. Robison, Chairman
ATTEST:
By: /s/ DAVID A. CARMONY
---------------------------------
David A. Carmony, Secretary
SHELBY COUNTY SAVINGS BANK, FSB
By: /s/ JAMES M. ROBISON
-----------------------------------
James M. Robison, Chairman
ATTEST:
By: /s/ BETTY J. BAKER
---------------------------------
Betty J. Baker, Secretary
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Each of the undersigned directors of Shelby County hereby (a) agrees
in his capacity as a director to recommend to Shelby County's shareholders the
approval of this Agreement and the Merger in accordance with Section 6.01
hereof, and (b) agrees in his individual capacity to vote his shares of Shelby
County Common Stock that are registered in his personal name (and agrees to use
his reasonable efforts to cause all additional shares of Shelby County Common
Stock owned jointly with any other person or by his spouse or over which he has
voting influence or control to be voted) in favor of this Agreement and the
Merger. In addition, each of the undersigned directors hereby agrees not to
make any transfers of shares of Shelby County Common Stock with the purpose of
avoiding his agreements set forth in the preceding sentence.
Dated this 12th day of March, 1998.
/s/ JAMES M. ROBISON
---------------------------------------
James M. Robison
/s/ RODNEY L. MEYERHOLTZ
---------------------------------------
Rodney L. Meyerholtz
/s/ DAVID A. CARMONY
---------------------------------------
David A. Carmony
/s/ LEONARD J. FISCHER
---------------------------------------
Leonard J. Fischer
/s/ JACK D. DISSER
---------------------------------------
Jack D. Disser
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