EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
DATED AS OF
APRIL 1, 2004
BY AND BETWEEN
WESBANCO, INC.,
WOFC, INC.,
AND
WESTERN OHIO FINANCIAL CORPORATION
TABLE OF CONTENTS
PAGE
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ARTICLE ONE -- THE MERGER ................................................... 2
1.01. Merger; Surviving Corporation ................................. 2
1.02. Effective Time ................................................ 2
1.03. Effects of the Merger ......................................... 2
ARTICLE TWO -- CONVERSION OF SHARES; SURRENDER OF CERTIFICATES .............. 2
2.01. Conversion of Seller Shares ................................... 2
2.02. Election and Exchange and Payment Procedures .................. 4
2.03. Seller Shareholders' Appraisal Rights ......................... 10
2.04. Anti-Dilution Provisions ...................................... 11
ARTICLE THREE -- REPRESENTATIONS AND WARRANTIES OF SELLER ................... 11
3.01. Representations and Warranties of Seller ...................... 11
ARTICLE FOUR -- REPRESENTATIONS AND WARRANTIES OF BUYER ..................... 32
4.01. Representations and Warranties of Buyer ....................... 32
ARTICLE FIVE -- FURTHER COVENANTS OF SELLER ................................. 47
5.01. Operation of Business ......................................... 47
5.02. Notification .................................................. 51
5.03. Acquisition Proposals ......................................... 52
5.04. Delivery of Information ....................................... 54
5.05. Affiliates Compliance with the Securities Act ................. 54
5.06. Takeover Laws ................................................. 55
5.07. No Control .................................................... 55
ARTICLE SIX -- FURTHER COVENANTS OF BUYER ................................... 55
6.01. Access to Information ......................................... 55
6.02. Opportunity of Employment; Employee Benefits .................. 55
6.03. Exchange Listing .............................................. 56
6.04. Notification .................................................. 57
6.05. Takeover Laws ................................................. 57
6.06. Officers' and Directors' Indemnification ...................... 57
6.07. Election of a Seller Director(s) to Buyer Board of Directors .. 59
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ARTICLE SEVEN -- FURTHER OBLIGATIONS OF THE PARTIES ......................... 59
7.01. Seller Stock Options .......................................... 59
7.02. Necessary Further Action ...................................... 62
7.03. Cooperative Action ............................................ 62
7.04. Satisfaction of Conditions .................................... 62
7.05. Press Releases ................................................ 63
7.06. Registration Statements; Proxy Statement; Shareholders' Meeting 63
7.07. Regulatory Applications ....................................... 65
7.08. Coordination of Dividends ..................................... 65
ARTICLE EIGHT -- CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PARTIES ..... 66
8.01. Conditions to the Obligations of Buyer ........................ 66
8.02. Conditions to the Obligations of Seller ....................... 67
8.03. Mutual Conditions ............................................. 68
ARTICLE NINE -- CLOSING ..................................................... 69
9.01. Closing ....................................................... 69
9.02. Closing Transactions Required of Buyer ........................ 69
9.03. Closing Transactions Required of Seller ....................... 70
ARTICLE TEN -- NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS .... 70
10.01. Non-Survival of Representations, Warranties and Covenants ..... 70
ARTICLE ELEVEN -- TERMINATION ............................................... 71
11.01. Termination ................................................... 71
11.02. Effect of Termination ......................................... 74
ARTICLE TWELVE -- MISCELLANEOUS ............................................. 75
12.01. Notices ....................................................... 75
12.02. Counterparts .................................................. 76
12.03. Entire Agreement .............................................. 76
12.04. Successors and Assigns ........................................ 77
12.05. Captions ...................................................... 77
12.06. Governing Law ................................................. 77
12.07. Payment of Fees and Expenses .................................. 77
12.08. Amendment ..................................................... 78
12.09. Waiver ........................................................ 78
12.10. Disclosure Schedules .......................................... 78
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12.11. No Third-Party Rights ......................................... 78
12.12. Waiver of Jury Trial .......................................... 78
12.13. Severability .................................................. 78
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GLOSSARY OF DEFINED TERMS
The following terms, when used in this Agreement, have the meanings
ascribed to them in the corresponding Sections of this Agreement listed below:
"Acquisition Proposal" -- Section 5.04
"Agreement" -- Preamble
"Aggregate Cash Consideration" -- Section 2.01(c)
"BHC Act" -- Section 4.01(a)
"Buyer" -- Preamble
"Buyer Balance Sheet Date" -- Section 4.01(g)
"Buyer Disclosure Schedule" -- Preamble
"Buyer ERISA Affiliate" -- Section 4.01(s)
"Buyer ERISA Affiliate Plan" -- Section 4.01(s)
"Buyer Financial Statements" -- Section 4.01(g)
"Buyer Pension Plans" -- Section 4.01(s)
"Buyer Shares" -- Preamble
"Buyer Stock Option Plans" -- Section 4.01(c)
"Cash Election Shares" -- Section 2.02(b)
"Cash Percentage" -- Section 2.01(c)
"CERCLA" -- Section 3.01(y)
"CBank" -- Section 3.01(a)
"Closing Date" -- Section 9.01
"Closing" -- Section 9.01
"Code" -- Preamble
"Compensation and Benefit Plans" -- Section 3.01(t)
"Confidentiality Letter" -- Section 12.03
"Constituent Corporations" -- Preamble
"Consultants" -- Section 3.01(t)
"Costs" -- Section 6.06(a)
"CRA" -- Section 3.01(hh)
"Delaware Secretary of State" -- Section 1.02
"Determination Date" -- Section 2.01(b)
"DGCL" -- Section 1.01
"Directors" -- Section 3.01(t)
"DOL" -- Section 3.01(t)
"DPC Shares" -- Section 2.01(c)
"Effective Time" -- Section 1.02
"Election Deadline" -- Section 2.02(b)
"Election Form" -- Section 2.02(a)
"Election Form Record Date" -- Section 2.02(b)
"Employees" -- Section 3.01(t)
"Environmental Law" -- Section 3.01(y)
"ERISA" -- Section 3.01(t)
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"Exchange Act" -- Section 3.01(g)
"Exchange Agent" -- Section 2.02(a)
"Exchange Ratio" -- Section 2.01(b)
"FDIC" -- Section 3.01(a)
"Financial Services" -- Section 3.01(a)
"GAAP" -- Section 3.01(f)
"Governmental Authority" -- Section 3.01(q)
"HOLA" -- Section 3.01(a)
"Hazardous Substances" -- Section 3.01(y)
"IRS" -- Section 3.01(m)
"Indemnified Party" -- Section 6.06(a)
"Insurance Amount" -- Section 6.06(b)
"Loan Assets" -- Section 3.01(j)
"Loan Documentation" -- Section 3.01(j)
"Mailing Date" -- Section 2.02(b)
"material adverse effect" -- Section 3.01(a)
"material" -- Section 3.01(a)
"Merger" -- Preamble
"Merger Consideration" -- Section 2.01(a)
"No-Election Shares" -- Section 2.02(b)
"Officers" -- Section 3.01(t)
"OTS" -- Section 3.01(a)
"PBGC" -- Section 3.01(t)
"PCBs" -- Section 3.01(y)
"Per Share Cash Consideration" -- Section 2.01(b)
"Per Share Stock Consideration" -- Section 2.01(b)
"Proxy Statement" -- Section 5.03(b)
"Proxy Statement/Prospectus" -- Section 7.06(a)
"Reallocated Cash Shares" -- Section 2.02(d)
"Reallocated Stock Shares" -- Section 2.02(d)
"Registration Statement" -- Section 7.06(a)
"Regulatory Authorities" -- Section 3.01(p)
"Rule 145 Affiliates" -- Section 5.06(a)
"SEC" -- Section 3.01(c)
"Securities Act" -- Section 3.01(v)
"Seller" -- Preamble
"Seller Balance Sheet Date" -- Section 3.01(f)
"Seller Central" -- Section 3.01(a)
"Seller Certificates" -- Section 2.02(g)
"Seller Disclosure Schedule" -- Preamble
"Seller Dissenting Share" -- Section 2.03
"Seller ERISA Affiliate Plan" -- Section 3.01(t)
"Seller ERISA Affiliate Plan" -- Section 3.01(t)
"Seller ESOP" -- Section 7.01(a)
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"Seller Financial Statements" -- Section 3.01(f)
"Seller Meeting" -- Section 5.03(b)
"Seller Pension Plan" -- Section 3.01(t)
"Seller Real Properties" -- Section 3.01(n)
"Seller Shares" -- Preamble
"Seller Stock Option Plans" -- Section 3.01(b)
"Seller Stock Options" -- Section 3.01(b)
"Seller Subsidiaries" -- Section 3.01(a)
"Seller Subsidiary Real Estate Collateral" -- Section 3.01(y)
"Stock Election Shares" -- Section 2.02(b)
"Subsidiary" -- Section 3.01(c)
"Surviving Corporation" -- Section 1.01
"Takeover Laws" -- Section 3.01(z)
"Tax" -- Section 3.01(m)
"Tax Returns" -- Section 3.01(m)
"Total Cash Amount -- Section 2.01(b)
"Trust Account Shares" -- Section 2.01(c)
"Updated Buyer Disclosure Schedule" -- Section 6.04
"Updated Seller Disclosure Schedule" -- Section 5.02
"WVBCA" -- Section 1.01
"West Virginia Secretary of State" -- Section 1.02
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "AGREEMENT"), dated as of
April 1, 2004, is made and entered into by and between WesBanco, Inc., a West
Virginia corporation ("BUYER"), WOFC, Inc., a West Virginia corporation and a
wholly owned subsidiary of Buyer ("ACQUISITION SUB") and Western Ohio Financial
Corporation, a Delaware corporation ("SELLER") (Acquisition Sub and Seller are
sometimes hereinafter collectively referred to as the "CONSTITUENT
CORPORATIONS").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of Seller, Acquisition Sub and
Buyer have each determined that it is in the best interests of their respective
corporations and shareholders for Buyer to acquire Seller pursuant to a merger
of Seller with and into Acquisition Sub (the "MERGER"), upon the terms and
subject to the conditions set forth in and pursuant to the terms of this
Agreement; and
WHEREAS, the Boards of Directors of Seller, Acquisition Sub and
Buyer have each approved this Agreement and the consummation of the transactions
contemplated hereby; and
WHEREAS, as a result of the Merger, in accordance with the terms of
this Agreement, Seller will cease to have a separate corporate existence, and
shareholders of Seller will receive from Buyer in exchange for each share of
common stock, $0.01 par value per share, of Seller ("SELLER SHARES"), (a) $35.00
in cash, or (b) 1.18 shares of common stock, $2.0833 par value per share, of
Buyer, as may be adjusted as provided herein ("BUYER SHARES"), all as determined
in accordance with the terms of this Agreement; and
WHEREAS, for Federal income tax purposes, it is intended that the
Merger contemplated by this Agreement qualify as a "reorganization" under the
provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended
(the "CODE"); and
WHEREAS, Seller has previously provided to Buyer a schedule
disclosing additional information about Seller (the "SELLER DISCLOSURE
SCHEDULE"), and Buyer has previously provided to Seller a schedule disclosing
additional information about Buyer (the "BUYER DISCLOSURE SCHEDULE");
NOW, THEREFORE, in consideration of the premises and the respective
representations, warranties, covenants, agreements and conditions hereinafter
set forth, Seller and Buyer, intending to be legally bound hereby, agree as
follows:
ARTICLE ONE
THE MERGER
1.01. MERGER; SURVIVING CORPORATION
Upon the terms and subject to the conditions of this Agreement, at
the Effective Time (as defined in Section 1.02), Seller shall merge with and
into Acquisition Sub in accordance with the West Virginia Business Corporation
Act (the "WVBCA") and the Delaware General Corporation Law (the "DGCL").
Acquisition Sub shall be the continuing and surviving corporation in the Merger,
shall continue to exist under the laws of the State of West Virginia and shall
be the only one of the Constituent Corporations to continue its separate
corporate existence after the Effective Time. As used in this Agreement, the
term "SURVIVING CORPORATION" refers to Acquisition Sub at and after the
Effective Time. As a result of the Merger, the outstanding shares of capital
stock and the treasury shares of the Constituent Corporations shall be converted
in the manner provided in Article Two.
1.02. EFFECTIVE TIME
The Merger shall become effective upon the latest of the following:
(a) the filing of the appropriate certificate of merger with the Secretary of
State of the State of West Virginia (the "WEST VIRGINIA SECRETARY OF STATE"),
(b) the filing of the appropriate certificate of merger with the Secretary of
State of the State of Delaware (the "DELAWARE SECRETARY OF STATE") or (c) such
time thereafter as is agreed to in writing by Buyer and Seller and so provided
in the certificates of merger filed as set forth above. The date and time at
which the Merger shall become effective is referred to in this Agreement as the
"EFFECTIVE TIME."
1.03. EFFECTS OF THE MERGER
At the Effective Time:
(a) the certificate of incorporation of Acquisition Sub as in
effect immediately prior to the Effective Time shall be the
articles of the Surviving Corporation;
(b) the bylaws of Acquisition Sub as in effect immediately prior
to the Effective Time shall be the regulations of the
Surviving Corporation; and
(c) the Merger shall have the effects prescribed in the WVBCA and
DGCL.
ARTICLE TWO
CONVERSION OF SHARES; SURRENDER OF CERTIFICATES
2.01. CONVERSION OF SELLER SHARES
At the Effective Time, by virtue of the Merger and without any
action on the part
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of the holder thereof:
(a) Conversion of Seller Shares. Subject to the other provisions
of this Article Two, each Seller Share issued and outstanding
immediately prior to the Effective Time (other than (i) Seller
Shares held directly or indirectly by Buyer or Seller or any
of their respective Subsidiaries (as defined below) (except
for Trust Account Shares and DPC Shares, as such terms are
defined in Section 2.01(b) hereof), and (ii) Seller Dissenting
Shares (as defined in Section 2.03)) shall, by virtue of this
Agreement and without any action on the part of the holder
thereof, be converted into and exchangeable for the right to
receive, at the election of the holder thereof as provided in
and subject to the provisions of this Section 2.01, either (i)
the Per Share Stock Consideration (as defined below) or (ii)
the Per Share Cash Consideration (as defined below). The Per
Share Stock Consideration and the Per Share Cash Consideration
are referred to herein collectively as the "MERGER
CONSIDERATION."
(b) Definitions. For purposes of this Agreement, the following
terms shall have the following meanings:
i. "PER SHARE STOCK CONSIDERATION" shall mean a
number of Buyer Shares equal to the Exchange
Ratio;
ii. "PER SHARE CASH CONSIDERATION" shall mean $35.00;
iii. "EXCHANGE RATIO" shall mean 1.18;
iv. "TOTAL CASH AMOUNT" shall mean 45% of the product
obtained by multiplying (x) the Per Share Cash
Consideration and (y) the total number of shares
of Seller Shares outstanding as of the close of
business on the Determination Date; and
v. "DETERMINATION DATE" shall mean the third calendar
day immediately prior to the Effective Time, or if
such calendar day is not a trading day on the
Nasdaq, then the trading day immediately preceding
such calendar day.
(c) At the Effective Time, all Seller Shares that are owned
directly or indirectly by Buyer or Seller or any of their
respective Subsidiaries (other than Seller Shares (x) held
directly or indirectly in trust accounts, managed accounts and
the like or otherwise held in a fiduciary capacity for the
benefit of third parties (any such shares, and shares of Buyer
Common Stock which are similarly held, whether held directly
or indirectly by Buyer or Seller, as the case may be, being
referred to herein as "TRUST
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ACCOUNT SHARES") or (y) held by Buyer or Seller or any of
their respective Subsidiaries in respect of a debt previously
contracted (any such Seller Shares, and Buyer Shares which are
similarly held, whether held directly or indirectly by Buyer
or Seller, being referred to herein as "DPC SHARES")) shall be
cancelled and shall cease to exist and no Buyer Shares, cash
or other consideration shall be delivered in exchange
therefor. All Buyer Shares that are owned by Seller or any of
its Subsidiaries (other than Trust Account Shares and DPC
Shares) shall become treasury stock of Buyer.
(d) The calculations required by this Section 2.01 shall be
prepared jointly by Buyer and Seller prior to the Closing
Date.
2.02. ELECTION AND EXCHANGE AND PAYMENT PROCEDURES
(a) Election Procedure. An election form and other appropriate and
customary transmittal materials (which shall specify that
delivery shall be effected, and risk of loss and title to the
certificates theretofore representing the Seller Shares shall
pass, only upon proper delivery of such certificates to the
Exchange Agent (as defined below)) in such form as Buyer and
Seller shall mutually agree (the "ELECTION FORM") shall be
mailed 35 days prior to the anticipated Effective Time or on
such other date as Seller and Buyer shall mutually agree (the
"MAILING DATE") to each holder of record of Seller Shares as
of the close of business on the fifth business day prior to
the Mailing Date (the "ELECTION FORM RECORD DATE").
(b) Election. Each Election Form shall permit the holder (or the
beneficial owner through appropriate and customary
documentation and instructions) to specify (i) the number of
such holder's Seller Shares with respect to which such holder
elects to receive the Per Share Stock Consideration ("STOCK
ELECTION SHARES"), (ii) the number of such holder's Seller
Shares with respect to which such holder elects to receive the
Per Share Cash Consideration ("CASH ELECTION SHARES"), or
(iii) that such holder makes no election with respect to such
holder's Seller Shares ("NO ELECTION SHARES"). All Seller
Shares with respect to which the Exchange Agent has not
received an effective, properly completed Election Form on or
before 5:00 p.m., on the 33rd day following the Mailing Date
(or such other time and date as Buyer and Seller may mutually
agree) (the "ELECTION DEADLINE") shall also be deemed to be No
Election Shares.
(c) Exchange Agent; Election Forms. Buyer will designate
Computershare Investor Services, LLC or such other entity as
reasonably shall be approved by Seller in writing to act as
agent (the "EXCHANGE AGENT") for purposes of conducting the
election procedure and the exchange and
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payment procedures as described in this Section 2.02. Buyer
shall make available one or more Election Forms as may
reasonably be requested from time to time by all persons who
become holders (or beneficial owners) of Seller Shares between
the Election Form Record Date and the close of business on the
business day prior to the Election Deadline, and Seller shall
provide to the Exchange Agent all information reasonably
necessary for it to perform as specified herein.
(d) Proper Election. Any such election shall have been properly
made only if the Exchange Agent shall have actually received a
properly completed Election Form by the Election Deadline. An
Election Form shall be deemed properly completed only if
accompanied by one or more certificates (or customary
affidavits and indemnification regarding the loss or
destruction of such certificates or the guaranteed delivery of
such certificates) representing all Seller Shares covered by
such Election Form, together with duly executed transmittal
materials included in the Election Form. Any Election Form may
be revoked or changed by the person submitting such Election
Form at or prior to the Election Deadline. If an Election Form
is revoked prior to the Election Deadline, the Seller Shares
represented by such Election Form shall become No Election
Shares and Buyer shall cause the certificates representing
such Seller Shares to be promptly returned without charge to
the Person submitting the Election Form upon written request
to that effect from the holder who submitted the Election
Form. Subject to the terms of this Agreement and of the
Election Form, the Exchange Agent shall have reasonable
discretion to determine whether any election, revocation or
change has been properly or timely made and to disregard
immaterial defects in the Election Forms, and any good faith
decisions of the Exchange Agent such matters shall be binding
and conclusive. Neither Buyer nor the Exchange Agent shall be
under any obligation to notify any person of any defect in an
Election Form.
(e) Pro Rata Allocation. Within ten business days after the
Election Deadline, unless the Effective Time has not yet
occurred, in which case as soon thereafter as practicable,
Buyer shall cause the Exchange Agent to effect the allocation
among the holders of Seller Shares of rights to receive Buyer
Shares or cash in the Merger in accordance with the Election
Forms as follows:
(1) Cash Election Shares More Than Total Cash Amount. If the
aggregate cash amount that would be paid upon the
conversion in the Merger of the Cash Election Shares
(the "SECTION 2.02(E) CASH AMOUNT") is greater than the
Total Cash Amount, then:
(A) all Stock Election Shares and No Election Shares
shall be
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converted into the right to receive the Per Share
Stock Consideration, (B) the Exchange Agent shall
then select from among the Cash Election Shares,
by a pro rata selection process, a sufficient
number of shares ("STOCK DESIGNATED SHARES") such
that the aggregate cash amount that will be paid
in the Merger (excluding, however, without
limitation, any cash paid in respect of options to
purchase Seller Shares under Section 7.01 or any
other provision of this Agreement) equals as
closely as practicable the Total Cash Amount, and
all Stock Designated Shares shall be converted
into the right to receive the Per Share Stock
Consideration; and
(B) the Cash Election Shares that are not Stock
Designated Shares will be converted into the right
to receive the Per Share Cash Consideration.
(2) Cash Election Shares Less Than Total Cash Amount. If the
Section 2.02(e) Cash Amount is less than the Total Cash
Amount, then:
(A) all Cash Election Shares shall be converted into
the right to receive the Per Share Cash
Consideration;
(B) the Exchange Agent shall then select first from
among the No Election Shares and then (if
necessary) from among the Stock Election Shares,
by a pro rata selection process (excluding, to the
extent possible, Seller Shares acquired through
the exercise of any incentive stock option at any
time within twelve months prior to the Effective
Time, which shares are identified on Exhibit
2.01(e)(2)(B) hereto), a sufficient number of
shares ("CASH DESIGNATED SHARES") such that the
aggregate cash amount that will be paid in the
Merger (excluding, however, without limitation,
any cash paid in respect of options to purchase
Seller Shares under Section 7.01 or any other
provision of this Agreement) equals as closely as
practicable the Total Cash Amount, and all Cash
Designated Shares shall be converted into the
right to receive the Per Share Cash Consideration;
and
(C) the Stock Election Shares and the No Election
Shares that are not Cash Designated Shares shall
be converted into the right to receive the Per
Share Stock Consideration.
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(3) Cash Election Shares Equal to Total Cash Amount. If the
Section 2.02(e) Cash Amount is equal or nearly equal (as
determined by the Exchange Agent) to the Total Cash
Amount, then subparagraphs (1) and (2) above shall not
apply, all Cash Election Shares shall be converted into
the right to receive the Per Share Cash Consideration
and all Stock Election Shares and No Election Shares
shall be converted into the right to receive the Per
Share Stock Consideration.
The pro rata selection process to be used by the Exchange Agent
shall consist of such equitable pro ration processes as shall be
mutually determined by Buyer and Seller.
(f) Deposit with Exchange Agent; Exchange Fund. At or prior to the
Effective Time, Buyer shall provide to the Exchange Agent the
number of Buyer Shares issuable pursuant to Section 2.01(a),
the Aggregate Cash Consideration payable pursuant to Section
2.02(e), the cash in respect of fractional Buyer Shares
payable pursuant to Section 2.02(j), and the amount of all
other cash payable in the Merger, if any, all of which shall
be held by the Exchange Agent in trust for the holders of
Seller Shares (collectively, the "EXCHANGE FUND"). No later
than ten days after the Election Deadline, the Exchange agent
shall distribute such Buyer Shares and make payment of such
cash as provided herein. The Exchange Agent shall not be
entitled to vote or exercise any rights of ownership with
respect to the Buyer Shares held by it from time to time
hereunder, except that it shall receive and hold in trust for
the recipients of the Buyer Shares until distributed thereto
pursuant to the provisions of this Agreement all dividends or
other distributions paid or distributed with respect to such
Buyer Shares for the account of the persons entitled thereto.
The Exchange Fund shall not be used for any purpose other than
as set forth in this paragraph. The Exchange Agent shall
invest cash in the Exchange Fund, as directed by Buyer, on a
daily basis; provided, however, that all such investments
shall be in (1) obligations of, or guaranteed by, the United
States of America, (2) commercial paper obligations receiving
the highest rating from either Moody's Investors Services,
Inc. or Standard and Poor's Corporation, or (3) certificates
of deposit of commercial banks (not including any Subsidiary
or affiliate of Buyer) with capital exceeding $1.0 billion.
All interest and other income resulting from such investments
shall be paid to Buyer.
(g) Surrender of Seller Certificates. After the completion of the
foregoing allocation, each holder of an outstanding
certificate or certificates which prior thereto represented
shares of Seller Shares ("SELLER CERTIFICATE"), who surrenders
such Seller Certificate to the Exchange Agent shall, upon
acceptance thereof by the Exchange Agent, be entitled to a
certificate
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representing the full number of Buyer Shares and/or the amount
of cash into which the aggregate number of Seller Shares
previously represented by such Seller Certificate surrendered
shall have been converted pursuant to this Agreement and, if
such holder's Seller Shares have been converted into Buyer
Shares, any other distribution theretofore paid with respect
to Buyer Shares issuable in the Merger which remains unpaid at
the Effective Time, in each case without interest. The
Exchange Agent shall accept such Seller Certificates upon
compliance with such reasonable terms and conditions as the
Exchange Agent may impose to effect an orderly exchange
thereof in accordance with normal exchange practices. Each
Seller Certificate that is not surrendered to the Exchange
Agent in accordance with the procedures provided for herein
shall, except as otherwise herein provided, until duly
surrendered to the Exchange Agent be deemed to evidence
ownership of the number of Buyer Shares or the right to
receive the amount of cash into which such Seller Shares shall
have been converted. After the Effective Time, there shall be
no further transfer on the records of Seller of Seller
Certificates representing Seller Shares and, if such Seller
Certificates are presented to Seller for transfer, they shall
be canceled against delivery of certificates for Buyer Shares
and/or cash as hereinabove provided.
(h) Lost Certificates. If there shall be delivered to the Exchange
Agent by any person who is unable to produce any Seller
Certificate for Seller Shares for surrender to the Exchange
Agent in accordance with this Section 2.02:
(i) evidence to the reasonable satisfaction of the Surviving
Corporation that such Seller Certificate has been lost,
wrongfully taken, or destroyed;
(ii) such security or indemnity as reasonably may be
requested by the Surviving Corporation to save it
harmless (which may include the requirement to obtain a
third party bond or surety); and
(iii) evidence to the reasonable satisfaction of the Surviving
Corporation that such person was the owner of the Seller
Shares theretofore represented by each such Seller
Certificate claimed by him to be lost, wrongfully taken
or destroyed and that he is the person who would be
entitled to present such Seller Certificate for exchange
pursuant to this Agreement;
then the Exchange Agent, in the absence of actual notice to it that
any Seller Shares theretofore represented by any such Seller
Certificate have been acquired by a bona fide purchaser, shall
deliver to such person the cash and/or Buyer Shares (and cash in
lieu of fractional Buyer Share interests, if any) that such person
would have been entitled to receive upon surrender of each such
lost,
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wrongfully taken or destroyed Seller Certificate.
(i) No Further Ownership Rights in Seller Shares. All cash and
Buyer Shares issued upon conversion of Seller Shares in
accordance with the terms hereof (including any cash paid
pursuant to Section 2.02(g) or 2.02(j)) shall be deemed to
have been issued in full satisfaction of all rights pertaining
to such Seller Shares, subject, however, to the Surviving
Corporation's obligation to pay any dividends or make any
other distributions with a record date prior to the Effective
Time which may have been declared or made by Seller on such
Seller Shares in accordance with the terms of this Agreement
on or prior to the Effective Time and which remain unpaid at
the Effective Time.
(j) No Fractional Buyer Shares.
(i) No certificates or scrip representing fractional Buyer
Shares shall be issued upon the surrender for exchange
of Seller Certificates evidencing Seller Shares, and
such fractional Buyer Share interests will not entitle
the owner thereof to vote or to any rights of a
shareholder of the Surviving Corporation.
(ii) Each holder of Seller Shares who would otherwise be
entitled to receive a fractional Buyer Share shall
receive from the Exchange Agent an amount of cash equal
to the product obtained by multiplying (a) the
fractional Buyer Share interest to which such holder
(after taking into account all Seller Shares held at the
Effective Time by such holder) would otherwise be
entitled by (b) $35.00.
(k) Termination of Exchange Fund. Any portion of the Exchange Fund
delivered to the Exchange Agent by Buyer pursuant to Section
2.02(f) which remains undistributed to the shareholders of
Seller for twelve (12) months after the Effective Time shall
be delivered to the Surviving Corporation, upon demand, and
any shareholders of Seller who have not theretofore complied
with this Article Two shall thereafter look only to the
Surviving Corporation for payment of the Per Share Stock
Consideration, the Per Share Cash Consideration, any cash in
lieu of fractional Buyer Share interest and any dividends or
distributions with respect to Buyer Shares, in each case
without interest.
(l) No Liability. None of Buyer, Seller, the Exchange Agent or the
Surviving Corporation shall be liable to any former holder of
Seller Shares for any payment of the Per Share Stock
Consideration, the Per Share Cash Consideration, any cash in
lieu of fractional Buyer Share interest or any dividends or
distributions with respect to Buyer Shares delivered to a
9
public official if required by any applicable abandoned
property, escheat or similar law.
(m) Withholding Rights. Buyer or the Exchange Agent shall be
entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of
Seller Certificates such amounts as Buyer or the Exchange
Agent is required to deduct and withhold with respect to the
making of such payment under the Code, or any other provision
of domestic or foreign (whether national, federal, state,
provincial, local or otherwise) tax law. To the extent that
amounts are so withheld and paid over to the appropriate
taxing authority by Buyer or the Exchange Agent, such withheld
amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of the Seller Certificates in
respect of which such deduction and withholding was made by
Buyer, the Surviving Corporation or the Exchange Agent.
(n) Waiver. The Surviving Corporation may from time to time, in
the case of one or more persons, waive one or more of the
rights provided to it in this Article Two to withhold certain
payments, deliveries and distributions; and no such waiver
shall constitute a waiver of its rights thereafter to withhold
any such payment, delivery or distribution in the case of any
person.
(o) Section 16(a) Exemption. Prior to the Effective Time, Buyer
and Seller shall take all such steps as may be required to
cause any acquisitions of Buyer equity securities (including
derivative securities with respect to any Buyer equity
securities) and dispositions of Seller equity securities
(including derivative securities with respect to any Seller
equity securities) resulting from the transactions
contemplated by this Agreement by each individual who is
anticipated to be subject to the reporting requirements of
Section 16(a) of the Exchange Act with respect to Buyer or who
is subject to the reporting requirements of Section 16(a) of
the Exchange Act with respect to Seller, to be exempt under
Rule 16b-3 promulgated under the Exchange Act.
2.03. SELLER SHAREHOLDERS' APPRAISAL RIGHTS
Anything contained in this Agreement or elsewhere to the contrary
notwithstanding, if any holder of an outstanding Seller Share who is entitled to
demand and properly demands appraisal of such Seller Share in accordance with
Section 262 of the DGCL (a "SELLER DISSENTING SHARE"), then such Seller
Dissenting Share shall not be converted into the right to receive the Per Share
Stock Consideration or the Per Share Cash Consideration, and instead:
(a) Each such Seller Dissenting Share shall nevertheless be deemed
to be
10
extinguished at the Effective Time as provided elsewhere in
this Agreement;
(b) Each holder perfecting such appraisal rights shall thereafter
have only such rights (and shall have such obligations) as are
provided in Section 262 of the DGCL, and the Surviving
Corporation shall not be required to deliver any cash payments
to such person in substitution for each such Seller Dissenting
Share in accordance with this Agreement; provided, however,
that if any such person shall have failed to perfect or shall
withdraw or lose such holder's rights under subsection (k) of
Section 262 of the DGCL, each such holder's Seller Dissenting
Shares shall thereupon be deemed to have been converted as of
the Effective Time into the right to receive the Per Share
Stock Consideration or the Per Share Cash Consideration, as
shall have been designated by each such holder prior to the
such perfection, or if no such designation shall have been
made, the Per Share Cash Consideration, without any interest
thereon, pursuant to Section 2.01.
No holder of Seller Dissenting Shares shall be entitled to submit a letter
of transmittal, and any letter of transmittal submitted by a holder of Seller
Dissenting Shares shall be invalid, unless and until the demand for appraisal
rights made in respect of such Seller Dissenting Shares shall have been or is
deemed to have been withdrawn.
2.04. ANTI-DILUTION PROVISIONS
The Exchange Ratio and the Per Share Stock Consideration shall be
adjusted fully to reflect any occurrence, subsequent to the date of this
Agreement but prior to the Effective Time, pursuant to which the outstanding
Buyer Shares shall have been increased, decreased, changed into or exchanged for
a different number or kind of shares or securities through reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split or other like changes in Buyer's capitalization; provided, however, that
nothing contained herein shall require any adjustment to the Exchange Ratio or
the Per Share Stock Consideration as a result of the issuance of additional
Buyer Shares for consideration which, if such issuance was for more than 19.9%
of the then outstanding Buyer Shares, would not require the approval of the
Buyer shareholders. Nothing contained herein shall be deemed to permit any
action which may be proscribed by this Agreement.
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES OF SELLER
3.01. REPRESENTATIONS AND WARRANTIES OF SELLER
Except as set forth on the Seller Disclosure Schedule (with specific
reference to the Section or Subsection of this Agreement to which the
information stated in such disclosure relates, provided that any fact, item,
contract, agreement, document or instrument listed or
11
described, and any information disclosed, in any Section or Subsection thereof
shall be deemed listed, described and disclosed in all other applicable Sections
and Subsections even though not expressly set forth in such other Section(s) or
Subsection(s)), Seller represents and warrants to Buyer and Acquisition Sub as
follows:
(a) Corporate Status.
(i) Seller is a Delaware corporation and a unitary savings
and loan holding company registered under the Home
Owners Loan Act, as amended ("HOLA"). Seller is duly
organized, validly existing and in good standing under
the laws of the State of Delaware and has the full
corporate power and authority to own its property, to
carry on its business as presently conducted, and to
enter into and, subject to the required adoption of this
Agreement by the Seller shareholders and the obtaining
of appropriate approvals of Governmental Authorities and
Regulatory Authorities, perform its obligations under
this Agreement and consummate the transactions
contemplated by this Agreement. Seller is qualified to
do business in the State of Ohio, but is not qualified
to do business in any other jurisdiction or required to
be so qualified to do business in any other jurisdiction
except where the failure to be so qualified would not
have a material adverse effect on Seller. Seller has
made available to Buyer true and complete copies of the
certificate of incorporation and bylaws of Seller, in
each case as amended to the date of this Agreement.
(ii) CornerstoneBanc Financial Services, Incorporated, a
Delaware corporation ("FINANCIAL SERVICES"), West
Central Financial Services, Inc., an Ohio corporation
("CENTRAL FINANCIAL"), and Cornerstone Bank, a federal
savings bank ("CBANK" and, together with Financial
Services and Central Financial, the "SELLER
SUBSIDIARIES") are the only Subsidiaries (as that term
is defined in Section 3.01(c)) of Seller. CBank is a
federal savings bank, is a member bank of the Federal
Home Loan Bank of Cincinnati and is regulated by the
Office of Thrift Supervision (the "OTS") and the Federal
Deposit Insurance Corporation (the "FDIC"). Each of the
Seller Subsidiaries is duly organized, validly existing
and in good standing under the laws of their respective
jurisdictions of incorporation and each has full power
and authority, corporate or otherwise, to own their
property and to carry on its business as presently
conducted. Each Seller Subsidiary is qualified to do
business in the State of Ohio, but is not qualified to
do business in any other jurisdiction or required to be
qualified to do business in any other jurisdiction
except where the failure to be so qualified would have a
material adverse effect on Seller. Seller has made
12
available to Buyer true and complete copies of the
governing instruments of each Seller Subsidiary, in each
case as amended to the date of this Agreement.
(iii) As used in this Agreement, (A) any reference to any
event, change or effect being "material" with respect to
any entity means an event, change or effect which is
material in relation to the financial condition,
properties, assets, liabilities, businesses or results
of operations of such entity and its subsidiaries taken
as a whole and (B) the term "material adverse effect"
means, with respect to an entity, a material adverse
effect on the financial condition, properties, assets,
liabilities, businesses or results of operations of such
entity and its subsidiaries taken as a whole or on the
ability of such entity to perform its obligations under
this Agreement or consummate the Merger and the other
material transactions contemplated by this Agreement
other than, in any case, any state of facts, change,
development, event, effect, condition or occurrence (i)
resulting from changes in the United States economy or
the United States securities markets in general; (ii)
resulting from changes in the industries in which Seller
or Buyer, as the case may be, operates and not
specifically relating to the Seller or Buyer, as the
case may be; (iii) resulting from any litigation or loss
of current or prospective customers, employee or
revenues that the party against which the material
adverse effect or material adverse change is sought to
be enforced successfully bears the burden of proving
arose from the entering into of this Agreement, or (iv)
resulting from the Merger generally; provided, however,
that in no event shall a decrease in the trading price
of Seller Shares or Buyer Shares, or litigation relating
thereto, be considered a material adverse effect or
material adverse change.
(b) Capitalization of Seller.
(i) The authorized capital of Seller consists solely of
7,250,000 Seller Shares, of which 2,645,000 Seller
Shares are issued and outstanding, and 250,000 shares of
preferred stock, par value $.01 per share, none of which
have been issued or are outstanding. As of March 25,
2004, 805,092 Seller Shares are held in its treasury by
Seller. All outstanding Seller Shares have been duly
authorized and are validly issued, fully paid and
non-assessable, and were not issued in violation of the
preemptive rights of any person. All Seller Shares
issued have been issued in compliance in all material
respects with all applicable federal and state
securities laws. As of March 25, 2004, 138,307 Seller
Shares were reserved for issuance upon the exercise of
outstanding stock options (the "SELLER STOCK
13
OPTIONS") granted under the Seller Financing Corporation
1995 Stock Option and Incentive Plan and the Seller
Financing Corporation 1998 Omnibus Incentive Plan
(collectively, the "SELLER STOCK OPTION PLANS"). Seller
has furnished to Buyer a true, complete and correct copy
of the Seller Stock Option Plans, and a list of all
participants in the Seller Stock Option Plans as of
February 29, 2004 is set forth in Section 3.01(b)(i) of
the Seller Disclosure Schedule, which list identifies
the number of Seller Shares subject to Seller Stock
Options held by each such participant, the exercise
price or prices of such Seller Stock Options and the
dates each such Seller Stock Option was granted, becomes
exercisable and expires.
(ii) As of February 29, 2004, except for this Agreement and
the Seller Stock Options, there are no options,
warrants, calls, rights, commitments or agreements of
any character to which Seller is a party or by which it
is bound obligating Seller to issue, deliver or sell, or
cause to be issued, delivered or sold, any additional
Seller Shares or obligating Seller to grant, extend or
enter into any such option, warrant, call, right,
commitment or agreement. As of the date of this
Agreement, there are no outstanding contractual
obligations of Seller to repurchase, redeem or otherwise
acquire any Seller Shares except for such obligations
arising under the Seller Stock Option Plans.
(iii) Except as disclosed in Section 3.01(b) of the Seller
Disclosure Schedule, since February 29, 2004, Seller has
not (A) issued or permitted to be issued any Seller
Shares, or securities exercisable for or convertible
into Seller Shares, other than upon exercise of the
Seller Stock Options granted prior to the date hereof
under the Seller Stock Option Plans; (B) repurchased,
redeemed or otherwise acquired, directly or indirectly
through any Seller Subsidiary or otherwise, any Seller
Shares; or (C) declared, set aside, made or paid to the
shareholders of Seller dividends or other distributions
on the outstanding Seller Shares.
(iv) No bonds, debentures, notes or other indebtedness of
Seller having the right to vote on any matters on which
Seller's shareholders may vote are issued or
outstanding.
(c) Subsidiaries. The Seller Subsidiaries are the only
Subsidiaries of Seller. Seller owns of record and beneficially
all of the issued and outstanding equity securities of CBank,
and CBank owns of record and beneficially all of the issued
and outstanding equity securities of Financial Services and
Central Financial. There are no options, warrants, calls,
rights,
14
commitments or agreements of any character to which Seller or
any Seller Subsidiary is a party or by which any of them is
bound obligating any Seller Subsidiary to issue, deliver or
sell, or cause to be issued, delivered or sold, additional
equity securities of any Seller Subsidiary (other than to
Seller, with respect to CBank, or CBank, with respect to
Financial Services and Central Financial) or obligating Seller
or any Seller Subsidiary to grant, extend or enter into any
such option, warrant, call, right, commitment or agreement.
There are no contracts, commitments, understandings or
arrangements relating to Seller's rights to vote or to dispose
of the equity securities of CBank, and all of the equity
securities of CBank held by Seller are fully paid and
non-assessable and are owned by Seller free and clear of any
charge, mortgage, pledge, security interest, hypothecation,
restriction, claim, option, lien, encumbrance or interest of
any persons whatsoever. There are no contracts, commitments,
understandings or arrangements relating to CBank's rights to
vote or to dispose of the equity securities of Financial
Services or Central Financial, and all of the equity
securities of Financial Services and Central Financial held by
CBank are fully paid and non-assessable and are owned by CBank
free and clear of any charge, mortgage, pledge, security
interest, hypothecation, restriction, claim, option, lien,
encumbrance or interest of any persons whatsoever. Except as
disclosed in Section 3.01(c) of the Seller Disclosure
Schedule, Seller does not own beneficially, directly or
indirectly, any equity securities or similar interests of any
person, or any interest in a partnership or joint venture of
any kind, other than the Seller Subsidiaries.
For purposes of this Agreement, "Subsidiary" has the meaning
ascribed to it in Rule 1-02 of Regulation S-X promulgated by
the Securities and Exchange Commission (the "SEC").
(d) Corporate Proceedings. Assuming the accuracy of the
representations and warranties of Buyer and Acquisition Sub
set forth in Section 4.01(y), all corporate proceedings of
Seller necessary to authorize the execution, delivery and
performance of this Agreement and the consummation of the
transactions contemplated hereby, in each case by Seller, have
been duly and validly taken, except for the adoption of this
Agreement by the holders of at least a majority of the
outstanding Seller Shares entitled to vote thereon (which is
the only required shareholder vote thereon) and subject, in
the case of the consummation of the Merger, to the filing and
recordation of a certificate of merger as required by the DGCL
and compliance with the applicable provisions of the WVBCA.
The Board of Directors of Seller has, by a vote of a majority
of the "Disinterested Directors" of such Board (as such term
is defined in Article Eighth of Seller's certificate of
incorporation), duly adopted resolutions (i) approving and
declaring advisable this Agreement, the Merger and the
15
other transactions contemplated hereby and thereby, (ii)
declaring that it is in the best interests of Seller's
stockholders that Seller enter into this Agreement and
consummate the Merger on the terms and subject to the
conditions set forth in this Agreement, (iii) declaring that
this Agreement is fair to Seller's stockholders, (iv)
directing that this Agreement be submitted to a vote at a
meeting of Seller's stockholders to be held as promptly as
practicable and (v) recommending that Seller's stockholders
adopt this Agreement, which resolutions have not been
subsequently rescinded, modified or withdrawn in any way
except as permitted by Section 5.03.
(e) Authorized and Effective Agreement. This Agreement has been
duly executed and delivered by Seller, and assuming the due
authorization, execution and delivery by Buyer and Acquisition
Sub, constitutes a valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms,
except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance
and other similar laws relating to or affecting the
enforcement of creditors' rights generally, by general
equitable principles (regardless of whether enforceability is
considered in a proceeding in equity or at law) and by an
implied covenant of good faith and fair dealing. Seller has
the right, power, authority and capacity to execute and
deliver this Agreement and, subject to the required adoption
of this Agreement by Seller's shareholders, the obtaining of
appropriate approvals by Regulatory Authorities and
Governmental Authorities and the expiration of applicable
regulatory waiting periods, to perform its obligations under
this Agreement.
(f) Financial Statements of Seller. The financial statements
(including the related notes) included in the Seller SEC
Documents (as defined below) comply as to form in all material
respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with generally
accepted accounting principles ("GAAP") (except, in the case
of unaudited statements, as permitted by Form 10-Q of the SEC)
applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and fairly
present in all material respects the consolidated financial
position of Seller and its consolidated subsidiaries as of the
dates thereof and their respective consolidated results of
operations and cash flows for the periods then ended (subject,
in the case of unaudited statements, to normal year-end audit
adjustments).
(g) SEC Filings. Seller has filed all reports and proxy materials
required to be filed by it with the SEC pursuant to the
Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT"), since January 1, 2001 (together with
16
all information incorporated therein by reference, the "SELLER
SEC DOCUMENTS"), except for any reports or proxy materials the
failure to file which would not have a material adverse effect
upon Seller. All such filings, at the time of filing, complied
in all material respects as to form and included all exhibits
required to be filed under the applicable rules of the SEC
applicable to such Seller SEC Documents. None of such
documents, as subsequently supplemented or amended prior to
the date hereof, contains any untrue statement of a material
fact or omits to state a material fact required to be stated
therein or necessary in order to make the statements therein,
in light of the circumstances under which they were made, not
misleading.
(h) Absence of Undisclosed Liabilities. Except as set forth in
Seller SEC Documents filed and publicly available prior to the
date of this Agreement (the "SELLER FILED SEC DOCUMENTS")
(including the financial statements included therein, as
corrected pursuant to the Corrective Release filed as Exhibit
99.2 to the Form 8-K filed by Seller with the SEC on March 5,
2004) or in Section 3.01(h) of the Seller Disclosure Schedule
and except as arising hereunder, Seller and its subsidiaries
have no liabilities or obligations (whether accrued, absolute,
contingent or otherwise) at December 31, 2003 (the "SELLER
BALANCE SHEET DATE"), other than liabilities and obligations
that individually or in the aggregate could not reasonably be
expected to have a material adverse effect on Seller. Except
as set forth in the Seller Filed SEC Documents or otherwise
disclosed in Section 3.01(h) of the Seller Disclosure
Schedule, all debts, liabilities, guarantees and obligations
of Seller and the Seller Subsidiaries incurred since the
Seller Balance Sheet Date have been incurred in the ordinary
course of business and are usual and normal in amount both
individually and in the aggregate. Except as disclosed in
Section 3.01(h) of the Seller Disclosure Schedule, neither
Seller nor any Seller Subsidiary is in default or breach of
any material agreement to which Seller or the Seller
Subsidiary is a party other than any such breaches or defaults
that individually or in the aggregate would not reasonably be
expected to have a material adverse effect on Seller. To the
knowledge of Seller, no other party to any material agreement
to which Seller or any Seller Subsidiary is a party is in
default or breach of such agreement, which breach or default
would reasonably be expected to have a material adverse effect
on Seller.
(i) Absence of Changes. Except (i) as set forth in the Seller
Filed SEC Documents, (ii) as set forth in Section 3.01(i) of
the Seller Disclosure Schedule, or (iii) in the ordinary
course of business consistent with Seller's past practice,
since the Seller Balance Sheet Date: (a) there has not been
any material adverse change in the business, operations,
assets or financial condition of Seller and the Seller
Subsidiaries taken as a whole, and, to the knowledge of
Seller, no fact or condition exists which Seller
17
believes will cause such a material adverse change in the
future; and (b) Seller has not taken or permitted any of the
actions described in Section 5.01(b) of this Agreement.
(j) Loan Documentation. The documentation ("LOAN DOCUMENTATION")
governing or relating to the material loan and credit-related
assets ("LOAN ASSETS") included in the loan portfolio of each
Seller Subsidiary is legally sufficient for the purposes
intended thereby and creates enforceable rights of such Seller
Subsidiary in accordance in all material respects with the
terms of such Loan Documentation, subject to applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and other similar laws relating to or affecting the
enforcement of creditors' rights generally, by general
equitable principles (regardless of whether enforceability is
considered in a proceeding in equity or at law) and by an
implied covenant of good faith and fair dealing, except for
such insufficiencies as would not reasonably be expected to
have a material adverse effect on Seller. Except as set forth
in the Seller Filed SEC Documents or in Section 3.01(j) of the
Seller Disclosure Schedule, no debtor under any of the Loan
Documentation has asserted any claim or defense with respect
to the subject matter thereof, which claim or defense, if
determined adversely to Seller, would reasonably be expected
to have a material adverse effect on Seller. Except as set
forth in the Seller SEC Documents or in Section 3.01(j) of the
Seller Disclosure Schedule, none of the Seller Subsidiaries is
a party to a loan, including any loan guaranty, with any
director, executive officer or five percent (5%) shareholder
of Seller or any Seller Subsidiary, or any person, corporation
or enterprise controlling, controlled by or under common
control with either Seller or any Seller Subsidiary. All loans
and extensions of credit that have been made by a Seller
Subsidiary comply in all material respects with applicable
regulatory limitations and procedures except for such failures
to comply as would not reasonably be expected to have a
material adverse effect on Seller.
(k) Allowance for Loan Losses. Except as set forth in the Seller
SEC Documents or in Section 3.01(k) of the Seller Disclosure
Schedule, there is no loan which was made by any Seller
Subsidiary and which is reflected as an asset of such Seller
Subsidiary on the Seller Financial Statements that (A)(i) is
90 days or more delinquent or (ii) has been classified by
examiners (regulatory or internal) as "Substandard,"
"Doubtful" or "Loss," and (B) the default by the borrower
under which would reasonably be expected to have a material
adverse effect on Seller. The allowance for loan losses
reflected on the Seller Financial Statements has been
determined in accordance with GAAP in all material respects
and in accordance in all material respects with all rules and
regulations applicable to Seller and the Seller Subsidiaries
and is adequate in all material
18
respects, except for such failures and inadequacies which
would not reasonably be expected to have a material adverse
effect on Seller.
(l) Reports and Records. Seller and the Seller Subsidiaries have
filed all reports and maintained all records required to be
filed or maintained by them under the rules and regulations of
the OTS and the FDIC, except for such reports and records the
failure to file or maintain would not reasonably be expected
to have a material adverse effect on Seller. All such
documents and reports complied in all material respects with
applicable requirements of law and rules and regulations in
effect at the time such documents and reports were filed and
contained in all material respects the information required to
be stated therein, except for such documents and records the
failure to file or contain such information would not
reasonably be expected to have a material adverse effect on
Seller. None of such documents or reports, when filed,
contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading,
other than such reports and documents which the failure to
file in such fashion would not reasonably be expected to have
a material adverse effect on Seller.
(m) Taxes. Except as set forth in Section 3.01(m) of the Seller
Disclosure Schedule, Seller and the Seller Subsidiaries have
timely filed all material returns, statements, reports and
forms (including elections, declarations, disclosures,
schedules, estimates and information returns) (collectively,
the "TAX RETURNS") with respect to all material federal,
state, local and foreign income, gross income, gross receipts,
gains, premium, sales, use, ad valorem, transfer, franchise,
profits, withholding, payroll, employment, excise, severance,
stamp, occupancy, license, lease, environmental, customs,
duties, property, windfall profits and all other material
taxes (including any interest, penalties or additions to tax
with respect thereto, individually, a "TAX" and, collectively,
"TAXES") required to be filed with the appropriate tax
authority through the date of this Agreement. Such Tax Returns
are and will be true, correct and complete in all material
respects. Seller and the Seller Subsidiaries have paid and
discharged all Taxes shown as due on such Tax Returns, other
than such Taxes that are adequately reserved as shown on the
Seller Financial Statements or have arisen in the ordinary
course of business since the Seller Balance Sheet Date. Except
as set forth in Section 3.01(m) of the Seller Disclosure
Letter, neither the Internal Revenue Service (the "IRS") nor
any other taxing agency or authority, domestic or foreign, has
asserted, is now asserting or, to the knowledge of Seller, is
threatening to assert against Seller or any Seller Subsidiary
any deficiency or claim for additional Taxes, which deficiency
or claim, if upheld, would reasonably be expected
19
to have a material adverse effect on Seller. There are no
unexpired waivers by Seller or any Seller Subsidiary of any
statute of limitations with respect to Taxes. The accruals and
reserves for Taxes reflected in the Seller Financial
Statements are adequate in all material respects for the
periods covered. Seller and the Seller Subsidiaries have
withheld or collected and paid over to the appropriate
Governmental Authorities or are properly holding for such
payment all Taxes required by law to be withheld or collected,
except for such failures to withhold or collect as would not
reasonably be expected to have a material adverse effect on
Seller. There are no liens for Taxes upon the assets of Seller
or any Seller Subsidiary, other than liens for current Taxes
not yet due and payable and liens that individually or in the
aggregate would not reasonably be expected to have a material
adverse effect on Seller. Neither Seller nor any Seller
Subsidiary has agreed to make, or is required to make, any
adjustment under Section 481(a) of the Code. Except as set
forth in the Seller SEC Documents or in Section 3.01(l) of the
Seller Disclosure Schedule, neither Seller nor any Seller
Subsidiary is a party to any agreement, contract, arrangement
or plan that has resulted, or could result, individually or in
the aggregate, in the payment of "excess parachute payments"
within the meaning of Section 280G of the Code. Neither Seller
nor any Seller Subsidiary has ever been a member of an
affiliated group of corporations, within the meaning of
Section 1504 of the Code, other than an affiliated group of
which Seller is or was the common Buyer corporation. No Tax is
required to be withheld pursuant to Section 1445 of the Code
as a result of the transactions contemplated by this
Agreement.
(n) Property and Title. Section 3.01(n) of the Seller Disclosure
Schedule lists and describes all real property, and any
leasehold interest in real property, owned or held by Seller
or any Seller Subsidiary and used in the business of Seller or
any Seller Subsidiary (collectively, the "SELLER REAL
PROPERTIES"). The Seller Real Properties constitute all of the
material real property and interests in real property used in
the businesses of Seller and the Seller Subsidiaries. Copies
of all leases of Seller Real Properties to which Seller or any
Seller Subsidiary is a party have been provided to Buyer. Such
leasehold interests have not been assigned or subleased. All
Seller Real Properties which are owned by Seller or any Seller
Subsidiary are free and clear of all mortgages, liens,
security interests, defects, encumbrances, easements,
restrictions, reservations, conditions, covenants, agreements,
encroachments, rights of way and zoning laws, except (i) those
set forth in the Seller SEC Documents or Section 3.01(n) of
the Seller Disclosure Schedule; (ii) easements, restrictions,
reservations, conditions, covenants, rights of way, zoning
laws and other defects and irregularities in title and
encumbrances which do not materially impair the
20
use thereof for the purposes for which they are held; (iii)
the lien of current taxes not yet due and payable and (iv)
other defects in title, easements, restrictive covenants and
similar encumbrances that individually or in the aggregate
would not reasonably be expected to have a material adverse
effect on Seller. Seller and the Seller Subsidiaries own, and
are in rightful possession of, and have good title to, all of
the other assets indicated in the Seller SEC Documents as
being owned by Seller or a Seller Subsidiary, free and clear
of any charge, mortgage, pledge, security interest,
hypothecation, restriction, claim, option, lien, encumbrance
or interest of any persons whatsoever except (i) those
described in the Seller SEC Documents or Section 3.01(n) of
the Seller Disclosure Schedule, (ii) for those assets disposed
of in the ordinary course of business consistent with past
practices, (iii) for such as are no longer used or useful in
the conduct of its businesses and (iv) for defects in title,
easements, restrictive covenants and similar encumbrances that
individually or in the aggregate would not reasonably be
expected to have a material adverse effect on Seller. The
assets of Seller and the Seller Subsidiaries, taken as a
whole, are adequate to continue to conduct the businesses of
Seller and the Seller Subsidiaries as such businesses are
presently being conducted.
(o) Legal Proceedings. Except as set forth in the Seller Filed SEC
Documents or Section 3.01(o) of the Seller Disclosure
Schedule, there are no actions, suits, proceedings, claims or
investigations pending or, to the knowledge of Seller and the
Seller Subsidiaries, threatened in any court, before any
governmental agency or instrumentality or in any arbitration
proceeding (i) against Seller or any Seller Subsidiary which,
if adversely determined against Seller or any Seller
Subsidiary, would have a material adverse effect on Seller; or
(ii) against or by Seller or any Seller Subsidiary which, if
adversely determined against Seller or any Seller Subsidiary,
would prevent the consummation of this Agreement or any of the
transactions contemplated hereby or declare the same to be
unlawful or cause the rescission thereof.
(p) Regulatory Matters. None of Seller, the Seller Subsidiaries
and the respective properties of Seller and the Seller
Subsidiaries is a party to or subject to any order, judgment,
decree, agreement, memorandum of understanding or similar
arrangement with, or a commitment letter or similar submission
to, or extraordinary supervisory letter from, any court or
federal or state governmental agency or authority, including
any such agency or authority charged with the supervision or
regulation of financial institutions (or their holding
companies) or issuers of securities or engaged in the
insurance of deposits (including, without limitation, the OTS,
the FDIC and the SEC) or the supervision or regulation of
Seller or any Seller Subsidiary (collectively, the "REGULATORY
AUTHORITIES") that individually
21
or in the aggregate would reasonably be expected to have a
material adverse effect on Seller. Neither Seller nor any
Seller Subsidiary has been advised by any Regulatory Authority
that such Regulatory Authority is contemplating issuing or
requesting (or is considering the appropriateness of issuing
or requesting) any such order, judgment, decree, agreement,
memorandum of understanding, commitment letter, supervisory
letter or similar submission that individually or in the
aggregate would reasonably be expected to have a material
adverse effect on Seller.
(q) No Conflict. Subject to the required adoption of this
Agreement by the shareholders of Seller, receipt of the
required approvals of Regulatory Authorities and Governmental
Authorities, expiration of applicable regulatory waiting
periods, and required filings under federal and state
securities laws, the execution, delivery and performance of
this Agreement, and the consummation of the transactions
contemplated hereby, by Seller do not and will not (i)
conflict with, or result in a violation of, or result in the
breach of or a default (or which with notice or lapse of time
would result in a default) under, any provision of: (A) any
federal, state or local law, regulation, ordinance, order,
rule or administrative ruling of any administrative agency or
commission or other federal, state or local governmental
authority or instrumentality (each, a "GOVERNMENTAL
AUTHORITY") applicable to Seller or any Seller Subsidiary or
any of their respective properties; (B) the certificate of
incorporation or bylaws of Seller, or the governing
instruments of any Seller Subsidiary; (C) any material
agreement, indenture or instrument to which Seller or any
Seller Subsidiary is a party or by which it or its properties
or assets may be bound; or (D) any order, judgment, writ,
injunction or decree of any court, arbitration panel or any
Governmental Authority applicable to Seller or any Seller
Subsidiary, other than, in the case of clauses (A), (C) and
(D), any such conflicts, violations, breaches or defaults that
individually or in the aggregate would not reasonably be
expected to have a material adverse effect on Seller; (ii)
result in the creation or acceleration of any security
interest, mortgage, option, claim, lien, charge or encumbrance
upon or interest in any property of Seller or any Seller
Subsidiary, other than such security interests, mortgages,
options, claims, liens, charges or encumbrances that
individually or in the aggregate would not reasonably be
expected to have a material adverse effect on Seller; or (iii)
violate the terms or conditions of, or result in the
cancellation, modification, revocation or suspension of, any
material license, approval, certificate, permit or
authorization held by Seller or any Seller Subsidiary, other
than such violations, cancellations, modifications,
revocations or suspensions that individually or in the
aggregate would not reasonably be expected to have a material
adverse effect on Seller.
(r) Brokers, Finders and Others. Except for the fees paid or
payable to
22
Friedman Billings Ramsey & Co., Inc., Seller's financial
advisor ("SELLER'S FINANCIAL ADVISOR"), there are no fees or
commissions of any sort whatsoever claimed by, or payable by
Seller or any Seller Subsidiary to, any broker, finder,
intermediary, attorney, accountant or any other similar person
in connection with effecting this Agreement or the
transactions contemplated hereby, except for ordinary and
customary legal and accounting fees.
(s) Employment Agreements. Except as disclosed in Section 3.01(s)
of the Seller Disclosure Schedule, neither Seller nor any
Seller Subsidiary is a party to any employment, change in
control, severance or consulting agreement not terminable at
will. Neither Seller nor any Seller Subsidiary is a party to,
bound by or negotiating, any collective bargaining agreement,
nor are any of their respective employees represented by any
labor union or similar organization. Seller and Seller
Subsidiaries are in compliance in all material respects with
all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and
hours other than with respect to any noncompliance that
individually or in the aggregate would not reasonably be
expected to have a material adverse effect on Seller, and
neither Seller nor any Seller Subsidiary has engaged in any
unfair labor practice that would not reasonably be expected to
have a material adverse effect on Seller.
(t) Employee Benefit Plans.
(i) Section 3.01(t)(i) of the Seller Disclosure Schedule
contains a complete and accurate list of all bonus,
incentive, deferred compensation, pension (including,
without limitation, Seller Pension Plans defined below),
retirement, profit-sharing, thrift, savings, employee
stock ownership, stock bonus, stock purchase, restricted
stock, stock option, severance, welfare (including,
without limitation, "welfare plans" within the meaning
of Section 3(1) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), fringe
benefit plans, employment or severance agreements and
all similar practices, policies and arrangements
maintained or contributed to (currently or within the
last six years) by (A) Seller or any Seller Subsidiary
and in which any employee or former employee (the
"Employees"), consultant or former consultant (the
"CONSULTANTS"), officer or former officer (the
"OFFICERS"), or director or former director (the
"DIRECTORS") of Seller or any Seller Subsidiary
participates or to which any such Employees,
Consultants, Officers or Directors either participate or
are parties or (B) any Seller ERISA Affiliate (as
defined below) (collectively, the "COMPENSATION AND
BENEFIT Plans"). Neither
23
Seller nor any Seller Subsidiary has any commitment to
create any additional Compensation and Benefit Plan or
to modify or change any existing Compensation and
Benefit Plan, except to the extent required by law and
as otherwise contemplated by Sections 6.02 and 7.01 of
this Agreement.
(ii) Each Compensation and Benefit Plan has been operated and
administered in accordance with its terms and with
applicable law, including, but not limited to, ERISA,
the Code, the Securities Act (as defined in Section
3.01(u)), the Exchange Act (as defined in Section
3.01(g)), the Age Discrimination in Employment Act, or
any regulations or rules promulgated thereunder, and all
filings, disclosures and notices required by ERISA, the
Code, the Securities Act, the Exchange Act, the Age
Discrimination in Employment Act and any other
applicable law have been timely made, except with
respect to such failures as would not reasonably be
expected to have a material adverse effect on Seller.
Each Compensation and Benefit Plan which is an "employee
pension benefit plan" within the meaning of Section 3(2)
of ERISA (a "SELLER PENSION PLAN") and which is intended
to be qualified under Section 401(a) of the Code has
received a favorable determination letter (including a
determination that the related trust under such
Compensation and Benefit Plan is exempt from tax under
Section 501(a) of the Code) from the IRS and Seller is
not aware of any circumstances likely to result in
revocation of any such favorable determination letter.
There is no material pending or, to the knowledge of
Seller, threatened legal action, suit or claim relating
to the Compensation and Benefit Plans other than routine
claims for benefits thereunder. Neither Seller nor any
Seller Subsidiary has engaged in a transaction, or
omitted to take any action, with respect to any
Compensation and Benefit Plan that would reasonably be
expected to subject Seller or any Seller Subsidiary to a
tax or penalty imposed by either Section 4975 of the
Code or Section 502 of ERISA, assuming for purposes of
Section 4975 of the Code that the taxable period of any
such transaction expired as of the date hereof.
(iii) No liability (other than for payment of premiums to the
Pension Benefit Guaranty Corporation ("PBGC") which have
been made or will be made on a timely basis) under Title
IV of ERISA has been or is expected to be incurred by
Seller or any Seller Subsidiary with respect to any
ongoing, frozen or terminated "single-employer plan,"
within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any of them, or any
single-employer plan of any entity (a "SELLER ERISA
AFFILIATE
24
PLAN") which is considered one employer with Seller
under Section 4001(a)(14) of ERISA or Section 414(b),
(c) or (m) of the Code (a "SELLER ERISA AFFILIATE").
None of Seller, the Seller Subsidiaries nor any Seller
ERISA Affiliate has contributed, or has been obligated
to contribute, to a multiemployer plan under Subtitle E
of Title IV of ERISA (as defined in ERISA Sections
3(37)(A) and 4001(a)(3)) at any time since September 26,
1980. No notice of a "reportable event", within the
meaning of Section 4043 of ERISA, for which the 30-day
reporting requirement has not been waived, has been
required to be filed for any Compensation and Benefit
Plan or by any Seller ERISA Affiliate Plan within the
12-month period ending on the date hereof, and no such
notice will be required to be filed as a result of the
transactions contemplated by this Agreement. The PBGC
has not instituted proceedings to terminate any Seller
Pension Plan or Seller ERISA Affiliate Plan and, to
Seller's knowledge, no condition exists that presents a
material risk that such proceedings will be instituted.
There is no pending investigation or enforcement action
by the PBGC, the Department of Labor (the "DOL"), the
IRS or any other Governmental Authority with respect to
any Compensation and Benefit Plan. Under each Seller
Pension Plan and Seller ERISA Affiliate Plan, as of the
date of the most recent actuarial valuation performed
prior to the date of this Agreement, the actuarially
determined present value of all "benefit liabilities",
within the meaning of Section 4001(a)(16) of ERISA (as
determined on the basis of the actuarial assumptions
contained in such actuarial valuation of such Seller
Pension Plan or Seller ERISA Affiliate Plan), did not
exceed the then current value of the assets of such
Seller Pension Plan or Seller ERISA Affiliate Plan and
since such date there has been neither an adverse change
in the financial condition of such Seller Pension Plan
or Seller ERISA Affiliate Plan nor any amendment or
other change to such Seller Pension Plan or Seller ERISA
Affiliate Plan that would increase the amount of
benefits thereunder which reasonably could be expected
to change such result and that individually or in the
aggregate would reasonably be expected to have a
material adverse effect on Seller.
(iv) All contributions required to be made under the terms of
any Compensation and Benefit Plan or Seller ERISA
Affiliate Plan or any employee benefit arrangements
under any collective bargaining agreement to which
Seller or any Seller Subsidiary is a party have been
timely made or have been reflected on the Seller
Financial Statements. Neither any Seller Pension Plan
nor any
25
Seller ERISA Affiliate Plan has an "accumulated funding
deficiency" (whether or not waived) within the meaning
of Section 412 of the Code or Section 302 of ERISA and
all required payments to the PBGC with respect to each
Seller Pension Plan or Seller ERISA Affiliate Plan have
been made on or before their due dates. None of Seller,
the Seller Subsidiaries nor any Seller ERISA Affiliate
(x) has provided, or would reasonably be expected to be
required to provide, security to any Seller Pension Plan
or to any Seller ERISA Affiliate Plan pursuant to
Section 401(a)(29) of the Code, and (y) has taken any
action, or omitted to take any action, that has
resulted, or would reasonably be expected to result, in
the imposition of a lien under Section 412(n) of the
Code or pursuant to ERISA that individually or in the
aggregate would reasonably be expected to have a
material adverse effect on Seller.
(v) Except as disclosed in Section 3.01(t)(v) of the Seller
Disclosure Schedule, neither Seller nor any Seller
Subsidiary has any obligations to provide retiree health
and life insurance or other retiree death benefits under
any Compensation and Benefit Plan, other than benefits
mandated by Section 4980B of the Code.
(vi) Seller and the Seller Subsidiaries do not maintain any
foreign Compensation and Benefit Plans.
(vii) With respect to each Compensation and Benefit Plan of
Seller, Seller has, if applicable, provided or made
available to Buyer, true and complete copies of
existing: (A) Compensation and Benefit Plan documents
and amendments thereto; (B) trust instruments and
insurance contracts; (C) most recent actuarial report
and financial statement; (D) most recent summary plan
description; (E) forms filed with the PBGC within the
past year (other than for premium payments); (E) most
recent determination letter issued by the IRS; and (G)
any Form 5310, Form 5310A, Form 5300 or Form 5330 filed
within the past year with the IRS.
(viii)Except as disclosed in the Seller Disclosure Schedule or
on Section 3.01(t)(viii) of the Seller Disclosure
Schedule, the consummation of the transactions
contemplated by this Agreement would not, directly or
indirectly (including, without limitation, as a result
of any termination of employment prior to or following
the Effective Time), reasonably be expected to (A)
entitle any Employee, Consultant or Director to any
payment (including severance pay or similar
compensation) or any increase in compensation, (B)
result in the vesting or acceleration of any benefits
under any Compensation and Benefit Plan of Seller or (C)
result in any
26
material increase in benefits payable under any
Compensation and Benefit Plan of Seller, any of which
reasonably would be expected to have a material adverse
effect on Seller.
(u) Compliance with Laws. Except with respect to Environmental
Laws (as defined in Section 3.01(y)) and Taxes, which are the
subject of Sections 3.01(y) and 3.01(m), respectively, each of
Seller and the Seller Subsidiaries:
(i) has been in compliance with all applicable federal,
state, local and foreign statutes, laws, regulations,
ordinances, rules, judgments, orders or decrees
applicable thereto or to the employees conducting such
business, including, without limitation, the Equal
Credit Opportunity Act, as amended, the Fair Housing
Act, as amended, the Federal Community Reinvestment Act,
as amended, the Home Mortgage Disclosure Act, as
amended, and all other applicable fair lending laws and
other laws relating to discriminatory business
practices, except for failures to be in compliance
which, individually or in the aggregate, have not had or
would not reasonably be expected to have a material
adverse effect on Seller;
(ii) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and
registrations with, all Governmental Authorities that
are required in order to permit it to own or lease its
properties and to conduct its business as presently
conducted, except where the failure to obtain any of the
foregoing or to make any such filing, application or
registration has not had or would not reasonably be
expected to have a material adverse effect on Seller;
all such permits, licenses, certificates of authority,
orders and approvals are in full force and effect and to
Seller's knowledge, no suspension or cancellation of any
of them has been threatened in writing; and
(iii) has received no written notification or communication
from any Governmental Authority since January 1, 2003,
(A) asserting that Seller or any Seller Subsidiary is
not in compliance with any of the statutes, regulations
or ordinances which such Governmental Authority
enforces, except for failures to be in compliance that
individually or in the aggregate would not reasonably be
expected to have a material adverse effect on Seller, or
(B) threatening to revoke any license, franchise, permit
or governmental authorization, which revocations,
individually or in the aggregate would reasonably be
expected to have a material adverse effect on Seller,
which has not been resolved to the satisfaction of the
27
Governmental Authority which sent such notification or
communication. There is no event which has occurred
that, to the knowledge of Seller, would reasonably be
expected to result in the revocation of any such
license, franchise, permit or governmental
authorization.
(v) Insurance.
(i) Section 3.01(v) of the Seller Disclosure Schedule lists
all of the material insurance policies, binders or bonds
maintained by Seller or any Seller Subsidiary and a
description of all material claims filed by Seller or
any Seller Subsidiary against the insurers of Seller and
the Seller Subsidiaries since December 31, 2002. Seller
and the Seller Subsidiaries are insured with reputable
insurers against such risks and in such amounts as the
management of Seller reasonably has determined to be
prudent in accordance with industry practices. All such
insurance policies are in full force and effect, Seller
and the Seller Subsidiaries are not in material default
thereunder and all claims thereunder have been filed in
due and timely fashion, except with respect to such
policies and claims, the failure to maintain or file
would not reasonably be expected to have a material
adverse effect on Seller.
(ii) The savings accounts and deposits of CBank are insured
up to applicable limits by the FDIC in accordance with
the Federal Deposit Insurance Act, and CBank has paid
all assessments and filed all reports required by the
Federal Deposit Insurance Act, except for such failures
as would not reasonably be expected to have a material
adverse effect on CBank or the availability of such
insurance.
(w) Governmental and Third-Party Proceedings. No consent,
approval, authorization of, or registration, declaration or
filing with, any court, Governmental Authority or any other
third party is required to be made or obtained by Seller or
any Seller Subsidiary in connection with the execution,
delivery or performance by Seller of this Agreement or the
consummation by Seller of the transactions contemplated
hereby, except for (A) filings of applications and notices, as
applicable, with and the approval of certain federal and state
banking authorities, (B) the filing of the appropriate
certificates of merger with the Secretaries of State of West
Virginia and Delaware pursuant to the WVBCA and the DGCL, (C)
the adoption of this Agreement by Seller's shareholders, (D)
the filing of a premerger notification and report form by
Seller under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (the "HSR ACT") or any other applicable
competition, merger control, antitrust or
28
similar law or regulation, (E) the filing with the SEC of the
Proxy Statement/Prospectus and such reports under the Exchange
Act, as may be required in connection with this Agreement, the
Merger and the other transactions contemplated hereby, (F) any
filings required under the rules and regulations of Nasdaq and
the Buyer's Exchange, and (G) such other consents, approvals,
orders, authorizations, registrations, declarations and
filings the failure of which to be obtained or made
individually or in the aggregate would not reasonably be
expected to have a material adverse effect on Seller.
(x) Contracts. (i) Except for Contracts filed as exhibits to the
Seller SEC Documents, there are no Contracts that are required
to be filed as an exhibit to any Seller SEC Document under the
Exchange Act and the rules and regulations promulgated
thereunder. Except for Contracts filed in unredacted form as
exhibits to the Seller SEC Documents and purchase orders
entered into in the ordinary course of business, Section
3.01(x) of the Seller Disclosure Schedule sets forth a true
and complete list as of the date of this Agreement of all
Contracts in existence as of the date of this Agreement (other
than those which have been performed completely): (A) which
involve the payment by or to Seller or any Seller Subsidiary
of more than $100,000 in connection with the purchase of
property or goods or the performance of services or (B) which
are not in the ordinary course of their respective businesses.
True, complete and correct copies of all such Contracts have
been delivered to Buyer. Neither Seller nor any Seller
Subsidiary, nor, to the knowledge of Seller, any other party
thereto, is in default under any such contract, agreement,
commitment, arrangement or other instrument to which it is a
party, by which its respective assets, business or operations
may be bound or affected in any way, or under which it or its
respective assets, business or operations receive benefits,
and there has not occurred any event that, with the lapse of
time or the giving of notice or both, would constitute such a
default except, in each case, for defaults that individually
or in the aggregate would not reasonably be expected to have a
material adverse effect on Seller.
(y) Environmental Matters. Except as otherwise disclosed in
Section 3.01(y) of the Seller Disclosure Schedule: (i) Seller
and the Seller Subsidiaries are and have been at all times in
compliance in all material respects with all applicable
Environmental Laws (as that term is defined in this Section
3.01(y)), and, to the knowledge of Seller, neither Seller nor
any Seller Subsidiary has engaged in any activity in violation
of any applicable Environmental Law except for failures to be
in compliance that individually or in the aggregate could not
reasonably be expected to have a material adverse effect on
Seller; (ii)(A) to the knowledge of Seller, no investigations,
inquiries, orders, hearings, actions or other proceedings by
29
or before any court or Governmental Authority are pending or
have been threatened in writing in connection with any of
Seller's or any Seller Subsidiary's activities and any Seller
Real Properties or improvements thereon, and (B) to the
knowledge of Seller, no investigations, inquiries, orders,
hearings, actions or other proceedings by or before any court
or Governmental Authority are pending or threatened in
connection with any real properties in respect of which any
Seller Subsidiary has foreclosed or holds a mortgage or
mortgages (hereinafter referred to as the "SELLER SUBSIDIARY
REAL ESTATE COLLATERAL"); (iii) to the knowledge of Seller, no
claims are pending or threatened by any third party against
Seller or any Seller Subsidiary, or with respect to the Seller
Real Properties or improvements thereon, or, to the knowledge
of Seller, the Seller Subsidiary Real Estate Collateral or
improvements thereon, relating to damage, contribution, cost
recovery, compensation, loss, injunctive relief, remediation
or injury resulting from any Hazardous Substance (as that term
is defined in this Section 3.01(x)) which have not been
resolved to the satisfaction of the involved parties and which
have had or are reasonably expected to have a material adverse
effect on Seller or any Seller Subsidiary; (iv) to the
knowledge of Seller, no Hazardous Substances have been
integrated into the Seller Real Properties or improvements
thereon or any component thereof, or the Seller Subsidiary
Real Estate Collateral or improvements thereon or any
component thereof in such manner or quantity as may reasonably
be expected to or in fact would pose a threat to human health
or the value of the real property and improvements; and (v)
neither Seller nor any Seller Subsidiary has knowledge that
(A) any of the Seller Real Properties or improvements thereon,
or the Seller Subsidiary Real Estate Collateral or
improvements thereon has been used for the treatment, storage
or disposal of Hazardous Substances or has been contaminated
by Hazardous Substances, (B) any of the business operations of
Seller or any Seller Subsidiary have contaminated lands,
waters or other property of others with Hazardous Substances,
except routine, office-generated solid waste, or (C) any of
the Seller Real Properties or improvements thereon, or the
Seller Subsidiary Real Estate Collateral or improvements
thereon have in the past or presently contain underground
storage tanks, friable asbestos materials or PCB-containing
equipment, which in any event would reasonably be expected to
have a material adverse effect on Seller.
For purposes of this Agreement, (i) "ENVIRONMENTAL LAW" means
the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"); the Resource
Conservation and Recovery Act of 1976, as amended; the
Hazardous Materials Transportation Act, as amended; the Toxic
Substances Control Act, as amended; the Federal Water
Pollution Control Act, as amended; the Safe
30
Drinking Water Act, as amended; the Clean Air Act, as amended;
the Occupational Safety and Health Act of 1970, as amended;
the Hazardous & Solid Waste Amendments Act of 1984, as
amended; the Superfund Amendments and Reauthorization Act of
1986, as amended; the regulations promulgated thereunder, and
any other federal, state, county, municipal, local or other
statute, law, ordinance or regulation which may relate to or
deal with human health or the environment, as of the date of
this Agreement, and (ii) "HAZARDOUS SUBSTANCES" means, at any
time: (a) any "hazardous substance" as defined in
Section 101(14) of CERCLA Or regulations promulgated
thereunder; (b) any "solid waste," "hazardous waste," or
"infectious waste," as such terms are defined in any other
Environmental Law as of the date of this Agreement; and (c)
friable asbestos, urea-formaldehyde, polychlorinated biphenyls
("PCBS"), nuclear fuel or material, chemical waste,
radioactive material, explosives, known carcinogens, petroleum
products and by-products, and other dangerous, toxic or
hazardous pollutants, contaminants, chemicals, materials or
substances listed or identified in, or regulated by, any
Environmental Law.
(z) Takeover Laws. Assuming the accuracy of the representations
and warranties of Buyer set forth in Section 4.01(y), the
approval of this Agreement and the Merger by the Board of
Directors of Seller constitutes approval of the Merger for
purposes of Section 203 of the DGCL and represents all of the
action necessary to ensure that the restrictions on business
combinations (as such term is defined therein) set forth in
Section 203 of the DGCL do not and will not apply to the
execution or delivery of this Agreement (including any
amendments to this Agreement) or the consummation of the
Merger and the other transactions contemplated hereby.
(aa) Seller Information. True and complete copies of all documents
listed in the Seller Disclosure Schedule have been made
available or provided to Buyer. The books of account, stock
record books and other financial and corporate records of the
Seller and its Subsidiaries, all of which have been made
available to Buyer, are complete and correct in all material
respects, including the maintenance of a system of internal
accounting controls sufficient to provide reasonable assurance
that transactions are executed with its management's
authorizations and such books and records are accurately
reflected in all material respects in the Seller Filed SEC
Documents.
(bb) Ownership of Buyer Shares. As of the date hereof, except as
otherwise disclosed in Section 3.01(cc) of the Seller
Disclosure Schedule, neither Seller nor, to the knowledge of
Seller, any of its affiliates or associates (as such terms are
defined under the Exchange Act), (i) beneficially owns,
directly or indirectly, or (ii) is a party to any agreement,
arrangement or
31
understanding for the purpose of acquiring, holding, voting or
disposing of, any Buyer Shares.
(cc) Fairness Opinion. The Board of Directors of Seller has
received the opinion of Seller's Financial Advisor dated the
date of this Agreement to the effect that the consideration to
be received by Seller's shareholders in the Merger is fair,
from a financial point of view, to Seller's shareholders.
(dd) CRA Compliance. Neither Seller nor any Seller Subsidiary has
received any notice of non-compliance with the applicable
provisions of the Federal Community Reinvestment Act, as
amended ("CRA"), and the regulations promulgated thereunder,
and CBank has received a CRA rating of satisfactory or better
from the FDIC. Seller knows of no fact or circumstance or set
of facts or circumstances which would be reasonably likely to
cause Seller or any Seller Subsidiary to receive any notice of
non-compliance with such provisions or cause the CRA rating of
Seller or any Seller Subsidiary to fall below satisfactory.
ARTICLE FOUR
REPRESENTATIONS AND WARRANTIES OF BUYER
4.01. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer and Acquisition Sub hereby jointly and severally warrant and
represent to Seller that:
(a) Corporate Status. Buyer is a West Virginia corporation and a
bank holding company registered under the Bank Holding Company
Act of 1956, as amended (the "BHC ACT"). Acquisition Sub is a
West Virginia corporation. Each of Buyer and Acquisition Sub
is duly organized, validly existing and in good standing under
the laws of the state of its incorporation and has the full
corporate power and authority to own its property, to carry on
its business as presently conducted and to enter into and,
subject to the required obtaining of appropriate approvals of
Governmental Authorities and Regulatory Authorities, perform
its obligations under this Agreement and consummate the
transactions contemplated by this Agreement, and is duly
qualified or licensed to do business and is in good standing
in the State of Ohio and each other jurisdiction in which the
nature of its business or the ownership, leasing or operation
of its properties makes such qualification or licensing
necessary, other than where the failure to be so organized,
existing, qualified or licensed or in good standing
individually or in the aggregate could not reasonably be
expected to have a material adverse effect on Buyer. Buyer has
made available to Seller true and complete copies of its and
Acquisition Sub's certificates of incorporation and bylaws,
each as
32
amended to the date of this Agreement.
(b) Corporate Proceedings. All corporate proceedings of Buyer and
Acquisition Sub necessary to authorize the execution, delivery
and performance of this Agreement, and the consummation of the
transactions contemplated by this Agreement, in each case by
Buyer and Acquisition Sub, have been duly and validly taken.
This Agreement has been validly executed and delivered by duly
authorized officers of Buyer and Acquisition Sub. No vote of
Buyer's stockholders is required to be obtained in connection
with the consummation of the transactions contemplated hereby.
(c) Capitalization of Buyer.
(i) As of February 27, 2004, the authorized capital stock of
Buyer consists of 50,000,000 common shares, 2.0833 par
value per share, of which 19,718,128 common shares are
issued and outstanding and 1,601,220 common shares are
held in treasury by Buyer, and 1,000,000 preferred
shares, no par value per share, of which no shares are
issued or outstanding. The outstanding Buyer Shares have
been duly authorized and are validly issued, fully paid
and non-assessable, and were not issued in violation of
the preemptive rights of any person. As of February 27,
2004, 1,000,000 Buyer Shares were reserved for issuance
upon the exercise of outstanding stock options granted
under Buyer's stock option plans (the "BUYER STOCK
OPTION PLANS") and 578,070 Buyer Shares were available
for future grants of stock options under the Buyer Stock
Option Plans. As of the date of this Agreement, except
for the Buyer Shares issuable pursuant to this Agreement
and as disclosed in Section 4.01(c) of the Buyer
Disclosure Schedule, Buyer has no other commitment or
obligation to issue, deliver or sell any Buyer Shares.
As of the date of this Agreement, there are no bonds,
debentures, notes or other indebtedness of Buyer, and no
securities or other instruments or obligations of Buyer
the value of which is in any way based upon or derived
from any capital or voting stock of Buyer, having the
right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on
which stockholders of Buyer may vote. Except as set
forth above, as of the date of this Agreement, there are
no material Contracts of any kind to which Buyer is a
party or by which Buyer is bound obligating Buyer to
issue, deliver or sell, or cause to be issued, delivered
or sold, additional shares of capital stock of, or other
equity or voting interests in, or securities convertible
into, or exchangeable or exercisable for, shares of
capital stock of, or other equity or voting interests
in, Buyer or obligating Buyer to issue,
33
grant, extend or enter into any such security, option,
warrant, call, right or Contract. As of the date of this
Agreement, there are no outstanding material contractual
obligations of Buyer to repurchase, redeem or otherwise
acquire any shares of capital stock of, or other equity
or voting interests in, Buyer.
(ii) The Buyer Shares to be issued in exchange for Seller
Shares in the Merger, when issued in accordance with the
terms of this Agreement, will be duly authorized,
validly issued, fully paid and non-assessable, will not
be subject to any preemptive or other statutory right of
stockholders and will be issued in compliance with
applicable United States federal and state securities
laws.
(d) Authorized and Effective Agreement. This Agreement constitutes
the legal, valid and binding obligation of Buyer and
Acquisition Sub, enforceable against Buyer and Acquisition Sub
in accordance with its terms, except as the same may be
limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance and other similar laws relating to or
affecting the enforcement of creditors' rights generally, by
general equitable principles (regardless of whether
enforceability is considered in a proceeding in equity or at
law) and by an implied covenant of good faith and fair
dealing. Each of Buyer and Acquisition Sub has the absolute
and unrestricted right, power, authority and capacity to
execute and deliver this Agreement and, subject to the
satisfaction of the requirements referred to in Section
4.01(j), the expiration of applicable regulatory waiting
periods, and required filings under federal and state
securities laws, to perform its obligations under this
Agreement.
(e) No Conflict. Subject to the receipt of the required approvals
of Regulatory Authorities and Governmental Authorities, the
expiration of applicable regulatory waiting periods, the
execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated by this
Agreement by Buyer and Acquisition Sub do not and will not (i)
conflict with, or result in a violation of, or result in the
breach of or a default (or which with notice or lapse of time
would result in a default) under, any provision of: (A) any
federal, state or local law, regulation, ordinance, order,
rule or administrative ruling of any Governmental Authority
applicable to Buyer or Acquisition Sub or any of its or their
properties; (B) the certificates of incorporation or bylaws of
Buyer or Acquisition Sub; (C) any material agreement,
indenture or instrument to which Buyer or Acquisition Sub is a
party or by which it or their properties or assets may be
bound; or (D) any order, judgment, writ, injunction or decree
of any court, arbitration panel or any Governmental Authority
applicable to Buyer or Acquisition Sub; (ii) result in the
creation or acceleration of any security interest, mortgage,
option, claim, lien,
34
charge or encumbrance upon or interest in any property of
Buyer; or (iii) violate the terms or conditions of, or result
in the cancellation, modification, revocation or suspension
of, any material license, approval, certificate, permit or
authorization held by Buyer or Acquisition Sub.
(f) SEC Filings. Buyer has filed all reports and proxy materials
required to be filed by it with the SEC pursuant to the
Exchange Act, except for any reports or proxy materials the
failure to file which would not have a material adverse effect
upon Buyer and its Subsidiaries taken as a whole. All such
filings, at the time of filing, complied in all material
respects as to form and included all exhibits required to be
filed under the applicable rules of the SEC. None of such
documents, when filed, contained any untrue statement of a
material fact or omitted to state a material fact required to
be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were
made, not misleading.
(g) Financial Statements of Buyer. Buyer has furnished to Seller
consolidated financial statements of Buyer consisting of the
consolidated balance sheets as of December 31 for each of the
years 2003, 2002 and 2001, and the related consolidated
statements of income, changes in shareholders' equity and cash
flows for the three years ended December 31, 2003 (the "BUYER
BALANCE SHEET DATE"), including accompanying notes and the
report thereon of Ernst & Young LLP (collectively, all of such
consolidated financial statements are referred to as the
"BUYER FINANCIAL STATEMENTS"). The Buyer Financial Statements
were prepared in conformity with GAAP applied on a consistent
basis and present fairly, in all material respects, the
consolidated financial condition of Buyer at the dates, and
the consolidated results of operations and cash flows for the
periods, stated therein; subject, in the case of the interim
financial statements, to normal year-end audit adjustments
which are not expected to be, individually or in the
aggregate, materially adverse to Buyer and the absence of full
footnotes.
(h) Takeover Laws. Buyer has taken all action required to be taken
by it in order to exempt this Agreement and the transactions
contemplated hereby from, and this Agreement and the
transactions contemplated hereby are exempt from, the
requirements of any "moratorium", "control share", "fair
price", "affiliate transaction", "business combination" or
other anti-takeover laws or regulations of any state
(collectively, "TAKEOVER LAWS") applicable to it, including,
without limitation, those of the States of West Virginia and
Delaware.
(i) Brokers, Finders and Others. Except for the fees paid or
payable to Keefe, Bruyette & Woods, Inc., Buyer's financial
advisor, there are no
35
fees or commissions of any sort whatsoever claimed by, or
payable by Buyer to, any broker, finder, intermediary or any
other similar person in connection with effecting this
Agreement or the transactions contemplated hereby.
(j) Governmental and Third-Party Proceedings. No consent,
approval, authorization of, or registration, declaration or
filing with, any court, Governmental Authority or any other
third party is required to be made or obtained by Buyer in
connection with the execution, delivery or performance by
Buyer of this Agreement or the consummation by Buyer of the
transactions contemplated hereby, except for (A) filings of
applications or notices, as applicable, with and the approval
of certain federal and state banking authorities, (B) the
filing of the appropriate certificate of merger with the
Secretaries of State of West Virginia and Delaware pursuant to
the WVBCA and DGCL and (C) receipt of the approvals set forth
in Section 7.09. As of the date hereof, Buyer is not aware of
any reason why the approvals set forth in Section 7.09 will
not be received without the imposition of a condition,
restriction or requirement of the type described in Section
7.09.
(k) Buyer Information. None of the information relating to Buyer
and its Subsidiaries to be contained in (i) the Registration
Statement (as defined in Section 7.06(a) below) will, at the
time the Registration Statement is filed with the SEC and at
the time it becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading
and (ii) the Proxy Statement, as of the date such Proxy
Statement is mailed to shareholders of Seller and up to and
including the date of the meeting of Seller's shareholders to
which such Proxy Statement relates, will contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under
which they were made, not misleading, provided that, in each
case, information as of a later date shall be deemed to modify
information as of an earlier date. All information about Buyer
and its Subsidiaries included in the Proxy Statement will be
deemed to have been supplied by Buyer.
(l) Absence of Undisclosed Liabilities. Except as set forth in
Buyer SEC Documents filed and publicly available prior to the
date of this Agreement (the "BUYER FILED SEC Documents")
(including the financial statements included therein) or in
Section 4.01(l) of the Buyer Disclosure Schedule and except as
arising hereunder, Buyer and its subsidiaries have no
liabilities or obligations of any nature (whether accrued,
absolute,
36
contingent or otherwise) at the Buyer Balance Sheet Date,
other than liabilities and obligations that individually or in
the aggregate could not reasonably be expected to have a
material adverse effect on Buyer. Except as set forth in the
Buyer Filed SEC Documents or otherwise disclosed in Section
4.01(l) of the Buyer Disclosure Schedule, all debts,
liabilities, guarantees and obligations of Buyer and the Buyer
Subsidiaries incurred since the Buyer Balance Sheet Date have
been incurred in the ordinary course of business and are usual
and normal in amount both individually and in the aggregate.
Except as disclosed in Section 4.01(l) of the Buyer Disclosure
Schedule, neither Buyer nor any Buyer Subsidiary is in default
or breach of any material agreement to which Buyer or the
Buyer Subsidiary is a party other than any such breaches or
defaults that individually or in the aggregate would not
reasonably be expected to have a material adverse effect on
Buyer. To the best knowledge of Buyer, no other party to any
material agreement to which Buyer or any Buyer Subsidiary is a
party is in default or breach of such agreement, which breach
or default would reasonably be expected to have a material
adverse effect on Buyer.
(m) Absence of Changes. Except (i) as set forth in the Buyer Filed
SEC Documents (ii) as set forth in Section 4.01(n) of the
Buyer Disclosure Schedule, or (iii) in the ordinary course of
business consistent with past practice, since the Buyer
Balance Sheet Date, there has not been any material adverse
change in the business, operations, assets or financial
condition of Buyer and the Buyer Subsidiaries taken as a
whole, and, to the knowledge of Buyer, no fact or condition
exists which Buyer believes will cause such a material adverse
change in the future.
(n) Allowance for Loan Losses. Except as set forth in the Buyer
SEC Documents or in Section 3.01(m) of the Buyer Disclosure
Schedule, there is no loan which was made by any Buyer
Subsidiary and which is reflected as an asset of such Buyer
Subsidiary on the Buyer Financial Statements that (A)(i) is 90
days or more delinquent or (ii) has been classified by
examiners (regulatory or internal) as "Substandard,"
"Doubtful" or "Loss," and (B) the default by the borrower
under which could reasonably be expected to have a material
adverse effect on Buyer. The allowance for loan losses
reflected on the Buyer Financial Statements has been
determined in accordance with GAAP in all material respects
and in accordance in all material respects with all rules and
regulations applicable to Buyer and the Buyer Subsidiaries and
is adequate in all material respects, except for such failures
and inadequacies which would not reasonably be expected to
have a material adverse effect on Buyer. Buyer has considered
all potential losses known to Buyer in establishing the
current allowance for loan losses for each Buyer Subsidiary,
other than such losses that if incurred would not have a
material adverse effect on
37
Buyer.
(o) Reports and Records. Buyer and the Buyer Subsidiaries have
filed all reports and maintained all records required to be
filed or maintained by them under the rules and regulations of
the Board of Governors of the Federal Reserve System and the
West Virginia Division of Banking, except for such reports and
records the failure to file or maintain would not reasonably
be expected to have a material adverse effect on Buyer. All
such documents and reports complied in all material respects
with applicable requirements of law and rules and regulations
in effect at the time such documents and reports were filed
and contained in all material respects the information
required to be stated therein, except for such documents and
records the failure to file or contain such information would
not reasonably be expected to have a material adverse effect
on Buyer. None of such documents or reports, when filed,
contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading,
other than such reports and documents which the failure to
file in such fashion would not reasonably be expected to have
a material adverse effect on Buyer.
(p) Taxes. Except as set forth in Section 4.01(p) of the Buyer
Disclosure Schedule, Buyer and the Buyer Subsidiaries have
timely filed all material Tax Returns with respect to all
material Taxes required to be filed with the appropriate tax
authority through the date of this Agreement. Such Tax Returns
are and will be true, correct and complete in all material
respects. Buyer and the Buyer Subsidiaries have paid and
discharged all Taxes shown as due on such Tax Returns, other
than such Taxes that are adequately reserved as shown on the
Buyer Financial Statements or have arisen in the ordinary
course of business since the Buyer Balance Sheet Date. Except
as set forth in Section 4.01(p) of the Buyer Disclosure
Letter, neither the IRS nor any other taxing agency or
authority, domestic or foreign, has asserted, is now asserting
or, to the knowledge of Buyer, is threatening to assert
against Buyer or any Buyer Subsidiary any deficiency or claim
for additional Taxes, which deficiency or claim, if upheld,
would reasonably be expected to have a material adverse effect
on Buyer. There are no unexpired waivers by Buyer or any Buyer
Subsidiary of any statute of limitations with respect to
Taxes. The accruals and reserves for Taxes reflected in the
Buyer Financial Statements are adequate in all material
respects for the periods covered. Buyer and the Buyer
Subsidiaries have withheld or collected and paid over to the
appropriate Governmental Authorities or are properly holding
for such payment all Taxes required by law to be withheld or
collected, except for such failures to withhold or collect as
would not reasonably be expected to have a material adverse
38
effect on Buyer. There are no liens for Taxes upon the assets
of Buyer or any Buyer Subsidiary, other than liens for current
Taxes not yet due and payable and liens that individually or
in the aggregate would not reasonably be expected to have a
material adverse effect on Buyer. Neither Buyer nor any Buyer
Subsidiary has agreed to make, or is required to make, any
adjustment under Section 481(a) of the Code. Except as set
forth in the Buyer SEC Documents or in Section 4.01(p) of the
Buyer Disclosure Schedule, neither Buyer nor any Buyer
Subsidiary is a party to any agreement, contract, arrangement
or plan that has resulted, or could result, individually or in
the aggregate, in the payment of "excess parachute payments"
within the meaning of Section 280G of the Code. Neither Buyer
nor any Buyer Subsidiary has ever been a member of an
affiliated group of corporations, within the meaning of
Section 1504 of the Code, other than an affiliated group of
which Buyer is or was the common Buyer corporation. No Tax is
required to be withheld pursuant to Section 1445 of the Code
as a result of the transactions contemplated by this
Agreement.
(q) Legal Proceedings. Except as set forth in the Buyer Filed SEC
Documents or Section 4.01(q) of the Buyer Disclosure Schedule,
there are no actions, suits, proceedings, claims or
investigations pending or, to the knowledge of Buyer and the
Buyer Subsidiaries, threatened in any court, before any
governmental agency or instrumentality or in any arbitration
proceeding (i) against Buyer or any Buyer Subsidiary which, if
adversely determined against Buyer or any Buyer Subsidiary,
could have a material adverse effect on Buyer; or (ii) against
or by Buyer or any Buyer Subsidiary which, if adversely
determined against Buyer or any Buyer Subsidiary, could
prevent the consummation of this Agreement or any of the
transactions contemplated hereby or declare the same to be
unlawful or cause the rescission thereof.
(r) Regulatory Matters. Except as set forth in Section 4.01(r) of
the Buyer Disclosure Schedule, none of Buyer, the Buyer
Subsidiaries nor the respective properties of Buyer and the
Buyer Subsidiaries is a party to or subject to any order,
judgment, decree, agreement, memorandum of understanding or
similar arrangement with, or a commitment letter or similar
submission to, or extraordinary supervisory letter from, any
Regulatory Authorities that individually or in the aggregate
could reasonably be expected to have a material adverse effect
on Buyer. Neither Buyer nor any Buyer Subsidiary has been
advised by any Regulatory Authority that such Regulatory
Authority is contemplating issuing or requesting (or is
considering the appropriateness of issuing or requesting) any
such order, judgment, decree, agreement, memorandum of
understanding, commitment letter, supervisory letter or
similar submission that individually or in the aggregate could
reasonably be expected to have
39
a material adverse effect on Buyer.
(s) Employee Benefit Plans.
(i) Section 4.01(s)(i) of the Buyer Disclosure Schedule
contains a complete and accurate list of all bonus,
incentive, deferred compensation, pension (including,
without limitation, Buyer Pension Plans defined below),
retirement, profit-sharing, thrift, savings, employee
stock ownership, stock bonus, stock purchase, restricted
stock, stock option, severance, welfare (including,
without limitation, "welfare plans" within the meaning
of Section 3(1) of ERISA, fringe benefit plans,
employment or severance agreements and all similar
practices, policies and arrangements maintained or
contributed to (currently or within the last six years)
by (A) Buyer or any subsidiary of Buyer and in which any
employee or former employee (the "BUYER EMPLOYEES"),
consultant or former consultant (the "BUYER
CONSULTANTS"), officer or former officer (the "BUYER
OFFICERS"), or director or former director (the "BUYER
DIRECTORS") of Buyer or any subsidiary of Buyer
participates or to which any such Buyer Employees, Buyer
Consultants, Buyer Officers or Buyer Directors either
participate or are parties or (B) any Buyer ERISA
Affiliate (as defined below) (collectively, the "BUYER
COMPENSATION AND BENEFIT PLANS"). Neither Buyer nor any
subsidiary of Buyer has any commitment to create any
additional Buyer Compensation and Benefit Plan or to
modify or change any existing Buyer Compensation and
Benefit Plan, except to the extent required by law and
as otherwise contemplated by Sections 6.02 and 7.01 of
this Agreement.
(ii) Except in a manner that would not reasonably be expected
to have a material adverse effect, each Buyer
Compensation and Benefit Plan has been operated and
administered in accordance with its terms and with
applicable law, including, but not limited to, ERISA,
the Code, the Securities Act (as defined in Section
3.01(u)), the Exchange Act (as defined in Section
3.01(g)), the Age Discrimination in Employment Act, or
any regulations or rules promulgated thereunder, and all
filings, disclosures and notices required by ERISA, the
Code, the Securities Act, the Exchange Act, the Age
Discrimination in Employment Act and any other
applicable law have been timely made. Each Buyer
Compensation and Benefit Plan which is an "employee
pension benefit plan" within the meaning of Section 3(2)
of ERISA (a "BUYER PENSION PLAN") and which is intended
to be qualified under Section 401(a) of the Code has
received a favorable determination letter (including a
determination that the related trust under such Buyer
40
Compensation and Benefit Plan is exempt from tax under
Section 501(a) of the Code) from the IRS and Buyer is
not aware of any circumstances likely to result in
revocation of any such favorable determination letter.
There is no material pending or, to the knowledge of
Buyer, threatened legal action, suit or claim relating
to the Buyer Compensation and Benefit Plans other than
routine claims for benefits thereunder. Neither Buyer
nor any subsidiary of Buyer has engaged in a
transaction, or omitted to take any action, with respect
to any Buyer Compensation and Benefit Plan that would
reasonably be expected to subject Buyer or any
subsidiary of Buyer to a tax or penalty imposed by
either Section 4975 of the Code or Section 502 of ERISA,
assuming for purposes of Section 4975 of the Code that
the taxable period of any such transaction expired as of
the date hereof.
(iii) No liability (other than for payment of premiums to the
PBGC which have been made or will be made on a timely
basis) under Title IV of ERISA has been or is expected
to be incurred by Buyer or any subsidiary of Buyer with
respect to any ongoing, frozen or terminated
"single-employer plan," within the meaning of Section
4001(a)(15) of ERISA, currently or formerly maintained
by any of them, or any single-employer plan of any
entity (a "BUYER ERISA AFFILIATE PLAN") which is
considered one employer with Buyer under Section
4001(a)(14) of ERISA or Section 414(b), (c) or (m) of
the Code (a "BUYER ERISA AFFILIATE"). None of Buyer, any
subsidiary of Buyer or any Buyer ERISA Affiliate has
contributed, or has been obligated to contribute, to a
multiemployer plan under Subtitle E of Title IV of ERISA
(as defined in ERISA Sections 3(37)(A) and 4001(a)(3))
at any time since September 26, 1980. No notice of a
"reportable event", within the meaning of Section 4043
of ERISA, for which the 30-day reporting requirement has
not been waived, has been required to be filed for any
Buyer Compensation and Benefit Plan or by any Buyer
ERISA Affiliate Plan within the 12-month period ending
on the date hereof, and no such notice will be required
to be filed as a result of the transactions contemplated
by this Agreement. The PBGC has not instituted
proceedings to terminate any Buyer Pension Plan or Buyer
ERISA Affiliate Plan and, to Buyer's knowledge, no
condition exists that presents a material risk that such
proceedings will be instituted. There is no pending
investigation or enforcement action by the PBGC, the
DOL, the IRS or any other Governmental Authority with
respect to any Buyer Compensation and Benefit Plan.
Except as disclosed in Section 4.01(r)(iii) of the Buyer
Disclosure Schedule, under each
41
Buyer Pension Plan and Buyer ERISA Affiliate Plan, as of
the date of the most recent actuarial valuation
performed prior to the date of this Agreement, the
actuarially determined present value of all "benefit
liabilities", within the meaning of Section 4001(a)(16)
of ERISA (as determined on the basis of the actuarial
assumptions contained in such actuarial valuation of
such Buyer Pension Plan or Buyer ERISA Affiliate Plan),
did not exceed the then current value of the assets of
such Buyer Pension Plan or Buyer ERISA Affiliate Plan
and since such date there has been neither an adverse
change in the financial condition of such Buyer Pension
Plan or Buyer ERISA Affiliate Plan nor any amendment or
other change to such Buyer Pension Plan or Buyer ERISA
Affiliate Plan that would increase the amount of
benefits thereunder which reasonably could be expected
to change such result.
(iv) All contributions required to be made under the terms of
any Buyer Compensation and Benefit Plan or Buyer ERISA
Affiliate Plan or any employee benefit arrangements
under any collective bargaining agreement to which Buyer
or any subsidiary of Buyer is a party have been timely
made or have been reflected on the Buyer Financial
Statements. Neither any Buyer Pension Plan nor any Buyer
ERISA Affiliate Plan has an "accumulated funding
deficiency" (whether or not waived) within the meaning
of Section 412 of the Code or Section 302 of ERISA and
all required payments to the PBGC with respect to each
Buyer Pension Plan and each Buyer ERISA Affiliate Plan
have been made on or before their due dates. None of
Buyer, the any subsidiary of Buyer nor any Buyer ERISA
Affiliate (x) has provided, or would reasonably be
expected to be required to provide, security to any
Buyer Pension Plan or to any Buyer ERISA Affiliate Plan
pursuant to Section 401(a)(29) of the Code, and (y) has
taken any action, or omitted to take any action, that
has resulted, or would reasonably be expected to result,
in the imposition of a lien under Section 412(n) of the
Code or pursuant to ERISA.
(v) Except as disclosed in Section 4.01(s)(v) of the Buyer
Disclosure Schedule, neither Buyer nor any subsidiary of
Buyer has any obligations to provide retiree health and
life insurance or other retiree death benefits under any
Buyer Compensation and Benefit Plan, other than benefits
mandated by Section 4980B of the Code.
(vi) Buyer and the subsidiaries of Buyer do not maintain any
foreign Buyer Compensation and Benefit Plans.
(vii) With respect to each Buyer Compensation and Benefit
Plan, if
42
applicable, Buyer has provided or made available to
Seller, true and complete copies of existing: (A) Buyer
Compensation and Benefit Plan documents and amendments
thereto; (B) trust instruments and insurance contracts;
(C) most recent actuarial report and financial
statement; (D) most recent summary plan description; (E)
forms filed with the PBGC within the past year (other
than for premium payments); (F) most recent
determination letter issued by the IRS; and (G) any Form
5310, Form 5310A, Form 5300 or Form 5330 filed within
the past year with the IRS.
(viii)Except as disclosed on Section 4.01(s)(viii) of the
Buyer Disclosure Schedule, the consummation of the
transactions contemplated by this Agreement would not,
directly or indirectly (including, without limitation,
as a result of any termination of employment prior to or
following the Effective Time), reasonably be expected to
(A) entitle any Buyer Employee, Buyer Consultant or
Buyer Director to any payment (including severance pay
or similar compensation) or any increase in
compensation, (B) result in the vesting or acceleration
of any benefits under any Buyer Compensation and Benefit
Plan or (C) result in any material increase in benefits
payable under any Buyer Compensation and Benefit Plan.
(ix) Except as disclosed on Section 4.01(s)(ix) of the Buyer
Disclosure Schedule, neither Buyer nor any subsidiary of
Buyer maintains any compensation plans, programs or
arrangements the payments under which would not
reasonably be expected to be deductible as a result of
the limitations under Section 162(m) of the Code and the
regulations issued thereunder.
(x) Except as disclosed on Section 4.01(s)(x) of the Buyer
Disclosure Schedule, as a result, directly or
indirectly, of the transactions contemplated by this
Agreement (including, without limitation, as a result of
any termination of employment prior to or following the
Effective Time), none of Buyer, Seller or the Surviving
Corporation, or any of their respective Subsidiaries
will be obligated to make a payment that would be
characterized as an "excess parachute payment" to an
individual who is a "disqualified individual" (as such
terms are defined in Section 280G of the Code) of Buyer
on a consolidated basis, without regard to whether such
payment is reasonable compensation for personal services
performed or to be performed in the future.
(t) Compliance with Laws. Except with respect to Environmental
Laws and Taxes, which are the subject of Sections 4.01(p) and
4.01(v), respectively,
43
each of Buyer and the Buyer Subsidiaries:
(i) has been in compliance with all applicable federal,
state, local and foreign statutes, laws, regulations,
ordinances, rules, judgments, orders or decrees
applicable thereto or to the employees conducting such
business, including, without limitation, the Equal
Credit Opportunity Act, as amended, the Fair Housing
Act, as amended, the Federal Community Reinvestment Act,
as amended, the Home Mortgage Disclosure Act, as
amended, and all other applicable fair lending laws and
other laws relating to discriminatory business
practices, except for failures to be in compliance
which, individually or in the aggregate, have not had or
would not reasonably be expected to have a material
adverse effect on Buyer;
(ii) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and
registrations with, all Governmental Authorities that
are required in order to permit it to own or lease its
properties and to conduct its business as presently
conducted, except where the failure to obtain any of the
foregoing or to make any such filing, application or
registration has not had or would not reasonably be
expected to have a material adverse effect on Buyer; all
such permits, licenses, certificates of authority,
orders and approvals are in full force and effect and to
Buyer's knowledge, no suspension or cancellation of any
of them has been threatened in writing; and
(iii) has received no written notification or communication
from any Governmental Authority since January 1, 2002,
(A) asserting that Buyer or any Buyer Subsidiary is not
in compliance with any of the statutes, regulations or
ordinances which such Governmental Authority enforces,
except for failures to be in compliance that
individually or in the aggregate would not reasonably be
expected to have a material adverse effect on Buyer, or
(B) threatening to revoke any license, franchise, permit
or governmental authorization, which revocations,
individually or in the aggregate would reasonably be
expected to have a material adverse effect on Buyer,
which has not been resolved to the satisfaction of the
Governmental Authority which sent such notification or
communication. There is no event which has occurred
that, to the knowledge of Buyer, would reasonably be
expected to result in the revocation of any such
license, franchise, permit or governmental
authorization.
(u) Contracts. (i) Except for Contracts filed as exhibits to the
Buyer SEC
44
Documents, there are no Contracts that are required to be
filed as an exhibit to any Buyer SEC Document under the
Exchange Act and the rules and regulations promulgated
thereunder. Neither Buyer nor any Buyer Subsidiary, nor, to
the knowledge of Buyer, any other party thereto, is in default
under any such contract, agreement, commitment, arrangement or
other instrument to which it is a party, by which its
respective assets, business or operations may be bound or
affected in any way, or under which it or its respective
assets, business or operations receive benefits, and there has
not occurred any event that, with the lapse of time or the
giving of notice or both, would constitute such a default
except, in each case, for defaults that individually or in the
aggregate would not reasonably be expected to have a material
adverse effect on Buyer.
(v) Environmental Matters. Except as otherwise disclosed in
Section 4.01(v) of the Buyer Disclosure Schedule: (i) Buyer
and the Buyer Subsidiaries are and have been at all times in
compliance in all material respects with all applicable
Environmental Laws, and, to the knowledge of Buyer, neither
Buyer nor any Buyer Subsidiary has engaged in any activity in
violation of any applicable Environmental Law except for
failures to be in compliance that individually or in the
aggregate could not reasonably be expected to have a material
adverse effect on Buyer; (ii)(A) to the knowledge of Buyer, no
investigations, inquiries, orders, hearings, actions or other
proceedings by or before any court or Governmental Authority
are pending or have been threatened in writing in connection
with any of Buyer's or any Buyer Subsidiary's activities and
any Buyer Real Properties or improvements thereon, and (B) to
the knowledge of Buyer, no investigations, inquiries, orders,
hearings, actions or other proceedings by or before any court
or Governmental Authority are pending or threatened in
connection with any real properties in respect of which any
Buyer Subsidiary has foreclosed or holds a mortgage or
mortgages (hereinafter referred to as the "BUYER SUBSIDIARY
REAL ESTATE Collateral"); (iii) to the knowledge of Buyer, no
claims a pending or threatened by any third party against
Buyer or any Buyer Subsidiary, or with respect to the Buyer
Real Properties or improvements thereon, or, to the knowledge
of Buyer, the Buyer Subsidiary Real Estate Collateral or
improvements thereon, relating to damage, contribution, cost
recovery, compensation, loss, injunctive relief, remediation
or injury resulting from any Hazardous Substance which have
not been resolved to the satisfaction of the involved parties
and which have had or are reasonably expected to have a
material adverse effect on Buyer or any Buyer Subsidiary; (iv)
to the knowledge of Buyer, no Hazardous Substances have been
integrated into the Buyer Real Properties or improvements
thereon or any component thereof, or the Buyer Subsidiary Real
Estate Collateral or improvements thereon or any component
thereof in such manner or quantity as may
45
reasonably be expected to or in fact would pose a threat to
human health or the value of the real property and
improvements; and (v) neither Buyer nor any Buyer Subsidiary
has knowledge that (A) any of the Buyer Real Properties or
improvements thereon, or the Buyer Subsidiary Real Estate
Collateral or improvements thereon has been used for the
treatment, storage or disposal of Hazardous Substances or has
been contaminated by Hazardous Substances, (B) any of the
business operations of Buyer or any Buyer Subsidiary have
contaminated lands, waters or other property of others with
Hazardous Substances, except routine, office-generated solid
waste, or (C) any of the Buyer Real Properties or improvements
thereon, or the Buyer Subsidiary Real Estate Collateral or
improvements thereon have in the past or presently contain
underground storage tanks, friable asbestos materials or
PCB-containing equipment, which in any event would reasonably
be expected to have a material adverse effect on Buyer.
(w) Buyer Information. True and complete copies of all documents
listed in the Buyer Disclosure Schedule have been made
available or provided to Buyer. The books of account, stock
record books and other financial and corporate records of the
Buyer and its Subsidiaries, all of which have been made
available to Buyer, are complete and correct in all material
respects, including the maintenance of a system of internal
accounting controls sufficient to provide reasonable assurance
that transactions are executed with its management's
authorizations and such books and records are accurately
reflected in all material respects in the Buyer Filed SEC
Documents.
(x) CRA Compliance. Neither Buyer nor any Buyer Subsidiary has
received any notice of non-compliance with the applicable
provisions of the CRA and the regulations promulgated
thereunder, and each Subsidiary of Buyer has received a CRA
rating of satisfactory or better from the FDIC. Buyer knows of
no fact or circumstance or set of facts or circumstances which
would be reasonably likely to cause Buyer or any Buyer
Subsidiary to receive any notice of non-compliance with such
provisions or cause the CRA rating of Buyer or any Buyer
Subsidiary to fall below satisfactory.
(y) Ownership of Seller Shares. As of the date hereof, except as
otherwise disclosed in Section 4.01(y) of the Buyer Disclosure
Schedule, neither Buyer nor any of its affiliates or
associates (as such terms are defined under the Exchange Act),
(i) beneficially owns, directly or indirectly, (ii) is a party
to any agreement, arrangement or understanding for the purpose
of acquiring, holding, voting or disposing of, any Seller
Shares, (iii) has been an "interested shareholder" (as such
term in defined in Section 203 of the DGCL) of Seller at any
time within the last three (3) years or (iv) is an "Interested
Stockholder" of Seller (as such term is defined in Article
46
Eighth of Seller's certificate of incorporation).
(z) Operation of Acquisition Sub. Acquisition Sub was formed
solely for the purpose of engaging in the transactions
contemplated hereby and has engaged in no business other than
in connection with the transactions contemplated by this
Agreement.
ARTICLE FIVE
FURTHER COVENANTS OF SELLER
5.01. OPERATION OF BUSINESS
Seller covenants to Buyer that, throughout the period from the date
of this Agreement to and including the Closing, except as expressly contemplated
or permitted by this Agreement or to the extent that Buyer shall otherwise
consent in writing:
(a) Conduct of Business. Seller's business, and the business of
each Seller Subsidiary, will be conducted only in the ordinary
and usual course consistent with past practice. Without the
written consent of Buyer, Seller shall not, and shall cause
each Seller Subsidiary not to, take any action which would be
inconsistent with any representation or warranty of Seller set
forth in this Agreement or which would cause a breach of any
such representation or warranty if made at or immediately
following such action, subject to such exceptions as do not,
and would not reasonably be expected to have, individually or
in the aggregate, a material adverse effect on Buyer or the on
the Surviving Corporation following the Effective Time or
except, in each case, as may be required by applicable law or
regulation.
(b) Changes in Business and Capital Structure. Except as provided
for by this Agreement, as set forth in Section 5.01(b) of the
Seller Disclosure Schedule or as otherwise approved expressly
in writing by Buyer, Seller will not, and will cause each
Seller Subsidiary not to:
(i) sell, transfer, mortgage, pledge or subject to any lien
or otherwise encumber any of the assets of Seller or any
Seller Subsidiary, tangible or intangible, which are
material, individually or in the aggregate, to Seller
except for (A) internal reorganizations or
consolidations involving existing subsidiaries that
would not be likely to present a material risk of any
material delay in the receipt of any required regulatory
approval, (B) securitization activities in the ordinary
course of business and (C) other dispositions of assets,
including subsidiaries, if the fair market value of the
total consideration received therefrom does not exceed
in the aggregate,
47
$50,000;
(ii) make any capital expenditure or capital additions or
betterments which individually exceed $100,000 or exceed
$500,000 in the aggregate and which otherwise are in any
manner inconsistent in any material respect with
Seller's capital budget for 2004;
(iii) become bound by, enter into, or perform any material
contract, commitment or transaction party which if so
entered into, would be reasonably likely to (A) have a
material adverse effect on Seller, (B) impair in any
material respect the ability of Seller to perform its
obligations under this Agreement or (C) prevent or
materially delay the consummation of the transactions
contemplated by this Agreement;
(iv) declare, pay or set aside for payment any dividends or
make any distributions on its capital shares issued and
outstanding other than quarterly cash dividends on
Seller Shares in respect of each fiscal quarter ending
on or after February 29, 2004 in an amount not to exceed
$0.25 per Seller Share and (B) dividends by a direct or
indirect wholly owned subsidiary of Seller to its
parent;
(v) purchase, redeem, retire or otherwise acquire any of its
capital shares other than pursuant to rights of
repurchase granted to Seller, or put rights granted to
any of its employees or former employees, pursuant to
the Seller Stock Option Plans;
(vi) issue or grant any option or right to acquire any of its
capital shares or any Voting Debt other than (A) the
issuance of Seller Shares pursuant to the exercise of
warrants or options outstanding as of the date of this
Agreement and (B) issuances by a wholly-owned subsidiary
of its capital stock or Voting Debt to its parent or
another wholly-owned subsidiary of Seller, or effect,
directly or indirectly, any share split or share
dividend, recapitalization, combination, exchange of
shares, readjustment or other reclassification;
(vii) amend or propose to amend its certificate of
incorporation, by-laws or other governing documents
except as otherwise expressly contemplated by this
Agreement;
(viii)merge or consolidate with any other person or otherwise
reorganize except for the Merger;
(ix) acquire all or any portion of the assets, business,
deposits or
48
properties of any other entity other than (A) by way of
foreclosures, (B) acquisitions of control in a bona fide
fiduciary capacity or in satisfaction of debts previously
contracted in good faith, in each case in the ordinary and
usual course of business consistent with past practice and (C)
internal reorganizations or consolidations involving existing
subsidiaries that would not be likely to present a material
risk of any material delay in the receipt of any required
regulatory approval;
(x) other than in the ordinary course of business consistent with
past practice, enter into, establish, adopt or amend any
pension, retirement, stock option, stock purchase, savings,
profit-sharing, deferred compensation, consulting, bonus,
group insurance or other employee benefit, incentive or
welfare contract, plan or arrangement, or any trust agreement
(or similar arrangement) related thereto, in respect of any
Director, Officer or Employee of Seller or any Seller
Subsidiary, or take any action to accelerate the vesting or
exercisability of stock options, restricted stock or other
compensation or benefits payable thereunder; provided,
however, that Seller may take such actions in order to satisfy
either applicable law or contractual obligations, including
those arising under its benefit plans, existing as of the date
hereof and disclosed in the Seller Disclosure Schedule or
regular annual renewals of insurance contracts.
(xi) announce or pay any general wage or salary increase or bonus,
other than normal pay increases and bonuses consistent with
past practices, or enter into or amend or renew any
employment, consulting, severance or similar agreements or
arrangements with any Officer, Director or Employee, except,
in each case, for changes which are required by applicable law
or to satisfy contractual obligations existing as of the date
hereof and disclosed in the Seller Disclosure Schedule;
provided, however, that Seller shall be permitted to pay (A)
pro rata bonuses as of the Closing Date to those officers of
Seller and CBank listed in Section 5.01(b)(xi) of the Seller
Disclosure Schedule based on (i) the bonuses being accrued on
Seller's or CBank's books for each of such officers in respect
of Seller's current fiscal year in accordance with the bonus
policies of Seller and CBank in effect as of the start of such
fiscal year and (ii) the actual number of days elasped from
the start of Seller's current fiscal year to the Closing Date
or, if the Closing Date occurs after December 1, 2004, the
full amount of such bonus that otherwise would have been paid
by Seller or CBank in respect of such fiscal year and (B)
quarterly performance and referral bonuses to employees of
CBank consistent with
49
CBank's current policy with respect to such bonus payments;
(xii) incur any long-term indebtedness for money borrowed, guarantee
any such long-term indebtedness or issue or sell and long-term
debt securities other than (i) in replacement of existing or
maturing debt, (ii) indebtedness of one subsidiary of Seller
to Seller or another subsidiary of Seller, or (iii) in the
ordinary course of business consistent with past practice;
(xiii) except as disclosed in any Seller SEC Document filed prior to
the date of this Agreement, implement or adopt any change in
its accounting principles, practices or methods, other than as
may be required by GAAP, or the rules and regulations of the
SEC or Nasdaq;
(xiv) change its existing deposit policy, incur deposit liabilities,
other than deposit liabilities incurred in the ordinary course
of business consistent with past practice, or accept any
brokered deposit having a maturity longer than 365 days, other
than in the ordinary course of business;
(xv) sell, purchase, enter into a lease, relocate, open or close
any banking or other office, or file any application
pertaining to such action with any Regulatory Authority;
(xvi) change any of its commercial or consumer loan policies in any
material respect, including credit underwriting criteria, or
make any material exceptions thereto, unless so required by
applicable law or Governmental Authority;
(xvii) purchase any mortgage loan servicing rights; or
(xviii) enter into any agreement to do any of the foregoing.
(c) Maintenance of Property. Seller shall, and shall cause the Seller
Subsidiaries to, use their commercially reasonable efforts to
maintain and keep their respective properties and facilities in
their present condition and working order, ordinary wear and tear
excepted, except with respect to such properties and facilities, the
loss of which would not reasonably be expected to have a material
adverse effect on Seller.
(d) Performance of Obligations. Seller shall, and shall cause the Seller
Subsidiaries to, perform all of their obligations under all
agreements relating to or affecting their respective properties,
rights and businesses, except where nonperformance would not have a
material adverse effect on
50
Seller.
(e) Maintenance of Business Organization. Seller shall, and shall cause
the Seller Subsidiaries to, use their commercially reasonable
efforts to maintain and preserve their respective business
organizations intact, to retain present key Employees and to
maintain the respective relationships of customers, suppliers and
others having business relationships with them.
(f) Insurance. Seller shall, and shall cause the Seller Subsidiaries to,
maintain insurance coverage with reputable insurers, which in
respect of amounts, premiums, types and risks insured, were
maintained by them at the Seller Balance Sheet Date, and upon the
renewal or termination of such insurance, Seller and the Seller
Subsidiaries will use their commercially reasonable efforts to renew
or replace such insurance coverage with reputable insurers, in
respect of the amounts, premiums, types and risks insured or
maintained by them at the Balance Sheet Date.
(g) Access to Information. (a) Seller shall, and shall cause each of its
Subsidiaries to, afford to Buyer and to Buyer's officers, employees,
investment bankers, attorneys, accountants and other advisors and
representatives reasonable and prompt access during normal business
hours during the period prior to the Effective Time or the
termination of this Agreement to all their respective properties,
assets, books, contracts, commitments, directors, officers,
employees, attorneys, accountants, auditors, other advisors and
representatives and records and, during such period, Seller shall,
and shall cause each of its subsidiaries to, make available to Buyer
on a prompt basis (i) a copy of each report, schedule, form,
statement and other document filed or received by it during such
period pursuant to the requirements of domestic or foreign (whether
national, federal, state, provincial, local or otherwise) laws and
(ii) all other information concerning its business, properties and
personnel as Buyer may reasonably request (including the financial
and tax work papers of Crowe, Chizek and Company, LLP), provided
that Buyer shall not unreasonably interfere with Seller's business
operations and Seller may, in its discretion, limit Buyer's access
to Seller's employees whose work product Seller reasonably wishes to
keep confidential.
5.02. NOTIFICATION
Between the date of this Agreement and the Closing Date, Seller
promptly shall notify Buyer in writing if Seller becomes aware of any fact or
condition that (a) causes or constitutes a breach in any material respect of any
of Seller's representations and warranties or (b) would (except as expressly
contemplated by this Agreement) cause or constitute a breach in any material
respect of any such representation or warranty had such representation or
warranty
51
been made as of the time of occurrence or discovery of such fact or condition.
Should any such fact or condition require any change in the Seller Disclosure
Schedule, Seller will promptly deliver to Buyer a supplement to the Seller
Disclosure Schedule specifying such change ("UPDATED SELLER DISCLOSURE
SCHEDULE"); provided, however, that the disclosure of such change in the Updated
Seller Disclosure Schedule shall not be deemed to constitute a cure of any
breach of any representation or warranty made pursuant to this Agreement unless
consented to in writing by Buyer. During the same period, Seller will promptly
notify Buyer of (i) the occurrence of any breach in any material respect of any
of Seller's covenants contained in this Agreement, (ii) the occurrence of any
event that may make the satisfaction of the conditions in this Agreement
impossible or unlikely in any material respect or (iii) the occurrence of any
event that is reasonably likely, individually or taken with all other facts,
events or circumstances known to Seller, to result in a material adverse effect
with respect to Seller.
5.03. ACQUISITION PROPOSALS
(a) From the date hereof until this Agreement has been terminated as
provided herein, Seller shall not, nor shall it permit any of its subsidiaries
to, or authorize or permit any director, officer or employee of Seller or any of
its subsidiaries or any investment banker, attorney, accountant or other advisor
or representative of Seller or any of its subsidiaries (the "SELLER
REPRESENTATIVES") to, directly or indirectly, (i) solicit, initiate or knowingly
encourage any Takeover Proposal (as defined below) or any inquiries or the
making of any proposal that constitutes or could reasonably be expected to lead
to a Takeover Proposal or (ii) enter into, continue or otherwise participate in
any discussions or negotiations regarding, or furnish to any person any
information with respect to, or otherwise cooperate in any way with respect to,
any Takeover Proposal; provided, however, that at any time prior to obtaining
the approval of its shareholders, the Board of Directors of Seller or Seller
Representatives may, in response to a bona fide written Takeover Proposal that
such Board of Directors determines in good faith constitutes or is reasonably
likely to lead to a Superior Proposal (as defined below), and which Takeover
Proposal was unsolicited and did not otherwise result from a breach of this
Section 5.03, and subject to compliance with Section 5.03(c) and (d), (x)
furnish information with respect to Seller and its subsidiaries to the person
making such Takeover Proposal (and its representatives) pursuant to a customary
confidentiality agreement, provided that all such information is provided to
Buyer or has been previously provided to Buyer, and (y) participate in
discussions or negotiations with the person making such Takeover Proposal (and
its representatives) regarding such Takeover Proposal.
The term "TAKEOVER PROPOSAL" means any inquiry, proposal or offer from any
person relating to, or that is reasonably likely to lead to, any direct or
indirect acquisition, in one transaction or a series of transactions, including
any merger, consolidation, tender offer, exchange offer, stock acquisition,
asset acquisition, share exchange, business combination, recapitalization,
liquidation, dissolution, joint venture or similar transaction, of (A) assets or
businesses that constitute or represent 20% or more of the total revenue or
assets of Seller and its subsidiaries, taken as a whole, or (B) 20% or more of
the outstanding Seller Shares, or other equity or voting interests in, any of
Seller's Subsidiaries directly or indirectly holding, individually or taken
together, the assets or businesses referred to in clause (A) above, in each
52
case other than the transactions contemplated by this Agreement.
(b) Neither the Board of Directors of Seller nor any committee thereof
shall, unless the Board of Directors or a committee thereof determines in good
faith, after consulting with legal counsel, that the failure to take any such
action set forth in this Section 5.03(b) would be reasonably likely to result in
a breach of its fiduciary duties under applicable laws (i) (A) withdraw (or
modify in a manner adverse to Buyer) the recommendation by such Board of
Directors or any such committee of this Agreement or the Merger, (B) determine
that this Agreement or the Merger is no longer advisable, (C) recommend that the
stockholders of Seller reject this Agreement or the Merger, (D) recommend the
approval or adoption of any Takeover Proposal or (E) resolve, agree or propose
publicly to take any such actions, (ii) adopt or approve any Takeover Proposal,
or withdraw its approval of this Agreement, or resolve or agree to take any such
actions, (iii) without limiting Section 5.03(b)(i), propose publicly to adopt or
approve any Takeover Proposal or propose publicly to withdraw its approval of
this Agreement, or resolve or agree to take any such actions, or (iv) cause or
permit Seller to enter into any letter of intent, memorandum of understanding,
agreement in principle, acquisition agreement, merger agreement, option
agreement, joint venture agreement, partnership agreement or other agreement
(each, an "ACQUISITION AGREEMENT") constituting or related to, or which is
intended to or is reasonably likely to lead to, any Takeover Proposal (other
than a confidentiality agreement referred to in Section 5.03(a)), or resolve or
agree to take any such actions. Notwithstanding anything in this Section 5.03 to
the contrary, at any time prior to obtaining the Stockholder Approval, the Board
of Directors of Seller may, in response to a Superior Proposal and that did not
result from a breach of Section 5.03(a), cause Seller to terminate this
Agreement pursuant to Section 11.01(d)(iii) and concurrently enter into a
binding Acquisition Agreement containing the terms of a Superior Proposal;
provided, however, however, that Seller shall not exercise its right to
terminate this Agreement pursuant to Section 11.01(d)(iii) until after the third
business day following Buyer's receipt of written notice (a "NOTICE OF SUPERIOR
PROPOSAL") from Seller advising Buyer that the Board of Directors of Seller has
received a Superior Proposal and that such Board of Directors intends to,
subject to any action taken by Buyer pursuant to this sentence, cause Seller to
accept such Superior Proposal and terminate this Agreement, specifying the terms
and conditions of the Superior Proposal and identifying the person making such
Superior Proposal (it being understood and agreed that any amendment to the
price or any other material term of a Superior Proposal shall require a new
Notice of Superior Proposal and a new three business day period).
The term "SUPERIOR PROPOSAL" means any bona fide binding written offer not
solicited by or on behalf of Seller and received subsequent to the date hereof
made by a third party that if consummated would result in such third party (or
in the case of a direct merger between such third party and Seller, the
stockholders of such third party) acquiring, directly or indirectly, more than
50% of the voting power of Seller or all or substantially all the assets of
Seller and its subsidiaries, taken as a whole, that the Board of Directors of
Seller determines in its good faith judgment (after consultation with its
financial advisor or other financial advisor of nationally recognized
reputation) is reasonably likely to result in terms which are more favorable
from a financial point of view to Seller's stockholders than the Merger, taking
into account, among other things, any changes to the terms of this Agreement
offered by Buyer in response to
53
such Superior Proposal or otherwise.
(c) In addition to the obligations of Seller set forth in paragraphs (a)
and (b) of this Section 5.03, Seller promptly shall, but in any case within 24
hours, advise Buyer in writing of any request for information that Seller
reasonably believes could lead to or contemplates a Takeover Proposal or of any
Takeover Proposal, or any inquiry Seller reasonably believes could lead to any
Takeover Proposal, the terms and conditions of such request, Takeover Proposal
or inquiry (including any subsequent material amendment or modification to such
terms and conditions) and the identity of the person making any such request,
Takeover Proposal or inquiry. Seller shall keep Buyer informed in all material
respects on a timely basis of the status and details (including material
amendments or proposed amendments) of any such request, Takeover Proposal or
inquiry.
(d) Nothing contained in this Section 5.03 or elsewhere in this Agreement
shall prohibit Seller from (i) taking and disclosing to its stockholders a
position contemplated by Rule 14e-2(a) and Rule 14d-9 promulgated under the
Exchange Act or (ii) making any disclosure to Seller's stockholders if, in the
good faith judgment of the Board of Directors of Seller, after consultation with
outside counsel, failure so to disclose would be inconsistent with applicable
law.
5.04. DELIVERY OF INFORMATION
Seller shall furnish to Buyer promptly after such documents are available:
(a) all reports, proxy statements or other communications by Seller to its
shareholders generally; and (b) all press releases relating to any transactions.
5.05. AFFILIATES COMPLIANCE WITH THE SECURITIES ACT
(a) No later than the 15th day prior to the mailing of the Seller Proxy
Statement, Seller shall deliver to Buyer a schedule of all persons
who Seller reasonably believes are, or are likely to be, as of the
date of the Seller Meeting, deemed to be "affiliates" of Seller as
that term is used in Rule 145 under the Securities Act and/or
Accounting Series Releases 130 and 135, as amended, of the SEC (the
"RULE 145 AFFILIATES"). Thereafter and until the Effective Time,
Seller shall identify to Buyer each additional person whom Seller
reasonably believes to have thereafter become a Rule 145 Affiliate.
(b) Seller shall use its diligent efforts to cause each person who is
identified as a Rule 145 Affiliate pursuant to Section 5.06(a) above
(who has not executed and delivered the same concurrently with the
execution of this Agreement) to execute and deliver to Buyer on or
before the date of mailing of the Seller Proxy Statement, a written
agreement, substantially in the form of Exhibit A attached hereto.
54
5.06. TAKEOVER LAWS
Seller shall take all necessary steps to (a) exempt (or cause the
continued exemption of) this Agreement and the Merger from the requirements of
Section 203 of the DGCL and from any provisions under its certificate of
incorporation and bylaws, as applicable, by action of the Board of Directors of
Seller or otherwise, and (b) assist in any challenge by Buyer to the validity,
or applicability to the Merger, of any Takeover Law.
5.07. NO CONTROL
Nothing contained in this Agreement shall give Buyer, directly or
indirectly, the right to control or direct the operations of Seller or any
Seller Subsidiary prior to the Effective Time. Prior to the Effective Time each
of Seller and Buyer shall exercise, consistent with the terms of this Agreement,
complete control and supervision over its and its subsidiaries respective
operations.
ARTICLE SIX
FURTHER COVENANTS OF BUYER
6.01. ACCESS TO INFORMATION
Buyer shall furnish to Seller promptly after such documents are available:
(i) all reports, proxy statements or other communications by Buyer to its
shareholders generally; and (ii) all press releases relating to any
transactions.
6.02. OPPORTUNITY OF EMPLOYMENT; EMPLOYEE BENEFITS
(a) Buyer agrees to use its commercially reasonable efforts to continue
the employment of substantially all of the Employees of Seller and
the Seller Subsidiaries after the Merger. Employees of Seller and
the Seller Subsidiaries (other than employees who are otherwise
parties to employment or change in control agreements) who are not
offered the opportunity to continue as employees following the
Effective Time shall be entitled to receive (a) severance
compensation of not less than one (1) week of pay for each year of
service with Seller and/or any Seller Subsidiary, with a minimum
severance of 4 weeks of pay and a maximum severance of 26 weeks of
pay, and (b) outplacement consultation services of a type and nature
to be agreed upon by Seller and Buyer prior to the Effective Time
and with a cost of up to $1,000 for each employee of Seller or any
Seller Subsidiary not offered employment after, or otherwise
terminated within three (3) months after, the Effective Time.
Nothing in this section or elsewhere in this Agreement shall be
deemed to be a contract of employment or be construed to give said
employees any rights other than as employees at will under Ohio law
and said employees shall not be deemed to be third-party
beneficiaries of this provision. From and
55
after the Effective Time, the Employees of Seller and the Seller
Subsidiaries that remain an employee thereof after the Effective
Time ("CONTINUING EMPLOYEES") shall be provided with employee
benefits that do not discriminate between employees who were covered
by the Compensation and Benefit Plans and employees who were covered
by the Buyer Compensation and Benefit plans. Each such Seller
Employee and/or Seller Subsidiary Employee shall be credited with
years of service with Seller, the appropriate Seller Subsidiary and,
to the extent credit would have been given by Seller or the
appropriate Seller Subsidiary for years of service with a
predecessor (including any business organization acquired by Seller
or any Seller Subsidiary), years of service with a predecessor of
Seller or a Seller Subsidiary, for purposes of eligibility and
vesting (but not for benefit accrual purposes) in the employee
benefit plans of Buyer, and shall not be subject to any exclusion or
penalty for pre-existing conditions that were covered under the
Seller Compensation and Benefit Plans immediately prior to the
Effective Time, or to any waiting period relating to such coverage.
Notwithstanding the foregoing, all then active Seller Employees and
all then active Seller Subsidiary Employees shall commence
participation in Buyer's Employee Stock Ownership Plan and its
Defined Benefit Pension Plan as of the Effective Time. The foregoing
covenants shall survive the Merger, and Buyer shall before the
Effective Time adopt resolutions that amend its tax-qualified
retirement plans to provide for the Seller or Seller Subsidiary
service credits referenced herein.
(b) The Surviving Corporation shall cause CBank or its successor to
honor the terms of each of the employment agreements as in effect at
the Seller Subsidiaries in accordance with their terms after the
Effective Time.
(c) Seller shall be entitled to create a retention bonus pool from which
Seller's senior management shall, subject to Buyer's prior approval,
with such approval not to be withheld or delayed unreasonably, be
able to offer retention bonuses to employees of Seller whom such
senior management wishes to encourage to remain in Seller's employ
until the Effective Time.
6.03. EXCHANGE LISTING
Buyer shall file a listing application with Nasdaq for the Buyer Shares to
be issued to the former holders of Seller Shares in the Merger at the time
prescribed by applicable rules and regulations of the Buyer Exchange, and shall
use all commercially reasonable efforts to cause the Buyer Shares to be issued
in connection with the Merger to be approved for listing on the Buyer Exchange,
subject to official notice of issuance, prior to the Closing Date. In addition,
Buyer will use its best efforts to maintain its listing on Nasdaq.
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6.04. NOTIFICATION
Between the date of this Agreement and the Closing Date, Buyer promptly
shall notify Seller in writing if Buyer becomes aware of any fact or condition
that (i) causes or constitutes a breach in any material respect of any of
Buyer's or Acquisition Sub's representations and warranties or (ii) would
(except as expressly contemplated by this Agreement) cause or constitute a
breach in any material respect of any such representation or warranty had such
representation or warranty been made as of the time of occurrence or discovery
of such fact or condition. Should any such fact or condition require any change
in the Buyer Disclosure Schedule, Buyer promptly shall deliver to Seller a
supplement to the Buyer Disclosure Schedule specifying such change ("UPDATED
BUYER DISCLOSURE SCHEDULE"); provided, however, that the disclosure of such
change in the Updated Buyer Disclosure Schedule shall not be deemed to
constitute a cure of any breach of any representation or warranty made pursuant
to this Agreement unless consented to in writing by Seller. During the same
period, Buyer promptly shall notify Seller of (i) the occurrence of any breach
in any material respect of any of Buyer's or Acquisition Sub's covenants
contained in this Agreement, (ii) the occurrence of any event that may make the
satisfaction of the conditions in this Agreement impossible or unlikely in any
material respect or (iii) the occurrence of any event that is reasonably likely,
individually or taken with all other facts, events or circumstances known to
Buyer, to result in a material adverse effect with respect to Buyer.
6.05. TAKEOVER LAWS
Buyer shall take all necessary steps to (a) exempt (or cause the continued
exemption of) this Agreement and the Merger from the requirements of any
Takeover Law and from any provisions under its Articles and Regulations, as
applicable, by action of the Board of Directors of Buyer or otherwise, and (b)
assist in any challenge by Seller to the validity, or applicability to the
Merger, of any Takeover Law.
6.06. OFFICERS' AND DIRECTORS' INDEMNIFICATION
(a) For a period of six (6) years following the Effective Time, Buyer
shall, to the fullest extent permitted by applicable law, indemnify,
defend and hold harmless, and provide advancement of expenses to,
each person who is not, or has been at any time prior to the date
hereof or who becomes prior to the Effective Time, a Director or
Officer of Seller or any Seller Subsidiary (each, an "INDEMNIFIED
PARTY") against all costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or
liabilities (collectively, "COSTS") incurred in connection with any
claim, action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative, arising out of actions or
omissions occurring on or prior to the Effective Time (including,
without limitation, matters, acts or omissions occurring in
connection with the approval of this Agreement and the consummation
of the transactions contemplated hereby), whether asserted or
claimed prior to, at or after the
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Effective Time; provided that any determination required to be made
with respect to whether an Indemnified Party's conduct complies with
the standards set forth under applicable law for indemnification
shall be made by the court in which the claim, action, suit or
proceeding was brought or by independent counsel (which shall not be
counsel that provides material services to Buyer) selected by Buyer
and reasonably acceptable to such Indemnified Party.
(b) If Buyer, the Surviving Corporation or any of its successors or
assigns (i) consolidates with or merges into any other person and is
not the continuing or surviving corporation or entity of such
consolidation or merger, (ii) transfers or conveys all or
substantially all its properties and assets to any person or (iii)
transfers, by means of a distribution, sale, assignment or other
transaction, all of the stock of the Surviving Corporation or all or
substantially all of its assets, to any person, then, and in each
such case, Buyer shall cause proper provision to be made so that the
successor and assign of Buyer or the Surviving Corporation assumes
the obligations set forth in this Section and in such event all
references to the Surviving Corporation in this Section shall be
deemed a reference to such successor and assign.
(c) For a period of six (6) years from the Effective Time, Buyer shall
provide that portion of directors' and officers' liability insurance
that serves to reimburse the present and former Officers and
Directors of Seller and the Seller Subsidiaries (determined as of
the Effective Time) (as opposed to Seller) with respect to claims
against such Officers and Directors arising from facts or events
which occurred before the Effective Time, on terms no less favorable
than those in effect on the date hereof; provided, however, that
Buyer may substitute therefor policies providing at least comparable
coverage containing terms and conditions no less favorable than
those in effect on the date hereof; provided, however that in no
event shall Buyer be required to expend more than 250% of the
current amount expended by Seller (the "INSURANCE AMOUNT") to
maintain or procure such directors' and officers' liability
insurance coverage; provided, further that if Buyer is unable to
maintain or obtain the insurance called for by this Section 6.06(c),
Buyer shall obtain as much comparable insurance as, in the good
faith judgment of the Surviving Corporation's board, is available
for the Insurance Amount.
(d) Any Indemnified Party wishing to claim indemnification under Section
6.06(a), upon learning of any claim, action, suit, proceeding or
investigation described above, shall promptly notify Buyer thereof;
provided that the failure so to notify shall not affect the
obligations of Buyer under Section 6.06(a) unless and to the extent
that Buyer is actually
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and materially prejudiced as a result of such failure.
(e) The provisions of this Section 6.06 shall survive consummation of
the Merger and are intended to be for the benefit of, and will be
enforceable by, each indemnified party, his or her heirs and his or
her representatives. The Surviving Corporation shall pay (as
incurred) all expenses, including reasonable expenses of counsel,
that an Indemnified Party may incur in enforcing the indemnity and
other obligations provided for in this Section 6.06.
6.07. ELECTION OF A SELLER DIRECTOR TO BOARD OF DIRECTORS; ADVISORY BOARD
(a) Buyer shall, or shall cause the board of directors of Buyer's
principal banking subsidiary, to appoint one (1) of the current
directors of Seller to such board at the first meeting of such board
held after the Effective Time. Such appointee shall hold such
position for at least one year after the effective date of such
appointment unless such person earlier resigns or is removed for
cause.
(b) Buyer shall cause Acquisition Sub to (i) create an advisory board
for CBank or its successor after the Effective Time, (ii) appoint
each then current director of Seller to such advisory board, (iii)
maintain such advisory board as so composed for at least one year
after the Effective Time, and (iv) provide such advisory board
members with compensation equal, on an annual basis, to that
received by them in the fiscal year ended December 31, 2003.
ARTICLE SEVEN
FURTHER OBLIGATIONS OF THE PARTIES
7.01. SELLER STOCK OPTIONS
(a) As soon as practicable following the date of this Agreement, the
Board of Directors of Seller (or, if appropriate, any committee
administering Seller Stock Option Plans) and the Board of Directors
of Buyer shall adopt such resolutions or take such other actions (if
any), including, without limitation, the approval of Seller's
stockholders pursuant to the Proxy Statement, as may be required to
effect the following:
(i) Each Seller Stock Option outstanding immediately prior to the
Effective Time that is exercisable for a Seller Share at an
exercise price less than $35.00 shall, upon the request of the
holder thereof, be deemed exercised on a net exercise basis
(i.e., based on the difference between the $35.00 and the
exercise price per share) and each Seller Share resulting from
such net exercise shall be entitled
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to receive the Per Share Cash Consideration pursuant to the
provisions of Section 2.01; provided, that such shares shall
not be deemed outstanding for purposes of calculation of the
Total Cash Amount pursuant to Article Two;
(ii) Each Seller Share subject to a Restricted Stock Award
outstanding immediately prior to the Effective Time shall, be
deemed outstanding for purposes of calculating the number of
Outstanding Shares entitled to receive the Merger
Consideration pursuant to the provisions of Article Two;
(iii) Each Seller Stock Option outstanding immediately prior to the
Effective Time as to which the holder thereof has not made the
election permitted pursuant to Section 7.01(a)(i) shall be
amended and converted into an option to purchase a number of
Buyer Shares (rounded to the nearest whole share) (an
"ADJUSTED OPTION") equal to (i) the number of Seller Shares
subject to such Seller Stock Option immediately prior to the
Effective Time multiplied by (ii) the Exchange Ratio; and the
per share exercise price for the Buyer Shares issuable upon
the exercise of such Adjusted Option shall be equal to (i) the
exercise price per share of the Seller Shares at which such
Seller Stock Option was exercisable immediately prior to the
Effective Time divided by (ii) the Exchange Ratio (rounded to
the nearest whole cent); provided, however, that in the case
of any Seller Stock Option to which Section 421 of the Code
applies by reason of its qualification under Section 422 of
the Code, the conversion formula shall be adjusted, if
necessary, to comply with Section 424(a) of the Code. Except
as otherwise provided herein, the Adjusted Options shall be
subject to the same terms and conditions (including expiration
date, vesting and exercise provisions) as were applicable to
the corresponding Seller Stock Options immediately prior to
the Effective Time;
(iv) make such other changes to Seller Stock Plans as Buyer and
Seller may agree are appropriate to give effect to the Merger
and the provisions of this Section 7.01; and
(v) Seller's Employee Stock Ownership Plan (the "SELLER ESOP")
shall be terminated as of the Effective Time. To the extent
permitted by applicable law and consistent with fiduciary
duties owed by the trustees of the Seller ESOP, promptly after
the Effective Time, the trustees of the Seller ESOP shall sell
a sufficient number of shares of Buyer Shares received with
respect to the Seller Shares held, unallocated, in the
suspense account in the Seller ESOP such that the proceeds of
such sale shall equal or
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exceed the then outstanding ESOP indebtedness and shall apply
the proceeds from such sale to the payment of the ESOP
indebtedness. Any remaining shares of Buyer Shares and cash
held in the suspense account after the repayment of the ESOP
indebtedness shall be allocated to the ESOP participants in
accordance with the terms of the Seller ESOP and applicable
laws and regulations. In connection with the termination of
the Seller ESOP, the Buyer shall promptly apply to the IRS for
a favorable determination letter on the tax-qualified status
of the Seller ESOP on termination and any amendments made to
the Seller ESOP in connection with its termination or
otherwise, if such amendments have not previously received a
favorable determination letter from the IRS with respect to
their qualification under Code Section 401(a). Any amendments
to the Seller ESOP requested by the IRS prior to the Effective
Time shall be adopted by Seller and any amendments requested
by the IRS after the Effective Time shall be adopted by Buyer
if upon advice of legal counsel to Buyer that such amendments
are appropriate. Any and all distributions from the Seller
ESOP after its termination shall be made consistent with the
aforementioned determination letter from the IRS. The account
balances of participants in the Seller ESOP will be
distributed as soon as practicable after the later of (a) the
Effective Time and (b) the receipt of a favorable
determination letter for termination of the Seller ESOP from
the IRS or, if earlier, the receipt of an opinion of counsel
reasonably acceptable to Buyer that such distribution may be
made in accordance with applicable law. Prior to the Effective
Time, Seller shall make contributions to, and payments on the
loan of, the Seller ESOP consistent with past practices on
regularly scheduled payment dates.
(b) The adjustments provided herein with respect to any Seller Stock
Options that are "incentive stock options" as defined in Section 422
of the Code shall be and are intended to be effected in a manner
which is consistent with Sections 422 and 424(a) of the Code and all
regulations promulgated thereunder.
(c) At the Effective Time, Buyer shall assume the Seller Stock Plans,
with the result that all obligations of Seller under Seller Stock
Plans with respect to the Adjusted Options shall be obligations of
Buyer following the Effective Time.
(d) On or prior to the date that is thirty (30) days after the Effective
Time, Buyer shall prepare and file with the SEC a registration
statement on Form S-8 (or another appropriate form) registering a
number of shares of Buyer Shares equal to at least the number of
shares subject to the Adjusted
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Options. Such registration statement shall be kept effective (and
the current status of the prospectus or prospectuses required
thereby shall be maintained) as long as any Adjusted Options may
remain outstanding.
(e) Except as otherwise specifically provided by this Section 7.01 and
except to the extent required under the respective terms of Seller
Stock Options as in effect on the date of this Agreement, all
restrictions or limitations on transfer with respect to Seller Stock
Options awarded under Seller Stock Plans or any other plan, program
or arrangement of Seller or any of its subsidiaries, to the extent
that such restrictions or limitations shall not have already lapsed,
and all other terms thereof, shall remain in full force and effect
with respect to such options after giving effect to the Merger and
the assumption by Buyer as set forth above.
(f) In addition to any method of exercise permitted under the applicable
Seller Stock Option, a holder of an Adjusted Option may exercise
such Adjusted Option in whole or in part in accordance with its
terms by delivering a properly executed notice of exercise to Buyer,
together with the consideration therefor and the federal withholding
tax information, if any, required in accordance with the related
Seller Stock Plan.
7.02. NECESSARY FURTHER ACTION
Each of Seller, Acquisition Sub and Buyer agrees to use its best efforts
to take, or cause to be taken, all necessary actions and execute all additional
documents, agreements and instruments required to consummate the transactions
contemplated in this Agreement.
7.03. COOPERATIVE ACTION
Subject to the terms and conditions of this Agreement, each of Seller,
Acquisition Sub and Buyer agrees to use its best efforts to take, or cause to be
taken, all further actions and execute all additional documents, agreements and
instruments which may be reasonably required, in the opinion of counsel for
Seller and counsel for Buyer and Acquisition Sub, to satisfy all legal
requirements of the States of West Virginia and Delaware and the United States,
so that this Agreement and the transactions contemplated hereby will become
effective as promptly as practicable.
7.04. SATISFACTION OF CONDITIONS
Each of Buyer, Acquisition Sub and Seller shall use its best efforts to
satisfy all of the conditions to this Agreement and to cause the consummation of
the transactions described in this Agreement, including making all applications,
notices and filings with Governmental Authorities and Regulatory Authorities and
taking all steps to secure promptly all consents, rulings and approvals of
Governmental Authorities and Regulatory Authorities which are necessary for the
performance by each party of each of its obligations under this Agreement and
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the transactions contemplated hereby.
7.05. PRESS RELEASES
None of Buyer, Acquisition Sub and Seller shall make any press release or
other public announcement concerning the transactions contemplated by this
Agreement without the consent of the other parties hereto as to the form and
contents of such press release or public announcement, except to the extent that
such press release or public announcement may be required by law or Nasdaq rules
to be made before such consent can be obtained.
7.06. REGISTRATION STATEMENTS; PROXY STATEMENT; SHAREHOLDERS' MEETING
(a) As promptly as reasonably practical following the date hereof,
Seller shall prepare, in consultation with Buyer and with Buyer's
cooperation, and cause to be filed with the SEC, mutually acceptable
proxy material which shall constitute the proxy statement/prospectus
relating to the matters to be submitted to the Seller stockholders
at the Seller's Stockholders Meeting (such proxy
statement/prospectus and all amendments or supplements thereto, the
"PROXY STATEMENT/PROSPECTUS"), and Buyer shall and file with the SEC
a registration statement on Form S-4 with respect to the issuance of
Buyer Shares in the Merger (such registration statement and all
amendments or supplements thereto, the "REGISTRATION STATEMENT").
Each of Seller and Buyer agrees to use all commercially reasonable
efforts to cause the Registration Statement including the Proxy
Statement/Prospectus to be declared effective under the Securities
Act as promptly as reasonably practicable after the filing thereof.
Buyer also agrees to use all reasonable efforts to obtain, prior to
the effective date of the Registration Statement, all necessary
state securities law or "Blue Sky" permits and approvals required to
carry out the transactions contemplated by this Agreement. Seller
agrees to promptly furnish to Buyer all information concerning
Seller, the Seller Subsidiaries and the Officers, Directors and
shareholders of Seller and the Seller Subsidiaries as Buyer
reasonably may request in connection with the foregoing. Each of
Seller and Buyer shall promptly notify the other upon the receipt of
any comments from the SEC or its staff or any request from the SEC
or its staff for amendments or supplements to the Registration
Statement or the Proxy Statement/Prospectus and shall promptly
provide the other with copies of all correspondence between it and
its representatives, on the one hand, and the SEC and its staff, on
the other hand. Notwithstanding the foregoing, prior to filing the
Registration Statement (or any amendment or supplement thereto) or
filing or mailing the Proxy Statement/ Prospectus (or any amendment
or supplement thereto) or responding to any comments of the SEC with
respect thereto, each of Seller and Buyer, as the case may be, (i)
shall provide the other party with a reasonable opportunity to
review and comment on such document or response, (ii) shall include
in
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such document or response all comments reasonably proposed by such
other party, and (iii) shall not file or mail such document or
respond to the SEC prior to receiving such other's approval, which
approval shall not be withheld, conditioned or delayed unreasonably.
(b) Each of Seller and Buyer agrees, as to itself and its Subsidiaries,
that none of the information supplied or to be supplied by it for
inclusion or incorporation by reference in (i) the Registration
Statement will, at the time the Registration Statement and each
amendment or supplement thereto, if any, is filed with the SEC and
at the time the Registration Statement becomes effective under the
Securities Act, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein in light of the
circumstances under which they were made, not misleading, and (ii)
the Proxy Statement/Prospectus and any amendment or supplement
thereto will, as of the date such Seller Proxy Statement is mailed
to shareholders of Seller and up to and including the date of the
meeting of Seller's shareholders to which such Seller Proxy
Statement relates, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein in light of the
circumstances under where they were made not misleading.
(c) Each of Seller and Buyer agrees, if it shall become aware prior to
the Effective Time of any information furnished by it that would
cause any of the statements in the Registration Statement and the
Proxy Statement/Prospectus to be false or misleading with respect to
any material fact, or to omit to state any material fact necessary
to make the statements therein not false or misleading, to promptly
inform the other party thereof and to take the necessary steps to
correct the Registration Statement and the Proxy
Statement/Prospectus.
(d) Buyer agrees to advise Seller, promptly after Buyer receives notice
thereof, of the time when the Registration Statement has become
effective or any supplement or amendment has been filed, of the
issuance of any stop order or the suspension of the qualification of
Buyer Shares for offering or sale in any jurisdiction, of the
initiation or threat of any proceeding for any such purpose, or of
any request by the SEC for the amendment or supplement of the
Registration Statement or for additional information.
(e) Seller shall, as promptly as practicable following the date of this
Agreement, establish a record date (which will be as promptly as
reasonably practicable following the date of this Agreement) for,
duly call, give notice of, convene and hold a meeting of its
stockholders (the "SELLER MEETING") for the purpose of adopting this
Agreement and approving the
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transactions contemplated hereby, regardless of whether the Board of
Directors of Seller determines at any time that this Agreement or
the Merger is no longer advisable or recommends that the
stockholders of Seller reject this Agreement or the Merger. Seller
shall cause the Seller Meeting to be held as promptly as practicable
following the effectiveness of the Registration Statement, and in
any event not later than 30 days after the effectiveness of the
Registration Statement. Seller shall, through its Board of
Directors, recommend to its stockholders that they adopt this
Agreement, and shall include such recommendation in the Proxy
Statement/Prospectus, in each case subject to its fiduciary duties
as provided in Section 5.03. Without limiting the generality of the
foregoing, Seller agrees that its obligations pursuant to this
Section shall not be affected by the commencement, public proposal,
public disclosure or communication to Seller or any other person of
any Takeover Proposal.
7.07. REGULATORY APPLICATIONS
Buyer, Acquisition Sub and Seller and their respective Subsidiaries shall
cooperate and use their respective best efforts to prepare all documentation, to
timely effect all filings and to obtain all permits, consents, approvals and
authorizations of all third parties and Governmental and Regulatory Authorities,
including, without limitation, those required to be filed pursuant to the HSR
Act and the BHC Act, as well as pre-merger notification forms required by the
merger notification or control laws and regulations of any applicable
jurisdiction, as agreed to by the parties, in any event which are necessary to
consummate the transactions contemplated by this Agreement. Each of Buyer and
Seller shall have the right to review in advance, and to the extent practicable,
each will consult with the other, in each case subject to applicable laws
relating to the exchange of information, with respect to, and shall be provided
in advance so as to reasonably exercise its right to review in advance, all
material written information submitted to any third party or any Governmental or
Regulatory Authority in connection with the transactions contemplated by this
Agreement. In exercising the foregoing right, each of the parties hereto agrees
to act reasonably and as promptly as practicable. Each party hereto agrees that
it will consult with the other party hereto with respect to the obtaining of all
material permits, consents, approvals and authorizations of all third parties
and Governmental and Regulatory Authorities necessary or advisable to consummate
the transactions contemplated by this Agreement and each party will keep the
other apprised of the status of material matters relating to completion of the
transactions contemplated hereby. Each party agrees, upon request, to furnish
the other party with all information concerning itself, its Subsidiaries,
directors, officers and shareholders and such other matters as may be reasonably
necessary or advisable in connection with any filing, notice or application made
by or on behalf of such other party or of its Subsidiaries to any third party or
Governmental or Regulatory Authority.
7.08. COORDINATION OF DIVIDENDS
After the date of this Agreement, Seller shall coordinate with Buyer the
payment of any dividends authorized under Section 5.01(b)(iv) and the record
date and payment dates
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relating thereto, it being the intention of the parties hereto that the holders
of Seller Shares (who will become holders of Buyer Shares following the Closing)
shall not receive two dividends, or fail to receive one dividend, from Seller
and/or Buyer for any single calendar quarter.
ARTICLE EIGHT
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PARTIES
8.01. CONDITIONS TO THE OBLIGATIONS OF BUYER AND ACQUISITION SUB
The obligations of Buyer and Acquisition Sub under this Agreement shall be
subject to the satisfaction, or written waiver by Buyer prior to the Closing
Date, of each of the following conditions precedent:
(a) The representations and warranties of Seller set forth in this
Agreement shall be true and correct in all material respects as of
the date of this Agreement and as of the Closing Date as though such
representations and warranties were also made as of the Closing
Date, except that those representations and warranties which by
their terms speak as of a specific date shall be true and correct as
of such date; and Buyer and Acquisition Sub shall have received a
certificate, dated the Closing Date, signed on behalf of Seller by
its chief executive officer and chief financial officer of Seller to
such effect.
(b) Seller shall have performed in all material respects all of its
covenants and obligations under this Agreement to be performed by it
on or prior to the Closing Date, including those relating to the
Closing, and Buyer and Acquisition Sub shall have received a
certificate, dated the Closing Date, signed on behalf of Seller by
its chief executive officer and chief financial officer of Seller to
such effect.
(c) In the aggregate, an amount of less than ten percent (10%) of the
number of Buyer Shares to be issued in the Merger shall be (i)
subject to purchase as fractional shares, and (ii) proposed to be
issued to Seller's shareholders who have perfected their appraisal
rights under Section 262 of the DGCL in connection with the
transactions contemplated by this Agreement.
(d) Buyer shall have received the written opinion of Kirkpatrick &
Lockhart ("K&L"), tax counsel to Buyer ("K&L"), dated the Closing
Date, to the effect that, on the basis of facts, representations and
assumptions set forth in such opinion, the Merger will be treated
for Federal income tax purposes as a reorganization within the
meaning of Section 368(a)(1)(A) of the Code. In rendering its
opinion, K&L will require and rely upon customary representations
contained in letters from Buyer and Seller that
66
counsel to Buyer reasonably deems relevant.
(e) Buyer shall have received the written opinion of Katten Muchin Zavis
Rosenman, counsel to Seller ("KMZR"), dated the Closing Date, in
substantially the form of Exhibit B hereto.
8.02. CONDITIONS TO THE OBLIGATIONS OF SELLER
The obligations of Seller under this Agreement shall be subject to
satisfaction, or written waiver by Seller prior to the Closing Date, of each of
the following conditions precedent:
(a) The representations and warranties of Buyer and Acquisition Sub set
forth in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date
as though such representations and warranties were also made as of
the Closing Date, except that representations and warranties which
by their terms speak as of a specific date shall be true and correct
as of such date; and Seller shall have received a certificate, dated
the Closing Date, signed on behalf of Buyer and Acquisition Sub by
Buyer's chief executive officer and chief financial officer to such
effect.
(b) Buyer shall have performed in all material respects all of its
covenants and obligations under this Agreement to be performed by it
on or prior to the Closing Date, including those related to the
Closing, and Seller shall have received a certificate, dated the
Closing Date, signed on behalf of Buyer and Acquisition Sub by
Buyer's chief executive officer and chief financial officer to such
effect.
(c) Seller shall have received the written opinion of KMZR to Seller,
dated the Closing Date, to the effect that, on the basis of facts,
representations and assumptions set forth in such opinion, the
Merger will be treated for Federal income tax purposes as a
reorganization within the meaning of Section 368(a)(1)(A) of the
Code. In rendering its opinion, KMZR will require and rely upon
customary representations contained in letters from Buyer and Seller
that counsel to Buyer reasonably deems relevant.
(d) Seller shall have received the written opinion of Phillips, Gardill,
Kaiser & Altmeyer, PLLC, transaction counsel to Buyer and
acquisition Sub, dated the Closing Date, dated the Closing Date, in
substantially the form of Exhibit C hereto.
(e) Buyer shall have obtained the consent or approval of each person
(other than Governmental and Regulatory Authorities) whose consent
or approval shall be required in connection with the transactions
contemplated hereby under any loan or credit agreement, note,
mortgage,
67
indenture, lease, license or other agreement or instrument, except
those for which failure to obtain such consents and approvals would
not, individually or in the aggregate, have a material adverse
effect, after the Effective Time, on the Surviving Corporation.
(f) Seller shall have received from Seller's Financial Advisor an
opinion reasonably acceptable to Seller, dated as of the date of the
first mailing of the Proxy Statement/Prospectus to Seller's
shareholders, to the effect that the consideration to be received by
such shareholders in the Merger is fair, from a financial point of
view.
8.03. MUTUAL CONDITIONS
The obligations of Seller and Buyer under this Agreement shall be subject
to the satisfaction, or written waiver by Buyer and Seller prior to the Closing
Date, of each of the following conditions precedent:
(a) The shareholders of Seller shall have duly adopted this Agreement by
the required vote.
(b) All approvals of Governmental Authorities and Regulatory Authorities
required to consummate the transactions contemplated by this
Agreement shall have been obtained and shall remain in full force
and effect and all statutory waiting periods in respect thereof
shall have expired and no such approvals or statute, rule or order
shall contain any conditions, restrictions or requirements which
would reasonably be expected to have a material adverse effect after
the Effective Time on the present or prospective consolidated
financial condition, business or operating results of the Surviving
Corporation.
(c) No temporary restraining order, preliminary or permanent injunction
or other order issued by a court of competent jurisdiction or other
legal restraint or prohibition preventing the consummation of the
Merger shall be in effect. No Governmental or Regulatory Authority
of competent jurisdiction shall have enacted, issued, promulgated,
enforced, deemed applicable or entered any statute, rule,
regulation, judgment, decree, injunction or other order prohibiting
consummation of the transactions contemplated by this Agreement or
making the Merger illegal.
(d) The Registration Statement shall have become effective under the
Securities Act and no stop-order or similar restraining order
suspending the effectiveness of the Registration Statement shall
have been issued and no proceeding for that purpose shall have been
initiated by the SEC.
(e) Buyer shall have received all state securities and "blue sky"
permits and
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other authorizations and approvals necessary to consummate the
Merger and the transactions contemplated hereby and no order
restraining the ability of Sunday to issue Sunday Shares pursuant to
the Merger shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by any state
securities administrator.
(f) The Buyer Shares to be issued in the Merger shall have been approved
for listing on the Buyer Exchange subject to official notice of
issuance.
(g) Each of the parties shall be satisfied with the deductibility under
the provisions of Section 280G of the Code of the payments to be
made to John W. Raisbeck, the President and Chief Executive Officer
of Seller, in connection with the transactions contemplated hereby.
(h) CBank or its successor shall have entered into Noncompete,
Consulting or Employment Agreements with those senior executives of
Seller and CBank listed in Section 8.03(h) of the Seller Disclosure
Schedule on terms and conditions mutually satisfactory to Buyer and
such individuals.
ARTICLE NINE
CLOSING
9.01. CLOSING
The closing (the "CLOSING") of the transactions contemplated by this
Agreement shall be held at Seller's main office in Springfield, Ohio, commencing
at 9:00 a.m. local time, on (a) the date designated by Buyer, which date shall
not be earlier than the third business day to occur after the last of the
conditions set forth in Article Eight shall have been satisfied or waived in
accordance with the terms of this Agreement (excluding conditions that, by their
terms, cannot be satisfied until the Closing Date) or later than the last
business day of the month in which such third business day occurs; provided, no
such election shall cause the Closing to occur on a date after that specified in
Section 11.01(b)(i) of this Agreement or after the date or dates on which any
Governmental or Regulatory Authority approval or any extension thereof expires,
and provided further, that if Seller has delivered a termination notice pursuant
to the provisions of Section 11.01(d)(iv), the Closing Date shall be the third
business day following delivery of the Top-Up Notice, if any, or (b) such other
date to which the parties agree in writing. The date of the Closing is sometimes
herein called the "CLOSING DATE."
9.02. CLOSING TRANSACTIONS REQUIRED OF BUYER
At the Closing, Buyer shall cause all of the following to be delivered to
Seller:
(a) The certificates of Buyer contemplated by Section 8.02(a) and (b) of
this
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Agreement.
(b) Copies of resolutions adopted by the directors of Buyer and
Acquisition Sub, approving and adopting this Agreement and
authorizing the consummation of the transactions described herein,
accompanied by a certificate of the secretary or assistant secretary
of Buyer and Acquisition Sub, as applicable, dated as of the Closing
Date, and certifying (i) the date and manner of adoption of each
such resolution; and (ii) that each such resolution is in full force
and effect, without amendment or repeal, as of the Closing Date.
(c) The opinions of counsel to Buyer and Acquisition Sub contemplated by
Section 8.02 of this Agreement.
9.03. CLOSING TRANSACTIONS REQUIRED OF SELLER
At the Closing, Seller shall cause all of the following to be delivered to
Buyer:
(a) Certificate of merger duly executed by the Surviving Corporation in
accordance with the WVBCA and DGCL and in appropriate form for
filing, respectively, with the Secretaries of State of West Virginia
and Delaware.
(b) The certificates of Seller contemplated by Sections 8.01(a) and (b)
of this Agreement.
(c) Copies of all resolutions adopted by the directors and the
shareholders of Seller approving and adopting this Agreement and
authorizing the consummation of the transactions described herein,
accompanied by a certificate of the secretary or the assistant
secretary of Seller, dated as of the Closing Date, and certifying
(i) the date and manner of the adoption of each such resolution; and
(ii) that each such resolution is in full force and effect, without
amendment or repeal, as of the Closing Date.
(d) The opinions of KMZR contemplated by Section 8.01(e) of this
Agreement.
ARTICLE TEN
NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
10.01. NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
The representations, warranties and covenants of Buyer, Acquisition Sub
and Seller set forth in this Agreement, or in any document delivered pursuant to
the terms hereof or in connection with the transactions contemplated hereby,
shall not survive the Closing and the
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consummation of the transactions referred to herein, other than covenants which
by their terms are to survive or be performed after the Effective Time
(including, without limitation, those set forth in Sections 6.02, 6.06, 6.07,
7.05 and 7.06, this Article Ten and Article Twelve); except that no such
representations, warranties or covenants shall be deemed to be terminated or
extinguished so as to deprive the Surviving Corporation (or any director,
officer or controlling person thereof) of any defense in law or equity which
otherwise would be available against the claims of any person, including,
without limitation, any shareholder or former shareholder of either Seller or
Buyer.
ARTICLE ELEVEN
TERMINATION
11.01. TERMINATION
This Agreement may be terminated, and the Merger may be abandoned,
at any time prior to the Effective Time, whether prior to or after this
Agreement has been adopted by the shareholders of Seller:
(a) By mutual written agreement of Seller and Buyer duly
authorized by action taken by or on behalf of their respective
Boards of Directors;
(b) By either Seller or Buyer upon written notification to the
non-terminating party by the terminating party:
(i) at any time after December 31, 2004, if the Merger shall
not have been consummated on or prior to such date and
such failure to consummate the Merger is not caused by a
breach of this Agreement by the terminating party;
(ii) if the shareholders of Seller shall not have adopted
this Agreement by reason of the failure to obtain the
requisite vote upon a vote held at a Seller Meeting, or
any adjournment thereof; or
(iii) if the approval of any Governmental or Regulatory
Authority required for consummation of the Merger and
the other transactions contemplated by this Agreement
shall have been denied by final non-appealable action of
such Governmental or Regulatory Authority.
(c) By Buyer by providing written notice to Seller:
(i) if prior to the Closing Date, any representation and
warranty of Seller shall have become untrue such that
the condition set forth at Section 8.01(a) would not be
satisfied and which breach has not been cured within ten
(10) business days following receipt by
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Seller of written notice of breach or is incapable of
being cured during such time period; or
(ii) if Seller shall have failed to comply in any material
respect with any covenant or agreement on the part of
Seller contained in this Agreement required to be
complied with prior to the date of such termination,
which failure to comply shall not have been cured within
ten (10) business days following receipt by Seller of
written notice of such failure to comply or is incapable
of being cured during such time period.
(d) By Seller by providing written notice to Buyer:
(i) if prior to the Closing Date, any representation and
warranty of Buyer or Acquisition Sub shall have become
untrue such that the condition set forth at Section
8.02(a) would not be satisfied and which breach has not
been cured within ten (10) business days following
receipt by Buyer of written notice of breach or is
incapable of being cured during such time period;
(ii) if Buyer or Acquisition Sub shall have failed to comply
in any material respect with any covenant or agreement
on the part of Buyer or Acquisition Sub contained in
this Agreement required to be complied with prior to the
date of such termination, which failure to comply shall
not have been cured within ten (10) business days
following receipt by Buyer of written notice of such
failure to comply or is incapable of being cured during
such time period;
(iii) by Seller following receipt of a Superior Proposal
subject to compliance with the terms and conditions of
Section 5.03(b);
(iv) if Seller's Financial Advisor shall have refused to
deliver the "bring-down" to its fairness opinion
required to be delivered pursuant to Section 8.02(f);
and
(v) this Agreement may be terminated any time prior to
Closing by the Board of Directors of Seller at any time
during the five-day period following the Determination
Date (as defined below) (the "WALKAWAY RIGHT"), if:
(1) the Average Closing Price (as defined below) shall
be less than the product of 0.80 and the Starting
Price (as defined below); and
(2) (a) the number obtained by dividing the Average
Closing
72
Price (as defined below) by the Starting Price
(such number being referred to herein as the
"BUYER RATIO") shall be less than (b) the number
obtained by dividing the Index Price (as defined
below) on the Determination Date by the Index
Price on the Starting Date (as defined below) and
subtracting 0.20 from such quotient;
subject to the following. If Seller elects to exercise
its termination right pursuant to the immediately
preceding sentence, it shall give prompt written notice
to Buyer; provided that such notice of election to
terminate may be withdrawn by Seller at any time within
the aforementioned five-day period. During the five-day
period commencing with its receipt of such notice, Buyer
shall have the option of increasing the Exchange Ratio
in a manner such that the conditions set forth in
clauses (1) and (2) above shall be deemed not to exist
(the "TOP-UP NOTICE. For purposes hereof, the condition
set forth in clause (1) above shall be deemed not to
exist if the Exchange Ratio and/or the Per Share Cash
Consideration is increased so that the Per Share
Consideration (as defined below) after such increase is
not less than the Per Share Consideration that would
have been in effect if the condition set forth in clause
(1) above did not exist. For purposes hereof, the
condition set forth in clause (2) above shall be deemed
not to exist if the Exchange Ratio is increased so that
the Per Share Consideration after such increase is not
less than the Per Share Consideration that would have
been in effect if the condition set forth in clause (2)
above did not exist. If Buyer makes this election,
within such five-day period, it shall give prompt
written notice to Seller of such election and the
revised Exchange Ratio, whereupon no termination shall
have occurred pursuant to this Section 11.01(d)(v) and
this Agreement shall remain in effect in accordance with
its terms (except as the Exchange Ratio shall have been
so modified), and any references in this Agreement to
"Exchange Ratio" shall thereafter be deemed to refer to
the Exchange Ratio after giving effect to any adjustment
made pursuant to this Section 11.01(d)(v). For purposes
of this Section 11.01(d)(v), the following terms shall
have the following meanings:
"AVERAGE CLOSING PRICE" means the average of the
last reported sale prices per share of the Buyer
Shares as reported on the Nasdaq (as reported in
The Wall Street Journal or, if not reported
therein, in another mutually agreed upon
authoritative source) for the 20 consecutive
trading days ending on the Determination Date.
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"DETERMINATION DATE" shall mean the date on which
the last approval, consent or waiver of any
Governmental Entity required to permit
consummation of the transactions contemplated by
this Agreement is received, without regard to any
requisite waiting period in respect thereof.
"INDEX PRICE" on a given date means the closing
value of the Nasdaq Bank Index as reported on
Bloomberg.com, or if not reported therein, in
another mutually agreed upon authoritative source.
"PER SHARE CONSIDERATION" shall mean the sum of
the Exchange Ratio multiplied by the Average
Closing Price.
"STARTING PRICE" shall mean last reported sale
prices per share of Buyer Common Stock as reported
on the Nasdaq (as reported in The Wall Street
Journal or, if not reported therein, in another
mutually agreed upon authoritative source) on the
Starting Date.
"STARTING DATE" shall mean the last full trading
day prior to the announcement by press release of
the Merger or, if such announcement occurs after
the close of trading on any trading day, such
trading day.
If Buyer declares or effects a stock dividend,
reclassification, recapitalization, split-up,
combination, exchange of shares or similar transaction
between the Starting Date and the Determination Date,
the prices for the common stock of Buyer shall be
appropriately adjusted for the purposes of applying this
Section 11.01(d)(v).
11.02. EFFECT OF TERMINATION
(a) If this Agreement is validly terminated by either Seller or
Buyer pursuant to Section 11.01, this Agreement will forthwith
become null and void and there will be no liability or
obligation on the part of either Seller or Buyer, except (i)
that the provisions of Sections 5.03, 7.05, 7.06 and 12.07 and
this Article XI will continue to apply following any such
termination, (ii) that nothing contained herein shall relieve
any party hereto from liability for breach of its
representations, warranties, covenants or agreements contained
in this Agreement and (iii) as provided in paragraph (b)
below.
(b) Seller shall promptly pay to Buyer a termination fee of
$2,500,000 in
74
immediately available federal funds if:
(i) Seller or CBank enters into any agreement in respect of
an Acquisition Proposal prior to the termination of this
Agreement or after the termination of this Agreement
pursuant to Sections 11.01(b)(ii) or 11.01(c) and before
the date that is six months after the date of
termination of this Agreement; or
(ii) Seller, CBank or the shareholders of Seller receive an
Acquisition Proposal, the Board of Directors of Seller
withdraws or modifies in any manner materially adverse
to Buyer its recommendation to the shareholders of
Seller and either (A) (1) the shareholders of Seller do
not adopt this Agreement at the meeting called and held
for such purpose in accordance with this Agreement and
(2) at any time after the date of this Agreement and
before the date of such shareholders' meeting, a
Takeover Proposal shall have been publicly announced or
other otherwise communicated to the Senior management or
Board of Directors of Seller or (B) the shareholders of
Seller fail to meet by December 15, 2004, to vote on the
adoption of this Agreement; or
(iii) Seller terminates this Agreement pursuant to the
provisions of Section 11.01(d)(iii) hereof.
ARTICLE TWELVE
MISCELLANEOUS
12.01. NOTICES
All notices, requests, demands and other communications required or
permitted to be given under this Agreement shall be given in writing and shall
be deemed to have been duly given (a) on the date of delivery if delivered by
hand or by telecopy, upon confirmation of receipt, (b) on the first business day
following the date of dispatch if delivered by a recognized next-day courier
service, or (c) on the third business day following the date of mailing if sent
by certified mail, postage prepaid, return receipt requested. All notices
thereunder shall be delivered to the following addresses:
If to Seller, to:
Western Ohio Financial Corporation
28 East Main Street
Springfield, Ohio 45501-0509
Attn: Chief Executive Officer
Facsimile Number: (937) 327-1126
75
with a copy to:
Katten Muchin Zavis Rosenman
1025 Thomas Jefferson Street N.W.
East Lobby, Suite 700
Washington, D.C. 20007-5201
Attention: Jeffrey W. Werthan
Facsimile Number: (202) 298-7570
If to Buyer, to:
WesBanco, Inc.
1 Bank Plaza
Wheeling, WV 26003
Attn: Chief Executive Officer
Facsimile Number: (304) 234-9450
with a copy to:
Phillips, Gardill, Kaiser & Altmeyer, PLLC
61 Fourteenth Street
Wheeling, WV 26003
Attention: James C. Gardill
Facsimile Number: (304) 232-4918
Any party to this Agreement may, by notice given in accordance with this Section
12.01, designate a new address for notices, requests, demands and other
communications to such party.
12.02. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be a duplicate original, but all of which taken
together shall be deemed to constitute a single instrument.
12.03. ENTIRE AGREEMENT
This Agreement and the related Letter of Confidentiality dated
January 16, 2004 as accepted by Seller and Buyer (the "LETTER OF
CONFIDENTIALITY") (a) constitute the entire agreement, and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter of this Agreement and the Letter of
Confidentiality and (b) except for the provisions of Sections 6.02(a), 6.02(b),
6.06, 6.07(b) and 7.01(a) of this Agreement, are not intended to confer upon any
person other than the parties hereto and thereto (and their respective
successors and assigns) any rights or remedies.
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12.04. SUCCESSORS AND ASSIGNS
This Agreement shall inure to the benefit of and be binding upon the
respective successors and assigns (including successive, as well as immediate,
successors and assigns) of the parties hereto. This Agreement may not be
assigned by either party hereto without the prior written consent of the other
party.
12.05. CAPTIONS
The captions contained in this Agreement are included only for
convenience of reference and do not define, limit, explain or modify this
Agreement or its interpretation, construction or meaning and are in no way to be
construed as part of this Agreement.
12.06. GOVERNING LAW
This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Delaware without giving effect to principles of
conflicts or choice of laws (except to the extent that mandatory provisions of
Federal law are applicable).
12.07. PAYMENT OF FEES AND EXPENSES
(a) Except as otherwise agreed in writing, each party hereto shall
pay all costs and expenses, including legal and accounting fees, and all
expenses relating to its performance of, and compliance with, its undertakings
herein. All fees to be paid to Governmental and Regulatory Authorities in
connection with the transactions contemplated by this Agreement shall be borne
by Buyer.
(b) Notwithstanding the provisions of subsection (a) above, if this
Agreement is terminated as a result of the failure of the parties to obtain the
approval of the Federal Reserve Board under the BHC Act, then Buyer shall
promptly reimburse Seller for Seller's documented out-of-pocket costs and
expenses in connection with this Agreement and the transactions contemplated
hereby.
(c) Each of the parties acknowledges that the agreements contained
in this Section are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, the other party would not enter
into this Agreement; accordingly, if either of the parties fails to pay in a
timely manner the amounts due pursuant to this Section and, in order to obtain
such payment, the other party makes a claim that results in a judgment against
the first party for the amounts set forth in this Section, the first party shall
pay to the other party its costs and expenses (including attorneys' fees and
expenses) in connection with such suit, together with interest on the applicable
amounts at a rate per annum equal to three-month LIBOR (as reported in The Wall
Street Journal (Northeast edition) or, if not reported therein, in another
authoritative source selected by the party to which payment is due) on the date
such payment was required to be made (or if no quotation for three-month LIBOR
is available for such date, on the next preceding date for which such a
quotation is available) plus 200 basis. Payment of the fees or the reimbursement
of expenses described in this Section shall not be in lieu of damages incurred
77
if of intentional breach of the provisions of this Section.
12.08. AMENDMENT
From time to time and at any time prior to the Effective Time, this
Agreement may be amended only by an agreement in writing executed in the same
manner as this Agreement, after authorization of such action by the Boards of
Directors of the Constituent Corporations; except that after the Seller Meeting,
this Agreement may not be amended if it would violate the DGCL or the federal
securities laws.
12.09. WAIVER
The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power or privilege, and no single or partial exercise of any such right, power
or privilege will preclude any other or further exercise of such right, power or
privilege or the exercise of any other right, power or privilege.
12.10. DISCLOSURE SCHEDULES
If of any inconsistency between the statements in the body of this
Agreement and those in the Seller Disclosure Schedule (other than an exception
expressly set forth as such in the Seller Disclosure Schedule with respect to a
specifically identified representation or warranty), the statements in the body
of this Agreement will control.
12.11. NO THIRD-PARTY RIGHTS
Except as specifically set forth herein, nothing expressed or
referred to in this Agreement will be construed to give any person other than
the parties to this Agreement any legal or equitable right, remedy or claim
under or with respect to this Agreement or any provision of this Agreement. This
Agreement and all of its provisions and conditions are for the sole and
exclusive benefit of the parties to this Agreement and their successors and
assigns.
12.12. WAIVER OF JURY TRIAL
Each of the parties hereto irrevocably waives any and all right to
trial by jury in any legal proceeding arising out of or related to this
Agreement or the transactions contemplated hereby.
12.13. SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable
by any court of competent jurisdiction, the other provisions of this Agreement
will remain in full force and effect. Any provision of this Agreement held
invalid or unenforceable only in part or degree will
78
remain in full force and effect to the extent not held invalid or unenforceable.
79
IN WITNESS WHEREOF, this Agreement and Plan of Merger has been
executed on behalf of Buyer, Acquisition Sub and Seller to be effective as of
the date set forth in the first paragraph above.
ATTEST: WESBANCO, INC.
By: /s/ Paul M. Limbert
- ---------------------------- ----------------------------------------
Printed Name: Paul M. Limbert
Title: President and Chief Executive Officer
ATTEST: WOFC, INC.
By: /s/ Paul M. Limbert
- ---------------------------- -----------------------------------------
Printed Name: Paul M. Limbert
Title:
ATTEST: WESTERN OHIO FINANCIAL CORPORATION
By: /s/ John W. Raisbeck
- ---------------------------- -----------------------------------------
Printed Name: John W. Raisbeck
Title: President and Chief Executive Officer
80
EXHIBIT A
________, 200_
WesBanco, Inc.
1 Bank Plaza
Wheeling, WV 26003
Attn: Chief Executive Officer
Gentlemen:
I have been advised that, as of the date hereof, I may be deemed to be an
"affiliate" of Western Ohio Financial Corporation, a Delaware corporation
("WFC"), as the term "affiliate" is (i) defined for purposes of paragraphs (c)
and (d) of Rule 145 of the Rules and Regulations (the "Rules and Regulations")
of the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Securities Act"), and/or (ii) used in
and for purposes of Accounting Series, Releases 130 and 135, as amended, of the
Commission. Pursuant to the terms of the Agreement and Plan of Merger, dated as
of April 1, 2004 (the "Merger Agreement"), by and between WFC, WesBanco, Inc., a
West Virginia corporation ("Buyer"), and WOFC, Inc., a West Virginia corporation
and a wholly-owned subsidiary of Buyer ("Acquisition Sub"), WFC will be merged
(the "Merger") with and into Acquisition Sub and the name of the surviving
corporation will be __________, a West Virginia corporation (the "Surviving
Corporation").
As used herein, "WFC Common Shares" means the shares of common stock,
$0.01 par value per share, of WFC, and "Buyer Shares" means the common shares,
$2.0833 par value per share, of Buyer.
I represent, warrant and covenant to Buyer that if I receive any Buyer
Shares as a result of the Merger:
A. I shall not make any sale, transfer or other disposition of any
Buyer Shares (including any securities which may be paid as a dividend or
otherwise distributed thereon or received pursuant to the exercise of
stock options) acquired by me in the Merger in violation of the 1933 Act
or the Rules and Regulations.
B. I have carefully read this letter and the Agreement and discussed
their requirements and other applicable limitations upon my ability to
sell, transfer or otherwise dispose of Buyer Shares (including any
securities which may be paid as a dividend or otherwise distributed
thereon or received pursuant to the exercise of stock options) to the
extent I felt necessary, with my counsel or counsel for WFC.
C. I have been advised that the issuance of Buyer Shares to me
pursuant to the Merger has been or will be registered with the Commission
under the 1933 Act on a Registration Statement on Form S-4. However, I
have also been advised that, because at the time the Merger will be
submitted for a vote of the shareholders of WFC, I may be deemed to be an
affiliate of WFC, the distribution by me of any Buyer Shares acquired by
me in the Merger will not be registered under the 1933 Act and that I may
not sell, transfer or otherwise dispose of any Buyer Shares (including any
securities which may be paid as a dividend or otherwise distributed
thereon or received pursuant to the exercise of stock options) acquired by
me in the Merger unless (i) such sale, transfer or other disposition has
been registered under the 1933 Act, (ii) such sale, transfer or other
disposition is made in conformity with the volume and other limitations of
Rule 145 promulgated by the Commission under the 1933 Act, or (iii) in the
opinion of counsel reasonably acceptable to the Surviving Corporation,
such sale, transfer or other disposition is otherwise exempt from
registration under the 1933 Act.
D. I understand that Buyer is under no obligation to register under
the 1933 Act the sale, transfer or other disposition by me or on my behalf
of any Buyer Shares acquired by me in the Merger or to take any other
action necessary in order to make an exemption from such registration
available.
E. I also understand that stop transfer instructions will be given
to Buyer's transfer agent with respect to Buyer Shares (including any
securities which may be paid as a dividend or otherwise distributed
thereon or received pursuant to the exercise of stock options) and that
there will be placed on the certificates for the Buyer Shares acquired by
me in the Merger, or any substitutions therefor, a legend stating in
substance:
"The common shares represented by this certificate were issued in a
transaction to which Rule 145 promulgated under the Securities Act
of 1933 applies. The common shares represented by this certificate
may only be transferred in accordance with the terms of an agreement
dated _________, 2004 between the registered holder hereof and the
issuer of the certificate, a copy of which agreement will be mailed
to the holder hereof without charge within five days after receipt
of written request therefor."
F. I also understand that unless the transfer by me of my Buyer
Shares has been registered under the 1933 Act or is a sale made in
conformity with the provisions of Rule 145, the Surviving Corporation
reserves the right to put the following legend on the certificates issued
to my transferee:
"The common shares represented by this certificate have not been
registered under the Securities Act of 1933 and were acquired from a
person who received such common shares in a transaction to which
Rule 145 promulgated under the Securities Act of 1933 applies. The
common shares may not be sold, pledged or otherwise transferred
except
2
in accordance with an exemption from the registration requirements
of the Securities Act of 1933."
It is understood and agreed that the legends set forth in paragraphs E and
F above shall be removed by delivery of substitute certificates without such
legends if the undersigned shall have delivered to the Surviving Corporation a
copy of a letter from the staff of the Commission, or an opinion of counsel in
form and substance reasonably satisfactory to the Surviving Corporation, to the
effect that such legends are not required for purposes of the 1933 Act.
Very truly yours,
_______________________________________
Printed Name:__________________________
Accepted this ___ day of
________, 2004
WESBANCO, INC.
By:______________________________________________
Printed Name:____________________________________
Title:___________________________________________
3