AGREEMENT OF REORGANIZATION AND MERGER
AMONG
FIRST MERCHANTS CORPORATION,
PENDLETON BANKING COMPANY
AND
ANDERSON COMMUNITY BANK
THIS AGREEMENT OF REORGANIZATION AND MERGER (the "Agreement"), is entered
this 27th day of October, 1998, by and among FIRST MERCHANTS CORPORATION ("First
Merchants"), PENDLETON BANKING COMPANY ("Pendleton"), and ANDERSON COMMUNITY
BANK ("Anderson").
W I T N E S S E T H:
WHEREAS, First Merchants is a corporation duly organized and existing under
the laws of the State of Indiana and a registered bank holding company under the
Bank Holding Company Act of 1956, as amended, with its principal place of
business in Muncie, Delaware County, Indiana;
WHEREAS, Pendleton is a state bank duly organized and existing under the
laws of the State of Indiana and a wholly-owned subsidiary of First Merchants
with its principal banking office in Pendleton, Madison County, Indiana;
WHEREAS, Anderson is a state bank duly organized and existing under the
laws of the State of Indiana with its principal banking office in Anderson,
Madison County, Indiana;
WHEREAS, it is the desire of First Merchants, Pendleton and Anderson to
effect a statutory merger of Anderson with and into Pendleton under the name of
"The Madison Community Bank"; and
WHEREAS, a majority of the entire Board of Directors of First Merchants and
Pendleton and a majority of the entire Board of Directors of Anderson have
approved this Agreement, designated it as a plan of reorganization within the
provisions of Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as
amended (the "Code"), and authorized its execution.
NOW, THEREFORE, in consideration of the mutual promises, covenants, and
agreements herein contained and other good and valuable consideration, the
receipt of which is hereby acknowledged, First Merchants, Pendleton, and
Anderson hereby make this Agreement
Ex. 10(h)-1
and prescribe the terms and conditions of the merger of Anderson with and into
Pendleton and the mode of carrying the transaction into effect as follows:
SECTION 1
THE MERGER
1.01. MERGER. Subject to the terms and conditions of this Agreement, on
the Effective Date (as defined in Section 11 hereof), Anderson shall be merged
with and into Pendleton, under the Articles of Incorporation of Pendleton, and
Pendleton shall be the "Continuing Bank" which shall continue its corporate
existence under the laws of the State of Indiana, pursuant to the provisions of
and with the effect provided in the Indiana Financial Institutions Act and
particularly Indiana Code Chapter 28-1-7 (the "Merger").
1.02. RIGHT TO REVISE MERGER. First Merchants and Pendleton may, at any
time, change the method of effecting the Merger if and to the extent First
Merchants and Pendleton deem such change to be desirable; provided, however,
that no such change, modification or amendment shall (a) alter or change the
amount or kind of consideration to be received by the shareholders of Anderson
specified in Section 3 hereof as a result of the Merger, (ii) adversely affect
the tax treatment to the shareholders of Anderson, or (iii) materially impede or
delay receipt of any approvals referred to in this Agreement or the consummation
of the transactions contemplated by this Agreement.
SECTION 2
EFFECT OF THE MERGER
Upon the Merger becoming effective:
2.01. GENERAL DESCRIPTION. The separate existence of Anderson shall
cease and the Continuing Bank shall possess all of the assets of Anderson
including all of its rights, privileges, immunities, powers, and franchises and
shall be subject to and assume all of the duties and liabilities of Anderson.
2.02. NAME AND OFFICES. Subject to regulatory approval, the name of the
Continuing Bank shall be changed to be "The Madison Community Bank," with 19
West 10th Street being the principal office of the Continuing Bank. After the
Effective Date, all offices of Pendleton and Anderson shall be operated as
branches of the Continuing Bank except for the principal office of the
Continuing Bank.
2.03. DIRECTORS OF THE CONTINUING BANK. The Board of Directors of the
Continuing Bank, until such time as their successors are elected and qualified,
shall consist of all of the current members of the Board of Directors of
Anderson and the Board of Directors of Pendleton who desire to serve on the
Board of Directors of the Continuing Bank; provided, however, that all such
directors of the Continuing Bank shall be subject to First Merchants' policy of
mandatory retirement at age seventy (70); provided, further, that the policy of
mandatory retirement shall not apply to any of Anderson's current directors
until twelve (12) months after the Effective Date. Any members of the Board of
Directors of the Continuing
Ex. 10(h)-2
Bank subject to such mandatory retirement policy may be designated by the
Continuing Bank's Board of Directors as directors emeritus to serve in an
advisory non-voting capacity and to attend meetings of the Continuing Bank's
Board of Directors. The Chairman of the Board of Directors of Anderson shall
serve as the Chairman of the Board of Directors of the Continuing Bank and the
Chairman of the Board of Directors of Pendleton shall serve as the Vice-Chairman
of the Board of Directors of the Continuing Bank, until such time as their
successors are elected and qualified.
2.04. OFFICERS OF THE CONTINUING BANK. The officers of Pendleton and
Anderson immediately prior to the Effective Date shall continue as officers of
the Continuing Bank until such time as their successors are elected and
qualified; provided, however, that the current President of Anderson, Michael L.
Baker, shall serve as the President and Chief Executive Officer of the
Continuing Bank until such time as his successor is elected and qualified.
2.05. ARTICLES OF INCORPORATION AND BYLAWS. The Articles of
Incorporation and Bylaws of the Continuing Bank shall be those of Pendleton
immediately prior to the Effective Date until the same shall be further amended
as provided by law. The Bylaws of Pendleton in effect immediately prior to the
Effective Date shall be amended as of the Effective Date (i) to increase the
size of the Board of Directors consistent with Section 2.03, (ii) to provide for
directors emeritus consistent with Section 2.03, and (iii) to change the name of
the Continuing Bank pursuant to Section 2.02.
2.06. ASSETS AND LIABILITIES. The title to all assets, real estate and
other property owned by Pendleton and Anderson shall vest in the Continuing Bank
without reversion or impairment. All liabilities of Pendleton and Anderson
shall be assumed by the Continuing Bank.
2.07. ADDITIONAL ACTIONS. If, at any time after the Effective Date, the
Continuing Bank shall consider or be advised that any further deeds, assignments
or assurances in law or any other acts are necessary or desirable (a) to vest,
perfect or confirm, of record or otherwise, in the Continuing Bank its right,
title or interest in, to or under any of the rights, properties or assets of
Anderson, or (b) otherwise carry out the purposes of this Agreement, Anderson
and its officers and directors shall be deemed to have granted to the Continuing
Bank an irrevocable power of attorney to execute and deliver all such deeds,
assignments or assurances in law and to do all acts necessary or proper to vest,
perfect or confirm title to and possession of such rights, properties or assets
in the Continuing Bank, and the officers and directors of the Continuing Bank
are authorized in the name of Anderson or otherwise to take any and all such
action.
Ex. 10(h)-3
SECTION 3
CONSIDERATION TO BE
DISTRIBUTED TO SHAREHOLDERS OF ANDERSON
3.01. CONSIDERATION. Upon and by reason of the Merger becoming
effective, the shareholders of Anderson of record on the Effective Date who have
not dissented to the Merger in accordance with Indiana Code Section 28-1-7-21,
as amended, shall be entitled to receive 1.38 shares of First Merchants common
stock for each share of Anderson common stock held (the "Conversion Ratio").
3.02. NO FRACTIONAL FIRST MERCHANTS COMMON SHARES. Certificates for
fractional shares of common stock of First Merchants shall not be issued in
respect of fractional interests arising from the Conversion Ratio. Each
Anderson shareholder who would otherwise have been entitled to a fraction of a
First Merchants share, upon surrender of all of his/her certificates
representing Anderson common shares, shall be paid in cash (without interest) in
an amount equal to the fraction of the average of the closing price of First
Merchants common stock as quoted by the NASDAQ National Market System for the
five (5) business days preceding the Effective Date. No such shareholder of
Anderson shall be entitled to dividends, voting rights or any other rights in
respect of any fractional share.
3.03. RECAPITALIZATION. If, between the date of this Agreement and the
Effective Date, First Merchants issues a stock dividend with respect to its
shares of common stock, combines, subdivides, or splits up its outstanding
shares or takes any similar recapitalization action, then the number of shares
of First Merchants common stock into which each outstanding Anderson share will
be converted under Section 3.01 hereof shall be adjusted so that each Anderson
shareholder shall receive such number of First Merchants shares as represents
the same percentage of outstanding shares of First Merchants common stock at the
Effective Date as would have been represented by the number of shares such
shareholder would have received if the recapitalization had not occurred.
3.04. DISTRIBUTION OF FIRST MERCHANTS COMMON STOCK AND CASH.
(a) Each share of common stock of Pendleton outstanding
immediately prior to the Effective Date shall remain outstanding unaffected
by the Merger, except that such shares shall be converted into shares of
the Continuing Bank.
(b) Following the Effective Date, distribution of stock
certificates representing First Merchants common stock and cash payments
for fractional shares shall be made by First Merchants to each former
shareholder of Anderson within ten (10) days of such shareholder's delivery
of his/her certificates representing common stock of Anderson to the
conversion agent, First Merchants Bank (the "Conversion Agent").
Certificates surrendered for exchange by a person who is deemed to be an
"affiliate" (as defined in Section 7.06 hereof) of Anderson shall not be
exchanged until First Merchants has received a written agreement from such
affiliate as required pursuant to Section 7.06 hereof. Interest shall not
accrue or be payable with respect to any cash payments.
Ex. 10(h)-4
(c) Following the Effective Date, stock certificates representing
Anderson common stock shall be deemed to evidence only the right to receive
ownership of First Merchants common stock (for all corporate purposes other
than the payment of dividends) and cash for fractional shares, as
applicable. No dividends or other distributions otherwise payable
subsequent to the Effective Date on stock of First Merchants shall be paid
to any shareholder entitled to receive the same until such shareholder has
surrendered his/her certificates for Anderson common stock to the
Conversion Agent in exchange for certificates representing First Merchants
common stock and cash. Upon surrender, there shall be paid to the
recordholder of the new certificate(s) evidencing shares of First Merchants
common stock the amount of all dividends and other distributions, without
interest thereon, withheld with respect to such common stock.
(d) At or after the Effective Date, there shall be no transfers on
the stock transfer books of Anderson of any shares of the common stock of
Anderson. If, after the Effective Date, certificates are presented for
transfer to Anderson, such certificates shall be cancelled and exchanged
for the consideration set forth in Section 3.01 hereof, as adjusted
pursuant to the terms of this Agreement.
(e) First Merchants shall be entitled to rely upon the stock
transfer books of Anderson to establish the persons entitled to receive
cash and shares of common stock of First Merchants, which books, in the
absence of actual knowledge by First Merchants of any adverse claim
thereto, shall be conclusive with respect to the ownership of such stock.
(f) With respect to any certificate for shares of Anderson common
stock which has been lost, stolen, or destroyed, First Merchants shall be
authorized to issue common stock to the registered owner of such
certificate upon receipt of an affidavit of lost stock certificate, in form
and substance satisfactory to First Merchants, and upon compliance by the
Anderson shareholder with all procedures historically required by Anderson
in connection with lost, stolen, or destroyed certificates.
SECTION 4
DISSENTING SHAREHOLDERS
If any holders of Anderson common stock perfect their dissenters' rights in
accordance with Indiana Code Section 28-1-7-21, as amended, any issued and
outstanding shares of Anderson common stock held by such dissenting holders
shall not be converted as described in Section 3 but shall from and after the
Effective Date represent the right to receive such consideration as may be
accorded to dissenting shareholders under Indiana Code Section 28-1-7-21, as
amended.
Ex. 10(h)-5
SECTION 5
REPRESENTATIONS AND
WARRANTIES OF ANDERSON
Anderson represents and warrants to First Merchants and Pendleton as
follows: (For the purposes of this Section, a "Disclosure Letter" is defined as
a letter referencing Section 5 of this Agreement which shall be prepared and
executed by an authorized executive officer of Anderson and delivered to and
initialed by an authorized executive officer of each of First Merchants and
Pendleton contemporaneous with the execution of this Agreement.)
5.01. ORGANIZATION AND AUTHORITY. Anderson is a state bank duly organized
and validly existing under the laws of the State of Indiana. Anderson has the
power and authority (corporate and other) to conduct its business in the manner
and by the means utilized as of the date hereof. Anderson has no subsidiaries.
Anderson is subject to primary federal regulatory supervision and regulation by
the Federal Deposit Insurance Corporation.
5.02. AUTHORIZATION.
(a) Anderson has the corporate power and authority to enter into
this Agreement and to carry out its obligations hereunder. This Agreement,
when executed and delivered, will have been duly authorized and will
constitute a valid and binding obligation of Anderson, enforceable in
accordance with its terms except to the extent limited by insolvency,
reorganization, liquidation, readjustment of debt or other laws of general
application relating to or affecting the enforcement of creditors' rights.
(b) Neither the execution of this Agreement, nor the consummation
of the transactions contemplated hereby, does or will (i) conflict with,
result in a breach of, or constitute a default under Anderson's Articles of
Incorporation or By-Laws; (ii) conflict with, result in a breach of, or
constitute a default under any federal, state or local law, statute,
ordinance, rule, regulation or court or administrative order or decree, or
any note, bond, indenture, mortgage, security agreement, contract,
arrangement or commitment, to which Anderson is subject or bound, the
result of which would materially affect the business or financial condition
of Anderson; (iii) result in the creation of or give any person,
corporation or entity, the right to create any lien, charge, encumbrance,
security interest, or any other rights of others or other adverse interest
upon any right, property or asset of Anderson; (iv) terminate or give any
person, corporation or entity, the right to terminate, amend, abandon, or
refuse to perform any note, bond, indenture, mortgage, security agreement,
contract, arrangement or commitment to which Anderson is subject or bound;
or (v) accelerate or modify, or give any party thereto the right to
accelerate or modify, the time within which, or the terms according to
which, Anderson is to perform any duties or obligations or receive any
rights or benefits under any note, bond, indenture, mortgage, security
agreement, contract, arrangement or commitment.
(c) Other than in connection or in compliance with the provisions
of applicable federal and state securities laws and applicable Indiana and
federal banking
Ex. 10(h)-6
and corporate statutes, all as amended, and the rules and regulations
promulgated thereunder, no notice to, filing with, authorization of,
exemption by, or consent or approval of, any public body or authority is
necessary for the consummation by Anderson of the transactions contemplated
by this Agreement.
5.03. CAPITALIZATION.
(a) As of June 30, 1998, Anderson had 2,000,000 shares of common
stock authorized, $1.00 par value per share, 589,784 shares of which were
issued and outstanding. Such issued and outstanding shares of Anderson
common stock have been duly and validly authorized by all necessary
corporate action of Anderson, are validly issued, fully paid and
nonassessable and have not been issued in violation of any preemptive
rights of any shareholders. Except as disclosed pursuant to Section
5.03(b) below, Anderson has no intention or obligation to authorize or
issue additional shares of its common stock. Anderson has not authorized
the issuance of any other class of stock. As of June 30, 1998, Anderson had
total capital of $6,988,299, which consisted of common stock of $589,784,
additional capital of $5,199,554, retained earnings of $1,186,990 and
unrealized gain on securities of $11,901.
(b) Except as set forth in the Disclosure Letter, there are no
options, commitments, calls, agreements, understandings, arrangements or
subscription rights regarding the issuance, purchase or acquisition of
capital stock, or any securities convertible into or representing the right
to purchase or otherwise receive the capital stock or any debt securities,
of Anderson by which Anderson is or may become bound. Anderson has no
outstanding contractual or other obligation to repurchase, redeem or
otherwise acquire any of its outstanding shares of capital stock.
(c) Except as set forth in the Disclosure Letter, no person or
entity beneficially owns 5% or more of Anderson's outstanding shares of
common stock.
(d) Anderson has not taken or agreed to take any action nor has
any knowledge of any fact or circumstance and Anderson will not take any
action that would prevent the Merger from qualifying for
pooling-of-interests accounting treatment.
5.04. ORGANIZATIONAL DOCUMENTS. The Articles of Incorporation and
By-Laws of Anderson have been delivered to First Merchants and represent true,
accurate and complete copies of such corporate documents of Anderson in effect
as of the date of this Agreement.
5.05. COMPLIANCE WITH LAW. Anderson has not engaged in any activity nor
taken or omitted to take any action which has resulted or, to the knowledge of
Anderson could result, in the violation of any local, state, federal or foreign
law, statute, rule, regulation or ordinance or of any order, injunction,
judgment or decree of any court or government agency or body, the violation of
which could materially affect the business, prospects, condition (financial or
otherwise) or results of operations of Anderson. Anderson possesses all
licenses, franchises, permits and other authorizations necessary for the
continued conduct of its business without material interference or interruption
and such licenses, franchises, permits and authorizations
Ex. 10(h)-7
shall be transferred to the Continuing Bank on the Effective Date without any
restrictions or limitations thereon or the need to obtain any consents of third
parties. All agreements and understandings with, and all orders and directives
of, all regulatory agencies or government authorities with respect to the
business or operations of Anderson, including all correspondence, communications
and commitments related thereto, are set forth in the Disclosure Letter.
Anderson has received no inquiries from any regulatory agency or government
authority relating to its compliance with the Bank Secrecy Act, the
Truth-in-Lending Act or the Community Reinvestment Act or any laws with respect
to the protection of the environment or the rules and regulations promulgated
thereunder.
5.06. ACCURACY OF STATEMENTS. Neither this Agreement nor any report,
statement, list, certificate or other information furnished or to be furnished
by Anderson to First Merchants in connection with this Agreement or any of the
transactions contemplated hereby (including, without limitation, any information
which has been or shall be supplied by Anderson with respect to its business,
operations and financial condition for inclusion in the proxy statement and
registration statement relating to the Merger) contains or shall contain (in the
case of information relating to the proxy statement at the time it is mailed and
for the registration statement at the time it becomes effective) any untrue
statement of a material fact or omits or shall omit to state a material fact
necessary to make the statements contained herein or therein not misleading.
5.07. LITIGATION AND PENDING PROCEEDINGS. Except as set forth in the
Disclosure Letter, there are no claims of any kind, nor any action, suits,
proceedings, arbitrations or investigations pending or to the knowledge of
Anderson threatened in any court or before any government agency or body,
arbitration panel or otherwise (nor does Anderson have any knowledge of a basis
for any claim, action, suit, proceeding, arbitration or investigation) against,
by or materially adversely affecting Anderson or its business, prospects,
conditions (financial or otherwise), results of operations or assets, or which
would prevent the performance of this Agreement or declare the same unlawful or
cause the rescission hereof. There are no material uncured violations, or
violations with respect to which material refunds or restitutions may be
required, cited in any compliance report to Anderson as a result of an
examination by any regulatory agency or body.
5.08. FINANCIAL STATEMENTS.
(a) Anderson's balance sheets as of the end of the two fiscal
years ended December 31, 1996 and 1997 and the six months ended June 30,
1998 and the related statements of income, shareholders' equity and cash
flows for the years or period then ended (hereinafter collectively referred
to as the "Financial Information") present fairly the financial condition
or position of Anderson as of the respective dates thereof and the results
of operations of Anderson for the respective periods covered thereby and
have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis.
(b) All loans reflected in the Financial Information and which
have been made, extended or acquired since June 30, 1998, (i) have been
made for good, valuable and
Ex. 10(h)-8
adequate consideration in the ordinary course of business; (ii) constitute
the legal, valid and binding obligation of the obligor and any guarantor
named therein; (iii) are evidenced by notes, instruments or other evidences
of indebtedness which are genuine and what they purport to be; and (iv) to
the extent that Anderson has a security interest in collateral or a
mortgage securing such loans, are secured by perfected security interests
or mortgages naming Anderson as the secured party or mortgagee.
5.09. ABSENCE OF CERTAIN CHANGES. Except for events and conditions
relating to the business environment in general or as set forth in the
Disclosure Letter, since June 30, 1998, no events or conditions of any
character, whether actual, threatened or contemplated, have occurred, or, to the
knowledge of Anderson, can reasonably be expected to occur, which materially
adversely affect Anderson's business, prospects, conditions (financial or
otherwise), assets or results of operations or which have caused, or can
reasonably be expected to cause, Anderson's business to be conducted in a
materially less profitable manner than prior to June 30, 1998.
5.10. ABSENCE OF UNDISCLOSED LIABILITIES. Anderson is not a party to any
agreement, contract, obligation, commitment, arrangement, liability, lease or
license which individually exceeds $10,000 per year or which may not be
terminated within one year from the date of this Agreement, except as set forth
in the Disclosure Letter and except for unfunded loan commitments made in the
ordinary course of Anderson's business consistent with past practices, nor to
the knowledge of Anderson does there exist any circumstances resulting from
transactions effected or to be effected or events which have occurred or may
occur or from any action taken or omitted to be taken which could reasonably be
expected to result in any such agreement, contract, obligation, commitment,
arrangement, liability, lease or license.
5.11. TITLE TO ASSETS.
(a) Except as set forth in the Disclosure Letter, Anderson has
good and marketable title to all personal property reflected in the June
30, 1998 Financial Information, good and marketable title to all other
properties and assets which Anderson purports to own, good and marketable
title to or right to use by terms of any lease or contract all other
property used in Anderson's business, and good and marketable title to all
property and assets acquired since June 30, 1998, free and clear of all
mortgages, liens, pledges, restrictions, security interests, charges,
claims or encumbrances of any nature.
(b) All furniture, fixtures, machinery, equipment, computer
software and hardware, and all other tangible personal property owned or
used by Anderson, including any such items leased as a lessee, are in good
working order and free of known defects, subject only to normal wear and
tear. The operation by Anderson of such properties and assets is in
compliance with all applicable laws, ordinances, rules and regulations of
any governmental authority having jurisdiction over such use.
Ex. 10(h)-9
5.12. LOANS AND INVESTMENTS.
(a) Except as set forth in the Disclosure Letter, there is no loan
of Anderson in excess of $10,000 that has been classified by bank
regulatory examiners as "Other Loans Specially Mentioned," "Substandard,"
"Doubtful" or "Loss," nor is there any loan of Anderson in excess of
$10,000 that has been identified by accountants or auditors (internal or
external) as having a significant risk of uncollectibility. Anderson's loan
watch list and all loans in excess of $10,000 that Anderson's management
has determined to be ninety (90) days or more past due with respect to
principal or interest or has placed on nonaccrual status are set forth in
the Disclosure Letter.
(b) Each of the reserves and allowances for possible loan losses
and the carrying value for real estate owned which are shown on the
Financial Information is, in the opinion of Anderson, adequate in all
material respects under the requirements of generally accepted accounting
principles applied on a consistent basis to provide for possible losses on
loans outstanding and real estate owned as of the date of such Financial
Information.
(c) Except as set forth in the Disclosure Letter, none of the
investments reflected in the Financial Information and none of the
investments made by Anderson since June 30, 1998 is subject to any
restrictions, whether contractual or statutory, which materially impairs
the ability of Anderson to dispose freely of such investment at any time.
Except as set forth in the Disclosure Letter, Anderson is not a party to
any repurchase agreements with respect to securities.
5.13. EMPLOYEE BENEFIT PLANS.
(a) The Disclosure Letter contains a list identifying each
"employee benefit plan," as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), which (i) is
subject to any provision of ERISA, and (ii) is maintained, administered or
contributed to by Anderson and covers any employee, director or former
employee or director of Anderson under which Anderson has any liability.
Copies of such plans (and, if applicable, related trust agreements or
insurance contracts) and all amendments thereto and written interpretations
thereof have been furnished to First Merchants together with the three most
recent annual reports prepared in connection with any such plan and the
current summary plan descriptions. Such plans are hereinafter referred to
individually as an "Employee Plan" and collectively as the "Employee
Plans." The Employee Plans which individually or collectively would
constitute an "employee pension benefit plan" as defined in Section 3(2) of
ERISA are identified in the list referred to above.
(b) The Employee Plans comply with and have been operated in
accordance with all applicable laws, regulations, rulings and other
requirements the breach or violation of which could materially affect
Anderson or an Employee Plan. Each Employee Plan has been administered in
substantial conformance with such
Ex. 10(h)-10
requirements and all reports and information required with respect to each
Employee Plan has been timely given.
(c) To the knowledge of Anderson, no "prohibited transaction," as
defined in Section 406 of ERISA or Section 4975 of the Code, for which no
statutory or administrative exemption exists, and no "reportable event," as
defined in Section 4043(b) of ERISA, has occurred with respect to any
Employee Plan. To the knowledge of Anderson, Anderson has no liability to
the Pension Benefit Guaranty Corporation ("PBGC"), to the Internal Revenue
Service ("IRS"), to the Department of Labor ("DOL") or to an employee or
Employee Plan beneficiary under Section 502 of ERISA.
(d) To the knowledge of Anderson, no "fiduciary," as defined in
Section (3)(21) of ERISA, of an Employee Plan has failed to comply with the
requirements of Section 404 of ERISA.
(e) Each of the Employee Plans which is intended to be qualified
under Code Section 401(a) has been amended to comply in all material
respects with the applicable requirements of the Code, including the Tax
Reform Act of 1986, the Revenue Act of 1987, the Technical and
Miscellaneous Revenue Act of 1988, the Omnibus Budget Reconciliation Act of
1989, the Revenue Reconciliation Act of 1990, the Tax Extension Act of
1991, the Unemployment Compensation Amendments of 1992, the Omnibus Budget
Reconciliation Act of 1993, and the Retirement Protection Act of 1994 and
any rules, regulations or other requirements promulgated thereunder (the
"Acts"). In addition, each such Employee Plan has been and is being
operated in substantial conformance with the applicable provisions of ERISA
and the Code, as amended by the Acts and as amended by the Small Business
Job Protection Act of 1996 and the Taxpayer Relief Act of 1997, even though
such Employee Plans are not yet required to be amended for such
legislation. Except as set forth in the Disclosure Letter, Anderson sought
and received favorable determination letters from the IRS within the
applicable remedial amendment periods under Code Section 401(b), and has
furnished to First Merchants copies of the most recent IRS determination
letters with respect to any such Employee Plan.
(f) No Employee Plan owns any security of Anderson.
(g) No Employee Plan has incurred an "accumulated funding
deficiency," as determined under Code Section 412 and ERISA Section 302.
(h) No Employee Plan has been terminated or incurred a partial
termination (either voluntarily or involuntarily).
(i) No claims against an Employee Plan or Anderson, with respect
to an Employee Plan, (other than normal benefit claims) have been asserted
or, to the knowledge of Anderson, threatened.
Ex. 10(h)-11
(j) There is no contract, agreement, plan or arrangement covering
any employee, director or former employee or director of Anderson that,
individually or collectively, could give rise to the payment of any amount
that would not be deductible by reason of Section 280G or Section 162(a)(1)
of the Code.
(k) No event has occurred that would cause the imposition of the
tax described in Code Section 4980B. All requirements of ERISA Section 601
have been met.
(l) The Disclosure Letter contains a list of each employment,
severance or other similar contract, arrangement or policy and each plan or
arrangement (written or oral) providing for insurance coverage (including
any self-insured arrangements), workers' compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, retirement benefits
or deferred compensation, profit sharing, bonuses, stock options, stock
appreciation or other forms of incentive compensation or post-retirement
insurance, compensation or benefits which (i) is not an Employee Plan, (ii)
was entered into, maintained or contributed to, as the case may be, by
Anderson and (iii) covers any employee, director or former employee or
director of Anderson. Such contracts, plans and arrangements as are
described above, copies or descriptions of all of which have been furnished
previously to First Merchants, are hereinafter referred to collectively as
the "Benefit Arrangements." Each of the Benefit Arrangements has been
maintained in substantial compliance with its terms and with the
requirements prescribed by any and all statutes, orders, rules and
regulations which are applicable to such Benefit Arrangements.
(m) Anderson has no present and knows of no future liability in
respect of post-retirement health and medical benefits for former employees
or directors of Anderson.
(n) Except as set forth in the Disclosure Letter, there has been
no amendment to, written interpretation or announcement (whether or not
written) by Anderson relating to, or change in employee participation or
coverage under, any Employee Plan or Benefit Arrangement which would
increase materially the expense of maintaining such Employee Plans or
Benefit Arrangements above the level of the expense incurred in respect
thereof for the fiscal year ended December 31, 1997.
(o) For purposes of this Section 5.13, references to Anderson are
deemed to include (i) all predecessors of Anderson, (ii) any subsidiary of
Anderson, (iii) all members of any controlled group (as determined under
Code Section 414(b) or (c)) that includes Anderson, and (iv) all members of
any affiliated service group (as determined under Code Section 414(m) or
(n)) that includes Anderson.
5.14 OBLIGATIONS TO EMPLOYEES. Except as set forth in the Disclosure
Letter, all accrued obligations and liabilities of Anderson, whether arising by
operation of law, by contract or by past custom, for payments to trust or other
funds, to any government agency or body or to any individual director, officer,
employee or agent (or his heirs, legatees or legal representative) with respect
to unemployment compensation or social security benefits and all
Ex. 10(h)-12
pension, retirement, savings, stock purchase, stock bonus, stock ownership,
stock option, stock appreciation rights or profit sharing plan, any employment,
deferred compensation, consultant, bonus or collective bargaining agreement or
group insurance contract or other incentive, welfare or employee benefit plan or
agreement maintained by Anderson for its current or former directors, officers,
employees and agents have been and are being paid to the extent required by law
or by the plan or contract, and adequate actuarial accruals and/or reserves for
such payments have been and are being made by Anderson in accordance with
generally accepted accounting and actuarial principles. All obligations and
liabilities of Anderson, whether arising by operation of law, by contract, or by
past custom, for all forms of compensation which are or may be payable to its
current or former directors, officers, employees or agents have been and are
being paid, and adequate accruals and/or reserves for payment therefor have been
and are being made in accordance with generally accepted accounting principles.
All accruals and reserves referred to in this Section 5.14 are correctly and
accurately reflected and accounted for in the books, statements and records of
Anderson.
5.15. TAXES, RETURNS AND REPORTS. Anderson has (a) duly filed all
federal, state, local and foreign tax returns of every type and kind required to
be filed as of the date hereof, and each return is true, complete and accurate
in all material respects; (b) paid in all materials respects all taxes,
assessments and other governmental charges due or claimed to be due upon it or
any of its income, properties or assets; and (c) not requested an extension of
time for any such payments (which extension is still in force). Except for
taxes not yet due and payable, the reserve for taxes on the Financial
Information is adequate to cover all of Anderson's tax liabilities (including,
without limitation, income taxes and franchise fees) that may become payable in
future years with respect to any transactions consummated prior to June 30,
1998. Anderson has no or will not have any liability for taxes of any nature for
or with respect to the operation of its business, including the assets of any
subsidiary, from June 30, 1998 up to and including the Effective Date, except to
the extent reflected on the Financial Information or on financial statements of
Anderson subsequent to such date and as set forth in the Disclosure Letter.
Anderson is not currently under audit by any state or federal taxing authority.
Except as set forth in the Disclosure Letter, neither the federal, state, or
local tax returns of Anderson have been audited by any taxing authority during
the past five (5) years.
5.16. DEPOSIT INSURANCE. The deposits of Anderson are insured by the
Federal Deposit Insurance Corporation ("FDIC") in accordance with the Federal
Deposit Insurance Act, and Anderson has paid all premiums and assessments due
with respect to such deposit insurance.
5.17. REPORTS. Since January 1, 1995, Anderson has timely filed all
reports, registrations and statements, together with any required amendments
thereto, that it was required to file with (i) the Indiana Department of
Financial Institutions, (ii) the FDIC, and (iii) any federal, state, municipal
or local government, securities, banking, environmental, insurance and other
governmental or regulatory authority, and the agencies and staffs thereof
(collectively, the "Regulatory Authorities"), having jurisdiction over the
affairs of Anderson. All such reports filed by Anderson complied in all
material respects with all the rules and regulations promulgated by the
applicable Regulatory Authorities and are true, accurate and complete and were
prepared in conformity with generally accepted regulatory accounting principles
applied on a consistent basis. There is no unresolved violation, criticism or
Ex. 10(h)-13
exception by any of the Regulatory Authorities with respect to any report or
statement filed by, or any examinations of, Anderson.
5.18. ABSENCE OF DEFAULTS. Anderson is not in violation of its charter
documents or By-Laws or in default under any material agreement, commitment,
arrangement, lease, insurance policy or other instrument, whether entered into
in the ordinary course of business or otherwise and whether written or oral, and
there has not occurred any event that, with the lapse of time or giving of
notice or both, would constitute such a default.
5.19. YEAR 2000 COMPLIANCE. To the best knowledge of Anderson, all
computer software and hardware utilized by Anderson is Year 2000 compliant,
which, for purposes of this Agreement, shall mean that the data outside the
range 1990-1999 will be correctly processed in any level of computer hardware or
software, including, but not limited to, microcode, firmware, applications
programs, files and databases. All computer software used by Anderson is
designed to be used prior to, during and after the calendar year 2000 A.D., and
that such software will operate during each such time period without error
relating to date data, specifically including any error relating to, or the
product of, date data that represents or references difference centuries or more
than one century.
5.20. TAX AND REGULATORY MATTERS. Anderson has not taken or agreed to
take any action or has any knowledge of any fact or circumstance that would (i)
prevent the transactions contemplated hereby from qualifying as a reorganization
within the meaning of Section 368 of the Code or (ii) materially impede or delay
receipt of any regulatory approval required for consummation of the transactions
contemplated by this Agreement.
5.21. REAL PROPERTY.
(a) The legal description of each parcel of real property owned by
Anderson (other than real property acquired in foreclosure or in lieu of
foreclosure in the course of the collection of loans and being held by
Anderson for disposition as required by law) is set forth in the Disclosure
Letter under the heading of "Owned Real Property" (such real property being
herein referred to as the "Owned Real Property"). The legal description of
each parcel of real property leased by Anderson is also set forth in the
Disclosure Letter under the heading of "Leased Real Property" (such real
property being herein referred to as the "Leased Real Property"). Anderson
shall update the Disclosure Letter within ten (10) days after acquiring or
leasing any real property after the date hereof. Collectively, the Owned
Real Property and the Leased Real Property are herein referred to as the
"Real Property."
(b) There is no pending action involving Anderson as to the title
of or the right to use any of the Real Property.
(c) Anderson has no interest in any other real property except
interests as a mortgagee, and except for any real property acquired in
foreclosure or in lieu of foreclosure and being held for disposition as
required by law.
Ex. 10(h)-14
(d) None of the buildings, structures or other improvements
located on the Real Property encroaches upon or over any adjoining parcel
of real estate or any easement or right-of-way or "setback" line and all
such buildings, structures and improvements are located and constructed in
conformity with all applicable zoning ordinances and building codes.
(e) None of the buildings, structures or improvements located on
the Real Property are the subject of any official complaint or notice by
any governmental authority of violation of any applicable zoning ordinance
or building code, and there is no zoning ordinance, building code, use or
occupancy restriction or condemnation action or proceeding pending, or, to
the best knowledge of Anderson, threatened, with respect to any such
building, structure or improvement. The Real Property is in good condition
for its intended purpose, ordinary wear and tear excepted, and has been
maintained in accordance with reasonable and prudent business practices
applicable to like facilities. The Real Property has been used and
operated in compliance with all applicable laws, statutes, rules,
regulations and ordinances applicable thereto.
(f) Except as may be reflected in the Financial Information or
with respect to such easements, liens, defects or encumbrances as do not
individually or in the aggregate materially adversely affect the use or
value of the Owned Real Property, Anderson has, and at the Closing Date
will have, good and marketable title to the Owned Real Property.
(g) Anderson has not caused or allowed the generation, treatment,
storage, disposal or release at any Real Property of any Toxic Substance,
except in accordance with all applicable federal, state and local laws and
regulations. "Toxic Substance" means any hazardous, toxic or dangerous
substance, pollutant, waste, gas or material, including, without
limitation, petroleum and petroleum products, metals, liquids, semi-solids
or solids, that are regulated under any federal, state or local statute,
ordinance, rule, regulation or other law pertaining to environmental
protection, contamination, quality, waste management or cleanup.
(h) Except as disclosed in the Disclosure Letter, there are no
underground storage tanks located on, in or under any Owned Real Property.
Anderson does not own or operate any underground storage tank at any Leased
Real Property.
(i) The Real Property is not "property" within the definition of
Indiana Code 13-11-2-174. Anderson is not required to provide a "disclosure
document" to First Merchants and Pendleton as a result of the Merger
pursuant to the Indiana Responsible Property Transfer Law (I.C. Section
13-25-3-1 ET SEQ.).
(j) There are no mechanic's or materialman's liens against the
Real Property, and no unpaid claims for labor performed, materials
furnished or services rendered in connection with constructing, improving
or repairing the Real Property in respect of which liens may or could be
filed against the Real Property.
Ex. 10(h)-15
5.22. BROKER'S OR FINDER'S FEES. Except as set forth in the Disclosure
Letter, no agent, broker or other person acting on behalf of Anderson or under
any authority of Anderson is or shall be entitled to any commission, broker's or
finder's fee or any other form of compensation or payment from any of the
parties hereto, other than attorneys' or accountants' fees, in connection with
any of the transactions contemplated by this Agreement.
5.23. BRING DOWN OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties of Anderson contained in this Section 5 shall be true, accurate
and correct on and as of the Effective Date except as affected by the
transactions contemplated by and specified within the terms of this Agreement.
5.24. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties contained in this Section 5 shall expire on the Effective Date or
the earlier termination of this Agreement, and thereafter Anderson and all
directors, officers and employees of Anderson shall have no further liability
with respect thereto unless a court of competent jurisdiction should determine
that any misrepresentation or breach of a warranty was willfully or
intentionally caused either by action or inaction.
SECTION 6
REPRESENTATIONS AND
WARRANTIES OF FIRST MERCHANTS
First Merchants represents and warrants to Anderson with respect to itself
and Pendleton as follows:
6.01. ORGANIZATION AND QUALIFICATION. First Merchants is a corporation
organized and existing under the laws of the State of Indiana, and Pendleton is
a state bank duly organized and validly existing under the laws of the State of
Indiana. First Merchants and Pendleton have the power and authority (corporate
and other) to conduct their respective businesses in the manner and by the means
utilized as of the date hereof.
6.02. AUTHORIZATION.
(a) First Merchants and Pendleton have the corporate power and
authority to enter into this Agreement and to carry out their respective
obligations hereunder subject to certain required regulatory approvals.
The Agreement, when executed and delivered, will have been duly authorized
and will constitute a valid and binding obligation of First Merchants and
Pendleton, enforceable in accordance with its terms, except to the extent
limited by insolvency, reorganization, liquidation, readjustment of debt,
or other laws of general application relating to or affecting the
enforcement of creditor's rights.
(b) Neither the execution of this Agreement, nor the consummation
of the transactions contemplated hereby, does or will (i) conflict with,
result in a breach of, or constitute a default under First Merchant's or
Pendleton's Articles of Incorporation or By-laws; (ii) conflict with,
result in a breach of, or constitute a default under any
Ex. 10(h)-16
federal, foreign, state, or local law, statute, ordinance, rule,
regulation, or court or administrative order or decree, or any note, bond,
indenture, mortgage, security agreement, contract, arrangement, or
commitment, to which First Merchants or Pendleton is subject or bound, the
result of which would materially affect the business or financial condition
of First Merchants; (iii) result in the creation of or give any person,
corporation or entity, the right to create any lien, charge, claim,
encumbrance, security interest, or any other rights of others or other
adverse interest upon any right, property or asset of First Merchants or
Pendleton; (iv) terminate or give any person, corporation or entity the
right to terminate, amend, abandon, or refuse to perform any note, bond,
indenture, mortgage, security agreement, contract, arrangement, or
commitment to which First Merchants or Pendleton is a party or by which
First Merchant or Pendleton is subject or bound; or (v) accelerate or
modify, or give any party thereto the right to accelerate or modify, the
time within which, or the terms according to which, First Merchants or
Pendleton is to perform any duties or obligations or receive any rights or
benefits under any note, bond, indenture, mortgage, security agreement,
contract, arrangement, or commitment.
(c) Other than in connection or in compliance with the provisions
of applicable federal and state securities laws, and applicable Indiana and
federal banking and corporate statutes, all as amended, and the rules and
regulations promulgated thereunder, no notice to, filing with,
authorization of, exemption by, or consent or approval of, any public body
or authority is necessary for the consummation by First Merchants and
Pendleton of the transactions contemplated by this Agreement.
6.03. CAPITALIZATION.
(a) As of June 30, 1998, First Merchants had 20,000,000 shares of
common stock authorized, no par value, of which 6,697,656 shares were
issued and outstanding. The shares of common stock are validly issued,
fully paid and nonassessable. Such issued and outstanding shares of First
Merchants common stock have been duly and validly authorized by all
necessary corporate action of First Merchants, are validly issued, fully
paid and nonasssessable and have not been issued in violation of any
preemptive rights of any shareholders.
(b) First Merchants has 500,000 shares of Preferred Stock
authorized, no par value, no shares of which have been issued and no
commitments exist to issue any of such shares.
(c) The shares of First Merchants' common stock to be issued
pursuant to the Merger will be fully paid, validly issued and
nonassessable.
(d) As of June 30, 1998, Pendleton had 114,000 shares of common
stock authorized, $10 par value per share, of which 114,000 shares were
issued and outstanding. Such issued and outstanding shares of Pendleton
common stock are owned by First Merchants, have been duly and validly
authorized by all necessary corporate
Ex. 10(h)-17
action of Pendleton, are validly issued, fully paid and nonassessable, and
have not been issued in violation of any preemptive rights of any Pendleton
shareholders.
6.04. ORGANIZATIONAL DOCUMENTS. The respective Articles of Incorporation
or Association and By-laws of First Merchants and Pendleton in force as of the
date hereof have been delivered to Anderson. The documents delivered by them
represent complete and accurate copies of the corporate documents of First
Merchants and Pendleton in effect as of the date of this Agreement.
6.05. ACCURACY OF STATEMENTS. Neither this Agreement nor any report,
statement, list, certificate or other information furnished or to be furnished
by First Merchants or Pendleton to Anderson in connection with this Agreement or
any of the transactions contemplated hereby (including, without limitation, any
information which has been or shall be supplied by First Merchants or Pendleton
with respect to their businesses, operations and financial condition for
inclusion in the proxy statement and registration statement relating to the
Merger) contains or shall contain (in the case of information relating to the
proxy statement at the time it is mailed and to the registration statement at
the time it becomes effective) any untrue statement of a material fact or omits
or shall omit to state a material fact necessary to make the statements
contained herein or therein, in light of the circumstances in which they are
made, not misleading.
6.06. COMPLIANCE WITH LAW. Neither First Merchants nor Pendleton have
engaged in any activity nor taken or omitted to take any action which has
resulted or, to the knowledge of First Merchants, could result in the violation
of any local, state, federal or foreign law, statute, rule, regulation or
ordinance or of any order, injunction, judgment or decree of any court or
government agency or body, the violation of which could materially adversely
affect the business, prospects, condition (financial or otherwise) or results of
operations of First Merchants. First Merchants and Pendleton possess all
licenses, franchises, permits and other authorizations necessary for the
continued conduct of their respective businesses without material interference
or interruption. There are no agreements or understandings with, nor any orders
or directives of, any regulatory agencies or government authorities, which would
have a material adverse effect on the consolidated financial position of First
Merchants. Pendleton has received no written inquiries from any regulatory
agency or government authority relating to its compliance with the Bank Secrecy
Act, the Truth-in-Lending Act or the Community Reinvestment Act.
6.07. FINANCIAL STATEMENTS. First Merchants' consolidated balance sheets
as of the end of the three (3) fiscal years ended December 31, 1995, 1996 and
1997 and the six months ended June 30, 1998 and the related consolidated
statements of income, shareholders' equity and cash flows for the years or
period then ended present fairly the consolidated financial condition or
position of First Merchants as of the respective dates thereof and the
consolidated results of operations of First Merchants for the respective periods
covered thereby and have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis. All required regulatory
reports have been filed by First Merchants with its primary federal regulator
during 1998, 1997, 1996 and 1995, and all of such reports are true,
Ex. 10(h)-18
accurate and complete in all material respects and have been prepared in
conformity with generally accepted regulatory accounting principles applied on a
consistent basis.
6.08. ABSENCE OF CERTAIN CHANGES. Except for events and conditions
relating to the business environment in general, since June 30, 1998, no events
or conditions of any character, whether actual, threatened or contemplated, have
occurred, or can reasonably be expected to occur, which materially adversely
affect First Merchants consolidated business, prospects, conditions (financial
or otherwise), assets or results of operations or which have caused, or can
reasonably be expected to cause, First Merchants business, on a consolidated
basis, to be conducted in a materially less profitable manner than prior to June
30, 1998.
6.09. FIRST MERCHANTS SECURITIES AND EXCHANGE COMMISSION FILINGS. First
Merchants has filed all reports and other documents required to be filed by it
under the Securities Exchange Act of 1934 and the Securities Act of 1933,
including First Merchants' Annual Report on Form 10-K for the year ended
December 31, 1997, and Quarterly Report on Form 10-Q for the quarter ended June
30, 1998, copies of which have previously been delivered to Anderson.
6.10 LITIGATION AND PENDING PROCEEDINGS. There are no claims of any
kind, nor any action, suits, proceedings, arbitrations or investigations pending
or to the knowledge of First Merchants threatened in any court or before any
government agency or body, arbitration panel or otherwise (nor does First
Merchants have any knowledge of a basis for any claim, action, suit, proceeding,
arbitration or investigation) against, by or materially adversely affecting
First Merchants or its business, prospects, conditions (financial or otherwise),
results of operations or assets, or which would prevent the performance of this
Agreement or declare the same unlawful or cause the recission hereof. There are
no material uncured violations, or violations with respect to which material
refunds or restitutions may be required, cited in any compliance report to First
Merchants as a result of an examination by any regulatory agency or body.
6.11 YEAR 2000 COMPLIANCE. To the best knowledge of First Merchants,
all computer software and hardware utilized by First Merchants is Year 2000
compliant, which, for purposes of this Agreement, shall mean that the data
outside the range 1990-1999 will be correctly processed in any level of computer
hardware or software, including, but not limited to, microcode, firmware,
applications programs, files and databases. All computer software used by First
Merchants is designed to be used prior to, during and after the calendar year
2000 A.D., and that such software will operate during each such time period
without error relating to date data, specifically including any error relating
to, or the product of, date data that represents or references different
centuries or more than one century.
6.12. SEPARATE EXISTENCE OF THE CONTINUING BANK. First Merchants
acknowledges that its present intention is to retain the Continuing Bank as a
separate banking subsidiary of First Merchants for a period of five (5) years
after the Effective Date.
6.13. BRING DOWN OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties of First Merchants and Pendleton contained in this Section 6
shall be true, accurate
Ex. 10(h)-19
and correct on and as of the Effective Date except as affected by the
transactions contemplated by and specified within the terms of this Agreement.
6.14. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties contained in this Section 6 shall expire on the Effective Date or
the earlier termination of this Agreement, and thereafter First Merchants and
Pendleton and all directors, officers and employees of First Merchants and
Pendleton shall have no further liability with respect thereto unless a court of
competent jurisdiction should determine that any misrepresentation or breach of
a warranty was willfully or intentionally caused either by action or inaction.
SECTION 7
COVENANTS OF ANDERSON
Anderson covenants and agrees with First Merchants and Pendleton as
follows:
7.01. SHAREHOLDER APPROVAL. Anderson shall submit this Agreement to its
shareholders for approval at a meeting to be called and held in accordance with
applicable law and the Articles of Incorporation and By-Laws of Anderson at the
earliest possible reasonable date. The Board of Directors of Anderson shall
recommend to the shareholders of Anderson that such shareholders approve this
Agreement and shall not thereafter withdraw or modify its recommendation. The
Board of Directors of Anderson shall use its best efforts to obtain any vote of
its shareholders necessary for the approval of this Agreement.
7.02. OTHER APPROVALS. Anderson shall proceed expeditiously, cooperate
fully and use its best efforts to procure upon reasonable terms and conditions
all consents, authorizations, approvals, registrations and certificates, to
complete all filings and applications and to satisfy all other requirements
prescribed by law which are necessary for consummation of the Merger on the
terms and conditions provided in this Agreement at the earliest possible
reasonable date.
7.03. CONDUCT OF BUSINESS.
(a) On and after the date of this Agreement and until the
Effective Date or until this Agreement shall be terminated as herein
provided, Anderson shall not, without the prior written consent of First
Merchants, (i) make any material changes in its capital structure; (ii)
authorize a class of stock or, except upon the exercise of stock options
disclosed pursuant to Section 5.03(b), issue, or authorize the issuance of,
stock other than or in addition to the outstanding stock as set forth in
Section 5.03 hereof; (iii) declare, distribute or pay any dividends on its
shares of common stock, or authorize a stock split, or make any other
distribution to its shareholders; (iv) merge, combine or consolidate with
or sell its assets or any of its securities to any other person,
corporation or entity, effect a share exchange or enter into any other
transaction not in the ordinary course of business; (v) incur any liability
or obligation, make any commitment, payment or disbursement, enter into any
contract, agreement, understanding or arrangement or engage in any
transaction, or acquire or dispose of any property or asset having a fair
market value in excess of $10,000.00 (except for
Ex. 10(h)-20
personal or real property acquired or disposed of in connection with
foreclosures on mortgages or enforcement of security interests and loans
made or sold by Anderson in the ordinary course of business); (vi) subject
any of its properties or assets to a mortgage, lien, claim, charge, option,
restriction, security interest or encumbrance; (vii) promote or increase or
decrease the rate of compensation (except for promotions and non-material
increases in the ordinary course of business and in accordance with past
practices) or enter into any agreement to promote or increase or decrease
the rate of compensation of any director, officer or employee of Anderson;
(viii) execute, create, institute, modify or amend any pension, retirement,
savings, stock purchase, stock bonus, stock ownership, stock option, stock
appreciation or depreciation right or prfit sharing plans, any employment,
deferred compensation, consultant, bonus or collective bargaining
agreement, group insurance contract or other incentive, welfare or employee
benefit plan or agreement for current or former directors, officers or
employees of Anderson, change the level of benefits or payments under any
of the foregoing or increase or decrease any severance or termination of
pay benefits or any other fringe or employee benefits other than as
required by law or regulatory authorities; (ix) amend its Articles of
Incorporation or By-Laws from those in effect on the date of this
Agreement; (x) modify, amend or institute new employment policies or
practices, or enter into, renew or extend any employment or severance
agreements with respect to any present or former Anderson directors,
officers or employees; (xi) give, dispose, sell, convey, assign,
hypothecate, pledge, encumber or otherwise transfer or grant a security
interest in any common stock of Anderson; (xii) fail to make additions to
Anderson's reserve for loan losses, or any other reserve account, in the
ordinary course of business and in accordance with sound banking practices;
(xiii) other than in the ordinary course of business consistent with past
practice, incur any indebtedness for borrowed money or assume, guarantee,
endorse or otherwise as an accommodation become responsible or liable for
the obligations of any other individual, corporation or other entity; and
(xiv) agree in writing or otherwise to take any of the foregoing actions.
(b) Anderson shall maintain, or cause to be maintained, in full
force and effect insurance on its properties and operations and fidelity
coverage on its directors, officers and employees in such amounts and with
regard to such liabilities and hazards as customarily are maintained by
other companies operating similar businesses.
(c) Anderson shall continue to give to First Merchants and
Pendleton and their respective employees, accountants, attorneys and other
authorized representatives reasonable access during regular business hours
and other reasonable times to all its premises, properties, statements,
books and records.
7.04. PRESERVATION OF BUSINESS. On and after the date of this Agreement
and until the Effective Date or until this Agreement is terminated as herein
provided, Anderson shall (a) carry on its business diligently, substantially in
the same manner as heretofore conducted, and in the ordinary course of business;
(b) use its best efforts to preserve its business organizations intact, to keep
its present officers and employees and to preserve its present relationship with
customers and others having business dealings with them; and (c) not do or fail
to do anything
Ex. 10(h)-21
which will cause a material breach of, or material default in, any contract,
agreement, commitment, obligation, understanding, arrangement, lease or license
to which it is a party or by which it is or may be subject or bound.
7.05 OTHER NEGOTIATIONS. Except with the prior written approval of
First Merchants and Pendleton, on and after the date of this Agreement and until
the Effective Date, Anderson shall not, and shall not permit or authorize its
respective directors, officers, employees, agents or representatives to,
directly or indirectly, initiate, solicit, encourage, or engage in discussions
or negotiations with, or provide information to, any corporation, association,
partnership, person or other entity or group concerning any merger,
consolidation, share exchange, combination, purchase or sale of substantial
assets, sale of shares of capital stock (or securities convertible or
exchangeable into or otherwise evidencing, or any agreement or instrument
evidencing the right to acquire, capital stock), tender offer, acquisition of
control of Anderson or similar transaction involving Anderson (all such
transactions hereinafter referred to as "Acquisition Transactions"). Anderson
shall promptly communicate to First Merchants and Pendleton the terms of any
proposal, written or oral, which it may receive with respect to an Acquisition
Transaction and any request by or indication of interest on the part of any
third party with respect to initiation of any Acquisition Transaction or
discussion with respect thereto. The above provisions of this Section 7.05
notwithstanding, nothing contained in this Agreement shall prohibit (i) Anderson
from furnishing information to, or entering into discussions or negotiations
with, any person or entity that makes an unsolicited proposal of an Acquisition
Transaction if and to the extent that (a) the Board of Directors of Anderson,
after consultation with and based upon the written advice of legal counsel,
determines in good faith that such action is required for the directors of
Anderson to fulfill their fiduciary duties and obligations to the Anderson
shareholders and other constituencies under Indiana law, and (b) prior to
furnishing such information to, or entering into discussions or negotiations
with, such person or entity, Anderson provides immediate written notice to First
Merchants and Pendleton to the effect that it is furnishing information to, or
entering into discussions or negotiations with, such person or entity, or (ii)
notwithstanding the provisions of Section 7.01, the Board of Directors of
Anderson from failing to make, withdrawing or modifying its recommendation to
shareholders regarding the Merger following receipt of a proposal for an
Acquisition Transaction if the Board of Directors of Anderson, after
consultation with and based upon the written advice of legal counsel, determines
in good faith that such action is required for the directors of Anderson to
fulfill their fiduciary duties and obligations to the Anderson shareholders and
other constituencies under Indiana law.
7.06. RESTRICTIONS REGARDING AFFILIATES. Anderson shall, within thirty
(30) days after the date of this Agreement and promptly thereafter until the
Effective Date to reflect any changes or upon the request of First Merchants,
provide First Merchants with a list identifying each person who may reasonably
be deemed to be an "affiliate" of Anderson within the meaning of such term as
used in Rule 145 under the Securities Act of 1933, as amended (the "1933 Act").
Each director, executive officer and other person who is an "affiliate" of
Anderson for purposes of the 1933 Act shall deliver to First Merchants, at least
thirty-one (31) days prior to the Effective Date, a written agreement, in form
and substance satisfactory to counsel to First Merchants, regarding compliance
by each such person with (i) the provisions of such Rule 145, and (ii) the
requirements of Accounting Principles Board Opinion No. 16
Ex. 10(h)-22
regarding the disposition of shares (or reduction of risk with respect thereto)
of Anderson common stock during the thirty (30) days preceding the Effective
Date, or First Merchants common stock until such time as financial results
covering at least thirty (30) days of post-Merger operations have been
published.
7.07. PRESS RELEASE. Anderson shall not issue any press releases or make
any other public announcements or disclosures relating to the Merger without the
prior approval of First Merchants and Pendleton.
7.08. DISCLOSURE LETTER UPDATE. Anderson shall promptly supplement,
amend and update monthly and as of the Effective Date the Disclosure Letter with
respect to any matters hereafter arising which, if in existence or having
occurred as of the date of this Agreement, would have been required to be set
forth or described in the Disclosure Letter.
7.09 CONFIDENTIALITY. Anderson shall use its best efforts to cause its
officers, employees, and authorized representatives to, hold in strict
confidence all confidential data and information obtained by it from First
Merchants and Pendleton, unless such information (i) was already known to
Anderson, (ii) becomes available to Anderson from other sources, (iii) is
independently developed by Anderson, (iv) is disclosed outside of Anderson with
and in accordance with the terms of prior written approval of First Merchants or
Pendleton, or (v) is or becomes readily ascertainable from public or published
information or trade sources or public disclosure of such information is
required by law or requested by a court or other governmental agency,
commission, or regulatory body. Anderson further agrees that in the event this
Agreement is terminated, it will return to First Merchants and Pendleton all
information obtained by Anderson regarding First Merchants and Pendleton,
including all copies made of such information by Anderson. This provision shall
survive the Effective Date or the earlier termination of this Agreement.
7.10 COOPERATION. Anderson shall generally cooperate with First
Merchants and Pendleton and their respective officers, employees, attorneys,
accountants and other agents, and, generally, do such other acts and things in
good faith as may be reasonable, necessary or appropriate to timely effectuate
the intents and purposes of this Agreement and the consummation of the
transactions contemplated hereby, including, without limitation, (i) Anderson
shall cooperate and assist First Merchants and Pendleton in preparation of
and/or filing of all regulatory applications, the registration statement for
registration of First Merchants' shares, and all other documentation required to
be prepared for consummation of the Merger and obtaining all necessary
approvals, and (ii) Anderson shall furnish First Merchants and Pendleton with
all information concerning itself that First Merchants and Pendleton may request
in connection with the preparation of the documentation referenced above. Prior
to the Closing (as defined in Section 12 hereof), Anderson agrees to disclose to
First Merchants and Pendleton any fact or matter that comes to the attention of
Anderson that might indicate that any of the representations or warranties of
Anderson may be untrue, incorrect, or misleading in any material respect.
7.11. ENVIRONMENTAL REPORTS. Anderson, at its sole cost and expense,
shall provide to First Merchants and Pendleton, as soon as reasonably practical,
but not later than thirty (30)
Ex. 10(h)-23
days after the date hereof, a copy of any and all environmental reports
currently in Anderson's possession or which Anderson can obtain without undue
effort on all real property owned, leased or operated by Anderson as of the date
hereof (but excluding space in retail and similar establishments leased by
Anderson for automatic teller machines or bank branch facilities where the space
leased comprises less than 20% of the total space leased to all tenants of such
property). Anderson shall not be required by this Section 7.11 to cause any new
environmental investigations to be conducted or environmental reports to be
prepared. Should the cost of taking all remedial or other corrective actions
and measures relating to real property owned, leased or operated by Anderson (i)
required by applicable law or reasonable likely to be required by applicable
law, or (ii) recommended or suggested by any report or reports as prudent in
light of serious life, health or safety concerns, in the aggregate, exceed the
sum of $100,000 as reasonably estimated by an environmental expert retained for
such purpose by First Merchants and Pendleton and reasonably acceptable to
Anderson, or if the cost of such actions and measures cannot be so reasonably
estimated by such expert to be such amount or less with any reasonable degree of
certainty, then First Merchants shall have the right for a period of fifteen
(15) business days following receipt of such estimate or indication that the
cost of such actions and measures cannot be so reasonably estimated to terminate
this Agreement by providing written notice of such termination to Anderson.
7.12. LETTER TO ANDERSON SHAREHOLDERS. Within five (5) business days
after execution of this Agreement by Anderson, Pendleton and First Merchants,
Anderson shall deposit in the United States mail a letter to each of the
shareholders of record of Anderson as of the date of execution of this Agreement
informing each shareholder about the execution of this Agreement and the
proposed Merger. The terms of such letter to the shareholders of Anderson shall
be in a form mutually agreed to by First Merchants, Pendleton and Anderson.
7.13. EXERCISE OF OPTIONS. Anderson shall cause the stock options
disclosed pursuant to Section 5.03(b) to be exercised and the related shares of
Anderson common stock to be issued on or before the Effective Date. Anderson
commits that no cash shall be paid to option holders in connection with the
exercise of such options and that immediately prior to the effective time of the
Merger, Anderson will have 612,434 shares of common stock outstanding.
SECTION 8
COVENANTS OF FIRST MERCHANTS AND PENDLETON
First Merchants and Pendleton covenant and agree with Anderson as follows:
8.01. APPROVALS. First Merchants and Pendleton shall proceed
expeditiously, cooperate fully and use their best efforts to procure upon
reasonable terms and conditions all consents, authorizations, approvals,
registrations and certificates, to complete all filings and applications and to
satisfy all other requirements prescribed by law which are necessary for
consummation of the Merger on the terms and conditions provided in this
Agreement. First Merchants and Pendleton shall provide Anderson with copies of
proposed regulatory filings in connection with the Merger and afford Anderson
the opportunity to offer comment on the filings before filing.
Ex. 10(h)-24
The approval of the shareholders of First Merchants of the transactions
contemplated by this Agreement is not required.
8.02. PENDLETON SHAREHOLDER APPROVAL. First Merchants, as the sole
shareholder of Pendleton, shall approve the Merger and the terms of this
Agreement as required by law.
8.03. EMPLOYEE BENEFIT PLANS. No later than January 1, 2000, First
Merchants will permit Anderson employees to participate in any tax-qualified
retirement plan First Merchants maintains for its employees, provided that such
an employee meets the applicable participation requirements, in lieu of
Anderson's current tax-qualified retirement plan(s). Until that time,
Anderson's current tax-qualified retirement plan(s) will be maintained at the
same level, with respect to benefit accruals, provided for on the Effective
Date. Following the Effective Date, Anderson employees will otherwise
participate in employee benefit plans that in the aggregate are substantially
comparable to the employee benefit plans provided to those employees by Anderson
on the Effective Date. Each Anderson employee who is still employed by Anderson
on the Effective Date and is a participant in the Anderson 401(k) plan shall be
fully vested with respect to all contributions made by or on behalf of such
employee under the Anderson 401(k) plan. For purposes of determining an
Anderson employee's eligibility and vesting service under a First Merchant's
employee benefit plan that the employee is permitted to enter, service with
Anderson will be treated as service with First Merchants; provided, however,
that service with Anderson shall not be treated as service with First Merchants
for purposes of benefit accrual under First Merchants' defined benefit pension
plan. In addition, service with Anderson will be counted for seniority purposes
for determining applicable vacation time, sick days, and years of service awards
with First Merchants.
8.04. FIRST MERCHANTS' BOARD OF DIRECTORS. In connection with the first
annual meeting of the shareholders of First Merchants following the Effective
Date, First Merchants shall cause all necessary action to be taken to cause the
current Chairman of the Board of Anderson, James F. Ault, to be nominated for
election as a member of the First Merchants' Board of Directors for a three
(3)-year term.
8.05. PRESS RELEASE. Except as required by law, neither First Merchants
nor Pendleton shall issue any press release to any national wire service
relating solely to the Merger without the prior approval of Anderson.
8.06. CONFIDENTIALITY. First Merchants and Pendleton shall, and shall use
their best efforts to cause their respective officers, employees, and authorized
representatives to, hold in strict confidence all confidential data and
information obtained by them from Anderson, unless such information (i) was
already known to First Merchants or Pendleton, (ii) becomes available to First
Merchants or Pendleton from other sources, (iii) is independently developed by
First Merchants or Pendleton, (iv) is disclosed outside of First Merchants or
Pendleton with and in accordance with the terms of prior written approval of
Anderson, or (v) is or becomes readily ascertainable from public or published
information or trade sources or public disclosure of such information is
required by law or requested by a court or other governmental agency,
commission, or regulatory body. First Merchants and Pendleton further agree that
in the event this Agreement is terminated, they will return to Anderson all
information obtained by First
Ex. 10(h)-25
Merchants and Pendleton regarding Anderson, including all copies made of such
information by First Merchants and Pendleton. This provision shall survive the
Effective Date or the earlier termination of this Agreement.
8.07. ANDERSON EMPLOYEES. On or before the Effective Date, it is First
Merchants' present intention to offer to employ all employees of Anderson, who
are currently actively employed by Anderson, a position either at the Anderson
Community Banking Centers of the Continuing Bank or some other position within
the First Merchants organization commencing on the Effective Date; provided such
Anderson employees satisfy all employment application and qualification
requirements applicable to all prospective First Merchants employees. In the
event any offer of employment by First Merchants is accepted by any Anderson
employees, First Merchants shall not be obligated to continue any employment
relationship with any former Anderson employee for any specific period of time
and such former Anderson employees shall be employees at will with First
Merchants. This Section 8.07 expresses the current intentions of First
Merchants with respect to the employees of Anderson, but shall not be construed
as a binding obligation of First Merchants or a guarantee of employment of all
Anderson employees.
8.08. DIRECTORS' AND OFFICERS' INDEMNIFICATION.
(a) After the Effective Date, First Merchants and Pendleton shall
indemnify, defend and hold harmless the present and former officers and
directors of Anderson against all losses, expenses, claims, damages and
liabilities arising out of actions or omissions (arising from their present or
former status as officers or directors) occurring on or prior to the Effective
Date to the full extent permitted under the applicable provisions of Indiana law
and under the articles of incorporation and bylaws of Anderson, as in effect on
the date hereof.
(b) If, after the Effective Date, First Merchants or Pendleton or any
of its or their successors or assigns (i) shall consolidate with or merge into
any other corporation or entity and shall not be the continuing or surviving
corporation or entity of such consolidation or merger or (ii) shall transfer all
or substantially all of its properties and assets to any individual, corporation
or other entity, then and in each such case, proper provision shall be made so
that the successors and assigns of First Merchants and/or Pendleton shall assume
the obligations set forth in this Section 8.08.
8.09 ACCESS. On and after the date of this Agreement and until the
Effective Date or until this Agreement is terminated as provided herein, First
Merchants and Pendleton shall continue to give Anderson and its employees,
accountants, attorneys and other authorized representatives reasonable access
during regular business hours and other reasonable times to all its premises,
properties, statements, books and records.
Ex. 10(h)-26
SECTION 9
CONDITIONS PRECEDENT TO THE MERGER
The obligation of each of the parties hereto to consummate the transactions
contemplated by this Agreement is subject to the satisfaction and fulfillment of
each of the following conditions on or prior to the Effective Date:
9.01. SHAREHOLDER APPROVAL. The shareholders of Anderson shall have
approved, ratified and confirmed this Agreement as required by applicable law.
First Merchants, as the sole shareholder of Pendleton, shall have approved,
ratified and confirmed this Agreement as required by applicable law.
9.02. REGISTRATION STATEMENT EFFECTIVE. First Merchants shall have
registered its shares of common stock to be issued to shareholders of Anderson
in accordance with this Agreement with the Securities and Exchange Commission
pursuant to the 1933 Act, and all state securities and "blue sky" approvals and
authorizations required to offer and sell such shares shall have been received
by First Merchants. The registration statement with respect thereto shall have
been declared effective by the Securities and Exchange Commission and no stop
order shall have been issued or threatened.
9.03. TAX OPINION. The parties shall have obtained an opinion of
counsel, which shall be in form and content satisfactory to counsel for all
parties hereto, to the effect that the Merger effected pursuant to this
Agreement shall constitute a tax-free transaction (except to the extent cash or
boot is received) to each party hereto and to the shareholders of each party.
Such opinion shall be based upon factual representations received by such
counsel from the parties, which representations may take the form of written
certifications.
9.04. AFFILIATE AGREEMENTS. First Merchants shall have obtained (a) from
Anderson, a list identifying each affiliate of Anderson and (b) from each
affiliate of Anderson, the agreements contemplated by Section 7.06 hereof.
9.05. REGULATORY APPROVALS. The FDIC and the Indiana Department of
Financial Institutions shall have authorized and approved the Merger and the
transactions related thereto. In addition, all appropriate orders, consents,
approvals and clearances from all other regulatory agencies and governmental
authorities whose orders, consents, approvals or clearances are required by law
for consummation of the transactions contemplated by this Agreement shall have
been obtained.
9.06. OFFICER'S CERTIFICATE. First Merchants, Pendleton and Anderson
shall have delivered to each other a certificate signed by their Chairman or
President and their Secretary, dated the Effective Date, certifying that (a) all
the representations and warranties of their respective entities are true,
accurate and correct on and as of the Effective Date; (b) all the covenants of
their respective entities have been complied with from the date of this
Agreement through and as of the Effective Date; and (c) their respective
entities have satisfied and fully complied with all conditions necessary to make
this Agreement effective as to them.
Ex. 10(h)-27
9.07. FAIRNESS OPINION. Anderson shall have obtained an opinion from an
investment banker of its choosing to the effect that the terms of the Merger are
fair to the shareholders of Anderson from a financial viewpoint. Such opinion
shall be (a) in form and substance reasonably satisfactory to Anderson, (b)
dated as of a date not later than the mailing date of the Proxy Statement
relating to the Merger and (c) included in the Proxy Statement.
9.08. POOLING OF INTERESTS. First Merchants and Pendleton shall have
obtained from their independent accountants, Olive, LLP, a letter stating that,
based upon their review of such documents and information which they deemed
relevant, such firm is currently unaware of any reason why the Merger cannot be
accounted for as a "pooling of interests."
9.09. NO JUDICIAL PROHIBITION. Neither Anderson, Pendleton nor First
Merchants shall be subject to any order, decree or injunction of a court or
agency of competent jurisdiction which enjoins or prohibits the consummation of
the Merger.
9.10. OTHER CONSENTS AND APPROVALS. All consents and other approvals
required for the transfer of any contracts, agreements, leases, loans, etc. as a
result of the Merger shall have been obtained.
SECTION 10
TERMINATION OF MERGER
10.01. MANNER OF TERMINATION. This Agreement and the transactions
contemplated hereby may be terminated at any time prior to the Effective Date by
written notice delivered by First Merchants or Pendleton to Anderson or by
Anderson to First Merchants and Pendleton:
(a) By Anderson, First Merchants or Pendleton, if there has been a
material misrepresentation, a breach of warranty or a failure to comply
with any covenant on the part of any party in the representations,
warranties, and covenants set forth herein; provided that Anderson shall
have no right to terminate for its own default, that First Merchants shall
have no right to terminate for its own default or a default by Pendleton,
and that Pendleton shall have no right to terminate for its own default or
a default by First Merchants;
(b) By Anderson, First Merchants or Pendleton, if it shall
determine in its sole discretion that the transactions contemplated by this
Agreement have become inadvisable or impracticable by reason of
commencement or threat of material litigation or proceedings against any of
the parties;
(c) By Anderson, if the financial condition, business, assets, or
results of operations of First Merchants shall have been materially and
adversely changed from that in existence at June 30, 1998, or by First
Merchants or Pendleton, if the financial condition, business, assets, or
results of operations of Anderson shall have been materially and adversely
changed from that in existence at June 30, 1998;
Ex. 10(h)-28
(d) By Anderson, First Merchants or Pendleton, if the transaction
contemplated herein has not been consummated by April 30, 1999 (provided
that if Anderson is the terminating party that it is not then in material
breach of any representation, warranty, covenant or other agreement
contained herein, if First Merchants is the terminating party that neither
it nor Pendleton is then in material breach of any representation,
warranty, covenant or other agreement contained herein, or if Pendleton is
the terminating party that neither it nor First Merchants is then in
material breach of any representation, warranty, covenant or other
agreement contained herein);
(e) By First Merchants or Pendleton if any of the items, events or
information set forth in any update to the Disclosure Letter has had or may
have a material adverse effect on the financial condition, results of
operations, business, or prospects of Anderson;
(f) By First Merchants, Pendleton or Anderson if, in the opinion
of counsel to First Merchants and Pendleton or to Anderson, the Merger will
not constitute a tax-free reorganization under the Code;
(g) By First Merchants if the Merger cannot be accounted for as a
"pooling of interests";
(h) By Anderson, (i) if First Merchants or any of its subsidiary
banks (including Pendleton) is acquired by a third party in a merger,
consolidation, share exchange, stock transaction or asset transaction, (ii)
if First Merchants enters into an agreement containing the terms and
conditions of such a transaction, or (iii) if the terms and conditions of
such a transaction involving First Merchants or any of its subsidiary banks
(including Pendleton) are publicly disclosed;
(i) By First Merchants pursuant to its termination rights set
forth in Section 7.11 hereof;
(j) By Anderson, if the appropriate discharge of the fiduciary
duties of the Board of Directors of Anderson consistent with Section 7.05
requires that Anderson terminate this Agreement;
(k) By First Merchants or Pendleton if it receives written notice
under Section 7.05 that Anderson intends to furnish information to or enter
into discussions or negotiations with a third party in connection with a
proposed Acquisition Transaction, if Anderson fails to give any such
written notice as required in Section 7.05 or if Anderson's Board of
Directors fails to make, withdraws or modifies its recommendation to
Anderson shareholders to vote in favor of the Merger following receipt of a
proposal for an Acquisition Transaction; or
(l) By either party (provided that the terminating party is not
then in
Ex. 10(h)-29
material breach of any representation or warranty contained in this
Agreement or in material breach of any covenant or other agreement
contained in this Agreement) in the event that any of the conditions
precedent to the obligations of such party to consummate the Merger cannot
be satisfied or fulfilled by the date specified in Section 10.1(d) of this
Agreement.
10.02. EFFECT OF TERMINATION. Except as provided below, in
the event that this Agreement is terminated pursuant to the provisions of
Section 10.01 hereof, no party shall have any liability to any other party
for costs, expenses, damages or otherwise; provided, however, that
notwithstanding the foregoing, in the event that this Agreement is
terminated pursuant to Section 10.01(a) hereof on account of a willful
breach of any of the representations and warranties set forth herein or any
breach of any of the agreements set forth herein, then the non-breaching
party shall be entitled to recover appropriate damages from the breaching
party, including, without limitation, reimbursement to the non-breaching
party of its costs, fees and expenses (including attorneys', accountants'
and advisors' fees and expenses) incident to the negotiation, preparation
and execution of this Agreement and related documentation; provided,
however that nothing in this proviso shall be deemed to constitute
liquidated damages for the willful breach by a party of the terms of this
Agreement or otherwise limit the rights of the non-breaching party.
Notwithstanding the foregoing, in the event of termination by First
Merchants or Pendleton in accordance with Section 10.01(k) or by Anderson
in accordance with Section 10.01(j), Anderson shall pay First Merchants the
sum of Seven Hundred Fifty Thousand Dollars ($750,000) as liquidated
damages. Such liquidated damages shall be in lieu of cost, expenses and
damages otherwise recoverable under the first sentence of this Section
10.02. Such payment shall be made within ten (10) days of the date of
notice of termination. Anderson acknowledges the reasonableness of such
amount in light of the considerable time and expense invested and to be
invested by First Merchants and its representatives in furtherance of the
Merger. Such amount was agreed upon by First Merchants and Anderson as
compensation to First Merchants for its time and expense and not as a
penalty to Anderson, it being impossible to ascertain the exact value of
the time and expense to be invested. First Merchants shall also be
entitled to recover from Anderson its reasonable attorney fees incurred in
the enforcement of this Section.
SECTION 11
EFFECTIVE DATE OF MERGER
Subject to the terms and upon satisfaction of all requirements of law and
the conditions specified in this Agreement, the Merger shall become effective at
the close of business on the day specified in the Articles of Merger of Anderson
with and into Pendleton as filed with the Secretary of State of the State of
Indiana (the "Effective Date"). The Effective Date shall occur no later than
the last business day of the month in which any waiting period following the
last approval of the Merger by a state or federal regulatory agency or
governmental authority expires.
Ex. 10(h)-30
SECTION 12
CLOSING
12.01. CLOSING DATE AND PLACE. The closing of the Merger (the "Closing")
shall take place at the main office of First Merchants on the Effective Date or
at such other place as mutually agreed to by First Merchants, Pendleton and
Anderson.
12.02. ARTICLES OF MERGER. Subject to the provisions of this Agreement,
on the Effective Date, the Articles of Merger shall be duly filed with the
Secretary of State of the State of Indiana.
12.03. OPINIONS OF COUNSEL. At the Closing, Anderson shall deliver an
opinion of its counsel, Leagre, Chandler & Millard, to First Merchants, and
First Merchants and Pendleton shall deliver an opinion of their counsel, Bingham
Summers Welsh & Spilman, to Anderson, dated as of the date of the Closing. The
form of such opinions shall be as mutually agreed to by the parties hereto and
their respective counsel.
SECTION 13
MISCELLANEOUS
13.01. EFFECTIVE AGREEMENT. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns, but none of the provisions thereof shall inure to the benefit
of any other person, firm, or corporation whomsoever, except as expressly
applied to the current and former officers and directors of First Merchants,
Pendleton and Anderson and their beneficiaries. Neither this Agreement nor any
of the rights, interests, or obligations hereunder shall be assigned or
transferred by either party hereto without the prior written consent of the
other party.
13.02. WAIVER; AMENDMENT.
(a) First Merchants, Pendleton and Anderson may, by an instrument
in writing executed in the same manner as this Agreement: (i) extend the
time for the performance of any of the covenants or agreements of any other
party under this Agreement; (ii) waive any inaccuracies in the
representations or warranties of any other party contained in this
Agreement or in any document delivered pursuant hereto or thereto; (iii)
waive the performance by any other party of any of the covenants or
agreements to be performed by it or them under this Agreement; or (iv)
waive the satisfaction or fulfillment of any condition the nonsatisfaction
or nonfulfillment of which is a condition to the right of the party so
waiving to terminate this Agreement. The waiver by any party hereto of a
breach of any provision of this Agreement shall not operate or be construed
as a waiver of any other or subsequent breach hereunder.
(b) Notwithstanding the prior approval by the shareholders of
Anderson, this Agreement may be amended, modified or supplemented by the
written agreement of Anderson, Pendleton and First Merchants without
further approval of such shareholders, except that no such amendment,
modification or supplement shall result
Ex. 10(h)-31
in a decrease in the consideration specified in Section 3 hereof or shall
materially adversely affect the rights of the shareholders of Anderson without
the further approval of such shareholders.
13.03. NOTICES. Any notice required or permitted by this Agreement shall
be deemed to have been duly given if delivered in person, receipted for or sent
by certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to First Merchants and Pendleton: With a copy to:
200 E. Jackson Street, Box 792 Bingham Summers Welsh & Spilman
Muncie, IN 47305 2700 Market Tower
Attn: Stefan S. Anderson, 10 West Market Street
Chairman and Chief Executive Indianapolis, Indiana 46204-2982
Officer Attn: David R. Prechtel, Esq.
If to Anderson: With a copy to:
19 West 10th Street Leagre, Chandler & Millard
Anderson, IN 46016 9100 Keystone Crossing, Suite 800
Attn: James F. Ault, Chairman Indianapolis, Indiana 46240
Attn: Michael L. Baker Attn: John R. Zerkle, Esq.
or to such substituted address as any of them have given to the other in
writing.
13.04. HEADINGS. The headings in this Agreement have been inserted solely
for the ease of reference and should not be considered in the interpretation or
construction of this Agreement.
13.05. SEVERABILITY. In case any one or more of the provisions contained
herein shall, for any reason, be held to be invalid, illegal, or unenforceable
in any respect, such invalidity, illegality, or unenforceability shall not
affect any other provision of this Agreement, but this Agreement shall be
construed as if such invalid, illegal, or unenforceable provision or provisions
had never been contained herein.
13.06. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but such counterparts shall
together constitute one and the same instrument. In addition, this Agreement and
the documents to be delivered hereunder may be executed by the parties hereto
either manually or by facsimile signatures, each of which shall constitute an
original signature.
13.07. GOVERNING LAW. This Agreement is executed in and shall be
construed in accordance with the laws of the State of Indiana.
Ex. 10(h)-32
13.08. ENTIRE AGREEMENT. This Agreement supersedes any other agreement,
whether oral or written, between First Merchants, Pendleton and Anderson
relating to the matters contemplated hereby, and constitutes the entire
agreement between the parties hereto.
13.09. EXPENSES. First Merchants, Pendleton and Anderson shall each pay
their own expenses incidental to the transactions contemplated hereby. It is
understood that the cost of the fairness opinion referenced in Section 9.07
shall be borne by Anderson whether or not the Merger is consummated. This
provision shall survive the Effective Date or the earlier termination of this
Agreement.
13.10 SURVIVAL OF COVENANTS. The provisions of Sections 7.09, 8.06,
10.02, 10.03, 13.09 and this Section 13.10 shall survive beyond the termination
of this Agreement. The provisions of Sections 8.03, 8.04, 8.08, 13.09 and this
Section 13.10 shall survive beyond the Effective Date.
IN WITNESS WHEREOF, First Merchants, Pendleton and Anderson have made and
entered into this Agreement as of the day and year first above written and have
caused this Agreement to be executed and attested by their duly authorized
officers.
FIRST MERCHANTS CORPORATION
ATTEST:
/s/ Larry R. Helms By: /s/ Stefan S. Anderson
- ------------------------------ ---------------------------------------
Larry R. Helms, Secretary Stefan S. Anderson, Chairman and Chief
Executive Officer
PENDLETON BANKING COMPANY
ATTEST:
/s/ Sherry Hazelbaker By: /s/ Norman Locke
- ------------------------------ ---------------------------------------
Sherry Hazelbaker, Secretary Norman Locke, President
ANDERSON COMMUNITY BANK
ATTEST:
/s/ Michael E. Stephens By: /s/ Michael L. Baker
- ------------------------------ ---------------------------------------
Michael E. Stephens, Secretary Michael L. Baker, President
and Chief Executive Officer
Ex. 10(h)-33