Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
dated as of
December 14, 1998
by and between
SKY FINANCIAL GROUP, INC.
and
FIRST WESTERN BANCORP, INC.
TABLE OF CONTENTS
Page
RECITALS .................................................................... 1
ARTICLE I Certain Definitions
1.01 Certain Definitions ................................................... 1
ARTICLE II The Merger
2.01 The Parent Merger ..................................................... 7
2.02 The Subsidiary Merger ................................................. 8
2.03 Effectiveness of Parent Merger ........................................ 8
2.04 Effective Date and Effective Time ..................................... 8
ARTICLE III Consideration; Exchange Procedures
3.01 Merger Consideration .................................................. 8
3.02 Rights as Stockholders, Stock Transfers ............................... 9
3.03 Fractional Shares ..................................................... 9
3.04 Exchange Procedures ................................................... 9
3.05 Anti-Dilution Provisions .............................................. 11
3.06 Options ............................................................... 11
ARTICLE IV Actions Pending Acquisition
4.01 Forbearances of FWB ................................................... 12
4.02 Forbearances of SFG ................................................... 14
ARTICLE V Representations and Warranties
5.01 Disclosure Schedules .................................................. 16
5.02 Standard .............................................................. 16
5.03 Representations and Warranties of FWB ................................. 16
5.04 Representations and Warranties of SFG ................................. 29
TABLE OF CONTENTS
Page
ARTICLE VI Covenants
6.01 Reasonable Best Efforts ............................................... 38
6.02 Stockholder Approvals ................................................. 38
6.03 Registration Statement ................................................ 39
6.04 Press Releases ........................................................ 40
6.05 Access; Information ................................................... 40
6.06 Acquisition Proposals.................................................. 41
6.07 Affiliate Agreements .................................................. 41
6.08 Takeover Laws ......................................................... 42
6.09 Certain Policies ...................................................... 42
6.10 NASDAQ Listing ........................................................ 42
6.11 Regulatory Applications ............................................... 42
6.12 Indemnification ....................................................... 43
6.13 Opportunity of Employment; Employee Benefits .......................... 44
6.14 Notification of Certain Matters ....................................... 44
6.15 Dividend Coordination ................................................. 44
6.16 SFG Board Representation .............................................. 45
6.17 Resulting Bank Board of Directors ..................................... 45
6.18 Formation of Advisory Board ........................................... 45
6.19 Accounting and Tax Treatment .......................................... 45
6.20 No Breaches of Representations and Warranties ......................... 45
6.21 Consents............................................................... 46
6.22 Insurance Coverage .................................................... 46
6.23 Correction of Information ............................................. 46
6.24 Confidentiality ....................................................... 46
6.25 Supplemental Assurances ............................................... 46
6.26 Employment Agreement .................................................. 47
ARTICLE VII Conditions to Consummation of the Merger
7.01 Conditions to Each Party's Obligation
to Effect the Merger .................................................. 47
7.02 Conditions to Obligation of FWB........................................ 48
7.03 Conditions to Obligation of SFG........................................ 49
ARTICLE VIII Termination
8.01 Termination............................................................ 50
8.02 Effect of Termination and Abandonment,
Enforcement of Agreement .............................................. 52
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TABLE OF CONTENTS
Page
ARTICLE IX Miscellaneous
9.01 Survival............................................................... 53
9.02 Waiver; Amendment...................................................... 53
9.03 Counterparts........................................................... 53
9.04 Governing Law.......................................................... 53
9.05 Expenses............................................................... 53
9.06 Notices................................................................ 53
9.07 Entire Understanding; No Third Party Beneficiaries..................... 54
9.08 Interpretation; Effect................................................. 54
9.09 Waiver of Jury Trial................................................... 54
EXHIBIT A Form of Stock Option Agreement
EXHIBIT B Form of FWB Affiliate Agreement
EXHIBIT C Procedure Regarding Section 8.01(e) of the Agreement
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AGREEMENT AND PLAN OF MERGER, dated as of December 14, 1998
(this "Agreement"), is by and between Sky Financial Group, Inc. ("SFG") and
First Western Bancorp, Inc. ("FWB").
RECITALS
A. FWB. FWB is a Pennsylvania corporation, having its principal
place of business in New Castle, Pennsylvania.
B. SFG. SFG is an Ohio corporation, having its principal place of
business in Bowling Green, Ohio.
C. Stock Option Agreement. As an inducement to the willingness of
SFG to continue to pursue the transactions contemplated by this Agreement, FWB
intends to grant to SFG an option pursuant to a stock option agreement, in
substantially the form of Exhibit A.
D. Intentions of the Parties. It is the intention of the parties to
this Agreement that the business combinations contemplated hereby be accounted
for under the "pooling-of-interests" accounting method and that each be treated
as a "reorganization" under Section 368(a) of the Internal Revenue Code of 1986,
as amended (the "Code").
E. Board Action. The respective Boards of Directors of each of SFG
and FWB have determined that it is in the best interests of their respective
companies and their stockholders to consummate the strategic business
combinations provided for herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements contained herein the
parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.01 CERTAIN DEFINITIONS. The following terms are used in this Agreement
with the meanings set forth below:
"Acquisition Proposal" means any tender or exchange offer, proposal
for a merger, consolidation or other business combination involving FWB or any
of its Subsidiaries or any proposal or offer to acquire in any manner a
substantial equity interest in, or a substantial portion of the assets or
deposits of, FWB or any of its Subsidiaries, other than the transactions
contemplated by this Agreement.
"Agreement" means this Agreement, as amended or modified from time
to time in accordance with Section 9.02.
"Agreement to Merge" has the meaning set forth in Section 2.02.
"Bank" means First Western Bank, National Association, a wholly-
owned subsidiary of FWB.
"BHCA" means the Bank Holding Company Act of 1956, as amended.
"CBC" means The Citizens Banking Company, an Ohio banking
corporation which is a wholly-owned subsidiary of SFG.
"Code" means the Internal Revenue Code of 1986, as amended.
"Compensation and Benefit Plans" has the meaning set forth in
Section 5.03(m).
"Consultants" has the meaning set forth in Section 5.03(m).
"Costs" has the meaning set forth in Section 6.12(a).
"Directors" has the meaning set forth in Section 5.03(m).
"Disclosure Schedule" has the meaning set forth in Section 5.01.
"Dissenting Shares" means any shares of FWB Common Stock held by a
holder who properly demands and perfects appraisal rights with respect to such
shares in accordance with applicable provisions of the PBCL.
"DSCP" means the Department of State of the Commonwealth of
Pennsylvania.
"Effective Date" means the date on which the Effective Time occurs.
"Effective Time" means the effective time of the Merger, as provided
for in Section 2.04.
"Employees" has the meaning set forth in Section 5.03(m).
"Environmental Laws" means all applicable local, state and federal
environmental, health and safety laws and regulations, including, without
limitation, the Resource Conservation and Recovery Act, the Comprehensive
Environmental Response, Compensation, and Liability Act, the Clean Water Act,
the Federal Clean Air Act, and the Occupational Safety and Health Act, each as
amended, regulations promulgated thereunder, and state counterparts.
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"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" has the meaning set forth in Section 5.03(m).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder.
"Exchange Agent" has the meaning set forth in Section 3.04.
"Exchange Fund" has the meaning set forth in Section 3.04.
"Exchange Ratio" has the meaning set forth in Section 3.01.
"FFIEC" means Federal Financial Institutions Examination Committee.
"FWB" has the meaning set forth in the preamble to this Agreement.
"FWB Articles" means the Articles of Incorporation of FWB.
"FWB Affiliate" has the meaning set forth in Section 6.07(a).
"FWB Board" means the Board of Directors of FWB.
"FWB By-Laws" means the By-Laws of FWB.
"FWB Common Stock" means the common stock, par value $5.00 per
share, of FWB.
"FWB Meeting" has the meaning set forth in Section 6.02.
"FWB Preferred Stock" means the preferred stock, without par value,
of FWB.
"FWB SEC Documents" has the meaning set forth in Section 5.03(g).
"FWB Stock" means FWB Common Stock and FWB Preferred Stock.
"FWB Stock Option" has the meaning set forth in Section 3.06.
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"FWB Stock Plans" means the option plans and agreements of FWB and
its Subsidiaries pursuant to which rights to purchase FWB Common Stock are
outstanding immediately prior to the Effective Time pursuant to the Incentive
Stock Option Plan for Key Officers and the Equity Compensation Plan for
Non-Employee Directors of First Western Bancorp, Inc. and First Western Bank,
National Association.
"Governmental Authority" means any court, administrative agency or
commission or other federal, state or local governmental authority or
instrumentality.
"Indemnified Party" has the meaning set forth in Section 6.12(a).
"IRS" has the meaning set forth in Section 5.03(m).
The term "knowledge" means, with respect to a party hereto, actual
knowledge of any officer of that party with the title of not less than a senior
vice president and that party's in-house counsel, if any.
"Lien" means any charge, mortgage, pledge, security interest,
restriction, claim, lien, or encumbrance.
"Material Adverse Effect" means, with respect to SFG or FWB, any
effect that (i) is material and adverse to the financial position, results of
operations or business of SFG and its Subsidiaries taken as a whole, or FWB and
its Subsidiaries taken as a whole, respectively, or (ii) would materially impair
the ability of either SFG or FWB to perform its obligations under this Agreement
or otherwise materially threaten or materially impede the consummation of the
Merger and the other transactions contemplated by this Agreement; provided,
however, that Material Adverse Effect shall not be deemed to include the impact
of (a) changes in banking and similar laws of general applicability or
interpretations thereof by courts or governmental authorities or other changes
affecting depository institutions generally, including changes in general
economic conditions and changes in prevailing interest and deposit rates, (b)
any modifications or changes to valuation policies and practices in connection
with the Merger or restructuring charges taken in connection with the Merger, in
each case in accordance with generally accepted accounting principles, (c)
changes resulting from expenses (such as legal, accounting and investment
bankers' fees) incurred in connection with this Agreement or the transactions
contemplated herein, and (d) actions or omissions of a party which have been
waived in accordance with Section 9.02 hereof.
"Merger" collectively refers to the Parent Merger and the Subsidiary
Merger, as set forth in Section 2.01 and Section 2.02, respectively.
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"Merger Consideration" has the meaning set forth in Section 2.01.
"NASDAQ" means The NASDAQ Stock Market, Inc.'s National Market
System.
"New Certificate" has the meaning set forth in Section 3.04.
"NASD" means The National Association of Securities Dealers.
"OCC" means The Office of the Comptroller of the Currency.
"OGCL" means the Ohio General Corporation Law.
"Old Certificate" has the meaning set forth in Section 3.04.
"OSS " means the Office of the Secretary of State of the State of
Ohio.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PBCL" means the Pennsylvania Business Corporation Law of 1988, as
amended.
"PDB" means the Pennsylvania Department of Banking.
"Parent Merger" has the meaning set forth in Section 2.01.
"Person" means any individual, bank, corporation, partnership,
association, joint-stock company, business trust or unincorporated organization.
"Pension Plan" has the meaning set forth in Section 5.03(m).
"Previously Disclosed" by a party shall mean information set forth
in its Disclosure Schedule.
"Proxy/Prospectus" has the meaning set forth in Section 6.03.
"Proxy Statement" has the meaning set forth in Section 6.03.
"Registration Statement" has the meaning set forth in Section 6.03.
"Regulatory Authority" has the meaning set forth in Section 5.03(i).
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"Replacement Option" has the meaning set forth in Section 3.06.
"Representatives" means, with respect to any Person, such Person's
directors, officers, employees, legal or financial advisors or any
representatives of such legal or financial advisors.
"Resulting Bank" has the meaning set forth in Section 2.02.
"Rights" means, with respect to any Person, securities or
obligations convertible into or exercisable or exchangeable for, or giving any
person any right to subscribe for or acquire, or any options, calls or
commitments relating to, or any stock appreciation right or other instrument the
value of which is determined in whole or in part by reference to the market
price or value of, shares of capital stock of such person.
"SEC" means the Securities and Exchange Commission.
"SFG" has the meaning set forth in the preamble to this Agreement.
"SFG Articles" means the Articles of Incorporation of SFG, as
amended.
"SFG Board" means the Board of Directors of SFG.
"SFG Code" means the Code of Regulations of SFG, as amended.
"SFG Common Stock" means the common stock, without par value, of
SFG.
"SFG Meeting" has the meaning set forth in Section 6.02.
"SFG SEC Documents" has the meaning set forth in Section 5.04(g).
"SFG Stock" means the SFG Common Stock and SFG serial preferred
stock.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations thereunder.
"Stock Option Agreement" has the meaning set forth in Recital C.
"Subsidiary" and "Significant Subsidiary" have the meanings ascribed
to them in Rule 1-02 of Regulation S-X of the SEC.
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"Surviving Corporation" has the meaning set forth in Section 2.01.
"Takeover Laws" has the meaning set forth in Section 5.03 (o).
"Tax" and "Taxes" means all federal, state, local or foreign taxes,
charges, fees, levies or other assessments, however denominated, including,
without limitation, all net income, gross income, gains, gross receipts, sales,
use, ad valorem, goods and services, capital, production, transfer, franchise,
windfall profits, license, withholding, payroll, employment, disability,
employer health, excise, estimated, severance, stamp, occupation, property,
environmental, unemployment or other taxes, custom duties, fees, assessments or
charges of any kind whatsoever, together with any interest and any penalties,
additions to tax or additional amounts imposed by any taxing authority whether
arising before, on or after the Effective Date.
"Tax Returns" means any return, amended return or other report
(including elections, declarations, disclosures, schedules, estimates and
information returns) required to be filed with respect to any Tax.
"Treasury Stock" shall mean shares of FWB Stock held by FWB or any
of its Subsidiaries or by SFG or any of its Subsidiaries, in each case other
than in a fiduciary capacity or as a result of debts previously contracted in
good faith.
ARTICLE II
THE MERGER
2.01 THE PARENT MERGER. At the Effective Time, FWB shall merge with and
into SFG (the "Parent Merger"), the separate corporate existence of FWB shall
cease and SFG shall survive and continue to exist as an Ohio corporation (SFG,
as the surviving corporation in the Parent Merger, sometimes being referred to
herein as the "Surviving Corporation"). SFG may at any time prior to the
Effective Time change the method of effecting the Merger (including, without
limitation, the provisions of this Article II) if and to the extent it deems
such change to be necessary, appropriate or desirable; provided, however, that
no such change shall (i) alter or change the amount or kind of consideration to
be issued to holders of FWB Stock as provided for in this Agreement (the "Merger
Consideration"), (ii) adversely affect the tax treatment of FWB's stockholders
as a result of receiving the Merger Consideration or the Merger qualifying for
"pooling-of-interests" accounting treatment or (iii) materially impede or delay
consummation of the transactions contemplated by this Agreement.
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2.02 THE SUBSIDIARY MERGER. At the time specified by CBC in its
certificate of merger filed with the OSS (which shall not be earlier than the
Effective Time), Bank shall merge with and into CBC (the "Subsidiary Merger")
pursuant to an agreement to merge (the "Agreement to Merge") to be executed by
Bank and CBC and filed with the OSS, the OCC and the PBD, as required. Upon
consummation of the Subsidiary Merger, the separate corporate existence of Bank
shall cease and CBC shall survive and continue to exist as a state banking
corporation (CBC, as the resulting bank in the Subsidiary Merger, sometimes
being referred to herein as the "Resulting Bank"). (The Parent Merger and the
Subsidiary Merger shall sometimes collectively be referred to as the "Merger".)
2.03 EFFECTIVENESS OF PARENT MERGER. Subject to the satisfaction or
waiver of the conditions set forth in Article VII, the Parent Merger shall
become effective upon the occurrence of the filing in the office of the OSS of a
certificate of merger and in the office of the DSCP of articles of merger in
accordance with Section 1701.81 of the OGCL and Section 1928 of the PBCL,
respectively, or such later date and time as may be set forth in such filings.
The Parent Merger shall have the effects prescribed in the OGCL.
2.04 EFFECTIVE DATE AND EFFECTIVE TIME. Effective Date and Effective Time
. Subject to the satisfaction or waiver of the conditions set forth in Article
VII, the parties shall cause the effective date of the Parent Merger (the
"Effective Date") to occur on (i) the third business day to occur after the last
of the conditions set forth in Article VII shall have been satisfied or waived
in accordance with the terms of this Agreement (or, at the election of SFG, on
the last business day of the month in which such third business day occurs or,
if such third business day occurs within the last three business days of such
month, on the last business day of the succeeding month; provided, no such
election shall cause the Effective Date to fall after the date specified in
Section 8.01(c) hereof or after the date or dates on which any Regulatory
Authority approval or any extension thereof expires, or (ii) such other date to
which the parties may agree in writing. The time on the Effective Date when the
Parent Merger shall become effective is referred to as the "Effective Time."
ARTICLE III
CONSIDERATION; EXCHANGE PROCEDURES
3.01 MERGER CONSIDERATION. Subject to the provisions of this Agreement,
at the Effective Time, automatically by virtue of the Parent Merger and without
any action on the part of any Person:
(a) OUTSTANDING FWB COMMON STOCK AND FWB RIGHTS. Each share,
excluding Treasury Stock and Dissenting Shares, of FWB
8
Common Stock issued and outstanding immediately prior to the Effective Time
shall become and be converted into 1.211 shares of SFG Common Stock (the
"Exchange Ratio"). The Exchange Ratio shall be subject to adjustment as set
forth in Section 3.05. One preferred share purchase right issuable pursuant to
the Shareholder Rights Agreement dated as of July 21, 1998 between SFG and The
Citizens Banking Company or any other purchase right issued in substitution
thereof (the "SFG Rights") shall be issued together with and shall attach to
each share of SFG Common Stock issued pursuant to this Section 3.01(a).
(b) TREASURY SHARES. Each share of FWB Common Stock held as Treasury
Stock immediately prior to the Effective Time shall be canceled and retired at
the Effective Time and no consideration shall be issued in exchange therefor.
(c) OUTSTANDING SFG STOCK. Each share of SFG Common Stock issued and
outstanding immediately prior to the Effective Time shall remain issued and
outstanding and unaffected by the Parent Merger.
3.02 RIGHTS AS STOCKHOLDERS; STOCK TRANSFERS. At the Effective Time,
holders of FWB Common Stock shall cease to be, and shall have no rights as,
stockholders of FWB, other than to receive any dividend or other distribution
with respect to such FWB Common Stock with a record date occurring prior to the
Effective Time and the consideration provided under this Article III, and
appraisal rights in the case of Dissenting Shares. After the Effective Time,
there shall be no transfers on the stock transfer books of FWB or the Surviving
Corporation of any shares of FWB Stock.
3.03 FRACTIONAL SHARES. Notwithstanding any other provision hereof, no
fractional shares of SFG Common Stock and no certificates or scrip therefor, or
other evidence of ownership thereof, will be issued in the Parent Merger;
instead, SFG shall pay to each holder of FWB Common Stock who would otherwise be
entitled to a fractional share of SFG Common Stock (after taking into account
all Old Certificates delivered by such holder) an amount in cash (without
interest) determined by multiplying such fractional share of SFG Common Stock to
which the holder would be entitled by the last sale price of SFG Common Stock,
as reported by the NASDAQ (as reported in The Wall Street Journal or, if not
reported therein, in another authoritative source), for the NASDAQ trading day
immediately preceding the Effective Date.
3.04 EXCHANGE PROCEDURES.
(a) At or prior to the Effective Time, SFG shall deposit, or shall
cause to be deposited, with Bank of New York (in such capacity, the "Exchange
Agent"), for the benefit of the holders of certificates formerly representing
shares of FWB Common Stock ("Old Certificates"), for exchange in accordance with
this Article III, certificates representing the shares of
9
SFG Common Stock ("New Certificates") and an estimated amount of cash (such cash
and New Certificates, together with any dividends or distributions with a record
date occurring on or after the Effective Date with respect thereto (without any
interest on any such cash, dividends or distributions), being hereinafter
referred to as the "Exchange Fund") to be paid pursuant to this Article III in
exchange for outstanding shares of FWB Common Stock.
(b) As promptly as practicable after the Effective Date, SFG shall
send or cause to be sent to each former holder of record of shares of FWB Common
Stock immediately prior to the Effective Time transmittal materials for use in
exchanging such stockholder's Old Certificates for the consideration set forth
in this Article III. SFG shall cause the New Certificates into which shares of a
stockholder's FWB Common Stock are converted on the Effective Date and/or any
check in respect of any fractional share interests or dividends or distributions
which such person shall be entitled to receive to be delivered to such
stockholder upon delivery to the Exchange Agent of Old Certificates representing
such shares of FWB Common Stock (or an indemnity affidavit reasonably
satisfactory to SFG and the Exchange Agent, if any of such certificates are
lost, stolen or destroyed) owned by such stockholder. No interest will be paid
on any such cash to be paid in lieu of fractional share interests or in respect
of dividends or distributions which any such person shall be entitled to receive
pursuant to this Article III upon such delivery.
(c) Notwithstanding the foregoing, neither the Exchange Agent, if
any, nor any party hereto shall be liable to any former holder of FWB Stock for
any amount properly delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.
(d) No dividends or other distributions with respect to SFG Common
Stock with a record date occurring on or after the Effective Date shall be paid
to the holder of any unsurrendered Old Certificate representing shares of FWB
Common Stock converted in the Parent Merger into the right to receive shares of
such SFG Common Stock until the holder thereof shall be entitled to receive New
Certificates in exchange therefor in accordance with the procedures set forth in
this Section 3.04. After becoming so entitled in accordance with this Section
3.04, the record holder thereof also shall be entitled to receive any such
dividends or other distributions, without any interest thereon, which theretofor
had become payable with respect to shares of SFG Common Stock such holder had
the right to receive upon surrender of the Old Certificates.
(e) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of FWB for six months after the Effective Time shall be paid to
SFG. Any stockholders of FWB who have not theretofor complied with this Article
III shall
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thereafter look only to SFG for payment of the shares of SFG Common Stock, cash
in lieu of any fractional shares and unpaid dividends and distributions on SFG
Common Stock deliverable in respect of each share of FWB Common Stock such
stockholder holds as determined pursuant to this Agreement, in each case,
without any interest thereon.
3.05 ANTI-DILUTION PROVISIONS. In the event SFG changes (or establishes a
record date for changing) the number of shares of SFG Common Stock issued and
outstanding between the date hereof and the Effective Date as a result of a
stock split, stock dividend, recapitalization, reclassification, split up,
combination, exchange of shares, readjustment or similar transaction with
respect to the outstanding SFG Common Stock and the record date therefor shall
be prior to the Effective Date, the Exchange Ratio shall be proportionately
adjusted.
3.06 OPTIONS.
(a) At the Effective Time, each outstanding option to purchase
shares of FWB Common Stock under the FWB Stock Plans (each, a "FWB Stock
Option"), whether vested or unvested, shall be converted into an option to
acquire, on the same terms and conditions as were applicable under such FWB
Stock Option, the number of shares of SFG Common Stock equal to (i) the number
of shares of FWB Common Stock subject to the FWB Stock Option, multiplied by
(ii) the Exchange Ratio (such product rounded to the nearest whole number) (a
"Replacement Option"), at an exercise price per share (rounded to the nearest
whole cent) equal to (y) the aggregate exercise price for the shares of FWB
Common Stock which were purchasable pursuant to such FWB Stock Option divided by
(z) the number of full shares of SFG Common Stock subject to such Replacement
Option in accordance with the foregoing. Notwithstanding the foregoing, each FWB
Stock Option which is intended to be an "incentive stock option" (as defined in
Section 422 of the Code) shall be adjusted in accordance with the requirements
of Section 424 of the Code. At or prior to the Effective Time, FWB shall use its
best efforts, including using its best efforts to obtain any necessary consents
from optionees, with respect to the FWB Stock Plans to permit the replacement of
the outstanding FWB Stock Options by SFG pursuant to this Section and to permit
SFG to assume the FWB Stock Plans. FWB shall further take all action necessary
to amend the FWB Stock Plans to eliminate automatic grants or awards thereunder
following the Effective Time. At the Effective Time, SFG shall assume the FWB
Stock Plans; provided, that such assumption shall be only in respect of the
Replacement Options and that SFG shall have no obligation with respect to any
awards under the FWB Stock Plans other than the Replacement Options and shall
have no obligation to make any additional grants or awards under such assumed
FWB Stock Plans.
(b) At all times after the Effective Time, SFG shall reserve for
issuance such number of shares of SFG Common Stock as
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necessary so as to permit the exercise of the Replacement Options in the manner
contemplated by this Agreement and the instruments pursuant to which the
corresponding FWB Stock Options were granted. SFG shall make all filings
required under federal and state securities laws no later than the Effective
Time so as to permit the exercise of such options and the sale of the shares
received by the optionee upon such exercise at and after the Effective Time and
SFG shall continue to make such filings thereafter as may be necessary to permit
the continued exercise of options and subsequent sale of such shares.
ARTICLE IV
ACTIONS PENDING ACQUISITION
4.01 FOREBEARANCES OF FWB. From the date hereof until the Effective Time,
except as expressly contemplated by this Agreement and/or disclosed on the
Disclosure Schedule, without the prior written consent of SFG, FWB will not, and
will cause each of its Subsidiaries not to:
(a) Ordinary Course. Conduct the business of FWB and its
Subsidiaries other than in the ordinary and usual course or fail to use
reasonable efforts to preserve intact their business organizations and assets
and maintain their rights, franchises and existing relations with customers,
suppliers, employees and business associates, or voluntarily take any action
which, at the time taken, is reasonably likely to have an adverse affect upon
FWB's ability to perform any of its material obligations under this Agreement.
(b) Capital Stock. Other than pursuant to Rights Previously
Disclosed and outstanding on the date hereof and options for up to 60,000 shares
of FWB Common Stock to be issuable under FWB's Stock Plans, (i) issue, sell or
otherwise permit to become outstanding, or authorize the creation of, any
additional shares of FWB Stock or any Rights, (ii) enter into any agreement with
respect to the foregoing, or (iii) permit any additional shares of FWB Stock to
become subject to new grants of employee or director stock options, other Rights
or similar stock-based employee rights.
(c) Dividends, Etc. (i) Make, declare, pay or set aside for payment
any dividend, other than (A) quarterly cash dividends on FWB Stock in an amount
not to exceed the per share amount declared and paid in its most recent
quarterly cash dividend, with record and payment dates as indicated in Section
6.15 hereof, and (B) dividends from wholly owned Subsidiaries to FWB, or (ii)
directly or indirectly adjust, split, combine, redeem, reclassify, purchase or
otherwise acquire, any shares of its capital stock.
(d) Compensation; Employment Agreements; Etc. Enter into or amend or
renew any employment, consulting, severance or
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similar agreements or arrangements with any director, officer or employee of FWB
or its Subsidiaries (other than the normal extension of the four existing change
of control agreements with senior management), or grant any salary or wage
increase or increase any employee benefit, (including incentive or bonus
payments) except (i) for normal individual increases in compensation to
employees in the ordinary course of business consistent with past practice, (ii)
for other changes that are required by applicable law, (iii) to satisfy
Previously Disclosed contractual obligations existing as of the date hereof, or
(iv) for grants of awards to newly hired employees consistent with past
practice. FWB shall have available, to facilitate retention of FWB employees, a
bonus pool of up to $1 million for key employees of FWB for use or commitment
prior to the Closing Date, it being understood and agreed that the designation
of such employees and the amount of the bonus payable to each of them shall be
subject to the prior reasonable approval of SFG.
(e) Benefit Plans. Enter into, establish, adopt or amend ((i) except
for a proposed amendment regarding early retirement under the existing defined
contribution plan which in any event will not materially increase FWB's funding
obligation thereunder, (ii) as may be required by applicable law, (iii) to
satisfy Previously Disclosed contractual obligations existing as of the date
hereof or (iv) the regular annual renewal of insurance contracts) any pension,
retirement, stock option, stock purchase, savings, profit sharing, deferred
compensation, consulting, bonus, group insurance or other employee benefit,
incentive or welfare contract, plan or arrangement, or any trust agreement (or
similar arrangement) related thereto, in respect of any director, officer or
employee of FWB or its Subsidiaries, or take any action to accelerate the
vesting or exercisability of stock options, restricted stock or other
compensation or benefits payable thereunder.
(f) Dispositions. Sell, transfer, mortgage, encumber or otherwise
dispose of or discontinue any of its assets, deposits, business or properties
except in the ordinary course of business.
(g) Acquisitions. Acquire (other than by way of foreclosures or
acquisitions of control in a bona fide fiduciary capacity or in satisfaction of
debts previously contracted in good faith, in each case in the ordinary and
usual course of business consistent with past practice) all or any portion of,
the assets, business, deposits or properties of any other entity.
(h) Governing Documents. Amend the FWB Articles, FWB By-Laws or the
articles of incorporation or by-laws (or similar governing documents) of any of
FWB's Subsidiaries, except for immaterial by-law amendments Previously Disclosed
to SFG.
13
(i) Accounting Methods. Implement or adopt any change in its
accounting principles, practices or methods, other than as may be required by
generally accepted accounting principles.
(j) Contracts. Except in the ordinary course of business consistent
with past practice, enter into or terminate any material contract (as defined in
Section 5.03(k)) or amend or modify in any material respect any of its existing
material contracts, except for a proposed contract with ▇▇▇▇▇▇▇▇ & Islay for
trust accounting services.
(k) Claims. Except in the ordinary course of business consistent
with past practice, settle any claim, action or proceeding, except for any
claim, action or proceeding which does not involve precedent for other material
claims, actions or proceedings and which involve solely money damages in an
amount, individually or in the aggregate for all such settlements, that is not
material to FWB and its Subsidiaries, taken as a whole.
(l) Adverse Actions. (a) Take any action while knowing that such
action would, or is reasonably likely to, prevent or impede the Merger from
qualifying (i) for "pooling-of-interests" accounting treatment or (ii) as a
reorganization within the meaning of Section 368(a) of the Code; or (b)
knowingly take any action that is intended or is reasonably likely to result in
(i) any of its representations and warranties set forth in this Agreement being
or becoming untrue in any material respect at any time at or prior to the
Effective Time, (ii) any of the conditions to the Merger set forth in Article
VII not being satisfied or (iii) a material violation of any provision of this
Agreement except, in each case, as may be required by applicable law or
regulation.
(m) Risk Management. Except pursuant to applicable law or
regulation, (i) implement or adopt any material change in its interest rate risk
management and other risk management policies, procedures or practices; (ii)
fail to follow its existing policies or practices with respect to managing its
exposure to interest rate and other risk; or (iii) fail to use commercially
reasonable means to avoid any material increase in its aggregate exposure to
interest rate risk.
(n) Indebtedness. Incur any indebtedness for borrowed money other
than in the ordinary course of business.
(o) Commitments. Agree or commit to do any of the foregoing.
4.02 FORBEARANCES OF SFG. From the date hereof until the Effective Time,
except as expressly contemplated by this Agreement, without the prior written
consent of FWB, SFG will not, and will cause each of its Subsidiaries not to:
14
(a) Ordinary Course. Conduct the business of SFG and its
Subsidiaries other than in the ordinary and usual course or fail to use
reasonable efforts to preserve intact their business organizations and assets
and maintain their rights, franchises and existing relations with customers,
suppliers, employees and business associates, or voluntarily take any action
which, at the time taken, is reasonably likely to have an adverse affect upon
SFG's ability to perform any of its material obligations under this Agreement.
(b) Preservation. Fail to use reasonable efforts to preserve intact
in any material respect their business organizations and assets and maintain
their rights, franchises and existing relations with customers, suppliers,
employees and business associates.
(c) Extraordinary Dividends. Make, declare, pay or set aside for
payment any dividend other than normal quarterly dividends in accordance with
past practice.
(d) Accounting Methods. Implement or adopt any change in its
accounting principles, practices or methods, other than as may be required by
generally accepted accounting principles.
(e) Claims. Except in the ordinary course of business consistent
with past practice, settle any claim, action or proceeding, except for any
claim, action or proceeding which does not involve precedent for other material
claims, actions or proceedings and which involve solely money damages in an
amount, individually or in the aggregate for all such settlements, that is not
material to SFG and its Subsidiaries, taken as a whole.
(f) Adverse Actions. (a) Take any action while knowing that such
action would, or is reasonably likely to, prevent or impede the Merger from
qualifying (i) for "pooling-of-interests" accounting treatment or (ii) as a
reorganization within the meaning of Section 368(a) of the Code; or (b)
knowingly take any action that is intended or is reasonably likely to result in
(i) any of its representations and warranties set forth in this Agreement being
or becoming untrue in any material respect at any time at or prior to the
Effective Time, (ii) any of the conditions to the Merger set forth in Article
VII not being satisfied or (iii) a material violation of any provision of this
Agreement except, in each case, as may be required by applicable law or
regulation; provided, however, that nothing contained herein shall limit the
ability of SFG to exercise its rights under the Stock Option Agreement.
(g) Risk Management. Except pursuant to applicable law or
regulation, (i) fail to follow its existing policies or practices with respect
to managing its exposure to interest rate and other risk, or (ii) fail to use
commercially reasonable means to avoid any material increase in its aggregate
exposure to interest rate risk.
15
(h) Commitments. Agree or commit to do any of the foregoing.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 DISCLOSURE SCHEDULES. On or prior to the date hereof, SFG has
delivered to FWB a schedule and FWB has delivered to SFG a schedule
(respectively, its "Disclosure Schedule") setting forth, among other things,
items, the disclosure of which are necessary or appropriate either in response
to an express disclosure requirement contained in a provision hereof or as an
exception to one or more representations or warranties contained in Section 5.03
or 5.04 or to one or more of its respective covenants contained in Article IV
and Article VI; provided, that (a) no such item is required to be set forth in a
Disclosure Schedule as an exception to a representation or warranty if its
absence would not be reasonably likely to result in the related representation
or warranty being deemed untrue or incorrect under the standard established by
Section 5.02, and (b) the mere inclusion of an item in a Disclosure Schedule as
an exception to a representation or warranty shall not be deemed an admission by
a party that such item represents a material exception or fact, event or
circumstance or that such item is reasonably likely to have or result in a
Material Adverse Effect on the party making the representation. FWB's
representations, warranties and covenants contained in this Agreement shall not
be deemed to be untrue, incorrect or to have been breached as a result of
effects on FWB arising solely from actions taken in compliance with a written
request of SFG.
5.02 STANDARD. No representation or warranty of FWB or SFG contained in
Section 5.03 or 5.04 shall be deemed untrue or incorrect, and no party hereto
shall be deemed to have breached a representation or warranty, as a consequence
of the existence of any fact, event or circumstance unless such fact,
circumstance or event, individually or taken together with all other facts,
events or circumstances inconsistent with any representation or warranty
contained in Section 5.03 or 5.04 has had, or is reasonably likely to have, a
Material Adverse Effect.
5.03 REPRESENTATIONS AND WARRANTIES OF FWB. Subject to Sections 5.01 and
5.02 and except as Previously Disclosed in a paragraph of its Disclosure
Schedule corresponding to the relevant paragraph below, FWB hereby represents
and warrants to SFG:
(a) ORGANIZATION, STANDING AND AUTHORITY. FWB is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania and any foreign jurisdictions where its ownership
or leasing of property or assets or the conduct of its business requires it to
be so
16
qualified. FWB is registered as a bank holding company under the BHCA. Bank is a
national banking association duly organized, validly existing and in good
standing under the laws of the United States of America. Bank is duly qualified
to do business and is in good standing in the Commonwealth of Pennsylvania and
any foreign jurisdictions where its ownership or leasing of property or assets
or the conduct of its business requires it to be so qualified.
(b) CAPITAL STRUCTURE OF FWB. As of November 30, 1998, the
authorized capital stock of FWB consisted solely of 20,000,000 shares of FWB
Common Stock, of which 11,863,813 shares were outstanding as of November 30,
1998 (of which 685,273 shares are held as Treasury Stock and 42,858 shares are
unallocated shares held in FWB's Employee Stock Ownership Plan ("ESOP")) and
4,000,000 shares of FWB Preferred Stock, of which none were outstanding as of
November 30, 1998. The outstanding shares of FWB Common Stock have been duly
authorized, are validly issued and outstanding, fully paid and nonassessable,
and are not subject to any preemptive rights (and were not issued in violation
of any preemptive rights). As of November 30, 1998, except as Previously
Disclosed in its Disclosure Schedule, (i) there were no shares of FWB Common
Stock authorized and reserved for issuance, (ii) FWB did not have any Rights
issued or outstanding with respect to FWB Common Stock, and (iii) FWB did not
have any commitment to authorize, issue or sell any FWB Common Stock or Rights,
except pursuant to this Agreement and the Stock Option Agreement. The number of
shares of FWB Common Stock which were issuable and reserved for issuance upon
exercise of FWB Stock Options as of November 30, 1998 were Previously Disclosed
in FWB's Disclosure Schedule.
(c) SUBSIDIARIES.
(i) (A) FWB has Previously Disclosed a list of all of its
Subsidiaries together with the jurisdiction of organization of each such
Subsidiary, (B) except as Previously Disclosed, it owns, directly or indirectly,
all the issued and outstanding equity securities of each of its Subsidiaries,
(C) except as Previously Disclosed, no equity securities of any of its
Subsidiaries are or may become required to be issued (other than to it or its
wholly-owned Subsidiaries) by reason of any Right or otherwise, (D) except as
Previously Disclosed, there are no contracts, commitments, understandings or
arrangements by which any of such Subsidiaries is or may be bound to sell or
otherwise transfer any equity securities of any such Subsidiaries (other than to
it or its wholly-owned Subsidiaries), (E) except as Previously Disclosed, there
are no contracts, commitments, understandings, or arrangements relating to its
rights to vote or to dispose of such securities and (F) except as Previously
Disclosed, all the equity securities of each Subsidiary held by FWB or its
Subsidiaries are fully paid and nonassessable (except pursuant to 12 U.S.C.
Section 55) and are owned by FWB or its Subsidiaries free and clear of any
Liens.
17
(ii) FWB does not own beneficially, directly or indirectly,
any equity securities or similar interests of any Person, or any interest in a
partnership or joint venture of any kind, other than its Subsidiaries.
(iii) Each of FWB's Subsidiaries has been duly organized and
is validly existing in good standing under the laws of the jurisdiction of its
organization, and is duly qualified to do business and in good standing in the
jurisdictions where its ownership or leasing of property or the conduct of its
business requires it to be so qualified.
(d) CORPORATE POWER; AUTHORIZED AND EFFECTIVE AGREEMENT. Each of FWB
and its Subsidiaries has full corporate power and authority to carry on its
business as it is now being conducted and to own all its properties and assets;
FWB has the corporate power and authority to execute, deliver and perform its
obligations under this Agreement and the Stock Option Agreement; and Bank has
the corporate power and authority to consummate the Subsidiary Merger and the
Agreement to Merge in accordance with the terms of this Agreement.
(e) CORPORATE AUTHORITY. Subject to receipt of the requisite
adoption of this Agreement by the holders of a majority of the outstanding
shares of FWB Common Stock entitled to vote thereon (which is the only
stockholder vote required thereon), this Agreement, the Stock Option Agreement
and the transactions contemplated hereby and thereby have been authorized by all
necessary corporate action of FWB and the FWB Board prior to the date hereof.
The Agreement to Merge, when executed by Bank, shall have been approved by the
Board of Directors of Bank and by the FWB Board, as the sole stockholder of
Bank. This Agreement is a valid and legally binding obligation of FWB,
enforceable in accordance with its terms (except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and similar laws of general applicability relating to or
affecting creditors' rights or by general equity principles). The FWB Board has
received the written opinion of Sandler ▇'▇▇▇▇▇ & Partners, L.P. to the effect
that as of the date hereof the consideration to be received by the holders of
FWB Common Stock in the Parent Merger is fair to the holders of FWB Common Stock
from a financial point of view.
(f) REGULATORY FILINGS; NO DEFAULTS.
(i) No consents or approvals of, or filings or registrations
with, any Governmental Authority or with any third party are required to be made
or obtained by FWB or any of its Subsidiaries in connection with the execution,
delivery or performance by FWB of this Agreement or the Stock Option Agreement
or to consummate the Merger except for (A) filings of applications, notices and
the Agreement to Merge, as applicable, with federal and state banking
authorities, (B) filings with the
18
SEC and state securities authorities, and (C) the filing of the certificate of
merger with the OSS and the articles of merger with the DSCP pursuant to the
OGCL and the PBCL. As of the date hereof, FWB is not aware of any reason why the
approvals set forth in Section 7.01(b) will not be received without the
imposition of a condition, restriction or requirement of the type described in
Section 7.01(b).
(ii) Subject to receipt of the regulatory and stockholder
approvals referred to above and expiration of related regulatory waiting
periods, and required filings under federal and state securities laws, the
execution, delivery and performance of this Agreement and the Stock Option
Agreement and the consummation of the transactions contemplated hereby and
thereby do not and will not (A) constitute a breach or violation of, or a
default under, or give rise to any Lien, any acceleration of remedies or any
right of termination under, any law, rule or regulation or any judgment, decree,
order, governmental permit or license, or agreement, indenture or instrument of
FWB or of any of its Subsidiaries or to which FWB or any of its Subsidiaries or
properties is subject or bound, (B) constitute a breach or violation of, or a
default under, the FWB Articles or the FWB By-Laws, or (C) require any consent
or approval under any such law, rule, regulation, judgment, decree, order,
governmental permit or license, agreement, indenture or instrument.
(g) FINANCIAL REPORTS AND SEC DOCUMENTS; MATERIAL ADVERSE EFFECT.
(i) FWB's Annual Reports on Form 10-K for the fiscal years
ended December 31, 1995, 1996 and 1997 and all other reports, registration
statements, definitive proxy statements or information statements filed or to be
filed by it or any of its Subsidiaries subsequent to December 31, 1997 under the
Securities Act, or under Section 13, 14 or 15(d) of the Exchange Act, in the
form filed or to be filed (collectively, "FWB SEC Documents") with the SEC, as
of the date filed, (A) complied or will comply in all material respects with the
applicable requirements under the Securities Act or the Exchange Act, as the
case may be, and (B) did not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; and each of the balance sheets or
statements of condition contained in or incorporated by reference into any such
SEC Document (including the related notes and schedules thereto) fairly
presents, or will fairly present, the financial position of FWB and its
Subsidiaries as of its date, and each of the statements of income and changes in
stockholders' equity and cash flows or equivalent statements in such FWB SEC
Documents (including any related notes and schedules thereto) fairly presents,
or will fairly present, the results of operations, changes in stockholders'
equity and cash flows, as the case may
19
be, of FWB and its Subsidiaries for the periods to which they relate, in each
case in accordance with generally accepted accounting principles consistently
applied during the periods involved, except in each case as may be noted
therein, subject to normal year-end audit adjustments and the absence of
footnotes in the case of unaudited statements.
(ii) Since December 31, 1997, FWB and its Subsidiaries have
not incurred any material liability not disclosed in FWB's SEC Documents, other
than in the ordinary course of business consistent with past practice.
(iii) Since December 31, 1997, except as disclosed in the FWB
SEC Documents, (A) FWB and its Subsidiaries have conducted their respective
businesses in the ordinary and usual course consistent with past practice
(excluding matters related to this Agreement and the transactions contemplated
hereby) and (B) no event has occurred or circumstance arisen that, individually
or taken together with all other facts, circumstances and events (described in
any paragraph of Section 5.03 or otherwise), is reasonably likely to have a
Material Adverse Effect with respect to FWB.
(h) LITIGATION. No litigation, claim or other proceeding before any
court or governmental agency is pending against FWB or any of its Subsidiaries
and, to FWB's knowledge, no such litigation, claim or other proceeding has been
threatened.
(i) REGULATORY MATTERS.
(i) Neither FWB nor any of its Subsidiaries or properties is a
party to or is subject to any order, decree, agreement, memorandum of
understanding or similar arrangement with, or a commitment letter or similar
submission to, or extraordinary supervisory letter from, any federal or state
governmental agency or authority charged with the supervision or regulation of
financial institutions (or their holding companies) or issuers of securities or
engaged in the insurance of deposits (including, without limitation, the Office
of the Comptroller of the Currency, the Federal Reserve System and the FDIC) or
the supervision or regulation of it or any of its Subsidiaries (collectively,
the "Regulatory Authorities").
(ii) Neither it nor any of its Subsidiaries has been advised
by any Regulatory Authority that such Regulatory Authority is contemplating
issuing or requesting (or is considering the appropriateness of issuing or
requesting) any such order, decree, agreement, memorandum of understanding,
commitment letter, supervisory letter or similar submission.
(j) COMPLIANCE WITH LAWS. Each of FWB and its Subsidiaries:
20
(i) is in compliance with all applicable federal, state, local
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders or
decrees applicable thereto or to the employees conducting such businesses,
including, without limitation, the Equal Credit Opportunity Act, the Fair
Housing Act, the Community Reinvestment Act, the Home Mortgage Disclosure Act
and all other applicable fair lending laws and other laws relating to
discriminatory business practices;
(ii) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations with, all
Governmental Authorities that are required in order to permit them to own or
lease their properties and to conduct their businesses as presently conducted;
all such permits, licenses, certificates of authority, orders and approvals are
in full force and effect and, to FWB's knowledge, no suspension or cancellation
of any of them is threatened; and
(iii) has received, since December 31, 1997, no notification
or communication from any Governmental Authority (A) asserting that FWB or any
of its Subsidiaries is not in compliance with any of the statutes, regulations,
or ordinances which such Governmental Authority enforces or (B) threatening to
revoke any license, franchise, permit, or governmental authorization (nor, to
FWB's knowledge, do any grounds for any of the foregoing exist).
(k) MATERIAL CONTRACTS; DEFAULTS. Except for this Agreement, the
Stock Option Agreement, those agreements and other documents filed as exhibits
to the FWB SEC Documents, neither it nor any of its Subsidiaries is a party to,
bound by or subject to any agreement, contract, arrangement, commitment or
understanding (whether written or oral) (i) that is a "material contract" within
the meaning of Item 601(b)(10) of the SEC's Regulation S-K or (ii) that
restricts or limits in any way the conduct of business by it or any of its
Subsidiaries (including without limitation a non-compete or similar provision).
Neither it nor any of its Subsidiaries is in default under any contract,
agreement, commitment, arrangement, lease, insurance policy or other instrument
to which it is a party, by which its respective assets, business, or operations
may be bound or affected in any way, or under which it or its respective assets,
business, or operations receive benefits, and there has not occurred any event
that, with the lapse of time or the giving of notice or both, would constitute
such a default.
(l) NO BROKERS. No action has been taken by FWB that would give
rise to any valid claim against any party hereto for a brokerage commission,
finder's fee or other like payment with respect to the transactions contemplated
by this Agreement, except for a fee to be paid to Sandler ▇'▇▇▇▇▇ & Partners,
L.P.
21
(m) EMPLOYEE BENEFIT PLANS.
(i) Section 5.03(m)(i) of FWB's Disclosure Schedule contains a
complete and accurate list of all existing bonus, incentive, deferred
compensation, pension, retirement, profit-sharing, thrift, savings, employee
stock ownership, stock bonus, stock purchase, restricted stock, stock option,
severance, welfare and fringe benefit plans, employment or severance agreements
and all similar practices, policies and arrangements maintained or contributed
to by FWB or any of its Subsidiaries and in which any employee or former
employee (the "Employees"), consultant or former consultant (the "Consultants")
or director or former director (the "Directors") of FWB or any of its
Subsidiaries participates or to which any such Employees, Consultants or
Directors are a party (the "Compensation and Benefit Plans"). Neither FWB nor
any of its Subsidiaries has any commitment to create any additional Compensation
and Benefit Plan or to modify or change any existing Compensation and Benefit
Plan, except as otherwise contemplated by Section 4.01(e) of this Agreement.
(ii) Each Compensation and Benefit Plan has been operated and
administered in all material respects in accordance with its terms and with
applicable law, including, but not limited to, ERISA, the Code, the Securities
Act, the Exchange Act, the Age Discrimination in Employment Act, or any
regulations or rules promulgated thereunder, and all filings, disclosures and
notices required by ERISA, the Code, the Securities Act, the Exchange Act, the
Age Discrimination in Employment Act and any other applicable law have been
timely made. Each Compensation and Benefit Plan which is an "employee pension
benefit plan" within the meaning of Section 3(2) of ERISA (a "Pension Plan") and
which is intended to be qualified under Section 401(a) of the Code has received
a favorable determination letter (including a determination that the related
trust under such Compensation and Benefit Plan is exempt from tax under Section
501(a) of the Code) from the Internal Revenue Service ("IRS"), and FWB is not
aware of any circumstances likely to result in revocation of any such favorable
determination letter. There is no material pending or, to the knowledge of FWB,
threatened legal action, suit or claim relating to the Compensation and Benefit
Plans other than routine claims for benefits thereunder. Neither FWB nor any of
its Subsidiaries has engaged in a transaction, or omitted to take any action,
with respect to any Compensation and Benefit Plan that would reasonably be
expected to subject FWB or any of its Subsidiaries to a tax or penalty imposed
by either Section 4975 of the Code or Section 502 of ERISA, assuming for
purposes of Section 4975 of the Code that the taxable period of any such
transaction expired as of the date hereof.
(iii) No liability (other than for payment of premiums to the
PBGC which have been made or will be made on a timely basis) under Title IV of
ERISA has been or is expected to be incurred by FWB or any of its Subsidiaries
with respect to any
22
ongoing, frozen or terminated "single-employer plan," within the meaning of
Section 4001(a)(15) of ERISA, currently or formerly maintained by any of them,
or any single-employer plan of any entity (an "ERISA Affiliate") which is
considered one employer with FWB under Section 4001(a)(14) of ERISA or Section
414(b) or (c) of the Code (an "ERISA Affiliate Plan"). None of FWB, any of its
Subsidiaries or any ERISA Affiliate has contributed, or has been obligated to
contribute, to a multiemployer plan under Subtitle E of Title IV of ERISA at any
time since September 26, 1980. No notice of a "reportable event", within the
meaning of Section 4043 of ERISA for which the 30-day reporting requirement has
not been waived, has been required to be filed for any Compensation and Benefit
Plan or by any ERISA Affiliate Plan within the 12-month period ending on the
date hereof, and no such notice will be required to be filed as a result of the
transactions contemplated by this Agreement. The PBGC has not instituted
proceedings to terminate any Pension Plan or ERISA Affiliate Plan and, to FWB's
knowledge, no condition exists that presents a material risk that such
proceedings will be instituted. To the knowledge of FWB, there is no pending
investigation or enforcement action by the PBGC, the Department of Labor (the
"DOL") or IRS or any other governmental agency with respect to any Compensation
and Benefit Plan. Under each Pension Plan and ERISA Affiliate Plan, as of the
date of the most recent actuarial valuation performed prior to the date of this
Agreement, the actuarially determined present value of all "benefit
liabilities", within the meaning of Section 4001(a)(16) of ERISA (as determined
on the basis of the actuarial assumptions contained in such actuarial valuation
of such Pension Plan or ERISA Affiliate Plan), did not exceed the then current
value of the assets of such Pension Plan or ERISA Affiliate Plan and since such
date there has been neither an adverse change in the financial condition of such
Pension Plan or ERISA Affiliate Plan nor any amendment or other change to such
Pension Plan or ERISA Affiliate Plan that would increase the amount of benefits
thereunder which reasonably could be expected to change such result.
(iv) All contributions required to be made under the terms of
any Compensation and Benefit Plan or ERISA Affiliate Plan or any employee
benefit arrangements under any collective bargaining agreement to which FWB or
any of its Subsidiaries is a party have been timely made or have been reflected
on FWB's financial statements. Neither any Pension Plan nor any ERISA Affiliate
Plan has an "accumulated funding deficiency" (whether or not waived) within the
meaning of Section 412 of the Code or Section 302 of ERISA and all required
payments to the PBGC with respect to each Pension Plan or ERISA Affiliate Plan
have been made on or before their due dates. None of FWB, any of its
Subsidiaries or any ERISA Affiliate (x) has provided, or would reasonably be
expected to be required to provide, security to any Pension Plan or to any ERISA
Affiliate Plan pursuant to Section 401(a)(29) of the Code, and (y) has taken any
action, or omitted to take any action, that has resulted, or would reasonably be
23
expected to result, in the imposition of a lien under Section 412(n) of the Code
or pursuant to ERISA.
(v) Neither FWB nor any of its Subsidiaries has any
obligations to provide retiree health and life insurance or other retiree death
benefits under any Compensation and Benefit Plan, other than benefits mandated
by Section 4980B of the Code. There has been no communication to Employees by
FWB or any of its Subsidiaries that would reasonably be expected to promise or
guarantee such Employees retiree health or life insurance or other retiree death
benefits on a permanent basis.
(vi) FWB and its Subsidiaries do not maintain any Compensation
and Benefit Plans covering foreign Employees.
(vii) With respect to each Compensation and Benefit Plan, if
applicable, FWB has provided or made available to SFG, true and complete copies
of existing: (A) Compensation and Benefit Plan documents and amendments thereto;
(B) trust instruments and insurance contracts; (C) two most recent Forms 5500
filed with the IRS; (D) most recent actuarial report and financial statement;
(E) the most recent summary plan description; (F) forms filed with the PBGC
within the past year (other than for premium payments); (G) most recent
determination letter issued by the IRS; (H) any Form 5310 or Form 5330 filed
within the past year with the IRS; and (I) most recent nondiscrimination tests
performed under ERISA and the Code (including 401(k) and 401(m) tests).
(viii) Except as disclosed on Section 5.03(m)(viii) of FWB's
Disclosure Schedule, the consummation of the transactions contemplated by this
Agreement would not, directly or indirectly (including, without limitation, as a
result of any termination of employment prior to or following the Effective
Time) reasonably be expected to (A) entitle any Employee, Consultant or Director
to any payment (including severance pay or similar compensation) or any increase
in compensation, (B) result in the vesting or acceleration of any benefits under
any Compensation and Benefit Plan or (C) result in any material increase in
benefits payable under any Compensation and Benefit Plan.
(ix) Except as disclosed on Section 5.03(m)(ix) of FWB's
Disclosure Schedule, neither FWB nor any of its Subsidiaries maintains any
compensation plans, programs or arrangements the payments under which would not
reasonably be expected to be deductible as a result of the limitations under
Section 162(m) of the Code and the regulations issued thereunder.
(x) Except as disclosed on Section 5.03(m)(x) of FWB's
Disclosure Schedule, as a result, directly or indirectly, of the transactions
contemplated by this Agreement (including, without limitation, as a result of
any termination of employment prior to or following the Effective Time), none of
SFG, FWB or
24
the Surviving Corporation, or any of their respective Subsidiaries will be
obligated to make a payment that would be characterized as an "excess parachute
payment" to an individual who is a "disqualified individual" (as such terms are
defined in Section 280G of the Code) of FWB on a consolidated basis, without
regard to whether such payment is reasonable compensation for personal services
performed or to be performed in the future.
(n) LABOR MATTERS. Neither FWB nor any of its Subsidiaries is a
party to or is bound by any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization, nor is FWB
or any of its Subsidiaries the subject of a proceeding asserting that it or any
such Subsidiary has committed an unfair labor practice (within the meaning of
the National Labor Relations Act) or seeking to compel FWB or any such
Subsidiary to bargain with any labor organization as to wages or conditions of
employment, nor is there any strike or other labor dispute involving it or any
of its Subsidiaries pending or, to FWB's knowledge, threatened, nor is FWB aware
of any activity involving its or any of its Subsidiaries' employees seeking to
certify a collective bargaining unit or engaging in other organizational
activity.
(o) TAKEOVER LAWS. FWB has taken all action required to be taken by
it in order to exempt this Agreement, the Stock Option Agreement and the
transactions contemplated hereby and thereby from, and this Agreement, the Stock
Option Agreement and the transactions contemplated hereby and thereby are exempt
from, the requirements of any "moratorium", "control share", "fair price",
"affiliate transaction", "business combination" or other antitakeover laws and
regulations of any state (collectively, "Takeover Laws") applicable to it,
including, without limitation, the Commonwealth of Pennsylvania, and including,
without limitation, Subchapters D (Section 2538), E, F, G, H, I and J of Chapter
25 of the PBCL.
(p) ENVIRONMENTAL MATTERS. To FWB's knowledge, neither the conduct
nor operation of FWB or its Subsidiaries nor any condition of any property
presently or previously owned, leased or operated by any of them (including,
without limitation, in a fiduciary or agency capacity), or on which any of them
holds a Lien, violates or violated Environmental Laws and to FWB's knowledge, no
condition has existed or event has occurred with respect to any of them or any
such property that, with notice or the passage of time, or both, is reasonably
likely to result in liability under Environmental Laws. To FWB's knowledge,
neither FWB nor any of its Subsidiaries has received any notice from any person
or entity that FWB or its Subsidiaries or the operation or condition of any
property ever owned, leased, operated, or held as collateral or in a fiduciary
capacity by any of them are or were in violation of or otherwise are alleged to
have liability under any Environmental Law, including, but not limited to,
responsibility (or potential responsibility) for the cleanup or
25
other remediation of any pollutants, contaminants, or hazardous or toxic wastes,
substances or materials at, on, beneath, or originating from any such property.
(q) TAX MATTERS.
(i) All Tax Returns that are required to be filed by or with
respect to FWB and its Subsidiaries have been duly filed, (ii) all Taxes shown
to be due on the Tax Returns referred to in clause (i) have been paid in full,
(iii) the Tax Returns referred to in clause (i) have been examined by the
Internal Revenue Service or the appropriate state, local or foreign taxing
authority or the period for assessment of the Taxes in respect of which such Tax
Returns were required to be filed has expired, (iv) all deficiencies asserted or
assessments made as a result of such examinations have been paid in full, (v) no
issues that have been raised by the relevant taxing authority in connection with
the examination of any of the Tax Returns referred to in clause (i) are
currently pending, and (vi) no waivers of statutes of limitation have been given
by or requested with respect to any Taxes of FWB or its Subsidiaries. FWB has
made or will make available to SFG true and correct copies of the United States
federal income Tax Returns filed by FWB and its Subsidiaries for each of the
three most recent fiscal years ended on or before December 31, 1997. Neither FWB
nor any of its Subsidiaries has any liability with respect to income, franchise
or similar Taxes that accrued on or before the end of the most recent period
covered by FWB's SEC Documents filed prior to the date hereof in excess of the
amounts accrued with respect thereto that are reflected in the financial
statements included in FWB's SEC Documents filed on or prior to the date hereof.
As of the date hereof, neither FWB nor any of its Subsidiaries has any reason to
believe that any conditions exist that might prevent or impede the Parent Merger
from qualifying as a reorganization within the meaning of Section 368(a) of the
Code.
(ii) No Tax is required to be withheld pursuant to Section
1445 of the Code as a result of the transfer contemplated by this Agreement.
(iii) FWB and its Subsidiaries will not be liable for any
taxes as a result of any Covered Transaction.
(r) RISK MANAGEMENT INSTRUMENTS. All material interest rate swaps,
caps, floors, option agreements, futures and forward contracts and other similar
risk management arrangements, whether entered into for FWB's own account, or for
the account of one or more of FWB's Subsidiaries or their customers (all of
which are listed on FWB's Disclosure Schedule), were entered into (i) in
accordance with prudent business practices and all applicable laws, rules,
regulations and regulatory policies and (ii) with counterparties believed to be
financially responsible at the time; and each of them constitutes the valid and
legally binding obligation of FWB or one of its Subsidiaries, enforceable
26
in accordance with its terms (except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and similar laws of general applicability relating to or affecting
creditors' rights or by general equity principles), and is in full force and
effect. Neither FWB nor its Subsidiaries, nor to FWB's knowledge any other party
thereto, is in breach of any of its obligations under any such agreement or
arrangement.
(s) BOOKS AND RECORDS. The books and records of FWB and its
Subsidiaries have been fully, properly and accurately maintained in all material
respects, have been maintained in accordance with sound business practices and
the requirements of Section 13(b)(2) of the Securities Exchange Act of 1934, as
amended, and there are no material inaccuracies or discrepancies of any kind
contained or reflected therein and they fairly reflect the substance of events
and transactions included therein.
(t) INSURANCE. FWB's Disclosure Schedule sets forth all of the
insurance policies, binders, or bonds maintained by FWB or its Subsidiaries. FWB
and its Subsidiaries are insured with reputable insurers against such risks and
in such amounts as the management of FWB reasonably has determined to be prudent
in accordance with industry practices. All such insurance policies are in full
force and effect; FWB and its Subsidiaries are not in material default
thereunder; and all claims thereunder have been filed in due and timely fashion.
(u) ACCOUNTING TREATMENT. As of the date hereof, it is aware of no
reason why the Merger will fail to qualify for "pooling-of-interests" accounting
treatment.
(v) DISCLOSURE. The representations and warranties contained in this
Section 5.03 do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained in this Section 5.03 not misleading.
(w) YEAR 2000. Neither FWB nor any of its Subsidiaries has received,
or has reason to believe that it will receive, a rating of less than
"satisfactory" on any Office of the Comptroller of the Currency or other
Regulatory Authority Year 2000 Report of Examination. FWB has disclosed to SFG a
complete and accurate copy of its plan, including an estimate of the anticipated
associated costs, for addressing the issues set forth in the statements of the
FFIEC dated May 5, 1997, entitled "Year 2000 Project Management Awareness," and
December 17, 1997, entitled "Safety and Soundness Guidelines Concerning the Year
2000 Business Risk," as such issues affect it and its Subsidiaries and such plan
is in material compliance with the schedule set for in the FFIEC statements.
27
(x) MATERIAL ADVERSE CHANGE. FWB has not, on a consolidated basis,
suffered a change in its business, financial condition or results of operations
since December 31, 1997, except as disclosed in the FWB SEC Documents, that has
had a Material Adverse Effect on FWB.
(y) ABSENCE OF UNDISCLOSED LIABILITIES. Neither FWB nor any of its
Subsidiaries has any liability (contingent or otherwise) that is material to FWB
on a consolidated basis, or that, when combined with all liabilities as to
similar matters would be material to FWB on a consolidated basis, except as
disclosed in the FWB Financial Statements.
(z) PROPERTIES. FWB and its Subsidiaries have good and marketable
title, free and clear of all liens, encumbrances, charges, defaults or equitable
interests to all of the properties and assets, real and personal, reflected on
the FWB Financial Statements as being owned by FWB as of December 31, 1997 or
acquired after such date, except (i) statutory liens for amounts not yet due and
payable, (ii) pledges to secure deposits and other liens incurred in the
ordinary course of banking business, (iii) such imperfections of title,
easements, encumbrances, liens, charges, defaults or equitable interests, if
any, as do not affect the use of properties or assets subject thereto or
affected thereby or otherwise materially impair business operations at such
properties, (iv) dispositions and encumbrances in the ordinary course of
business, and (v) liens on properties acquired in foreclosure or on account of
debts previously contracted. All leases pursuant to which FWB or any of its
Subsidiaries, as lessee, leases real or personal property (except for leases
that have expired by their terms or that FWB or any such Subsidiary has agreed
to terminate since the date hereof) are valid without default thereunder by the
lessee or, to FWB's knowledge, the lessor.
(aa) LOANS. Each loan reflected as an asset in the FWB financial
statements as of December 31, 1997 and each balance sheet date subsequent
thereto, other than loans the unpaid balance of which does not exceed $1 million
in the aggregate, (i) is evidenced by notes, agreements or other evidences of
indebtedness which are true, genuine and what they purport to be, (ii) to the
extent secured, has been secured by valid liens and security interest which have
been perfected, and (iii) is the legal, valid and binding obligation of the
obligor named therein, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent conveyance and other laws of general
applicability relating to or affecting creditors' rights and to general equity
principles. Except as Previously Disclosed, as of December 31, 1997, Bank is not
a party to a loan, including any loan guaranty, with any director, executive
officer or 5% shareholder of FWB or any of its Subsidiaries or any person,
corporation or enterprise controlling, controlled by or under common control
with any of the foregoing. All loans and extensions of credit that have been
made by Bank and that are
28
subject either to Section 22(b) of the Federal Reserve Act, as amended, or to 12
C.F.R. sec. 563.43, comply therewith.
(bb) ALLOWANCE FOR LOAN LOSSES. The allowance for loan losses
reflected on the FWB Financial Statements, as of their respective dates, is
adequate in all material respects under the requirements of generally accepted
accounting principles to provide for reasonably anticipated losses on
outstanding loans.
(cc) REPURCHASE AGREEMENTS. With respect to all agreements pursuant
to which FWB or any of its Subsidiaries has purchased securities subject to an
agreement to resell, if any, FWB or such Subsidiary, as the case may be, has a
valid, perfected first lien or security interest in or evidence of ownership in
book entry form of the government securities or other collateral securing the
repurchase agreement, and the value of such collateral equals or exceeds the
amount of the debt secured thereby.
(dd) DEPOSIT INSURANCE. The deposits of Bank are insured by the FDIC
in accordance with The Federal Deposit Insurance Act ("FDIA"), and Bank has paid
all assessments and filed all reports required by the FDIA.
5.04 REPRESENTATIONS AND WARRANTIES OF SFG. Subject to Sections 5.01 and
5.02 and except as Previously Disclosed in a paragraph of its Disclosure
Schedule corresponding to the relevant paragraph below, SFG hereby represents
and warrants to FWB as follows :
(a) ORGANIZATION, STANDING AND AUTHORITY. SFG is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Ohio. SFG is duly qualified to do business and is in good standing in the State
of Ohio and any foreign jurisdictions where its ownership or leasing of property
or assets or the conduct of its business requires it to be so qualified. SFG is
registered as a bank holding company under the BHCA. CBC is a state banking
association duly organized, validly existing and in good standing under the laws
of the State of Ohio. CBC is duly qualified to do business and is in good
standing in the State of Ohio and any foreign jurisdictions where its ownership
or leasing of property or assets or the conduct of its business requires it to
be so qualified.
(b) SFG STOCK.
(i) As of November 30, 1998, the authorized capital stock of
SFG consists of 160,000,000 shares, of which 150,000,000 shares are SFG Common
Stock, of which 45,095,083 shares were outstanding as of November 30, 1998, and
10,000,000 shares are SFG serial preferred stock, par value $10.00 per share, of
which no shares are outstanding as of November 30, 1998. As of November 30,
1998, except as set forth in its Disclosure Schedule, SFG does not have any
Rights issued or
29
outstanding with respect to SFG Common Stock and SFG does not have any
commitment to authorize, issue or sell any SFG Common Stock or Rights, except
pursuant to this Agreement. The outstanding shares of SFG Common Stock have been
duly authorized and are validly issued and outstanding, fully paid and
nonassessable, and subject to no preemptive rights (and were not issued in
violation of any preemptive rights).
(ii) The shares of SFG Common Stock to be issued in exchange
for shares of FWB Common Stock in the Parent Merger, when issued in accordance
with the terms of this Agreement, will be duly authorized, validly issued, fully
paid and nonassessable and subject to no preemptive rights.
(c) SUBSIDIARIES. SFG has Previously Disclosed a list of all its
Subsidiaries together with the jurisdiction or organization of each Subsidiary.
Each of SFG's Subsidiaries has been duly organized and is validly existing in
good standing under the laws of the jurisdiction of its organization, and is
duly qualified to do business and is in good standing in the jurisdictions where
its ownership or leasing of property or the conduct of its business requires it
to be so qualified and it owns, directly or indirectly, all the issued and
outstanding equity securities of each of its Significant Subsidiaries.
(d) CORPORATE POWER. Each of SFG and its Subsidiaries has the
corporate power and authority to carry on its business as it is now being
conducted and to own all its properties and assets; and SFG has the corporate
power and authority to execute, deliver and perform its obligations under this
Agreement and the Stock Option Agreement and to consummate the transactions
contemplated hereby and thereby.
(e) CORPORATE AUTHORITY; AUTHORIZED AND EFFECTIVE AGREEMENT. Subject
in the case of this Agreement to receipt of the requisite adoption of this
Agreement (including the Parent Plan of Merger) by the holders of a majority of
the outstanding shares of SFG Common Stock entitled to vote thereon, this
Agreement, the Stock Option Agreement and the transactions contemplated hereby
and thereby have been authorized by all necessary corporate action of SFG and
the SFG Board prior to the date hereof and no stockholder approval is required
on the part of SFG. The Agreement to Merge, when executed by CBC, shall have
been approved by the Board of Directors of CBC and by the SFG Board, as the sole
stockholder of CBC. This Agreement is a valid and legally binding agreement of
SFG, enforceable in accordance with its terms (except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and similar laws of general applicability relating to or
affecting creditors rights or by general equity principles).
30
(f) REGULATORY APPROVALS; NO DEFAULTS.
(i) No consents or approvals of, or filings or registrations
with, any Governmental Authority or with any third party are required to be made
or obtained by SFG or any of its Subsidiaries in connection with the execution,
delivery or performance by SFG of this Agreement or to consummate the Merger
except for (A) the filing of applications, notices, or the Agreement to Merge,
as applicable, with the federal and state banking authorities; (B) the filing
and declaration of effectiveness of the Registration Statement; (C) the filing
of the certificate of merger with the OSS and the PSS pursuant to the OGCL and
the PBCL; (D) such filings as are required to be made or approvals as are
required to be obtained under the securities or "Blue Sky" laws of various
states in connection with the issuance of SFG Common Stock in the Parent Merger;
and (E) receipt of the approvals set forth in Section 7.01(b). As of the date
hereof, SFG is not aware of any reason why the approvals set forth in Section
7.01(b) will not be received without the imposition of a condition, restriction
or requirement of the type described in Section 7.01(b).
(ii) Subject to the satisfaction of the requirements referred
to in the preceding paragraph and expiration of the related waiting periods, and
required filings under federal and state securities laws, the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby do not and will not (A) constitute a breach or
violation of, or a default under, or give rise to any Lien, any acceleration of
remedies or any right of termination under, any law, rule or regulation or any
judgment, decree, order, governmental permit or license, or agreement, indenture
or instrument of SFG or of any of its Subsidiaries or to which SFG or any of its
Subsidiaries or properties is subject or bound, (B) constitute a breach or
violation of, or a default under, the articles of incorporation or Code of
Regulations (or similar governing documents) of SFG or any of its Subsidiaries,
or (C) require any consent or approval under any such law, rule, regulation,
judgment, decree, order, governmental permit or license, agreement, indenture or
instrument.
(g) FINANCIAL REPORTS AND SEC DOCUMENTS; MATERIAL ADVERSE EFFECT.
(i) SFG's supplemental consolidated financial statements as of
December 31, 1997 and 1996 and for each of the three years in the period ended
December 31, 1997, as filed with the SEC on SFG's Current Report on Form 8-K
dated October 15, 1998 (which include the financial statements of Mid Am, Inc.,
Citizens Bancshares, Inc., Century Financial Corporation and Unibank), copies of
which have been delivered to FWB, and all other reports, registration
statements, definitive proxy statements or other statements filed or to be filed
by it or any of its Subsidiaries with the SEC subsequent to December 31, 1997
31
under the Securities Act, or under Section 13, 14 or 15(d) of the Exchange Act,
in the form filed or to be filed (collectively, "SFG SEC Documents") as of the
date filed, (A) complied or will comply in all material respects with the
applicable requirements under the Securities Act or the Exchange Act, as the
case may be, and (B) did not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; and each of the balance sheets or
statements of condition contained in or incorporated by reference into any such
SFG SEC Document (including the related notes and schedules thereto) fairly
presents, or will fairly present, the financial position of SFG and its
Subsidiaries as of its date, and each of the statements of income or results of
operations and changes in stockholders' equity and cash flows or equivalent
statements in such SFG SEC Documents (including any related notes and schedules
thereto) fairly presents, or will fairly present, the results of operations,
changes in shareholders' equity and cash flows, as the case may be, of SFG and
its Subsidiaries for the periods to which they relate, in each case in
accordance with generally accepted accounting principles consistently applied
during the periods involved, except in each case as may be noted therein,
subject to normal year-end audit adjustments in the case of unaudited
statements.
(ii) The Ohio Bank and the Unibank financial statements as of
December 31, 1997 and 1996 and for each of the three years in the period ended
December 31, 1997, copies of which have been delivered to FWB, (A) complied or
will comply in all material respects with generally accepted accounting
principles, and (B) did not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(iii) Each of Mid Am Inc.'s ("Mid Am") and Citizens
Bancshares, Inc.'s ("Citizens") Annual Reports on Form 10-K for the fiscal years
ended December 31, 1995, 1996 and 1997 and all other reports, registration
statements, definitive proxy statements or information statements filed or to be
filed by either of them or any of their respective Subsidiaries subsequent to
December 31, 1997 under the Securities Act, or under Section 13, 14 or 15(d) of
the Exchange Act, in the form filed or to be filed (collectively, "the Mid
Am/Citizens SEC Documents") with the SEC, as of the date filed, (A) complied or
will comply in all material respects with the applicable requirements under the
Securities Act or the Exchange Act, as the case may be, and (B) did not and will
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading; and
each of the balance sheets or statements of condition contained
32
in or incorporated by reference into any such SEC Document (including the
related notes and schedules thereto) fairly presents, or will fairly present,
the financial position of each of Mid Am and Citizens, respectively, and their
respective Subsidiaries as of its date, and each of the statements of income and
changes in stockholders' equity and cash flows or equivalent statements in such
Mid Am/Citizens SEC Documents (including any Mid Am/Citizens related notes and
schedules thereto) fairly presents, or will fairly present, the results of
operations, changes in stockholders' equity and cash flows, as the case may be,
of each of Mid Am and Citizens, respectively, and their respective Subsidiaries
for the periods to which they relate, in each case in accordance with generally
accepted accounting principles consistently applied during the periods involved,
except in each case as may be noted therein, subject to normal year-end audit
adjustments and the absence of footnotes in the case of unaudited statements.
(iv) To SFG's knowledge (without any independent
investigation), Century Financial Corporation's Annual Reports on Form 10-K for
the fiscal years ended December 31, 1995, 1996 and 1997 and all other reports,
registration statements, definitive proxy statements or information statements
filed or to be filed by it or any of its Subsidiaries subsequent to December 31,
1997 under the Securities Act, or under Section 13, 14 or 15(d) of the Exchange
Act, in the form filed or to be filed (collectively, "Century SEC Documents")
with the SEC, as of the date filed, (A) complied or will comply in all material
respects with the applicable requirements under the Securities Act or the
Exchange Act, as the case may be, and (B) did not and will not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and each of the
balance sheets or statements of condition contained in or incorporated by
reference into any such Century SEC Document (including the related notes and
schedules thereto) fairly presents, or will fairly present, the financial
position of Century and its Subsidiaries as of its date, and each of the
statements of income and changes in stockholders' equity and cash flows or
equivalent statements in such Century SEC Documents (including any related notes
and schedules thereto) fairly presents, or will fairly present, the results of
operations, changes in stockholders' equity and cash flows, as the case may be,
of Century and its Subsidiaries for the periods to which they relate, in each
case in accordance with generally accepted accounting principles consistently
applied during the periods involved, except in each case as may be noted
therein, subject to normal year-end audit adjustments and the absence of
footnotes in the case of unaudited statements.
(v) Since December 31, 1997, no event has occurred or
circumstance arisen that, individually or taken together with all other facts,
circumstances and events (described in any paragraph of Section 5.04 or
otherwise), is
33
reasonably likely to have a Material Adverse Effect with respect to SFG, except
as disclosed in the SFG, Mid Am/Bancshares and Century SEC Documents.
(h) LITIGATION; REGULATORY ACTION.
(i) No litigation, claim or other proceeding before any court
or governmental agency is pending against SFG or any of its Subsidiaries and, to
the best of SFG's knowledge, no such litigation, claim or other proceeding has
been threatened.
(ii) Neither SFG nor any of its Subsidiaries or properties is
a party to or is subject to any order, decree, agreement, memorandum of
understanding or similar arrangement with, or a commitment letter or similar
submission to, or extraordinary supervisory letter from a Regulatory Authority,
nor has SFG or any of its Subsidiaries been advised by a Regulatory Authority
that such agency is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree, agreement,
memorandum of understanding, commitment letter, supervisory letter or similar
submission.
(i) COMPLIANCE WITH LAWS. Each of SFG and its Subsidiaries:
(i) is in compliance with all applicable federal, state, local
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders or
decrees applicable thereto or to the employees conducting such businesses,
including, without limitation, the Equal Credit Opportunity Act, the Fair
Housing Act, the Community Reinvestment Act, the Home Mortgage Disclosure Act
and all other applicable fair lending laws and other laws relating to
discriminatory business practices; and
(ii) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations with, all
Governmental Authorities that are required in order to permit them to conduct
their businesses substantially as presently conducted; all such permits,
licenses, certificates of authority, orders and approvals are in full force and
effect and, to the best of its knowledge, no suspension or cancellation of any
of them is threatened; and
(iii) has received, since December 31, 1996, no notification
or communication from any Governmental Authority (A) asserting that SFG or any
of its Subsidiaries is not in compliance with any of the statutes, regulations,
or ordinances which such Governmental Authority enforces or (B) threatening to
revoke any license, franchise, permit, or governmental authorization (nor, to
SFG's knowledge, do any grounds for any of the foregoing exist).
(j) BROKERAGE AND FINDER'S FEES. Except for fees payable to its
financial advisor, ▇▇▇▇▇▇▇▇ Investments, Inc.
34
("▇▇▇▇▇▇▇▇"), SFG has not employed any broker, finder, or agent, or agreed to
pay or incurred any brokerage fee, finder's fee, commission or other similar
form of compensation in connection with this Agreement or the transactions
contemplated hereby.
(k) TAKEOVER LAWS. SFG has taken all action required to be taken by
it in order to exempt this Agreement, the Stock Option Agreement and the
transactions contemplated hereby and thereby from, and this Agreement, the Stock
Option Agreement and the transactions contemplated hereby and thereby are exempt
from, the requirements of any Takeover Laws applicable to SFG.
(l) ENVIRONMENTAL MATTERS. To SFG's knowledge, neither the conduct
nor operation of SFG or its Subsidiaries nor any condition of any property
presently or previously owned, leased or operated by any of them (including,
without limitation, in a fiduciary or agency capacity), or on which any of them
holds a Lien, violated Environmental Laws and to SFG's knowledge no condition
has existed or event has occurred with respect to any of them or any such
property that, with notice or the passage of time, or both, is reasonably likely
to result in liability under Environmental Laws. To SFG's knowledge, neither SFG
nor any of its Subsidiaries has received any notice from any person or entity
that SFG or its Subsidiaries or the operation or condition of any property ever
owned, leased, operated, or held as collateral or in a fiduciary capacity by any
of them are or were in violation of or otherwise are alleged to have liability
under any Environmental Law, including, but not limited to, responsibility (or
potential responsibility) for the cleanup or other remediation of any
pollutants, contaminants, or hazardous or toxic wastes, substances or materials
at, on, beneath, or originating from any such property.
(m) TAX MATTERS. (i) All Tax Returns that are required to be filed
by or with respect to SFG and its Subsidiaries have been duly filed, (ii) all
Taxes shown to be due on the Tax Returns referred to in clause (i) have been
paid in full, (iii) the Tax Returns referred to in clause (i) have been examined
by the Internal Revenue Service or the appropriate state, local or foreign
taxing authority or the period for assessment of the Taxes in respect of which
such Tax Returns were required to be filed has expired, (iv) all deficiencies
asserted or assessments made as a result of such examinations have been paid in
full, (v) no issues that have been raised by the relevant taxing authority in
connection with the examination of any of the Tax Returns referred to in clause
(i) are currently pending, and (vi) no waivers of statutes of limitation have
been given by or requested with respect to any Taxes of SFG or its Subsidiaries.
Neither SFG nor any of its Subsidiaries has any liability with respect to
income, franchise or similar Taxes that accrued on or before the end of the most
recent period covered by SFG's SEC Documents filed prior to the date hereof in
excess of the amounts accrued with respect thereto that are reflected in the
financial statements included in SFG's SEC Documents filed on or prior to
35
the date hereof. As of the date hereof, SFG has no reason to believe that any
conditions exist that might prevent or impede the Parent Merger from qualifying
as a reorganization with the meaning of Section 368(a) of the Code.
(n) BOOKS AND RECORDS. The books and records of SFG and its
Subsidiaries have been fully, properly and accurately maintained in all material
respects, have been maintained in accordance with sound business practices and
the requirements of Section 13(b)(2) of the Securities and Exchange Act of 1934,
as amended, and there are no material inaccuracies or discrepancies of any kind
contained or reflected therein, and they fairly present the substance of events
and transactions included therein.
(o) INSURANCE. SFG's Disclosure Schedule sets forth all of the
insurance policies, binders, or bonds maintained by SFG or its Subsidiaries. SFG
and its Subsidiaries are insured with reputable insurers against such risks and
in such amounts as the management of SFG reasonably has determined to be prudent
in accordance with industry practices. All such insurance policies are in full
force and effect; SFG and its Subsidiaries are not in material default
thereunder; and all claims thereunder have been filed in due and timely fashion.
(p) ACCOUNTING TREATMENT. As of the date hereof, SFG is aware of no
reason why the Merger will fail to qualify for "pooling-of-interests" accounting
treatment and is aware of no reason why any other merger of SFG consummated
within the prior two years will fail to so qualify.
(q) CONTRACTS. Neither SFG nor any of its Subsidiaries is in default
under any contract, agreement, commitment, arrangement, lease, insurance policy
or other instrument to which it is a party, by which its respective assets,
business, or operations may be bound or affected in any way, or under which it
or its respective assets, business, or operations receive benefits, and there
has not occurred any event that, with the lapse of time or the giving of notice
or both, would constitute such a default.
(r) DISCLOSURE. The representations and warranties contained in this
Section 5.04 do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained in this Section 5.04 not misleading.
(s) RISK MANAGEMENT INSTRUMENTS. All material interest rate swaps,
caps, floors, option agreements, futures and forward contracts and other similar
risk management arrangements, whether entered into for SFG's own account, or for
the account of one or more of its Subsidiaries or their customers, were entered
into (i) in accordance with prudent business practices and all applicable laws,
rules, regulations and regulatory policies and
36
with counterparties believed to be financially responsible at the time; and each
of them constitutes the valid and legally binding obligation of SFG or one of
its Subsidiaries, enforceable in accordance with its terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general equity
principles), and is in full force and effect. Neither SFG nor its Subsidiaries,
nor to SFG's knowledge any other party thereto, is in breach of any of its
obligations under any such agreement or arrangement in any material respect.
(t) YEAR 2000. Neither SFG nor any of its Subsidiaries has received,
or has reason to believe that it will receive, a rating of less than
"satisfactory" on any Year 2000 Report of Examination of any Regulatory
Authority. SFG has disclosed to FWB a complete and accurate copy of its plan,
including an estimate of the anticipated associated costs, for addressing the
issues set forth in the statements of the FFIEC dated May 5, 1997, entitled
"Year 2000 Project Management Awareness," and December 17, 1997, entitled
"Safety and Soundness Guidelines Concerning the Year 2000 Business Risk," as
such issues affect it and its Subsidiaries, and such plan is in material
compliance with the schedule set forth in the FFIEC statements.
(u) MATERIAL ADVERSE CHANGE. SFG has not, on a consolidated basis,
suffered a change in its business, financial condition or results of operations
since December 31, 1997 that has had a Material Adverse Effect on SFG, except as
described in the SFG, Mid/Am Bancshares and Century SEC Documents.
(v) LOANS. Each loan reflected as an asset in the SFG financial
statements as of December 31, 1997 and each balance sheet date subsequent
thereto, other than loans the unpaid balance of which does not exceed $1 million
in the aggregate, (i) is evidenced by notes, agreements or other evidences of
indebtedness which are true, genuine and what they purport to be, (ii) to the
extent secured, has been secured by valid liens and security interest which have
been perfected, and (iii) is the legal, valid and binding obligation of the
obligor named therein, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent conveyance and other laws of general
applicability relating to or affecting creditors' rights and to general equity
principles. Except as Previously Disclosed, as of December 31, 1997, CBC is not
a party to a loan, including any loan guaranty, with any director, executive
officer or 5% shareholder of SFG or any of its Subsidiaries or any person,
corporation or enterprise controlling, controlled by or under common control
with any of the foregoing. All loans and extensions of credit that have been
made by Bank and that are subject either to Section 22(b) of the Federal Reserve
Act, as amended, or to 12 C.F.R. sec. 563.43, comply therewith.
37
(w) ALLOWANCE FOR LOAN LOSSES. The allowance for loan losses
reflected on the SFG Financial Statements, as of their respective dates, is
adequate in all material respects under the requirements of generally accepted
accounting principles to provide for reasonably anticipated losses on
outstanding loans.
(x) REPURCHASE AGREEMENTS. With respect to all agreements pursuant
to which SFG or any of its Subsidiaries has purchased securities subject to an
agreement to resell, if any, SFG or such Subsidiary, as the case may be, has a
valid, perfected first lien or security interest in or evidence of ownership in
book entry form of the government securities or other collateral securing the
repurchase agreement, and the value of such collateral equals or exceeds the
amount of the debt secured thereby.
(y) DEPOSIT INSURANCE. The deposits of CBC are insured by the FDIC
in accordance with the FDIA, and CBC has paid all assessments and filed all
reports required by the FDIA.
ARTICLE VI
COVENANTS
6.01 REASONABLE BEST EFFORTS. Subject to the terms and conditions of this
Agreement, each of FWB and SFG agrees to use their reasonable best efforts in
good faith to take, or cause to be taken, all actions, and to do, or cause to be
done, all things necessary, proper or desirable, or advisable under applicable
laws, so as to permit consummation of the Merger as promptly as practicable and
otherwise to enable consummation of the transactions contemplated hereby and
shall cooperate fully with the other party hereto to that end.
6.02 STOCKHOLDER APPROVALS. FWB agrees to take, in accordance with
applicable law and the FWB Articles and FWB By-Laws, all action necessary to
convene an appropriate meeting of its stockholders to consider and vote upon the
adoption of this Agreement and any other matters required to be approved or
adopted by FWB's stockholders for consummation of the Parent Merger (including
any adjournment or postponement, the "FWB Meeting"), as promptly as practicable
after the Registration Statement is declared effective. The FWB Board shall
recommend that its stockholders adopt this Agreement at the FWB Meeting unless
otherwise necessary under the applicable fiduciary duties of the FWB Board, as
determined by the FWB Board in good faith after consultation with and based upon
advice of independent legal counsel. SFG agrees to take, in accordance with
applicable law, the SFG Articles and SFG Code, all action necessary to convene
an appropriate meeting of its stockholders to consider and vote upon the
adoption of this Agreement and any other matters required to be approved or
adopted by SFG's stockholders for consummation of the Parent Merger (including
any adjournment or postponement, the "SFG Meeting"), as promptly as practicable
38
after the Registration Statement is declared effective. The SFG Board shall
recommend that its stockholders adopt this Agreement at the SFG Meeting unless
otherwise necessary under the applicable fiduciary duties of the SFG Board, as
determined by the SFG Board in good faith after consultation with and based upon
advice of independent legal counsel.
6.03 REGISTRATION STATEMENT.
(a) SFG agrees to prepare pursuant to all applicable laws, rules and
regulations a registration statement on Form S-4 (the "Registration Statement")
to be filed by SFG with the SEC in connection with the issuance of SFG Common
Stock in the Parent Merger (including the proxy statement and prospectus and
other proxy solicitation materials of FWB constituting a part thereof (the
"Proxy Statement") and all related documents). FWB agrees to cooperate, and to
cause its Subsidiaries to cooperate, with SFG, its counsel and its accountants,
in preparation of the Registration Statement and the Proxy Statement; and
provided that FWB and its Subsidiaries have cooperated as required above, SFG
agrees to file the Proxy Statement and the Registration Statement (together, the
"Proxy/Prospectus") with the SEC as promptly as reasonably practicable. Each of
FWB and SFG agrees to use all reasonable efforts to cause the Proxy/Prospectus
to be declared effective under the Securities Act as promptly as reasonably
practicable after filing thereof. SFG also agrees to use all reasonable efforts
to obtain, prior to the effective date of the Registration Statement, all
necessary state securities law or "Blue Sky" permits and approvals required to
carry out the transactions contemplated by this Agreement. FWB agrees to furnish
to SFG all information concerning FWB, its Subsidiaries, officers, directors and
stockholders as may be reasonably requested in connection with the foregoing.
(b) Each of FWB and SFG agrees, as to itself and its Subsidiaries,
that none of the information supplied or to be supplied by it for inclusion or
incorporation by reference in (i) the Registration Statement will, at the time
the Registration Statement and each amendment or supplement thereto, if any,
becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and (ii) the Proxy
Statement and any amendment or supplement thereto will, at the date of mailing
to the FWB stockholders and at the time of the FWB Meeting, as the case may be,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading or any statement which, in the light of the circumstances under
which such statement is made, will be false or misleading with respect to any
material fact, or which will omit to state any material fact necessary in order
to make the statements therein not false or misleading or necessary to correct
any statement in any earlier statement in the Proxy Statement or any amendment
or
39
supplement thereto. Each of FWB and SFG further agrees that if it shall become
aware prior to the Effective Date of any information furnished by it that would
cause any of the statements in the Proxy Statement to be false or misleading
with respect to any material fact, or to omit to state any material fact
necessary to make the statements therein not false or misleading, to promptly
inform the other party thereof and to take the necessary steps to correct the
Proxy Statement.
(c) SFG agrees to advise FWB, promptly after SFG receives notice
thereof, of the time when the Registration Statement has become effective or any
supplement or amendment has been filed, of the issuance of any stop order or the
suspension of the qualification of SFG Stock for offering or sale in any
jurisdiction, of the initiation or threat of any proceeding for any such
purpose, or of any request by the SEC for the amendment or supplement of the
Registration Statement or for additional information.
6.04 PRESS RELEASES. Each of FWB and SFG agrees that it will not, without
the prior approval of the other party, issue any press release or written
statement for general circulation relating to the transactions contemplated
hereby, except as otherwise required by applicable law or regulation or NASDAQ
rules.
6.05 ACCESS; INFORMATION. (a) Each of FWB and SFG agrees that upon
reasonable notice and subject to applicable laws relating to the exchange of
information, it shall afford the other party and the other party's officers,
employees, counsel, accountants and other authorized representatives, such
access during normal business hours throughout the period prior to the Effective
Time to the books, records (including, without limitation, tax returns and work
papers of independent auditors), properties, personnel and to such other
information as any party may reasonably request and, during such period, it
shall furnish promptly to such other party (i) a copy of each material report,
schedule and other document filed by it pursuant to federal or state securities
or banking laws, and (ii) all other information concerning the business,
properties and personnel of it as the other may reasonably request.
(b) Each agrees that it will not, and will cause its representatives
not to, use any information obtained pursuant to this Section 6.05 (as well as
any other information obtained prior to the date hereof in connection with the
entering into of this Agreement) for any purpose unrelated to the consummation
of the transactions contemplated by this Agreement. Subject to the requirements
of law, each party will keep confidential, and will cause its representatives to
keep confidential, all information and documents obtained pursuant to this
Section 6.05 (as well as any other information obtained prior to the date hereof
in connection with the entering into of this Agreement) unless such information
(i) was already known to such party, (ii) becomes
40
available to such party from other sources not known by such party to be bound
by a confidentiality obligation, (iii) is disclosed with the prior written
approval of the party to which such information pertains or (iv) is or becomes
readily ascertainable from published information or trade sources. In the event
that this Agreement is terminated or the transactions contemplated by this
Agreement shall otherwise fail to be consummated, each party shall promptly
cause all copies of documents or extracts thereof containing information and
data as to another party hereto to be returned to the party which furnished the
same. No investigation by either party of the business and affairs of the other
shall affect or be deemed to modify or waive any representation, warranty,
covenant or agreement in this Agreement, or the conditions to either party's
obligation to consummate the transactions contemplated by this Agreement.
(c) During the period from the date of this Agreement to the
Effective Time, each party shall promptly furnish the other with copies of all
monthly and other interim financial statements produced in the ordinary course
of business as the same shall become available.
6.06 ACQUISITION PROPOSALS. FWB agrees that it shall not, and shall cause
its Subsidiaries and its and its Subsidiaries' officers, directors, agents,
advisors and affiliates not to, solicit or encourage inquiries or proposals with
respect to, or engage in any negotiations concerning, or provide any
confidential information to, or have any discussions with, any person relating
to, any Acquisition Proposal, subject to the extent that the FWB Board
determines in good faith, after consultations with independent legal counsel
that it is required by its fiduciary duties to do so. It shall immediately cease
and cause to be terminated any activities, discussions or negotiations conducted
prior to the date of this Agreement with any parties other than SFG with respect
to any of the foregoing and shall use its reasonable best efforts to enforce any
confidentiality or similar agreement relating to an Acquisition Proposal. FWB
shall promptly (within 24 hours) advise SFG following the receipt by FWB of any
Acquisition Proposal and the substance thereof (including the identity of the
person making such Acquisition Proposal), and advise SFG of any material
developments with respect to such Acquisition Proposal immediately upon the
occurrence thereof.
6.07 AFFILIATE AGREEMENTS. (a) Not later than the 15th day prior to the
mailing of the Proxy Statement, FWB shall deliver to SFG a schedule of each
person that, to the best of its knowledge, is or is reasonably likely to be, as
of the date of the FWB Meeting, deemed to be an "affiliate" of FWB (each, a "FWB
Affiliate") as that term is used in Rule 145 under the Securities Act or SEC
Accounting Series Releases 130 and 135. FWB shall use its reasonable best
efforts to cause each person who may be deemed to be a FWB Affiliate to execute
and deliver to FWB on or
41
before the date of mailing of the Proxy Statement an agreement in the form
attached hereto as Exhibit B.
6.08 TAKEOVER LAWS. No party hereto shall take any action that would cause
the transactions contemplated by this Agreement or the Stock Option Agreement to
be subject to requirements imposed by any Takeover Law and each of them shall
take all necessary steps within its control to exempt (or ensure the continued
exemption of) the transactions contemplated by this Agreement from, or if
necessary challenge the validity or applicability of, any applicable Takeover
Law, as now or hereafter in effect.
6.09 CERTAIN POLICIES. Prior to the Effective Date, FWB shall, consistent
with generally accepted accounting principles and on a basis mutually
satisfactory to it and SFG, modify and change its loan, litigation and real
estate valuation policies and practices (including loan classifications and
levels of reserves) so as to be applied on a basis that is consistent with that
of SFG; provided, however, that FWB shall not be obligated to take any such
action pursuant to this Section 6.09 unless and until SFG acknowledges that all
conditions to its obligation to consummate the Merger have been satisfied and
certifies to FWB that SFG's representations and warranties, subject to Section
5.02, are true and correct as of such date and that SFG is otherwise material in
compliance with this Agreement. FWB's representations, warranties and covenants
contained in this Agreement shall not be deemed to be untrue or breached in any
respect for any purpose as a consequence of any modifications or changes
undertaken solely on account of this Section 6.09.
6.10. NASDAQ LISTING. SFG shall file a listing application, or a NASDAQ
Notification Form for Change in the Number of Shares Outstanding, as required by
NASDAQ, with respect to the shares of SFG Common Stock to be issued to the
holders of FWB Common Stock in the Merger.
6.11 REGULATORY APPLICATIONS.
(a) SFG and FWB and their respective Subsidiaries shall cooperate
and use their respective reasonable best efforts to prepare all documentation,
to timely effect all filings and to obtain all permits, consents, approvals and
authorizations of all third parties and Governmental Authorities necessary to
consummate the transactions contemplated by this Agreement. Each of SFG and FWB
shall have the right to review in advance, and to the extent practicable each
will consult with the other, in each case subject to applicable laws relating to
the exchange of information, with respect to, and shall be provided in advance
so as to reasonably exercise its right to review in advance, all material
written information submitted to any third party or any Governmental Authority
in connection with the transactions contemplated by this Agreement. In
exercising the foregoing right, each of the parties hereto agrees to act
reasonably and as
42
promptly as practicable. Each party hereto agrees that it will consult with the
other party hereto with respect to the obtaining of all material permits,
consents, approvals and authorizations of all third parties and Governmental
Authorities necessary or advisable to consummate the transactions contemplated
by this Agreement and each party will keep the other party apprised of the
status of material matters relating to completion of the transactions
contemplated hereby.
(b) Each party agrees, upon request, to furnish the other party with
all information concerning itself, its Subsidiaries, directors, officers and
stockholders and such other matters as may be reasonably necessary or advisable
in connection with any filing, notice or application made by or on behalf of
such other party or any of its Subsidiaries to any third party or Governmental
Authority.
6.12 INDEMNIFICATION.
(a) Following the Effective Date, SFG shall indemnify, defend and
hold harmless the present directors, officers and employees of FWB and its
Subsidiaries (each, an "Indemnified Party") against all costs or expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages or liabilities (collectively, "Costs") incurred in connection with any
claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of actions or omissions occurring
on or prior to the Effective Time (including, without limitation, the
transactions contemplated by this Agreement) to the fullest extent that FWB is
permitted to indemnify (and advance expenses to) its directors, officers, and
employees under the laws of the State of Pennsylvania, the FWB Articles and the
FWB By-Laws as in effect on the date hereof; provided that any determination
required to be made with respect to whether an officer's, director's or
employee's conduct complies with the standards set forth under Pennsylvania law,
the FWB Articles and the FWB By-Laws shall be made by independent counsel (which
shall not be counsel that provides material services to SFG) selected by SFG and
reasonably acceptable to such officer, director or employee.
(b) For a period of three years from the Effective Time, SFG shall
use its reasonable best efforts to provide that portion of director's and
officer's liability insurance that serves to reimburse the present and former
officers and directors of FWB or any of its Subsidiaries (determined as of the
Effective Time) (as opposed to FWB) with respect to claims against such
directors and officers arising from facts or events which occurred before the
Effective Time, on terms no less favorable than those in effect on the date
hereof; PROVIDED, HOWEVER, that SFG may substitute therefor policies providing
at least comparable coverage containing terms and conditions no less favorable
than those in effect on the date hereof; and provided, further, that officers
and directors of FWB or any Subsidiary may
43
be required to make application and provide customary representations and
warranties to SFG's insurance carrier for the purpose of obtaining such
insurance.
(c) Any Indemnified Party wishing to claim indemnification under
Section 6.12(a), upon learning of any claim, action, suit, proceeding or
investigation described above, shall promptly notify SFG thereof; provided that
the failure so to notify shall not affect the obligations of SFG under Section
6.12(a) unless and to the extent that SFG is actually prejudiced as a result of
such failure.
(d) If SFG or any of its successors or assigns shall consolidate
with or merge into any other entity and shall not be the continuing or surviving
entity of such consolidation or merger or shall transfer all or substantially
all of its assets to any entity, then and in each case, proper provision shall
be made so that the successors and assigns of SFG shall assume the obligations
set forth in this Section 6.12.
6.13 OPPORTUNITY OF EMPLOYMENT; EMPLOYEE BENEFITS. The existing employees
of FWB shall have the opportunity to continue as employees of SFG or one of its
Subsidiaries, on the Closing Date; subject, however, to the right of SFG and its
Subsidiaries to terminate any such employees either (i) for "cause" or (ii)
pursuant to the procedures set forth in the SFG Workforce Redesign Process
previously disclosed to FWB. It is understood and agreed that nothing in this
Section 6.13 or elsewhere in this Agreement shall be deemed to be a contract of
employment or be construed to give said employees any rights other than as
employees at will under applicable law and said employees shall not be deemed to
be third-party beneficiaries of this provision. From and after the Effective
Time, FWB employees shall continue to participate in the FWB employee benefit
plans in effect at the Effective Time unless and until SFG, in its sole
discretion, shall determine that FWB employees shall, subject to applicable
eligibility requirements, participate in employee benefit plans of SFG and that
all or some of the FWB plans shall be terminated or merged into certain employee
benefit plans of SFG. Notwithstanding the foregoing, each FWB employee shall be
credited with years of FWB (or predecessor) service for purposes of eligibility
and vesting in the employee benefit plans of SFG.
6.14 NOTIFICATION OF CERTAIN MATTERS. Each of FWB and SFG shall give
prompt notice to the other of any fact, event or circumstance known to it that
(i) is reasonably likely, individually or taken together with all other facts,
events and circumstances known to it, to result in any Material Adverse Effect
with respect to it or (ii) would cause or constitute a material breach of any of
its representations, warranties, covenants or agreements contained herein.
6.15 DIVIDEND COORDINATION. It is agreed by the parties hereto that they
will cooperate to assure that as a result of the
44
Parent Merger, during any applicable period, there shall not be a payment of
both a SFG and a FWB dividend. The parties further agree that if the Effective
Closing Date is at the end of a fiscal quarter, then they will cooperate to
assure that the FWB shareholders receive the dividend, if any, declared by FWB
rather than the dividend for that period, if any, declared by SFG. FWB intends
to change its existing dividend payment policy such that for 1999 its dividends
shall be declared with record and payment dates the same as SFG's. To accomplish
this program, FWB shall declare a dividend equal to 2/3's of what its normal
dividend for its fiscal dividend quarter ended January 31, 1999 would have been,
which dividend shall be payable January 4, 1999 to shareholders of record on
December 24, 1998. In no event will the selection of the Effective Date cause
the stockholders of FWB to lose a quarterly or a portion of a quarterly
dividend.
6.16 SFG BOARD REPRESENTATION. SFG shall cause its Executive Committee to
nominate for election ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ to the SFG Board
and ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇ to the Executive Committee, which nominees shall be
recommended by FWB and selected by SFG in its discretion. Additional matters
regarding future representation are as set forth in a letter dated of even date
herewith from SFG.
6.17 RESULTING BANK BOARD OF DIRECTORS. Following the consummation of the
Subsidiary Merger, it is contemplated that six (6) members of the FWB Board of
Directors will be selected by SFG to serve as directors of the Resulting Bank to
be recommended by FWB and to be selected by SFG in its reasonable discretion.
6.18 FORMATION OF ADVISORY BOARD. Following the consummation of the
Subsidiary Merger, the members of the FWB Board of Directors who do not become
members of the Resulting Bank's Board of Directors shall be given the
opportunity to serve on an advisory board to the Resulting Bank.
6.19 ACCOUNTING AND TAX TREATMENT. Each of SFG and FWB agrees not to take
any actions subsequent to the date of this Agreement that would adversely affect
the ability to treat the Merger as a "pooling-of-interests" in accordance with
GAAP or FWB or the shareholders of FWB to characterize the Merger as a tax-free
reorganization under Section 368(a) of the IRC, and each of SFG and FWB agrees
to take such action as may be reasonably required, if such action may be
reasonably taken to reverse the impact of any past actions which would adversely
impact the ability of SFG or FWB (as the case may be) to treat the Merger as a
"pooling-of-interests" for accounting purposes or for the Merger to be
characterized as a tax-free reorganization under Section 368(a) of the IRC.
6.20 NO BREACHES OF REPRESENTATIONS AND WARRANTIES. Between the date of
this Agreement and the Effective Time, without the written consent of the other
party, each of SFG and FWB will not do any act or suffer any omission of any
nature
45
whatsoever which would cause any of the representations or warranties made in
Article III of this Agreement to become untrue or incorrect in any material
respect.
6.21 CONSENTS. Each of SFG and FWB shall use its best efforts to obtain
any required consents to the transactions contemplated by this Agreement.
6.22 INSURANCE COVERAGE. FWB shall cause the policies of insurance listed
in the Disclosure Schedule to remain in effect between the date of this
Agreement and the Closing Date.
6.23 CORRECTION OF INFORMATION. Each of SFG and FWB shall promptly correct
and supplement any information furnished under this Agreement so that such
information shall be correct and complete in all material respects at all times,
and shall include all facts necessary to make such information correct and
complete in all material respects at all times.
6.24 CONFIDENTIALITY. Except for the use of information in connection with
the Registration Statement described in Section 7.1 hereof and any other
governmental filings required in order to complete the transactions contemplated
by this Agreement, all information (collectively, the "Information") received by
each of FWB and SFG, pursuant to the terms of this Agreement shall be kept in
strictest confidence; provided that, subsequent to the filing of the
Registration Statement with the Securities and Exchange Commission, this Section
6.24 shall not apply to information included in the Registration Statement or to
be included in the official proxy/prospectus to be sent to the shareholders of
FWB and SFG under Section 6.03. FWB and SFG agree that the Information will be
used only for the purpose of completing the transactions contemplated by this
Agreement. FWB and SFG agree to hold the Information in strictest confidence and
shall not use, and shall not disclose directly or indirectly any of such
Information except when, after and to the extent such Information (i) is or
becomes generally available to the public other than through the failure of FWB
or SFG to fulfill its obligations hereunder, (ii) was already known to the party
receiving the Information on a nonconfidential basis prior to the disclosure or
(iii) is subsequently disclosed to the party receiving the Information on a
nonconfidential basis by a third party having no obligation of confidentiality
to the party disclosing the Information. It is agreed and understood that the
obligations of FWB and SFG contained in this Section 6.24 shall survive the
Closing. In the event the transactions contemplated by this Agreement are not
consummated, FWB and SFG agree to return all copies of the Information provided
to the other promptly.
6.25 SUPPLEMENTAL ASSURANCES.
(a) On the date the Registration Statement becomes effective and on
the Effective Date, FWB shall deliver to SFG a
46
certificate signed by its principal executive officer and its principal
financial officer to the effect, to such officers' knowledge, that the
information contained in the Registration Statement relating to the business and
financial condition and affairs of FWB, does not contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading.
(b) On the date the Registration Statement becomes effective and on
the Effective Date, SFG shall deliver to FWB a certificate signed by its chief
executive officer and its chief financial officer to the effect, to such
officers' knowledge, that the Registration Statement (other than the information
contained therein relating to the business and financial condition and affairs
of FWB) does not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading.
6.26 EMPLOYMENT AGREEMENT. As a result of the Parent Merger, ▇▇▇▇▇▇ ▇.
▇'▇▇▇▇▇, Chief Executive Officer of FWB, shall be entitled to payment under an
existing change in control agreement. Immediately thereafter, SFG shall enter
into a new 10-year employment agreement at a base compensation of $275,000 per
year plus a 50% incentive compensation opportunity under SFG's incentive
compensation plan and an appropriate amount of stock options for the new
position on terms and conditions mutually satisfactory to SFG and the said Chief
Executive Officer.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
7.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each of SFG and FWB to consummate the Merger is subject
to the fulfillment or written waiver by SFG and FWB prior to the Effective Time
of each of the following conditions:
(a) STOCKHOLDER APPROVALS. This Agreement (including the Parent Plan
of Merger) shall have been duly adopted by the requisite vote of the
stockholders of SFG and FWB.
(b) REGULATORY APPROVALS. All regulatory approvals required to
consummate the transactions contemplated hereby shall have been obtained and
shall remain in full force and effect and all statutory waiting periods in
respect thereof shall have expired and no such approvals shall contain (i) any
conditions, restrictions or requirements which the SFG Board reasonably
determines would either before or after the Effective Time have a Material
Adverse Effect on SFG and its Subsidiaries taken as a whole after giving effect
to the consummation of the Merger, or
47
(ii) any conditions, restrictions or requirements that are not customary and
usual for approvals of such type and which the SFG Board reasonably determines
would either before or after the Effective Date be unduly burdensome.
(c) NO INJUNCTION. No Governmental Authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, judgment, decree, injunction or other order (whether
temporary, preliminary or permanent) which is in effect and prohibits
consummation of the transactions contemplated by this Agreement.
(d) REGISTRATION STATEMENT. The Registration Statement shall have
become effective under the Securities Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by the SEC.
(e) BLUE SKY APPROVALS. All permits and other authorizations under
state securities laws necessary to consummate the transactions contemplated
hereby and to issue the shares of SFG Common Stock to be issued in the Parent
Merger shall have been received and be in full force and effect.
(f) ACCOUNTING TREATMENT. SFG shall have received from ▇▇▇▇▇, ▇▇▇▇▇▇
and Company, LLP, SFG's independent auditors, a letter, dated the date of or
shortly prior to each of the mailing date of the Proxy Statement and the
Effective Date, stating its opinion that the Merger shall qualify for
pooling-of-interests accounting treatment.
7.02 CONDITIONS TO OBLIGATION OF FWB. The obligation of FWB to consummate
the Merger is also subject to the fulfillment or written waiver by FWB prior to
the Effective Time of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of SFG set forth in this Agreement shall be true and correct, subject
to Section 5.02, as of the date of this Agreement and as of the Effective Date
as though made on and as of the Effective Date (except that representations and
warranties that by their terms speak as of the date of this Agreement or some
other date shall be true and correct as of such date), and FWB shall have
received a certificate, dated the Effective Date, signed on behalf of SFG by the
Chief Executive Officer and the Chief Financial Officer of SFG to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF SFG. SFG shall have performed in
all material respects all obligations required to be performed by them under
this Agreement at or prior to the Effective Time, and FWB shall have received a
certificate, dated the Effective Date, signed on behalf of SFG by the Chief
48
Executive Officer and the Chief Financial Officer of SFG to such effect.
(c) TAX OPINION. FWB shall have received an opinion of counsel to
SFG, dated the Effective Date, to the effect that, on the basis of facts,
representations and assumptions set forth in such opinion, (i) the Parent Merger
constitutes a "reorganization" within the meaning of Section 368 of the Code and
(ii) no gain or loss will be recognized by stockholders of FWB who receive
shares of SFG Common Stock in exchange for shares of FWB Common Stock, and cash
in lieu of fractional share interests, other than the gain or loss to be
recognized as to cash received in lieu of fractional share interests. In
rendering its opinion, counsel to SFG's independent auditors may require and
rely upon representations contained in letters from FWB and SFG.
(d) OPINION OF SFG'S COUNSEL. FWB shall have received an opinion of
Squire, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P., counsel to SFG, dated the Effective Date, to
the effect that, on the basis of the facts, representations and assumptions set
forth in the opinion, (i) SFG is a corporation duly organized and in good
standing under the laws of the State of Ohio, (ii) this Agreement has been duly
executed by SFG and constitutes the binding obligation of SFG, enforceable in
accordance with its terms against SFG, except as the same may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium, and
other similar laws relating to or affecting the enforcement of creditors' rights
generally, by general equitable principles (regardless of whether enforceability
is considered in a proceeding in equity or at law) and by an implied covenant of
good faith and fair dealing and (iii) that, assuming approval of SFG's
stockholders, the SFG Common Stock to be issued as Merger Consideration, when
issued, shall be duly authorized, fully paid and non-assessable, and (iv) that
upon the filing of the certificate of merger with the OSS, and the articles of
merger with DSCP, the Parent Merger shall become effective.
(e) FAIRNESS OPINION. FWB shall have received a fairness opinion
from Sandler ▇'▇▇▇▇▇ & Partners, L.P., financial advisor to FWB, dated as of a
date reasonably proximate to the date of the Proxy Statement, stating that the
Merger Consideration is fair to the stockholders of FWB from a financial point
of view.
7.03 CONDITIONS TO OBLIGATION OF SFG. The obligation of SFG to consummate
the Merger is also subject to the fulfillment or written waiver by SFG prior to
the Effective Time of each of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of FWB set forth in this Agreement shall be true and correct, subject
to Section 5.02, as of the date of this Agreement and as of the Effective Date
as though
49
made on and as of the Effective Date (except that representations and warranties
that by their terms speak as of the date of this Agreement or some other date
shall be true and correct as of such date) and SFG shall have received a
certificate, dated the Effective Date, signed on behalf of FWB by the Chief
Executive Officer and the Chief Financial Officer of FWB to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF FWB. FWB shall have performed in
all material respects all obligations required to be performed by it under this
Agreement at or prior to the Effective Time, and SFG shall have received a
certificate, dated the Effective Date, signed on behalf of FWB by the Chief
Executive Officer and the Chief Financial Officer of FWB to such effect.
(c) OPINION OF FWB'S COUNSEL. SFG shall have received an opinion of
▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇, LLP counsel to FWB, dated the Effective Date, to the
effect that, on the basis of the facts, representations and assumptions set
forth in the opinion, (i) FWB is a corporation duly organized and in good
standing under the laws of the Commonwealth of Pennsylvania, (ii) this Agreement
has been duly executed by FWB and constitutes a binding obligation on FWB,
enforceable in accordance with its terms against FWB, except as the same may be
limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium, and other similar laws relating to or affecting the enforcement of
creditors' rights generally, by general equitable principles (regardless of
whether enforceability is considered in a proceeding in equity or at law) and by
an implied covenant of good faith and fair dealing and (iii) that, assuming
approval of FWB's stockholders, upon the filing of the certificate of merger
with the OSS and the articles of merger with the DSCP, the Parent Merger shall
become effective.
(d) AFFILIATE AGREEMENTS. SFG shall have received the agreements
referred to in Section 6.07 from each affiliate of FWB.
(e) FAIRNESS OPINION. SFG shall have received a fairness opinion
from ▇▇▇▇▇▇▇▇, dated as of a date reasonably proximate to the date of the Proxy
Statement, stating that the Merger Consideration is fair to the stockholders of
SFG from a financial point of view.
ARTICLE VIII
TERMINATION
8.01 TERMINATION. This Agreement may be terminated, and the Acquisition
may be abandoned:
(a) MUTUAL CONSENT. At any time prior to the Effective Time, by the
mutual consent of SFG and FWB, if the Board of Directors of each so determines
by vote of a majority of the members of its entire Board.
50
(b) BREACH. At any time prior to the Effective Time, by SFG or FWB,
if its Board of Directors so determines by vote of a majority of the members of
its entire Board, in the event of either: (i) a breach by the other party of any
representation or warranty contained herein (subject to the standard set forth
in Section 5.02), which breach cannot be or has not been cured within 30 days
after the giving of written notice to the breaching party of such breach; or
(ii) a breach by the other party of any of the covenants or agreements contained
herein, which breach cannot be or has not been cured within 30 days after the
giving of written notice to the breaching party of such breach, provided that
such breach (whether under (i) or (ii)) would be reasonably likely, individually
or in the aggregate with other breaches, to result in a Material Adverse Effect.
(c) DELAY. At any time prior to the Effective Time, by SFG or FWB,
if its Board of Directors so determines by vote of a majority of the members of
its entire Board, in the event that the Parent Merger is not consummated by
September 30, 1999, except to the extent that the failure of the Parent Merger
then to be consummated arises out of or results from the knowing action or
inaction of the party seeking to terminate pursuant to this Section 8.01(c).
(d) NO APPROVAL. By FWB or SFG, if its Board of Directors so
determines by a vote of a majority of the members of its entire Board, in the
event (i) the approval of any Governmental Authority required for consummation
of the Merger and the other transactions contemplated by this Agreement shall
have been denied by final nonappealable action of such Governmental Authority;
(ii) the FWB stockholders fail to adopt this Agreement at the FWB Meeting; or
(iii) any of the closing conditions have not been met as required by Article VII
hereof.
(e) SFG COMMON STOCK. By FWB in accordance with the procedures set
forth in Exhibit C hereto if its Board of Directors so determines by a vote of
the majority of its entire Board of Directors in the event the Average NMS
Closing Price (as defined below) of SFG Common Stock is (i) lower than $25.00
AND (ii) is more than ten percent (10%) lower than the average of the NMS
Closing Prices of an index of selected, publicly traded, peer group commercial
financial institutions set forth on Exhibit C hereto, unless SFG determines to
issue additional Merger Consideration such that the condition set forth in (i)
above will no longer exist. For purposes of this Section 8.01(e), the term "NMS
Closing Price" shall mean the price per share of the last sale of SFG Common
Stock reported on the NASDAQ National Market System at the close of the trading
day by the National Association of Securities Dealers, Inc. The term "Average
NMS Closing Price" shall mean the arithmetic mean of the NMS Closing Prices for
the ten (10) trading days immediately preceding the fifth (5th) trading day
prior to the receipt of final federal regulatory approval of the Merger.
51
(f) DUE DILIGENCE. By SFG, if after SFG conducts its due diligence
inquiry of FWB for up to thirty days following the date hereof, the SFG Board
determines in good faith, within fifteen days thereafter, that the due diligence
inquiry has revealed one or more matters that (I) are inconsistent with any of
the representations and warranties of FWB and which have had, constitute or are
reasonably likely to have a Material Adverse Effect on FWB, or (ii) in the
reasonable judgment of the SFG Board either (A) is of such significance as to
constitute or have or be reasonably likely to have a Material Adverse Effect on
FWB, or (B) deviates materially and adversely from the financial statements for
the fiscal year ended December 31, 1997 of FWB.
(g) DUE DILIGENCE. By FWB, if after FWB conducts its due diligence
inquiry of SFG for up to thirty days following the date hereof, the FWB Board
determines in good faith, within fifteen days thereafter, that the due diligence
inquiry has revealed one or more matters that (i) are inconsistent with any of
the representations and warranties of SFG and which have had, constitute or are
reasonably likely to have a Material Adverse Effect on SFG, or (ii) in the
reasonable judgment of the FWB Board either (A) is of such significance as to
constitute or have or be reasonably likely to have a Material Adverse Effect on
SFG, or (B) deviates materially and adversely from the financial statements for
the fiscal year ended December 31, 1997 of SFG.
(h) FAILURE TO EXECUTE AND DELIVER STOCK OPTION AGREEMENT. By SFG,
if at any time prior to the close of business, Eastern Standard Time on December
15, 1998, FWB shall not have executed and delivered the Stock Option Agreement
to SFG.
8.02 EFFECT OF TERMINATION AND ABANDONMENT, ENFORCEMENT OF AGREEMENT. In
the event of termination of this Agreement and the abandonment of the Merger
pursuant to this Article VIII, no party to this Agreement shall have any
liability or further obligation to any other party hereunder except (i) as set
forth in Section 9.01 and (ii) that termination will not relieve a breaching
party from liability for any willful breach of this Agreement giving rise to
such termination. Notwithstanding anything contained herein to the contrary, the
parties hereto agree that irreparable damage will occur in the event that a
party breaches any of its obligations, duties, covenants and agreements
contained herein. It is accordingly agreed that the parties shall be entitled to
an injunction or injunctions to prevent breaches or threatened breaches of this
Agreement and to enforce specifically the terms and provisions of this Agreement
in any court of the United States or any state having jurisdiction, this being
in addition to any other remedy to which they are entitled by law or in equity.
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ARTICLE IX
MISCELLANEOUS
9.01 SURVIVAL. No representations, warranties, agreements and covenants
contained in this Agreement shall survive the Effective Time (other than
Sections 6.12, 6.13, 6.16, and 6.17 and this Article IX which shall survive the
Effective Time) or the termination of this Agreement if this Agreement is
terminated prior to the Effective Time (other than Sections 6.03(b), 6.04,
6.05(b), 8.02, and this Article IX which shall survive such termination).
9.02 WAIVER; AMENDMENT. Prior to the Effective Time, any provision of this
Agreement may be (i) waived by the party benefited by the provision, or (ii)
amended or modified at any time, by an agreement in writing between the parties
hereto executed in the same manner as this Agreement, except that after the FWB
Meeting, this Agreement may not be amended if it would violate the PBCL or the
federal securities laws.
9.03 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original.
9.04 GOVERNING LAW. This Agreement shall be governed by, and interpreted
in accordance with, the laws of the State of Ohio applicable to contracts made
and to be performed entirely within such State (except to the extent that
mandatory provisions of Federal law are applicable).
9.05 EXPENSES. Each party hereto will bear all expenses incurred by it in
connection with this Agreement and the transactions contemplated hereby, except
that printing and mailing expenses shall be shared equally between FWB and SFG.
All fees to be paid to Regulatory Authorities and the SEC in connection with the
transactions contemplated by this Agreement shall be borne by SFG.
9.06 NOTICES. All notices, requests and other communications hereunder to
a party shall be in writing and shall be deemed given if personally delivered,
telecopied (with confirmation) or mailed by registered or certified mail (return
receipt requested) to such party at its address set forth below or such other
address as such party may specify by notice to the parties hereto.
If to FWB, to:
First Western Bancorp, Inc.
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇, Chairman and CEO
53
With a copy to:
First Western Bancorp, Inc.
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, General Counsel
With a copy to:
▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: J. ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, Esq.
If to SFG, to:
SFG Group, Inc.
▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇, President and COO
With a copy to:
SFG Group, Inc.
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, General Counsel
With a copy to:
Squire, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: M. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
9.07 ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES. This Agreement,
any separate agreement entered into by the parties on even date herewith, and
any Stock Option Agreement entered into represent the entire understanding of
the parties hereto with reference to the transactions contemplated hereby and
thereby and this Agreement supersedes any and all other oral or written
agreements heretofore made (other than any such separate agreement or Stock
Option Agreement). Nothing in this Agreement, whether express or implied, is
intended to confer upon any person, other than the parties hereto or their
respective successors, any rights, remedies, obligations or liabilities under or
by reason of this Agreement.
9.08 INTERPRETATION; EFFECT. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of, or
Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
54
only and are not part of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation."
9.09 WAIVER OF JURY TRIAL. Each of the parties hereto hereby irrevocably
waives any and all right to trial by jury in any legal proceeding arising out of
or related to this Agreement or the transactions contemplated hereby.
* * *
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
FIRST WESTERN BANCORP, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
Title: Chairman and CEO
SKY FINANCIAL GROUP, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and COO
56