Exhibit 99
AGREEMENT AND
PLAN OF MERGER
BY AND BETWEEN
HB ACQUISITION COMPANY
AND
▇▇▇▇▇▇▇ BANCORP, INC.
THIS AGREEMENT (hereinafter called "Agreement") is entered into as of
the 30 day May, 1997, by and between HB ACQUISITION COMPANY and ▇▇▇▇▇▇▇
BANCORP, INC. and joined in by ▇▇▇▇▇▇▇ FEDERAL SAVINGS BANK and BANK OF RALEIGH.
WHEREAS, HB Acquisition Company ("NewCo") is a newly formed West
Virginia corporation with its principal office and place of business located in
Beckley, West Virginia; and
WHEREAS, Bank of Raleigh ("Raleigh") is a West Virginia state bank with
its principal office and place of business located in Beckley, West Virginia;
and
WHEREAS, Horizon Bancorp, Inc. ("Horizon") is the sole shareholder of
NewCo and the sole shareholder of Raleigh; and
WHEREAS, ▇▇▇▇▇▇▇ Federal Savings Bank ("Beckley") is a federal savings
bank with its principal office and place of business located in Beckley, West
Virginia, having one subsidiary, Two Hundred Corporation ("THC"); and
WHEREAS, ▇▇▇▇▇▇▇ Bancorp, Inc. ("BBI") is the sole shareholder of
Beckley, and has principal offices located in Beckley, West Virginia; and
WHEREAS, NewCo and BBI have agreed that it is in their mutual best
interests and in the best interests of their respective shareholders for NewCo
to be merged with BBI with BBI as the surviving corporation with the effect that
each of the outstanding shares of BBI's common stock ("BBI Stock") and all
outstanding stock options ("BBI Options") will be acquired for cash all in the
manner and upon the terms and conditions contained in this Agreement (the
"Merger"); and
WHEREAS, to effectuate the foregoing, NewCo and BBI desire to adopt
this Agreement as a plan of merger; and
WHEREAS, NewCo's Board of Directors has approved this Agreement and
will recommend to its sole shareholder, Horizon, that it approve the
transactions described herein; and
WHEREAS, BBI's Board of Directors has approved this Agreement and will
recommend to its shareholders that they approve the transactions described
herein;
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NOW, THEREFORE, in consideration of the premises, the mutual benefits
to be derived from this Agreement, and of the representations, warranties,
conditions, covenants and promises herein contained, and subject to the terms
and conditions hereof, NewCo and BBI intending to be legally bound hereby adopt
and make this Agreement and mutually agree as follows:
ARTICLE I. THE PLAN OF MERGER
1.1 Names of Merging Corporations. The names of the corporations proposed to be
merged are ▇▇▇▇▇▇▇ BANCORP, INC. and HB ACQUISITION COMPANY.
1.2. Nature of Transaction. Subject to the provisions of this Agreement, at the
"Effective Time", defined below, BBI and NewCo shall be merged with BBI as the
surviving corporation (the "Merger").
1.3. Effect of Merger; Surviving Corporation; Bank Merger. At the Effective Time
and by reason of the Merger, the separate corporate existence of NewCo shall
cease while the corporate existence of BBI as the surviving corporation in the
Merger shall continue with all of its purposes, objects, rights, privileges,
powers and franchises, all of which shall be unaffected and unimpaired by the
Merger. Contemporaneously with the Merger, Beckley shall be merged with and into
Raleigh, whereupon the separate corporate existence of Beckley shall cease (the
"Bank Merger"). NewCo may but is not required to waive the requirement that the
Bank Merger occur contemporaneously with the Merger. Within seven (7) days of
the date of this Agreement, NewCo and BBI agree to cause Raleigh and Beckley,
respectively, to execute a bank merger agreement substantially in the form of
that agreement attached hereto as Exhibit A and to submit the same to their
respective shareholders for approval no later than June 30, 1997.
1.4. Assets and Liabilities of BBI and NewCo. At the Effective Time and by
reason of the Merger, and in accordance with applicable law, all of the
property, assets and rights of every kind and character of NewCo (including
without limitation all real, personal or mixed property, all debts due on
whatever account, all other choses in action, insurance policies, and every
other interest of or belonging to or due to NewCo, whether tangible or
intangible) shall vest in BBI as the surviving corporation, and BBI as the
surviving corporation shall succeed to all the rights, privileges, immunities,
powers, purposes and franchises of a public or private nature and shall assume
the liabilities and lawful obligations of NewCo, all without any conveyance,
assignment or further act or deed whereupon BBI as the surviving entity shall
continue.
1.5. Cancellation and Payment for Stock and Options.
a. Cancellation of BBI Stock and BBI Options; Cash Consideration. At the
Effective Time all rights of BBI's shareholders with respect to all
then outstanding shares of BBI Stock shall cease to exist and the
holders of shares of BBI Stock shall cease to be and shall have no
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further rights as shareholders of BBI. All BBI Options existing and
unexercised at the Effective Time shall be canceled. All rights to
acquire BBI Stock under the Beckley Management Stock Bonus Plan
("MSBP") shall be canceled. In exchange for each outstanding share of
BBI Stock or fraction thereof (other than shares held by BBI as
treasury shares or as to which dissenters rights are properly
exercised) each holder of such Stock shall receive cash in the amount
of Twenty-Five Dollars and Sixty Four Cents ($25.64) per share subject
to increase as provided below if Closing does not occur by September
30, 1997 (the "Cash Payment"). In the event of any Stock split, Stock
dividend or other recapitalization by BBI, the Cash Payment shall be
adjusted proportionately. The holders of BBI Options ("Option Holders)
shall receive in exchange for cancellation thereof the Cash Payment
less the amount required at the Effective Time to exercise the option.
Holders of restricted Stock awards under the MSBP ("Award Holders")
shall receive in exchange for cancellation of such awards and all
further rights to any Stock or awards under the MSBP the Cash Payment;
provided; however, on or prior to the Effective Time, BBI may cancel
the BBI Options and MSBP stock awards in exchange for a cash payment to
the Award Holders or Option Holders equivalent to that which would
otherwise be paid as of the Effective Time by NewCo, less applicable
tax withholding. The Cash Payment shall increase by Two Cents (2 cents)
per share for each month or portion thereof beginning October 1, 1997
that the Merger is not effective unless such delay is requested by BBI,
in which case no increase shall occur for the amount of delay
occasioned by the BBI request. The total shares (including an option as
a share and including restricted Stock) to be acquired hereunder is Six
Hundred Sixty Thousand Eight Hundred and Fifty Four (660,854) shares
such being the total number of shares outstanding (i) assuming all BBI
Options were exercised and (ii) including MSBP stock awards.
b. Surrender of Certificates. Following the Effective Time, certificates
representing shares of BBI Stock outstanding at the Effective Time
(herein sometimes referred to as the "Certificates") shall be
surrendered for payment as follows. As promptly as practicable
following the Effective Time, NewCo shall send or cause to be sent to
each former BBI shareholder of record immediately prior to the
Effective Time written instructions and transmittal materials (a
"Transmittal Letter") for use in surrendering Certificates. Upon the
proper surrender and delivery in accordance with NewCo's instructions
and accompanied by a properly completed Transmittal Letter by a former
BBI shareholder of his, her or its Certificates(s), NewCo shall remit
or cause to be remitted to the shareholder the Cash Payment to which
the shareholder is entitled. In the case of BBI Options, prior to
Closing, NewCo shall send or cause to be sent to each Option Holder a
letter acknowledging cancellation of the option rights ("Cancellation
Letter"). Upon receipt of a properly completed Cancellation Letter,
NewCo shall remit or cause to be remitted to the sender the Cash
Payment to which such person is entitled as soon as practicable after
the Effective Time. Following the Effective Time, there shall be no
transfers of BBI Stock on the stock transfer books of BBI or the
registration of any transfer of a Certificate by any holder thereof.
c. Dissenters. Any shareholder of BBI who properly exercises the right of
dissent and appraisal with respect to the Merger ("Dissenters Rights")
shall be entitled to receive
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payment of the fair value of his or her shares of BBI Stock in the
manner and pursuant to the procedures provided by applicable law.
Shares of BBI Stock held by persons who exercise Dissenters Rights
shall not be exchanged for the Cash Payment; provided, however, that if
any shareholder of BBI who exercises Dissenters Rights shall fail to
perfect his or her right to dissent or effectively shall waive or lose
such right, then each of his or her shares of BBI Stock, at NewCo's
sole option, shall be deemed to have been exchanged for the Cash
Payment as of the Effective Time.
d. Lost Certificates. After the Effective Time, any former shareholder of
BBI whose Certificate evidencing shares of BBI Stock has been lost,
destroyed, stolen or otherwise is missing shall be entitled to receive
the Cash Payment to which he or she is entitled upon compliance with
reasonable conditions imposed by NewCo including, without limitation, a
requirement that the shareholder provide a lost instruments indemnity
or surety bond in form, substance and amount satisfactory to NewCo and
execute an affidavit of ownership and entitlement.
e. Outstanding NewCo Stock. The status of the shares of NewCo common stock
which are outstanding immediately prior to the Effective Time shall not
be affected by the Merger. Such stock shall be and become by operation
of law the sole outstanding stock of the surviving corporation.
1.6. Certificate of Incorporation, Bylaws and Management. The Certificate of
Incorporation and Bylaws of BBI in effect at the Effective Time shall be the
Certificate of Incorporation and Bylaws of the surviving corporation. The
officers and directors of NewCo in office at the Effective Time shall become the
officers and directors of the surviving corporation and shall continue to hold
such offices until removed as provided by law or until the election or
appointment of their respective successors. The directors and officers of BBI
shall resign at the Effective Time.
1.7. Closing and Effective Time. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇ LLP in Charleston, West Virginia, or at such other place as NewCo shall
designate, on a date specified by NewCo (the "Closing Date") after the
expiration of any and all required waiting periods following the receipt of
required approvals of the Merger and the Bank Merger by governmental or
regulatory authorities. Notwithstanding the foregoing, BBI may postpone Closing
to no later than November 1, 1997 provided (i) such delay shall not jeopardize
merely by the passage of time associated with such delay the likelihood that the
transactions described herein will be consummated, (ii) the delay will not cause
additional significant expense to either party, and (iii) BBI reasonably
believes that such delay will benefit its shareholders as a result of a
reasonably anticipated changes in any law applicable to such shareholders. At
the Closing, NewCo and BBI shall take such actions including without limitation
the delivery of certain closing documents and the execution of such Certificates
of Merger as are required herein and as otherwise shall be required by law to
consummate the Merger and the Bank Merger and cause them to become effective.
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Subject to the terms and conditions set forth herein (including without
limitation the receipt of all required approvals of governmental and regulatory
authorities), the Merger shall become effective on the date and at the time (the
"Effective Time") specified in the Certificate of Merger for the Merger filed
with the appropriate governmental body in accordance with law; provided,
however, that the Effective Time shall in no event be more than ten (10) days
following the Closing Date.
1.8 Reservation of Right to Restructure. NewCo reserves the right to restructure
the proposed acquisition in any manner which does not lessen the Cash Payment
nor causes Beckley or BBI to receive any less benefit or protection as provided
for herein.
ARTICLE II. REPRESENTATIONS AND WARRANTIES
2.1. Representations and Warranties of BBI. Except as otherwise disclosed herein
or disclosed to NewCo in writing in the form of a document specifically
designated as a "Disclosure Statement" (the "BBI Disclosure Statement") which
shall be delivered by BBI to NewCo within fifteen (15) days of the execution of
this Agreement, to the best of its knowledge, BBI hereby represents and warrants
to NewCo as follows:
a. Organization; Standing; Power. BBI and Beckley (i) are duly organized
and incorporated, validly existing and in good standing (as a unitary
savings and loan holding company and a federal savings bank,
respectively) under the laws of the State of Delaware and federal law,
respectively; (ii) have all requisite power and authority to own,
lease and operate their properties and to carry on their business as
now being conducted; (iii) are duly qualified to do business in West
Virginia and in each other jurisdiction in which the character of the
properties owned, leased or operated by them therein or in which the
transaction of their business makes such qualification necessary,
except where failure so to qualify would not have a material adverse
effect on Beckley or BBI; and (iv) are not transacting business or
operating any properties owned or leased by them in violation of any
provision of federal, state or local law or any rule or regulation
promulgated thereunder, which violation would have a material adverse
effect on Beckley or BBI.
b. Capital Stock. BBI's authorized capital stock consists of One Million
Two Hundred Fifty Thousand (1,250,000) shares of common stock and Two
Hundred Fifty Thousand (250,000) shares of preferred stock, of which
Six Hundred One Thousand Four Hundred Sixty Five (601,465) shares of
common stock ("BBI Stock") are issued and outstanding and constitute
BBI's only outstanding securities. BBI has Fifty Nine Thousand Three
Hundred Eighty Nine (59,389) shares of common stock subject to option
agreements and Four Thousand Two Hundred Eighty Four (4,284) shares of
common stock held under the MSBP of which Four Thousand Two Hundred
Eighty Four (4,284) shares have been allocated to participants under
the MSBP.
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Each outstanding share of BBI Stock (i) has been duly
authorized and is validly issued and outstanding, and is fully paid and
nonassessable, (ii) has not been issued in violation of the preemptive
rights of any shareholder, and (iii) is subject to the registration and
reporting requirements of the Securities Exchange Act of 1934, as
amended (the "1934 Act"). The BBI Stock trades on the over-the-counter
market (OTC Bulletin Board) under the symbol "BCKB."
▇▇▇▇▇▇▇'▇ authorized capital stock consists of (i) One Million Two Hundred
Fifty Thousand (1,250,000) shares of common stock, One Cent ($.01) par
value, of which One Hundred Thousand (100,000) shares ("Beckley
Stock") are outstanding and issued to BBI and which constitute
▇▇▇▇▇▇▇'▇ only outstanding securities and (ii) Two Hundred Fifty
Thousand (250,000) shares of preferred stock ($0.01 par value ), none
of which are issued and outstanding. Each outstanding share of Beckley
Stock has been duly authorized and is validly issued and outstanding
and is fully paid and nonassessable.
c. Subsidiaries. Beckley is BBI's only subsidiary. Beckley has one
subsidiary, THC. Except as set forth in the BBI Disclosure Statement,
neither Beckley, THC nor BBI own any stock or other equity interest in
any other corporation, service corporation, joint venture, partnership
or other entity, nor is any commitment, agreement or understanding to
acquire any such stock or equity interest binding or enforceable upon
Beckley, BBI or THC.
d. Convertible Securities, Options, Etc. Except as shown on the BBI
Disclosure Statement, Beckley, BBI and THC do not have any outstanding
(i) securities or other obligations (including debentures or other
debt instruments) which are convertible into shares of Beckley Stock,
or BBI Stock or THC Stock or into any other securities of Beckley,
BBI, or THC (ii) options, warrants, rights, calls or other commitments
of any nature which entitle any person to receive or acquire any
shares of Beckley Stock, or BBI Stock or THC Stock or any other
securities of Beckley, BBI, or THC or (iii) plan, agreement or other
arrangement pursuant to which shares of Beckley Stock , or THC or BBI
Stock or any other securities of Beckley, BBI or THC or options,
warrants, rights, calls, or other commitments of any nature pertaining
thereto, have been or will be issued.
e. Authorization and Validity of Agreement. This Agreement has been duly
and validly approved by BBI's Board of Directors and executed and
delivered on BBI's behalf. Subject only to approval of this Agreement
by the shareholders of BBI in the manner required by law and required
regulatory approval, (i) BBI has the corporate power and authority to
execute and deliver this Agreement and to perform its obligations and
agreements and carry out the transactions described herein, (ii) all
corporate proceedings and approvals required to authorize BBI to enter
into this Agreement and to perform its obligations and agreements and
carry out the transactions described herein have been duly and
properly completed or obtained, and (iii) this Agreement constitutes
the valid and binding agreement of BBI enforceable in accordance with
its terms (except to the extent enforceability may be limited by (A)
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws from
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time to time in effect which affect creditors' rights generally, (B)
legal and equitable limitations on the availability of injunctive
relief, specific performance and other equitable remedies, and (C)
general principles of equity and applicable laws or court decisions
limiting the enforceability of indemnification provisions).
f. Validity of Transactions and Absence of Required Consents or Waivers.
Neither the execution and delivery of this Agreement, nor the
consummation of the transactions described herein, nor compliance by
BBI with any of its obligations or agreements contained herein, will:
(i) conflict with or result in a breach of the terms and conditions
of, or constitute a default or violation under any provision of, the
Certificate of Incorporation, Charter or Bylaws of Beckley or BBI, or
any material contract, agreement, lease, mortgage, note, bond,
indenture, license, or obligation or understanding (oral or written)
to which Beckley or BBI is bound or by which it, its business, capital
stock or any of its properties or assets may be affected; (ii) result
in the creation or imposition of any lien, claim, interest, charge,
restriction, or encumbrance upon any of the properties or assets of
Beckley or BBI; (iii) violate any applicable federal or state statute,
law, rule or regulation, or any judgment, order, writ, injunction or
decree of any court, administrative or regulatory agency or
governmental body; (iv) result in the acceleration of any obligation
or indebtedness of Beckley or BBI; or (v) interfere with or otherwise
adversely affect the ability of either Beckley or BBI to carry on its
business as presently conducted.
No consents, approvals or waivers are required to be obtained
from any person or entity in connection with BBI's execution and
delivery of this Agreement, or the performance of its obligations or
agreements or the consummation of the transactions described herein,
except for required approvals of BBI's and ▇▇▇▇▇▇▇'▇ shareholders and
of governmental or regulatory authorities.
g. Regulatory Reports. Beckley and BBI have timely filed all reports,
registrations and statements, together with any amendments required to
be made with respect thereto, that are required to be filed with (i)
the Federal Deposit Insurance Corporation (the "FDIC") including the
Savings Association Insurance Fund ("SAIF"), (ii) the Securities and
Exchange Commission (the "SEC"), (iii) the Office of Thrift
Supervision (the "OTS") and/or (iv) any other governmental or
regulatory authorities having jurisdiction over Beckley or BBI. All
such reports, registrations and statements filed by Beckley and BBI
with the FDIC, the OTS, the SEC or other such regulatory authority are
collectively referred to hereinafter as the "Regulatory Reports". As
of their respective dates, the Regulatory Reports complied in all
material respects with all the statutes, rules and regulations
enforced or promulgated by the regulatory authority with which they
were filed and were accurate in all material respects. Neither Beckley
nor BBI has been notified that any such Regulatory Reports were
deficient in any material respect as to form or content. Following the
date of this Agreement, Beckley and BBI shall deliver to NewCo,
simultaneous with the filing thereof, a copy of each report,
registration, statement, or other regulatory filing made by Beckley or
BBI with the FDIC,
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the OTS, the SEC, or any other regulatory authority unless such
delivery is contrary to law or regulation.
h. Financial Statements. BBI has delivered to NewCo a copy of its
consolidated balance sheets as of December 31, 1995 and December 31,
1996, and its consolidated statements of operations, changes in
stockholders' equity and cash flows for the years ended December 31,
1994, December 31, 1995 and December 31, 1996, together with notes
thereto and the audit reports (collectively, the "BBI Financial
Statements"), and (ii) its consolidated balance sheet as of March 31,
1997 and its statement of operations for the three (3) months ended
▇▇▇▇▇ ▇▇, ▇▇▇▇ (▇▇▇ "▇▇▇ Interim Financial Statements"); and,
following the date of this Agreement, BBI promptly will deliver to
NewCo all other annual or interim financial statements prepared by or
for Beckley or BBI. The BBI Financial Statements and the BBI Interim
Financial Statements (including any related notes and schedules
thereto) were prepared in accordance with generally accepted
accounting principles ("GAAP") applied on a consistent basis
throughout the periods indicated and with Regulation S-X of the 1934
Securities Exchange Act and present fairly BBI's financial position,
results of operations and cash flows as of the dates indicated and for
the periods specified therein. The BBI Financial Statements through
December 31, 1996 have been audited by ▇▇▇▇▇ and ▇▇▇▇▇▇, CPA's, A.C.,
BBI's independent certified public accountants.
i. Tax Returns and Other Tax Matters. (i) Through December 31, 1996,
Beckley, BBI and THC have timely filed or caused to be filed all
federal, state and local tax returns and reports which are required by
law to have been filed, and, to the best knowledge and belief of
management of BBI, all such returns and reports were true, correct and
complete and contained all material information required to be
contained therein; (ii) all federal, state and local income, business
and occupation, franchise, sales, use, property, excise, withholding,
employment and other taxes (including interest and penalties), charges
and assessments which have become due from or been assessed or levied
against Beckley, BBI or THC or their respective properties have been
fully paid or, if not yet due, a reserve or accrual which is adequate
in all material respects for the payment of all such taxes to be paid
and the obligation for such unpaid taxes is reflected on the BBI
Financial Statements; (iii) except as set forth in BBI's Disclosure
Statement, the tax returns and reports of Beckley, BBI and THC have
not been subject to audit by the Internal Revenue Service (the "IRS")
or the Department of Tax and Revenue of the State of West Virginia or
any other state in the last ten (10) years, and neither Beckley, BBI
nor THC has received any indication of the pendency of any audit or
examination in connection with any tax return or report and have no
knowledge that any such return or report is subject to adjustment; and
(iv) neither Beckley, BBI nor THC has executed any waiver or extended
the statute of limitations (or been asked to execute a waiver or
extend a statute of limitation) with respect to any tax year, the
audit of any tax return or report or the assessment or collection of
any tax.
j. Absence of Material Adverse Changes. Since March 31, 1997, Beckley,
BBI and THC have conducted their business only in the ordinary course,
and there has been no material
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adverse change, and there has occurred no event or development and
there currently exists no condition or circumstance which, with the
lapse of time or otherwise, may or could cause, create or result in a
material adverse change, in or affecting the financial condition of
Beckley, BBI or THC or in their results of operations, prospects,
business, assets, loan portfolio, investments, properties or
operations except as may be set forth in the BBI Disclosure Statement.
k. Absence of Undisclosed Liabilities. Beckley, BBI and THC do not have
any liabilities or obligations, whether matured or unmatured, accrued,
absolute, contingent or otherwise, whether due or to become due
(including without limitation tax liabilities or unfunded liabilities
under employee benefit plans or arrangements), other than (i) those
reflected in the BBI Disclosure Statement, BBI Financial Statements or
the BBI Interim Financial Statements, or (ii) obligations or
liabilities incurred in the ordinary course of their business since
April 30, 1997 which are not in the aggregate, material to Beckley, BBI
and THC.
l. Compliance with Existing Obligations. Beckley, BBI and THC have
performed in all material respects all obligations required to be
performed by them under, and they are not in default in any respect
under, or in violation in any respect of, the terms and conditions of
their respective Certificate of Incorporation, Charter or Bylaws,
and/or any contract, agreement, lease, mortgage, note, bond, indenture,
license, obligation, understanding or other undertaking (whether oral
or written) to which Beckley, BBI or THC is bound or by which the
business, capital stock or any property or asset of Beckley, BBI or THC
may be affected.
m. Litigation and Compliance with Law. (i) There are no actions, suits,
arbitrations, controversies or other proceedings or investigations
(or, to the best knowledge and belief of management of Beckley and
BBI, any facts or circumstances which reasonably could result in
such), including without limitation any such action by any
governmental or regulatory authority, which currently exist or are
ongoing, pending or, to the best knowledge and belief of management of
Beckley and BBI threatened, contemplated or probable of assertion,
against, relating to or otherwise affecting Beckley, BBI or THC or any
of their properties, assets or employees which, if determined
adversely, could result in liability on the part of Beckley, BBI or
THC for, or subject Beckley, BBI or THC to, monetary damages, fines or
penalties or an injunction, or which could have a material adverse
effect on the financial condition, results of operations, prospects,
business, assets, loan portfolio, investments, properties or
operations of ▇▇▇▇▇▇▇, BBI or THC or on the ability of BBI to
consummate the Merger or ▇▇▇▇▇▇▇ to consummate the Bank Merger.
(ii) ▇▇▇▇▇▇▇, BBI and THC have all licenses, permits, orders,
authorizations or approvals ("Permits") of any federal, state, local or
foreign governmental or regulatory body that are material to or
necessary for the conduct of their business or to own, lease and
operate their properties; all such Permits are in full force and
effect; no violations are or have been recorded or noted by an
supervisory agency or body in respect of any such Permits; and no
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proceeding is pending or, to the best knowledge of management of
▇▇▇▇▇▇▇ or BBI, threatened or probable of assertion to suspend,
cancel, revoke or limit any Permit.
(iii) Neither ▇▇▇▇▇▇▇, BBI nor THC is subject to any
supervisory agreement, enforcement order, writ, injunction, capital
directive, supervisory directive, memorandum of understanding or other
similar agreement, order, directive, memorandum or consent of, with or
issued by any regulatory or other governmental authority (including
without limitation the FDIC or the OTS) relating to its financial
condition, directors or officers, employees, operations, capital,
regulatory compliance, or otherwise; there are no judgments, orders,
stipulations, injunctions, decrees or awards against ▇▇▇▇▇▇▇, BBI or
THC which in any manner limit, restrict, regulate, enjoin, or prohibit
any present or past business or practice of ▇▇▇▇▇▇▇, BBI or THC; and,
neither ▇▇▇▇▇▇▇, BBI nor THC has been advised nor has any reason to
believe that any regulatory or other governmental authority or any
court is contemplating, threatening or requesting the issuance of any
such agreement, order, injunction, directive, memorandum, judgment,
stipulation, decree or award.
(iv) Neither ▇▇▇▇▇▇▇, BBI nor THC is in violation or default
in any material respect under, and each has complied in all material
respects with, all laws, statutes, ordinances, rules, regulations,
orders, writs, injunctions or decrees of any court or federal, state,
municipal or other governmental or regulatory authority having
jurisdiction or authority over it or its business operations,
properties or assets (including without limitation the Consumer Credit
Protection Act, and all other laws and regulations applicable to
extensions of credit by ▇▇▇▇▇▇▇) and to the best of the knowledge and
belief of the directors of ▇▇▇▇▇▇▇ and BBI, there is no basis for any
claim by any person or authority for compensation, reimbursement or
damages or otherwise for any violation of any of the foregoing.
n. Real Properties. The BBI Disclosure Statement and/or the BBI Financial
Statements lists all real property owned by ▇▇▇▇▇▇▇, BBI and THC
including improvements thereon (including ▇▇▇▇▇▇▇'▇ banking facilities
and all other real estate or foreclosed properties including
improvements thereon owned by ▇▇▇▇▇▇▇) ("Real Property") and all
leases pertaining to any such Real Property to which ▇▇▇▇▇▇▇, BBI or
THC is a party ("Real Property Leases"). With respect to all Real
Property, ▇▇▇▇▇▇▇, BBI or THC has good and marketable title to such
Real Property and owns the same free and clear of all mortgages,
liens, leases, encumbrances, title defects and exceptions to title
other than (i) the lien of current taxes not yet due and payable, and
(ii) such imperfections of title and restrictions, covenants and
easements (including utility easements) which do not materially affect
the value of the Real Property and which do not and will not
materially detract from, interfere with or restrict the present or
future use of the properties subject thereto or affected thereby. With
respect to each Real Property Lease (i) such lease is valid and
enforceable in accordance with its terms, (ii) there currently exists
no circumstance or condition which constitutes an event of default by
▇▇▇▇▇▇▇, BBI or THC(as lessor or lessee) or its respective lessor or
lessee which, with the passage of time or the giving of required
notices will or could
10
constitute such an event of default, and (iii) the execution and
delivery of this Agreement does not constitute an event of default
thereunder.
To the best of the knowledge and belief of management of
▇▇▇▇▇▇▇ and BBI, the Real Property complies in all material respects
with all applicable federal, state and local laws, regulations,
ordinances or orders of any governmental authority, including those
relating to zoning, building and use permits, and the Real Property may
be used under applicable zoning ordinances for commercial purposes or
its historical purpose as a matter of right rather than as a
conditional or nonconforming use.
Except as disclosed in the BBI Disclosure Statement, all
improvements and fixtures included in or on the Real Property are in
good condition and repair, ordinary wear and tear excepted, and there
does not exist any condition which interferes (or will interfere after
the Merger) with the use or affects the economic value thereof.
o. Loans, Accounts, Notes and Other Receivables. (i) All loans, accounts,
notes and other receivables reflected as assets on ▇▇▇▇▇▇▇'▇ books and
records (A) have resulted from bona fide business transactions in the
ordinary course of ▇▇▇▇▇▇▇'▇ operations, (B) generally were made in all
material respects in accordance with ▇▇▇▇▇▇▇'▇ standard loan policies
and procedures, and (C) are owned by ▇▇▇▇▇▇▇ free and clear of all
liens, encumbrances,
assignments, participation or repurchase agreements or other exceptions
to title or to the ownership or collection rights of any other person
or entity.
(ii) All records of ▇▇▇▇▇▇▇ regarding all outstanding loans,
accounts, notes, and other receivables, and all other real estate
owned, are accurate in all material respects, and, with respect to each
loan which ▇▇▇▇▇▇▇'▇ loan documentation indicates is secured by any
real or personal property or property rights ("Loan Collateral"), such
loan is secured by valid, perfected and enforceable liens on all such
Loan Collateral having the priority described in ▇▇▇▇▇▇▇'▇ records of
such loan.
(iii) To the best knowledge of ▇▇▇▇▇▇▇ and BBI, each loan
reflected as an asset on ▇▇▇▇▇▇▇'▇ books, and each guaranty therefore,
is the legal, valid and binding obligation of the obligor or guarantor
thereon, and no defense, offset or counterclaim has been asserted with
respect to any such loan or guaranty.
(iv) ▇▇▇▇▇▇▇ previously has furnished to NewCo (A) a written
listing of each loan, extension of credit or other asset of ▇▇▇▇▇▇▇
which, as of March 31, 1997, is classified by the OTS, or by ▇▇▇▇▇▇▇ as
"Loss," "Doubtful," "Substandard," or "Special Mention" (or otherwise
by words of similar import), or which ▇▇▇▇▇▇▇ has designated as a
special asset or for special handling or placed on any "watch list"
because of concerns regarding the ultimate collectibility or
deteriorating condition of such asset or any obligor or Loan Collateral
therefor, and (B) a written listing of each loan or extension of credit
of ▇▇▇▇▇▇▇ which, as of March 31, 1997, was past due as to the payment
of principal and/or interest, or as to which
11
any obligor thereon (including the borrower or any guarantor) otherwise
was in default, is the subject of a proceeding in bankruptcy or
otherwise has indicated any inability or intention not to repay such
loan or extension of credit in a timely manner. Each such listing is
accurate and complete as of the date indicated.
(v) ▇▇▇▇▇▇▇'▇ reserve for possible losses (the "Loan Loss
Reserve") has been established in conformity with GAAP, sound banking
practices and all applicable requirements of the FDIC and rules and
policies of the OTS and, in the best judgment of management of ▇▇▇▇▇▇▇
and BBI, is reasonable in view of the size and character of ▇▇▇▇▇▇▇'▇
loan portfolio, current economic conditions and other relevant factors,
and is adequate to provide for losses relating to or the risk of loss
inherent in ▇▇▇▇▇▇▇'▇ loan portfolio and other real estate owned. At
March 31, 1997, ▇▇▇▇▇▇▇'▇ Loan Loss Reserve was Three Hundred and Five
Thousand Dollars ($305,000.00). Since that date, such reserve has not
been adjusted below the greater of $305,000.00 or 1.47% of outstanding
loans.
p. Securities Portfolio and Investments. Other than as disclosed in the
BBI Disclosure Statement, all securities owned by ▇▇▇▇▇▇▇, BBI or THC
(whether owned of record or beneficially) are held free and clear of
all mortgages, liens, pledges, encumbrances, or any other restriction
or rights of any other person or entity, whether contractual or
statutory, which would materially impair the ability of ▇▇▇▇▇▇▇, BBI
or THC to dispose freely of any such security and/or otherwise to
realize the benefits of ownership thereof at any time. There are no
voting trusts or other agreements or undertakings to which ▇▇▇▇▇▇▇,
BBI or THC is a party with respect to the voting of any such
securities. With respect to all "repurchase agreements" to which
▇▇▇▇▇▇▇ has "purchased" securities under agreement to resell, ▇▇▇▇▇▇▇
has a valid, perfected first lien or security interest in the
government securities or other collateral securing the repurchase
agreement, and the value of the collateral securing each such
repurchase agreement equals or exceeds the amount of the debt owed to
▇▇▇▇▇▇▇ which is secured by such collateral.
Except for fluctuations in the market values of United States
Treasury and agency or municipal securities, since March 31, 1997,
there has been no significant deterioration or material adverse change
in the quality, or any material decrease in the value, of ▇▇▇▇▇▇▇'▇ or
BBI's securities portfolio as a whole nor has any portion of such
portfolio been handled as a trading as opposed to an investment
account.
q. Personal Property and Other Assets. All assets of ▇▇▇▇▇▇▇, BBI or THC
other than those other assets referred to in Paragraphs 2.1.o. and
2.1.p. (but including all banking equipment, data processing
equipment, vehicles, and all other personal property located in or
used in the operation of each office of ▇▇▇▇▇▇▇ or otherwise used by
▇▇▇▇▇▇▇, BBI or THC in the operation of its business) are owned by
▇▇▇▇▇▇▇, BBI or THC free and clear of all liens, encumbrances, leases,
title defects, or exceptions to title. Except as set forth in the BBI
Disclosure Statement, all of ▇▇▇▇▇▇▇'▇, BBI's and THC's personal
property material to its
12
respective business is in good operating condition and repair,
ordinary wear and tear excepted.
r. Patents and Trademarks. ▇▇▇▇▇▇▇, BBI and THC each own, possess or have
the right to use any and all patents, licenses, trademarks, trade
names, copyrights, trade secrets, and proprietary and other
confidential information necessary to conduct their business as now
conducted; and, neither ▇▇▇▇▇▇▇, BBI nor THC has violated, or currently
is in conflict with, any patent, license, trademark, trade name,
copyright, or proprietary right of any other person or entity.
s. Environmental Matters. (i) ▇▇▇▇▇▇▇ has delivered to NewCo copies of all
written reports, correspondence, notices, or other materials, if any,
in its possession pertaining to environmental surveys or assessments of
the Real Property or any of ▇▇▇▇▇▇▇'▇ Loan Collateral and any
improvements thereon, or to any violation of "Environmental Laws" (as
defined below) on, affecting or otherwise involving the Real Property,
any Loan Collateral or otherwise involving ▇▇▇▇▇▇▇, BBI or THC.
(ii) There has been no presence, use, production, generation,
handling, transportation, treatment, storage, disposal, distribution,
labeling, reporting, testing, processing, emission, discharge, release,
threatened release, control, removal, clean-up, or remediation of any
Hazardous Substances (as defined below) by any person prior to the date
hereof on, from or relating to the Real Property or, to the best of the
knowledge and belief of management of ▇▇▇▇▇▇▇ and BBI, the Loan
Collateral, which constitutes a violation of any Environmental Laws.
(iii) Neither ▇▇▇▇▇▇▇, BBI nor THC is subject to any claims,
demands, causes of action, suits, proceedings, losses, damages,
penalties, liabilities, obligations, costs, or expenses of any kind and
nature which arise out of, under or in connection with, or which result
from or are based upon the presence, use, production, generation,
handling, transportation, treatment, storage, disposal, distribution,
labeling, reporting, testing, processing, emission, discharge, release,
threatened release, control, removal, clean-up, or remediation of any
Hazardous Substances on, from or relating to the Real Property or, to
the best of the knowledge and belief of management of ▇▇▇▇▇▇▇ and BBI,
any Loan Collateral by ▇▇▇▇▇▇▇ or any other person or entity.
(iv) No facts, events or conditions relating to the Real
Property or, to the best knowledge of management of ▇▇▇▇▇▇▇ and BBI,
any Loan Collateral, or the operations of ▇▇▇▇▇▇▇ at any of its office
locations, will prevent, hinder or limit continued compliance with
Environmental Laws, or give rise to any investigatory, emergency
removal, remedial, or corrective actions, obligations or liabilities
(whether accrued, absolute, contingent, unliquidated, or otherwise)
pursuant to Environmental Laws.
(v) For purposes of this Agreement, "Environmental Laws" shall include:
13
(A) all federal, state and local statutes, regulations, ordinances,
orders, decrees, and similar provisions having the force or
effect of law,
(B) all contractual agreements, and
(C) all common law, concerning public health and safety, worker
health and safety, and pollution or protection of the
environment, including withoutlimitation all standards of conduct
and bases of obligations relating to the presence, use,
production, generation, handling, transportation, treatment,
storage, disposal, distribution, labeling, reporting, testing,
processing, discharge, release, threatened release, control,
emergency removal, clean-up or remediation of any Hazardous
Substances (including without limitation the Comprehensive
Environmental Response Compensation and Liability Act, the
Superfund Amendment and Reauthorization Act, the Federal
Insecticide, Fungicide and Rodenticide Act, the Hazardous
Materials Transportation Act, the Resource Conservation and
Recovery Act, the Clean Water Act, the Clean Air Act, the Toxic
Substances Control Act, any "Superfund" or "Superlien" law, the
Americans with Disabilities Act, and the Occupational Safety and
Health Act), as such may now or at any time hereafter be defined
or in effect.
For purposes of this Agreement, "Hazardous Substances" shall
include hazardous, toxic or otherwise regulated materials, substances
or wastes; chemical substances or mixtures; pesticides; pollutants;
contaminants; toxic chemicals; oil or other petroleum products,
byproducts, or constituents (including but not limited to crude oil,
diesel oil, fuel oil, gasoline, lubrication oil, oil refuse, oil mixed
with other waste, oil sludge, and all other liquid hydrocarbons
regardless of specific gravity); asbestos or asbestos containing
material; flammable explosives; polychlorinated biphenyls ("PCBs") or
any material containing PCBS; radioactive materials; biological micro
organisms, viruses, fungi, spores; environmental tobacco smoke; radon
or radon gas; formaldehyde or any material containing formaldehyde;
fumigants; any material or substance comprising or contributing to
conditions known as "sick building syndrome," "building-related
illness" or similar conditions (or exposures; and/or any hazardous,
toxic, regulated or dangerous waste, substance or material defined as
such by the United States Environmental Protection Agency or any other
federal, state or local governmental agency or political subdivision
thereof, or for the purpose of or by any Environmental Laws, as now or
at any time hereafter may be in effect.
t. Absence of Brokerage or Finders Commissions. Other than ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & Co., no person or firm has been retained by or has acted on
behalf of, pursuant to any agreement, arrangement or understanding
with, or under the authority of ▇▇▇▇▇▇▇, BBI, or THC or any of their
Boards of Directors, as a broker, finder or agent or has performed
similar functions or otherwise is or may be entitled to receive or
claim a brokerage fee or other commission in connection with the
transactions described herein, and neither BBI, ▇▇▇▇▇▇▇ nor THC has
14
agreed to pay any brokerage fee or other commission to any person or
entity in connection with the transactions described herein.
u. Employment Agreements and Matters. Other than the January 1, 1997
employment agreement with ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇ Contract"),
neither ▇▇▇▇▇▇▇, BBI nor THC is a party to or bound by any oral or
written employment agreement, express or implied, with any of its
directors, officers or employees, or to any collective bargaining
agreement with any of its employees, any labor union or any other
collective bargaining unit or organization. Each of ▇▇▇▇▇▇▇, BBI and
THC (i) has paid in full to or accrued on behalf of all its respective
directors, officers and employees all compensation for labor or
services rendered, including all wages, salaries, commissions, bonuses,
fees and other direct compensation for all labor or services performed
by them to the date of this Agreement and all vacation pay, sick pay,
severance pay and other amounts promised to the extent required by law
or when ▇▇▇▇▇▇▇, BBI or THC has a policy or practice of making such
payments, and (ii) is in compliance with all applicable federal, state
and local laws, statutes, rules and regulations with regard to
employment and employment practices, terms and conditions, and wages
and hours and other compensation matters. There is no pending, or to
its knowledge, threatened dispute or strike involving ▇▇▇▇▇▇▇, BBI or
THC and any of their respective employees, or any pending or to its
knowledge or threatened proceeding in which it is asserted that
▇▇▇▇▇▇▇, BBI or THC has committed an unfair labor practice; and,
neither ▇▇▇▇▇▇▇ nor BBI nor THC is aware of any activity involving it
or any of its employees seeking to certify a collective bargaining unit
or engaging in any other labor organization activity.
v. Material Contracts. Except for those documents described in the BBI
Disclosure Statement neither ▇▇▇▇▇▇▇ nor BBI nor THC is a party to or
bound by any agreement (i) involving money or other property in an
amount or with a value in excess of Fifty Thousand Dollars ($50,000),
(ii) which is not to be performed in full prior to September 30, 1997,
(iii) which calls for the provision of goods or services to ▇▇▇▇▇▇▇,
BBI or THC and cannot be terminated without material penalty upon
written notice to the other party thereto, (iv) which is material to
▇▇▇▇▇▇▇, BBI or THC and was not entered into in the ordinary course of
business, (v) which involves hedging, options or any similar trading
activity, or interest rate exchanges or swaps, (vi) which commits
▇▇▇▇▇▇▇ to extend any loan or credit (with the exception of letters of
credit, lines of credit and loan commitments extended in the ordinary
course of ▇▇▇▇▇▇▇'▇ business), (vii) which involves the purchase or
sale of any assets of ▇▇▇▇▇▇▇, BBI, or THC, or the purchase, sale,
issuance, redemption or transfer of any capital stock or other
securities of ▇▇▇▇▇▇▇, BBI, or THC, or (viii) with any director,
officer or principal shareholder of ▇▇▇▇▇▇▇, BBI or THC including
without limitation any employment or consulting agreement, but not
including any agreement relating to loans or other banking services
which were made in the ordinary course of ▇▇▇▇▇▇▇'▇ business and on
substantially the same terms and conditions as were prevailing at that
time for similar agreements with unrelated persons.
Neither ▇▇▇▇▇▇▇ nor BBI nor THC is in default in any material
respect, and there has not occurred any event which with the lapse of
time or giving of notice or both would
15
constitute such a default, under any contract, lease, insurance policy,
commitment, or arrangement to which it is a party or by which it or its
property is or may be bound or affected or under which it or its
property receives benefits, where the consequences of such default
would have a material adverse effect on the financial condition,
results of operations, prospects, business, assets, loan portfolio,
investments, properties, or operations of ▇▇▇▇▇▇▇, BBI or THC.
w. Employee Benefit Plans. (i) The BBI Disclosure Statement contains a
true and complete list of all bonus, deferred compensation, pension,
retirement, profit-sharing, thrift, savings, employee stock ownership,
stock bonus, stock purchase, restricted stock, and stock option plans;
all employment and severance contracts; all medical, dental, health,
and life insurance plans; all vacation, sickness and other leave plans,
disability and death benefit plans; and all other employee benefit
plans, contracts or arrangements maintained or contributed to by
▇▇▇▇▇▇▇, BBI or THC for the benefit of any employees, former employees,
directors, former directors, or any of their beneficiaries
(collectively, the "Plans"). True and complete copies of all Plans,
including, but not limited to, any trust instruments and/or insurance
contracts, if any, forming a part thereof, and all amendments thereto,
will be promptly supplied to NewCo Except as provided in the BBI
Disclosure Statement, neither ▇▇▇▇▇▇▇, BBI nor THC maintains, sponsors,
contributes to or otherwise participates in any "Employee Benefit Plan"
within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), any "Multi-employer Plan"
within the meaning of Section 3(37) of ERISA, any "Multiple Employer
Welfare Arrangement" within the meaning of Section 3(40) of ERISA or
would be subject to any withdrawal liability under any Multi- employer
Plan. Except as set forth in the BBI Disclosure Statement, each Plan
which is an "employee pension benefit plan" within the meaning of
Section 3(2) of ERISA and which is intended to be qualified under
Section 401(a) of the Internal Revenue Code of 1986, as amended (the
"Code") has received a determination letter from the IRS and neither
▇▇▇▇▇▇▇, BBI nor THC is aware of any circumstances reasonably likely to
result in the revocation or denial of any such favorable determination
letter. All reports and returns with respect to the Plans (and any
Plans previously maintained by ▇▇▇▇▇▇▇ or BBI) required to be filed
with any governmental department, agency, service or other authority,
including without limitation Internal Revenue Service Form 5500 (Annual
Report), have been properly and timely filed.
(ii) All "Employee Benefit Plans" maintained by or otherwise
covering employees or former employees of ▇▇▇▇▇▇▇, BBI or THC to the
extent subject to ERISA, currently are, and at all times have been, in
compliance with all material provisions and requirements of ERISA.
There is no pending or threatened litigation relating to any Plan or
any such Plan previously maintained by ▇▇▇▇▇▇▇, BBI or THC. Neither
▇▇▇▇▇▇▇ nor BBI nor THC has engaged in a transaction with respect to
any Plan that could subject ▇▇▇▇▇▇▇, BBI or THC to a tax or penalty
imposed by either Section 4975 of the Code or Section 502(i) of ERISA
and none of them has any welfare or benefit plan which promises or
provides for post-retirement or post-employment benefits or payments.
16
(iii) ▇▇▇▇▇▇▇ will promptly deliver to NewCo a true, correct
and complete copy (including copies of all amendments thereto) of any
Retirement Plan of ▇▇▇▇▇▇▇, BBI or THC (the "Retirement Plans"),
together with true, correct and complete copies of the summary plan
description relating to the Retirement Plans, the most recent
determination letter received from the IRS regarding the Retirement
Plans, and the most recent Annual Report (Form 5500 series) and related
schedules, if any, for the Retirement Plans.
Except as disclosed in the BBI Disclosure Statement, the
Retirement Plans are qualified under the provisions of Section 401(a)
of the Code, the trust under each Retirement Plan is an exempt trust
under Section 501(a) of the Code, and a favorable determination letter
with respect to each Retirement Plan has been obtained. There are no
issues relating to said qualification or exemption of any Retirement
Plan currently pending before the IRS, the United States Department of
Labor, the Pension Benefit Guaranty Corporation or any court. The
Retirement Plans and the administration thereof meet (and have met
since the establishment of the Retirement Plan) all of the applicable
requirements of ERISA, the Code and all other laws, rules and
regulations applicable to the Retirement Plans and do not violate (and
since the establishment of the Retirement Plan have not violated) any
of the applicable provisions of ERISA, the Code and such other laws,
rules and regulations. Without limiting the generality of the
foregoing, all reports and returns with respect to the Retirement Plans
required to be filed with any governmental department, agency, service,
or other authority have been properly and timely filed. There are no
issues or disputes with respect to the Retirement Plans or the
administration thereof currently existing between ▇▇▇▇▇▇▇, BBI, or THC
or any trustee or other fiduciary thereunder, and any governmental
agency, any current or former employee of ▇▇▇▇▇▇▇, BBI or THC or
beneficiary of any such employee or any other person or entity. No
"reportable event" within the meaning of Section 4043(b) of ERISA has
occurred at any time with respect to the Retirement Plans.
(iv) No liability under subtitle C or D of Title IV of ERISA
has been or is expected to be incurred by ▇▇▇▇▇▇▇, BBI or THC with
respect to any Retirement Plan or with respect to any other ongoing,
frozen or terminated defined benefit pension plan currently or formerly
maintained by ▇▇▇▇▇▇▇, BBI or THC. Neither ▇▇▇▇▇▇▇ nor BBI nor THC
presently contributes to a "Multi-employer Plan" or has contributed to
such a plan. All contributions required to be made pursuant to the
terms of each of the Plans (including without limitation the Retirement
Plans and any other "pension plan" (as defined in Section 3(2) of
ERISA) maintained by ▇▇▇▇▇▇▇, BBI or THC) have been timely made. Except
as disclosed in the BBI Disclosure Statement, no Retirement Plan or any
other "pension plan" maintained by ▇▇▇▇▇▇▇, BBI or THC has an
"accumulated funding deficiency" (whether or not waived) within the
meaning of Section 412 of the Code or Section 302 of ERISA. Neither
▇▇▇▇▇▇▇ nor BBI nor THC has provided, or is required to provide,
security to any "pension plan" or to any "Single Employer Plan"
pursuant to Section 401(a)(29) of the Code. Under the Retirement Plans
and any other "pension plan" maintained by ▇▇▇▇▇▇▇, BBI or THC as of
the last day of the most recent plan year ended prior to the date
hereof, the actuarially determined present value of all "benefit
liabilities," within the meaning of Section 4001(a)(16) of ERISA (as
determined on the
17
basis of the actuarial assumptions contained in the plan's most recent
actuarial valuation) did not exceed the then current value of the
assets of such plan, and there has been no material change in the
financial condition of any such plan since the last day of the most
recent plan year.
(v) There are no restrictions on the rights of ▇▇▇▇▇▇▇, BBI or
THC to amend or terminate any Plan without incurring any liability
thereunder. Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will (except
as otherwise specifically provided herein) (A) result in any payment to
any person (including without limitation any severance compensation or
payment, unemployment compensation, "golden parachute" or "change in
control" payment, or otherwise) becoming due under any plan or
agreement to any director, officer, employee, or consultant, (B)
increase any benefits otherwise payable under any plan or agreement, or
(C) result in any acceleration of the time of payment or vesting of any
such benefit except that the ▇▇▇▇▇▇▇▇' Contract, the MSBP and BBI
option plan will accelerate.
x. Insurance. ▇▇▇▇▇▇▇, BBI and THC have in effect a "banker's blanket
bond" and other policies of general liability, casualty, directors and
officers liability, employee fidelity, errors and omissions, and other
property and liability insurance as listed in the BBI Disclosure
Statement (the "Policies") . The Policies provide coverage in such
amounts and against such liabilities, casualties, losses, or risks as
is customary or reasonable for entities engaged in the businesses of
▇▇▇▇▇▇▇, BBI or THC or as is required by applicable law or regulation;
and, in the reasonable opinion of management of ▇▇▇▇▇▇▇ and BBI, the
insurance coverage provided under the Policies is considered reasonable
and adequate in all respects for ▇▇▇▇▇▇▇, BBI and THC. Each of the
Policies is in full force and effect and is valid and enforceable in
accordance with its terms, and is underwritten by an insurer of
recognized financial responsibility; and, ▇▇▇▇▇▇▇, BBI and THC have
taken all requisite actions (including the giving of required notices)
under each such Policy in order to preserve all rights thereunder with
respect to all matters. Neither ▇▇▇▇▇▇▇ nor BBI nor THC is in default
under the provisions of, has received notice of cancellation or
nonrenewal of or any premium increase on, or has any knowledge of any
failure to pay any premium on or any inaccuracy in any application for
any Policy. There are no pending claims with respect to any Policy (and
neither ▇▇▇▇▇▇▇ nor BBI nor THC is aware of any facts which would form
the basis of any such claim), and neither ▇▇▇▇▇▇▇ nor BBI nor THC has
knowledge of any facts or of the occurrence of any event that is
reasonably likely to form the basis for any such claim.
y. Insurance of Deposit. All deposits of ▇▇▇▇▇▇▇ are insured by SAIF of
the FDIC to the maximum extent permitted by law, all deposit insurance
premiums due from ▇▇▇▇▇▇▇ to the FDIC have been paid in full in a
timely fashion, and, to the best of the knowledge and belief of
▇▇▇▇▇▇▇'▇ executive officers, no proceedings have been commenced or are
contemplated by the FDIC or otherwise to terminate such insurance.
18
z. Options Granted; Awards. The BBI Disclosure Statement (i) lists the
number of outstanding options held by and the name of the holder for
each person to whom a stock option has been granted and currently is
outstanding under any stock option for ▇▇▇▇▇▇▇, BBI or THC and (ii)
lists the number of shares and the name of each Award Holder for all
shares involving the MSBP.
aa. Obstacles to Regulatory Approval or Tax Treatment. To the best of the
knowledge and belief of BBI, there exists no fact or condition
(including ▇▇▇▇▇▇▇'▇ record of compliance with the Community
Reinvestment Act) relating to ▇▇▇▇▇▇▇, BBI or THC that may reasonably
be expected to (i) prevent or materially impede or delay ▇▇▇▇▇▇▇, BBI
or THC from obtaining the regulatory approvals required in order to
consummate transactions described herein, and, if any such fact or
condition becomes known to ▇▇▇▇▇▇▇ or BBI, BBI shall promptly (and in
any event within three (3) days after obtaining such knowledge)
communicate such fact or condition to NewCo.
bb. Disclosure. To the best of the knowledge and belief of BBI, all written
statements, certificates, schedules, lists, or other written
information furnished by or on behalf of ▇▇▇▇▇▇▇, BBI or THC at any
time to NewCo in connection with this Agreement (including without
limitation the statements contained herein), when considered as a
whole, will be accurate in all material respects.
2.2. Representations and Warranties of NewCo. NewCo hereby represents and
warrants to BBI as follows:
a. Organization; Standing; Power. NewCo (i) is duly organized and
incorporated, validly existing and in good standing under the laws of
West Virginia, (ii) has all requisite power and authority (corporate
and other) to own its properties and conduct its business as now being
conducted, (iii) is duly qualified to do business and is in good
standing in each other jurisdiction in which the character of the
properties owned or leased by it therein or in which the transaction of
its business makes such qualification necessary except where failure so
to qualify would not have a material adverse effect on NewCo and its
affiliates considered as one enterprise, and (iv) is not transacting
business, or operating any properties owned or leased by it, in
violation of any provision of federal or state law or any rule or
regulation promulgated thereunder, which violation would have a
material adverse effect on NewCo and its affiliates considered as one
enterprise.
b. Capital Stock. NewCo's authorized capital stock consists of Five
Thousand (5,000) shares of common Stock ("NewCo Stock"). As of the date
of this Agreement, an aggregate of Five Thousand (5,000) shares of
NewCo Stock had been issued and were outstanding, all of which are
owned by Horizon. NewCo's outstanding capital stock has been duly
authorized and validly issued, and is fully paid and nonassessable.
19
c. Authorization and Validity of Agreement. This Agreement has been duly
and validly approved by NewCo's Board of Directors and executed and
delivered on NewCo's behalf. Subject only to approval and ratification
of this Agreement by Horizon as the sole shareholder of NewCo in the
manner required by law and required regulatory approvals, (i) NewCo has
the corporate power and authority to execute and deliver this Agreement
and to perform its obligations and agreements and carry out the
transactions described herein, (ii) all corporate proceedings required
to be taken to authorize NewCo to enter into this Agreement and to
perform its respective obligations and agreements and carry out the
transactions described herein have been duly and properly taken, and
(iii) this Agreement constitutes the valid and binding agreement of
NewCo enforceable in accordance with its terms (except to the extent
enforceability may be limited by (A) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws from time to time in effect
which affect creditors' rights generally, (B) legal and equitable
limitations on the availability of injunctive relief, specific
performance and other equitable remedies, and (C) general principles of
equity and applicable laws or court decisions limiting the
enforceability of indemnification provisions).
d. Validity of Transactions; Absence of Required Consents or Waivers.
Except where the same would not have a material adverse effect on NewCo
and its affiliates considered as one enterprise, neither the execution
and delivery of this Agreement, nor the consummation of the
transactions described herein, nor compliance by NewCo with any of its
obligations or agreements contained herein, will:
(i) conflict with or result in a breach of the terms and
conditions of, or constitute a default or violation under any provision
of, NewCo's Certificate of Incorporation, Charter or Bylaws, or any
contract, agreement, lease, mortgage, note, bond, indenture, license,
or obligation or understanding (oral or written) to which NewCo is
bound or by which it, its business, capital stock or any of its
properties or assets may be affected;
(ii) result in the creation or imposition of any lien,
claim, interest, charge, restriction or encumbrance upon any of NewCo's
properties or assets;
(iii) violate any applicable federal or state statute, law,
rule or regulation, or any order, writ, injunction, or decree of any
court, administrative or regulatory agency or governmental body;
(iv) result in the acceleration of any obligation or
indebtedness of NewCo; or,
(v) interfere with or otherwise adversely affect NewCo's
ability to carry on its business as presently conducted.
No consents, approvals or waivers are required to be obtained
from any person or entity in connection with NewCo's execution and
delivery of this Agreement, or the
20
performance of its obligations or agreements or the consummation of the
transactions described herein, except for required approvals of NewCo's
shareholder and of governmental or regulatory authorities.
e. Obstacles to Regulatory Approval or Tax Treatment. To the best of the
knowledge and belief of the executive officers of NewCo, no fact or
condition (including the record of compliance with the Community
Reinvestment Act by Raleigh) relating to NewCo exists that may
reasonably be expected to (i) prevent or materially impede or delay
NewCo from obtaining the regulatory approvals required in order to
consummate transactions described herein, and, if any such fact or
condition becomes known to the executive officers of NewCo, NewCo
promptly (and in any event within three (3) days after obtaining such
knowledge) shall communicate such fact or condition to BBI.
f. Disclosure. To the best of the knowledge and belief of NewCo, all
written statements, certificates, schedules, lists or written
information furnished by or on behalf of NewCo at any time to BBI in
connection with this Agreement (including without limitation the
statements contained herein), when considered as a whole, will be
accurate and complete in all material respects. Each document delivered
or to be delivered by NewCo to BBI is or will be a true and complete
copy of such document, unmodified except by another document delivered
by NewCo.
g. Financial Capability. NewCo has sufficient financial resources
available to it to consummate the transactions contemplated herein and
to make the required Cash Payment.
h. Other Transactions. NewCo may have negotiations for the acquisition of
other banking institutions. Nothing contained herein shall in any
manner limit the ability of NewCo or any of its affiliates including
Horizon to acquire additional banking institutions or other
corporations, either before or after the Effective Date, for such
consideration (cash, notes, common or preferred stock) and upon such
terms and conditions as deemed appropriate by NewCo or Horizon or other
affiliates as the case may be. Notwithstanding the foregoing, NewCo
will not, and will use its best efforts to cause its affiliates to not,
make or agree to make any acquisition or take any action that
materially adversely affect its ability to consummate the transaction
contemplated hereby in a reasonably timely manner.
ARTICLE III. COVENANTS OF BBI
3.1. Affirmative Covenants of BBI. BBI hereby covenants and agrees as
follows with NewCo.:
a. BBI Option Holders. BBI will use its best efforts to cause each Option
Holder listed in the BBI Disclosure Statement (as well as each
additional person who shall become a BBI Option Holder after the date
of this Agreement) to execute and deliver to NewCo prior to the
21
Closing the Cancellation Letter relating to cancellation of such option
rights in return for the Cash Payment all in form and content
reasonably satisfactory to NewCo.
b. Conduct of Business Prior to Effective Time. While the parties
recognize that the operation of ▇▇▇▇▇▇▇, BBI and THC until the
Effective Time is the responsibility of ▇▇▇▇▇▇▇, BBI , THC and their
Board of Directors and officers, BBI agrees that, between the date of
this Agreement and the Effective Time, ▇▇▇▇▇▇▇, BBI and THC
respectively will carry on its business, in substantially the same
manner as such business heretofore was conducted, and, to the extent
consistent with such business and within its reasonable ability to do
so, BBI agrees that it and, where applicable, ▇▇▇▇▇▇▇ and THC will:
(i) preserve intact their present business organization, keep
available their present officers, and preserve their relationships with
customers, depositors, creditors, correspondents, suppliers, and others
having business relationships with them;
(ii) maintain all of their properties and equipment in
customary repair, order and condition, ordinary wear and tear excepted;
(iii) maintain their books of account and records in the
usual, regular and ordinary manner in accordance with sound business
practices applied on a consistent basis;
(iv) comply with all laws, rules and regulations applicable t
them, their properties, assets or employees and to the conduct of their
business;
(v) continue to maintain in force insurance; not modify any
bonds or policies of insurance in effect as of the date hereof unless
the same, as modified, provides substantially equivalent coverage; and,
not cancel, allow to be terminated or, to the extent available, fail to
renew, any such bond or policy of insurance unless the same is replaced
with a bond or policy providing substantially equivalent coverage;
(vi) promptly provide to NewCo such information about ▇▇▇▇▇▇▇,
BBI and THC and their financial condition, results of operations,
prospects, businesses, assets, loan portfolio, investments, properties
or operations, as NewCo reasonably shall request.
c. Periodic Information Regarding Loans. All new extensions of credit by
▇▇▇▇▇▇▇ in excess of $100,000 and any further extensions of credit to
existing borrowers that have not made timely payments in the past will
be submitted to NewCo on a before-the-fact basis for NewCo's review but
not approval within three (3) business days prior to ▇▇▇▇▇▇▇'▇ issuance
of a commitment on such loan.
Additionally, ▇▇▇▇▇▇▇ agrees to make available and provide to
NewCo the following information with respect to its loans and other
extensions of credit (such assets herein referred to as "Loans") as of
March 31, 1997, and as of the end of each month thereafter until
22
the Effective Time, such information for each month to be in form and
substance as is usual and customary in the conduct of its business and
to be furnished within fifteen (15) days of the end of each month
ending after the date hereof:
(i) a list of Loans past due for sixty (60) days or more
as to principal or interest;
(ii) the amount of the Loan Loss Reserve (to be furnished
within fifteen (15) days of the end of each calendar quarter after the
date hereof unless prepared on a more frequent basis), which shall
include a list of all classified or "watch list" Loans, along with the
outstanding balance and amount specifically allocated to the Loan Loss
Reserve for each such classified or "watch list" Loan;
(iii) a list of Loans in nonaccrual status;
(iv) a list of all Loans over Fifty Thousand Dollars
($50,000.00) without principal reduction for a period of longer than
one year;
(v) a list of all foreclosed real property or other real
estate owned and all repossessed personal property;
(vi) a list of reworked or restructured Loans over Fifty
Thousand Dollars ($50,000.00) and still outstanding, including original
terms, restructured terms and status;
(vii) a list of all impaired loans as so classified under
GAAP; and
(viii) a list of any litigation by or against ▇▇▇▇▇▇▇
pertaining to any Loans or credits, which list shall contain a
description of circumstances surrounding such litigation, its present
status and management's evaluation of such litigation.
d. Notice of Certain Changes or Events. Following the execution of this
Agreement and up to the Effective Time, BBI promptly will notify NewCo
in writing of and provide to it such information as it shall request
regarding (i) any material adverse change in its consolidated financial
condition, consolidated results of operations, business, assets, loan
portfolio, investments, properties or operations, or of the actual or
prospective occurrence of any condition or event of which it has actual
knowledge, which, with the lapse of time or otherwise, may or could
cause, create or result in any such material adverse change, or (ii)
the actual or prospective existence or occurrence of any condition or
event of which it has actual knowledge which, with the lapse of time or
otherwise, has caused or may or could cause any statement,
representation or warranty of ▇▇▇▇▇▇▇, BBI or THC herein to be or
become inaccurate, misleading or incomplete, or which has resulted or
may or could cause, create or result in the breach or violation of any
of ▇▇▇▇▇▇▇'▇ or BBI's covenants or agreements contained herein or in
the failure of any of the conditions described in Paragraphs 6.1. or
6.3. below.
23
e. Consents to Assignment of Leases. ▇▇▇▇▇▇▇, BBI and THC will use its
best efforts to obtain all required consents of its lessors to the
assignment to NewCo or Raleigh of their rights and obligations under
any personal property leases, each of which consents shall be in such
form as shall be specified by NewCo.
f. Further Action; Instruments of Transfer, etc. ▇▇▇▇▇▇▇ and BBI each
covenants and agrees with NewCo that it (i) will use its best efforts
in good faith to take or cause to be taken all action required of
▇▇▇▇▇▇▇, BBI or THC hereunder as promptly as practicable so as to
permit the consummation of the transactions described herein at the
earliest possible date, (ii) shall perform all acts and execute and
deliver to NewCo all documents or instruments required herein or as
otherwise shall be reasonably necessary or useful to or requested of
BBI in consummating such transactions, and, (iii) will cooperate with
NewCo in every way in carrying out, and will pursue diligently the
expeditious completion of, such transactions.
g. Bank Merger. NewCo and BBI each agrees to promptly proceed to prepare
or cause to be prepared all documents and submit or cause to be
submitted all necessary requests for approvals required to effect the
Bank Merger. Each party agrees to keep the other reasonably advised of
its actions in this regard and to furnish each other with copies of all
notices, agreements, filings and matters pertaining thereto.
▇. ▇▇▇▇▇▇▇▇' Contract. As of the close of business on the Effective Time,
BBI and ▇▇▇▇▇▇▇ shall terminate the employment of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and
shall accrue and immediately pay such individual in the form of a lump
sum payment or installments at his election the amounts due such
individual under Section 12(a) of the ▇▇▇▇▇▇▇▇' Contract provided
▇▇▇▇▇▇▇▇ must give written notice of his election to receive a lump sum
or to receive periodic payments to both BBI and NewCo at least thirty
(30) days prior to commencement of any payments to him.
i. Benefit Plans. On or prior to the Effective Time, or as soon as
administratively feasible thereafter, ▇▇▇▇▇▇▇ and BBI shall take such
actions as they deem necessary and appropriate with respect to the
termination and distribution of benefits payable under the BBI Employee
Stock Ownership Plan and Trust ("ESOP") in accordance with its terms,
▇▇▇▇▇▇▇'▇ defined benefit plan, the Stock Option Plan, the MSBP and the
termination of the employment of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President, and the
payment of sums due and payable in accordance with the ▇▇▇▇▇▇▇▇'
Contract. As of the Effective Time, NewCo shall deliver in immediately
available funds to the ESOP Trust the Cash Payment per share multiplied
by the number of shares of BBI Stock held by the ESOP. The ESOP shall
thereafter immediately make distribution of benefits. The plan
administrative committees and plan trustee committees (collectively,
the "Responsible Parties") in place with respect to such plans, trusts
and agreements as of the date of the Merger shall remain in place as of
the Effective Time and thereafter for as long as is deemed necessary to
finalize all actions associated with such plan termination and benefits
distribution. Further, the Responsible Parties shall be indemnified for
all actions taken after the Effective Time that are necessary and
appropriate for the
24
completion of their responsibilities in the same manner as if such
actions were taken prior to the Effective Time, provided, however, that
said persons must consult with and follow the reasonable directives of
NewCo after the Effective Time. NewCo agrees that such directives will
not cause material delay in the distribution of benefits.
3.2. Negative Covenants of BBI. BBI hereby covenants and agrees that, between
the date hereof and the Effective Time, BBI or, if applicable, ▇▇▇▇▇▇▇, or THC,
will not do any of the following things or take any of the following actions
without the prior written consent and authorization of NewCo which consent and
authorization shall not be unreasonably withheld:
a. Amendments to Certificate of Incorporation, etc. Amend its Certificate
of Incorporation, Charter or Bylaws.
b. Change in Capital Stock. (i) Make any change in its authorized capital
Stock, or create any other or additional authorized capital Stock or
other securities, or (ii) issue, sell, purchase, redeem, retire,
reclassify, combine, or split any shares of its capital Stock or other
securities (including securities convertible into capital Stock), or
enter into any agreement or understanding with respect to any such
action except pursuant to Stock benefit plans currently in effect and
legally binding commitments currently in effect.
c. Options, Warrants and Rights. Grant or issue any new or additional
options, warrants, calls, puts or other rights of any kind relating to
the purchase, redemption or conversion of shares of its capital Stock
or any other securities (including securities convertible into capital
Stock) or enter into any agreement or understanding with respect to any
such action or to award any further Stock rights under the MSBP.
d. Dividends. Declare or pay any dividends on outstanding shares of
capital Stock or make any other distributions on or in respect of any
shares of its capital Stock or otherwise to its shareholders.
e. Employment, Benefit or Retirement Agreements or Plans. Except as
contemplated by this Agreement or as required by law (i) enter into or
become bound by any oral or written contract, agreement or commitment
for the employment or compensation of any director, officer, employee
or consultant which is not immediately terminable by ▇▇▇▇▇▇▇, BBI or
THC without cost or other liability on no more than thirty (30) days'
notice; (ii) adopt, enter into or become bound by any new or additional
profit-sharing, bonus, incentive, change in control or "golden
parachute," Stock option, Stock purchase, pension, retirement,
insurance (hospitalization, life or other), paid leave (sick leave,
vacation leave or other), or similar contract, agreement, commitment,
understanding, plan, or arrangement (whether formal or informal) with
respect to or which provides for benefits for any of its current or
former directors, officers, employees, or consultants; or (iii) enter
into or become bound by any contract with or commitment to any labor or
trade union or association or any collective bargaining group.
25
f. Increase in Compensation. Increase the compensation or benefits of, or
pay any bonus or other special or additional compensation to, any of
its directors, officers, employees or consultants, other than standard,
customary adjustments and merit increases consistent with past
practices.
g. Accounting Practices. Make any changes in its accounting methods,
practices or procedures or in depreciation or amortization policies,
schedules or rates heretofore applied except as required by GAAP or
governmental regulations or authorities.
h. Acquisitions; Additional Branch Offices. Directly or indirectly (i)
acquire or merge with, or acquire any branch or all or any significant
part of the assets of, any other person or entity, (ii) open any new
branch office, or (iii) enter into or become bound by any contract,
agreement, commitment or letter of intent relating to, or otherwise
take or agree to take any action in furtherance of, any such
transaction or the opening of a new branch office.
i. Changes in Business Practices. Except as may be required by the FDIC,
the OTS, or any other governmental or other regulatory agency or as
shall be required by applicable law, regulation or this Agreement, (i)
change in any material respect the nature of its business or the manner
in which it conducts its business, (ii) discontinue any material
portion or line of its business, or (iii) change in any material
respect its lending, investment, asset-liability management or other
material banking or business policies (except to the extent required by
Paragraphs 3.1.b. above). ▇▇▇▇▇▇▇ and BBI may purchase tail coverage
under its director and officers liability policy to provide coverage to
its directors and officers after the Effective Time in such amount and
duration as shall be reasonably available and at such cost not to
exceed Forty Thousand Dollars ($40,000.00). If NewCo can obtain the
same coverage at less cost then BBI agrees to purchase the coverage
arranged by NewCo.
j. Exclusive Merger Agreement. Directly or indirectly, through any person
(i) encourage, solicit or attempt to initiate or procure discussions,
negotiations or offers with or from any person or entity (other than
NewCo) relating to a merger or other acquisition of BBI or the purchase
or acquisition of any BBI Stock, BBI Stock or any THC Stock, any branch
office of ▇▇▇▇▇▇▇ or all or any significant part of THC's, ▇▇▇▇▇▇▇'▇ or
BBI's assets; or provide assistance to any person in connection with
any such offer; (ii) except to the extent required by law, disclose to
any person or entity any information not customarily disclosed to the
public concerning Beckley, BBI or THC or their respective business, or
afford to any other person or entity access to its properties,
facilities, books or records; (iii) sell or transfer any branch office
of Beckley or all or any significant part of ▇▇▇▇▇▇▇'▇, BBI's, or THC's
assets to any other person or entity; or (iv) subject to its fiduciary
duty to its shareholders enter into or become bound by any contract,
agreement, commitment or letter of intent relating to, or otherwise
take or agree to take any action in furtherance of, any such
transaction.
k. Acquisition or Disposition of Assets. (i) Sell or lease (as lessor), or
enter into or become bound by any contract, agreement, option or
commitment relating to the sale, lease (as lessor)
26
or other disposition of any real estate; or sell or lease (as lessor),
or enter into or become bound by any contract, agreement, option or
commitment relating to the sale, lease (as lessor) or other disposition
of any equipment or any other fixed or capital asset (other than real
estate) having a book value or a fair market value, whichever is
greater, of more than Fifty Thousand Dollars ($50,000) for any
individual item or asset, or more than Fifty Thousand Dollars ($50,000)
in the aggregate for all such items or assets;
(ii) Purchase or lease (as lessee), or enter into or become
bound by any contract, agreement, option or commitment relating to the
purchase, lease (as lessee) or other acquisition of any real property;
or purchase or lease (as lessee), or enter into or become bound by any
contract, agreement, option or commitment relating to the purchase,
lease (as lessee) or other acquisition of any equipment or any other
fixed assets (other than real estate) having a purchase price, or
involving aggregate lease payments, in excess of Fifty Thousand Dollars
($50,000) for any individual item or asset, or more than One Hundred
Thousand Dollars ($100,000) in the aggregate for all such items or
assets;
(iii) Sell, purchase or repurchase, or enter into or become
bound by any contract, agreement, option or commitment to sell,
purchase or repurchase, any loan or other receivable or any
participation in any loan or other receivable other than in the
ordinary course of business or as required by the OTS or the FDIC; or
(iv) Sell or dispose of, or enter into or become bound by any
contract, agreement, option or commitment relating to the sale or other
disposition of, any other asset (whether tangible or intangible, and
including without limitation any trade name, trademark, copyright,
service ▇▇▇▇ or intellectual property right or license); or assign its
right to or otherwise give any other person its permission or consent
to use or do business under the corporate name of Beckley, BBI or THC
or any name similar thereto; or release, transfer or waive any license
or right granted to it by any other person to use any trademark, trade
name, copyright, service ▇▇▇▇, or intellectual property right.
Notwithstanding the foregoing, Beckley may foreclose, bid in
or otherwise dispose of Loan Collateral (real or personal) according to
its usual and customary practice.
l. Debt; Liabilities. Except in the ordinary course of its business
consistent with its past practices, (i) enter into or become bound by
any promissory note, loan agreement or other agreement or arrangement
pertaining to its borrowing of money, (ii) assume, guarantee, endorse
or otherwise become responsible or liable for any obligation of any
other person or entity, or (iii) incur any other liability or
obligation (absolute or contingent).
m. Liens; Encumbrances. Mortgage, pledge or subject any of its assets to,
or permit any of its assets to become or (with the exception of those
liens and encumbrances specifically described in the BBI Disclosure
Statement) remain subject to, any lien or any other encumbrance (other
than in the ordinary course of business consistent with its past
practices
27
in connection with securing of public funds, deposits, repurchase
agreements or other similar operating matters).
n. Waiver of Rights. Waive, release or compromise any material rights in
its favor (except in the ordinary course of business) except in good
faith for fair value in money or money's worth, nor waive, release or
compromise any rights against or with respect to any of its officers,
directors or shareholders or members of families of officers, directors
or shareholders.
o. Retirement Contributions. Notwithstanding anything in this Agreement to
the contrary, Beckley or BBI will make a cash contributions to the ESOP
on or before the Effective Date in an amount not to exceed the
outstanding principal balance on the ESOP promissory note by and
between the ESOP Trust and BBI; provided that such Beckley or BBI
contributions shall be limited to the extent that it will not exceed
the limits of tax deductibility under the Code for any ESOP plan years
ending on or before the Effective Time. Such contributions shall not be
considered in determining whether there has been a material adverse
change to the business operations or financial statements of Beckley or
BBI.
ARTICLE IV. COVENANTS OF NEWCO
4.1. Covenants of Raleigh. NewCo hereby covenants and agrees as follows with
BBI:
a. Employment Agreement. (i) The existing employment agreement with the
President of Beckley (a true copy of which has been furnished to NewCo)
shall be terminated at the Effective Time with payments as called for
therein to be made (if not previously paid by BBI or Beckley) by NewCo
or BBI. (ii) NewCo will use its best efforts to retain all Beckley
employees (other than ▇▇▇▇▇▇▇▇) after the Merger. Any individual (other
than ▇▇▇▇▇ ▇▇▇▇▇▇▇▇) employed by Beckley at the Effective Time shall be
entitled to severance compensation equal to three (3) months salary if
not retained by NewCo or Raleigh. For purposes hereof, "retained" shall
mean the offer of continuation of employment under substantially the
same terms with the same or similar duties at a location in Raleigh
County, West Virginia for a period of at least one (1) year subject to
termination for cause. "Cause" shall mean dishonesty, unexcused absence
from work or gross insubordination. NewCo or Raleigh will give any
employee at least thirty (30) days notice that he or she will not be
retained after the Merger.
b. Employee Benefits. NewCo agrees that after the Merger, all employees of
Beckley and dependents covered under the Beckley health plans or
welfare plans as the case may be that are retained by NewCo or Raleigh
shall (i) be covered under the Raleigh health plan with no uninsured
waiting periods or exclusion for pre-existing conditions, (ii) receive
credit for prior service at Beckley under the Raleigh vacation plan and
receive credit (up to a maximum of ninety (90) days) for unused sick
days under the Raleigh sick leave plan, (iii) immediately
28
become participants in the Raleigh pension and 401(k) plan, and (iv)
immediately be entitled to vested benefits under the Raleigh 401(k)
plan. The normal vesting schedule will apply for the Raleigh pension
plan with no credit for past service as a Beckley employee. In
addition, all retained employees shall be eligible to otherwise receive
benefits available to other Raleigh employees similarly situated.
ARTICLE V. MUTUAL AGREEMENTS
5.1. Shareholders Meeting; Proxy Statement.
a. Meeting of Shareholders. BBI shall cause a special meeting of its
shareholders (the "Shareholders Meetings") to be held as soon as
reasonably possible for the purpose of BBI's shareholders voting on the
approval of the Merger. BBI shall act upon approval of the Bank Merger
by no later than June 30, 1997. In connection with the call and conduct
of and all other matters relating to the Shareholders Meeting
(including the solicitation of proxies), BBI shall fully comply with
all provisions of applicable law and regulations and with BBI's
respective governing instruments.
b. Preparation and Distribution of Proxy Statement. BBI shall prepare a
"Proxy Statement" for distribution to BBI's shareholders as BBI's proxy
statement relating to BBI's solicitation of proxies for use at its
shareholders meeting. The Proxy Statement shall be in such form and
shall contain or be accompanied by such information as is required by
applicable law and regulations. BBI shall use its best efforts to file
such statement with the SEC by July 1, 1997.
c. Recommendation of BBI's Board of Directors and Voting of Shares. Unless
due to a material change in circumstances or for any other reason BBI's
Board of Directors reasonably believes that such a recommendation would
violate the directors' fiduciary duties or obligations as such to BBI
or to its shareholders, BBI's Board of Directors shall recommend to
BBI's shareholders that they vote their shares of BBI Stock at the
Shareholders Meeting to ratify and approve this Agreement and the
Merger, and the Proxy Statement mailed to BBI's shareholders will so
indicate and state that BBI's Board of Directors considers the Merger
to be advisable and in the best interests of BBI and its shareholders.
Each director of BBI has agreed and represented to BBI for the benefit
of NewCo that he or she intends to vote all shares of BBI Stock owned
by him or her in favor of the Agreement and the Merger.
d. Information for Proxy Statement. NewCo, Beckley and BBI each agrees to
promptly respond and to use its best efforts to cause its directors,
officers, accountants and affiliates to promptly respond, to requests
by BBI and its counsel for information for inclusion in the Proxy
Statement. NewCo, Beckley and BBI each hereby covenants with the other
that none of the information provided by it for inclusion in the Proxy
Statement will, at the time of its
29
mailing to shareholders, contain any untrue statement of a material
fact or omit any material fact required to be stated therein or
necessary in order to make the statements contained therein, in light
of the circumstances under which they were made, not misleading; and,
at all times following such mailing up to and including the Effective
Time, none of such information contained in the Proxy Statement, as it
may be amended or supplemented, will contain any untrue statement of a
material fact or omit any material fact required to be stated therein
or necessary in order to make the statements contained therein, in
light of the circumstances under which they were made, not misleading.
5.2. Regulatory Approvals. As soon as practicable after the date of this
Agreement, NewCo, Raleigh, Beckley and BBI each shall prepare and file, or cause
to be prepared and filed, all applications for regulatory approvals and actions
as may be required of them, respectively, by applicable law and regulations with
respect to the Merger and the Bank Merger (including applications to the FDIC,
the West Virginia Board, the OTS and to any other applicable federal or state
banking, or other regulatory authority). Each such party shall use their
respective best efforts in good faith to obtain all necessary regulatory
approvals required for consummation of the mergers described herein. Each such
party shall cooperate with each other party in the preparation of all
applications to regulatory authorities and, upon request, promptly shall furnish
all documents, information, financial statements, or other material that may be
required by any other party to complete any such application; and, before the
filing therefore, each party to this Agreement shall have the right to review
and comment on the form and content of any such application to be filed by any
other party. Should the appearance of any of the officers, directors, employees,
or counsel of any of the parties hereto be requested by any other party or by
any governmental agency at any hearing in connection with any such application,
such party shall promptly use its best efforts to arrange for such appearance.
5.3. Access. Following the date of this Agreement and to and including the
Effective Time, Beckley , BBI and THC shall provide NewCo and Raleigh and its
employees, accountants, counsel, or other representatives, with access to all
its books, records, files, and other information (whether maintained
electronically or otherwise), to all its properties and facilities, and to all
its employees, accountants, counsel, and consultants as NewCo shall, in its sole
discretion, consider to be necessary or appropriate; provided, however, that any
investigation or reviews conducted by NewCo ("Due Diligence") shall be performed
in such a manner as will not interfere unreasonably with ▇▇▇▇▇▇▇'▇ or BBI's
normal operations or with ▇▇▇▇▇▇▇'▇ relationship with its customers or
employees, and shall be conducted in accordance with procedures established by
the parties having due regard for the foregoing. NewCo shall provide Beckley and
its representatives with such access to such records as may be necessary for an
evaluation of the financial ability of NewCo to complete this acquisition and
remit the Cash Payment.
5.4. Costs. Subject to the provisions of Paragraph 7.3. below, and whether or
not this Agreement shall be terminated or the Merger shall be consummated, NewCo
and Beckley each shall pay its own legal, accounting and financial advisory fees
and all its other costs and expenses incurred or to be incurred in connection
with the execution and performance of its obligations under this Agreement
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or otherwise in connection with this Agreement and the transactions described
herein (including without limitation all accounting fees, legal fees, printing
costs, travel expenses, and the cost of fairness opinions).
5.5. Announcements. BBI and NewCo each agrees that no person other than the
parties to this Agreement is authorized to make any public announcements or
statements about this Agreement or any of the transactions described herein, and
that, without the prior review and consent of the others (which consent shall
not unreasonably be denied or delayed), no party hereto may make any public
announcement, statement or disclosure as to the terms and conditions of this
Agreement or the transactions described herein, except for such disclosures as
may be required incidental to obtaining the prior approval of any regulatory
agency or official to the consummation of the transactions described herein.
However, notwithstanding anything contained herein to the contrary, prior review
and consent shall not be required if in the good faith opinion of counsel to
NewCo or BBI any such disclosure by NewCo or BBI is required by law or otherwise
is prudent.
5.6. Confidentiality. NewCo, Beckley and BBI each agrees that it shall treat as
confidential and not disclose to any unauthorized person any documents or other
information obtained from or learned about the other during the course of the
negotiation of this Agreement and the carrying out of the events and
transactions described herein (including any information obtained during the
course of any due diligence investigation or review provided for herein or
otherwise) and which documents or other information relates in any way to the
business, operations, personnel, customers or financial condition of such other
party; and, that it will not use any such documents or other information for any
purpose except for the purposes for which such documents and information were
provided to it and in furtherance of the transactions described herein. However,
the above obligations of confidentiality shall not prohibit the disclosure of
any such document or information by any party to this Agreement to the extent
(i) such document or information is then available generally to the public or is
already known to the person or entity to whom disclosure is proposed to be made
(other than through the previous actions of such party in violation of this
Paragraph 5.6), (ii) such document or information was available to the
disclosing party on a nonconfidential basis prior to the same being obtained
pursuant to this Agreement, (iii) disclosure is required by subpoena or order of
a court or regulatory authority of competent jurisdiction, or by the SEC or
other regulatory authorities in connection with the transactions described
herein, or (iv) to the extent that, in the reasonable opinion of legal counsel
to such party, disclosure otherwise is required by law.
In the event this Agreement is terminated for any reason, then each of
the parties hereto immediately shall return to the other party all copies of any
and all documents or other written materials or information (including computer
generated and stored data) of or relating to such other party which were
obtained from them during the course of the negotiation of this Agreement and
the carrying out of the events and transactions described herein (whether during
the course of any due diligence investigation or review provided for herein or
otherwise) and which documents or other information relates in any way to the
business, operations, personnel, customers or financial condition of such other
party.
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The parties' obligations of confidentiality under this Paragraph 5.6.
shall survive and remain in effect following any termination of this Agreement.
5.7. Tax-Free Reorganization. NewCo and Beckley each undertakes and agrees to
use its best efforts to cause the Bank Merger to qualify as a tax-free
"reorganization" within the meaning of Section 368 of the Code and that neither
shall take or permit its representatives to take any action that would cause the
Bank Merger to fail to so qualify as a tax-free reorganization. NewCo and BBI
each undertakes and agrees to use their best efforts to cause the Merger to
qualify as a purchase of stock within the meaning of Section 368(a) of the Code.
5.8. Transition Team. NewCo and Beckley shall create a transition team comprised
of management of Beckley and staff and representatives of NewCo (the "Transition
Team"). The purpose of the Transition Team shall be to provide detailed guidance
to NewCo in fulfilling and consummating the Merger. The Transition Team shall
meet as needed until the Effective Time. Members of the Transition Team shall
receive no compensation for such service. After the Effective Time, the
directors of Beckley shall serve as advisory, non-voting directors of Raleigh
for a period of six (6) months. As advisory directors such persons shall attend
meetings as requested, provide advice and information with regard to the
previous operations of Beckley, actively support the operations of Raleigh and
use their best efforts to cause the continuation of customer loan and deposit
business with Raleigh. Advisory directors shall be paid Two Hundred Dollars
($200.00) per month.
ARTICLE VI. CONDITIONS PRECEDENT TO MERGER
6.1. Conditions to all Parties' Obligations. Notwithstanding any other provision
of this Agreement to the contrary, the obligations of each of the parties to
this Agreement to consummate the transactions described herein shall be
conditioned upon the satisfaction of each of the following conditions precedent
on or prior to the Closing Date:
a. Approval by Governmental Regulatory Authorities; No Disadvantageous
Conditions.
(i) The Merger described herein shall have been approved, to
the extent required by law, by the OTS, the FDIC, and the West Virginia
Board, and by all other governmental or regulatory agencies or
authorities having jurisdiction over such transactions;
(ii) No governmental or regulatory agency or authority shall
have withdrawn its approval of the Merger or imposed any condition on
the Merger or conditioned its approval thereof, which condition is
reasonably deemed by NewCo to be materially disadvantageous or
burdensome or to so materially adversely impact the economic or
business benefits of this Agreement to NewCo as to render it
inadvisable for it to consummate the Merger;
32
(iii) All waiting periods required following necessary
approvals of the Merger by regulatory agencies and by the United States
Department of Justice shall have expired, and, in connection with such
review, no objection to the Merger shall have been raised; and
(iv) All other consents, approvals and permissions, and the
satisfaction of all of the requirements prescribed by law or
regulation, necessary to the carrying out of the Merger contemplated
herein shall have been procured.
b. Adverse Proceedings, Injunction, Etc. There shall not be (i) any order,
decree or injunction of any court or agency of competent jurisdiction
which enjoins or prohibits the Merger or any of the other transactions
described herein or any of the parties hereto from consummating any
such transaction, (ii) any pending or threatened investigation of the
Merger or any of such other transactions by the United States
Department of Justice, or any actual or threatened litigation under
federal antitrust laws relating to the Merger or any other such
transaction, (iii) any suit, action or proceeding by any person
(including any governmental, administrative or regulatory agency),
pending or threatened before any court or governmental agency in which
it is sought to restrain or prohibit BBI or NewCo from consummating the
Merger or carrying out any of the terms or provisions of this
Agreement, or (iv) any other suit, claim, action or proceeding pending
or threatened against NewCo or BBI or any of their respective officers
or directors which shall reasonably be considered by NewCo or BBI to be
materially burdensome in relation to the proposed Merger or materially
adverse in relation to the financial condition, results of operations,
prospects, businesses, assets, loan portfolio, investments, properties,
or operations of either such corporation, and which has not been
dismissed, terminated or resolved to the satisfaction of all parties
hereto within ninety (90) days of the institution or threat thereof.
c. Approval by Shareholders. The shareholder of NewCo and the shareholders
of BBI and Beckley shall each have duly approved, ratified and
confirmed this Agreement and the transaction contemplated herein, all
to the extent required by and in accordance with the provisions of this
Agreement, applicable law, and applicable provisions of their
respective governing instruments.
d. No Termination or Abandonment. This Agreement shall not have been
terminated or abandoned by any party hereto.
e. Date to Complete. The Merger shall have been completed by January 10,
1998.
6.2. Additional Conditions to BBI's Obligations. Notwithstanding any other
provision of this Agreement to the contrary, BBI's separate obligation to
consummate the transactions described herein shall be conditioned upon the
satisfaction of each of the following conditions precedent on or prior to the
Closing Date:
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a. Compliance with Laws. NewCo shall have complied in all material
respects with all federal and state laws and regulations applicable to
the transactions described herein and where the violation of or failure
to comply with any such law or regulation could or may have a material
adverse effect on the consolidated financial condition, results of
operations, prospects, businesses, assets, loan portfolio, investments,
properties, or operations of NewCo and its affiliates considered as one
enterprise.
b. NewCo's Representations and Warranties and Performance of Agreements;
Officers' Certificate. Unless waived in writing by BBI as provided
below, each of the representations and warranties of NewCo contained in
this Agreement shall have been true and correct as of the date hereof
and shall remain true and correct on and as of the Effective Time with
the same force and effect as though made on and as of such date, except
(i) for changes which are not, in the aggregate, material and adverse
to the consolidated financial condition, results of operations,
prospects, businesses, assets, loan portfolio, investments, properties
or operations of NewCo and its affiliates considered as one enterprise,
and (ii) as otherwise contemplated by this Agreement; and NewCo shall
have performed in all material respects all of its obligations,
covenants and agreements hereunder to be performed by it on or before
the Closing Date.
BBI shall have received a certificate dated as of the Closing
Date and executed by NewCo to the foregoing effect and as to such other
matters as may be reasonably requested by BBI.
c. Legal Opinion of Horizon Counsel. BBI shall have received from ▇▇▇▇▇▇▇▇
& ▇▇▇▇▇▇▇ LLP, counsel for NewCo, a written opinion dated as of the
Closing Date and substantially in the form of Exhibit B attached hereto
or otherwise in form and substance reasonably satisfactory to BBI.
d. Other Documents and Information from Raleigh. NewCo shall have provided
to BBI correct and complete copies of its Certificate of Incorporation,
Bylaws, and board resolutions (all certified by its Secretary),
together with certificates of the incumbency of its officers and such
other closing documents and information as may be reasonably requested
by BBI or its counsel.
e. Certificate of Merger; Other Actions. A Certificate of Merger in the
form described in Paragraph 1.7. above shall have been duly executed
and delivered by NewCo as provided in that Paragraph.
f. Acceptance by BBI's Counsel. The form and substance of all legal
matters described herein or related to the transactions contemplated
herein shall be reasonably acceptable to BBI's legal counsel.
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g. Fairness Opinion. Beckley and BBI shall have received from its
financial advisor, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and Co., a written opinion (the
"Fairness Opinion"), dated as of a date prior to the mailing of the
Proxy Statement to BBI's shareholders in connection with the BBI
Shareholders Meeting, to the effect that the terms of the Merger are
fair, from a financial point of view, to BBI and its shareholders.
h. Horizon Guarantee. Horizon shall have agreed in writing to guarantee
the payment of all obligations or liabilities of NewCo by no later than
June 30, 1997.
6.3. Additional Conditions to NewCo's Obligations. Notwithstanding any other
provision of this Agreement to the contrary, NewCo's obligations to consummate
the transactions described herein shall be conditioned upon the satisfaction of
each of the following conditions precedent on or prior to the Closing Date:
a. Material Adverse Change. There shall not have occurred any material
adverse change in the consolidated financial condition, results of
operations, businesses, assets, loan portfolio, investments, or
properties of BBI, and there shall not have occurred any event or
development and there shall not exist any condition or circumstance
which, with the lapse of time or otherwise, may or could cause, create
or result in any such material adverse change.
b. Compliance with Laws. BBI shall have complied in all material respects
with all federal and state laws and regulations applicable to the
transactions described herein and where the violation of or failure to
comply with any such law or regulation could or may have a material
adverse effect on the consolidated financial condition, results of
operations, prospects, business assets, loan portfolio, properties, or
operations of BBI or Beckley.
c. BBI's Representations and Warranties and Performance of Agreements;
Officers' Certificate. Unless waived in writing by NewCo as provided
below, each of the representations and warranties of BBI contained in
this Agreement as supplemented by the BBI Disclosure Statement shall
have been true and correct as of the date hereof and shall remain true
and correct on and as of the Effective Time with the same force and
effect as though made on and as of such date, except (i) for changes
which are not, in the aggregate, material and adverse to the
consolidated financial condition, results of operations, businesses,
assets, loan portfolio, investments, and properties of BBI, and (ii) as
otherwise contemplated by this Agreement; and BBI shall have performed
in all material respects all its obligations, covenants and agreements
hereunder to be performed by it on or before the Closing Date.
NewCo shall have received a certificate dated as of the
Closing Date and executed by BBI and its President and Chief Financial
Officer to the foregoing effect and as to such other matters as may be
reasonably requested by NewCo.
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d. Cancellation Letters from Option Holders. NewCo shall have received the
Cancellation Letters in form and content satisfactory to NewCo and
signed by all persons listed in the BBI Disclosure Statement as Option
Holders.
e. Legal Opinion of Beckley Counsel. NewCo shall have received from
▇▇▇▇▇▇▇, Spidi, Sloane & ▇▇▇▇▇, P.C., counsel to Beckley and BBI, a
written opinion, dated as of the Closing Date and substantially in the
form of Exhibit C attached hereto or otherwise in form and substance
reasonably satisfactory to NewCo.
f. Other Documents and Information from BBI. BBI shall have provided to
NewCo correct and complete copies of BBI's Certificate of
Incorporation, Bylaws and board and shareholder resolutions (all
certified by BBI's Secretary), together with certificates of the
incumbency of BBI's officers and such other closing documents and
information as may be reasonably requested by NewCo or its counsel.
g. Consents to Assignment of Leases. Beckley and BBI shall each have
obtained all required consents to the assignment to NewCo of its rights
and obligations under any personal property lease material to the
business of Beckley or BBI or any Real Property Lease, and such
consents shall be in such form and substance as shall be satisfactory
to NewCo.
h. Certificate of Merger; Other Actions. A Certificate of Merger in the
form described in Paragraph 1.7. above shall have been duly executed
and delivered by BBI as provided in that Paragraph.
i. Completion of Due Diligence. By no later than June 30, 1997, NewCo
shall have completed its Due Diligence and shall be satisfied in its
sole discretion with the results of that examination.
j. Acceptance by NewCo's Counsel. The form and substance of all legal
matters described herein or related to the transactions contemplated
herein shall be reasonably acceptable to NewCo's legal counsel.
k. Fairness Opinion. NewCo shall have received a letter from its
investment advisor prior to June 30, 1997 in form and substance
satisfactory to NewCo that the transaction is fair from a financial
standpoint to the shareholder of NewCo.
l. Bank Merger. The Bank Merger shall be capable of being consummated
contemporaneously with Closing of the Merger without any material
adverse condition or limitation which would prevent, hinder, or
restrict NewCo from continuing the operations of Beckley and BBI after
the Merger in the same manner as said operations had been conducted
previously and BBI shall have approved the Bank Merger by June 30, 1997
in its capacity as sole shareholder of Beckley.
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ARTICLE VII. TERMINATION; BREACH; REMEDIES
7.1. Mutual Termination. At any time prior to the Effective Time (and whether
before or after approval hereof by the shareholders of BBI and/or approval by
the shareholder of NewCo), this Agreement may be terminated by the mutual
agreement of NewCo and BBI. Upon any such mutual termination, all obligations of
BBI and NewCo hereunder shall terminate and each party shall pay its own costs
and expenses as provided herein.
7.2. Unilateral Termination. This Agreement may be terminated by either NewCo or
BBI (whether before or after approval hereof by BBI's shareholders and/or
approval by the shareholder of NewCo) upon written notice to the other parties
and under the circumstances described below.
a. Termination by New. Co. This Agreement may be terminated by NewCo by
action of its Board of Directors or Executive Committee:
(i) if any of the conditions to the obligations of NewCo shall
not have been materially satisfied or effectively waived in writing by
NewCo (except to the extent that the failure of such condition to be
satisfied has been caused by the failure of NewCo to satisfy any of its
obligations, covenants or agreements contained herein);
(ii) if BBI shall have violated or failed to fully perform
any of its obligations, covenants or agreements contained herein in any
material respect;
(iii) if NewCo determines at any time that any of BBI's
representations or warranties contained herein and in any other
certificate or writing delivered pursuant to this Agreement shall have
been false or misleading in any material respect when made, or that
there has occurred any event or development or that there exists any
condition or circumstance which has caused or, with the lapse of time
or otherwise, may or could cause any such representations or warranties
to become false or misleading in any material respect;
(iv) if BBI's shareholders do not ratify and approve the
Merger and/or do not ratify and approve this Agreement and the Merger
to the extent required by law.
(v) if NewCo's shareholder does not ratify and approve this
Agreement and the Merger by June 30, 1997.
However, before NewCo may terminate this Agreement for any of the
reasons specified above in (i), (ii) or (iii) of this paragraph, it shall give
written notice to BBI as provided herein stating its intent to terminate and a
description of the specific breach, default, violation or other condition giving
rise to its right to so terminate, and, such termination by NewCo shall not
become effective if, within thirty (30) days following the giving of such
notice, BBI shall cure such breach, default or violation or satisfy such
condition to the reasonable satisfaction of NewCo. In the event BBI cannot or
does not cure such breach, default or violation or satisfy such condition to the
reasonable
37
satisfaction of NewCo within such thirty (30) day period, NewCo shall have
thirty (30) days to notify BBI of its intention to terminate this Agreement. A
failure to so notify BBI will be deemed to be a waiver by NewCo of the breach,
default or violation pursuant to Paragraph 9.2. below.
b. Termination by BBI. This Agreement may be terminated by BBI:
(i) if any of the conditions to the obligations of BBI shall
not have been satisfied or effectively waived in writing by BBI (except
to the extent that the failure of such condition to be satisfied has
been caused by the failure of BBI to satisfy any of its obligations,
covenants or agreements contained herein);
(ii) if NewCo shall have violated or failed to fully perform
any of its obligations, covenants or agreements contained herein in any
material respect;
(iii) if BBI determines at any time that any of NewCo's
representations and warranties contained herein or in any other
certificate or writing delivered pursuant to this Agreement shall have
been false or misleading in any material respect when made, or that
there has occurred any event or development or that there exists any
condition or circumstance which has caused or, with the lapse of time
or otherwise, may or could cause any such representations or warranties
to become false or misleading in any material respect;
(iv) if BBI's shareholders do not ratify and approve the
Merger and do not ratify and approve this Agreement and the Merger to
the extent required by law; or
(v) if NewCo's shareholder does not ratify and approve
this Agreement and the Merger; or
(vi) if BBI does not receive from its investment advisor
the Fairness Opinion in a form reasonably satisfactory to BBI and its
counsel; or
(vii) if the Merger is not completed by January 10, 1998;
or
(viii) If prior to the Effective Time, a corporation,
partnership, person or other entity or group shall have made a bona
fide proposal that Beckley and/or BBI has considered and that the Board
of Directors of Beckley and/or BBI believes, in good faith after
consultation with its financial advisors, is more favorable, from a
financial point of view, to the shareholders of Beckley and/or BBI than
the proposal set forth in this Agreement (a Superior Proposal");
provided, that NewCo does not make, within four (4) business days of
NewCo's receiving notice of such third-party proposal, an offer that
the Board of Directors of Beckley and/or BBI believes, in good faith
after consultation with its financial advisor, is at least as
favorable, from a financial point of view, to the shareholders of
Beckley and/or BBI as such Superior Proposal.
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However, before BBI may terminate this Agreement for any of the reasons
specified above in clause (i), (ii), (iii), or (v) of this paragraph, it shall
give written notice to NewCo as provided herein stating its intent to terminate
and a description of the specific breach, default, violation, or other condition
giving rise to its right to so terminate, and, such termination by BBI shall not
become effective if, within thirty (30) days following the giving of such
notice, NewCo shall cure such breach, default or violation or satisfy such
condition to the reasonable satisfaction of BBI. In the event NewCo cannot or
does not cure such breach, default or violation or satisfy such condition to the
reasonable satisfaction of BBI within such thirty (30) day period, BBI shall
have thirty (30) days to notify NewCo of its intention to terminate this
Agreement. A failure to so notify NewCo will be deemed to be a waiver by BBI of
the breach, default or violation pursuant to Paragraph 9.2. below.
7.3. Breach; Remedies. Except as otherwise provided below, in the event of a
material breach by BBI of any of its representations or warranties contained in
this Agreement or in any other certificate or writing delivered pursuant to this
Agreement, or in the event of its failure to perform or violation of any of its
obligations, agreements or covenants contained in Paragraphs 3.1 or 3.2, or
Paragraphs 5.1. through 5.9. of this Agreement, then NewCo may, in addition to
other remedies available to it under law or equity terminate this Agreement
prior to the Effective Time.
In the event of a breach by NewCo of any of its representations or
warranties contained in this Agreement, or in the event of its failure to
perform or violation of any of its obligations, agreements or covenants
contained in this Agreement, then BBI may terminate this Agreement prior to the
Effective Time. In the event of any such termination of this Agreement by BBI,
then BBI may elect to either (i) receive reimbursement from NewCo for up to (but
not more than) One Hundred Fifty Thousand Dollars ($150,000.00) in out-of-pocket
expenses which actually have been incurred by BBI, or (ii) to pursue its
remedies at law. If BBI elects to be reimbursed, it must notify NewCo of that
election within thirty (30) days of termination.
7.4 Payment upon Termination - Subsequent Acquisition Transaction. If this
Agreement is terminated by Beckley and/or BBI pursuant to Section 7.2(b) (viii)
and prior thereto Beckley and/or BBI shall have entered into an agreement to
engage in an Acquisition Event (as defined herein) or an Acquisition Event shall
have occurred or the Board of Directors of Beckley and/or BBI shall have
authorized or approved an Acquisition Event or shall have publicly announced an
intention to authorize or approve or shall have recommended that the
shareholders of Beckley and/or BBI approve or accept any Acquisition Event, then
Beckley and/or BBI shall promptly, but in no event later than five (5) business
days after the first of such events shall have occurred, pay NewCo a fee equal
to Five Hundred Thousand Dollars ($500,000).
"Acquisition Event" means any of the following: (i) a merger,
consolidation or similar transaction involving Beckley, BBI, or any successor;
(ii) a purchase, lease or other acquisition in one or a series of related
transactions of assets of Beckley or BBI; (iii) a purchase or other acquisition
(including by way of merger, consolidation, share exchange or a similar
transaction) in one or a series of related transactions of beneficial ownership
of securities representing 25% or more of the
39
voting power of Beckley or BBI, in each case with or by a person or entity other
than NewCo or an affiliate of NewCo.
ARTICLE VIII. INDEMNIFICATION
8.1. Agreement to Indemnify. BBI and NewCo hereby agree that in the event this
Agreement is terminated for any reason and the Merger is not consummated, then
they will indemnify each other as provided below.
a. By BBI. BBI shall indemnify, hold harmless and defend NewCo from and
against any and all claims, disputes, demands, causes of action, suits,
proceedings, losses, damages, liabilities, obligations, costs and
expenses of every kind and nature, including without limitation
reasonable attorneys' fees and legal costs and expenses in connection
therewith, whether known or unknown, and whether now existing or
hereafter arising, which may be threatened against, incurred,
undertaken, received or paid by NewCo:
(i) in connection with or which arise out of or result from or
are based upon (A) BBI's operations or business transactions or its
relationship with any of its employees, or (B) BBI's failure to comply
with any statute or regulation of any federal, state or local
government or agency (or any political subdivision thereof) in
connection with the transactions described in this Agreement;
(ii) in connection with or which arise out of or result from
or are based upon any fact, condition or circumstance that constitutes
a material breach by BBI of, or any inaccuracy, incompleteness or
inadequacy in, any of its representations or warranties under or in
connection with this Agreement, or any failure of BBI to perform any of
its covenants, agreements or obligations under or in connection with
this Agreement; and
(iii) in connection with or which arise out of or result from
or are based upon any information provided by BBI which is included in
the Proxy Statement and which information causes the Proxy Statement at
the time of its mailing to BBI's shareholders to contain any untrue
statement of a material fact or to omit any material fact required to
be stated therein or necessary in order to make the statements
contained therein, in light of the circumstances under which they were
made, not false or misleading.
b. By NewCo. NewCo shall indemnify, hold harmless and defend BBI from and
against any and all claims, disputes, demands, causes of action, suits,
proceedings, losses, damages, liabilities, obligations, costs, and
expenses of every kind and nature, including without limitation
reasonable attorneys' fees and legal costs and expenses in connection
therewith, whether known or unknown, and whether now existing or
hereafter arising, which may be threatened against, incurred,
undertaken, received or paid by BBI:
40
(i) in connection with or which arise out of or result from or
are based upon (A) NewCo's operations or business transactions or its
relationship with any of its employees, or (B) NewCo's failure to
comply with any statute or regulation of any federal, state or local
government or agency (or any political subdivision thereof) in
connection with the transactions described in this Agreement;
(ii) in connection with or which arise out of or result from
or are based upon of any fact, condition or circumstance that
constitutes a breach by NewCo of, or any inaccuracy, incompleteness or
inadequacy in, any of its representations or warranties under or in
connection with this Agreement, or any failure of NewCo to perform any
of its covenants, agreements or obligations under or in connection with
this Agreement; and,
(iii) in connection with or which arise out of or result from
or are based upon any information provided by it which is included in
the Proxy Statement and which information causes the Proxy Statement at
the time of its mailing to BBI's shareholders to contain any untrue
statement of a material fact or to omit any material fact required to
be stated therein or necessary in order to make the statements
contained therein, in light of the circumstances under which they were
made, not false or misleading.
8.2. Procedure for Claiming Indemnification.
a. By NewCo. If any matter subject to indemnification hereunder arises in
the form of a claim against NewCo, its successors and assigns
(collectively, "Indemnitee") (herein referred to as a "Third Party
Claim"), the applicable Indemnitee promptly shall give notice and
details thereof, including copies of all pleadings and pertinent
documents, to BBI. Within fifteen (15) days of such notice, BBI either
(i) shall pay the Third Party Claim either in full or upon agreed
compromise or (ii) shall notify the applicable Indemnitee and NewCo
that BBI disputes the Third Party Claim and intends to defend against
it, and thereafter shall so defend and pay any adverse final judgment
or award in regard thereto. Such defense shall be controlled by BBI and
the cost of such defense shall be borne by BBI except that the
applicable Indemnitee shall have the right to participate in such
defense at its own expense and provided that BBI shall have no right in
connection with any such defense or the resolution of any such Third
Party Claim to impose any cost, restriction, limitation or condition of
any kind upon any of the parties comprising Indemnitee hereunder. NewCo
agrees that it shall cooperate in all reasonable respects in the
defense of any such Third Party Claim, including making personnel,
books and records relevant to the Third Party Claim available to BBI
without charge therefor except for out-of-pocket expenses. If BBI fails
to take action within fifteen (15) days as hereinabove provided or,
having taken such action, thereafter fails diligently to defend and
resolve the Third Party Claim, the parties comprising Indemnitee shall
have the right to pay, compromise or defend the Third Party Claim and
to assert the indemnification provisions hereof. Each of the parties
comprising Indemnitee also
41
shall have the right, exercisable in good faith, to take such action as
may be necessary to avoid a default prior to the assumption of the
defense of the Third Party Claim by BBI.
b. By BBI. If any matter subject to indemnification hereunder arises in
the form of a claim against BBI or its successors and assigns (herein
referred to as a "Third Party Claim"), BBI promptly shall give notice
and details thereof, including copies of all pleadings and pertinent
documents, to NewCo Within fifteen (15) days of such notice, NewCo
either (i) shall pay the Third Party Claim either in full or upon
agreed compromise or (ii) shall notify BBI that NewCo disputes the
Third Party Claim and intends to defend against it, and thereafter
shall so defend and pay any adverse final judgment or award in regard
thereto. Such defense shall be controlled by NewCo and the cost of such
defense shall be borne by NewCo except that BBI shall have the right to
participate in such defense at its own expense and provided that NewCo
shall have no right in connection with any such defense or the
resolution of any such Third Party Claim to impose any cost,
restriction, limitation or condition of any kind upon BBI. BBI agrees
that it shall cooperate in all reasonable respects in the defense of
any such Third Party Claim, including making personnel, books and
records relevant to the Third Party Claim available to NewCo without
charge therefor except for out-of-pocket expenses. If NewCo fails to
take action within fifteen (15) days as hereinabove provided or, having
taken such action, thereafter fails diligently to defend and resolve
the Third Party Claim, BBI shall have the right to pay, compromise or
defend the Third Party Claim and to assert the indemnification
provisions hereof. BBI also shall have the right, exercisable in good
faith, to take such action as may be necessary to avoid a default prior
to the assumption of the defense of the Third Party Claim by NewCo.
ARTICLE IX. MISCELLANEOUS PROVISIONS
9.1. Survival of Representations, Warranties, Indemnification and Other
Agreements.
a. Representations, Warranties and Other Agreements. Other than those
representations, warranties, agreements and covenants which by their
terms are intended to survive the Merger, none of the representations,
warranties or agreements herein shall survive the effectiveness of the
Merger, and no party shall have any right after the Effective Time to
recover damages or any other relief from any other party to this
Agreement by reason of any breach of representation or warranty, any
nonfulfillment or nonperformance of any agreement contained herein, or
otherwise.
b. Indemnification. The parties' indemnification agreements and
obligations contained herein shall become effective only in the event
this Agreement is terminated, and neither of the parties shall have any
obligations under Paragraph 8.1. in the event of or following
consummation of the Merger.
42
9.2. Waiver. Any term or condition of this Agreement may be waived (except as to
matters of regulatory approvals and approvals required by law), either in whole
or in part, at any time by the party which is, and whose shareholders are,
entitled to the benefits thereof; provided, however, that any such waiver shall
be effective only upon a determination by the waiving party (through action of
its Board of Directors) that such waiver would not adversely affect the
interests of the waiving party or its shareholders; and, provided further, that
no waiver of any term or condition of this Agreement by any party shall be
effective unless such waiver is in writing and signed by the waiving party or as
provided in Paragraphs 7.2.a. and 7.2.b. above, or be construed to be a waiver
of any succeeding breach of the same term or condition. No failure or delay of
any party to exercise any power, or to insist upon a strict compliance by any
other party of any obligation, and no custom or practice at variance with any
terms hereof, shall constitute a waiver of the right of any party to demand full
and complete compliance with such terms.
9.3. Amendment. This Agreement may be amended, modified or supplemented at any
time or from time to time prior to the Effective Time, and either before or
after its approval by the shareholders of BBI, by an agreement in writing
approved by a majority of the Boards of Directors of NewCo and BBI executed in
the same manner as this Agreement.
9.4. Notices. All notices and other communications hereunder shall be in writing
and shall be deemed to have been duly given if delivered personally or by
courier, or mailed by certified mail, return receipt requested, postage prepaid,
and addressed as follows:
If to Beckley or BBI, to: Beckley Bancorp Inc.
President and CEO
Attn: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
Post Office Box 1069
Beckley, West Virginia 25802-1069
With a copy to: ▇▇▇▇▇▇▇, Spidi, Sloane & ▇▇▇▇▇, P.C.
Attn: ▇▇▇▇ ▇. Spidi, Esq.
One Franklin Square
▇▇▇▇ ▇ ▇▇., ▇.▇., ▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to NewCo, to: HB Acquisition Company
Attn: Mr. C. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
President
▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
With copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, III, Esquire
File, ▇▇▇▇▇, ▇▇▇▇▇▇▇ & File
Law Building
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esquire
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to Raleigh, to: Bank of Raleigh
Attn: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
President
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
With copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, III, Esquire
File, ▇▇▇▇▇, ▇▇▇▇▇▇▇ & File
Law Building
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esquire
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
9.5. Further Assurance. BBI and NewCo each agree to furnish to the other such
further assurances with respect to the matters contemplated herein and their
respective agreements, covenants, representations and warranties contained
herein, including the opinion of legal counsel, as such other party may
reasonably request.
44
9.6. Headings and Captions. Headings and captions of the sections and paragraphs
of this Agreement have been inserted for convenience of reference only and do
not constitute a part hereof.
9.7. Entire Agreement. This Agreement (including all schedules and exhibits
attached hereto and all documents incorporated herein by reference) contains the
entire agreement of the parties with respect to the transactions described
herein and supersedes any and all other oral or written agreements) heretofore
made, and there are no representations or inducements by or to, or any
agreements between, any of the parties hereto other than those contained herein
in writing.
9.8. Severability of Provisions. The invalidity or unenforceability of any term,
phrase, clause, paragraph, restriction, covenant, agreement or other provision
hereof shall in no way affect the validity or enforceability of any other
provision or part hereof.
9.9. Assignment. Except to the extent provided for restructuring, this Agreement
may not be assigned by any party hereto except with the prior written consent of
the other parties hereto.
9.10. Counterparts. Any number of counterparts of this Agreement may be signed
and delivered, each of which shall be considered an original and which together
shall constitute one agreement.
9.11. Governing Law. This Agreement is made in and shall be construed and
enforced in accordance with the laws of West Virginia.
9.12. Inspection. Any right of NewCo hereunder to investigate or inspect the
assets, books, records, files, and other information of BBI in no way shall
establish any presumption that NewCo should have conducted any investigation or
that such right has been exercised by NewCo, its agents, representatives, or
others. Any investigations or inspections that have been made by NewCo, by its
agents, representatives, or others prior to the Closing Date shall not be deemed
in any way in derogation or limitation of the covenants, representations and
warranties made by or on behalf of BBI in this Agreement.
[This space left blank intentionally]
45
IN WITNESS WHEREOF, NewCo, Raleigh, BBI, and Beckley have each caused
this Agreement to be executed in its name by its duly authorized officers and
its corporate seal to be affixed hereto as of the date first above written.
HB ACQUISITION COMPANY
By:/s/C. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
------------------------------------------------
Its: President
[CORPORATE SEAL]
/s/ ▇. ▇. ▇▇▇▇▇
------------------------------------------------
Its: Secretary
BANK OF RALEIGH
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------------
Its: Executive Vice President
[CORPORATE SEAL]
▇▇▇▇▇▇▇ BANCORP, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------------------
Its: President
[CORPORATE SEAL]
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
------------------------------------------------
Its: Secretary
▇▇▇▇▇▇▇ FEDERAL SAVINGS BANK
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------------------
Its: President
[CORPORATE SEAL]
46
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), made and entered
into as of the ______ day of ________, 1997, by and between BANK OF RALEIGH, a
West Virginia state banking corporation with its principal offices located in
Beckley, West Virginia, (hereinafter "Raleigh"), and ▇▇▇▇▇▇▇ FEDERAL SAVINGS
BANK, a federal savings bank national banking association with its principal
offices located in Beckley, West Virginia, (hereinafter "Beckley").
WHEREAS, Beckley is a federal savings bank with its principal offices
located in Beckley, West Virginia with an authorized capital of
$__________________ divided into _______ shares of common stock with par value
of __________ Dollars ($______) and __________ shares of preferred stock with a
par value of ________ Dollars ($_______) and a capital stock account of
$__________ consisting of ________ issued and outstanding shares, with a surplus
of $__________ and undivided profits, including retained earnings of
$____________ as of ___________________, 1997; and
WHEREAS, all of the issued and outstanding stock of Beckley is owned by
▇▇▇▇▇▇▇ Bancorp, Inc., a Delaware corporation; and
WHEREAS, Raleigh is a West Virginia state bank with its principal
offices located in Beckley, West Virginia with an authorized capital of
$__________________ divided into _______ shares of common stock with par value
of __________ Dollars ($______) and a capital stock account of $__________
consisting of ________ issued and outstanding shares, with a surplus of
$__________ and undivided profits, including retained earnings of $____________
as of ___________________, 1997; and
WHEREAS, all of the issued and outstanding stock of Raleigh is owned by
Horizon Bancorp, Inc., a West Virginia corporation; and
WHEREAS, pursuant to the terms and conditions of that certain Agreement
and Plan of Merger dated as of May ____, 1997, ▇▇▇▇▇▇▇ Bancorp, Inc., the sole
shareholder of Beckley, and HB Acquisition Company will merge, with ▇▇▇▇▇▇▇
Bancorp, Inc. as the surviving corporation and a wholly owned subsidiary of
Horizon Bancorp, Inc. (the "Prior Merger"); and
WHEREAS, immediately after consummation of the Prior Merger, and
subject to receipt of all regulatory and shareholder approvals, Beckley will
merge with and into Raleigh, with Raleigh as the surviving corporation, pursuant
to this Agreement; and
Exhibit A - 1
WHEREAS, the Board of Directors of Beckley and the Board of Directors
of Raleigh have each approved this Agreement and have authorized the execution
hereof in counterparts.
NOW, THEREFORE, for and in consideration of the promises and the mutual
agreements hereinafter set forth, and in accordance with the provisions of
applicable law, the parties agree as follows:
SECTION 1: THE MERGER
(1) The Merger. On the Effective Date (as defined herein) and subject
to the terms and conditions hereof, Beckley shall merge with and into Raleigh
(the "Merger"), under the charter of Raleigh. Raleigh shall be the surviving
bank (hereinafter sometimes called the "Surviving Bank") and shall conduct its
banking operations under the title of Bank of Raleigh.
(2) General Effect of Merger. From and after the Effective Date:
(a) The corporate existence of Beckley shall be merged into
and continued in Raleigh as the Surviving Bank, and the Surviving Bank shall be
deemed to be the same business and corporate entity as Raleigh. As of the
Effective Date, the separate existence and corporate organization of Beckley
shall cease.
(b) All of the rights, franchises, powers, privileges and
permissions of Raleigh and Beckley in and to every type of asset and property,
real, personal and mixed, and choses in action shall be passed to and be vested
in Raleigh as the Surviving Bank by virtue of the merger, without any further
act, deed, order or decree, and Raleigh, as the Surviving Bank, shall automat
ically, without any order or other action on the part of any court or otherwise,
hold and enjoy all rights of property, franchises and interests, including
appointments, designations, nominations and all other rights and interests as
trustee, executor, administrator, registrar, transfer agent, guardian, assignee,
receiver, committee or other fiduciary, in the same manner and to the same
extent as were held or enjoyed by Raleigh or Beckley immediately prior to the
Effective Date.
(c) Raleigh as the Surviving Bank shall be responsible for all
liabilities, duties, obligations and undertakings of every kind and description
of Raleigh and Beckley as they existed immediately prior to the Effective Date.
SECTION 2: THE SURVIVING BANK
(1) Title. Unless and until the same shall be properly changed, the
name of and title under which the Surviving Bank shall conduct its banking
operations shall be Bank of Raleigh.
(2) Business Locations. The main and branch offices and other places of
business of the Surviving Bank shall be the same locations used by Raleigh and
Beckley immediately prior to the Effective Date.
Exhibit A - 2
(3) Articles of Incorporation, Charter and Bylaws. The Articles of
Incorporation, Charter and Bylaws of Raleigh, as in effect on the Effective
Date, shall continue unchanged as the Articles of Incorporation, Charter and
Bylaws of the Surviving Bank.
(4) Directors and Officers. The directors and officers of Raleigh on
the Effective Date shall continue as the directors and officers of the Surviving
Bank and said directors and officers shall hold office as prescribed in the
Bylaws of Raleigh and applicable law until their successors shall have been
elected and shall qualify.
SECTION 3: ON THE EFFECTIVE DATE OF THE MERGER
(1) Conversion of Shares. On the Effective Date, Horizon Bancorp, Inc.
will own all of the outstanding shares of Bank of Raleigh as well as all of the
outstanding shares of ▇▇▇▇▇▇▇ Bancorp, Inc., which in turns will own all of the
outstanding shares of Beckley. On the Effective Date, all of the outstanding
shares of Beckley shall be surrendered and canceled. The shares of Raleigh
outstanding as of the Effective Date shall be unaffected as a result of the
Merger. No new shares of stock shall be issued by reason of this Merger.
SECTION 4: REGULATORY APPROVAL
Prior to the Effective Date, Raleigh and Beckley shall use their best
efforts in good faith to take or cause to be taken as promptly as practicable
all such steps as shall be necessary to obtain all necessary regulatory
approvals.
SECTION 5: CONDITIONS PRECEDENT, CLOSING DATE AND EFFECTIVE DATE
(1) Conditions Precedent. The consummation of this Agreement and the
Merger is conditioned upon the following:
(a) The sole shareholder of Raleigh and the sole shareholder
of Beckley shall each have approved this Agreement as required by law.
(b) All required regulatory approvals shall have been obtained
and all other consents, approvals and permissions and the satisfaction of all
the requirements prescribed by law which are necessary to the carrying out of
the transactions contemplated hereby shall have been procured; and
(c) All delay periods and all periods for review, objection or
appeal of or to any of the consents, approvals or permissions required with
respect to the consummation of the Merger and this Agreement shall have expired.
(2) Closing Date. The closing shall be held at such time and place
as Raleigh and Beckley shall agree upon. The time and date of closing are herein
called the "Closing Date".
Exhibit A - 3
(3) Effective Date. The Merger shall become effective (the "Effective
Date") on the date on which the Certificate of Merger is issued by the Secretary
of State of West Virginia.
SECTION 6: TERMINATION OF AGREEMENT
(1) Grounds for Termination. This Agreement and the transactions
contemplated hereby may be terminated at any time prior to the Effective Date by
the mutual written consent of Raleigh and Beckley.
(2) Automatic Termination. In the event the Prior Merger is not
consummated as of January 10, 1998, then this Agreement shall automatically
terminate as of midnight of said date, unless extended by the mutual agreement
of the parties.
(3) Effect of Termination; Right to Proceed. In the event this
Agreement shall be terminated as hereinabove provided, all further obligations
of Raleigh and Beckley under this Agreement shall terminate without further
liability of Raleigh to Beckley or Beckley to Raleigh.
SECTION 7: GOVERNING LAW, SUCCESSORS AND ASSIGNS, COUNTERPARTS,
ENTIRE AGREEMENT
This Agreement (a) shall be governed by and construed under and in
accordance with the laws of the United States of America and of the State of
West Virginia; (b) shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns, provided, however,
that this Agreement may not be assigned by any party without the written consent
of the other parties hereto; (c) may be executed in one or more counterparts,
all of which shall be considered one and the same agreement, and shall become
effective and binding as to Raleigh and Beckley when one or more counterparts
shall have been signed and delivered by Raleigh and Beckley; and (d) embodies
the entire agreement and understanding, and supersedes all prior agreements and
understandings, between Raleigh and Beckley relating to the subject matter
hereof.
SECTION 8: EFFECT OF CAPTIONS
The captions in this Agreement are included for convenience only and
shall not in any way affect the interpretation or construction of any of the
provisions hereof.
SECTION 9: AMENDMENTS
This Agreement may be amended by the written agreement of Raleigh and
Beckley at any time prior to the Closing Date with respect to any of the terms
contained herein.
SECTION 10: WAIVER
Exhibit A - 4
Except with respect to required approvals of applicable regulatory
authorities and shareholders, either party may, by written instrument signed by
its President at any time, extend the time for the performance of any of the
obligations or other acts of the other and may waive, with respect to the other:
(i) compliance with any of the covenants, undertakings or agreements, or
satisfaction of any of the conditions to its obligations contained in this
Agreement, and/or (ii) the performance of any obligations set out herein.
SECTION 11: EXPENSES
Unless otherwise agreed, each of the parties hereto will pay, without a
right of reimbursement from the other party and whether or not the transactions
contemplated by this Agreement shall be consummated, the costs incurred by it
incident to the performance of its obligations under this Agreement and to the
consummation of the Merger and of the other transactions contemplated herein,
including the fees and disbursements of counsel, accountants and consultants
employed by such party in connection therewith.
SECTION 12: AGREEMENT TO TAKE NECESSARY AND DESIRABLE ACTIONS
Raleigh and Beckley each agree to execute and deliver such other
documents, certificates, agreements and other writings and to take such other
actions as may be necessary or desirable in order to consummate or implement
expeditiously the transactions contemplated by this Agreement.
IN WITNESS WHEREOF, Raleigh and Beckley have each caused this Agreement
to be executed on its behalf by its officers duly authorized all by a resolution
of their respective boards of directors, and witness the signature hereto of
each said boards of directors as of the day and year first above written.
BANK OF RALEIGH
-----------------------------------
, President
------------------------
ATTEST:
----------------------------
----------
▇▇▇▇▇▇▇ FEDERAL SAVINGS BANK
Exhibit A - 5
-----------------------------------
, President
------------------------
ATTEST:
-----------------------------
---------------,
Exhibit A - 6
EXHIBIT B
Form of Legal Opinion of Counsel for HB Acquisition Company
________________, 199___
▇▇▇▇▇▇▇ Bancorp, Inc.
----------------------------
----------------------------
Gentlemen and Ladies:
We have acted as counsel to HB Acquisition Company ("HBAC") and Bank of
Raleigh ("Raleigh") in connection with the Agreement and Plan of Merger by and
between HBAC, Raleigh, ▇▇▇▇▇▇▇ Bancorp, Inc. ("BBI"), and ▇▇▇▇▇▇▇ Federal
Savings Bank ("Beckley") dated May ______, 1997, (the "Agreement") whereunder
HBAC and BBI will merge, with BBI as the surviving corporation (the "Merger").
As such counsel, we have reviewed such organizational documents, indentures,
contracts, deeds, instruments, minutes, actions of the Board of Directors and
shareholders of HBAC and such other documents as we have deemed necessary as a
basis for the opinions expressed herein, which are being delivered to you
pursuant to the Agreement. Capitalized terms appearing herein and not otherwise
defined are used as defined in the Agreement.
In reviewing the documents referred to above, we have assumed without
inquiry the genuineness of all signatures, and the conformity with originals of
all documents submitted to us as copies. We have assumed that BBI has and had
the power to enter into and to perform the Merger, and all other instruments in
which its joinder is contemplated in connection with the Agreement. We have also
assumed BBI's due authorization, execution and delivery of the Agreement and
other instruments described therein and the validity, binding effect and
enforceability thereof with respect to BBI in accordance with their respective
terms. We have relied as to certain factual matters on representations of HBAC
contained in the Agreement, on certificates of officers of HBAC and certain
public officials or agencies.
Whenever we state our opinion to be to our knowledge, we mean that our
attorneys who have given substantive legal attention to representation of HBAC
in the transaction have not made any investigation to acquire actual knowledge
of the existence or absence of the facts forming the basis for such opinion, but
are without information generally which contradicts the existence or absence of
the facts forming the basis for such opinion.
Exhibit B - 1
Based upon and subject to the foregoing and the qualifications set
forth below, it is our opinion that, except as disclosed in the Agreement or the
Disclosure Statement given by HBAC in connection therewith:
1. HBAC (i) is duly organized and incorporated, validly existing and in
good standing under the laws of West Virginia, (ii) has all requisite
power and authority (corporate and other) to own its properties and
conduct its businesses as now being conducted, and (iii) is duly
qualified to do business and is in good standing in West Virginia and,
to our knowledge, in each other jurisdiction in which the character of
the properties owned or leased by it therein or in which the
transaction of its respective businesses makes such qualification
necessary, except where failure so to qualify would not have a material
adverse effect on HBAC, and its affiliates considered as one
enterprise.
2. HBAC's authorized capital stock consists of ________ (___________)
shares of One Dollar ($1.00) par value per share common stock ("HBAC
Stock"). All of the outstanding shares of HBAC are owned by Horizon
Bancorp, Inc.
3. HBAC has the corporate power and authority to execute and deliver the
Agreement and to perform its obligations and agreements and carry out
the transactions described therein; the Board of Directors of HBAC has
taken all action required by law, its Certificate of Incorporation and
its Bylaws to authorize the execution and delivery of the Agreement;
and the Board of Directors and the sole shareholder of HBAC has taken
all action required by applicable law and its Certificate of
Incorporation and Bylaws to authorize the Merger.
4. The execution and delivery of the Agreement did not, and the
consummation of the transactions described therein will not, violate
any provision of, the Certificate of Incorporation or Bylaws of HBAC,
or, to our knowledge, any contract, agreement, lease, mortgage, note,
bond, indenture, license, or obligation or understanding to which HBAC
is a party or which is material to the business of HBAC and its
affiliates considered as one enterprise, or any order, judgment or
decree known to us to be applicable to HBAC or result in the creation
of any security interest, lien, charge or encumbrance upon any of the
property or assets of HBAC under any material instrument or agreement
know to us to which it is a party.
5. The Agreement has been executed and delivered by HBAC, and is, assuming
due authorization, execution and delivery by BBI and Beckley, a valid
and binding agreement of HBAC in accordance with its terms (except to
the extent enforceability may be limited by (A) applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws from time to
time in effect which affect creditors' rights generally, (B) legal and
equitable limitations on the availability of injunctive relief,
specific performance and other equitable remedies, (C) general
principles of equity governing and limiting the availability of
specific performance, injunctive relief and other equitable remedies
and (D) applicable laws and regulations and
Exhibit B - 2
the application of principles of public policy underlying such laws and
regulations limiting the enforceability of indemnification provisions).
6. We are not aware of any material suit, legal proceeding or
investigation pending or threatened, against HBAC, except as previously
disclosed in the HBAC Disclosure Statement and other than ordinary
routine litigation incidental to the business of HBAC; provided,
however, that we are not counsel to HBAC in any litigation and with
respect to litigation we are relying solely upon the representations
and warranties of HBAC made in the Agreement with respect to material
litigation and on HBAC's officer's certificate.
4. The execution and delivery of the Agreement did not, and the
consummation of the transactions described therein will not, violate
any provision of, the Certificate of Incorporation or Bylaws of HBAC,
or, to our knowledge, any contract, agreement, lease, mortgage, note,
bond, indenture, license, or obligation or understanding to which HBAC
is a party or which is material to the business of HBAC and its
affiliates considered as one enterprise, or any order, judgment or
decree known to us to be applicable to HBAC or result in the creation
of any security interest, lien, charge or encumbrance upon any of the
property or assets of HBAC under any material instrument or agreement
know to us to which it is a party.
5. No consents, approvals or waivers are required to be obtained from any
person or entity in connection with HBAC's execution and delivery of
the Agreement, or, to our knowledge, the performance of its obligations
or agreements or the consummation of the transactions described
therein, except for required approvals of governmental or regulatory
authorities and shareholders which have been obtained.
We are licensed to practice in the State of West Virginia, and our
opinions are not intended to, and do not, cover the laws of any other state. To
the extent that matters as to which we have opined may be governed by the laws
of any other state, our opinions are given as if such matters were governed by
the laws of the State of West Virginia. Our opinion is based upon reported
decisions of the West Virginia Supreme Court of Appeals as of the date hereof
and we assume no obligation to advise you of changes that may hereafter be
brought to our attention.
The opinions rendered herein are solely for your benefit and are not to
be used, circulated or otherwise referred to without our prior written consent.
Very truly yours,
Exhibit B - 3
EXHIBIT C
Form of Legal Opinion of Counsel for ▇▇▇▇▇▇▇ Bancorp, Inc.
_________________, 199___
HB Acquisition Company
----------------------
----------------------
Gentlemen and Ladies:
We have acted as special counsel to ▇▇▇▇▇▇▇ Bancorp, Inc. ("BBI") and
Beckley Federal Beckley ("Beckley") in connection with in connection with the
Agreement and Plan of Merger by and between HB Acquisition Company ("HBAC"),
Bank of Raleigh, BBI, and Beckley dated May ______, 1997, (the "Agreement")
whereunder HBAC and BBI will merge, with BBI as the surviving corporation (the
"Merger"). This opinion is given pursuant to Section 6.3(e) of the Agreement.
Capitalized terms not otherwise defined herein shall have the meanings as set
forth in the Agreement.
As special counsel for BBI and Beckley we have examined such corporate
records, certificates and other documents, and such questions of law, as we have
considered necessary or appropriate for the purpose of rendering this opinion.
In the course of our examination we have assumed the genuineness of all
signatures on original documents, and the due execution and delivery of all
documents requiring due execution and delivery for the effectiveness thereof. As
to matters of fact relating to our opinion, we have relied on certificates and
written statements of officers of BBI and Beckley and upon the representations
and warranties of BBI and Beckley made in the Agreement. With respect to
questions of good standing, we have relied solely upon the official letters of
appropriate governmental authorities. We have also assumed for the purposes of
the opinions expressed herein that the Agreement is a valid and binding
obligation of HBAC.
Each of the opinions hereinafter expressed is subject to the following
further qualifications whether or not such opinions refer to such
qualifications:
(1) We have made no independent investigation as to the accuracy or
completeness of any representation, warranty, data or other factual information,
written or oral, set forth herein, made
Exhibit C - 1
or furnished in connection with the Agreement or the transactions contemplated
thereby or in any of the other documents referred to herein.
(2) Attorneys at our firm are licensed to practice law in the District
of Columbia. The opinions expressed herein are limited to the federal securities
and banking laws and regulations and Delaware laws applicable to BBI and Beckley
in connection with the Merger and the Agreement, and we do not opine on any
other federal law or the laws of any other applicable jurisdiction.
(3) We have acted as special counsel solely in connection with the
application of federal securities and banking laws and regulations and Delaware
laws applicable to the Merger and the Agreement and, consequently, there may
exist matters of a legal nature concerning BBI and Beckley or affiliated parties
in connection with which we have not been consulted and have not represented BBI
or Beckley.
(4) Our opinions below are limited to the matters expressly set forth
in this opinion letter, and no opinion is to be implied or inferred beyond the
matters stated. Without limiting the foregoing, we express no opinion as to the
anti-fraud provisions of federal and state securities laws.
(5) We offer no opinion and do not purport to opine as to the
enforceability of provisions contained in any documents relating to the Merger
or contemplated by the Agreement or documents as to which BBI or Beckley is a
party (a) relating to disclaimers, liability limitations with respect to third
parties, releases, or legal or equitable rights, or discharges of defenses and
remedies, (b) fixing the amount of liquidated damages, (c) requiring the payment
of interest on interest, (d) providing for indemnification or contribution, and
(e) relating to the payment of attorney's fees.
(6) This opinion should in no way be construed as an opinion as to the
materiality of the contents of the Proxy Statement.
(7) Except as otherwise expressly stated, this opinion shall be
governed and interpreted in accordance with the Legal Opinion Accord of the
American Bar Association Section of Business Law (1991).
Based upon and subject to the foregoing and the qualifications set
forth below, it is our opinion that, except as disclosed in the Agreement or the
Disclosure Statement given by BBI in connection therewith:
1. BBI (i) is duly organized and incorporated, validly existing and in
good standing (as a unitary savings and loan holding company) under the
laws of the State of Delaware; (ii) has all requisite power and
authority (corporate and other) to own, lease and operate its
properties and to carry on its business as now being conducted; and
(iii) is duly qualified to do business in the State of West Virginia,
and, to our knowledge, in each other jurisdiction in which the
character of the properties owned, leased or operated by it therein or
in which the transaction
Exhibit C - 2
of its business made such qualification necessary, except where failure
so to qualify would not have a material adverse effect on BBI and its
subsidiaries considered as one enterprise.
2. Beckley (i) is duly organized and incorporated, validly existing and
has a corporate existence (as a federal Beckley) under the laws of the
United States of America; (ii) has all requisite power and authority
(corporate and other) to own, lease and operate its properties and to
carry on its business as now being conducted; and (iii) has a corporate
existence in West Virginia, and, to our knowledge, in each other
jurisdiction in which the character of the properties owned, leased or
operated by it therein or in which the transaction of its business
makes such qualification necessary, except where failure so to qualify
would not have a material adverse effect on Beckley.
3. BBI and Beckley each has the corporate power and authority to execute
and deliver the Agreement and to perform its respective obligations and
agreements and carry out the transactions described therein; the Board
of Directors of BBI and Beckley have each taken all action required by
law, its Certificate of Incorporation, Charter and Bylaws to authorize
the execution and delivery of the Agreement; and the Board of Directors
and the shareholders of BBI and Beckley have each taken all action
required by applicable law and its Certificate of Incorporation,
Charter and Bylaws to authorize the Merger.
4. The execution and delivery of the Agreement did not, and the
consummation of the transactions described therein will not, violate
any provision of, the Certificate of Incorporation or Bylaws of BBI or
the Charter or Bylaws of Beckley, or, to our knowledge, any contract,
agreement, lease, mortgage, note, bond, indenture, license, or
obligation or understanding to which BBI or Beckley is a party or which
is material to the business of BBI and Beckley taken as a whole, or any
order, judgment or decree known to us to be applicable to BBI or
Beckley or result in the creation of any security interest, lien,
charge or encumbrance upon any of the property or assets of BBI or
Beckley under any material instrument or agreement know to us to which
it is a party.
5. The Agreement has been executed and delivered by BBI and Beckley, and
is, assuming due authorization, execution and delivery by HBAC, a valid
and binding agreement of BBI and Beckley in accordance with its terms.
6. We are not aware of any material suit, legal proceeding or
investigation pending or threatened, against BBI or Beckley, except as
previously disclosed in the BBI Disclosure Statement and other than
ordinary routine litigation incidental to the business of BBI and
▇▇▇▇▇▇▇; provided, however, that we are not counsel to BBI or ▇▇▇▇▇▇▇
in any litigation and with respect to litigation we are relying solely
upon the representations and warranties of BBI and ▇▇▇▇▇▇▇ made in the
Agreement with respect to material litigation and on BBI's officer's
certificate.
7. Each outstanding share of BBI stock and ▇▇▇▇▇▇▇ stock (i) has been duly
authorized and is validly issued and outstanding, and is fully paid and
nonassessable. Except as disclosed in
Exhibit C - 3
the Agreement or in the BBI Disclosure Statement, neither BBI nor
▇▇▇▇▇▇▇ has any outstanding (i) securities or other obligations
(including debentures or other debt instruments) which are convertible
into shares of BBI Stock or ▇▇▇▇▇▇▇ Stock or into any other securities
of BBI or ▇▇▇▇▇▇▇, (ii) options, warrants, rights, calls or other
commitments of any nature which entitle any person to receive or
acquire any shares of BBI Stock or ▇▇▇▇▇▇▇ Stock or any other
securities of BBI or ▇▇▇▇▇▇▇, or (iii) plan, agreement or other
arrangement pursuant to which shares of BBI Stock or ▇▇▇▇▇▇▇ Stock or
any other securities of BBI or ▇▇▇▇▇▇▇, or options, warrants, rights,
calls or other commitments of any nature pertaining thereto, have been
or may be issued.
8. No term or provision of the Certificate of Incorporation or Bylaws of
BBI or the Charter or Bylaws of ▇▇▇▇▇▇▇, or to our knowledge, any
mortgage, indenture, agreement, contract or other instruments known to
us to which BBI or ▇▇▇▇▇▇▇ is a party or which may be binding upon its
respective properties, requires the consent or authorization of any
other person, firm or corporation as a condition precedent to the
consummation of the Merger.
9. No consent or approval by any governmental authority is required under
the laws of the United States of America or the State of Delaware in
connection with the execution and delivery by BBI and ▇▇▇▇▇▇▇ of the
Agreement or the consummation of the transactions contemplated by the
Agreement, other than those approvals contemplated by the Agreement.
10. The Proxy Statement delivered to the shareholders of BBI complied as to
form in all material respects with applicable regulations of the
Securities and Exchange Commission.
As used in the opinions expressed herein, the phrase "to our knowledge"
used herein refers only to the actual current knowledge of the attorneys within
our firm who have given substantive attention to BBI or ▇▇▇▇▇▇▇ in connection
with the transactions contemplated by the Agreement and does not (a) include
constructive notice of matters or information, or (b) imply that we have
undertaken any independent investigation (i) with any persons outside of our
firm or (ii) as to the accuracy or completeness of any factual representation,
information or matter made or furnished in connection with the transactions
contemplated by the Agreement. Furthermore, such reference means only that we do
not know of any fact or circumstances contradicting the statements made herein,
and does not imply that we know the statements to be correct or have any basis
for such statements.
This opinion is being rendered solely for the benefit of the addressee
hereof and may not be relied upon by, nor may copies be delivered to, any other
person without our prior written consent. This opinion is given as of the date
hereof, is expressly limited to the facts existing as of such date and we assume
no obligations to advise you of changes that may hereafter be brought to our
attention.
Very truly yours,
▇▇▇▇▇▇▇, SPIDI, SLOANE & ▇▇▇▇▇, P.C.
Exhibit C - 4