1
Exhibit 2
AGREEMENT OF AFFILIATION AND MERGER
THIS AGREEMENT OF AFFILIATION AND MERGER ("Agreement") is made and entered
into effective as of the 30th day of March, 2001, by and between FIRST FINANCIAL
CORPORATION ("FIRST FINANCIAL"), FFC MERGER CORP ("MERGER CORP"), and COMMUNITY
FINANCIAL CORP. ("COMMUNITY").
W I T N E S S E T H:
WHEREAS, First Financial is an Indiana corporation registered as a bank
holding company under the federal Bank Holding Company Act of 1956, as amended
("BHC Act"), with its principal office located in Terre Haute, Vigo County,
Indiana; and
WHEREAS, Merger Corp is an Indiana corporation with its principal office
located in Terre Haute, Vigo County, Indiana and is a wholly-owned subsidiary of
First Financial; and
WHEREAS, Community is an Illinois corporation registered as a bank holding
company under the BHC Act, with its principal office located in Olney, Richland
County, Illinois, and is the sole shareholder of Community Bank and Trust, N.A.,
a national banking association ("Bank"), and American Bank of Illinois in
Highland, an Illinois state banking institution organized and existing under the
laws of the State of Illinois; and
WHEREAS, it is the desire of First Financial and Community to affiliate
through a corporate reorganization whereby Community will be merged with and
into Merger Corp; and
WHEREAS, a majority of the entire Board of Directors of each of First
Financial, Merger Corp and Community have approved this Agreement, authorized
its execution and designated this Agreement a plan of reorganization and a plan
of merger.
NOW, THEREFORE, in consideration of the foregoing premises, the
representations, warranties, covenants and agreements herein contained and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, First Financial, Merger Corp and Community hereby make this
Agreement and prescribe the terms and conditions of the affiliation of First
Financial and Community and the mode of carrying such merger into effect as
follows:
2
SECTION 1
THE MERGER
1.01. General Description. Upon the terms and subject to the conditions of
this Agreement, at the Effective Time (as defined in Section 10 hereof),
Community shall be merged with and into and under the Articles of Incorporation
of Merger Corp ("Merger"). Merger Corp shall survive the Merger ("Surviving
Corporation") and shall continue its corporate existence under the laws of the
State of Indiana pursuant to the provisions of and with the effect provided in
the Indiana Business Corporation Law, as amended. Upon consummation of the
Merger, Bank shall become a wholly-owned subsidiary of Merger Corp.
1.02. Name, Officers and Management. The name of the Surviving Corporation
shall be "FFC Merger Corp." Its principal office shall be located at One First
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇. The officers of Merger Corp serving
at the Effective Time shall continue to serve as the officers of the Surviving
Corporation, until such time as their successors shall have been duly elected
and have been qualified. The directors of Community shall cease to be directors
of Community as of the Effective Time and shall not become directors of Merger
Corp or First Financial after the Effective Time. The directors of Merger Corp
as of the Effective Time shall remain the directors of the Surviving
Corporation, until such time as their successors have been duly elected and have
been qualified.
1.03. Capital Structure. The capital of the Surviving Corporation shall be
not less than the capital of Merger Corp immediately prior to the Effective
Time.
1.04. Articles of Incorporation and By-Laws. The Articles of Incorporation
and By-Laws of Merger Corp in existence at the Effective Time shall remain the
Articles of Incorporation and By-Laws of the Surviving Corporation following the
Effective Time, until such Articles of Incorporation and By-Laws shall be
further amended as provided by applicable law.
1.05. Assets and Liabilities. At the Effective Time, the title to all
assets, real estate and other property owned by Community shall vest in Merger
Corp without reversion or impairment. At the Effective Time, all liabilities of
Community shall be assumed by Merger Corp.
1.06. Additional Actions. If at any time after the Effective Time, Merger
Corp or First Financial shall consider or be advised that any further deeds,
assignments or assurances in law or any other acts are necessary or desirable
(a) to vest, perfect or confirm, of record or otherwise, in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of Community or the Bank, or (b) otherwise carry out the
purposes of this Agreement, Community and the Bank and their respective officers
and directors shall be deemed to have granted to the Surviving Corporation an
irrevocable power of attorney to execute and deliver all
2
3
such deeds, assignments or assurances in law and to do all acts necessary or
proper to vest, perfect or confirm title to and possession of such rights,
properties or assets in the Surviving Corporation and otherwise to carry on the
purposes of this Agreement, and the officers and directors of the Surviving
Corporation are authorized in the name of Community or the Bank or otherwise to
take any and all such action.
SECTION 2
MERGER CONSIDERATION
2.01. Conversion of Shares. Each share of Community's common stock issued
and outstanding immediately prior to the Effective Time, other than shares held
by shareholders who have exercised their dissenter's rights as set forth in
Section 3 ("Dissenting Shares"), shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into and represent the
right to receive the consideration payable as set forth below to the holder of
record thereof, without any interest thereon, upon surrender of the certificate
representing such common stock.
2.02. Consideration. (a) As consideration for the Merger, shareholders of
Community, other than those shareholders who have exercised their dissenter's
rights as set forth in Section 3, will be entitled to receive in cash for each
share of Community common stock they own an amount equal to:
(i) the Aggregate Purchase Price (as defined in Section
2.02(b), and as may be amended or modified by Section
2.02(c)) minus (A) the aggregate amount to be paid to the
Community ESOP pursuant to Section 2.02(e), and (B) minus
the aggregate amount to be paid to the holders of record as
of the Effective Time of the outstanding "in the money"
options of Community (as defined in Section 2.02(f))
pursuant to Section 2.02(f),
(ii) divided by 2,147,470 (which is the number of shares of
Community common stock which will be outstanding as of the
Effective Time).
(b) First Financial shall pay an aggregate purchase price (the "Aggregate
Purchase Price") equal to the sum of the following, less an amount equal to the
fees and expenses incurred by Community pursuant to Section 6.13(b), which
amount shall not exceed $25,000 (if the actual amount incurred by Community
pursuant to Section 6.13(b) exceeds $25,000, the amount in excess of $25,000
shall be borne by the Bank), and less any liabilities of Community (computed on
a parent company only basis):
3
4
(i) $19,500,000;
(ii) the proceeds realized by Community on an after-tax
basis (in an amount agreed to by First Financial,
Community, and the independent auditors of First Financial)
from the sale of American Bank of Illinois in Highland,
MidAmerica Bank of St. Clair County and The Egyptian State
Bank;
(iii) the amount of cash held by Community on a parent
company only basis (other than amounts included pursuant to
some other section of this Section 2.02(b));
(iv) the amounts receivable by Community pursuant to
requests for refunds of income taxes paid (in an amount
agreed to by First Financial, Community, and the
independent auditors of First Financial);
(v) an amount equal to the principal balance of the loans
identified on Schedules 2.02(b)(v)(1) and (2) of the
Disclosure Schedule (as identified in Section 4 hereof)
which has been placed on the parent company only financial
statements of Community and for which the Bank, as of the
Effective Time, will have a $300,000 reserve allocated
within its general loan loss reserve for the credits set
forth on Schedule 2.02(b)(v)(1) of the Disclosure Schedule;
and
(vi) an amount equal to the fair market value of securities
held by Community on a parent company only basis.
(c) If at the Effective Time the Bank has realized on its financial
records a recovery (in an amount agreed to by First Financial, Community, and
the independent auditors of First Financial) on those loans identified in
Schedule 2.02(c) of the Disclosure Schedule, then the amount set forth in
Section 2.02(b)(i) shall be increased by the amount of the recovery, determined
in accordance with this section of the Agreement; provided, however, that in no
event shall such increase in the amount set forth in Section 2.02(b)(i) exceed
$500,000.
(d) For purposes of Section 2.02(e) and Section 2.02(f), the Per Share
Merger Consideration shall be determined by dividing:
(i) the sum of (A) the Aggregate Purchase Price, (B) the
amount of proceeds which would be realized by Community if
the "in the money" options to purchase shares of Community
common stock" were exercised, and (C) the amount of the
retired ESOP debt of $662,605.48, by
4
5
(ii) 2,365,869.
The number in Section 2.02(d)(ii) is the sum of 2,147,470 (which is the number
of shares of Community common stock outstanding), 154,340 (which is the number
of "in the money" Community options to purchase shares of Community common stock
outstanding) and 64,059 (which is the number of shares of Community common stock
held by Community as treasury stock which would have been outstanding if the
Community ESOP had not been terminated).
(e) Of the total Aggregate Purchase Price to be received by Community, an
amount equal to:
(i) (A) 64,059, multiplied by (B) the Per Share Merger
Consideration less $10.3437, plus
(ii) (A) 64,059, multiplied by (B) the quotient of (1) the
taxes (and any applicable interest or penalties) required
to be paid by Community in accordance with the provisions
of Section 6.12(b), and (2) 2,365,869,
will be placed in the Employee Stock Ownership Plan of Community.
The amount of $10.3437 which is subtracted from the Per Share Merger
Consideration in Section 2.02(e)(i)(B) for this purpose is the quotient of the
amount of the retired ESOP debt divided by the number of shares of Community
common stock held by Community as treasury stock which would have been
outstanding if the Community ESOP had not been terminated, or $662,605.48
divided by 64,059.
The number in Section 2.02(e)(ii)(B)(2) is the sum of 2,147,470 (which is the
number of shares of Community common stock outstanding), 154,340 (which is the
number of "in the money" Community options to purchase shares of Community
common stock outstanding) and 64,059 (which is the number of shares of Community
common stock held by Community as treasury stock which would have been
outstanding if the Community ESOP had not been terminated).
(f) Each outstanding "in the money option" of Community shall be canceled
and exchanged for an amount of the total Aggregate Purchase Price to be received
by Community equal to the Per Share Merger Consideration less the exercise price
of such option. For purposes of this Agreement, an outstanding "in the money"
option of Community shall be defined as an option with an exercise price less
than the Per Share Merger Consideration. As of the date of
5
6
this Agreement there are, and as of the Effective Time there will be, 154,340
outstanding "in the money" options of Community.
2.03. Distribution of Cash. (a) Promptly following the Effective Time,
First Financial shall mail to each Community shareholder a letter of transmittal
providing instructions as to the transmittal to First Financial of certificates
formerly representing shares of Community common stock and the payment of cash
in exchange therefor pursuant to the terms of this Agreement.
(b) Following the Effective Time, First Financial shall distribute cash
payments, without interest, for shares of Community (other than Dissenting
Shares) to each shareholder of Community at the Effective Time within twenty
(20) business days following receipt by First Financial of the shareholder's
certificate(s) formerly representing such shareholder's shares of Community
common stock together with a properly completed and executed letter of
transmittal, all in form and substance reasonably satisfactory to the Surviving
Corporation and First Financial.
(c) Following the Effective Time, stock certificates formerly
representing Community common stock (other than Dissenting Shares) held by
shareholders of Community shall be deemed to evidence only the right to receive
cash, without interest thereon, pursuant to Section 2.01 and Section 2.02
hereof.
(d) At or after the Effective Time, there shall be no transfers on the
stock transfer books of Community of any shares of the common stock of
Community. First Financial shall be entitled to rely upon the stock transfer
books of Community to establish the persons entitled to receive any cash payment
pursuant to this Agreement, which books shall be conclusive with respect to the
ownership of shares of Community common stock.
(e) With respect to any certificate for shares of Community common stock
which has been lost, stolen or destroyed, First Financial shall be authorized to
pay cash pursuant to Section 2.01 and Section 2.02 hereof to the registered
owner of such certificate upon First Financial's (i) receipt of an agreement to
indemnify First Financial against loss from such lost, stolen or destroyed
certificate, an affidavit of lost, stolen or destroyed stock certificate and a
bond, all in form and substance reasonably satisfactory to First Financial, and
upon compliance by the shareholder of Community with all other reasonable
requirements of First Financial in connection with such lost, stolen or
destroyed stock certificates.
6
7
SECTION 3
DISSENTING SHARES
Shareholders of Community who properly exercise and perfect statutory
dissenters' rights shall have the rights accorded to dissenting shareholders
under Article 11 of the Illinois Business Corporations Act of 1983, as amended.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF COMMUNITY
Community hereby represents and warrants to First Financial and Merger Corp
with respect to itself and Bank, as its wholly-owned subsidiary, as follows:
4.01. Organization and Authority. Community is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Illinois. Bank is a national banking association duly organized, validly
existing and in good standing under the laws of the United States of America.
Community and Bank have full power and authority (corporate and otherwise) to
own and lease their properties as presently owned and leased and to conduct
their respective business in the manner and by the means utilized as of the date
hereof. Except as set forth in the Disclosure Schedule (for purposes of this
Agreement, "Disclosure Schedule" shall mean the schedules referencing the
applicable provisions of this Agreement which are attached hereto and made a
part of this Agreement), Community's only subsidiaries are the Bank and American
Bank of Illinois in Highland (located in Highland and Pocahontas, Illinois), and
it has no other subsidiaries and owns no voting stock or equity securities of
any corporation, partnership, association or other entity, except for stock held
by the Bank in the Federal Home Loan Bank of Chicago and the Federal Reserve
Bank of St. Louis. Bank has no subsidiaries. Bank is subject to primary
regulatory supervision and examination by the Office of the Comptroller of the
Currency. Community has one class of stock registered pursuant to Section 12 of
the Securities Exchange Act of 1934, as amended ("1934 Act"), and is subject to
the reporting requirements of the 1934 Act. Community has entered into a binding
agreement to sell the stock which it owns of American Bank of Illinois in
Highland.
4.02. Authorization. (a) Community has the requisite corporate power and
authority to enter into this Agreement and to perform its obligations hereunder,
subject to the fulfillment of the conditions precedent set forth in Section
8.02(e) and (f) hereof. This Agreement and its execution and delivery by
Community have been duly authorized and approved by the Board of Directors of
Community and, assuming due execution and delivery by First Financial,
constitutes a valid and binding obligation of Community, subject to the
fulfillment of the conditions precedent set forth in Section 8.02 hereof, and is
enforceable in accordance with its terms, except to the extent limited by
general principles of equity and public policy and by bankruptcy, insolvency,
fraudulent transfer, reorganization, liquidation, moratorium, readjustment of
debt or other laws of general application relating to or affecting the
enforcement of creditors' rights.
7
8
(b) Neither the execution of this Agreement nor consummation of the
Merger contemplated hereby: (i) conflicts with or violates Community's
Certificate of Incorporation or By-Laws; (ii) conflicts with or violates any
local, state, federal or foreign law, statute, ordinance, rule or regulation
(provided that the approvals of or filings with applicable government regulatory
agencies or authorities required for consummation of the Merger are obtained) or
any court or administrative judgment, order, injunction, writ or decree; (iii)
conflicts with, results in a breach of or constitutes a default under any note,
bond, indenture, mortgage, deed of trust, license, lease, contract, agreement,
arrangement, commitment or other instrument to which Community or Bank is a
party or by which Community or Bank is subject or bound; (iv) results in the
creation of or gives any person, corporation or entity the right to create any
lien, charge, claim, encumbrance or security interest, or results in the
creation of any other rights or claims of any other party (other than First
Financial) or any other adverse interest, upon any right, property or asset of
Community or Bank; or (v) terminates or gives any person, corporation or entity
the right to terminate, accelerate, amend, modify or refuse to perform under any
note, bond, indenture, mortgage, agreement, contract, lease, license,
arrangement, deed of trust, commitment or other instrument to which Community or
Bank is bound or with respect to which Community or Bank is to perform any
duties or obligations or receive any rights or benefits.
(c) Other than in connection or in compliance with the provisions of the
applicable federal and state banking, securities, and corporation statutes, all
as amended, and the rules and regulations promulgated thereunder, no notice to,
filing with, exemption by or consent, authorization or approval of any
governmental agency or body is necessary for consummation of the Merger by
Community or Bank.
4.03. Capitalization. (a) The authorized capital stock of Community as of
the date hereof consists, and at the Effective Time will consist, of 1,000,000
shares of preferred stock, $0.01 par value per share, none of which is issued or
outstanding, and 7,000,000 shares of common stock, $0.01 par value per share. As
of the date hereof, and at the Effective Time, 2,147,470 shares of the common
stock of Community are and will be issued and outstanding (such issued and
outstanding shares are referred to herein as "Community Common Stock"). Such
issued and outstanding shares of Community Common Stock have been duly and
validly authorized by all necessary corporate action of Community, are validly
issued, fully paid and nonassessable and have not been issued in violation of
any pre-emptive rights of any present or former Community shareholder. Community
has no common stock authorized, issued or outstanding other than as described in
this Section 4.03(a) and has no intention or obligation to authorize or issue
any other capital stock or any additional shares of Community Common Stock. On a
consolidated basis as of December 31, 2000, Community had total capital of
approximately $34,890,653, which consisted of common stock of $26,450, capital
surplus of $19,378,177 and undivided profits of $15,486,026, including
unrealized gains or losses on available-for-sale securities. Each share of
Community Common Stock is entitled to one vote per share. A description of the
Community Common Stock is contained in the Certificate of Incorporation of
Community, as amended, as set forth in the Disclosure Schedule pursuant to
Section 4.04 hereof.
8
9
(b) The authorized capital stock of Bank as of the date hereof consists,
and at the Effective Time will consist, of 1,000,000 shares of common stock,
$4.00 par value per share, all of which shares are issued and outstanding (such
issued and outstanding shares are referred to herein as "Bank Common Stock").
Such issued and outstanding shares of Bank Common Stock have been duly and
validly authorized by all necessary corporate action of Bank, are validly
issued, fully paid and nonassessable, and have not been issued in violation of
any pre-emptive rights of any present or former Bank shareholder. All of the
issued and outstanding shares of common stock of Bank are owned by Community
free and clear of all liens, pledges, charges, claims, encumbrances,
restrictions, security interests, options and pre-emptive rights and of all
other rights or claims of any other person, corporation or entity with respect
thereto. Bank has no capital stock authorized, issued or outstanding other than
as described in this Section 4.03(b) and has no intention or obligation to
authorize or issue any other capital stock or any additional shares of Bank
Common Stock. On a consolidated basis as of December 31, 2000, Bank had total
capital of approximately $19,454,534, which consisted of common stock of
$4,000,000, capital surplus of $8,691,900 and undivided profits of $6,762,634,
including unrealized gains or losses on available-for-sale securities. Each
share of Bank Common Stock is entitled to one vote per share. A description of
the Bank Common Stock is contained in the Articles of Incorporation of Bank, as
amended, as set forth in the Disclosure Schedule pursuant to Section 4.04
hereof.
(c) Except as set forth in Schedule 4.03(c) of the Disclosure Schedule,
there are no options, warrants, commitments, calls, puts, agreements,
understandings, arrangements or subscription rights relating to any shares of
Community Common Stock, or any securities convertible into or representing the
right to purchase or otherwise acquire any common stock or debt securities of
Community, by which Community is or may become bound. Community does not have
any outstanding contractual or other obligation to repurchase, redeem or
otherwise acquire any of the issued and outstanding shares of Community Common
Stock.
(d) There are no options, warrants, commitments, calls, puts, agreements,
understandings, arrangements or subscription rights relating to any shares of
Bank Common Stock, or any securities convertible into or representing the right
to purchase or otherwise acquire any common stock or debt securities of Bank, by
which Bank is or may become bound. Bank does not have any outstanding
contractual or other obligation to repurchase, redeem or otherwise acquire any
of the issued and outstanding shares of Bank Common Stock.
(e) Except as set forth in the Disclosure Schedule, Community has no
knowledge of any person or entity which beneficially owns 5% or more of its
outstanding shares of common stock.
4.04. Organizational Documents. The respective Articles of Incorporation
and By-Laws of Community, and the Articles of Association and By-Laws of Bank,
representing true, accurate and complete copies of such corporate documents in
effect as of the date of this Agreement, have been delivered to First Financial
and are included in the Disclosure Schedule.
9
10
4.05. Compliance with Law. (a) Except as set forth in Schedule 4.05 of the
Disclosure Schedule, none of Community, Bank, nor the fiduciaries of any
Community Plans (as defined in Section 4.14(a)), have engaged in any activity
nor taken or omitted to take any action which has resulted or could result in
the violation of any local, state, federal or foreign law, statute, regulation,
rule, ordinance, order, restriction or requirement, nor are they in violation of
any order, injunction, judgment, writ or decree of any court or government
agency or body. Community and Bank possess and hold all licenses, franchises,
permits, certificates and other authorizations necessary for the continued
conduct of their business without interference or interruption, and such
licenses, franchises, permits, certificates and authorizations are transferable
(to the extent required) to First Financial or Merger Corp at the Effective Time
without any restrictions or limitations thereon or the need to obtain any
consents of government agencies or other third parties other than as set forth
in this Agreement. The Bank has received no inquiries from any regulatory agency
or government authority relating to its compliance with the Bank Secrecy Act,
the Truth-in-Lending Act or the Community Reinvestment Act or any laws with
respect to the protection of the environment or the rules and regulations
promulgated thereunder.
(b) All agreements, understandings and commitments with, and all orders
and directives of, all government regulatory agencies or authorities with
respect to the financial condition, results of operations, business, assets or
capital of Community or Bank which presently are binding upon or require action
by, or at any time during the last five (5) years have been binding upon or have
required action by, Community or Bank are set forth in the Disclosure Schedule,
and all correspondence, communications and commitments related thereto have been
made available to First Financial. Except as set forth in Schedule 4.05 of the
Disclosure Schedule, there are no uncured violations, or violations with respect
to which refunds or restitutions may be required, cited in any examination
report of Community or Bank as a result of an examination by any regulatory
agency or body, or set forth in any accountant's or auditor's report to
Community or Bank.
(c) All of the existing offices and branches of Community and Bank have
been legally authorized and established in accordance with all applicable
federal, state and local laws, statutes, regulations, rules, ordinances, orders,
restrictions and requirements. Bank has no approved but unopened offices or
branches.
4.06. Accuracy of Statements Made and Materials Provided to First
Financial. Except as set forth in Schedule 4.06 of the Disclosure Schedule;
(a) No representation, warranty or other statement made, or any
information provided, by or on behalf of Community or Bank in this Agreement or
the Disclosure Schedule (and any update thereto), and no written report,
statement, list, certificate, materials or other information furnished or to be
furnished by or on behalf of Community or Bank to First Financial through
10
11
and including the Effective Time in connection with this Agreement, the Merger
contemplated hereby, or First Financial's due diligence investigation or
confidential review of Community and the Bank or otherwise (including, without
limitation, any written information which has been or shall be supplied by
Community or Bank with respect to its financial condition, results of
operations, business, assets, capital or directors and officers for inclusion in
the proxy statement relating to the Merger), contains or shall contain (in the
case of information relating to the proxy statement at the time it is mailed to
Community's shareholders) any untrue statement of material fact or omits or
shall omit to state a material fact necessary to make the statements contained
herein or therein, in light of the circumstances in which they are made, not
false or misleading.
(b) No materials or information provided by or on behalf of Community or
Bank to First Financial for use by First Financial or Merger Corp in any filing
with any state or federal regulatory agency or authority shall (i) contain any
untrue or misleading statement of material fact, or (ii) omit to state a
material fact necessary to make the statements contained therein, in light of
the circumstances in which they are made, not false or misleading.
4.07. Litigation and Pending Proceedings. (a) Except as set forth in the
Disclosure Schedule, there are no claims, actions, suits, proceedings,
arbitrations or investigations pending or, to the best knowledge of Community
and Bank after due inquiry, threatened in any court or before any government
agency or authority, arbitration panel or otherwise (nor does Community or Bank
have any knowledge of a basis for any claim, action, suit, proceeding,
litigation, arbitration or investigation) against, by or affecting Community or
Bank.
(b) Except as set forth in the Disclosure Schedule, neither Community nor
Bank is: (i) subject to any outstanding judgment, order, writ, injunction or
decree of any court, arbitration panel or governmental agency or authority; (ii)
presently charged with or, to the best knowledge of Community or Bank after due
inquiry, under governmental investigation with respect to any actual or alleged
violations of any law, statute, rule, regulation or ordinance; or (iii) the
subject of any pending or, to the best knowledge of Community and Bank after due
inquiry, threatened proceeding by any government regulatory agency or authority
having jurisdiction over its respective business, assets, capital, properties or
operations.
4.08. Financial Statements and Reports. Community has delivered to First
Financial copies of the following financial statements and reports of Community
and Bank, including the notes thereto (collectively, the "Community Financial
Statements"):
(a) Consolidated Balance Sheets and the related Consolidated Statements
of Income and Consolidated Statements of Changes in Shareholders' Equity of
Community as of and for the years ended December 31, 2000, 1999 and 1998;
(b) Consolidated Statements of Cash Flows of Community for the years
ended December 31, 2000, 1999, and 1998;
11
12
(c) Consolidated Statements of Changes in Financial Position of Community
for the years ended December 31, 2000 and 1999;
(d) Reports of Condition and Income ("Call Reports") for Bank as of the
close of business on December 31, 2000, 1999, 1998; and
(e) Financial Statements of Community on Form FRY-9LP and Form FRY-9C
filed with the Board of Governors of the Federal Reserve System at the close of
business on December 31, 2000 and 1999.
Except as set forth in Schedule 4.08 of the Disclosure Schedule, the
Community Financial Statements are true, accurate and complete in all material
respects and present fairly the consolidated financial position of Community and
Bank as of and at the dates shown and the consolidated results of operations for
the periods covered thereby. The Community Financial Statements described in
clauses (a), (b) and (c) above for completed fiscal years are audited financial
statements and have been prepared in conformance with generally accepted
accounting principles applied on a consistent basis, except as may otherwise be
indicated in any accountants' notes or reports with respect to such financial
statements. The Community Financial Statements do not include any assets,
liabilities or obligations or omit to state any assets, liabilities or
obligations, (whether absolute, accrued, contingent or otherwise), or any other
facts which inclusion or omission would render any of the Community Financial
Statements false, misleading or inaccurate in any material respect.
4.09. Properties, Contracts, Employees and Other Agreements. (a) Set forth
in the Disclosure Schedule is a true, accurate and complete copy of the
following:
(i) A brief description and the location of all real property owned by
Community or Bank and the principal buildings and structures located
thereon, together with a legal description of such real property and
a title insurance policy or abstract opinion insuring the same, and
each lease of real property to which Community or Bank is a party,
identifying the parties thereto, the annual rental payable, the
expiration date of the lease and a brief description of the property
covered;
(ii) All conditional sales contracts or other title retention agreements
relating to Community or Bank and agreements for the purchase of
federal funds;
(iii) All agreements, contracts, leases, licenses, lines of credit,
understandings, commitments or obligations of Community or Bank which
individually or in the aggregate:
12
13
(A) involve payment or receipt by Community or Bank (other than as
disbursements of loan proceeds to customers, loan payments by
customers or customer deposits) of more than $10,000;
(B) involve payments based on profits of Community or Bank;
(C) relate to the purchase of goods, products, supplies or services
in excess of $10,000;
(D) were not made in the ordinary course of business; or
(E) may not be terminated without penalty within one (1) year from
the date of this Agreement;
(iv) The name and current annual salary of each director, officer and
employee of Community or Bank whose current annual salary is in
excess of $50,000, and the profit sharing, bonus or other form of
compensation (other than basic salary) paid or payable by Community
or Bank to or for the benefit of each such person for the year ended
December 31, 2000 and 1999, and any employment, severance or deferred
compensation agreement or arrangement with respect to each such
person; and
(v) A brief description (with reference to any applicable contractual
provisions) of any obligations or liabilities (whether absolute,
accrued, contingent or otherwise) of Community or Bank related to
American Bank of Illinois in Highland, MidAmerica Bank of St. Clair
County, or The Egyptian State Bank which will continue or arise at or
exist subsequent to consummation of the sale by Community of the
stock which it now owns or owned in the past of American Bank of
Illinois in Highland, MidAmerica Bank of St. Clair County, or The
Egyptian State Bank
(b) Community and Bank have, prior to the date of this Agreement,
provided or given access to First Financial to the files and documentation of
all borrowers of Bank, or persons or entities that are or may become obligated
to Bank under an existing letter of credit, line of credit, loan transaction,
loan agreement, promissory note or other commitment of Bank, in excess of
$10,000 individually or in the aggregate, whether in principal, interest or
otherwise, and including all guarantors of such indebtedness.
(c) Each of the agreements, contracts, commitments, leases, instruments
and documents set forth in the Disclosure Schedule relating to this Section 4.09
is valid and enforceable in accordance with its terms, except to the extent
limited by general principles of equity and public policy or by bankruptcy,
insolvency, fraudulent transfer, readjustment of debt or other laws of general
application relative to or affecting the enforcement of creditor's rights.
13
14
Community and Bank are, and to their respective best knowledge after due
inquiry, all other parties thereto are, in material compliance with the
provisions thereof, and Community and Bank are not, and to their respective best
knowledge after due inquiry, no other party thereto is, in default in the
performance, observance or fulfillment of any material obligation, covenant or
provision contained therein. None of the foregoing requires the consent of any
party to its assignment in connection with the Merger contemplated by this
Agreement. Other than as disclosed pursuant to this Section 4.09, to the best
knowledge of Community and Bank after due inquiry, no circumstances exist
resulting from transactions effected or to be effected, from events which have
occurred or may occur or from any action taken or omitted to be taken which
could reasonably be expected to result in the creation of any agreement,
contract, obligation, commitment, arrangement, lease or document described in or
contemplated by this Section 4.09.
(d) Neither Community nor Bank is, to the best knowledge of Community and
Bank after due inquiry, in default under or in breach of, or alleged to be in
default under or in breach of, any loan or credit agreement, conditional sales
contract or other title retention agreement, security agreement, bond,
indenture, mortgage, license, contract, lease, commitment or any other
instrument, agreement or obligation.
4.10. Absence of Undisclosed Liabilities. Except as provided in the
Community Financial Statements and in the Disclosure Schedule, except for
unfunded loan commitments and obligations on letters of credit to customers of
Bank, except for trade payables incurred in the ordinary course of Community's
and Bank's business (for purposes of this Section 4, all references to ordinary
course of business shall be deemed to be Community's and Bank's ordinary course
of business), and except for the Merger contemplated by this Agreement, neither
Community nor Bank has, nor will have at the Effective Time, any obligation,
agreement, contract, commitment, liability, lease or license which exceeds
$10,000 individually, or any obligation, agreement, contract, commitment,
liability, lease or license made outside of the ordinary course of business, nor
does there exist any circumstances resulting from transactions effected or
events occurring on or prior to the date of this Agreement or from any action
omitted to be taken during such period which could reasonably be expected to
result in any such obligation, agreement, contract, commitment, liability, lease
or license.
4.11. Title to Assets. Except as described in this Section 4.11: (a)
Community and Bank have good and marketable title in fee simple absolute to all
real property (including, without limitation, all real property used as bank
premises and all other real estate owned) which is reflected in the Community
Financial Statements as of December 31, 2000; good and marketable title to all
personal property reflected in the Community Financial Statements as of December
31, 2000, other than personal property disposed of in the ordinary course of
business since December 31, 2000; good and marketable title to or right to use
by valid and enforceable lease or contract all other properties and assets
(whether real or personal, tangible or intangible) which Community and Bank
purport to own or which Community or Bank uses in its business; good and
marketable title to, or right to use by terms of a valid and enforceable lease
or contract,
14
15
all other property used in their respective businesses; and good and marketable
title to all property and assets acquired and not disposed of or leased since
December 31, 2000. All of such properties and assets are owned by Community or
Bank free and clear of all land or conditional sales contracts, mortgages,
liens, pledges, restrictions, security interests, charges, claims, rights of
third parties or encumbrances of any nature except: (i) as set forth in the
Disclosure Schedule; (ii) as specifically noted in reasonable detail in the
Community Financial Statements; (iii) statutory liens for taxes not yet
delinquent or being contested in good faith by appropriate proceedings; (iv)
pledges or liens required to be granted in connection with the acceptance of
government deposits or granted in connection with repurchase or reverse
repurchase agreements; and (v) easements, encumbrances and liens of record,
imperfections of title and other limitations which are not material in amounts
to Community on a consolidated basis and which do not materially detract from
the value or materially interfere with the present or contemplated use of any of
the properties subject thereto or otherwise materially impair the use thereof
for the purposes for which they are held or used. All real property owned or
leased by Community or Bank is in compliance with all applicable zoning and land
use laws.
(b) Community, Bank, and all current or former direct or indirect
subsidiaries of Community or Bank have conducted their respective business in
compliance with all federal, state, county and municipal laws, statutes,
regulations, rules, ordinances, orders, directives, restrictions and
requirements relating to, without limitation, responsible property transfer,
underground storage tanks, petroleum products, air pollutants, water pollutants
or storm water or process waste water or otherwise relating to the environment
or toxic or hazardous substances or to the manufacturing, recycling, handling,
processing, distribution, use, generation, treatment, storage, disposal or
transport of any hazardous or toxic substances or petroleum products (including
polychlorinated biphenyls, whether contained or uncontained, and
asbestos-containing materials, whether friable or not), including, without
limitation, the Federal Solid Waste Disposal Act, the Hazardous and Solid Waste
Amendments, the Federal Clean Air Act, the Federal Clean Water Act, the
Occupational Health and Safety Act, the Federal Resource Conservation and
Recovery Act, the Toxic Substances Control Act, the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980 and the Superfund
Amendments and Reauthorization Act of 1986, all as amended, and regulations of
the Environmental Protection Agency, the Nuclear Regulatory Agency, the Army
Corp of Engineers, the Department of Interior, the United States Fish and
Wildlife Service and any state department of natural resources or state
environmental protection agency now or at any time thereafter in effect
(collectively, "Environmental Laws"). There are no pending or, to the best
knowledge of Community and Bank after due inquiry, threatened claims, actions or
proceedings by any local municipality, sewage district or other governmental
entity against Community, Bank, or any current or former direct or indirect
subsidiaries of Community or Bank with respect to the Environmental Laws, and
there is no reasonable basis or grounds for any such claim, action or
proceeding. No environmental clearances or other governmental approvals relating
to environmental matters are required for the conduct of the business of
Community or Bank or the consummation of the Merger contemplated hereby. Neither
Community, Bank, nor any current
15
16
or former direct or indirect subsidiaries of Community or Bank is the owner, and
has not been in the chain of title or the operator or lessee, of any property on
which any substances have been used, stored, deposited, treated, recycled or
disposed of, which substances if known to be present on, at or under such
property would require clean-up, removal or any other remedial action under any
Environmental Law. Community and Bank owns, operates, leases and controls, and
has owned, operated, leased and controlled, all real property in compliance with
the Environmental Laws. Neither Community, Bank, nor any current or former
direct or indirect subsidiaries of Community or Bank has any liability for any
clean-up or remediation under any of the Environmental Laws with respect to any
real property.
4.12. Loans and Investments. Except as set forth in Schedule 4.12 of the
Disclosure Schedule:
(a) There is no loan by Community or Bank in excess of $10,000 that has
been classified by bank regulatory examiners or management as "Other Loans
Specially Mentioned," "Substandard," "Doubtful" or "Loss" or in excess of
$10,000 that has been identified by accountants or auditors (internal or
external) as having a significant risk of uncollectability. The most recent loan
watch list of Bank and a list of all loans in excess of $10,000 which Bank has
determined to be thirty (30) days or more past due with respect to principal or
interest payments or has placed on nonaccrual status are set forth in the
Disclosure Schedule.
(b) All loans reflected in the Community Financial Statements as of
December 31, 2000 and which have been made, extended, renewed, restructured,
approved, amended or acquired since December 31, 2000: (i) have been made for
good, valuable and adequate consideration in the ordinary course of business;
(ii) constitute the legal, valid and binding obligation of the obligor and any
guarantor named therein, except to the extent limited by general principles of
equity and public policy or by bankruptcy, insolvency, fraudulent transfer,
reorganization, liquidation, moratorium, readjustment of debt or other laws of
general application relative to or affecting the enforcement of creditors'
rights; (iii) are evidenced by notes, instruments or other evidences of
indebtedness which are true, genuine and what they purport to be; and (iv) are
secured, to the extent that Community or Bank has a security interest in
collateral or a mortgage securing such loans, by perfected security interests or
recorded mortgages naming Bank as the secured party or mortgagee (unless by
written agreement to the contrary).
(c) The reserves, the allowance for possible loan and lease losses and
the carrying value for real estate owned which are shown on the Community
Financial Statements are adequate in all material respects under the
requirements of generally accepted accounting principles applied on a consistent
basis to provide for possible losses on items for which reserves were made, on
loans and leases outstanding and real estate owned as of the respective dates.
(d) None of the investments reflected in the Community Financial
Statements as of and for the period ended December 31, 2000 and none of the
investments made by Community
16
17
or Bank since December 31, 2000 are subject to any restriction, whether
contractual or statutory, which materially impairs the ability of Community or
Bank to dispose freely of such investment at any time. Neither Community nor
Bank is a party to any repurchase agreements with respect to securities.
(e) Set forth in the Disclosure Schedule is a true, accurate and complete
list of all loans in which Bank has any participation interest or which have
been made with or through another financial institution on a recourse basis
against Bank.
(f) Except as set forth in the Disclosure Schedule, and except for
customer deposits and ordinary trade payables, neither Community nor Bank has,
nor will they have at the Effective Time, any indebtedness for borrowed money.
4.13. Shareholder Rights Plan and Anti-takeover Mechanisms. Except as
otherwise provided in the Disclosure Schedule, Community has no shareholder
rights plan or any other plan, program or agreement involving, restricting,
prohibiting or discouraging a change in control or merger of Community or which
may be considered an anti-takeover mechanism.
4.14. Employee Benefit Plans. Except as set forth in Schedule 4.14(a) - (g)
of the Disclosure Schedule:
(a) With respect to the employee benefit plans, as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), sponsored or otherwise maintained by Community or Bank, whether
written or oral; in which Community or Bank participates as a participating
employer; to which Community or Bank contributes; with respect to which
Community or Bank acts as administrator, custodian, trustee or fiduciary; and
including any such plans which have been terminated, merged into another plan,
frozen or discontinued; with respect to which Community or Bank may have any
liability (whether absolute, accrued, contingent or otherwise), (collectively,
"Community Plans"): (i) all such Community Plans have, on a continuous basis
since their adoption, been, in all material respects, maintained in compliance
with the requirements prescribed by all applicable statutes, orders and
governmental rules or regulations, including, without limitation, ERISA, the
Internal Revenue Code (the "Code"), and the Department of Labor ("Department")
and Treasury Regulations promulgated thereunder; (ii) all Community Plans
intended to constitute tax-qualified plans under Section 401(a) of the Code have
complied since their adoption or have been timely amended to comply in all
material respects with all applicable requirements of the Code and the Treasury
Regulations promulgated thereunder, and favorable determination letters have
been timely received from the Internal Revenue Service ("Service") (or the
remedial amendment period has not expired) with respect to each such Community
Plan stating that each, in its current form (or at the time of its disposition
if it has been terminated, merged, frozen or discontinued), is qualified under
and satisfies all applicable provisions of the Code and Treasury Regulations;
(iii) no Community Plan (or its related trust) holds any stock or other
securities of Community or
17
18
any related or affiliated person or entity; (iv) neither Community nor Bank has
any liability to the Department or the Service with respect to any Community
Plan; (v) Community has not engaged in any transaction that may subject
Community or the Bank, or any Community Plan, to a civil penalty imposed by
Section 502 of ERISA; (vi) no non-exempt prohibited transaction (as defined in
Section 406 of ERISA or as defined in Section 4975(c) of the Code) has occurred
with respect to any Community Plan; (vii) each Community Plan subject to ERISA
or intended to be qualified under Section 401(a) of the Code has been and, if
applicable, is being operated in all material respects in accordance with the
applicable provisions of ERISA and the Code and the Department and Treasury
Regulations promulgated thereunder; (viii) no participant or beneficiary or
non-participating employee has been denied any benefit due or to become due
under any Community Plan or has been misled as to his or her rights under any
Community Plan; (ix) all obligations required to be performed by Community or
Bank under any provision of any Community Plan have been performed by them in
all material respects and they are not in default under or in violation of, in
any material respect, any provision of any Community Plan; (x) no event has
occurred which would constitute grounds for an enforcement action by any party
under Part 5 of Title I of ERISA under any Community Plan; (xi) there are no
actions, suits, proceedings or claims pending (other than routine claims for
benefits) or, to the best knowledge of Community and Bank after due inquiry,
threatened, against Community, Bank, any Community Plan or the assets of any
Community Plan; and (xii) with respect to any Community Plan sponsored,
participated in or contributed to by Community or Bank, or with respect to which
Community or Bank is responsible for complying with the reporting and disclosure
requirements of ERISA or the Code, there has been no violation of the reporting
and disclosure requirements imposed either under ERISA or the Code for which a
penalty has been or may be imposed.
(b) With regard to any Community Plan intended to be qualified under
Section 401(a) of the Code, no director, officer, employee or agent of Community
or Bank has engaged in any action or failed to act in such a manner that, as a
result of such action or failure to act, the Service could revoke or deny that
plan's qualification under Section 401(a) of the Code, the exemption under
Section 501(a) of the Code for any trust related to such plan, or the status of
such plan as an "employee stock ownership plan" described in Section 4975(e)(7)
of the Code.
(c) Community has provided to First Financial true, accurate and complete
copies and, in the case of any plan or program which has not been reduced to
writing, a summary of all of the following (including all plans and programs
which have been terminated): (i) pension, retirement, profit-sharing, savings,
stock purchase, stock bonus, stock ownership, stock option and stock
appreciation right plans and all amendments thereto and all summary plan
descriptions thereof (including any modifications thereto); (ii) all employment,
deferred compensation (whether funded or unfunded), salary continuation,
consulting, bonus, severance and collective bargaining agreements, arrangements
or understandings; (iii) all executive and other incentive compensation plans,
programs and agreements; (iv) all group insurance and health insurance
contracts, policies or plans; (v) all other incentive, welfare or employee
benefit plans,
18
19
understandings, arrangements or agreements, maintained or sponsored,
participated in, or contributed to by Community or Bank for its current or
former directors, officers or employees; and (vi) all reports to any government
department or agency filed within the preceding three years by Community or Bank
with respect to any Community Plan.
(d) No current or former director, officer or employee of Community or
Bank is entitled to or may become entitled to any benefit under any welfare
benefit plans (as defined in Section 3(1) of ERISA) after termination of
employment with Community or Bank, except that such individuals may be entitled
to continue their group health care coverage pursuant to Section 4980B of the
Code if they pay the cost of such coverage pursuant to the applicable
requirements of the Code with respect thereto.
(e) No Community Plan is, and neither Community nor the Bank has any
liability with respect to any plan that is (i) a defined benefit pension plan
subject to Title IV of ERISA, (ii) a pension plan subject to Section 302 of
ERISA or Section 412 of the Code, or (iii) a multi-employer pension plan (as
that term is defined in Sections 4001(a)(3) and 3(37) of ERISA).
(f) With respect to any group health plan (as defined in Section 607(1)
of ERISA) sponsored or maintained by Community or Bank, in which Community or
Bank participates as a participating employer or to which Community or Bank
contributes, no director, officer, employee or agent of Community or Bank has
engaged in any action or failed to act in such a manner that, as a result of
such action or failure to act, would cause a tax to be imposed on Community or
Bank under Code Section 4980B(a). With respect to all such plans, all applicable
provisions of Section 4980B of the Code and Section 601 of ERISA have been
complied with in all material respects by Community and Bank.
(g) There are no collective bargaining, employment, management,
consulting, deferred compensation, reimbursement, indemnity, retirement, early
retirement, severance or similar plans or agreements, commitments or
understandings, or any employee benefit or retirement plan or agreement, binding
upon Community or Bank and no such agreement, commitment, understanding or plan
is under discussion or negotiation by management with any employee or group of
employees, any member of management or any other person.
4.15. Obligations to Employees. All obligations and liabilities of and all
payments by Community and Bank, and all Community Plans, whether arising by
operation of law, by contract or by past custom, for payments to trusts or other
funds, to any government agency or authority or to any present or former
director, officer, employee or agent (or his or her heirs, legatees or legal
representatives) have been and are being paid to the extent required by
applicable law or by the plan, trust, contract or past custom or practice, and
adequate actuarial accruals and reserves for such payments have been and are
being made by Community and Bank in accordance with generally accepted
accounting principles and applicable law applied on a consistent basis and
actuarial methods with respect to the following: (a) withholding taxes,
19
20
unemployment compensation or social security benefits; (b) all pension,
profit-sharing, savings, stock purchase, stock bonus, stock ownership, stock
option and stock appreciation rights plans and agreements; (c) all employment,
deferred compensation (whether funded or unfunded), salary continuation,
consulting, retirement, early retirement, severance, reimbursement, bonus or
collective bargaining plans and agreements; (d) all executive and other
incentive compensation plans, programs, or agreements; (e) all group insurance
and health contracts, policies and plans; and (f) all other incentive, welfare,
retirement or employee benefit plans or agreements maintained or sponsored,
participated in, or contributed to by Community or Bank for its current or
former directors, officers, employees and agents, including, without limitation,
all liabilities and obligations to the Community Plans (as defined in Section
4.14(a) hereof). All obligations and liabilities of Community and Bank, whether
arising by operation of law, by contract or by past custom or practice, for all
other forms of compensation which are or may be payable to their current or
former directors, officers, employees or agents or to any Community Plan have
been and are being paid to the extent required by applicable law or by the plan
or contract, and adequate actuarial accruals and reserves for payment therefor
have been and are being made by Community and Bank in accordance with generally
accepted accounting and actuarial principles applied on a consistent basis. All
accruals and reserves referred to in this Section 4.15 are correctly and
accurately reflected and accounted for in all material respects in the Community
Financial Statements and the books, statements and records of Community and
Bank.
4.16. Taxes, Returns and Reports. Except as set forth in the Disclosure
Schedule, Community has since January 1, 1995 (a) duly and timely filed all
federal, state, local and foreign tax returns of every type and kind required to
be filed, and each such return is true, accurate and complete in all material
respects; (b) paid or otherwise adequately reserved in accordance with generally
accepted accounting principles for all taxes, assessments and other governmental
charges due or claimed to be due upon it and Bank or any of their income,
properties or assets; and (c) not requested an extension of time for any such
payments (which extension is still in force). Community has established, and
shall establish in the Subsequent Community Financial Statements, in accordance
with generally accepted accounting principles, a reserve for taxes in the
Community Financial Statements adequate to cover all of Community's and Bank's
tax liabilities (including, without limitation, income taxes, payroll taxes and
withholding, and franchise fees) for the periods then ending. Neither Community
nor Bank has, nor will either of them have, any liability for taxes of any
nature for or with respect to the operation of their respective businesses,
including the business of any subsidiary, or ownership of their assets,
including the assets of any subsidiary, from the date hereof up to and including
the Effective Time, except to the extent set forth in the Subsequent Community
Financial Statements (as hereinafter defined) or as accrued or reserved for on
the books and records of Community. Neither Community nor Bank is currently
under audit by any state or federal taxing authority. No federal, state or local
tax returns of Community have been audited by any taxing authority during the
past five (5) years.
20
21
4.17. Deposit Insurance. The deposits of Bank are insured by the FDIC in
accordance with the Federal Deposit Insurance Act, as amended, to the fullest
extent provided by applicable law and Community and Bank have paid or properly
reserved or accrued for all current premiums and assessments with respect to
such deposit insurance.
4.18. Insurance. Set forth in the Disclosure Schedule is a list and brief
description of all policies of insurance (including, without limitation,
bankers' blanket bond, directors' and officers' liability insurance, property
and casualty insurance, group health or hospitalization insurance and insurance
providing benefits for employees) owned or held by Community or Bank on the date
hereof or with respect to which Community or Bank pays any premiums. Each such
policy is in full force and effect and all premiums due thereon have been paid
when due, and a true, accurate and complete copy thereof has been made available
to First Financial prior to the date hereof.
4.19. Books and Records. The books and records of Community and Bank are
complete and correct and accurately reflect the basis for the financial
condition, results of operations, business, assets and capital of Community and
Bank set forth in the Community Financial Statements.
4.20. Broker's, Finder's or Other Fees. Except as set forth in the
Disclosure Schedule and except for reasonable fees of Community's attorneys and
accountants, all of which shall be paid by Community prior to the Effective
Time, no agent, broker or other person acting on behalf of Community or Bank or
under any authority of Community or Bank is or shall be entitled to any
commission, broker's or finder's fee or any other form of compensation or
payment from any of the parties hereto relating to this Agreement and the Merger
contemplated hereby.
4.21. Disclosure Schedule and Documents. All written data, documents,
materials and information referred to in this Agreement and delivered by
Community or Bank pursuant to or in connection with the Disclosure Schedule are
true, accurate and complete in all material respects as of the date hereof and
with respect to such items delivered subsequent to the date hereof or with any
update to the Disclosure Schedule, will be true, accurate and complete in all
material respects on the date of delivery thereof.
4.22. Interim Events. Except as set forth in Schedule 4.22 of the
Disclosure Schedule and except as otherwise required or permitted hereunder,
since December 31, 2000, neither Community nor Bank has, other than in the
ordinary course of business:
(a) Suffered any changes having an adverse impact on the financial
condition, results of operations, business, assets or capital of Community or
Bank in excess of $10,000 individually or in the aggregate;
21
22
(b) Suffered any damage, destruction or loss to any of its properties,
not fully paid by insurance proceeds, in excess of $5,000 individually or in the
aggregate;
(c) Declared, distributed or paid any dividend or other distribution to
its shareholders;
(d) Repurchased, redeemed or otherwise acquired shares of its common
stock, issued any shares of its common stock or stock appreciation rights or
sold or agreed to issue or sell any shares of its common stock or any right to
purchase or acquire any such stock or any security convertible into such stock
or taken any action to reclassify, recapitalize or split its stock;
(e) Granted or agreed to grant any increase in benefits payable or to
become payable under any pension, retirement, profit sharing, health, bonus,
insurance or other welfare benefit plan or agreement to employees, officers or
directors of Community or Bank except pursuant to the express terms thereof;
(f) Increased the salary of any director, officer or employee or entered
into any employment contract, indemnity agreement or understanding with any
officer or employee or installed any employee welfare, pension, retirement,
stock option, stock appreciation, stock dividend, profit sharing or other
similar plan or arrangement;
(g) Leased, sold or otherwise disposed of any of its assets except as
contemplated by Section 2.02(c) or in the ordinary course of business or leased,
purchased or otherwise acquired from third parties any assets except in the
ordinary course of business;
(h) Except for the Merger contemplated by this Agreement, merged,
consolidated or sold shares of its common stock, agreed to merge or consolidate
with or into any third party, agreed to sell any shares of its common stock or
acquired or agreed to acquire any stock, equity interest, assets or business of
any third party;
(i) Incurred, assumed or guaranteed any obligation or liability (whether
absolute, accrued, contingent or otherwise) other than obligations and
liabilities incurred in the ordinary course of business;
(j) Mortgaged, pledged or subjected to a lien, security interest, option
or other encumbrance any of its assets except for tax and other liens which
arise by operation of law and with respect to which payment is not past due and
except for pledges or liens: (i) required to be granted in connection with
acceptance by Community or Bank of government deposits; or (ii) granted in
connection with repurchase or reverse repurchase agreements;
(k) Except as set forth in the Disclosure Schedule, canceled, released or
compromised any loan, debt, obligation, claim or receivable other than in the
ordinary course of business;
22
23
(l) Entered into any transaction, contract or commitment other than in
the ordinary course of business;
(m) Agreed to enter into any transaction for the borrowing or loaning of
monies, other than in the ordinary course of its lending business; or
(n) Conducted its business in any manner other than substantially as it
was being conducted through December 31, 2000.
4.23. Regulatory Filings. Community has filed and will continue to file in
a timely manner all required filings with the Securities and Exchange Commission
("SEC"), as required by applicable law, including, but not limited to, all
reports on Form 8-K, Form 10-K and Form 10-Q and proxy statements, and with all
federal and state regulatory agencies and authorities as required by applicable
law. All such filings with the SEC and with all other federal and state
regulatory agencies by Community, Bank, and all current or former direct or
indirect subsidiaries of Community or Bank were and will be true, accurate and
complete as of the dates of the filings and have been complied or will comply in
all respects as to form with the applicable requirements and prepared in
conformity with generally accepted regulatory accounting principles applied on a
consistent basis, and no such filing contained or will contain any untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements, at the time and in light of the circumstances
under which they were made, not false or misleading.
4.24. Contracts. Neither Community nor Bank is in default under or in
breach of or, to the best knowledge of Community and Bank after due inquiry,
alleged to be in default under or in breach of, any loan or credit agreement,
conditional sales contract or other title retention agreement, security
agreement, bond, indenture, mortgage, license, contract, lease, commitment or
any other instrument or obligation.
4.25. No Third Party Options. There are no agreements, options, commitments
or rights with, of or to any third party to acquire any shares of capital stock
or assets of Community or Bank.
4.26. Indemnification Agreements. Except as set forth in Schedule 4.26 of
the Disclosure Schedule:
(a) Neither Community nor Bank is a party to any indemnification,
indemnity or reimbursement agreement, contract, commitment or understanding to
indemnify any present or former director, officer, employee, fiduciary of any
Community Plan, shareholder or agent against liability or hold the same harmless
from liability.
23
24
(b) No claims have been made against or filed with Community or Bank nor
have, to the best knowledge of Community and Bank after due inquiry, any claims
been threatened against Community or Bank, nor is Community or Bank aware after
due inquiry of any facts or circumstances which may create the basis for a
claim, for indemnification against liability or for reimbursement of any costs
or expenses incurred in connection with any legal or regulatory proceeding by
any present or former director, officer, shareholder, employee or agent of
Community or Bank.
4.27. Shareholder Approval. The affirmative vote of the holders of
two-thirds of the Community Common Stock (which are issued and outstanding on
the record date relating to the meeting of shareholders) is required for
shareholder approval of this Agreement and the Merger.
4.28. Trust Administration. The Bank has properly administered all accounts
for which it acts as a fiduciary (under ERISA or otherwise) or agent, custodian,
personal representative, guardian, conservator or investment adviser or
investment manager in accordance with the terms of the governing documents and
applicable state and federal law. Neither Community, the Bank nor any director,
officer or employee of Community or the Bank acting on behalf of the Bank has
committed any breach of trust or other violation of applicable law or regulation
with regard to any such fiduciary or agency account, and the accountings for
each such fiduciary or agency account are true and correct in all material
respects and accurately reflect the assets of such fiduciary or agency account.
4.29. Absence of Changes. Except as set forth in Schedule 4.29 of the
Disclosure Schedule, since December 31, 2000 there has not been any change in
the financial condition, the results of operations or the business of Community
or the Bank which would have a material adverse effect on Community or the Bank.
4.30. Sale of Subsidiary Banks. Except as set forth in Schedule 4.30 of the
Disclosure Schedule, upon consummation of the sale by Community of the stock it
holds of American Bank of Illinois in Highland, MidAmerica Bank of St. Clair
County, and The Egyptian State Bank (the "Sold Banks"), Community shall have no
liability or obligation (whether absolute, accrued, contingent or otherwise) to
any individual or entity, with respect to the sale of the stock of the Sold
Banks or with respect in any way to the Sold Banks. After due inquiry, Community
is not aware of any set of facts which could be expected to give rise to such
liabilities or obligations.
4.31. Opinion of Financial Advisor. The Board of Directors of Community, at
a duly constituted and held meeting at which a quorum was present throughout,
has been informed orally by a reputable financial advisor experienced in
transactions such as the Merger that the terms of the Merger are fair to the
shareholders of Community from a financial point of view.
4.32. Regulatory Matters. Neither Community nor the Bank has taken or
agreed to take any action or has any knowledge of any fact or circumstance that
would materially impede or
24
25
delay receipt of any regulatory approval required for consummation of the
transactions contemplated by this Agreement.
4.33. Representations and Warranties at the Effective Time. All
representations and warranties of Community and Bank contained herein shall be
true, accurate and complete in all material respects on and as of the Effective
Time as though made or given at such time.
4.34. Nonsurvival of Representations and Warranties. The representations
and warranties of Community and Bank contained in this Agreement shall expire at
the Effective Time, and thereafter Community and Bank, and all directors,
officers and employees of Community and Bank shall have no further liability
with respect thereto, except for fraud or except as otherwise provided by law,
whether statutory, common law or otherwise.
SECTION 5
REPRESENTATIONS AND WARRANTIES OF FIRST FINANCIAL
First Financial represents and warrants to Community as follows:
5.01. Organization and Authority. First Financial is a corporation duly
organized and validly existing under the laws of the State of Indiana and has
full power and authority (corporate and otherwise) to own and lease its
properties as presently owned and leased and to conduct its business in the
manner and by the means utilized as of the date hereof.
5.02. Authorization. First Financial has the requisite corporate power and
authority to enter into this Agreement and to carry out its obligations
hereunder, subject to the fulfillment of the conditions precedent set forth in
Section 8.01 hereof. This Agreement and its execution and delivery by First
Financial have been duly authorized by the Board of Directors of First
Financial. This Agreement constitutes a valid and binding obligation of First
Financial, subject to the conditions precedent set forth in Section 8.01 hereof,
and is enforceable in accordance with its terms, except to the extent limited by
general principles of equity and public policy and by bankruptcy, insolvency,
reorganization, liquidation, moratorium, readjustment of debt or other laws of
general application relating to or affecting the enforcement of creditors'
rights.
(b) Neither the execution of this Agreement nor consummation of the
Merger contemplated hereby: (i) conflicts with or violates First Financial's
Articles of Incorporation or By-Laws; (ii) conflicts with or violates in any
material respect any local, state, federal or foreign law, statute, ordinance,
rule or regulation (provided that the approvals of or filings with applicable
government regulatory agencies or authorities required for consummation of the
Merger are obtained) or any court or administrative judgment, order, injunction,
writ or decree; or (iii) conflicts with, results in a breach of or constitutes a
material default under any note, bond, indenture, mortgage, deed of trust,
license, contract, lease, agreement, arrangement, commitment
25
26
or other instrument to which First Financial is subject or bound and which is
material to First Financial on a consolidated basis.
(c) Other than in connection or in compliance with applicable federal and
state banking, securities and corporation statutes, all as amended, and the
rules and regulations promulgated thereunder, no notice to, filing with,
exemption by or consent, authorization or approval of any governmental agency or
body is necessary for the consummation by First Financial of the Merger
contemplated by this Agreement.
5.03. Litigation and Pending Proceedings. There are no claims, actions,
suits, proceedings, investigations or arbitrations pending or, to the best
knowledge of First Financial after due inquiry by the officers of First
Financial, threatened in any court or before any government agency or authority,
arbitration panel or otherwise (nor does First Financial have any knowledge of a
basis for any claim, action, suit, proceeding, litigation, investigation or
arbitration) against, by or affecting First Financial which would reasonably be
expected to prevent the performance of this Agreement, declare the same unlawful
or cause the rescission hereof.
5.04. Accuracy of Statements Made to Community. No representation, warranty
or other statement made, or any information provided, by First Financial in this
Agreement, and no written report, statement, list, certificate, materials or
other information furnished or to be furnished by First Financial to Community
through and including the Effective Time in connection with this Agreement or
the Merger contemplated hereby, contains or shall contain (in the case of
information relating to the proxy statement at the time it is mailed to
Community's shareholders) any untrue or misleading statement of material fact or
omits or shall omit to state a material fact necessary to make the statements
contained herein or therein, in light of the circumstances in which they are
made, not false or misleading.
5.05. Representations and Warranties at the Effective Date. All
representations and warranties of First Financial contained herein shall be
true, accurate and complete in all material respects on and as of the Effective
Time as though made or given at such time.
5.06. Nonsurvival of Representations and Warranties. The representations
and warranties of First Financial contained in this Agreement shall expire at
the Effective Time and, thereafter, neither First Financial nor its directors,
officers and employees shall have any further liability with respect thereto,
except for fraud or except as otherwise provided by law, whether statutory,
common law or otherwise.
5.07. Shareholder Approval. Approval by First Financial's shareholders of
the Merger or any other actions contemplated by this Agreement is not required.
26
27
SECTION 6
COVENANTS OF COMMUNITY
Community covenants and agrees with First Financial and Merger Corp as
follows:
6.01. Shareholder Approval. Community will submit this Agreement to its
shareholders for approval at a meeting to be called and held in accordance with
applicable law and the Articles of Incorporation of Community at the earliest
practicable date. The Board of Directors of Community will recommend to
Community's shareholders that such shareholders approve this Agreement and the
Merger contemplated hereby and will solicit proxies voting in favor of this
Agreement from Community's shareholders.
6.02. Other Approvals. (a) Community will proceed expeditiously, cooperate
fully and use its best efforts to assist First Financial in procuring upon
reasonable terms and conditions all consents, authorizations, approvals,
registrations and certificates, in completing all filings and applications and
in satisfying all other requirements prescribed by law which are necessary for
consummation of the Merger on the terms and conditions provided in this
Agreement at the earliest possible reasonable date.
(b) Community will use commercially reasonable efforts to obtain any
required third party consents to agreements, contracts, commitments, leases,
instruments and documents described in the Disclosure Schedule pursuant to
Section 4.
(c) Community will cooperate with First Financial in and shall take all
necessary action to effectuate the disposition of the Community Plans, as
provided in Section 6.13 hereof. Community shall pay all costs and expenses
associated with such dispositions.
6.03. Conduct of Business. (a) Except as set forth in the Disclosure
Schedule, on and after the date of this Agreement and until the Effective Time
or until this Agreement will be terminated as herein provided, Community will
not, without the prior written consent of First Financial:
(i) make any changes in its capital stock accounts (including,
without limitation, any stock split, stock dividend,
recapitalization or reclassification);
(ii) authorize a class of stock or issue, or authorize the
issuance of, securities other than or in addition to the
issued and outstanding common stock as set forth in Section
4.03 hereof;
(iii) distribute or pay any dividends on its shares of common
stock, or authorize a stock split, or make any other
distribution to its shareholders;
27
28
(iv) redeem any of its outstanding shares of common stock;
(v) merge, combine or consolidate or effect a share exchange
with or sell its assets or any of its securities to any
other person, corporation or entity or enter into any other
similar transaction not in the ordinary course of business;
(vi) purchase any assets or securities or assume any liabilities
of another bank holding company, bank, corporation or other
entity, except in the ordinary course of business necessary
to manage its investment portfolio;
(vii) make any loan or commitment to lend money, issue any letter
of credit or accept any deposit, except in the ordinary
course of business in accordance with its existing banking
practices;
(viii) except for the disposition in the ordinary course of
business of other real estate owned and except for the sale
by Community of the stock it holds of American Bank of
Illinois in Highland, MidAmerica Bank of St. Clair County,
and The Egyptian State Bank, acquire or dispose of any real
or personal property or fixed asset constituting a capital
investment in excess of $10,000 individually or $25,000 in
the aggregate;
(ix) subject any of its properties or assets to a mortgage, lien,
claim, charge, option, restriction, security interest or
encumbrance, except for tax and other liens which arise by
operation of law and with respect to which payment is not
past due and except for pledges or liens: (i) required to be
granted in connection with acceptance by Community of
government deposits; or (ii) granted in connection with
repurchase or reverse repurchase agreements;
(x) promote to a new position or increase the rate of
compensation or enter into any agreement to promote to a new
position or increase the rate of compensation, of any
director, officer or employee of Community or Bank;
(xi) execute, create, institute, modify, amend, terminate (except
with respect to any amendments to the Community Plans
required by law, rule or regulation) or engage in any
transaction with any pension, retirement, savings, stock
purchase, stock bonus, stock ownership, stock option, stock
appreciation or depreciation right or profit sharing plans;
any employment, deferred compensation, consulting, bonus or
collective bargaining
28
29
agreement; any group insurance or health contract or policy;
or any other incentive, retirement, welfare or employee
welfare benefit plan, agreement or understanding for current
or former directors, officers or employees of Community or
Bank; or change the level of benefits or payments under any
of the foregoing or increase or decrease any severance or
termination of pay benefits or any other fringe or employee
benefits other than as required by law or regulatory
authorities or the terms of any of the foregoing;
(xii) modify, amend or institute new employment policies or
practices, or enter into, renew or extend any employment,
indemnity, reimbursement, consulting, compensation or
severance agreements with respect to any present or former
directors, officers or employees of Community or Bank;
(xiii) hire or employ any new or additional employees of Community
or Bank, except those which are reasonably necessary for the
proper operation of its business;
(xiv) elect or appoint any officers or directors of Community or
Bank who are not presently serving in such capacities;
(xv) amend, modify or restate Community's or Bank's Articles of
Incorporation or By-Laws from those in effect on the date of
this Agreement and as delivered to First Financial
hereunder;
(xvi) give, dispose of, sell, convey or transfer; assign,
hypothecate, pledge or encumber; or grant a security
interest in or option to or right to acquire any shares of
common stock or substantially all of the assets of Community
or Bank, or enter into any agreement or commitment relative
to the foregoing;
(xvii) fail to continue to make additions to in accordance with
past practices and to otherwise maintain in all respects
Community's or Bank's reserve for loan and lease losses, or
any other reserve account, in accordance with safe, sound,
and prudent banking practices and in accordance with
generally accepted accounting principles applied on a
consistent basis; (xviii) fail to accrue, pay, discharge and
satisfy all debts, liabilities, obligations and expenses,
including, but not limited to, trade payables, incurred in
the regular and ordinary course of business as such debts,
liabilities, obligations and expenses become due;
29
30
(xix) issue, or authorize the issuance of, any securities
convertible into or exchangeable for any shares of the
capital stock of Community or Bank;
(xx) except for obligations disclosed within this Agreement, FHLB
daily advances utilized for the purpose of Community's and
the Bank's cash management, or in Schedule 6.03(a)(xx) of
the Disclosure Statement, trade payables and similar
liabilities and obligations incurred in the ordinary course
of business and the payment, discharge or satisfaction in
the ordinary course of business of liabilities reflected in
the Community Financial Statements or the Subsequent
Community Financial Statements, borrow any money or incur
any indebtedness including, without limitation, through the
issuance of debentures, or incur any liability or obligation
(whether absolute, accrued, contingent or otherwise), in an
aggregate amount exceeding $10,000;
(xxi) open, close, move or, in any material respect, expand,
diminish, renovate, alter or change any of its offices or
branches;
(xxii) pay or commit to pay any management or consulting or other
similar type of fees; or
(xxiii) enter into any contract, agreement, lease, commitment,
understanding, arrangement or transaction or incur any
liability or obligation (other than as contemplated by
Section 6.03(a)(vii) hereof and legal, accounting and fees
related to the Merger) requiring payments by Community which
exceed $10,000, whether individually or in the aggregate, or
that is not a trade payable or incurred in the ordinary
course of business.
(b) Community will maintain, or cause to be maintained, in full force and
effect, insurance on its and the Bank's assets, properties and operations,
fidelity coverage and directors' and officers' liability insurance in such
amounts and with regard to such liabilities and hazards as are currently insured
by Community and/or the Bank as of the date of this Agreement.
6.04. Preservation of Business. On and after the date of this Agreement and
until the Effective Time or until this Agreement is terminated as herein
provided, Community will: (a) carry on its business diligently, substantially in
the manner as is presently being conducted and in the ordinary course of
business; (b) use commercially reasonable efforts to preserve its business
organization intact (except for the sale by Community of the stock it holds of
American Bank of Illinois in Highland, MidAmerica Bank of St. Clair County, and
The Egyptian State Bank), keep available the services of the present officers
and employees and preserve its present relationships with customers and persons
having business dealings with it; (c) maintain all of the properties and assets
that it owns or utilizes in the operation of its business as currently
30
31
conducted in good operating condition and repair, reasonable wear and tear
excepted, and maintain insurance upon such properties and assets in amounts and
kinds comparable to that in effect on the date of this Agreement; (d) maintain
its books, records and accounts in the usual, regular and ordinary manner, on a
basis consistent with prior years and in compliance with all material respects
with all statutes, laws, rules and regulations applicable to them and to the
conduct of its business; and (e) not knowingly do or fail to do anything which
will cause a breach of, or default in, any contract, agreement, commitment,
obligation, understanding, arrangement, lease or license to which it is a party
or by which it is or may be subject or bound which would reasonably be expected
to have a material adverse effect on the financial condition, results of
operations, business, assets, or capital of Community.
6.05. Press Releases. Except as required by law, Community will not issue
any press or news releases or make any other public announcements or disclosures
relating to the Merger without the prior consent of First Financial following
delivery to First Financial of a final copy of such press or news release, which
consent shall not be unreasonably withheld.
6.06. Disclosure Schedule Update. Community will promptly supplement, amend
and update, upon the occurrence of any change prior to the Effective Time, and
as of the Effective Time, the Disclosure Schedule with respect to any matters or
events hereafter arising which, if in existence or having occurred as of the
date of this Agreement, would have been required to be set forth or described in
the Disclosure Schedule or this Agreement and including, without limitation, any
fact which, if existing or known as of the date hereof, would have made any of
the representations or warranties of Community or Bank contained herein
materially incorrect, untrue or misleading.
6.07. Information, Access Thereto, Confidentiality. First Financial and its
representatives and agents will, at all times during normal business hours prior
to the Effective Time, have full and continuing access to the properties,
facilities, operations, books and records of Community. First Financial and its
representatives and agents may, prior to the Effective Time, make or cause to be
made such reasonable investigation of the operations, books, records and
properties of Community and Bank and of their respective financial and legal
condition as deemed necessary or advisable to familiarize themselves with such
operations, books, records, properties and other matters; provided, however,
that such access or investigation shall not interfere unnecessarily with the
normal business operations of Community. Upon request, Community will furnish
First Financial or its representatives or agents, their attorneys' responses to
external auditors requests for information, management letters received from
their external auditors and such financial, loan and operating data and other
information reasonably requested by First Financial which has been or is
developed by Community, its auditors, accountants or attorneys (provided with
respect to attorneys, such disclosure would not result in the waiver by
Community of any claim of attorney-client privilege), and will permit First
Financial or its representatives or agents to discuss such information directly
with any individual or firm performing auditing or accounting functions for
Community, and such auditors and accountants
31
32
will be directed to furnish copies of any reports or financial information as
developed to First Financial or its representatives or agents. No investigation
by First Financial will affect the representations and warranties made by
Community or Bank herein. Any confidential information or trade secrets received
by First Financial or its representatives or agents in the course of such
examination will be treated confidentially, and any correspondence, memoranda,
records, copies, documents and electronic or other media of any kind containing
such confidential information or trade secrets or both shall be destroyed by
First Financial or, at Community's request, returned to Community in the event
this Agreement is terminated as provided in Section 9 hereof. This Section 6.07
will not require the disclosure of any information to First Financial which
would be prohibited by law.
6.08. Subsequent Community Financial Statements. As soon as reasonably
available after the date of this Agreement, Community will deliver to First
Financial the monthly unaudited consolidated balance sheets and profit and loss
statements of Community prepared for its internal use, Bank's Call Reports for
each quarterly period completed prior to the Effective Time, and all other
financial reports or statements submitted by Community or Bank to regulatory
authorities after the date hereof, to the extent permitted by law (collectively,
"Subsequent Community Financial Statements"). The Subsequent Community Financial
Statements will be prepared on a basis consistent with past accounting practices
and generally accepted accounting principles applied on a consistent basis to
the extent applicable and shall present fairly the financial condition and
results of operations as of the dates and for the periods presented. The
Subsequent Community Financial Statements, including the notes thereto, will not
include any assets, liabilities or obligations or omit to state any assets,
liabilities or obligations (whether absolute, accrued, contingent or otherwise)
or any other facts, which inclusion or omission would render such financial
statements inaccurate, incomplete or misleading in any material respect.
6.09. Employee Benefits. Neither the terms of this Agreement nor the
provision of any employee benefits by First Financial to employees of Community
or the Bank will: (a) create any employment contract, agreement or understanding
with or employment rights for, or constitute a commitment or obligation of
employment to, any of the officers or employees of Community or the Bank; or (b)
prohibit or restrict First Financial or its subsidiaries, whether before or
after the Effective Time, from changing, amending or terminating any employee
benefit plans or programs provided to its employees from time to time.
6.10. Environmental Reports. If requested by First Financial, Community and
Bank will cooperate with an environmental consulting firm designated by First
Financial in connection with the conduct by such firm of a phase one
environmental investigation on all real property owned or leased by Community as
of the date of this Agreement, and any real property acquired or leased by
Community after the date of this Agreement.
32
33
6.11. Other Negotiations. On and after the date of this Agreement and until
the Effective Time or until this Agreement is terminated as herein provided,
except with the prior written approval of First Financial, neither Community nor
Bank shall, and neither Community nor Bank shall permit or authorize its
directors, officers, employees, agents or representatives to, directly or
indirectly, initiate, solicit, encourage or engage in discussions or
negotiations with, or provide information to, any corporation, association,
partnership, person or other entity or group concerning any merger,
consolidation, share exchange, combination, purchase or sale of substantial
assets, sale of shares of common stock (or securities convertible or
exchangeable into or otherwise evidencing, or any agreement or instrument
evidencing the right to acquire, capital stock) or similar transaction relating
to Community or Bank or to which Community or Bank may become a party (all such
transactions are hereinafter referred to as "Acquisition Transactions").
Community or Bank shall promptly communicate to First Financial the terms of any
proposal or offer which either of them may receive with respect to an
Acquisition Transaction and any request by or indication of interest on the part
of any third party with respect to the initiation of any Acquisition Transaction
or discussions with respect thereto.
6.12. Payment of Certain Expenses and Taxes. On or prior to the Effective
Time, Community shall pay all legal, accounting, and investment banking fees of
Community relating to the Merger and the transfer, in December 2000, of
Community stock by the Community Employee Stock Ownership Plan ("ESOP") to
Community. Prior to the Effective Time, Community shall also take the following
actions:
(a) Special Payment to Community ESOP. Pay to the Special Trustee of the
Community ESOP an amount equal to the amount to be placed in the ESOP
pursuant to Section 2.02(e) of this Agreement.
(b) Payment of Taxes. File with the Internal Revenue Service Form 5330,
Return of Excise Taxes Related to Employee Benefit Plans, for 2000
and 2001 and cause to be paid all taxes (and, to the extent
applicable, any interest and penalties associated with such taxes) on
the basis that the amount produced by the calculation required in
Section 6.12(a) is subject to the tax imposed by Section 4975(a) of
the Code for calendar years 2000 and 2001.
6.13. Disposition of Community Tax-Qualified Plans. Community shall take
all necessary corporate action to effectuate the disposition of the
tax-qualified plans sponsored by them (collectively, "Community Tax-Qualified
Plans") as provided in this Section 6.13 and Section 7.03 hereof. Such action
shall be taken at the expense of Community, in a manner which satisfies all
requirements of applicable law, and is satisfactory to counsel for FFC.
(a) Participation in Merger Transaction and Merger of Community 401(k)
Plan.
33
34
(i) In connection with the Merger, Community shall appoint an
independent fiduciary, acceptable to First Financial and its
counsel, which may be the same entity as the Special Trustee
provided for in subsection 6.13(b), and shall be also take all
actions necessary to cause the fiduciaries of the Community
401(k) Plan to take all of the following actions:
(A) Implement a written confidential pass through voting
procedure pursuant to which the participants under the
Community 401(k) Plan and their beneficiaries may direct the
appointed independent fiduciary regarding the manner in
which the shares of Community common stock allocated to
their Community 401(k) accounts are to be voted with respect
to the Merger; and
(B) Provide the Community 401(k) Plan participants and their
beneficiaries with a written notice regarding the existence
of and provisions for such confidential pass through voting
procedures, as well as the same written materials to be
provided to the shareholders of Community in connection with
the Merger.
(ii) As soon as administratively feasible after the Effective Time
("Disposition Date"), the Community Financial Corp. 401(k) Plan
("Community 401(k) Plan") shall be merged with and into the
First Financial Corporation Employees' 401(k) Savings Plan ("FFC
401(k) Plan"); provided, however, that such merger shall be
subject to receipt of a determination letter from the Internal
Revenue Service ("Service") to the effect that the merger of the
Community 401(k) Plan into the FFC 401(k) Plan will not
adversely affect the tax-qualified status of either plan. First
Financial shall be responsible for obtaining such determination
letter. All account balances maintained under the Community
401(k) Plan shall become fully vested on the day on which the
Effective Time occurs. From the date of this Agreement through
the Disposition Date, Community may continue to make
contributions to the Community 401(k) Plan so long as such
contributions are comparable in amount to any past contributions
to such plan.
(b) Participation in Merger Transaction and Termination of Community
ESOP. In connection with the Merger, Community shall appoint an independent,
institutional "Special Trustee" experienced in acting as an independent employee
stock ownership plan trustee and which is acceptable to First Financial and its
counsel, to act as an independent fiduciary solely on behalf of the Community
ESOP and the participants and beneficiaries thereunder and shall also take all
actions necessary to cause the fiduciaries of the Community ESOP, including the
"Special Trustee" thereunder, to take all of the following actions:
34
35
(i) Implement a written confidential pass through voting
procedure pursuant to which the participants under the
Community ESOP and their beneficiaries may direct the
Special Trustee regarding the manner in which the shares of
Community common stock allocated to their Community ESOP
accounts are to be voted with respect to the Merger;
(ii) Provide the Community ESOP participants and their
beneficiaries with a written notice regarding the existence
of and provisions for such confidential pass through voting
procedures, as well as the same written materials to be
provided to the shareholders of Community in connection with
the Merger;
(iii) Obtain a written opinion from an independent financial
advisor, which is experienced in acting as a financial
advisor to independent employee stock ownership plan
trustees and which is acceptable to First Financial and its
counsel, to the Special Trustee of the Community ESOP to the
effect that the consideration to be received by the
Community ESOP in the Merger in exchange for the shares of
Community common stock, will (i) constitute no less than
"adequate consideration" as defined in Section 3(18) of
ERISA, and (ii) that the terms and conditions of the Merger,
as they apply to the Community ESOP, including the
disposition of shares of Community common stock prior to the
Merger (taking into account the actions required to be taken
in connection therewith by Section 6.12) and the disposition
of the Community ESOP in connection therewith, are fair to
the Community ESOP and its participants from a financial
point of view. The contents of the written opinion referred
to in the preceding sentence must be acceptable in form and
content to First Financial and its counsel;
(iv) Take any and all additional actions necessary to satisfy the
requirements of ERISA applicable to the Community ESOP
fiduciaries in connection with the Merger;
(v) Prior to the distribution of any ESOP accounts in connection
with the termination of the Community ESOP, Community shall
have obtained a determination letter from the Service to the
effect that the termination will not affect the
tax-qualified status of the Community ESOP.
(c) First Financial and its counsel shall either draft or review and
shall be supplied with copies of all documents, filings, resolutions, amendments
or other writings prepared by or
35
36
on behalf of Community in connection with carrying out any of the provisions of
this Section 6.13.
6.14. SEC and Other Reports. Promptly upon its becoming available, furnish
to First Financial one (1) copy of each financial statement, report, notice, or
proxy statement sent by Community to its shareholders generally and of each
regular or periodic report, registration statement or prospectus filed by
Community with Nasdaq or the SEC or any successor agency, and of any order
issued by any Governmental Authority in any proceeding to which Community is a
party. For purposes of this provision, "Governmental Authority" shall mean any
government (or any political subdivision or jurisdiction thereof), court,
bureau, agency or other governmental entity having or asserting jurisdiction
over Community or any of its business, operations or properties.
6.15. Adverse Actions. Community shall not knowingly take any action that
is intended or is reasonably likely to result in (i) any of its representations
and warranties set forth in this Agreement being or becoming untrue in any
respect at any time at or prior to the Effective Time, (ii) any of the
conditions to the Merger set forth in Section 8 not being satisfied, (iii) a
material violation of any provision of this Agreement or (iv) a delay in the
consummation of the Merger except, in each case, as may be required by
applicable law or regulation.
6.16. Termination Expenses. At or prior to the Effective Time the Bank
shall accrue for and pay all salary termination expenses associated with the
termination of the Bank's and Community's employment agreements.
6.17. Addition to Loan Loss Reserve. Prior to the Effective Time the Bank
shall make an additional provision to its allowance for loan loss reserve in an
amount as shall be requested by First Financial.
36
37
SECTION 7
COVENANTS OF FIRST FINANCIAL
First Financial covenants and agrees with Community as follows:
7.01. Approvals. (a) First Financial shall have primary responsibility for
the preparation, filing and costs of all bank holding company and bank
regulatory applications required for consummation of the Merger. First Financial
shall provide to Community's counsel copies of all applications filed and copies
of all material written communications with all state and federal bank
regulatory agencies relating to such applications. First Financial shall proceed
expeditiously, cooperate fully and use its best efforts to procure, upon terms
and conditions reasonably acceptable to First Financial, all consents,
authorizations, approvals, registrations and certificates, to complete all
filings and applications and to satisfy all other requirements prescribed by law
which are necessary for consummation of the Merger on the terms and conditions
provided in this Agreement at the earliest possible reasonable date.
7.02 Press Releases. Except as required by law, First Financial shall not
issue any press releases or make any other public announcements or disclosures
relating primarily to Community with respect to the Merger without the prior
consent of Community, which consent shall not be unreasonably withheld.
7.03. Employee Benefit Plans. (a) At such time as First Financial shall
determine, in its sole discretion, but in no event later than December 31, 2001,
First Financial will make available to the employees of Community who continue
as employees of any subsidiary of First Financial after the Effective Time and,
further, subject to Subsections 7.03(b), (c) and (d) hereof, substantially the
same employee benefits on substantially the same terms and conditions that First
Financial may offer to similarly situated officers and employees of its banking
subsidiaries from time to time. Until such time as the employees of Community
become covered by the First Financial welfare benefit plans, the employees of
Community shall remain covered by their respective welfare benefit plans,
subject to the terms of such plans.
(b) Subject to the provisions of subsection (c) hereof, years of service
(as defined in the applicable First Financial plan) of an officer or employee of
Community prior to the Effective Time shall be credited, effective as of the
date on which such employees become covered by a particular First Financial
plan, to each such officer or employee eligible for coverage under Section
7.03(a) hereof for purposes of: (i) eligibility under First Financial's employee
welfare benefit plans; and (ii) eligibility and vesting, but not for purposes of
benefit accrual or contributions, under the First Financial Corporation
Employees' Pension Plan ("FFC Pension Plan") under the First Financial
Corporation Employee Stock Ownership Plan ("FFC ESOP") or under the FFC 401(k)
Plan. Subject to the provisions of Section 6.13 hereof, those officers and
employees of Community who otherwise meet the eligibility requirements of the
37
38
FFC Pension Plan or FFC ESOP, based upon their age and years of Community
service, shall become participants thereunder on the first plan entry date under
the FFC Pension Plan or FFC ESOP, as the case may be, which coincides with or
next follows the Effective Time. Those officers or employees who do not meet the
eligibility requirements of the FFC Pension Plan, First Financial Corporation
401(k) Plan or FFC ESOP on such date shall become participants thereunder on the
first plan entry date under the FFC Pension Plan or FFC ESOP, as the case may
be, which coincides with or next follows the date on which such eligibility
requirements are satisfied. Subject to the provisions of Section 6.13 hereof,
those officers and employees of Community who otherwise meet the eligibility
requirements of the FFC 401(k) Plan, based upon their age and years of Community
service shall become participants thereunder on the day immediately following
the Disposition Date of such plan. Those officers or employees who do not meet
the eligibility requirements of the FFC 401(k) Plan on such date shall become
participants thereunder on the first plan entry date under the FFC 401(k) Plan
which coincides with or next follows the date on which such eligibility
requirements are satisfied.
(c) No employee of Community serving as of the Effective Time shall be
subject to any pre-existing condition limitation under any of First Financial's
welfare benefit plans if such officer, employee or individual was not subject to
any pre-existing condition limitation under the corresponding Community welfare
benefit plan on the day immediately preceding the day he becomes a participant
in the First Financial welfare benefit plans pursuant to Section 7.03(a) hereof.
If in the sole discretion of First Financial it is administratively feasible
without unreasonable efforts or expense, expenses incurred by a Community
employee or a Community employee's covered dependent or spouse under a Community
welfare benefit plan shall be taken into account for purposes of satisfying any
applicable deductible, coinsurance or maximum out-of-pocket provisions under the
corresponding First Financial welfare benefit plan in the year in which such
individuals become participants in the First Financial plan.
(d) Neither the terms of this Agreement nor the provision of any employee
benefits by First Financial or any of its subsidiaries to employees of Community
or Bank shall: (i) create any employment contract, agreement or understanding
with or employment rights for, or constitute a commitment or obligation of
employment to, any of the officers or employees of Community or Bank; or (ii)
prohibit or restrict First Financial or its subsidiaries, whether before or
after the Effective Time, from changing, amending or terminating any employee
benefits provided to its employees from time to time.
(e) First Financial shall take any and all actions necessary to
effectuate the disposition of the Community Plans provided by this Section 7.03
and by Section 6.13 hereof.
7.04. Adverse Actions. First Financial shall not knowingly take any action
that is intended or is reasonably likely to result in (i) any of its
representations and warranties set forth in this Agreement being or becoming
untrue in any respect at any time at or prior to the
38
39
Effective Time, (ii) any of the conditions to the Merger set forth in Section 8
not being satisfied, (iii) a material violation of any provision of this
Agreement or (iv) a delay in the consummation of the Merger except, in each
case, as may be required by applicable law or regulation.
7.05. Directors' and Officers' Liability Insurance. First Financial agrees
that either Community or the Bank (as determined by Community), prior to the
Effective Time, may pay the premium necessary to extend for three years from the
Effective Time, Community's current directors' and officers' liability insurance
policy with respect to matters occurring prior to the Effective Time; provided,
however, that the amount of such premium shall not exceed an amount in the
aggregate greater than three times the cost of the most recent policy of one
year.
7.06. Assumption of Supplemental Executive Retirement Agreements.
Notwithstanding any other provision herein to the contrary, at the Effective
Time, First Financial and Merger Corp hereby expressly assume and agree to be
jointly and severally liable for the rights and obligations of, among other
things, Community and Bank under those three (3) certain Supplemental Executive
Retirement Agreements identified in this Section 7.06 below and briefly
described on Schedule 4.09(a)(iv) of the Disclosure Schedule to this Agreement:
(i) That certain Supplemental Executive Retirement Agreement by and
between Community Bank & Trust N.A., f/k/a/ Community Bank & Trust, fsb and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ dated as of June 22, 1995;
(ii) That certain Supplemental Executive Retirement Agreement by and
between Community Bank & Trust N.A., f/k/a/ Community Bank & Trust, fsb and
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ dated as of June 22, 1995; and
(iii) That certain Supplemental Executive Retirement Agreement by and
between Community Bank & Trust N.A., f/k/a/ Community Bank & Trust, fsb and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ dated as of June 22, 1995.
SECTION 8
CONDITIONS PRECEDENT TO THE MERGER
8.01. First Financial. The obligation of First Financial to consummate the
Merger is subject to the satisfaction and fulfillment of each of the following
conditions on or prior to the Effective Time, unless waived in writing by First
Financial:
(a) Representations and Warranties at Effective Time. Each of the
representations and warranties of Community contained in this Agreement will be
true, accurate and correct in
39
40
all material respects at and as of the Effective Time as though such
representations and warranties had been made or given on and as of the Effective
Time.
(b) Covenants. Each of the covenants and agreements of Community will
have been fulfilled or complied with in all material respects from the date of
this Agreement through and as of the Effective Time.
(c) Deliveries at Closing. First Financial will have received from
Community at the Closing (as hereinafter defined) the items and documents, in
form and content reasonably satisfactory to First Financial, set forth in
Section 11.02(b) hereof.
(d) Regulatory Approvals. The appropriate banking regulators will have
authorized and approved the Merger on terms and conditions satisfactory to First
Financial. In addition, all appropriate orders, consents, approvals and
clearances from all other regulatory agencies and governmental authorities whose
orders, consents, approvals or clearances are required by law for consummation
of the Merger contemplated by this Agreement will have been obtained on terms
and conditions satisfactory to First Financial.
(e) Shareholder Approval. The shareholders of Community will have
approved and adopted this Agreement as required by applicable law and its
Articles of Incorporation.
(f) Officers' Certificate. Community will have delivered to First
Financial a certificate signed by its President and its Secretary, dated as of
the Effective Time, certifying that: (i) all the representations and warranties
of Community are true, accurate and correct in all material respects on and as
of the Effective Time; (ii) all the covenants of Community have been complied
with in all material respects from the date of this Agreement through and as of
the Effective Time; and (iii) Community has satisfied and fully complied with
all conditions necessary to make this Agreement effective as to them.
(g) Stock Options. Except for the 154,340 outstanding "in the money"
Community options to purchase shares of Community common stock referenced in
Section 2 of this Agreement, all options, warrants, commitments, calls, puts,
agreements, understandings, arrangements or subscription rights relating to any
shares of Community Common Stock, or any securities convertible into or
representing the right to purchase or otherwise acquire any common stock or debt
securities of Community, by which Community is or may become bound, will have
been terminated or expired.
(h) Adequate Consideration and Fairness Opinion. A written opinion shall
have been delivered to the Special Trustee of the Community ESOP by its
independent financial advisor to the effect specified in Section 6.13(b)(iii).
Such opinion shall (i) be in form and substance satisfactory to First Financial
and its counsel, (ii) be dated as of a date not later than the mailing
40
41
date of the proxy statement-prospectus relating to the Merger to be mailed to
Community's shareholders, and (iii) updated or confirmed in writing as of the
Effective Time.
(i) Amount of Liabilities and Assets. First Financial shall have agreed
to the amount of the potential tax liabilities of Community and the amounts
contemplated by Sections 2.02(b)(ii) and (iv) for purposes of determining the
Aggregate Purchase Price in Section 2.02(b), and any amount contemplated by
Section 2.02(c).
(j) Director Waivers. First Financial shall have received from each of
the Directors of Community and the Bank waivers, in form and substance
satisfactory to it, of such individual's rights to seek reimbursement of or make
a claim for the expenses incurred or which may be incurred in connection with
the matters set forth in Schedule 4.26(b) of the Disclosure Schedule.
8.02. Community. The obligation of Community to consummate the Merger is
subject to the satisfaction and fulfillment of each of the following conditions
on or prior to the Effective Time, unless waived in writing by Community:
(a) Representations and Warranties at Effective Time. Each of the
representations and warranties of First Financial contained in this Agreement
will be true, accurate and correct in all material respects on and as of the
Effective Time as though the representations and warranties had been made or
given at and as of the Effective Time.
(b) Covenants. Each of the covenants and agreements of First Financial
will have been fulfilled or complied with in all material respects from the date
of this Agreement through and as of the Effective Time.
(c) Deliveries at Closing. Community will have received from First
Financial at the Closing the items and documents, in form and content reasonably
satisfactory to Community, listed in Section 11.02(a) hereof.
(d) Regulatory Approvals. The appropriate banking regulators will have
authorized and approved the Merger. In addition, all appropriate orders,
consents, approvals and clearances from all other regulatory agencies and
governmental authorities whose orders, consents, approvals or clearances are
required by law for consummation of the Merger contemplated by this Agreement
will have been obtained.
(e) Shareholder Approval. The shareholders of Community will have
approved and adopted this Agreement as required by applicable law and
Community's Articles of Incorporation.
41
42
(f) Officers' Certificate. First Financial will have delivered to
Community a certificate signed by its Chairman or President and its Secretary,
dated as of the Effective Time, certifying that: (i) all the representations and
warranties of First Financial are true, accurate and correct in all material
respects on and as of the Effective Time; (ii) all the covenants of First
Financial have been complied with in all material respects from the date of this
Agreement through and as of the Effective Time; and (iii) First Financial has
satisfied and fully complied with all conditions necessary to make this
Agreement effective as to it.
SECTION 9
TERMINATION OF MERGER
9.01. Manner of Termination. This Agreement and the Merger may be
terminated at any time prior to the Effective Time by written notice delivered
by First Financial to Community, or by Community to First Financial, as follows:
(a) By First Financial or Community, if:
(i) the Merger contemplated by this Agreement has not been
consummated by September 30, 2001; or
(ii) the Agreement and the Merger are not approved by the
requisite vote of the shareholders of Community at the
Special Meeting of Shareholders of Community; or
(iii) the respective Boards of Directors of First Financial and
Community mutually agree to terminate this Agreement.
(b) By First Financial if:
(i) First Financial determines in its sole discretion that any
item, event or information set forth in any supplement,
amendment or update to the Disclosure Schedule, or the
results of any environmental report pursuant to Section
6.10, has had or could be expected to have a material
adverse effect on the business, assets, capitalization,
financial condition or results of operations of Community;
or First Financial otherwise becomes aware of any item,
event or information which it determines in its sole
discretion has had or could be expected to have a material
adverse effect on the business, assets, capitalization,
financial condition or results of operations of Community
(it being understood and acknowledged by Community that the
due diligence review of Community by First Financial was not
complete as of the date of this Agreement); or
42
43
(ii) there has been a misrepresentation or a breach of any
warranty by or on the part of Community in its
representations and warranties set forth in this Agreement
which has had or would be expected to have a material
adverse effect on the business, assets, capitalization,
financial condition or results of operations of Community;
provided, however, that in the event of any inaccuracy in
the representations and warranties contained in Section 4.03
hereof relative to the number of issued and outstanding
shares of capital stock or options to purchase shares of
capital stock of Community or Bank, First Financial will
have the absolute right to terminate this Agreement without
regard to the materiality of any such inaccuracy; or
(iii) there has been a breach of or failure to comply with any
covenant set forth in this Agreement by or on the part of
Community which could reasonably be expected to have a
material adverse effect on the economic value of the Merger
to First Financial; or
(iv) First Financial shall reasonably determine that the Merger
contemplated by this Agreement has become inadvisable or
impracticable by reason of commencement or threat of any
claim, litigation or proceeding against First Financial,
Community, or any director or officer of any of such
entities (A) relating to this Agreement or the Merger, or
(B) which is likely to have a material adverse effect on the
business, assets, capitalization, financial condition or
results of operations of Community; or
(v) there has been a material adverse change in the business,
assets, capitalization, financial condition or results of
operations of Community as of the Effective Time as compared
to that in existence as of December 31, 2000 other than (A)
any change resulting from the action taken by Community
pursuant to Section 6.12 or Section 6.17, (B) any change set
forth on the Disclosure Schedule as of and delivered as of
the date of this Agreement, or (C) resulting primarily by
reason of changes in banking laws or regulations (or
interpretations thereof), changes in the general level of
interest rates or changes in economic, financial or market
conditions affecting the banking industry generally in
Community's market area; or
(vi) Community's Board of Directors has failed to approve and
recommend this Agreement or the Merger, or has withdrawn or
modified in any manner adverse to First Financial its
approval or recommendation of this
43
44
Agreement or the Merger or will have resolved or publicly
announced an intention to do either of the foregoing; or
(vii) the sale by Community for cash of all of the shares of
American Bank of Illinois in Highland, MidAmerica Bank of
St. Clair County, and The Egyptian State Bank has not
consummated by May 30, 2001.
(c) By Community, if:
(i) there has been a misrepresentation or a breach of any
warranty by or on the part of First Financial in its
representations and warranties set forth in this Agreement
which has had or would be expected to have a material
adverse effect on the business, assets, capitalization of
First Financial; or
(ii) there has been a breach of or failure to comply with any
covenant set forth in this Agreement by or on the part of
First Financial or First Financial which has had or would be
expected to have a material adverse effect on the business,
assets, capitalization, financial condition or results of
operations of First Financial; or
(iii) it shall reasonably determine that the Merger contemplated
by this Agreement has become inadvisable or impracticable by
reason of commencement or threat of any material claim,
litigation or proceeding against First Financial (A)
relating to this Agreement or the Merger, or (B) which is
likely to have a material adverse effect on the business,
assets, capitalization of First Financial.
9.02. Effect of Termination. Upon termination by written notice, this
Agreement shall be of no further force or effect, and there shall be no further
obligations or restrictions on future activities on the part of First Financial,
Community and their respective directors, officers, employees, agents and
shareholders, except as provided in compliance with the confidentiality
provisions of this Agreement set forth in Section 6.07 and the payment of
expenses set forth in Section 12.10 hereof. Termination will not in any way
release a breaching party from liability for any willful breach of this
Agreement giving rise to such termination.
44
45
SECTION 10
EFFECTIVE TIME OF THE MERGER
Upon the terms and subject to the conditions specified in this Agreement,
the Merger will become effective at the close of business on the day and at the
time specified in the Articles of Merger of Community with and into Merger Corp
as filed with the Indiana and Illinois Secretaries of State ("Effective Time").
Unless otherwise mutually agreed to by the parties hereto, the Effective Time
will occur on the last business day of the month following (a) the fulfillment
of all conditions precedent to the Merger set forth in Section 8 of this
Agreement and (b) the expiration of all waiting periods in connection with the
bank regulatory applications filed for the approval of the Merger.
SECTION 11
CLOSING
11.01. Closing Date and Place. So long as all conditions precedent set
forth in Section 8 hereof have been satisfied and fulfilled, the closing of the
Merger ("Closing") will take place on the Effective Time at a location to be
reasonably determined by First Financial.
11.02. Deliveries. (a) At the Closing, First Financial will deliver to
Community the following:
(i) the officers' certificate contemplated by Section 8.02(g)
hereof;
(ii) copies of all approvals by government regulatory agencies
necessary to consummate the Merger;
(iii) copies of the resolutions of the Board of Directors of First
Financial and Merger Corp certified by the Secretary of
First Financial and Merger Corp, respectively, relative to
the approval of this Agreement and the Merger; and
(iv) such other documents as Community or its legal counsel may
reasonably request.
(b) At the Closing, Community will deliver to First Financial the
following:
(i) an opinion of its legal counsel in the form attached hereto
as Exhibit A and dated as of the Effective Time;
45
46
(ii) the officers' certificate contemplated by Section 8.01(f)
hereof;
(iii) a list of Community's shareholders as of the Effective Time
certified by the President and Secretary of Community;
(iv) copies of the resolutions adopted by the Board of Directors
and shareholders of Community certified by the Secretary of
Community relative to the approval of this Agreement and the
Merger;
(v) such other documents as First Financial or its legal counsel
may reasonably request; and
(vi) the Fairness Opinion required by Sections 8.01(h) and
8.02(h) hereof; and
SECTION 12
MISCELLANEOUS
12.01. Effective Agreement. This Agreement will be binding upon and inure
to the benefit of the respective parties hereto and their respective successors
and assigns; provided, however, that this Agreement may not be assigned by any
party hereto without the prior written consent of the other parties hereto;
provided, however, that no such extension, waiver or amendment agreed to after
authorization of this Agreement by the shareholders of Community will affect the
rights of such shareholders in any manner which is materially adverse to such
shareholders. The representations, warranties, covenants and agreements
contained in this Agreement are for the sole benefit of the parties hereto and
their successors and assigns, and they will not be construed as conferring any
rights on any other persons.
12.02. Waiver; Amendment. (a) The parties hereto may by an instrument in
writing: (i) extend the time for the performance of or otherwise amend any of
the covenants, conditions or agreements of the other parties under this
Agreement; (ii) waive any inaccuracies in the representations or warranties of
the other parties contained in this Agreement or in any document delivered
pursuant hereto or thereto; (iii) waive the performance by the other parties of
any of the covenants or agreements to be performed by it or them under this
Agreement; or (iv) waive the satisfaction or fulfillment of any condition, the
nonsatisfaction or nonfulfillment of which is a condition to the right of the
party so waiving to consummate the Merger. The waiver by any party hereto of a
breach of or noncompliance with any provision of this Agreement will not operate
or be construed as a continuing waiver or a waiver of any other or subsequent
breach or noncompliance hereunder.
(b) This Agreement may be amended, modified or supplemented only by a
written agreement executed by the parties hereto.
46
47
12.03. Notices. All notices, requests and other communications hereunder
will be in writing (which will include telecopier communication) and will be
deemed to have been duly given if delivered by hand and receipted for, sent by
certified United States Mail, return receipt requested, first class postage
pre-paid, delivered by overnight express receipted delivery service or
telecopied if confirmed immediately thereafter by also mailing a copy of such
notice, request or other communication by certified United States Mail, return
receipt requested, with first class postage pre-paid as follows:
If to First Financial: with a copy to (which will not
constitute notice):
First Financial Corporation ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
One First Financial Plaza One Indiana Square, Suite 2800
▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ATTN: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
ATTN: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, CFO and Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Secretary Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
If to Community: with a copy to (which will not
constitute notice):
Community Financial Corp. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ LLP
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ATTN: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President ATTN: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇ Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
or such substituted address or person as any of them have given to the other in
writing. All such notices, requests or other communications will be effective:
(a) if delivered by hand, when delivered; (b) if mailed in the manner provided
herein, five (5) business days after deposit with the United States Postal
Service; (c) if delivered by overnight express delivery service, on the next
business day after deposit with such service; and (d) if by telecopier, on the
next business day if also confirmed by mail in the manner provided herein.
12.04. Headings. The headings in this Agreement have been inserted solely
for ease of reference and should not be considered in the interpretation or
construction of this Agreement.
47
48
12.05. Severability. In case any one or more of the provisions contained
herein will, for any reason, be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability will not affect any
other provision of this Agreement, but this Agreement will be construed as if
such invalid, illegal or unenforceable provision or provisions had never been
contained herein.
12.06. Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be an original, but such counterparts will
together constitute one and the same instrument.
12.07. Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of Indiana and applicable federal laws,
without regard to principles of conflicts of law.
12.08. Entire Agreement. This Agreement and the Exhibits hereto supersede
all other prior or contemporaneous understandings, commitments, representations,
negotiations or agreements, whether oral or written, among the parties hereto
relating to the Merger or matters contemplated herein and constitute the entire
agreement between the parties hereto, except as otherwise provided herein. Upon
the execution of this Agreement by all the parties hereto, any and all other
prior writings of either party relating to the Merger will terminate and will be
rendered of no further force or effect. The parties hereto agree that each party
and its counsel reviewed and revised this Agreement and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party will not be employed in the interpretation of this Agreement or
any amendments or exhibits hereto.
12.09. Survival of Representations, Warranties or Covenants. Except as set
forth in the following sentence, none of the representations, warranties or
covenants of the parties will survive the Effective Time or the earlier
termination of this Agreement, and thereafter First Financial, Merger Corp,
Community, and all the respective directors, officers and employees of First
Financial, Merger Corp and Community will have no further liability with respect
thereto, except for fraud or except as otherwise provided by law, whether
statutory, common law or otherwise. The covenants contained in Sections 6.07
(regarding confidentiality), 9.02, 12.08, 12.09 and 12.10 shall survive
termination of this Agreement. The covenants contained in Sections 6.07
(regarding confidentiality), 12.08, 12.09 and 12.10 shall survive the Effective
Time.
12.10. Expenses. Each party to this Agreement shall pay its own expenses
incidental to the Merger contemplated hereby.
12.11. Certain References. Whenever in this Agreement a singular word is
used, it also will include the plural wherever required by the context and
vice-versa. Except expressly stated otherwise, all references in this Agreement
to periods of days shall be construed to refer to
48
49
calendar, not business, days. The term "business day" will mean any day except
Saturday and Sunday when Terre Haute First National Bank in Terre Haute,
Indiana, the lead bank of First Financial, is open for the transaction of
business.
12.12. Disclosure Schedule. The Disclosure Schedule attached hereto is
intended to be and hereby is specifically made a part of this Agreement.
49
50
IN WITNESS WHEREOF, First Financial, Merger Corp and Community have made
and entered into this Agreement as of the day and year first above written and
have caused this Agreement to be executed, attested in counterparts and
delivered by their duly authorized officers.
FIRST FINANCIAL CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Chairman of the Board
and President
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Secretary
FFC MERGER CORP
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Chairman of the Board
and President
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Secretary
COMMUNITY FINANCIAL CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇
----------------
▇▇▇▇▇ ▇▇▇▇▇▇, Secretary
50