EXHIBIT 99.2
AGREEMENT AND PLAN OF MERGER
DATED AS OF NOVEMBER 10, 2003
BY AND BETWEEN
FIRST PLACE FINANCIAL CORP.
AND
FRANKLIN BANCORP, INC.
TABLE OF CONTENTS
PAGE
----
ARTICLE I THE MERGER.........................................................1
1.1 The Merger.........................................................1
1.2 Effective Time.....................................................1
1.3 Effects of the Merger..............................................2
1.4 Certificate of Incorporation and Bylaws............................2
1.5 Directors and Executive Officers of the Surviving Corporation......2
1.6 Tax Consequences...................................................2
1.7 Offices............................................................2
1.8 Additional Actions.................................................2
1.9 First Place Common Stock...........................................2
ARTICLE II CONSIDERATION; ELECTION AND EXCHANGE PROCEDURES...................3
2.1 Conversion of Shares...............................................3
2.2 Election Procedures................................................4
2.3 Exchange Procedures................................................7
2.4 Rights as Stockholders; Stock Transfers............................9
2.5 No Fractional Shares...............................................9
2.6 Anti-Dilution Provisions...........................................9
2.7 Withholding Rights.................................................9
2.8 Options............................................................9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF FRANKLIN......................10
3.1 Corporate Organization............................................10
3.2 Capitalization....................................................11
3.3 Authority; No Violation...........................................12
3.4 Consents and Approvals............................................13
3.5 Reports...........................................................13
3.6 Financial Statements..............................................14
3.7 Broker's Fees.....................................................15
3.8 Absence of Certain Changes or Events..............................15
3.9 Legal Proceedings.................................................15
3.10 Taxes............................................................16
3.11 Employee Benefit Plan Matters....................................17
3.12 Regulatory Reports...............................................18
3.13 Franklin Information.............................................18
3.14 Ownership of First Place Common Stock............................19
3.15 Compliance with Applicable Law...................................19
3.16 Certain Contracts................................................19
3.17 Agreements with Regulatory Agencies..............................20
3.18 Investment Securities............................................20
3.19 Intellectual Property............................................21
3.20 Undisclosed Liabilities..........................................21
3.21 State Takeover Laws..............................................21
3.22 Administration of Fiduciary Accounts.............................21
3.23 Environmental Matters............................................21
3.24 Derivative Transactions..........................................22
i
3.25 Opinion..........................................................23
3.26 Assistance Agreements............................................23
3.27 Approvals........................................................23
3.28 Loan Portfolio...................................................23
3.29 Properties.......................................................24
3.30 Labor and Employment Matters.....................................24
3.31 Termination Benefits.............................................25
3.32 Deposits.........................................................25
3.33 Required Vote; Antitakeover Provisions Inapplicable..............25
3.34 Transactions With Affiliates.....................................25
3.35 Insurance........................................................25
3.36 Indemnification..................................................26
3.37 Voting Agreements................................................26
3.38 CRA Rating.......................................................26
3.39 No Dissenters Rights.............................................26
3.40 Disclosure.......................................................26
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF FIRST PLACE....................26
4.1 Corporate Organization............................................26
4.2 Capitalization....................................................27
4.3 Authority; No Violation...........................................28
4.4 Consents and Approvals............................................29
4.5 Reports...........................................................29
4.6 Financial Statements..............................................30
4.7 Broker's Fees.....................................................30
4.8 Absence of Certain Changes or Events..............................30
4.9 Legal Proceedings.................................................31
4.10 Taxes............................................................31
4.11 Employee Benefit Plan Matters....................................32
4.12 SEC Reports......................................................32
4.13 First Place Information..........................................32
4.14 Ownership of Franklin Common Stock...............................32
4.15 Compliance with Applicable Law...................................33
4.16 Agreements with Regulatory Agencies..............................33
4.17 Undisclosed Liabilities..........................................33
4.18 Assistance Agreements............................................33
4.19 Approvals........................................................34
4.20 Loan Portfolio...................................................34
4.21 Properties.......................................................34
4.22 Labor and Employment Matters.....................................34
4.23 Intellectual Property............................................35
4.24 Required Vote....................................................35
4.25 Transactions With Affiliates.....................................35
4.26 Insurance........................................................35
4.27 Off-Balance Sheet Commitments....................................35
4.28 CRA Rating.......................................................35
4.29 First Place Financing............................................36
4.30 Pro Forma Capital Requirements...................................36
ii
4.31 Disclosure.......................................................36
ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS.........................36
5.1 Forbearances of Franklin..........................................36
5.2 Forbearances of First Place.......................................39
ARTICLE VI ADDITIONAL AGREEMENTS............................................40
6.1 Reasonable Best Efforts...........................................40
6.2 Stockholder Approval..............................................40
6.3 Registration Statement............................................40
6.4 Regulatory Filings................................................41
6.5 Press Releases....................................................42
6.6 Access; Information...............................................42
6.7 Affiliates........................................................43
6.8 Acquisition Proposals.............................................43
6.9 Certain Policies..................................................44
6.10 NASDAQ Listing...................................................44
6.11 Indemnification..................................................44
6.12 Benefit Plans....................................................46
6.13 Notification of Certain Matters..................................47
6.14 Subsequent Interim and Annual Financial Statements...............47
6.15 Board and Loan Committee Visitation Rights.......................47
6.16 Establish Regional Advisory Board................................48
6.17 Current Information..............................................48
6.18 Execution and Authorization of Bank Merger Agreement.............48
6.19 Notice Of Transactions...........................................48
6.20 Franklin Bank Dividend...........................................48
ARTICLE VII CONDITIONS PRECEDENT............................................49
7.1 Conditions to Each Party's Obligation To Effect the Merger........49
7.2 Conditions to Obligations of First Place..........................50
7.3 Conditions to Obligations of Franklin.............................51
ARTICLE VIII TERMINATION AND AMENDMENT......................................52
8.1 Termination.......................................................52
8.2 Effect of Termination.............................................55
8.3 Extension; Waiver.................................................56
ARTICLE IX GENERAL PROVISIONS...............................................56
9.1 Closing...........................................................56
9.2 Alternative Structure.............................................56
9.3 Nonsurvival of Representations, Warranties and Agreements.........57
9.4 Expenses..........................................................57
9.5 Notices...........................................................57
9.6 Interpretation....................................................58
9.7 Entire Agreement..................................................58
9.8 Governing Law.....................................................58
9.9 Enforcement of the Agreement......................................58
9.10 Severability.....................................................58
9.11 Amendment........................................................59
9.12 Assignment.......................................................59
9.13 Counterparts.....................................................59
iii
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of November 10, 2003, is by
and between First Place Financial Corp., a Delaware corporation ("First Place"),
and Franklin Bancorp, Inc., a Michigan corporation ("Franklin") (First Place and
Franklin are sometimes collectively referred to herein as the "Parties").
WHEREAS, the Boards of Directors of First Place and Franklin have
determined that it is in the best interests of their respective companies and
their stockholders to consummate the business combination, in the form of a
merger, provided for herein in which Franklin will, subject to the terms and
conditions set forth herein, merge with and into First Place (the "Merger"); and
WHEREAS, simultaneously with the execution and delivery of this
Agreement and Plan of Merger ("Agreement"), First Place Bank, a federal savings
association and a wholly owned subsidiary of First Place (the "Bank," and
sometimes referred to herein as the "Surviving Institution"), and Franklin Bank,
N.A., a federally-chartered national bank and a wholly owned subsidiary of
Franklin ("Franklin Bank"), will enter into a Plan of Merger (the "Bank Merger
Agreement") providing for the merger (the "Subsidiary Merger") of Franklin Bank
with and into the Bank, and it is intended that the Subsidiary Merger be
consummated immediately following the consummation of the Merger; and
WHEREAS, the directors and executive officers of Franklin have on the
date hereof entered into Voting Agreements with First Place, agreeing to vote
for the Merger; and
WHEREAS, the Parties desire to make certain representations, warranties
and agreements in connection with the Merger and also to prescribe certain
conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and intending to be
legally bound hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Subject to the terms and conditions of this Agreement,
in accordance with the Delaware General Corporation Law (the "DGCL") and the
Michigan Business Corporation Act (the "MBCA"), at the Effective Time (as
defined in Section 1.2 hereof), Franklin shall merge with and into First Place.
First Place shall be the surviving corporation (hereinafter sometimes called the
"Surviving Corporation") in the Merger, and shall continue its corporate
existence under the laws of the State of Delaware. The name of the Surviving
Corporation shall be "First Place Financial Corp." Upon consummation of the
Merger, the separate corporate existence of Franklin shall terminate.
1.2 Effective Time. The Merger shall become effective as set forth in
the certificate of merger (the "Certificate of Merger") which shall be filed
with appropriate authorities in the States of Delaware and Michigan (the
"Authorities") on the Closing Date (as defined in Section
1
9.1 hereof). The term "Effective Time" shall be the date and time when the
Merger becomes effective, as set forth in the Certificate of Merger.
1.3 Effects of the Merger. At and after the Effective Time, the Merger
shall have the effects set forth in the DGCL, including Sections 259 and 261,
and the MBCA, including Section 450.1724.
1.4 Certificate of Incorporation and Bylaws. At the Effective Time, the
Certificate of Incorporation and Bylaws of First Place, as in effect immediately
prior to the Effective Time, shall be the Certificate of Incorporation and
Bylaws of the Surviving Corporation until thereafter changed or amended as
provided therein or by applicable law.
1.5 Directors and Executive Officers of the Surviving Corporation. The
directors of First Place prior to the Effective Time shall be the directors of
First Place immediately after the Effective Time. The executive officers of
First Place prior to the Effective Time shall be the executive officers of First
Place immediately after the Effective Time, each of whom shall serve until such
time as their successors shall be duly elected and qualified.
1.6 Tax Consequences. It is intended that the Merger and the Subsidiary
Merger each constitute a tax free reorganization within the meaning of Section
368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the "Code").
1.7 Offices. After the Effective Time, the headquarters of the
Surviving Corporation shall be at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇.
1.8 Additional Actions. If, at any time after the Effective Time, First
Place shall consider that any further assignments or assurances in law or any
other acts are necessary or desirable to (i) vest, perfect or confirm, of record
or otherwise, in First Place its right, title or interest in, to or under any of
the rights, properties or assets of Franklin acquired or to be acquired by First
Place as a result of, or in connection with, the Merger and the Subsidiary
Merger, or (ii) otherwise carry out the purposes of this Agreement, Franklin,
and its proper officers and directors, shall be deemed to have granted to First
Place an irrevocable power of attorney to execute and deliver all such proper
deeds, assignments and 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 First Place and otherwise to carry out the purposes of this
Agreement, and the proper officers and directors of First Place are fully
authorized in the name of First Place or otherwise to take any and all such
action.
1.9 First Place Common Stock. Each share of First Place common stock,
par value $0.01 per share, ("First Place Common Stock") that is issued and
outstanding immediately prior to the Effective Time shall remain issued and
outstanding and shall be unchanged by the Merger.
2
ARTICLE II
CONSIDERATION; ELECTION AND EXCHANGE PROCEDURES
2.1 Conversion of Shares. At the Effective Time, by virtue of the
Merger and without any action on the part of a holder of shares of Franklin
Common Stock, no par value ("Franklin Common Stock"):
(a) (1) Franklin Common Stock. Subject to Sections 2.2, 2.5,
2.6, and 2.7 and 8.1(j) hereof, each share of Franklin Common Stock issued and
outstanding immediately prior to the Effective Time (excluding Franklin Common
Stock held as treasury shares) shall be converted into, and shall be canceled in
exchange for, the right to receive, at the election of the holder thereof:
(i) Per Share Cash Consideration. A cash
amount equal to $21.00 (the "Per Share Cash Consideration"); or
(ii) Per Share Stock Consideration. 1.137
shares of First Place Common Stock (the "Per Share Stock Consideration" or the
"Exchange Ratio"); or
(iii) 50/50 Cash/Stock Consideration. A cash
amount equal to $10.50 and .5685 shares of First Place Common Stock (the "50/50
Cash/Stock Consideration").
The aggregate consideration paid by First Place to holders of Franklin Common
Stock will be comprised of 50% in cash consideration ("Cash Consideration") and
50% in First Place Common Stock ("Stock Consideration"), subject to Section
8.1(j) hereof. The "Aggregate Merger Consideration" shall be (i) the cash amount
equal to (A) 50% of the number of shares of Franklin Common Stock issued and
outstanding multiplied by (B) $21.00 (the "Maximum Cash Consideration") and (ii)
the number of shares of First Place Common Stock equal to the product of (X) 50%
of the number of shares of Franklin Common Stock issued and outstanding
multiplied by (Y) 1.137 shares of First Place Common Stock. The Aggregate Merger
Consideration does not include sums paid out for Franklin stock options
("Franklin Options") as set forth in Section 2.8 hereof.
(2) Additional Definitions. For purposes of this
Agreement:
(i) "Average Share Price" of the First Place
Common Stock shall mean the average of the closing sales price of a share of
First Place Common Stock, as reported on NASDAQ, for the 10 trading-day period
ending with the Determination Date.
(ii) "Determination Date" shall mean the
close of business on the fifth business day preceding the Effective Time.
(iii) "NASDAQ" means The Nasdaq Stock
Market, Inc.'s National Market or such national securities exchange on which the
First Place Common Stock is to be listed.
(b) At the Effective Time, all shares of Franklin Common Stock
that are owned by Franklin as treasury stock and all shares of Franklin Common
Stock that are owned
3
directly or indirectly by First Place or Franklin or any of their respective
Subsidiaries (other than shares of Franklin Common Stock held directly or
indirectly in trust accounts, managed accounts and the like or otherwise held in
a fiduciary capacity that are beneficially owned by third parties, whether held
directly or indirectly by First Place or Franklin, as the case may be, being
referred to herein as "Trust Account Shares") shall be cancelled and shall cease
to exist and no stock of First Place or other consideration shall be delivered
in exchange therefore. All shares of First Place Common Stock that are owned by
Franklin or any of its Subsidiaries (other than Trust Account Shares) shall
become treasury stock of First Place.
2.2 Election Procedures.
(a) Election Form. An election form, in such form as Franklin
and First Place shall mutually agree (the "Election Form"), shall be mailed no
later than the date on which the Proxy Statement is mailed to holders of
Franklin Common Stock to each holder of record of Franklin Common Stock as of
the record date for the Franklin Stockholder Meeting (defined in Section 6.2
hereof). Each Election Form shall permit the holder of Franklin Common Stock (or
in the case of nominee record holders, the beneficial owner through proper
instructions and documentation), subject to the conditions set forth in Section
2.1 hereof, (i) to elect to receive First Place Common Stock with respect to all
of such ▇▇▇▇▇▇'▇ ▇▇▇▇▇▇▇▇ Common Stock as hereinabove provided (a "Stock
Election"), (ii) to elect to receive cash with respect to all of such ▇▇▇▇▇▇'▇
▇▇▇▇▇▇▇▇ Common Stock as hereinabove provided (a "Cash Election"), (iii) to
elect to receive cash with respect to some of such holder's shares and shares of
First Place Common Stock with respect to such holder's remaining shares (a
"Mixed Election"), (iv) to elect to receive 50/50 Cash/Stock Consideration with
respect to all of such holders shares of Franklin Common Stock ("50/50
Election"), or (v) to indicate that such holder makes no such election with
respect to such holder's shares of Franklin Common Stock (a "Non-Election").
Shares of Franklin Common Stock as to which a Cash Election has been made
(including pursuant to a Mixed Election) are referred to herein as "Cash
Election Shares." Shares of Franklin Common Stock as to which a Stock Election
has been made (including pursuant to a Mixed Election) are referred to herein as
"Stock Election Shares." Shares of Franklin Common Stock as to which no election
has been made are referred to herein as "No-Election Shares." Nominee record
holders who hold Franklin Common Stock on behalf of multiple beneficial owners
shall indicate how many of the shares held by them are Stock Election Shares,
Cash Election Shares and No-Election Shares. If a stockholder either (i) does
not submit a properly completed Election Form by the Election Deadline, or (ii)
revokes an Election Form prior to the Election Deadline and does not resubmit a
properly completed Election Form prior to the Election Deadline, the shares of
Franklin Common Stock held by such stockholder shall be designated No-Election
Shares.
(b) Election Deadline. The term "Election Deadline" shall mean
5:00 p.m., Eastern Time, on the business day on which the Franklin Stockholder
Meeting is first convened, or such other date as First Place and Franklin shall
mutually agree upon.
(c) Effective Election. Any election to receive First Place
Common Stock or cash shall have been properly made only if the agent designated
by First Place to act as the exchange agent for purposes of conducting the
election procedure and the exchange procedure described in this Section 2.2 and
Section 2.3 hereof (the "Exchange Agent") shall have actually received a
properly completed Election Form by the Election Deadline. Any Election Form may
4
be revoked or changed by the person submitting such Election Form to the
Exchange Agent (or any other person to whom the subject shares of Franklin
Common Stock are subsequently transferred) by written notice to the Exchange
Agent only if such written notice is actually received by the Exchange Agent at
or prior to the Election Deadline. The Exchange Agent shall have reasonable
discretion to determine when any election, modification or revocation is
received, whether any such election, modification or revocation has been
properly made and to disregard immaterial defects in any Election Form, and any
good faith decisions of the Exchange Agent regarding such matters shall be
binding and conclusive. Neither First Place, Franklin nor the Exchange Agent
shall be under any obligation to notify any person of any defect in an Election
Form.
(d) Allocation. The Exchange Agent shall effect the allocation
among holders of Franklin Common Stock of rights to receive First Place Common
Stock or cash in the Merger in accordance with the Election Forms as follows:
(i) Maximum Cash Consideration Undersubscribed. If
the number of Cash Election Shares times the Per Share Cash Consideration is
less than the Maximum Cash Consideration, then:
(1) all Cash Election Shares shall be
converted into the right to receive cash;
(2) No-Election Shares shall then be deemed
to be Cash Election Shares to the extent necessary to have the total number of
Cash Election Shares times the Per Share Cash Consideration equal the Maximum
Cash Consideration. If less than all of the No-Election Shares need to be
treated as Cash Election Shares, then the Exchange Agent shall select which
No-Election Shares shall be treated as Cash Election Shares in such manner as
the Exchange Agent shall determine, and all remaining No-Election Shares shall
thereafter be treated as Stock Election Shares;
(3) if all of the No-Election Shares are
treated as Cash Election Shares under the preceding subsection and the total
number of Cash Election Shares times the Per Share Cash Consideration is less
than the Maximum Cash Consideration, then the Exchange Agent shall convert on a
pro rata basis as described below in Section 2.2(e) hereof a sufficient number
of Stock Election Shares into Cash Election Shares ("Reallocated Cash Shares")
such that the sum of the number of Cash Election Shares plus the number of
Reallocated Cash Shares times the Per Share Cash Consideration equals the
Maximum Cash Consideration, and all Reallocated Cash Shares will be converted
into the right to receive cash; and
(4) the Stock Election Shares which are not
Reallocated Cash Shares shall be converted into the right to receive First Place
Common Stock.
(ii) Maximum Cash Consideration Oversubscribed. If
the number of Cash Election Shares times the Per Share Cash Consideration is
greater than the Maximum Cash Consideration, then:
5
(1) all Stock Election Shares and all
No-Election Shares shall be converted into the right to receive First Place
Common Stock;
(2) the Exchange Agent shall convert on a
pro rata basis as described below in Section 2.2(e) hereof a sufficient number
of Cash Election Shares ("Reallocated Stock Shares") such that the number of
remaining Cash Election Shares into Stock Election Shares times the Per Share
Cash Consideration equals the Maximum Cash Consideration, and all Reallocated
Stock Shares shall be converted into the right to receive First Place Common
Stock; and
(3) the Cash Election Shares which are not
Reallocated Stock Shares shall be converted into the right to receive cash.
(iii) Maximum Cash Consideration Satisfied. If the
number of Cash Election Shares times the Per Share Cash Consideration is equal
to the Maximum Cash Consideration, then subparagraphs (d)(i) and (ii) above
shall not apply and all Cash Election Shares shall be converted into the right
to receive cash and all No-Election Shares and all Stock Election Shares will be
converted into the right to receive First Place Common Stock.
(iv) No Reallocation of Shares Subject to the 50/50
Election. The shares of Franklin Common Stock under a 50/50 Election will not be
subject to reallocation, except as may be required by Section 2.2(f) and Section
8.1(j).
(e) Pro Rata Reallocations. In the event that the Exchange
Agent is required pursuant to Section 2.2(d)(i)(3) hereof to convert some Stock
Election Shares into Reallocated Cash Shares, each holder of Stock Election
Shares (based upon the number of Stock Election Shares held) shall be allocated
a pro rata portion of the total Reallocated Cash Shares. In the event the
Exchange Agent is required pursuant to Section 2.2(d)(ii)(2) hereof to convert
some Cash Election Shares (based upon the number of Cash Election Shares held)
into Reallocated Stock Shares, each holder of Cash Election Shares shall be
allocated a pro rata portion of the total Reallocated Stock Shares.
(f) Stock Consideration Adjustment. Notwithstanding any other
provision of this Agreement, if at the time of the Closing, the aggregate value
of the shares of First Place Common Stock to be exchanged for shares of Franklin
Common Stock is less than 50% of the consideration paid by First Place in the
Merger, then First Place shall direct the Exchange Agent to convert a minimum
number of No-Election Shares and, to the extent necessary a minimum number of
Cash Election Shares (on a pro rata basis) and to the extent necessary
thereafter the cash portion of the 50/50 Election (on a pro rata basis), into
Stock Election Shares so that the aggregate value of the shares of First Place
Common Stock exchanged for shares of Franklin Common Stock constitutes 50% of
the aggregate value of the consideration paid by First Place in the Merger. For
purposes of this Section 2.2(f) hereof only, the value of a share of First Place
Common Stock will be the value as of the Closing Date.
6
2.3 Exchange Procedures.
(a) Mailing of Transmittal Material. Provided that Franklin
has delivered, or caused to be delivered, to the Exchange Agent all information
which is necessary for the Exchange Agent to perform its obligations as
specified herein, the Exchange Agent shall, no later than fifteen (15) business
days after the Closing Date, mail or make available to each holder of record of
a stock certificate or certificates representing shares of Franklin Common Stock
("Certificate") a notice and letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon proper delivery of the Certificates to the Exchange Agent)
advising such holder of the effectiveness of the Merger and the procedure for
surrendering to the Exchange Agent such Certificate or Certificates in exchange
for the consideration set forth in Section 2.1(a) hereof deliverable in respect
thereof pursuant to this Agreement. A letter of transmittal will be properly
completed only if accompanied by Certificates representing all shares of
Franklin Common Stock covered thereby, subject to the provisions of paragraph
(d) of this Section 2.3 hereof.
(b) First Place Deliveries. At the Effective Time, for the
benefit of the holders of Certificates, (i) First Place shall deliver to the
Exchange Agent certificates evidencing the number of shares of First Place
Common Stock issuable and (ii) First Place shall deliver, or cause First Place
Bank to deliver, to the Exchange Agent, the cash portion of the Aggregate Merger
Consideration payable pursuant to this Article II in exchange for Certificates
representing outstanding shares of Franklin Common Stock. The Exchange Agent
shall not be entitled to vote or exercise any rights of ownership with respect
to the shares of First Place Common Stock held by it from time to time
hereunder, except that it shall receive and hold all dividends or other
distributions paid or distributed with respect to such shares for the account of
the persons entitled thereto.
(c) Exchange Agent Deliveries. After completion of the
allocations referred to in paragraphs (d), (e) and (f) of Section 2.2 hereof,
each holder of an outstanding Certificate or Certificates who has surrendered
such Certificate or Certificates to the Exchange Agent will, upon acceptance
thereof by the Exchange Agent, be entitled to a certificate or certificates
representing the number of whole shares of First Place Common Stock and/or the
amount of cash into which the aggregate number of shares of Franklin Common
Stock previously represented by such Certificate or Certificates surrendered
shall have been converted pursuant to this Agreement (including, but not limited
to, payment for fractional shares under Section 2.5 hereof) and, if such
holder's shares of Franklin Common Stock have been converted into First Place
Common Stock, any other distribution theretofore paid with respect to First
Place Common Stock issuable in the Merger, in each case without interest. The
Exchange Agent shall accept such Certificates upon compliance with such
reasonable terms and conditions as the Exchange Agent may impose to effect an
orderly exchange thereof in accordance with normal exchange practices. Each
outstanding Certificate which prior to the Effective Time represented Franklin
Common Stock and which is not surrendered to the Exchange Agent in accordance
with the procedures provided for herein shall, except as otherwise herein
provided, until duly surrendered to the Exchange Agent be deemed to evidence
ownership of the number of shares of First Place Common Stock and/or the right
to receive the amount of cash into which such Franklin Common Stock shall have
been converted. After the Effective Time, there shall be no further transfer on
the records of Franklin of Certificates representing shares of Franklin Common
Stock and if such
7
Certificates are presented to Franklin for transfer, they shall be cancelled
against delivery of certificates for First Place Common Stock or cash as
hereinabove provided. No dividends which have been declared will be remitted to
any person entitled to receive shares of First Place Common Stock under Section
2.2 hereof until such person surrenders the Certificate or Certificates
representing Franklin Common Stock, at which time such dividends shall be
remitted to such person, without interest.
(d) Lost or Destroyed Certificates; Issuances of First Place
Common Stock in New Names. The Exchange Agent and First Place, as the case may
be, shall not be obligated to deliver cash and/or a certificate or certificates
representing shares of First Place Common Stock to which a holder of Franklin
Common Stock would otherwise be entitled as a result of the Merger until such
holder surrenders the Certificate or Certificates representing the shares of
Franklin Common Stock for exchange as provided in this Section 2.3 hereof, or,
in default thereof, an appropriate affidavit of loss and indemnity agreement
and/or a bond in an amount as may be reasonably required in each case by First
Place. If any certificates evidencing shares of First Place Common Stock are to
be issued in a name other than that in which the Certificate evidencing Franklin
Common Stock surrendered in exchange therefore is registered, it shall be a
condition of the issuance thereof that the Certificate so surrendered shall be
properly endorsed or accompanied by an executed form of assignment separate from
the Certificate and otherwise in proper form for transfer and that the person
requesting such exchange pay to the Exchange Agent any transfer or other tax
required by reason of the issuance of a certificate for shares of First Place
Common Stock in any name other than that of the registered holder of the
Certificate surrendered or otherwise establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not payable.
(e) Unclaimed Merger Consideration. Any portion of the shares
of First Place Common Stock and cash delivered to the Exchange Agent by First
Place pursuant to Section 2.3(b) hereof that remains unclaimed by the
stockholders of Franklin for nine months after the Effective Time (as well as
any proceeds from any investment thereof) shall be delivered by the Exchange
Agent to First Place. Any stockholders of Franklin who have not theretofore
complied with Section 2.3(c) hereof shall thereafter look only to First Place
for the consideration deliverable in respect of each share of Franklin Common
Stock such stockholder holds as determined pursuant to this Agreement without
any interest thereon. If outstanding Certificates for shares of Franklin Common
Stock are not surrendered or the payment for them is not claimed prior to the
date on which such shares of First Place Common Stock or cash would otherwise
escheat to or become the property of any governmental unit or agency, the
unclaimed items shall, to the extent permitted by abandoned property and any
other applicable law, become the property of First Place (and to the extent not
in its possession shall be delivered to it), free and clear of all claims or
interest of any person previously entitled to such property. Neither the
Exchange Agent nor any party to this Agreement shall be liable to any holder of
stock represented by any Certificate for any consideration paid to a public
official pursuant to applicable abandoned property, escheat or similar laws.
First Place and the Exchange Agent shall be entitled to rely upon the stock
transfer books of Franklin to establish the identity of those persons entitled
to receive the consideration specified in this Agreement, which books shall be
conclusive with respect thereto. In the event of a dispute with respect to
ownership of stock represented by any Certificate, First Place and the Exchange
Agent shall be entitled to deposit any consideration
8
represented thereby in escrow with an independent third party and thereafter be
relieved with respect to any claims thereto.
(f) Affiliate Agreements. Notwithstanding anything in this
Agreement to the contrary, Certificates surrendered for exchange by any
affiliate, within the meaning of Rule 145 promulgated under the Securities Act
of 1933, as amended ("Securities Act"), of Franklin ("Franklin Affiliate") shall
not be exchanged for certificates representing shares of First Place Common
Stock to which such Franklin Affiliate may be entitled pursuant to the terms of
this Agreement until First Place has received an Affiliate Letter (as defined in
Section 6.7 hereof) from such person as specified in Section 6.7 hereof.
2.4 Rights as Stockholders; Stock Transfers. At the Effective Time,
holders of Franklin Common Stock shall cease to be, and shall have no rights as,
stockholders of Franklin other than to receive the consideration provided under
this Article II hereof. After the Effective Time, there shall be no transfers on
the stock transfer books of Franklin or the Surviving Corporation of shares of
Franklin Common Stock.
2.5 No Fractional Shares. Notwithstanding any other provision of this
Agreement, neither certificates nor scrip for fractional shares of First Place
Common Stock shall be issued in the Merger. Each holder of Franklin Common Stock
who otherwise would have been entitled to a fraction of a share of First Place
Common Stock (after taking into account all Certificates delivered by such
holder) shall receive in lieu thereof cash (without interest) in an amount
determined by multiplying the fractional share interest to which such holder
would otherwise be entitled by the Average Share Price of the First Place Common
Stock, rounded to the nearest whole cent. No such holder shall be entitled to
dividends, voting rights or any other rights in respect of any fractional share.
2.6 Anti-Dilution Provisions. If, between the date hereof and the
Effective Time, the shares of First Place Common Stock shall be changed into a
different number or class of shares by reason of any reclassification,
recapitalization, split-up, combination, exchange of shares or readjustment, or
a stock dividend thereon shall be declared with a record date within said period
(a "Capital Change"), the Per Share Stock Consideration shall be adjusted
accordingly.
2.7 Withholding Rights. First Place (through the Exchange Agent, if
applicable) shall be entitled to deduct and withhold from any amounts otherwise
payable pursuant to this Agreement to any holder of shares of Franklin Common
Stock such amounts as First Place is required under the Code or any state, local
or foreign tax law or regulation thereunder to deduct and withhold with respect
to the making of such payment. Any amounts so withheld shall be treated for all
purposes of this Agreement as having been paid to the holder of Franklin Common
Stock in respect of which such deduction and withholding was made by First
Place.
2.8 Options. Schedule 2.8 of the Franklin Disclosure Schedule (defined
hereafter) sets forth all of the Franklin stock option plans ("Franklin Option
Plans") and all grantees holding unexercised and unexpired Franklin Options as
of the date of this Agreement ("Franklin Optionholder"), including the name of
each such Franklin Optionholder, the date on which each Franklin Option was
granted, the number of Franklin Options held, the expiration date of each
Franklin Option, the price at which each Franklin Option may be exercised under
the Franklin
9
Option Plans, the number of shares of Franklin Common Stock subject to each
Franklin Option, the type of grant and the status of the Franklin Option grant
as qualified or non-qualified under Section 422 of the Code. Each vested and
unvested Franklin Option to purchase Franklin Common Stock that is outstanding
immediately before the Effective Time and listed on Schedule 2.8 of the Franklin
Disclosure Schedule shall be cancelled and extinguished at the Effective Time
and shall become the right to receive the amount set forth below in this Section
2.8 hereof. As promptly as practicable subsequent to the Effective Time and
subject to each Franklin Optionholder entering into a stock option cancellation
agreement, in the form reasonably acceptable to First Place ("Option
Cancellation Agreement"), First Place shall provide to each grantee listed in
Schedule 2.8 of the Franklin Disclosure Schedule, for delivery and cancellation
of such Franklin Option, a cash payment in an amount equal to the product of (a)
the number of shares of Franklin Common Stock subject to such grantee's Franklin
Options and (b) the sum of the difference between (i) the amount of $21.00 less
(ii) the exercise price per share of each such Franklin Option and any required
withholding. First Place shall transfer the amount of any such withholding to
Franklin or shall assume the obligation to pay such withholding to the
applicable taxing authority. At or before the Effective Time, Franklin shall use
its best efforts to cause to be effected any necessary amendments to the terms
of Franklin Options or Franklin Option Plans to give effect to the provisions of
this Section 2.8 hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF FRANKLIN
Prior to the date hereof, Franklin has delivered to First Place a
schedule and First Place has delivered to Franklin a schedule (respectively, its
"Disclosure Schedule") setting forth, among other things, items the disclosure
of which is necessary or appropriate either in response to an express disclosure
requirement contained in a provision hereof or as an exception to one or more
representations or warranties contained in Article III or IV hereof or to one or
more of its covenants contained in Article V hereof or additional agreements in
Article VI hereof.
Subject to the foregoing, Franklin hereby represents and warrants to
First Place as of the date of this Agreement and as of the Closing Date as
follows:
3.1 Corporate Organization.
(a) Franklin is a corporation duly organized, validly existing
and in good standing under the laws of the State of Michigan. Franklin has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted, and is duly licensed
or qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed or qualified would not have a
Material Adverse Effect (as defined in Section 8.1(e) hereof) on Franklin and
its Subsidiaries taken as a whole. Franklin is duly registered as a bank holding
company under the Bank Holding Company Act of 1956, as amended (the "BHCA"). The
Articles of Incorporation and Bylaws of Franklin, copies of which have
previously been delivered to First Place, are true, complete and correct copies
of such documents as in effect as of the date of this Agreement. As used in this
Agreement, the word "Subsidiary" when used with respect to any party means any
corporation, partnership or other organization,
10
whether incorporated or unincorporated, which is consolidated with such party
for financial reporting purposes.
(b) Franklin Bank is in good standing as a national
association duly organized and validly existing under the laws of the United
States of America and the rules and regulations (the "OCC Regulations") of the
Office of the Comptroller of the Currency (the "OCC"). Franklin Bank has in
effect all federal, state, local and foreign governmental authorizations
necessary for it to own or lease its properties and assets and to carry on its
business as now conducted. The deposit accounts of Franklin Bank are insured by
the Federal Deposit Insurance Corporation (the "FDIC") through the Savings
Association Insurance Fund ("SAIF") in the manner and to the maximum extent
permitted by law, and all premiums and assessments required to be paid in
connection therewith have been paid when due by Franklin Bank. Each of
Franklin's other Subsidiaries is duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or organization.
Each of Franklin's Subsidiaries has the corporate power and authority to own or
lease all of its properties and assets and to carry on its business as it is now
being conducted and is duly licensed or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or the location of the properties and assets owned or leased by it
makes such licensing or qualification necessary, except where the failure to be
so licensed or qualified would not have a Material Adverse Effect on Franklin
and its Subsidiaries taken as a whole. The Charter, bylaws and similar governing
documents of each Subsidiary of Franklin, copies of which have previously been
delivered to First Place, are true, complete and correct copies of such
documents as in effect as of the date of this Agreement.
(c) The minute books of Franklin and each of its Subsidiaries
contain true, complete and accurate records in all material respects of all
meetings and other corporate actions held or taken since September 30, 2000 of
their respective stockholders and Boards of Directors (including committees of
their respective Boards of Directors). Franklin has made available to First
Place all minutes of the Board of Directors of Franklin and its Subsidiaries
since September 30, 2000.
3.2 Capitalization.
(a) The authorized capital stock of Franklin consists of
6,000,000 shares of Franklin Common Stock. No preferred stock or other capital
stock is authorized. As of the date of this Agreement, there are (x) 3,726,282
shares of Franklin Common Stock issued and outstanding and no shares of Franklin
Common Stock held in Franklin's treasury and (y) no shares of Franklin Common
Stock reserved for issuance upon exercise of outstanding stock options or
otherwise except for 268,735 shares of Franklin Common Stock reserved for
issuance pursuant to Franklin's Option Plans and described in Schedule 2.8 of
the Franklin Disclosure Schedule. All of the issued and outstanding shares of
Franklin common stock have been duly authorized and validly issued and are fully
paid, nonassessable and free of preemptive rights. Except as referred to above
or reflected in Schedule 2.8 of the Franklin Disclosure Schedule, Franklin does
not have and is not bound by any outstanding subscriptions, options, warrants,
calls, commitments or agreements of any character calling for the purchase or
issuance of any shares of Franklin Common Stock or Franklin Preferred Stock or
any other equity security of
11
Franklin or any securities representing the right to purchase or otherwise
receive any shares of Franklin Common Stock or any other equity security of
Franklin.
(b) Schedule 3.2(b) of the Franklin Disclosure Schedule sets
forth a true and correct list of all of the Subsidiaries of Franklin as of the
date of this Agreement, including the number of shares of capital stock of each
Subsidiary issued and the holder(s) of such shares. Except as set forth in
Schedule 3.2(b) of the Franklin Disclosure Schedule, Franklin owns, directly or
indirectly, all of the issued and outstanding shares of the capital stock of
each of such Subsidiaries, free and clear of all liens, charges, encumbrances
and security interests whatsoever, and all of such shares are duly authorized
and validly issued and are fully paid, nonassessable and free of preemptive
rights. No Subsidiary of Franklin has or is bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares of capital stock or
any other equity security of such Subsidiary or any securities representing the
right to purchase or otherwise receive any shares of capital stock or any other
equity security of such Subsidiary. Assuming compliance by First Place with
Section 2.8 hereof, at the Effective Time, there will not be any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character by which Franklin or any of its Subsidiaries will be bound calling for
the purchase or issuance of any shares of the capital stock of Franklin or any
of its Subsidiaries.
3.3 Authority; No Violation.
(a) Franklin has full corporate power and authority to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the Merger and the transactions
contemplated hereby have been duly and validly approved by the Board of
Directors of Franklin. The Board of Directors of Franklin has directed that this
Agreement be submitted to Franklin's stockholders for adoption at a meeting of
such stockholders and, except for the adoption of this Agreement by the
requisite vote of Franklin's stockholders, no other corporate proceedings
(except for regulatory approvals) on the part of Franklin are necessary to
approve this Agreement and to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by Franklin and
(assuming due authorization, execution and delivery by First Place) constitutes
a valid and binding obligation of Franklin, enforceable against Franklin in
accordance with its terms, except as enforcement may be limited by general
principles of equity whether applied in a court of law or a court of equity and
by bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
similar laws affecting creditors' rights and remedies generally.
(b) Franklin Bank has full corporate power and authority to
execute, deliver and perform its obligations under the Bank Merger Agreement and
to consummate the Subsidiary Merger and the transactions contemplated thereby.
The execution and delivery of the Bank Merger Agreement and the consummation of
the transactions contemplated thereby will be duly and validly approved by the
Board of Directors of Franklin Bank and approved by the sole stockholder of
Franklin Bank. No other corporate proceedings on the part of Franklin Bank will
be necessary to consummate the transactions contemplated by the Bank Merger
Agreement. The Bank Merger Agreement has been duly and validly executed and
delivered by Franklin Bank and (assuming due authorization, execution and
delivery by the Bank) constitutes a valid and binding
12
obligation of Franklin Bank, enforceable against Franklin Bank in accordance
with its terms, except as enforcement may be limited by general principles of
equity whether applied in a court of law or a court of equity and by bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and similar laws
affecting creditors' rights and remedies generally.
(c) Neither the execution and delivery of this Agreement by
Franklin or the Bank Merger Agreement by Franklin Bank, nor the consummation by
Franklin or Franklin Bank, as the case may be, of the transactions contemplated
hereby or thereby, nor compliance by Franklin or Franklin Bank, as the case may
be, with any of the terms or provisions hereof or thereof, will (i) violate any
provision of the Articles of Incorporation or Bylaws of Franklin or the Charter,
bylaws or similar governing documents of any of its Subsidiaries, or (ii)
assuming that the consents and approvals referred to in Section 3.4 hereof are
duly obtained, (x) violate any statute, code, ordinance, rule, regulation,
judgment, order, writ, decree or injunction applicable to Franklin or any of its
Subsidiaries, or any of their respective properties or assets, or (y) violate,
conflict with, result in a breach of any provision of or the loss of any benefit
under, constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, result in the termination of or a right
of termination or cancellation under, accelerate the performance required by,
result in the obligation to sell or result in the creation of any lien, pledge,
security interest, charge or other encumbrance upon any of the respective
properties or assets of Franklin or any of its Subsidiaries under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument or obligation to which
Franklin or any of its Subsidiaries is a party, or by which they or any of their
respective properties or assets may be bound or affected. First Place shall be
approved as a successor lessee to any lease agreements.
3.4 Consents and Approvals. Except for (a) the filing of applications
with the OTS, and approval or non-objection of such applications by the OTS and
any other applicable Governmental Entity (as defined in this Section 3.4
hereof), (b) the filing with the Securities and Exchange Commission (the "SEC")
of a proxy statement/prospectus in definitive form relating to the Franklin
Stockholder Meeting to be held in connection with this Agreement and the Merger
and Subsidiary Merger contemplated hereby (the "Proxy Statement"), (c) the
adoption of this Agreement by the requisite vote of the stockholders of
Franklin, (d) the filing of the Certificate of Merger with the Secretary of
State of the State of Michigan and the State of Delaware, (e) such filings,
authorizations or approvals as may be set forth in Schedule 3.4 of the Franklin
Disclosure Schedule, no consents or approvals of or filings or registrations
with any court, administrative agency or commission or other governmental
authority or instrumentality (each a "Governmental Entity") or with any third
party are necessary in connection with (1) the execution and delivery by
Franklin of this Agreement, (2) the consummation by Franklin of the Merger and
the other transactions contemplated hereby, (3) the execution and delivery by
Franklin Bank of the Bank Merger Agreement, and (4) the consummation by Franklin
Bank of the Subsidiary Merger and the transactions contemplated thereby.
3.5 Reports. Franklin and each of its Subsidiaries have timely filed
all material reports, registrations and statements, together with any amendments
required to be made with respect thereto, that they were required to file since
September 30, 1998 with (i) the OCC, (ii) the Federal Reserve Board ("FRB"),
(iii) the FDIC, (iv) any state regulatory authority (each a "State Regulator")
and (v) any other self-regulatory organization ("SRO") (collectively, the
"Regulatory
13
Agencies" and individually a "Regulatory Agency"), and all other material
reports and statements required to be filed by them since September 30, 1998,
including, without limitation, any report or statement required to be filed
pursuant to the laws, rules or regulations of the United States, the OCC, the
FRB, the FDIC, any State Regulator or any SRO, and have paid all fees and
assessments due and payable in connection therewith. Except for normal
examinations conducted by a Regulatory Agency in the regular course of the
business of Franklin and its Subsidiaries and except as set forth in Schedule
3.5 of the Franklin Disclosure Schedule, no Regulatory Agency has initiated any
proceeding or, to the best knowledge of Franklin, investigation into the
business or operations of Franklin or any of its Subsidiaries since September
30, 1998. There is no unresolved material violation, criticism, or exception by
any Regulatory Agency with respect to any report or statement relating to any
examinations of Franklin or any of its Subsidiaries.
3.6 Financial Statements. Franklin has previously delivered to First
Place copies of (a) the consolidated balance sheets of Franklin and its
Subsidiaries at December 31 for the fiscal years ended 2002 and 2001, and the
related consolidated statements of income, changes in stockholders' equity and
cash flows for the fiscal years ended December 31, 2000 through 2002, inclusive,
as reported in Franklin's Annual Report on Form 10-K for the fiscal year ended
December 31, 2002 filed with the SEC under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), in each case accompanied by the audit report of
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, independent public accountants with respect to Franklin, and
(b) the unaudited consolidated balance sheets of Franklin and its Subsidiaries
as of September 30, 2003 and September 30, 2002 and the related unaudited
consolidated statements of income, cash flows and changes in stockholders'
equity for the three and nine month periods then ended as reported in Franklin's
Quarterly Report on Form 10-Q for the period ended September 30, 2003 filed with
the SEC under the Exchange Act. The December 31, 2002 consolidated balance sheet
of Franklin (including the related notes, where applicable) fairly presents the
consolidated financial position of Franklin and its Subsidiaries as of the date
thereof, and the other financial statements referred to in this Section 3.6
hereof (including the related notes, where applicable) fairly present, and the
financial statements referred to in Section 6.14 hereof will fairly present
(subject, in the case of the unaudited statements, to recurring audit
adjustments normal in nature and amount and the absence of footnotes), the
results of the consolidated operations and consolidated financial position of
Franklin and its Subsidiaries for the respective fiscal periods or as of the
respective dates therein set forth; each of such statements (including the
related notes, where applicable) comply, and the financial statements referred
to in Section 6.14 hereof will comply, in all material respects with applicable
accounting requirements (subject, in the case of the unaudited statements, to
recurring audit adjustments normal in nature and amount and the absence of
footnotes) and with the published rules and regulations of the SEC with respect
thereto; and each of such statements (including the related notes, where
applicable) has been, and the financial statements referred to in Section 6.14
hereof will be, prepared in accordance with generally accepted accounting
principles ("GAAP") (subject, in the case of the unaudited statements, to
recurring audit adjustments normal in nature and amount and the absence of
footnotes) consistently applied during the periods involved, except as indicated
in the notes thereto. The audits of Franklin have been concluded in accordance
with generally accepted auditing standards of the United States of America. The
books and records of Franklin and its Subsidiaries have been, and are being,
maintained in all material respects in accordance with GAAP and any other
applicable legal and accounting requirements and reflect only actual
transactions.
14
3.7 Broker's Fees. Neither Franklin nor any Subsidiary of Franklin nor
any of their respective officers or directors has employed any broker or finder
or incurred any liability for any broker's fees, commissions or finder's fees in
connection with any of the transactions contemplated by this Agreement or the
Bank Merger Agreement, except that Franklin has engaged, and will pay a fee or
commission to ▇▇▇▇▇ Financial LLC ("▇▇▇▇▇") in accordance with the terms of a
letter agreement between ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ concerning the Merger and the
issuance of an opinion regarding the fairness, from a financial point of view,
of the Aggregate Merger Consideration to Franklin stockholders, a true, complete
and correct copy of which has been previously delivered by Franklin to First
Place.
3.8 Absence of Certain Changes or Events.
(a) Except as may be set forth in Schedule 3.8(a) of the
Franklin Disclosure Schedule or as disclosed in Franklin's Quarterly Report on
Form 10-Q for the quarter ended September 30, 2003 (a true, complete and correct
copy of which has previously been delivered to First Place), since December 31,
2002, (i) neither Franklin nor any of its Subsidiaries has incurred any material
liability, and (ii) no event has occurred which has caused, or is reasonably
likely to cause, individually or in the aggregate, a Material Adverse Effect on
Franklin.
(b) Except as set forth in Schedule 3.8(b) of the Franklin
Disclosure Schedule, since September 30, 2003, Franklin and its Subsidiaries
each (i) has been operated in the ordinary course of business and (ii) has not
made any changes in its respective capital or corporate structures, nor any
material change in its methods of business operations.
(c) Except as set forth in Schedule 3.8(c) of the Franklin
Disclosure Schedule and to the extent permitted under Section 5.1(d)(i), since
September 30, 2003, neither Franklin nor any of its Subsidiaries has (i)
increased the wages, salaries, compensation, pension, or other fringe benefits
or perquisites payable to any executive officer, employee, or director from the
amount thereof in effect as of September 30, 2003 (which amounts have been
previously disclosed to First Place), granted any severance or termination pay,
entered into any contract to make or grant any severance or termination pay,
granted any Franklin Options or other derivative security or paid any bonus or
(ii) suffered any strike, work stoppage, slow-down, or other labor disturbance
or (iii) taken any of the actions set forth in Section 5.1 hereof.
3.9 Legal Proceedings.
(a) Except as set forth in Schedule 3.9(a) of the Franklin
Disclosure Schedule, neither Franklin nor any of its Subsidiaries is a party to
any, and there are no pending or, to the best of Franklin's knowledge,
threatened, legal, administrative, arbitral or other proceedings, claims,
actions, suits or governmental or regulatory investigations (i) of any nature
against Franklin or any of its Subsidiaries or (ii) challenging the validity or
propriety of the transactions contemplated by this Agreement or the Bank Merger
Agreement as to which there is a reasonable probability of an adverse
determination and which, if adversely determined, would, individually or in the
aggregate, have or be reasonably likely to have a Material Adverse Effect on
Franklin and its Subsidiaries as a whole.
15
(b) There is no injunction, order, judgment, decree, or
regulatory restriction imposed upon Franklin, any of its Subsidiaries or the
assets of Franklin or any of its Subsidiaries, which has had, or could
reasonably be expected to have, a Material Adverse Effect on Franklin and its
Subsidiaries as a whole.
(c) Except as set forth in Schedule 3.9(c) of the Franklin
Disclosure Schedule, there are no actions, suits , claims, proceedings,
investigations or assessments of any kind pending, or to the best of Franklin's
knowledge, threatened against any of the directors or officers of Franklin or
its Subsidiaries in their capacities as such, and no director or officer of
Franklin or its Subsidiaries currently is being indemnified or seeking to be
indemnified by Franklin or its Subsidiaries pursuant to applicable law or the
Articles of Incorporation, charter, bylaws or other similar governing documents.
3.10 Taxes. Except as set forth in Schedule 3.10 of the Franklin
Disclosure Schedule, each of Franklin and its Subsidiaries has (i) duly and
timely filed or will duly and timely file (including applicable extensions
granted without penalty) all Tax Returns (as hereinafter defined) required to be
filed at or prior to the Effective Time, and such Tax Returns which have
heretofore been filed are, and those to be hereinafter filed will be, complete
and accurate in all material respects, and (ii) paid in full or have made
adequate provision for on the financial statements of Franklin (in accordance
with GAAP) all Taxes (as hereinafter defined) and will pay in full or make
adequate provision for all Taxes. Franklin has made available to First Place
true and correct copies of the United States federal income tax returns filed by
Franklin and its Subsidiaries for each of the three most recent fiscal years for
which such returns have be filed. There are no material liens for Taxes upon the
assets of either Franklin or its Subsidiaries except for statutory liens for
current Taxes not yet due. Except as set forth in Schedule 3.10 of the Franklin
Disclosure Schedule, neither Franklin nor any of its Subsidiaries has requested
any extension of time within which to file any Tax Returns in respect of any
fiscal year which have not since been filed and no request for waivers of the
time to assess any Taxes are pending or outstanding. The federal and state
income Tax Returns of Franklin and its Subsidiaries have been audited by the
Internal Revenue Service or appropriate state tax authorities only with respect
to those periods and jurisdictions set forth on Schedule 3.10 of the Franklin
Disclosure Schedule. Except as set forth on Schedule 3.10 of the Franklin
Disclosure Schedule, neither Franklin nor any of its Subsidiaries is presently
subject to any audits, investigations or proceeding by any tax authority, and
neither Franklin nor any of its Subsidiaries has received any notice from any
tax authority that it intends to conduct any such audit, investigation or
proceeding. Except as set forth in Schedule 3.10 of the Franklin Disclosure
Schedule, no claim has been made by a tax authority in a jurisdiction where
Franklin or any of its Subsidiaries does not file a tax return that Franklin or
any of its Subsidiaries is or may be subject to taxation in the jurisdiction.
Except as set forth in Schedule 3.10 of the Franklin Disclosure Schedule,
neither Franklin nor any of its Subsidiaries (i) is a party to any agreement
providing for the allocation or sharing of Taxes (other than the allocation of
federal income taxes as provided by Regulation 1.1552-l(a)(l)) under the Code;
(ii) is required to include in income any adjustment pursuant to Section 481(a)
of the Code, by reason of the voluntary change in accounting method (nor has any
taxing authority proposed in writing any such adjustment or change of accounting
method); or (iii) has filed a consent pursuant to Section 341(f) of the Code.
16
For the purposes of this Agreement, "Taxes" shall mean all taxes,
charges, fees, levies, penalties or other assessments imposed by any United
States federal, state, local or foreign taxing authority, including, but not
limited to income, excise, property, sales, transfer, franchise, payroll,
withholding, social security or other taxes, including any interest, penalties
or additions attributable thereto.
For purposes of this Agreement, "Tax Return" shall mean any return,
report, information return or other document (including any related or
supporting information) with respect to Taxes.
3.11 Employee Benefit Plan Matters.
(a) Schedule 3.11(a) of the Franklin Disclosure Schedule sets
forth a true and complete list of each employee benefit plan, as the term is
defined in Section 3 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and other arrangement or agreement that is maintained or
contributed to or required to be contributed to as of the date of this Agreement
(collectively referred to as the "Plans") by Franklin, any of its Subsidiaries
or by any trade or business, whether or not incorporated (an "ERISA Affiliate"),
all of which together with Franklin would be deemed a "single employer" within
the meaning of Section 4001 in ERISA, for the benefit of any employee or former
employee of Franklin, any Subsidiary or any ERISA Affiliate.
(b) Franklin has heretofore delivered to First Place true and
complete copies of each of the Plans and related trust instruments and all
amendments thereto, summary plan descriptions, summaries of material
modifications, underlying insurance contracts and all other related documents,
including but not limited to (i) the actuarial report for any Plan (if
applicable) for each of the last two years, (ii) the most recent determination
letter from the Internal Revenue Service (if applicable) for any Plan, (iii) the
most recent two (2) years' annual reports (Form 5500), together with all
schedules, as required, filed with the Internal Revenue Service or Department of
Labor ("DOL"), (iv) any financial statements and opinions required by Section
103(e)(3) of ERISA with respect to each Plan, and (v) for any Plan which for
ERISA purposes is a "top-hat" plan, a copy of any top-hat filing with DOL.
(c) Except as set forth in Schedule 3.11(c) of the Franklin
Disclosure Schedule, (i) each of the Plans has been operated and administered in
all material respects in accordance with its terms and applicable law, including
but not limited to ERISA and the Code, (ii) each of the Plans intended to be
"qualified" within the meaning of Section 401(a) of the Code either (1) has
received a favorable determination letter from the Internal Revenue Service
("IRS"), or (2) is or will be the subject of an application for a favorable
determination letter, and Franklin is not aware of any circumstances likely to
result in the revocation or denial of any such favorable determination letter,
(iii) with respect to each Plan which is subject to Title IV of ERISA, the
present value of accrued benefits under such Plan, based upon the actuarial
assumptions used for funding purposes in the most recent actuarial report
prepared by such Plan's actuary with respect to such Plan, did not, as of its
latest valuation date, exceed the then current value of the assets of such Plan
allocable to such accrued benefits, (iv) no Plan provides benefits, including
without limitation death or medical benefits (whether or not insured), with
respect to current or former employees of Franklin, its Subsidiaries or any
ERISA Affiliate beyond their retirement or other termination of service, other
than (w) coverage mandated by
17
applicable law, (x) death benefits or retirement benefits under any "employee
pension plan," as that term is defined in Section 3(2) of ERISA, (y) deferred
compensation benefits accrued as liabilities on the books of Franklin, its
Subsidiaries or the ERISA Affiliates or (z) benefits the full cost of which is
borne by the current or former employee (or his beneficiary), (v) no liability
under Title IV of ERISA has been incurred by Franklin, its Subsidiaries or any
ERISA Affiliate that has not been satisfied in full, and no condition exists
that presents a material risk to Franklin, its Subsidiaries or a Franklin ERISA
Affiliate of incurring a material liability thereunder, (vi) no Plan is a
"multiemployer pension plan," as such term is defined in Section 3(37) of ERISA,
(vii) all contributions or other amounts payable by Franklin, its Subsidiaries
or any ERISA Affiliates as of the Effective Time with respect to each Plan in
respect of current or prior plan years have been paid or accrued in accordance
with GAAP and Section 412 of the Code, (viii) neither Franklin, its Subsidiaries
nor any ERISA Affiliate has engaged in a merger in connection with which
Franklin, its Subsidiaries or any ERISA Affiliate could be subject to either a
civil penalty assessed pursuant to Section 409 or 502(i) of ERISA or a tax
imposed pursuant to Section 4975 or 4976 of the Code, (ix) there are no pending,
or, to the best knowledge of Franklin, threatened or anticipated claims (other
than routine claims for benefits) by, on behalf of or against any of the Plans
or any trusts related thereto and (x) the consummation of the transactions
contemplated by this Agreement will not (y) entitle any current or former
employee or officer of Franklin or any ERISA Affiliate to severance pay,
termination pay or any other payment, except as expressly provided in this
Agreement or (z) accelerate the time of payment or vesting or increase the
amount of compensation due any such employee or officer.
3.12 Regulatory Reports. Franklin has previously made available to
First Place an accurate and complete copy of each (a) final registration
statement, prospectus, report (including Form 10-Ks, Form 10-Qs and Form 8-Ks),
schedule and definitive proxy statement filed since September 30, 2000 by
Franklin with the OCC or the SEC pursuant to the Securities Act or the Exchange
Act (the "Franklin Reports") and (b) communication mailed by Franklin to its
stockholders since September 30, 2000, and no such registration statement,
prospectus, report, schedule, proxy statement or communication contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances in which they were made, not misleading,
except that information as of a later date shall be deemed to modify information
as of an earlier date. Franklin has timely filed all Franklin Reports and other
documents required to be filed by it under the Securities Act and the Exchange
Act, and, as of their respective dates, all Franklin Reports complied in all
material respects with the published rules and regulations of the SEC with
respect thereto.
3.13 Franklin Information. The information provided by and relating to
Franklin and its Subsidiaries to be contained in, or incorporated by reference
in, the Proxy Statement and First Place's Registration Statement on Form S-4
(the "S-4"), or in any other document filed with any other regulatory agency in
connection herewith, will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in light
of the circumstances in which they are made, not misleading. The information
included in, or incorporated by reference in, the sections of the Proxy
Statement and provided by Franklin for inclusion in the S-4 will comply in all
material respects with the provisions of the Securities Act and the Exchange Act
and the rules and regulations thereunder.
18
3.14 Ownership of First Place Common Stock. Except as set forth in
Schedule 3.14 of the Franklin Disclosure Schedule, none of Franklin or any of
its Subsidiaries or their respective directors, officers, affiliates or
associates, (i) beneficially own, directly or indirectly, or (ii) is a party to
any agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of, in each case, any shares of capital stock of
First Place.
3.15 Compliance with Applicable Law. Franklin and each of its
Subsidiaries: (i) is in material compliance with all applicable federal, state,
local and foreign statutes, laws, regulations, policies, ordinances, rules,
judgments, orders or decrees applicable thereto or to the employees conducting
such businesses, including, without limitation, the OCC Policy Statement No.
2000-23, the Equal Credit Opportunity Act, the Fair Housing Act, the Community
Reinvestment Act, the Home Mortgage Disclosure Act, the Bank Secrecy Act and all
other applicable fair lending laws and other laws relating to discriminatory
business practices; (ii) hold all material licenses, franchises, permits and
authorizations necessary for the lawful conduct of their respective businesses
under and pursuant to all, and are in compliance with and are not, to its
knowledge, in default in any respect under any applicable law, statute, order,
rule, regulation, policy and/or guideline of any Governmental Entity relating to
Franklin or any of its Subsidiaries, except where the failure to hold such
license, franchise, permit or authorization or such noncompliance or default
would not, individually or in the aggregate, have or be reasonably likely to
have a Material Adverse Effect on Franklin and its Subsidiaries as a whole; and
(iii) neither Franklin nor any of its Subsidiaries knows of, or has received
notice of, any material violations of any of the above or threats to resolve,
suspect or otherwise restrict any of the above since December 31, 1998.
3.16 Certain Contracts.
(a) Except as set forth in Schedule 3.16(a) of the Franklin
Disclosure Schedule, neither Franklin nor any of its Subsidiaries is a party to
or bound by any contract, arrangement, commitment or understanding (whether
written or oral) (i) with respect to the employment of any directors, officers,
employees or consultants, (ii) which, upon the consummation of the transactions
contemplated by this Agreement or the Bank Merger Agreement will (either alone
or upon the occurrence of any additional acts or events) result in any payment
(whether of severance pay or otherwise) becoming due from First Place, Franklin,
the Surviving Corporation, the Surviving Institution or any of their respective
Subsidiaries to any officer or employee thereof, (iii) which is a material
contract (as defined in Item 601(b)(10) of Regulation S-K of the SEC) to be
performed after the date of this Agreement that has not been filed or
incorporated by reference in the Franklin Reports, (iv) which is a consulting
agreement (including data processing, software programming and licensing
contracts) not terminable on 60 days or less notice involving the payment of
more than $25,000 per annum, in the case of any such agreement with an
individual, or $50,000 per annum, in the case of any other such agreement, (v)
which materially restricts the conduct of any line of business by Franklin or
any of its Subsidiaries, (vi) with or to a labor union or guild (including any
collective bargaining agreement) or (vii) (including any stock option plan,
stock appreciation rights plan, restricted stock plan or stock purchase plan)
any of the benefits of which will be increased, or the vesting of the benefits
of which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the Bank Merger Agreement, or the value of any
of the benefits of which will be calculated on the basis of any of the
transactions contemplated by this
19
Agreement or the Bank Merger Agreement. Each contract, arrangement, commitment
or understanding of the type described in this Section 3.16(a) hereof, whether
or not set forth in Schedule 3.16(a) of the Franklin Disclosure Schedule, is
referred to herein as a "Franklin Contract." Franklin has previously delivered
to First Place true and correct copies of each Franklin Contract.
(b) Except as set forth in Schedule 3.16(b) of the Franklin
Disclosure Schedule, (i) each Franklin Contract is valid and binding and in full
force and effect, (ii) Franklin and each of its Subsidiaries have in all
material respects performed all obligations required to be performed by it to
date under each Franklin Contract, except where such noncompliance, individually
or in the aggregate, would not have or be reasonably likely to have a Material
Adverse Effect on Franklin and its Subsidiaries as a whole, (iii) no event or
condition exists which constitutes or, after notice or lapse of time or both,
would constitute, a material default on the part of Franklin or any of its
Subsidiaries under any such Franklin Contract, except where such default,
individually or in the aggregate, would not have or be reasonably likely to have
a Material Adverse Effect on Franklin and (iv) no other party to such Franklin
Contract is, to the best knowledge of Franklin, in default in any respect
thereunder.
3.17 Agreements with Regulatory Agencies. Except as set forth in
Schedule 3.17 of the Franklin Disclosure Schedule, neither Franklin nor any of
its Subsidiaries is subject to any cease-and-desist or other order issued by, or
is a party to any written agreement, consent agreement or memorandum of
understanding with, or is a party to any commitment letter or similar
undertaking to, or is subject to any order or directive by, or is a recipient of
any supervisory letter from, or has adopted any board resolutions at the request
of (each, whether or not set forth on Schedule 3.17 of the Franklin Disclosure
Schedule, a "Regulatory Agreement"), any Regulatory Agency or other Governmental
Entity that restricts the conduct of its business or that in any manner relates
to its capital adequacy, its credit policies, its management or its business,
nor has Franklin or any of its Subsidiaries been advised by any Regulatory
Agency or other Governmental Entity that it is considering issuing or requesting
any Regulatory Agreement.
3.18 Investment Securities. Schedule 3.18 of the Franklin Disclosure
Schedule sets forth the book and market value as of September 30, 2003 of the
investment securities, mortgage-backed securities and securities held for
investment, sale or trading of Franklin and its Subsidiaries. Schedule 3.18 of
the Franklin Disclosure Schedule sets forth an investment securities report
which includes, security descriptions, CUSIP numbers, pool face values, book
values, coupon rates and current market values. The totals presented in the
securities report agree to the amounts carried in Franklin's and its
Subsidiaries' general ledgers in accordance with GAAP. Except as disclosed in
Schedule 3.18 of the Franklin Disclosure Schedule, since September 30, 2003 to
the date hereof, neither Franklin nor its Subsidiaries has incurred any unusual
or extraordinary losses in its investment portfolio, and, except for matters of
general application to the banking industry (including, but not limited to,
changes in laws or regulations or generally accepted accounting principles) or
for events relating to the business environment in general, including market
fluctuations and changes in interest rates, Franklin is not aware of any events
which may be expected to result in any material adverse change in the quality or
performance of the investment portfolio of Franklin or its Subsidiaries.
20
3.19 Intellectual Property. Franklin and each of its Subsidiaries owns
(without lien or encumbrance of any kind) or possesses valid and binding
licenses and other rights to use without payment all material patents,
copyrights, trade secrets, trade names, servicemarks, trademarks and computer
software used in its businesses; and neither Franklin nor any of its
Subsidiaries has received any notice of conflict with respect thereto that
asserts the right of others. Franklin and each of its Subsidiaries have in all
material respects performed all the obligations required to be performed by them
and are not in default in any material respect under any contract, agreement,
arrangement or commitment relating to any of the foregoing, except where such
non-performance or default would not, individually or in the aggregate, have or
be reasonably likely to have a Material Adverse Effect on Franklin and its
Subsidiaries as a whole. Schedule 3.19 of the Franklin Disclosure Schedule lists
all patents, registered copyrights, trade names, servicemarks, trademarks of
Franklin and its Subsidiaries and whether such intellectual property is owned or
licensed by Franklin and its Subsidiaries.
3.20 Undisclosed Liabilities. Except (a) as set forth in Schedule 3.20
of the Franklin Disclosure Schedule, (b) for those liabilities that are fully
reflected or reserved against on the consolidated balance sheet of Franklin
included in its Form 10-Q for the period ended September 30, 2003 and (c) for
liabilities incurred in the ordinary course of business since September 30, 2003
that, either alone or when combined with all similar liabilities, have not had,
and could not reasonably be expected to have, a Material Adverse Effect on
Franklin and its Subsidiaries as a whole, neither Franklin nor any of its
Subsidiaries has incurred any liability of any nature whatsoever (whether
absolute, accrued, contingent or otherwise and whether due or to become due).
3.21 State Takeover Laws. Franklin has "opted out" of the application
of the provisions of Chapter 7A and Chapter 7B, the antitakeover sections of the
MBCA in this Articles of Incorporation, and such provisions will not apply to
this Agreement or the transactions contemplated hereby. There are no other
antitakeover provisions in the Franklin Articles of Incorporation, MBCA or the
laws, rules, regulations under the state or federal law that will apply to this
Agreement and the transactions contemplated herein.
3.22 Administration of Fiduciary Accounts. Franklin and each of its
Subsidiaries has properly administered in all material respects all accounts for
which it acts as a fiduciary, including but not limited to accounts for which it
serves as a trustee, agent, custodian, personal representative, guardian,
conservator or investment advisor, in accordance with the terms of the governing
documents and applicable state and federal law and regulation and common law.
Neither Franklin nor any of its Subsidiaries nor any of their respective
directors, officers or employees has committed any breach of trust with respect
to any such fiduciary account which has had or could reasonably be expected to
have a Material Adverse Effect on Franklin and its Subsidiaries as a whole, and
the books and records for each such fiduciary account are true and correct in
all material respects and accurately reflect the assets of such fiduciary
account.
3.23 Environmental Matters. Except as set forth in Schedule 3.23 of the
Franklin Disclosure Schedule:
(a) Each of Franklin, its Subsidiaries, the Participation
Facilities and the Loan Properties (each as hereinafter defined) are, and have
been, in compliance with all applicable
21
federal, state and local laws including common law, regulations and ordinances
and with all applicable decrees, orders and contractual obligations relating to
pollution, the discharge of, or exposure to materials in the environment or
workplace ("Environmental Laws"), except for violations which, either
individually or in the aggregate, have not had and cannot reasonably be expected
to have a Material Adverse Effect on Franklin;
(b) There is no suit, claim, action or proceeding, pending or,
to the knowledge of Franklin, threatened, before any Governmental Entity or
other forum in which Franklin, any of its Subsidiaries, any Participation
Facility or any Loan Property, has been or, with respect to threatened
proceedings, may be, named as a defendant (x) for alleged noncompliance
(including by any predecessor), with any Environmental Laws, or (y) relating to
the release, threatened release or exposure to any material whether or not
occurring at or on a site owned, leased or operated by Franklin or any of its
Subsidiaries, any Participation Facility or any Loan Property, except where such
noncompliance or release has not resulted, and cannot be reasonably expected to
result, either individually or in the aggregate, in a Material Adverse Effect on
Franklin and its Subsidiaries as a whole;
(c) During the period of (x) Franklin's or any of its
Subsidiaries' ownership or operation of any of their respective current
properties, (y) Franklin's or any of its Subsidiaries' participation in the
management of any Participation Facility, or (z) Franklin's or any of its
Subsidiaries' holding of a security interest in a Loan Property, to the
knowledge of Franklin there has been no release of materials in, on, under or
affecting any such property, except where such release has not had and cannot
reasonably be expected to result in, either individually or in the aggregate, a
Material Adverse Effect on Franklin and its Subsidiaries as a whole. To the
knowledge of Franklin, prior to the period of (x) Franklin's or any of its
Subsidiaries' ownership or operation of any of their respective current
properties, (y) Franklin's or any of its Subsidiaries' participation in the
management of any Participation Facility, or (z) Franklin's or any of its
Subsidiaries' holding of a security interest in a Loan Property, there was no
release or threatened release of materials in, on, under or affecting any such
property, Participation Facility or Loan Property, except where such release has
not had and cannot be reasonably expected to have, either individually or in the
aggregate, a Material Adverse Effect on Franklin and its Subsidiaries as a
whole;
(d) Except as set forth in Schedule 3.23(d) of the Franklin
Disclosure Schedule, Franklin and its Subsidiaries have not received any Phase I
or Phase II environmental surveys on all properties owned or leased by Franklin
or its Subsidiaries, including but not limited to other real estate owned
("OREO") properties; and
(e) The following definitions apply for purposes of this
Section 3.23 hereof: (x) "Loan Property" means any property in which Franklin or
any of its Subsidiaries holds a security interest; and (y) "Participation
Facility" means any facility in which Franklin or any of its Subsidiaries
participates in the management.
3.24 Derivative Transactions. Except as set forth in Schedule 3.24 of
the Franklin Disclosure Schedule, neither Franklin nor any of its Subsidiaries
is a party to or has agreed to enter into an exchange traded or over-the-counter
equity, interest rate, foreign exchange or other swap, forward, future, option,
cap, floor or collar or any other contract that is not included on its
22
balance sheet and is a derivatives contract (including various combinations
thereof) (each, a "Derivatives Contract") nor does Franklin and its Subsidiaries
own securities that (i) are referred to generically as "structured notes," "high
risk mortgage derivatives," "capped floating rate notes" or "capped floating
rate mortgage derivatives" or (ii) are likely to have changes in value as a
result of interest or exchange rate changes that significantly exceed normal
changes in value attributable to interest or exchange rate changes.
3.25 Opinion. Franklin has received a written opinion, dated the date
hereof, from ▇▇▇▇▇ to the effect that, subject to the terms, conditions and
qualifications set forth therein, as of the date thereof the Merger is fair to
Franklin's stockholders from a financial point of view.
3.26 Assistance Agreements. Neither Franklin nor any of its
Subsidiaries is a party to any agreement or arrangement entered into in
connection with the consummation of a federally assisted acquisition of a
depository institution pursuant to which Franklin or any of its Subsidiaries is
entitled to receive financial assistance or indemnification from any
governmental agency.
3.27 Approvals. As of the date of this Agreement, Franklin knows of no
reason why all regulatory approvals required for the consummation of the
transactions contemplated hereby (including, without limitation, the Merger and
the Subsidiary Merger) should not be obtained without the imposition of a
Burdensome Condition (as defined in Section 7.1(g) hereof).
3.28 Loan Portfolio.
(a) In Franklin's reasonable judgment, the allowance for loan
losses reflected in Franklin's audited statement of financial condition at
December 31, 2002 was, and the allowance for loan losses shown on the balance
sheets in Franklin's Reports for periods ending after December 31, 2002 have
been and will be, adequate in all material respects, as of the dates thereof,
under GAAP, and no Regulatory Agencies have required or requested Franklin to
increase the allowance for loan losses for such periods. Franklin Bank's
allowance for loan losses is, and shall be as of the Effective Time (including
any modification as required by Section 6.9 hereof), in compliance with
standards established by applicable Governmental Entities and the Financial
Accounting Standards Board and is and shall be adequate under all such
standards.
(b) As of September 30, 2003, except as set forth in Schedule
3.28 of the Franklin Disclosure Schedule, neither Franklin nor any of its
Subsidiaries is a party to any written or oral (i) loan agreement, note or
borrowing arrangement (including, without limitation, leases, credit
enhancements, commitments, guarantees and interest-bearing assets)
(collectively, "Loans"), under the terms of which the obligor is, as of the date
of this Agreement, over 90 days delinquent in payment of principal or interest
or in default of any other provision, or (ii) Loans with any director, executive
officer or ten percent stockholder of Franklin or any of its Subsidiaries, or to
the best knowledge of Franklin, any person, corporation or enterprise
controlling, controlled by or under common control with any of the foregoing.
Schedule 3.28 of the Franklin Disclosure Schedule sets forth (i) all of the
Loans of Franklin or any of its Subsidiaries that as of the date of this
Agreement are classified by any bank examiner (whether regulatory or internal)
as "Other Loans Specially Mentioned," "Special Mention," "Substandard,"
23
"Doubtful," "Loss," "Classified," "Criticized," "Credit Risk Assets," "Concerned
Loans," "Watch List," "OREO" acquired by foreclosure or deed in lieu thereof,
including book value or words of similar import, together with the principal
amount of and accrued and unpaid interest on each such Loan and the identity of
the Loan by number; and (ii) by category of Loan (i.e., commercial, consumer,
etc.), all of the other Loans of Franklin and its Subsidiaries that as of the
date of this Agreement are classified as such, together with the aggregate
principal amount of and accrued and unpaid interest on such Loans by category.
Franklin shall promptly inform First Place in writing of any Loan that becomes
classified in the manner described in the previous sentence, or any Loan the
classification of which is changed, at anytime after September 30, 2003.
(c) Each loan reflected as an asset in the Franklin Reports
(i) is evidenced by notes, agreements or other evidences of indebtedness which
are true, genuine and correct in all material respects, (ii) to the extent
secured, has been secured by valid liens and security interests which have been
perfected, and (iii) is the legal, valid and binding obligation of the obligor
named therein, enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent conveyance and other laws of general applicability
relating to or affecting creditors' rights and to general equity principles, in
each case other than loans as to which the failure to satisfy the foregoing
standards would not have a Material Adverse Effect on Franklin and its
Subsidiaries as a whole.
3.29 Properties. All real and personal property owned by Franklin and
its Subsidiaries or presently used by it in their businesses is in an adequate
condition (ordinary wear and tear excepted) and is sufficient to carry on its
business in the ordinary course of business consistent with its past practices.
Franklin and its Subsidiaries have good and marketable title free and clear of
all Liens to all of the material properties and assets, real and personal,
reflected on the balance sheet of Franklin as of September 30, 2003 included in
Franklin's Reports or acquired after such date, other than properties sold by
Franklin in the ordinary course of business, except (i) Liens for current taxes
and assessments not yet due or payable (ii) pledges to secure deposits and other
Liens incurred in the ordinary course of its banking business, (iii) such
imperfections of title, easements and encumbrances, if any, as are not material
in character, amount or extent and (iv) as reflected on the balance sheet of
Franklin as of September 30, 2003 included in Franklin's Reports. All real and
personal property which is material to Franklin's or its Subsidiaries'
businesses and leased or licensed by Franklin or its Subsidiaries is held
pursuant to leases or licenses which are valid and enforceable in accordance
with their respective terms and such leases will not terminate or lapse prior to
the Effective Time.
3.30 Labor and Employment Matters. Except as set forth in Schedule 3.30
of the Franklin Disclosure Schedule, neither Franklin nor its Subsidiaries is or
has ever been a party to, or is or has ever been bound by, any collective
bargaining agreement, contract, or other agreement or understanding with a labor
union or labor organization with respect to its employees, nor is Franklin or
its Subsidiaries the subject of any proceeding asserting that it has committed
an unfair labor practice or seeking to compel it or any such Subsidiary to
bargain with any labor organization as to wages and conditions of employment,
nor is the management of Franklin aware of any strike, other labor dispute,
organizational effort or other activity taken with a view toward unionization
involving Franklin or its Subsidiaries pending or threatened. Except as set
forth in Schedule 3.30 of the Franklin Disclosure Schedule, Franklin and its
24
Subsidiaries are in compliance with applicable laws regarding employment or
employees and retention of independent contractors and are in material
compliance with all applicable employment tax laws. As of the date hereof,
Franklin is in full compliance with the recordation of applicant tracking data
pursuant to an affirmative action plan in accordance with Executive Order 11246
and the OFCCP regulations.
3.31 Termination Benefits. Schedule 3.31 of the Franklin Disclosure
Schedule contains a complete and accurate schedule showing as of the date of
this Agreement the monetary amounts payable, subject to a determination of the
market value, and identifying the in-kind benefits due under the Specified
Compensation and Benefit Programs (as defined herein) for each Named Individual
(as defined herein) individually. For purposes hereof, "Specified Compensation
and Benefit Programs" shall include all employment agreements, change in control
agreements, severance or special termination agreements, severance plans,
pension, retirement or deferred compensation plans for non-employee directors,
supplemental executive retirement programs, tax indemnification agreements,
outplacement programs, cash bonus programs, stock appreciation right, phantom
stock or stock unit plan, and health, life, disability and other insurance or
welfare plans, but shall not include any tax-qualified pension, profit-sharing
or employee stock ownership plan. For purposes hereof, "Named Individual" shall
include each non-employee director of Franklin or its Subsidiaries and any
officer or employee of Franklin or its Subsidiaries.
3.32 Deposits. Except as set forth in Schedule 3.32 of the Franklin
Disclosure Schedule, none of the deposits of Franklin Bank is a "brokered"
deposit.
3.33 Required Vote; Antitakeover Provisions Inapplicable. The
affirmative vote of the holders of majority of the issued and outstanding shares
of Franklin is necessary to approve this Agreement and the Merger on behalf of
Franklin. No other vote of the stockholders of Franklin or any Subsidiary is
required by law, Franklin Articles of Incorporation and Bylaws or otherwise to
approve this Agreement and the Merger. Franklin and its Subsidiaries have taken
all actions required to exempt First Place and the Agreement from any provisions
of an antitakeover nature in their Articles of Incorporation and Bylaws and any
other governing documents and the provisions of any federal or state
"antitakeover," "fair price," "moratorium," "control share acquisition" or
similar laws or regulations.
3.34 Transactions With Affiliates. All "covered transactions" between
Franklin and its Subsidiaries and an "affiliate" within the meaning of Sections
23A and 23B of the Federal Reserve Act and the regulations thereunder have been
in compliance with such provisions.
3.35 Insurance. Except as set forth in Schedule 3.35 of the Franklin
Disclosure Schedule, Franklin and its Subsidiaries are presently insured, and
since December 31, 1998, have been insured, for reasonable amounts with
financially sound and reputable insurance companies, against such risks as
companies engaged in a similar business would, in accordance with good business
practice, customarily be insured. All of the insurance policies and bonds
maintained by Franklin and its Subsidiaries are in full force and effect,
Franklin and its Subsidiaries are not in default thereunder and all material
claims thereunder have been filed in due and timely fashion.
25
3.36 Indemnification. Except as set forth in Schedule 3.36(a) of the
Franklin Disclosure Schedule and except as provided in Franklin's employment
agreements, its indemnification agreement with ▇▇▇▇▇, or the Articles of
Incorporation or Bylaws of Franklin, neither Franklin nor its Subsidiaries is a
party to any indemnification agreement with any of its present or future
directors, officers, employees, agents or other persons who serve or served in
any other capacity with any other enterprise at the request of Franklin (a
"Covered Person"), and, except as set forth in Schedule 3.36(b) of the Franklin
Disclosure Schedule, there are no claims for which any Covered Person would be
entitled to indemnification under the Articles of Incorporation or Bylaws of
Franklin or any Subsidiary of Franklin, applicable law, regulation or any
indemnification agreement.
3.37 Voting Agreements. The Franklin directors and certain officers, as
set forth in Schedule 3.37 of the Franklin Disclosure Schedule, have entered
into a voting agreement ("Voting Agreement"), the form of which is attached as
Annex A, hereto.
3.38 CRA Rating. Each of the Subsidiaries or affiliates of Franklin
that is an insured depository institution was rated "Satisfactory" or
"Outstanding" following its most recent Community Reinvestment Act examination
by the regulatory agency responsible for its supervision. Neither Franklin nor
its Subsidiaries have received notice of and has knowledge of any planned or
threatened objection by any community group to the transactions contemplated
hereby.
3.39 No Dissenters Rights. The holders of Franklin Common Stock and the
Franklin Optionholders do not and will not have dissenters' rights of appraisal
under the provisions of the MBCA or under any other federal or state statue,
rule or regulation in connection with the Merger or the Subsidiary Merger.
3.40 Disclosure. The representations and warranties contained in this
Article III hereof do not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements and
information contained in this Article III hereof not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF FIRST PLACE
Subject to the first paragraph under Article III hereof, First Place
hereby represents and warrants to Franklin as of the date of this Agreement and
as of the Closing Date as follows:
4.1 Corporate Organization.
(a) First Place is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. First
Place has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being conducted,
and is duly licensed or qualified to do business in each jurisdiction in which
the nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to
26
be so licensed or qualified would not have a Material Adverse Effect on First
Place and its Subsidiaries as a whole. First Place is duly registered as a
savings and loan holding company under the HOLA. The Certificate of
Incorporation and Bylaws of First Place, copies of which have previously been
made available to Franklin, are true, complete and correct copies of such
documents as in effect as of the date of this Agreement.
(b) The Bank is a federal savings association that is duly
organized and validly existing under the laws of the United States of America
and the rules and regulations of the OTS. The Bank has in effect all federal,
state, local and foreign governmental authorizations necessary for it to own or
lease its properties and assets and to carry on its business as now conducted.
The deposit accounts of the Bank are insured by the FDIC through the SAIF to the
fullest extent permitted by law, and all premiums and assessments required in
connection therewith have been paid by the Bank. Each of First Place's other
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation. Each Subsidiary of First Place
has the corporate power and authority to own or lease all of its properties and
assets and to carry on its business as it is now being conducted, and is duly
licensed or qualified to do business in each jurisdiction in which the nature of
the business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed or qualified would not have a
Material Adverse Effect on First Place and its Subsidiaries as a whole. The
Certificate of Incorporation and Bylaws of each subsidiary of First Place,
copies of which have previously been made available to Franklin, are true,
complete and correct copies of such documents as in effect as of the date of
this Agreement.
(c) The minute books of First Place and each of its
Subsidiaries contain true, complete and accurate records in all material
respects of all meetings and other corporate actions held or taken since
September 30, 2000 of their respective stockholders and Boards of Directors
(including committees of their respective Boards of Directors).
4.2 Capitalization.
(a) As of the date of this Agreement, the authorized capital
stock of First Place consists of 33,000,000 shares of First Place Common Stock
and 3,000,000 shares of preferred stock, par value $.01 per share ("First Place
Preferred Stock"). As of the date of this Agreement, there were 13,285,510
shares of First Place Common Stock and no shares of First Place Preferred Stock
issued and outstanding, and 4,842,762 shares of First Place Common Stock held in
First Place's treasury. As of the date of this Agreement, no shares of First
Place Common Stock or First Place Preferred Stock were reserved for issuance,
except that 946,736 shares of First Place Common Stock were reserved for
issuance upon the exercise of stock options pursuant to First Place Financial
Corp. 1999 Incentive Plan (the "First Place Stock Plan"). All of the issued and
outstanding shares of First Place Common Stock have been duly authorized and
validly issued and are fully paid, nonassessable and free of preemptive rights,
with no personal liability attaching to the ownership thereof. Except for the
stock options set forth above, First Place does not have and is not bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the purchase or issuance of any shares of First
Place Common Stock or First Place Preferred Stock or any other equity securities
of First Place or any securities representing the right to purchase or otherwise
27
receive any shares of First Place Common Stock or First Place Preferred Stock.
The shares of First Place Common Stock to be issued pursuant to the Merger will
be duly authorized and validly issued and, at the Effective Time, all such
shares will be fully paid, nonassessable and free of preemptive rights.
(b) Schedule 4.2(b) of the First Place Disclosure Schedule
sets forth a true and correct list of all of First Place Subsidiaries as of the
date of this Agreement. Except as set forth in Schedule 4.2(b) of the First
Place Disclosure Schedule, First Place owns, directly or indirectly, all of the
issued and outstanding shares of capital stock of each of the Subsidiaries of
First Place, free and clear of all liens, charges, encumbrances and security
interests whatsoever, and all of such shares are duly authorized and validly
issued and are fully paid, nonassessable and free of preemptive rights. No
Subsidiary of First Place has or is bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any character with any
party that is not a direct or indirect Subsidiary of First Place calling for the
purchase or issuance of any shares of capital stock or any other equity security
of such Subsidiary or any securities representing the right to purchase or
otherwise receive any shares of capital stock or any other equity security of
such Subsidiary.
4.3 Authority; No Violation.
(a) First Place has full corporate power and authority to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly and validly approved by the Board of Directors of First Place. No
other corporate proceedings on the part of First Place are necessary to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by First Place and (assuming due
authorization, execution and delivery by Franklin) constitutes a valid and
binding obligation of First Place, enforceable against First Place in accordance
with its terms, except as enforcement may be limited by general principles of
equity whether applied in a court of law or a court of equity and by bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and similar laws
affecting creditors' rights and remedies generally.
(b) The Bank has full corporate power and authority to
execute, deliver and perform its obligations under the Bank Merger Agreement and
to consummate the Subsidiary Merger contemplated thereby. The execution and
delivery of the Bank Merger Agreement and the consummation of the transactions
contemplated thereby have been duly and validly approved by the Board of
Directors of the Bank and approved by the sole stockholder of the Bank. No other
corporate proceedings on the part of the Bank will be necessary to consummate
the transactions contemplated by the Bank Merger Agreement. The Bank Merger
Agreement has been duly and validly executed and delivered by the Bank and will
(assuming due authorization, execution and delivery by Franklin Bank)
constitutes a valid and binding obligation of the Bank, enforceable against the
Bank in accordance with its terms, except as enforcement may be limited by
general principles of equity whether applied in a court of law or a court of
equity and by bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and similar laws affecting creditors' rights and remedies generally.
28
(c) Except as set forth in Schedule 4.3(c) of the First Place
Disclosure Schedule, neither the execution and delivery of this Agreement by
First Place or the Bank Merger Agreement by the Bank, nor the consummation by
First Place or the Bank, as the case may be, of the transactions contemplated
hereby or thereby, nor compliance by First Place or the Bank, as the case may
be, with any of the terms or provisions hereof or thereof, will (i) violate any
provision of the Certificate of Incorporation or Bylaws of First Place, or the
Certificate of Incorporation or Bylaws or similar governing documents of any of
its Subsidiaries or (ii) assuming that the consents and approvals referred to in
Section 4.4 hereof are duly obtained, (x) violate any statute, code, ordinance,
rule, regulation, judgment, order, writ, decree or injunction applicable to
First Place or any of its Subsidiaries or any of their respective properties or
assets, or (y) violate, conflict with, result in a breach of any provision of or
the loss of any benefit under, constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, result in
the termination of or a right of termination or cancellation under, accelerate
the performance required by, or result in the creation of any lien, pledge,
security interest, charge or other encumbrance upon any of the respective
properties or assets of First Place or any of its Subsidiaries under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument or obligation to which
First Place or any of its Subsidiaries is a party, or by which they or any of
their respective properties or assets may be bound or affected.
4.4 Consents and Approvals. Except for (a) the filing of applications
with the OTS and approval or non-objection of such applications by the OTS and
any other Governmental Entity, (b) the filing with the SEC of the S-4, (c) the
filing of the Certificate of Merger with the Secretary of State of the State of
Michigan and the State of Delaware, (d) such filings and approvals as are
required to be made or obtained under the securities or "Blue Sky" laws of
various states in connection with the issuance of the shares of First Place
Common Stock pursuant to this Agreement, and (e) such filings, authorizations or
approvals as may be set forth in Schedule 4.4 of the First Place Disclosure
Schedule, no consents or approvals of or filings or registrations with any
Governmental Entity or with any third party are necessary in connection with (1)
the execution and delivery by First Place of this Agreement, (2) the
consummation by First Place of the Merger and the other transactions
contemplated hereby, (3) the execution and delivery by the Bank of the Bank
Merger Agreement, and (4) the consummation of the Bank of the Subsidiary Merger
and the transactions contemplated by the Bank Merger Agreement.
4.5 Reports. First Place and each of its Subsidiaries have timely filed
all material reports, registrations and statements, together with any amendments
required to be made with respect thereto, that they were required to file since
September 30, 2000 with any Regulatory Agency, and all other material reports
and statements required to be filed by them since September 30, 2000, including,
without limitation, any report or statement required to be filed pursuant to the
laws, rules or regulations of the United States, the OTS, the FDIC, any State
Regulator or any SRO, and have paid all fees and assessments due and payable in
connection therewith. Except for normal examinations conducted by a Regulatory
Agency in the regular course of the business of First Place and its
Subsidiaries, and, except as set forth in Schedule 4.5 of the First Place
Disclosure Schedule, no Regulatory Agency has initiated any proceeding or, to
the best knowledge of First Place, investigation into the business or operations
of First Place or any of its Subsidiaries since September 30, 2000. There is no
unresolved material violation,
29
criticism, or exception by any Regulatory Agency with respect to any report or
statement relating to any examinations of First Place or any of its
Subsidiaries.
4.6 Financial Statements. First Place has previously delivered to
Franklin copies of (i) the consolidated balance sheets of First Place and its
Subsidiaries at June 30 for the fiscal years ended 2003 and 2002, and the
related consolidated statements of income, changes in stockholders' equity and
cash flows for First Place for the fiscal year ended June 30, 2001 through 2003,
in each case accompanied by the audit report of ▇▇▇▇▇ ▇▇▇▇▇▇ and Company LLC,
independent public accountants with respect to First Place and its Subsidiaries,
and (ii) the unaudited consolidated balance sheet of First Place and its
Subsidiaries as of September 30, 2003 and the related unaudited consolidated
statements of income, changes in stockholders' equity and cash flows for the
three month periods then ended as reported in First Place's Quarterly Report on
Form 10-Q for the period ended September 30, 2003 and filed with the SEC under
the Exchange Act. The June 30, 2003 consolidated balance sheet of First Place
(including the related notes, where applicable) fairly presents the consolidated
financial position of First Place and its Subsidiaries as of the date thereof,
and the other financial statements referred to in this Section 4.6 hereof
(including the related notes, where applicable) fairly present, and the
financial statements referred to in Section 6.14 hereof will fairly present
(subject, in the case of the unaudited statements, to recurring audit
adjustments normal in nature and amount and the absence of footnotes), the
results of the consolidated operations and changes in stockholders' equity and
consolidated financial position of First Place and its Subsidiaries for the
respective fiscal periods or as of the respective dates therein set forth; each
of such statements (including the related notes, where applicable) comply, and
the financial statements referred to in Section 6.14 hereof will comply, in all
material respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto; and each of such
statements (including the related notes, where applicable) has been, and the
financial statements referred to in Section 6.14 hereof will be, prepared in
accordance with GAAP consistently applied during the periods involved, except as
indicated in the notes thereto or, in the case of unaudited statements, as
permitted by Form 10-Q. The books and records of First Place and its
Subsidiaries have been, and are being, maintained in all material respects in
accordance with GAAP and any other applicable legal and accounting requirements
and reflect only actual transactions.
4.7 Broker's Fees. Neither First Place nor any Subsidiary of First
Place, nor any of their respective officers or directors, has employed any
broker or finder or incurred any liability for any broker's fees, commissions or
finder's fees in connection with any of the transactions contemplated by this
Agreement or the Bank Merger Agreement, except that First Place has engaged, and
will pay a fee or commission to, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇, Inc. ("KBW") in
accordance with the terms of a letter agreement between KBW and First Place.
4.8 Absence of Certain Changes or Events.
(a) Except as may be set forth in Schedule 4.8(a) of the First
Place Disclosure Schedule, or as disclosed in First Place's Quarterly Report on
Form 10-Q for the quarter ended September 30, 2003 (a true, complete and correct
copy of which has previously been delivered to Franklin), since September 30,
2003, (i) neither First Place nor any of its Subsidiaries has incurred any
material liability, except in the ordinary course of their business consistent
with
30
their past practices, and (ii) no event has occurred which has caused, or is
reasonably likely to cause, individually or in the aggregate, a Material Adverse
Effect on First Place.
(b) Except as set forth in Schedule 4.8(b) of the First Place
Disclosure Schedule, since September 30, ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and its Subsidiaries
have carried on their respective businesses in the ordinary course consistent
with their past practices.
4.9 Legal Proceedings.
(a) Except as set forth in Schedule 4.9(a) of the First Place
Disclosure Schedule, neither First Place nor any of its Subsidiaries is a party
to any and there are no pending or to the best of First Place's knowledge,
threatened, legal, administrative, arbitral or other proceedings, claims,
actions or governmental or regulatory investigations of any nature against First
Place or any of its Subsidiaries or challenging the validity or propriety of the
transactions contemplated by this Agreement or the Bank Merger Agreement as to
which there is a reasonable probability of an adverse determination and which,
if adversely determined, would, individually or in the aggregate, have or be
reasonably likely to have a Material Adverse Effect on First Place and its
Subsidiaries as a whole.
(b) There is no injunction, order, judgment, decree, or
regulatory restriction imposed upon First Place, any of its Subsidiaries or the
assets of First Place or any of its Subsidiaries which has had, or could
reasonably be expected to have, a Material Adverse Effect on First Place and its
Subsidiaries as a whole.
(c) Except as set forth in Schedule 4.9(c) of the First Place
Disclosure Schedule, there are no actions, suits, claims, proceedings,
investigations or assessments of any kind pending, or to the best of First
Place's knowledge, threatened against any of the directors or officers of First
Place or its Subsidiaries in their capacities as such, and no director or
officer of First Place or its Subsidiaries currently is being indemnified or
seeking to be indemnified by First Place or its Subsidiaries pursuant to
applicable law or the Certification of Incorporation, charter, bylaws or other
similar governing documents.
4.10 Taxes. Except as set forth in Schedule 4.10 of the First Place
Disclosure Schedule, each of First Place and its Subsidiaries has (i) duly and
timely filed or will duly and timely file (including applicable extensions
granted without penalty) all Tax Returns required to be filed at or prior to the
Effective Time, and such Tax Returns which have heretofore been filed are, and
those to be hereinafter filed will be, complete and accurate in all material
respects, and (ii) paid in full or have made adequate provision for on the
financial statements of First Place (in accordance with GAAP) all Taxes and will
pay in full or make adequate provision for all Taxes. There are no material
liens for Taxes upon the assets of either First Place or its Subsidiaries except
for statutory liens for current Taxes not yet due. Except as set forth in
Schedule 4.10 of the First Place Disclosure Schedule, neither First Place nor
any of its Subsidiaries has requested any extension of time within which to file
any Tax Returns in respect of any fiscal year which have not since been filed
and no request for waivers of the time to assess any Taxes are pending or
outstanding. Except as set forth on Schedule 4.10 of the First Place Disclosure
Schedule, neither First Place nor any of its Subsidiaries is presently subject
to any audits, investigations or proceeding by any tax authority, and neither
First Place nor any of its Subsidiaries has received
31
any notice from any tax authority that it intends to conduct any such audit,
investigation or proceeding. Except as set forth in Schedule 4.10 of the First
Place Disclosure Schedule, no claim has been made by a tax authority in a
jurisdiction where First Place or any of its Subsidiaries does not file a tax
return that First Place or any of its Subsidiaries is or may be subject to
taxation in the jurisdiction.
4.11 Employee Benefit Plan Matters. Except as set forth in Schedule
4.11 of the First Place Disclosure Schedule, (i) each employee benefit plan, as
the term is defined in Section 3 of ERISA, and other arrangement or agreement
that is maintained or contributed to as of the date of this Agreement
(collectively referred to as "First Place Plans") has been operated and
administered in all material respects in accordance with its terms and
applicable law, including but not limited to ERISA and the Code, (ii) each of
First Place Plans intended to be "qualified" within the meaning of Section
401(a) of the Code has either (1) received a favorable determination letter from
the IRS, or (2) is or will be the subject of an application for a favorable
determination letter, and First Place is not aware of any circumstances likely
to result in the revocation or denial of any such favorable determination
letter.
4.12 SEC Reports. First Place has previously made available to Franklin
an accurate and complete copy of each (a) final registration statement,
prospectus, report, schedule and definitive proxy statement filed since
September 30, 2000 by First Place with the SEC pursuant to the Securities Act or
the Exchange Act (the "First Place Reports") and (b) communication mailed by
First Place to its stockholders since September 30, 2000, and no such
registration statement, prospectus, report, schedule, proxy statement or
communication contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances in which they were
made, not misleading, except that information as of a later date shall be deemed
to modify information as of an earlier date. First Place has timely filed all
First Place Reports and other documents required to be filed by it under the
Securities Act and the Exchange Act, and, as of their respective dates, all
First Place Reports complied in all material respects with the published rules
and regulations of the SEC with respect thereto.
4.13 First Place Information. The information relating to First Place
and its Subsidiaries to be contained in, or incorporated by reference in, the
Proxy Statement and the S-4 (except for such portions thereof that relate only
to Franklin or any of its Subsidiaries as represented in Section 3.13 hereof),
or in any other document filed with any other regulatory agency in connection
herewith, will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances in which they are made, not misleading. The S-4 (except for such
portions thereof that relate only to Franklin or any of its Subsidiaries as
represented in Section 3.13 hereof) will comply in all material respects with
the provisions of the Securities Act and Exchange Act and the rules and
regulations thereunder and the Exchange Act and the rules and regulations
thereunder.
4.14 Ownership of Franklin Common Stock. None of First Place or any of
its Subsidiaries, (i) beneficially own, directly or indirectly, or (ii) is a
party to any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of, in each case, any shares of capital
stock of Franklin.
32
4.15 Compliance with Applicable Law. First Place and each of its
Subsidiaries: (i) is in material compliance with all applicable federal, state,
local and foreign statutes, laws, regulations, ordinances, rules, judgments,
orders or decrees applicable thereto or to the employees conducting such
businesses, including, without limitation, the Equal Credit Opportunity Act, the
Fair Housing Act, the Community Reinvestment Act, the Home Mortgage Disclosure
Act, the Bank Secrecy Act and all other applicable fair lending laws and other
laws relating to discriminatory business practices; (ii) holds all material
licenses, franchises, permits and authorizations necessary for the lawful
conduct of their respective businesses under and pursuant to all, and are in
compliance with and are not, to its knowledge, in default in any respect under
any, applicable law, statute, order, rule, regulation, policy and/or guideline
of any Governmental Entity relating to First Place or any of its Subsidiaries,
except where the failure to hold such license, franchise, permit or
authorization or such non-compliance or default would not, individually or in
the aggregate, have, or be reasonably likely to have, a Material Adverse Effect
on First Place and its Subsidiaries as a whole; and (iii) neither First Place
nor any of its Subsidiaries knows of, or has received notice of, any material
violations of any of the above or threats to resolve, suspect or otherwise
restrict any of the above since December 31, 1998.
4.16 Agreements with Regulatory Agencies. Except as set forth in
Schedule 4.16 of the First Place Disclosure Schedule, neither First Place nor
any of its Subsidiaries is subject to any cease-and-desist or other order issued
by, or is a party to any written agreement, consent agreement or memorandum of
understanding with, or is a party to any commitment letter or similar
undertaking to, or is subject to any order or directive by, or is a recipient of
any supervisory letter from, or has adopted any board resolutions at the request
of (each, whether or not set forth in Schedule 4.16 of First Place Disclosure
Schedule, a "First Place Regulatory Agreement"), any Regulatory Agency or other
Governmental Entity that restricts the conduct of its business or that in any
manner relates to its capital adequacy, its credit policies, its management or
its business, nor has First Place or any of its Subsidiaries been advised by any
Regulatory Agency or other Governmental Entity that it is considering issuing or
requesting any Regulatory Agreement.
4.17 Undisclosed Liabilities. Except (a) as set forth in Schedule 4.17
of the First Place Disclosure Schedule, (b) for those liabilities that are fully
reflected or reserved against on the consolidated balance sheet of First Place
included in its Form 10-Q (including, but not limited to any footnotes contained
therein) for the period ended September 30, 2003 and (c) for liabilities
incurred in the ordinary course of business consistent with past practice since
September 30, 2003 that, either alone or when combined with all similar
liabilities, have not had, and could not reasonably be expected to have, a
Material Adverse Effect on First Place and its Subsidiaries as a whole, neither
First Place nor any of its Subsidiaries has incurred any liability of any nature
whatsoever (whether absolute, accrued, contingent or otherwise and whether due
or to become due).
4.18 Assistance Agreements. Neither First Place nor any of its
Subsidiaries is a party to any agreement or arrangement entered into in
connection with the consummation of a federally assisted acquisition of a
depository institution pursuant to which First Place or any of its Subsidiaries
is entitled to receive financial assistance or indemnification from any
governmental agency.
33
4.19 Approvals. As of the date of this Agreement, First Place knows of
no reason why all regulatory approvals required for the consummation of the
transactions contemplated hereby (including, without limitation, the Merger and
the Subsidiary Merger) should not be obtained without the imposition of a
Burdensome Condition (as defined in Section 7.2(i) hereof).
4.20 Loan Portfolio.
(a) Except as set forth in Schedule 4.20(a) of the First Place
Disclosure Schedule, First Place's reasonable judgment, the allowance for loan
losses reflected in First Place's audited statement of financial condition at
June 30, 2003 was, and the allowance for loan losses shown on the balance sheets
in First Place's filings with the SEC for periods ending after June 30, 2003
have been and will be, adequate in all material respects, as of the dates
thereof, under GAAP, and no Regulatory Agencies have required or requested First
Place to increase the allowance for loan losses for such periods. The Bank's
allowance for loan losses is, and shall be as of the Effective Time, in
compliance with standards established by applicable Governmental Entities and
the Financial Accounting Standards Board and is and shall be adequate under all
such standards.
(b) Each loan reflected as an asset in First Place's filings
with the SEC (i) is evidenced by notes, agreements or other evidences of
indebtedness which are true, genuine and correct in all material respects, (ii)
to the extent secured, has been secured by valid liens and security interests
which have been perfected, and (iii) is the legal, valid and binding obligation
of the obligor named therein, enforceable in accordance with its terms, subject
to bankruptcy, insolvency, fraudulent conveyance and other laws of general
applicability relating to or affecting creditors' rights and to general equity
principles, in each case other than loans as to which the failure to satisfy the
foregoing standards would not have a Material Adverse Effect on First Place and
its Subsidiaries as a whole.
4.21 Properties. All real and personal property owned by First Place
and its Subsidiaries or presently used by it in their business is in an adequate
condition (ordinary wear and tear excepted) and is sufficient to carry on its
business in the ordinary course of business consistent with its past practices.
First Place and its Subsidiaries have good and marketable title free and clear
of all Liens to all of the material properties and assets, real and personal,
reflected on the balance sheet of First Place as of September 30, 2003 included
in First Place's Reports or acquired after such date, other than properties sold
by First Place in the ordinary course of business, except (i) Liens for current
taxes and assessments not yet due or payable (ii) pledges to secure deposits and
other Liens incurred in the ordinary course of its banking business, (iii) such
imperfections of title, easements and encumbrances, if any, as are not material
in character, amount or extent and (iv) as reflected on the balance sheet of
First Place as of September 30, 2003 included in First Place's Reports. All real
and personal property which is material to First Place's or its Subsidiaries'
businesses and leased or licensed by First Place or its Subsidiaries is held
pursuant to leases or licenses which are valid and enforceable in accordance
with their respective terms and such leases will not terminate or lapse prior to
the Effective Time.
4.22 Labor and Employment Matters. Except as set forth in Schedule 4.22
of the First Place Disclosure Schedule, neither First Place nor its Subsidiaries
is or has ever been a party to, or is or has ever been bound by, any collective
bargaining agreement, contract, or other
34
agreement or understanding with a labor union or labor organization with respect
to its employees, nor is First Place or its Subsidiaries the subject of any
proceeding asserting that it has committed an unfair labor practice or seeking
to compel it or any such Subsidiary to bargain with any labor organization as to
wages and conditions of employment, nor is the management of First Place aware
of any strike, other labor dispute, organizational effort or other activity
taken with a view toward unionization involving First Place or its Subsidiaries
pending or threatened. First Place and its Subsidiaries are in compliance with
applicable laws regarding employment or employees and retention of independent
contractors and are in material compliance with all applicable employment tax
laws.
4.23 Intellectual Property. First Place and each of its Subsidiaries
owns or possesses the rights to use without payment all material trade names,
servicemarks and trademarks used in its businesses; and neither First Place nor
any of its Subsidiaries has received any notice of conflict with respect thereto
that asserts the right of others. First Place and each of its Subsidiaries have
in all material respects performed all the obligations required to be performed
by them and are not in default in any material respect under any contract,
agreement, arrangement or commitment relating to any of the foregoing, except
where such non-performance or default would not, individually or in the
aggregate, have or be reasonably likely to have a Material Adverse Effect on
First Place and its Subsidiaries as a whole.
4.24 Required Vote. No vote of the stockholders of First Place is
required by law, First Place's Certificate of Incorporation and Bylaws or
otherwise to approve this Agreement and the Merger.
4.25 Transactions With Affiliates. All "covered transactions" between
First Place and its Subsidiaries and an "affiliate" within the meaning of
Sections 23A and 23B of the Federal Reserve Act and the regulations thereunder
have been in compliance with such provisions.
4.26 Insurance. First Place and its Subsidiaries are presently insured,
and since June 30, 1999, have been insured, for reasonable amounts with
financially sound and reputable insurance companies, against such risks as
companies engaged in a similar business would, in accordance with good business
practice, customarily be insured. All of the insurance policies and bonds
maintained by First Place and its Subsidiaries are in full force and effect,
First Place and its Subsidiaries are not in default thereunder and all material
claims thereunder have been filed in due and timely fashion.
4.27 Off-Balance Sheet Commitments. As of September 30, ▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇ has no off-balance sheet commitments other than as reported on the OTS
Thrift Financial Report filed with the OTS.
4.28 CRA Rating. Each of the Subsidiaries or affiliates of First Place
that is an insured depository institution was rated "Satisfactory" or
"Outstanding" following its most recent Community Reinvestment Act examination
by the regulatory agency responsible for its supervision. Neither First Place
nor its Subsidiaries have received notice of and has knowledge of any planned or
threatened objection by any community group to the transactions contemplated
hereby.
35
4.29 First Place Financing. Not later than the Closing Date and subject
to Section 7.2(d), First Place will have available sufficient cash or other
liquid assets which may be used to fund the transactions contemplated by this
Agreement.
4.30 Pro Forma Capital Requirements. First Place is, and on a pro forma
basis giving effect for the transactions contemplated by this Agreement and any
financing or capital injection contemplated by First Place, will be "adequately
capitalized", as defined for purposes of the FDIA, and in compliance with all
capital requirements, standards and ratios required by each state or federal
bank regulator with jurisdiction over First Place.
4.31 Disclosure. The representations and warranties contained in this
Article IV hereof do not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements and
information contained in this Article IV hereof not misleading.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Forbearances of Franklin. From the date hereof until the Effective
Time, except as expressly contemplated or permitted by this Agreement or as
previously disclosed in a Disclosure Schedule ("Previously Disclosed"), without
the prior written consent of First Place, Franklin will not and will not permit
any of its Subsidiaries to:
(a) Ordinary Course. Conduct its business other than in the
ordinary and usual course consistent with past practice or fail to use
reasonable best efforts to preserve its business organization, keep available
the present services of its employees and preserve for itself and First Place
the goodwill of the customers of Franklin and its Subsidiaries and others with
whom business relations exist.
(b) Capital Stock. Other than pursuant to the Franklin Options
that are exercisable and are either qualified under Section 422 of the Code or
will expire prior to the Effective Time which are set forth on Schedule 2.8 of
the Franklin Disclosure Schedule and outstanding on the date hereof, (i) issue,
sell or otherwise permit to become outstanding, or authorize the creation of,
any additional shares of stock or any rights or (ii) permit any additional
shares of stock to become subject to grants of employee or director stock
options or other rights.
(c) Dividends; Etc. (i) Make, declare, pay or set aside for
payment any dividend on or in respect of, or declare or make any distribution on
any shares of Franklin Common Stock, other than normal quarterly dividends in
the amount of no more than $.08 per share of Franklin Common Stock paid at such
times as Franklin historically has done (Franklin will consult with First Place
on the timing of the declaration, record, and payable dates of its last
quarterly dividend to be paid prior to the Effective Time so that stockholders
of Franklin do not receive a Franklin dividend and a First Place dividend in the
same calendar quarter) or (ii) directly or indirectly adjust, split, combine,
redeem, reclassify, purchase or otherwise acquire, any shares of its capital
stock.
(d) Compensation; Employment Agreements; Etc. Enter into or
amend or renew any employment, consulting, severance or similar agreements or
arrangements with any
36
director, officer or employee of Franklin or grant any salary or wage increase
or increase any employee benefit (including incentive or bonus payments), except
(i) for normal individual increases in compensation to employees in the ordinary
course of business consistent with past practice, provided that no such increase
shall result in an annual adjustment of more than 3.5% (ii) for other changes
that are required by applicable law, and (iii) to satisfy contractual
obligations existing as of the date hereof and set forth in Schedule 5.1(d) of
the Franklin Disclosure Schedule.
(e) Hiring. Hire any person as an employee of Franklin or its
Subsidiaries or promote any employee, except (i) to satisfy contractual
obligations existing as of the date hereof and set forth on Schedule 5.1(e) of
the Franklin Disclosure Schedule and (ii) persons hired to fill any vacancies
arising after the date hereof and whose employment is terminable at the will of
Franklin or its Subsidiaries other than any person to be hired who would have a
base salary, including any guaranteed bonus or any similar bonus, considered on
an annual basis of more than $40,000.
(f) Benefit Plans. Other than making contributions to the ESOP
and Franklin's 401(k) plan not to exceed $175,000 in the aggregate for the 2003
calendar year, enter into, establish, adopt or amend, or make any contributions
to (except (i) as may be required by applicable law or (ii) to satisfy
contractual obligations existing as of the date hereof and set forth on Schedule
5.1(f) of the Franklin Disclosure Schedule), any pension, retirement, stock
option, stock purchase, savings, profit sharing, deferred compensation,
consulting, bonus, group insurance or other employee benefit, incentive or
welfare contract, plan or arrangement, or any trust agreement (or similar
arrangement) related thereto, in respect of any director, officer or employee of
Franklin or any Subsidiary or take any action, other than contemplated by this
Agreement, to accelerate the vesting or exercisability of stock options,
restricted stock or other compensation or benefits payable thereunder.
(g) Dispositions. Except as set forth on Schedule 5.1(g) of
the Franklin Disclosure Schedule, sell, transfer, mortgage, encumber or
otherwise dispose of or discontinue any of its assets, deposits, business or
properties including investment securities, loans and OREO.
(h) Acquisitions. Acquire (other than by way of foreclosures
or acquisitions of control in a bona fide fiduciary capacity or in satisfaction
of debts previously contracted in good faith, in each case in the ordinary and
usual course of business consistent with past practice) all or any portion of
the assets, business, deposits or properties of any other entity.
(i) Capital Expenditures. Make any capital expenditures other
than capital expenditures in the ordinary course of business consistent with
past practice in amounts exceeding $10,000.
(j) Governing Documents. Amend its Articles of Incorporation,
Bylaws or similar governing documents.
37
(k) Accounting Methods. Implement or adopt any change in its
accounting principles, practices or methods, other than as may be required by
changes in laws or regulations or GAAP, except as contemplated in Section 6.9
hereof.
(l) Contracts. Enter into, renew, terminate, permit automatic
renewal, amendment to or modification of any agreement for services to be
provided to Franklin or any Subsidiary or any other contract that exceeds
$15,000 in value.
(m) Claims. Except as set forth on Schedule 5.1(m) of the
Franklin Disclosure Schedule, enter into any settlement or similar agreement
with respect to any action, suit, proceeding, order or investigation to which
Franklin or any Subsidiary is or becomes a party after the date of this
Agreement, which settlement, agreement or action involves payment by Franklin or
any Subsidiary of an amount which exceeds $10,000 and/or would impose any
material restriction on the business of Franklin or any Subsidiary or create
precedent for claims that are reasonably likely to be material to Franklin or
any Subsidiary.
(n) Banking Operations. Enter into any new material line of
business; implement, adopt or otherwise change its lending, investment,
underwriting, risk (including interest rate risk policies, procedures and
practices) and asset liability management and other material banking and
operating policies, except as required by applicable law, regulation or policies
imposed by any Governmental Entity; or file any application or make any contract
with respect to branching or site location or branching or site relocation.
Except as contemplated by Section 6.9 hereof, fail to follow its existing
policies and practices with respect to managing their exposure to interest rate
risk or fail to use commercially reasonable means to avoid any material increase
in their aggregate exposure to interest rate risk.
(o) Derivatives Contracts. Enter into any structured
transactions, securities, arbitrage or hedging activity, including use of
derivatives.
(p) Indebtedness. Incur any indebtedness for borrowed money
(other than deposits, federal funds purchased, cash management accounts, Federal
Home Loan Bank borrowings that mature within one year and securities sold under
agreements to repurchase that mature within one year, in each case in the
ordinary course of business consistent with past practice) or assume, guarantee,
endorse or otherwise as an accommodation become responsible for the obligations
of any other Person, other than in the ordinary course of business consistent
with past practice.
(q) Investment Securities. Acquire (other than by way of
foreclosures or acquisitions in a bona fide fiduciary capacity or in
satisfaction of debts previously contracted in good faith, in each case in the
ordinary course of business consistent with past practice) any debt security or
equity investment other than federal funds or United States Government
securities or United States Government agency securities, in each case with a
term of one (1) year or less.
(r) Loans. Make, purchase, renew or otherwise modify any loan,
loan commitment, letter of credit or other extension of credit (collectively,
"Loans") other than in the ordinary course of business, provided that any
commercial business loan with a principal balance in excess of $500,000 (whether
individually or in the aggregate), multi-family residential loan
38
with a principal balance in excess of $1,000,000 (whether individually or in the
aggregate), commercial real estate loan with a principal balance in excess of
$1,000,000 (whether individually or in the aggregate), single family owner
occupied loan with a principal balance in excess of $300,000 (whether
individually or in the aggregate) or any other loan with a principal balance in
excess of $50,000 (whether individually or in the aggregate) cannot be
originated, purchased, renewed or modified without First Place's prior written
consent which shall be deemed given if a written objection thereto is not
received within two business days after delivery of written notice thereof.
Purchase or commit to purchase any bulk loan portfolio.
(s) Investments in Real Estate. Make any investment or
commitment to invest in real estate or in any real estate development project
(other than by way of foreclosure or acquisitions in a bona fide fiduciary
capacity or in satisfaction of a debt previously contracted in good faith, in
each case in the ordinary course of business consistent with past practice).
(t) Adverse Actions. (i) Take any action that would, or is
reasonably likely to, prevent or impede the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code or (ii) take any
action that is intended or is reasonably likely to result in (x) any of its
representations and warranties set forth in this Agreement being or becoming
untrue in any material respect at any time at or prior to the Effective Time,
(y) any of the conditions to the Merger set forth in Article VII hereof not
being satisfied or (z) a material violation of any provision of this Agreement
except as may be required by applicable law or regulation.
(u) Board Membership. Except as set forth in Schedule 5.1(u)
of the Franklin Disclosure Schedule, elect to the Board of Directors of itself
or its Subsidiaries or to any office any person who is not a member of the Board
of Directors or an officer of Franklin or its Subsidiaries as of the date of
this Agreement.
(v) Franklin Advertising. Reduce, diminish or otherwise
materially adversely affect the existing level, quality and frequency of
advertising, commercials and/or other promotional campaigns for Franklin and its
Subsidiaries.
(w) No New Subsidiaries. Neither Franklin nor its Subsidiaries
will establish, acquire or otherwise create any new entity.
(x) Commitments. Enter into any contract with respect to, or
otherwise agree or commit to do, any of the foregoing.
5.2 Forbearances of First Place. From the date hereof until the
Effective Time, except as expressly contemplated or permitted by this Agreement,
without the prior written consent of Franklin, First Place will not, and will
cause each of its Subsidiaries not to:
(a) Adverse Actions. (i) Take any action that would, or is
reasonably likely to, prevent or impede the Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code or (ii) take any
action that is intended or is reasonably likely to result in (x) any of its
representations and warranties set forth in this Agreement being or becoming
untrue in any material respect at any time at or prior to the Effective Time,
(y) any of the conditions to the Merger set forth in Article VII hereof not
being satisfied or (z) a material
39
violation of any provision of this Agreement, except as may be required by
applicable law or regulation.
(b) Commitments. Enter into any contract with respect to, or
otherwise agree or commit to do, any of the foregoing.
(c) Governing Documents. Amend its Certificate of
Incorporation or Bylaws, which as a direct result of such amendment the holders
of Franklin Common Stock would be adversely affected.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Reasonable Best Efforts. Subject to the terms and conditions of
this Agreement, each of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ Bank, First Place and the Bank agrees
to use its reasonable best efforts in good faith to take, or cause to be taken,
all actions, and to do, or cause to be done, all things necessary, proper or
desirable, or advisable under applicable laws, so as to permit consummation of
the Merger and the Bank Merger Agreement as promptly as practicable and
otherwise to enable consummation of the Merger and the Bank Merger Agreement,
including the satisfaction of the conditions set forth in Article VII hereof,
and shall cooperate fully with the other party hereto to that end.
6.2 Stockholder Approval. Franklin agrees to take, in accordance with
applicable law and its Articles of Incorporation and Bylaws, all action
necessary to convene as soon as reasonably practicable a special meeting of its
stockholders to consider and vote upon the approval of this Agreement and any
other matters required to be approved by Franklin's stockholders for
consummation of the Merger (including any adjournment or postponement, the
"Franklin Stockholder Meeting"). Except with the prior approval of First Place,
no other matters shall be submitted for the approval of Franklin stockholders at
the Franklin Stockholders Meeting. The Franklin Board shall at all times prior
to and during such meeting recommend such approval and shall take all reasonable
lawful action to solicit such approval by its stockholders; provided that
nothing in this Agreement shall prevent the Franklin Board from withholding,
withdrawing, amending or modifying its recommendation if the Franklin Board
determines, after consultation with its outside counsel, that such action is
legally required in order for the directors to comply with their fiduciary
duties to the Franklin stockholders under applicable law; provided, further,
that Section 6.8 hereof shall govern the withholding, withdrawing, amending or
modifying of such recommendation in the circumstances described therein.
6.3 Registration Statement.
(a) First Place agrees to prepare an S-4 or other applicable
registration statement to be filed by First Place with the SEC in connection
with the issuance of First Place Common Stock in the Merger (including the Proxy
Statement and other proxy solicitation materials of Franklin constituting a part
thereof and all related documents). Franklin shall prepare and furnish such
information relating to it and its directors, officers and stockholders as may
be reasonably required in connection with the above referenced documents based
on its
40
knowledge of and access to the information required for said documents, and
Franklin, and its legal, financial and accounting advisors, shall have the right
to review and approve (which approval shall not be unreasonably withheld or
delayed) the S-4 prior to its filing. Franklin agrees to cooperate with First
Place and First Place's counsel and accountants in requesting and obtaining
appropriate opinions, consents and letters from its financial advisor and
independent auditor in connection with the S-4 and the Proxy Statement. Provided
that Franklin has cooperated as described above, First Place agrees to file, or
cause to be filed, the S-4 with the SEC as promptly as reasonably practicable.
Each of Franklin and First Place agrees to use its reasonable best efforts to
cause the S-4 to be declared effective under the Securities Act as promptly as
reasonably practicable after the filing thereof. First Place also agrees to use
its reasonable best efforts to obtain all necessary state securities law or
"Blue Sky" permits and approvals required to carry out the transactions
contemplated by this Agreement. After the S-4 is declared effective under the
Securities Act, Franklin shall promptly mail at its expense the Proxy Statement
to its stockholders.
(b) Each of Franklin and First Place agrees that none of the
information supplied or to be supplied by it for inclusion or incorporation by
reference in (i) the S-4 shall, at the time the S-4 and each amendment or
supplement thereto, if any, becomes effective under the Securities Act, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading and (ii) the Proxy Statement and any amendment or supplement thereto
shall, at the date(s) of mailing to stockholders and at the time of the Franklin
Stockholders Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading. Each of Franklin and First Place further
agrees that if such party shall become aware prior to the Effective Time of any
information furnished by such party that would cause any of the statements in
the S-4 or the Proxy Statement to be false or misleading with respect to any
material fact, or to omit to state any material fact necessary to make the
statements therein not false or misleading, to promptly inform the other parties
thereof and to take the necessary steps to correct the S-4 or the Proxy
Statement.
(c) First Place agrees to advise Franklin, promptly after
First Place receives notice thereof, of the time when the S-4 has become
effective or any supplement or amendment has been filed, of the issuance of any
stop order or the suspension of the qualification of First Place Common Stock
for offering or sale in any jurisdiction, of the initiation or, to the extent
First Place is aware thereof, threat of any proceeding for any such purpose, or
of any request by the SEC for the amendment or supplement of the S-4 or for
additional information.
6.4 Regulatory Filings.
(a) Each of First Place, the Bank, Franklin and Franklin Bank
shall cooperate and use their respective reasonable best efforts to prepare all
documentation, to effect all filings and to obtain all permits, consents,
approvals and authorizations of all third parties and Governmental Entities
necessary to consummate the Merger and Subsidiary Merger and the other
transactions contemplated hereby; and any initial filings with Governmental
Entities shall be made by First Place as soon as reasonably practicable after
the execution hereof. Each of First Place and Franklin shall have the right to
review and approve (which approval shall not be unreasonably withheld or
delayed), and to the extent practicable each shall consult with the
41
other, in each case subject to applicable laws relating to the exchange of
information, with respect to all written information submitted to any third
party or any Governmental Entity in connection with the Merger and Subsidiary
Merger. In exercising the foregoing right, each of such parties agrees to act
reasonably and as promptly as practicable. Each party hereto agrees that it
shall consult with the other parties hereto with respect to the obtaining of all
permits, consents, approvals, waivers and authorizations of all third parties
and Governmental Entities necessary or advisable to consummate the Merger and
Subsidiary Merger, and each party shall keep the other parties apprised of the
status of material matters relating to completion of the Merger.
(b) Each party agrees, upon request, to furnish the other
parties with all information concerning itself, its Subsidiaries (if
applicable), directors, officers and stockholders and such other matters as may
be reasonably necessary or advisable in connection with any filing, notice or
application made by or on behalf of such other parties or any of their
Subsidiaries (if applicable) to any third party or Governmental Entity.
6.5 Press Releases. Franklin and First Place shall consult with each
other before issuing any press release with respect to the Merger or this
Agreement. First Place and Franklin will issue a joint press release with
respect to the Merger or this Agreement as soon as practicable after this
Agreement is fully executed. Franklin shall not issue any press release with
respect to the Merger or this Agreement or make any such public statements
without the prior consent of First Place, which consent shall not be
unreasonably withheld; provided, however, that Franklin may, without the prior
consent of First Place (but after consultation with First Place, to the extent
practicable under the circumstances), issue such press release or make such
public statements as may upon the advice of outside counsel be required by law
or the rules or regulations of NASDAQ. Franklin and First Place shall cooperate
to develop all public announcement materials and make appropriate management
available at presentations related to the Merger as reasonably requested by the
other party.
6.6 Access; Information.
(a) Franklin agrees that upon reasonable notice and subject to
applicable laws relating to the exchange of information, it shall afford First
Place and First Place's officers, employees, counsel, accountants and other
authorized representatives such access during normal business hours throughout
the period prior to the Effective Time to the books, records (including, without
limitation, Tax Returns and work papers of independent auditors), properties and
personnel of Franklin and to such other information relating to Franklin as
First Place may reasonably request and, during such period, it shall furnish
promptly to First Place all information concerning the business, properties and
personnel of Franklin as First Place may reasonably request, subject to
applicable law.
(b) First Place agrees that upon reasonable notice and subject
to applicable laws relating to the exchange of information, it shall afford
Franklin and its authorized representatives such access to First Place's
personnel as Franklin may reasonably request.
(c) Each party agrees that it will not, and will cause its
representatives not to, use any information obtained pursuant to this Section
6.6 hereof (as well as any other
42
information obtained prior to the date hereof in connection with the entering
into of this Agreement) for any purpose unrelated to the consummation of the
Merger. Subject to the requirements of law, each party shall keep confidential,
and shall cause its representatives to keep confidential, all information and
documents obtained pursuant to this Section 6.6 hereof (as well as any other
information obtained prior to the date hereof in connection with the entering
into of this Agreement) unless such information (i) was already known to such
party, (ii) becomes available to such party from other sources not known by such
party to be bound by a confidentiality obligation, (iii) is disclosed with the
prior written approval of the party to which such information pertains or (iv)
is or becomes readily ascertainable from publicly available sources. In the
event that this Agreement is terminated or the Merger shall otherwise fail to be
consummated, each party shall promptly cause all copies of documents or extracts
thereof containing information and data as to another party hereto to be
returned to the party which furnished the same. No investigation by any party of
the business and affairs of any other party shall affect or be deemed to modify
or waive any representation, warranty, covenant or agreement in this Agreement,
or the conditions to any party's obligation to consummate the Merger.
6.7 Affiliates. Franklin shall use its reasonable best efforts to
identify those persons who may be deemed to be Franklin Affiliates and to cause
each person so identified to deliver to First Place as soon as practicable, and
in any event prior to the date of Franklin Stockholders Meeting, a written
agreement to comply with the requirements of Rule 145 under the Securities Act
in connection with the sale or other transfer of First Place Common Stock
received in the Merger, which agreement shall be in the form attached hereto as
Annex B (the "Affiliate Letter").
6.8 Acquisition Proposals. Franklin agrees that it shall not, and that
it shall direct and use its reasonable best efforts to cause its directors,
officers, employees, agents and representatives not to, directly or indirectly,
initiate, solicit, encourage or otherwise facilitate any inquiries or the making
of any proposal or offer with respect to a merger, reorganization, share
exchange, consolidation or similar transaction involving Franklin, or any
purchase of all or substantially all of the assets of Franklin or more than 10%
of the outstanding equity securities of Franklin (any such proposal or offer
being hereinafter referred to as an "Acquisition Proposal"). Franklin further
agrees that it shall not, and that it shall direct and use its reasonable best
efforts to cause its directors, officers, employees, agents and representatives
not to, directly or indirectly, engage in any negotiations concerning, or
provide any confidential information or data to, or have any discussions with,
any person relating to an Acquisition Proposal, or otherwise facilitate any
effort or attempt to make or implement an Acquisition Proposal; provided,
however, that nothing contained in this Agreement shall prevent Franklin or the
Franklin Board from (A) complying with its disclosure obligations under federal
or state law; (B) providing information in response to a request therefore by a
Person who has made an unsolicited bona fide written Acquisition Proposal if the
Franklin Board receives from the Person so requesting such information an
executed confidentiality agreement; (C) engaging in any negotiations or
discussions with any person who has made an unsolicited bona fide written
Acquisition Proposal or (D) recommending such an Acquisition Proposal to the
stockholders of Franklin, if and only to the extent that, in each such case
referred to in clause (B), (C) or (D) above, (i) the Franklin Board determines
in good faith (after receipt of a written opinion of outside legal counsel) that
such action would be required in order for its directors to comply with
43
their respective fiduciary duties under applicable law and (ii) the Franklin
Board determines in good faith (after receipt of a written opinion of its
financial advisor) that such Acquisition Proposal, if accepted, is reasonably
likely to be consummated, taking into account all legal, financial and
regulatory aspects of the proposal and the person making the proposal and would,
if consummated, result in a transaction more favorable to Franklin's
stockholders from a financial point of view than the Merger. An Acquisition
Proposal which is received and considered by the Franklin in compliance with
this Section 6.8 hereof and which meets the requirements set forth in clause (D)
of the preceding sentence is herein referred to as a "Superior Proposal."
Franklin agrees that it will immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any Acquisition Proposals. Franklin agrees that it
will notify First Place if any such inquiries, proposals or offers are received
by, any such information is requested from, or any such discussions or
negotiations are sought to be initiated or continued with, Franklin or any of
its representatives.
6.9 Certain Policies. Prior to the Effective Time, Franklin shall,
consistent with GAAP, the rules and regulations of the SEC and applicable
banking laws and regulations, modify or change its loan, OREO, investment
portfolio, accrual, reserve, tax, litigation and real estate valuation policies
and practices (including loan classifications and levels of reserves)
(collectively the "Policies and Practices") so as to be applied on a basis that
is consistent with that of First Place; provided that in any event, no
modification or change to the Policies and Practices made by Franklin pursuant
to this Section 6.9 hereof shall constitute or be deemed to be a breach,
violation of or failure to satisfy any representation, warranty, covenant,
agreement, condition or other provision of this Agreement or otherwise be
considered in determining whether any such breach, violation or failure to
satisfy shall have occurred. First Place shall provide such assistance and
direction to Franklin as is necessary in conforming to such Policies and
Practices between the date of this Agreement until the Effective Time. The
recording of any such modifications or changes shall not be deemed to imply any
misstatement of previously furnished financial statements or information and
shall not be construed as concurrence of Franklin or its management with any
such modifications or changes.
6.10 NASDAQ Listing. First Place agrees to use its reasonable best
efforts to list, prior to the Effective Time, on the NASDAQ the shares of First
Place Common Stock to be issued in connection with the Merger.
6.11 Indemnification.
(a) From and after the Effective Time through the fifth
anniversary of the Effective Time, First Place and its Subsidiaries (the
"Indemnifying Party") shall indemnify and hold harmless each present and former
director, officer and employee of Franklin, determined as of the Effective Time
(the "Indemnified Parties") against any costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of matters existing or occurring at or prior to the Effective Time, whether
asserted or claimed prior to, at or after the Effective Time, arising in whole
or in part out of or pertaining to the fact that he or she was a director,
officer, employee, fiduciary or agent of Franklin or its Subsidiaries or is or
was serving at the request of Franklin or its Subsidiaries as a director,
officer, employee, fiduciary or agent of another corporation,
44
partnership, joint venture, trust or other enterprise, including without
limitation matters related to the negotiation, execution and performance of this
Agreement or consummation of the Merger, to the fullest extent which such
Indemnified Parties would be entitled under the Franklin Articles of
Incorporation, the Franklin Bylaws, and/or any agreement, arrangement or
understanding which has been Previously Disclosed to First Place by Franklin
pursuant to this Section 6.11 hereof, in each case as in effect on the date
hereof.
(b) Any Indemnified Party wishing to claim indemnification
under this Section 6.11 hereof, upon learning of any such claim, action, suit,
proceeding or investigation, shall promptly notify the Indemnifying Party, but
the failure to so notify shall not relieve the Indemnifying Party of any
liability it may have to such Indemnified Party if such failure does not
actually prejudice the Indemnifying Party. In the event of any such claim,
action, suit, proceeding or investigation (whether arising before or after the
Effective Time), (i) the Indemnifying Party shall have the right to assume the
defense thereof and the Indemnifying Party shall not be liable to such
Indemnified Parties for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Parties in connection with
the defense thereof, except that if the Indemnifying Party elects not to assume
such defense or counsel for the Indemnified Parties advises that there are
issues which raise conflicts of interest between the Indemnifying Party and the
Indemnified Parties, the Indemnified Parties may retain counsel which is
reasonably satisfactory to the Indemnifying Party, and the Indemnifying Party
shall pay, promptly as statements therefore are received, the reasonable fees
and expenses of such counsel for the Indemnified Parties (which may not exceed
one firm in any jurisdiction), (ii) the Indemnified Parties will cooperate in
the defense of any such matter, (iii) the Indemnifying Party shall not be liable
for any settlement effected without its prior written consent and (iv) the
Indemnifying Party shall have no obligation hereunder in the event that a
federal or state banking agency or a court of competent jurisdiction shall
determine that indemnification of an Indemnified Party in the manner
contemplated hereby is prohibited by applicable laws and regulations.
(c) Prior to Effective Time, First Place shall cause the
persons serving as directors and officers of Franklin and its Subsidiaries
immediately prior to the Effective Time to be covered by the directors' and
officers' liability insurance policy maintained by Franklin for a period of
three years after the Effective Time (provided that First Place may substitute
therefore policies of at least the same coverage and amounts containing terms
and conditions which are not materially less advantageous than such policy or
single premium tail coverage with policy limits equal to Franklin's existing
coverage limits) with respect to acts or omissions occurring prior to the
Effective Time which were committed by such directors and officers in their
capacities as such, provided that in no event shall First Place be required to
expend for any one year an amount in excess of 125% of the aggregate premiums
paid by Franklin in 2003 on an annualized basis for such purpose (which
aggregate premiums on an annualized basis are disclosed in Section 6.11(c) of
the Franklin Disclosure Schedule) (the "Insurance Amount"), and further provided
that if First Place is unable to maintain or obtain the insurance called for by
this Section 6.11 hereof as a result of the preceding provision, First Place
shall use its reasonable best efforts to obtain the most advantageous coverage
as is available for the Insurance Amount.
(d) If First Place or any of its successors or assigns shall
consolidate with or merge into any other entity and shall not be the continuing
or surviving entity of such
45
consolidation or merger or shall transfer all or substantially all of its assets
to any other entity, then and in each case, proper provision shall be made so
that the successors and assigns of First Place or the surviving company shall
assume the obligations set forth in this Section 6.11 hereof prior to or
simultaneously with the consummation of such transaction.
(e) The provision of this Section 6.11 shall survive the
Closing of this Merger.
6.12 Benefit Plans.
(a) First Place shall take all reasonable action so that
either contemporaneous with or as soon as administratively practicable after the
Effective Time, employees of Franklin who become employees of First Place shall
be entitled to coverages under retirement benefit plans that provide
substantially comparable retirement benefits in place at Franklin and its
Subsidiaries that are set forth on Schedule 3.11 of the Franklin Disclosure
Schedule prior to the Effective Time, excluding those insurance policies and
programs listed on Schedule 3.11. Notwithstanding the foregoing, nothing in this
Agreement shall require that First Place either continue the Franklin Employee
Stock Ownership Plan ("Franklin ESOP"), make contributions to the Franklin ESOP
to the extent it is continued or to permit Franklin employees to participate in
the First Place Employee Stock Ownership Plan. Nothing herein shall limit the
ability of First Place to amend or terminate any of Franklin's Benefit Plans in
accordance with their terms at any time.
(b) At and following the Effective Time, First Place shall
honor, and First Place shall continue to be obligated to perform, in accordance
with their terms, contractual rights of, current and former employees of
Franklin existing as of the Effective Time, as well as all employment or
"change-in-control" agreements of Franklin which are Previously Disclosed,
subject in each case as the same may be modified or terminated with respect to
certain executive officers of Franklin in accordance with any applicable terms.
The severance or termination payments which are payable pursuant to such
agreements, plans or policies of Franklin (which have been quantified in
reasonable detail as of the date hereof) are set forth in Schedule 6.12(b) of
the Franklin Disclosure Schedule and shall be subject to the limitations under
Section 280(G) of the Code.
(c) At such time as employees of Franklin become eligible to
participate in a medical, dental or health plan of First Place or its
Subsidiaries, First Place shall cause each such plan to (i) provide full credit
for under such plans for any deductibles, co-payment and out-of-pocket expenses
incurred by the employees and their beneficiaries during the portion of the
calendar year prior to such participation and (ii) waive any waiting period
limitation or evidence of insurability requirement which would otherwise be
applicable to such employee on or after the Effective Time to the extent such
employee had satisfied any similar limitation or requirement under an analogous
Plan prior to the Effective Time. First Place shall assume full responsibility
for providing COBRA continuation coverage to current and former Franklin
employees who are M&A Qualified Beneficiaries as the term is defined in Treas.
Reg. ▇▇.▇▇. 54.4980B-1 - B-10.
(d) Those employees (other than employees listed in Schedule
6.12(b) and/or temporary and/or co-operative employees) of Franklin or its
Subsidiaries who are terminated on the Effective Time or because First Place
identifies them for inclusion in a force reduction as a
46
result of the pending merger and who sign and deliver a termination and release
agreement in the form acceptable to First Place, shall be entitled to severance
pay equal to two weeks of pay for each full year of service, subject to a
minimum of two weeks and a maximum of twenty-six weeks. Such payments will be
made within 30 days after the later of the Effective Time or the date the
release becomes effective or the negotiated date of termination after the
Effective Time. Employees employed by more than one corporation shall be
eligible for severance pay based only on the corporation with which they have
the longest service. If any corporation employing the employee also has a
severance pay plan, any amounts paid pursuant to that plan shall reduce the
amount that the employee will receive under this Section 6.12(d) and in no event
shall there be any duplication of severance pay. Nothing contained in this
Section 6.12(d) hereof shall be construed or interpreted to limit or modify in
any way First Place's at will employment policy or provide any third party
beneficiary rights to employees of Franklin or its Subsidiaries. In no event
shall severance pay be taken into account in determining the amount of any other
benefit (including but not limited to, an individual's benefit under any pension
plan). If, by reason of the controlling plan document, controlling law or
otherwise, severance pay is taken into account in determining any other benefit,
the severance pay otherwise payable shall be reduced by the present value of the
additional benefit determined under other benefit plans attributable to the
severance pay period.
(e) Within 30 days after the Effective Time and upon receiving
an executed receipt and release from each Franklin employee on the Closing Date,
First Place will pay the amounts to the Franklin Employees listed on Schedule
6.12(b) of the Franklin Disclosure Schedule, which shall be the full and only
payment due to such Franklin Employees.
6.13 Notification of Certain Matters. Each of Franklin and First Place
shall give prompt notice to the other of any fact, event or circumstance known
to it that (i) is reasonably likely, individually or taken together with all
other facts, events and circumstances known to it, to result in any Material
Adverse Effect with respect to it and its respective Subsidiaries taken as a
whole or (ii) would cause or constitute a material breach of any of its
representations, warranties, covenants or agreements contained herein.
6.14 Subsequent Interim and Annual Financial Statements. First Place
will deliver to Franklin and Franklin will deliver to First Place (delivered to
First Place no later than March 28, 2004) their respective Annual Reports on
Form 10-K for the year ending June 30, 2003 and December 31, 2003, respectively,
as filed with the SEC under the Exchange Act. As soon as reasonably available,
but in no event more than 45 days after the end of each fiscal quarter ending
after the date of this Agreement, First Place will deliver to Franklin and
Franklin will deliver to First Place their respective Quarterly Reports on Form
10-Q, as filed with the SEC under the Exchange Act.
6.15 Board and Loan Committee Visitation Rights. Franklin and its
Subsidiaries shall allow one representative designated by First Place to attend
all meetings of Franklin's and its Subsidiaries' Boards of Directors in a
nonvoting capacity, and in connection therewith, Franklin shall give such
representative copies of all notices, minutes, consents and other materials,
financial or otherwise, which Franklin and its Subsidiaries provides to its
Board of Directors. Franklin and its Subsidiaries shall also allow one
representative of First Place to attend all
47
meetings of Franklin Bank's loan committee in a nonvoting capacity, and in
connection therewith, Franklin Bank shall give such representative copies of all
notices, minutes, consents and other materials, financial or otherwise, which
Franklin Bank provides to its loan committee.
6.16 Establish Regional Advisory Board. At the Effective Time, First
Place intends to establish by resolution of the Board of Directors a regional
advisory board ("Regional Advisory Board") that will have the responsibility of
providing advice to the First Place Board of Directors about Franklin Bank's
business and operations, market area, regional economic conditions and such
other advisory responsibilities as determined by the First Place Board of
Directors.
6.17 Current Information. During the period from the date of this
Agreement to the Effective Time, Franklin will cause one or more of its
designated representatives to notify on a regular and frequent basis (not less
than monthly) representatives of First Place and to report (i) the general
status of the ongoing operations of Franklin and its Subsidiaries; (ii) the
status of, and the action proposed to be taken with respect to, those Loans held
by it or any Subsidiary as well as its non-performing assets; (iii) the
origination of all Loans other than 1-4 family residential mortgage loans and
consumer loans; (iv) changes in its deposit balances equal to or more than $2.0
million; and (v) any material changes in its pricing of deposits. Franklin will
promptly notify the other of any material change in the normal course of
business or in the operation of its properties or the properties of any of its
Subsidiaries and all regulatory communications and governmental complaints,
investigations or hearings (or communications indicating that the same may be
contemplated), or the institution or the threat of significant litigation
involving itself or any of its Subsidiaries, and will keep First Place fully
informed of such events.
6.18 Execution and Authorization of Bank Merger Agreement. On the date
of this Agreement, (a) First Place shall have (i) caused the Board of Directors
of the Bank to approve the Bank Merger Agreement, (ii) caused the Bank to
execute and deliver the Bank Merger Agreement, and (iii) approved the Bank
Merger Agreement as the sole stockholder of the Bank, and (b) Franklin shall
have (i) caused the Board of Directors of Franklin Bank to approve the Bank
Merger Agreement, (ii) caused Franklin Bank to execute and deliver the Bank
Merger Agreement, and (iii) approved the Bank Merger Agreement as the sole
stockholder of Franklin Bank. The Bank Merger Agreement shall be substantially
in the form attached hereto as Annex C. As of the Closing Date, First Place
intends to operate Franklin Bank, under the "Franklin Bank" name, as a division
of First Place Bank, which may be discontinued in First Place's sole discretion.
6.19 Notice Of Transactions. First Place will provide Franklin prior
written notice of acquisitions by it or any of its Subsidiaries to acquire, an
interest in any company or business (whether by a purchase of assets, purchase
of stock or merger), (each an "Acquisition" for purposes of this Section only),
involving an aggregate consideration exceeding $5,000,000.
6.20 Franklin Bank Dividend. Prior to the Effective Time, Franklin Bank
will pay a cash dividend from Franklin Bank to Franklin in the maximum amount
permitted, subject to applicable OCC Regulations. This dividend will be paid to
Franklin prior to the Effective Time.
48
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation To Effect the Merger. The
respective obligation of each party hereto to effect the Merger is subject to
the satisfaction or, to the extent permitted by applicable law, written waiver
by the parties hereto at or prior to the Effective Time each of the following
conditions:
(a) Stockholder Approval. This Agreement shall have been
adopted by the requisite affirmative vote of the holders of at least a majority
of the outstanding shares of Franklin Common Stock entitled to vote thereon.
(b) NASDAQ Stock Market Listing. The shares of First Place
Common Stock which shall be issued to the stockholders of Franklin upon
consummation of the Merger shall have been authorized for listing on the NASDAQ
Stock Market, subject to official notice of issuance.
(c) Other Approvals. All regulatory approvals required to
consummate the transactions contemplated hereby (including the Merger and the
Subsidiary Merger) shall have been obtained and shall remain in full force and
effect and all statutory waiting periods in respect thereof shall have expired
(all such approvals and the expiration of all such waiting periods being
referred to herein as the "Requisite Regulatory Approvals").
(d) S-4. The S-4 shall have become effective under the
Securities Act and no stop order suspending the effectiveness of the S-4 shall
have been issued and no proceedings for that purpose shall have been initiated
or threatened by the SEC.
(e) No Injunctions or Restraints; Illegality. No order,
injunction or decree issued by any court or agency of competent jurisdiction or
other legal restraint or prohibition (an "Injunction") preventing the
consummation of the Merger, the Subsidiary Merger or any of the other
transactions contemplated by this Agreement or the Bank Merger Agreement shall
be in effect. No statute, rule, regulation, order, injunction or decree shall
have been enacted, entered, promulgated or enforced by any Governmental Entity
which prohibits, restricts or makes illegal consummation of the Merger or the
Subsidiary Merger.
(f) Federal Tax Opinion. First Place and Franklin shall have
received an opinion of ▇▇▇▇▇▇ ▇▇▇▇▇ LLP, counsel to First Place ("First Place's
Counsel"), in form and substance reasonably satisfactory to both First Place and
Franklin, substantially to the effect that, on the basis of facts,
representations and assumptions set forth in such opinion which are consistent
with the state of facts existing at the Effective Time, the Merger and
Subsidiary Merger will be treated as reorganizations within the meaning of
Section 368(a) of the Code. In rendering such opinion, First Place's Counsel may
require and rely upon representations and covenants, including those contained
in certificates of officers of First Place, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ Bank and others,
reasonably satisfactory to such counsel.
(g) No Burdensome Condition. None of the Requisite Regulatory
Approvals shall impose any term, condition or restriction upon First Place,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ Bank, the Bank or any of their respective Subsidiaries that
First Place, or Franklin, in good faith,
49
reasonably determines would so materially adversely affect the economic or
business benefits of the transactions contemplated by this Agreement to First
Place or Franklin as to render inadvisable in the reasonable good faith judgment
of First Place or Franklin, the consummation of the Merger (a "Burdensome
Condition").
7.2 Conditions to Obligations of First Place. The obligation of First
Place to effect the Merger is also subject to the satisfaction or waiver by
First Place at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Franklin set forth in this Agreement shall be true and correct in
all material respects as of the date of this Agreement and (except to the extent
such representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date. First Place shall
have received a certificate dated as of the Closing Date signed on behalf of
Franklin by the Chief Executive Officer and the Chief Financial Officer of
Franklin to the foregoing effect.
(b) Performance of Obligations of Franklin. Franklin shall
have performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date, and First Place
shall have received a certificate dated as of the Closing Date signed on behalf
of Franklin by the Chief Executive Officer and the Chief Financial Officer of
Franklin to such effect.
(c) Deposit of Certificates. Franklin shall have deposited
with the Exchange Agent all Certificates surrendered by holders of Franklin
Common Stock pursuant to Article II hereof.
(d) Receipt of Dividend. At or prior to the Effective Time,
First Place shall have received regulatory approval for a dividend of up to
$10.0 million from First Place Bank, which First Place contemplates applying
toward the transactions contemplated by this Agreement.
(e) Change in Stockholder Equity. The aggregate amount of
consolidated stockholders' equity (including Franklin Common Stock, additional
paid-in capital, retained earnings, accumulated other comprehensive income and
excluding treasury stock) of Franklin immediately prior to the Effective Time,
as shown by and reflected in its books and records of accounts on a consolidated
basis in accordance with GAAP, consistently applied, shall not be less than
$44,848,000. For purposes of this Section 7.2(e) hereof, (A) any expenses or
accruals after the date hereof relating to (i) termination or funding of any of
the Plans of Franklin or its Subsidiaries as contemplated herein, (ii)
adjustments made to reflect expenses and losses in the market value of
investments held by Franklin or its Subsidiaries, as required by GAAP, including
SFAS 115, (iii) expenses, restructuring charges and transaction expenses
(including but not limited to, accounting, investment banking and legal fees)
associated with this Agreement and the transactions contemplated herein, or (iv)
modification and amendments to loan and other policy and procedures as set forth
under Section 6.9 hereof that adversely impact stockholders' equity, shall be
excluded for purposes of calculation of Franklin's stockholders equity as
contemplated herein
50
(f) Receipt of Option Cancellation Agreements. Franklin shall
have delivered executed Option Cancellation Agreements from all of the Franklin
Optionholders at or prior to the Effective Time.
(g) Receipt of Voting Agreements. Franklin shall have
delivered executed voting agreements from its executive officers and directors
on the date of this Agreement.
(h) Consents Under Agreements. The consent, approval or waiver
of each person (other than the Governmental Entities) whose consent or approval
shall be required in order to permit the succession by the Surviving Corporation
or the Surviving Institution pursuant to the Merger or the Subsidiary Merger, as
the case may be, to any obligation, right or interest of Franklin or any
Subsidiary of Franklin under any loan or credit agreement, note, mortgage,
indenture, lease, license or other agreement or instrument shall have been
obtained, except where the failure to obtain such consent, approval or waiver
would not have a Materially Adversely Effect the economic or business benefits
of the transactions contemplated by this Agreement to First Place as to render
inadvisable, in the reasonable good faith judgment of First Place, the
consummation of the Merger.
(i) No Pending Governmental Actions. No proceeding initiated
by any Governmental Entity seeking an Injunction shall be pending.
(j) Franklin Account Database. Franklin will have caused its
Core system database (Eastpoint) to contain only current open accounts and those
accounts closed after January 1, 2003, with closed accounts prior to January 1,
2003 being purged from the database.
(k) Other Actions. Franklin shall have furnished First Place
with such certificates of its officers or others and such other documents to
evidence fulfillment of the conditions set forth in Section 7.1 and this Section
7.2 hereof as First Place may reasonably request.
7.3 Conditions to Obligations of Franklin. The obligation of Franklin
to effect the Merger is also subject to the satisfaction or waiver by Franklin
at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. The representations and
warranties of First Place set forth in this Agreement shall be true and correct
in all material respects as of the date of this Agreement and (except to the
extent such representations and warranties speak as of an earlier date) as of
the Closing Date as though made on and as of the Closing Date. Franklin shall
have received a certificate dated as of the Closing Date signed on behalf of
First Place by the Chief Executive Officer and the Chief Financial Officer of
First Place to the foregoing effect.
(b) Performance of Obligations of First Place. First Place
shall have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date, and
Franklin shall have received a certificate dated as of the Closing Date signed
on behalf of First Place by the Chief Executive Officer and the Chief Financial
Officer of First Place to such effect.
51
(c) No Pending Governmental Actions. No proceeding initiated
by any Governmental Entity seeking an injunction shall be pending.
(d) Deposit of Cash and Stock Consideration. First Place shall
have deposited with the Exchange Agent the Cash Consideration and the Stock
Consideration to be paid to holders of Franklin Common Stock pursuant to Article
II hereof.
(e) Other Actions. First Place shall have furnished Franklin
with such certificates of its officers or others and such other documents to
evidence fulfillment of the conditions set forth in Section 7.1 and this Section
7.3 hereof as Franklin may reasonably request.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of the matters presented in
connection with the Merger by the stockholders of Franklin:
(a) Mutual Consent. By mutual consent of Franklin and First
Place in a written instrument, if the Board of Directors of each so determines
by a two-thirds vote of the members of its entire Board;
(b) No Regulatory Approval. By either First Place or Franklin
upon written notice to the other party (i) 60 days after the date on which any
request or application for a Requisite Regulatory Approval shall have been
denied or withdrawn at the request or recommendation of the Governmental Entity
which must grant such Requisite Regulatory Approval, unless within the 60-day
period following such denial or withdrawal a petition for rehearing or an
amended application has been filed with the applicable Governmental Entity,
provided, however, that no party shall have the right to terminate this
Agreement pursuant to this Section 8.1(b)(i) hereof if such denial or request or
recommendation for withdrawal shall be due to the failure of the party seeking
to terminate this Agreement to perform or observe the covenants and agreements
of such party set forth herein; (ii) if any Governmental Entity of competent
jurisdiction shall have issued a final nonappealable order enjoining or
otherwise prohibiting the consummation of any of the transactions contemplated
by this Agreement; or (iii) there shall be a Burdensome Condition upon First
Place, the Bank, Franklin or Franklin Bank.
(c) Delay. By either First Place or Franklin if the Merger
shall not have been consummated on or before July 31, 2004, unless the failure
of the Closing to occur by such date shall be due to the failure of the party
seeking to terminate this Agreement to perform or observe the covenants and
agreements of such party set forth herein;
(d) Franklin Stockholder Approval. By either First Place or
Franklin (provided that if Franklin is the terminating party it shall not be in
material breach of any of its obligations under Section 6.2 hereof) if any
approval of the stockholders of Franklin required for the consummation of the
Merger shall not have been obtained by reason of the failure to obtain the
required vote at a duly held meeting of such stockholders or at any adjournment
or postponement thereof;
52
(e) Material Breach of Representations. By either First Place
or Franklin (provided that the terminating party is not then in material breach
of any representation, warranty, covenant or other agreement contained herein)
if there shall have been a material breach of any of the representations or
warranties set forth in this Agreement on the part of the other party, which
breach is not cured within 30 days following written notice to the party
committing such breach, or which breach, by its nature, cannot be cured within
30 days after notice with the breaching party failing to diligently pursue a
cure to completion. No representation or warranty of Franklin or First Place
shall be deemed untrue or incorrect, and no party hereto shall be deemed to have
breached a representation or warranty, as a consequence of the existence of any
fact, event or circumstance unless such fact, event or circumstance,
individually or taken together with all other facts, events or circumstances
inconsistent with any representation or warranty has had or is reasonably likely
to have a Material Adverse Effect. For purposes of this Agreement, "knowledge"
shall mean, with respect to a party hereto, actual knowledge of any officer of
that party with the title, if any, ranking not less than senior vice president
and that party's in-house counsel, if any. "Material Adverse Effect" means any
effect that (i) is material and adverse to the financial position, results of
operations or business of First Place and its Subsidiaries taken as a whole or
Franklin and its Subsidiaries taken as a whole, respectively, or (ii) would
materially impair the ability of First Place or Franklin to perform its
obligations under this Agreement or otherwise materially threaten or materially
impede the consummation of the Merger and the other transactions contemplated by
this Agreement; provided, however, that Material Adverse Effect shall not be
deemed to include the impact of (a) changes in thrift, banking and similar laws
of general applicability or interpretations thereof by courts or governmental
authorities, or other changes affecting depository institutions generally,
including changes in general economic conditions and changes in prevailing
interest and deposit rates, (b) changes in GAAP or regulatory accounting
requirements applicable to thrifts, banks and their holding companies generally,
(c) any modifications or changes to valuation policies and practices in
connection with the Merger or Subsidiary Merger or restructuring charges taken
in connection with the Merger or Subsidiary Merger, in each case in accordance
with GAAP, (d) changes resulting from expenses (such as legal, accounting and
investment bankers' fees) incurred in connection with this Agreement, (e)
actions or omissions of First Place or Franklin taken with the prior written
consent of Franklin or First Place, as applicable, in contemplation of the
transactions contemplated hereby, (f) the payments of any amounts due, or the
provision of any benefits to, any officer or employee under employment,
change-in-control or severance agreements as of the date hereof, and (g) acts of
terrorism or war.
(f) Material Breach of Covenants. By either First Place or
Franklin (provided that the terminating party is not then in material breach of
any representation, warranty, covenant or other agreement contained herein) if
there shall have been a material breach of any of the covenants or agreements
set forth in this Agreement on the part of the other party, which breach shall
not have been cured within thirty days following receipt by the breaching party
of written notice of such breach from the other party hereto; provided, however,
that neither party shall have the right to terminate this Agreement pursuant to
this Section 8.1(f) hereof unless such breach shall have a Material Adverse
Effect, as defined in Section 8.1(e) hereof, on the other party; or
(g) Failure to Recommend. By First Place, if (i) the Board of
Directors of Franklin do not recommend in the Proxy Statement that its
stockholders adopt this Agreement;
53
(ii) after recommending in the Proxy Statement that stockholders adopt this
Agreement, the Board of Directors shall have withdrawn, modified or qualified
such recommendation in any respect adverse in any respect to the interest of
First Place or (iii) Franklin fails to call, give proper notice of, convene and
hold the Franklin Stockholder Meeting.
(h) Certain Tender or Exchange Offers. By First Place if a
tender offer or exchange offer for 20% or more of the outstanding shares of
Franklin Common Stock is commenced (other than by First Place or a Subsidiary
thereof), and the Franklin Board recommends that the stockholders of Franklin
tender their shares in such tender or exchange offer or otherwise fails to
recommend that such stockholders reject such tender offer or exchange offer
within the ten-business day period specified in Rule 14e-2(a) under the Exchange
Act.
(i) Superior Proposal. At any time prior to the Franklin
Stockholder Meeting, by Franklin in order to concurrently enter into an
acquisition agreement or similar agreement (each, an "Acquisition Agreement")
with respect to a Superior Proposal which has been received and considered by
Franklin and the Franklin Board in full compliance with all of the requirements
of Section 6.8 hereof, provided, however, that this Agreement may be terminated
by Franklin pursuant to this Section 8.1(i) hereof only after the fifth business
day following Franklin's provision of written notice to First Place advising
First Place that the Franklin Board is prepared to accept a Superior Proposal,
and only if, during such five-business day period, First Place does not, in its
sole discretion, make an offer to Franklin that the Franklin Board determines in
good faith, after consultation with its financial and legal advisors, is at
least as favorable as the Superior Proposal.
(j) Decrease in Average Share Price. By Franklin, if the
Average Share Price shall be less than $16.15 (as the same may be adjusted to
reflect any Capital Change (as defined in Section 2.6 hereof)) and First Place
does not exercise its option to increase the Cash Consideration and/or Stock
Consideration (as provided below), prior to the expiration of the First Place
Option Period (defined below) subject, however, to the following. During the
First Place Option Period, First Place shall have the option during the
three-day period following the Determination Date ("First Place Option Period"),
in its sole and absolute discretion, of increasing the Stock Consideration or
the Cash Consideration or a combination thereof to be received by the holders of
Franklin Common Stock such that the Per Share Cash Consideration and Per Share
Stock Consideration or combination thereof is equal to $19.68 per share based
upon the Average Share Price. If First Place makes an election contemplated by
the preceding sentence by the end of the First Place Option Period, it shall
give prompt written notice to Franklin of such election, the method it intends
to pay the additional consideration (whether cash, stock or a combination
thereof) and the amounts of additional Cash Consideration, Stock Consideration
or combination thereof First Place will agree to pay at the Effective Time,
whereupon no termination shall have occurred pursuant to this Section 8.1(j)
hereof and this Agreement shall remain in effect in accordance with its terms,
except as the total Cash Consideration or Stock Consideration and the Aggregate
Merger Consideration shall have been so modified as provided in this Section
8.1(j) hereof, and any references in this Agreement to "Cash Consideration,"
"Per Share Cash Consideration," "Stock Consideration," "Per Share
Consideration," and "Aggregate Merger Consideration" shall thereafter be deemed
to refer to the as adjusted numbers pursuant to this Section 8.1(j) hereof. The
additional consideration paid pursuant to this Section 8.1(j) will be allocated
pro rata among those who have elected Stock
54
Election Shares, the 50/50 Election and No Election (only with respect to the
First Place Common Stock to be received). If First Place does not exercise its
option to increase the consideration as provided above, and if Franklin elects
to exercise its termination right as provided in the first sentence above, then
Franklin must give written notice within a two-day period after the expiration
of the First Place Option Period.
8.2 Effect of Termination.
(a) In the event of termination of this Agreement and the
abandonment of the Merger pursuant to this Article VIII hereof, no party to this
Agreement shall have any liability or further obligation to any other party
hereunder except (i) as set forth in this Section 8.2, Section 9.3 and 9.4
hereof and (ii) that termination will not relieve a breaching party from
liability for any willful breach of any covenant, agreement, representation or
warranty of this Agreement giving rise to such termination.
(b) In recognition of the efforts, expenses and other
opportunities foregone by First Place while structuring and pursuing the Merger,
the parties hereto agree that Franklin shall pay to First Place a termination
fee of $3.2 million (the "Termination Fee") in the manner set forth below if:
(i) this Agreement is terminated by First Place
pursuant to Section 8.1(g) or (h) hereof;
(ii) this Agreement is terminated by (A) First Place
pursuant to Section(s) 8.1(e) and (f) hereof, (B) by First Place pursuant to
Section 8.1(c) hereof (provided such delay is caused by Franklin), or (C) by
either First Place or Franklin pursuant to Section 8.1(d) hereof (other than by
reason of any breach by First Place or Franklin, respectively), and in the case
of any termination pursuant to clause (A), (B) or (C) an Acquisition Proposal
(as defined in Section 6.8 hereof) shall have been publicly announced or
otherwise communicated or made known to the Franklin Board of Directors or any
of its members (or any Person shall have publicly announced, communicated or
made known an intention, whether or not conditional, to make an Acquisition
Proposal) at any time after the date of this Agreement and prior to the taking
of the vote of the stockholders of Franklin contemplated by this Agreement at
the Franklin Stockholder Meeting, in the case of clause (C), or the date of
termination of this Agreement, in the case of clause (A) or (B); or
(iii) this Agreement is terminated by Franklin
pursuant to Section 8.1(i) hereof.
In the event the Termination Fee shall become payable pursuant to this Section
8.2(b) hereof, the Termination Fee shall be paid within five days following the
date of termination of this Agreement. Any amount that becomes payable pursuant
to this Section 8.2(b) hereof shall be paid by wire transfer of immediately
available funds to an account designated by First Place. The sums paid under
this Section 8.2(b) shall be the sole remedy available to First Place in the
event of a termination of this Agreement under 8.2(b)(i), (ii) and (iii).
55
(c) Franklin and First Place agree that the agreement
contained in Section 8.2(b) hereof is an integral part of the transactions
contemplated by this Agreement, that without such agreement First Place would
not have entered into this Agreement and that such amounts do not constitute a
penalty or liquidated damages in the event of a breach of this Agreement by
Franklin. If Franklin fails to pay First Place the amounts due under paragraph
(b) above within the time periods specified therein, Franklin shall pay the
costs and expenses (including reasonable legal fees and expenses) incurred by
First Place in connection with any action in which First Place prevails,
including the filing of any lawsuit, taken to collect payment of such amounts,
together with interest on the amount of any such unpaid amounts at the prime
lending rate prevailing during such period as published in The Wall Street
Journal, calculated on a daily basis from the date such amounts were required to
be paid until the date of actual payment.
8.3 Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party, but such
extension or waiver or failure to insist on strict compliance with an
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.
ARTICLE IX
GENERAL PROVISIONS
9.1 Closing. Subject to the terms and conditions of this Agreement and
the Bank Merger Agreement, the closing of the Merger (the "Closing") will take
place at 10:00 a.m. on a date to be specified by the parties, which shall be the
first day which is (a) the last business day of a month and (b) at least two
business days after the satisfaction or waiver (subject to applicable law) of
the latest to occur of the conditions set forth in Article VII hereof (the
"Closing Date"), at the offices of First Place's counsel unless another time,
date or place is agreed to in writing by the parties hereto.
9.2 Alternative Structure. Notwithstanding anything to the contrary
contained in this Agreement, subject to Franklin's consent, which consent shall
not be unreasonably withheld, prior to the Effective Time, First Place shall be
entitled to revise the structure of the Merger and/or the Subsidiary Merger and
related transactions provided that each of the transactions comprising such
revised structure shall (i) fully qualify as, or fully be treated as part of,
one or more tax-free reorganizations within the meaning of Section 368(a) of the
Code, and not subject any of the stockholders of Franklin to adverse tax
consequences or change the amount of consideration to be received by such
stockholders, (ii) be capable of consummation in as timely a manner as the
structure contemplated herein and (iii) not otherwise be prejudicial to the
interests of the stockholders of Franklin. This Agreement and any related
documents shall be appropriately amended in order to reflect any such revised
structure.
56
9.3 Nonsurvival of Representations, Warranties and Agreements. None of
the representations, warranties, covenants and agreements in this Agreement or
in any instrument delivered pursuant to this Agreement shall survive the
Effective Time (except for those covenants and agreements contained herein and
therein which by their terms apply in whole or in part after the Effective Time)
or the termination of this Agreement if this Agreement is terminated prior to
the Effective Time (other than Sections 6.6(c), 8.1, 8.2 and this Article IX
hereof, which shall survive any such termination). Notwithstanding anything in
the foregoing to the contrary, no representations, warranties, agreements and
covenants contained in this Agreement shall be deemed to be terminated or
extinguished so as to deprive either Party hereto or any of their affiliates of
any defense at law or in equity which otherwise would be available against the
claims of any person.
9.4 Expenses. Except as costs and expenses may be payable pursuant to
Section 8.2 hereof, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby, including, without
limitation, fees and expenses of its own financial consultants, accountants and
counsel shall be paid by the party incurring such expense, provided, however,
that all filing and other fees paid to the SEC or any other Governmental Entity
in connection with the Merger, the Subsidiary Merger and other transactions
contemplated thereby shall be borne by First Place, provided, further, however,
that nothing contained herein shall limit either party's rights to recover any
liabilities or damages arising out of the other party's willful breach of any
provision of this Agreement.
9.5 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation), mailed by registered or certified mail (return receipt requested)
or delivered by an express courier (with confirmation) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) if to First Place, to:
First Place Financial Corp.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
President and Chief Executive Officer
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇ LLP
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. Passaic, Jr.
57
(b) if to Franklin, to:
Franklin Bancorp, Inc.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Chairman of the Board
with a copy to:
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
9.6 Interpretation. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation." The phrases "the date
of this Agreement," "the date hereof" and terms of similar import, unless the
context otherwise requires, shall be deemed to refer to November 10, 2003.
9.7 Entire Agreement. This Agreement (including the documents and the
instruments referred to herein) constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof, other than the
Confidentiality Agreement entered into by First Place on September 5, 2003 and
the Confidentiality Agreement entered into by Franklin on October 24, 2003 and
the Bank Merger Agreement.
9.8 Governing Law. This Agreement shall be governed and construed in
accordance with the law of the State of Delaware, without regard to any
applicable conflicts of law.
9.9 Enforcement of the Agreement. The Parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
9.10 Severability. Except to the extent that application of this
Section 9.10 hereof would have a Material Adverse Effect on Franklin or First
Place and their respective Subsidiaries taken as a whole, any term or provision
of this Agreement which is invalid or unenforceable in any jurisdiction shall,
as to that jurisdiction, be ineffective to the extent of such invalidity or
58
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable. In all
such cases, the parties shall use their reasonable best efforts to substitute a
valid, legal and enforceable provision which, insofar as practicable, implements
the original purposes and intents of this Agreement.
9.11 Amendment. Subject to compliance with applicable law, this
Agreement may be amended by the parties hereto, by action taken or authorized by
their respective Boards of Directors, at any time before or after adoption of
the Agreement by the stockholders of either Franklin or First Place; provided,
however, that after adoption of the Agreement by Franklin's stockholders, there
may not be, without further approval of such stockholders, any amendment of this
Agreement which reduces the amount or changes the form of the consideration to
be delivered to Franklin stockholders hereunder other than as contemplated by
this Agreement or as otherwise required by applicable law. This Agreement may
not be amended except by an instrument in writing signed on behalf of each of
the parties hereto.
9.12 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other Party. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.
9.13 Counterparts. This Agreement may be executed in counterparts, all
of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each of the Parties and
delivered to the other Party, it being understood that each Party need not sign
the same counterpart.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
59
IN WITNESS WHEREOF, First Place and Franklin have caused this Agreement
to be executed by their respective officers thereunto duly authorized as of the
date first above written.
FIRST PLACE FINANCIAL CORP.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President and Chief Executive
Officer
Attest:
/s/ J. ▇▇▇▇▇ ▇▇▇▇
------------------------------------
Name: J. ▇▇▇▇▇ ▇▇▇▇
Title: General Counsel and Secretary
FRANKLIN BANCORP, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman of the Board
Attest:
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Secretary
60