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AGREEMENT AND PLAN OF MERGER
DATED AS OF MAY 3, 1999
BY AND BETWEEN
CITIZENS BANCSHARES COMPANY
AND
MBLA FINANCIAL CORPORATION
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TABLE OF CONTENTS
PAGE NO.
Introductory Statement.........................................................4
ARTICLE I
THE MERGER...............................................................4
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Section 1.1. Structure of the Merger....................................4
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Section 1.2. Effect on Outstanding Shares of MBLA Common Stock..........4
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Section 1.3. Exchange Procedures........................................6
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Section 1.4. Effect on Outstanding Shares of Acquisition Sub
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Common Stock...............................................7
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Section 1.5. Stock Options..............................................7
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Section 1.6. Bank Merger................................................8
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Section 1.7. Directors and Officers of MBLA at Effective Time...........8
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Section 1.8. Alternative Structure......................................8
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Section 1.9. Certificate of Incorporation and Bylaws of the Surviving
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Corporation................................................8
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ARTICLE II
REPRESENTATIONS AND WARRANTIES...........................................8
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Section 2.1. Disclosure Letters.........................................8
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Section 2.2. Standards..................................................9
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Section 2.3. Representations and Warranties of MBLA.....................9
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Section 2.4. Representations and Warranties of Citizens................23
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ARTICLE III
CONDUCT PENDING THE MERGER..............................................26
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Section 3.1. Conduct of MBLA's Business Prior to the Effective Time....26
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Section 3.2. Forbearance by MBLA.......................................27
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Section 3.3. Conduct of Citizens's Business Prior to the Effective
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Time......................................................30
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ARTICLE IV
COVENANTS...............................................................30
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Section 4.1. Acquisition Proposals.....................................30
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Section 4.2. Certain Policies of MBLA..................................31
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Section 4.3. Access and Information....................................32
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Section 4.4. Certain Filings, Consents and Arrangements................33
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Section 4.5. Antitakeover Provisions...................................33
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Section 4.6. Additional Agreements.....................................33
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Section 4.7. Publicity.................................................33
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Section 4.8. Stockholders Meetings.....................................33
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Section 4.9. Proxy Statement...........................................34
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Section 4.10. Notification of Certain Matters...........................34
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Section 4.11. Employees, Directors and Officers.........................34
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Section 4.12. Indemnification...........................................35
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Section 4.13. Year 2000.................................................37
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ARTICLE V
CONDITIONS TO CONSUMMATION..............................................37
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Section 5.1. Conditions to Each Party's Obligations....................37
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Section 5.2. Conditions to the Obligations of Citizens and
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Citizens Bank.............................................38
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Section 5.3. Conditions to the Obligations of MBLA and Macon Building
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& Loan....................................................38
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ARTICLE VI
TERMINATION.............................................................39
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Section 6.1. Termination...............................................39
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Section 6.2. Termination Fee...........................................40
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Section 6.3 Effect of Termination.....................................40
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ARTICLE VII
CLOSING, EFFECTIVE DATE AND EFFECTIVE TIME..............................41
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Section 7.1. Effective Date and Effective Time.........................41
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Section 7.2. Deliveries at the Closing.................................41
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ARTICLE VIII
CERTAIN OTHER MATTERS...................................................41
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Section 8.1. Certain Definitions; Interpretation.......................41
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Section 8.2. Survival..................................................42
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Section 8.3. Waiver; Amendment.........................................42
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Section 8.4. Counterparts..............................................42
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Section 8.5. Governing Law.............................................42
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Section 8.6. Expenses..................................................42
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Section 8.7. Notices...................................................42
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Section 8.8. Entire Agreement; etc.....................................43
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Section 8.9. Successors and Assigns; Assignment........................43
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AGREEMENT AND PLAN OF MERGER
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This is an AGREEMENT AND PLAN OF MERGER, dated as of the 3rd day
of May, 1999 ("AGREEMENT"), by and between Citizens Bancshares Company, a
Missouri corporation ("CITIZENS"), and MBLA Financial Corporation, a Delaware
corporation ("MBLA").
INTRODUCTORY STATEMENT
The Board of Directors of each of Citizens and MBLA (i) has
determined that this Agreement and the business combination and related
transactions contemplated hereby are in the best interests of Citizens and MBLA,
respectively, and in the best interests of their respective stockholders and
(ii) has approved, at meetings of each of such Boards of Directors, this
Agreement.
Citizens and MBLA desire to make certain representations, warranties
and agreements in connection with the business combination and related
transactions provided for herein and to prescribe various conditions to such
transactions.
In consideration of their mutual promises and obligations hereunder,
the parties hereto adopt and make this Agreement and prescribe the terms and
conditions hereof and the manner and basis of carrying it into effect, which
shall be as follows:
ARTICLE I
THE MERGER
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Section 1.1. Structure of the Merger. Prior to the Effective Date
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(as defined in SECTION 7.1), Citizens will form a Delaware corporation that will
be a wholly-owned subsidiary of Citizens ("ACQUISITION SUB"). On the Effective
Date, Acquisition Sub will merge with and into MBLA ("MERGER"), with MBLA being
the surviving entity, pursuant to the provisions of, and with the effect
provided in, the Delaware General Corporation Law ("DGCL"). Upon consummation of
the Merger, the separate corporate existence of Acquisition Sub shall cease.
MBLA shall be the surviving corporation in the Merger and shall continue to be
governed by the laws of the State of Delaware and its name and separate
corporate existence, with all of its rights, privileges, immunities, powers and
franchises, shall continue unaffected by the Merger. From and after the
Effective Time (as defined in SECTION 7.1), MBLA shall possess all of the
properties and rights and be subject to all of the liabilities and obligations
of Acquisition Sub, all as more fully described in the DGCL.
Section 1.2. Effect on Outstanding Shares of MBLA Common Stock.
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(a) By virtue of the Merger, automatically and without any action on
the part of the holder thereof, each share of common stock, par value $.01 per
share, of MBLA ("MBLA COMMON STOCK") issued and outstanding at the Effective
Time, other than Excluded Shares (as
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defined below), shall become and be converted into the right to receive $24.15
in cash, subject to adjustment as described below (the "MERGER CONSIDERATION").
"EXCLUDED SHARES" shall consist of (i) shares the holder of
which pursuant to any applicable law providing for dissenters' or appraisal
rights is entitled to receive payment in accordance with the provisions of any
such law, such holder to have only the rights provided in any such law (the
"DISSENTERS' SHARES"), (ii) shares held directly or indirectly by Citizens
(other than shares held in a fiduciary capacity or in satisfaction of a debt
previously contracted) and (iii) shares held by MBLA as treasury stock.
(b) The Merger Consideration shall be increased or decreased, as the
case may be, by an amount equal to the Net Worth (as defined below) of MBLA as
of the last day of the month prior to the month in which the Effective Time
shall occur minus the sum of $28,390,000 and the Excess Transaction Costs (as
hereinafter defined) divided by the sum of the number of shares of MBLA Common
Stock issued and outstanding on the Effective Date and the number of shares of
MBLA Common Stock subject to MBLA Options (as defined in SECTION 1.5) on the
Effective Date. "NET WORTH" shall mean the consolidated stockholders' equity of
MBLA calculated in accordance with generally accepted accounting principles,
consistently applied ("GAAP"), excluding any changes in unrealized gain on
securities available for sale after December 31, 1998 and any reductions for
attorneys' fees up to $75,000 incurred after March 16, 1999 relating to the
transactions contemplated by this Agreement and financial advisors' fees up to
$300,000. Furthermore, Net Worth shall be exclusive of the effect of any
payments made or expenses incurred under the terms of existing employment
agreements (solely with respect to termination payments and post-termination
benefits), existing salary continuation agreements, existing director retirement
plans or with respect to the termination of any existing data processing
contract, each as identified in MBLA's Disclosure Letter (as defined in SECTION
2.1). "EXCESS TRANSACTION COSTS" shall mean the sum of the following items: (i)
the amount, if any, by which attorneys' fees incurred by MBLA after March 16,
1999 and on or prior to the Effective Date in connection with the transactions
contemplated by this Agreement exceed $75,000; and (ii) the amount, if any, by
which financial advisor's fees incurred by MBLA on or prior to the Effective
Date exceed $300,000, in each case only to the extent that such Excess
Transaction Costs are not reflected in the Net Worth of MBLA.
(c) If, between the date of this Agreement and the Effective Time,
the outstanding shares of MBLA Common Stock shall have been changed into a
different number of shares or into a different class by reason of any stock
dividend, subdivision, reclassification, recapitalization, split, combination or
exchange of shares, the Merger Consideration shall be adjusted correspondingly
to the extent appropriate to reflect such change in the number of outstanding
shares.
(d) As of the Effective Time, each Excluded Share, other than
Dissenters' Shares, shall be cancelled and retired and shall cease to exist, and
no exchange or payment shall be made with respect thereto.
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Section 1.3. Exchange Procedures.
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(a) Appropriate transmittal materials ("LETTER OF TRANSMITTAL")
shall be mailed as soon as reasonably practicable after the Effective Time, and
in no event later than 5 business days thereafter, to each holder of record of
MBLA Common Stock as of the Effective Time. A Letter of Transmittal will be
deemed properly completed only if accompanied by certificates representing all
shares of MBLA Common Stock to be converted thereby.
(b) At and after the Effective Time, each certificate ("MBLA
CERTIFICATE") previously representing shares of MBLA Common Stock (except as
specifically set forth in SECTION 1.2) shall represent only the right to receive
the Merger Consideration multiplied by the number of shares of MBLA Common Stock
previously represented by the MBLA Certificate.
(c) Prior to the Effective Time, Citizens shall deposit, or shall
cause to be deposited, in a segregated account with Citizens Bank, which shall
act as exchange agent ("EXCHANGE AGENT") for the benefit of the holders of
shares of MBLA Common Stock, for exchange in accordance with this SECTION 1.3,
an amount of cash sufficient to pay the aggregate Merger Consideration to be
paid with respect to the outstanding shares of MBLA Common Stock pursuant to
SECTION 1.2.
(d) The Letter of Transmittal shall (i) specify that delivery shall
be effected, and risk of loss and title to the MBLA Certificates shall pass,
only upon delivery of the MBLA Certificates to the Exchange Agent, (ii) be in a
form and contain any other provisions as Citizens may reasonably determine and
(iii) include instructions for use in effecting the surrender of the MBLA
Certificates in exchange for the Merger Consideration. Upon the proper surrender
of the MBLA Certificates to the Exchange Agent, together with a properly
completed and duly executed Letter of Transmittal, the holder of such MBLA
Certificates shall be entitled to receive in exchange therefor a check in the
amount equal to the cash that such holder has the right to receive pursuant to
SECTION 1.2. MBLA Certificates so surrendered shall forthwith be canceled. As
soon as practicable, but no later than 10 business days following receipt of the
properly completed Letter of Transmittal and any necessary accompanying
documentation, the Exchange Agent shall issue a check as provided herein. If
there is a transfer of ownership of any shares of MBLA Common Stock not
registered in the transfer records of MBLA, the Merger Consideration shall be
issued to the transferee thereof if the MBLA Certificates representing such MBLA
Common Stock are presented to the Exchange Agent, accompanied by all documents
required, in the reasonable judgment of Citizens and the Exchange Agent, (x) to
evidence and effect such transfer and (y) to evidence that any applicable stock
transfer taxes have been paid.
(e) From and after the Effective Time there shall be no transfers on
the stock transfer records of MBLA of any shares of MBLA Common Stock. If, after
the Effective Time, MBLA Certificates are presented to Citizens, they shall be
canceled and exchanged for the Merger Consideration deliverable in respect
thereof pursuant to this Agreement in accordance with the procedures set forth
in this SECTION 1.3.
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(f) Any portion of the aggregate amount of cash to be paid pursuant
to SECTION 1.2 that remains unclaimed by the stockholders of MBLA for 12 months
after the Effective Time shall be repaid by the Exchange Agent to Citizens upon
the written request of Citizens. After such request is made, any stockholders of
MBLA who have not theretofore complied with this SECTION 1.3 shall look only to
Citizens for the Merger Consideration deliverable in respect of each share of
MBLA Common Stock such stockholder holds, as determined pursuant to SECTION 1.2
of this Agreement, without any interest thereon. If outstanding MBLA
Certificates are not surrendered prior to the date on which such payments would
otherwise escheat to or become the property of any governmental unit or agency,
the unclaimed items shall, to the extent permitted by any abandoned property,
escheat or other applicable laws, become the property of Citizens (and, to the
extent not in its possession, shall be paid over to it), free and clear of all
claims or interest of any person previously entitled to such claims.
Notwithstanding the foregoing, neither the Exchange Agent nor any party to this
Agreement (or any affiliate thereof) shall be liable to any former holder of
MBLA Common Stock for any amount delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(g) Citizens and the Exchange Agent shall be entitled to rely upon
MBLA's stock transfer books to establish the identity of those persons entitled
to receive the Merger Consideration, which books shall be conclusive with
respect thereto. In the event of a dispute with respect to ownership of stock
represented by any MBLA Certificate, Citizens and the Exchange Agent shall be
entitled to deposit any Merger Consideration represented thereby in escrow with
an independent third party and thereafter be relieved with respect to any claims
thereto.
(h) If any MBLA Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such MBLA Certificate to be lost, stolen or destroyed and, if required by the
Exchange Agent, the posting by such person of a bond in such amount as the
Exchange Agent may direct as indemnity against any claim that may be made
against it with respect to such MBLA Certificate, the Exchange Agent will issue
in exchange for such lost, stolen or destroyed MBLA Certificate the Merger
Consideration deliverable in respect thereof pursuant to SECTION 1.2.
Section 1.4. Effect on Outstanding Shares of Acquisition Sub Common
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Stock. By virtue of the Merger, automatically and without any action on the part
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of the holder thereof, each share of Common Stock of Acquisition Sub issued and
outstanding at the Effective Time shall be converted into one share of the
Common Stock of MBLA, as the surviving corporation.
Section 1.5. Stock Options. At the Effective Time, each option to
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acquire shares of MBLA Common Stock (an "MBLA OPTION") granted pursuant to the
1993 Incentive Stock Option Plan and the 1993 Stock Option Plan for Outside
Directors (together, the "MBLA OPTION PLANS") that is then outstanding and
unexercised shall be canceled, and in lieu thereof the holders of such options
shall be paid in cash an amount equal to the product of (i) the number of shares
of MBLA Common Stock subject to such option at the Effective Time and (ii) an
amount equal to the excess of the Merger Consideration over the exercise price
per share of such option,
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net of any cash which must be withheld under federal and state income and
employment tax requirements. At the Effective Time the MBLA Option Plans shall
be deemed terminated.
Section 1.6. Bank Merger. Concurrently with or as soon as
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practicable after the execution and delivery of this Agreement, Citizens Bank
and Trust Company ("CITIZENS BANK"), a wholly-owned subsidiary of Citizens, and
Macon Building and Loan Association, F.A. ("MACON BUILDING & LOAN"), a
wholly-owned subsidiary of MBLA, shall enter into the Plan of Bank Merger, in
the form attached hereto as EXHIBIT A, pursuant to which the merger of Macon
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Building & Loan with and into Citizens Bank ("BANK MERGER") will be effected.
The parties hereto intend that the Bank Merger shall become effective on the
Effective Date and shall take all actions necessary or appropriate to cause the
Bank Merger to become effective immediately following the Effective Time.
Section 1.7. Directors and Officers of MBLA at Effective Time. At
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the Effective Time, the directors and officers of MBLA shall consist of the
directors and officers of Acquisition Sub serving immediately prior to the
Effective Time, each to hold office in accordance with the Certificate of
Incorporation and Bylaws of the surviving corporation until their respective
successors are duly elected or appointed and qualified.
Section 1.8. Alternative Structure. Notwithstanding anything to the
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contrary contained in this Agreement, prior to the Effective Time, Citizens may
specify that the structure of the transactions contemplated hereby be revised
and the parties shall enter into such alternative transactions as Citizens may
determine to effect the purposes of this Agreement; PROVIDED, HOWEVER, that such
revised structure shall not (i) alter or change the amount or kind of the Merger
Consideration or the treatment of MBLA Options or the economic benefits of the
transactions contemplated hereby to the holders of MBLA Common Stock, (ii)
diminish the benefits to be received by the directors, officers or employees of
MBLA or Macon Building & Loan as set forth in or as contemplated by this
Agreement, or (iii) materially impede or delay the receipt of any approval
referred to in this Agreement. This Agreement and any related documents shall be
appropriately amended in order to reflect any such revised structure.
Section 1.9. Certificate of Incorporation and Bylaws of the
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Surviving Corporation. The Certificate of Incorporation and Bylaws of MBLA in
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effect immediately prior to the Effective Time shall be the Certificate of
Incorporation and Bylaws of the surviving corporation from and after the
Effective Time until amended as provided by law.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
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Section 2.1. Disclosure Letters. Prior to the execution and delivery
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of this Agreement, MBLA and Citizens have each delivered to the other a letter
(each, its "DISCLOSURE LETTER") setting forth, among other things, facts,
circumstances and events the disclosure of which is required or appropriate in
relation to any or all of their respective representations and warranties (and
making specific reference to the Section of this Agreement to which they
relate);
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PROVIDED, that (a) no such fact, circumstance or event is required to be set
forth in the Disclosure Letter as an exception to a representation or warranty
if its absence is not reasonably likely to result in the related representation
or warranty being deemed untrue or incorrect under the standards established by
SECTION 2.2 and (b) the mere inclusion of a fact, circumstance or event in a
Disclosure Letter shall not be deemed an admission by a party that such item
represents a material exception or that such item is reasonably likely to result
in a Material Adverse Effect (as defined in SECTION 2.2(B)).
Section 2.2. Standards.
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(a) No representation or warranty of MBLA or Citizens contained in
SECTIONS 2.3 or 2.4, respectively, shall be deemed untrue or incorrect, and no
party hereto shall be deemed to have breached a representation or warranty, on
account of the existence of any fact, circumstance or event unless, as a direct
or indirect consequence of such fact, circumstance or event, individually or
taken together with all other facts, circumstances or events inconsistent with
any paragraph of SECTIONS 2.3 or 2.4, as applicable, there is reasonably likely
to exist a Material Adverse Effect. MBLA's representations, warranties and
covenants contained in this Agreement shall not be deemed to be untrue or
breached as a result of effects arising solely from actions taken pursuant to
this Agreement or in compliance with a written request of Citizens.
(b) As used in this Agreement, the term "MATERIAL ADVERSE EFFECT"
means either (i) an effect which is material and adverse to the business,
financial condition or results of operations of MBLA or Citizens, as the context
may dictate, and its Subsidiaries (as defined herein) taken as a whole;
PROVIDED, HOWEVER, that any such effect resulting from any (A) changes in laws,
rules or regulations or generally accepted accounting principles or regulatory
accounting requirements or interpretations thereof that apply to both Citizens
and Citizens Bank and MBLA and Macon Building & Loan, as the case may be, or to
similarly situated financial and/or depository institutions or (B) changes in
economic conditions affecting financial institutions generally, including but
not limited to, changes in the general level of market interest rates shall not
be considered in determining if a Material Adverse Effect has occurred; or (ii)
the failure of a representation or warranty contained in SECTIONS 2.3(A)(I),
(III) and (IV), SECTION 2.3(B), SECTION 2.3(C), the first sentence of SECTION
2.3(I), SECTION 2.3(T), SECTIONS 2.4(A)(I) and (IV), SECTION 2.4(B), the last
sentence of each of SECTION 2.3(E) or SECTION 2.4(C) or the second sentence of
each of SECTION 2.3(F)(I) or SECTION 2.4(D)(I) to be true and correct in all
material respects.
(c) For purposes of this Agreement, "KNOWLEDGE" shall mean, with
respect to a party hereto, actual knowledge of any of the members of the Board
of Directors of that party or any officer of that party with the title ranking
not less than vice president.
Section 2.3. Representations and Warranties of MBLA. Subject to
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SECTIONS 2.1 and 2.2, MBLA represents and warrants to Citizens that, except as
disclosed in MBLA's Disclosure Letter:
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(a) Organization.
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(i) MBLA is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and is registered as a
savings and loan holding company under the Home Owners' Loan Act, as amended
("HOLA"). Macon Building & Loan is a stock savings association duly organized,
validly existing and in good standing under the laws of the United States of
America and is a wholly-owned Subsidiary (as defined below) of MBLA. Each
Subsidiary of MBLA other than Macon Building & Loan is a corporation, limited
liability company or partnership duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or organization.
Each of MBLA and its Subsidiaries has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted. As used in this Agreement, unless the context requires
otherwise, the term "SUBSIDIARY" when used with respect to any party means any
corporation or other organization, whether incorporated or unincorporated, which
is consolidated with such party for financial reporting purposes or which is
controlled, directly or indirectly, by such party.
(ii) MBLA and each of its Subsidiaries has the requisite
corporate power and authority and is duly qualified to do business and is in
good standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary.
(iii) MBLA's Disclosure Letter sets forth all of MBLA's
Subsidiaries and all entities (whether corporations, partnerships or similar
organizations), including the corresponding percentage ownership, in which MBLA
owns, directly or indirectly, 5% or more of the ownership interests as of the
date of this Agreement and indicates for each of MBLA's Subsidiaries, as of such
date, its jurisdiction of organization and the jurisdiction(s) wherein it is
qualified to do business. All such Subsidiaries and ownership interests are in
compliance with all applicable laws, rules and regulations relating to direct
investments in equity ownership interests. MBLA owns, either directly or
indirectly, all of the outstanding capital stock of each of its Subsidiaries. No
Subsidiary of MBLA other than Macon Building & Loan is an "insured depository
institution" as defined in the Federal Deposit Insurance Act, as amended
("FDIA"), and the applicable regulations thereunder. All of the shares of
capital stock of MBLA's Subsidiaries are fully paid, nonassessable and not
subject to any preemptive rights and are owned by MBLA or a Subsidiary of MBLA
free and clear of any claims, liens, encumbrances or restrictions (other than
those imposed by applicable federal and state securities laws), and there are no
agreements or understandings with respect to the voting or disposition of any
such shares.
(iv) The deposits of Macon Building & Loan are insured by the
Savings Association Insurance Fund of the Federal Deposit Insurance Corporation
("FDIC") to the extent provided in the FDIA.
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(b) Capital Structure.
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(i) The authorized capital stock of MBLA consists of 2,500,000
shares of MBLA Common Stock and 500,000 shares of preferred stock, par value
$.01 per share. As of the date of this Agreement (A) 1,247,021 shares of MBLA
Common Stock were issued and outstanding, (B) no shares of MBLA preferred stock
were issued and outstanding, (C) no shares of MBLA Common Stock were reserved
for issuance, except that 78,225 shares of MBLA Common Stock were reserved for
issuance pursuant to the MBLA Option Plans, (D) no shares of MBLA preferred
stock were reserved for issuance and (E) 518,190 shares of MBLA Common Stock
were held by MBLA in its treasury or by its Subsidiaries. The authorized capital
stock of Macon Building & Loan consists of 1,000,000 shares of common stock, par
value $1.00 per share, and 200,000 shares of preferred stock, par value $1.00
per share. As of the date of this Agreement, 1,000 shares of such common stock
were outstanding, no shares of such preferred stock were outstanding and all
outstanding shares of such common stock were, and as of the Effective Time will
be, owned by MBLA. All outstanding shares of capital stock of MBLA and Macon
Building & Loan are duly authorized and validly issued, fully paid and
nonassessable and not subject to any preemptive rights and, with respect to
shares of MBLA held by MBLA in its treasury or by its Subsidiaries and shares of
Macon Building & Loan, are free and clear of all liens, claims, encumbrances or
restrictions (other than those imposed by applicable federal and state
securities laws) and there are no agreements or understandings with respect to
the voting or disposition of any such shares. MBLA's Disclosure Letter sets
forth a complete and accurate list of all outstanding options to purchase MBLA
Common Stock that have been granted pursuant to the MBLA Option Plans, including
the names of the optionees, dates of grant, exercise prices, dates of vesting,
dates of termination and shares subject to each grant.
(ii) No bonds, debentures, notes or other indebtedness having
the right to vote on any matters on which stockholders may vote of MBLA are
issued or outstanding.
(iii) As of the date of this Agreement, except for options
granted pursuant to the MBLA Option Plans, neither MBLA nor any of its
Subsidiaries has or is bound by any outstanding subscriptions, options,
warrants, calls, rights, convertible securities, commitments or agreements of
any character obligating MBLA or any of its Subsidiaries to issue, deliver or
sell, or cause to be issued, delivered or sold, any additional shares of capital
stock of MBLA or any of its Subsidiaries or obligating MBLA or any of its
Subsidiaries to grant, extend or enter into any such option, warrant, call,
right, convertible security, commitment or agreement. As of the date hereof,
there are no outstanding contractual obligations of MBLA or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital
stock of MBLA or any of its Subsidiaries.
(c) Authority.
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(i) MBLA has all requisite corporate power and authority to
enter into this Agreement, and, subject to approval of this Agreement by the
requisite vote of MBLA's stockholders and receipt of all required regulatory or
governmental approvals, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and, subject to
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the approval of this Agreement by MBLA's stockholders, the consummation of the
transactions contemplated hereby, have been duly authorized by all necessary
corporate actions on the part of MBLA. This Agreement has been duly and validly
executed and delivered by MBLA and constitutes a valid and binding obligation of
MBLA, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights and remedies
generally and subject, as to enforceability, to general principles of equity,
whether applied in a court of law or a court of equity.
(ii) Macon Building & Loan has all requisite corporate power
and authority to enter into the Plan of Bank Merger and, subject to approval of
the Plan of Bank Merger by MBLA as the sole stockholder of Macon Building & Loan
and the receipt of all required regulatory or governmental approvals, to
consummate the transactions contemplated thereby. The execution and delivery of
the Plan of Bank Merger and the consummation of the transactions contemplated
thereby have been duly authorized by all necessary corporate actions on the part
of Macon Building & Loan. The Plan of Bank Merger, upon execution and delivery
by Macon Building & Loan, will be duly and validly executed and delivered by
Macon Building & Loan and will constitute a valid and binding obligation of
Macon Building & Loan, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency and similar laws affecting creditors' rights
and remedies generally and subject, as to enforceability, to general principles
of equity, whether applied in a court of law or a court of equity.
(d) Stockholder Approval; Fairness Opinion. The affirmative vote of
a majority of the outstanding shares of MBLA Common Stock entitled to vote on
this Agreement is the only vote of the stockholders of MBLA required for
approval of this Agreement and the consummation of the Merger and the related
transactions contemplated hereby. MBLA has received the written opinion of
Manchester Partners, L.L.C., a division of ▇.▇. ▇▇▇▇▇▇▇ & Co., to the effect
that, as of the date hereof, the Merger Consideration to be received by MBLA's
stockholders is fair, from a financial point of view, to such stockholders.
(e) No Violations; Consents. The execution, delivery and performance
of this Agreement by MBLA do not, and the consummation of the transactions
contemplated hereby will not, constitute (i) assuming receipt of all Requisite
Regulatory Approvals (as defined in SECTION 2.4(C)) and requisite stockholder
approvals, a breach or violation of, or a default under, any law, rule or
regulation or any judgment, decree, order, governmental permit or license to
which MBLA or any of its Subsidiaries (or any of their respective properties) is
subject, (ii) a breach or violation of, or a default under, the certificate of
incorporation or bylaws of MBLA or the similar organizational documents of any
of its Subsidiaries or (iii) a breach or violation of, or a default under (or an
event which, with due notice or lapse of time or both, would constitute a
default under), or result in the termination of, accelerate the performance
required by, or result in the creation of any lien, pledge, security interest,
charge or other encumbrance upon any of the properties or assets of MBLA or any
of its Subsidiaries under, any of the terms, conditions or provisions of any
note, bond, indenture, deed of trust, loan agreement or other agreement,
instrument or obligation to which MBLA or any of its Subsidiaries is a party, or
to which any of their respective properties or assets may be subject. The
consummation by MBLA and Macon Building & Loan of the transactions (including
the Bank Merger) contemplated hereby (exclusive
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of the effect of any changes effected pursuant to SECTION 1.7) will not require
any approval, consent or waiver under any such law, rule, regulation, judgment,
decree, order, governmental permit or license or the approval, consent or waiver
of any other party to any such agreement, or instrument, other than (x) the
approval of the holders of a majority of the outstanding shares of MBLA Common
Stock entitled to vote thereon, (y) the approval of MBLA as the sole stockholder
of Macon Building & Loan and (z) the consent of the Office of Thrift Supervision
("OTS"). As of the date hereof, the executive officers of MBLA know of no reason
pertaining to MBLA why any of the approvals referred to in this SECTION 2.3(E)
should not be obtained without the imposition of any material condition or
restriction described in the last sentence of SECTION 5.1(B).
(f) Reports and Financial Statements.
--------------------------------
(i) MBLA and each of its Subsidiaries have each 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
June 30, 1994 with (a) the FDIC, (b) the OTS, (c) the National Association of
Securities Dealers, Inc. ("NASD") and (d) the Securities and Exchange Commission
("SEC") (collectively, "MBLA'S REPORTS") and have paid all fees and assessments
due and payable in connection therewith. As of their respective dates, none of
MBLA's Reports contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. All of MBLA's Reports filed with the SEC complied in all
material respects with the applicable requirements of the Securities Exchange
Act of 1934, as amended ("EXCHANGE ACT") and the rules and regulations of the
SEC promulgated thereunder.
(ii) Each of the financial statements of MBLA included in
MBLA's Reports complied as to form, as of their respective dates of filing with
the SEC, in all material respects with applicable accounting requirements and
with the published rules and regulations of the SEC with respect thereto and
have been prepared in accordance with GAAP applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto or, in the
case of the unaudited financial statements, as permitted by the SEC). Each of
the consolidated statements of condition contained or incorporated by reference
in MBLA's Reports (including in each case any related notes and schedules) and
each of the consolidated statements of operations, consolidated statements of
cash flows and consolidated statements of changes in stockholders' equity,
contained or incorporated by reference in MBLA's Reports (including in each case
any related notes and schedules) fairly presented (a) the financial position of
the entity or entities to which it relates as of its date and (b) the results of
operations, stockholders' equity and cash flows, as the case may be, of the
entity or entities to which it relates for the periods set forth therein
(subject, in the case of unaudited interim statements, to normal year-end audit
adjustments that are not material in amount or effect), in each case in
accordance with GAAP, except as may be noted therein.
(g) Absence of Certain Changes or Events. Except as disclosed in
------------------------------------
MBLA's Reports filed on or prior to the date of this Agreement, since June 30,
1998, (i) MBLA and its
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Subsidiaries have not incurred any liability, except in the ordinary course of
their business consistent with past practice, (ii) MBLA and its Subsidiaries
have conducted their respective businesses only in the ordinary and usual course
of such businesses consistent with their past practices, (iii) there has not
been any Material Adverse Effect with respect to MBLA and its Subsidiaries,
taken as a whole, (iv) there has been no increase in the salary, compensation,
pension or other benefits payable or to become payable by MBLA or any of its
Subsidiaries to any of their respective directors, officers or employees, other
than in conformity with the policies and practices of such entity in the usual
and ordinary course of its business, (v) neither MBLA nor any of its
Subsidiaries has paid or made any accrual or arrangement for payment of bonuses
or special compensation of any kind or any severance or termination pay to any
of their directors, officers or employees, and (vi) there has been no change in
any accounting principles, practices or methods of MBLA or any of its
Subsidiaries other than as required by GAAP.
(h) Absence of Claims. No litigation, controversy, claim, action,
-----------------
suit or other legal administrative or arbitration proceeding before any court,
governmental agency or arbitrator is pending against MBLA or any of its
Subsidiaries and no such litigation, controversy, claim, action, suit or
proceeding has been threatened. To the knowledge of MBLA, there are no
investigations, reviews or inquiries by any court or governmental agency pending
or threatened against MBLA or any of its Subsidiaries.
(i) Absence of Regulatory Actions. Since June 30, 1994, neither MBLA
-----------------------------
nor any of its Subsidiaries is a party to any cease and desist order, written
agreement or memorandum of understanding with, or any commitment letter or
similar undertaking to, or has been subject to any action, proceeding, order or
directive by, or has been a recipient of any extraordinary supervisory letter
from any federal or state governmental authority charged with the supervision or
regulation of depository institutions or depository institution holding
companies or engaged in the insurance of bank and/or savings and loan deposits
("GOVERNMENT REGULATORS"), or has adopted any board resolutions at the request
of any Government Regulator, or has been advised by any Government Regulator
that it is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such action, proceeding, order,
directive, written agreement, memorandum of understanding, extraordinary
supervisory letter, commitment letter, board resolutions or similar undertaking.
There is no unresolved violation, criticism or exception by any Government
Regulators with respect to any report or statement relating to any examinations
of MBLA or any of its Subsidiaries.
(j) Taxes. All federal, state, local and foreign tax returns
-----
required to be filed by or on behalf of MBLA or any of its Subsidiaries have
been timely filed or requests for extensions have been timely filed and any such
extension shall have been granted and not have expired, and all such filed
returns are complete and accurate in all material respects. All taxes shown on
such returns, all taxes required to be shown on returns for which extensions
have been granted and all other taxes required to be paid by MBLA or any of its
Subsidiaries have been paid in full or adequate provision has been made for any
such taxes on MBLA's balance sheet (in accordance with GAAP). For purposes of
this SECTION 2.3(J), the term "taxes" shall include all income, franchise, gross
receipts, real and personal property, real property transfer and gains, wage and
employment taxes. As of the date of this Agreement, there is no audit
examination,
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deficiency assessment, tax investigation or refund litigation with respect to
any taxes of MBLA or any of its Subsidiaries, and no claim has been made by any
authority in a jurisdiction where MBLA or any of its Subsidiaries do not file
tax returns that MBLA or any such Subsidiary is subject to taxation in that
jurisdiction. All taxes, interest, additions and penalties due with respect to
completed and settled examinations or concluded litigation relating to MBLA or
any of its Subsidiaries have been paid in full or adequate provision has been
made for any such taxes on MBLA's balance sheet (in accordance with GAAP). MBLA
and its Subsidiaries have not executed an extension or waiver of any statute of
limitations on the assessment or collection of any material tax due that is
currently in effect. MBLA and each of its Subsidiaries has withheld and paid all
taxes required to have been withheld and paid in connection with amounts paid or
owing to any employee, independent contractor, creditor, stockholder or other
third party, and MBLA and each of its Subsidiaries has timely complied with all
applicable information reporting requirements under Part III, Subchapter A of
Chapter 61 of the Internal Revenue Code (the "IRC") and similar applicable state
and local information reporting requirements.
(k) Agreements.
----------
(i) MBLA and its Subsidiaries are not bound by any material
contract (as defined in Item 601(b)(10) of Regulation S-K promulgated by the
SEC), to be performed after the date hereof that has not been filed with or
incorporated by reference in MBLA's Reports. Neither MBLA nor any of its
Subsidiaries is a party to an oral or written (A) consulting agreement
(including data processing and software programming contracts) not terminable on
60 days' or less notice, (B) agreement with any present or former director,
officer or employee of MBLA or any of its Subsidiaries the benefits of which are
contingent, or the terms of which are materially altered, upon the occurrence of
a transaction involving MBLA or any of its Subsidiaries of the nature
contemplated by this Agreement, (C) agreement with respect to any employee or
director of MBLA or any of its Subsidiaries providing any term of employment or
compensation guarantee extending for a period longer than 60 days, (D) agreement
or plan, including any stock option plan, phantom stock or stock appreciation
rights plan, restricted stock plan or stock purchase plan, any of the benefits
of which will be increased, or the vesting or payment of the benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this 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
Agreement or (E) agreement containing covenants that limit the ability of MBLA
or any of its Subsidiaries to compete in any line of business or with any
person, or that involve any restriction on the geographic area in which, or
method by which, MBLA (including any successor thereof) or any of its
Subsidiaries may carry on its business (other than as may be required by law or
any regulatory agency) or (F) any lease or license with respect to any property,
real or personal, whether as landlord, tenant, licensor or licensee, involving a
liability or obligation as obligor in excess of $5,000 on an annual basis. To
the knowledge of MBLA, each of the agreements and other documents referenced in
MBLA's Disclosure Letter with respect to this SECTION 2.3(K)(I) is a valid,
binding and enforceable obligation of the parties sought to be bound thereby,
subject to applicable bankruptcy, insolvency and similar laws affecting
creditors' rights and remedies generally and subject, as to enforceability to
general principles of equity, whether applied in a court of law or a court of
equity. MBLA has
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previously delivered to Citizens true and complete copies of each agreement and
other documents referenced in MBLA's Disclosure Letter with respect to this
SECTION 2.3(K)(I).
(ii) Neither MBLA nor any of its Subsidiaries is in default
under (and no event has occurred which, with due notice or lapse of time or
both, would constitute a default under) or is in violation of any provision of
any note, bond, indenture, mortgage, deed of trust, loan agreement, lease or
other agreement to which it is a party or by which it is bound or to which any
of its respective properties or assets is subject and, to the knowledge of MBLA,
no other party to any such agreement (excluding any loan or extension of credit
made by MBLA or any of its Subsidiaries) is in default in any respect
thereunder.
(iii) MBLA and each of its Subsidiaries owns or possesses
valid and binding licenses and other rights to use without payment all patents,
copyrights, trade secrets, trade names, servicemarks and trademarks used in its
businesses, and neither MBLA nor any of its Subsidiaries has received any notice
of conflict with respect thereto that asserts the right of others. Each of MBLA
and its Subsidiaries has performed all the obligations required to be performed
by it and are not in default under any contact, agreement, arrangement or
commitment relating to any of the foregoing.
(l) Labor Matters. MBLA and its Subsidiaries are in material
-------------
compliance with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, and are not
engaged in any unfair labor practice. Neither MBLA nor any of 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 MBLA or any of
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
has any such proceeding been threatened, nor is there any strike, other labor
dispute or organizational effort involving MBLA or any of its Subsidiaries
pending or threatened.
(m) Employee Benefit Plans. MBLA's Disclosure Letter contains a
----------------------
complete and accurate list of all written or oral pension, retirement, stock
option, stock purchase, stock ownership, savings, stock appreciation right,
profit sharing, deferred compensation, consulting, bonus, group insurance,
severance and other benefit plans, funds, contracts, agreements and
arrangements, including, but not limited to, "employee benefit plans," as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), incentive and welfare policies, contracts, plans and
arrangements and all trust agreements related thereto with respect to any
present or former directors, officers or other employees of MBLA or any of its
Subsidiaries (hereinafter collectively referred to as the "MBLA EMPLOYEE
PLANS"). Prior to the date hereof, MBLA has provided to Citizens true and
complete copies of each of the MBLA Employee Plans, any related trust agreements
and any amendments thereto, together with the most recent determination letters
issued by the IRS with respect to any qualified plans and the most recent
actuarial valuation report, Form 5500 and summary plan description for each MBLA
Employee Plan. All of the MBLA Employee Plans comply in all material respects
with all
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applicable requirements of ERISA, the IRC and other applicable laws; with
respect to the MBLA Employee Plans, no event has occurred that would subject
MBLA or any of its Subsidiaries to a material liability under ERISA, the IRC or
any other applicable law; there has occurred no "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the IRC) which is likely to
result in the imposition of any penalties or taxes under Section 502(i) of ERISA
or Section 4975 of the IRC upon MBLA or any of its Subsidiaries; and all
required contributions to the MBLA Employee Plans through the date hereof have
been made. Neither MBLA nor any of its Subsidiaries has provided, or is required
to provide, security to any MBLA pension plan or to any single-employer plan of
an ERISA Affiliate pursuant to Section 401(a)(29) of the IRC. Neither MBLA, its
Subsidiaries, nor any ERISA Affiliate has contributed to any "multiemployer
plan," as defined in Section 3(37) of ERISA, on or after September 26, 1980.
There is no pending or threatened litigation, administrative action or
proceeding relating to any MBLA Employee Plan. There has been no announcement or
commitment by MBLA or any of its Subsidiaries to create an additional MBLA
Employee Plan, or to amend any MBLA Employee Plan, except for amendments
required by applicable law which do not materially increase the cost of such
MBLA Employee Plan; and, except as specifically identified in MBLA's Disclosure
Letter, MBLA and its Subsidiaries do not have any obligations for
post-retirement or post-employment benefits under any MBLA Employee Plan that
cannot be amended or terminated upon 60 days' notice or less without incurring
any liability thereunder, except for coverage required by Part 6 of Title I of
ERISA or Section 4980B of the IRC, or similar state laws, the cost of which is
borne by the insured individuals. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby will not result in
any payment or series of payments by MBLA or any of its Subsidiaries to any
person which is an "excess parachute payment" (as defined in Section 280G of the
IRC), increase or secure (by way of a trust or other vehicle) any benefits
payable under any MBLA Employee Plan or accelerate the time of payment or
vesting of any such benefit.
(n) Title to Assets. MBLA's Disclosure Letter contains a complete
---------------
and accurate list of all real property owned or leased by MBLA or any of its
Subsidiaries, including all properties of MBLA or any of its Subsidiaries
classified as "Real Estate Owned" or words of similar import (the "REAL
PROPERTY"). To the knowledge of MBLA, none of the buildings, structures or other
improvements located on the Real Property encroaches upon or over any adjoining
parcel or real estate or any easement or right-of-way. MBLA and each of its
Subsidiaries have good and marketable title to their respective properties and
assets (including any intellectual property asset such as any trademark, service
▇▇▇▇, tradename or copyright) and property acquired in a judicial foreclosure
proceeding or by way of a deed in lieu of foreclosure or similar transfer
whether real or personal, tangible or intangible, reflected on the consolidated
financial statements of MBLA as of June 30, 1998, or acquired after such date,
other than such items of personal property as have been disposed of in the
ordinary course of business since June 30, 1998, in each case free and clear of
any liens, security interests, encumbrances, mortgages, pledges, restrictions,
charges or rights or interests of others, except pledges to secure deposits and
other liens incurred in the ordinary course of business. Each lease pursuant to
which MBLA or any of its Subsidiaries is lessee or lessor is valid and in full
force and effect and neither MBLA nor any of its Subsidiaries, nor any other
party to any such lease is in default or in violation of any provisions of any
such lease. All material tangible properties of MBLA and each of its
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Subsidiaries are in a good state of maintenance and repair, conform with all
applicable ordinances, regulations and zoning laws and are considered by MBLA to
be adequate for the current business of MBLA and its Subsidiaries.
(o) Compliance with Laws. MBLA and each of its Subsidiaries has all
--------------------
permits, licenses, certificates of authority, orders and approvals of, and has
made all filings, applications and registrations with, all federal, state, local
and foreign governmental or regulatory bodies (each, a "GOVERNMENTAL ENTITY")
that are required in order to permit it to carry on its business as it is
presently conducted; all such permits, licenses, certificates of authority,
orders and approvals are in full force and effect, and, to the best knowledge of
MBLA, no suspension or cancellation of any of them is threatened. Since the date
of its incorporation, the corporate affairs of MBLA have not been conducted in
violation of any law, ordinance, regulation, order, writ, rule, decree or
approval of any Governmental Entity. Neither MBLA nor any of its Subsidiaries
are in material violation of, is, to the knowledge of MBLA, under investigation
with respect to any material violation of, or has been given notice or been
charged with any material violation of, any law, ordinance, regulation, order,
writ, rule, decree or condition to approval of any Governmental Entity.
(p) Fees. Other than financial advisory services performed for MBLA
----
by Manchester Partners, L.L.C., neither MBLA nor any of its Subsidiaries, nor
any of their respective officers, directors, employees or agents, has employed
any broker or finder or incurred any liability for any financial advisory fees,
brokerage fees, commissions or finder's fees, and no broker or finder has acted
directly or indirectly for MBLA or any of its Subsidiaries in connection with
this Agreement or the transactions contemplated hereby. MBLA has provided
Citizens with a true and correct copy of the contract between MBLA and
Manchester Partners, L.L.C.
(q) Environmental Matters. There is no suit, claim, action, demand,
---------------------
executive or administrative order, directive, investigation or proceeding
pending or threatened before any court, governmental agency or board or other
forum against MBLA or any of its Subsidiaries for alleged noncompliance
(including by any predecessor) with, or liability under, any Environmental Law
(as defined below) or relating to the presence of or release into the
environment of any Hazardous Material (as defined below), whether or not
occurring at or on a site owned, leased or operated by it or any of its
Subsidiaries. To MBLA's knowledge, the properties currently owned or operated by
MBLA or any of its Subsidiaries (including, without limitation, soil,
groundwater or surface water on, under or adjacent to the properties, and
buildings thereon) are not contaminated with and do not otherwise contain any
Hazardous Material other than as permitted under applicable Environmental Law.
Neither MBLA nor any of its Subsidiaries has received any notice, demand letter,
executive or administrative order, directive, request or other communication
(written or oral) for information from any federal, state, local or foreign
governmental entity or any third party indicating that it may be in violation
of, or liable under, any Environmental Law. To MBLA's knowledge, there are no
underground storage tanks on, in or under any properties owned or operated by
MBLA or any of its Subsidiaries and no underground storage tanks have been
closed or removed from any properties owned or operated by MBLA or any of its
Subsidiaries. To MBLA's knowledge, during the period of MBLA's or any of its
Subsidiaries' ownership or operation of any of their respective current
properties, there has been
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no contamination by or release of Hazardous Materials in, on, under or affecting
such properties. To MBLA's knowledge, prior to the period of MBLA's or any of
its Subsidiaries' ownership or operation of any of their respective current
properties, there was no contamination by or release of Hazardous Material in,
on, under or affecting such properties.
"ENVIRONMENTAL LAW" means (i) any federal, state or local law,
statute, ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, legal doctrine, order, directive, executive or administrative
order, judgment, decree, injunction, legal requirement or agreement with any
governmental entity relating to (A) the protection, preservation or restoration
of the environment (which includes, without limitation, air, water vapor,
surface water, groundwater, drinking water supply, structures, soil, surface
land, subsurface land, plant and animal life or any other natural resource), or
to human health or safety as it relates to Hazardous Materials, or (B) the
exposure to, or the use, storage, recycling, treatment, generation,
transportation, processing, handling, labeling, production, release or disposal
of, Hazardous Materials, in each case as amended and as now in effect. The term
Environmental Law includes all federal, state and local laws, rules, regulations
or requirements relating to the protection of the environment or health and
safety, including, without limitation, (i) the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Superfund
Amendments and Reauthorization Act of 1986, the Federal Water Pollution Control
Act of 1972, the Federal Clean Air Act, the Federal Clean Water Act, the Federal
Resource Conservation and Recovery Act of 1976 (including, but not limited to,
the Hazardous and Solid Waste Amendments thereto and Subtitle I relating to
underground storage tanks), the Federal Solid Waste Disposal and the Federal
Toxic Substances Control Act, the Federal Insecticide, Fungicide and Rodenticide
Act, the Federal Occupational Safety and Health Act of 1970 as it relates to
Hazardous Materials, the Federal Hazardous Substances Transportation Act, the
Emergency Planning and Community Right-To-Know Act, the Safe Drinking Water Act,
the Endangered Species Act, the National Environmental Policy Act, the Rivers
and Harbors Appropriation Act or any so-called "Superfund" or "Superlien" law,
each as amended and as now or hereafter in effect, and (ii) any common law or
equitable doctrine (including, without limitation, injunctive relief and tort
doctrines such as negligence, nuisance, trespass and strict liability) that may
impose liability or obligations for injuries or damages due to, or threatened as
a result of, the presence of or exposure to any Hazardous Material.
"HAZARDOUS MATERIAL" means any substance (whether solid, liquid or
gas) which is or could be detrimental to human health or safety or to the
environment, currently or hereafter listed, defined, designated or classified as
hazardous, toxic, radioactive or dangerous, or otherwise regulated, under any
Environmental Law, whether by type or by quantity, including any substance
containing any such substance as a component. Hazardous Material includes,
without limitation, any toxic waste, pollutant, contaminant, hazardous
substance, toxic substance, hazardous waste, special waste, industrial
substance, oil or petroleum, or any derivative or by-product thereof, radon,
radioactive material, asbestos, asbestos-containing material, urea formaldehyde
foam insulation, lead and polychlorinated biphenyl.
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(r) Loan Portfolio; Allowance; Asset Quality.
----------------------------------------
(i) With respect to each loan owned by MBLA or its
Subsidiaries in whole or in part, to MBLA's knowledge (A) the note and the
related security documents are each legal, valid and binding obligations of the
maker or obligor thereof, enforceable against such maker or obligor in
accordance with their terms, (B) the note and the related security documents,
copies of which are included in the loan files, are true and correct copies of
the documents they purport to be and have not been suspended, amended, modified,
canceled or otherwise changed except as otherwise disclosed by documents in the
applicable loan file and (C) MBLA or one of its Subsidiaries is the sole holder
of legal and beneficial title to each loan reflected in the consolidated
financial statements of MBLA except as otherwise disclosed in the applicable
loan file or on the books and records of MBLA and its Subsidiaries.
(ii) The allowance for loan losses reflected in MBLA's
statement of financial condition at December 31, 1998 was, and the allowance for
possible losses shown on the balance sheets in MBLA's Reports for periods ending
after December 31, 1998 will be, in the opinion of management, adequate to
provide for losses inherent in MBLA's loan portfolio.
(iii) MBLA's Disclosure Letter sets forth a true and complete
listing, as of March 31, 1999, of (A) all loans, leases, advances, credit
enhancements, guarantees, other extensions of credit, commitments and
interest-bearing assets of MBLA and its Subsidiaries (collectively, "LOANS")
that have been classified (whether regulatory or internal) as "Special Mention,"
"Substandard," "Doubtful," "Loss" or words of similar import listed by category,
including the amounts thereof; (B) Loans (1) that are contractually past due 90
days or more in the payment of principal and/or interest, (2) that are on a
non-accrual status, (3) where the interest rate terms have been reduced and/or
the maturity dates have been extended subsequent to the agreement under which
the Loan was originally created due to concerns regarding the borrower's ability
to pay in accordance with such initial terms, or (4) where a specific reserve
allocation exists in connection therewith, listed by category, including the
amounts thereof; and (C) Loans with any director, executive officer or five
percent or greater stockholder of MBLA or any of its Subsidiaries or any person,
corporation or enterprise controlling, controlled by or under common control
with any of the foregoing, including the amounts thereof. To the knowledge of
MBLA, neither MBLA nor any of its Subsidiaries is a party to any Loan that is in
violation of any law, regulation or rule of any Governmental entity. Any asset
of MBLA or any of its Subsidiaries that is classified as "Real Estate Owned" or
words of similar import that is included in any non-performing assets of MBLA or
any of its Subsidiaries is listed in MBLA's Disclosure Letter and is carried net
of reserves at the lower of cost or fair value, less estimated selling costs,
based on current independent appraisals or evaluations or current management
appraisals or evaluations; PROVIDED, HOWEVER, that "current" shall mean within
the past 12 months.
(s) Deposits. None of the deposits of MBLA or any of its
--------
Subsidiaries is a "brokered" deposit.
(t) Anti-takeover Provisions Inapplicable. MBLA and its Subsidiaries
-------------------------------------
have taken all actions required to exempt MBLA, Citizens, Acquisition Sub,
Citizens Bank, the
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Agreement, the Plan of Bank Merger, the Merger and the Bank Merger from any
provisions of an antitakeover nature contained in their organizational
documents, and the provisions of any federal or state "anti-takeover," "fair
price," "moratorium," "control share acquisition" or similar laws or
regulations.
(u) Material Interests of Certain Persons. No officer or director of
-------------------------------------
MBLA, or any "associate" (as such term is defined in Rule 12b-2 under the
Exchange Act of any such officer or director, has any material interest in any
material contract or property (real or personal), tangible or intangible, used
in or pertaining to the business of MBLA or any of its Subsidiaries.
(v) Insurance. In the opinion of management, MBLA and its
---------
Subsidiaries are presently insured for amounts deemed reasonable by management
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 MBLA and its Subsidiaries are in full
force and effect, MBLA and its Subsidiaries are not in default thereunder and
all material claims thereunder have been filed in due and timely fashion.
(w) Investment Securities; Derivatives.
----------------------------------
(i) Except for investments in Federal Home Loan Bank ("FHLB")
Stock, pledges to secure FHLB borrowings, and reverse repurchase agreements
entered into in arms-length transactions pursuant to normal commercial terms and
conditions and entered into in the ordinary course of business and restrictions
that exist for securities to be classified as "held to maturity," none of the
investments reflected in the consolidated balance sheet of MBLA at December 31,
1998, and none of the investment securities held by it or any of its
Subsidiaries since December 31, 1998, is subject to any restriction (contractual
or statutory) that would materially impair the ability of the entity holding
such investment freely to dispose of such investment at any time.
(ii) Except for adjustable-rate mortgage loans and
adjustable-rate advances, neither MBLA 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 a derivative contract (including
various combinations thereof) or owns securities that (a) are referred to
generically as "structured notes," "high risk mortgage derivatives," "capped
floating rate notes" or "capped floating rate mortgage derivatives" or (b) 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.
(x) Indemnification. Except as provided in the certificate of
---------------
incorporation or bylaws of MBLA and the similar governing documents of its
Subsidiaries, neither MBLA nor any Subsidiary is a party to any indemnification
agreement with any of its present or former directors, officers, employees,
agents or other persons who serve or served in any other capacity with any other
enterprise at the request of MBLA and, to the best knowledge of MBLA, there are
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no claims for which any such person would be entitled to indemnification under
the organization certificate of incorporation or bylaws of MBLA or the similar
governing documents of any of its Subsidiaries, under any applicable law or
regulation or under any indemnification agreement.
(y) Books and Records. The books and records of MBLA and its
-----------------
Subsidiaries on a consolidated basis have been, and are being, maintained in
accordance with applicable legal and accounting requirements and reflect in all
material respects the substance of events and transactions that should be
included therein.
(z) Corporate Documents. Complete and correct copies of the
-------------------
certificate of incorporation, bylaws and similar governing documents of MBLA and
each of MBLA's Subsidiaries, as in effect as of the date of this Agreement, have
previously been delivered to Citizens. The minute books of MBLA and Macon
Building & Loan constitute a complete and correct record of all actions taken by
their respective boards of directors (and each committee thereof) and their
stockholders. The minute books of each of MBLA's other Subsidiaries constitutes
a complete and correct record of all actions taken by their respective boards of
directors (and each committee thereof) and the stockholders of each such
Subsidiary.
(aa) Year 2000 Matters. MBLA and its Subsidiaries have completed a
-----------------
review of their computer systems to identify systems that could be affected by
the "Year 2000" issue and reasonably believe they have identified all such Year
2000 problems. MBLA's management has developed and commenced implementation of a
plan which is designed to complete any required initial changes to the computer
systems of MBLA and its Subsidiaries and to complete testing of those changes by
June 30, 1999 (the "Year 2000 Plan"), a true and complete copy of which has been
provided to Citizens. Between the date of this Agreement and the Effective Time,
MBLA shall use commercially practicable efforts to implement and/or continue to
undertake its Year 2000 Plan. Year 2000 issues have not had, and are not
reasonably expected to have, a Material Adverse Effect on MBLA and its
Subsidiaries, taken as a whole.
(bb) Proxy Statement. The information regarding MBLA to be included
---------------
in the proxy statement to be filed with the SEC by MBLA under the Exchange Act
and distributed in connection with MBLA's meeting of stockholders to vote upon
this Agreement and the Merger (as amended or supplemented from time to time, the
"PROXY STATEMENT") will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading.
(cc) Community Reinvestment Act Compliance. Macon Building & Loan is
-------------------------------------
in material compliance with the applicable provisions of the Community
Reinvestment Act ("CRA") and the regulations promulgated thereunder, and Macon
Building & Loan currently has a CRA rating of satisfactory or better. To MBLA's
knowledge, there is no fact or circumstance or set of facts or circumstances
that would cause Macon Building & Loan to fail to comply with such provisions or
cause the CRA rating of Macon Building & Loan to fall below satisfactory.
(dd) Undisclosed Liabilities. As of the date hereof, MBLA and its
-----------------------
Subsidiaries have not incurred any debt, liability or obligation of any nature
whatsoever (whether accrued,
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contingent, absolute or otherwise and whether due or to become due) except for
(i) liabilities reflected on or reserved against in the consolidated financial
statements of MBLA as of December 31, 1998, (ii) liabilities incurred since
December 31, 1998 in the ordinary course of business consistent with past
practice that, either alone or when combined with all similar liabilities, have
not had, and would not reasonably be expected to have, a Material Adverse Effect
on MBLA and its Subsidiaries, taken as a whole, and (iii) liabilities incurred
for legal, accounting, financial advising fees and out-of-pocket expenses in
connection with a proposed sale or merger of MBLA.
Section 2.4. Representations and Warranties of Citizens. Subject to
------------------------------------------
SECTIONS 2.1 and 2.2, Citizens represents and warrants to MBLA that, except as
specifically disclosed in Citizens's Disclosure Letter:
(a) Organization.
------------
(i) Citizens is a corporation duly organized, validly existing
and in good standing under the laws of the State of Missouri and is registered
as a bank holding company under the Bank Holding Company Act, as amended
("BCHA"). Citizens Bank is a bank duly organized, validly existing and in good
standing under the laws of the State of Missouri and is a Subsidiary of
Citizens. Each Subsidiary of Citizens other than Citizens Bank is a corporation,
limited liability company or partnership duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation or
organization. Each of Citizens and its Subsidiaries has all requisite corporate
power and authority to own, lease and operate its properties and to carry on its
business as now being conducted.
(ii) Citizens and each of its Subsidiaries has the requisite
corporate power and authority and is duly qualified to do business and is in
good standing in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification necessary.
(iii) All of the shares of capital stock of Citizens Bank are
fully paid, nonassessable and not subject to any preemptive rights and (except
for directors' qualifying shares) are owned by Citizens free and clear of any
claims, liens, encumbrances or restrictions (other than those imposed by
applicable federal and state securities laws) and there are no agreements or
understandings with respect to the voting or disposition of any such shares.
(iv) The deposits of Citizens Bank are insured by the Bank
Insurance Fund of the FDIC to the extent provided in the FDIA.
(b) Authority.
---------
(i) Citizens has all requisite corporate power and authority
to enter into this Agreement and, subject to receipt of all required regulatory
or governmental approvals, to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by the Boards of
Directors of Citizens. This Agreement has been duly and validly
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executed and delivered by Citizens and constitutes a valid and binding
obligation of Citizens, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency and similar laws affecting creditors' rights
and remedies generally and subject, as to enforceability, to general principles
of equity, whether applied in a court of law or a court of equity.
(ii) Citizens Bank has all requisite corporate power and
authority to enter into the Plan of Bank Merger and, subject to approval of the
Plan of Bank Merger by the stockholders of Citizens Bank and the receipt of all
required regulatory or governmental approvals, to consummate the transactions
contemplated thereby. The execution and delivery of the Plan of Bank Merger and,
subject to the approval of the stockholders of Citizens Bank, the consummation
of the transactions contemplated thereby, have been duly authorized by the Board
of Directors of Citizens Bank. The Plan of Bank Merger, upon execution and
delivery by Citizens Bank, will be duly and validly executed and delivered by
Citizens Bank and will constitute a valid and binding obligation of Citizens
Bank, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights and remedies
generally and subject, as to enforceability, to general principles of equity,
whether applied in a court of law or a court of equity.
(c) No Violations; Consents. The execution, delivery and performance
-----------------------
of this Agreement by Citizens do not, and the consummation of the transactions
contemplated hereby will not, constitute (i) assuming receipt of all Requisite
Regulatory Approvals, a breach or violation of, or a default under, any law,
rule or regulation or any judgment, decree, order, governmental permit or
license to which Citizens or any of its Subsidiaries (or any of their respective
properties) is subject, (ii) a breach or violation of, or a default under, the
articles of incorporation or bylaws of Citizens or the similar organizational
documents of any of its Subsidiaries or (iii) a breach or violation of, or a
default under (or an event which, with due notice or lapse of time or both,
would constitute a default under), or result in the termination of, accelerate
the performance required by, or result in the creation of any lien, pledge,
security interest, charge or other encumbrance upon any of the properties or
assets of Citizens or any of its Subsidiaries under, any of the terms,
conditions or provisions of any note, bond, indenture, deed of trust, loan
agreement or other agreement, instrument or obligation to which Citizens or any
of its Subsidiaries is a party, or to which any of their respective properties
or assets may be subject. The consummation by Citizens and Citizens Bank of the
transactions (including the Bank Merger) contemplated hereby (exclusive of the
effect of any changes effected pursuant to SECTION 1.7) will not require any
approval, consent or waiver under any such law, rule, regulation, judgment,
decree, order, governmental permit or license or the approval, consent or waiver
of any other party to any such agreement, or instrument, other than (x) the
approval of Citizens as the sole shareholder of Acquisition Sub, (y) the
approval of the shareholders of Citizens Bank, and (z) the approval of the Board
of Governors of the Federal Reserve System ("FRB") under the BHCA, the approval
of the Missouri Division of Finance under Chapter 362 of the Missouri Revised
Statutes, and the approval of the FDIC under Section 18(c) of the FDIA
(collectively, the "REQUISITE REGULATORY APPROVALS"). As of the date hereof, the
executive officers of Citizens know of no reason pertaining to Citizens why any
of the approvals referred to in this SECTION 2.4(C) should not be obtained
without the imposition of any material condition or restriction described in
the last sentence of SECTION 5.1(B).
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(d) Reports and Financial Statements.
--------------------------------
(i) Citizens and each of its Subsidiaries have each 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 December 31, 1996 with (a) the FDIC, (b) the FRB and (c) the Missouri
Division of Finance (collectively, "CITIZENS' REPORTS") and, to Citizens'
knowledge, have paid all fees and assessments due and payable in connection
therewith. As of their respective dates, none of Citizens' Reports contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements made therein, in light
of the circumstances under which they were made, not misleading.
(ii) The financial statements of Citizens, as of December 31,
1998 and 1997 and for each of the years in the three-year period ended December
31, 1998, have been prepared in accordance with GAAP applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto). The consolidated statements of condition at December 31, 1998 and 1997
(including in each case any related notes and schedules) and each of the
consolidated statements of operations, consolidated statements of cash flows and
consolidated statements of changes in stockholders' equity, for the years ended
December 31, 1998, 1997 and 1996 (including in each case any related notes and
schedules) fairly presented (a) the financial position of the entity or entities
to which it relates as of its date and (b) the results of operations,
stockholders' equity and cash flows, as the case may be, of the entity or
entities to which it relates for the periods set forth therein, in each case in
accordance with GAAP, except as may be noted therein.
(e) Absence of Certain Changes or Events. Except as disclosed in
------------------------------------
Citizens' Reports filed on or prior to the date of this Agreement, since
December 31, 1998, there has not been any Material Adverse Effect with respect
to Citizens and its Subsidiaries, taken as a whole, that would reasonably be
expected to prevent or adversely affect the ability of Citizens to obtain the
Requisite Regulatory Approvals.
(f) Absence of Claims. No litigation, proceeding, controversy, claim
-----------------
or action before any court or governmental agency is pending or has been
threatened against Citizens or any of its Subsidiaries that would reasonably be
expected to prevent or adversely affect or which seeks to prohibit the
consummation of the transactions contemplated by this Agreement.
(g) Absence of Regulatory Actions. Neither Citizens nor any of its
-----------------------------
Subsidiaries is a party to any cease and desist order, written agreement or
memorandum of understanding with, or any commitment letter or similar written
undertaking to, or is subject to any action, proceeding, order or directive by,
or is a recipient of any extraordinary supervisory letter from any Government
Regulator, or has adopted any board resolutions at the request of any Government
Regulator, nor has it been advised by any Governmental Regulator that it is
contemplating issuing or requesting (or is considering the appropriateness of
issuing or requesting) any such action, proceeding, order, directive, written
agreement, memorandum of
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understanding, extraordinary supervisory letter, commitment letter, board
resolutions or similar written undertaking.
(h) Year 2000 Matters. Citizens has completed a review of its
-----------------
computer systems to identify systems that could be affected by the "Year 2000"
issue and reasonably believes it has identified all Year 2000 problems.
Citizens' management has developed and commenced implementation of a plan which
is designed to complete any required initial changes to its computer systems and
to complete testing of those changes by December 31, 1999. Between the date of
this Agreement and the Effective Time, Citizens shall use commercially
practicable efforts to implement and/or continue to undertake such plan. Year
2000 issues are not reasonably expected to prevent or adversely affect the
ability of Citizens to obtain the Requisite Regulatory Approvals.
(i) Proxy Statement. The information regarding Citizens provided to
---------------
MBLA by Citizens for inclusion in the Proxy Statement will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading.
(j) Community Reinvestment Act Compliance. Citizens' depository
-------------------------------------
institution Subsidiaries are each in material compliance with the applicable
provisions of the CRA and the regulations promulgated thereunder, and each
currently has a CRA rating of satisfactory or better. To Citizens' knowledge,
there is no fact or circumstance or set of facts or circumstances that would
cause any of its depository institution Subsidiaries to fail to comply with such
provisions or cause the CRA rating of any such institution to fall below
satisfactory.
(k) Availability of Funds. Citizens has received a written loan
---------------------
commitment for, or has readily available to it, sufficient funds to satisfy its
obligations under Article I of this Agreement.
ARTICLE III
CONDUCT PENDING THE MERGER
--------------------------
Section 3.1. Conduct of MBLA's Business Prior to the Effective Time.
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Except as expressly provided in this Agreement, during the period from the date
of this Agreement to the Effective Time, MBLA shall, and shall cause its
Subsidiaries to, use its best efforts to (i) conduct its business in the
regular, ordinary and usual course consistent with past practice, (ii) maintain
and preserve intact its business organization, properties, leases, employees and
advantageous business relationships and retain the services of its officers and
key employees, (iii) take no action which would adversely affect or delay the
ability of MBLA or Citizens to perform their respective covenants and agreements
on a timely basis under this Agreement, (iv) take no action which would
adversely affect or delay the ability of MBLA, Macon Building & Loan, Citizens
or Citizens Bank to obtain any necessary approvals, consents or waivers of any
governmental authority required for the transactions contemplated hereby or
which would reasonably be
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expected to result in any such approvals, consents or waivers containing any
material condition or restriction, (v) take no action that results in or is
reasonably likely to have a Material Adverse Effect on MBLA or Macon Building &
Loan, (vi) continue to implement its Year 2000 Plan in accordance with its
terms, (vii) maintain insurance in such amounts and against such risks and
losses as are customary for companies engaged in a similar business, (viii)
confer on a regular and frequent basis with one or more representatives of
Citizens to discuss, subject to applicable law, material operational matters and
the general status of the ongoing operations of MBLA and its Subsidiaries, (ix)
promptly notify Citizens of any significant change in its business, properties,
assets, condition (financial or otherwise) or results of operations, and (x)
promptly provide Citizens with copies of all filings made by MBLA or any of its
Subsidiaries with any state or federal court, administrative agency, commission
or other Governmental Entity in connection with this Agreement and the
transactions contemplated hereby.
Section 3.2. Forbearance by MBLA. Without limiting the covenants set
-------------------
forth in SECTION 3.1 hereof, except as otherwise provided in this Agreement and
except to the extent required by law or regulation or any Governmental Entity,
during the period from the date of this Agreement to the Effective Time, MBLA
shall not, and shall not permit any of its Subsidiaries to, without the prior
consent of Citizens:
(a) unless required by applicable law or regulation or regulatory
directive, change any provisions of the certificate of incorporation or bylaws
of MBLA or the similar governing documents of its Subsidiaries;
(b) issue, deliver or sell any shares of its capital stock or any
securities or obligations convertible or exercisable for any shares of its
capital stock or change the terms of any of its outstanding stock options or
warrants or issue, grant or sell any option, warrant, call, commitment, stock
appreciation right, right to purchase or agreement of any character relating to
the authorized or issued capital stock of MBLA except pursuant to the exercise
of stock options or warrants outstanding as of the date of this Agreement, or
split, combine, reclassify or adjust any shares of its capital stock or
otherwise change its capitalization;
(c) other than regular semi-annual dividends not in excess of $0.30
per share of MBLA Common Stock, make, declare or pay any cash or stock dividend
or make any other distribution on, or directly or indirectly redeem, purchase or
otherwise acquire, any shares of its capital stock or any securities or
obligations convertible into or exchangeable for any shares of its capital
stock. Subject to applicable regulatory restrictions, if any, Macon Building &
Loan may pay a cash dividend that is, in the aggregate, sufficient to fund any
dividend by MBLA permitted hereunder;
(d) other than in the ordinary course of business consistent with
past practice, (i) sell, transfer, assign, mortgage, encumber or otherwise
dispose of any of its material properties, leases, assets or other rights or
agreements to any individual, corporation or other entity other than a direct or
indirect wholly owned Subsidiary of MBLA or (ii) cancel, release or assign any
indebtedness of any such individual, corporation or other entity;
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(e) except to the extent required by law or as specifically provided
for elsewhere herein, increase in any manner the compensation or fringe benefits
of any of its employees or directors, other than general increases in
compensation for non-executive officer employees in the ordinary course of
business consistent with past practice; pay any pension or retirement allowance
not required by any existing plan or agreement to any employees or directors, or
become a party to, amend or commit itself to fund or otherwise establish any
trust or account related to any MBLA Employee Plan (as defined in SECTION
2.3(M)) with or for the benefit of any employee or director; voluntarily
accelerate the vesting of any stock options or other compensation or benefit;
grant or award any stock options; make any discretionary contribution to any
MBLA Employee Plan; hire any employee with an annual total compensation payment
in excess of $35,000; or enter into any employment contract or other agreement
or arrangement with any director, officer or other employee;
(f) except as contemplated by SECTION 4.2, change its method of
accounting as in effect at March 31, 1999, except as required by changes in GAAP
as concurred in by MBLA's independent auditors;
(g) settle any claim, action or proceeding involving any liability
of MBLA or any of its Subsidiaries for money damages in excess of $50,000 or
impose material restrictions upon the operations of MBLA or any of its
Subsidiaries;
(h) acquire or agree to acquire, by merging or consolidating with,
or by purchasing a substantial equity interest in or a substantial portion of
the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof or
otherwise acquire or agree to acquire any assets, in each case which are
material, individually or in the aggregate, to MBLA, except in satisfaction of
debts previously contracted;
(i) except pursuant to commitments existing at the date hereof which
have previously been disclosed to Citizens, other than in the ordinary course
consistent with past practice, make any real estate loans secured by undeveloped
land or real estate located outside the State of Missouri (other than real
estate secured by one-to-four family homes) or make any construction loans
(other than construction loans secured by one-to-four family homes) outside the
State of Missouri;
(j) establish or commit to the establishment of any new branch or
other office facilities or file any application to relocate or terminate the
operation of any banking office;
(k) other than in the ordinary course of business consistent with
past practice in individual amounts not to exceed $50,000 and other than
investments for MBLA's portfolio made in accordance with SECTION 3.2(L), make
any investment either by purchase of stock or securities, contributions to
capital, property transfers, or purchase of any property or assets of any other
individual, corporation or other entity;
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(l) make any investment in any debt security, including
mortgage-backed and mortgage-related securities (other than U.S. government and
U.S. government agency securities with final maturities not greater than five
years, mortgage-backed or mortgage related securities which would not be
considered "high risk" securities pursuant to Thrift Bulletin Number 52 issued
by the OTS or securities of the FHLB, in each case that are purchased in the
ordinary course of business consistent with past practice), or materially
restructure or change its investment securities portfolio, through purchases,
sales or otherwise;
(m) enter into, renew, amend or terminate any contract or agreement,
or make any change in any of its leases or contracts, other than with respect to
those involving aggregate payments of less than, or the provision of goods or
services with a market value of less than, $20,000 per annum and other than
contracts or agreements covered by SECTION 3.2(N);
(n) make, renegotiate, renew, increase, extend, modify or purchase
any loan, lease (credit equivalent), advance, credit enhancement or other
extension of credit, or make any commitment in respect of any of the foregoing,
except (A) in conformity with existing lending practices in amounts not to
exceed an aggregate of $300,000 with respect to any individual borrower or (B)
loans or advances as to which MBLA has a binding obligation to make such loan or
advances as of the date hereof;
(o) incur any additional borrowings other than short-term (six
months or less) FHLB borrowings and reverse repurchase agreements consistent
with past practice, or pledge any of its assets to secure any borrowings other
than as required pursuant to the terms of borrowings of MBLA or any Subsidiary
in effect at the date hereof or in connection with borrowings or reverse
repurchase agreements permitted hereunder;
(p) make any capital expenditures in excess of $20,000 per
expenditure other than pursuant to binding commitments existing on the date
hereof disclosed in the MBLA Disclosure Schedule and other than expenditures
necessary to maintain existing assets in good repair or to make payment of
necessary taxes;
(q) organize, capitalize, lend to or otherwise invest in any
Subsidiary;
(r) elect to any senior executive office any person who is not a
member of the senior executive officer team of MBLA as of the date of this
Agreement or elect to the Board of Directors of MBLA any person who is not a
member of the Board of Directors of MBLA as of the date of this Agreement;
(s) engage in any transaction that is not in the usual and ordinary
course of business and consistent with past practices;
(t) enter into any new line of business;
(u) take or omit to take any action that is intended or may
reasonably be expected to result in any of MBLA's representations and warranties
set forth in this Agreement
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being or becoming untrue in any material respect, or which would make any of
such representations and warranties untrue or incorrect in any material respect
if made anew after taking such action;
(v) make any equity investment or commitment to make such an
investment in real estate or in any real estate development project, other than
in connection with foreclosures, settlements in lieu of foreclosure or troubled
loan or debt restructuring in the ordinary course of business consistent with
prudent banking practices;
(w) make or increase any loan or other extension of credit, or
commit to make or increase any such loan or extension of credit, to any director
or officer of MBLA or any of its Subsidiaries, or any entity controlled,
directly or indirectly, by any of the foregoing, other than renewals of existing
loans or commitments to loan; or
(x) agree or make any commitment to take any action that is
prohibited by this Section 3.2.
In the event that Citizens does not respond in writing to MBLA
within 5 business days of receipt by Citizens of a written request for MBLA to
engage in any of the actions for which Citizens's prior written consent is
required pursuant to this SECTION 3.2, Citizens shall be deemed to have
consented to such action. Any request by MBLA or response thereto by Citizens
shall be made in accordance with the notice provisions of SECTION 8.7, shall
note that it is a request pursuant to this SECTION 3.2 and shall state that a
failure to respond within 5 business days shall constitute consent.
Section 3.3. Conduct of Citizens' Business Prior to the Effective
----------------------------------------------------
Time. Except as expressly provided in this Agreement, during the period from the
----
date of this Agreement to the Effective Time, Citizens shall, and shall cause
its Subsidiaries to, use its best efforts to (i) take no action which would
materially adversely affect or delay the ability of MBLA or Citizens to perform
their respective covenants and agreements on a timely basis under this Agreement
and (ii) take no action which would adversely affect or delay the ability of
MBLA, Citizens, Macon Building & Loan or Citizens Bank to obtain any necessary
approvals, consents or waivers of any governmental authority required for the
transactions contemplated hereby or which would reasonably be expected to result
in any such approvals, consents or waivers containing any material condition or
restriction.
ARTICLE IV
COVENANTS
---------
Section 4.1. Acquisition Proposals. From and after the date hereof
---------------------
until the termination of this Agreement, neither MBLA or Macon Building & Loan,
nor any of their respective officers, directors, employees, representatives,
agents or affiliates (including, without limitation, any investment banker,
attorney or accountant retained by MBLA or any of its Subsidiaries), will,
directly or indirectly, initiate, solicit or knowingly encourage (including by
way
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of furnishing non-public information or assistance), or facilitate knowingly,
any inquiries or the making of any proposal that constitutes, or may reasonably
be expected to lead to, any Acquisition Proposal (as defined below), or enter
into or maintain or continue discussions or negotiate with any person or entity
in furtherance of such inquiries or to obtain an Acquisition Proposal or agree
to or endorse any Acquisition Proposal; PROVIDED, HOWEVER, that nothing
contained in this SECTION 4.1 shall prohibit the Board of Directors of MBLA from
(i) furnishing information to, or entering into discussions or negotiations with
any, person or entity that makes an unsolicited written, bona fide proposal to
acquire MBLA pursuant to a merger, consolidation, share exchange, business
combination, tender or exchange offer or other similar transaction, if, and only
to the extent that, (A) the Board of Directors of MBLA receives a written
opinion from its independent financial advisor that such proposal may be
superior to the Merger from a financial point-of-view to MBLA's stockholders and
(B) the Board of Directors of MBLA, after consultation with independent legal
counsel, determines in good faith that such action is necessary for the Board of
Directors of MBLA to comply with its fiduciary duties to stockholders under
applicable law (such proposal that satisfies (A) and (B) being referred to
herein as a "SUPERIOR PROPOSAL"), (ii) complying with Rule 14e-2 promulgated
under the Exchange Act with regard to a tender or exchange offer or (iii)
failing to make or withdrawing or modifying its recommendation and entering into
a Superior Proposal if there exists a Superior Proposal and the Board of
Directors of MBLA, after consultation with independent legal counsel, determines
in good faith that such action is necessary for the Board of Directors of MBLA
to comply with its fiduciary duties to stockholders under applicable law. MBLA
shall notify Citizens orally and in writing of any Acquisition Proposal
(including, without limitation, the terms and conditions of any such Acquisition
Proposal and the identity of the person making such Acquisition Proposal) as
promptly as practicable (but, in any event, no later than 24 hours) after the
receipt thereof and shall keep Citizens informed of the status and details of
any such Acquisition Proposal. For purposes of this Agreement, "ACQUISITION
PROPOSAL" shall mean any of the following (other than the transactions
contemplated hereunder) involving MBLA or any of its Subsidiaries: (i) any
merger, consolidation, share exchange, business combination, or other similar
transaction; (ii) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of 25% or more of the assets of MBLA or Macon Building & Loan, taken
as a whole, in a single transaction or series of transactions; (iii) any tender
offer or exchange offer for 25% or more of the outstanding shares of capital
stock of MBLA or the filing of a registration statement under the Securities Act
of 1933 in connection therewith; or (iv) any public announcement of a proposal,
plan or intention to do any of the foregoing or any agreement to engage in any
of the foregoing.
Section 4.2. Certain Policies of MBLA.
------------------------
(a) At the request of Citizens, MBLA shall cause Macon Building &
Loan to modify and change its loan, litigation and real estate valuation
policies and practices (including loan classifications and levels of reserves)
and investment and asset/liability management policies and practices after the
date on which all Requisite Regulatory Approvals and stockholder approvals are
received, and after receipt of written confirmation from Citizens that it is not
aware of any fact or circumstance that would prevent completion of the Merger,
and prior to the Effective Time so as to be consistent on a mutually
satisfactory basis with those of Citizens Bank; PROVIDED, HOWEVER, that MBLA
shall not be required to take such action more than 30 days prior
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to the Effective Date; and PROVIDED, FURTHER, that such policies and procedures
are not prohibited by GAAP or any applicable laws and regulations.
Notwithstanding the foregoing, Macon Building & Loan shall not be required to
increase its levels of reserves pursuant to this SECTION 4.2 until after the
Merger Consideration has been calculated in accordance with SECTION 1.2.
(b) MBLA's representations, warranties and covenants contained in
this Agreement shall not be deemed to be untrue or breached in any respect for
any purpose as a consequence of any modifications or changes undertaken solely
on account of this SECTION 4.2. Citizens agrees to hold harmless, indemnify and
defend MBLA and its Subsidiaries, and their respective directors, officers and
employees, for any loss, claim, liability or other damage caused by or resulting
from compliance with this SECTION 4.2.
Section 4.3. Access and Information. Upon reasonable notice, MBLA
----------------------
shall (and shall cause its Subsidiaries to) afford Citizens and its
representatives (including, without limitation, directors, officers and
employees of Citizens and its affiliates and counsel, accountants and other
professionals retained by Citizens) such reasonable 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), contracts, properties, personnel and to such other
information relating to MBLA and its Subsidiaries as Citizens may reasonably
request; PROVIDED, HOWEVER, that no investigation pursuant to this SECTION 4.3
shall affect or be deemed to modify any representation or warranty made herein.
MBLA shall provide Citizens with true and complete copies of all financial and
other information relating to the business or operations of MBLA and its
Subsidiaries that is provided to directors of MBLA and Macon Building & Loan in
connection with meetings of their Board of Directors of committees thereof. In
furtherance, and not in limitation of the foregoing, MBLA shall make available
to Citizens all information necessary or appropriate for the preparation and
filing of all real property and real estate transfer tax returns and reports
required by reason of the Merger or the Bank Merger. Citizens will not, and will
cause its representatives not to, use any information obtained pursuant to this
SECTION 4.3 for any purpose unrelated to the consummation of the transactions
contemplated by this Agreement. Subject to the requirements of applicable law,
Citizens will keep confidential, and will cause its representatives to keep
confidential, all information and documents obtained pursuant to this SECTION
4.3 unless such information (i) was already known to Citizens or an affiliate of
Citizens, other than pursuant to a confidentiality agreement or other
confidential relationship, (ii) becomes available to Citizens or an affiliate of
Citizens from other sources not known by such party to be bound by a
confidentiality agreement or other obligation of secrecy, (iii) is disclosed
with the prior written approval of MBLA or (iv) is or becomes readily
ascertainable from published information or trade sources. In the event that
this Agreement is terminated or the transactions contemplated by this Agreement
shall otherwise fail to be consummated, each party shall promptly cause all
copies of documents or extracts thereof containing information and data as to
another party hereto (or an affiliate of any party hereto) to be returned to the
party that furnished the same.
Section 4.4. Certain Filings, Consents and Arrangements. Citizens
------------------------------------------
shall as soon as practicable and in cooperation with MBLA (and in any event
within 45 days after the date hereof) make, or cause to be made, any filings and
applications and provide any notices required
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to be filed or provided in order to obtain all approvals, consents and waivers
of Governmental Entities and third parties necessary or appropriate for the
consummation of the transactions contemplated hereby. Citizens shall provide
MBLA and its counsel with an opportunity to review all filings, applications and
notices prior to their being submitted to any governmental authority and shall
provide MBLA with copies of all filings, applications and notices submitted to
any governmental authority.
Section 4.5. Antitakeover Provisions. MBLA and its Subsidiaries
-----------------------
shall take all steps required by any relevant federal or state law or regulation
or under any relevant agreement or other document to exempt or continue to
exempt Citizens, Acquisition Sub, Citizens Bank, the Agreement, the Plan of Bank
Merger, the Merger and the Bank Merger from any provisions of an antitakeover
nature contained in MBLA's or its Subsidiaries' organization certificates and
bylaws and the provisions of any federal or state antitakeover laws.
Section 4.6. Additional Agreements. Subject to the terms and
---------------------
conditions herein provided, each of the parties hereto agrees to use all
reasonable efforts to take promptly, or cause to be taken promptly, all actions
and to do promptly, or cause to be done promptly, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement, including the Merger
and the Bank Merger, as expeditiously as possible, including using efforts to
obtain all necessary actions or non-actions, extensions, waivers, consents and
approvals from all applicable Governmental Entities, effecting all necessary
registrations, applications and filings (including, without limitation, filings
under any applicable state securities laws) and obtaining any required
contractual consents and regulatory approvals.
Section 4.7. Publicity. MBLA and Citizens shall consult with each
---------
other in issuing any press releases or otherwise making public statements with
respect to the Merger and any other transaction contemplated hereby and in
making any filings with any governmental entity or with any national securities
exchange with respect thereto.
Section 4.8. Stockholders Meeting. MBLA shall take all action
--------------------
necessary, in accordance with applicable law and its Certificate of
Incorporation and Bylaws, to convene a meeting of its stockholders ("STOCKHOLDER
MEETING") as promptly as practicable for the purpose of considering and voting
on approval and adoption of this Agreement, the Merger and the other
transactions provided for in this Agreement. Except to the extent legally
required for the discharge by the Board of Directors of its fiduciary duties as
advised by such Board's counsel, the Board of Directors of MBLA shall (a)
recommend at its Stockholder Meeting that the stockholders vote in favor of and
approve the transactions provided for in this Agreement and (b) use its best
reasonable efforts to solicit such approvals. MBLA may employ professional proxy
solicitors to assist in contacting stockholders in connection with soliciting
favorable votes on the Merger.
Section 4.9. Proxy Statement. As soon as practicable after the date
---------------
hereof, MBLA shall prepare a Proxy Statement for the purpose of taking
stockholder action on the Merger and this Agreement and shall file the Proxy
Statement with the SEC, respond to
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comments of the staff of the SEC and, promptly after the Proxy Statement is
cleared by the SEC, mail the Proxy Statement to the holders of record (as of the
applicable record date) of shares of voting stock of MBLA. MBLA shall provide
Citizens and its counsel with an opportunity to review the Proxy Statement prior
to its being filed with the SEC and shall provide Citizens and its counsel with
copies of the definitive Proxy Statement.
Section 4.10 Notification of Certain Matters. MBLA shall give prompt
-------------------------------
notice to Citizens of: (a) any event or notice of, or other communication
relating to, a default or event that, with notice or lapse of time or both,
would become a default, received by MBLA or any of its Subsidiaries subsequent
to the date of this Agreement and prior to the Effective Time, under any
contract material to the financial condition, properties, businesses or results
of operations of MBLA and its Subsidiaries taken as a whole to which MBLA or any
Subsidiary is a party or is subject; and (b) any event, condition, change or
occurrence which individually or in the aggregate has, or which, so far as
reasonably can be foreseen at the time of its occurrence, is reasonably likely
to result in a Material Adverse Effect with respect to MBLA and its Subsidiaries
taken as a whole. Each of MBLA and Citizens shall give prompt notice to the
other party of any (i) notice or other communication from any third party
alleging that the consent of such third party is or may be required in
connection with any of the transactions contemplated by this Agreement and (ii)
the occurrence or non-occurrence of any fact or event which would be reasonably
likely to cause any representation or warranty contained in this Agreement to be
untrue or inaccurate in any respect at any time from the date hereof to the
Effective Time or to cause any covenant, condition or agreement under this
Agreement not to be complied with or satisfied in all material respects.
Section 4.11 Employees, Directors and Officers.
---------------------------------
(a) All persons who are employees of Macon Building & Loan
immediately prior to the Effective Time and whose employment is not specifically
terminated at or prior to the Effective Time (a "CONTINUING EMPLOYEE") shall, at
the Effective Time, become employees of Citizens Bank; PROVIDED, HOWEVER, that
in no event shall any of MBLA's employees be officers of Citizens Bank, or have
or exercise any power or duty conferred upon such an officer, unless and until
duly elected or appointed to such position in accordance with the bylaws of
Citizens Bank. All of the Continuing Employees shall be employed at the will of
Citizens Bank and no contractual right to employment shall inure to such
employees because of this Agreement. Citizens will use its best efforts to
retain all of the employees of Macon Building & Loan, subject to the
qualifications of such employees and the needs of Citizens Bank.
(b) Except as otherwise provided in paragraph (d) of this SECTION
4.11, appropriate steps shall be taken to terminate all MBLA Employee Plans as
of the Effective Time or as promptly as practical thereafter. Immediately
following the Effective Time, each Continuing Employee shall be eligible to
participate in Citizens' benefit plans on the same basis as a new employee of
Citizens or Citizens Bank (it being understood that inclusion of Continuing
Employees in Citizens' benefit plans may occur at different times with respect
to different plans). Service with MBLA or Macon Building & Loan shall be treated
as service with Citizens Bank for purposes of satisfying any waiting periods,
evidence of insurability requirements, or the
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application of any preexisting condition limitation with respect to any Citizens
or Citizens Bank "welfare benefit plan", as defined in Section 3(1) of ERISA,
but not with respect to any pension, profit sharing or any other employee
benefit plan. Each Continuing Employee shall receive credit for service with
MBLA or Macon Building & Loan for purposes of computing vacation pay benefits.
(c) Citizens agrees to honor existing employment and salary
continuation agreements, including the change in control provisions of such
agreements, between MBLA and Macon Building & Loan and certain employees as set
forth in MBLA's Disclosure Letter. Such payments may be made by MBLA immediately
prior to the Effective Time if so agreed to by Citizens, or on such other
schedule as may be mutually agreed upon by the individual employee and Citizens.
Citizens also agrees to honor the Directors' Consultation and Retirement Plan of
MBLA.
(d) Prior to the Effective Time, MBLA shall terminate the MBLA
Employee Stock Ownership Plan ("ESOP") by proper action of the Board of
Directors of MBLA. As soon as administratively practicable after the Effective
Time, the ESOP shall apply any cash received in the Merger with respect to
unallocated shares of MBLA Common Stock to the repayment in full of the
outstanding ESOP indebtedness. Any surplus cash remaining after repayment of
such indebtedness shall be allocated as investment earnings of the ESOP to the
stock accounts of ESOP participants (and, if required, to the accounts of former
participants or their beneficiaries) in proportion to their stock account
balances in a manner consistent with the terms of the ESOP plan document.
(e) MBLA shall use its best efforts to obtain from each holder of an
MBLA Option and to deliver to Citizens at or before the Closing ( as defined in
SECTION 7.1) an agreement to the cancellation of such holder's MBLA Options in
exchange for a cash payment as described in SECTION 1.5.
Section 4.12 Indemnification.
---------------
(a) From and after the Effective Time through the sixth anniversary
of the Effective Date, Citizens (and any successor) agrees to indemnify and hold
harmless each present and former director and officer of MBLA and its
Subsidiaries and each officer or employee of MBLA and its Subsidiaries that is
serving or has served as a director or trustee of another entity expressly at
MBLA's request or direction (each, an "INDEMNIFIED PARTY"), against any costs or
expenses (including reasonable attorneys' fees), judgments, fines, amounts paid
in settlement, losses, claims, damages or liabilities (collectively, "COSTS")
incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of matters existing or occurring at or prior to the Effective Time
(including the transactions contemplated by this Agreement), whether asserted or
claimed prior to, at or after the Effective Time, and to advance any such Costs
to each Indemnified Party as they are from time to time incurred, in each case
to the fullest extent such Indemnified Party would have been permitted to be
indemnified as a director, officer or employee of MBLA and its Subsidiaries and
under the DGCL (as in effect on the Effective Date).
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(b) Any Indemnified Party wishing to claim indemnification under
SECTION 4.12(A), upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify Citizens thereof, but the failure to so
notify shall not relieve Citizens of any liability it may have hereunder to such
Indemnified Party if such failure does not materially and substantially
prejudice Citizens. In the event of any such claim, action, suit, proceeding or
investigation: (i) Citizens shall have the right to assume the defense thereof
with counsel reasonably acceptable to the Indemnified Party and Citizens shall
not be liable to such Indemnified Party for any legal expenses of other counsel
subsequently incurred by such Indemnified Party in connection with the defense
thereof, except that if Citizens does not elect to assume such defense within a
reasonable time or counsel for the Indemnified Party at any time advises that
there are issues which raise conflicts of interest between Citizens and the
Indemnified Party (and counsel for Citizens does not disagree), the Indemnified
Party may retain counsel satisfactory to such Indemnified Party, and Citizens
shall remain responsible for the reasonable fees and expenses of such counsel as
set forth above, to be paid promptly as statements therefor are received;
PROVIDED, HOWEVER, that Citizens shall be obligated pursuant to this paragraph
(b) to pay for only one firm of counsel for all Indemnified Parties in any one
jurisdiction with respect to any given claim, action, suit, proceeding or
investigation unless the use of one counsel for such Indemnified Parties would
present such counsel with a conflict of interest; (ii) the Indemnified Party
will reasonably cooperate in the defense of any such matter; and (iii) Citizens
shall not be liable for any settlement effected by an Indemnified Party without
its prior written consent, which consent may not be withheld unless such
settlement is unreasonable in light of such claims, actions, suits, proceedings
or investigations against, or defenses available to, such Indemnified Party.
(c) Citizens shall pay all reasonable Costs, including attorneys'
fees, that may be incurred by any Indemnified Party in successfully enforcing
the indemnity and other obligations provided for in this SECTION 4.12 to the
fullest extent permitted under the DGCL (as in effect on the Effective Date).
The rights of each Indemnified Party hereunder shall be in addition to any other
rights such Indemnified Party may have under applicable law.
(d) Citizens shall maintain MBLA's existing directors and officers'
insurance policy (or provide a policy providing comparable coverage and amounts
on terms no less favorable to the persons currently covered by MBLA's existing
policy, including Citizens's existing policy if its meets the foregoing
standard) covering persons who are currently covered by such insurance for a
period of six years after the Effective Date.
(e) In the event Citizens or any of its successors or assigns (i)
consolidates with or merges into any other person or entity and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers or conveys all or substantially all of its properties and assets
to any person or entity, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of Citizens
assume the obligations set forth in this SECTION 4.12.
(f) The provisions of this SECTION 4.12 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and his or her
representatives.
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Section 4.13 Year 2000. From the date hereof until the Effective
---------
Time, with respect to all computer systems of MBLA and its Subsidiaries, MBLA
hereby covenants and agrees (a) to use its best efforts to comply with all
Federal Financial Institution Examination Council Year 2000 regulations and
guidelines and (b) that MBLA and Macon Building & Loan will each take all
actions necessary to receive a rating of "Satisfactory" or better on any Year
2000 compliance examination conducted by their respective examining agencies.
ARTICLE V
CONDITIONS TO CONSUMMATION
--------------------------
Section 5.1. Conditions to Each Party's Obligations. The respective
--------------------------------------
obligations of each party to effect the Merger, the Bank Merger and any other
transactions contemplated by this Agreement shall be subject to the satisfaction
of the following conditions:
(a) This Agreement shall have been approved by the requisite vote of
MBLA's stockholders in accordance with applicable laws and regulations.
(b) The Requisite Regulatory Approvals, the consent of the OTS and
any other required waivers with respect to this Agreement and the transactions
contemplated hereby shall have been obtained and shall remain in full force and
effect, and all statutory waiting periods shall have expired; and all other
consents, waivers and approvals of any third parties which are necessary to
permit the consummation of the Merger and the other transactions contemplated
hereby shall have been obtained or made except for those the failure to obtain
would not have a Material Adverse Effect (i) on MBLA and its Subsidiaries taken
as a whole or (ii) on Citizens and its Subsidiaries taken as a whole. No such
approval or consent shall have imposed any condition or requirement that would
so materially and adversely impact the economic or business benefits to Citizens
or MBLA of the transactions contemplated hereby that, had such condition or
requirement been known, such party would not, in its reasonable judgment, have
entered into this Agreement.
(c) No party hereto shall be subject to any order, decree, ruling or
injunction of a court or agency of competent jurisdiction which enjoins or
prohibits the consummation of the Merger, the Bank Merger or any other
transactions contemplated by this Agreement and no Governmental Entity shall
have instituted any proceeding for the purpose of enjoining or prohibiting the
consummation of the Merger, the Bank Merger or any transactions contemplated by
this Agreement.
(d) No statute, rule or regulation shall have been enacted, entered,
promulgated, interpreted, applied or enforced by any governmental authority
which prohibits, restricts or makes illegal consummation of the Merger, the Bank
Merger or any other transactions contemplated by this Agreement.
Section 5.2. Conditions to the Obligations of Citizens and Citizens
------------------------------------------------------
Bank. The obligations of Citizens and Citizens Bank to effect the Merger, the
----
Bank Merger and any other
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transactions contemplated by this Agreement shall be further subject to the
satisfaction of the following additional conditions:
(a) Each of the obligations of MBLA and Macon Building & Loan,
respectively, required to be performed by it at or prior to the Closing pursuant
to the terms of this Agreement shall have been duly performed and complied with
in all material respects and the representations and warranties of MBLA and
Macon Building & Loan contained in this Agreement shall be true and correct,
subject to SECTIONS 2.1 and 2.2, as of the date of this Agreement and as of the
Effective Time as though made at and as of the Effective Time (except as to any
representation or warranty which specifically relates to an earlier date), and
Citizens shall have received a certificate to the foregoing effect signed by the
chief executive officer and the chief financial or principal accounting officer
of MBLA.
(b) On the Closing Date, Dissenters' Shares shall not constitute
more than 10% of the outstanding shares of MBLA Common Stock.
(c) Citizens shall have received the opinion of counsel to MBLA and
Macon Building & Loan with respect to those matters set forth on Exhibit B
hereto in form and substance reasonably satisfactory to Citizens.
(d) On the Closing Date, Macon Building & Loan's allowance for loan
losses shall be not less than $700,000.
(e) On the Closing Date, Citizens shall have received a statement
from each of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, and Manchester Partners, L.L.C.
setting forth the total fees paid or payable with respect to all legal or
financial advisory services, as the case may be, rendered in connection with
this Agreement and the transactions contemplated hereby.
Section 5.3. Conditions to the Obligations of MBLA and Macon
-----------------------------------------------
Building & Loan. The obligations of MBLA and Macon Building & Loan to effect the
---------------
Merger, the Bank Merger and any other transactions contemplated by this
Agreement shall be further subject to the satisfaction of the following
additional conditions:
(a) Each of the obligations of Citizens and Citizens Bank,
respectively, required to be performed by it at or prior to the Closing pursuant
to the terms of this Agreement shall have been duly performed and complied with
in all material respects and the representations and warranties of Citizens and
Citizens Bank contained in this Agreement shall be true and correct, subject to
SECTIONS 2.1 and 2.2, as of the date of this Agreement and as of the Effective
Time as though made at and as of the Effective Time (except as to any
representation or warranty which specifically relates to an earlier date), and
MBLA shall have received a certificate to the foregoing effect signed by the
chief executive officer and the chief financial or principal accounting officer
of Citizens.
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(b) Citizens shall have provided to the Exchange Agent sufficient
cash to pay the aggregate Merger Consideration and MBLA shall have received a
certificate from the Exchange Agent to such effect.
(c) MBLA shall have received the opinion of counsel to Citizens and
Citizens Bank with respect to those matters set forth on Exhibit C hereto in
form and substance reasonably satisfactory to MBLA.
ARTICLE VI
TERMINATION
-----------
Section 6.1. Termination. This Agreement may be terminated, and the
-----------
Merger abandoned, at or prior to the Effective Date, either before or after any
requisite stockholder approval:
(a) by the mutual consent of Citizens and MBLA in a written
instrument, if the Board of Directors of each so determines by vote of a
majority of the members of its entire Board; or
(b) by Citizens or MBLA, if its Board of Directors so determines by
vote of a majority of the members of its entire Board, in the event of the
failure of the stockholders of MBLA to approve the Agreement at the Stockholder
Meeting; PROVIDED, HOWEVER, that MBLA shall only be entitled to terminate the
Agreement pursuant to this clause if it has complied in all material respects
with its obligations under SECTION 4.8; or
(c) by Citizens or MBLA, by written notice to the other party, if
either (i) any approval, consent or waiver of a governmental agency required to
permit consummation of the transactions contemplated hereby shall have been
denied or (ii) any governmental authority of competent jurisdiction shall have
issued a final, unappealable order enjoining or otherwise prohibiting
consummation of the transactions contemplated by this Agreement; or
(d) by Citizens or MBLA, if its Board of Directors so determines by
vote of a majority of the members of its entire Board, in the event that the
Merger is not consummated by January 31, 2000, unless the failure to so
consummate by such time is due to the breach of any representation, warranty or
covenant contained in this Agreement by the party seeking to terminate; or
(e) by Citizens or MBLA (provided that the party seeking termination
is not then in material breach of any representation, warranty, covenant or
other agreement contained herein), in the event of (i) a failure to perform or
comply by the other party with any covenant or agreement of such other party
contained in this Agreement, which failure or non-compliance is material in the
context of the transactions contemplated by this Agreement, or (ii) subject to
SECTION 2.2(A), any inaccuracies, omissions or breach in the representations,
warranties, covenants or agreements of the other party contained in this
Agreement the circumstances as to which either
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individually or in the aggregate have, or reasonably could be expected to have,
a Material Adverse Effect on such other party; in either case which has not been
or cannot be cured within 30 calendar days after written notice thereof is given
by the party seeking to terminate to such other party; or
(f) by MBLA, if the Board of Directors of MBLA reasonably determines
that a proposal made by a third party to acquire, directly or indirectly,
including pursuant to a tender offer, exchange offer, merger, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction, for consideration consisting of cash and/or securities, more than
50% of the combined voting power of the shares of MBLA Common Stock then
outstanding or all or substantially all of the assets of MBLA constitutes a
Superior Proposal and that such proposal must be accepted in order to comply
with the Board of Directors' fiduciary duties to Stockholders under applicable
law; PROVIDED, HOWEVER, that prior to any such termination, MBLA shall use its
reasonable efforts to negotiate in good faith with Citizens to make such
adjustments in the terms and conditions of this Agreement a would enable MBLA to
proceed with the transactions contemplated herein.
Section 6.2. Termination Fee.
---------------
(a) In the event that (a) MBLA terminates this Agreement pursuant to
SECTION 6.1(F) or (b) Citizens or MBLA terminates this Agreement pursuant to
SECTION 6.1(B) after it has been publicly announced prior to the Stockholders
Meeting that a person (other than Citizens) has made or disclosed an intention
to make a proposal to engage in a merger, consolidation, share exchange or other
similar transaction with MBLA or Macon Building & Loan and within 12 months
after the termination of this Agreement MBLA or Macon Building & Loan enters
into an agreement with any person to effect a merger, consolidation, share
exchange or other similar transaction, then MBLA shall, within 10 business days
following written demand by Citizens, pay to Citizens an amount equal to
$1,000,000.
(b) In the event that the Merger is not consummated as a result of
the failure to satisfy the conditions set forth in SECTION 5.1(B), then Citizens
shall, within 10 business days following written demand by MBLA, pay to MBLA an
amount equal to $187,500.
Section 6.3. Effect of Termination. In the event of termination of
---------------------
this Agreement by either Citizens or MBLA prior to the consummation of the
Merger as provided in SECTION 6.1, this Agreement shall forthwith become void
and have no effect except (i) the obligations of the parties under SECTIONS 4.3
(with respect to confidentiality and the return of information), 6.2 and 8.6
shall survive any termination of this Agreement and (ii) that notwithstanding
anything to the contrary contained in this Agreement, no party shall be relieved
or released from any liabilities or damages arising out of its willful breach of
any provision of this Agreement.
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ARTICLE VII
CLOSING, EFFECTIVE DATE AND EFFECTIVE TIME
------------------------------------------
Section 7.1. Effective Date and Effective Time. The closing of the
---------------------------------
transactions contemplated hereby ("CLOSING") shall take place at the offices of
▇▇▇▇▇▇▇, Mag & Fizzell, P.C., ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇, unless another place is agreed to by Citizens and MBLA, on a date
designated by Citizens ("CLOSING DATE") that is no later than 14 days following
the date on which the expiration of the last applicable waiting period in
connection with notices to and approvals of governmental authorities shall occur
and all conditions to the consummation of this Agreement are satisfied or
waived, or on such other date as may be agreed to by the parties. Prior to the
Closing Date, Acquisition Sub and MBLA shall execute a Certificate of Merger in
accordance with all appropriate legal requirements, which shall be filed as
required by law on the Closing Date, and the Merger provided for therein shall
become effective upon such filing or on such date as may be specified in such
Certificate of Merger. The date of such filing or such later effective date as
specified in the Certificate of Merger is herein referred to as the "EFFECTIVE
DATE." The "EFFECTIVE TIME" of the Merger shall be as set forth in the
Certificate of Merger.
Section 7.2. Deliveries at the Closing. Subject to the provisions of
-------------------------
Articles V and VI, on the Closing Date there shall be delivered to Citizens and
MBLA the documents and instruments required to be delivered under Article V.
ARTICLE VIII
CERTAIN OTHER MATTERS
---------------------
Section 8.1. Certain Definitions; Interpretation. As used in this
-----------------------------------
Agreement, the following terms shall have the meanings indicated:
"material" means material to Citizens or MBLA (as the case may be)
and its respective Subsidiaries, taken as a whole.
"person" includes an individual, corporation, limited liability
company, partnership, association, trust or unincorporated organization.
When a reference is made in this Agreement to Sections, Exhibits or
Schedules, such reference shall be to a Section of, Exhibit or Schedule to, this
Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for ease of reference only and shall not affect
the meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed
followed by the words "without limitation." Any singular term in this Agreement
shall be deemed to include the plural, and any plural term the singular. Any
reference to gender in this Agreement shall be deemed to include any other
gender.
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Section 8.2. Survival. Only those agreements and covenants of the
--------
parties that are by their terms applicable in whole or in part after the
Effective Time, including SECTIONS 4.3, 4.11 and 4.12 of this Agreement, shall
survive the Effective Time. All other representations, warranties, agreements
and covenants shall be deemed to be conditions of the Agreement and shall not
survive the Effective Time.
Section 8.3. Waiver; Amendment. Prior to the Effective Time, any
-----------------
provision of this Agreement may be (i) waived in writing by the party benefitted
by the provision or (ii) amended or modified at any time (including the
structure of the transaction) by an agreement in writing between the parties
hereto except that, after the vote by the stockholders of MBLA or Citizens, no
amendment or modification may be made that would reduce the amount or alter or
change the kind of consideration to be received by holders of MBLA Common Stock
or contravene any provision of the DGCL or the federal banking laws, rules and
regulations.
Section 8.4. Counterparts. This Agreement may be executed in
------------
counterparts each of which shall be deemed to constitute an original, but all of
which together shall constitute one and the same instrument.
Section 8.5. Governing Law. This Agreement shall be governed by,
-------------
and interpreted in accordance with, the laws of the State of Missouri, without
regard to conflicts of laws principles.
Section 8.6. Expenses. Each party hereto will bear all expenses
--------
incurred by it in connection with this Agreement and the transactions
contemplated hereby.
Section 8.7. Notices. All notices, requests, acknowledgments and
-------
other communications hereunder to a party shall be in writing and shall be
deemed to have been duly given when delivered by hand, overnight courier or
facsimile transmission (confirmed in writing) to such party at its address or
facsimile number set forth below or such other address or facsimile transmission
as such party may specify by notice (in accordance with this provision) to the
other party hereto.
If to MBLA, to:
MBLA Financial Corporation
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Attention:▇▇▇▇ ▇. ▇▇▇▇, President
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With copies to:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
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If to Citizens, to:
Citizens Bancshares Company
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Attention:▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chairman
With copies to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇, Mag & Fizzell, P.C.
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Section 8.8. Entire Agreement; etc. This Agreement, together with
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the Plan of Bank Merger and the Disclosure Letters, represents the entire
understanding of the parties hereto with reference to the transactions
contemplated hereby and supersedes any and all other oral or written agreements
heretofore made. All terms and provisions of this Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns. Except for SECTIONS 4.11 and 4.12, which confer rights
on the parties described therein, nothing in this Agreement is intended to
confer upon any other person any rights or remedies of any nature whatsoever
under or by reason of this Agreement.
Section 8.9. Successors and Assigns; Assignment. This Agreement
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shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that this Agreement may
not be assigned by either party hereto without the written consent of the other
party.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers as of the 3rd day of May, 1999.
CITIZENS BANCSHARES COMPANY
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chairman and Chief Executive Officer
MBLA FINANCIAL CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇
President and Chief Executive Officer
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