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EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
DATED AS OF SEPTEMBER 25, 2002
BY AND BETWEEN
FIRST CAPITAL, INC.
AND
HOMETOWN BANCSHARES, INC.
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TABLE OF CONTENTS
Page No.
Introductory Statement.......................................................1
ARTICLE I - DEFINITIONS......................................................1
ARTICLE II - THE MERGER......................................................8
2.1 The Merger......................................................8
2.2 Closing.........................................................8
2.3 Effective Time..................................................8
2.4 Effects of the Merger...........................................8
2.5 Effect on Outstanding Shares of Hometown Common Stock...........8
2.6 Election and Proration Procedures...............................9
2.7 Exchange Procedures............................................12
2.8 Effect on Outstanding Shares of First Capital Common Stock.....14
2.9 Directors of Surviving Corporation after Effective Time........14
2.10 Articles of Incorporation and Bylaws...........................15
2.11 [RESERVED].....................................................15
2.12 Dissenters' Rights.............................................15
2.13 Bank Merger....................................................15
2.14 Alternative Structure..........................................15
ARTICLE III - REPRESENTATIONS AND WARRANTIES................................16
3.1 Disclosure Letters.............................................16
3.2 Representations and Warranties of Hometown.....................16
3.3 Representations and Warranties of First Capital................30
ARTICLE IV - CONDUCT PENDING THE MERGER.....................................38
4.1 Forbearances by Hometown.......................................38
4.2 Forbearances by First Capital..................................41
ARTICLE V - COVENANTS.......................................................42
5.1 Acquisition Proposals..........................................42
5.2 Certain Policies and Actions of Hometown.......................43
5.3 Access and Information.........................................43
5.4 Applications; Consents.........................................44
5.5 Antitakeover Provisions........................................45
5.6 Additional Agreements..........................................45
5.7 Publicity......................................................45
5.8 Stockholder Meeting............................................45
5.9 Registration of First Capital Common Stock.....................46
5.10 Affiliate Letters..............................................47
5.11 Notification of Certain Matters................................47
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5.12 Employee Benefits Matters......................................47
5.13 Indemnification................................................48
5.14 Advisory Board.................................................49
ARTICLE VI - CONDITIONS TO CONSUMMATION.....................................50
6.1 Conditions to Each Party's Obligations.........................50
6.2 Conditions to the Obligations of First Capital.................51
6.3 Conditions to the Obligations of Hometown......................52
ARTICLE VII - TERMINATION...................................................52
7.1 Termination....................................................52
7.2 Termination Fee................................................53
7.3 Effect of Termination..........................................54
ARTICLE VIII - CERTAIN OTHER MATTERS........................................54
8.1 Interpretation.................................................54
8.2 Survival.......................................................54
8.3 Waiver; Amendment..............................................55
8.4 Counterparts...................................................55
8.5 Governing Law..................................................55
8.6 Expenses.......................................................55
8.7 Notices........................................................55
8.8 Entire Agreement; etc..........................................56
8.9 Successors and Assigns; Assignment.............................56
EXHIBITS
Exhibit A Form of Voting Agreement
Exhibit B Plan of Bank Merger
Exhibit C Form of Affiliate Letter
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AGREEMENT AND PLAN OF MERGER
This is an AGREEMENT AND PLAN OF MERGER, dated as of the 25th day of
September, 2002 ("AGREEMENT"), by and between First Capital, Inc., an Indiana
corporation ("FIRST CAPITAL"), and Hometown Bancshares, Inc., an Indiana
corporation ("HOMETOWN").
INTRODUCTORY STATEMENT
The Board of Directors of each of First Capital and Hometown (i) has
determined that this Agreement and the business combination and related
transactions contemplated hereby are advisable and in the best interests of
First Capital or Hometown, as the case may be, and in the best long-term
interests of the stockholders of First Capital or Hometown, as the case may be,
and (ii) has determined that this Agreement and the transactions contemplated
hereby are consistent with, and in furtherance of, its respective business
strategies.
The parties hereto intend that the Merger as defined herein shall qualify
as a reorganization under the provisions of Section 368(a) of the IRC for
federal income tax purposes.
First Capital and Hometown each 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.
As a condition and inducement to First Capital's willingness to enter into
this Agreement, each of the members of the Board of Directors of Hometown has
entered into an agreement dated as of the date hereof in the form of Exhibit A
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pursuant to which he (or she) will vote his (or her) shares of Hometown Common
Stock in favor of this Agreement and the transactions contemplated hereby.
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
DEFINITIONS
For purposes of this Agreement:
"ACQUISITION PROPOSAL" means with respect to a party any proposal or offer
with respect to any of the following (other than the transactions contemplated
hereunder): (i) any merger, consolidation, share exchange, business combination,
or other similar transaction involving such party or any of its Subsidiaries;
(ii) any sale, lease, exchange, mortgage, pledge, transfer or other disposition
of 25% or more of such party's consolidated assets outside of the regular course
of
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business in a single transaction or series of related transactions; (iii) any
tender offer or exchange offer for 25% or more of the outstanding shares of such
party's capital stock or the filing of a registration statement under the
Securities Act 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 an any of the foregoing.
"AGREEMENT" means this Agreement, as amended, modified or amended and
restated from time to time in accordance with its terms.
"ARTICLES OF MERGER" shall have the meaning given to that term in SECTION
2.3.
"BANK MERGER" shall have the meaning given to that term in SECTION 2.13.
"BHC ACT" means the Bank Holding Company Act of 1956, as amended.
"CASH CONSIDERATION" shall have the meaning given to that term in SECTION
2.5(A).
"CASH ELECTION" shall have the meaning given to that term in SECTION
2.6(B).
"CASH ELECTION SHARES" shall have the meaning given to that term in
SECTION 2.6(B).
"CASH PRORATION FACTOR" shall have the meaning given to that term in
SECTION 2.6(E)(II)(B).
"CERTIFICATE" shall have the meaning given to that term in SECTION 2.6(C).
"CLOSING" shall have the meaning given to that term in SECTION 2.2.
"CLOSING DATE" shall have the meaning given to that term in SECTION 2.2.
"CONTINUING EMPLOYEE" shall have the meaning given to that term in SECTION
5.12(A).
"CRA" means the Community Reinvestment Act.
"DISCLOSURE LETTER" shall have the meaning given to that term in SECTION
3.1.
"DISSENTERS' SHARES" shall have the meaning given to that term in SECTION
2.12.
"EFFECTIVE TIME" shall have the meaning given to that term in SECTION 2.3.
"ELECTION DEADLINE" shall have the meaning given to that term in SECTION
2.6(C).
"ELECTION FORM" shall have the meaning given to that term in SECTION
2.6(A).
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"ELECTION MODIFICATION PERIOD" shall have the meaning given to that term
in SECTION 2.6(C).
"ENVIRONMENTAL LAW" means any federal, state or local law, statute,
ordinance, rule, regulation, code, license, permit, authorization, approval,
consent, order, directive, executive or administrative order, judgment, decree,
injunction, or agreement with any Governmental Entity relating to (i) the
protection, preservation or restoration of the environment (which includes,
without limitation, air, water vapor, surface water, groundwater, drinking water
supply, 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 (ii) 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, without limitation, 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, 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 in
effect.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXCHANGE AGENT" shall have the meaning given to that term in SECTION
2.6(C).
"EXCHANGE RATIO" shall have the meaning given to that term in SECTION
2.5(A).
"EXCLUDED SHARES" shall consist of (i) Dissenters' Shares and (ii) shares
held directly or indirectly by First Capital (other than shares held in a
fiduciary capacity or in satisfaction of a debt previously contracted).
"FDIA" means the Federal Deposit Insurance Act, as amended.
"FDIC" means the Federal Deposit Insurance Corporation.
"FEDERAL RESERVE BOARD" means the Board of Governors of the Federal
Reserve System.
"FIRST CAPITAL" shall have the meaning given to that term in the preamble.
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"FIRST CAPITAL COMMON STOCK" means the common stock, par value $.01 per
share, of First Capital.
"FIRST CAPITAL PRICE" means the average of the closing sales prices of
First Capital Common Stock, as reported on The Nasdaq Stock Market, during the
Measurement Period; provided, however, that in the event First Capital Common
Stock does not trade on one or more of the trading days in the Measurement
Period, any such date shall be disregarded in computing the average closing
sales price and the average shall be based upon the closing sales price and
number of days on which First Capital Common Stock actually traded during the
Measurement Period.
"FIRST CAPITAL REGULATORY FILINGS" shall have the meaning given to that
term in SECTION 3.3(G)(II).
"FIRST CAPITAL'S REPORTS" shall have the meaning given to that term in
SECTION 3.3(G)(I).
"FIRST ▇▇▇▇▇▇▇▇ BANK" shall have the meaning given to that term in SECTION
2.13.
"GAAP" means generally accepted accounting principles.
"GOVERNMENT REGULATOR" means 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
deposits.
"GOVERNMENTAL ENTITY" means any court, administrative agency or commission
or other governmental authority or instrumentality.
"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.
"HOLA" means the Home Owners' Loan Act, as amended.
"HOMETOWN" shall have the meaning given to that term in the preamble.
"HOMETOWN COMMON STOCK" means the common stock, no par value per share, of
Hometown.
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"HOMETOWN EMPLOYEE PLANS" shall have the meaning given to that term in
SECTION 3.2(R)(I).
"HOMETOWN NATIONAL BANK" shall have the meaning given to that term in
SECTION 2.13.
"HOMETOWN QUALIFIED PLAN" shall have the meaning given to that term in
SECTION 3.2(R)(IV).
"HOMETOWN REGULATORY FILINGS" shall have the meaning given to that term in
SECTION 3.2(G).
"IBCL" means the Indiana Business Corporation Law.
"INDEMNIFIED PARTY" shall have the meaning given to that term in SECTION
5.13(A).
"IRC" means the Internal Revenue Code of 1986, as amended.
"IRS" means the Internal Revenue Service.
"KNOWLEDGE" means, with respect to a party hereto, actual knowledge of the
members of the Board of Directors of that party or any officer of that party
with the title ranking not less than senior vice president.
"LETTER OF TRANSMITTAL" shall have the meaning given to that term in
SECTION 2.7(A).
"LIEN" means any charge, mortgage, pledge, security interest, claim, lien
or encumbrance.
"LOAN" means a loan, lease, advance, credit enhancement, guarantee or
other extension of credit.
"LOAN PROPERTY" means any property in which the applicable party (or a
subsidiary of it) holds a security interest and, where required by the context,
includes the owner or operator of such property, but only with respect to such
property.
"MAILING DATE" shall have the meaning given to that term in SECTION
2.6(A).
"MATERIAL ADVERSE EFFECT" means an effect which is material and adverse to
the business, financial condition or results of operations of Hometown or First
Capital, as the context may dictate, and its Subsidiaries taken as a whole;
PROVIDED, HOWEVER, that any such effect resulting from any (i) changes in laws,
rules or regulations or generally accepted accounting principles or regulatory
accounting requirements or interpretations thereof that apply to both First
Capital and Hometown, or to financial and/or depository institutions generally,
(ii) changes in
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economic conditions affecting financial institutions generally, including but
not limited to, changes in the general level of market interest rates, (iii)
actions and omissions of First Capital or Hometown taken with the prior written
consent of the other in contemplation of the transactions contemplated hereby
and (iv) direct effects of compliance with this Agreement on the operating
performance of the parties, including expenses incurred by the parties in
consummating the transactions contemplated by this Agreement, shall not be
considered in determining if a Material Adverse Effect has occurred.
"MAXIMUM INSURANCE AMOUNT" shall have the meaning given to that term in
SECTION 5.13(C).
"MEASUREMENT PERIOD" means the twenty consecutive trading days ending on
the third business day prior to the Closing Date.
"MERGER" shall have the meaning given to that term in SECTION 2.1.
"MERGER CONSIDERATION" shall have the meaning given to that term in
SECTION 2.5(A).
"MIXED ELECTION" shall have the meaning given to that term in SECTION
2.6(B).
"NASD" means the National Association of Securities Dealers, Inc.
"NON-ELECTION" shall have the meaning given to that term in SECTION
2.6(B).
"NON-ELECTION PRORATION FACTOR" shall have the meaning given to that term
in SECTION 2.6(E)(II)(A).
"NON-ELECTION SHARES" shall have the meaning given to that term in SECTION
2.6(B).
"OTS" means the Office of Thrift Supervision.
"PARTICIPATION FACILITY" means any facility in which the applicable party
(or a Subsidiary of it) participates in the management (including all property
held as trustee or in any other fiduciary capacity) and, where required by the
context, includes the owner or operator of such property, but only with respect
to such property.
"PERSON" means an individual, corporation, limited liability company,
partnership, association, trust, unincorporated organization or other entity.
"PROXY STATEMENT-PROSPECTUS" shall have the meaning given to that term in
SECTION 5.9(A).
"REGISTRATION STATEMENT" shall have the meaning given to that term in
SECTION 5.9(A).
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"REPRESENTATIVE" shall have the meaning given to that term in SECTION
2.6(B).
"SEC" means the United States Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"SHORTFALL NUMBER" shall have the meaning given to that term in SECTION
2.6(E)(II).
"STOCK CONSIDERATION" shall have the meaning given to that term in SECTION
2.5(A).
"STOCK CONVERSION NUMBER" shall have the meaning given to that term in
SECTION 2.6(D).
"STOCK ELECTION" shall have the meaning given to that term in SECTION
2.6(B).
"STOCK ELECTION NUMBER" shall have the meaning given to that term in
SECTION 2.6(B).
"STOCK ELECTION SHARES" shall have the meaning given to that term in
SECTION 2.6(B).
"STOCK PRORATION FACTOR" shall have the meaning given to that term in
SECTION 2.6(D).
"STOCKHOLDER MEETING" shall have the meaning given to that term in SECTION
5.8.
"SUBSIDIARY" means a corporation, partnership, joint venture or other
entity in which Hometown or First Capital, as the case may be, has, directly or
indirectly, an equity interest representing 50% or more of any class of the
capital stock thereof or other equity interests therein.
"SUPERIOR PROPOSAL" means an unsolicited, bona fide written offer made by
a third party to consummate an Acquisition Proposal that (i) Hometown's Board of
Directors determines in good faith, after consulting with its outside legal
counsel and its financial advisor, would, if consummated, result in a
transaction that is more favorable to the stockholders of Hometown than the
transactions contemplated hereby, including any adjustments to the terms and
conditions of such transactions proposed by First Capital in response to such
Acquisition Proposal, and taking into account all legal, financial, regulatory
and other aspects of the Acquisition Proposal and the entity making the
Acquisition Proposal, (ii) is not conditioned on obtaining financing, and (iii)
is for 100% of the outstanding shares of Hometown Common Stock.
"SURVIVING CORPORATION" shall have the meaning given to that term in
SECTION 2.1.
"TAXES" means all income, franchise, gross receipts, real and personal
property, real property transfer and gains, wage and employment taxes.
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ARTICLE II
THE MERGER
2.1 THE MERGER. Upon the terms and subject to the conditions set forth in
this Agreement, Hometown will merge with and into First Capital ("MERGER") at
the Effective Time. At the Effective Time, the separate corporate existence of
Hometown shall cease. First Capital shall be the surviving corporation
(hereinafter sometimes referred to in such capacity as the "SURVIVING
CORPORATION") in the Merger and shall continue to be governed by the IBCL and
its name and separate corporate existence, with all of its rights, privileges,
immunities, powers and franchises, shall continue unaffected by the Merger.
2.2 CLOSING. The closing of the Merger (the "CLOSING") will take place in
the offices of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇ at 10:00 a.m. on the date designated by First Capital within thirty days
following satisfaction or waiver of the conditions to Closing set forth in
Article VI (other than those conditions that by their nature are to be satisfied
at the Closing), or such later date as the parties may otherwise agree (the
"CLOSING DATE").
2.3 EFFECTIVE TIME. In connection with the Closing, First Capital shall
duly execute and deliver articles of merger (the "ARTICLES OF MERGER") to the
Indiana Secretary of State for filing pursuant to the IBCL. The parties will
make all other filings or recordings required under the IBCL. The Merger shall
become effective at such time as the Articles of Merger are duly filed with the
Indiana Secretary of State or at such later date or time as First Capital and
Hometown agree and specify in the Articles of Merger (the date and time the
Merger becomes effective being the "EFFECTIVE TIME").
2.4 EFFECTS OF THE MERGER. The Merger will have the effects set forth in
the IBCL. Without limiting the generality of the foregoing, and subject thereto,
from and after the Effective Time, First Capital shall possess all of the
properties, rights, privileges, powers and franchises of Hometown and be subject
to all of the debts, liabilities and obligations of Hometown.
2.5 EFFECT ON OUTSTANDING SHARES OF HOMETOWN COMMON STOCK.
(a) Subject to the provisions of SECTION 2.6 hereof, by virtue of
the Merger, automatically and without any action on the part of the holder
thereof, each share of Hometown Common Stock issued and outstanding at the
Effective Time, other than Excluded Shares, shall become and be converted into,
at the election of the holder as provided in and subject to the limitations set
forth in this Agreement, either (i) the right to receive $46.50 in cash without
interest (the "CASH CONSIDERATION") or (ii) the number of shares of First
Capital Common Stock equal to the Exchange Ratio (as defined below)(the "STOCK
CONSIDERATION"). The Cash Consideration and the Stock Consideration are
sometimes referred to herein collectively as the "MERGER CONSIDERATION." The
"EXCHANGE RATIO" shall be equal (rounded to the nearest one- thousandth) to (A)
the result obtained by dividing $39.52 by the First Capital Price if the First
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Capital Price is less than $14.45, (B) 2.735 if the First Capital Price is (i)
$14.45 or more and (ii) less than $19.55 or (C) the result obtained by dividing
$53.47 by the First Capital Price if the First Capital Price is $19.55 or more.
(b) Notwithstanding any other provision of this Agreement, no
fraction of a share of First Capital Common Stock and no certificates or scrip
therefor will be issued in the Merger; instead, First Capital shall pay to each
holder of Hometown Common Stock who would otherwise be entitled to a fraction of
a share of First Capital Common Stock an amount in cash, rounded to the nearest
cent, determined by multiplying such fraction by the First Capital Price.
(c) If, between the date of this Agreement and the Effective Time,
the outstanding shares of First Capital 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 Exchange Ratio shall be adjusted
appropriately to provide the holders of Hometown Common Stock the same economic
effect as contemplated by this Agreement prior to such event.
(d) As of the Effective Time, each Excluded Share, other than
Dissenters' Shares, shall be canceled and retired and shall cease to exist, and
no exchange or payment shall be made with respect thereto. All shares of First
Capital Common Stock that are held by Hometown, if any, other than shares held
in a fiduciary capacity or in satisfaction of a debt previously contracted,
shall be canceled and shall constitute authorized but unissued shares. In
addition, no Dissenters' Shares shall be converted into shares of First Capital
Common Stock pursuant to this SECTION 2.5 but instead shall be treated in
accordance with the provisions set forth in SECTION 2.12 of this Agreement.
2.6 ELECTION AND PRORATION PROCEDURES.
(a) An election form in such form as Hometown and First Capital
shall mutually agree (an "ELECTION FORM") shall be mailed on the Mailing Date
(as defined below) to each holder of record of shares of Hometown Common Stock
as of a record date which shall be the same date as the record date for
eligibility to vote on the Merger. The "MAILING DATE" shall be the date on which
proxy materials relating to the Merger are mailed to holders of shares of
Hometown Common Stock. First Capital shall make available Election Forms as may
be reasonably requested by all persons who become holders of Hometown Common
Stock after the record date for eligibility to vote on the Merger and prior to
the Election Deadline (as defined herein), and Hometown shall provide to the
Exchange Agent all information reasonably necessary for it to perform its
obligations as specified herein.
(b) Each Election Form shall entitle the holder of shares of
Hometown Common Stock (or the beneficial owner through appropriate and customary
documentation and instructions) to (i) elect to receive the Cash Consideration
for all of such holder's shares (a "CASH ELECTION"), (ii) elect to receive the
Stock Consideration for all of such holder's shares (a
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"STOCK ELECTION"), (iii) elect to receive the Stock Consideration with respect
to some of such holder's shares and the Cash Consideration with respect to such
holder's remaining shares (a "MIXED ELECTION") or (iv) make no election or to
indicate that such holder has no preference as to the receipt of the Cash
Consideration or the Stock Consideration (a "NON-ELECTION"). Holders of record
of shares of Hometown Common Stock who hold such shares as nominees, trustees or
in other representative capacities (a "REPRESENTATIVE") may submit multiple
Election Forms, provided that such Representative certifies that each such
Election Form covers all the shares of Hometown Common Stock held by that
Representative for a particular beneficial owner. Shares of Hometown Common
Stock as to which a Cash Election has been made (including pursuant to a Mixed
Election) are referred to herein as "CASH ELECTION SHARES." Shares of Hometown
Common Stock as to which a Stock Election has been made (including pursuant to a
Mixed Election) are referred to herein as "STOCK ELECTION SHARES." Shares of
Hometown Common Stock as to which no election has been made are referred to as
"NON-ELECTION SHARES." For purposes of this Section, Excluded Shares shall be
deemed Cash Election Shares. The aggregate number of shares of Hometown Common
Stock with respect to which a Stock Election has been made is referred to herein
as the "STOCK ELECTION NUMBER."
(c) To be effective, a properly completed Election Form must be
received by a bank or trust company designated by First Capital and reasonably
satisfactory to Hometown (the "EXCHANGE AGENT") on or before 5:00 p.m., New York
City time, on the third business day immediately preceding Hometown's
Stockholder Meeting (or such other time and date as Hometown and First Capital
may mutually agree) (the "ELECTION DEADLINE"). An election shall have been
properly made only if the Exchange Agent shall have actually received a properly
completed Election Form by the Election Deadline. An Election Form shall be
deemed properly completed only if accompanied by one or more certificates
theretofore representing Hometown Common Stock ("CERTIFICATES") (or customary
affidavits and, if required by First Capital pursuant to SECTION 2.7(I),
indemnification regarding the loss or destruction of such Certificates or the
guaranteed delivery of such Certificates) representing all shares of Hometown
Common Stock covered by such Election Form, together with duly executed
transmittal materials included with the Election Form. Any Hometown stockholder
may at any time prior to the Election Deadline change his or her election by
written notice received by the Exchange Agent prior to the Election Deadline
accompanied by a properly completed and signed revised Election Form. Any
Hometown stockholder may, at any time prior to the Election Deadline, revoke his
or her election by written notice received by the Exchange Agent prior to the
Election Deadline or by withdrawal prior to the Election Deadline of his or her
Certificates, or of the guarantee of delivery of such Certificates, previously
deposited with the Exchange Agent. Notwithstanding the previous two sentences,
if the Effective Time shall not occur within 15 days following the Election
Deadline, then during the period commencing on the 16th day following the
Election Deadline and ending on 5:00 p.m., New York City time, on the third
business day prior to the Closing Date (the "ELECTION MODIFICATION PERIOD"), any
Hometown stockholder may change or revoke his or her election in the manner
specified in the previous two sentences. All elections shall be revoked
automatically if the Exchange Agent is notified in writing by First Capital and
Hometown that this Agreement has been terminated. If a stockholder either (i)
does not submit a
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properly completed Election Form by the Election Deadline, (ii) revokes (as
opposed to changes) his or her Election Form prior to the Election Deadline and
does not submit a new properly executed Election Form prior to the Election
Deadline or (iii) revokes his or her Election Form during the Election
Modification Period, the shares of Hometown Common Stock held by such
stockholder shall be designated Non-Election Shares. First Capital shall cause
the Certificates representing Hometown Common Stock described in (ii) or (iii)
in the immediately preceding sentence to be promptly returned without charge to
the person submitting the Election Form upon written request to that effect from
the person who submitted the Election Form. Subject to the terms of this
Agreement and of the Election Form, the Exchange Agent shall have reasonable
discretion to determine whether any election, revocation or change has been
properly or timely made and to disregard immaterial defects in any Election
Form, and any good faith decisions of the Exchange Agent regarding such matters
shall be binding and conclusive.
(d) Notwithstanding any other provision contained in this Agreement,
50% of the total number of shares of Hometown Common Stock outstanding at the
Effective Time (the "STOCK CONVERSION NUMBER") shall be converted into the Stock
Consideration and the remaining outstanding shares of Hometown Common Stock
(excluding shares of Hometown Common Stock to be canceled as provided in SECTION
2.5(D) and Dissenters' Shares) shall be converted into the Cash Consideration.
(e) Within three business days after the later to occur of the
Election Deadline or the Effective Time, First Capital shall cause the Exchange
Agent to effect the allocation among holders of Hometown Common Stock of rights
to receive the Cash Consideration and the Stock Consideration as follows:
(i) If the Stock Election Number exceeds the Stock Conversion
Number, then all Cash Election Shares and all Non-Election Shares shall be
converted into the right to receive the Cash Consideration, and each holder of
Stock Election Shares will be entitled to receive (A) the number of shares of
First Capital Common Stock equal to the product obtained by multiplying (1) the
number of Stock Election Shares held by such holder by (2) the Exchange Ratio by
(3) a fraction the numerator of which is the Stock Conversion Number and the
denominator of which is the Stock Election Number (the "STOCK PRORATION FACTOR")
and (B) cash in an amount equal to the product obtained by multiplying (1) the
number of Stock Election Shares held by such holder by (2) the Cash
Consideration by (3) one minus the Stock Proration Factor;
(ii) If the Stock Election Number is less than the Stock
Conversion Number (the amount by which the Stock Conversion Number exceeds the
Stock Election Number being referred to herein as the "SHORTFALL NUMBER"), then
all Stock Election Shares shall be converted into the right to receive the Stock
Consideration and the Non-Election Shares and Cash Election Shares shall be
treated in the following manner:
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(A) if the Shortfall Number is less than or equal to the
number of Non-Election Shares, then all Cash Election Shares shall be converted
into the right to receive the Cash Consideration and each holder of Non-Election
Shares shall receive (1) the number of shares of First Capital Common Stock
equal to the product obtained by multiplying (x) the number of Non-Election
Shares held by such holder by (y) the Exchange Ratio by (z) a fraction the
numerator of which is the Shortfall Number and the denominator of which is the
total number of Non-Election Shares (the "NON-ELECTION PRORATION FACTOR") and
(B) cash in an amount equal to the product obtained by multiplying (x) the
number of Non-Election Shares held by such holder by (y) the Cash Consideration
by (z) one minus the Non-Election Proration Factor; or
(B) if the Shortfall Number exceeds the number of Non-
Election Shares, then all Non-Election Shares shall be converted into the right
to receive the Stock Consideration, and each holder of Cash Election Shares
shall receive (1) the number of shares of First Capital Common Stock equal to
the product obtained by multiplying (x) the number of Cash Election Shares held
by such holder by (y) the Exchange Ratio by (z) a fraction the numerator of
which is the amount by which the Shortfall Number exceeds the number of
Non-Election Shares and the denominator of which is the total number of Cash
Election Shares (the "CASH PRORATION FACTOR") and (B) cash in an amount equal to
the product obtained by multiplying (x) the number of Cash Election Shares held
by such holder by (y) the Cash Consideration by (z) one minus the Cash Proration
Factor.
2.7 EXCHANGE PROCEDURES.
(a) Appropriate transmittal materials ("LETTER OF TRANSMITTAL") in a
form satisfactory to First Capital and Hometown shall be mailed as soon as
practicable after the Effective Time to each holder of record of Hometown Common
Stock as of the Effective Time who did not previously submit a completed
Election Form in accordance with SECTION 2.6(C). A Letter of Transmittal will be
deemed properly completed only if accompanied by certificates representing all
shares of Hometown Common Stock to be converted thereby. Delivery of a properly
completed Election Form in accordance with SECTION 2.6(C) which is not
subsequently revoked shall satisfy the requirement for delivery of a Letter of
Transmittal pursuant to this SECTION 2.7.
(b) At and after the Effective Time, each Certificate (except as
specifically set forth in SECTION 2.5) shall represent only the right to receive
the Merger Consideration.
(c) Prior to the Effective Time, First Capital shall (i) reserve for
issuance with its transfer agent and registrar a sufficient number of shares of
First Capital Common Stock to provide for payment of the aggregate Stock
Consideration and (ii) deposit, or cause to be deposited, with the Exchange
Agent, for the benefit of the holders of shares of Hometown Common Stock, for
exchange in accordance with this SECTION 2.7, an amount of cash sufficient to
pay the aggregate Cash Consideration.
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(d) The Letter of Transmittal shall (i) specify that delivery shall
be effected, and risk of loss and title to the Certificates shall pass, only
upon delivery of the Certificates to the Exchange Agent, (ii) be in a form and
contain any other provisions as First Capital may reasonably determine and (iii)
include instructions for use in effecting the surrender of the Certificates in
exchange for the Merger Consideration. Upon the proper surrender of the
Certificates to the Exchange Agent, together with a properly completed and duly
executed Letter of Transmittal, the holder of such Certificates shall be
entitled to receive in exchange therefor a certificate representing that number
of whole shares of First Capital Common Stock that such holder has the right to
receive pursuant to SECTION 2.5, if any, and a check in the amount equal to the
cash that such holder has the right to receive pursuant to SECTION 2.5, if any
(including any cash in lieu of fractional shares, if any, that such holder has
the right to receive pursuant to SECTION 2.5, and any dividends or other
distributions to which such holder is entitled pursuant to SECTION 2.5).
Certificates so surrendered shall forthwith be canceled. As soon as practicable
following the Effective Time and the receipt of the properly completed Letter of
Transmittal and any necessary accompanying documentation, the Exchange Agent
shall distribute First Capital Common Stock and cash as provided herein. The
Exchange Agent shall not be entitled to vote or exercise any rights of ownership
with respect to the shares of First Capital Common Stock held by it from time to
time hereunder, except that it shall receive and hold all dividends or other
distributions paid or distributed with respect to such shares for the account of
the persons entitled thereto. If there is a transfer of ownership of any shares
of Hometown Common Stock not registered in the transfer records of Hometown, the
Merger Consideration shall be issued to the transferee thereof if the
Certificates representing such Hometown Common Stock are presented to the
Exchange Agent, accompanied by all documents required, in the reasonable
judgment of First Capital and the Exchange Agent, to evidence and effect such
transfer and to evidence that any applicable stock transfer taxes have been
paid.
(e) No dividends or other distributions declared or made after the
Effective Time with respect to First Capital Common Stock issued pursuant to
this Agreement shall be remitted to any person entitled to receive shares of
First Capital Common Stock hereunder until such person surrenders his or her
Certificates in accordance with this SECTION 2.7. Upon the surrender of such
person's Certificates, such person shall be entitled to receive any dividends or
other distributions, without interest thereon, which subsequent to the Effective
Time had become payable but not paid with respect to shares of First Capital
Common Stock represented by such person's Certificates.
(f) The stock transfer books of Hometown shall be closed immediately
upon the Effective Time and from and after the Effective Time there shall be no
transfers on the stock transfer records of Hometown of any shares of Hometown
Common Stock. If, after the Effective Time, Certificates are presented to First
Capital, 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 2.7.
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(g) Any portion of the aggregate amount of cash to be paid pursuant
to SECTION 2.5, any dividends or other distributions to be paid pursuant to this
SECTION 2.7 or any proceeds from any investments thereof that remains unclaimed
by the stockholders of Hometown for six months after the Effective Time shall be
repaid by the Exchange Agent to First Capital upon the written request of First
Capital. After such request is made, any stockholders of Hometown who have not
theretofore complied with this SECTION 2.7 shall look only to First Capital for
the Merger Consideration deliverable in respect of each share of Hometown Common
Stock such stockholder holds, as determined pursuant to SECTION 2.5 of this
Agreement, without any interest thereon. If any Merger Consideration is not
claimed by the person(s) entitled thereto 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
First Capital. 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 Hometown Common Stock for any amount delivered to a public official
pursuant to applicable abandoned property, escheat or similar laws.
(h) First Capital and the Exchange Agent shall be entitled to rely
upon Hometown'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 Certificate, First Capital 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.
(i) If any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person claiming such
Certificate to be lost, stolen or destroyed and, if required by the Exchange
Agent or First Capital, 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 Certificate, the Exchange Agent will issue in
exchange for such lost, stolen or destroyed Certificate the Merger Consideration
deliverable in respect thereof pursuant to SECTION 2.5.
2.8 EFFECT ON OUTSTANDING SHARES OF FIRST CAPITAL COMMON STOCK. At and
after the Effective Time, each share of First Capital Common Stock issued and
outstanding immediately prior to the Effective Time shall remain an issued and
outstanding share of common stock of the Surviving Corporation and shall not be
affected by the Merger.
2.9 DIRECTORS OF SURVIVING CORPORATION AFTER EFFECTIVE TIME. Immediately
after the Effective Time, until their respective successors are duly elected or
appointed and qualified, the directors of the Surviving Corporation shall
consist of the directors of First Capital serving immediately prior to the
Effective Time.
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2.10 ARTICLES OF INCORPORATION AND BYLAWS. The articles of incorporation
of First Capital, as in effect immediately prior to the Effective Time, shall be
the articles of incorporation of the Surviving Corporation until thereafter
amended in accordance with applicable law. The bylaws of First Capital, as in
effect immediately prior to the Effective Time, shall be the bylaws of the
Surviving Corporation until thereafter amended in accordance with applicable
law.
2.11 [RESERVED]
2.12 DISSENTERS' RIGHTS. Notwithstanding any other provision of this
Agreement to the contrary, shares of Hometown Common Stock that are outstanding
immediately prior to the Effective Time and which are held by stockholders who
shall have not voted in favor of the Merger or consented thereto in writing and
who properly shall have delivered written notice to Hometown before the vote is
taken of the stockholders' intent to demand payment for such shares in
accordance with the IBCL (collectively, the "DISSENTERS' SHARES") shall not be
converted into or represent the right to receive the Merger Consideration. Such
stockholders instead shall be entitled to receive payment of the fair value of
such shares held by them in accordance with the provisions of the IBCL, except
that all Dissenters' Shares held by stockholders who shall have failed to
perfect or who effectively shall have withdrawn or otherwise lost their rights
to appraisal of such shares under the IBCL shall thereupon be deemed to have
been converted into and to have become exchangeable, as of the Effective Time,
for the right to receive, without any interest thereon, the Merger Consideration
upon surrender in the manner provided in SECTION 2.7 of the Hometown
Certificate(s) that, immediately prior to the Effective Time, evidenced such
shares. Hometown shall give First Capital (i) prompt notice of any written
demands for payment for any shares of Hometown Common Stock, attempted
withdrawals of such demands and any other instruments served pursuant to the
IBCL and received by Hometown relating to stockholders' dissenters' rights, and
(ii) the opportunity to participate in all negotiations and proceedings with
respect to demands under the IBCL consistent with the obligations of Hometown
thereunder. Hometown shall not, except with the prior written consent of First
Capital, (x) make any payment with respect to such demand, (y) offer to settle
or settle any demand for payment or (z) waive any failure to timely deliver a
written demand for payment or timely take any other action to perfect
dissenters' rights in accordance with the IBCL.
2.13 BANK MERGER. Concurrently with or as soon as practicable after the
execution and delivery of this Agreement, First ▇▇▇▇▇▇▇▇ Bank ("FIRST ▇▇▇▇▇▇▇▇
BANK"), a wholly owned subsidiary of First Capital, and Hometown National Bank
("HOMETOWN NATIONAL BANK"), a wholly owned subsidiary of Hometown, shall enter
into the Plan of Bank Merger, in the form attached hereto as Exhibit B, pursuant
---------
to which Hometown National Bank will merge with and into First ▇▇▇▇▇▇▇▇ Bank
(the "BANK MERGER"). The parties intend that the Bank Merger will become
effective simultaneously with or immediately following the Effective Time.
2.14 ALTERNATIVE STRUCTURE. Notwithstanding anything to the contrary
contained in this Agreement, prior to the Effective Time, First Capital may
specify that the structure of the
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transactions contemplated by this Agreement be revised and the parties shall
enter into such alternative transactions as First Capital may reasonably
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, (ii) change the intended federal income tax consequences of the
transactions contemplated by this Agreement or (iii) materially impede or delay
the receipt of any regulatory approval referred to in, or the consummation of
the transactions contemplated by, this Agreement. In the event that First
Capital elects to make such a revision, the parties agree to execute appropriate
documents to reflect the revised structure.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 DISCLOSURE LETTERS. Prior to the execution and delivery of this
Agreement, First Capital and Hometown 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). 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. Any matter disclosed pursuant to one section of a
party's Disclosure Letter shall be deemed disclosed for all purposes of such
party's Disclosure Letter.
3.2 REPRESENTATIONS AND WARRANTIES OF HOMETOWN. Hometown represents and
warrants to First Capital that, except as disclosed in Hometown's Disclosure
Letter:
(a) ORGANIZATION AND QUALIFICATION. Hometown is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Indiana and is registered as a bank holding company under the BHC Act. Hometown
has all requisite corporate power and authority to own, lease and operate its
properties and to conduct the business currently being conducted by it. Hometown
is duly qualified or licensed as a foreign corporation to transact business and
is in good standing in each jurisdiction in which the character of the
properties owned or leased by it or the nature of the business conducted by it
makes such qualification or licensing necessary, except where the failure to be
so qualified or licensed and in good standing would not have a Material Adverse
Affect on Hometown.
(b) SUBSIDIARIES.
(i) Hometown's Disclosure Letter sets forth with respect to
each of Hometown's Subsidiaries its name, its jurisdiction of incorporation,
Hometown's percentage ownership, the number of shares of stock owned or
controlled by Hometown and the name and number of shares held by any other
person who owns any stock of the Subsidiary. Hometown owns of record and
beneficially all the capital stock of each of its Subsidiaries free and clear of
any Liens. There are no contracts, commitments, agreements or understandings
relating to
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Hometown's right to vote or dispose of any equity securities of its
Subsidiaries. Hometown's ownership interest in each of its Subsidiaries is in
compliance with all applicable laws, rules and regulations relating to equity
investments by bank holding companies or national banking associations.
(ii) Each of Hometown's Subsidiaries is a corporation duly
organized and validly existing under the laws of its jurisdiction of
incorporation, has all requisite corporate power and authority to own, lease and
operate its properties and to conduct the business currently being conducted by
it and is duly qualified or licensed as a foreign corporation to transact
business and is in good standing in each jurisdiction in which the character of
the properties owned or leased by it or the nature of the business conducted by
it makes such qualification or licensing necessary, except where the failure to
be so qualified or licensed and in good standing would not have a Material
Adverse Affect on such Subsidiary.
(iii) The outstanding shares of capital stock of each
Subsidiary have been validly authorized and are validly issued, fully paid and
nonassessable. No shares of capital stock of any Subsidiary of Hometown are or
may be required to be issued by virtue of any options, warrants or other rights,
no securities exist that are convertible into or exchangeable for shares of such
capital stock or any other debt or equity security of any Subsidiary, and there
are no contracts, commitments, agreements or understandings of any kind for the
issuance of additional shares of capital stock or other debt or equity security
of any Subsidiary or options, warrants or other rights with respect to such
securities.
(iv) No Subsidiary of Hometown other than Hometown National
Bank is an "insured depository institution" as defined in the FDIA and the
applicable regulations thereunder. The deposits of Hometown National Bank are
insured by the FDIC through the Bank Insurance Fund to the fullest extent
permitted by law. Hometown National Bank is a member in good standing of the
Federal Home Loan Bank of Indianapolis.
(c) CAPITAL STRUCTURE.
(i) The authorized capital stock of Hometown consists of:
(A) 900,000 shares of Hometown Common Stock; and
(B) 25,000 shares of preferred stock, no par value per
share.
(ii) As of the date of this Agreement:
(A) 229,550 shares of Hometown Common Stock are issued
and outstanding, all of which are validly issued, fully paid and nonassessable
and were issued in full compliance with all applicable laws and not in violation
of any preemptive rights;
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(B) no shares of Hometown preferred stock are issued
and outstanding;
(iii) No bonds, debentures, notes or other indebtedness having
the right to vote on any matters on which stockholders of Hometown may vote are
issued or outstanding.
(iv) Except as set forth in this SECTION 3.2(C), as of the
date of this Agreement, (A) no shares of capital stock or other voting
securities of Hometown are issued, reserved for issuance or outstanding and (B)
neither Hometown 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 Hometown 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 Hometown or obligating Hometown
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 Hometown or any
of its Subsidiaries to repurchase, redeem or otherwise acquire any shares of
capital stock of Hometown or any of its Subsidiaries.
(d) AUTHORITY. Hometown has all requisite corporate power and
authority to enter into this Agreement, to perform its obligations hereunder and
to consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
by this Agreement have been duly authorized by all necessary corporate actions
on the part of Hometown's Board of Directors, and no other corporate proceedings
on the part of Hometown are necessary to authorize this Agreement or to
consummate the transactions contemplated by this Agreement other than the
approval and adoption of this Agreement by the affirmative vote of the holders
of a majority of the outstanding shares of Hometown Common Stock. This Agreement
has been duly and validly executed and delivered by Hometown and constitutes a
valid and binding obligation of Hometown, enforceable against Hometown in
accordance with its terms, subject to applicable bankruptcy, insolvency and
similar laws affecting creditors' rights and remedies generally and to general
principles of equity, whether applied in a court of law or a court of equity.
(e) NO VIOLATIONS. The execution, delivery and performance of this
Agreement by Hometown do not, and the consummation of the transactions
contemplated by this Agreement (including the Bank Merger) by Hometown and
Hometown National Bank will not, (i) assuming all required governmental
approvals have been obtained and the applicable waiting periods have expired,
violate any law, rule or regulation or any judgment, decree, order, governmental
permit or license to which Hometown or any of its Subsidiaries (or any of their
respective properties) is subject, (ii) violate the articles of incorporation or
bylaws of Hometown or the similar organizational documents of any of its
Subsidiaries or (iii) constitute 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 upon any of the properties or
assets of
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Hometown 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 Hometown or any of its Subsidiaries
is a party, or to which any of their respective properties or assets may be
subject except, in the case of (iii), for any such breaches, violations or
defaults that would not, individually or in the aggregate, have a Material
Adverse Effect on Hometown.
(f) CONSENTS AND APPROVALS. No consents or approvals of, or filings
or registrations with, any Governmental Entity or any third party are required
to be made or obtained in connection with the execution and delivery by Hometown
of this Agreement or the consummation by Hometown of the Merger and the other
transactions contemplated by this Agreement, including the Bank Merger, except
for (i) filings of applications and notices with, receipt of approvals or
nonobjections from, and expiration of the related waiting period required by,
federal and state banking authorities, (ii) filing of the Registration Statement
with the SEC and declaration by the SEC of the Registration Statement's
effectiveness under the Securities Act, (iii) the registration or qualification
of the shares of First Capital Common Stock to be issued in exchange for shares
of Hometown Common Stock under state securities or "blue sky" laws and (iv) the
listing of the shares of First Capital Common Stock to be issued in exchange for
shares of Hometown Common Stock on the Nasdaq Stock Market. As of the date
hereof, Hometown knows of no reason pertaining to Hometown why any of the
approvals referred to in this SECTION 3.2(F) should not be obtained without the
imposition of any material condition or restriction described in SECTION 6.1(B).
(g) REGULATORY FILINGS. Hometown and each Subsidiary of Hometown has
filed with the SEC and any Government Regulator all reports, schedules,
registrations, and statements that it has been required to file since December
31, 1998 (collectively, "HOMETOWN REGULATORY FILINGS"). As of their respective
dates, each of the Hometown Regulatory Filings complied in all material respects
with all of the laws, rules and regulations of the SEC or the Government
Regulator with which they were filed. None of the Hometown Regulatory Filings
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.
(h) FINANCIAL STATEMENTS. Hometown has previously made available to
First Capital copies of the consolidated balance sheets of Hometown and its
Subsidiaries as of December 31, 2001 and 2000 and related consolidated
statements of income, cash flows and changes in stockholders' equity for each of
the years in the two-year period ended December 31, 2001, together with the
notes thereto, accompanied by the audit report of Hometown's independent public
auditors. Such financial statements were prepared from the books and records of
Hometown and its Subsidiaries, fairly present the consolidated financial
position of Hometown and its Subsidiaries in each case at and as of the dates
indicated and the consolidated results of operations, retained earnings and cash
flows of Hometown and its Subsidiaries for the periods indicated, and, except as
otherwise set forth in the notes thereto, were prepared in
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accordance with GAAP consistently applied throughout the periods covered
thereby. The books and records of Hometown and its Subsidiaries have been, and
are being, maintained in all respects in accordance with GAAP and any other
legal and accounting requirements and reflect only actual transactions.
(i) UNDISCLOSED LIABILITIES. Neither Hometown nor any of its
Subsidiaries has incurred any debt, liability or obligation of any nature
whatsoever (whether accrued, contingent, absolute or otherwise and whether due
or to become due) other than liabilities reflected on or reserved against in the
consolidated balance sheet of Hometown as of December 31, 2001, except for (i)
liabilities incurred since December 31, 2001 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 Hometown and (ii) liabilities incurred for legal,
accounting, financial advising fees and out-of-pocket expenses in connection
with the transactions contemplated by this Agreement.
(j) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
Hometown's Disclosure Letter, since December 31, 2001, (i) Hometown and its
Subsidiaries have conducted their respective businesses only in the ordinary and
usual course of such businesses consistent with their past practices, (ii) there
has not been any event or occurrence that has had, or is reasonably expected to
have, a Material Adverse Effect on Hometown, (iii) there has been no increase in
the salary, compensation, pension or other benefits payable or to become payable
by Hometown 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, (iv) neither
Hometown 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 (v) there
has been no change in any accounting principles, practices or methods of
Hometown or any of its Subsidiaries other than as required by GAAP.
(k) LITIGATION. There are no suits, actions or legal, administrative
or arbitration proceedings pending or, to the knowledge of Hometown, threatened
against or affecting Hometown or any of its Subsidiaries or any property or
asset of Hometown or any of its Subsidiaries that (i) individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect on
Hometown or (ii) challenge the validity or propriety of the transactions
contemplated by this Agreement. To the knowledge of Hometown, there are no
investigations, reviews or inquiries by any court or Governmental Entity pending
or threatened against Hometown or any of its Subsidiaries. There are no
judgments, decrees, injunctions, orders or rulings of any Governmental Entity or
arbitrator outstanding against Hometown or any of its Subsidiaries that,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on Hometown.
(l) ABSENCE OF REGULATORY ACTIONS. Since December 31, 1997, neither
Hometown nor any of its Subsidiaries has been a party to any cease and desist
order, written
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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 any Government Regulator, 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, commitment letter,
board resolutions or similar undertaking. There are no unresolved violations,
criticisms or exceptions by any Government Regulator with respect to any report
or statement relating to any examinations of Hometown or its Subsidiaries.
(m) COMPLIANCE WITH LAWS. Hometown and each of its Subsidiaries
conducts its business in compliance with all statutes, laws, regulations,
ordinances, rules, judgements, orders or decrees applicable to it or the
employees conducting such business. Hometown 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 Governmental
Entities 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 no suspension or
cancellation of any of them is threatened. Neither Hometown nor any of its
Subsidiaries has been given notice or been charged with any violation of, any
law, ordinance, regulation, order, writ, rule, decree or condition to approval
of any Governmental Entity which, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect on Hometown.
(n) TAXES. All federal, state, local and foreign tax returns
required to be filed by or on behalf of Hometown 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 Hometown or any of
its Subsidiaries have been paid in full or adequate provision has been made for
any such taxes on Hometown's balance sheet (in accordance with GAAP). There is
no audit examination, deficiency assessment, tax investigation or refund
litigation with respect to any taxes of Hometown or any of its Subsidiaries, and
no claim has been made in writing by any authority in a jurisdiction where
Hometown or any of its Subsidiaries do not file tax returns that Hometown 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 Hometown or any of its
Subsidiaries have been paid in full or adequate provision has been made for any
such taxes on Hometown's balance sheet (in accordance with GAAP). Hometown and
its Subsidiaries have not executed an extension or waiver of any statute of
limitations on the assessment or collection of any tax due that is currently in
effect. Hometown 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 Hometown and each of its Subsidiaries has timely complied
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with all applicable information reporting requirements under Part III,
Subchapter A of Chapter 61 of the IRC and similar applicable state and local
information reporting requirements. Neither Hometown nor any of its Subsidiaries
is a party to any agreement, contract, arrangement or plan that has resulted or
would result, individually or in the aggregate, in connection with this
Agreement in the payment of any "excess parachute payments" within the meaning
of Section 280G of the IRC and neither Hometown nor any of its Subsidiaries has
made any payments and is not a party to any agreement, and does not maintain any
plan, program or arrangement, that could require it to make any payments
(including any deemed payment of compensation upon the issuance of any Hometown
Common Stock), that would not be fully deductible by reason of Section 162(m) of
the IRC.
(o) AGREEMENTS.
(i) Hometown's Disclosure Letter lists any contract,
arrangement, commitment or understanding (whether written or oral) to which
Hometown or any of its Subsidiaries is a party or is bound:
(A) with any executive officer or other key employee of
Hometown 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 Hometown or any of its Subsidiaries of the nature contemplated by this
Agreement;
(B) with respect to the employment of any directors,
officers, employees or consultants;
(C) 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 (including any stock option
plan, phantom stock or stock appreciation rights plan, restricted stock plan or
stock purchase plan);
(D) containing covenants that limit the ability of
Hometown 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, Hometown (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);
(E) pursuant to which Hometown or any of its
Subsidiaries may become obligated to invest in or contribute capital to any
entity;
(F) not fully disclosed in Hometown Regulatory Filings
that relates to borrowings of money (or guarantees thereof) by Hometown or any
of its Subsidiaries in
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excess of $50,000, other than purchases of Federal Funds or repurchase
agreements fully secured by U.S. government agency securities;
(G) which is a 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 $25,000 on an annual
basis;
(H) the termination of which would require payment by
Hometown or any of its Subsidiaries in excess of $25,000; or
(I) which would constitute a material contract (as
defined in Item 601(b)(10) of Regulation S-K promulgated by the SEC);
(ii) Neither Hometown 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
Hometown, no other party to any such agreement (excluding any loan or extension
of credit or security agreements relating thereto made by Hometown or any of its
Subsidiaries) is in default in any respect thereunder, except for such defaults
or violations that would not, individually or in the aggregate, have a Material
Adverse Effect on Hometown.
(p) INTELLECTUAL PROPERTY. Hometown 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, service marks and
trademarks material to its businesses, and neither Hometown nor any of its
Subsidiaries has received any notice of conflict with respect thereto that
asserts the right of others. Each of Hometown 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, except for such non- performance or defaults that would not,
individually or in the aggregate, have a Material Adverse Effect on Hometown.
(q) LABOR MATTERS. Hometown and its Subsidiaries are in material
compliance with all applicable laws respecting employment, retention of
independent contractors, employment practices, terms and conditions of
employment, and wages and hours. Neither Hometown 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 Hometown 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
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strike, other labor dispute or organizational effort involving Hometown or any
of its Subsidiaries pending or, to the knowledge of Hometown, threatened.
(r) EMPLOYEE BENEFIT PLANS.
(i) Hometown's Disclosure Letter contains a complete and
accurate list of all 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, contracts, agreements and arrangements, including, but not limited to,
"employee benefit plans," as defined in Section 3(3) of 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 Hometown or any of its Subsidiaries (hereinafter referred to
collectively as the "HOMETOWN EMPLOYEE PLANS"). Hometown has previously
delivered or made available to First Capital true and complete copies of each
agreement, plan and other documents referenced in Hometown's Disclosure Letter
or has provided a written description of any Hometown Employee Plan for which no
document is available. There has been no announcement or commitment by Hometown
or any of its Subsidiaries to create an additional Hometown Employee Plan, or to
amend any Hometown Employee Plan, except for amendments required by applicable
law which do not materially increase the cost of such Hometown Employee Plan.
(ii) There is no pending or, to the knowledge of Hometown,
threatened litigation, administrative action or proceeding relating to any
Hometown Employee Plan. All of the Hometown Employee Plans comply in all
material respects with all applicable requirements of ERISA, the IRC and other
applicable laws. There has occurred no "prohibited transaction" (as defined in
Section 406 of ERISA or Section 4975 of the IRC) with respect to the Hometown
Employee Plans which is likely to result in the imposition of any penalties or
taxes upon Hometown or any of its Subsidiaries under Section 502(i) of ERISA or
Section 4975 of the IRC.
(iii) No Hometown Employee Plan currently or formerly
maintained by Hometown is or was subject to Title IV of ERISA. Neither Hometown
nor any of its Subsidiaries has contributed to any "multiemployer plan," as
defined in Section 3(37) of ERISA, on or after September 26, 1980.
(iv) Each Hometown Employee Plan that is an "employee pension
benefit plan" (as defined in Section 3(2) of ERISA) and which is intended to be
qualified under Section 401(a) of the IRC (a "HOMETOWN QUALIFIED PLAN") has
received a favorable determination letter from the IRS, and Hometown and its
Subsidiaries are not aware of any circumstances likely to result in revocation
of any such favorable determination letter. No Hometown Qualified Plan is an
"employee stock ownership plan" (as defined in Section 4975(e)(7) of the IRC).
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(v) Neither Hometown nor any of its Subsidiaries has any
obligations for post-retirement or post-employment benefits under any Hometown
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.
(s) PROPERTIES.
(i) A description of each parcel of real property owned by
Hometown or a Subsidiary of Hometown is set forth in Hometown's Disclosure
Letter. Hometown and each of its Subsidiaries has good and marketable title to
all real property owned by it (including any property acquired in a judicial
foreclosure proceeding or by way of a deed in lieu of foreclosure or similar
transfer), in each case free and clear of any Liens except (i) liens for taxes
not yet due and payable and (ii) such easements, restrictions and encumbrances,
if any, as are not material in character, amount or extent, and do not
materially detract from the value, or materially interfere with the present use
of the properties subject thereto or affected thereby. All real property and
fixtures of Hometown and each of its Subsidiaries are in a good state of
maintenance and repair (normal wear and tear excepted), conform with all
applicable ordinances, regulations and zoning laws and are considered by
Hometown to be adequate for the current business of Hometown and its
Subsidiaries. To the knowledge of Hometown, none of the buildings, structures or
other improvements located on its real property encroaches upon or over any
adjoining parcel or real estate or any easement or right-of-way.
(ii) Hometown and each of its Subsidiaries has good and
marketable title to all tangible personal property owned by it, free and clear
of all Liens except such encumbrances, if any, as are not material in character,
amount or extent, and do not materially detract from the value, or materially
interfere with the present use of the properties subject thereto or affected
thereby. With respect to personal property used in the business of Hometown and
its Subsidiaries that is leased rather than owned, neither Hometown nor any of
its Subsidiaries is in default in any material respect under the terms of any
such lease.
(iii) A description of all real property leased by Hometown or
a Subsidiary of Hometown is set forth in Hometown's Disclosure Letter. Each
lease pursuant to which Hometown or any of its Subsidiaries as lessee, leases
real or personal property, is valid and in full force and effect and neither
Hometown nor any of its Subsidiaries, nor, to Hometown's knowledge, any other
party to any such lease, is in default or in violation of any material
provisions of any such lease.
(t) FAIRNESS OPINION. Hometown has received the opinion of ▇▇▇▇▇ ▇.
▇▇▇▇▇ & Company to the effect that, as of the date hereof, the Merger
Consideration is fair, from a financial point of view, to Hometown's
stockholders.
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(u) FEES. Other than financial advisory services performed for
Hometown by ▇▇▇▇▇ ▇. ▇▇▇▇▇ & Company pursuant to an agreement dated June 30,
2002, a true and complete copy of which has been previously delivered to First
Capital, neither Hometown 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 Hometown or any of its Subsidiaries in connection with this
Agreement or the transactions contemplated hereby.
(v) ENVIRONMENTAL MATTERS.
(i) Each of Hometown and its Subsidiaries and, to the
knowledge of Hometown, the Participation Facilities and the Loan Properties are,
and have been, in substantial compliance with all Environmental Laws.
(ii) There is no suit, claim, action, demand, executive or
administrative order, directive, investigation or proceeding pending or, to the
knowledge of Hometown, threatened, before any court, governmental agency or
board or other forum against Hometown or any of its Subsidiaries or any
Participation Facility (A) for alleged noncompliance (including by any
predecessor) with, or liability under, any Environmental Law or (B) relating to
the presence of or release into the environment of any Hazardous Material,
whether or not occurring at or on a site owned, leased or operated by Hometown
or any of its Subsidiaries or any Participation Facility.
(iii) To the knowledge of Hometown, 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 relating to or against any Loan Property (or Hometown or any of
its Subsidiaries in respect of such Loan Property) (A) relating to alleged
noncompliance (including by any predecessor) with, or liability under, any
Environmental Law or (B) relating to the presence of or release into the
environment of any Hazardous Material, whether or not occurring at a Loan
Property.
(iv) Neither Hometown nor any of its Subsidiaries has received
any notice, demand letter, executive or administrative order, directive or
request for information from any Governmental Entity or any third party
indicating that it may be in violation of, or liable under, any Environmental
Law.
(v) There are no underground storage tanks at any properties
owned or operated by Hometown or any of its Subsidiaries or, to the knowledge of
Hometown, at any Participation Facility and no underground storage tanks have
been closed or removed from any properties owned or operated by Hometown or any
of its Subsidiaries or, to the knowledge of Hometown, any Participation
Facility.
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(vi) During the period of (A) Hometown's or its Subsidiary's
ownership or operation of any of their respective current properties or (B)
Hometown's or its Subsidiary's participation in the management of any
Participation Facility, there has been no release of Hazardous Materials in, on,
under or affecting such properties. To the knowledge of Hometown, prior to the
period of (A) Hometown's or its Subsidiary's ownership or operation of any of
their respective current properties or (B) Hometown's or its Subsidiary's
participation in the management of any Participation Facility, there was no
contamination by or release of Hazardous Material in, on, under or affecting
such properties.
(w) LOAN PORTFOLIO; ALLOWANCE FOR LOAN LOSSES.
(i) With respect to each Loan owned by Hometown or its
Subsidiaries in whole or in part:
(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 subject
to bankruptcy, insolvency, fraudulent convenyance and other laws of general
applicability relating to or affecting creditors' rights and to general equity
principles;
(B) neither Hometown nor any of its Subsidiaries, nor
any prior holder of a Loan, has modified the note or any of the related security
documents in any material respect or satisfied, canceled or subordinated the
note or any of the related security documents except as otherwise disclosed by
documents in the applicable Loan file;
(C) Hometown or a Subsidiary of Hometown is the sole
holder of legal and beneficial title to each Loan (or Hometown's or its
Subsidiary's applicable participation interest, as applicable), except as
otherwise referenced on the books and records of Hometown or a Subsidiary of
Hometown;
(D) the original note and the related security documents
are included in the Loan files, and copies of any documents 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
(E) with respect to a Loan held in the form of a
participation, the participation documentation is legal, valid, binding and
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent conveyance and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
(ii) Neither the terms of any Loan, any of the documentation
for any Loan, the manner in which any Loans have been administered and serviced,
nor Hometown's
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practices of approving or rejecting Loan applications, violate in any material
respect any federal, state, or local law, rule or regulation applicable thereto,
including, without limitation, the Truth In Lending Act, Regulations O and Z of
the Federal Reserve Board, the CRA, the Equal Credit Opportunity Act, and any
state laws, rules and regulations relating to consumer protection, installment
sales and usury.
(iii) The allowance for loan losses reflected in Hometown's
audited balance sheet at December 31, 2001 was, and the allowance for loan
losses shown on the balance sheets in the Hometown Regulatory Filings for
periods ending after December 31, 2001, in the opinion of management, was or
will be adequate, as of the dates thereof, under GAAP. Hometown has no knowledge
of any fact which is likely to require a future material increase in the
provision for loan losses or a material decrease in the allowance for loan
losses under GAAP.
(x) DEPOSITS. The deposit accounts of Hometown National Bank are
insured by the FDIC to the maximum extent permitted by law. None of the deposits
of Hometown or any of its Subsidiaries is a "brokered" deposit.
(y) ANTI-TAKEOVER PROVISIONS INAPPLICABLE. Hometown and its
Subsidiaries have taken all actions required to exempt First Capital, the
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 "anti-takeover," "fair price,"
"moratorium," "control share acquisition" or similar laws or regulations
contained in the IBCL.
(z) MATERIAL INTERESTS OF CERTAIN PERSONS. No officer or director of
Hometown, 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 Hometown or any of its Subsidiaries other
than banking relationships in the ordinary course of business.
(aa) INSURANCE. In the opinion of management, Hometown and its
Subsidiaries are presently insured for amounts deemed reasonable by management
against such risks as companies of a similar size engaged in a similar business
would, in accordance with good business practice, customarily be insured. All of
the insurance policies and bonds maintained by Hometown and its Subsidiaries are
in full force and effect, Hometown and its Subsidiaries are not in default
thereunder and all material claims thereunder have been filed in due and timely
fashion.
(bb) INVESTMENT SECURITIES; DERIVATIVES.
(i) Except for restrictions that exist for securities that are
classified as "held to maturity," none of the investment securities held by
Hometown or any of its Subsidiaries 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.
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(ii) Neither Hometown 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.
(cc) INDEMNIFICATION. Except as provided in the articles of
incorporation or bylaws of Hometown and the similar organizational documents of
its Subsidiaries, neither Hometown nor any of its Subsidiaries is a party to any
agreement that provides for the indemnification of any of its present or former
directors, officers or employees, or other persons who serve or served as a
director, officer or employee of another corporation, partnership or other
enterprise at the request of Hometown and, to the knowledge of Hometown, there
are no claims for which any such person would be entitled to indemnification
under the articles of incorporation or bylaws of Hometown or the similar
organizational documents of any of its Subsidiaries, under any applicable law or
regulation or under any indemnification agreement.
(dd) CORPORATE DOCUMENTS. Hometown's Disclosure Letter contains a
complete and correct copy of the articles of incorporation, bylaws and similar
organizational documents of Hometown and each of Hometown's Subsidiaries, as in
effect as of the date of this Agreement. Neither Hometown nor any of Hometown's
Subsidiaries is in violation of its articles of incorporation, bylaws or similar
organizational documents. The minute books of Hometown and each of Hometown's
Subsidiaries constitute a complete and correct record of all actions taken by
their respective boards of directors (and each committee thereof) and their
stockholders.
(ee) HOMETOWN INFORMATION. The information regarding Hometown and
its Subsidiaries to be supplied by Hometown for inclusion in the Registration
Statement, any filings or approvals under applicable state securities laws, or
any filing pursuant to Rule 165 or Rule 425 under the Securities Act 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.
(ff) COMMUNITY REINVESTMENT ACT COMPLIANCE. Hometown National Bank
is in material compliance with the applicable provisions of the CRA and the
regulations promulgated thereunder, and Hometown National Bank currently has a
CRA rating of satisfactory or better. To the knowledge of Hometown, there is no
fact or circumstance or set of facts or circumstances that would cause Hometown
National Bank to fail to comply with such provisions or cause the CRA rating of
Hometown National Bank to fall below satisfactory.
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(gg) TAX TREATMENT OF THE MERGER. Hometown has no knowledge of any
fact or circumstance relating to it that would prevent the transactions
contemplated by this Agreement from qualifying as a reorganization under Section
368 of the IRC.
3.3 REPRESENTATIONS AND WARRANTIES OF FIRST CAPITAL. First Capital
represents and warrants to Hometown that, except as set forth in First Capital's
Disclosure Letter:
(a) ORGANIZATION AND QUALIFICATION. First Capital is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Indiana and is registered with the OTS as a savings and loan holding
company. First Capital has all requisite corporate power and authority to own,
lease and operate its properties and to conduct the business currently being
conducted by it. First Capital is duly qualified or licensed as a foreign
corporation to transact business and is in good standing in each jurisdiction in
which the character of the properties owned or leased by it or the nature of the
business conducted by it makes such qualification or licensing necessary, except
where the failure to be so qualified or licensed and in good standing would not
have a Material Adverse Affect on First Capital.
(b) SUBSIDIARIES.
(i) First Capital owns of record and beneficially all the
capital stock of each of its Subsidiaries free and clear of any Liens. There are
no contracts, commitments, agreements or understandings relating to First
Capital's right to vote or dispose of any equity securities of its Subsidiaries.
First Capital's ownership interest in each of its Subsidiaries is in compliance
with all applicable laws, rules and regulations relating to equity investments
by savings and loan holding companies or federally chartered savings
associations.
(ii) Each of First Capital's Subsidiaries is a corporation
duly organized and validly existing under the laws of its jurisdiction of
incorporation, has all requisite corporate power and authority to own, lease and
operate its properties and to conduct the business currently being conducted by
it and is duly qualified or licensed as a foreign corporation to transact
business and is in good standing in each jurisdiction in which the character of
the properties owned or leased by it or the nature of the business conducted by
it makes such qualification or licensing necessary, except where the failure to
be so qualified or licensed and in good standing would not have a Material
Adverse Affect on First Capital.
(iii) The outstanding shares of capital stock of each
Subsidiary have been validly authorized and are validly issued, fully paid and
nonassessable. No shares of capital stock of any Subsidiary of First Capital are
or may be required to be issued by virtue of any options, warrants or other
rights, no securities exist that are convertible into or exchangeable for shares
of such capital stock or any other debt or equity security of any Subsidiary,
and there are no contracts, commitments, agreements or understandings of any
kind for the issuance of additional shares of capital stock or other debt or
equity security of any Subsidiary or options, warrants or other rights with
respect to such securities.
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(iv) No Subsidiary of First Capital other than First ▇▇▇▇▇▇▇▇
Bank is an "insured depository institution" as defined in the FDIA and the
applicable regulations thereunder. First ▇▇▇▇▇▇▇▇ Bank is a qualified thrift
lender pursuant to Section 10(m) of the HOLA and its deposits are insured by the
FDIC through the Savings Association Insurance Fund to the fullest extent
permitted by law. First ▇▇▇▇▇▇▇▇ Bank is a member in good standing of the
Federal Home Loan Bank of Indianapolis.
(c) CAPITAL STRUCTURE.
(i) The authorized capital stock of First Capital consists
of:
(A) 5,000,000 shares of First Capital Common Stock;
and
(B) 1,000,000 shares of preferred stock, par value
$.01 per share.
(ii) As of the date of this Agreement:
(A) 2,542,128 shares of First Capital Common Stock are
issued and outstanding, all of which are validly issued, fully paid and
nonassessable and were issued in full compliance with all applicable laws and
not in violation of any preemptive rights;
(B) no shares of First Capital preferred stock are
issued and outstanding; and
(C) 74,828 shares of First Capital Common Stock are
reserved for issuance pursuant to outstanding grants or awards under First
Capital's stock-based benefit plans.
(iii) No bonds, debentures, notes or other indebtedness having
the right to vote on any matters on which stockholders of First Capital may vote
are issued or outstanding.
(iv) Except as set forth in this SECTION 3.3(C), as of the
date of this Agreement, (A) no shares of capital stock or other voting
securities of First Capital are issued, reserved for issuance or outstanding and
(B) neither First Capital 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 First Capital
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 First Capital or
obligating First Capital 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 First Capital or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any shares of capital stock of First Capital or any of its
Subsidiaries.
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(v) The shares of First Capital Common Stock to be issued in
exchange for shares of Hometown Common Stock upon consummation of the Merger in
accordance with this Agreement have been duly authorized and when issued in
accordance with the terms of this Agreement, will be validly issued, fully paid
and nonassessable and subject to no preemptive rights.
(d) AUTHORITY. First Capital has all requisite corporate power and
authority to enter into this Agreement, to perform its obligations hereunder and
to consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
by this Agreement have been duly authorized by all necessary corporate actions
on the part of First Capital's Board of Directors, and no other corporate
proceedings on the part of First Capital are necessary to authorize this
Agreement or to consummate the transactions contemplated by this Agreement. This
Agreement has been duly and validly executed and delivered by First Capital and
constitutes a valid and binding obligation of First Capital, enforceable against
First Capital in accordance with its terms, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights and remedies generally
and to general principles of equity, whether applied in a court of law or a
court of equity.
(e) NO VIOLATIONS. The execution, delivery and performance of this
Agreement by First Capital do not, and the consummation of the transactions
contemplated by this Agreement (including the Bank Merger) by First Capital and
First ▇▇▇▇▇▇▇▇ Bank will not, (i) assuming all required governmental approvals
have been obtained and the applicable waiting periods have expired, violate any
law, rule or regulation or any judgment, decree, order, governmental permit or
license to which First Capital or any of its Subsidiaries (or any of their
respective properties) is subject, (ii) violate the articles of incorporation or
bylaws of First Capital or the similar organizational documents of any of its
Subsidiaries or (iii) constitute 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 upon any of the properties or
assets of First Capital 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 First Capital or
any of its Subsidiaries is a party, or to which any of their respective
properties or assets may be subject except, in the case of (iii), for any such
breaches, violations or defaults that would not, individually or in the
aggregate, have a Material Adverse Effect on First Capital.
(f) CONSENTS AND APPROVALS. No consents or approvals of, or filings
or registrations with, any Governmental Entity or any third party are required
to be made or obtained in connection with the execution and delivery by First
Capital of this Agreement or the consummation by First Capital of the Merger and
the other transactions contemplated by this Agreement, including the Bank
Merger, except for (i) filings of applications and notices with, receipt of
approvals or nonobjections from, and expiration of the related waiting period
required
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by, federal and state banking authorities, (ii) filing of the Registration
Statement with the SEC and declaration by the SEC of the Registration
Statement's effectiveness under the Securities Act, (iii) the registration or
qualification of the shares of First Capital Common Stock to be issued in
exchange for shares of First Capital Common Stock under state securities or
"blue sky" laws and (iv) the listing of the shares of First Capital Common Stock
to be issued in exchange for shares of First Capital Common Stock on the Nasdaq
Stock Market. As of the date hereof, First Capital knows of no reason pertaining
to First Capital why any of the approvals referred to in this SECTION 3.3(F)
should not be obtained without the imposition of any material condition or
restriction described in SECTION 6.1(B).
(g) SECURITIES AND REGULATORY FILINGS.
(i) First Capital has filed with the SEC all reports,
schedules, registration statements, definitive proxy statements and other
documents that it has been required to file under the Securities Act or the
Exchange Act since December 31, 1998 (collectively, "FIRST CAPITAL'S REPORTS").
None of First Capital'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. As of their respective dates, all of
First Capital's Reports complied in all material respects with the applicable
requirements of the Securities Act or the Exchange Act, as the case may be, and
the rules and regulations of the SEC promulgated thereunder. Each of the
financial statements (including, in each case, any notes thereto) of First
Capital included in First Capital'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.
(ii) First Capital and each Subsidiary of First Capital has
filed with any Government Regulator all reports, schedules, registrations, and
statements that it has been required to file since December 31, 1998
(collectively, "FIRST CAPITAL REGULATORY FILINGS"). As of their respective
dates, each of the First Capital Regulatory Filings complied in all material
respects with all of the laws, rules and regulations of the Government Regulator
with which they were filed. None of the First Capital Regulatory Filings
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.
(h) FINANCIAL STATEMENTS. First Capital has previously made
available to Hometown copies of (i) the consolidated balance sheets of First
Capital and its Subsidiaries as of December 31, 2001 and 2000 and related
consolidated statements of income, cash flows and changes in stockholders'
equity for each of the years in the two-year period ended December 31, 2001,
together with the notes thereto, accompanied by the audit report of First
Capital's independent public auditors, as reported in First Capital's Annual
Report on Form 10-KSB for the year ended December 31, 2001 filed with the SEC
and (ii) the unaudited consolidated balance
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sheet of First Capital and its Subsidiaries as of June 30, 2002 and the related
consolidated statements of income and cash flows for the six months ended June
30, 2002 and 2001, as reported in First Capital's Quarterly Report on Form
10-QSB for the period ended June 30, 2002 filed with the SEC. Such financial
statements were prepared from the books and records of First Capital and its
Subsidiaries, fairly present the consolidated financial position of First
Capital and its Subsidiaries in each case at and as of the dates indicated and
the consolidated results of operations and cash flows of First Capital and its
Subsidiaries for the periods indicated, and, except as otherwise set forth in
the notes thereto, were prepared in accordance with GAAP consistently applied
throughout the periods covered thereby; PROVIDED, HOWEVER, that the unaudited
financial statements for interim periods are subject to normal year-end
adjustments (which will not be material individually or in the aggregate) and
lack a statement of changes in stockholders' equity and footnotes to the extent
permitted under applicable regulations. The books and records of First Capital
and its Subsidiaries have been, and are being, maintained in all respects in
accordance with GAAP and any other legal and accounting requirements and reflect
only actual transactions.
(i) UNDISCLOSED LIABILITIES. Neither First Capital nor any of its
Subsidiaries has incurred any debt, liability or obligation of any nature
whatsoever (whether accrued, contingent, absolute or otherwise and whether due
or to become due) other than liabilities reflected on or reserved against in the
consolidated balance sheet of First Capital as of June 30, 2002 as included in
First Capital's Quarterly Report on Form 10-QSB for the period ended June 30,
2002, except for (i) liabilities incurred since June 30, 2002 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 First Capital and (ii)
liabilities incurred for legal, accounting, financial advising fees and
out-of-pocket expenses in connection with the transactions contemplated by this
Agreement.
(j) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
First Capital's Reports filed with the SEC prior to the date of this Agreement,
since June 30, 2002, (i) First Capital and its Subsidiaries have conducted their
respective businesses only in the ordinary and usual course of such businesses
consistent with their past practices and (ii) there has not been any event or
occurrence that has had, or is reasonably expected to have, a Material Adverse
Effect on First Capital.
(k) LITIGATION. There are no suits, actions or legal, administrative
or arbitration proceedings pending or, to the knowledge of First Capital,
threatened against or affecting First Capital or any of its Subsidiaries or any
property or asset of First Capital or any of its Subsidiaries that (i)
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on First Capital or (ii) challenge the validity or
propriety of the transactions contemplated by this Agreement. There are no
judgments, decrees, injunctions, orders or rulings of any Governmental Entity or
arbitrator outstanding against First Capital or any of its Subsidiaries that,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on First Capital.
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(l) ABSENCE OF REGULATORY ACTIONS. Since December 31, 1997, neither
First Capital nor any of its Subsidiaries has been 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 any Government Regulator, 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, commitment letter, board resolutions or similar undertaking.
There are no unresolved violations, criticisms or exceptions by any Government
Regulator with respect to any report or statement relating to any examinations
of First Capital or its Subsidiaries.
(m) COMPLIANCE WITH LAWS. First Capital and each of its Subsidiaries
conducts its business in compliance with all statutes, laws, regulations,
ordinances, rules, judgements, orders or decrees applicable to it or the
employees conducting such business. First Capital 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 Governmental
Entities 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 no suspension or
cancellation of any of them is threatened. Neither First Capital nor any of its
Subsidiaries has been given notice or been charged with any violation of, any
law, ordinance, regulation, order, writ, rule, decree or condition to approval
of any Governmental Entity which, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect on First Capital.
(n) TAXES. All federal, state, local and foreign tax returns
required to be filed by or on behalf of First Capital 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 First Capital or
any of its Subsidiaries have been paid in full or adequate provision has been
made for any such taxes on First Capital's balance sheet (in accordance with
GAAP). There is no audit examination, deficiency assessment, tax investigation
or refund litigation with respect to any taxes of First Capital or any of its
Subsidiaries, and no claim has been made in writing by any authority in a
jurisdiction where First Capital or any of its Subsidiaries do not file tax
returns that First Capital 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 First
Capital or any of its Subsidiaries have been paid in full or adequate provision
has been made for any such taxes on First Capital's balance sheet (in accordance
with GAAP). First Capital and its Subsidiaries have not executed an extension or
waiver of any statute of limitations on the assessment or collection of any tax
due that is currently in effect. First Capital and each of its Subsidiaries has
withheld and paid all taxes required to have been withheld and paid in
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connection with amounts paid or owing to any employee, independent contractor,
creditor, stockholder or other third party, and First Capital and each of its
Subsidiaries has timely complied with all applicable information reporting
requirements under Part III, Subchapter A of Chapter 61 of the IRC and similar
applicable state and local information reporting requirements.
(o) AGREEMENTS.
(i) First Capital 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
First Capital's Reports.
(ii) Neither First Capital 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 First
Capital, no other party to any such agreement (excluding any loan or extension
of credit made by First Capital or any of its Subsidiaries) is in default in any
respect thereunder, except for such defaults or violations that would not,
individually or in the aggregate, have a Material Adverse Effect on First
Capital.
(p) FIRST CAPITAL INFORMATION. The information regarding First
Capital and its Subsidiaries to be supplied by First Capital for inclusion in
the Registration Statement, any filings or approvals under applicable state
securities laws, or any filing pursuant to Rule 165 or Rule 425 under the
Securities Act or Rule 14a-12 under the Exchange Act 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. The Proxy
Statement-Prospectus (except for such portions thereof that relate only to
Hometown or any of its Subsidiaries) will comply as to form in all material
respects with the provisions of the Exchange Act and the rules and regulations
thereunder. The Registration Statement will comply as to form in all material
respects with the provisions of the Securities Act and the rules and regulations
thereunder.
(q) ENVIRONMENTAL MATTERS.
(i) Each of First Capital and its Subsidiaries and, to the
knowledge of First Capital, the Participation Facilities and the Loan Properties
are, and have been, in substantial compliance with all Environmental Laws.
(ii) There is no suit, claim, action, demand, executive or
administrative order, directive, investigation or proceeding pending or, to the
knowledge of First Capital, threatened, before any court, governmental agency or
board or other forum against First Capital or any of its Subsidiaries or any
Participation Facility (A) for alleged noncompliance (including
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by any predecessor) with, or liability under, any Environmental Law or (B)
relating to the presence of or release into the environment of any Hazardous
Material, whether or not occurring at or on a site owned, leased or operated by
First Capital or any of its Subsidiaries or any Participation Facility.
(iii) To the knowledge of First Capital, 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 relating to or against any Loan Property (or
First Capital or any of its Subsidiaries in respect of such Loan Property) (A)
relating to alleged noncompliance (including by any predecessor) with, or
liability under, any Environmental Law or (B) relating to the presence of or
release into the environment of any Hazardous Material, whether or not occurring
at a Loan Property.
(iv) Neither First Capital nor any of its Subsidiaries has
received any notice, demand letter, executive or administrative order, directive
or request for information from any Governmental Entity or any third party
indicating that it may be in violation of, or liable under, any Environmental
Law.
(v) There are no underground storage tanks at any properties
owned or operated by First Capital or any of its Subsidiaries or, to the
knowledge of First Capital, at any Participation Facility and no underground
storage tanks have been closed or removed from any properties owned or operated
by First Capital or any of its Subsidiaries or, to the knowledge of First
Capital, any Participation Facility.
(vi) During the period of (A) First Capital's or its
Subsidiary's ownership or operation of any of their respective current
properties or (B) First Capital's or its Subsidiary's participation in the
management of any Participation Facility, there has been no release of Hazardous
Materials in, on, under or affecting such properties. To the knowledge of First
Capital, prior to the period of (A) First Capital's or its Subsidiary's
ownership or operation of any of their respective current properties or (B)
First Capital's or its Subsidiary's participation in the management of any
Participation Facility, there was no contamination by or release of Hazardous
Material in, on, under or affecting such properties.
(r) COMMUNITY REINVESTMENT ACT COMPLIANCE. First ▇▇▇▇▇▇▇▇ Bank is in
material compliance with the applicable provisions of the CRA and the
regulations promulgated thereunder, and First ▇▇▇▇▇▇▇▇ Bank currently has a CRA
rating of satisfactory or better. To the knowledge of First Capital, there is no
fact or circumstance or set of facts or circumstances that would cause First
▇▇▇▇▇▇▇▇ Bank to fail to comply with such provisions or cause the CRA rating of
First ▇▇▇▇▇▇▇▇ Bank to fall below satisfactory.
(s) TAX TREATMENT OF THE MERGER. First Capital has no knowledge of
any fact or circumstance relating to it that would prevent the transactions
contemplated by this Agreement from qualifying as a reorganization under Section
368 of the IRC.
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(t) AVAILABILITY OF FUNDS. First Capital has and will have available
to it at the Effective Time, sources of capital sufficient to pay the aggregate
Cash Consideration and to pay any other amounts payable pursuant to this
Agreement and to effect the transactions contemplated hereby.
ARTICLE IV
CONDUCT PENDING THE MERGER
4.1 FORBEARANCES BY HOMETOWN. Except as expressly contemplated or
permitted by 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, Hometown shall not, nor shall Hometown permit
any of its Subsidiaries to, without the prior written consent of First Capital,
which consent shall not be unreasonably withheld:
(a) conduct its business other than in the regular, ordinary and
usual course consistent with past practice; fail to maintain and preserve intact
its business organization, properties, leases, employees and advantageous
business relationships and retain the services of its officers and key
employees; or take any action that would adversely affect or delay its ability
to perform its obligations under this Agreement or to consummate the
transactions contemplated hereby;
(b) (i) incur, modify, extend or renegotiate any indebtedness for
borrowed money, or assume, guarantee, endorse or otherwise as an accommodation
become responsible for the obligations of any other individual, corporation or
other entity, other than the creation of deposit liabilities, purchases of
Federal Funds, borrowings from the Federal Home Loan Bank or the Federal Reserve
Bank of St. Louis that mature within one year, entry into repurchase agreements
fully secured by U.S. government agency securities, bankers acceptances,
treasury tax and loan accounts established in the ordinary course of business,
and sales of certificates of deposit that mature within five years;
(ii) purchase any brokered certificates of deposit; or
(iii) prepay any indebtedness or other similar arrangements so
as to cause Hometown to incur any prepayment penalty thereunder;
(c) (i) adjust, split, combine or reclassify any capital stock;
(ii) make, declare or pay any dividend, or make any other
distribution on its capital stock;
(iii) grant any individual, corporation or other entity any
right to acquire any shares of its capital stock; or
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(iv) issue any additional shares of capital stock or any
securities or obligations convertible or exercisable for any shares of its
capital stock;
(d) sell, transfer, mortgage, encumber or otherwise dispose of any
of its material properties or assets to any individual, corporation or other
entity other than a Subsidiary, or cancel, release or assign any indebtedness to
any such person or any claims held by any such person, except in the ordinary
course of business consistent with past practice or pursuant to contracts or
agreements in force at the date of this Agreement;
(e) except pursuant to contracts or agreements in force at the date
of or permitted by this Agreement, make any equity investment, either by
purchase of stock or securities, contributions to capital, property transfers
(other than foreclosures in connection with satisfaction of loans in the
ordinary course of Hometown National Bank's business), or purchase outside the
ordinary course of business of any property or assets of any other individual,
corporation or other entity;
(f) 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 4.1(G);
(g) 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 (i) in conformity with existing lending practices in amounts not to
exceed an aggregate of $350,000, or $500,000 if such loan is approved at a
meeting of the Board of Directors of Hometown National Bank, with respect to any
individual borrower or (ii) loans or advances as to which Hometown has a binding
obligation to make such loans or advances as of the date hereof;
(h) except for loans or extensions of credit made on terms generally
available to the public, 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 executive officer of Hometown or Hometown National Bank, or any
entity controlled, directly or indirectly, by any of the foregoing;
(i) (i) increase in any manner the compensation or fringe benefits
of any of its employees or directors other than in the ordinary course of
business consistent with past practice and pursuant to policies currently in
effect, or pay any bonus, pension, retirement allowance or contribution not
required by any existing plan or agreement to any such employees or directors;
(ii) become a party to, amend or commit itself to any pension,
retirement, profit-sharing or welfare benefit plan or agreement or employment
agreement with or for the benefit of any employee or director;
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(iii) voluntarily accelerate the vesting of, or the lapsing of
restrictions with respect to, any stock options or other stock-based
compensation; or
(iv) elect to any senior executive office any person who is
not a member of its senior executive officer team as of the date of this
Agreement or elect to its Board of Directors any person who is not a member of
its Board of Directors as of the date of this Agreement, or hire any employee
with annual compensation in excess of $50,000;
(j) settle any claim, action or proceeding involving payment by it
of money damages in excess of $25,000 or impose any material restriction on its
operations or the operations of any of its Subsidiaries;
(k) amend its articles of incorporation or bylaws, or similar
governing documents;
(l) restructure or materially change its investment securities
portfolio or its interest rate risk position, through purchases, sales or
otherwise, or the manner in which the portfolio is classified or reported;
(m) 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 one
year;
(n) make any capital expenditures other than pursuant to binding
commitments existing on the date hereof and other than expenditures necessary to
maintain existing assets in good repair or to make payment of necessary taxes or
other obligations due and owing;
(o) 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;
(p) take any action that is intended or expected to result in any of
its representations and warranties set forth in this Agreement being or becoming
untrue in any material respect at any time prior to the Effective Time such that
the conditions specified in SECTION 6.2(A) cannot be satisfied, or in any of the
conditions to the Merger set forth in Article VI not being satisfied or in a
violation of any provision of this Agreement;
(q) implement or adopt any change in its accounting principles,
practices or methods, other than as may be required by GAAP or regulatory
guidelines;
(r) knowingly take any action that would prevent or impede the
Merger from qualifying as a reorganization within the meaning of Section 368 of
the IRC; or
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(s) agree to take, make any commitment to take, or adopt any
resolutions of its board of directors in support of, any of the actions
prohibited by this SECTION 4.1.
Any request by Hometown or response thereto by First Capital shall
be made in accordance with the notice provisions of SECTION 8.7 and shall note
that it is a request pursuant to this SECTION 4.1. First Capital shall be deemed
to consent and agree to any request hereunder to the extent it does not respond
thereto within five business days.
4.2 FORBEARANCES BY FIRST CAPITAL. Except as expressly contemplated or
permitted by 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, First Capital shall not, nor shall First
Capital permit any of its Subsidiaries to, without the prior written consent of
Hometown, which shall not unreasonably be withheld:
(a) take any action that would adversely affect or delay its ability
to perform its obligations under this Agreement or to consummate the
transactions contemplated hereby;
(b) take any action that is intended to or expected to result in any
of its representations and warranties set forth in this Agreement being or
becoming untrue in any material respect at any time prior to the Effective Time
such that the conditions specified in SECTION 6.3(A) cannot be satisfied, or in
any of the conditions to the Merger set forth in Article VI not being satisfied
or in a violation of any provision of this Agreement;
(c) knowingly take any action that would prevent or impede the
Merger from qualifying as a reorganization withing the meaning of Section 368 of
the IRC;
(d) amend its articles of incorporation or bylaws in a manner that
would materially and adversely effect the benefits of the Merger to the
stockholders of Hometown;
(e) enter into any agreement with respect to an Acquisition Proposal
with a third party that (i) reasonably could be expected to result in the Merger
not being consummated or (ii) that would be consummated prior to the Closing
Date and would effect a change in the kind of Merger Consideration to be
received by stockholders of Hometown; or
(f) agree to take, make any commitment to take, or adopt any
resolutions of its Board of Directors in support of, any of the actions
prohibited by this SECTION 4.2.
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ARTICLE V
COVENANTS
5.1 ACQUISITION PROPOSALS.
(a) Except as permitted by this Agreement, neither Hometown, its
Subsidiaries nor the officers and directors of Hometown or any of its
Subsidiaries shall, and Hometown shall use all reasonable efforts to cause its
employees and agents, including any investment banker, financial advisor,
attorney, accountant or other representative retained by Hometown or any of its
Subsidiaries, not to, directly or indirectly, (i) solicit, initiate or encourage
(including by way of furnishing non-public information), or take any other
action to facilitate, any inquiries, discussions or the making of any proposal
that constitutes or could reasonably be expected to lead to an Acquisition
Proposal, (ii) participate in any discussions or negotiations, or otherwise
communicate in any way with any person (other than First Capital), regarding an
Acquisition Proposal or (iii) enter into or consummate any agreement requiring
it to abandon, terminate or fail to consummate the transactions contemplated
hereby. Notwithstanding the foregoing, Hometown may, in response to an
Acquisition Proposal that reasonably is expected to result in a Superior
Proposal that has not been withdrawn and that did not otherwise result from a
breach of this SECTION 5.1, (x) furnish non-public information with respect to
Hometown to the person who made such Acquisition Proposal pursuant to a
confidentiality agreement on terms no more favorable to such person than the
confidentiality agreement between First Capital and Hometown dated August 7,
2002 and (y) participate in discussions or negotiations with such person
regarding such Acquisition Proposal, if and so long as Hometown's Board of
Directors determines in good faith, after consultation with and based upon the
advice of its outside legal counsel, that such action is required in order for
the Board of Directors to comply with its fiduciary duties under applicable law.
(b) Hometown will notify First Capital immediately orally (within
one day) and in writing (within three days) of any Acquisition Proposal, any
request for non-public information that could reasonably be expected to lead to
an Acquisition Proposal, or any inquiry with respect to or that could reasonably
be expected to lead to an Acquisition Proposal, including, in each case, the
identity of the person making such Acquisition Proposal, request or inquiry and
the terms and conditions thereof. Hometown will keep First Capital informed of
any developments with respect to any such Acquisition Proposal, request or
inquiry immediately upon the occurrence thereof.
(c) Hometown will immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any parties conducted
heretofore that relate to any Acquisition Proposal. Hometown will take the
necessary steps to inform the appropriate individuals or entities referred to in
the first sentence of SECTION 5.1(A) of the obligations undertaken in this
SECTION 5.1. Hometown will promptly request each person (other than First
Capital) that has executed a confidentiality agreement prior to the date hereof
in connection with its consideration of a business combination with Hometown or
any of its Subsidiaries to return or
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destroy all confidential information previously furnished to such person by or
on behalf of Hometown or any of its Subsidiaries. Hometown shall not release any
third party from, or waive any provisions of, any confidentiality agreements or
standstill agreement to which it or any of its Subsidiaries is a party.
5.2 CERTAIN POLICIES AND ACTIONS OF HOMETOWN. At the request of First
Capital, Hometown shall cause Hometown National Bank 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 so as to be consistent with those of First
▇▇▇▇▇▇▇▇ Bank; PROVIDED, HOWEVER, that Hometown shall not be required to take
such action prior to the date on which the conditions set forth in SECTIONS
6.1(A), 6.1(B) and 6.1(E) have been satisfied, and until after receipt of
written confirmation from First Capital that it is not aware of any fact or
circumstance that would prevent completion of the Merger, and PROVIDED FURTHER,
that such policies and procedures are not prohibited by GAAP or any applicable
laws and regulations. Hometown'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 5.2.
5.3 ACCESS AND INFORMATION.
(a) Upon reasonable notice, Hometown shall (and shall cause
Hometown's Subsidiaries to) afford First Capital and its representatives
(including, without limitation, directors, officers and employees of First
Capital and its affiliates and counsel, accountants and other professionals
retained by First Capital) 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 Hometown and Hometown's Subsidiaries as First Capital may reasonably
request. Upon reasonable notice, First Capital shall (and shall cause First
Capital's Subsidiaries to) afford Hometown and its representatives (including,
without limitation, directors, officers and employees of Hometown and its
affiliates and counsel, accountants and other professionals retained by
Hometown) such reasonable access during normal business hours throughout the
period prior to the Effective Time to the executive officers of First Capital
and to such information regarding First Capital and its Subsidiaries as Hometown
may reasonably request. No investigation by any party pursuant to this SECTION
5.3 shall affect or be deemed to modify any representation or warranty made by
the other party in this Agreement.
(b) From the date hereof until the Effective Time, Hometown shall,
and shall cause Hometown's Subsidiaries to, promptly provide First Capital with
(i) a copy of each report, schedule, registration statement and other document
filed or received by it pursuant to the requirements of the Securities Act or
the Exchange Act, (ii) a copy of each report filed with federal or state banking
regulators, (iii) a copy of each periodic report to its senior management and
all materials relating to its business or operations furnished to its Board of
Directors, (iv) a copy of each press release made available to the public and
(v) all other information concerning
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its business, properties and personnel as First Capital may reasonably request.
Notwithstanding the foregoing, neither Hometown nor its Subsidiaries shall be
required to provide access to or to disclose information where such access or
disclosure would violate the rights of such entity's customers, jeopardize the
attorney-client privilege of the entity in possession or control of such
information, or contravene any law, rule, regulation, order, judgment, decree or
binding agreement entered into prior to the date of this Agreement. The parties
hereto will make appropriate substitute disclosure arrangements under
circumstances in which the restrictions of the previous sentence apply.
(c) Each of First Capital and Hometown agrees that it will not, and
will cause its representatives not to, use any information obtained pursuant to
this SECTION 5.3 for any purpose unrelated to the consummation of the
transactions contemplated by this Agreement. Subject to the requirements of
applicable law, each of First Capital and Hometown agrees that it will keep
confidential, and will cause its representatives to keep confidential, all
information and documents obtained pursuant to this SECTION 5.3 unless such
information (i) was already known to it or an affiliate of it, other than
pursuant to a confidentiality agreement or other confidential relationship, (ii)
becomes available to it or an affiliate of it 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 the other party
or (iv) is or becomes readily ascertainable from published information or trade
sources.
(d) From and after the date hereof, representatives First Capital
and Hometown shall meet on a regular basis to discuss and plan for the
conversion of Hometown's and its Subsidiaries' data processing and related
electronic informational systems to those used by First Capital and its
Subsidiaries with the goal of conducting such conversion simultaneously with the
consummation of the Bank Merger.
5.4 APPLICATIONS; CONSENTS.
(a) The parties hereto shall cooperate with each other and shall use
their reasonable best efforts to prepare and file as soon as practicable after
the date hereof all necessary applications, notices and filings to obtain all
permits, consents, approvals and authorizations of all Governmental Entities
that are necessary or advisable to consummate the transactions contemplated by
this Agreement. Hometown and First Capital shall furnish each other with all
information concerning themselves, their respective subsidiaries, and their and
their respective subsidiaries' directors, officers and stockholders and such
other matters as may be reasonably necessary or advisable in connection with any
application, notice or filing made by or on behalf of First Capital, Hometown or
any of their respective subsidiaries to any Governmental Entity in connection
with the transactions contemplated by this Agreement and the Plan of Bank
Merger. First Capital and Hometown shall have the right to review in advance,
and to the extent practicable each will consult with the other on, all the
information relating to First Capital and Hometown, as the case may be, and any
of their respective subsidiaries, that appears in any filing
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made with, or written materials submitted to, any Governmental Entity pursuant
to this SECTION 5.4(A).
(b) As soon as practicable after the date hereof, each of the
parties hereto shall, and they shall cause their respective subsidiaries to, use
its best efforts to obtain any consent, authorization or approval of any third
party that is required to be obtained in connection with the transactions
contemplated by this Agreement and the Plan of Bank Merger.
5.5 ANTITAKEOVER PROVISIONS. Each party 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 First
Capital, First ▇▇▇▇▇▇▇▇ Bank, the Agreement, the Plan of Bank Merger and the
Merger from any provisions of an antitakeover nature in their respective
articles of incorporation and bylaws, or similar organizational documents, and
the provisions of any federal or state antitakeover laws.
5.6 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 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.
5.7 PUBLICITY. The initial press release announcing this Agreement shall
be a joint press release and thereafter Hometown and First Capital shall consult
with each other prior to 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 or market with respect thereto; PROVIDED, HOWEVER,
that nothing in this SECTION 5.7 shall be deemed to prohibit any party from
making any disclosure which its counsel deems necessary in order to satisfy such
party's disclosure obligations imposed by law.
5.8 STOCKHOLDER MEETING. Hometown will submit to its stockholders this
Agreement and any other matters required to be approved or adopted by
stockholders in order to carry out the intentions of this Agreement. In
furtherance of that obligation, Hometown will take, in accordance with
applicable law and its articles of incorporation and bylaws, all action
necessary to call, give notice of, convene and hold a meeting of its
stockholders (the "STOCKHOLDER MEETING") as promptly as practicable for the
purpose of considering and voting on approval and adoption of this Agreement and
the transactions provided for in this Agreement. Unless Hometown's Board of
Directors submits this Agreement to the Hometown stockholders without a
recommendation of approval, Hometown's Board of Directors will use all
reasonable best
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efforts to obtain from Hometown's stockholders a vote approving this Agreement.
Except as provided in this Agreement or required by law, (i) Hometown's Board of
Directors shall recommend to Hometown's stockholders approval of this Agreement,
(ii) the Proxy Statement- Prospectus shall include a statement to the effect
that Hometown's Board of Directors has recommended that Hometown's stockholders
vote in favor of the approval of this Agreement and (iii) neither Hometown's
Board of Directors nor any committee thereof shall withdraw, amend or modify, or
propose or resolve to withdraw, amend or modify in a manner adverse to First
Capital, the recommendation of Hometown's Board of Directors that Hometown's
stockholders vote in favor of approval of this Agreement or make any statement
in connection with the Stockholder Meeting inconsistent with such
recommendation. Notwithstanding the foregoing, if Hometown's Board of Directors,
after consultation with and based on the advice of counsel, determines in good
faith that it would result in a violation of its fiduciary duties under
applicable law to recommend this Agreement, then in submitting the Agreement to
stockholders at the Stockholder Meeting it may submit the Agreement without
recommendation of approval, in which case the Board of Directors may communicate
the basis for its lack of a recommendation of approval to the stockholders in
the Proxy Statement-Prospectus or an appropriate amendment or supplement thereto
to the extent required by law.
5.9 REGISTRATION OF FIRST CAPITAL COMMON STOCK.
(a) As promptly as reasonably practicable following the date hereof,
First Capital shall prepare and file with the SEC a registration statement on
Form S-4 with respect to the issuance of First Capital Common Stock in the
Merger (such Form S-4, and any amendments or supplements thereto, the
"REGISTRATION STATEMENT"). The Registration Statement shall contain proxy
materials relating to the matters to be submitted to the Hometown stockholders
at the Stockholders Meeting, which shall also constitute the prospectus relating
to the shares of First Capital Common Stock to be issued in the Merger (such
proxy statement/prospectus, and any amendments or supplements thereto, the
"PROXY STATEMENT-PROSPECTUS"). Hometown will furnish to First Capital the
information required to be included in the Registration Statement with respect
to its business and affairs and shall have the right to review and consult with
First Capital and approve the form of, and any characterizations of such
information included in, the Registration Statement prior to its being filed
with the SEC. First Capital shall use reasonable best efforts to have the
Registration Statement declared effective by the SEC and to keep the
Registration Statement effective as long as is necessary to consummate the
Merger and the transactions contemplated hereby. Hometown will use reasonable
best efforts to cause the Proxy Statement-Prospectus to be mailed to Hometown's
stockholders as promptly as practicable after the Registration Statement is
declared effective under the Securities Act. First Capital will advise Hometown,
promptly after it receives notice thereof, of the time when the Registration
Statement has become effective, the issuance of any stop order, the suspension
of the qualification of the First Capital Common Stock issuable in connection
with the Merger for offering or sale in any jurisdiction, or any request by the
SEC for amendment of the Proxy Statement-Prospectus or the Registration
Statement. If at any time prior to the Effective Time any information relating
to First Capital or Hometown, or any of their respective affiliates, officers or
directors, should be
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discovered by First Capital or Hometown which should be set forth in an
amendment or supplement to any of the Registration Statement or the Proxy
Statement-Prospectus so that any of such documents would not include any
misstatement of a material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, the party which discovers such information shall promptly
notify the other party hereto and, to the extent required by law, rules or
regulations, an appropriate amendment or supplement describing such information
shall be promptly filed by First Capital with the SEC and disseminated by
Hometown to the stockholders of Hometown.
(b) First Capital shall also take any action required to be taken
under any applicable state securities laws in connection with the Merger and
each of Hometown and First Capital shall furnish all information concerning it
and the holders of Hometown Common Stock as may be reasonably requested in
connection with any such action.
(c) Prior to the Effective Time, First Capital shall notify The
Nasdaq Stock Market of the additional shares of First Capital Common Stock to be
issued by First Capital in exchange for the shares of Hometown Common Stock.
5.10 AFFILIATE LETTERS. Hometown shall use its best efforts to cause each
director, executive officer and other person who is an "affiliate" of Hometown
under Rule 145 of the Securities Act to deliver to First Capital as soon as
practicable and prior to the mailing of the Proxy Statement-Prospectus executed
letter agreements, each substantially in the form attached hereto as Exhibit C,
---------
providing that such person will comply with Rule 145.
5.11 NOTIFICATION OF CERTAIN MATTERS. Each party shall give prompt notice
to the other of: (i) 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 it 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 each
party and its Subsidiaries taken as a whole to which each party or any
Subsidiary is a party or is subject; and (ii) 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. Each of Hometown and First Capital shall
give prompt notice to the other party of any 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.
5.12 EMPLOYEE BENEFITS MATTERS.
(a) Subject to determination of its staffing needs, First Capital
desires to retain substantially all of the employees of Hometown National Bank
following the Effective Time. All persons who are employees of Hometown National
Bank immediately prior to the Effective Time and whose employment is not
specifically terminated at or prior to the Effective Time (a
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"CONTINUING EMPLOYEE") shall, at the Effective Time, become employees of First
▇▇▇▇▇▇▇▇ Bank; PROVIDED, HOWEVER, that in no event shall any of Hometown
National Bank's employees be officers of First ▇▇▇▇▇▇▇▇ 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 First
▇▇▇▇▇▇▇▇ Bank. All of the Continuing Employees shall be employed at the will of
First ▇▇▇▇▇▇▇▇ Bank and no contractual right to employment shall inure to such
employees because of this Agreement.
(b) As of the Effective Time, First Capital shall make available
employer- provided health and other employee welfare benefit plans to each
Continuing Employee on the same basis as it provides such coverage to First
Capital employees except that any pre-existing condition, eligibility waiting
period or other limitations or exclusions otherwise applicable under such plans
to new employees shall not apply to a Continuing Employee or their covered
dependents who were covered under a similar Hometown plan at the Effective Time
of the Merger.
(c) As of the Effective Time, each Continuing Employee shall be
eligible to participate in First Capital's 401(k) plan and employee stock
ownership plan with full credit for prior service with Hometown for purposes of
eligibility and vesting. As soon as administratively practicable following the
Effective Time, First Capital shall cause Hometown's 401(k) plan to be merged
into First Capital's 401(k) plan.
(d) First Capital agrees to honor in accordance with their terms all
benefits vested as of the Effective Time under the Hometown Employee Plans and
all vested benefits or other vested amounts earned or accrued through such time
under contracts, arrangement commitments or understandings described in
Hometown's Disclosure Letter, including benefits which vest or are otherwise
accrued as a result of the consummation of the transactions contemplated by this
Agreement.
(e) Except as otherwise provided in Hometown's Disclosure Letter,
each Hometown employee who is terminated at the Effective Time and each
Continuing Employee who is terminated within 12 months of the Effective Time
(other than for cause) shall receive a severance payment equal to the greater of
(i) two weeks salary for every year of employment with Hometown or (ii) one
month's salary.
5.13 INDEMNIFICATION.
(a) From and after the Effective Time through the sixth anniversary
of the Effective Time, First Capital agrees to indemnify and hold harmless each
present and former director and officer of Hometown and its Subsidiaries and
each officer or employee of Hometown and its Subsidiaries that is serving or has
served as a director or trustee of another entity expressly at Hometown's
request or direction (each, an "INDEMNIFIED PARTY"), against any costs or
expenses (including reasonable attorneys' fees), judgments, fines, amounts paid
in
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settlement, losses, claims, damages or liabilities incurred in connection with
any claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of matters existing or occurring at
or prior to the Effective Time (including the transactions contemplated by this
Agreement), whether asserted or claimed prior to, at or after the Effective
Time, as they are from time to time incurred, in each case to the fullest extent
such person would have been indemnified or have the right to advancement of
expenses pursuant to the articles of incorporation and bylaws of Hometown and
its Subsidiaries, as applicable, as in effect on the date of this Agreement and
to the fullest extent permitted by law.
(b) Any Indemnified Party wishing to claim indemnification under
SECTION 5.13(A), upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify First Capital thereof, but the failure to
so notify shall not relieve First Capital of any liability it may have hereunder
to such Indemnified Party if such failure does not materially and substantially
prejudice First Capital.
(c) First Capital shall maintain Hometown's existing directors' and
officers' liability insurance policy (or provide a policy providing comparable
coverage and amounts on terms no less favorable to the persons currently covered
by Hometown's existing policy, including First Capital's existing policy if it
meets the foregoing standard) covering persons who are currently covered by such
insurance for a period of six years after the Effective Time; PROVIDED, HOWEVER,
that in no event shall First Capital be obligated to expend, in order to
maintain or provide insurance coverage pursuant to this SECTION 5.13(C), an
amount per annum in excess of 150% of the amount of the annual premiums paid by
Hometown as of the date hereof for such insurance ("MAXIMUM INSURANCE AMOUNT");
PROVIDED FURTHER, that if the amount of the annual premiums necessary to
maintain or procure such insurance coverage exceeds the Maximum Insurance
Amount, First Capital shall obtain the most advantageous coverage obtainable for
an annual premium equal to the Maximum Insurance Amount.
(d) In the event First Capital 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
First Capital assume the obligations set forth in this SECTION 5.13.
(e) The provisions of this SECTION 5.13 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and his or her
representatives.
5.14 ADVISORY BOARD. For a period of two years from the Effective Time or
such longer time as First Capital in its sole discretion shall determine, First
Capital shall maintain an advisory board for the purpose of advising First
Capital on the operations of Hometown National Bank. Each of the non-employee
directors of Hometown as of the Effective Time shall be
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invited to serve on the advisory board. Each advisory director shall be paid
$150 per meeting attended.
ARTICLE VI
CONDITIONS TO CONSUMMATION
6.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective obligations
of each party to effect the Merger shall be subject to the satisfaction of the
following conditions:
(a) STOCKHOLDER APPROVAL. This Agreement shall have been approved by
the requisite vote of Hometown's stockholders in accordance with applicable laws
and regulations.
(b) REGULATORY APPROVALS. All approvals, consents or waivers of any
Governmental Entity required to permit consummation of the transactions
contemplated by this Agreement shall have been obtained and shall remain in full
force and effect, and all statutory waiting periods shall have expired;
PROVIDED, HOWEVER, that none of such approvals, consents or waivers shall
contain any condition or requirement that would so materially and adversely
impact the economic or business benefits to First Capital of the transactions
contemplated hereby that, had such condition or requirement been known, First
Capital would not, in its reasonable judgment, have entered into this Agreement.
(c) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No party hereto shall
be subject to any order, decree or injunction of a court or agency of competent
jurisdiction that enjoins or prohibits the consummation of the Merger or the
Bank Merger and no Governmental Entity shall have instituted any proceeding for
the purpose of enjoining or prohibiting the consummation of the Merger or the
Bank Merger or any transactions contemplated by this Agreement. No statute, rule
or regulation shall have been enacted, entered, promulgated or enforced by any
Governmental Entity which prohibits or makes illegal consummation of the Merger.
(d) REGISTRATION STATEMENT; BLUE SKY LAWS. The Registration
Statement shall have been declared effective by the SEC and no proceedings shall
be pending or threatened by the SEC to suspend the effectiveness of the
Registration Statement, and First Capital shall have received all required
approvals by state securities or "blue sky" authorities with respect to the
transactions contemplated by this Agreement.
(e) THIRD PARTY CONSENTS. First Capital and Hometown shall have
obtained the consent or approval of each person (other than the governmental
approvals or consents referred to in SECTION 6.1(B)) whose consent or approval
shall be required to consummate the transactions contemplated by this Agreement,
except those for which failure to obtain such consents and approvals would not,
individually or in the aggregate, have a Material Adverse Effect on First
Capital (after giving effect to the consummation of the transactions
contemplated hereby).
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(f) TAX OPINIONS. First Capital and Hometown shall have received
opinions of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, dated as of the Closing Date, in form
and substance customary in transactions of the type contemplated hereby, and
reasonably satisfactory to Hometown and First Capital, as the case may be,
substantially to the effect that on the basis of the facts, representations and
assumptions set forth in such opinions which are consistent with the state of
facts existing at the Effective Time, (i) the Merger will be treated for federal
income tax purposes as a reorganization within the meaning of Section 368(a) of
the IRC, (ii) First Capital and Hometown will each be a party to that
reorganization within the meaning of Section 368(b) of the IRC and (iii) except
to the extent of any cash received in lieu of a fractional share interest in
First Capital Common Stock, no gain or loss will be recognized by the
stockholders of Hometown who exchange their Hometown Common Stock for First
Capital Common Stock pursuant to the Merger. Such opinions may be based on, in
addition to the review of such matters of fact and law as counsel considers
appropriate, representations contained in certificates of officers of First
Capital, Hometown and others.
6.2 CONDITIONS TO THE OBLIGATIONS OF FIRST CAPITAL. The obligations of
First Capital to effect the Merger shall be further subject to the satisfaction
of the following additional conditions, any one or more of which may be waived
by First Capital:
(a) HOMETOWN'S REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of Hometown contained in SECTIONS 3.2(A) (except
as relates to qualification), (B) (except as relates to qualification), (C),
(D), (E)(I) and (II), (Y) and (GG) of this Agreement shall be true and correct
(except for inaccuracies that are de minimis) as of the date of this Agreement
and as of the Closing Date as though made at and as of the Closing Date, and
there shall not exist any inaccuracies in the representations and warranties of
Hometown contained in this Agreement (including the representations and
warranties set forth in the Sections designated above) such that the effect of
such inaccuracies individually or in the aggregate has, or is reasonably likely
to have, a Material Adverse Effect on Hometown.
(b) PERFORMANCE OF HOMETOWN'S OBLIGATIONS. Hometown shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Effective Time.
(c) OFFICERS' CERTIFICATE. First Capital shall have received a
certificate signed by the chief executive officer and the chief financial or
principal accounting officer of Hometown to the effect that the conditions set
forth in SECTIONS 6.2(A) and (B) have been satisfied.
(d) MINIMUM BOOK VALUE. The total stockholder's equity of Hometown
as of December 31, 2002 as shown on its audited consolidated balance sheet as of
such date shall not be less than $6,800,000, exclusive of the effect of (i) any
payments made or expenses incurred by Hometown after June 30, 2002 in connection
with the execution, performance and consummation of this Agreement and (ii) any
actions taken by Hometown at the request of First Capital pursuant to SECTION
5.2.
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6.3 CONDITIONS TO THE OBLIGATIONS OF HOMETOWN. The obligations of Hometown
to effect the Merger shall be further subject to the satisfaction of the
following additional conditions, any one or more of which may be waived by
Hometown:
(a) FIRST CAPITAL'S REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of First Capital contained in SECTIONS 3.3(A)
(except as relates to qualification), (B) (except as relates to qualification),
(C), (D), (E)(I) and (II), and (R) of this Agreement shall be true and correct
(except for inaccuracies that are de minimis) as of the date of this Agreement
and as of the Closing Date as though made at and as of the Closing Date, and
there shall not exist any inaccuracies in the representations and warranties of
First Capital contained in this Agreement (including the representations and
warranties set forth in the Sections designated above) such that the effect of
such inaccuracies individually or in the aggregate has, or is reasonably likely
to have, a Material Adverse Effect on First Capital.
(b) PERFORMANCE OF FIRST CAPITAL'S OBLIGATIONS. First Capital shall
have performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Effective Time.
(c) OFFICERS' CERTIFICATE. Hometown shall have received a
certificate signed by the chief executive officer and the chief financial or
principal accounting officer of First Capital to the effect that the conditions
set forth in SECTIONS 6.3(A) and (B) have been satisfied.
(d) DEPOSIT OF MERGER CONSIDERATION. First Capital shall have
deposited with the Exchange Agent sufficient cash to pay the aggregate Cash
Consideration.
ARTICLE VII
TERMINATION
7.1 TERMINATION. This Agreement may be terminated, and the Merger
abandoned, at any time prior to the Effective Time, by action taken or
authorized by the Board of Directors of the terminating party, either before or
after any requisite stockholder approval:
(a) by the mutual written consent of First Capital and Hometown; or
(b) by either First Capital or Hometown, in the event of the failure
of Hometown's stockholders to approve the Agreement at the Stockholder Meeting;
PROVIDED, HOWEVER, that Hometown 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 5.8; or
(c) by either First Capital or Hometown, if either (i) any approval,
consent or waiver of a Governmental Entity required to permit consummation of
the transactions contemplated by this Agreement shall have been denied or (ii)
any Governmental Entity of
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competent jurisdiction shall have issued a final, unappealable order enjoining
or otherwise prohibiting consummation of the transactions contemplated by this
Agreement; or
(d) by either First Capital or Hometown, in the event that the
Merger is not consummated by June 30, 2003 unless the failure to so consummate
by such time is due to the failure of the party seeking to terminate this
Agreement to perform or observe the covenants and agreements of such party set
forth herein; or
(e) by either First Capital or Hometown (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 a
breach of any covenant or agreement on the part of the other party set forth in
this Agreement, or if any representation or warranty of the other party shall
have become untrue, in either case such that the conditions set forth in
SECTIONS 6.2(A) and (B) or SECTIONS 6.3(A) and (B), as the case may, be would
not be satisfied and such breach or untrue representation or warranty has not
been or cannot be cured within thirty (30) days following written notice to the
party committing such breach or making such untrue representation or warranty;
or
(f) by First Capital, if the Board of Directors of Hometown does not
publicly recommend in the Proxy Statement-Prospectus that stockholders approve
and adopt this Agreement or if, after recommending in the Proxy
Statement-Prospectus that stockholders approve and adopt this Agreement, the
Board of Directors of Hometown withdraws, qualifies or revises such
recommendation or takes any action in any respect materially adverse to First
Capital.
7.2 TERMINATION FEE.
(a) If First Capital terminates this Agreement pursuant to SECTION
7.1(F), then Hometown shall make payment to First Capital of a termination fee
in the amount of $175,000. Such amount shall be paid by wire transfer of
immediately available funds within two business days following such termination.
If within 12 months after such termination, Hometown shall consummate or enter
into an agreement with respect to an Acquisition Proposal, then Hometown shall
make payment to First Capital of an additional termination fee in the amount of
$175,000. Such amount shall be paid by wire transfer of immediately available
funds on the date of such consummation or execution.
(b) If this Agreement is terminated by (i) First Capital pursuant to
SECTION 7.1(E) where the breach giving rise to such termination was willful and
in such case an Acquisition Proposal by a third party with respect to Hometown
has been publicly announced, disclosed or communicated or made known to the
senior management or Board of Directors of Hometown by such third party at any
time after the date of this Agreement and prior to the date of the date of
termination or (ii) either party pursuant to SECTION 7.1(B) and in such case an
Acquisition Proposal by a third party with respect to Hometown has been publicly
announced, disclosed or communicated or made known to the senior management or
Board of Directors of
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Hometown by such third party at any time after the date of this Agreement and
prior to the date of the Stockholders Meeting, then Hometown shall make payment
to First Capital of a termination fee in the amount of $350,000 if within 12
months after such termination, Hometown shall consummate or enter into any
agreement with respect to an Acquisition Proposal. Such amount shall be paid by
wire transfer of immediately available funds on the date of such execution or
consummation.
(c) Notwithstanding anything herein to the contrary, in no event
shall the aggregate amount that Hometown must pay to First Capital pursuant to
SECTIONS 7.2(A) and (B) exceed $350,000.
(d) If this Agreement is terminated by Hometown pursuant to SECTION
7.1(E) where the breach giving rise to such termination was willful and in such
case an Acquisition Proposal by a third party with respect to First Capital has
been publicly announced, disclosed or communicated or made known to the senior
management or Board of Directors of First Capital by such third party at any
time after the date of this Agreement and prior to the date of the date of
termination, then First Capital shall make payment to Hometown of a termination
fee in the amount of $350,000 if within 12 months after such termination, First
Capital shall consummate or enter into any agreement with respect to an
Acquisition Proposal. Such amount shall be paid by wire transfer of immediately
available funds on the date of such execution or consummation.
7.3 EFFECT OF TERMINATION. In the event of termination of this Agreement
by either First Capital or Hometown as provided in SECTION 7.1, this Agreement
shall forthwith become void and, subject to SECTION 7.2, have no effect, and
there shall be no liability on the part of any party hereto or their respective
officers and directors, except that (i) SECTIONS 5.3(C), 7.2, and 8.6, shall
survive any termination of this Agreement, and (ii) 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.
ARTICLE VIII
CERTAIN OTHER MATTERS
8.1 INTERPRETATION. When a reference is made in this Agreement to Sections
or Exhibits such reference shall be to a Section of, or Exhibit 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.
8.2 SURVIVAL. None of the representations and warranties in this
Agreement or in any instrument delivered pursuant to this Agreement shall
survive the Effective Time. This SECTION
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8.2 shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time.
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 Hometown, 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 Hometown Common Stock or contravene
any provision of the IBCL or the federal banking laws, rules and regulations.
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.
8.5 GOVERNING LAW. This Agreement shall be governed by, and interpreted
in accordance with, the laws of the State of Indiana, without regard to
conflicts of laws principles.
8.6 EXPENSES. Each party hereto will bear all expenses incurred by it in
connection with this Agreement and the transactions contemplated hereby;
provided that the cost of printing and mailing to Hometown's stockholders the
Proxy Statement-Prospectus shall be borne equally by First Capital and Hometown.
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 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 First Capital, to:
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇
With copies to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
55
59
If to Hometown, to:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: C. ▇▇▇▇▇▇ ▇▇▇▇▇
With copies to:
▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
PNC Plaza
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
8.8 ENTIRE AGREEMENT; ETC. This Agreement, together with 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 SECTION
5.13, which confers 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.
8.9 SUCCESSORS AND ASSIGNS; ASSIGNMENT. This Agreement 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.
56
60
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers as of the date first above
written.
FIRST CAPITAL, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President and Chief Executive Officer
HOMETOWN BANCSHARES, INC.
By: /s/ C. ▇▇▇▇▇▇ ▇▇▇▇▇
---------------------------------------
C. ▇▇▇▇▇▇ ▇▇▇▇▇
Chief Executive Officer
57
61
EXHIBIT A
____________, 2002
First Capital, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Board of Directors
To the Board of Directors:
The undersigned is a director of Hometown Bancshares, Inc. ("Hometown")
and the beneficial holder of shares of common stock of Hometown (the "Hometown
Common Stock").
First Capital, Inc. ("First Capital") and Hometown are considering the
execution of an Agreement and Plan of Merger (the "Agreement") contemplating the
acquisition of Hometown through the merger of Hometown with and into First
Capital (the "Merger"). The execution of the Agreement by First Capital is
subject to the execution and delivery of this letter agreement.
In consideration of the substantial expenses that First Capital will incur
in connection with the transactions contemplated by the Agreement and in order
to induce First Capital to execute the Agreement and to proceed to incur such
expenses, the undersigned agrees and undertakes, in his capacity as a
stockholder of Hometown, and not in his capacity as a director or officer of
Hometown, as follows:
1. While this letter agreement is in effect the undersigned shall not,
directly or indirectly, (a) sell or otherwise dispose of or encumber prior to
the record date of Hometown's Stockholder Meeting (as defined in the Agreement)
any or all of his shares of Hometown Common Stock, or (b) deposit any shares of
Hometown Common Stock into a voting trust or enter into a voting agreement or
arrangement with respect to any shares of Hometown Common Stock or grant any
proxy with respect thereto, other than to other members of the Board of
Directors of Hometown for the purpose of voting to approve the Agreement and the
Merger and matters related thereto.
2. While this letter agreement is in effect the undersigned shall vote or
cause to be voted all of the shares of Hometown Common Stock that the
undersigned shall be entitled to so vote, whether such shares are beneficially
owned by the undersigned on the date of this letter agreement or are
subsequently acquired, for the approval of the Agreement and the Merger at
Hometown's Stockholder Meeting.
3. The undersigned acknowledges and agrees that any remedy at law for
breach of the foregoing provisions shall be inadequate and that, in addition to
any other relief which may be
62
First Capital, Inc.
Page 2
available, First Capital shall be entitled to temporary and permanent injunctive
relief without having to prove actual damages.
4. The foregoing restrictions shall not apply to shares with respect to
which the undersigned may have voting power as a fiduciary for others. In
addition, this letter agreement shall only apply to actions taken by the
undersigned in his capacity as a stockholder of Hometown and, if applicable,
shall not in any way limit or affect actions the undersigned may take in his
capacity as a director or officer of Hometown.
5. This letter agreement shall automatically terminate upon the earlier of
(i) the favorable vote of Hometown's stockholders with respect to the approval
of the Agreement and the Merger, (ii) the termination of the Agreement in
accordance with its terms or (iii) the Effective Time (as that term is defined
in the Agreement) of the Merger.
6. As of the date hereof, the undersigned has voting power with respect to
_______ shares of Hometown Common Stock.
IN WITNESS WHEREOF, the undersigned has executed this agreement as of the
date first above written.
Very truly yours,
----------------------------------
----------------------------------
Print Name
Accepted and agreed to as of
the date first above written:
First Capital, Inc.
------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President and Chief Executive Officer
63
EXHIBIT B
PLAN OF MERGER
OF
HOMETOWN NATIONAL BANK
WITH AND INTO
FIRST ▇▇▇▇▇▇▇▇ BANK
THIS PLAN OF MERGER ("Plan of Merger") is entered into as of the 25th day
of September, 2002 by and between HOMETOWN NATIONAL BANK, a national banking
association chartered and existing under the laws of the United States of
America ("Hometown Bank"), and FIRST ▇▇▇▇▇▇▇▇ BANK, a stock savings bank
chartered and existing under the laws of the United States of America ("First
▇▇▇▇▇▇▇▇").
WHEREAS, this Plan of Merger is being entered into pursuant to the
Agreement and Plan of Merger dated as of September 25, 2002 (the "Merger
Agreement") by and between First Capital, Inc. and Hometown Bancshares, Inc.,
pursuant to which First Capital, Inc. will acquire Hometown Bancshares, Inc.;
and
WHEREAS, this Plan of Merger has been approved by at least two-thirds of
the directors of each of First ▇▇▇▇▇▇▇▇ and Hometown Bank.
NOW, THEREFORE, in consideration of the covenants and agreements of the
parties contained herein, the parties hereto hereby make, adopt and approve this
Plan of Merger in order to set forth the terms and conditions for the merger of
Hometown Bank with and into First ▇▇▇▇▇▇▇▇ (the "Merger").
1. Effective Time of the Merger. The Merger shall not be effective
----------------------------
unless and until the Merger receives any necessary approvals from
the Office of Thrift Supervision pursuant to 12 C.F.R. 563.22 or
such other later time specified on the Articles of Combination filed
with the Office of Thrift Supervision (the "Effective Time").
2. Constituent Institutions. The name of each constituent institution
------------------------
to the Merger is FIRST ▇▇▇▇▇▇▇▇ BANK and HOMETOWN NATIONAL BANK.
3. Name of the Resulting Institution. The resulting institution in the
---------------------------------
Merger shall be FIRST ▇▇▇▇▇▇▇▇ BANK (First ▇▇▇▇▇▇▇▇ is sometimes
referred to herein as the "Resulting Institution").
64
4. Location of Home Office and Other Offices of Resulting Institution.
------------------------------------------------------------------
The location of the principal office and other offices of the
Resulting Institution are listed in Appendix A hereto attached.
----------
5. Terms and Conditions of Merger. Subject to the terms and conditions
------------------------------
of this Plan of Merger, at the Effective Time, Hometown Bank shall
be merged with and into First ▇▇▇▇▇▇▇▇ pursuant to the provisions
of, and with the effect provided under the laws of, the United
States of America. At the Effective Time, the separate existence of
Hometown Bank shall cease and First ▇▇▇▇▇▇▇▇ as the resulting
institution, shall continue unaffected and unimpaired by the Merger.
6. Charter. At the Effective Time, the charter of First ▇▇▇▇▇▇▇▇, as
-------
in effect immediately prior to the Effective Time, shall constitute
the charter of the Resulting Institution, unless and until the same
shall be amended as provided by law and the terms of such charter.
7. Bylaws. At the Effective Time, the bylaws of First ▇▇▇▇▇▇▇▇, as in
------
effect immediately prior to the Effective Time, shall be the bylaws
of the Resulting Institution, unless and until amended or repealed
as provided by law, its charter and such bylaws.
8. Savings Account Issuance by Resulting Institution. After the
-------------------------------------------------
Effective Time, the Resulting Institution will continue to issue
deposit accounts, including savings accounts, on the same basis as
immediately prior to the Effective Time.
9. Directors of Resulting Institution. The number of the persons who
----------------------------------
shall constitute the Board of Directors of the Resulting Institution
after the Effective Time will be eleven (11). The names of the
persons who shall constitute the Board of Directors of the Resulting
Institution after the Effective Time are listed in Appendix B hereto
----------
attached.
10. Effect on Outstanding Shares of Hometown Bank Common Stock. At the
----------------------------------------------------------
Effective Time, by virtue of the Merger and without any action on
the part of the holder thereof, all outstanding shares of common
stock, par value $20.00 per share, of Hometown Bank shall
automatically be canceled and retired and shall cease to exist.
11. Effect on Outstanding Shares of First ▇▇▇▇▇▇▇▇ Common Stock. The
-----------------------------------------------------------
shares of common stock, par value $1.00 per share, of First ▇▇▇▇▇▇▇▇
issued and outstanding immediately prior to the Effective Time shall
remain outstanding and unchanged after the Merger and shall be the
only issued and outstanding shares of the Resulting Institution.
2
65
12. Conditions to Each Party's Obligation to Effect the Merger. The
----------------------------------------------------------
respective obligations of each party to effect the Merger shall be
subject to the satisfaction of the conditions set forth in Article
VI of the Merger Agreement.
13. Termination. This Plan of Merger shall terminate automatically upon
-----------
termination of the Merger Agreement.
14. Amendment. This Plan of Merger may not be amended except by an
---------
agreement in writing signed on behalf of each of the parties hereto.
15. Governing Law. This Plan of Merger shall be governed by and
-------------
construed and enforced in accordance with the laws of the United
States of America.
16. Captions. The captions heading the sections in this Plan of Merger
--------
are for convenience only and shall not affect the construction or
interpretation of this Plan of Merger.
17. Counterparts. This Plan of Merger may be executed in two or more
------------
counterparts, any of which may be facsimile copies, each of which
shall be deemed an original instrument, but all of which together
shall constitute one and the same instrument.
3
66
IN WITNESS WHEREOF, each of the Parties has caused this Plan of Merger to
be duly executed and delivered by its duly authorized officers as of the date
first above written.
FIRST ▇▇▇▇▇▇▇▇ BANK
ATTEST:
By:
------------------------------ ------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇
Its: President and Chief Executive Officer
ATTEST: HOMETOWN NATIONAL BANK
By:
------------------------------ ------------------------------------------
C. ▇▇▇▇▇▇ ▇▇▇▇▇
Its: Chief Executive Officer
4
67
APPENDIX A
Location of Home Office and Other Offices of Resulting Institution
MAIN OFFICE:
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
BRANCH OFFICES:
▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇.▇.
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇
▇▇▇▇▇▇▇▇ ▇
Directors of Resulting Institution
Name Residence Address Year Term Expires
---- ----------------- -----------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 7457 Settlers Run 2005
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇.▇. ▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇.▇. ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇.▇. ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇, ▇.▇. ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇ 6520 Wieseka Hill Road 2004
Floyds Knobs, IN 47119
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
69
EXHIBIT C
_________, 2002
First Capital, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
I have been advised that I may be deemed to be, but do not admit that I
am, an "affiliate" of Hometown Bancshares, Inc., an Indiana corporation
("Hometown"), as that term is defined in Rule 144 and used in Rule 145
promulgated by the Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "Securities Act"). I understand that
pursuant to the terms of the Agreement and Plan of Merger, dated as of September
25, 2002 (the "Merger Agreement"), by and between Hometown and First Capital,
Inc., an Indiana corporation ("First Capital"), Hometown plans to merge with and
into First Capital (the "Merger").
I further understand that as a result of the Merger, I may receive shares
of common stock, par value $0.01 per share, of First Capital ("First Capital
Common Stock") in exchange for shares of common stock, without par value, of
Hometown ("Hometown Common Stock").
I have carefully read this letter and reviewed the Merger Agreement and
discussed their requirements and other applicable limitations upon my ability to
sell, transfer, or otherwise dispose of First Capital Common Stock, to the
extent I felt necessary, with my counsel or counsel for Hometown.
I represent, warrant and covenant with and to First Capital that in the
event I receive any shares of First Capital Common Stock as a result of the
Merger:
1. I shall not make any sale, transfer, or other disposition of such
shares of First Capital Common Stock unless (i) such sale, transfer or other
disposition has been registered under the Securities Act, (ii) such sale,
transfer or other disposition is made in conformity with the provisions of Rule
145 under the Securities Act (as such rule may be amended from time to time), or
(iii) in the opinion of counsel in form and substance reasonably satisfactory to
First Capital, or under a "no-action" letter obtained by me from the staff of
the SEC, such sale, transfer or other disposition will not violate the
registration requirements of, or is otherwise exempt from registration under,
the Securities Act.
70
First Capital, Inc.
Page 2
2. I understand that First Capital is under no obligation to register the
sale, transfer or other disposition of shares of First Capital Common Stock by
me or on my behalf under the Securities Act or to take any other action
necessary in order to make compliance with an exemption from such registration
available.
3. I understand that stop transfer instructions will be given to First
Capital's transfer agent with respect to shares of First Capital Common Stock
issued to me as a result of the Merger and that there will be placed on the
certificates for such shares, or any substitutions therefor, a legend stating in
substance:
"The shares represented by this certificate were issued as a result of the
merger of Hometown Bancshares, Inc. with and into First Capital, Inc. on
_______, 2002, in a transaction to which Rule 145 promulgated under the
Securities Act of 1933 applies. The shares represented by this certificate
may not be sold, transferred, or otherwise disposed of except or unless
(1) covered by an effective registration statement under the Securities
Act of 1933, as amended, (2) in accordance with Rule 145(d) of the Rules
and Regulations under such Act, or (3) in accordance with a legal opinion
satisfactory to counsel for First Capital, Inc. that such sale or offer is
otherwise exempt from the registration requirements of such Act."
It is understood and agreed that such stop transfer instructions shall be
rescinded and the legends set forth above in this paragraph (3) shall be removed
by delivery of substitute certificates without such legends if I shall have
delivered to First Capital (i) a copy of a "no action" letter from the staff of
the SEC, or an opinion of counsel in form and substance reasonably satisfactory
to First Capital, to the effect that such legend is not required for purposes of
the Act, or (ii) evidence or representations satisfactory to First Capital that
First Capital Common Stock represented by such certificates is being or has been
sold in conformity with the provisions of Rule 145(d), or (iii) upon the
expiration of the restrictive period set forth in Rule 145(d).
I further understand and agree that the provisions of Rule 145 shall apply
to all shares of First Capital Common Stock that my spouse, any relative of
mine, or any relative of my spouse, any one of whom has the same home as me,
receives as a result of the Merger and I further represent, warrant and covenant
with and to First Capital that I will have, and will cause each of such persons
to have, all shares of Hometown Common Stock owned (other than shares held
through tax qualified retirement or benefit plans) by me or such persons
registered in my name or the name of such persons, as applicable, prior to the
effective date of the Merger and not in the name of any bank, broker or dealer,
nominee or clearing house.
By acceptance hereof, First Capital agrees, for a period of two years
after the Effective Time (as defined in the Agreement) that, so long as it is
obligated to file reports pursuant to
71
First Capital, Inc.
Page 3
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, that it
will use its reasonable best efforts to timely file such reports so that the
public information requirements of Rule 144(c) promulgated under the Securities
Act are satisfied and the resale provisions of Rule 145(d)(1) and (2) are
therefore available to me in the event I desire to transfer any First Capital
Common Stock issued to me in the Merger. In addition, in connection with any
sale, transfer or other disposition by me of First Capital Common Stock issued
to me in the Merger, First Capital agrees to cause its legal counsel to provide
promptly an opinion to First Capital's transfer agent to the effect that such
sale, transfer or other disposition is exempt from registration under the
Securities Act, where such opinion of counsel may be properly given. You have
indicated that I can use the attached form to obtain such opinion to the extent
I propose to sell my shares pursuant to Rule 145(d).
Very truly yours,
By:
--------------------------------
Name:
Agreed and accepted this ____ day of _____________ 2002.
First Capital, Inc.
By:
-------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President and Chief Executive Officer
72
First Capital, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
This certificate is provided to you in connection with the sale of the following
shares of common stock of First Capital, Inc. (the "Shares").
Name of Shareholder Certificate No.(s) Number of Shares
------------------------------ ---------------------- ------------------
------------------------------ ---------------------- ------------------
The undersigned certifies that:
1. The Shares were acquired in connection with the merger of Hometown
Bancshares, Inc. with and into First Capital, Inc.
2. (check one)
____ A. The following information reflects all sales of common stock
of First Capital, Inc. made during the past three months for
the persons specified below:
Amount Date
i. Myself
---------- ----------
ii. My spouse, children and all other
relatives living in my household
---------- ----------
iii. Trusts or estates in which any person
in (i) or (ii) above are trustees,
executors or have a 10% beneficial
interest
---------- ----------
iv. Corporations or other organizations
(other than First Capital, Inc.) In
which persons in (i) or (ii) above own
collectively 10% or more of any class
of equity security or have a 10%
equity interest
---------- ----------
v. Anyone acting in concert with any of
the above for any of the securities
of First Capital, Inc.
---------- ----------
B. The undersigned does not intend to sell additional shares of
common stock of First Capital, Inc. through any other means
until execution or cancellation of this transaction.
73
C. The undersigned has not solicited or arranged for the
solicitation of orders to buy the Shares in anticipation of or
in connection with this sale.
D. The undersigned has not made any payment in connection with
this sale, other than to the broker who executes the order to
sell the Shares.
or ____ The undersigned is not an officer, director or 10% shareholder of
First Capital, Inc. and at least one year has elapsed since the date
the Shares were acquired from First Capital, Inc.
or ____ The undersigned is not, and has not been for at least three months,
an officer, director or 10% shareholder of First Capital, Inc. and
at least two years has elapsed since the date the Shares were
acquired from First Capital, Inc.
-----------------------------
Signature
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Print Name
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Date
2