EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
DATED AS OF
AUGUST 4, 2004
BY AND AMONG
FIRST DEFIANCE FINANCIAL CORP.,
FIRST FEDERAL BANK OF THE MIDWEST,
COMBANC, INC.
AND
THE COMMERCIAL BANK
TABLE OF CONTENTS
PAGE
ARTICLE ONE -- THE MERGER.........................................................................................1
1.01. Corporate Merger....................................................................................1
1.02. Effective Time......................................................................................2
1.03. Governing Documents of the Surviving Corporation....................................................2
1.04. Bank Merger.........................................................................................2
1.05. Structure of Combination............................................................................2
ARTICLE TWO -- CONVERSION OF SHARES; SURRENDER OF CERTIFICATES....................................................2
2.01. Conversion of ComBanc Shares........................................................................2
2.02. Exchange of ComBanc Certificates....................................................................4
2.03. Dissenting ComBanc Shares...........................................................................7
2.04. Anti-Dilution Provisions............................................................................7
2.05. FDEF Shares.........................................................................................7
2.06. Tax Consequences....................................................................................7
ARTICLE THREE -- REPRESENTATIONS AND WARRANTIES OF COMBANC AND COMMERCIAL BANK....................................7
3.01. Corporate Status....................................................................................8
3.02. Capitalization of ComBanc...........................................................................9
3.03. Capitalization of Commercial Bank...................................................................9
3.04. Corporate Proceedings..............................................................................10
3.05. Authorization......................................................................................10
3.06. Financial Statements of ComBanc....................................................................10
3.07. SEC Filings........................................................................................11
3.08. Absence of Undisclosed Liabilities.................................................................11
3.09. Absence of Changes.................................................................................11
3.10. Loans..............................................................................................11
3.11. Allowance for Loan Losses..........................................................................12
3.12. Reports and Records................................................................................12
3.13. Taxes..............................................................................................12
3.14. Property and Title.................................................................................13
3.15. Legal Proceedings..................................................................................14
3.16. Compliance with Laws and Regulations...............................................................14
3.17. No Conflict........................................................................................15
3.18. Brokers, Finders and Others........................................................................15
3.19. Employment Agreements..............................................................................15
3.20. Employee Benefit Plans.............................................................................16
3.21. Insurance..........................................................................................17
3.22. Governmental and Third-Party Proceedings...........................................................18
3.23. Contracts..........................................................................................18
3.24. Environmental Matters..............................................................................18
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3.25. ComBanc Information................................................................................19
3.26. CRA Compliance.....................................................................................19
3.27. Ownership of FDEF Shares...........................................................................19
3.28. Fairness Opinion...................................................................................20
3.29. Real Property Interest.............................................................................20
3.30. Internal Controls..................................................................................20
ARTICLE FOUR -- REPRESENTATIONS AND WARRANTIES OF FDEF AND FIRST FEDERAL.........................................21
4.01. Corporate Status...................................................................................21
4.02. Corporate Proceedings..............................................................................21
4.03. Capitalization of FDEF.............................................................................21
4.04. Authorized and Effective Agreement.................................................................22
4.05. No Conflict........................................................................................23
4.06. SEC Filings........................................................................................23
4.07. Financial Statements of FDEF and First Federal.....................................................23
4.08. Brokers, Finders and Others........................................................................24
4.09. Governmental and Third-Party Proceedings...........................................................24
4.10. Absence of Undisclosed Liabilities.................................................................24
4.11. Absence of Changes.................................................................................24
4.12. Legal Proceedings..................................................................................25
4.13. Regulatory Matters.................................................................................25
4.14. Ownership of ComBanc Shares........................................................................25
ARTICLE FIVE -- FURTHER COVENANTS OF COMBANC AND COMMERCIAL BANK.................................................25
5.01. Operation of Business..............................................................................25
5.02. Notification.......................................................................................28
5.03. Acquisition Proposals..............................................................................29
5.04. Delivery of Information............................................................................29
5.05. Affiliates Compliance with the Securities Act......................................................29
5.06. Voting Agreement...................................................................................29
5.07. No Control.........................................................................................29
5.08. Accounting Policies................................................................................30
5.09. ComBanc Meeting....................................................................................30
5.10. Tax Matters........................................................................................30
5.11. Insurance Coverage.................................................................................31
5.12. Supplemental Assurances............................................................................31
ARTICLE SIX -- FURTHER COVENANTS OF FDEF.........................................................................31
6.01. Employees; Employee Benefits.......................................................................31
6.02. Exchange Listing...................................................................................32
6.03. Notification.......................................................................................32
6.04. Indemnification....................................................................................32
6.05. Board of Directors.................................................................................33
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6.06. Advisory Board.....................................................................................33
ARTICLE SEVEN -- FURTHER OBLIGATIONS OF THE PARTIES..............................................................34
7.01. Cooperative Action.................................................................................34
7.02. Press Releases.....................................................................................34
7.03. Proxy/Prospectus; Registration Statement...........................................................34
7.04. Regulatory Applications............................................................................35
7.05. Termination of Profit Sharing Plan.................................................................35
7.06. Confidentiality....................................................................................36
ARTICLE EIGHT -- CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PARTIES..........................................36
8.01. Conditions to the Obligations of FDEF and First Federal............................................36
8.02. Conditions to the Obligations of ComBanc and Commercial Bank.......................................37
8.03. Mutual Conditions..................................................................................38
ARTICLE NINE -- CLOSING..........................................................................................38
9.01. Closing............................................................................................38
9.02. Closing Deliveries Required of FDEF and First Federal..............................................39
9.03. Closing Deliveries Required of ComBanc and Commercial Bank.........................................39
ARTICLE TEN -- TERMINATION.......................................................................................39
10.01. Termination........................................................................................39
10.02. Effect of Termination..............................................................................40
10.03. Termination Fee....................................................................................40
10.04. Force Majeure......................................................................................40
ARTICLE ELEVEN -- MISCELLANEOUS..................................................................................41
11.01. Notices............................................................................................41
11.02. Counterparts.......................................................................................42
11.03. Entire Agreement...................................................................................42
11.04. Successors and Assigns.............................................................................42
11.05. Captions...........................................................................................42
11.06. Governing Law......................................................................................42
11.07. Payment of Fees and Expenses.......................................................................42
11.08. Amendment..........................................................................................42
11.09. Waiver.............................................................................................42
11.10. No Third-Party Rights..............................................................................42
11.11. Waiver of Jury Trial...............................................................................43
11.12. Severability.......................................................................................43
11.13. Non-Survival of Representations, Warranties and Covenants..........................................43
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GLOSSARY OF DEFINED TERMS
The following terms, when used in this Agreement, have the meanings
ascribed to them in the corresponding Sections of this Agreement listed below:
"Acquisition Transactions" -- Section 5.03
"Aggregated Cash Consideration" -- Section 2.01(c)
"Agreement" -- Preamble
"Average" -- Section 2.01(b)
"Bank Merger" -- Preamble
"Bank Merger Agreement" -- Preamble
"BHCA" -- Section 3.01(a)
"Cash Election Shares" -- Section 2.02(a)
"CERCLA" -- Section 3.24
"Closing" -- Section 9.01
"Closing Date" -- Section 9.01
"Code" -- Section 2.02(f)
"ComBanc" -- Preamble
"ComBanc Balance Sheet Date" -- Section 3.06
"ComBanc Certificates" -- Section 2.02(a)
"ComBanc Disclosure Schedule" -- Article Three
"ComBanc Dissenting Share" -- Section 2.03
"ComBanc Financial Statements" -- Section 3.06
"ComBanc Meeting" -- Section 3.04(b)
"ComBanc Real Properties" -- Section 3.14(a)
"ComBanc Shares" -- Section 1.01
"ComBanc's Counsel" -- Section 7.01
"ComBanc's Financial Advisor" -- Section 3.18
"Commercial Bank" -- Preamble
"Commercial Bank Real Estate Collateral" -- Section 3.24
"Compensation and Benefit Plans" -- Section 3.20(a)
"Consultants" -- Section 3.20(a)
"Continuing Employees" -- Section 6.01
"Corporate Merger" -- Preamble
"CRA" -- Section 3.26
"DGCL" -- Section 1.01
"Directors" -- Section 3.20(a)
"Effective Time" -- Section 1.02
"Election Deadline" -- Section 2.02(b)
"Election Form" -- Section 2.02(a)
"Employees" -- Section 3.20(a)
"Environmental Law" -- Section 3.24
"ERISA" -- Section 3.20(a)
"ERISA Affiliate" -- Section 3.20(c)
"Exchange Act" -- Section 3.07
"Exchange Agent" -- Section 2.02(a)
"Exchange Ratio" -- Section 2.01(a)
"FDEF" -- Preamble
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"FDEF Filed SEC Documents" -- Section 4.10
"FDEF Financial Statements" -- Section 4.07
"FDEF Shares" -- Section 2.01(a)
"FDEF Stock Option Plans" -- Section 4.03(a)
"FDEF Stock Options" -- Section 4.03(a)
"FDEF's Counsel" -- Section 7.01
"FDIC" -- Section 3.01(b)
"Federal Reserve" -- Section 3.01(b)
"First Federal" -- Preamble
"GAAP" -- Section 3.06
"Governmental Authority" -- Section 3.16(c)
"HOLA" -- Section 4.01(a)
"Hazardous Substances" -- Section 3.24
"IRS" -- Section 3.13
"Information" -- Section 7.06
"Loan Assets" -- Section 3.10
"Loan Documentation" -- Section 3.10
"material" -- Section 3.01(d)
"material adverse effect" -- Section 3.01(d)
"MRP" -- Section 4.03(a)
"Nasdaq" -- Section 4.09
"No-Election Shares" -- Section 2.02(a)
"ODFI" -- Section 3.01(b)
"OGCL" -- Section 1.01
"OTS" -- Section 4.01(b)
"Officers" -- Section 3.19(a)
"Outstanding ComBanc Shares" -- Section 2.01(c)
"PCBs" -- Section 3.24
"Pension Plan" -- Section 3.20(b)
"Per Share Cash Consideration" -- Section 2.01(a)
"Per Share Reduction" -- Section 2.01(d)
"Per Share Stock Consideration" -- Section 2.01(a)
"Proxy/Prospectus" -- Section 7.03(a)
"Reallocated Cash Shares" -- Section 2.02(c)
"Reallocated Stock Shares" -- Section 2.02(c)
"Registration Statement" -- Section 7.03(a)
"Regulatory Authorities" -- Section 3.16(a)
"Rule 145 Affiliates" -- Section 5.05
"SEC" -- Section 3.01(c)
"Securities Act" -- Section 3.20(b)
"Stock Election Shares" -- Section 2.02(a)
"Subsidiary" -- Section 3.01(c)
"Surviving Corporation" -- Section 1.01
"Tax" -- Section 3.13
"Tax Returns" -- Section 3.13
"Updated ComBanc Disclosure Schedule" -- Section 5.02
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "AGREEMENT"), dated as
of August 4, 2004, is made and entered into by and among First Defiance
Financial Corp., an Ohio corporation ("FDEF"); First Federal Bank of the
Midwest, a federal savings bank ("FIRST FEDERAL"); ComBanc, Inc., a Delaware
corporation ("COMBANC"); and The Commercial Bank, an Ohio commercial bank
("COMMERCIAL BANK").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of ComBanc, Commercial Bank,
FDEF and First Federal have each determined that it is in the best interests of
their respective corporations and shareholders for ComBanc to merge with and
into FDEF (the "CORPORATE MERGER") followed by the merger of Commercial Bank
with and into First Federal (the "BANK MERGER"), upon the terms and subject to
the conditions set forth in and pursuant to the terms of this Agreement and the
Bank Merger Agreement to be entered into by and between First Federal and
Commercial Bank, the form of which is attached hereto as Exhibit A (the "BANK
MERGER AGREEMENT"); and
WHEREAS, the Boards of Directors of ComBanc, Commercial Bank,
FDEF and First Federal have each approved this Agreement and the consummation of
the transactions contemplated hereby;
NOW, THEREFORE, in consideration of the premises and the
respective representations, warranties, covenants, agreements and conditions
hereinafter set forth, FDEF, First Federal, ComBanc and Commercial Bank,
intending to be legally bound hereby, agree as follows:
ARTICLE ONE
THE MERGER
1.01. CORPORATE MERGER. Upon the terms and subject to the
conditions of this Agreement, at the Effective Time (as defined in Section
1.02), ComBanc shall merge with and into FDEF in accordance with the Ohio
General Corporation Law (the "OGCL") and the Delaware General Corporation Law
(the "DGCL"). FDEF shall be the continuing and surviving corporation in the
Corporate Merger, shall continue to exist under the laws of the State of Ohio,
and shall be the only one of FDEF and ComBanc to continue its separate corporate
existence after the Effective Time. As used in this Agreement, the term
"SURVIVING CORPORATION" refers to FDEF immediately after the Effective Time. As
a result of the Corporate Merger, the outstanding common stock, without par
value, of ComBanc (the "COMBANC SHARES") and ComBanc's treasury shares shall be
converted or cancelled in the manner provided in Article Two.
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1.02. EFFECTIVE TIME. The EFFECTIVE TIME of the Corporate
Merger shall be the date and time upon which the last of the following occurs:
(a) the filing of the appropriate certificate of merger with the Ohio Secretary
of State, (b) the filing of the appropriate certificate of merger with the
Delaware Secretary of State or (c) such time thereafter as is agreed to in
writing by FDEF and ComBanc and provided in the certificates of merger filed as
set forth above.
1.03. GOVERNING DOCUMENTS OF THE SURVIVING CORPORATION. At the
Effective Time, the articles of incorporation and code of regulations of FDEF as
in effect immediately prior to the Effective Time shall be the articles of
incorporation and code of regulations of the Surviving Corporation.
1.04. BANK MERGER. Following the Corporate Merger, FDEF
shall cause the Bank Merger to be completed in accordance with the Bank Merger
Agreement.
1.05. STRUCTURE OF COMBINATION. With the consent of ComBanc,
which consent shall not be unreasonably withheld, FDEF and First Federal may at
any time change the method of effecting the mergers (including, without
limitation, the provisions of this Article One) if and to the extent FDEF deems
such change to be desirable; provided, however, that no such change shall (i)
alter or change the amount or composition of the per share merger consideration
described in Section 2.01 of this Agreement; (ii) be likely to materially delay
or jeopardize receipt of any required regulatory approvals or materially delay
the satisfaction of any conditions to the closing of the Corporate Merger; or
(iii) adversely affect the tax treatment of ComBanc or ComBanc stockholders as a
result of receiving the per share merger consideration. ComBanc and Commercial
Bank shall, if requested by FDEF, enter into one or more amendments to this
Agreement in order to effect any such change.
ARTICLE TWO
CONVERSION OF SHARES; SURRENDER OF CERTIFICATES
2.01. CONVERSION OF COMBANC SHARES. At the Effective
Time, by virtue of the Corporate Merger and without any action on the part of
the holder thereof:
(a) Subject to Sections 2.02, 2.03 and 2.04, each ComBanc
Share issued and outstanding immediately prior to the Effective Time (other than
ComBanc Shares to be canceled in accordance with Section 2.01(d) and ComBanc
Dissenting Shares, as defined in Section 2.03) shall be converted into the right
to receive, at the election of the holder thereof pursuant to Section 2.02(a):
(i) the number of common shares, $.01 par value
per share, of FDEF ("FDEF SHARES") that is equal to the Exchange Ratio as
defined in Section 2.01(b) (the "PER SHARE STOCK CONSIDERATION"), or
(ii) a cash amount equal to $17.20 (the "PER SHARE
CASH CONSIDERATION").
(b) Subject to adjustments, if any, pursuant to Section
2.01(c), the Exchange Ratio shall be a fraction the numerator of which shall be
$17.20 and the denominator of which
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shall be the average closing price of an FDEF Share for the five consecutive
trading days ending one trading day prior to the Effective Time (the "AVERAGE");
provided, however, that in the event the Average is less than $21.56, then the
Exchange Ratio shall equal 0.79769; provided further, however, that in the event
the Average is greater than $26.35, the Exchange Ratio shall equal 0.65266.
(c) Notwithstanding anything in this Agreement to the
contrary, to preserve the status of the Corporate Merger as a tax-free
reorganization within the meaning of Section 368(a)(1)(A) of the Code, if the
aggregate value of the FDEF Shares to be issued in connection with the Corporate
Merger, based upon the closing price of the FDEF Shares as reported on The
Nasdaq Stock Market ("Nasdaq") on the business day immediately preceding the
Effective Time, would be less than 45% of the sum of the Aggregate Cash
Consideration (as defined below), plus the value of the FDEF Shares to be
received by the holders of the ComBanc Shares as consideration in connection
with the Corporate Merger, then FDEF may, in its sole discretion, increase the
Per Share Stock Consideration so that the aggregate value of the FDEF Shares to
be issued to the holders of the ComBanc Shares in connection with the Corporate
Merger, as determined based upon the closing price of the FDEF Shares on Nasdaq
on the business day immediately preceding the Effective Time, is equal to 45% of
the sum of the Aggregate Cash Consideration, plus the value of the FDEF Shares
to be received by the holders of the ComBanc Shares as consideration in
connection with the Corporate Merger. For purposes of this Agreement, the
"AGGREGATE CASH CONSIDERATION" shall be an amount equal to the Per Share Cash
Consideration multiplied by 50% of the number of ComBanc Shares outstanding at
the Effective Time (the "OUTSTANDING COMBANC SHARES") (i.e. excluding any of
ComBanc's treasury shares).
(d) If the shareholders' equity of ComBanc on the Closing Date
is less than $22,500,000, excluding unrealized accumulated other comprehensive
income related to ComBanc's investment portfolio, the Per Share Stock
Consideration and the Per Share Cash Consideration to be paid for the ComBanc
Shares shall be decreased by an amount equal to (i) the difference between
$22,500,000 and the shareholders' equity of ComBanc on the Closing Date, divided
by (ii) the number of ComBanc Shares outstanding on the Closing Date (the "PER
SHARE REDUCTION"), and each ComBanc shareholder shall be entitled to receive
from FDEF either (a) an amount equal to $17.20 less the Per Share Reduction or
(b) a number of FDEF Shares equal to the Exchange Ratio, where the numerator of
the Exchange Ratio shall be $17.20 less the Per Share Reduction, subject to the
adjustment set forth in Section 2.01(b).
(e) No certificates or scrip representing fractional FDEF
Shares shall be issued. Each holder of ComBanc Shares who would otherwise be
entitled to receive a fractional FDEF Share shall receive an amount of cash
equal to the product obtained by multiplying (i) the fractional FDEF Share
interest to which such holder (after taking into account all ComBanc Shares held
at the Effective Time by such holder) would otherwise be entitled by (ii) the
Average.
(f) Any treasury shares held by ComBanc and any ComBanc Shares
owned by FDEF for its own account shall be cancelled and retired at the
Effective Time and no consideration shall be issued in exchange therefor.
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2.02. EXCHANGE OF COMBANC CERTIFICATES.
(a) Seven business days after the Effective Time, or as soon
as practicable thereafter, FDEF, or an exchange agent designated by FDEF to
discharge its duties pursuant to this Section 2.02 (the "EXCHANGE AGENT"), shall
mail to each holder of record of ComBanc Shares (i) a form letter of transmittal
and instructions for use in surrendering for exchange the certificates
evidencing the ComBanc Shares ("COMBANC CERTIFICATES") that will have been
cancelled and extinguished as a result of the Corporate Merger and (ii) an
election form ("ELECTION FORM"). The letter of transmittal shall specify that
the risk of loss and title to the ComBanc Certificates shall pass only upon
delivery of such certificates as specified in the letter of transmittal. Each
Election Form shall permit the holder (or in the case of nominee record holders,
the beneficial owner through proper instructions and documentation) (i) to elect
to receive FDEF Shares with respect to all such holder's ComBanc Shares, (ii) to
elect to receive cash with respect to all such holder's ComBanc Shares, (iii) to
elect to receive 50% cash and 50% FDEF Shares with respect to such holder's
ComBanc Shares, or (iv) to indicate that such holder makes no such election with
respect to such holder's ComBanc Shares ("NO-ELECTION SHARES"). Any ComBanc
Shares with respect to which the holder has elected to receive cash are
hereinafter referred to as "CASH ELECTION SHARES," and any ComBanc Shares with
respect to which the holder has elected to receive FDEF Shares are hereinafter
referred to as "STOCK ELECTION SHARES." Any ComBanc Shares with respect to which
the holder thereof shall not, as of the Election Deadline (as defined below),
have made an election by submission to the Exchange Agent of an effective,
properly completed Election Form shall be deemed to be No-Election Shares. Any
ComBanc Dissenting Shares shall be deemed to be Cash Election Shares for
purposes of the allocation provisions of subsection (c) below, but in no event
shall such shares be classified as Reallocated Stock Shares (as defined in
Section 2.02(c)(ii)(B) below).
(b) For purposes of this Agreement, the term "ELECTION
DEADLINE" shall mean 5:00 p.m., Eastern Time, on the 20th day following but not
including the date of mailing of the Election Form, or such other date upon
which FDEF and ComBanc shall mutually agree prior to the Effective Time. Any
election to receive cash, FDEF Shares or a combination of cash and FDEF Shares
shall have been properly made only if the Exchange Agent shall have actually
received a properly completed Election Form by the Election Deadline. The
Exchange Agent shall be required to make all determinations as to when any
election, modification or revocation has been received and whether any such
election, modification or revocation has been properly made.
(c) The Exchange Agent shall effect the allocation among
holders of ComBanc Shares of rights to receive cash, FDEF Shares, or a
combination of cash and FDEF Shares in accordance with the Election Forms as
follows:
(i) If the number of Cash Election Shares is
less than one-half of the Outstanding ComBanc Shares, then:
(A) each of the Cash Election Shares
(other than ComBanc Dissenting Shares) shall be converted into the right to
receive the Per Share Cash Consideration,
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(B) the Exchange Agent will allocate
first among the No-Election Shares (by the method of allocation described in
Section 2.02(d)(i) below) and then, if necessary, will allocate among the Stock
Election Shares (by the method of allocation described in Section 2.02(d)(ii)
below), a sufficient number of non-Cash Election Shares ("REALLOCATED CASH
SHARES") such that the sum of the number of Cash Election Shares plus the number
of Reallocated Cash Shares equals one-half of the Outstanding ComBanc Shares ,
and each of the Reallocated Cash Shares shall be converted into the right to
receive the Per Share Cash Consideration, and
(C) each of the No-Election Shares
(if any) and Stock Election Shares which are not Reallocated Cash Shares shall
be converted into the right to receive the Per Share Stock Consideration.
(ii) If the number of Cash Election Shares is
greater than one-half of the Outstanding ComBanc Shares, then:
(A) each of the Stock Election Shares
and No-Election Shares shall be converted into the right to receive the Per
Share Stock Consideration,
(B) the Exchange Agent will allocate
among the Cash Election Shares (other than ComBanc Dissenting Shares) (by the
method of allocation described in Section 2.02(d) below), a sufficient number of
Cash Election Shares ("REALLOCATED STOCK SHARES") such that the sum of the
number of remaining Cash Election Shares (including all of the ComBanc
Dissenting Shares) equals one-half of the Outstanding ComBanc Shares, and each
of the Reallocated Stock Shares shall be converted into the right to receive the
Per Share Stock Consideration, and
(C) each of the Cash Election Shares
(other than ComBanc Dissenting Shares) which are not Reallocated Stock Shares
shall be converted into the right to receive the Per Share Cash Consideration.
(iii) If the number of Cash Election Shares
(including the ComBanc Dissenting Shares) is equal to one-half of the
Outstanding ComBanc Shares, then subparagraphs (c)(i) and (ii) above shall not
apply and all No-Election Shares and all Stock Election Shares shall be
converted into the right to receive the Per Share Stock Consideration.
(d) Any pro rata allocation shall be performed by the
Exchange Agent as follows:
(i) If the Exchange Agent is required pursuant
to Section 2.02(c)(i)(B) to designate from among all No-Election Shares the
Reallocated Cash Shares to receive the Per Share Cash Consideration, each holder
of No-Election Shares shall be allocated a pro rata portion (based on such
holder's No-Election Shares relative to all No-Election Shares) of the total
Reallocated Cash Shares.
(ii) If the Exchange Agent is required pursuant
to Section 2.02(c)(i)(B) to designate from among all Stock Election Shares the
Reallocated Cash Shares to receive the Per Share Cash Consideration, each holder
of Stock Election Shares shall be allocated a pro rata
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portion (based on such holder's Stock Election Shares relative to all Stock
Election Shares) of the remainder of the total Reallocated Cash Shares less the
number of No-Election Shares which are Reallocated Cash Shares.
(iii) If the Exchange Agent is required pursuant to
Section 2.02(c)(ii)(B) to designate from among all holders of Cash Election
Shares the Reallocated Stock Shares to receive the Per Share Stock
Consideration, each holder of Cash Election Shares shall be allocated a pro rata
portion (based on such holder's Cash Election Shares relative to all Cash
Election Shares) of the remainder of the total Reallocated Stock Shares less the
number of No-Election Shares which are Reallocated Stock Shares. For purposes of
this Section 2.02(d)(iii), ComBanc Dissenting Shares shall not be considered to
be Cash Election Shares.
(e) Upon surrender of a ComBanc Certificate for cancellation,
together with a letter of transmittal, duly executed, the holder of such ComBanc
Certificate shall be entitled to receive in exchange therefor a certificate
representing the full number of FDEF Shares and/or the amount of cash into which
the aggregate number of ComBanc Shares previously represented by such
surrendered ComBanc Certificate shall have been converted pursuant to this
Agreement., and the ComBanc Certificate so surrendered shall thereafter be
cancelled. All payments made upon the surrender of ComBanc Certificates pursuant
to this Article Two shall be deemed to have been made in full satisfaction of
all rights pertaining to the shares evidenced by such ComBanc Certificates.
(f) If any ComBanc Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such ComBanc Certificate to be lost, stolen or destroyed and, if required by
FDEF in its sole discretion, the posting by such person of a bond in such amount
as FDEF may determine is reasonably necessary as indemnity against any claim
that may be made against it with respect to such ComBanc Certificate, the
Exchange Agent shall issue in exchange for such lost, stolen or destroyed
ComBanc Certificate the cash and/or FDEF Shares (and cash in lieu of fractional
FDEF Share interests, if any) deliverable in respect thereof.
(g) None of FDEF, ComBanc, the Exchange Agent or the Surviving
Corporation shall be liable to any former holder of ComBanc Shares for any
payment of the Per Share Stock Consideration, the Per Share Cash Consideration,
any cash in lieu of a fractional FDEF Share interest or any dividends or
distributions with respect to FDEF Shares delivered to a public official if
required by any applicable abandoned property, escheat or similar law.
(h) No dividends or other distributions declared after the
Effective Time with respect to FDEF Shares and payable to the holders of record
thereof after the Effective Time shall be paid to the holder of any
unsurrendered ComBanc Certificate until it is surrendered by the holder thereof.
Subject to the effect, if any, of applicable law, after the subsequent surrender
and exchange of a ComBanc Certificate, the record holder thereof shall be
entitled to receive any dividends or other distributions, without any interest
thereon, which became payable with respect to the FDEF Shares represented by
such ComBanc Certificate.
(i) After the Effective Time, there shall be no further
registration or transfer of ComBanc Shares on the stock transfer books of
ComBanc. In the event that, after the
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Effective Time, ComBanc Certificates are presented for transfer, they shall be
cancelled and exchanged as provided in this Article Two.
(j) FDEF or the Exchange Agent shall be entitled to deduct and
withhold from the Per Share Stock Consideration or the Per Share Cash
Consideration such amounts as FDEF or the Exchange Agent is required to deduct
and withhold with respect to the making of such payment under the Internal
Revenue Code of 1986, as amended (the "CODE"), or any other provision of
domestic or foreign tax law (whether national, federal, state, provincial, local
or otherwise). To the extent that amounts are so withheld and paid over to the
appropriate taxing authority by FDEF or the Exchange Agent, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the holder of the ComBanc Certificates.
(k) The Surviving Corporation may from time to time waive one
or more of the rights provided to it in this Article Two to withhold certain
payments, deliveries and distributions; and no such waiver shall constitute a
waiver of its rights thereafter to withhold any such payment, delivery or
distribution in the case of any person.
2.03. DISSENTING COMBANC SHARES. Anything contained in this
Agreement or elsewhere to the contrary notwithstanding, if any holder of an
outstanding ComBanc Share dissents from the Corporate Merger pursuant to Section
262 of the DGCL and is thereby entitled to appraisal rights thereunder (a
"COMBANC DISSENTING SHARE"), then such ComBanc Dissenting Share shall be
extinguished but shall not be converted into the right to receive the Per Share
Stock Consideration or the Per Share Cash Consideration. Instead, such ComBanc
Dissenting Share shall be entitled only to such rights (and shall have such
obligations) as are provided in Section 262 of the DGCL.
2.04. ANTI-DILUTION PROVISIONS. The Exchange Ratio shall be
adjusted to reflect any occurrence subsequent to the date of this Agreement but
prior to the Effective Time, pursuant to which the outstanding FDEF Shares shall
have been or will be increased, decreased, changed into or exchanged for a
different number or kind of shares or securities through reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split or other like changes in FDEF's capitalization.
2.05. FDEF SHARES. Each FDEF Share issued and outstanding
immediately prior to the Effective Time shall continue to be issued and
outstanding and unaffected by the Corporate Merger.
2.06. TAX CONSEQUENCES. For federal income tax purposes, the
Corporate Merger is intended to constitute a reorganization within the meaning
of Section 368(a) of the Code. The parties hereto hereby adopt this Agreement as
a "plan of reorganization" within the meaning of Treasury Department regulation
sections 1.368-2(g) and 1.368-3(a).
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES OF
COMBANC AND COMMERCIAL BANK
Except as set forth on a disclosure schedule prepared by
ComBanc and Commercial Bank (the "COMBANC DISCLOSURE SCHEDULE"), ComBanc and
Commercial Bank
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represent and warrant to FDEF and First Federal that each of the following
statements is true and accurate:
3.01. CORPORATE STATUS.
(a) ComBanc is a Delaware corporation and a bank holding
company registered under the Bank Holding Company Act of 1956, as amended
("BHCA"). ComBanc is duly organized, validly existing and in good standing under
the laws of the State of Delaware and has the full corporate power and authority
to own its property, to carry on its business as presently conducted, and to
enter into and, subject to the required adoption of this Agreement by the
ComBanc stockholders and the obtaining of appropriate approvals of Governmental
and Regulatory Authorities (as defined below), perform its obligations under
this Agreement and consummate the transactions contemplated by this Agreement.
ComBanc is not qualified to do business in any other jurisdiction or required to
be so qualified to do business in any other jurisdiction except where the
failure to be so qualified individually or in the aggregate would not reasonably
be expected to have a material adverse effect on ComBanc. ComBanc has provided
to FDEF and First Federal true and complete copies of the certificate of
incorporation and bylaws of ComBanc, in each case as amended to the date of this
Agreement.
(b) Commercial Bank is an Ohio commercial bank and a Federal
Reserve member bank, and is regulated by the Ohio Division of Financial
Institutions (the "ODFI"), the Board of Governors of the Federal Reserve System
(the "FEDERAL RESERVE"), and the Federal Deposit Insurance Corporation (the
"FDIC"). Commercial Bank is duly organized, validly existing and in good
standing under the laws of the State of Ohio and has full power and authority,
corporate or otherwise, to own its property and to carry on its business as
presently conducted. Commercial Bank is not qualified to do business in any
other jurisdiction or required to be qualified to do business in any other
jurisdiction, except where the failure to be so qualified individually or in the
aggregate would not reasonably be expected to have a material adverse effect on
Commercial Bank. Commercial Bank has provided to FDEF and First Federal true and
complete copies of the articles of incorporation and other governing instruments
of Commercial Bank, in each case as amended to the date of this Agreement.
(c) Commercial Bank is the only Subsidiary (as defined below)
of ComBanc. For purposes of this Agreement, "SUBSIDIARY" has the meaning
ascribed to such term in Rule 1-02 of Regulation S-X promulgated by the
Securities and Exchange Commission (the "SEC").
(d) As used in this Agreement, (i) any reference to any event,
change, effect, development, circumstance or occurrence being "MATERIAL" with
respect to any entity means an event, change, effect, development, circumstance
or occurrence that is or is reasonably likely to be material in relation to the
financial condition, properties, assets, liabilities, businesses or results of
operations of such entity and its subsidiaries taken as a whole, and (ii) the
term "MATERIAL ADVERSE EFFECT" means, with respect to any entity, an event,
change, effect, development, circumstance or occurrence that, individually or
together with any other event, change, effect, development, circumstance or
occurrence, (A) has or would be reasonably likely to have a material adverse
effect on the business, condition (financial or otherwise), capitalization,
assets (tangible or intangible), liabilities (accrued, contingent or otherwise),
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operations, regulatory affairs, financial performance or prospects of such
entity and its Subsidiaries, taken as a whole, or (B) materially impairs the
ability of such entity to perform its obligations under this Agreement or to
consummate the Corporate Merger and the other transactions contemplated by this
Agreement.
3.02. CAPITALIZATION OF COMBANC.
(a) The authorized capital of ComBanc consists solely of
5,000,000 ComBanc Shares, of which 2,211,014 are issued and outstanding and
164,986 are held in treasury. All outstanding ComBanc Shares have been duly
authorized and are validly issued, fully paid and non-assessable, and were not
issued in violation of the preemptive rights of any person. All ComBanc Shares
issued have been issued in compliance in all material respects with all
applicable federal and state securities laws.
(b) As of the date of this Agreement, there are no options,
warrants, calls, rights, commitments or agreements of any character to which
ComBanc is a party or by which it is bound, obligating ComBanc to issue, deliver
or sell, or cause to be issued, delivered or sold, any additional ComBanc Shares
or obligating ComBanc to grant, extend or enter into any such option, warrant,
call, right, commitment or agreement. As of the date of this Agreement, there
are no outstanding contractual obligations of ComBanc to repurchase, redeem or
otherwise acquire any ComBanc Shares.
(c) Except as disclosed in Section 3.02(c) of the ComBanc
Disclosure Schedule, since December 31, 2003, ComBanc has not (A) issued or
permitted to be issued any ComBanc Shares, or securities exercisable for or
convertible into ComBanc Shares; (B) repurchased, redeemed or otherwise
acquired, directly or indirectly through any ComBanc Subsidiary or otherwise,
any ComBanc Shares; or (C) declared, set aside, made or paid to the stockholders
of ComBanc dividends or other distributions on the outstanding ComBanc Shares.
(d) No bonds, debentures, notes or other indebtedness of
ComBanc having the right to vote on any matters on which ComBanc stockholders
may vote are issued or outstanding.
3.03. CAPITALIZATION OF COMMERCIAL BANK.
(a) The authorized capital of Commercial Bank consists solely
of 1,188,000 shares of common stock, of which 1,188,000 are issued and
outstanding. All outstanding shares of Commercial Bank are owned beneficially
and of record by ComBanc. Such shares have been duly authorized and are validly
issued, fully paid and non-assessable, were not issued in violation of the
preemptive rights of any person, and have been issued in compliance in all
material respects with all applicable federal and state securities laws.
(b) As of the date of this Agreement, there are no options,
warrants, calls, rights, commitments or agreements of any character to which
Commercial Bank is a party or by which it is bound, obligating Commercial Bank
to issue, deliver or sell, or cause to be issued, delivered or sold, any
additional shares of Commercial Bank or obligating Commercial Bank to grant,
extend or enter into any such option, warrant, call, right, commitment or
agreement. As of the date of this Agreement, there are no outstanding
contractual obligations of Commercial Bank to repurchase, redeem or otherwise
acquire any shares of Commercial Bank.
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(c) Commercial Bank has not (A) issued or permitted to be
issued any shares of Commercial Bank, or securities exercisable for or
convertible into shares of Commercial Bank; (B) repurchased, redeemed or
otherwise acquired, directly or indirectly any shares of Commercial Bank; or (C)
declared, set aside, made or paid to the shareholders of Commercial Bank
dividends or other distributions on the outstanding shares of Commercial Bank.
(d) No bonds, debentures, notes or other indebtedness of
Commercial Bank having the right to vote on any matters on which Commercial Bank
shareholders may vote are issued or outstanding.
3.04. CORPORATE PROCEEDINGS.
(a) This Agreement has been (i) duly executed and delivered by
ComBanc and Commercial Bank, (ii) approved by the boards of directors of ComBanc
and Commercial Bank and (iii) adopted by ComBanc as the sole shareholder of
Commercial Bank.
(b) Subject to the adoption of this Agreement by a majority of
the issued and outstanding ComBanc Shares at a meeting of the ComBanc
stockholders (the "COMBANC MEETING") and to the filing of all requisite
applications with Regulatory Authorities and the receipt of all requisite
regulatory approvals, ComBanc and Commercial Bank have all requisite corporate
power and authority to enter into this Agreement and to perform all of their
obligations hereunder.
3.05. AUTHORIZATION. This Agreement has been duly executed and
delivered by each of ComBanc and Commercial Bank, and assuming the due
authorization, execution and delivery by FDEF and First Federal, constitutes a
valid and binding obligation of each of ComBanc and Commercial Bank, enforceable
against each of them in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and other similar laws relating to or affecting the enforcement of
creditors' rights generally, by general equitable principles (regardless of
whether enforceability is considered in a proceeding in equity or at law) and by
an implied covenant of good faith and fair dealing and except to the extent such
enforceability may be limited by laws relating to safety and soundness of
insured depository institutions as set forth in 12 U.S.C. Section 1818(b) or by
appointment of a conservator by the FDIC. Each of ComBanc and Commercial Bank
has the right, power, authority and capacity to execute and deliver this
Agreement and, subject to the required adoption of this Agreement by the ComBanc
stockholders, the obtaining of appropriate approvals by Regulatory Authorities
and Governmental Authorities and the expiration of applicable regulatory waiting
periods, to perform its obligations under this Agreement.
3.06. FINANCIAL STATEMENTS OF COMBANC. Except as set forth in
Section 3.06 of the ComBanc Disclosure Schedule, the audited consolidated
financial statements of ComBanc, consisting of consolidated statements of
financial condition as of December 31, 2003, 2002 and 2001, and the related
consolidated statements of earnings, shareholders' equity and cash flows for the
three years then ended, including the related notes and the reports thereon of
BKD, LLP, and the unaudited interim consolidated statements of ComBanc,
consisting of consolidated statements of financial condition as of June 30, 2004
(the "COMBANC BALANCE
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SHEET DATE"), the related unaudited consolidated statements of earnings, cash
flows, including the related notes thereto, for the six months ended June 30,
2004, of ComBanc (collectively, all of such audited and unaudited consolidated
financial statements are referred to as the "COMBANC FINANCIAL STATEMENTS"),
copies of which have recently been provided to FDEF and First Federal, have been
prepared in accordance with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and present fairly, in all
material respects, the consolidated financial condition, earnings and cash flows
of ComBanc and Commercial Bank for the periods then ended.
3.07. SEC FILINGS. ComBanc has filed all reports and proxy
materials required to be filed by it with the SEC pursuant to the Securities
Exchange Act of ββββ (βββ "ββββββββ βββ"). All such filings, at the time of
filing, complied in all material respects as to form and included all exhibits
required to be filed under the applicable rules of the SEC. None of such
documents, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
3.08. ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth
in the ComBanc Financial Statements or in Section 3.08 of the ComBanc Disclosure
Schedule, ComBanc and Commercial Bank have no liabilities or obligations
(whether accrued, absolute, contingent or otherwise) as of the date hereof,
other than liabilities and obligations that individually or in the aggregate
could not reasonably be expected to have a material adverse effect on ComBanc or
Commercial Bank. Except as set forth in Section 3.08 of the ComBanc Disclosure
Schedule, all debts, liabilities, guarantees and obligations of ComBanc and
Commercial Bank incurred since the ComBanc Balance Sheet Date have been incurred
in the ordinary course of business and are usual and normal in amount both
individually and in the aggregate. Except as disclosed in Section 3.08 of the
ComBanc Disclosure Schedule, neither ComBanc nor Commercial Bank is in default
or breach of any material agreement to which ComBanc or Commercial Bank is a
party other than any such breaches or defaults that individually or in the
aggregate would not reasonably be expected to have a material adverse effect on
ComBanc or Commercial Bank. To the knowledge of ComBanc and Commercial Bank, no
other party to any material agreement to which ComBanc or Commercial Bank is a
party is in default or breach of such agreement, which breach or default would
reasonably be expected to have a material adverse effect on ComBanc or
Commercial Bank.
3.09. ABSENCE OF CHANGES. Except as set forth in Section 3.09
of the ComBanc Disclosure Schedule, since the ComBanc Balance Sheet Date there
has not been any material adverse change in the business, operations, assets or
financial condition of ComBanc and Commercial Bank taken as a whole.
3.10. LOANS. Except for such insufficiencies as would not
reasonably be expected to have a material adverse effect on ComBanc or
Commercial Bank, the documentation ("LOAN DOCUMENTATION") governing or relating
to the loan and credit-related assets ("LOAN ASSETS") included in the loan
portfolio of Commercial Bank is legally sufficient for the purposes intended
thereby and creates enforceable rights of Commercial Bank in accordance with the
terms of such Loan Documentation, subject to applicable bankruptcy, insolvency,
reorganization,
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moratorium, fraudulent conveyance and other similar laws relating to or
affecting the enforcement of creditors' rights generally. All loans and
extensions of credit that have been made by Commercial Bank comply in all
material respects with applicable regulatory limitations and procedures. Except
as set forth in Section 3.10 of the ComBanc Disclosure Schedule, no debtor under
any of the Loan Documentation has asserted any claim or defense with respect to
the subject matter thereof. Except as set forth in Section 3.10 of the ComBanc
Disclosure Schedule, neither ComBanc nor Commercial Bank is a party to a loan,
including any loan guaranty, with any director, executive officer or 5%
shareholder of ComBanc or Commercial Bank, or any person, corporation or
enterprise controlling, controlled by or under common control with either
ComBanc or Commercial Bank.
3.11. ALLOWANCE FOR LOAN LOSSES. Except as set forth in
Section 3.11 of the ComBanc Disclosure Schedule, there is no loan which is
reflected as an asset in the ComBanc Financial Statements that (a) is 90 days or
more delinquent, (b) has been classified as "substandard," "doubtful" or "loss,"
or (c) has been designated as "special mention." ComBanc's allowance for loan
losses has been determined in accordance with GAAP and in accordance with all
rules and regulations applicable to ComBanc and Commercial Bank and is adequate
to provide for reasonably anticipated losses on outstanding loans.
3.12. REPORTS AND RECORDS. ComBanc and Commercial Bank have
filed all reports and maintained all records required to be filed or maintained
by them under the rules and regulations of the Federal Reserve, the ODFI and the
FDIC. All such documents and reports complied in all material respects with
applicable requirements of law and rules and regulations in effect at the time
such documents and reports were filed and contained in all material respects the
information required to be stated therein. None of such documents or reports,
when filed, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
3.13. TAXES.
(a) Except as set forth in Section 3.13(a) of the ComBanc
Disclosure Schedule, ComBanc and Commercial Bank have timely filed all returns,
statements, reports and forms (including, without limitation, elections,
declarations, disclosures, schedules, estimates and information returns)
(collectively, the "TAX RETURNS") with respect to all federal, state, local and
foreign income, gross income, gross receipts, gains, premium, sales, use, ad
valorem, transfer, franchise, profits, withholding, payroll, employment, excise,
severance, stamp, occupancy, license, lease, environmental, customs, duties,
property, windfall profits and all other taxes (including, without limitation,
any interest, penalties or additions to tax with respect thereto, individually a
"TAX," and collectively, "TAXES") required to be filed with the appropriate tax
authority. Such Tax Returns were true, correct and complete in all material
respects. ComBanc and Commercial Bank have paid and discharged all Taxes due
(whether reflected on such Tax Returns or otherwise), other than such Taxes that
are adequately accrued as shown on the ComBanc Financial Statements or have
arisen in the ordinary course of business since the ComBanc Balance Sheet Date.
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(b) Except as set forth in Section 3.13(b) of the ComBanc
Disclosure Schedule, neither the Internal Revenue Service (the "IRS") nor any
other taxing agency or authority, domestic or foreign, has asserted, is now
asserting or, to the knowledge of ComBanc or Commercial Bank, is threatening to
assert against ComBanc or Commercial Bank any deficiency or claim for additional
Taxes. There are no unexpired waivers by ComBanc or Commercial Bank of any
statute of limitations with respect to Taxes. The accruals and reserves for
Taxes reflected in the ComBanc Financial Statements are adequate in all material
respects for the periods covered. ComBanc and Commercial Bank have withheld or
collected and paid over to the appropriate Governmental Authorities or are
properly holding for such payment all Taxes required by law to be withheld or
collected. There are no liens for Taxes upon the assets of ComBanc or Commercial
Bank, other than liens for current Taxes not yet due and payable. Neither
ComBanc nor Commercial Bank has agreed to make, or is required to make, any
adjustment under Section 481(a) of the Code.
(c) Except as set forth in Section 3.13(c) of the ComBanc
Disclosure Schedule, neither ComBanc nor Commercial Bank is a party to any
agreement, contract, arrangement or plan that has resulted, or could result,
individually or in the aggregate, in the payment of "excess parachute payments"
within the meaning of Section 280G of the Code.
(d) Neither ComBanc nor Commercial Bank (i) has ever been a
member of an affiliated group of corporations, within the meaning of Section
1504 of the Code, other than an affiliated group of which ComBanc is or was the
common parent corporation, or (ii) has any liability for the Taxes of any other
person or entity under Treasury Department Regulation Section 1.1502-6 (or any
similar provision of state, local or foreign law), as a transferee or successor,
by contract or otherwise.
(e) No Tax is required to be withheld pursuant to Section 1445
of the Code as a result of the transactions contemplated by this Agreement.
3.14. PROPERTY AND TITLE.
(a) Section 3.14(a) of the ComBanc Disclosure Schedule lists
and describes all real property, and any leasehold interest in real property,
owned or held by ComBanc or Commercial Bank (collectively, the "COMBANC REAL
PROPERTIES"). Copies of all leases of ComBanc Real Properties to which ComBanc
or Commercial Bank is a party have been provided to FDEF. Such leasehold
interests have not been assigned or subleased. All ComBanc Real Properties which
are owned by ComBanc or Commercial Bank are free and clear of all mortgages,
liens, security interests, defects, encumbrances, easements, restrictions,
reservations, conditions, covenants, agreements, encroachments, rights of way
and zoning laws, except (i) those set forth in Section 3.14(a) of the ComBanc
Disclosure Schedule; (ii) easements, restrictions, reservations, conditions,
covenants, rights of way, zoning laws and other defects and irregularities in
title and encumbrances which do not materially impair the use thereof for the
purposes for which they are held; and (iii) liens for current Taxes not yet due
and payable.
(b) ComBanc and Commercial Bank own, and are in rightful
possession of, and have good title to, all of the other assets indicated in the
ComBanc Financial Statements as being owned by ComBanc or Commercial Bank, free
and clear of any charge, mortgage, pledge,
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security interest, hypothecation, restriction, claim, option, lien, encumbrance
or interest of any persons whatsoever except (a) those described in Section
3.14(b) of the ComBanc Disclosure Schedule and (ii) those assets disposed of in
the ordinary course of business consistent with past practices.
(c) The assets of ComBanc and Commercial Bank, taken as a
whole, are adequate to continue to conduct the businesses of ComBanc and
Commercial Bank as such businesses are presently being conducted.
3.15. LEGAL PROCEEDINGS. Except as set forth in Section 3.15
of the ComBanc Disclosure Schedule and other than routine foreclosure and
collection matters where ComBanc or Commercial Bank are only plaintiffs, there
are no actions, suits, proceedings, claims or investigations pending or, to the
knowledge of ComBanc or Commercial Bank, threatened in any court, before any
governmental agency or instrumentality or in any arbitration proceeding against
or by ComBanc or Commercial Bank.
3.16. COMPLIANCE WITH LAWS AND REGULATIONS.
(a) Except as set forth in Section 3.16(a) of the ComBanc
Disclosure Schedule, neither ComBanc, Commercial Bank nor their respective
properties is a party to or subject to any order, judgment, decree, agreement,
memorandum of understanding or similar arrangement with, or a commitment letter
or similar submission to, or extraordinary supervisory letter from, any court or
federal or state governmental agency or authority, including any such agency or
authority charged with the supervision or regulation of financial institutions
(or their holding companies) or issuers of securities (including, without
limitation, the Federal Reserve, the ODFI, the FDIC, and the SEC) or the
supervision or regulation of ComBanc or Commercial Bank (collectively, the
"REGULATORY AUTHORITIES"). Neither ComBanc nor Commercial Bank has been advised
by any Regulatory Authority that such Regulatory Authority is contemplating
issuing or requesting (or is considering the appropriateness of issuing or
requesting) any new or additional order, judgment, decree, agreement, memorandum
of understanding, commitment letter, supervisory letter or similar submission.
(b) Each of ComBanc and Commercial Bank has been in compliance
with all applicable federal, state, local and foreign statutes, laws,
regulations, ordinances, rules, judgments, orders or decrees applicable thereto
or to the employees conducting such business, including, without limitation, the
Equal Credit Opportunity Act, as amended, the Fair Housing Act, as amended, the
Federal Community Reinvestment Act, as amended, the Home Mortgage Disclosure
Act, as amended, and all other applicable fair lending laws and other laws
relating to discriminatory business practices, except for failures to be in
compliance which, individually or in the aggregate, have not had or would not
reasonably be expected to have a material adverse effect on ComBanc or
Commercial Bank.
(c) Each of ComBanc and Commercial Bank has all permits,
licenses, authorizations, orders and approvals of, and has made all filings,
applications and registrations with, each Regulatory Authority and
administrative agency or commission or other federal, state or local government
authority or instrumentality (each, a "GOVERNMENTAL AUTHORITY") that is required
in order to permit it to own or lease its properties and to conduct its business
as
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presently conducted, except where the failure to obtain any of the foregoing or
to make any such filing, application or registration has not had or would not
reasonably be expected to have a material adverse effect on ComBanc or
Commercial Bank; and 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 has been threatened in writing.
(d) The savings accounts and deposits of Commercial Bank are
insured up to applicable limits by the FDIC in accordance with the Federal
Deposit Insurance Act, and Commercial Bank has paid all assessments and filed
all reports required by the Federal Deposit Insurance Act.
3.17. NO CONFLICT. Except as set forth in the ComBanc
Disclosure Schedule, subject to the required adoption of this Agreement by the
stockholders of ComBanc, receipt of the required approvals of Governmental and
Regulatory Authorities, expiration of applicable regulatory waiting periods, and
required filings under federal and state securities laws, the execution,
delivery and performance of this Agreement, and the consummation of the
transactions contemplated hereby, by ComBanc and Commercial Bank does not and
will not (a) conflict with, or result in a violation of, or result in the breach
of or a default (or which with notice or lapse of time would result in a
default) under, any provision of: (i) any federal, state or local law,
regulation, ordinance, order, rule or administrative ruling of any Governmental
Authority applicable to ComBanc or Commercial Bank or any of their respective
properties; (ii) the certificate of incorporation or bylaws of ComBanc, or the
articles of incorporation, code of regulations or other governing instruments of
Commercial Bank; (iii) any material agreement, indenture or instrument to which
ComBanc or Commercial Bank is a party or by which either of their properties or
assets may be bound; or (iv) any order, judgment, writ, injunction or decree of
any court, arbitration panel or any Governmental Authority applicable to ComBanc
or Commercial Bank; (b) result in the creation or acceleration of any security
interest, mortgage, option, claim, lien, charge or encumbrance upon or interest
in any property of ComBanc or Commercial Bank; or (c) violate the terms or
conditions of, or result in the cancellation, modification, revocation or
suspension of, any material license, approval, certificate, permit or
authorization held by ComBanc or Commercial Bank.
3.18. BROKERS, FINDERS AND OTHERS. Except for $266,000 in
aggregate fees and expenses that are payable to βββββ, ββββββββ and βββββ, Inc.
("COMBANC'S FINANCIAL ADVISOR") and the ordinary and customary legal and
accounting fees, there are no fees or commissions of any sort whatsoever claimed
by, or payable by ComBanc or Commercial Bank to, any broker, finder,
intermediary, attorney, accountant or any other similar person in connection
with effecting this Agreement or the transactions contemplated hereby.
3.19. EMPLOYMENT AGREEMENTS. Neither ComBanc nor Commercial
Bank is a party to any employment, change in control, severance or consulting
agreement. Neither ComBanc nor Commercial Bank is a party to, bound by or
negotiating, any collective bargaining agreement, nor are any of their
respective employees represented by any labor union or similar organization.
Each of ComBanc and Commercial Bank is in compliance with all applicable laws
respecting employment and employment practices, terms and conditions of
employment and wages and hours other than with respect to any noncompliance that
individually or in the aggregate would not reasonably be expected to have a
material adverse effect on ComBanc or
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Commercial Bank. Neither ComBanc nor Commercial Bank has engaged in any unfair
labor practice, other than practices that individually or in the aggregate would
not reasonably be expected to have a material adverse effect on ComBanc or
Commercial Bank.
3.20. EMPLOYEE BENEFIT PLANS.
(a) Section 3.20(a) of the ComBanc Disclosure Schedule
contains a complete and accurate list of all bonus, incentive, deferred
compensation, pension (including, without limitation, Pension Plans defined
below), retirement, profit-sharing, thrift, savings, employee stock ownership,
stock bonus, stock purchase, restricted stock, stock option, severance, welfare
(including, without limitation, "welfare plans" within the meaning of Section
3(1) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), fringe benefit plans, employment or severance agreements and all
similar practices, policies and arrangements maintained or contributed to
(currently or within the last six years) by (i) ComBanc or Commercial Bank and
in which any employee or former employee (the "EMPLOYEES"), consultant or former
consultant (the "CONSULTANTS"), officer or former officer (the "OFFICERS"), or
director or former director (the "DIRECTORS") of ComBanc or Commercial Bank
participates or to which any such Employees, Consultants, Officers or Directors
are parties or (ii) any ERISA Affiliate (as defined below) (collectively, the
"COMPENSATION AND BENEFIT PLANS"). Neither ComBanc nor Commercial Bank has any
commitment to create any additional Compensation and Benefit Plan or to modify
or change any existing Compensation and Benefit Plan, except to the extent
required by law.
(b) Each Compensation and Benefit Plan has been operated and
administered substantially in accordance with its terms and with applicable law,
including, but not limited to, ERISA, the Code, the Securities Act of 1933, as
amended (the "SECURITIES ACT"), the Exchange Act, the Age Discrimination in
Employment Act, or any regulations or rules promulgated thereunder, and all
filings, disclosures and notices required by ERISA, the Code, the Securities
Act, the Exchange Act, the Age Discrimination in Employment Act and any other
applicable law have been timely made. The prototype plan sponsor of the
Compensation and Benefit Plan which is an "employee pension benefit plan" within
the meaning of Section 3(2) of ERISA (a "PENSION PLAN") and which is intended to
be qualified under Section 401(a) of the Code has received a favorable opinion
letter from the IRS and neither ComBanc nor Commercial Bank (i) has obtained a
determination letter from the IRS or (ii) is aware of any circumstances likely
to result in revocation of such prototype plan sponsor's favorable opinion
letter. There is no material pending or, to the knowledge of ComBanc or
Commercial Bank, threatened, legal action, suit or claim relating to the
Compensation and Benefit Plans other than routine claims for benefits
thereunder. Neither ComBanc nor Commercial Bank has engaged in a transaction, or
omitted to take any action, with respect to any Compensation and Benefit Plan
that would reasonably be expected to subject ComBanc or Commercial Bank to a tax
or penalty imposed by either Section 4975 of the Code or Section 502 of ERISA,
assuming for purposes of Section 4975 of the Code that the taxable period of any
such transaction expired as of the date hereof.
(c) Except as set forth in Section 3.20(c) of the ComBanc
Disclosure Schedule, (i) none of ComBanc or Commercial Bank, or any entity which
is considered one employer with ComBanc or Commercial Bank under Section
4001(a)(14) of ERISA or Section 414(b), (c) or (m) of the Code (an "ERISA
Affiliate"), has ever sponsored, maintained or
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been obligated to contribute to any Pension Plan subject to either Title IV of
ERISA or the funding requirements of Section 412 of the Code; (ii) none of
ComBanc or Commercial Bank, or any ERISA Affiliate, has contributed, or has been
obligated to contribute, to a multiemployer plan under Subtitle E of Title IV of
ERISA (as defined in ERISA Sections 3(37)(A) and 4001(a)(3)) at any time since
September 26, 1980; and (iii) there is no pending investigation or enforcement
action by the PBGC, the Department of Labor, the IRS or any other Governmental
Authority with respect to any Compensation and Benefit Plan.
(d) Except as set forth in Section 3.20(d) of the ComBanc
Disclosure Schedule, all contributions required to be made under the terms of
any Compensation and Benefit Plan or ERISA Affiliate plan or any employee
benefit arrangements under any collective bargaining agreement to which ComBanc
or Commercial Bank is a party have been timely made or have been reflected on
the ComBanc Financial Statements.
(e) Except as disclosed in Section 3.20(e) of the ComBanc
Disclosure Schedule, neither ComBanc nor Commercial Bank has any obligations to
provide retiree health and retiree life insurance or other retiree death
benefits under any Compensation and Benefit Plan, other than benefits mandated
by Section 4980B of the Code.
(f) ComBanc and Commercial Bank do not maintain any foreign
Compensation and Benefit Plans.
(g) With respect to each Compensation and Benefit Plan, if
applicable, ComBanc or Commercial Bank has provided to FDEF, true and complete
copies of: (i) Compensation and Benefit Plan documents and all subsequent
amendments thereto; (ii) trust instruments and insurance contracts and all
subsequent amendments thereto; (iii) the most recent annual returns (Forms 5500)
and financial statements; (iv) the most recent summary plan descriptions and all
subsequent summaries of material modifications; (v) the most recent
determination letter issued by the IRS with respect to each Compensation and
Benefit Plan that is intended to comply with Code Section 401(a); and (vi) any
Form 5310, Form 5310A, Form 5300 or Form 5330 filed with the IRS within the
twelve months ending immediately before the date hereof.
(h) Except as disclosed in Section 3.20(h) of the ComBanc
Disclosure Schedule, the consummation of the transactions contemplated by this
Agreement would not, directly or indirectly (including, without limitation, as a
result of any termination of employment prior to or following the Effective
Time), reasonably be expected to (i) entitle any Employee, Officer, Consultant
or Director to any payment (including severance pay or similar compensation) or
any increase in compensation, (ii) result in the vesting or acceleration of any
benefits under any Compensation and Benefit Plan or (iii) result in any material
increase in benefits payable under any Compensation and Benefit Plan.
3.21. INSURANCE. ComBanc and Commercial Bank are insured with
reputable insurers against such risks and in such amounts as the management of
ComBanc and Commercial Bank reasonably have determined to be prudent in
accordance with industry practices. Section 3.21 of the ComBanc Disclosure
Schedule lists all of the insurance policies, binders or bonds maintained by
ComBanc or Commercial Bank and a description of all claims
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filed by ComBanc or Commercial Bank against the insurers of ComBanc and
Commercial Bank since January 1, 2001. All such insurance policies are in full
force and effect, neither ComBanc nor Commercial Bank is in material default
thereunder and all claims thereunder have been filed in due and timely fashion.
3.22. GOVERNMENTAL AND THIRD-PARTY PROCEEDINGS. Except as set
forth in Section 3.22 of the ComBanc Disclosure Schedule, no consent, approval,
authorization of, or registration, declaration or filing with, any court,
Governmental Authority, Regulatory Authority or any other third party is
required to be made or obtained by ComBanc or Commercial Bank in connection with
the execution, delivery or performance by ComBanc of this Agreement or the
consummation by ComBanc of the transactions contemplated hereby, except for (a)
filings of applications and notices, as applicable, with and the approval of
certain federal and state banking authorities, (b) the filing of the appropriate
certificates of merger with the Secretaries of State of Ohio and Delaware
pursuant to the OGCL and DGCL, (c) the adoption of this Agreement by the ComBanc
stockholders, and (d) the filing with the SEC of the Proxy/Prospectus (as
defined in Section 7.03(a)).
3.23. CONTRACTS. Section 3.23 of the ComBanc Disclosure
Schedule describes all contracts, whether written or oral, in existence as of
the date of this Agreement (other than those which have been performed
completely or which may be terminated without penalty and upon no more than 30
days' prior notice) which involve the payment by or to ComBanc or Commercial
Bank of more than $10,000 in connection with the purchase of property or goods
or the performance of services. True, complete and correct copies of all such
contracts have been delivered to FDEF. Neither ComBanc nor Commercial Bank, nor,
to the knowledge of ComBanc or Commercial Bank, any other party thereto, is in
default under any such contract, agreement, commitment, arrangement or other
instrument to which it is a party, by which its respective assets, business or
operations may be bound or affected in any way, or under which it or its
respective assets, business or operations receive benefits, and there has not
occurred any event that, with the lapse of time or the giving of notice or both,
would constitute such a default.
3.24. ENVIRONMENTAL MATTERS. Except as otherwise disclosed in
Section 3.24 of the ComBanc Disclosure Schedule: neither the conduct nor
operation of ComBanc or Commercial Bank nor any condition of any property
presently or previously owned, leased or operated by any of them (including,
without limitation, in a fiduciary or agency capacity), or on which any of them
holds a lien, violates or violated Environmental Laws and to ComBanc's
knowledge, no condition has existed or event has occurred with respect to any of
them or any such property that, with notice or the passage of time, or both, is
reasonably likely to result in liability under Environmental Laws. Except as
otherwise disclosed in Section 3.24 of the ComBanc Disclosure Schedule, to
ComBanc's knowledge, neither ComBanc nor Commercial Bank has received any notice
from any person or entity that ComBanc or Commercial Bank or the operation or
condition of any property ever owned, leased, operated, or held as collateral or
in a fiduciary capacity by any of them are or were in violation of or otherwise
alleged to have liability under any Environmental Law, including, but not
limited to, responsibility (or potential responsibility) for the cleanup or
other remediation of any pollutants, contaminants, or hazardous or toxics
wastes, substances or materials at, on, beneath, or originating from any such
property. Neither ComBanc nor Commercial Bank has knowledge that (i) any of the
ComBanc Real Properties or improvements thereon or any of the real properties in
respect of which Commercial
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Bank has foreclosed or holds a mortgage or mortgages (hereinafter referred to as
the "COMMERCIAL BANK REAL ESTATE COLLATERAL") or improvements thereon has been
used for the treatment, storage or disposal of Hazardous Substances or has been
contaminated by Hazardous Substances, (ii) any of the business operations of
ComBanc or Commercial Bank have contaminated lands, waters or other property of
others with Hazardous Substances, except routine, office-generated solid waste,
or (iii) any of the ComBanc Real Properties or improvements thereon, or the
Commercial Bank Real Estate Collateral or improvements thereon have in the past
or presently contain underground storage tanks, friable asbestos materials or
PCB-containing equipment.
For purposes of this Agreement, (a) "ENVIRONMENTAL LAW" means
all applicable local, state and federal environmental, health and safety laws
and regulations, including, without limitation, the Resource Conservation and
Recovery Act, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended ("CERCLA"), the Clean Water Act, the Federal
Clean Air Act, and the Occupational Safety and Health Act, each as amended,
regulations promulgated thereunder, and state counterparts, and (b) "HAZARDOUS
SUBSTANCES" means, at any time: (i) any "hazardous substance" as defined in
Section 101(14) of CERCLA or regulations promulgated thereunder; (ii) any "solid
waste," "hazardous waste," or "infectious waste," as such terms are defined in
any other Environmental Law as of the date of this Agreement; and (iii) friable
asbestos, urea-formaldehyde, polychlorinated biphenyls ("PCBS"), nuclear fuel or
material, chemical waste, radioactive material, explosives, known carcinogens,
petroleum products and by-products, and other dangerous, toxic or hazardous
pollutants, contaminants, chemicals, materials or substances listed or
identified in, or regulated by, any Environmental Law.
3.25. COMBANC INFORMATION. True and complete copies of all
documents listed in the ComBanc Disclosure Schedule have been made available or
provided to FDEF. The books of account, stock record books and other financial
and corporate records of ComBanc and Commercial Bank, all of which have been
made available to FDEF, are complete and correct in all material respects,
including the maintenance of a system of internal accounting controls sufficient
to provide reasonable assurance that transactions are executed with its
management's authorizations and such books and records are accurately reflected
in all material respects in the ComBanc Financial Statements, except for
portions of records of various meetings that relate specifically to the
consideration of the transactions contemplated by this Agreement.
3.26. CRA COMPLIANCE. Neither ComBanc nor Commercial Bank has
received any notice of non-compliance with the applicable provisions of the
Community Reinvestment Act ("CRA") and the regulations promulgated thereunder,
and Commercial Bank received a CRA rating of "satisfactory" or better on each of
its last three examinations. Neither ComBanc nor Commercial Bank knows of any
fact or circumstance or set of facts or circumstances which would be reasonably
likely to cause ComBanc or Commercial Bank to receive any notice of
non-compliance with such provisions or cause the CRA rating of ComBanc or
Commercial Bank to fall below satisfactory.
3.27. OWNERSHIP OF FDEF SHARES. As of the date hereof, except
as otherwise disclosed in Section 3.27 of the ComBanc Disclosure Schedule,
neither ComBanc nor Commercial Bank nor, to the knowledge of ComBanc and
Commercial Bank, any of their
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affiliates (as such term is defined under the Exchange Act), (a) beneficially
owns, directly or indirectly, or (b) is a party to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of, any
FDEF Shares.
3.28. FAIRNESS OPINION. The Board of Directors of ComBanc has
received the opinion of the ComBanc's Financial Advisor dated the date of this
Agreement to the effect that the consideration to be received by the ComBanc
stockholders in the Corporate Merger is fair, from a financial point of view, to
the ComBanc stockholders.
3.29. REAL PROPERTY INTEREST. ComBanc Shares are not a U.S.
real property interest within the meaning of Treasury Department Regulation
Sections 1.897-2(b)(1) and (h).
3.30. INTERNAL CONTROLS.
(a) The Chief Executive Officer and Vice President-Controller
of ComBanc have evaluated the effectiveness of ComBanc's disclosure controls and
procedures as of the end of the periods covered by the ComBanc Financial
Statements and as of the date of this Agreement. Section 3.30(a) of the ComBanc
Disclosure Schedule presents the conclusions of the Chief Executive Officer and
Vice President-Controller of ComBanc about the effectiveness of such disclosure
controls and procedures as of the end of the periods covered by the ComBanc
Financial Statements. The Chief Executive Officer and Vice President-Controller
of ComBanc have disclosed to ComBanc's auditors and the audit committee of
ComBanc's board of directors and to FDEF: (i) all significant deficiencies and
material weaknesses in the design or operation of the disclosure controls and
procedures which are reasonably likely to adversely affect ComBanc's ability to
record, process, summarize and report financial information and (ii) any fraud,
whether or not material, that involves management or other employees who have a
significant role in ComBanc's disclosure controls and procedures.
(b) The Chief Executive Officer and Vice President-Controller
of ComBanc have evaluated the effectiveness of ComBanc's internal control over
financial reporting as of the end of the periods covered by the ComBanc
Financial Statements and as of the date of this Agreement. Section 3.30(b) of
the ComBanc Disclosure Schedule presents the conclusions of the Chief Executive
Officer and Vice President-Controller of ComBanc about the effectiveness of such
internal control as of the end of the periods covered by the ComBanc Financial
Statements. The Chief Executive Officer and Vice President-Controller of ComBanc
have disclosed to ComBanc's auditors and the audit committee of ComBanc's board
of directors and to FDEF: (i) all significant deficiencies and material
weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect ComBanc's ability to
record, process, summarize and report financial information and (ii) any fraud,
whether or not material, that involves management or other employees who have a
significant role in ComBanc's internal control over financial reporting. ComBanc
has provided to FDEF all documentation related to ComBanc's internal control
over financial reporting.
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ARTICLE FOUR
REPRESENTATIONS AND WARRANTIES OF FDEF AND FIRST FEDERAL
FDEF and First Federal hereby represent and warrant to ComBanc
and Commercial Bank that:
4.01. CORPORATE STATUS.
(a) FDEF is an Ohio corporation and a unitary savings and loan
holding company registered under the Home Owners' Loan Act, as amended (the
"HOLA"). FDEF is duly organized, validly existing and in good standing under the
laws of the State of Ohio and has the full corporate power and authority to own
its property, to carry on its business as presently conducted and to enter into
and, subject to the required obtaining of appropriate approvals of Governmental
and Regulatory Authorities, perform its obligations under this Agreement and
consummate the transactions contemplated by this Agreement, and is duly
qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership, leasing or
operation of its properties makes such qualification or licensing necessary,
other than where the failure to be so organized, existing, qualified or licensed
or in good standing individually or in the aggregate could not reasonably be
expected to have a material adverse effect on FDEF. FDEF has made available to
ComBanc true and complete copies of its articles of incorporation and code of
regulations as amended to the date of this Agreement.
(b) First Federal is a federal savings bank and is regulated
by the Office of Thrift Supervision ("OTS") and the FDIC. First Federal is duly
organized, validly existing and in good standing under the laws of the United
States and has the full corporate power and authority to own its property and to
carry on its business as presently conducted. First Federal is not qualified to
do business in any other jurisdiction or required to be qualified to do business
in any other jurisdiction except where the failure to be so organized, existing,
qualified or licensed or in good standing individually or in the aggregate could
not reasonably be expected to have a material adverse effect on First Federal.
First Federal has made available to ComBanc true and complete copies of its
charter and bylaws as amended to the date of this Agreement.
4.02. CORPORATE PROCEEDINGS. All corporate proceedings of FDEF
and First Federal necessary to authorize the execution, delivery and performance
of this Agreement, and the consummation of the transactions contemplated by this
Agreement, have been duly and validly taken. This Agreement has been duly
executed and delivered by each of FDEF and First Federal. No vote of FDEF's
shareholders is required to be obtained in connection with the consummation of
the transactions contemplated hereby unless the number of FDEF Shares to be
issued pursuant to the consummation of the Corporate Merger will entitle the
former ComBanc stockholders to exercise one-sixth or more of the voting power of
FDEF immediately after the Corporate Merger.
4.03. CAPITALIZATION OF FDEF.
(a) As of the date of this Agreement, the authorized capital
stock of FDEF consists only of (i) 25,000,000 shares of common stock, par value
$.01 per share, of which
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6,317,885 shares are issued and outstanding, and 4,663,217 shares are held in
treasury, and (ii) 5,000,000 preferred shares, par value $.01 per share, none of
which are outstanding. The outstanding FDEF Shares have been duly authorized and
are validly issued, fully paid and non-assessable, and were not issued in
violation of the preemptive rights of any person. As of the date of this
Agreement, 662,932 FDEF Shares are reserved for issuance upon the exercise of
outstanding stock options (the "FDEF STOCK OPTIONS") granted under FDEF's stock
option plans (the "FDEF STOCK OPTION PLANS") and 13,253 FDEF Shares are
available for future grants of stock options under the FDEF Stock Option Plans.
As of the date of this Agreement, except for the FDEF Stock Options, unvested
FDEF Shares that have been awarded under the 1996 Management Recognition Plan
and Trust ("MRP"), and the shares issuable to ComBanc's stockholders pursuant to
this Agreement, FDEF has no other commitment or obligation to issue, deliver or
sell any FDEF Shares. As of the date of this Agreement, there are no bonds,
debentures, notes or other indebtedness of FDEF, and no securities or other
instruments or obligations of FDEF, the value of which is in any way based upon
or derived from any capital or voting stock of FDEF, having the right to vote
(or convertible into, or exchangeable for, securities having the right to vote)
on any matters on which shareholders of FDEF may vote. Except as set forth
above, as of the date of this Agreement, there are no material contracts of any
kind to which FDEF is a party or by which FDEF is bound obligating FDEF to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock of, or other equity or voting interests in, or
securities convertible into, or exchangeable or exercisable for, shares of
capital stock of, or other equity or voting interests in, FDEF or obligating
FDEF to issue, grant, extend or enter into any such security, option, warrant,
call, right or contract. As of the date of this Agreement, there are no
outstanding material contractual obligations of FDEF to repurchase, redeem or
otherwise acquire any shares of capital stock of, or other equity or voting
interests in, FDEF.
(b) The FDEF Shares to be issued in exchange for ComBanc
Shares in the Corporate Merger, when issued in accordance with the terms of this
Agreement, will be duly authorized, validly issued, fully paid and
non-assessable, will not be subject to any preemptive or other statutory right
of stockholders and will be issued in compliance with applicable United States
federal and state securities laws.
4.04. AUTHORIZED AND EFFECTIVE AGREEMENT. This Agreement has
been duly executed and delivered by each of FDEF and First Federal, and assuming
the due authorization, execution and delivery by each of ComBanc and Commercial
Bank, constitutes the legal, valid and binding obligation of each of FDEF and
First Federal, enforceable against them in accordance with its terms, except as
the same may be limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance and other similar laws relating to or affecting the
enforcement of creditors' rights generally, by general equitable principles
(regardless of whether enforceability is considered in a proceeding in equity or
at law) and by an implied covenant of good faith and fair dealing. Each of FDEF
and First Federal has the right, power, authority and capacity to execute and
deliver this Agreement and, subject to the obtaining of appropriate approvals by
Governmental and Regulatory Authorities and the expiration of applicable
regulatory waiting periods, and required filings under federal and state
securities laws, to perform its obligations under this Agreement.
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4.05. NO CONFLICT. Subject to the receipt of the required
approvals of Governmental and Regulatory Authorities, the expiration of
applicable regulatory waiting periods and required filings under federal and
state securities laws, the execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated hereby, by FDEF
and First Federal do not and will not (a) conflict with, or result in a
violation of, or result in the breach of or a default (or which with notice or
lapse of time would result in a default) under, any provision of: (i) any
federal, state or local law, regulation, ordinance, order, rule or
administrative ruling of any Governmental Authority applicable to FDEF or any of
its properties; (ii) the articles of incorporation or code of regulations of
FDEF or the charter or bylaws of First Federal; (iii) any material agreement,
indenture or instrument to which FDEF or First Federal is a party or by which it
or its properties or assets may be bound; or (iv) any order, judgment, writ,
injunction or decree of any court, arbitration panel or any Governmental
Authority applicable to FDEF or First Federal other than, in the case of clauses
(i), (iii) and (iv) any such conflicts, violations, breaches or defaults that
individually or in the aggregate would not reasonably be expected to have a
material effect on FDEF on a consolidated basis; (b) result in the creation or
acceleration of any security interest, mortgage, option, claim, lien, charge or
encumbrance upon or interest in any property of FDEF or First Federal, other
than such security interests, mortgage, options, claims, liens, charges or
encumbrances that individually or in the aggregate would not reasonably be
expected to have a material adverse effect on FDEF on a consolidated basis; or
(c) violate the terms or conditions of, or result in the cancellation,
modification, revocation or suspension of, any material license, approval,
certificate, permit or authorization held by FDEF other than such violations,
cancellations, modifications, revocations or suspensions that individually or in
the aggregate would not reasonably be expected to have a material effect on FDEF
on a consolidated basis.
4.06. SEC FILINGS. FDEF has filed all reports and proxy
materials required to be filed by it with the SEC pursuant to the Exchange Act.
All such filings, at the time of filing, complied in all material respects as to
form and included all exhibits required to be filed under the applicable rules
of the SEC. None of such documents, when filed, contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
4.07. FINANCIAL STATEMENTS OF FDEF AND FIRST FEDERAL. FDEF and
First Federal have furnished to ComBanc and Commercial Bank (a) the audited
consolidated financial statements of FDEF consisting of consolidated balance
sheets as of December 31, 2003, 2002 and 2001, and the related consolidated
statements of income, changes in shareholders' equity and cash flows for the
three years ended December 31, 2003, including accompanying notes and the report
thereon of Ernst and Young LLP, and (b) the unaudited interim consolidated
statements of FDEF, consisting of consolidated statements of financial condition
as of June 30, 2004, the related unaudited consolidated statements of earnings,
shareholders' equity, and cash flows including the related notes thereto for the
six months ended June 30, 2004, of FDEF (collectively, all of such audited and
unaudited consolidated financial statements are referred to as the "FDEF
FINANCIAL STATEMENTS"). The FDEF Financial Statements were prepared in
conformity with GAAP applied on a consistent basis and present fairly, in all
material respects, the consolidated financial condition of FDEF at the dates,
and the consolidated results of operations and cash flows for the periods,
stated therein.
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4.08. BROKERS, FINDERS AND OTHERS. Except for fees paid to
Austin Associates, LLC, there are no fees or commissions of any sort whatsoever
claimed by, or payable by FDEF to, any broker, finder, intermediary attorney,
accountant or any other similar person in connection with effecting this
Agreement or the transactions contemplated hereby, except for ordinary and
customary legal and accounting fees.
4.09. GOVERNMENTAL AND THIRD-PARTY PROCEEDINGS. No consent,
approval, authorization of, or registration, declaration or filing with, any
court, Governmental or Regulatory Authority or any other third party is required
to be made or obtained by FDEF or First Federal in connection with the
execution, delivery or performance by FDEF or First Federal of this Agreement or
the consummation by FDEF of the transactions contemplated hereby, except for (a)
filings of applications or notices, as applicable, with and the approval of
certain federal and state banking authorities, (b) the filing of the appropriate
certificate of merger with the Secretaries of State of Ohio and Delaware
pursuant to the OGCL and DGCL, (c) the filing with the SEC of the Registration
Statement (as defined in Section 7.03 below) and such reports under the Exchange
Act as may be required in connection with this Agreement, the Corporate Merger
and the other transactions contemplated hereby, (d) any filings required under
the rules and regulations of The Nasdaq Stock Market, Inc. ("NASDAQ"), and (e)
such other consents, approvals, orders, authorizations, registrations,
declarations and filings, except for such consents, approvals orders,
authorizations, registrations, declarations and filings, the failure of which to
be obtained or made individually or in the aggregate would not reasonably be
expected to have a material effect on FDEF on a consolidated basis.
4.10. ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth
in publicly available documents filed by FDEF with the SEC prior to the date of
this Agreement (the "FDEF FILED SEC DOCUMENTS") and in the FDEF Financial
Statements, and except as arising hereunder, FDEF has no liabilities or
obligations (whether accrued, absolute, contingent or otherwise) as of June 30,
2004, other than liabilities and obligations that individually or in the
aggregate would not reasonably be expected to have a material adverse effect on
FDEF. Except as set forth in the FDEF Filed SEC Documents, all debts,
liabilities, guarantees and obligations of FDEF and First Federal incurred since
June 30, 2004, have been incurred in the ordinary course of business and are
usual and normal in amount both individually and in the aggregate. Neither FDEF
nor First Federal is in default or breach of any material agreement to which
FDEF or First Federal is a party other than any such breaches or defaults that
individually or in the aggregate would not reasonably be expected to have a
material adverse effect on FDEF on a consolidated basis. To the best knowledge
of FDEF and First Federal, no other party to any material agreement to which
FDEF or First Federal is a party is in default or breach of such agreement,
which breach or default would reasonably be expected to have a material adverse
effect on FDEF on a consolidated basis.
4.11. ABSENCE OF CHANGES. Except (a) as set forth in the FDEF
Filed SEC Documents, (b) as otherwise publicly disclosed in press releases
issued by FDEF, or (c) in the ordinary course of business consistent with past
practice, since December 31, 2003, there has not been any material adverse
change in the business, operations, assets or financial condition of FDEF and
First Federal taken as a whole, and, to the knowledge of FDEF and First Federal,
no fact or condition exists that FDEF or First Federal believes will cause such
a material adverse change in the future.
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4.12. LEGAL PROCEEDINGS. Except as set forth in the FDEF Filed
SEC Documents, there are no actions, suits, proceedings, claims or
investigations pending or, to the knowledge of FDEF and First Federal,
threatened in any court, before any Governmental Authority or instrumentality or
in any arbitration proceeding (a) against FDEF or First Federal which, if
adversely determined against FDEF or First Federal, would have a material
adverse effect on FDEF on a consolidated basis; or (b) against or by FDEF or
First Federal which, if adversely determined against FDEF or First Federal,
would prevent the consummation of this Agreement or any of the transactions
contemplated hereby or declare the same to be unlawful or cause the rescission
thereof.
4.13. REGULATORY MATTERS. None of FDEF, First Federal or the
respective properties of FDEF and First Federal is a party to or subject to any
order, judgment, decree, agreement, memorandum of understanding or similar
arrangement with, or a commitment letter or similar submission to, or
supervisory letter from, any Regulatory Authorities. Neither FDEF nor First
Federal has been advised by any Regulatory Authority that such Regulatory
Authority is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, judgment, decree,
agreement, memorandum of understanding, commitment letter, supervisory letter or
similar submission.
4.14. OWNERSHIP OF COMBANC SHARES. Neither FDEF nor First
Federal, nor to the knowledge of FDEF, any of its affiliates or associates (as
such terms are defined under the Exchange Act), (a) beneficially owns, directly
or indirectly or (b) is a party to any agreement, arrangement or understanding
for the purpose of acquiring, holding, voting or disposing of, any ComBanc
Shares.
ARTICLE FIVE
FURTHER COVENANTS OF COMBANC AND COMMERCIAL BANK
5.01. OPERATION OF BUSINESS. ComBanc and Commercial Bank each
covenant to FDEF that, throughout the period from the date of this Agreement to
and including the Closing (as defined in Section 9.01), except as expressly
contemplated or permitted by this Agreement or to the extent that FDEF shall
otherwise consent in writing which consent shall not be unreasonably withheld or
delayed:
(a) ComBanc and Commercial Bank will conduct their respective
businesses only in the ordinary and usual course consistent with past practice,
and neither ComBanc nor Commercial Bank shall take any action that would be
inconsistent with any representation or warranty of ComBanc or Commercial Bank
set forth in this Agreement or which would cause a breach of any such
representation or warranty if made at or immediately following such action,
except as may be required by applicable law or regulation.
(b) Except as provided for by this Agreement or as otherwise
approved expressly in writing by FDEF, neither ComBanc nor Commercial Bank will:
(i) sell, transfer, mortgage, pledge or subject to
any lien or otherwise encumber any of the assets of ComBanc or Commercial Bank,
tangible or intangible, which are
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material, individually or in the aggregate, to ComBanc or Commercial Bank except
for securitization activities in the ordinary course of business;
(ii) make any capital expenditure or capital
additions or improvements which individually exceed $10,000 or in the aggregate
exceed $25,000;
(iii) become bound by, enter into, or perform any
material contract, commitment or transaction that would be reasonably likely to
(A) have a material adverse effect on ComBanc or Commercial Bank, (B) impair in
any material respect the ability of ComBanc or Commercial Bank to perform its
obligations under this Agreement or (C) prevent or materially delay the
consummation of the transactions contemplated by this Agreement or the Bank
Merger Agreement;
(iv) declare, pay or set aside for payment any
dividends or make any distributions on ComBanc shares;
(v) purchase, redeem, retire or otherwise acquire any
ComBanc Shares;
(vi) issue any ComBanc Shares or grant any option or
right to acquire any of its capital shares;
(vii) amend or propose to amend any of the governing
documents of ComBanc or Commercial Bank;
(viii) reorganize or acquire all or any portion of
the assets, business, deposits or properties of any other entity other than in
the ordinary and usual course of business consistent with past practice (A) by
way of foreclosures or (B) by acquisitions of control in a bona fide fiduciary
capacity or in satisfaction of debts previously contracted in good faith;
(ix) enter into, establish, adopt or amend any
pension, retirement, stock option, stock purchase, savings, profit-sharing,
deferred compensation, consulting, bonus, group insurance or other employee
benefit, incentive or welfare contract, plan or arrangement, or any trust
agreement (or similar arrangement) related thereto, in respect of any Director,
Officer or Employee of ComBanc or Commercial Bank, or take any action to
accelerate the vesting or exercisability of stock options, restricted stock or
other compensation or benefits payable thereunder; provided, however, that
ComBanc or Commercial Bank may take such actions in order to satisfy either
applicable law or contractual obligations, including those arising under its
benefit plans, existing as of the date hereof and disclosed in the ComBanc
Disclosure Schedule, or regular annual renewals of insurance contracts;
(x) announce or pay any general wage or salary
increase or bonus, or enter into or amend or renew any employment, consulting,
severance or similar agreements or arrangements with any Officer, Director or
Employee of ComBanc or Commercial Bank, except, in each case, (i) as set forth
in Section 5.01(x) of the ComBanc Disclosure Schedule, (ii) for changes that are
required by applicable law or (iii) to satisfy contractual obligations existing
as of the date hereof that are disclosed in the ComBanc Disclosure Schedule;
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(xi) borrow or agree to borrow any funds, including
but not limited to repurchase transactions, or indirectly guarantee or agree to
guarantee any obligations of others;
(xii) implement or adopt any change in its accounting
principles, practices or methods, other than as may be required by GAAP;
(xiii) make or change any Tax election or Tax
accounting method, file any amended Tax Return, settle any Tax claim or
assessment or consent to the extension or waiver of any statute of limitations
with respect to Taxes;
(xiv) originate or issue a commitment to originate
any loan or note in a principal amount of $100,000 or more or on an aggregate
basis to one borrower of $250,000 or more, or modify, renew, or release any
collateral on any existing loan the outstanding balance of which, including
principal, interest and fees, is $100,000 or more;
(xv) establish any new lending programs or make any
changes in its policies concerning which persons may approve loans;
(xvi) enter into any securities transactions or
purchase or otherwise acquire any investment security other than U.S. Government
and U.S. agency obligations;
(xvii) increase or decrease the rate of interest paid
on time deposits or certificates of deposits, except in a manner and pursuant to
policies consistent with past practices in relation to rates prevailing in
Commercial Bank's market;
(xviii) foreclose upon or otherwise take title to or
possession or control of any real property without first obtaining a Phase I
Environmental Report thereon which indicates that the property is free of
pollutants, contaminants or hazardous or toxic waste materials including
asbestos and petroleum products; provided, however, that Commercial Bank shall
not be required to obtain such a report with respect to single-family,
non-agriculture residential property of one acre or less to be foreclosed upon
unless it has reason to believe such property may contain any such pollutants,
contaminants, waste materials including asbestos or petroleum products;
(xx) purchase or otherwise acquire any interest in a
loan held by a third party; or
(xxi) enter into any agreement to do any of the
foregoing.
(c) ComBanc and Commercial Bank shall use their commercially
reasonable efforts to maintain and keep their respective properties and
facilities in their present condition and working order, ordinary wear and tear
excepted.
(d) ComBanc and Commercial Bank shall perform all of their
obligations under all agreements relating to or affecting their respective
properties, rights and businesses.
(e) ComBanc and Commercial Bank shall use their commercially
reasonable efforts to maintain and preserve their respective business
organizations intact, to retain present
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key Employees and to maintain the respective relationships of customers,
suppliers and others having business relationships with them.
(f) ComBanc or Commercial Bank shall maintain insurance
coverage with reputable insurers, which in respect of amounts, premiums, types
and risks insured, were maintained by them at the ComBanc Balance Sheet Date,
and upon the renewal or termination of such insurance, ComBanc and Commercial
Bank will use their commercially reasonable efforts to renew or replace such
insurance coverage with reputable insurers, in respect of the amounts, premiums,
types and risks insured or maintained by them at the ComBanc Balance Sheet Date.
(g) ComBanc and Commercial Bank shall afford to FDEF and First
Federal and to their officers, employees, investment bankers, attorneys,
accountants and other advisors and representatives reasonable and prompt access
during normal business hours during the period prior to the Effective Time or
the termination of this Agreement to all their respective properties, assets,
books, contracts, commitments, directors, officers, employees, attorneys,
accountants, auditors, other advisors and representatives and records and,
during such period, ComBanc and Commercial Bank shall make available to FDEF or
First Federal on a prompt basis (i) a copy of each report, schedule, form,
statement and other document filed or received by it during such period pursuant
to the requirements of domestic or foreign (whether national, federal, state,
provincial, local or otherwise) laws and (ii) all other information concerning
its business, properties and personnel as FDEF or First Federal may reasonably
request (including the financial and Tax work papers of independent auditors and
financial consultants), provided that neither FDEF or First Federal shall
unreasonably interfere with the business operations of ComBanc or Commercial
Bank and either ComBanc or Commercial Bank may, in its discretion, limit the
access of FDEF or First Federal to the employees of ComBanc or Commercial Bank
whose work product ComBanc or Commercial Bank reasonably wishes to keep
confidential.
5.02. NOTIFICATION. Between the date of this Agreement and the
Closing Date, ComBanc promptly shall notify FDEF in writing if ComBanc or
Commercial Bank becomes aware of any fact or condition that (a) causes or
constitutes a breach of any of the representations and warranties of ComBanc or
Commercial Bank, or (b) would (except as expressly contemplated by this
Agreement) cause or constitute a breach of any such representation or warranty
had such representation or warranty been made as of the time of occurrence or
discovery of such fact or condition. Should any such fact or condition require
any change in the ComBanc Disclosure Schedule, ComBanc will promptly deliver to
FDEF a supplement to the ComBanc Disclosure Schedule specifying such change
("UPDATED COMBANC DISCLOSURE SCHEDULE"); provided, however, that the disclosure
of such change in the Updated ComBanc Disclosure Schedule shall not be deemed to
constitute a cure of any breach of any representation or warranty made pursuant
to this Agreement unless consented to in writing by FDEF. During the same
period, ComBanc will promptly notify FDEF of (i) the occurrence of any breach of
any of the covenants of ComBanc or Commercial Bank contained in this Agreement,
(ii) the occurrence of any event that may make the satisfaction of the
conditions in this Agreement impossible or unlikely or (iii) the occurrence of
any event that is reasonably likely, individually or taken with all other facts,
events or circumstances known to ComBanc or Commercial Bank, to result in a
material adverse effect with respect to ComBanc or Commercial Bank.
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5.03. ACQUISITION TRANSACTIONS. ComBanc and Commercial Bank
shall (a) not, directly or indirectly, solicit or initiate any proposals or
offers from any person or entity, or discuss or negotiate with any such person
or entity, regarding any acquisition or purchase of all or a material amount of
the assets of, any equity securities of, or any merger, consolidation or
business combination with, ComBanc or Commercial Bank (collectively,
"ACQUISITION Transactions"), (b) not disclose to any person any information not
customarily disclosed publicly or provide access to its properties, books or
records or otherwise assist or encourage any person in connection with any of
the foregoing in connection with an Acquisition Transaction, and (c) give FDEF
prompt notice of any such inquiries, offers or proposals. The foregoing sentence
shall not apply however to the consideration, negotiation and consummation of an
Acquisition Transaction not solicited by ComBanc or Commercial Bank or any of
their respective officers, directors, agents or affiliates if, and to the extent
that, the Board of Directors of ComBanc (as constituted as of the date of this
Agreement) reasonably determines in good faith after consultation with ComBanc's
Financial Advisors and upon written advice of counsel to ComBanc that failure to
consider such Acquisition Transaction could reasonably be expected to constitute
a breach of its fiduciary duties to the shareholders of ComBanc; provided,
however, that ComBanc shall give FDEF prompt notice of any such proposal of an
Acquisition Transaction and keep FDEF promptly informed regarding the substance
thereof and the response of the Board of Directors of ComBanc thereto.
5.04. DELIVERY OF INFORMATION. ComBanc and Commercial Bank
shall furnish to FDEF promptly after such documents are available: (a) all
reports, proxy statements or other communications by ComBanc to its
stockholders, (b) all press releases relating to any transactions, (c) all
filings made with the SEC, and (d) all status reports submitted to a Regulatory
Authority pursuant to the Written Agreement among ComBanc, Commercial Bank, the
Federal Reserve and the ODFI, dated December 19, 2003.
5.05. AFFILIATES COMPLIANCE WITH THE SECURITIES ACT. No later
than the 15th day prior to the mailing of the Proxy/Prospectus (as defined in
Section 7.03 below), ComBanc shall deliver to FDEF a schedule of all persons
whom ComBanc reasonably believes are, or are likely to be, as of the date of the
ComBanc Meeting, deemed to be "affiliates" of ComBanc as that term is used in
Rule 145 under the Securities Act (the "RULE 145 AFFILIATES"). Thereafter and
until the Effective Time, ComBanc shall identify to FDEF each additional person
whom ComBanc reasonably believes to have thereafter become a Rule 145 Affiliate.
5.06. VOTING AGREEMENT. Concurrently with the execution and
delivery of this Agreement, and as a condition and material inducement to FDEF's
willingness to enter into this Agreement, each of the directors and executive
officers of ComBanc and Commercial Bank shall enter into a Voting Agreement in
the form attached hereto as Exhibit B. If any person shall become a director or
executive officer of ComBanc or Commercial Bank after the date of this Agreement
and until the Effective Time, ComBanc and Commercial Bank shall cause each such
person to execute a Voting Agreement.
5.07 NO CONTROL. Nothing contained in this Agreement shall
give FDEF or First Federal, directly or indirectly, the right to control or
direct the operations of ComBanc or Commercial Bank prior to the Effective Time.
Prior to the Effective Time, each of ComBanc
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and FDEF shall exercise, consistent with the terms of this Agreement, complete
control and supervision over its and its subsidiaries respective operations.
5.08 ACCOUNTING POLICIES. Before the Effective Time and at the
request of FDEF, ComBanc or Commercial Bank shall promptly (a) establish and
take such accruals to conform Commercial Bank' loan and accrual policies to
FDEF's policies; (b) establish and take such accruals and charges in order to
implement such policies in respect of excess facilities and equipment capacity,
severance costs, litigation matters, write-off or write-down of various assets
and other appropriate accounting adjustments; and (c) recognize for financial
accounting purposes such expenses of the Corporate Merger, the Bank Merger and
restructuring charges related to or to be incurred in connection with such
mergers, to the extent permitted by law, consistent with GAAP and on a basis
mutually satisfactory to it and FDEF; provided, however, that neither ComBanc
nor Commercial Bank shall be obligated to make any such changes or adjustments
until the satisfaction of all unwaived conditions set forth in Sections 8.01,
8.02 and 8.03, and further provided that no basis for termination of this
Agreement by any party pursuant to Article Ten is then extant. ComBanc and
Commercial Bank'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 5.08.
5.09 COMBANC MEETING. ComBanc shall, as promptly as
practicable following the effective date of the Registration Statement,
establish a record date for, duly call, give notice of, convene and hold the
ComBanc Meeting no later than 45 days after the effectiveness of the
Registration Statement, unless otherwise agreed to by FDEF and ComBanc. The
ComBanc Board of Directors shall recommend to its stockholders that they adopt
this Agreement, and shall include such recommendation in the Proxy/Prospectus.
5.10 TAX MATTERS.
(a) Without the prior written consent of FDEF, neither ComBanc
nor any of its Subsidiaries shall make or change any election, change an annual
accounting period, adopt or change any accounting method, file any amended Tax
Return, enter into any closing agreement, settle any Tax claim or assessment
relating to ComBanc or any of its Subsidiaries, surrender any right to claim a
refund of Taxes, consent to any extension or waiver of the limitation period
applicable to any tax claim or assessment relating to ComBanc or any of its
Subsidiaries, or take any other similar action relating to the filing of any Tax
Return or the payment of any Tax, if such election, adoption, change, amendment,
agreement, settlement, surrender, consent or other action would have the effect
of increasing the Tax liability of ComBanc or any of its Subsidiaries for any
period ending after the Effective Date or decreasing any Tax attribute of
ComBanc or any of its Subsidiaries existing on the Effective Date.
(b) Except as otherwise set forth herein, each of FDEF and
ComBanc agrees not to take any actions subsequent to the date of this Agreement
that would adversely affect the ability of ComBanc and its shareholders to
characterize the Merger as a tax-free reorganization under Section 368(a) of the
Code, and each of FDEF and ComBanc agrees to take such action as may be
reasonably required, if such action may be reasonably taken, to reverse the
impact of past
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actions which would adversely impact the ability of the Corporate Merger to be
characterized as a tax-free reorganization under Section 368(a) of the Code.
5.11 INSURANCE COVERAGE. ComBanc shall cause the policies of
insurance listed in the ComBanc Disclosure Schedule to remain in effect between
the date of this Agreement and the Effective Time.
5.12 SUPPLEMENTAL ASSURANCES.
(a) On the date the Registration Statement becomes effective
and on the Effective Time, ComBanc shall deliver to FDEF a certificate signed by
its principal executive officer and its principal financial officer to the
effect, to such officers' knowledge, that the information contained in the
Registration Statement relating to the business and financial condition and
affairs of ComBanc, does not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading.
(b) On the date the Registration Statement becomes effective
and on the Effective Time, FDEF shall deliver to ComBanc a certificate signed by
its chief executive officer and its chief financial officer to the effect, to
such officers' knowledge, that the Registration Statement (other than the
information contained therein relating to the business and financial condition
and affairs of ComBanc) does not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading.
ARTICLE SIX
FURTHER COVENANTS OF FDEF
6.01. EMPLOYEES; EMPLOYEE BENEFITS.
(a) All employees of Commercial Bank as of the date of this
Agreement who are actively employed by ComBanc as of the Effective Time and who
are not currently covered by a written employment or severance agreement with
Commercial Bank shall be at will employees of First Federal ("CONTINUING
EMPLOYEES"). Continuing Employees will be eligible to participate in First
Federal's benefit plans on the earliest date permitted by such plan, with credit
for years of service with ComBanc or Commercial Bank for the purpose of
eligibility and vesting (but not for the purpose of accrual of benefits or
allocation of employer contributions). FDEF shall cause any and all pre-existing
condition limitations (to the extent such limitations did not apply to a
pre-existing condition under ComBanc's equivalent plan) and eligibility waiting
periods under group health plans to be waived with respect to such participants
and their eligible dependents.
(b) Any Continuing Employee, excluding those six employees
listed in Section 6.01(b) of the ComBanc Disclosure Schedule, who is not covered
by a written employment or severance agreement and who is terminated by FDEF or
First Federal without cause within 12 months of the Effective Time shall receive
a severance payment equal to the product of one week of his or her then current
base salary multiplied by the number of total years
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of service as a Commercial Bank employee; provided, however, that the maximum
severance payment shall equal twenty-six weeks of his or her base salary.
(c) Any Continuing Employee listed in Section 6.01(b) of the
ComBanc Disclosure Schedule who is not covered by a written employment or
severance agreement and who is terminated by FDEF or First Federal without cause
within 12 months of the Effective Time shall receive a severance payment equal
to the product of two weeks of his or her then current base salary multiplied by
the number of total years of service as a Commercial Bank employee; provided,
however, that the minimum severance payment shall equal thirteen weeks of his or
her base salary and that the maximum severance payment shall equal twenty-six
weeks of his or her base salary.
(d) Each person who is listed in Section 6.01(d) of the
ComBanc Disclosure Schedule and is receiving benefits as of the date of this
Agreement under ComBanc's health insurance plan as a retiree will be entitled to
receive benefits under FDEF's Retiree Medical Benefits Plan and will pay
premiums for coverage under such plan based upon the sum of the retiree's age
and years of service at the time of retirement in accordance with the FDEF
Retiree Medical Benefits Plan.
(e) The covenants of this Section 6.01 shall survive the
Corporate Merger.
6.02. EXCHANGE LISTING. FDEF shall file a listing application
with Nasdaq for the FDEF Shares to be issued to the former holders of ComBanc
Shares in the Corporate Merger at the time prescribed by applicable rules and
regulations of Nasdaq, and shall use all commercially reasonable efforts to
cause the FDEF Shares to be issued in connection with the Corporate Merger to be
approved for listing on Nasdaq, subject to official notice of issuance, prior to
the Closing Date.
6.03. NOTIFICATION. Between the date of this Agreement and the
Closing Date, FDEF will promptly notify ComBanc in writing if FDEF or First
Federal becomes aware of any fact or condition that (a) causes or constitutes a
breach of any of the representations and warranties of FDEF or First Federal or
(b) would (except as expressly contemplated by this Agreement) cause or
constitute a breach of any such representation or warranty had such
representation or warranty been made as of the time of occurrence or discovery
of such fact or condition. During the same period, FDEF will promptly notify
ComBanc of (i) the occurrence of any breach of any of the covenants of FDEF or
First Federal contained in this Agreement, (ii) the occurrence of any event that
may make the satisfaction of the conditions in this Agreement impossible or
unlikely or (iii) the occurrence of any event that is reasonably likely,
individually or taken with all other facts, events or circumstances known to
FDEF or First Federal, to result in a material adverse effect with respect to
FDEF or First Federal.
6.04 INDEMNIFICATION.
(a) Nothing in this Agreement is intended to affect any rights
to indemnification to which any officer or director of ComBanc or Commercial
Bank may be entitled pursuant to the Certificate of Incorporation, Bylaws,
Articles of Incorporation, or Code of Regulations of ComBanc or Commercial Bank
in effect prior to the Effective Time. From the
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Effective Time and continuing for a period of three years thereafter, the
current and former officers and directors of ComBanc and Commercial Bank shall
be indemnified by FDEF from their acts and omissions occurring prior to the
Effective Time to the maximum extent permitted by the Articles of Incorporation
and Code of Regulations of FDEF but subject to any applicable limitations of
Ohio law. As a condition to receiving such indemnification, the party claiming
indemnification shall assign to FDEF, by separate writing, all right, title and
interest in and to the proceeds of the claiming party's applicable insurance
coverage, if any, including insurance maintained or provided by FDEF or ComBanc
or Commercial Bank to the extent of such indemnity. No person shall be entitled
to such indemnification with respect to a claim (i) if such person fails to
cooperate in the defense and investigation of such claim as to which
indemnification may be made, (ii) made by such person against FDEF, its
subsidiaries, ComBanc or Commercial Bank arising out of or in connection with
this Agreement, the transactions contemplated hereby or the conduct of the
business of FDEF, its subsidiaries, ComBanc or Commercial Bank, or (iii) if such
person fails to deliver such notices as may be required under any applicable
directors and officers liability insurance policy to preserve any possible
claims of which the claiming party is aware, to the extent such failure results
in the denial of payment under such policy.
(b) For a period of three years from the Effective Time, FDEF
shall use its reasonable best efforts to provide that portion of directors' and
officers' liability insurance that serves to reimburse the present and former
Officers and Directors of ComBanc or Commercial Bank with respect to claims
against such Directors and Officers arising from facts or events that occurred
before the Effective Time; provided, however, that in no event shall FDEF be
required to expend more than 125% of the current amount expended by ComBanc or
Commercial Bank to maintain or procure such directors' and officers' insurance.
6.05 BOARD OF DIRECTORS. FDEF will select one individual from
the Board of Directors of Commercial Bank in existence on the date of this
Agreement to serve on the Board of Directors of FDEF and First Federal beginning
immediately after the Effective Time. FDEF and First Federal will take all
necessary action prior to the Effective Time to increase the number of directors
on their respective Boards of Directors to permit the addition of this
individual. At the Effective Time, the director selected and nominated pursuant
to this Section 6.05 shall be elected or appointed to fill a vacancy on the
respective Boards.
6.06 ADVISORY BOARD. First Federal agrees to take all action
necessary to appoint all of the directors of Commercial Bank in existence on the
date of this Agreement who are not serving on the Board of Directors of FDEF or
First Federal and who are not employees of FDEF or First Federal, effective as
of the Effective Time, to an advisory board of First Federal for a term of one
year. First Federal shall pay the members of the advisory board a fee of $500.00
per meeting attended and the advisory board shall meet monthly during the year
following the Corporate Merger. Each member of the advisory board shall execute
a non-compete agreement that extends for a period of twelve months in the form
attached hereto as Exhibit C.
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ARTICLE SEVEN
FURTHER OBLIGATIONS OF THE PARTIES
7.01. COOPERATIVE ACTION. Subject to the terms and conditions
of this Agreement, each of ComBanc, Commercial Bank, FDEF and First Federal
agrees to use its best efforts to satisfy all of the conditions to this
Agreement and to cause the consummation of the transactions described in this
Agreement, and to take, or cause to be taken, all further actions and execute
all additional documents, agreements and instruments which may be reasonably
required, in the opinion of counsel for ComBanc ("COMBANC'S COUNSEL") and
counsel for FDEF ("FDEF'S COUNSEL"), to satisfy all legal requirements of the
States of Ohio and Delaware and of the United States, so that this Agreement and
the transactions contemplated hereby will become effective as promptly as
practicable.
7.02. PRESS RELEASES. Neither FDEF nor ComBanc shall make any
press release or other public announcement concerning the transactions
contemplated by this Agreement without the consent of the other party hereto as
to the form and contents of such press release or public announcement, except to
the extent that such press release or public announcement may be required by law
or Nasdaq rules to be made before such consent can be obtained.
7.03. PROXY/PROSPECTUS; REGISTRATION STATEMENT.
(a) As promptly as reasonably practical following the date
hereof, ComBanc and FDEF shall prepare mutually acceptable proxy and prospectus
material that will constitute the proxy statement/prospectus (including all
amendments or supplements thereto, the "PROXY/PROSPECTUS") relating to the
matters to be submitted to the ComBanc stockholders for the ComBanc Meeting, and
FDEF shall file with the SEC a registration statement with respect to the
issuance of FDEF Shares in the Corporate Merger (such registration statement,
which shall include the Proxy/Prospectus and all amendments or supplements
thereto, the "REGISTRATION STATEMENT"). Each of ComBanc and FDEF agrees to use
all commercially reasonable efforts to cause the Registration Statement to be
declared effective under the Securities Act as promptly as reasonably
practicable after the filing thereof. FDEF also agrees to use all reasonable
efforts to obtain, prior to the effective date of the Registration Statement,
all necessary state securities law or "Blue Sky" permits and approvals required
to carry out the transactions contemplated by this Agreement. ComBanc agrees to
promptly furnish to FDEF all information concerning ComBanc, Commercial Bank and
the Officers, Directors and stockholders of ComBanc as FDEF reasonably may
request in connection with the foregoing. Each of ComBanc and FDEF shall
promptly notify the other upon the receipt of any comments from the SEC or its
staff or any request from the SEC or its staff for amendments or supplements to
the Registration Statement and shall promptly provide the other with copies of
all correspondence between it and its representatives, on the one hand, and the
SEC and its staff, on the other hand. Notwithstanding the foregoing, prior to
filing the Registration Statement (or any amendment or supplement thereto),
mailing the Proxy/Prospectus (or any amendment or supplement thereto), or
responding to any comments of the SEC with respect thereto, each of ComBanc and
FDEF, as the case may be, (i) shall provide the other party with a reasonable
opportunity to review and comment on such document or response, (ii) shall
include in such document or response all comments reasonably proposed by such
other party, and (iii) shall not file or mail such document or
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respond to the SEC prior to receiving such other's approval, which approval
shall not be unreasonably withheld or delayed.
(b) Each of ComBanc and FDEF agrees, as to itself and its
Subsidiaries, that none of the information to be supplied by it for inclusion or
incorporation by reference in (i) the Registration Statement will, at the time
the Registration Statement and each amendment or supplement thereto, if any, is
filed with the SEC and at the time the Registration Statement becomes effective
under the Securities Act, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein in light of the circumstances under which they were
made, not misleading, and (ii) the Proxy/Prospectus and any amendment or
supplement thereto will, as of the date such Proxy/Prospectus is mailed to
stockholders of ComBanc and up to and including the date of the meeting of
ComBanc's stockholders to which such Proxy/Prospectus relates, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein in light of the
circumstances under which they were made not misleading.
(c) Each of ComBanc and FDEF agrees, if it shall become aware
prior to the Effective Time of any information furnished by it that would cause
any of the statements in the Registration Statement to be false or misleading
with respect to any material fact, or to omit to state any material fact
necessary to make the statements therein not false or misleading, to promptly
inform the other party thereof and to take the necessary steps to correct the
Registration Statement.
(d) FDEF agrees to advise ComBanc, promptly after FDEF
receives notice thereof, of the time when the Registration Statement has become
effective or any supplement or amendment has been filed, of the issuance of any
stop order or the suspension of the qualification of FDEF Shares for offering or
sale in any jurisdiction, of the initiation or threat of any proceeding for any
such purpose, or of any request by the SEC for the amendment or supplement of
the Registration Statement or for additional information.
7.04. REGULATORY APPLICATIONS. FDEF will prepare and cause to
be filed at its expense such applications and other documents with the OTS, the
FDIC, the ODFI, and any other Regulatory or Governmental Authorities as are
required to secure the requisite approval to the consummation of the
transactions provided for in this Agreement. ComBanc and Commercial Bank agree
that they will, as promptly as practicable after request and at their own
expense, provide FDEF with all information and documents concerning ComBanc and
Commercial Bank as shall be required in connection with preparing any
applications, registration statements and other documents that are to be
prepared and filed by FDEF and in connection with regulatory approvals required
to be obtained by FDEF hereunder.
7.05. TERMINATION OF PLANS. As of the Effective Time,
ComBanc's health insurance plan will be terminated and, in FDEF's discretion,
ComBanc's 401(k) Profit Sharing Plan (Plan #001) will either be terminated or
merged into FDEF's 401(k) Employee Savings Plan. Prior to the Effective Time,
ComBanc will terminate the retiree health insurance benefits for those people
who may retire after the date of this Agreement.
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7.06. CONFIDENTIALITY. The parties to this Agreement
acknowledge the confidential and proprietary nature of the information as
hereinafter described which has heretofore been exchanged and which will be
received from each other hereunder (the "INFORMATION") and agree to hold and
keep the same confidential. Such Information will include any and all financial,
technical, commercial, marketing, customer or other information concerning the
business, operations and affairs of a party that may be provided to the other,
irrespective of the form of the communications, by such party's employees or
agents. Such Information shall not include information that is or becomes
generally available to the public other than as a result of a disclosure by a
party or its representatives in violation of this Agreement, or Information
which is required to be furnished or used in connection with legal proceedings.
The parties agree that the Information will be used solely for the purposes
contemplated by this Agreement and that such Information will not be disclosed
to any person other than employees and agents of a party who are directly
involved in evaluating the transaction. The Information shall not be used in any
way detrimental to a party, including use directly or indirectly in the conduct
of the other party's business or enterprise in which such party may have an
interest, now or in the future, and whether or not now in competition with such
other party. Upon the written request of the disclosing party, upon termination
of this Agreement, the other parties will promptly return or destroy Information
in their possession and certify to the disclosing party that the party has done
so.
ARTICLE EIGHT
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PARTIES
8.01. CONDITIONS TO THE OBLIGATIONS OF FDEF AND FIRST FEDERAL.
The obligations of FDEF and First Federal under this Agreement shall be subject
to the satisfaction, or written waiver by FDEF and First Federal prior to the
Closing Date, of each of the following conditions precedent:
(a) The representations and warranties of ComBanc and
Commercial Bank set forth in this Agreement shall be true and correct in all
material respects as of the date of this Agreement and as of the Closing Date as
though such representations and warranties were also made as of the Closing
Date, except that those representations and warranties which by their terms
speak as of a specific date shall be true and correct as of such date; and FDEF
shall have received a certificate, dated the Closing Date, signed by the chief
executive officer and the chief financial officer of each of ComBanc and
Commercial Bank to such effect.
(b) Each of ComBanc and Commercial Bank shall have performed
in all material respects all of its covenants and obligations under this
Agreement to be performed by it on or prior to the Closing Date, including those
relating to the Closing and the closing deliveries required by Section 9.03 of
this Agreement, and FDEF shall have received a certificate, dated the Closing
Date, signed by the chief executive officer and the chief financial officer of
each of ComBanc and Commercial Bank to such effect.
(c) The holders of not more than 12% of the outstanding
ComBanc Shares shall have perfected their appraisal rights under Section 262 of
the DGCL, if applicable, in connection with the transactions contemplated by
this Agreement.
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(d) ComBanc and Commercial Bank shall have obtained the
consent or approval of each person (other than Governmental and Regulatory
Authorities) whose consent or approval shall be required in connection with the
transactions contemplated hereby under any loan or credit agreement, note,
mortgage, indenture, lease, license or other agreement or instrument, except
those for which failure to obtain such consents and approvals would not,
individually or in the aggregate, have a material adverse effect, after the
Effective Time, on the Surviving Corporation.
(e) All of the Deferred Compensation Agreements with members
of ComBanc or Commercial Bank's Board of Directors shall be terminated.
8.02. CONDITIONS TO THE OBLIGATIONS OF COMBANC AND COMMERCIAL
BANK. The obligations of ComBanc and Commercial Bank under this Agreement shall
be subject to satisfaction, or written waiver by ComBanc and Commercial Bank
prior to the Closing Date, of each of the following conditions precedent:
(a) The representations and warranties of FDEF and First
Federal set forth in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date as though
such representations and warranties were also made as of the Closing Date,
except that representations and warranties which by their terms speak as of a
specific date shall be true and correct as of such date; and ComBanc shall have
received a certificate, dated the Closing Date, signed by the chief executive
officer and the chief financial officer of each of FDEF and First Federal to
such effect.
(b) Each of FDEF and First Federal shall have performed in all
material respects all of its covenants and obligations under this Agreement to
be performed by it on or prior to the Closing Date, including those related to
the Closing and the closing deliveries required by Section 9.02 of this
Agreement, and ComBanc shall have received a certificate, dated the Closing
Date, signed by the chief executive officer and the chief financial officer of
each of FDEF and First Federal to such effect.
(c) FDEF and First Federal shall have obtained the consent or
approval of each person (other than Governmental and Regulatory Authorities)
whose consent or approval shall be required in connection with the transactions
contemplated hereby under any loan or credit agreement, note, mortgage,
indenture, lease, license or other agreement or instrument, except those for
which failure to obtain such consents and approvals would not, individually or
in the aggregate, have a material adverse effect, after the Effective Time, on
the Surviving Corporation.
(d) ComBanc shall have received from ComBanc's Financial
Advisor an opinion reasonably acceptable to ComBanc, dated as of the Closing
Date, to the effect that the consideration to be received by the holders of
ComBanc Shares in the Corporate Merger is fair, from a financial point of view,
to the holders of ComBanc's Shares.
(e) FDEF shall have purchased the directors' and officers'
liability insurance required by Section 6.04(b) of this Agreement.
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(f) There shall not have been an adjustment to the
consideration to be paid to ComBanc stockholders pursuant to Section 2.01(d).
8.03. MUTUAL CONDITIONS. The obligations of ComBanc,
Commercial Bank, FDEF and First Federal under this Agreement shall be subject to
the satisfaction, or written waiver by the parties prior to the Closing Date, of
each of the following conditions precedent:
(a) The stockholders of ComBanc shall have duly adopted this
Agreement by the required vote.
(b) All approvals of Governmental and Regulatory Authorities
required to consummate the transactions contemplated by this Agreement shall
have been obtained and shall remain in full force and effect and all statutory
waiting periods in respect thereof shall have expired and no such approvals or
statute, rule or order shall contain, other than divestitures or dispositions
required to satisfy antitrust requirements, any conditions, restrictions or
requirements that would reasonably be expected to have a material adverse effect
after the Effective Time on the present or prospective consolidated financial
condition, business or operating results of the Surviving Corporation.
(c) No temporary restraining order, preliminary or permanent
injunction or other order issued by a court of competent jurisdiction or other
legal restraint or prohibition preventing the consummation of the Corporate
Merger shall be in effect. No Governmental or Regulatory Authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced, deemed
applicable or entered any statute, rule, regulation, judgment, decree,
injunction or other order prohibiting consummation of the transactions
contemplated by this Agreement or making the Corporate Merger illegal.
(d) The Registration Statement shall have become effective
under the Securities Act and no stop-order or similar restraining order
suspending the effectiveness of the Registration Statement shall have been
issued and no proceeding for that purpose shall have been initiated by the SEC.
(e) FDEF and ComBanc shall have received the written opinion
of FDEF's Counsel, dated the Closing Date, to the effect that, on the basis of
facts, representations and assumptions set forth in such opinion, the Corporate
Merger will be treated for federal income tax purposes as a reorganization
within the meaning of Section 368(a)(1)(A) of the Code. In rendering its
opinion, FDEF's Counsel will require and rely upon customary representations
contained in letters from FDEF and ComBanc that FDEF's Counsel reasonably deems
relevant.
ARTICLE NINE
CLOSING
9.01. CLOSING. The closing of the Corporate Merger pursuant to
this Agreement (the "CLOSING") shall take place at a date and time agreed upon
by FDEF and ComBanc within a reasonable time after the satisfaction or waiver of
the last of the conditions to the Corporate Merger set forth in Article Eight of
this Agreement to be satisfied. Notwithstanding any of the foregoing to the
contrary, the Closing shall not occur on a date after that specified in Section
10.01(b)(i) of this Agreement or after the date or dates on which any
Governmental or
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Regulatory Authority approval or any extension thereof expires. The date of the
Closing is sometimes herein called the "CLOSING DATE."
9.02. CLOSING DELIVERIES REQUIRED OF FDEF AND FIRST FEDERAL.
At the Closing, FDEF and First Federal shall cause all of the following to be
delivered to ComBanc:
(a) The certificates of FDEF and First Federal contemplated by
Section 8.02(a) and (b) of this Agreement.
(b) Copies of all resolutions adopted by the directors of FDEF
and First Federal, approving and adopting this Agreement and authorizing the
consummation of the transactions described herein, accompanied by a certificate
of the secretary or assistant secretary of FDEF and First Federal, as
applicable, dated as of the Closing Date, and certifying (i) the date and manner
of adoption of each such resolution; and (ii) that each such resolution is in
full force and effect, without amendment or repeal, as of the Closing Date.
9.03. CLOSING DELIVERIES REQUIRED OF COMBANC AND COMMERCIAL
BANK. At the Closing, ComBanc and Commercial Bank shall cause all of the
following to be delivered to FDEF:
(a) The certificates of ComBanc and Commercial Bank
contemplated by Sections 8.01(a) and (b) of this Agreement.
(b) Copies of all resolutions adopted by the directors and the
shareholders of ComBanc and Commercial Bank approving and adopting this
Agreement and authorizing the consummation of the transactions described herein,
accompanied by a certificate of the secretary or the assistant secretary of
ComBanc and Commercial Bank, as applicable, dated as of the Closing Date, and
certifying (i) the date and manner of the adoption of each such resolution; and
(ii) that each such resolution is in full force and effect, without amendment or
repeal, as of the Closing Date.
(c) A written agreement from each Rule 145 Affiliate
identified by ComBanc pursuant to Section 5.05 in which such Rule 145 Affiliate
confirms that the FDEF Shares received by such Rule 145 Affiliate pursuant to
the Corporate Merger will be transferable only in accordance with Rule 145 of
the Securities Act.
ARTICLE TEN
TERMINATION
10.01. TERMINATION. This Agreement may be terminated, and the
Corporate Merger may be abandoned, at any time prior to the Effective Time,
whether prior to or after this Agreement has been adopted by the shareholders of
ComBanc:
(a) By mutual written agreement of ComBanc and FDEF duly
authorized by action taken by or on behalf of their respective Boards of
Directors;
(b) By either ComBanc or FDEF upon written notification to the
non-terminating party:
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(i) at any time after March 31, 2005, if the Corporate Merger
shall not have been consummated on or prior to such date and such failure to
consummate the Corporate Merger is not caused by a breach of this Agreement by
the terminating party;
(ii) if any event occurs which, in the reasonable opinion of
either FDEF or ComBanc, would preclude satisfaction of any of the conditions set
forth in Section 8.03 of this Agreement; or
(iii) if, in compliance with the provisions of Section 5.03 of
this Agreement, ComBanc executes a definitive agreement in connection with, or
closes, an Acquisition Transaction;
(c) By ComBanc upon written notice to FDEF if any event occurs
which, in the reasonable opinion of ComBanc, would preclude satisfaction of any
of the conditions set forth in Section 8.02 of this Agreement;
(d) By ComBanc upon written notice to FDEF if, pursuant to
Section 2.01(c), FDEF, in its sole discretion, does not increase the Per Share
Stock Consideration to preserve the status of the Corporate Merger as a tax-free
reorganization.
(e) By FDEF upon written notice to ComBanc if any event occurs
which, in the reasonable opinion of FDEF, would preclude satisfaction of any of
the conditions set forth in Section 8.01 of this Agreement.
10.02. EFFECT OF TERMINATION. If this Agreement is validly
terminated by either ComBanc or FDEF pursuant to Section 10.01, this Agreement
will forthwith become null and void and there will be no liability or obligation
on the part of ComBanc, Commercial Bank, FDEF or First Federal except that (i)
the provisions of Sections 5.03, 7.06 and 11.07 and this Article Ten will
continue to apply following any such termination, and (ii) except as set forth
in Section 10.04, nothing contained herein shall relieve any party hereto from
liability for breach of its representations, warranties, covenants or agreements
contained in this Agreement.
10.03. TERMINATION FEE. In the event ComBanc executes a
definitive agreement in connection with, or closes, an Acquisition Transaction
at any time after the date of this Agreement until the expiration of twelve
months from the date of termination of this Agreement, ComBanc shall pay to FDEF
in immediately available funds the sum of $2,000,000 within ten days after the
earlier of such execution or closing.
10.04. FORCE MAJEURE. Notwithstanding anything to the contrary
in this Agreement, in the event this Agreement is terminated as a result of a
failure of a condition, which failure is due to a natural disaster or other act
of God, or an act of war or terrorism, and provided no party has failed to
observe the material obligations of such party under this Agreement, no party
shall be obligated to pay to the other party to this Agreement any fees or
expenses or otherwise be liable hereunder.
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ARTICLE ELEVEN
MISCELLANEOUS
11.01. NOTICES. All notices, requests, demands and other
communications required or permitted to be given under this Agreement shall be
given in writing and shall be deemed to have been duly given (a) on the date of
delivery if delivered by hand or by telecopy, upon confirmation of receipt, (b)
on the first business day following the date of dispatch if delivered by a
recognized next-day courier service, or (c) on the third business day following
the date of mailing if sent by certified mail, postage prepaid, return receipt
requested. All notices thereunder shall be delivered to the following addresses:
If to ComBanc or Commercial Bank, to:
ComBanc, Inc.
βββ ββββ ββββββ ββββββ
βββββββ, ββββ βββββ
Attn: ββββ β. ββββββ, President
Facsimile Number: (βββ) βββ-ββββ
With a copy to:
Squire, βββββββ & βββββββ L.L.P.
ββββ βββ βββββ
βββ ββββββ ββββββ
βββββββββ, ββββ βββββ
Attn: βββββ β. βββββββ, Esq.
Facsimile Number: (βββ) βββ-ββββ
If to FDEF or First Federal, to:
First Defiance Financial Corp.
βββ βββββββ ββββββ
ββββββββ, ββββ βββββ
Attn: βββββββ β. Small, Chairman, President
and Chief Executive Officer
Facsimile Number: (βββ) βββ-ββββ
With a copy to:
Vorys, βββββ, βββββββ and βββββ LLP
Suite 2000, Atrium Two
βββ ββββ ββββββ ββββββ
ββββββββββ, ββββ βββββ
Attn: βββββ ββββββββ βββββ, Esq.
Facsimile Number: (βββ) βββ-ββββ
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Any party to this Agreement may, by notice given in accordance
with this Section 11.01, designate a new address for notices, requests, demands
and other communications to such party.
11.02. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be a duplicate original, but
all of which taken together shall be deemed to constitute a single instrument.
11.03. ENTIRE AGREEMENT. This Agreement (including the
exhibits, documents and instruments referred to herein) constitutes the entire
agreement, and supersedes all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter of this
Agreement.
11.04. SUCCESSORS AND ASSIGNS. This Agreement shall inure to
the benefit of and be binding upon the respective successors and assigns
(including successive, as well as immediate, successors and assigns) of the
parties hereto. This Agreement may not be assigned by either party hereto
without the prior written consent of the other party.
11.05. CAPTIONS. The captions contained in this Agreement are
included only for convenience of reference and do not define, limit, explain or
modify this Agreement or its interpretation, construction or meaning and are in
no way to be construed as part of this Agreement.
11.06. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Ohio without giving
effect to principles of conflicts or choice of laws (except to the extent that
mandatory provisions of federal law are applicable).
11.07. PAYMENT OF FEES AND EXPENSES. Except as otherwise
agreed in writing, each party hereto shall pay all of its own costs and
expenses, including legal and accounting fees, and all expenses relating to its
performance of, and compliance with, its undertakings herein, except that
printing and mailing expenses shall be shared equally between ComBanc and FDEF.
All fees to be paid to Governmental and Regulatory Authorities in connection
with the transactions contemplated by this Agreement shall be borne by FDEF.
11.08. AMENDMENT. From time to time and at any time prior to
the Effective Time, this Agreement may be amended only by an agreement in
writing executed in the same manner as this Agreement, except that after the
ComBanc Meeting, this Agreement may not be amended if it would violate the DGCL.
11.09. WAIVER. The rights and remedies of the parties to this
Agreement are cumulative and not alternative. Neither the failure nor any delay
by any party in exercising any right, power or privilege under this Agreement or
the documents referred to in this Agreement will operate as a waiver of such
right, power or privilege, and no single or partial exercise of any such right,
power or privilege will preclude any other or further exercise of such right,
power or privilege or the exercise of any other right, power or privilege.
11.10. NO THIRD-PARTY RIGHTS. Except as specifically set forth
herein, nothing expressed or referred to in this Agreement will be construed to
give any person other than the
-42-
parties to this Agreement any legal or equitable right, remedy or claim under or
with respect to this Agreement or any provision of this Agreement. This
Agreement and all of its provisions and conditions are for the sole and
exclusive benefit of the parties to this Agreement and their successors and
assigns.
11.11. WAIVER OF JURY TRIAL. Each of the parties hereto
irrevocably waives any and all right to trial by jury in any legal proceeding
arising out of or related to this Agreement or the transactions contemplated
hereby.
11.12. SEVERABILITY. If any provision of this Agreement is
held invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect. Any provision
of this Agreement held invalid or unenforceable only in part or degree will
remain in full force and effect to the extent not held invalid or unenforceable.
11.13. NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
COVENANTS. The representations, warranties and covenants of FDEF, First Federal,
ComBanc and Commercial Bank set forth in this Agreement, or in any document
delivered pursuant to the terms hereof or in connection with the transactions
contemplated hereby, shall not survive the Closing and the consummation of the
transactions referred to herein, other than covenants which by their terms are
to survive or be performed after the Effective Time (including, without
limitation, those set forth in Article Six and this Article Eleven); except that
the Surviving Corporation and any director, officer or controlling person
thereof may rely on such representations, warranties or covenants in any defense
in law or equity which otherwise would be available against the claims of any
person, including, without limitation, any shareholder or former shareholder of
either ComBanc or FDEF.
[REMAINDER OF THE PAGE INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, this Agreement and Plan of Merger has been executed
on behalf of FDEF, First Federal, ComBanc and Commercial Bank to be effective as
of the date set forth in the first paragraph above.
ATTEST: FIRST DEFIANCE FINANCIAL CORP.
By: /s/ βββββββ β. Small
------------------------- --------------------------------------------
βββββββ β. Small, Chairman, President and
Chief Executive Officer
ATTEST: FIRST FEDERAL BANK OF THE MIDWEST
By: /s/ βββββββ β. Small
------------------------- --------------------------------------------
βββββββ β. Small, Chairman and
Chief Executive Officer
ATTEST: COMBANC, INC.
By: /s/ ββββ β. ββββββ
------------------------- --------------------------------------------
ββββ β. ββββββ, Chairman, President and CEO
ATTEST: THE COMMERCIAL BANK
By: /s/ ββββ β. ββββββ
------------------------- --------------------------------------------
ββββ β. ββββββ, President and CEO
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EXHIBIT A
AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER (this "Agreement") is entered into as of the
___ day of ___________, 2004, by and between First Federal Bank of the Midwest
("First Federal"), a federal savings bank, and The Commercial Bank ("Commercial
Bank"), an Ohio commercial bank.
R E C I T A L S :
WHEREAS, First Federal is a wholly owned subsidiary of First Defiance
Financial Corp. ("FDEF"), an Ohio corporation, and Commercial Bank is a wholly
owned subsidiary of ComBanc, Inc. ("ComBanc"), a Delaware corporation;
WHEREAS, FDEF, First Federal, ComBanc and Commercial Bank have entered
into an Agreement and Plan of Merger dated ___________________, 2004 (the
"Merger Agreement"), which provides for the merger of ComBanc with and into FDEF
and the subsequent merger of Commercial Bank with and into First Federal; and
WHEREAS, the Boards of Directors of each of the parties hereto have
approved this Agreement;
NOW, THEREFORE, in consideration of the mutual premises and mutual
agreements contained herein, the parties hereto have agreed as follows:
ARTICLE I
THE MERGER
Section 1.01. At the Effective Time (as defined in Article IV below),
Commercial Bank shall merge with and into First Federal (the "Merger") pursuant
to Ohio Rev. Code Sections 1115.11 and 1701.79, and the applicable regulations
of the Division of Financial Institutions of the Ohio Department of Commerce
(the "Division") and the Office of Thrift Supervision ("OTS"). Upon consummation
of the Merger, the separate corporate existence of Commercial Bank shall cease
and First Federal shall continue as the surviving institution (the "Surviving
Institution").
Section 1.02. The name of the Surviving Institution shall be First
Federal Bank of the Midwest.
ARTICLE II
CONVERSION OF SECURITIES
Section 2.01. First Federal Stock. The shares of common stock of First
Federal issued and outstanding immediately prior to the Effective Time shall be
unaffected by the Merger and
shall constitute the only outstanding shares of capital stock of the Surviving
Institution at and after the Effective Time.
Section 2.02. Commercial Bank Stock. At the Effective Time, by virtue
of the Merger and without any action on the part of First Federal or Commercial
Bank, all of the shares of common stock of Commercial Bank, $6.25 par value per
share, that are issued and outstanding immediately prior thereto shall thereupon
be canceled.
ARTICLE III
EFFECTIVE TIME
Section 3.01. The Merger shall become effective immediately following
and contingent upon the occurrence of the Closing (as defined in Article Nine of
the Merger Agreement) at the date and time specified in the articles of
combination to be filed with the Office of Thrift Supervision (the "Effective
Time"); provided, however, that such filing shall not occur and the Merger shall
not be effective until all of the following events have taken place: (a) ComBanc
shall have been merged with and into FDEF; (b) the sole shareholders of First
Federal and Commercial Bank shall have adopted this Agreement; (c) the Merger
shall have been approved by all regulatory authorities; and (d) all applicable
regulatory waiting periods shall have expired.
ARTICLE IV
CHARTER AND BYLAWS
OF SURVIVING INSTITUTION
Section 4.01. The charter and bylaws of First Federal as in effect at
the Effective Time shall be the charter and bylaws of the Surviving Institution
at and after the Effective Time.
ARTICLE V
EXECUTIVE OFFICERS OF SURVIVING INSTITUTION
Section 5.01. The executive officers of First Federal immediately
before the Effective Time shall serve in the same capacities as executive
officers of the Surviving Institution at and after the Effective Time.
ARTICLE V
DIRECTORS OF RESULTING INSTITUTION
6.1 At and after the Effective Time and until changed in accordance
with law, the number of directors of the Resulting Institution shall be five.
The directors of Foundation immediately prior to the Effective Time shall be the
directors of the Resulting Institution at and after the Effective Time, whose
names, terms and residence addresses are as follows:
-2-
DIRECTOR Term to Expire Residence Address
-------------- -----------------
βββββββ β. Small
βββ β. βββ βββββββ
βββββββ β. ββββββ
βββββββ β. ββββββ
βββββ β. βββββ
ββββ β. βββββββ
ββββββ β. ββββββ
βββββ β. βββββ
ββββββ β. βββββ
ARTICLE VII
EFFECTS OF MERGER
Section 7.01. At the Effective Time, Commercial Bank shall merge with
and into First Federal, with First Federal as the Surviving Institution. The
business of the Surviving Institution shall be that of a federal savings bank,
as provided for in its charter. All assets, rights, interests, privileges,
powers, franchises and property (real, personal and mixed) of First Federal and
Commercial Bank shall be automatically transferred to and vested in the
Surviving Institution by virtue of the Merger without any deed or other document
of transfer.
Section 7.02. The Surviving Institution, without any order or action on
the part of any court or otherwise and without any documents of assumption or
assignment, shall hold and enjoy all of the assets, rights, privileges, powers,
properties, franchises and interests, including, without limitation,
appointments, powers, designations, nominations and all other rights, interests
and powers as agent or fiduciary, in the same manner and to the same extent as
such rights, interests and powers were held or enjoyed by First Federal and
Commercial Bank, respectively.
Section 7.03. The Surviving Institution shall be responsible for all of
the liabilities, restrictions and duties of every kind and description of both
First Federal and Commercial Bank, immediately prior to the Merger, including,
without limitation, liabilities for all savings accounts, deposits, debts,
obligations and contracts of First Federal and Commercial Bank, respectively,
matured or unmatured, whether accrued, absolute, contingent and otherwise and
whether or not reflected or reserved against on balance sheets, books of
accounts or records of either First Federal or Commercial Bank. Deposit accounts
shall be deemed issued in the name of the Surviving Institution in accordance
with applicable regulations. All rights of creditors and other obligees and all
liens on property of either First Federal or Commercial Bank shall be preserved,
shall be assumed by the Surviving Institution and shall not be released or
impaired.
-3-
ARTICLE VIII
OFFICES OF SURVIVING INSTITUTION
Section 8.01. After the Effective Time, the locations of the offices of
the Resulting Institution shall be as follows:
Home Office: βββ βββββββ ββββββ
ββββββββ, ββββ βββββ
Branch Offices: ββββ ββββ ββββ ββββββ βββ ββββ ββββ ββββββ
ββββββββββ, ββββ βββββ βββββ, ββββ βββββ
βββ ββββ ββββ ββββββ βββ βββββ ββββββ ββββββ
βββββ, ββββ βββββ βββββββ, ββββ βββββ
βββ ββββ ββββββ βββββ βββ ββββ ββββ ββββββ
ββββββ, ββββ βββββ ββββββββββ, ββββ βββββ
βββ β. βββββββ ββββββ βββ βββββββ βββββ
ββββββββ, ββββ βββββ ββββββββ, ββββ βββββ
βββ βββββ ββββββ ββββ ββββββββ ββββββ
ββββββββ, ββββ βββββ ββββββββ, ββββ βββββ
ββββ β. βββββββ ββββββ ββββ β. ββββββββββ ββββββ
βββββββ βββββ, ββββ βββββ ββββββββ, ββββ βββββ
βββ β. ββββ ββββββ βββ β. ββββββββ ββββββ
ββββββ, ββββ βββββ ββββββββ, ββββ βββββ
βββ β. ββββ ββββββ ββββ β. ββββ ββββββ
ββββββ, ββββ βββββ βββββββ, ββββ βββββ
ββββ βββββββ βββββ βββ β. ββββ ββββββ
βββββββ, ββββ βββββ βββββββ, ββββ βββββ
βββ β. ββββββ ββββββ ββββ βββββββββ ββββ
βββββββ, ββββ βββββ ββββ, ββββ βββββ
ββββ β. ββββ ββββββ βββ β. βββββββββ ββββββ
ββββ, ββββ βββββ βββββ, ββββ βββββ
-4-
ARTICLE IX
LIQUIDATION ACCOUNT
Section 9.01. At the Effective Time, the Surviving Institution shall
assume Commercial Bank's liquidation account established upon Commercial Bank's
conversion to the stock form of ownership.
ARTICLE X
OTHER TERMS
Section 10.01. All terms used in this Agreement shall, unless defined
herein, have the meanings set forth in the Merger Agreement.
Section 10.02. Subject to applicable law, at any time prior to the
consummation of the Merger, this Agreement may be amended by an instrument in
writing signed on behalf of each of the parties hereto.
Section 10.03. This Agreement shall terminate and become null and void,
and the transactions contemplated herein shall thereupon be abandoned, upon any
occurrence of a termination of the Merger Agreement pursuant to Article Ten
thereof.
Section 10.04. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original and all of such
counterparts shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first above written.
ATTEST: FIRST FEDERAL BANK OF THE MIDWEST
By:
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ATTEST: THE COMMERCIAL BANK
By:
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EXHIBIT B
VOTING AGREEMENT
THIS VOTING AGREEMENT (this "Agreement") is entered into this _____ day
of ________, 2004, between the undersigned Stockholder (the "Stockholder") of
ComBanc, Inc., a Delaware corporation ("ComBanc"), and First Defiance Financial
Corp., an Ohio corporation ("FDEF").
RECITALS
A. The Stockholder owns or has the power to vote, other than in a
fiduciary capacity, _______ common shares, without par value, of ComBanc
(together with all other shares of ComBanc that the Stockholder may subsequently
acquire or obtain the power to vote, other than in a fiduciary capacity, the
"Shares").
B. ComBanc has entered into an Agreement and Plan of Merger by and
among FDEF, First Federal Bank of the Midwest, ComBanc and The Commercial Bank
of even date herewith (the "Merger Agreement").
C. Under the terms of the Merger Agreement, ComBanc has agreed to call
a meeting of its stockholders for the purpose of voting upon the adoption of the
Merger Agreement (together with any adjournments thereof, the "ComBanc
Meeting").
D. The parties to the Merger Agreement have made it a condition to
their entering into the Merger Agreement that certain stockholders of ComBanc,
including the Stockholder, agree to vote their shares of ComBanc in favor of the
adoption of the Merger Agreement.
AGREEMENT
Accordingly, the parties hereto agree as follows:
1. AGREEMENT TO VOTE. The Stockholder agrees, subject to Section 2
below, to vote the Shares as follows:
(a) in favor of the adoption of the Merger Agreement;
(b) against the approval of any proposal relating to a
competing merger or business combination involving an acquisition of ComBanc or
the purchase of all or a substantial portion of the assets of ComBanc by any
person or entity other than FDEF or an affiliate of FDEF; and
(c) against any other transaction which is inconsistent
with the obligations of ComBanc under the Merger Agreement.
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2. LIMITATION ON VOTING POWER. It is expressly understood and
acknowledged that nothing contained herein is intended to restrict the
Stockholder from voting on any matter, or otherwise from acting, in the
Stockholder's capacity as a director or officer of ComBanc with respect to any
matter, including but not limited to, the management or operation of ComBanc.
3. TERMINATION. This Agreement shall terminate on the earlier of (a)
the date on which the Merger Agreement is terminated in accordance with Article
Ten of the Merger Agreement, (b) the date on which the merger contemplated by
the Merger Agreement is consummated, or (c) the death of the Stockholder.
4. REPRESENTATIONS, WARRANTIES, AND ADDITIONAL COVENANTS OF THE
STOCKHOLDER. The Stockholder hereby represents and warrants to FDEF that (a) the
Stockholder has the capacity and all necessary power and authority to vote the
Shares, and (b) this Agreement constitutes a legal, valid, and binding
obligation of the Stockholder, enforceable in accordance with its terms, except
as may be limited by bankruptcy, insolvency, or similar laws affecting
enforcement of creditors rights generally. The Stockholder further agrees that,
during the term of this Agreement, the Stockholder will not, without the prior
written consent of FDEF, which consent shall not be unreasonably withheld, sell,
pledge, or otherwise voluntarily dispose of any of the Shares which are owned by
the Stockholder or take any other voluntary action which would have the effect
of removing the Stockholder's power to vote the Shares or which would be
inconsistent with this Agreement. Notwithstanding the foregoing, the Stockholder
may transfer all or a portion of the Shares to an immediate family member, but
only if the transferee executes an identical Voting Agreement.
5. SPECIFIC PERFORMANCE. The undersigned hereby acknowledges that
damages would be an inadequate remedy for any breach of the provisions of this
Agreement and agrees that the obligations of the Stockholder shall be
specifically enforceable and that FDEF shall be entitled to injunctive or other
equitable relief upon such a breach by the Stockholder. The Stockholder further
agrees to waive any bond in connection with obtaining any such injunctive or
equitable relief. This provision is without prejudice to any other rights that
FDEF may have against the Stockholder for any failure to perform his obligations
under this Agreement.
6. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the State of Ohio without regard to any of its
conflict of laws principles.
7. CAPITALIZED TERMS. Capitalized terms used herein without definition
shall have the meanings attributed to such terms in the Merger Agreement.
IN WITNESS WHEREOF, the undersigned have executed or caused to be
executed this Agreement as of the day and year first above written.
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STOCKHOLDER FIRST DEFIANCE FINANCIAL CORP.
By:
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Name:
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Print Name: Title:
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EXHIBIT C
NON-COMPETE AGREEMENT
This Non-Disclosure and Non-Competition Agreement (this
"Agreement") is made and entered into this ____ day of _______________, 200_ by
and between First Federal Bank of the Midwest, a federal savings bank ("First
Federal"), and the undersigned ("Member") for the benefit of First Federal.
RECITALS
A. First Defiance Financial Corp. and First Federal have spent
and continue to spend considerable time, money and effort developing their
business (the "Business").
B. Member desires to serve as a member of the Advisory Board
of First Federal and First Federal desires to have Member serve as such.
C. As a member of the Advisory Board, Member may discover the
names of First Federal's customers, its method of doing business, and other
valuable knowledge in connection with the Business.
D. For the proper protection of the Business it is essential
that all matters connected with, arising out of, or pertaining to the Business
and its method of operation, and the names of its customers, be kept secret; and
that the good will, customer contacts and customer relations developed in the
Business, together with the benefits of the advertising and promotion of the
Business and products be preserved.
NOW, THEREFORE, in consideration of the covenants and
agreements set forth in this Agreement, First Federal and Member hereby covenant
and agree as follows:
1. Secret and Confidential Information. Member agrees to treat
as confidential all information whether of a technical or business nature,
belonging to the Business which is possessed by Member, which may be disclosed
to Member or which Member may develop in the course of Member's service on the
Advisory Board ("Service"), including, without limitation, financial data and
statements, pricing and pricing strategies and plans, business plans, marketing
plans, customer lists, and account lists ("Confidential Information"). For
purposes of this Agreement, Confidential Information does not include
information which (i) becomes generally available to the public other than as a
result of a disclosure by Member, (ii) is developed by Member independent of any
confidential information received from First Federal, or (iii) is lawfully
obtained by Member from a third party outside of this Agreement. Member shall
not disclose, publish or otherwise use, either during Member's Service or after
termination of Member's Service, any such Confidential Information, trade
secrets or secret information without the prior written consent of First
Federal.
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2. Return of Business Property. Member agrees that following
Member's termination of Service for any reason, Member will promptly return to
First Federal all financial and business documents, operations manuals, business
plans, information pertaining to pricing of products and services, customers,
profit margins and the design of saving and lending products, and other
materials of a confidential nature in any way relating to the Business which are
in Member's possession and/or made available to Member during Member's Service,
together with all existing copies, however reproduced including paper documents
and computer data or other media however stored.
3. Non-Solicitation. Member recognizes that First Federal's
workforce constitutes an important and vital aspect of its Business operations.
Therefore, Member will not hire or solicit, or assist anyone in the hiring or
soliciting of, any of First Defiance Financial Corp.'s, First Federal's or any
of their affiliates employees, independent contractors, or subcontractors,
without the express prior written consent of First Federal, for the duration of
Member's Service.
4. Non-Competition. Member shall not for a period of twelve months
following the date of this Agreement do any of the following:
(i) Directly or indirectly engage in business with or on
behalf of, or
(ii) Assist or have an active interest in (whether as
proprietor, partner, investor, greater than 5%
shareholder, officer, director or any type of
principal whatsoever); or
(iii) Enter the employment of or act as agent for, or
advisor or consultant to,
any person, firm, partnership, association, corporation or
business organization, entity or enterprise, including without
limitation, enterprises involving persons related by blood or
marriage to Member, and whether or not pursued for gain,
profit, or other pecuniary advantage, which is, or to Member's
knowledge is planning to, or to Member's knowledge is about to
become, directly or indirectly, engaged in the business of
providing financial products and services including but not
limited to any of the following: consumer and business
financial products, mortgage brokerage services, mortgage
loans, checking accounts, savings accounts, individual
retirement accounts, loan accounts, safe deposit boxes,
certificates of deposit and related products and services, to
any person, firm, partnership, association, corporation or
business organization, entity or enterprise within a circle
extending 50 miles from any office of First Federal or its
affiliates.
Member herewith recognizes and expresses that the obligations
and restrictions imposed by the foregoing paragraphs are reasonable and proper
in order to
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protect First Federal from the loss of valuable assets, business methods, and
other trade secrets.
5. Payments to Member. In consideration and exchange for the
covenants and agreements set forth in this Agreement, First Federal shall pay to
Member the sum of $500 per Advisory Board meeting that is attended by Member.
6. Legal Covenants. Member agrees that any future claim or
cause of action Member has against First Federal or its affiliates, whether
based on this Agreement or otherwise, does not constitute a defense to the
enforcement by First Federal of the covenants within this Agreement. Both Member
and First Federal expressly agree that it is the intent of this Agreement to
comply with any and all policy, statutory and common law. If any of the contents
of this Agreement are determined to be unlawful, such sentence, paragraph,
clause or combination of same, shall be void; yet the remainder of the Agreement
shall remain binding on the signing parties. In the event a portion of this
Agreement is determined to be unlawful, it is agreed by both parties that the
court shall substitute a reasonable, judicially enforceable limitation in its
place.
Member understands, acknowledges and agrees that any violation
of Member's covenants and agreements set forth in this Agreement will cause
irreparable injury to First Federal, and therefore, First Federal may enforce
this Agreement if necessary by means of injunction as well as institution of a
civil action for damages or by any other appropriate legal remedy.
Member agrees to indemnify and hold First Federal harmless
from and against any and all loss, cost, damage, or expense, including without
limitation, attorneys' fees that arises out of any breach by Member of this
Agreement.
7. Relationship of Parties. Member is not an employee of First
Federal and, as a result, shall not be entitled to any of the employee benefits
provided to First Federal employees.
8. Governing Law; Jurisdiction. This Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of Ohio. Any action, suit or proceeding in respect of or arising out of this
Agreement or the transactions contemplated hereby may be prosecuted as to any
one or more of the parties hereto in the courts of the State of Ohio. EACH PARTY
HERETO CONSENTS AND SUBMITS TO THE EXERCISE OF JURISDICTION OVER HIS PERSON BY
ANY COURT SITUATED IN OHIO AND HAVING JURISDICTION OVER THE SUBJECT MATTER OF
ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF OR IN RESPECT OF THIS AGREEMENT
AND THE TRANSACTIONS CONTEMPLATED HEREBY.
9. Entire Agreement. This Agreement constitutes the entire
agreement concerning the subject matters set forth herein and supersedes any and
all
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prior agreements or understandings between First Federal and Member with regard
to non-disclosure and non-competition.
10. Successors and Assigns. The privileges and benefits of
this Agreement shall be extended to the successors and assigns of First Federal.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered as of the date first above written.
Attest: FIRST FEDERAL BANK OF THE MIDWEST
By:
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its
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MEMBER
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