EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
DATED AS OF DECEMBER 30, 2002
BY AND BETWEEN
CLASSIC BANCSHARES, INC.
AND
FIRST FEDERAL FINANCIAL BANCORP, INC.
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TABLE OF CONTENTS
Page No.
Introductory Statement.........................................................1
ARTICLE I - DEFINITIONS........................................................1
ARTICLE II - THE MERGER........................................................7
2.1 The Merger......................................................7
2.2 Closing.........................................................7
2.3 Effective Time..................................................8
2.4 Effects of the Merger...........................................8
2.5 Effect on Outstanding Shares of FFFB Common Stock...............8
2.6 Election and Proration Procedures...............................9
2.7 Exchange Procedures............................................11
2.8 Effect on Outstanding Shares of CLAS Common Stock..............13
2.9 Directors After Effective Time.................................14
2.10 Certificate of Incorporation and Bylaws........................14
2.11 Treatment of Stock Options and Restricted Stock................14
2.12 Dissenters' Rights.............................................14
2.13 Bank Merger....................................................15
2.14 Alternative Structure..........................................15
ARTICLE III - REPRESENTATIONS AND WARRANTIES..................................15
3.1 Disclosure Letters.............................................15
3.2 Representations and Warranties of FFFB.........................15
3.3 Representations and Warranties of CLAS.........................31
ARTICLE IV - CONDUCT PENDING THE MERGER.......................................38
4.1 Forbearances by FFFB...........................................38
4.2 Forbearances by CLAS...........................................41
ARTICLE V - COVENANTS.........................................................42
5.1 Acquisition Proposals..........................................42
5.2 Certain Policies and Actions of FFFB...........................43
5.3 Access and Information.........................................43
5.4 Applications; Consents.........................................44
5.5 Antitakeover Provisions........................................45
5.6 Additional Agreements..........................................45
5.7 Publicity......................................................45
5.8 Stockholder Meetings...........................................45
5.9 Registration of CLAS Common Stock..............................46
5.10 Affiliate Letters..............................................47
5.11 Notification of Certain Matters................................48
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5.12 Employee Benefits Matters......................................48
5.13 Indemnification................................................50
5.14 Section 16 Matters.............................................51
5.15 Dividends......................................................51
5.16 Consulting Agreement...........................................52
ARTICLE VI - CONDITIONS TO CONSUMMATION.......................................52
6.1 Conditions to Each Party's Obligations.........................52
6.2 Conditions to the Obligations of CLAS..........................53
6.3 Conditions to the Obligations of FFFB..........................54
ARTICLE VII - TERMINATION.....................................................54
7.1 Termination....................................................54
7.2 Termination Fee................................................56
7.3 Effect of Termination..........................................56
ARTICLE VIII - CERTAIN OTHER MATTERS..........................................56
8.1 Interpretation.................................................56
8.2 Survival.......................................................57
8.3 Waiver; Amendment..............................................57
8.4 Counterparts...................................................57
8.5 Governing Law..................................................57
8.6 Expenses.......................................................57
8.7 Notices........................................................57
8.8 Entire Agreement; etc..........................................58
8.9 Successors and Assigns; Assignment.............................58
EXHIBITS
Exhibit A Form of Voting Agreement
Exhibit B Form of Plan of Bank Merger
Exhibit C Form of Affiliate Letter
Exhibit D Form of Employment Agreement with Xxxxxxx X. Xxxxx
Exhibit E Form of Consulting Agreement with I. Xxxxxxx Xxxx
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AGREEMENT AND PLAN OF MERGER
This is an
AGREEMENT AND PLAN OF MERGER, dated as of the 30th day of
December, 2002 ("AGREEMENT"), by and between CLASSIC BANCSHARES, INC., a
Delaware corporation ("CLAS"), and FIRST FEDERAL FINANCIAL BANCORP, INC., a
Delaware corporation ("FFFB").
INTRODUCTORY STATEMENT
The Board of Directors of each of CLAS and FFFB (i) has determined that
this Agreement and the business combination and related transactions
contemplated hereby are advisable and in the best interests of CLAS or FFFB, as
the case may be, and in the best long-term interests of the stockholders of CLAS
or FFFB, as the case may be, and (ii) has determined that this Agreement and the
transactions contemplated hereby are consistent with, and in furtherance of, its
respective business strategies.
The parties hereto intend that the Merger (as defined herein) shall qualify
as a reorganization under the provisions of Section 368(a) of the IRC for
federal income tax purposes.
CLAS and FFFB each desire to make certain representations, warranties and
agreements in connection with the business combination and related transactions
provided for herein and to prescribe various conditions to such transactions.
As a condition and inducement to CLAS's willingness to enter into this
Agreement, each of the members of the Board of Directors of FFFB has entered
into an agreement dated as of the date hereof in the form of EXHIBIT A pursuant
to which he will vote his shares of FFFB Common Stock in favor of this Agreement
and the transactions contemplated hereby.
In consideration of their mutual promises and obligations hereunder, the
parties hereto adopt and make this Agreement and prescribe the terms and
conditions hereof and the manner and basis of carrying it into effect, which
shall be as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement:
"ACQUISITION PROPOSAL" means any proposal or offer with respect to any of
the following (other than the transactions contemplated hereunder): (i) any
merger, consolidation, share exchange, business combination, or other similar
transaction involving FFFB or any of its Subsidiaries; (ii) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of 25% or more of
FFFB's consolidated assets in a single transaction or series of transactions;
(iii) any tender offer or exchange offer for 25% or more of the outstanding
shares of FFFB's capital stock or the filing of a registration statement under
the Securities Act in connection therewith; or (iv) any public announcement of a
proposal, plan or intention to do any of the foregoing or any agreement to
engage in an any of the foregoing.
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"AGREEMENT" means this Agreement, as amended, modified or amended and
restated from time to time in accordance with its terms.
"BANK MERGER" shall have the meaning given to that term in SECTION 2.13.
"BANK MERGER ACT" means the Bank Merger Act, as amended.
"CASH CONSIDERATION" shall have the meaning given to that term in SECTION
2.5(a).
"CASH ELECTION" shall have the meaning given to that term in SECTION
2.6(b).
"CASH ELECTION SHARES" shall have the meaning given to that term in SECTION
2.6(b).
"CERTIFICATE" shall have the meaning given to that term in SECTION 2.6(c).
"CERTIFICATE OF MERGER" shall have the meaning given to that term in
SECTION 2.3.
"CLAS" shall have the meaning given to that term in the preamble.
"CLAS COMMON STOCK" means the common stock, par value $.01 per share, of
CLAS.
"CLAS PRICE" means the average of the closing sales price of CLAS Common
Stock, as reported on The Nasdaq Small Cap Market, for the twenty consecutive
trading days ending on December 27, 2002, whether or not the CLAS Common Stock
was traded on any particular trading day.
"CLAS RATIO" shall have the meaning given to that term in SECTION 7.1(g).
"CLAS'S REPORTS" shall have the meaning given to that term in SECTION
3.3(g).
"CLAS STOCKHOLDER MEETING" shall have the meaning given to that term on
SECTION 5.8.
"CLOSING" shall have the meaning given to that term in SECTION 2.2.
"CLOSING DATE" shall have the meaning given to that term in SECTION 2.2.
"CONTINUING EMPLOYEE" shall have the meaning given to that term in SECTION
5.12(a).
"CRA" means the Community Reinvestment Act.
"DGCL" means the
Delaware General Corporation Law.
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"DISCLOSURE LETTER" shall have the meaning given to that term in SECTION
3.1.
"DISSENTERS' SHARES" shall have the meaning given to that term in SECTION
2.12.
"EFFECTIVE TIME" shall have the meaning given to that term in SECTION 2.3.
"ELECTION DEADLINE" shall have the meaning given to that term in SECTION
2.6(c).
"ELECTION FORM" shall have the meaning given to that term in SECTION
2.6(a).
"ENVIRONMENTAL LAW" means any federal, state or local law, statute,
ordinance, rule, regulation, code, license, permit, authorization, approval,
consent, order, directive, executive or administrative order, judgment, decree,
injunction, or agreement with any Governmental Entity relating to (i) the
protection, preservation or restoration of the environment (which includes,
without limitation, air, water vapor, surface water, groundwater, drinking water
supply, soil, surface land, subsurface land, plant and animal life or any other
natural resource), or to human health or safety as it relates to Hazardous
Materials, or (ii) the exposure to, or the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling, production, release
or disposal of, Hazardous Materials, in each case as amended and as now in
effect. The term Environmental Law includes, without limitation, the Federal
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
the Superfund Amendments and Reauthorization Act of 1986, the Federal Water
Pollution Control Act of 1972, the Federal Clean Air Act, the Federal Clean
Water Act, the Federal Resource Conservation and Recovery Act of 1976, the
Federal Solid Waste Disposal and the Federal Toxic Substances Control Act, the
Federal Insecticide, Fungicide and Rodenticide Act, the Federal Occupational
Safety and Health Act of 1970 as it relates to Hazardous Materials, the
Federal Hazardous Substances Transportation Act, the Emergency Planning and
Community Right-To-Know Act, the Safe Drinking Water Act, the Endangered
Species Act, the National Environmental Policy Act, the Rivers and Harbors
Appropriation Act or any so-called "Superfund" or "Superlien" law, each as
amended and as now in effect.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE" means any entity that is considered one employer with
FFFB under Section 4001(b)(1) of ERISA or Section 414(b), (c), (m) or (o) of the
IRC.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXCHANGE AGENT" shall have the meaning given to that term in SECTION
2.6(c).
"EXCHANGE RATIO" shall have the meaning given to that term in SECTION
2.5(a).
"EXCLUDED SHARES" shall consist of (i) Dissenters' Shares and (ii) shares
held directly or indirectly by CLAS (other than shares held in a fiduciary
capacity or in satisfaction of a debt previously contracted).
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"FDIA" means the Federal Deposit Insurance Act, as amended.
"FDIC" means the Federal Deposit Insurance Corporation.
"FFFB" shall have the meaning given to that term in the preamble and shall
include all predecessor entities of FFFB.
"FFFB COMMON STOCK" means the common stock, par value $.01 per share, of
FFFB.
"FFFB EMPLOYEE PLANS" shall have the meaning given to that term in SECTION
3.2(r)(i).
"FFFB OPTION" shall have the meaning given to that term in SECTION 2.11(a).
"FFFB PENSION PLAN" shall have the meaning given to that term in SECTION
3.2(r)(iii).
"FFFB QUALIFIED PLAN" shall have the meaning given to that term in SECTION
3.2(r)(iv).
"FFFB'S REPORTS" shall have the meaning given to that term in SECTION
3.2(g).
"FFFB STOCKHOLDER MEETING" shall have the meaning given to that term in
SECTION 5.8.
"FIRST FEDERAL" shall have the meaning given to that term in SECTION 2.13.
"FIRST FEDERAL ESOP" shall have the meaning given to that term in SECTION
5.12(d).
"FRB" mean the Board of Governors of the Federal Reserve System.
"GAAP" means generally accepted accounting principles.
"GOVERNMENT REGULATOR" means any federal or state governmental authority
charged with the supervision or regulation of depository institutions or
depository institution holding companies or engaged in the insurance of bank or
savings association deposits.
"GOVERNMENTAL ENTITY" means any court, administrative agency or commission
or other governmental authority or instrumentality.
"HAZARDOUS MATERIAL" means any substance (whether solid, liquid or gas)
which is or could be detrimental to human health or safety or to the
environment, currently or hereafter listed, defined, designated or classified as
hazardous, toxic, radioactive or dangerous, or otherwise regulated, under any
Environmental Law, whether by type or by quantity, including any substance
containing any such substance as a component. Hazardous Material includes,
without limitation, any toxic waste, pollutant, contaminant, hazardous
substance, toxic substance, hazardous waste, special waste, industrial
substance, oil or petroleum, or any derivative or by-product thereof, radon,
radioactive
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material, asbestos, asbestos-containing material, urea formaldehyde foam
insulation, lead and polychlorinated biphenyl.
"HOLA" means the Home Owners' Loan Act, as amended.
"INDEMNIFIED PARTY" shall have the meaning given to that term in SECTION
5.13(a).
"IRC" means the Internal Revenue Code of 1986, as amended.
"IRS" means the Internal Revenue Service.
"KNOWLEDGE" means, with respect to a party hereto, actual knowledge of the
members of the Board of Directors of that party or any officer of that party
with the title ranking not less than senior vice president.
"LETTER OF TRANSMITTAL" shall have the meaning given to that term in
SECTION 2.7(a).
"LIEN" means any charge, mortgage, pledge, security interest, claim, lien
or encumbrance.
"LOAN" means a loan, lease, advance, credit enhancement, guarantee or other
extension of credit.
"LOAN PROPERTY" means any property in which the applicable party (or a
subsidiary of it) holds a security interest and, where required by the context,
includes the owner or operator of such property, but only with respect to such
property.
"MAILING DATE" shall have the meaning given to that term in SECTION 2.6(a).
"MATERIAL ADVERSE EFFECT" means an effect which is material and adverse to
the business, financial condition or results of operations of FFFB or CLAS, as
the context may dictate, and its Subsidiaries taken as a whole; PROVIDED,
HOWEVER, that any such effect resulting from any (i) changes in laws, rules or
regulations or generally accepted accounting principles or regulatory accounting
requirements or interpretations thereof that apply to both CLAS and FFFB, or to
financial and/or depository institutions generally, (ii) changes in economic
conditions affecting financial institutions generally within the region in which
CLAS and FFFB operate, including but not limited to, changes in the general
level of market interest rates, (iii) actions and omissions of CLAS or FFFB
taken with the prior written consent of the other in contemplation of the
transactions contemplated hereby and (iv) direct effects of compliance with this
Agreement on the operating performance of the parties, including expenses
incurred by the parties in consummating the transactions contemplated by this
Agreement, shall not be considered in determining if a Material Adverse Effect
has occurred.
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"MAXIMUM INSURANCE AMOUNT" shall have the meaning given to that term in
SECTION 5.13(c).
"MERGER" shall have the meaning given to that term in SECTION 2.1.
"MERGER CONSIDERATION" shall have the meaning given to that term in SECTION
2.5(a).
"MIXED ELECTION" shall have the meaning given to that term in SECTION
2.6(b).
"NASD" means the National Association of Securities Dealers, Inc.
"NON-ELECTION" shall have the meaning given to that term in SECTION 2.6(b).
"NON-ELECTION SHARES" shall have the meaning given to that term in SECTION
2.6(b).
"OTS" means the Office of Thrift Supervision.
"PARTICIPATION FACILITY" means any facility in which the applicable party
(or a Subsidiary of it) participates in the management (including all property
held as trustee or in any other fiduciary capacity) and, where required by the
context, includes the owner or operator of such property, but only with respect
to such property.
"PERSON" means an individual, corporation, limited liability company,
partnership, association, trust, unincorporated organization or other entity.
"PROXY STATEMENT-PROSPECTUS" shall have the meaning given to that term in
SECTION 5.9(a).
"REGISTRATION STATEMENT" shall have the meaning given to that term in
SECTION 5.9(a).
"REPRESENTATIVE" shall have the meaning given to that term in SECTION
2.6(b).
"SEC" means the United States Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"SHORTFALL NUMBER" shall have the meaning given to that term in SECTION
2.6(e)(ii).
"STOCK CONSIDERATION" shall have the meaning given to that term in SECTION
2.5(a).
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"STOCK CONVERSION NUMBER" shall have the meaning given to that term in
SECTION 2.6(d).
"STOCK ELECTION" shall have the meaning given to that term in SECTION
2.6(b).
"STOCK ELECTION SHARES" shall have the meaning given to that term in
SECTION 2.6(b).
"STOCK ELECTION NUMBER" shall have the meaning given to that term in
SECTION 2.6(b).
"SUBSIDIARY" means a corporation, financial institution, partnership, joint
venture or other entity in which FFFB or CLAS, as the case may be, has, directly
or indirectly, an equity interest representing 50% or more of any class of the
capital stock thereof or other equity interests therein and includes all
predecessor entities thereof.
"SUPERIOR PROPOSAL" means an unsolicited, bona fide written offer made by a
third party to consummate an Acquisition Proposal that (i) FFFB's Board of
Directors determines in good faith, after consulting with its outside legal
counsel and its financial advisor, would, if accepted, be reasonably likely to
be consummated, (ii) is for 100% of the outstanding shares of FFFB Common
Stock and (iii) is, in the opinion of FFFB's Board of Directors after
consultation with its financial advisor, more favorable to the stockholders of
FFFB from a financial point of view than the transactions contemplated hereby.
"SURVIVING CORPORATION" shall have the meaning given to that term in
SECTION 2.1.
"TAXES" means all income, franchise, gross receipts, real and personal
property, real property transfer and gains, wage and employment taxes and any
applicable interest and penalties related thereto.
ARTICLE II
THE MERGER
2.1 THE MERGER. Upon the terms and subject to the conditions set forth in
this Agreement, FFFB will merge with and into CLAS ("MERGER") at the Effective
Time. At the Effective Time, the separate corporate existence of FFFB shall
cease. CLAS shall be the surviving corporation (hereinafter sometimes referred
to in such capacity as the "SURVIVING CORPORATION") in the Merger and shall
continue to be governed by the DGCL and its name and separate corporate
existence, with all of its rights, privileges, immunities, powers and
franchises, shall continue unaffected by the Merger.
2.2 CLOSING. The closing of the Merger (the "CLOSING") will take place in
the offices of Jenkens & Xxxxxxxxx, P.C., 0000 Xxxxxxxxxxxx Xxxxxx, X.X., #000,
Xxxxxxxxxx, XX 00000 at 2:00 p.m. on the date designated by CLAS on the fifth
day following satisfaction or waiver of the conditions to Closing set forth in
Article VI (other than those conditions that by their nature are to be satisfied
at the Closing), or such later date as the parties may otherwise agree (the
"CLOSING DATE").
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2.3 EFFECTIVE TIME. In connection with the Closing, CLAS shall duly
execute and deliver a certificate of merger (the "CERTIFICATE OF MERGER") to the
Delaware Secretary of State for filing pursuant to the DGCL. The parties will
make all other filings or recordings required under the DGCL and the DGCL. The
Merger shall become effective at such time as the Certificate of Merger is duly
filed with the
Delaware Secretary of State or at such later date or time as CLAS
and FFFB agree and specify in the Certificate of Merger (the date and time the
Merger becomes effective being the "EFFECTIVE TIME").
2.4 EFFECTS OF THE MERGER. The Merger will have the effects set forth in
the DGCL. Without limiting the generality of the foregoing, and subject thereto,
from and after the Effective Time, CLAS shall possess all of the properties,
rights, privileges, powers and franchises of FFFB and be subject to all of the
debts, liabilities and obligations of FFFB.
2.5 EFFECT ON OUTSTANDING SHARES OF FFFB COMMON STOCK.
(a) Subject to the provisions of SECTION 2.6 hereof, by virtue of
the Merger, automatically and without any action on the part of the holder
thereof, each share of FFFB Common Stock issued and outstanding at the
Effective Time, other than Excluded Shares, shall become and be converted
into, at the election of the holder as provided in and subject to the
limitations set forth in this Agreement, either (i) the right to receive
$24.00 in cash without interest (the "CASH CONSIDERATION") or (ii) the number
of shares of CLAS Common Stock equal to the Exchange Ratio (as defined below)
(the "STOCK CONSIDERATION"). The Cash Consideration and the Stock
Consideration are sometimes referred to herein collectively as the "MERGER
CONSIDERATION." The "EXCHANGE RATIO" shall be equal to 0.9797, which
represents the quotient of $24.00 divided by the CLAS Price.
(b) Notwithstanding any other provision of this Agreement, no
fraction of a share of CLAS Common Stock and no certificates or scrip therefor
will be issued in the Merger; instead, CLAS shall pay to each holder of FFFB
Common Stock who would otherwise be entitled to a fraction of a share of CLAS
Common Stock an amount in cash, rounded to the nearest cent, determined by
multiplying such fraction by the average of the closing sales price of CLAS
Common Stock as reported on The Nasdaq Small Cap Market during the twenty
consecutive trading days ending on the date of the Effective Time; provided,
however, that in the event CLAS Common Stock does not trade on one or more of
the trading days in such twenty day period, any such date shall be disregarded
in computing the average closing sales price and the average shall be based upon
the closing sales price and number of days on which CLAS Common Stock actually
traded during such twenty day period.
(c) If, between the date of this Agreement and the Effective Time,
the outstanding shares of CLAS Common Stock shall have been changed into a
different number of shares or into a different class by reason of any stock
dividend, subdivision, reclassification, recapitalization, split, combination or
exchange of shares, the Exchange Ratio shall be adjusted appropriately to
provide the holders of FFFB Common Stock the same economic effect as
contemplated by this Agreement prior to such event.
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(d) As of the Effective Time, each Excluded Share, other than
Dissenters' Shares, shall be canceled and retired and shall cease to exist, and
no exchange or payment shall be made with respect thereto. All shares of CLAS
Common Stock that are held by FFFB, if any, other than shares held in a
fiduciary capacity or in satisfaction of a debt previously contracted, shall be
canceled and shall constitute authorized but unissued shares. In addition, no
Dissenters' Shares shall be converted into shares of CLAS Common Stock pursuant
to this SECTION 2.5 but instead shall be treated in accordance with the
provisions set forth in SECTION 2.12 of this Agreement.
2.6 ELECTION AND PRORATION PROCEDURES.
(a) An election form in such form as FFFB and CLAS shall mutually
agree (an "ELECTION Form") shall be mailed on the Mailing Date (as defined
below) to each holder of record of shares of FFFB Common Stock as of a record
date which shall be the same date as the record date for eligibility to vote
on the Merger. The "MAILING DATE" shall be the date on which proxy materials
relating to the Merger are mailed to holders of shares of FFFB Common Stock.
CLAS shall make available Election Forms as may be reasonably requested by
all persons who become holders of FFFB Common Stock after the record date for
eligibility to vote on the Merger and prior to the Election Deadline (as
defined herein), and FFFB shall provide to the Exchange Agent (as defined
herein) all information reasonably necessary for it to perform its
obligations as specified herein.
(b) Each Election Form shall entitle the holder of shares of FFFB
Common Stock (or the beneficial owner through appropriate and customary
documentation and instructions) to (i) elect to receive the Cash Consideration
for all of such holder's shares (a "CASH ELECTION"), (ii) elect to receive the
Stock Consideration for all of such holder's shares (a "STOCK ELECTION"), (iii)
elect to receive the Cash Consideration with respect to some of such holder's
shares and the Stock Consideration with respect to such holder's remaining
shares (a "MIXED ELECTION") or (iv) make no election or to indicate that such
holder has no preference as to the receipt of the Cash Consideration or the
Stock Consideration (a "NON-ELECTION"). Holders of record of shares of FFFB
Common Stock who hold such shares as nominees, trustees or in other
representative capacities (a "REPRESENTATIVE") may submit multiple Election
Forms, provided that such Representative certifies that each such Election Form
covers all the shares of FFFB Common Stock held by that Representative for a
particular beneficial owner. Shares of FFFB Common Stock as to which a Cash
Election has been made (including pursuant to a Mixed Election) are referred to
herein as "CASH ELECTION SHARES." Shares of FFFB Common Stock as to which a
Stock Election has been made (including pursuant to a Mixed Election) are
referred to herein as "STOCK ELECTION SHARES." Shares of FFFB Common Stock as to
which no election has been made are referred to as "NON-ELECTION SHARES." The
aggregate number of shares of FFFB Common Stock with respect to which a Stock
Election has been made is referred to herein as the "STOCK ELECTION NUMBER."
(c) To be effective, a properly completed Election Form must be
received by CLAS's transfer agent (the "EXCHANGE AGENT") on or before 5:00 p.m.
on the third business day immediately preceding FFFB's Stockholder Meeting or on
such other time and date as FFFB and CLAS may mutually agree) (the "ELECTION
DEADLINE"). An election shall have been properly made only if the Exchange Agent
shall have actually received a properly completed Election Form by the
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Election Deadline. An Election Form shall be deemed properly completed only
if accompanied by one or more certificates representing FFFB Common Stock
("CERTIFICATES") (or customary affidavits and, if required by CLAS pursuant
to SECTION 2.7(i), indemnification regarding the loss or destruction of such
Certificates or the guaranteed delivery of such Certificates) representing
all shares of FFFB Common Stock covered by such Election Form, together with
duly executed transmittal materials included with the Election Form. Any FFFB
stockholder may at any time prior to the Election Deadline change his or her
election by written notice received by the Exchange Agent prior to the
Election Deadline accompanied by a properly completed and signed revised
Election Form. Any FFFB stockholder may, at any time prior to the Election
Deadline, revoke his or her election by written notice received by the
Exchange Agent prior to the Election Deadline or by withdrawal prior
to the Election Deadline of his or her Certificates, or of the guarantee of
delivery of such Certificates, previously deposited with the Exchange Agent. All
elections shall be revoked automatically if the Exchange Agent is notified in
writing by CLAS and FFFB that this Agreement has been terminated. If a
stockholder either (i) does not submit a properly completed Election Form by the
Election Deadline or (ii) revokes its Election Form prior to the Election
Deadline and does not submit a new properly executed Election Form prior to the
Election Deadline, the shares of FFFB Common Stock held by such stockholder
shall be designated Non-Election Shares. CLAS shall cause the Certificates
representing FFFB Common Stock described in (ii) to be promptly returned without
charge to the person submitting the Election Form upon written request to that
effect from the person who submitted the Election Form. Subject to the terms of
this Agreement and of the Election Form, the Exchange Agent shall have
reasonable discretion to determine whether any election, revocation or change
has been properly or timely made and to disregard immaterial defects in any
Election Form, and any good faith decisions of the Exchange Agent regarding such
matters shall be binding and conclusive.
(d) Notwithstanding any other provision contained in this Agreement,
50% of the total number of shares of FFFB Common Stock outstanding at the
Effective Time (the "STOCK CONVERSION NUMBER") shall be converted into the Stock
Consideration and the remaining outstanding shares of FFFB Common Stock
(excluding shares of FFFB Common Stock to be canceled as provided in SECTION
2.5(d) and Dissenters' Shares) shall be converted into the Cash Consideration;
PROVIDED, HOWEVER, that for federal income tax purposes, it is intended that the
Merger will qualify as a reorganization under the provisions of Section 368(a)
of the IRC and, notwithstanding anything to the contrary contained herein, in
order that the Merger will not fail to satisfy continuity of interest
requirements under applicable federal income tax principles relating to
reorganizations under Section 368(a) of the IRC, CLAS shall increase the number
of shares of FFFB Common Stock that will be converted into the Stock
Consideration and reduce the number of shares of FFFB Common Stock that will be
converted into the right to receive the Cash Consideration to ensure that the
Stock Consideration will represent 45% of the value of the aggregate Merger
Consideration, increased by the value of any Excluded Shares, each as measured
as of the Effective Time.
(e) Within three business days after the later to occur of the
Election Deadline or the Effective Time, CLAS shall cause the Exchange Agent to
effect the allocation among holders of FFFB Common Stock of rights to receive
the Cash Consideration and the Stock Consideration and to distribute such
consideration as follows:
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(i) If the Stock Election Number exceeds the Stock Conversion
Number, then all Cash Election Shares and all Non-Election Shares shall be
converted into the right to receive the Cash Consideration, and each holder of
Stock Election Shares will be entitled to receive (A) the Stock Consideration in
respect of that number of Stock Election Shares equal to the product obtained by
multiplying (1) the number of Stock Election Shares held by such holder by (2) a
fraction, the numerator of which is the Stock Conversion Number and the
denominator of which is the Stock Election Number and (B) the Cash
Consideration in respect of the remaining number of such holder's Stock
Election Shares;
(ii) If the Stock Election Number is less than the Stock
Conversion Number (the amount by which the Stock Conversion Number exceeds the
Stock Election Number being referred to herein as the "SHORTFALL NUMBER"), then
all Stock Election Shares shall be converted into the right to receive the Stock
Consideration and the Non-Election Shares and Cash Election Shares shall be
treated in the following manner:
(A) if the Shortfall Number is less than or equal to the
number of Non-Election Shares, then all Cash Election Shares shall be converted
into the right to receive the Cash Consideration and each holder of Non-Election
Shares shall receive (1) the Stock Consideration in respect of that number of
Non-Election Shares equal to the product obtained by multiplying (x) the number
of Non-Election Shares held by such holder by (y) a fraction, the numerator of
which is the Shortfall Number and the denominator of which is the total number
of Non-Election Shares and (2) the Cash Consideration in respect of the
remaining number of such holder's Non-Election Shares; or
(B) if the Shortfall Number exceeds the number of
Non-Election Shares, then all Non-Election Shares shall be converted into the
right to receive the Stock Consideration, and each holder of Cash Election
Shares shall receive (1) the Stock Consideration in respect of that number of
Cash Election Shares equal to the product obtained by multiplying (x) the number
of Cash Election Shares held by such holder by (y) a fraction, the numerator of
which is the amount by which the Shortfall Number exceeds the total number of
Non-Election Shares and the denominator of which is the total number of Cash
Election Shares and (2) the Cash Consideration in respect of the remaining
number of such holder's Cash Election Shares.
For purposes of the foregoing calculations, Excluded Shares shall be
deemed to be Cash Election Shares. For purposes of this SECTION 2.6(e), if CLAS
is obligated to increase the number of shares of FFFB Common Stock to be
converted into shares of CLAS Common Stock as a result of the application of the
last clause of SECTION 2.6(d) above, then the higher number shall be substituted
for the Stock Conversion Number in the calculations set forth in this SECTION
2.6(e).
2.7 EXCHANGE PROCEDURES.
(a) Appropriate transmittal materials ("LETTER OF TRANSMITTAL") in a
form satisfactory to CLAS and FFFB shall be mailed as soon as practicable after
the Effective Time to each holder of record of FFFB Common Stock as of the
Effective Time who did not previously submit a
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completed Election Form. A Letter of Transmittal will be deemed properly
completed only if accompanied by certificates representing all shares of FFFB
Common Stock to be converted thereby.
(b) At and after the Effective Time, each Certificate (except as
specifically set forth in SECTION 2.5(d)) shall represent only the right to
receive the Merger Consideration.
(c) Prior to the Effective Time, CLAS shall (i) reserve for issuance
with its transfer agent and registrar a sufficient number of shares of CLAS
Common Stock to provide for payment of the aggregate Stock Consideration and
(ii) deposit, or cause to be deposited, with the Exchange Agent, for the benefit
of the holders of shares of FFFB Common Stock, an amount of cash sufficient to
pay the aggregate Cash Consideration.
(d) The Letter of Transmittal shall (i) specify that delivery shall
be effected, and risk of loss and title to the Certificates shall pass, only
upon delivery of the Certificates to the Exchange Agent, (ii) be in a form and
contain any other provisions as CLAS may reasonably determine and (iii) include
instructions for use in effecting the surrender of the Certificates in exchange
for the Merger Consideration. Upon the proper surrender of the Certificates to
the Exchange Agent, together with a properly completed and duly executed Letter
of Transmittal, the holder of such Certificates shall be entitled to receive in
exchange therefor a certificate representing that number of whole shares of CLAS
Common Stock that such holder has the right to receive pursuant to SECTION 2.5,
if any, and a check in the amount equal to the cash that such holder has the
right to receive pursuant to SECTION 2.5, if any, (including any cash in lieu of
fractional shares, if any, that such holder has the right to receive pursuant to
SECTION 2.5, and any dividends or other distributions to which such holder is
entitled pursuant to SECTION 2.5). Certificates so surrendered shall forthwith
be canceled. As soon as practicable following receipt of the properly completed
Letter of Transmittal and any necessary accompanying documentation, the Exchange
Agent shall distribute CLAS Common Stock and cash as provided herein. The
Exchange Agent shall not be entitled to vote or exercise any rights of ownership
with respect to the shares of CLAS Common Stock held by it from time to time
hereunder, except that it shall receive and hold all dividends or other
distributions paid or distributed with respect to such shares for the account of
the persons entitled thereto. If there is a transfer of ownership of any shares
of FFFB Common Stock not registered in the transfer records of FFFB, the Merger
Consideration shall be issued to the transferee thereof if the Certificates
representing such FFFB Common Stock are presented to the Exchange Agent,
accompanied by all documents required, in the reasonable judgment of CLAS and
the Exchange Agent, to evidence and effect such transfer and to evidence that
any applicable stock transfer taxes have been paid.
(e) No dividends or other distributions declared or made after the
Effective Time with respect to CLAS Common Stock issued pursuant to this
Agreement shall be remitted to any person entitled to receive shares of CLAS
Common Stock hereunder until such person surrenders his or her Certificates in
accordance with this SECTION 2.7. Upon the surrender of such person's
Certificates, such person shall be entitled to receive any dividends or other
distributions, without interest thereon, which subsequent to the Effective Time
had become payable but not paid with respect to shares of CLAS Common Stock
represented by such person's Certificates.
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(f) The stock transfer books of FFFB shall be closed immediately upon
the Effective Time and from and after the Effective Time there shall be no
transfers on the stock transfer records of FFFB of any shares of FFFB Common
Stock. If, after the Effective Time, Certificates are presented to CLAS, they
shall be canceled and exchanged for the Merger Consideration deliverable in
respect thereof pursuant to this Agreement in accordance with the procedures set
forth in this SECTION 2.7.
(g) Any portion of the aggregate amount of cash to be paid pursuant
to SECTION 2.5, any dividends or other distributions to be paid pursuant to this
SECTION 2.7 or any proceeds from any investments thereof that remains unclaimed
by the stockholders of FFFB for six months after the Effective Time shall be
repaid by the Exchange Agent to CLAS upon the written request of CLAS. After
such request is made, any stockholders of FFFB who have not theretofore complied
with this SECTION 2.7 shall look only to CLAS for the Merger Consideration
deliverable in respect of each share of FFFB Common Stock such stockholder
holds, as determined pursuant to SECTION 2.5 of this Agreement, without any
interest thereon. If outstanding Certificates are not surrendered prior to the
date on which such payments would otherwise escheat to or become the property of
any governmental unit or agency, the unclaimed items shall, to the extent
permitted by any abandoned property, escheat or other applicable laws, become
the property of CLAS (and, to the extent not in its possession, shall be paid
over to it), free and clear of all claims or interest of any person previously
entitled to such claims. Notwithstanding the foregoing, neither the Exchange
Agent nor any party to this Agreement (or any affiliate thereof) shall be liable
to any former holder of FFFB Common Stock for any amount delivered to a public
official pursuant to applicable abandoned property, escheat or similar laws.
(h) CLAS and the Exchange Agent shall be entitled to rely upon FFFB's
stock transfer books to establish the identity of those persons entitled to
receive the Merger Consideration, which books shall be conclusive with respect
thereto. In the event of a dispute with respect to ownership of stock
represented by any Certificate, CLAS and the Exchange Agent shall be entitled to
deposit any Merger Consideration deliverable in respect thereof in escrow with
an independent third party and thereafter be relieved with respect to any claims
thereto.
(i) If any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person claiming such
Certificate to be lost, stolen or destroyed and, if required by the Exchange
Agent or CLAS, the posting by such person of a bond in such amount as the
Exchange Agent may direct as indemnity against any claim that may be made
against it with respect to such Certificate, the Exchange Agent will issue in
exchange for such lost, stolen or destroyed Certificate the Merger Consideration
deliverable in respect thereof pursuant to SECTION 2.5.
2.8 EFFECT ON OUTSTANDING SHARES OF CLAS COMMON STOCK. At and after the
Effective Time, each share of CLAS Common Stock issued and outstanding
immediately prior to the Effective Time shall remain an issued and outstanding
share of common stock of the Surviving Corporation and shall not be affected by
the Merger.
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2.9 DIRECTORS AFTER EFFECTIVE TIME. Immediately after the Effective Time,
until their respective successors are duly elected or appointed and qualified,
the directors of the Surviving Corporation shall consist of the directors of
CLAS serving immediately prior to the Effective Time and the directors of
Classic Bank shall consist of the current directors of Classic Bank serving at
the Effective Time; provided however that CLAS shall offer to Xxxxxx X. Xxxxxxxx
the opportunity to serve on its Board of Directors and Classic Bank shall offer
to Xxxxx Xxxxxxxx and Xxxxxx X. Xxxxxxxxx the opportunity to serve on its board
of directors.
2.10 CERTIFICATE OF INCORPORATION AND BYLAWS. The certificate of
incorporation of CLAS, as in effect immediately prior to the Effective Time,
shall be the certificate of incorporation of the Surviving Corporation until
thereafter amended in accordance with applicable law. The bylaws of CLAS, as in
effect immediately prior to the Effective Time, shall be the bylaws of the
Surviving Corporation until thereafter amended in accordance with applicable
law.
2.11 TREATMENT OF STOCK OPTIONS AND RESTRICTED STOCK.
(a) Each option to purchase shares of FFFB Common Stock issued by
FFFB and outstanding at the Effective Time (a "FFFB OPTION") pursuant to any
stock option plan approved by FFFB's stockholder's prior to the date hereof,
whether or nor then vested or exercisable, shall be cancelled and all rights
thereunder shall be extinguished. As consideration for such cancellation, FFFB
shall make payment immediately prior to the Effective Time to each holder of a
FFFB Option of an amount determined by multiplying (x) the number of shares of
FFFB Common Stock subject to such holder's FFFB Option by (y) an amount equal to
the excess (if any) of (i) the value of $24 over (ii) the exercise price per
share of such FFFB Option, PROVIDED, HOWEVER, that no such payment shall be made
to such holder unless and until such holder has executed and delivered to FFFB
an instrument in such form prescribed by CLAS and reasonably satisfactory to
FFFB accepting such payment in full settlement of his or her rights relative to
FFFB Option.
(b) At the Effective Time, each share of restricted stock outstanding
as of the Effective Time and issued pursuant to FFFB's Recognition and Retention
Plan and Trust and 2002 Directors Stock Plan, to the extent not already vested,
shall vest and shall represent the right to receive the same rights provided to
other holders of FFFB Common Stock pursuant to SECTION 2.5 above.
2.12 DISSENTERS' RIGHTS. Notwithstanding any other provision of this
Agreement to the contrary, shares of FFFB Common Stock that are outstanding
immediately prior to the Effective Time and which are held by stockholders who
shall have not voted in favor of the Merger and who have filed with FFFB a
written objection to the Merger (collectively, the "DISSENTERS' SHARES") shall
not be converted into or represent the right to receive the Merger
Consideration. Such stockholders instead shall be entitled only to such rights
as are granted by applicable law, except that all Dissenters' Shares held by
stockholders who shall have failed to perfect or who effectively shall have
withdrawn or otherwise lost their rights to payment of the fair value of their
shares under the DGCL shall thereupon be deemed to have been converted into and
to have become exchangeable for, as of the Effective Time, the right to receive,
without any interest thereon, the Merger Consideration upon surrender in the
manner provided in SECTION 2.7 of the FFFB Certificate or FFFB Certificates
that,
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immediately prior to the Effective Time, evidenced such shares. FFFB shall
give CLAS (i) prompt notice of any written objections to the Merger and (ii) the
opportunity to participate in all negotiations and proceedings with respect to
demands under the DGCL consistent with the obligations of FFFB thereunder. FFFB
shall not, except with the prior written consent of CLAS, (x) make any payment
with respect to such demand, (y) offer to settle or settle any demand for
payment or (z) waive any failure to timely deliver a written demand for payment
or timely take any other action in accordance with the DGCL.
2.13 BANK MERGER. Concurrently with or as soon as practicable after the
execution and delivery of this Agreement, Classic Bank, a wholly owned
subsidiary of CLAS, and First Federal Savings Bank of Ironton ("FIRST FEDERAL"),
a wholly owned subsidiary of FFFB, shall enter into the Plan of Bank Merger, in
the form attached hereto as EXHIBIT B, pursuant to which First Federal will
merge with and into Classic Bank (the "BANK MERGER"). The parties intend that
the Bank Merger will become effective simultaneously with or immediately
following the Effective Time.
2.14 ALTERNATIVE STRUCTURE. Notwithstanding anything to the contrary
contained in this Agreement, prior to the Effective Time, CLAS may specify that
the structure of the transactions contemplated by this Agreement be revised and
the parties shall enter into such alternative transactions as CLAS may
reasonably determine to effect the purposes of this Agreement; PROVIDED,
HOWEVER, that such revised structure shall not (i) alter or change the amount or
kind of the Merger Consideration, (ii) change the intended federal income tax
consequences of the transactions contemplated by this Agreement or (iii)
materially impede or delay the receipt of any regulatory approval referred to
in, or the consummation of the transactions contemplated by, this Agreement. In
the event that CLAS elects to make such a revision, the parties agree to execute
appropriate documents to reflect the revised structure.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 DISCLOSURE LETTERS. Prior to the execution and delivery of this
Agreement, CLAS and FFFB have each delivered to the other a letter (each, its
"DISCLOSURE LETTER") setting forth, among other things, facts, circumstances and
events the disclosure of which is required or appropriate in relation to any or
all of their respective representations and warranties (and making specific
reference to the Section of this Agreement to which they relate); provided, that
no such fact, circumstance or event is required to be set forth in the
Disclosure Letter as an exception to a representation or warranty if its absence
is not reasonably likely to result in the related representation or warranty
being deemed untrue or incorrect under the standards of SECTION 6.2(a) or
SECTION 6.3(a) as applicable. The mere inclusion of a fact, circumstance or
event in a Disclosure Letter shall not be deemed an admission by a party that
such item represents a material exception or that such item is reasonably
likely to result in a Material Adverse Effect. Any matter disclosed pursuant
to one section of a party's Disclosure Letter shall be deemed disclosed for
all purposes of such party's Disclosure Letter.
3.2 REPRESENTATIONS AND WARRANTIES OF FFFB. FFFB represents and warrants
to CLAS that, except as disclosed in FFFB's Disclosure Letter:
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(a) ORGANIZATION AND QUALIFICATION. FFFB is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is registered with the OTS as a savings and loan holding company.
FFFB has all requisite corporate power and authority to own, lease and operate
its properties and to conduct the business currently being conducted by it. FFFB
is duly qualified or licensed as a foreign corporation to transact business and
is in good standing in each jurisdiction in which the character of the
properties owned or leased by it or the nature of the business conducted by it
makes such qualification or licensing necessary, except where the failure to be
so qualified or licensed and in good standing would not have a Material Adverse
Affect on FFFB.
(b) SUBSIDIARIES.
(i) FFFB's Disclosure Letter sets forth with respect to each
of FFFB's Subsidiaries its name, its jurisdiction of incorporation, FFFB's
percentage ownership, the number of shares of stock owned or controlled by FFFB
and the name and number of shares held by any other person who owns any stock of
the Subsidiary. FFFB owns of record and beneficially, directly or indirectly,
all the capital stock of each of its Subsidiaries free and clear of any Liens.
There are no contracts, commitments, agreements or understandings relating to
FFFB's right to vote or dispose of any equity securities of its Subsidiaries.
FFFB's ownership interest in each of its Subsidiaries is in compliance with all
applicable laws, rules and regulations relating to equity investments by savings
and loan holding companies or federally chartered savings associations.
(ii) Each of FFFB's Subsidiaries is a corporation or issued
depository institution duly organized and validly existing under the laws of its
jurisdiction of incorporation or organization, has all requisite corporate power
and authority to own, lease and operate its properties and to conduct the
business currently being conducted by it and is duly qualified or licensed as a
foreign corporation to transact business and is in good standing in each
jurisdiction in which the character of the properties owned or leased by it or
the nature of the business conducted by it makes such qualification or licensing
necessary, except where the failure to be so qualified or licensed and in good
standing would not have a Material Adverse Affect on such Subsidiary.
(iii) The outstanding shares of capital stock of each
Subsidiary have been validly authorized and are validly issued, fully paid and
nonassessable. No shares of capital stock of any Subsidiary of FFFB are or may
be required to be issued by virtue of any options, warrants or other rights, no
securities exist that are convertible into or exchangeable for shares of such
capital stock or any other debt or equity security of any Subsidiary, and
there are no contracts, commitments, agreements or understandings of any kind
for the issuance of additional shares of capital stock or other debt or
equity security of any Subsidiary or options, warrants or other rights with
respect to such securities.
(iv) No Subsidiary of FFFB other than First Federal is an
"insured depository institution" as defined in the FDIA and the applicable
regulations thereunder. First Federal is a qualified thrift lender pursuant to
Section 10(m) of the HOLA and its deposits are insured by the FDIC through the
Savings Association Insurance Fund to the fullest extent permitted by law. First
Federal is a member in good standing of the Federal Home Loan Bank of
Cincinnati.
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(c) CAPITAL STRUCTURE.
(i) The authorized capital stock of FFFB consists of:
(A) 1,000,000 shares of FFFB Common Stock; and
(B) 500,000 shares of preferred stock, par value $.01
per share.
(ii) As of the date of this Agreement:
(A) 461,622 shares of FFFB Common Stock are issued and
outstanding, all of which are validly issued, fully paid and nonassessable and
were issued in full compliance with all applicable laws including 21,996 shares
of unvested restricted stock and no unallocated shares under the Recognition and
Retention Plan and Trust;
(B) no shares of FFFB preferred stock are issued and
outstanding; and
(C) no shares of FFFB Common Stock are reserved for
issuance under any director or employee benefit plan other than:
(1) 49,790 shares held in the FFFB Employee Stock
Ownership Plan;
(2) 10,993 shares are unallocated under the FFFB
Recognition and Retention Plan and Trust and there are no unvested awards under
such plan;
(3) 67,178 shares reserved for issuance under the FFFB
Stock Option Plan of which 36,224 shares are subject to outstanding awards; and
(4) there were no shares reserved for issuance under the
2002 Directors Stock Plan which are not subject to outstanding awards.
(iii) Set forth in FFFB's Disclosure Letter is a complete and
accurate list of all outstanding FFFB Options, including the names of the
optionees, dates of grant, exercise prices, dates of vesting, dates of
termination, shares subject to each grant and whether stock appreciation,
limited or other similar rights were granted in connection with such options.
(iv) No bonds, debentures, notes or other indebtedness having
the right to vote on any matters on which stockholders of FFFB may vote are
issued or outstanding.
(v) Except as set forth in this Section 3.2(c) and the FFFB
Disclosure Letter and except for rights (the "Rights") which have been
distributed to stockholders of FFFB pursuant to FFFB's Stockholder Protection
Rights Agreement dated March 22, 2001 between FFFB and the Registrar and
Transfer Company, Cransford, New Jersey, (the "FFFB Rights Agreement"),
17
as of the date of this Agreement, (A) no shares of capital stock or other
voting securities of FFFB or any of its Subsidiaries are issued, reserved for
issuance or outstanding and (B) neither FFFB nor any of its Subsidiaries has
or is bound by any outstanding subscriptions, options, warrants, calls,
rights, convertible securities, commitments or agreements of any character
obligating FFFB or any of its Subsidiaries to issue, deliver or sell, or
cause to be issued, delivered or sold, any additional shares of capital stock
of FFFB or obligating FFFB or any of its Subsidiaries to grant, extend or
enter into any such option, warrant, call, right, convertible security,
commitment or agreement. As of the date hereof, there are no outstanding
contractual obligations of FFFB or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any shares of capital stock of FFFB or any of its
Subsidiaries.
(d) AUTHORITY.
(i) FFFB has all requisite corporate power and authority to
enter into this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
by this Agreement have been duly authorized by all necessary corporate actions
on the part of FFFB's Board of Directors, and no other corporate proceedings on
the part of FFFB are necessary to authorize this Agreement or to consummate the
transactions contemplated by this Agreement other than the approval and adoption
of this Agreement by the affirmative vote of the holders of a majority of the
outstanding shares of FFFB Common Stock. This Agreement has been duly and
validly executed and delivered by FFFB and constitutes a valid and binding
obligation of FFFB, enforceable against FFFB in accordance with its terms,
subject to applicable bankruptcy, insolvency and similar laws affecting
creditors' rights and remedies generally and to general principles of equity,
whether applied in a court of law or a court of equity.
(ii) Effective prior to execution of this Agreement, FFFB has
taken all action necessary under the FFFB Rights Agreement so that execution of
this Agreement and consummation of the transactions contemplated herein shall
not result in the grant of any Rights to any person or enable or require any
of the Rights to be exercised, transferred or triggered.
(e) NO VIOLATIONS. The execution, delivery and performance of this
Agreement by FFFB do not, and the consummation of the transactions contemplated
by this Agreement will not, (i) assuming all required governmental approvals
have been obtained and the applicable waiting periods have expired, violate any
law, rule or regulation or any judgment, decree, order, governmental permit or
license to which FFFB or any of its Subsidiaries (or any of their respective
properties) is subject, (ii) violate the certificate of incorporation or bylaws
of FFFB or the similar organizational documents of any of its Subsidiaries or
(iii) constitute a breach or violation of, or a default under (or an event
which, with due notice or lapse of time or both, would constitute a default
under), or result in the termination of, accelerate the performance required by,
or result in the creation of any Lien upon any of the properties or assets of
FFFB or any of its Subsidiaries under, any of the terms, conditions or
provisions of any note, bond, indenture, deed of trust, loan agreement or other
agreement, instrument or obligation to which FFFB or any of its Subsidiaries is
a party, or to which any of their respective properties or assets may be subject
except, in the case of (iii), for any such
18
breaches, violations or defaults that would not, individually or in the
aggregate, have a Material Adverse Effect on FFFB.
(f) CONSENTS AND APPROVALS. No consents or approvals of, or filings
or registrations with, any Governmental Entity or any third party are required
to be made or obtained in connection with the execution and delivery by FFFB of
this Agreement or the consummation by FFFB of the Merger and the other
transactions contemplated by this Agreement, including the Bank Merger, except
for (i) filings of applications and notices with, receipt of approvals or
nonobjections from, and expiration of the related waiting period required by,
federal and state banking authorities, (ii) filing of the Registration Statement
with the SEC and declaration by the SEC of the Registration Statement's
effectiveness under the Securities Act, (iii) the registration or qualification
of the shares of CLAS Common Stock to be issued in exchange for shares of FFFB
Common Stock under state securities or "blue sky" laws and (iv) the listing of
the shares of CLAS Common Stock to be issued in exchange for shares of FFFB
Common Stock on The Nasdaq Small Cap Market. As of the date hereof, FFFB knows
of no reason pertaining to FFFB why any of the approvals referred to in this
SECTION 3.2(f) should not be obtained without the imposition of any material
condition or restriction described in SECTION 6.1(b).
(g) SECURITIES FILINGS. Since October 1, 1999, FFFB has filed with
the SEC all reports, schedules, registration statements, definitive proxy
statements and other documents that it has been required to file under the
Securities Act or the Exchange Act (collectively, "FFFB'S REPORTS"). FFFB has
made available to CLAS an accurate and complete copy of (i) each of FFFB's
Reports and (ii) each communication mailed by FFFB to its stockholders prior to
the date hereof. None of FFFB's Reports or such communications contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements made therein, in light
of the circumstances under which they were made, not misleading. As of their
respective dates, all of FFFB's Reports complied in all material respects with
the applicable requirements of the Securities Act or the Exchange Act, as the
case may be, and the rules and regulations of the SEC promulgated thereunder.
Each of the financial statements (including, in each case, any notes thereto) of
FFFB included in FFFB's Reports complied as to form, as of their respective
dates of filing with the SEC, in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto.
(h) FINANCIAL STATEMENTS. FFFB has previously made available to CLAS
copies of (i) the consolidated balance sheets of FFFB and its Subsidiaries as of
September 30, 2001 and 2000 and related consolidated statements of income, cash
flows and changes in stockholders' equity for each of the years in the two-year
period ended September 30, 2001, together with the notes thereto, accompanied by
the audit report of FFFB's independent public auditors, as reported in FFFB's
Annual Report on Form 10-KSB for the year ended September 30, 2001 filed with
the SEC, (ii) the unaudited consolidated balance sheet of FFFB and its
Subsidiaries as of June 30, 2002 and the related consolidated statements of
income and cash flows for the nine months ended June 30, 2002 and 2001, as
reported in FFFB's Quarterly Report on Form 10-QSB for the period ended June 30,
2002 filed with the SEC and (iii) the unaudited condensed consolidated balance
sheet of FFFB and its Subsidiaries as of September 30, 2002 and the related
unaudited consolidated statements of income and cash flows for the three and
twelve month periods ended September 30, 2001 and 2002 as
19
reported in FFFB's Reports. Such financial statements were prepared from the
books and records of FFFB and its Subsidiaries, fairly present the
consolidated financial position of FFFB and its Subsidiaries in each case at
and as of the dates indicated and the consolidated results of operations,
retained earnings and cash flows of FFFB and its Subsidiaries for the periods
indicated, and, except as otherwise set forth in the notes thereto, were
prepared in accordance with GAAP consistently applied throughout the periods
covered thereby; PROVIDED, HOWEVER, that the unaudited financial statements
for interim periods are subject to normal year-end adjustments (which will
not be material individually or in the aggregate) and lack footnotes to the
extent permitted under applicable regulations. The books and records of FFFB
and its Subsidiaries have been, and are being, maintained in all respects in
accordance with GAAP and any other legal and accounting requirements and
reflect only actual transactions.
(i) UNDISCLOSED LIABILITIES. Except as set forth on the FFFB
Disclosure Letter, neither FFFB nor any of its Subsidiaries has incurred any
debt, liability or obligation of any nature whatsoever (whether accrued,
contingent, absolute or otherwise and whether due or to become due) other than
liabilities reflected on or reserved against in the consolidated balance sheet
of FFFB as of June 30, 2002 as included in FFFB's Quarterly Report on Form
10-QSB for the period ended June 30, 2002, except for (i) liabilities incurred
since June 30, 2002 in the ordinary course of business consistent with past
practice that, either alone or when combined with all similar liabilities, have
not had, and would not reasonably be expected to have, a Material Adverse Effect
on FFFB and (ii) liabilities incurred for legal, accounting, financial advising
fees and out-of-pocket expenses in connection with the transactions contemplated
by this Agreement.
(j) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
FFFB's Reports filed with the SEC prior to the date of this Agreement, and
except for actions and omissions of FFFB taken with the prior written consent of
CLAS in contemplation of the transactions contemplated hereby and for direct
effects of compliance with this Agreement on the operating performance of FFFB,
including expenses incurred by FFFB in consummating the transactions
contemplated by this Agreement, since June 30, 2002, (i) FFFB and its
Subsidiaries have conducted their respective businesses only in the ordinary and
usual course of such businesses consistent with their past practices, (ii) there
has not been any event or occurrence that has had, or is reasonably expected to
have, a Material Adverse Effect on FFFB or on the ability of FFFB to complete
the transactions contemplated by this Agreement, (iii) there has been no
increase in the salary, compensation, pension or other benefits payable or to
become payable by FFFB or any of its Subsidiaries to any of their respective
directors, officers or employees, other than in conformity with the policies and
practices of such entity in the usual and ordinary course of its business, (iv)
neither FFFB nor any of its Subsidiaries has paid or made any accrual or
arrangement for payment of bonuses or special compensation of any kind or any
severance or termination pay to any of their directors, officers or employees
and (v) there has been no change in any accounting principles, practices or
methods of FFFB or any of its Subsidiaries other than as required by GAAP.
20
(k) LITIGATION. There are no suits, actions or legal, administrative
or arbitration proceedings pending or, to the knowledge of FFFB, threatened
against or affecting FFFB or any of its Subsidiaries or any property or asset of
FFFB or any of its Subsidiaries that (i) individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect on FFFB or (ii)
challenge the validity or propriety of the transactions contemplated by this
Agreement. To the knowledge of FFFB, there are no investigations, reviews or
inquiries by any court or Governmental Entity pending or threatened against FFFB
or any of its Subsidiaries. There are no judgments, decrees, injunctions, orders
or rulings of any Governmental Entity or arbitrator outstanding against FFFB or
any of its Subsidiaries that, individually or in the aggregate, would reasonably
be expected to have a Material Adverse Effect on FFFB.
(l) ABSENCE OF REGULATORY ACTIONS. Since December 31, 1997, neither
FFFB nor any of its Subsidiaries has been a party to any cease and desist order,
written agreement or memorandum of understanding with, or any commitment letter
or similar undertaking to, or has been subject to any action, proceeding, order
or directive by any Government Regulator, or has adopted any board resolutions
at the request of any Government Regulator, or has been advised by any
Government Regulator that it is contemplating issuing or requesting (or is
considering the appropriateness of issuing or requesting) any such action,
proceeding, order, directive, written agreement, memorandum of understanding,
commitment letter, board resolutions or similar undertaking. There are no
unresolved violations, criticisms or exceptions by any Government Regulator with
respect to any report or statement relating to any examinations of FFFB or its
Subsidiaries.
(m) COMPLIANCE WITH LAWS. FFFB and each of its Subsidiaries conducts
its business in compliance in all material requests with all statutes, laws,
regulations, ordinances, rules, judgements, orders or decrees applicable to it
or the employees conducting such business. FFFB and each of its Subsidiaries has
all material permits, licenses, certificates of authority, orders and approvals
of, and has made all filings, applications and registrations with, all
Governmental Entities that are required in order to permit it to carry on its
business as it is presently conducted; all such permits, licenses, certificates
of authority, orders and approvals are in full force and effect, and to the
knowledge of FFFB, no suspension or cancellation of any of them is threatened.
Neither FFFB nor any of its Subsidiaries has been given notice or been charged
with any violation of, any law, ordinance, regulation, order, writ, rule, decree
or condition to approval of any Governmental Entity which, individually or in
the aggregate, would reasonably be expected to have a Material Adverse Effect on
FFFB.
(n) TAXES. All federal, state, local and foreign tax returns required
to be filed by or on behalf of FFFB or any of its Subsidiaries have been timely
filed or requests for extensions have been timely filed and any such extension
shall have been granted and not have expired, and all such filed returns are
complete and accurate in all material respects. All taxes shown on such returns,
all taxes required to be shown on returns for which extensions have been granted
and all other taxes required to be paid by FFFB or any of its Subsidiaries have
been paid in full or adequate provision has been made for any such taxes on
FFFB's balance sheet (in accordance with GAAP). There is no audit examination,
deficiency assessment, tax investigation or refund litigation with respect to
any taxes of FFFB or any of its Subsidiaries, and no claim has been made in
writing by any authority in
21
a jurisdiction where FFFB or any of its Subsidiaries do not file tax returns
that FFFB or any such Subsidiary is subject to taxation in that jurisdiction.
All taxes, interest, additions and penalties due with respect to completed
and settled examinations or concluded litigation relating to FFFB or any of
its Subsidiaries have been paid in full or adequate provision has been made
for any such taxes on FFFB's balance sheet (in accordance with GAAP). FFFB
and its Subsidiaries have not executed an extension or waiver of any statute
of limitations on the assessment or collection of any tax due that is
currently in effect. FFFB and each of its Subsidiaries has withheld and paid
all taxes required to have been withheld and paid in connection with amounts
paid or owing to any employee, independent contractor, creditor, stockholder
or other third party, and FFFB and each of its Subsidiaries has timely
complied with all applicable information reporting requirements under Part
III, Subchapter A of Chapter 61 of the IRC and similar applicable state and
local information reporting requirements. Except as set forth in the FFFB
Disclosure Letter, neither FFFB nor any of its Subsidiaries is a party to any
agreement, contract, arrangement or plan that has resulted or would result,
individually or in the aggregate, in connection with this Agreement, in the
payment of any "excess parachute payments" within the meaning of Section 280G
of the IRC and neither FFFB nor any of its Subsidiaries has made any payments
and is not a party to any agreement, and does not maintain any plan, program
or arrangement, that could require it to make any payments (including any
deemed payment of compensation upon the exercise of a FFFB Option or upon the
issuance of any FFFB Common Stock), that would not be fully deductible by
reason of Section 162(m) of the IRC.
(o) AGREEMENTS.
(i) FFFB and its Subsidiaries are not bound by any material
contract (as defined in Item 601(b)(10) of Regulation S-K promulgated by the
SEC) to be performed after the date hereof that has not been filed with FFFB's
Reports.
(ii) FFFB's Disclosure Letter lists any contract, arrangement,
commitment or understanding (whether written or oral) not filed with FFFB's
Reports to which FFFB or any of its Subsidiaries is a party or is bound:
(A) with any executive officer or other key employee of
FFFB or any of its Subsidiaries the benefits of which are contingent, or the
terms of which are materially altered, upon the occurrence of a transaction
involving FFFB or any of its Subsidiaries of the nature contemplated by this
Agreement;
(B) with respect to the employment of any directors,
officers, employees or consultants;
(C) any of the benefits of which will be increased, or
the vesting or payment of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement, or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement (including any stock option
plan, phantom stock or stock appreciation rights plan, restricted stock plan or
stock purchase plan);
22
(D) containing covenants that limit the ability of FFFB
or any of its Subsidiaries to compete in any line of business or with any
person, or that involve any restriction on the geographic area in which, or
method by which, FFFB (including any successor thereof) or any of its
Subsidiaries may carry on its business (other than as may be required by law or
any regulatory agency);
(E) pursuant to which FFFB or any of its Subsidiaries
may become obligated to invest in or contribute capital to any entity;
(F) not fully disclosed in FFFB's Reports that relates
to borrowings of money (or guarantees thereof) by FFFB or any of its
Subsidiaries in excess of $50,000; or
(G) which is a lease or license with respect to any
property, real or personal, whether as landlord, tenant, licensor or licensee,
involving a liability or obligation as obligor in excess of $25,000 on an annual
basis.
(iii) Except as set forth on the FFFB Disclosure Letter, FFFB
nor any of its Subsidiaries is in default under (and no event has occurred
which, with due notice or lapse of time or both, would constitute a default
under) or is in violation of any provision of any note, bond, indenture,
mortgage, deed of trust, loan agreement, lease or other agreement to which it
is a party or by which it is bound or to which any of its respective
properties or assets is subject and, to the knowledge of FFFB, no other party
to any such agreement (excluding any loan or extension of credit made by FFFB
or any of its Subsidiaries) is in default in any respect thereunder, except
for such defaults or violations that would not, individually or in the
aggregate, have a Material Adverse Effect on FFFB.
(p) INTELLECTUAL PROPERTY. FFFB and each of its Subsidiaries owns or
possesses valid and binding licenses and other rights to use without payment all
patents, copyrights, trade secrets, trade names, service marks and trademarks
material to its businesses, and neither FFFB nor any of its Subsidiaries has
received any notice of conflict with respect thereto that asserts the right of
others. Each of FFFB and its Subsidiaries has performed all the obligations
required to be performed by it and are not in default under any contact,
agreement, arrangement or commitment relating to any of the foregoing.
(q) LABOR MATTERS. FFFB and its Subsidiaries are in material
compliance with all applicable laws respecting employment, retention of
independent contractors, employment practices, terms and conditions of
employment, and wages and hours. Neither FFFB nor any of its Subsidiaries is or
has ever been a party to, or is or has ever been bound by, any collective
bargaining agreement, contract or other agreement or understanding with a labor
union or labor organization with respect to its employees, nor is FFFB or any of
its Subsidiaries the subject of any proceeding asserting that it has committed
an unfair labor practice or seeking to compel it or any such Subsidiary to
bargain with any labor organization as to wages and conditions of employment
nor, to the knowledge of FFFB, has any such proceeding been threatened, nor is
there any strike, other labor dispute or organizational effort involving FFFB or
any of its Subsidiaries pending or, to the knowledge of FFFB, threatened.
23
(r) EMPLOYEE BENEFIT PLANS.
(i) FFFB's Disclosure Letter contains a complete and accurate
list of all pension, retirement, stock option, stock purchase, stock ownership,
recognition and retention, savings, stock appreciation right, profit sharing,
deferred compensation, consulting, bonus, group insurance, severance and other
benefit plans, contracts, agreements and arrangements, including, but not
limited to, "employee benefit plans," as defined in Section 3(3) of ERISA,
incentive and welfare policies, contracts, plans and arrangements and all trust
agreements related thereto with respect to any present or former directors,
officers or other employees of FFFB or any of its Subsidiaries (hereinafter
referred to collectively as the "FFFB EMPLOYEE PLANS"). True and complete copies
of each agreement, plan and other documents referenced in FFFB's Disclosure
Letter have been made available to CLAS. There has been no announcement or
commitment by FFFB or any of its Subsidiaries to create an additional FFFB
Employee Plan, or to amend any FFFB Employee Plan, except for amendments
required by applicable law which do not materially increase the cost of such
FFFB Employee Plan.
(ii) There is no pending or threatened litigation,
administrative action or proceeding relating to any FFFB Employee Plan. All of
the FFFB Employee Plans comply in all material respects with all applicable
requirements of ERISA, the IRC and other applicable laws. There has occurred no
"prohibited transaction" (as defined in Section 406 of ERISA or Section 4975 of
the IRC) with respect to the FFFB Employee Plans which is likely to result in
the imposition of any penalties or taxes upon FFFB or any of its Subsidiaries
under Section 502(i) of ERISA or Section 4975 of the IRC.
(iii) No liability to the Pension Benefit Guarantee Corporation
has been or is expected by FFFB or any of its Subsidiaries to be incurred with
respect to any FFFB Employee Plan which is subject to Title IV of ERISA ("FFFB
PENSION PLAN"), or with respect to any "single-employer plan" (as defined in
Section 4001(a) of ERISA) currently or formerly maintained by FFFB or any ERISA
Affiliate. No FFFB Pension Plan had an "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived, as of the last day of
the end of the most recent plan year ending prior to the date hereof; the fair
market value of the assets of each FFFB Pension Plan exceeds the present value
of the "benefit liabilities" (as defined in Section 4001(a)(16) of ERISA) under
such FFFB Pension Plan as of the end of the most recent plan year with respect
to the respective FFFB Pension Plan ending prior to the date hereof, calculated
on the basis of the actuarial assumptions used in the most recent actuarial
valuation for such FFFB Pension Plan as of the date hereof; and no notice of a
"reportable event" (as defined in Section 4043 of ERISA) for which the 30-day
reporting requirement has not been waived has been required to be filed for any
FFFB Pension Plan within the 12-month period ending on the date hereof. Neither
FFFB nor any of its Subsidiaries has provided, or is required to provide,
security to any FFFB Pension Plan or to any single-employer plan of an ERISA
Affiliate pursuant to Section 401(a)(29) of the IRC. Neither FFFB, its
Subsidiaries, nor any ERISA Affiliate has contributed to any "multiemployer
plan," as defined in Section 3(37) of ERISA, on or after September 26, 1980.
24
(iv) Each FFFB Employee Plan that is an "employee pension
benefit plan" (as defined in Section 3(2) of ERISA) and which is intended to be
qualified under Section 401(a) of the IRC (a "FFFB QUALIFIED PLAN") has received
a favorable determination letter from the IRS, and FFFB and its Subsidiaries are
not aware of any circumstances likely to result in revocation of any such
favorable determination letter. Each FFFB Qualified Plan that is an "employee
stock ownership plan" (as defined in Section 4975(e)(7) of the IRC) has
satisfied all of the applicable requirements of Sections 409 and 4975(e)(7) of
the IRC and the regulations thereunder in all material respects and any assets
of any such FFFB Qualified Plan that, as of the end of the plan year, are not
allocated to participants' individual accounts are pledged as security for, and
may be applied to satisfy, any securities acquisition indebtedness.
(v) Neither FFFB nor any of its Subsidiaries has any
obligations for post-retirement or post-employment benefits under any FFFB
Employee Plan that cannot be amended or terminated upon 60 days' notice or less
without incurring any liability thereunder, except for coverage required by
Part 6 of Title I of ERISA or Section 4980B of the IRC, or similar state
laws, the cost of which is borne by the insured individuals.
(s) PROPERTIES.
(i) A description of each parcel of real property owned by
FFFB or a Subsidiary of FFFB is set forth in FFFB's Disclosure Letter. FFFB and
each of its Subsidiaries has good and marketable title to all real property
owned by it (including any property acquired in a judicial foreclosure
proceeding or by way of a deed in lieu of foreclosure or similar transfer), in
each case free and clear of any Liens except (A) liens for taxes not yet due and
payable, (B) such easements, restrictions and encumbrances, if any, as are not
material in character, amount or extent, and do not materially detract from the
value, or materially interfere with the present use of the properties subject
thereto or affected thereby and (C) as reflected on the consolidated balance
sheet of FFFB as of June 30, 2003 included in FFFB's Reports. All real property
and fixtures of FFFB and each of its Subsidiaries are in a good state of
maintenance and repair (normal wear and tear excepted), conform in all material
respects with all applicable ordinances, regulations and zoning laws and are
considered by FFFB to be adequate for the current business of FFFB and its
Subsidiaries. To the knowledge of FFFB, none of the buildings, structures or
other improvements located on its real property encroaches upon or over any
adjoining parcel or real estate or any easement or right-of-way.
(ii) FFFB and each of its Subsidiaries has good and marketable
title to all tangible personal property owned by it, free and clear of all Liens
except such encumbrances, if any, as are not material in character, amount or
extent, and do not materially detract from the value, or materially interfere
with the present use of the properties subject thereto or affected thereby. With
respect to personal property used in the business of FFFB and its Subsidiaries
that is leased rather than owned, neither FFFB nor any of its Subsidiaries is in
default under the terms of any such lease except where any such default would
not result in a Material Adverse Effect on FFFB.
25
(iii) A description of all real property leased by FFFB or a
Subsidiary of FFFB is set forth in FFFB's Disclosure Letter. Each lease pursuant
to which FFFB or any of its Subsidiaries as lessee, leases real or personal
property, is valid and in full force and effect and neither FFFB nor any of its
Subsidiaries, nor, to FFFB's knowledge, any other party to any such lease, is in
default or in violation of any material provisions of any such lease except
where any such default would not result in a Material Adverse Effect on FFFB.
(t) FAIRNESS OPINION. FFFB has received the opinion of Xxxxxx & Co.
to the effect that, as of the date hereof, the Merger Consideration is fair,
from a financial point of view, to FFFB's stockholders.
(u) FEES. Other than financial advisory services performed for FFFB
by Xxxxxx & Company, Inc. pursuant to an agreement dated December 17, 2002, a
true and complete copy of which is set forth in FFFB's Disclosure Letter,
neither FFFB nor any of its Subsidiaries, nor any of their respective
officers, directors, employees or agents, has employed any broker or finder
or incurred any liability for any financial advisory fees, brokerage fees,
commissions or finder's fees, and no broker or finder has acted directly or
indirectly for FFFB or any of its Subsidiaries in connection with this
Agreement or the transactions contemplated hereby.
(v) ENVIRONMENTAL MATTERS.
(i) Each of FFFB and its Subsidiaries, the Participation
Facilities, and, to the knowledge of FFFB, the Loan Properties are, and have
been, in substantial compliance with all Environmental Laws except where such
failure to be in compliance with any Environmental Laws would not, individually
or in the aggregate, have a Material Adverse Effect on FFFB.
(ii) There is no suit, claim, action, demand, executive or
administrative order, directive, investigation or proceeding pending or, to the
knowledge of FFFB, threatened, before any court, governmental agency or board or
other forum against FFFB or any of its Subsidiaries or any Participation
Facility (A) for alleged noncompliance (including by any predecessor) with, or
liability under, any Environmental Law or (B) relating to the presence of or
release into the environment of any Hazardous Material, whether or not occurring
at or on a site owned, leased or operated by FFFB or any of its Subsidiaries or
any Participation Facility.
(iii) To the knowledge of FFFB, there is no suit, claim,
action, demand, executive or administrative order, directive, investigation or
proceeding pending or threatened before any court, governmental agency or board
or other forum relating to or against any Loan Property (or FFFB or any of its
Subsidiaries in respect of such Loan Property) (A) relating to alleged
noncompliance (including by any predecessor) with, or liability under, any
Environmental Law or (B) relating to the presence of or release into the
environment of any Hazardous Material, whether or not occurring at a Loan
Property.
26
(iv) Neither FFFB nor any of its Subsidiaries, has received
any notice, demand letter, executive or administrative order, directive or
request for information from any Governmental Entity or any third party
indicating that it may be in violation of, or liable under, any Environmental
Law.
(v) To the knowledge of FFFB and its Subsidiaries, there are
no underground storage tanks at any properties owned or operated by FFFB or any
of its Subsidiaries or any Participation Facility and no underground storage
tanks have been closed or removed from any properties owned or operated by FFFB
or any of its Subsidiaries or any Participation Facility.
(vi) To the knowledge of FFFB and its Subsidiaries during the
period of (A) FFFB's or its Subsidiary's ownership or operation of any of their
respective current properties or (B) FFFB's or its Subsidiary's participation in
the management of any Participation Facility, there has been no release of
Hazardous Materials in, on, under or affecting such properties. To the
knowledge of FFFB, prior to the period of (A) FFFB's or its Subsidiary's
ownership or operation of any of their respective current properties or (B)
FFFB's or its Subsidiary's participation in the management of any
Participation Facility, there was no contamination by or release of Hazardous
Material in, on, under or affecting such properties.
(w) LOAN PORTFOLIO; ALLOWANCE FOR LOAN LOSSES.
(i) With respect to each Loan owned by FFFB or its
Subsidiaries in whole or in part:
(A) The note and the related security documents are each
legal, valid and binding obligations of the maker or obligor thereof,
enforceable against such maker or obligor in accordance with their terms subject
to bankruptcy, insolvency, and other laws of general applicability relating to
or affecting creditor's rights and general equity principles;
(B) neither FFFB nor any of its Subsidiaries, nor to the
knowledge of FFFB and its Subsidiaries, any prior holder of a Loan, has modified
the note or any of the related security documents in any material respect or
satisfied, canceled or subordinated the note or any of the related security
documents except as otherwise disclosed by documents in the applicable Loan
file;
(C) FFFB or a Subsidiary of FFFB is the sole holder of
legal and beneficial title to each Loan (or FFFB's or its Subsidiary's
applicable participation interest, as applicable), except as otherwise
referenced on the books and records of FFFB or a Subsidiary of FFFB;
(D) the original note and the related security documents
are included in the Loan files, and copies of any documents in the Loan files
are true and correct copies of the documents they purport to be and have not
been suspended, amended, modified, canceled or otherwise changed except as
otherwise disclosed by documents in the applicable Loan file; and
27
(E) with respect to a Loan held in the form of a
participation, the participation documentation is legal, valid, binding and
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent conveyance and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
(ii) The allowance for loan losses amounts reflected in FFFB's
balance sheets at September 30, 2001, June 30, 2002, September 30, 2002 and the
date hereof, were, and the allowance for loan losses shown on the balance sheets
in FFFB's Reports for periods ending after September 30, 2002, in the opinion of
management, were or will be adequate, as of the dates thereof, under GAAP.
(iii) The FFFB Disclosure Letter sets forth every FFFB loan,
lease or other extension of credit as of November 30, 2002 (A) which is 90 days
or more delinquent, (B) has been classified as "special mention", "substandard",
"doubtful", "loss", "non-performing", or "of concern", or (C) involves a
borrower or collateral in bankruptcy, reorganization or similar proceeding.
Since November 30, 2002, there has been no material adverse change in the items
listed in parts (A), (B) and (C) of this paragraph.
(x) DEPOSITS. Except as set forth in the FFFB Disclosure Letter, none
of the deposits of First Federal is a "brokered" deposit, as such terms is
defined at 12 C.F.R. Section 337.6(a)(2).
(y) ANTI-TAKEOVER PROVISIONS INAPPLICABLE. Assuming the accuracy of
the representations contained in Section 3.3(f) hereof, the Agreement, the Plan
of Bank Merger, the Merger and the Bank Merger are not subject to any provisions
of an antitakeover nature contained in FFFB's or its Subsidiaries'
organizational documents, the Stockholder Protection Rights Agreement, and the
provisions of any federal or state "anti-takeover," "fair price," "moratorium,"
"control share acquisition" or similar laws or regulations. To the best of
FFFB's knowledge, the FFFB Rights Agreement has not been amended since adoption;
as of the Effective Time, the Rights will not be, nor will they have ever been,
exercisable or transferable separately from the FFFB Common Stock; and upon the
completion the Merger, the Rights will expire and no person shall have any
rights with respect to the FFFB Rights Agreement.
(z) MATERIAL INTERESTS OF CERTAIN PERSONS. No officer or director of
FFFB, or any "associate" (as such term is defined in Rule 12b-2 under the
Exchange Act) of any such officer or director, has any material interest in any
material contract or property (real or personal), tangible or intangible, used
in or pertaining to the business of FFFB or any of its subsidiaries.
(aa) INSURANCE. In the opinion of management, FFFB and its
Subsidiaries are presently insured for amounts deemed reasonable by management
against such risks as companies engaged in a similar business would, in
accordance with good business practice, customarily be insured. All of the
insurance policies and bonds maintained by FFFB and its Subsidiaries are in full
force and effect, FFFB and its Subsidiaries are not in default thereunder and
all material claims thereunder have been filed in due and timely fashion.
28
(bb) INVESTMENT SECURITIES; DERIVATIVES.
(i) Except as indicated in the FFFB Disclosure Letter and
except for (A) restrictions that exist for securities that are classified as
"held to maturity" and (B) securities which are pledged with respect to certain
borrowings of FFFB, none of the investment securities held by FFFB or any of its
Subsidiaries is subject to any restriction (contractual or statutory) that would
materially impair the ability of the entity holding such investment freely to
dispose of such investment at any time.
(ii) Except as set forth in the FFFB Disclosure Letter neither
FFFB nor any of its Subsidiaries is a party to or has agreed to enter into an
exchange-traded or over-the-counter equity, interest rate, foreign exchange or
other swap, forward, future, option, cap, floor or collar or any other contract
that is a derivative contract (including various combinations thereof) or owns
securities that are referred to generically as "structured notes," "high risk
mortgage derivatives," "capped floating rate notes" or "capped floating rate
mortgage derivatives."
(cc) INDEMNIFICATION. Except as provided in the certificate of
incorporation or bylaws of FFFB and the similar organizational documents of its
Subsidiaries and except as set forth in FFFB's Disclosure Letter, neither FFFB
nor any of its Subsidiaries is a party to any agreement that provides for the
indemnification of any of its present or former directors, officers or
employees, or other persons who serve or served as a director, officer or
employee of another corporation, partnership or other enterprise at the request
of FFFB and, to the knowledge of FFFB, there are no claims for which any such
person would be entitled to indemnification under the certificate of
incorporation or bylaws of FFFB or the similar organizational documents of any
of its Subsidiaries, under any applicable law or regulation or under any
indemnification agreement.
(dd) CORPORATE DOCUMENTS. FFFB has previously furnished or made
available to CLAS a complete and correct copy of the certificate of
incorporation, bylaws and similar organizational documents of FFFB and each of
FFFB's Subsidiaries, as in effect as of the date of this Agreement. Neither FFFB
nor any of FFFB's Subsidiaries is in violation of its certificate of
incorporation, bylaws or similar organizational documents. The minute books of
FFFB and each of FFFB's Subsidiaries constitute a complete and correct record of
all material actions taken by their respective boards of directors (and each
committee thereof) and their stockholders.
(ee) FFFB INFORMATION. The information regarding FFFB and its
Subsidiaries to be supplied by FFFB for inclusion in the Registration Statement,
any filings or approvals under applicable state securities laws, or any filing
pursuant to Rule 165 or Rule 425 under the Securities Act or Rule 14a-12 under
the Exchange Act will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The Proxy Statement-Prospectus (except for such
portions thereof as relate only to CLAS or any of its Subsidiaries) will comply
as to form in all material respects with the provisions of the Exchange Act and
the rules and regulations thereunder.
29
(ff) COMMUNITY REINVESTMENT ACT COMPLIANCE. First Federal is in
material compliance with the applicable provisions of the CRA and the
regulations promulgated thereunder except where the failure to be in compliance
would not have a Material Adverse Effect of FFFB, and First Federal currently
has a CRA rating of satisfactory or better. To the knowledge of FFFB, there is
no fact or circumstance or set of facts or circumstances that would cause First
Federal to fail to comply with such provisions or cause the CRA rating of
First Federal to fall below satisfactory.
(gg) TAX TREATMENT OF THE MERGER. FFFB has no knowledge of any fact or
circumstance relating to it that would prevent the transactions contemplated by
this Agreement from qualifying as a reorganization under Section 368 of the IRC.
(hh) MERGER WITH LINCOLN SAVINGS AND LOAN ASSOCIATION.
(i) The merger between First Federal and Lincoln Savings and
Loan Association (the "Lincoln Merger") was completed on October 4, 2002 (the
"Lincoln Closing Date").
(ii) As of the Lincoln Closing Date, the representation and
warranties contained in the Agreement and Plan of Reorganization between Lincoln
Savings and Loan Association ("Lincoln") and First Federal (the "Lincoln Merger
Agreement") dated April 25, 2002 were true and complete in every respect as if
made on such date.
(iii) All documentation related to the Lincoln Merger
(including the disclosure letter to the Lincoln Merger Agreement) is attached to
the FFFB Disclosure Letter.
(iv) All of the conditions to closing set forth in the Lincoln
Merger Agreement were complied with as of the Lincoln Closing Date and there
were no waivers by any party of any such condition.
(v) All material accounting adjustments made or to be made in
connection with the Lincoln Merger and all non depository obligations in excess
of $10,000 assumed in connection with the Lincoln Merger, regardless of whether
or not paid as of the date hereof, are set forth in the FFFB Disclosure Letter.
For the purpose of the preceding sentence, "non-depository obligations" shall
include but not be limited to any obligations to (x) pay additional amounts to
former Lincoln shareholders, (y) redeem Lincoln securities or (z) make any
termination or similar payment in connection with any Lincoln item or data
processing or similar contract.
(ii) VOTING REQUIREMENTS.
The affirmative vote at the FFFB Stockholders Meeting of the
holders of a majority of the outstanding shares of FFFB Common Stock to approve
and adopt this Agreement is the only vote of the holders of any class or series
of the FFFB's capital stock necessary to approve and adopt this Agreement and
the transactions contemplated hereby, including the Merger.
30
3.3 REPRESENTATIONS AND WARRANTIES OF CLAS. CLAS REPRESENTS AND WARRANTS
TO FFFB THAT, EXCEPT AS SET FORTH IN CLAS'S DISCLOSURE LETTER:
(a) ORGANIZATION AND QUALIFICATION. CLAS is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is registered with the FRB as a financial holding company. CLAS has
all requisite corporate power and authority to own, lease and operate its
properties and to conduct the business currently being conducted by it. CLAS is
duly qualified or licensed as a foreign corporation to transact business and is
in good standing in each jurisdiction in which the character of the properties
owned or leased by it or the nature of the business conducted by it makes such
qualification or licensing necessary, except where the failure to be so
qualified or licensed and in good standing would not have a Material Adverse
Effect on CLAS.
(b) SUBSIDIARIES.
(i) CLAS owns of record and beneficially all the capital
stock of each of its Subsidiaries free and clear of any Liens. There are no
contracts, commitments, agreements or understandings relating to CLAS's right to
vote or dispose of any equity securities of its Subsidiaries. CLAS's ownership
interest in each of its Subsidiaries is in compliance with all applicable laws,
rules and regulations.
(ii) Each of CLAS's Subsidiaries is a corporation or insured
depository institution duly organized and validly existing under the laws of its
jurisdiction of incorporation or organization, has all requisite corporate power
and authority to own, lease and operate its properties and to conduct the
business currently being conducted by it and is duly qualified or licensed as a
foreign corporation to transact business and is in good standing in each
jurisdiction in which the character of the properties owned or leased by it or
the nature of the business conducted by it makes such qualification or licensing
necessary, except where the failure to be so qualified or licensed and in good
standing would not have a Material Adverse Affect on CLAS.
(iii) The outstanding shares of capital stock of each
Subsidiary have been validly authorized and are validly issued, fully paid and
nonassessable. Except as set forth in the Disclosure Letter, no shares of
capital stock of any Subsidiary are or may be required to be issued by virtue of
any options, warrants or other rights, no securities exist that are convertible
into or exchangeable for shares of such capital stock or any other debt or
equity security of any Subsidiary, and there are no contracts, commitments,
agreements or understandings of any kind for the issuance of additional shares
of capital stock or other debt or equity security of any Subsidiary or options,
warrants or other rights with respect to such securities.
(iv) No Subsidiary of CLAS other than Classic Bank is an
"insured depository institution" as defined in the FDIA and the applicable
regulations thereunder. Classic Bank's deposits are insured by the FDIC to the
fullest extent permitted by law. Classic Bank is a member in good standing of
the Federal Home Loan Bank of Cincinnati.
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(c) CAPITAL STRUCTURE.
(i) The authorized capital stock of CLAS consists of:
(A) 1,700,000 shares of CLAS Common Stock; and
(B) 100,000 shares of preferred stock, par value $.01
per share.
(ii) As of the date of this Agreement:
(A) 1,105,486 shares of CLAS Common Stock are issued
and outstanding, all of which are validly issued, fully paid and
nonassessable and were issued in full compliance with all applicable laws;
(B) no shares of CLAS preferred stock are issued and
outstanding; and
(C) 285,150 shares of CLAS Common Stock are reserved for
issuance under CLAS's stock-based benefit plans and awards covering 240,636
shares are currently outstanding thereunder.
(iii) No bonds, debentures, notes or other indebtedness having
the right to vote on any matters on which stockholders of CLAS may vote are
issued or outstanding.
(iv) Except as set forth in its Disclosure Letter, as of the
date of this Agreement, (A) no shares of capital stock or other voting
securities of CLAS are issued, reserved for issuance or outstanding and (B)
neither CLAS nor any of its Subsidiaries has or is bound by any outstanding
subscriptions, options, warrants, calls, rights, convertible securities,
commitments or agreements of any character obligating CLAS or any of its
Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or
sold, any additional shares of capital stock of CLAS or obligating CLAS or any
of its Subsidiaries to grant, extend or enter into any such option, warrant,
call, right, convertible security, commitment or agreement. As of the date
hereof, there are no outstanding contractual obligations of CLAS or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital
stock of CLAS or any of its Subsidiaries.
(v) The shares of CLAS Common Stock to be issued in exchange
for shares of FFFB Common Stock upon consummation of the Merger in accordance
with this Agreement have been duly authorized and when issued in accordance with
the terms of this Agreement, will be validly issued, fully paid and
nonassessable and subject to no preemptive rights.
(d) AUTHORITY. CLAS has all requisite corporate power and authority
to enter into this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate actions on the part of CLAS's Board of Directors, and no other
corporate
32
proceedings (other than the approval and adoption of this Agreement
by CLAS's stockholders) on the part of CLAS are necessary to authorize this
Agreement or to consummate the transactions contemplated by this Agreement.
This Agreement has been duly and validly executed and delivered by CLAS and
constitutes a valid and binding obligation of CLAS, enforceable against CLAS
in accordance with its terms, subject to applicable bankruptcy, insolvency
and similar laws affecting creditors' rights and remedies generally and to
general principles of equity, whether applied in a court of law or a court of
equity.
(e) NO VIOLATIONS. The execution, delivery and performance of this
Agreement by CLAS do not, and the consummation of the transactions contemplated
by this Agreement will not, (i) assuming all required governmental approvals
have been obtained and the applicable waiting periods have expired, violate any
law, rule or regulation or any judgment, decree, order, governmental permit or
license to which CLAS or any of its Subsidiaries (or any of their respective
properties) is subject, (ii) violate the certificate of incorporation or bylaws
of CLAS or the similar organizational documents of any of its Subsidiaries or
(iii) constitute a breach or violation of, or a default under (or an event
which, with due notice or lapse of time or both, would constitute a default
under), or result in the termination of, accelerate the performance required by,
or result in the creation of any Lien upon any of the properties or assets of
CLAS or any of its Subsidiaries under, any of the terms, conditions or
provisions of any note, bond, indenture, deed of trust, loan agreement or other
agreement, instrument or obligation to which CLAS or any of its Subsidiaries is
a party, or to which any of their respective properties or assets may be subject
except, in the case of (iii), for any such breaches, violations or defaults that
would not, individually or in the aggregate, have a Material Adverse Effect on
CLAS.
(f) CONSENTS AND APPROVALS. No consents or approvals of, or filings
or registrations with, any Governmental Entity or any third party are required
to be made or obtained in connection with the execution and delivery by CLAS of
this Agreement or the consummation by CLAS of the Merger and the other
transactions contemplated by this Agreement, including the Bank Merger, except
for (i) filings of applications and notices with, receipt of approvals or
nonobjections from, and expiration of the related waiting period required by,
federal and state banking authorities, (ii) filing of the Registration Statement
with the SEC and declaration by the SEC of the Registration Statement's
effectiveness under the Securities Act, (iii) the registration or qualification
of the shares of CLAS Common Stock to be issued in exchange for shares of CLAS
Common Stock under state securities or "blue sky" laws and (iv) the listing of
the shares of CLAS Common Stock to be issued in exchange for shares of FFFB
Common Stock on The Nasdaq Small Cap Market. As of the date hereof, CLAS knows
of no reason pertaining to CLAS why any of the approvals referred to in this
SECTION 3.3(f) should not be obtained without the imposition of any material
condition or restriction described in SECTION 6.1(b).
(g) SECURITIES FILINGS. Since October 1, 1999, CLAS has filed with
the SEC all reports, schedules, registration statements, definitive proxy
statements and other documents that it has been required to file under the
Securities Act or the Exchange Act (collectively, "CLAS'S REPORTS"). CLAS has
made available to FFFB an accurate and complete copy of (i) each of CLAS's
33
Reports and (ii) each communication mailed by CLAS to its stockholders prior to
the date hereof. None of CLAS's Reports or such communications contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements made therein, in light
of the circumstances under which they were made, not misleading. As of their
respective dates, all of CLAS's Reports complied in all material respects with
the applicable requirements of the Securities Act or the Exchange Act, as the
case may be, and the rules and regulations of the SEC promulgated thereunder.
Each of the financial statements (including, in each case, any notes thereto) of
CLAS included in CLAS's Reports complied as to form, as of their respective
dates of filing with the SEC, in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto.
(h) FINANCIAL STATEMENTS. CLAS has previously made available to FFFB
copies of (i) the consolidated balance sheets of CLAS and its Subsidiaries as of
March 31, 2002 and 2001 and related consolidated statements of income, cash
flows and changes in stockholders' equity for the two years ended March 31,
2002, together with the notes thereto, accompanied by the audit report of CLAS's
independent public auditors, as reported in CLAS's Annual Report on Form 10-KSB
for the year ended March 31, 2002 filed with the SEC and (ii) the unaudited
consolidated balance sheet of CLAS and its Subsidiaries as of September 30, 2002
and the related consolidated statements of income, cash flows and changes in
stockholders' equity for the six months ended September 30, 2002 and 2001, as
reported in CLAS's Quarterly Report on Form 10-Q for the period ended September
30, 2002 filed with the SEC. Such financial statements were prepared from the
books and records of CLAS and its Subsidiaries, fairly present the consolidated
financial position of CLAS and its Subsidiaries in each case at and as of the
dates indicated and the consolidated results of operations, retained earnings
and cash flows of CLAS and its Subsidiaries for the periods indicated, and,
except as otherwise set forth in the notes thereto, were prepared in accordance
with GAAP consistently applied throughout the periods covered thereby; PROVIDED,
HOWEVER, that the unaudited financial statements for interim periods are subject
to normal year-end adjustments (which will not be material individually or in
the aggregate) and lack footnotes to the extent permitted under applicable
regulations. The books and records of CLAS and its Subsidiaries have been, and
are being, maintained in all respects in accordance with GAAP and any other
legal and accounting requirements and reflect only actual transactions.
(i) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
CLAS's Reports filed with the SEC prior to the date of this Agreement, since
September 30, 2002 there has not been any event or occurrence that has had, or
is reasonably expected to have, a Material Adverse Effect on CLAS or on the
ability of CLAS to complete the transactions contemplated by this Agreement.
(j) LITIGATION. There are no suits, actions or legal, administrative
or arbitration proceedings pending or, to the knowledge of CLAS, threatened
against or affecting CLAS or any of its Subsidiaries or any property or asset of
CLAS or any of its Subsidiaries that (i) individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect on CLAS or (ii)
challenge the validity or propriety of the transactions contemplated by this
Agreement. To the
34
knowledge of CLAS, there are no investigations, reviews or inquires by any
court or Governmental Entity pending or threatened against CLAS or any of its
Subsidiaries. There are no judgments, decrees, injunctions, orders or rulings
of any Governmental Entity or arbitrator outstanding against CLAS or any of
its Subsidiaries that, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect on CLAS.
(k) ABSENCE OF REGULATORY ACTIONS. Since December 31, 1997, neither
CLAS nor any of its Subsidiaries has been a party to any cease and desist order,
written agreement or memorandum of understanding with, or any commitment letter
or similar undertaking to, or has been subject to any action, proceeding, order
or directive by any Government Regulator, or has adopted any board resolutions
at the request of any Government Regulator, or has been advised by any
Government Regulator that it is contemplating issuing or requesting any such
action, proceeding, order, directive, written agreement, memorandum of
understanding, commitment letter, board resolutions or similar undertaking.
There are no unresolved violations, criticisms or exceptions by any Government
Regulator with respect to any report or statement relating to any examinations
of CLAS or its Subsidiaries.
(l) COMPLIANCE WITH LAWS. CLAS and each of its Subsidiaries conducts
its business in compliance with all statutes, laws, regulations, ordinances,
rules, judgements, orders or decrees applicable to it or the employees
conducting such business. CLAS and each of its Subsidiaries has all permits,
licenses, certificates of authority, orders and approvals of, and has made all
filings, applications and registrations with, all Governmental Entities that are
required in order to permit it to carry on its business as it is presently
conducted; all such permits, licenses, certificates of authority, orders and
approvals are in full force and effect, and, to the knowledge of CLAS, no
suspension or cancellation of any of them is threatened. Neither CLAS nor any of
its Subsidiaries has been given notice or been charged with any violation of,
any law, ordinance, regulation, order, writ, rule, decree or condition to
approval of any Governmental Entity which, individually or in the aggregate,
would reasonably be expected to have a Material Adverse Effect on CLAS.
(m) TAXES. All federal, state, local and foreign tax returns required
to be filed by or on behalf of CLAS or any of its Subsidiaries have been timely
filed or requests for extensions have been timely filed and any such extension
shall have been granted and not have expired, and all such filed returns are
complete and accurate in all material respects. All taxes shown on such returns,
all taxes required to be shown on returns for which extensions have been granted
and all other taxes required to be paid by CLAS or any of its Subsidiaries
have been paid in full or adequate provision has been made for any such taxes
on CLAS's balance sheet (in accordance with GAAP). There is no audit
examination, deficiency assessment, tax investigation or refund litigation
with respect to any taxes of CLAS or any of its Subsidiaries, and no claim
has been made in writing by any authority in a jurisdiction where CLAS or any
of its Subsidiaries do not file tax returns that CLAS or any such Subsidiary
is subject to taxation in that jurisdiction. All taxes, interest, additions
and penalties due with respect to completed and settled examinations or
concluded litigation relating to CLAS or any of its Subsidiaries have been
paid in full or adequate provision has been made for any such taxes on CLAS's
balance sheet (in accordance with GAAP). CLAS and its Subsidiaries have not
executed an
35
extension or waiver of any statute of limitations on the assessment or
collection of any tax due that is currently in effect. CLAS and each of its
Subsidiaries has withheld and paid all taxes required to have been withheld
and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder or other third party, and CLAS
and each of its Subsidiaries has timely complied with all applicable
information reporting requirements under Part III, Subchapter A of Chapter 61
of the IRC and similar applicable state and local information reporting
requirements.
(n) AGREEMENTS.
(i) CLAS and its Subsidiaries are not bound by any material
contract (as defined in Item 601(b)(10) of Regulation S-K promulgated by the
SEC), to be performed after the date hereof that has not been filed with CLAS's
Reports.
(ii) Neither CLAS nor any of its Subsidiaries is in default
under (and no event has occurred which, with due notice or lapse of time or
both, would constitute a default under) or is in violation of any provision of
any note, bond, indenture, mortgage, deed of trust, loan agreement, lease or
other agreement to which it is a party or by which it is bound or to which any
of its respective properties or assets is subject and, to the knowledge of CLAS,
no other party to any such agreement (excluding any loan or extension of credit
made by CLAS or any of its Subsidiaries) is in default in any respect
thereunder, except for such defaults or violations that would not, individually
or in the aggregate, have a Material Adverse Effect on CLAS.
(o) CLAS INFORMATION. The information regarding CLAS and its
Subsidiaries to be supplied by CLAS for inclusion in the Registration Statement,
any filings or approvals under applicable state securities laws, or any filing
pursuant to Rule 165 or Rule 425 under the Securities Act or Rule 14a-12 under
the Exchange Act will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The Proxy Statement-Prospectus (except for such
portions thereof that relate only to FFFB or any of its Subsidiaries) will
comply as to form in all material respects with the provisions of the
Exchange Act and the rules and regulations thereunder. The Registration
Statement will comply as to form in all material respects with the provisions
of the Securities Act and the rules and regulations thereunder.
(p) COMMUNITY REINVESTMENT ACT COMPLIANCE. Classic Bank is in
material compliance with the applicable provisions of the CRA and the
regulations promulgated thereunder, except where such failure to be in
compliance would not reasonably be expected to have a Material Adverse Effect on
CLAS. Classic Bank currently has a CRA rating of satisfactory or better. To the
knowledge of CLAS, there is no fact or circumstance or set of facts or
circumstances that would cause Classic Bank to fail to comply with such
provisions or cause the CRA rating of Classic Bank to fall below satisfactory.
36
(q) TAX TREATMENT OF THE MERGER. CLAS has no knowledge of any fact or
circumstance relating to it that would prevent the transactions contemplated by
this Agreement from qualifying as a reorganization under Section 368 of the IRC.
(r) AVAILABILITY OF FUNDS. CLAS has and will have available to it at
the Effective Time, sources of capital sufficient to pay the aggregate Cash
Consideration and to pay any other amounts payable pursuant to this Agreement
and to effect the transactions contemplated hereby. Classic Bank is, and
immediately following the Merger and the Bank Merger will be, in compliance with
all applicable capital requirements.
(s) ENVIRONMENTAL MATTERS.
(i) Each of CLAS and its Subsidiaries, the Participation
Facilities, and, to the knowledge of CLAS, the Loan Properties are, and have
been, in substantial compliance with all Environmental Laws, except where any
failure to be in compliance with any Environmental Laws would not, individually
or in aggregate, have a Material Adverse Effect on CLAS.
(ii) There is no suit, claim, action, demand, executive or
administrative order, directive, investigation or proceeding pending or, to the
knowledge of CLAS, threatened, before any court, governmental agency or board or
other forum against CLAS or any of its Subsidiaries or any Participation
Facility (A) for alleged noncompliance (including by any predecessor) with, or
liability under, any Environmental Law or (B) relating to the presence of or
release into the environment of any Hazardous Material, whether or not occurring
at or on a site owned, leased or operated by CLAS or any of its Subsidiaries or
any Participation Facility.
(iii) To the knowledge of CLAS, there is no suit, claim,
action, demand, executive or administrative order, directive, investigation or
proceeding pending or threatened before any court, governmental agency or board
or other forum relating to or against any Loan Property (or CLAS or any of its
Subsidiaries in respect of such Loan Property) (A) relating to alleged
noncompliance (including by any predecessor) with, or liability under, any
Environmental Law or (B) relating to the presence of or release into the
environment of any Hazardous Material, whether or not occurring at a Loan
Property.
(iv) Neither CLAS nor any of its Subsidiaries has received
any notice, demand letter, executive or administrative order, directive or
request for information from any Governmental Entity or any third party
indicating that it may be in violation of, or liable under, any Environmental
Law.
(v) There are no underground storage tanks at any properties
owned or operated by CLAS or any of its Subsidiaries or any Participation
Facility and no underground storage tanks have been closed or removed from any
properties owned or operated by CLAS or any of its Subsidiaries or any
Participation Facility.
37
(vi) During the period of (A) CLAS's or its Subsidiary's
ownership or operation of any of their respective current properties or (B)
CLAS's or its Subsidiary's participation in the management of any Participation
Facility, there has been no release of Hazardous Materials in, on, under or
affecting such properties. To the knowledge of CLAS, prior to the period of (A)
CLAS's or its Subsidiary's ownership or operation of any of their respective
current properties or (B) CLAS's or its Subsidiary's participation in the
management of any Participation Facility, there was no contamination by or
release of Hazardous Material in, on, under or affecting such properties.
(t) OWNERSHIP OF FFFB COMMON STOCK. As of the date hereof, none of
CLAS or any of its Subsidiaries, or to CLAS's knowledge, any of its other
affiliates or associates (as such terms are defined under the Exchange Act),
owns beneficially or of record, directly or indirectly, or is a party to any
agreement, arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of, shares of FFFB Common Stock (other than shares held in a
fiduciary capacity that are beneficially owned by third parties or as a result
of debts previously contracted).
(w) STOCKHOLDER APPROVAL. The approval of this Agreement by the
holders of the CLAS Common Stock is the only vote of the holders of any class or
series of CLAS's capital stock necessary to approve and adopt this Agreement and
the transactions contemplated hereby, including the Merger, and such approval
does not require the vote of more than a majority of the outstanding shares of
the CLAS Common Stock.
ARTICLE IV
CONDUCT PENDING THE MERGER
4.1 FORBEARANCES BY FFFB. Except as expressly contemplated or permitted by
this Agreement and to the extent required by law or regulation, during the
period from the date of this Agreement to the Effective Time, FFFB shall not,
nor shall FFFB permit any of its Subsidiaries to, without the prior written
consent of CLAS, which consent shall not be unreasonably withheld:
(a) conduct its business other than in the regular, ordinary and
usual course consistent with past practice; fail to maintain and preserve intact
its business organization, properties, leases, employees and advantageous
business relationships and retain the services of its officers and key
employees; or take any action that would adversely affect or delay its ability
to perform its obligations under this Agreement or to consummate the
transactions contemplated hereby;
(b) (i) incur, modify, extend or renegotiate any indebtedness for
borrowed money, or assume, guarantee, endorse or otherwise as an accommodation
become responsible for the obligations of any other individual, corporation or
other entity, other than (i) NOW, money market and passbook deposit accounts,
(ii) securities sold with an agreement to repurchase within one year, federal
funds purchases with terms of one year or less, and borrowings from a Federal
Home Loan Bank that mature within one year and (iii) certificates of deposit
that mature within 37 months; PROVIDED, HOWEVER, that in no event shall any new
borrowings under Section (ii) above exceed an aggregate of $1,000,000;
38
(ii) prepay any indebtedness or other similar arrangements so
as to cause FFFB to incur any prepayment penalty thereunder;
(c) (i) adjust, split, combine or reclassify any capital stock;
(ii) make, declare or pay any dividend, or make any other
distribution on its capital stock, except for regular quarterly cash dividends
at a rate not in excess of $.07 per share of FFFB Common Stock and dividends
paid by any of FFFB's Subsidiaries for the purpose of enabling FFFB to pay such
dividends;
(iii) grant any stock awards under the FFFB Employee Plans
(other than the ESOP) or grant any individual, corporation or other entity any
right to acquire any shares of its capital stock; or
(iv) issue any additional shares of capital stock or any
securities or obligations convertible or exercisable for any shares of its
capital stock except pursuant to the exercise of stock options outstanding and
approved by FFFB's stockholders as of the date hereof;
(d) sell, transfer, mortgage, encumber or otherwise dispose of any of
its material properties or assets to any individual, corporation or other entity
other than a Subsidiary, or cancel, release or assign any indebtedness to any
such person or any claims held by any such person, except in the ordinary course
of business consistent with past practice or pursuant to contracts or agreements
in force at the date of this Agreement;
(e) except pursuant to contracts or agreements in force at the date
of or permitted by this Agreement, make any equity investment, either by
purchase of stock or securities, contributions to capital, property transfers,
or purchase of any property or assets of any other individual, corporation or
other entity;
(f) enter into, renew, amend or terminate any contract or agreement,
or make any change in any of its leases or contracts, other than with respect to
those contracts or agreements individually involving aggregate payments of less
than, or the provision of goods or services with a market value of less than,
$30,000 per annum and other than contracts or agreements covered by SECTION
4.1(g);
(g) make, renegotiate, renew, increase, extend, modify or purchase
any loan, lease (credit equivalent), advance, credit enhancement or other
extension of credit, or make any commitment in respect of any of the foregoing,
except (i) in conformity with existing lending practices in amounts not to
exceed an aggregate of $100,000 per borrower with respect to any individual
borrower or (ii) loans or advances as to which FFFB has a binding obligation to
make such loans or advances as of the date hereof;
39
(h) except for loans or extensions of credit made on terms generally
available to the public, make or increase any loan or other extension of credit,
or commit to make or increase any such loan or extension of credit, to any
director or executive officer of FFFB or First Federal, or any entity
controlled, directly or indirectly, by any of the foregoing, other than renewals
of existing loans or commitments to loan;
(i) increase in any manner the compensation or fringe
benefits of any of its employees or directors, or pay or make any stock award,
cash or stock bonus, pension, retirement allowance or contribution to any such
employees or directors not required by any binding agreement in effect as of the
date hereof, except for annual employee salary increases of not more than 2%
consistent with past practice;
(ii) become a party to, amend (except as may be required by
law) or commit itself to any pension, retirement, profit-sharing or welfare
benefit plan or agreement or employment agreement with or for the benefit of any
employee or director;
(iii) voluntarily accelerate the vesting of, or the lapsing of
restrictions with respect to, any stock options or other stock-based
compensation;
(iv) elect to any senior executive office any person who is
not a member of its senior executive officer team as of the date of this
Agreement or elect to its Board of Directors any person who is not a member of
its Board of Directors as of the date of this Agreement, or hire any employee;
(v) submit for approval or ratification any stock option or
similar plan to its stockholders; or
(vi) make any quarterly contribution to the First Federal
ESOP in excess of the First Federal's average quarterly contributions to the
First Federal ESOP over the last two years; or
(j) settle any claim, action or proceeding involving payment by it of
money damages in excess of $25,000 or impose any material restriction on its
operations or the operations of any of its Subsidiaries;
(k) amend its certificate of incorporation or bylaws, or similar
governing documents;
(l) restructure or materially change its investment securities
portfolio through purchases, sales or otherwise, or the manner in which the
portfolio is classified or reported;
40
(m) make any investment in any debt security, including
mortgage-backed and mortgage-related securities, other than U.S. government and
U.S. government agency securities with final maturities not greater than one
year;
(n) make any capital expenditures other than pursuant to binding
commitments existing on the date hereof, expenditures necessary to maintain
existing assets in good repair, to make payment of necessary taxes;
(o) establish or commit to the establishment of any new branch or
other office facilities or file any application to relocate or terminate the
operation of any banking office;
(p) take any action that is intended or expected to result in any of
its representations and warranties set forth in this Agreement being or becoming
untrue in any material respect at any time prior to the Effective Time, or in
any of the conditions to the Merger set forth in Article VI not being satisfied
or in a violation of any provision of this Agreement;
(q) implement or adopt any change in its accounting principles,
practices or methods, other than as may be required by GAAP or regulatory
guidelines;
(r) knowingly take any action that would prevent or impede the Merger
from qualifying as a reorganization within the meaning of Section 368 of the
IRC; or
(s) agree to take, make any commitment to take, or adopt any
resolutions of its board of directors in support of, any of the actions
prohibited by this SECTION 4.1.
Any request by FFFB or response thereto by CLAS shall be made in
accordance with the notice provisions of SECTION 8.7 and shall note that it is a
request pursuant to this SECTION 4.1.
4.2 FORBEARANCES BY CLAS. Except as expressly contemplated or permitted by
this Agreement, and except to the extent required by law or regulation or any
Governmental Entity, during the period from the date of this Agreement to the
Effective Time, CLAS shall not, nor shall CLAS permit any of its Subsidiaries
to, without the prior written consent of FFFB, which shall not unreasonably be
withheld:
(a) take any action that is intended to or expected to result in any
of its representations and warranties set forth in this Agreement being or
becoming untrue in any material respect at any time prior to the Effective Time,
or in any of the conditions to the Merger set forth in Article VI not being
satisfied or in a violation of any provision of this Agreement;
(b) knowingly take any action that would prevent or impede the Merger
from qualifying as a reorganization withing the meaning of Section 368 of the
IRC;
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(c) amend its certificate of incorporation or bylaws in a manner that
would materially and adversely effect the benefits of the Merger to the
stockholders of FFFB; or
(d) agree to take, make any commitment to take, or adopt any
resolutions of its Board of Directors in support of, any of the actions
prohibited by this SECTION 4.2.
ARTICLE V
COVENANTS
5.1 ACQUISITION PROPOSALS.
(a) Except as permitted by this Agreement, FFFB shall not, and shall
not authorize or permit any of its Subsidiaries or any of its Subsidiaries'
officers, directors or employees or any investment banker, financial advisor,
attorney, accountant or other representative retained by FFFB or any of its
Subsidiaries to, directly or indirectly, (i) solicit, initiate or knowingly
encourage (including by way of furnishing non-public information), or take any
other action to facilitate, any inquiries, discussions or the making of any
proposal that constitutes or could reasonably be expected to lead to an
Acquisition Proposal or (ii) participate in any discussions or negotiations, or
otherwise communicate in any way with any person (other than CLAS), regarding an
Acquisition Proposal. Notwithstanding the foregoing, FFFB may, in response to a
Superior Proposal that has not been withdrawn and that did not otherwise result
from a breach of this SECTION 5.1, (x) furnish non-public information with
respect to FFFB to the person who made such Superior Proposal (y) participate in
discussions or negotiations with such person regarding such Superior Proposal
and (z) recommend such Superior Proposal to the stockholders of FFFB, if and so
long as FFFB's Board of Directors determines in good faith, after consultation
with and based upon the advice of its outside legal counsel, that such action is
legally necessary for the proper discharge of its fiduciary duties under
applicable law.
(b) Nothing contained in this SECTION 5.1 shall prohibit FFFB from at
any time taking and disclosing to its stockholders a position contemplated by
Rule 14d-9 or Rule 14e-2 promulgated under the Exchange Act or making any
disclosure required by Rule 14a-9 promulgated under the Exchange Act.
(c) FFFB will notify CLAS immediately orally (within one day) and in
writing (within three days) of any Acquisition Proposal, any request for
non-public information that could reasonably be expected to lead to an
Acquisition Proposal, or any inquiry with respect to or that could reasonably be
expected to lead to an Acquisition Proposal, including, in each case, the
identity of the person making such Acquisition Proposal, request or inquiry and
the terms and conditions thereof, and shall provide to CLAS any written
materials received by FFFB or any of its Subsidiaries in connection therewith.
FFFB will keep CLAS informed of any developments with respect to any such
Acquisition Proposal, request or inquiry immediately upon the occurrence
thereof. FFFB will immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing. FFFB will take the necessary
42
steps to inform the appropriate individuals or entities referred to in the
first sentence of SECTION 5.1(a) of the obligations undertaken in this
SECTION 5.1. FFFB will promptly request each person (other than CLAS) that
has executed a confidentiality agreement prior to the date hereof in
connection with its consideration of a business combination with FFFB or any
of its Subsidiaries to return or destroy all confidential information
previously furnished to such person by or on behalf of FFFB or any of its
Subsidiaries. FFFB shall not release any third party from, or waive any
provisions of, any confidentiality agreements or standstill agreement to
which it or any of its Subsidiaries is a party.
5.2 CERTAIN POLICIES AND ACTIONS OF FFFB. At the request of CLAS, FFFB
shall (i) cause First Federal to modify and change its loan, litigation and real
estate valuation policies and practices (including loan classifications and
levels of reserves) and investment and asset/liability management policies and
practices so as to be consistent with those of Classic Bank and (ii) recognize
for financial reporting purposes of all its expenses related to the Merger;
PROVIDED, HOWEVER, that FFFB shall not be required to take such actions prior to
the date on which all regulatory and stockholder approvals required to
consummate the transactions contemplated hereby are received, and until after
receipt of written confirmation from CLAS that it is not aware of any fact or
circumstance that would prevent completion of the Merger, and PROVIDED FURTHER,
that such policies and procedures are not prohibited by GAAP or any applicable
laws and regulations. FFFB's representations, warranties and covenants contained
in this Agreement shall not be deemed to be untrue or breached in any respect
for any purpose as a consequence of any modifications or changes undertaken
solely on account of this SECTION 5.2.
5.3 ACCESS AND INFORMATION.
(a) Upon reasonable notice, FFFB shall (and shall cause FFFB's
Subsidiaries to) afford CLAS and its representatives (including, without
limitation, directors, officers and employees of CLAS and its affiliates and
counsel, accountants and other professionals retained by CLAS) such reasonable
access during normal business hours throughout the period prior to the Effective
Time to the books, records (including, without limitation, tax returns and work
papers of independent auditors), contracts, properties, personnel and to such
other information relating to FFFB and FFFB's Subsidiaries as CLAS may
reasonably request. Upon reasonable notice, CLAS shall (and shall cause Classic
Bank to) afford FFFB and its representatives (including, without limitation,
directors, officers and employees of FFFB and its affiliates and counsel,
accountants and other professionals retained by FFFB) such reasonable access
during normal business hours throughout the period prior to the Effective Time
to the executive officers of CLAS and Classic Bank and to such information
regarding CLAS and its Subsidiaries as FFFB may reasonably request. No
investigation by any party pursuant to this SECTION 5.3 shall affect or be
deemed to modify any representation or warranty made by the other party in this
Agreement.
(b) From the date hereof until the Effective Time, FFFB shall, and
shall cause FFFB's Subsidiaries to, promptly provide CLAS with (i) a copy of
each report, schedule, registration statement and other document filed or
received by it pursuant to the requirements of the Securities Act or the
Exchange Act, (ii) a copy of each report filed with federal or state banking
regulators, (iii)
43
a copy of each periodic report to its senior management and all materials
relating to its business or operations furnished to its Board of Directors,
(iv) a copy of each press release made available to the public and (iv) all
other information concerning its business, properties and personnel as CLAS
may reasonably request. Notwithstanding the foregoing, neither FFFB nor its
Subsidiaries shall be required to provide access to or to disclose information
where such access or disclosure relates to any party's compliance with this
Agreement or would violate the rights of such entity's customers, jeopardize the
attorney-client privilege of the entity in possession or control of such
information, or contravene any law, rule, regulation, order, judgment, decree or
binding agreement entered into prior to the date of this Agreement. The parties
hereto will make appropriate substitute disclosure arrangements under
circumstances in which the restrictions of the previous sentence apply.
(c) FFFB and CLAS will not, and will cause its representatives not
to, use any information obtained pursuant to this SECTION 5.3 for any purpose
unrelated to the consummation of the transactions contemplated by this
Agreement. Subject to the requirements of applicable law, FFFB and CLAS will
keep confidential, and will cause its representatives to keep confidential, all
information and documents obtained pursuant to this SECTION 5.3 unless such
information (i) was already known to such party or an affiliate, other than
pursuant to a confidentiality agreement or other confidential relationship, (ii)
becomes available to such party or an affiliate from other sources not known by
such party to be bound by a confidentiality agreement or other obligation of
secrecy, (iii) is disclosed with the prior written approval of the other party
or (iv) is or becomes readily ascertainable from published information or trade
sources.
(d) From and after the date hereof, representatives of CLAS and FFFB
shall meet on a regular basis to discuss and plan for the conversion of FFFB's
and its Subsidiaries' data processing and related electronic informational
systems to those used by CLAS and its Subsidiaries with the goal of conducting
such conversion simultaneously with the consummation of the Bank Merger.
5.4 APPLICATIONS; CONSENTS; TRANSITION.
(a) The parties hereto shall cooperate with each other and shall use
their reasonable best efforts to prepare and file as soon as practicable after
the date hereof all necessary applications, notices and filings to obtain all
permits, consents, approvals and authorizations of all Governmental Entities
that are necessary or advisable to consummate the transactions contemplated by
this Agreement. FFFB and CLAS shall furnish each other with all information
concerning themselves, their respective Subsidiaries, and their respective
Subsidiaries' directors, officers and stockholders and such other matters as may
be reasonably necessary or advisable in connection with any application, notice
or filing made by or on behalf of CLAS, FFFB or any of their respective
Subsidiaries to any Governmental Entity in connection with the transactions
contemplated by this Agreement and the Plan of Bank Merger. CLAS and FFFB shall
have the right to review in advance, and to the extent practicable each will
consult with the other on, all the information relating to CLAS and FFFB, as the
case may be, and any of their respective Subsidiaries, that appears in any
filing made with, or written materials submitted to, any Governmental Entity
pursuant to this SECTION 5.4(a).
44
(b) As soon as practicable after the date hereof, each of the parties
hereto shall, and they shall cause their respective Subsidiaries to, use its
best efforts to obtain any consent, authorization or approval of any third party
that is required to be obtained in connection with the transactions contemplated
by this Agreement and the Plan of Bank Merger.
(c) CLAS and FFFB shall, and shall cause their respective
Subsidiaries to, use their reasonable best efforts to facilitate the integration
of the FFFB and its Subsidiaries, with the businesses of CLAS and its
Subsidiaries to be effective as of the Effective Time. Without limiting the
generality of the foregoing, from the date hereof through the Effective Time and
consistent with the performance of their day-to-day operations and the
continuous operation of the FFFB and its Subsidiaries in the ordinary course of
business, FFFB and its Subsidiaries shall cause their employees to use their
reasonable best efforts to provide support and assistance to CLAS on such tasks
as may be reasonably required to result in a successful integration at the
Effective Time.
5.5 ANTITAKEOVER PROVISIONS. FFFB and its Subsidiaries shall take all
steps required by any relevant federal or state law or regulation or under any
relevant agreement or other document to exempt or continue to exempt CLAS,
Classic Bank, the Agreement, the Plan of Bank Merger and the Merger from any
provisions of an antitakeover nature in FFFB's or its Subsidiaries' certificate
of incorporation and bylaws, or similar organizational documents, and the
provisions of any federal or state antitakeover laws.
5.6 ADDITIONAL AGREEMENTS. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all reasonable efforts to
take promptly, or cause to be taken promptly, all actions and to do promptly, or
cause to be done promptly, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement as expeditiously as possible,
including using efforts to obtain all necessary actions or non-actions,
extensions, waivers, consents and approvals from all applicable Governmental
Entities, effecting all necessary registrations, applications and filings
(including, without limitation, filings under any applicable state securities
laws) and obtaining any required contractual consents and regulatory approvals.
5.7 PUBLICITY. The initial press release announcing this Agreement shall
be a joint press release and thereafter FFFB and CLAS shall consult with each
other prior to issuing any press releases or otherwise making public statements
with respect to the Merger and any other transaction contemplated hereby and in
making any filings with any Governmental Entity or with any national securities
exchange or market with respect thereto; PROVIDED, HOWEVER, that nothing in this
SECTION 5.7 shall be deemed to prohibit any party from making any disclosure
which its counsel deems necessary in order to satisfy such party's disclosure
obligations imposed by law.
5.8 STOCKHOLDER MEETINGS.
(a) FFFB will submit to its stockholders this Agreement and any other
matters required to be approved or adopted by stockholders in order to carry out
the intentions of this
45
Agreement. In furtherance of that obligation, FFFB will take, in accordance
with applicable law and its certificate of incorporation and bylaws, all
action necessary to call, give notice of, convene and hold a meeting of its
stockholders (the "FFFB STOCKHOLDER MEETING") as promptly as practicable for
the purpose of considering and voting on approval and adoption of this
Agreement and the transactions provided for in this Agreement. FFFB's Board
of Directors will use all reasonable best efforts to obtain from FFFB's
stockholders a vote approving this Agreement. Except as otherwise provided in
Section 5.1(a) of this Agreement, (i) FFFB's Board of Directors shall
recommend to FFFB's stockholders approval of this Agreement, (ii) the Proxy
Statement-Prospectus shall include a statement to the effect that FFFB's
Board of Directors has recommended that FFFB's stockholders vote in favor of
the approval of this Agreement and (iii) neither FFFB's Board of Directors
nor any committee thereof shall withdraw, amend or modify, or propose or
resolve to withdraw, amend or modify in a manner adverse to CLAS, the
recommendation of FFFB's Board of Directors that FFFB's stockholders vote in
favor of approval of this Agreement or make any statement in connection with
the FFFB Stockholder Meeting inconsistent with such recommendation provided
that nothing in this Agreement shall prevent FFFB's Board of Directors from
withholding, withdrawing, amending or modifying its recommendation if FFFB's
Board of Directors determines, after consultation with its outside counsel,
that such action is legally required in order for the directors to comply
with their fiduciary duties to FFFB's shareholders under applicable law;
provided, further, that Section 5.1 shall govern withholding, withdrawing,
amending or modifying of such recommendation in the circumstances described
therein.
(b) If required by applicable law or regulation or by the rules and
regulations of the Nasdaq Small Cap Market, CLAS will submit to its stockholders
this Agreement and any other matters required to be approved or adopted by
stockholders in connection with this Agreement. In furtherance of that
obligation, CLAS will take, in accordance with applicable law and its
certificate of incorporation and bylaws, all action necessary to call, give
notice of, convene and hold a meeting of its stockholders (the "CLAS STOCKHOLDER
MEETING") as promptly as practicable for the purpose of considering and voting
on approval and adoption of this Agreement and the transactions provided for in
this Agreement. CLAS's Board of Directors will use all reasonable best efforts
to obtain from CLAS's stockholders a vote approving this Agreement. In
connection therewith, (i) CLAS's Board of Directors shall recommend to CLAS's
stockholders approval of this Agreement, (ii) the Proxy Statement-Prospectus
shall include a statement to the effect that CLAS's Board of Directors has
recommended that CLAS's stockholders vote in favor of the approval of this
Agreement and (iii) neither CLAS's Board of Directors nor any committee thereof
shall withdraw, amend or modify, or propose or resolve to withdraw, amend or
modify in a manner adverse to CLAS, the recommendation of CLAS's Board of
Directors that CLAS's stockholders vote in favor of approval of this Agreement
or make any statement in connection with the CLAS Stockholder Meeting
inconsistent with such recommendation.
5.9 REGISTRATION OF CLAS COMMON STOCK.
(a) As promptly as reasonably practicable following the date hereof,
CLAS shall prepare and file with the SEC a registration statement on Form S-4
with respect to the issuance of
46
CLAS Common Stock in the Merger (such Form S-4, and any amendments or
supplements thereto, the "REGISTRATION STATEMENT"). The Registration
Statement shall contain proxy materials relating to the matters to be
submitted to the FFFB stockholders at the FFFB Stockholders Meeting and the
CLAS stockholders at the CLAS Stockholders Meeting which shall also
constitute the prospectus relating to the shares of CLAS Common Stock to be
issued in the Merger (such proxy statement/prospectus, and any amendments or
supplements thereto, the "PROXY STATEMENT-PROSPECTUS"). FFFB will furnish to
CLAS the information required to be included in the Registration Statement
with respect to its business and affairs and shall have the right to review
and consult with CLAS and approve the form of, and any characterizations of
such information included in, the Registration Statement prior to its being
filed with the SEC. CLAS shall use reasonable best efforts to have the
Registration Statement declared effective by the SEC and to keep the
Registration Statement effective as long as is necessary to consummate the
Merger and the transactions contemplated hereby. FFFB will use its best
efforts to cause the Proxy Statement-Prospectus to be mailed to FFFB's
stockholders and CLAS shall use its best efforts to cause the Proxy Statement
- Prospectus to be mailed to its stockholders, in each instance, promptly as
practicable after the Registration Statement is declared effective under the
Securities Act. CLAS will advise FFFB, promptly after it receives notice
thereof, of the time when the Registration Statement has become effective,
the issuance of any stop order, the suspension of the qualification of the
CLAS Common Stock issuable in connection with the Merger for offering or sale
in any jurisdiction, or any request by the SEC for amendment of the Proxy
Statement-Prospectus or the Registration Statement. If at any time prior to
the Effective Time, any information relating to CLAS or FFFB, or any of their
respective affiliates, officers or directors, is discovered by CLAS or FFFB
which should be set forth in an amendment or supplement to any of the
Registration Statement or the Proxy Statement-Prospectus so that any of such
documents would not include any misstatement of a material fact or omit to
state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, the party which
discovers such information shall promptly notify the other party hereto and,
to the extent required by law, rules or regulations, an appropriate amendment
or supplement describing such information shall be promptly filed by CLAS
with the SEC and disseminated by FFFB to the stockholders of FFFB and
disseminated by CLAS to the stockholders of CLAS.
(b) CLAS shall also take any action required to be taken under any
applicable state securities laws in connection with the Merger and each of FFFB
and CLAS shall furnish all information concerning it and the holders of FFFB
Common Stock as may be reasonably requested in connection with any such action.
(c) Prior to the Effective Time, CLAS shall list on The Nasdaq Small
Cap Market the shares of CLAS Common Stock to be issued by CLAS in exchange for
the shares of FFFB Common Stock.
5.10 AFFILIATE LETTERS. FFFB shall use its best efforts to cause each
director, executive officer and other person who is an "affiliate" of FFFB under
Rule 145 of the Securities Act to deliver to CLAS as soon as practicable and
prior to the mailing of the Proxy Statement-Prospectus executed
47
letter agreements, each substantially in the form attached hereto as EXHIBIT C,
providing that such person will comply with Rule 145.
5.11 NOTIFICATION OF CERTAIN MATTERS. Each party shall give prompt notice
to the other of: (i) any event or notice of, or other communication relating to,
a default or event that, with notice or lapse of time or both, would become a
default, received by it or any of its Subsidiaries subsequent to the date of
this Agreement and prior to the Effective Time, under any contract material to
the financial condition, properties, businesses or results of operations of each
party and its Subsidiaries taken as a whole to which each party or any
Subsidiary is a party or is subject; and (ii) any event, condition, change or
occurrence which individually or in the aggregate has, or which is reasonably
likely to result in a Material Adverse Effect. Each of FFFB and CLAS shall give
prompt notice to the other party of any notice or other communication from any
third party alleging that the consent of such third party is or may be required
in connection with any of the transactions contemplated by this Agreement.
5.12 EMPLOYEE BENEFITS MATTERS.
(a) All persons who are employees of First Federal immediately prior
to the Effective Time and whose employment is not specifically terminated at or
prior to the Effective Time (a "CONTINUING EMPLOYEE") shall, at the Effective
Time, become employees of Classic Bank; PROVIDED, HOWEVER, that in no event
shall any of First Federal's employees be officers of Classic Bank, or have or
exercise any power or duty conferred upon such an officer, unless and until duly
elected or appointed to such position in accordance with the bylaws of Classic
Bank and that CLAS shall use reasonable efforts to offer a position to all
employees of First Federal. Except for Continuing Employees who enter into
employment contracts with CLAS or Classic Bank, all of the Continuing Employees
shall be employed at the will of Classic Bank and no contractual right to
employment shall inure to such employees because of this Agreement. In the event
any Continuing Employee without an employment contact is terminated without
cause within one year following the Effective Time, he or she shall be entitled
to receive, within 60 days of such termination, a cash severance payment equal
to three weeks salary for each full year of continuous service he or she has
with FFFB, or First Federal, Classic Bank or CLAS, up to a maximum of 30 weeks
salary.
(b) As of the Effective Time, CLAS shall make available
employer-provided health and other employee welfare benefit plans to each
Continuing Employee on the same basis as it provides such coverage to CLAS
employees, except that any eligibility waiting period otherwise applicable under
such plans to new employees shall not apply to a Continuing Employee or their
covered dependents who were covered under a similar FFFB Employee Plan at the
Effective Time and provided that, for the first year following the Effective
Time, CLAS shall reimburse Continuing Employees to the extent necessary so that
their out of pocket cost for maintaining health insurance through Classic Bank's
group plan is not higher than their out of pocket cost for maintaining health
insurance through the FFFB Employee Plans as of the Effective Time.
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(c) With respect to accrued but unused vacation time to which any
Continuing Employee is entitled pursuant to the vacation policy applicable to
such Continuing Employee immediately prior to the Effective Time, CLAS and its
Subsidiaries shall assume the liability only for any vacation time accrued in
2003 and will allow such Continuing Employee to use such accrued 2003 vacation
time in accordance with the provisions of CLAS's vacation policy as in effect at
the Effective Time as if such vacation time accrued in 2003 were accrued while
in the employ of CLAS or one of its Subsidiaries.
(d) Each Continuing Employee shall be treated as a new employee of
CLAS for purposes of participation in CLAS's employee stock ownership plan and
any tax qualified pension plan of CLAS or in which CLAS participates (other than
its defined benefit plan which is frozen as to new entrants), provided, however,
that Continuing Employees will receive credit for service with FFFB for purposes
of vesting and determination of eligibility to participate, but not for accrual
of benefits and provided further that continuing Employees shall not be entitled
to commence participation in the Classic Bank ESOP until the beginning of the
first new plan year following the Effective Time.
(e) (i) Each participant in the FFFB Employee Stock Ownership Plan
("FFFB ESOP") not fully vested will become fully vested in his or her FFFB ESOP
account as of the Effective Time. As soon as practicable after the execution of
this Agreement, FFFB, First Federal and CLAS will corporate to cause the FFFB
ESOP to be amended in a manner reasonably acceptable to FFFB and Classic to
provide that the FFFB ESOP will terminate upon the Effective Time. Upon the
repayment of the FFFB ESOP loan, the remaining shares in the loan suspense
account will be allocated (to the extent permitted by Sections 401(a), 415 or
4975 of the Code and the applicable laws and regulations including, without
limitation, the applicable provisions of ERISA) to FFFB ESOP participants (as
determined under the terms of the FFFB ESOP). Between the date hereof and the
Effective Time, the existing FFFB ESOP indebtedness shall continue to be repaid
in quarterly installments pursuant to the terms of the ESOP Loan Agreement dated
as of June 3, 1996 by and between the FFFB Employee Stock Ownership Plan Trust
and FFFB, and FFFB or First Federal shall make only such contributions to the
FFFB ESOP as necessary to fund such payments. Any indebtedness of the FFFB ESOP
remaining as of the Effective Time shall be repaid from the trust associated
with the FFFB ESOP through application of the Merger Consideration received
by the FFFB ESOP. FFFB and CLAS agree that, subject to the conditions
described herein, as soon as possible after the Effective Time and repayment
of the FFFB ESOP loan and subject to applicable law, participants in the FFFB
ESOP will receive lump sum distributions of their FFFB ESOP accounts.
(ii) The actions relating to the termination of the FFFB ESOP
will be adopted conditioned upon the consummation of the Merger and upon
receiving a favorable determination letter from the IRS with regard to the
continued qualification of the FFFB ESOP after any required amendments. FFFB and
CLAS will cooperate in submitting appropriate requests for any such
determination letter to the IRS and will use their best efforts to seek the
issuance of such letter as soon as possible following the date hereof. FFFB and
CLAS will adopt such additional amendments
49
to the FFFB ESOP as may be reasonably required by the IRS as a condition to
granting such determination letter, provided that such amendments do not
substantially change the terms outlined herein or would result in a Material
Adverse Effect on FFFB or result in an additional material liability to CLAS.
(iii) As of and following the Effective Time, CLAS shall cause
the FFFB ESOP to be maintained for the exclusive benefit of employees and other
persons who were participants or beneficiaries therein prior to the Effective
Time and proceed with termination of the FFFB ESOP through distribution of its
assets in accordance with its terms, subject to the amendments described herein
and as otherwise may be required to comply with applicable law or to obtain a
favorable determination letter from the IRS as to the continuing qualified
status of the FFFB ESOP, provided, however, that no such distributions of the
FFFB ESOP shall occur until a favorable termination ruling has been received
from the IRS.
(f) Subject to the foregoing paragraphs, CLAS agrees to honor in
accordance with their terms all benefits vested as of the Effective Time under
the FFFB Employee Plans and all vested benefits or other vested amounts earned
or accrued through such time under contracts, arrangement commitments or
understandings described in FFFB's Disclosure Letter, including benefits which
vest or are otherwise accrued as a result of the consummation of the
transactions contemplated by this Agreement.
(g) Prior to the Effective Time, Xxxxxxx X. Xxxxx shall have
terminated his employment agreement set forth in the FFFB Disclosure Letter and
shall have been offered the opportunity to enter into an employment agreement
with Classic Bank in the form attached as Exhibit D hereto.
5.13 INDEMNIFICATION.
(a) From and after the Effective Time through the sixth anniversary
of the Effective Time, CLAS agrees to indemnify and hold harmless each present
and former director, officer and employee of FFFB and its Subsidiaries and each
director, officer or employee of FFFB and its Subsidiaries that is serving or
has served as a director, officer, employee, representative or agent of another
entity expressly at FFFB's request or direction (each, an "INDEMNIFIED PARTY"),
against any costs or expenses (including reasonable attorneys' fees), judgments,
fines, amounts paid in settlement, losses, claims, damages or liabilities
incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of matters existing or occurring at or prior to the Effective Time
(including the transactions contemplated by this Agreement), whether asserted or
claimed prior to, at or after the Effective Time, as they are from time to time
incurred, in each case to the fullest extent such person would have been
indemnified or have the right to advancement of expenses pursuant to FFFB's
certificate of incorporation and bylaws and, to the extent applicable, any
agreement between FFFB and First Federal and such Indemnified Party which are
included in the FFFB Disclosure Letter, as in effect on the date of this
Agreement, and to the fullest extent permitted by law.
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(b) Any Indemnified Party wishing to claim indemnification under
SECTION 5.13(a), upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify CLAS thereof, but the failure to so notify
shall not relieve CLAS of any liability it may have hereunder to such
Indemnified Party if such failure does not materially and substantially
prejudice CLAS.
(c) CLAS shall maintain FFFB's existing directors' and officers'
liability insurance policy (or provide a policy providing comparable coverage
and amounts on terms no less favorable to the persons currently covered by
FFFB's existing policy, including CLAS's existing policy if it meets the
foregoing standard) covering persons who are currently covered by such insurance
for a period of three years after the Effective Time; PROVIDED, HOWEVER, that in
no event shall CLAS be obligated to expend, in order to maintain or provide
insurance coverage pursuant to this SECTION 5.13(c), an amount per annum in
excess of 125% of the annual premiums paid by FFFB as of the date hereof for
such insurance ("MAXIMUM INSURANCE AMOUNT"); PROVIDED FURTHER, that if the
amount of the annual premiums necessary to maintain or procure such insurance
coverage exceeds the Maximum Insurance Amount, CLAS shall obtain the most
advantageous coverage obtainable for an annual premium equal to the Maximum
Insurance Amount.
(d) In the event CLAS or any of its successors or assigns (i)
consolidates with or merges into any other person or entity and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers or conveys all or substantially all of its properties and assets
to any person or entity, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of CLAS assume
the obligations set forth in this SECTION 5.13.
(e) The provisions of this SECTION 5.13 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and his or her
representatives.
5.14 SECTION 16 MATTERS. Prior to the Effective Time, FFFB and CLAS shall
take all such steps as may be required to cause any dispositions of FFFB Common
Stock (including derivative securities with respect to FFFB Common Stock) or
acquisitions of CLAS Common Stock resulting from the transactions contemplated
by this Agreement by each individual who is subject to the reporting
requirements of Section 16(a) of the Exchange Act with respect to FFFB to be
exempt under Rule 16b-3 promulgated under the Exchange Act. FFFB agrees to
promptly furnish CLAS with all requisite information necessary for CLAS to take
the actions contemplated by this SECTION 5.14.
5.15 DIVIDENDS. After the date of this Agreement, FFFB shall declare and
pay dividends on the FFFB Common Stock on a quarterly basis and each of CLAS and
FFFB shall coordinate with the other the payment of dividends with respect to
the CLAS Common Stock and the FFFB Common Stock and the record dates and payment
dates relating thereto, it being the intention of the parties hereto that
holders of CLAS Common Stock and FFFB Common Stock shall not receive two
dividends, or fail to receive one dividend, for any single calendar quarter with
respect to their shares
51
of CLAS Common Stock and/or FFFB Common Stock or any shares of CLAS Common
Stock that any such holder receives in exchange for such shares of FFFB
Common Stock in the Merger.
5.16 CONSULTING AGREEMENT. Simultaneous with the signing of the Agreement,
CLAS will offer Xxxxxxx Xxxx the opportunity to enter into the Consulting
Agreement the form of which is set forth in Exhibit E of this Agreement.
ARTICLE VI
CONDITIONS TO CONSUMMATION
6.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective obligations of
each party to effect the Merger shall be subject to the satisfaction of the
following conditions:
(a) STOCKHOLDER APPROVAL. This Agreement shall have been approved by
the requisite vote of FFFB's and CLAS stockholders in accordance with applicable
laws and regulations.
(b) REGULATORY APPROVALS. All approvals, consents or waivers of any
Governmental Entity and the NASDAQ required to permit consummation of the
transactions contemplated by this Agreement shall have been obtained and shall
remain in full force and effect, and all statutory waiting periods shall have
expired; PROVIDED, HOWEVER, that none of such approvals, consents or waivers
shall contain any condition or requirement that would reasonably be likely to
have or result in a Material Adverse Effect on CLAS and its Subsidiaries
after the Effective Time.
(c) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No party hereto shall
be subject to any order, decree or injunction of a court or agency of competent
jurisdiction that enjoins or prohibits the consummation of the Merger or the
Bank Merger and no Governmental Entity shall have instituted any proceeding for
the purpose of enjoining or prohibiting the consummation of the Merger or the
Bank Merger or any transactions contemplated by this Agreement. No statute, rule
or regulation shall have been enacted, entered, promulgated or enforced by any
Governmental Entity which prohibits or makes illegal consummation of the Merger.
(d) REGISTRATION STATEMENT; BLUE SKY LAWS. The Registration Statement
shall have been declared effective by the SEC and no proceedings shall be
pending or threatened by the SEC to suspend the effectiveness of the
Registration Statement, and CLAS shall have received all required approvals by
state securities or "blue sky" authorities with respect to the transactions
contemplated by this Agreement.
(e) THIRD PARTY CONSENTS. CLAS and FFFB shall have obtained the
consent or approval of each person (other than the governmental approvals or
consents referred to in SECTION 6.1(b)) whose consent or approval shall be
required to consummate the transactions contemplated by this Agreement, except
those for which failure to obtain such consents and approvals would not,
individually or in the aggregate, have a Material Adverse Effect on CLAS (after
giving effect to the consummation of the transactions contemplated hereby).
52
(f) TAX OPINIONS. CLAS and FFFB shall have received opinions of
Jenkens & Xxxxxxxxx, A Professional Corporation, and Xxxxxx, Xxxx & Xxxxxx
L.L.P., respectively, dated as of the Closing Date, in form and substance
customary in transactions of the type contemplated hereby, and reasonably
satisfactory to FFFB and CLAS, as the case may be, substantially to the effect
that on the basis of the facts, representations and assumptions set forth in
such opinions which are consistent with the state of facts existing at the
Effective Time, (i) the Merger will be treated for federal income tax purposes
as a reorganization within the meaning of Section 368(a) of the IRC, (ii) CLAS
and FFFB will each be a party to that reorganization within the meaning of
Section 368(b) of the IRC and (iii) except to the extent of any cash received in
lieu of a fractional share interest in CLAS Common Stock and cash consideration
received in the Merger, no gain or loss will be recognized by the stockholders
of FFFB who exchange their FFFB Common Stock for CLAS Common Stock pursuant to
the Merger. Such opinions may be based on, in addition to the review of such
matters of fact and law as counsel considers appropriate, representations
contained in certificates of officers of CLAS, FFFB and others.
6.2 CONDITIONS TO THE OBLIGATIONS OF CLAS. The obligations of CLAS to
effect the Merger shall be further subject to the satisfaction of the following
additional conditions, any one or more of which may be waived by CLAS in
accordance with SECTION 8.3 hereof:
(a) FFFB'S REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of FFFB contained in SECTIONS 3.2(a) (except as
relates to qualification), (b) (except as relates to qualification), (c), (d),
(e)(i) and (ii), (i), (m), (o), (y) and (gg) of this Agreement shall be true and
correct (except for inaccuracies that are de minimis) as of the date of this
Agreement and as of the Closing Date as though made at and as of the Closing
Date except (i) to the extent such representations and warranties are by their
express provisions made as of a specific time or date and (ii) for the effect of
the transactions contemplated by this Agreement, and there shall not exist any
inaccuracies in the representations and warranties of FFFB contained in this
Agreement (including the representations and warranties set forth in the
Sections designated above) such that the effect of such inaccuracies
individually or in the aggregate has, or is reasonably likely to have, a
Material Adverse Effect on FFFB.
(b) PERFORMANCE OF FFFB's OBLIGATIONS. FFFB shall have performed in
all material respects all obligations required to be performed by it under this
Agreement at or prior to the Effective Time.
(c) OFFICERS' CERTIFICATE. CLAS shall have received a certificate
signed by the chief executive officer and the chief financial or principal
accounting officer of FFFB to the effect that the conditions set forth in
SECTIONS 6.2(a) and (b) have been satisfied.
(d) OPINION OF COUNSEL. FFFB shall have caused to be delivered to
CLAS an opinion dated as of the Effective Time from the law firm of Xxxxx, Xxxx
& Xxxxxx, LLP, counsel to FFFB, concerning the following matters to the best of
their knowledge:
53
(i) the FFFB Rights Agreement has not been amended since
adoption; and
(ii) as of the Effective Time, the Rights will not be, nor
will they have ever been, exercisable or transferrable separately from the FFFB
Common Stock; and
(iii) upon the completion of the Merger, the Rights shall
expire and no persons shall have any rights with respect to the FFFB Rights
Agreement.
6.3 CONDITIONS TO THE OBLIGATIONS OF FFFB. The obligations of FFFB to
effect the Merger shall be further subject to the satisfaction of the following
additional conditions, any one or more of which may be waived by FFFB:
(a) CLAS's REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of CLAS contained in SECTIONS 3.3(a) (except as
relates to qualification), (b), (i), (ii) AND (iv) (except as relates to
qualification), (c), e(i) AND (ii) AND (l) of this Agreement shall be true and
correct (except for inaccuracies that are de minimis) as of the date of this
Agreement and as of the Closing Date (as though made at and as of the Closing
Date except (i) to the extent such representations and warranties are by their
express provisions made as of a specific time or date and (ii) for the effect of
the transactions contemplated by this Agreement), and there shall not exist any
inaccuracies in the representations and warranties of CLAS contained in this
Agreement (including the representations and warranties set forth in the
Sections designated above) such that the effect of such inaccuracies
individually or in the aggregate has, or is reasonably likely to have, a
Material Adverse Effect on CLAS.
(b) PERFORMANCE OF CLAS's OBLIGATIONS. CLAS shall have performed in
all material respects all obligations required to be performed by it under this
Agreement at or prior to the Effective Time.
(c) OFFICERS' CERTIFICATE. FFFB shall have received a certificate
signed by the chief executive officer and the chief financial or principal
accounting officer of CLAS to the effect that the conditions set forth in
SECTIONS 6.3(a) and (b) have been satisfied.
(d) DEPOSIT OF MERGER CONSIDERATION. CLAS shall have deposited with
the Exchange Agent sufficient cash to pay the aggregate Cash Consideration.
ARTICLE VII
TERMINATION
7.1 TERMINATION. This Agreement may be terminated, and the Merger
abandoned, at any time prior to the Effective Time, by action taken or
authorized by the Board of Directors of the terminating party, either before or
after any requisite stockholder approval:
54
(a) by the mutual written consent of CLAS and FFFB; or
(b) by either CLAS or FFFB, in the event of the failure of FFFB's
stockholders to approve the Agreement at the FFFB Stockholder Meeting; PROVIDED,
HOWEVER, that FFFB shall only be entitled to terminate the Agreement pursuant to
this clause if it has complied in all material respects with its obligations
under SECTION 5.8; or
(c) by either CLAS or FFFB, upon written notice to the other, if
either (i) any approval, consent or waiver of a Governmental Entity required to
permit consummation of the transactions contemplated by this Agreement shall
have been denied or (ii) any Governmental Entity of competent jurisdiction
shall have issued a final, unappealable order enjoining or otherwise
prohibiting consummation of the transactions contemplated by this Agreement;
or
(d) by either CLAS or FFFB, in the event that the Merger is not
consummated by June 30, 2003, unless the failure to so consummate by such time
is due to the failure of the party seeking to terminate this Agreement to
perform or observe the covenants and agreements of such party set forth herein;
or
(e) by either CLAS or FFFB, upon written notice to the other,
(provided that the party seeking termination is not then in material breach of
any representation, warranty, covenant or other agreement contained herein), in
the event of a breach of any covenant or agreement on the part of the other
party set forth in this Agreement, or if any representation or warranty of the
other party shall have become untrue, in either case such that the conditions
set forth in SECTIONS 6.2(a) and (b) or SECTIONS 6.3(a) and (b), as the case may
be, would not be satisfied and such breach or untrue representation or warranty
has not been or cannot be cured within thirty (30) days following written notice
to the party committing such breach or making such untrue representation or
warranty;
(f) by CLAS, if the Board of Directors of FFFB does not publicly
recommend in the Proxy Statement-Prospectus that stockholders approve and adopt
this Agreement or if, after recommending in the Proxy Statement-Prospectus that
stockholders approve and adopt this Agreement, the Board of Directors of FFFB
withdraws, qualifies or revises such recommendation in any respect materially
adverse to CLAS; or
(g) at any time prior to the FFFB Stockholder Meeting, by FFFB in
order to concurrently enter into an acquisition agreement or similar agreement
(each an "Acquisition Agreement") with respect to a Superior Proposal which has
been received and considered by FFFB and FFFB's Board of Directors in compliance
with Section 5.1 hereof, provided, however, that this Agreement may be
terminated by FFFB pursuant to this Section 7.1(g) only after the fifth business
day following the receipt by CLAS of written notice from FFFB advising CLAS that
FFFB is prepared to enter into an Acquisition Agreement with respect to a
Superior Proposal, and describing in reasonable detail such proposal and only
if, during such five business day period, CLAS does not, in its sole discretion,
make an offer to FFFB that FFFB's Board of Directors determines in good faith,
after consultation with its financial and legal advisors, is at least as
favorable as the Superior Proposal.
55
(h) by CLAS, if any person or group (as those terms are defined in
the Exchange Act), other than CLAS or any Subsidiary, shall have acquired
beneficial ownership of 25% or more of the voting power of FFFB or any of its
significant Subsidiaries.
(i) by CLAS at any time after FFFB becomes entitled to
terminate the Agreement under paragraph (g) above.
7.2 TERMINATION FEE.
(a) If CLAS terminates this Agreement pursuant to SECTION 7.1(f), (h)
or (i) FFFB terminates this Agreement pursuant to Section 7.1(g), then FFFB
shall make payment to CLAS of a termination fee in the amount of $450,000. Such
amount shall be paid by wire transfer of immediately available funds within two
business days following such termination.
(b) If this Agreement is terminated by (i) CLAS pursuant to SECTION
7.1(c) or (ii) either party pursuant to SECTION 7.1(b), and in any such case an
Acquisition Proposal has been publicly announced, disclosed or communicated or
made known to the senior management or Board of Directors of FFFB at any time
after the date of this Agreement and prior to the date of the Stockholders
Meeting, in the case of clause (ii), or the date of termination, in the case of
clause (i), then FFFB shall make payment to CLAS of a termination fee in the
amount of $450,000 if within 12 months after such termination, FFFB shall
consummate or enter into any agreement with respect to such Acquisition
Proposal. Such amount shall be paid by wire transfer of immediately available
funds on the date of such execution or consummation.
(c) Notwithstanding anything herein to the contrary, in no event
shall the aggregate amount that FFFB must pay to CLAS pursuant to SECTIONS
7.2(a) and (b) exceed $450,000.
7.3 EFFECT OF TERMINATION. In the event of termination of this Agreement
by either CLAS or FFFB as provided in SECTION 7.1, this Agreement shall
forthwith become void and, subject to SECTION 7.2, have no effect, and there
shall be no liability on the part of any party hereto or their respective
officers and directors, except that (i) SECTIONS 5.3(c), 7.2, and 8.6, shall
survive any termination of this Agreement, and (ii) notwithstanding anything to
the contrary contained in this Agreement, no party shall be relieved or released
from any liabilities or damages arising out of its willful breach of any
provision of this Agreement.
ARTICLE VIII
CERTAIN OTHER MATTERS
8.1 INTERPRETATION. When a reference is made in this Agreement to Sections
or Exhibits such reference shall be to a Section of, or Exhibit to, this
Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for ease of reference only and shall not affect
the meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed
followed by the words "without
56
limitation." Any singular term in this Agreement shall be deemed to include
the plural, and any plural term the singular. Any reference to gender in this
Agreement shall be deemed to include any other gender.
8.2 SURVIVAL. Only those agreements and covenants of the parties that are
by their terms applicable in whole or in part after the Effective Time,
including SECTION 5.13 of this Agreement, shall survive the Effective Time. All
other representations, warranties, agreements and covenants shall be deemed to
be conditions of the Agreement and shall not survive the Effective Time.
8.3 WAIVER; AMENDMENT. Prior to the Effective Time, any provision of this
Agreement may be: (i) waived in writing by the party benefitted by the provision
or (ii) amended or modified at any time (including the structure of the
transaction) by an agreement in writing between the parties hereto except that,
after the vote by the stockholders of FFFB, no amendment or modification may be
made that would reduce the amount or alter or change the kind of consideration
to be received by holders of FFFB Common Stock or contravene any provision of
the DGCL, the federal and state securities and banking laws, or any of the rules
and regulations thereunder.
8.4 COUNTERPARTS. This Agreement may be executed in counterparts each of
which shall be deemed to constitute an original, but all of which together shall
constitute one and the same instrument.
8.5 GOVERNING LAW. This Agreement shall be governed by, and interpreted in
accordance with, the laws of the State of
Delaware, without regard to conflicts
of laws principles.
8.6 EXPENSES. Each party hereto will bear all expenses incurred by it in
connection with this Agreement and the transactions contemplated hereby, except
that expenses incurred in connection with the printing and mailing of the Proxy
Statement-Prospectus and Registration Statement shall be shared equally by CLAS
and FFFB.
8.7 NOTICES. All notices, requests, acknowledgments and other
communications hereunder to a party shall be in writing and shall be deemed to
have been duly given when delivered by hand, overnight courier or facsimile
transmission to such party at its address or facsimile number set forth below or
such other address or facsimile transmission as such party may specify by notice
(in accordance with this provision) to the other party hereto.
If to CLAS, to:
Classic Bancshares, Inc.
000 Xxxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx
57
With a copy to:
Jenkens & Xxxxxxxxx, PC
0000 Xxxxxxxxxxxx Xxxxxx, X.X., #000
Xxxxxxxxxx, X.X. 00000
Facsimile: (000) 000-0000
Attention: Xxx X. Xxxxxxxx, Esq.
If to FFFB, to:
FIRST FEDERAL FINANCIAL BANCORP, INC.
000 XXXXXX XXXXXX
XXXXXXX, XXXX 00000-0000
Facsimile: (000) 000-0000
Attention: I. Xxxxxxx Xxxx
With a copy to:
Xxxxxx, Xxxx & Xxxxxx
0000 Xxxxxx Xxxxxxxx Xxxxx, #0000
Xxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxx, Esq.
Xxxxxxx X. Xxxx, Esq.
8.8 ENTIRE AGREEMENT; ETC. This Agreement, together with the Disclosure
Letters, represents the entire understanding of the parties hereto with
reference to the transactions contemplated hereby and supersedes any and all
other oral or written agreements heretofore made. All terms and provisions of
this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns. Except for SECTION
5.13, which confers rights on the parties described therein, nothing in this
Agreement is intended to confer upon any other person any rights or remedies of
any nature whatsoever under or by reason of this Agreement.
8.9 SUCCESSORS AND ASSIGNS; ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that this Agreement may not be
assigned by either party hereto without the written consent of the other party.
58
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers as of the date first above
written.
CLASSIC BANCSHARES, INC.
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------------
Xxxxx X. Xxxxxxx
President and Chief Executive Officer
FIRST FEDERAL FINANCIAL BANCORP, INC.
By: /s/ I. Xxxxxxx Xxxx
-------------------------------------
I. Xxxxxxx Xxxx
President
59
EXHIBIT A
December 30, 2002
Classic Bancshares, Inc.
000 Xxxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Board of Directors
To the Board of Directors:
The undersigned is a director of First Federal Financial Bancorp, Inc.
("FFFB") and the beneficial holder of shares of common stock of FFFB (the "FFFB
Common Stock").
Classic Bancshares, Inc. ("CLAS") and FFFB are considering the execution of
an
Agreement and Plan of Merger (the "Agreement") contemplating the acquisition
of FFFB through the merger of FFFB with and into CLAS (the "Merger"). The
execution of the Agreement by CLAS is subject to the execution and delivery of
this letter agreement.
In consideration of the substantial expenses that CLAS will incur in
connection with the transactions contemplated by the Agreement and in order to
induce CLAS to execute the Agreement and to proceed to incur such expenses, the
undersigned agrees and undertakes, in his capacity as a stockholder of FFFB, and
not in his capacity as a director or officer of FFFB, as follows:
1. While this letter agreement is in effect the undersigned shall not,
directly or indirectly, (a) sell or otherwise dispose of or encumber prior to
the record date of FFFB's Stockholder Meeting (as defined in the Agreement)
(except in the ordinary course of business for purposes of securing margin
credit) any or all of his shares of FFFB Common Stock, or (b) deposit any shares
of FFFB Common Stock into a voting trust or enter into a voting agreement or
arrangement with respect to any shares of FFFB Common Stock or grant any proxy
with respect thereto, other than to other members of the Board of Directors of
FFFB for the purpose of voting to approve the Agreement and the Merger and
matters related thereto.
2. While this letter agreement is in effect the undersigned shall vote or
cause to be voted all of the shares of FFFB Common Stock that the undersigned
shall be entitled to so vote, whether such shares are beneficially owned by the
undersigned on the date of this letter agreement or are subsequently acquired,
whether pursuant to the exercise of stock options or otherwise, for the approval
of the Agreement and the Merger at FFFB's Stockholder Meeting.
3. The undersigned acknowledges and agrees that any remedy at law for
breach of the foregoing provisions shall be inadequate and that, in addition to
any other relief which may be available, CLAS shall be entitled to temporary and
permanent injunctive relief without having to prove actual damages.
Classic Bancshares, Inc
December 30, 2002
Page 2
4. The foregoing restrictions shall not apply to shares with respect to
which the undersigned may have voting power as a fiduciary for others. In
addition, this letter agreement shall only apply to actions taken by the
undersigned in his capacity as a stockholder of FFFB and, if applicable, shall
not in any way limit or affect actions the undersigned may take in his capacity
as a director or officer of FFFB.
5. This letter agreement shall automatically terminate upon the earlier
of (i) the favorable vote of FFFB's stockholders with respect to the approval of
the Agreement and the Merger, (ii) the termination of the Agreement in
accordance with its terms or (iii) the Effective Date (as that term is defined
in the Agreement) of the Merger.
6. As of the date hereof, the undersigned has voting power with respect
to _______ shares of FFFB Common Stock.
IN WITNESS WHEREOF, the undersigned has executed this agreement as of the
date first above written.
Very truly yours,
----------------------------------------
----------------------------------------
Print Name
Accepted and agreed to as of
the date first above written:
Classic Bancshares, Inc.
----------------------------------------
Xxxxx X. Xxxxxxx
President and Chief Executive Officer
EXHIBIT B
PLAN OF MERGER
OF
FIRST FEDERAL SAVINGS BANK OF IRONTON
WITH AND INTO
CLASSIC BANK
THIS PLAN OF MERGER ("Plan of Merger") is entered into as of the ____ day
of December, 2002 by and between FIRST FEDERAL SAVINGS BANK OF IRONTON, a stock
savings bank chartered and existing under the laws of the United States of
America ("First Federal"), and CLASSIC BANK ("Classic").
WHEREAS, this Plan of Merger is being entered into pursuant to the
Agreement and Plan of Merger dated as of __________, 2002 (the "Merger
Agreement") by and between Classic Bancshares, Inc. and First Federal Financial
Bancorp, Inc., pursuant to which Classic Bancshares, Inc. will acquire First
Federal Financial Bancorp, Inc.; and
WHEREAS, this Plan of Merger has been approved by at least two-thirds of
the directors of each of Classic and First Federal.
NOW, THEREFORE, in consideration of the covenants and agreements of the
parties contained herein, the parties hereto hereby make, adopt and approve this
Plan of Merger in order to set forth the terms and conditions for the merger of
First Federal with and into Classic (the "Merger").
1. EFFECTIVE TIME OF THE MERGER. The Merger shall not be effective
unless and until the Merger receives all necessary approvals from
the Kentucky Department of Financial Institutions and all
appropriate filings are made under Section 287.172 of the
Kentucky Revised Statutes.
2. CONSTITUENT INSTITUTIONS. The name of each constituent
institution to the Merger is CLASSIC BANK and FIRST FEDERAL
SAVINGS BANK OF IRONTON.
3. NAME OF THE RESULTING INSTITUTION. The resulting institution in
the Merger shall be CLASSIC BANK (Classic is sometimes referred
to herein as the "Resulting Institution").
4. LOCATION OF HOME OFFICE AND OTHER OFFICES OF RESULTING
INSTITUTION. The location of the principal office and other
offices of the Resulting Institution are listed in APPENDIX A
hereto attached.
5. TERMS AND CONDITIONS OF MERGER. Subject to the terms and
conditions of this Plan of Merger, at the Effective Time, First
Federal shall be merged with and into Classic pursuant to the
provisions of, and with the effect provided under the laws of,
the State of Kentucky and the United States of America. At the
Effective Time, the separate existence of First Federal shall
cease and Classic as the resulting institution, shall continue
unaffected and unimpaired by the Merger.
6. CHARTER. At the Effective Time, the charter of Classic, as in
effect immediately prior to the Effective Time, shall constitute
the charter of the Resulting Institution, unless and until the
same shall be amended as provided by law and the terms of such
charter.
7. BYLAWS. At the Effective Time, the bylaws of Classic, as in
effect immediately prior to the Effective Time, shall be the
bylaws of the Resulting Institution, unless and until amended or
repealed as provided by law, its charter and such bylaws.
8. SAVINGS ACCOUNT ISSUANCE BY RESULTING INSTITUTION. After the
Effective Time, the Resulting Institution will continue to issue
deposit accounts, including savings accounts, on the same basis
as immediately prior to the Effective Time.
9. LIQUIDATION ACCOUNT. The Resulting Institution shall, at the time
of the Merger, assume the liquidation account(s) of First Federal
immediately prior to the Effective Time, which liquidation
account(s) shall participate PARI PASSU with any other
liquidation accounts of the Resulting Institution. In the event
of a complete liquidation of the Resulting Institution, and only
in such event, the amount distributable to each account holder
will be determined in accordance with the rules and regulations
of the Office of Thrift Supervision pertaining to conversions by
savings associations from mutual to stock form of organization,
on the basis of such account holder's subaccount balance with the
Resulting Institution at the time of its liquidation. No merger,
consolidation, purchase of bulk assets with assumption of savings
accounts and other liabilities, or similar transaction, whether
or not the Resulting Institution is the surviving institution,
will be deemed to be a complete liquidation for this purpose,
and, in any such transaction, the liquidation account shall be
assumed by the surviving institution.
10. DIRECTORS OF RESULTING INSTITUTION. The names of the persons who
shall constitute the Board of Directors of the Resulting
Institution after the Effective Time are listed in APPENDIX B
hereto attached.
11. EFFECT ON OUTSTANDING SHARES OF FIRST FEDERAL COMMON STOCK. At
the Effective Time, by virtue of the Merger and without any
action on the part of the holder
thereof, all outstanding shares of common stock, par value
$1.00 per share, of First Federal shall automatically be
canceled and retired and shall cease to exist.
12. EFFECT ON OUTSTANDING SHARES OF CLASSIC COMMON STOCK. The shares
of common stock, par value $1.00 per share, of Classic issued and
outstanding immediately prior to the Effective Time shall remain
outstanding and unchanged after the Merger and shall be the only
issued and outstanding shares of the Resulting Institution.
13. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligations of each party to effect the Merger shall
be subject to the satisfaction of the conditions set forth in
Article VI of the Merger Agreement.
14. TERMINATION. This Plan of Merger shall terminate automatically
upon termination of the Merger Agreement.
15. AMENDMENT. This Plan of Merger may not be amended except by an
agreement in writing signed on behalf of each of the parties
hereto.
16. GOVERNING LAW. This Plan of Merger shall be governed by and
construed and enforced in accordance with the laws of the State
of Kentucky.
17. CAPTIONS. The captions heading the sections in this Plan of
Merger are for convenience only and shall not affect the
construction or interpretation of this Plan of Merger.
18. COUNTERPARTS. This Plan of Merger may be executed in two or more
counterparts, any of which may be facsimile copies, each of which
shall be deemed an original instrument, but all of which together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, each of the Parties has caused this Plan of Merger to
be duly executed and delivered by its duly authorized officers as of the date
first above written.
CLASSIC BANK
ATTEST:
By:
------------------------------- ----------------------------------------
Xxxxx X. Xxxxxxx
Its: President and Chief Executive
Officer
ATTEST: FIRST FEDERAL SAVINGS BANK OF IRONTON
By:
------------------------------- ----------------------------------------
I. Xxxxxxx Xxxx
Its: President
APPENDIX A
Location of Home Office and Other Offices of Resulting Institution
MAIN OFFICE:
000 Xxxxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
BRANCH OFFICES:
0000 Xxxxxxxxx Xxxx.
Xxxxxxx, XX 00000
000 Xxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
00000 X.X. 00
Xxxxxxx, XX 00000
000 X. Xxxxx Xxxxxx Xxxx.
Xxxxxxx, XX 00000
000 X. Xxxx Xxxxx
Xxxxxxxxxxx, XX 00000
000 Xxxxx Xxxx Xxxxx
Xxxxxxxxxxx, XX 00000
0000 Xxxxxxx Xxxx
Xxxxxxx, XX 00000
000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
000 Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
000 Xxxx Xxxxxx
Xxxxxxx, XX 00000-0000
APPENDIX B
Directors of Resulting Institution
Name Residence Address Year Term Expires
---- ----------------- -----------------
Xxxxx X. Xxxxxxx 0000 Xxxx Xxxxxx 0000
Xxxxxxx, XX 00000
Xxxxxx X. Xxxxxx 0000 Xxxxxxxxxx Xxxxxx 0000
Xxxxxxx, XX 00000
Xxxx X. Xxxxxxxxx HC 66 Box 1420 2003
Xxxxxxxx, XX 00000
Xxxxxxx Xxxxx 000 Xxxxxxx Xxxx Xxxxx 0000
Xxxxxxx, XX 00000
WM. Xxxxxx Xxxxxxx 0000 Xxxxxxxx Xxxxxx 0000
Xxxxxxx, XX 00000
Xxxx Xxxxx X.X. Xxx 000 0000
Xxxxxxx, XX 00000
Xxxxx X. Xxxxx 0000 Xxxxxxxxxx Xxxxxx 0000
Xxxxxxx, XX 00000
Xxxxx Bocooko, Jr. 000 Xxxxx Xxxxxx 0000
Xxxxxxxxxxx, XX 00000
Xxxxx X. Xxxxxxxx 0000 Xxxxx Xxxxx Xxxxxx 0000
Xxxxxxx, XX 00000
Xxxxxx X. Xxxxxxxxx 000 Xxxxx Xxxxx Xxxxxx 0000
Xxxxxxx, XX 00000
EXHIBIT C
_________, 2002
Classic Bancshares, Inc.
000 Xxxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
I have been advised that I may be deemed to be, but do not admit that I am,
an "affiliate" of First Federal Financial Bancorp, Inc., a
Delaware corporation
("FFFB"), as that term is defined in Rule 144 and used in Rule 145 promulgated
by the Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "Securities Act"). I understand that pursuant to the
terms of the
Agreement and Plan of Merger, dated as of December __, 2002 (the
"Merger Agreement"), by and between FFFB and Classic Bancshares, Inc., a
Delaware corporation ("CLAS"), FFFB plans to merge with and into CLAS (the
"Merger").
I further understand that as a result of the Merger, I may receive shares
of common stock, par value $0.01 per share, of CLAS ("CLAS Common Stock") in
exchange for shares of common stock, par value $0.01 per share, of FFFB ("FFFB
Common Stock").
I have carefully read this letter and reviewed the Merger Agreement and
discussed their requirements and other applicable limitations upon my ability to
sell, transfer, or otherwise dispose of CLAS Common Stock, to the extent I felt
necessary, with my counsel or counsel for FFFB.
I represent, warrant and covenant with and to CLAS that in the event I
receive any shares of CLAS Common Stock as a result of the Merger:
1. I shall not make any sale, transfer, or other disposition of such
shares of CLAS Common Stock unless (i) such sale, transfer or other disposition
has been registered under the Securities Act, (ii) such sale, transfer or other
disposition is made in conformity with the provisions of Rule 145 under the
Securities Act (as such rule may be amended from time to time), or (iii) in the
opinion of counsel in form and substance reasonably satisfactory to CLAS, or
under a "no-action" letter obtained by me from the staff of the SEC, such sale,
transfer or other disposition will not violate the registration requirements of,
or is otherwise exempt from registration under, the Securities Act.
_________, 2002
Page 2
2. I understand that CLAS is under no obligation to register the sale,
transfer or other disposition of shares of CLAS Common Stock by me or on my
behalf under the Securities Act or to take any other action necessary in order
to make compliance with an exemption from such registration available.
3. I understand that stop transfer instructions will be given to CLAS's
transfer agent with respect to shares of CLAS Common Stock issued to me as a
result of the Merger and that there will be placed on the certificates for such
shares, or any substitutions therefor, a legend stating in substance:
"The shares represented by this certificate were issued as a result of the
merger of First Federal Financial Bancorp, Inc. with and into Classic
Bancshares, Inc. on _______, 2003, in a transaction to which Rule 145
promulgated under the Securities Act of 1933 applies. The shares
represented by this certificate may be transferred only in accordance with
the terms of a letter agreement between the registered holder hereof and
Classic Bancshares, Inc., a copy of which agreement is on file at the
principal offices of Classic Bancshares, Inc."
4. I understand that, unless transfer by me of the CLAS Common Stock
issued to me as a result of the Merger has been registered under the Securities
Act or such transfer is made in conformity with the provisions of Rule 145(d)
under the Securities Act, CLAS reserves the right, in its sole discretion, to
place the following legend on the certificates issued to my transferee:
"The shares represented by this certificate have not been registered under
the Securities Act of 1933 and were acquired from [SHAREHOLDER] who, in
turn, received such shares as a result of the merger of First Federal
Financial Bancorp, Inc. with and into Classic Bancshares, Inc. on ______,
2003, in a transaction to which Rule 145 under the Securities Act of 1933
applies. The shares have been acquired by the holder not with a view to, or
for resale in connection with, any distribution thereof within the meaning
of the Securities Act of 1933 and may not be offered, sold, pledged or
otherwise transferred except in accordance with an exemption from the
registration requirements of the Securities Act of 1933."
It is understood and agreed that the legends set forth in paragraphs (3)
and (4) above shall be removed by delivery of substitute certificates without
such legends if I shall have delivered to CLAS (i) a copy of a "no action"
letter from the staff of the SEC, or an opinion of counsel in form and substance
reasonably satisfactory to CLAS, to the effect that such legend is not required
for purposes of the Act, or (ii) evidence or representations satisfactory to
CLAS that CLAS Common Stock represented by such certificates is being or has
been sold in conformity with the provisions of Rule 145(d).
_________, 2002
Page 3
I further understand and agree that the provisions of Rule 145 shall apply
to all shares of CLAS Common Stock that my spouse, any relative of mine, or any
relative of my spouse, any one of whom has the same home as me, receives as a
result of the Merger and I further represent, warrant and covenant with and
to CLAS that I will have, and will cause each of such persons to have, all
shares of FFFB Common Stock owned (other than shares held through tax
qualified retirement or benefit plans) by me or such persons registered in my
name or the name of such persons, as applicable, prior to the effective date
of the Merger and not in the name of any bank, broker or dealer, nominee or
clearing house.
By acceptance hereof, CLAS agrees, for a period of two years after the
Effective Time (as defined in the Agreement) that, so long as it is obligated to
file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended, that it will use its reasonable best efforts to timely file
such reports so that the public information requirements of Rule 144(c)
promulgated under the Securities Act are satisfied and the resale provisions of
Rule 145(d)(1) and (2) are therefore available to me in the event I desire to
transfer any CLAS Common Stock issued to me in the Merger.
Very truly yours,
By:
--------------------------------
Name:
Acknowledged this ____ day of _____________ 2002.
First Federal Financial Bancorp, Inc.
By:
-------------------------------------
I. Xxxxxxx Xxxx
President
EXHIBIT D
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made effective as of _________ __ 2002, by and among
CLASSIC BANK (the "BANK"), CLASSIC BANCSHARES, INC., a Delaware corporation (the
"COMPANY"), and XXXXXXX X. XXXXX ("EXECUTIVE").
RECITALS
A. EXECUTIVE has served in a position of substantial responsibility
with First Federal Savings Bank of Ironton ("First Federal").
B. The COMPANY and First Federal Financial Bancorp, Inc. ("First
Federal Financial"), the parent of First Federal, have entered into an
Agreement
and Plan of Merger dated _________ __ 2002, pursuant to which First Federal
Financial and First Federal will merge with and into the COMPANY and the BANK,
with the COMPANY and the BANK as the surviving entities (the "Merger").
C. The COMPANY and the BANK wish to ensure the continued services of
the EXECUTIVE following the completion of the Merger.
D. EXECUTIVE is willing to serve in the employ of the BANK on a
full-time basis for the term provided for under this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and upon the other terms and conditions hereinafter provided, the
parties hereby agree as follows:
1. POSITION AND RESPONSIBILITIES.
During the period of his employment hereunder, EXECUTIVE agrees to
serve as Southern Ohio Market President of the BANK with responsibility for
overseeing the sales and marketing activities of the former offices of First
Federal acquired by the BANK. EXECUTIVE shall perform such duties as are
requested by management and the Board of Directors or are customarily performed
by persons situated in a similar executive capacity.
2. TERMS AND DUTIES.
(a) The term of this Agreement shall be deemed to have commenced as of
the closing date of the aforementioned Merger (the "Effective Date") and shall
continue for thirty six (36) months thereafter. Commencing on the first
anniversary date, and continuing at each anniversary date thereafter, the Board
of Directors of the COMPANY (the "Board") or the BANK may extend the Agreement
for an additional year. Prior to the extension of the Agreement as provided
herein,
the Board of Directors of the COMPANY or the BANK will conduct a formal
performance evaluation of EXECUTIVE for purposes of determining whether to
extend the Agreement.
(b) During the period of his employment hereunder, except for periods
of absence occasioned by illness, reasonable vacation periods, and reasonable
leaves of absence, EXECUTIVE shall devote substantially all his business time,
attention, skill, and efforts to the faithful performance of his duties
hereunder.
3. COMPENSATION AND REIMBURSEMENT.
(a) The compensation specified under this Agreement shall constitute
the salary and benefits paid for the duties described in Sections 1 and 2. The
BANK shall pay EXECUTIVE as compensation a salary of $60,000 per year ("Base
Salary"). Such Base Salary shall be payable in accordance with the customary
payroll practices of the BANK. During the period of this Agreement, EXECUTIVE's
Base Salary shall be reviewed at least annually; the first such review will be
made no later than one year from the date of this Agreement. In addition to the
Base Salary provided for in this Section 3(a), the BANK shall provide EXECUTIVE
with all such other benefits as are provided uniformly to permanent full-time
employees of the BANK.
(b) EXECUTIVE will be entitled to participate in the Bank's employee
benefit plans including, but not limited to, retirement plans, supplemental
retirement plans, pension plans, profit-sharing plans, health-and-accident
plans, medical coverage or any other employee benefit plan or arrangement made
available by the BANK in the future to its senior executives and key management
employees, subject to, and on a basis consistent with, the terms, conditions and
overall administration of such plans and arrangements. In addition, the
EXECUTIVE shall be entitled to be considered for awards under the COMPANY'S and
BANK'S stock benefit, incentive and option plans.
(c) In addition to the Base Salary provided for by paragraph (a) of
this Section 3, the BANK shall pay or reimburse EXECUTIVE for all reasonable
travel and other obligations under this Agreement and may provide such
additional compensation in such form and such amounts as the Board may from time
to time determine.
4. PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.
(a) Upon the occurrence of an Event of Termination (as herein defined)
during EXECUTIVE's term of employment under this Agreement, the provisions of
this Section shall apply. As used in this Agreement, an "Event of Termination"
shall mean and include any one or more of the following: (i) the termination by
the BANK of EXECUTIVE's full-time employment hereunder for any reason other than
a Change in Control, as defined in Section 5(a) hereof; disability, as defined
in Section 6(a) hereof; death; retirement, as defined in Section 7 hereof; or
Termination for Cause, as defined in Section 8 hereof or (ii) EXECUTIVE's
resignation from the BANK's employ upon a relocation of EXECUTIVE's principal
place of employment by more than 30 miles from its
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location at the effective date of this Agreement, any reduction in Base
Salary) other than as a part of a general reduction in salary applicable to
all or most of the BANK's officers), or a material reduction in the benefits
and perquisites to EXECUTIVE from those being provided as of the effective
date of this Agreement (other than as a part of a general reduction in
benefits and perquisites applicable to all or most of the BANK's officers).
(b) Upon the occurrence of an Event of Termination, the BANK shall pay
EXECUTIVE, or, in the event of his subsequent death, his beneficiary or
beneficiaries, or his estate, as the case may be, as severance pay or liquidated
damages, or both, a sum equal to his Base Salary for the remaining term of the
Agreement. All payments made pursuant to this Section 4(b) shall be paid in
substantially equal monthly installments over the remaining term of this
Agreement following EXECUTIVE's termination; provided, however, that if the
remaining term of the Agreement is less than one (1) year (determined as of
EXECUTIVE's Date of Termination), such payments and benefits shall be paid to
EXECUTIVE in a lump sum within thirty (30) days of the Date of Termination.
(c) Upon the occurrence of an Event of Termination, the BANK will cause
to be continued life, medical, dental and disability coverage substantially
identical to the coverage maintained by the BANK for EXECUTIVE prior to his
termination. Such coverage shall cease upon the earlier of the date of
EXECUTIVE's employment by another employer and the expiration of the remaining
term of this Agreement.
5. CHANGE IN CONTROL.
(a) No benefit shall be paid under this Section 5 unless there shall
have occurred a Change in Control of the COMPANY or the BANK. For purposes of
this Agreement, a "Change in Control" of the COMPANY or the BANK shall be deemed
to occur (a) if there occurs a change in control of the BANK or the COMPANY
within the meaning of the Bank Holding Company Act or the Change in Bank Control
Act, (b) if any person (as such term is used in Sections 13(d) and 14(d)(2) of
the Exchange Act) is or becomes the beneficial owner, directly or indirectly, of
securities of the COMPANY or the BANK representing twenty-five percent (25%) or
more of the combined voting power of the COMPANY's or the BANK's then
outstanding voting securities, (c) if the membership of the board of directors
of the COMPANY or the BANK changes as the result of a contested election, such
that individuals who were directors at the beginning of any twenty-four (24)
month period (whether commencing before or after the date of adoption of this
Agreement) do not constitute a majority of the Board at the end of such period,
or (d) upon the consummation of a transaction approved by the shareholders of
the COMPANY or the BANK involving a merger, consolidation, sale or disposition
of all or substantially all of the COMPANY's or the BANK's assets, or a similar
transaction occurs in which the COMPANY or the BANK is not the resulting entity.
(b) If any of the events described in Section 5(a) hereof constituting
a Change in Control have occurred or the Board of the BANK or the COMPANY has
reasonably determined that a
D-3
Change in Control (as defined herein) has occurred, EXECUTIVE shall be
entitled to the benefits provided for in paragraphs (c), (d) and (e) of this
Section 5 upon his subsequent involuntary termination following the effective
date of a Change in Control (or voluntary termination within twelve (12)
months of the effective date of a Change in Control following any material
demotion, loss of title, office or significant authority, material reduction
in his annual compensation or benefits (other than a reduction affecting the
BANK's personnel generally), or the relocation of his principal place of
employment by more than 30 miles from its location immediately prior to the
Change in Control), unless such termination is because of his death,
retirement as provided in Section 7, termination for Cause, or termination
for Disability.
(c) Upon the occurrence of a Change in Control followed by EXECUTIVE's
termination of employment, the BANK shall pay EXECUTIVE, or in the event of his
subsequent death, his beneficiary or beneficiaries, or his estate, as the case
may be, as severance pay or liquidated damages, or both, a sum equal to 2.99
times EXECUTIVE's "base amount," within the meaning of Section 280G(b)(3) of the
Internal Revenue Code of 1986 ("Code"), as amended. Such payment shall be made
in a lump sum paid within ten (10) days of EXECUTIVE's Date of Termination.
(d) Upon the occurrence of a Change in Control followed by EXECUTIVE's
termination of employment, the BANK will cause to be continued life, medical,
dental and disability coverage substantially identical to the coverage
maintained by the BANK for EXECUTIVE prior to his severance. Such coverage shall
cease upon the expiration of thirty-six (36) months.
(e) Notwithstanding the preceding paragraphs of this Section 5, in the
event that the aggregate payments or benefits to be made or afforded to
EXECUTIVE under this Section, together with any other payments or benefits
received or to be received by EXECUTIVE in connection with a Change in Control,
would be deemed to include an "excess parachute payment" under Section 280G of
the Code, then such payments or benefits shall be reduced to the extent
necessary to reduce the present value of such payments or benefits to an amount
which is one dollar ($1.00) less than three (3) times EXECUTIVE's "base amount"
under Section 280G(b)(3) of the Code with the allocation of the reduction among
such payments and benefits to be determined by EXECUTIVE.
6. TERMINATION FOR DISABILITY
(a) If EXECUTIVE shall become disabled as defined in the BANK's then
current disability plan (or, if no such plan is then in effect, if EXECUTIVE is
permanently and totally disabled within the meaning of Section 22(e)(3) of the
Code as determined by a physician designated by the Board), the BANK may
terminate EXECUTIVE's employment for "Disability."
(b) Upon EXECUTIVE's termination of employment for Disability, the
BANK will pay EXECUTIVE, as disability pay, a bi-weekly payment equal to
three-fourths (3/4) of EXECUTIVE's bi-weekly rate of Base Salary on the
effective date of such termination. These disability payments shall commence
on the effective date of EXECUTIVE's termination and will end on the earlier
of (i) the date EXECUTIVE returns to full-time employment with the BANK; (ii)
EXECUTIVE's full-
D-4
time employment by another employer; (iii) EXECUTIVE attaining the age of
sixty-five (65); (iv) EXECUTIVE's death; or (v) the expiration of six months
from the date of termination for disability. The disability pay shall be
reduced by the amount, if any, paid to EXECUTIVE under any plan of the BANK
providing disability benefits to EXECUTIVE.
(c) The BANK will cause to be continued life, medical, dental and
disability coverage substantially identical to the coverage maintained by the
BANK for EXECUTIVE prior to his termination for Disability. This coverage and
payments shall cease upon the earlier of (i) the date EXECUTIVE returns to
full-time employment with the BANK; (ii) EXECUTIVE's full-time employment by
another employer; (iii) EXECUTIVE's attaining the age of sixty-five (65); (iv)
EXECUTIVE's death; or (v) the expiration of two years from the date of
termination for disability.
(d) Notwithstanding the foregoing, there will be no reduction in the
compensation otherwise payable to EXECUTIVE during any period during which
EXECUTIVE is incapable of performing his duties hereunder by reason of temporary
disability.
7. TERMINATION UPON RETIREMENT; DEATH OF EXECUTIVE; RESIGNATION.
Termination by the BANK of EXECUTIVE based on "Retirement" shall mean
retirement at or after attaining age sixty-five (65) or in accordance with any
retirement arrangement established with EXECUTIVE's consent with respect to him.
Upon termination of EXECUTIVE upon Retirement, EXECUTIVE shall be entitled to
all benefits under any retirement plan of the BANK or the COMPANY and other
plans to which EXECUTIVE is a party. Upon the death of EXECUTIVE during the term
of this Agreement, the BANK shall pay to EXECUTIVE's estate the compensation due
to EXECUTIVE through the last day of the calendar month in which his death
occurred. In addition, in the event of the death of the EXECUTIVE before age 65
during the term of this Agreement, the BANK shall provide, for a period of two
years, similar medical and dental benefits to those which it provided to her in
the date of his death. Upon the voluntary resignation of EXECUTIVE during the
term of this Agreement, other than in connection with an Event of Termination,
the BANK shall pay to EXECUTIVE the compensation due to EXECUTIVE through his
Date of Termination.
8. TERMINATION FOR CAUSE.
For purposes of this Agreement, "Termination for Cause" shall
include termination because of EXECUTIVE's personal dishonesty, incompetence,
willful misconduct, breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful violation of any law,
rule, regulation (other than traffic violations or similar infractions) or
final cease-and-desist order, or material breach of any provision of this
Agreement. EXECUTIVE shall not have the right to receive compensation or
other benefits for any period after Termination for Cause. Any stock option
or other awards granted to EXECUTIVE under any of the stock benefit plans of
the Company or the Bank or any affiliate thereof to the extent not vested
shall become null and void upon
D-5
EXECUTIVE'S receipt of Notice of Termination for cause and shall not be
exercisable after such date.
9. ADDITIONAL TERMINATION PROVISIONS.
(a) The BOARD may terminate EXECUTIVE's employment at any time, but any
termination by the BOARD, other than Termination for Cause, shall not prejudice
EXECUTIVE's right to compensation or other benefits under this Agreement.
EXECUTIVE shall not have the right to receive compensation or other benefits for
any period after Termination for Cause as defined in Section 8 herein.
(b) If EXECUTIVE is suspended and/or temporarily prohibited from
participating in the conduct of the BANK's affairs by a notice served under
Section 8 of the Federal Deposit Insurance Act ("FDIA"), the BANK's obligations
under the Agreement shall be suspended as of the date of service, unless stayed
by appropriate proceedings. If the charges in the notice are dismissed, the BANK
may, in its discretion, (i) pay EXECUTIVE all or part of the compensation
withheld while its contract obligations were suspended and (ii) reinstate (in
whole or in part) any of its obligations that were suspended.
(c) If EXECUTIVE is removed and/or permanently prohibited from
participating in the conduct of the BANK's affairs by an order issued under
Section 8 of the FDIA, all obligations of the BANK under the Agreement shall
terminate as of the effective date of the order, but vested rights of the
contracting parties shall not be affected.
(d) If the BANK is in default (as defined in Section 3(x)(1) of the
FDIA), all obligations under this Agreement shall terminate as of the date of
default, but this paragraph shall not affect any vested rights of the parties.
(e) Any payments made to EXECUTIVE pursuant to this Agreement, or
otherwise, are subject to and conditioned upon compliance with 12
U.S.C.ss.1828(k) and any regulations promulgated thereunder.
10. NOTICE.
(a) Any purported termination by the BANK or by EXECUTIVE shall be
communicated by Notice of Termination to the other party hereto. For purposes of
this Agreement, a "Notice of Termination" shall mean a written notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of EXECUTIVE's employment under the provision so
indicated.
(b) "Date of Termination" shall mean (A) if EXECUTIVE's employment is
terminated for Disability, thirty (30) days after a Notice of Termination is
given (provided that he shall not have
D-6
returned to the performance of his duties on a full-time basis during such
thirty (30) day period), and (B) if his employment is terminated for any
other reason, other than Termination for Cause, the date specified in the
Notice of Termination. In the event of EXECUTIVE's Termination for Cause, the
Date of Termination shall be the same as the date of the Notice of
Termination.
(c) If, within thirty (30) days after any Notice of Termination is
given, the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, except upon the occurrence of
a Change in Control and voluntary termination by EXECUTIVE, in which case the
Date of Termination shall be the date specified in the Notice, the Date of
Termination shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties, by a binding arbitration award, or
by a final judgment, order or decree of a court of competent jurisdiction (the
time for appeal therefrom having expired and no appeal having been perfected)
and provided further, that the Date of Termination shall be extended by a notice
of dispute only if such notice is given in good faith and the party giving such
notice pursues the resolution of such dispute with reasonable diligence.
11. NON-COMPETITION.
(a) Upon any termination of EXECUTIVE's employment hereunder pursuant
to an Event of Termination as provided in Section 4 hereof, EXECUTIVE agrees not
to compete with the BANK and/or the COMPANY for the lesser of (i) the remaining
term of the Agreement or (ii) a period of one (1) year following such
termination in any city, town or county in which the BANK and/or the COMPANY has
an office or has filed an application for regulatory approval to establish an
office, determined as of the effective date of such termination. EXECUTIVE
agrees that during such period and within said cities, towns and counties,
EXECUTIVE shall not work for or advise, consult or otherwise serve with,
directly or indirectly, any entity whose business materially competes with the
depository, lending or other business activities of the BANK and/or the COMPANY.
The parties hereto, recognizing that irreparable injury will result to the BANK
and/or the COMPANY, its business and property in the event of EXECUTIVE's breach
of this Subsection 11(a) agree that in the event of any such breach by
EXECUTIVE, the BANK and/or the COMPANY will be entitled, in addition to any
other remedies and damages available, to an injunction to restrain the violation
hereof by EXECUTIVE, EXECUTIVE's partners, agents, servants, employers,
employees and all persons acting for or with EXECUTIVE. EXECUTIVE represents and
admits that, in the event of the termination of his employment pursuant to
Section 4 hereof, EXECUTIVE's experience and capabilities are such that
EXECUTIVE can obtain employment in a business engaged in other lines and/or of a
different nature than the BANK and/or the COMPANY, and that the enforcement of a
remedy by way of injunction will not prevent EXECUTIVE from earning a
livelihood. Nothing herein will be construed as prohibiting the BANK and/or the
COMPANY from pursuing any other remedies available to the BANK and/or the
COMPANY for such breach or threatened breach, including the recovery of damages
from EXECUTIVE.
(b) EXECUTIVE recognizes and acknowledges that the knowledge of the
business activities and plans for business activities of the BANK and
affiliates thereof, as it may exist from
D-7
time to time, is a valuable, special and unique asset of the business of the
BANK. EXECUTIVE will not, during or after the term of his employment,
disclose any knowledge of the past, present, planned or considered business
activities of the BANK or affiliates thereof (the "Confidential Information")
to any person, firm, corporation, or other entity for any reason or purpose
whatsoever. Notwithstanding the foregoing, EXECUTIVE may disclose (i) any
knowledge of banking, financial and/or economic principles, concepts or ideas
which are not solely and exclusively derived from the business plans and
activities of the BANK, (ii) any Confidential Information that is or becomes
generally available to the public other than as a result of a disclosure by
EXECUTIVE and (iii) any Confidential Information in response to a request for
information in any legal proceeding, interrogatory, subpoena or similar
process provided that, in the reasonable opinion of EXECUTIVE's counsel,
EXECUTIVE is compelled to disclose such Confidential Information. In the
event of a breach or threatened breach by EXECUTIVE of the provisions of this
Section, the BANK will be entitled to an injunction restraining EXECUTIVE
from disclosing, in whole or in part, any Confidential Information, or from
rendering any services to any person, firm, corporation, other entity to whom
such Confidential Information, in whole or in part, has been disclosed or is
threatened to be disclosed. Nothing herein will be construed as prohibiting
the BANK from pursuing any other remedies available to the BANK for such
breach or threatened breach, including the recovery of damages from EXECUTIVE.
12. SOURCE OF PAYMENTS.
All payments provided for in this Agreement shall be timely paid in
cash or check from the general funds of the BANK. The COMPANY, however,
guarantees all payments and the provision of all amounts and benefits due
hereunder to EXECUTIVE and, if such payments are not timely paid or provided by
the BANK, such amounts and benefits shall be paid or provided by the COMPANY.
13. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.
This Agreement contains the entire understanding between the parties
hereto and, as of the Effective Date, shall supersede any prior employment
agreement between or among First Federal, First Federal Financial and EXECUTIVE
(including the agreement among the Employee, First Federal and First Federal
Financial dated September 20, 1999.)
14. NO ATTACHMENT.
(a) Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation, or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to affect any such action shall be null,
void, and of no effect.
(b) This Agreement shall be binding upon, and inure to the benefit of,
EXECUTIVE, the BANK, the COMPANY and their respective successors and assigns.
D-8
15. MODIFICATION AND WAIVER.
(a) This Agreement may not be modified or amended
except by an instrument in writing signed by the parties hereto.
(b) No term or condition of this Agreement shall be deemed to have been
waived, nor shall there by any estoppel against the enforcement of any provision
of this Agreement, except by written instrument of the party charged with such
waiver or estoppel. No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future as to any act other than that specifically
waived.
16. MITIGATION.
In the event that the BANK or the COMPANY is required to make payments
to the EXECUTIVE pursuant to Sections 4 or 6 hereof in connection with the
termination of EXECUTIVE'S employment, unless there is an Event of Termination
under Section 4(a)(ii), the cash severance amount required to be paid by the
BANK and/or the COMPANY shall be reduced during each year that such payments are
required to be made by 50% of any payments made to the EXECUTIVE by any other
employer. In all other circumstances, the EXECUTIVE shall not be required to
mitigate the amount of any benefits hereunder by seeking other employment or
otherwise, nor shall the amount of any such benefits be reduced by any
compensation earned by the EXECUTIVE as a result of employment by another
employer after the Date of Termination or otherwise.
17. SEVERABILITY.
If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each
such other provision and part thereof shall to the full extent consistent with
law continue in full force and effect.
18. HEADINGS FOR REFERENCE ONLY.
The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.
19. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of Kentucky,
unless otherwise specified herein; provided, however, that in the event of a
conflict between the terms of this
D-9
Agreement and any applicable federal or state law or regulation, the provisions
of such law or regulation shall prevail.
20. SUCCESSOR TO THE BANK OR THE COMPANY.
The BANK and the COMPANY shall require any successor or assignee,
whether direct or indirect, by purchase, merger, consolidation or otherwise, to
all or substantially all of the business or assets of the BANK or the COMPANY,
expressly and unconditionally to assume and agree to perform the BANK's or the
COMPANY's obligations under this Agreement, in the same manner and to the same
extent that the BANK or the COMPANY would be required to perform if no such
succession or assignment had taken place.
IN WITNESS WHEREOF, the BANK and the COMPANY have caused this Agreement
to be executed and their seal to be affixed hereunto by a duly authorized
officer, and EXECUTIVE has signed this Agreement, all on the ______ day of
___________, 2002.
ATTEST: CLASSIC BANK
___________________________ BY: __________________________
Xxxxx X. Xxxxxxx
For the Entire Board of Directors
ATTEST: CLASSIC BANCSHARES, INC.
___________________________ BY: __________________________
Xxxxx X. Xxxxxxx
For the Entire Board of Directors
WITNESS: EXECUTIVE
___________________________ _______________________________
Xxxxxxx X. Xxxxx
D-10
EXHIBIT E
FORM OF
NON-COMPETITION AND CONSULTING AGREEMENT
This Non-Competition and Consulting Agreement ("Agreement") is entered into
this ___ day of _______________, 2003 ("Effective Date") by and between Classic
Bank (the "Bank") and I. Xxxxxxx Xxxx ("Consultant").
RECITALS
A. Classic Bancshares, Inc. ("CLAS") and First Federal Financial Bancorp,
Inc. ("FFFB"), parent of First Federal Savings Bank of Ironton ("First
Federal"), have signed an
Agreement and Plan of Merger, pursuant to which FFFB
will merge (the "Merger") with and into CLAS, with CLAS surviving the merger.
B. The Bank recognizes the specialized knowledge and expertise of the
Consultant related to the operations of First Federal.
C. To ensure the continued availability of the Consultant, the Bank
desires to enter into a non-competition agreement and consulting relationship
with Consultant upon the terms and conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the covenants and terms set forth in
this Agreement and of the mutual benefits accruing to the Bank and Consultant
from the relationship to be established between the parties by the terms of this
Agreement, the Bank and Consultant hereby agree as follows:
1. CONSULTING RELATIONSHIP
The Bank hereby retains Consultant, and Consultant hereby agrees to be
retained, upon the effective date of the Merger, by the Bank, as an independent
contractor, and not as an employee.
2. CONSULTING SERVICES
Consultant agrees that during the term of this Agreement:
A. Consultant will consult on matters related to the overall Ironton
business and operations of the Bank including:
- personnel;
- potential acquisitions of other institutions;
- operating processes and procedures;
- existing and prospective customers and market areas; and
- financial services products.
B. Consultant shall exercise a reasonable degree of skill, prudence and
care in performing the services referred to in Paragraph A above.
C. During the Term of this Agreement, Consultant shall provide services
under this Agreement on a schedule mutually agreed upon with senior
management of the Bank; PROVIDED, HOWEVER, that Consultant shall not
be required to render more than 15 hours of service per month. It is
expressly acknowledged that Consultant may perform services as an
employee or independent contractor of another company, subject to the
restrictions in Section 6 hereof; provided that, if Consultant
performs such services for another company, he shall schedule his
services to such other company so as not to interfere with his
consulting services hereunder. Consultant shall not be obligated to
render any services under this Agreement during such period when he is
unable to do so due to illness, disability or injury, subject to the
terms of Section 5(b) hereof.
D. Consultant shall not enter into agreements or make commitments on
behalf of the Bank without prior written consent or approval of the
Bank or its chief executive officer.
3. COMPENSATION
A. The Bank agrees to pay Consultant for his consulting services
performed under this Agreement at a rate of $1,000 per month for a
period of 12 months, commencing as of the date of this agreement.
B. For his commitments and agreements as described in Section 6 herein,
the Bank agrees to pay consultant $1,000 per month for a period of 12
months, commencing as of the date of this agreement.
C. The Bank hereby agrees to reimburse the Consultant for all reasonable
expenses incurred by the Consultant on behalf of and with the consent
of the Bank, provided that the Consultant shall furnish appropriate
documentation of such expenses and receives prior approval of such
expenses.
D. The Bank agrees to provide Consultant with reasonable office
facilities for the performance of his consulting services.
4. OTHER CONDITIONS
Consultant shall have no authority over any employee or officer of the
Bank, nor shall the Bank be required in any manner to implement any plans or
suggestions Consultant may provide.
5. TERM AND TERMINATION; EFFECT OF TERMINATION
The term of this Agreement shall begin on the effective date of the Merger
and shall continue for a period of 12 calendar months thereafter ("Term") unless
terminated in accordance with Sections A. B. or C. as set forth below.
A. Termination for Cause. The Bank may terminate this Agreement at any
time for "Cause." Termination for Cause means termination because of
the Consultant's breach of this Agreement, personal dishonesty, or
willful violation of any law, rule or regulation related to the
business or operations of the Bank or its subsidiaries.
B. Death or Disability. In the event of Consultant's death or permanent
disability (as determined by a physician selected by the Bank),
Consultant's obligations under the Agreement shall terminate.
C. Termination Without Cause. In the event of a termination of Consultant
by the Bank during the Term, other than a Termination for Cause,
Consultant's obligation's under the Agreement shall terminate.
D. Effect of Termination. In the event of Consultant's Termination for
Cause, no further payments or benefits shall be payable or provided to
Consultant under this Agreement. In the event of (i) a termination by
the Bank other than a Termination for Cause or (ii) termination by
reason of Consultant's disability, Consultant (or his guardian) shall
be entitled to receive the payments and benefits Consultant would have
received under Section 3 had he continued to provide services through
the expiration of the Term. In the event of a termination by reason of
Consultant's death, Consultant's estate shall be entitled to receive
the payments Consultant would have received under Section 3 had he
continued to provide services through the expiration of the Term.
6. NON-COMPETITION AND CONFIDENTIAL BUSINESS
A. Consultant, during the Term of the Agreement, will not compete with
the Bank or an affiliate of the Bank in any city, town or county in
which the Bank or an affiliate has an office or has filed an
application for regulatory approval to establish an office.
B. During the Term of this Agreement, the Consultant hereby agrees that
he shall not, without the Bank's prior written consent, engage in
providing professional services or enter into employment as an
employee, director, consultant, representative, or similar
relationship with any entity whose business materially competes
with the depository, lending or other business activities of the
Bank or its affiliates in any city,
town or county in which the Bank or an affiliate has an office
or has filed an application for regulatory approval to establish an
office.
C. During the Term of this Agreement, the Consultant hereby agrees that
he shall not, on his own behalf or on behalf of others, employ,
solicit, or induce, or attempt to employ, solicit or induce, any
employee of the Bank for employment with any financial services
enterprise, including, but not limited to, a savings and loan
association, bank, credit union or mortgage banking firm, nor will
Consultant directly or indirectly, on his behalf or for others, seek
to influence any Bank employee to leave the Bank's employ.
D. During the Term of this Agreement and thereafter, Consultant agrees
that he will not, without the express written consent of the Bank,
directly or indirectly communicate or divulge his knowledge of the
past, present or considered business activities, proprietary data or
other confidential information, of the Bank or its affiliates, nor
will he use such information for his own benefit or for the benefit of
any other person, firm, association, or corporation, except that
Consultant may disclose such matters to the extent that disclosure is
(a) requested by the Bank in the course of the consulting relationship
or (b) required by a court or other governmental agency of competent
jurisdiction. The foregoing restriction shall not apply to information
that is or becomes generally available to the public other than as a
result of a disclosure by Consultant.
7. INDEPENDENT CONTRACTOR
The parties hereto agree and acknowledge that the relationship between the
Bank and Consultant shall be that of an independent contractor and not that of
employer-employee, master-servant or principal-agent. Nothing in this Agreement,
or its implementation, shall be construed to the contrary.
8. EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFIT PLANS
This Agreement shall represent the complete Agreement between the Bank and
Consultant concerning the subject matter hereof and supersedes all prior
agreements or understandings, written or oral. No attempted modification or
waiver of any of the provisions hereof shall be binding on either party unless
made in writing and signed by both Consultant and the Bank.
9. NOTICES
Any notice required or permitted to be given hereunder shall be in writing
and shall be effective three (3) business days after it is properly sent by
registered or certified mail, if to the Bank to the President at the principal
administrative offices of the Bank, or if to Consultant to the address set forth
beneath his signature to this Agreement, or to such other address as either
party may from time to time designate by notice.
10. ASSIGNABILITY
The Bank shall require any successor or assignee, whether direct or
indirect, by purchase, merger, consolidation or otherwise, to all or
substantially all of the business or assets of the Bank, expressly and
unconditionally to assume and agree to perform the Bank's obligations under this
Agreement, in the same manner and to the same extent that the Bank would be
required to perform if no such succession or assignment had taken place. This
Agreement shall be binding upon Consultant, his heirs and permitted assigns and
the Bank, its successors and permitted assigns.
11. SEVERABILITY
Each of the sections contained in this Agreement shall be enforceable
independently of every other section in this Agreement, and the invalidity or
nonenforceability of any section shall not invalidate or render nonenforceable
any other section contained herein. If any section or provision within a section
is found invalid or unenforceable, it is the intent of the parties that a court
of competent jurisdiction shall reform the section or provisions to produce its
nearest enforceable economic equivalent.
12. ARBITRATION
Unless otherwise mutually agreed to by the Consultant and the Bank in
writing, any controversy or claim arising out of or relating to this Agreement
or the breach thereof shall be settled by binding arbitration in accordance with
the Commercial Arbitration Rules of the American Arbitration Association, with
such arbitration hearing to be held at the offices of the American Arbitration
Association ("AAA") nearest to Ashland, Kentucky and judgment upon the award
rendered by the arbitrator(s) may be entered in any court having jurisdiction
thereof. Either the Consultant or the Bank may file a request for such
arbitration with the AAA.
13. APPLICABLE LAW
It is the intention of the parties hereto that all questions and
interpretations with respect to the construction and performance of this
Agreement and the rights and liabilities of the parties hereto shall be
determined in accordance with the laws of the State of Kentucky, with respect to
any matter or thing arising out of this Agreement or pursuant thereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and the first above written.
CLASSIC BANK
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By: Xxxxx X. Xxxxxxx
CONSULTANT
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I. Xxxxxxx Xxxx
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