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EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
DATED AS OF
AUGUST 4, 2004
BY AND AMONG
FIRST DEFIANCE FINANCIAL CORP.,
FIRST FEDERAL BANK OF THE MIDWEST,
COMBANC, INC.
AND
THE COMMERCIAL BANK
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TABLE OF CONTENTS
PAGE
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ARTICLE ONE -- THE
MERGER.........................................................................................1
1.01. Corporate
Merger....................................................................................1
1.02. Effective
Time......................................................................................2
1.03. Governing
Documents of the Surviving
Corporation....................................................2
1.04. Bank
Merger.........................................................................................2
1.05. Structure
of
Combination............................................................................2
ARTICLE TWO -- CONVERSION OF SHARES;
SURRENDER OF
CERTIFICATES....................................................2
2.01. Conversion
of ComBanc
Shares........................................................................2
2.02. Exchange
of ComBanc
Certificates....................................................................4
2.03. Dissenting
ComBanc
Shares...........................................................................7
2.04.
Anti-Dilution
Provisions............................................................................7
2.05. FDEF
Shares.........................................................................................7
2.06. Tax
Consequences....................................................................................7
ARTICLE THREE -- REPRESENTATIONS AND
WARRANTIES OF COMBANC AND COMMERCIAL
BANK....................................7
3.01. Corporate
Status....................................................................................8
3.02.
Capitalization of
ComBanc...........................................................................9
3.03.
Capitalization of Commercial
Bank...................................................................9
3.04. Corporate
Proceedings..............................................................................10
3.05.
Authorization......................................................................................10
3.06. Financial
Statements of
ComBanc....................................................................10
3.07. SEC
Filings........................................................................................11
3.08. Absence of
Undisclosed
Liabilities.................................................................11
3.09. Absence of
Changes.................................................................................11
3.10.
Loans..............................................................................................11
3.11. Allowance
for Loan
Losses..........................................................................12
3.12. Reports
and
Records................................................................................12
3.13.
Taxes..............................................................................................12
3.14. Property
and
Title.................................................................................13
3.15. Legal
Proceedings..................................................................................14
3.16. Compliance
with Laws and
Regulations...............................................................14
3.17. No
Conflict........................................................................................15
3.18. Brokers,
Finders and
Others........................................................................15
3.19. Employment
Agreements..............................................................................15
3.20. Employee
Benefit
Plans.............................................................................16
3.21.
Insurance..........................................................................................17
3.22.
Governmental and Third-Party
Proceedings...........................................................18
3.23.
Contracts..........................................................................................18
3.24.
Environmental
Matters..............................................................................18
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3.25. ComBanc
Information................................................................................19
3.26. CRA
Compliance.....................................................................................19
3.27. Ownership
of FDEF
Shares...........................................................................19
3.28. Fairness
Opinion...................................................................................20
3.29. Real
Property
Interest.............................................................................20
3.30. Internal
Controls..................................................................................20
ARTICLE FOUR -- REPRESENTATIONS AND
WARRANTIES OF FDEF AND FIRST
FEDERAL.........................................21
4.01. Corporate
Status...................................................................................21
4.02. Corporate
Proceedings..............................................................................21
4.03.
Capitalization of
FDEF.............................................................................21
4.04. Authorized
and Effective
Agreement.................................................................22
4.05. No
Conflict........................................................................................23
4.06. SEC
Filings........................................................................................23
4.07. Financial
Statements of FDEF and First
Federal.....................................................23
4.08. Brokers,
Finders and
Others........................................................................24
4.09.
Governmental and Third-Party
Proceedings...........................................................24
4.10. Absence of
Undisclosed
Liabilities.................................................................24
4.11. Absence of
Changes.................................................................................24
4.12. Legal
Proceedings..................................................................................25
4.13. Regulatory
Matters.................................................................................25
4.14. Ownership
of ComBanc
Shares........................................................................25
ARTICLE FIVE -- FURTHER COVENANTS OF
COMBANC AND COMMERCIAL
BANK.................................................25
5.01. Operation
of
Business..............................................................................25
5.02.
Notification.......................................................................................28
5.03.
Acquisition
Proposals..............................................................................29
5.04. Delivery
of
Information............................................................................29
5.05. Affiliates
Compliance with the Securities
Act......................................................29
5.06. Voting
Agreement...................................................................................29
5.07. No
Control.........................................................................................29
5.08. Accounting
Policies................................................................................30
5.09. ComBanc
Meeting....................................................................................30
5.10. Tax
Matters........................................................................................30
5.11. Insurance
Coverage.................................................................................31
5.12.
Supplemental
Assurances............................................................................31
ARTICLE SIX -- FURTHER COVENANTS OF
FDEF.........................................................................31
6.01. Employees;
Employee
Benefits.......................................................................31
6.02. Exchange
Listing...................................................................................32
6.03.
Notification.......................................................................................32
6.04.
Indemnification....................................................................................32
6.05. Board of
Directors.................................................................................33
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6.06. Advisory
Board.....................................................................................33
ARTICLE SEVEN -- FURTHER OBLIGATIONS OF THE
PARTIES..............................................................34
7.01.
Cooperative
Action.................................................................................34
7.02. Press
Releases.....................................................................................34
7.03.
Proxy/Prospectus; Registration
Statement...........................................................34
7.04. Regulatory
Applications............................................................................35
7.05.
Termination of Profit Sharing
Plan.................................................................35
7.06.
Confidentiality....................................................................................36
ARTICLE EIGHT -- CONDITIONS PRECEDENT TO
THE OBLIGATIONS OF THE
PARTIES..........................................36
8.01. Conditions
to the Obligations of FDEF and First
Federal............................................36
8.02. Conditions
to the Obligations of ComBanc and Commercial
Bank.......................................37
8.03. Mutual
Conditions..................................................................................38
ARTICLE NINE --
CLOSING..........................................................................................38
9.01.
Closing............................................................................................38
9.02. Closing
Deliveries Required of FDEF and First
Federal..............................................39
9.03. Closing
Deliveries Required of ComBanc and Commercial
Bank.........................................39
ARTICLE TEN --
TERMINATION.......................................................................................39
10.01.
Termination........................................................................................39
10.02. Effect of
Termination..............................................................................40
10.03. Termination
Fee....................................................................................40
10.04. Force
Majeure......................................................................................40
ARTICLE ELEVEN --
MISCELLANEOUS..................................................................................41
11.01.
Notices............................................................................................41
11.02.
Counterparts.......................................................................................42
11.03. Entire
Agreement...................................................................................42
11.04. Successors and
Assigns.............................................................................42
11.05.
Captions...........................................................................................42
11.06. Governing
Law......................................................................................42
11.07. Payment of Fees
and
Expenses.......................................................................42
11.08.
Amendment..........................................................................................42
11.09.
Waiver.............................................................................................42
11.10. No Third-Party
Rights..............................................................................42
11.11. Waiver of Jury
Trial...............................................................................43
11.12.
Severability.......................................................................................43
11.13. Non-Survival of
Representations, Warranties and
Covenants..........................................43
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GLOSSARY OF DEFINED TERMS
The following terms, when used in this Agreement, have the
meanings
ascribed to them in the corresponding
Sections of this Agreement listed below:
"Acquisition Transactions"
--
Section 5.03
"Aggregated Cash Consideration"
--
Section 2.01(c)
"Agreement"
--
Preamble
"Average"
--
Section 2.01(b)
"Bank Merger"
--
Preamble
"Bank Merger Agreement"
--
Preamble
"BHCA"
--
Section 3.01(a)
"Cash Election Shares"
--
Section 2.02(a)
"CERCLA"
--
Section 3.24
"Closing"
--
Section 9.01
"Closing Date"
--
Section 9.01
"Code"
--
Section 2.02(f)
"ComBanc"
--
Preamble
"ComBanc Balance Sheet Date"
--
Section 3.06
"ComBanc Certificates"
--
Section 2.02(a)
"ComBanc Disclosure Schedule"
--
Article Three
"ComBanc Dissenting Share"
--
Section 2.03
"ComBanc Financial Statements"
--
Section 3.06
"ComBanc Meeting"
--
Section 3.04(b)
"ComBanc Real Properties"
--
Section 3.14(a)
"ComBanc Shares"
--
Section 1.01
"ComBanc's Counsel"
--
Section 7.01
"ComBanc's Financial Advisor"
--
Section 3.18
"Commercial Bank"
--
Preamble
"Commercial Bank Real Estate Collateral"
--
Section 3.24
"Compensation and Benefit Plans"
--
Section 3.20(a)
"Consultants"
--
Section 3.20(a)
"Continuing Employees"
--
Section 6.01
"Corporate Merger"
--
Preamble
"CRA"
--
Section 3.26
"DGCL"
--
Section 1.01
"Directors"
--
Section 3.20(a)
"Effective Time"
--
Section 1.02
"Election Deadline"
--
Section 2.02(b)
"Election Form"
--
Section 2.02(a)
"Employees"
--
Section 3.20(a)
"Environmental Law"
--
Section 3.24
"ERISA"
--
Section 3.20(a)
"ERISA Affiliate"
--
Section 3.20(c)
"Exchange Act"
--
Section 3.07
"Exchange Agent"
--
Section 2.02(a)
"Exchange Ratio"
--
Section 2.01(a)
"FDEF"
--
Preamble
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"FDEF Filed SEC Documents"
--
Section 4.10
"FDEF Financial Statements"
--
Section 4.07
"FDEF Shares"
--
Section 2.01(a)
"FDEF Stock Option Plans"
--
Section 4.03(a)
"FDEF Stock Options"
--
Section 4.03(a)
"FDEF's Counsel"
--
Section 7.01
"FDIC"
--
Section 3.01(b)
"Federal Reserve"
--
Section 3.01(b)
"First Federal"
--
Preamble
"GAAP"
--
Section 3.06
"Governmental Authority"
--
Section 3.16(c)
"HOLA"
--
Section
4.01(a)
"Hazardous Substances"
--
Section 3.24
"IRS"
--
Section 3.13
"Information"
--
Section 7.06
"Loan Assets"
--
Section 3.10
"Loan Documentation"
--
Section 3.10
"material"
--
Section 3.01(d)
"material adverse effect"
--
Section 3.01(d)
"MRP"
--
Section 4.03(a)
"Nasdaq"
--
Section 4.09
"No-Election Shares"
--
Section 2.02(a)
"ODFI"
--
Section 3.01(b)
"OGCL"
--
Section 1.01
"OTS"
--
Section 4.01(b)
"Officers"
--
Section 3.19(a)
"Outstanding ComBanc Shares"
--
Section 2.01(c)
"PCBs"
--
Section 3.24
"Pension Plan"
--
Section 3.20(b)
"Per Share Cash Consideration"
--
Section 2.01(a)
"Per Share Reduction"
--
Section 2.01(d)
"Per Share Stock Consideration"
--
Section 2.01(a)
"Proxy/Prospectus"
--
Section 7.03(a)
"Reallocated Cash Shares"
--
Section 2.02(c)
"Reallocated Stock Shares"
--
Section
2.02(c)
"Registration Statement"
--
Section 7.03(a)
"Regulatory Authorities"
--
Section 3.16(a)
"Rule 145 Affiliates"
--
Section 5.05
"SEC"
--
Section 3.01(c)
"Securities Act"
--
Section 3.20(b)
"Stock Election Shares"
--
Section 2.02(a)
"Subsidiary"
--
Section 3.01(c)
"Surviving Corporation"
--
Section 1.01
"Tax"
--
Section 3.13
"Tax Returns"
--
Section 3.13
"Updated ComBanc Disclosure Schedule"
--
Section 5.02
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "AGREEMENT"), dated as
of August 4, 2004, is made and entered into
by and among First Defiance
Financial Corp., an Ohio corporation
("FDEF"); First Federal Bank of the
Midwest, a federal savings bank ("FIRST
FEDERAL"); ComBanc, Inc., a Delaware
corporation ("COMBANC"); and The Commercial
Bank, an Ohio commercial bank
("COMMERCIAL BANK").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of ComBanc, Commercial Bank,
FDEF and First Federal have each determined
that it is in the best interests of
their respective corporations and
shareholders for ComBanc to merge with and
into FDEF (the "CORPORATE MERGER") followed
by the merger of Commercial Bank
with and into First Federal (the "BANK
MERGER"), upon the terms and subject to
the conditions set forth in and pursuant to
the terms of this Agreement and the
Bank Merger Agreement to be entered into by
and between First Federal and
Commercial Bank, the form of which is
attached hereto as Exhibit A (the "BANK
MERGER AGREEMENT"); and
WHEREAS, the Boards of Directors of ComBanc, Commercial Bank,
FDEF and First Federal have each approved
this Agreement and the consummation of
the transactions contemplated hereby;
NOW, THEREFORE, in
consideration of the premises and the
respective representations, warranties,
covenants, agreements and conditions
hereinafter set forth, FDEF, First Federal,
ComBanc and Commercial Bank,
intending to be legally bound hereby, agree
as follows:
ARTICLE ONE
THE MERGER
1.01. CORPORATE MERGER. Upon the terms and subject to the
conditions of this Agreement, at the
Effective Time (as defined in Section
1.02), ComBanc shall merge with and into
FDEF in accordance with the Ohio
General Corporation Law (the "OGCL") and
the Delaware General Corporation Law
(the "DGCL"). FDEF shall be the continuing
and surviving corporation in the
Corporate Merger, shall continue to exist
under the laws of the State of Ohio,
and shall be the only one of FDEF and
ComBanc to continue its separate corporate
existence after the Effective Time. As used
in this Agreement, the term
"SURVIVING CORPORATION" refers to FDEF
immediately after the Effective Time. As
a result of the Corporate Merger, the
outstanding common stock, without par
value, of ComBanc (the "COMBANC SHARES")
and ComBanc's treasury shares shall be
converted or cancelled in the manner
provided in Article Two.
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1.02. EFFECTIVE TIME. The EFFECTIVE TIME of the Corporate
Merger shall be the date and time upon
which the last of the following occurs:
(a) the filing of the appropriate
certificate of merger with the Ohio Secretary
of State, (b) the filing of the appropriate
certificate of merger with the
Delaware Secretary of State or (c) such
time thereafter as is agreed to in
writing by FDEF and ComBanc and provided in
the certificates of merger filed as
set forth above.
1.03. GOVERNING DOCUMENTS OF THE SURVIVING CORPORATION. At the
Effective Time, the articles of
incorporation and code of regulations of FDEF as
in effect immediately prior to the
Effective Time shall be the articles of
incorporation and code of regulations of
the Surviving Corporation.
1.04. BANK
MERGER. Following the
Corporate Merger, FDEF
shall cause the Bank Merger to be completed
in accordance with the Bank Merger
Agreement.
1.05. STRUCTURE OF COMBINATION. With the consent of ComBanc,
which consent shall not be unreasonably
withheld, FDEF and First Federal may at
any time change the method of effecting the
mergers (including, without
limitation, the provisions of this Article
One) if and to the extent FDEF deems
such change to be desirable; provided,
however, that no such change shall (i)
alter or change the amount or composition
of the per share merger consideration
described in Section 2.01 of this
Agreement; (ii) be likely to materially delay
or jeopardize receipt of any required
regulatory approvals or materially delay
the satisfaction of any conditions to the
closing of the Corporate Merger; or
(iii) adversely affect the tax treatment of
ComBanc or ComBanc stockholders as a
result of receiving the per share merger
consideration. ComBanc and Commercial
Bank shall, if requested by FDEF, enter
into one or more amendments to this
Agreement in order to effect any such
change.
ARTICLE TWO
CONVERSION OF SHARES; SURRENDER OF CERTIFICATES
2.01.
CONVERSION OF COMBANC SHARES. At the Effective
Time, by virtue of the Corporate Merger and
without any action on the part of
the holder thereof:
(a) Subject to Sections 2.02, 2.03 and 2.04, each ComBanc
Share issued and outstanding immediately
prior to the Effective Time (other than
ComBanc Shares to be canceled in accordance
with Section 2.01(d) and ComBanc
Dissenting Shares, as defined in Section
2.03) shall be converted into the right
to receive, at the election of the holder
thereof pursuant to Section 2.02(a):
(i)
the number of common shares, $.01 par value
per share, of FDEF ("FDEF SHARES") that is
equal to the Exchange Ratio as
defined in Section 2.01(b) (the "PER SHARE
STOCK CONSIDERATION"), or
(ii) a cash amount equal to $17.20 (the "PER SHARE
CASH CONSIDERATION").
(b) Subject to adjustments, if any, pursuant to Section
2.01(c), the Exchange Ratio shall be a
fraction the numerator of which shall be
$17.20 and the denominator of which
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shall be the average closing price of an
FDEF Share for the five consecutive
trading days ending one trading day prior
to the Effective Time (the "AVERAGE");
provided, however, that in the event the
Average is less than $21.56, then the
Exchange Ratio shall equal 0.79769;
provided further, however, that in the event
the Average is greater than $26.35, the
Exchange Ratio shall equal 0.65266.
(c) Notwithstanding anything in this Agreement to the
contrary, to preserve the status of the
Corporate Merger as a tax-free
reorganization within the meaning of
Section 368(a)(1)(A) of the Code, if the
aggregate value of the FDEF Shares to be
issued in connection with the Corporate
Merger, based upon the closing price of the
FDEF Shares as reported on The
Nasdaq Stock Market ("Nasdaq") on the
business day immediately preceding the
Effective Time, would be less than 45% of
the sum of the Aggregate Cash
Consideration (as defined below), plus the
value of the FDEF Shares to be
received by the holders of the ComBanc
Shares as consideration in connection
with the Corporate Merger, then FDEF may,
in its sole discretion, increase the
Per Share Stock Consideration so that the
aggregate value of the FDEF Shares to
be issued to the holders of the ComBanc
Shares in connection with the Corporate
Merger, as determined based upon the
closing price of the FDEF Shares on Nasdaq
on the business day immediately preceding
the Effective Time, is equal to 45% of
the sum of the Aggregate Cash
Consideration, plus the value of the FDEF Shares
to be received by the holders of the
ComBanc Shares as consideration in
connection with the Corporate Merger. For
purposes of this Agreement, the
"AGGREGATE CASH CONSIDERATION" shall be an
amount equal to the Per Share Cash
Consideration multiplied by 50% of the
number of ComBanc Shares outstanding at
the Effective Time (the "OUTSTANDING
COMBANC SHARES") (i.e. excluding any of
ComBanc's treasury shares).
(d) If the shareholders' equity of ComBanc on the Closing Date
is less than $22,500,000, excluding
unrealized accumulated other comprehensive
income related to ComBanc's investment
portfolio, the Per Share Stock
Consideration and the Per Share Cash
Consideration to be paid for the ComBanc
Shares shall be decreased by an amount
equal to (i) the difference between
$22,500,000 and the shareholders' equity of
ComBanc on the Closing Date, divided
by (ii) the number of ComBanc Shares
outstanding on the Closing Date (the "PER
SHARE REDUCTION"), and each ComBanc
shareholder shall be entitled to receive
from FDEF either (a) an amount equal to
$17.20 less the Per Share Reduction or
(b) a number of FDEF Shares equal to the
Exchange Ratio, where the numerator of
the Exchange Ratio shall be $17.20 less the
Per Share Reduction, subject to the
adjustment set forth in Section
2.01(b).
(e) No certificates or scrip representing fractional FDEF
Shares shall be issued. Each holder of
ComBanc Shares who would otherwise be
entitled to receive a fractional FDEF Share
shall receive an amount of cash
equal to the product obtained by
multiplying (i) the fractional FDEF Share
interest to which such holder (after taking
into account all ComBanc Shares held
at the Effective Time by such holder) would
otherwise be entitled by (ii) the
Average.
(f) Any treasury shares held by ComBanc and any ComBanc Shares
owned by FDEF for its own account shall be
cancelled and retired at the
Effective Time and no consideration shall
be issued in exchange therefor.
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2.02.
EXCHANGE OF COMBANC CERTIFICATES.
(a) Seven business days after the Effective Time, or as soon
as practicable thereafter, FDEF, or an
exchange agent designated by FDEF to
discharge its duties pursuant to this
Section 2.02 (the "EXCHANGE AGENT"), shall
mail to each holder of record of ComBanc
Shares (i) a form letter of transmittal
and instructions for use in surrendering
for exchange the certificates
evidencing the ComBanc Shares ("COMBANC
CERTIFICATES") that will have been
cancelled and extinguished as a result of
the Corporate Merger and (ii) an
election form ("ELECTION FORM"). The letter
of transmittal shall specify that
the risk of loss and title to the ComBanc
Certificates shall pass only upon
delivery of such certificates as specified
in the letter of transmittal. Each
Election Form shall permit the holder (or
in the case of nominee record holders,
the beneficial owner through proper
instructions and documentation) (i) to elect
to receive FDEF Shares with respect to all
such holder's ComBanc Shares, (ii) to
elect to receive cash with respect to all
such holder's ComBanc Shares, (iii) to
elect to receive 50% cash and 50% FDEF
Shares with respect to such holder's
ComBanc Shares, or (iv) to indicate that
such holder makes no such election with
respect to such holder's ComBanc Shares
("NO-ELECTION SHARES"). Any ComBanc
Shares with respect to which the holder has
elected to receive cash are
hereinafter referred to as "CASH ELECTION
SHARES," and any ComBanc Shares with
respect to which the holder has elected to
receive FDEF Shares are hereinafter
referred to as "STOCK ELECTION SHARES." Any
ComBanc Shares with respect to which
the holder thereof shall not, as of the
Election Deadline (as defined below),
have made an election by submission to the
Exchange Agent of an effective,
properly completed Election Form shall be
deemed to be No-Election Shares. Any
ComBanc Dissenting Shares shall be deemed
to be Cash Election Shares for
purposes of the allocation provisions of
subsection (c) below, but in no event
shall such shares be classified as
Reallocated Stock Shares (as defined in
Section 2.02(c)(ii)(B) below).
(b) For purposes of this Agreement, the term "ELECTION
DEADLINE" shall mean 5:00 p.m., Eastern
Time, on the 20th day following but not
including the date of mailing of the
Election Form, or such other date upon
which FDEF and ComBanc shall mutually agree
prior to the Effective Time. Any
election to receive cash, FDEF Shares or a
combination of cash and FDEF Shares
shall have been properly made only if the
Exchange Agent shall have actually
received a properly completed Election Form
by the Election Deadline. The
Exchange Agent shall be required to make
all determinations as to when any
election, modification or revocation has
been received and whether any such
election, modification or revocation has
been properly made.
(c) The Exchange Agent shall effect the allocation among
holders of ComBanc Shares of rights to
receive cash, FDEF Shares, or a
combination of cash and FDEF Shares in
accordance with the Election Forms as
follows:
(i)
If the number of Cash Election Shares is
less than one-half of the Outstanding
ComBanc Shares, then:
(A) each of
the Cash Election Shares
(other than ComBanc Dissenting Shares)
shall be converted into the right to
receive the Per Share Cash
Consideration,
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(B) the
Exchange Agent will allocate
first among the No-Election Shares (by the
method of allocation described in
Section 2.02(d)(i) below) and then, if
necessary, will allocate among the Stock
Election Shares (by the method of
allocation described in Section 2.02(d)(ii)
below), a sufficient number of non-Cash
Election Shares ("REALLOCATED CASH
SHARES") such that the sum of the number of
Cash Election Shares plus the number
of Reallocated Cash Shares equals one-half
of the Outstanding ComBanc Shares ,
and each of the Reallocated Cash Shares
shall be converted into the right to
receive the Per Share Cash Consideration,
and
(C) each of
the No-Election Shares
(if any) and Stock Election Shares which
are not Reallocated Cash Shares shall
be converted into the right to receive the
Per Share Stock Consideration.
(ii) If
the number of Cash Election Shares is
greater than one-half of the Outstanding
ComBanc Shares, then:
(A) each of
the Stock Election Shares
and No-Election Shares shall be converted
into the right to receive the Per
Share Stock Consideration,
(B) the
Exchange Agent will allocate
among the Cash Election Shares (other than
ComBanc Dissenting Shares) (by the
method of allocation described in Section
2.02(d) below), a sufficient number of
Cash Election Shares ("REALLOCATED STOCK
SHARES") such that the sum of the
number of remaining Cash Election Shares
(including all of the ComBanc
Dissenting Shares) equals one-half of the
Outstanding ComBanc Shares, and each
of the Reallocated Stock Shares shall be
converted into the right to receive the
Per Share Stock Consideration, and
(C) each of
the Cash Election Shares
(other than ComBanc Dissenting Shares)
which are not Reallocated Stock Shares
shall be converted into the right to
receive the Per Share Cash Consideration.
(iii) If the
number of Cash Election Shares
(including the ComBanc Dissenting Shares)
is equal to one-half of the
Outstanding ComBanc Shares, then
subparagraphs (c)(i) and (ii) above shall not
apply and all No-Election Shares and all
Stock Election Shares shall be
converted into the right to receive the Per
Share Stock Consideration.
(d)
Any pro rata allocation shall be performed by the
Exchange Agent as follows:
(i)
If the Exchange Agent is required pursuant
to Section 2.02(c)(i)(B) to
designate from among all No-Election Shares the
Reallocated Cash Shares to receive the Per
Share Cash Consideration, each holder
of No-Election Shares shall be allocated a
pro rata portion (based on such
holder's No-Election Shares relative to all
No-Election Shares) of the total
Reallocated Cash Shares.
(ii) If
the Exchange Agent is required pursuant
to Section 2.02(c)(i)(B) to designate from
among all Stock Election Shares the
Reallocated Cash Shares to receive the Per
Share Cash Consideration, each holder
of Stock Election Shares shall be allocated
a pro rata
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portion (based on such holder's Stock
Election Shares relative to all Stock
Election Shares) of the remainder of the
total Reallocated Cash Shares less the
number of No-Election Shares which are
Reallocated Cash Shares.
(iii) If the Exchange Agent is required pursuant to
Section 2.02(c)(ii)(B) to designate from
among all holders of Cash Election
Shares the Reallocated Stock Shares to
receive the Per Share Stock
Consideration, each holder of Cash Election
Shares shall be allocated a pro rata
portion (based on such holder's Cash
Election Shares relative to all Cash
Election Shares) of the remainder of the
total Reallocated Stock Shares less the
number of No-Election Shares which are
Reallocated Stock Shares. For purposes of
this Section 2.02(d)(iii), ComBanc
Dissenting Shares shall not be considered to
be Cash Election Shares.
(e) Upon surrender of a ComBanc Certificate for cancellation,
together with a letter of transmittal, duly
executed, the holder of such ComBanc
Certificate shall be entitled to receive in
exchange therefor a certificate
representing the full number of FDEF Shares
and/or the amount of cash into which
the aggregate number of ComBanc Shares
previously represented by such
surrendered ComBanc Certificate shall have
been converted pursuant to this
Agreement., and the ComBanc Certificate so
surrendered shall thereafter be
cancelled. All payments made upon the
surrender of ComBanc Certificates pursuant
to this Article Two shall be deemed to have
been made in full satisfaction of
all rights pertaining to the shares
evidenced by such ComBanc Certificates.
(f) If any ComBanc Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit
of that fact by the person claiming
such ComBanc Certificate to be lost, stolen
or destroyed and, if required by
FDEF in its sole discretion, the posting by
such person of a bond in such amount
as FDEF may determine is reasonably
necessary as indemnity against any claim
that may be made against it with respect to
such ComBanc Certificate, the
Exchange Agent shall issue in exchange for
such lost, stolen or destroyed
ComBanc Certificate the cash and/or FDEF
Shares (and cash in lieu of fractional
FDEF Share interests, if any) deliverable
in respect thereof.
(g) None of FDEF, ComBanc, the Exchange Agent or the Surviving
Corporation shall be liable to any former
holder of ComBanc Shares for any
payment of the Per Share Stock
Consideration, the Per Share Cash Consideration,
any cash in lieu of a fractional FDEF Share
interest or any dividends or
distributions with respect to FDEF Shares
delivered to a public official if
required by any applicable abandoned
property, escheat or similar law.
(h) No dividends or other distributions declared after the
Effective Time with respect to FDEF Shares
and payable to the holders of record
thereof after the Effective Time shall be
paid to the holder of any
unsurrendered ComBanc Certificate until it
is surrendered by the holder thereof.
Subject to the effect, if any, of
applicable law, after the subsequent surrender
and exchange of a ComBanc Certificate, the
record holder thereof shall be
entitled to receive any dividends or other
distributions, without any interest
thereon, which became payable with respect
to the FDEF Shares represented by
such ComBanc Certificate.
(i) After the Effective Time, there shall be no further
registration or transfer of ComBanc Shares
on the stock transfer books of
ComBanc. In the event that, after the
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Effective Time, ComBanc Certificates are
presented for transfer, they shall be
cancelled and exchanged as provided in this
Article Two.
(j) FDEF or the Exchange Agent shall be entitled to deduct and
withhold from the Per Share Stock
Consideration or the Per Share Cash
Consideration such amounts as FDEF or the
Exchange Agent is required to deduct
and withhold with respect to the making of
such payment under the Internal
Revenue Code of 1986, as amended (the
"CODE"), or any other provision of
domestic or foreign tax law (whether
national, federal, state, provincial, local
or otherwise). To the extent that amounts
are so withheld and paid over to the
appropriate taxing authority by FDEF or the
Exchange Agent, such withheld
amounts shall be treated for all purposes
of this Agreement as having been paid
to the holder of the ComBanc
Certificates.
(k) The Surviving Corporation may from time to time waive one
or more of the rights provided to it in
this Article Two to withhold certain
payments, deliveries and distributions; and
no such waiver shall constitute a
waiver of its rights thereafter to withhold
any such payment, delivery or
distribution in the case of any person.
2.03. DISSENTING COMBANC SHARES. Anything contained in this
Agreement or elsewhere to the contrary
notwithstanding, if any holder of an
outstanding ComBanc Share dissents from the
Corporate Merger pursuant to Section
262 of the DGCL and is thereby entitled to
appraisal rights thereunder (a
"COMBANC DISSENTING SHARE"), then such
ComBanc Dissenting Share shall be
extinguished but shall not be converted
into the right to receive the Per Share
Stock Consideration or the Per Share Cash
Consideration. Instead, such ComBanc
Dissenting Share shall be entitled only to
such rights (and shall have such
obligations) as are provided in Section 262
of the DGCL.
2.04. ANTI-DILUTION PROVISIONS. The Exchange Ratio shall be
adjusted to reflect any occurrence
subsequent to the date of this Agreement but
prior to the Effective Time, pursuant to
which the outstanding FDEF Shares shall
have been or will be increased, decreased,
changed into or exchanged for a
different number or kind of shares or
securities through reorganization,
recapitalization, reclassification, stock
dividend, stock split, reverse stock
split or other like changes in FDEF's
capitalization.
2.05. FDEF SHARES. Each FDEF Share issued and outstanding
immediately prior to the Effective Time
shall continue to be issued and
outstanding and unaffected by the Corporate
Merger.
2.06. TAX CONSEQUENCES. For federal income tax purposes, the
Corporate Merger is intended to constitute
a reorganization within the meaning
of Section 368(a) of the Code. The parties
hereto hereby adopt this Agreement as
a "plan of reorganization" within the
meaning of Treasury Department regulation
sections 1.368-2(g) and 1.368-3(a).
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES OF
COMBANC AND COMMERCIAL BANK
Except as set forth on a disclosure schedule prepared by
ComBanc and Commercial Bank (the "COMBANC
DISCLOSURE SCHEDULE"), ComBanc and
Commercial Bank
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represent and warrant to FDEF and First
Federal that each of the following
statements is true and accurate:
3.01.
CORPORATE STATUS.
(a) ComBanc is a Delaware corporation and a bank holding
company registered under the Bank Holding
Company Act of 1956, as amended
("BHCA"). ComBanc is duly organized,
validly existing and in good standing under
the laws of the State of Delaware and has
the full corporate power and authority
to own its property, to carry on its
business as presently conducted, and to
enter into and, subject to the required
adoption of this Agreement by the
ComBanc stockholders and the obtaining of
appropriate approvals of Governmental
and Regulatory Authorities (as defined
below), perform its obligations under
this Agreement and consummate the
transactions contemplated by this Agreement.
ComBanc is not qualified to do business in
any other jurisdiction or required to
be so qualified to do business in any other
jurisdiction except where the
failure to be so qualified individually or
in the aggregate would not reasonably
be expected to have a material adverse
effect on ComBanc. ComBanc has provided
to FDEF and First Federal true and complete
copies of the certificate of
incorporation and bylaws of ComBanc, in
each case as amended to the date of this
Agreement.
(b) Commercial Bank is an Ohio commercial bank and a Federal
Reserve member bank, and is regulated by
the Ohio Division of Financial
Institutions (the "ODFI"), the Board of
Governors of the Federal Reserve System
(the "FEDERAL RESERVE"), and the Federal
Deposit Insurance Corporation (the
"FDIC"). Commercial Bank is duly organized,
validly existing and in good
standing under the laws of the State of
Ohio and has full power and authority,
corporate or otherwise, to own its property
and to carry on its business as
presently conducted. Commercial Bank is not
qualified to do business in any
other jurisdiction or required to be
qualified to do business in any other
jurisdiction, except where the failure to
be so qualified individually or in the
aggregate would not reasonably be expected
to have a material adverse effect on
Commercial Bank. Commercial Bank has
provided to FDEF and First Federal true and
complete copies of the articles of
incorporation and other governing instruments
of Commercial Bank, in each case as amended
to the date of this Agreement.
(c) Commercial Bank is the only Subsidiary (as defined below)
of ComBanc. For purposes of this Agreement,
"SUBSIDIARY" has the meaning
ascribed to such term in Rule 1-02 of
Regulation S-X promulgated by the
Securities and Exchange Commission (the
"SEC").
(d) As used in this Agreement, (i) any reference to any event,
change, effect, development, circumstance
or occurrence being "MATERIAL" with
respect to any entity means an event,
change, effect, development, circumstance
or occurrence that is or is reasonably
likely to be material in relation to the
financial condition, properties, assets,
liabilities, businesses or results of
operations of such entity and its
subsidiaries taken as a whole, and (ii) the
term "MATERIAL ADVERSE EFFECT" means, with
respect to any entity, an event,
change, effect, development, circumstance
or occurrence that, individually or
together with any other event, change,
effect, development, circumstance or
occurrence, (A) has or would be reasonably
likely to have a material adverse
effect on the business, condition
(financial or otherwise), capitalization,
assets (tangible or intangible),
liabilities (accrued, contingent or otherwise),
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<PAGE>
operations, regulatory affairs, financial
performance or prospects of such
entity and its Subsidiaries, taken as a
whole, or (B) materially impairs the
ability of such entity to perform its
obligations under this Agreement or to
consummate the Corporate Merger and the
other transactions contemplated by this
Agreement.
3.02.
CAPITALIZATION OF COMBANC.
(a) The authorized capital of ComBanc consists solely of
5,000,000 ComBanc Shares, of which
2,211,014 are issued and outstanding and
164,986 are held in treasury. All
outstanding ComBanc Shares have been duly
authorized and are validly issued, fully
paid and non-assessable, and were not
issued in violation of the preemptive
rights of any person. All ComBanc Shares
issued have been issued in compliance in
all material respects with all
applicable federal and state securities
laws.
(b) As of the date of this Agreement, there are no options,
warrants, calls, rights, commitments or
agreements of any character to which
ComBanc is a party or by which it is bound,
obligating ComBanc to issue, deliver
or sell, or cause to be issued, delivered
or sold, any additional ComBanc Shares
or obligating ComBanc to grant, extend or
enter into any such option, warrant,
call, right, commitment or agreement. As of
the date of this Agreement, there
are no outstanding contractual obligations
of ComBanc to repurchase, redeem or
otherwise acquire any ComBanc Shares.
(c) Except as disclosed in Section 3.02(c) of the ComBanc
Disclosure Schedule, since December 31,
2003, ComBanc has not (A) issued or
permitted to be issued any ComBanc Shares,
or securities exercisable for or
convertible into ComBanc Shares; (B)
repurchased, redeemed or otherwise
acquired, directly or indirectly through
any ComBanc Subsidiary or otherwise,
any ComBanc Shares; or (C) declared, set
aside, made or paid to the stockholders
of ComBanc dividends or other distributions
on the outstanding ComBanc Shares.
(d) No bonds, debentures, notes or other indebtedness of
ComBanc having the right to vote on any
matters on which ComBanc stockholders
may vote are issued or outstanding.
3.03. CAPITALIZATION
OF COMMERCIAL BANK.
(a) The authorized capital of Commercial Bank consists solely
of 1,188,000 shares of common stock, of
which 1,188,000 are issued and
outstanding. All outstanding shares of
Commercial Bank are owned beneficially
and of record by ComBanc. Such shares have
been duly authorized and are validly
issued, fully paid and non-assessable, were
not issued in violation of the
preemptive rights of any person, and have
been issued in compliance in all
material respects with all applicable
federal and state securities laws.
(b) As of the date of this Agreement, there are no options,
warrants, calls, rights, commitments or
agreements of any character to which
Commercial Bank is a party or by which it
is bound, obligating Commercial Bank
to issue, deliver or sell, or cause to be
issued, delivered or sold, any
additional shares of Commercial Bank or
obligating Commercial Bank to grant,
extend or enter into any such option,
warrant, call, right, commitment or
agreement. As of the date of this
Agreement, there are no outstanding
contractual obligations of Commercial Bank
to repurchase, redeem or otherwise
acquire any shares of Commercial Bank.
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<PAGE>
(c) Commercial Bank has not (A) issued or permitted to be
issued any shares of Commercial Bank, or
securities exercisable for or
convertible into shares of Commercial Bank;
(B) repurchased, redeemed or
otherwise acquired, directly or indirectly
any shares of Commercial Bank; or (C)
declared, set aside, made or paid to the
shareholders of Commercial Bank
dividends or other distributions on the
outstanding shares of Commercial Bank.
(d) No bonds, debentures, notes or other indebtedness of
Commercial Bank having the right to vote on
any matters on which Commercial Bank
shareholders may vote are issued or
outstanding.
3.04.
CORPORATE PROCEEDINGS.
(a) This Agreement has been (i) duly executed and delivered by
ComBanc and Commercial Bank, (ii) approved
by the boards of directors of ComBanc
and Commercial Bank and (iii) adopted by
ComBanc as the sole shareholder of
Commercial Bank.
(b) Subject to the adoption of this Agreement by a majority of
the issued and outstanding ComBanc Shares
at a meeting of the ComBanc
stockholders (the "COMBANC MEETING") and to
the filing of all requisite
applications with Regulatory Authorities
and the receipt of all requisite
regulatory approvals, ComBanc and
Commercial Bank have all requisite corporate
power and authority to enter into this
Agreement and to perform all of their
obligations hereunder.
3.05. AUTHORIZATION. This Agreement has been duly executed and
delivered by each of ComBanc and Commercial
Bank, and assuming the due
authorization, execution and delivery by
FDEF and First Federal, constitutes a
valid and binding obligation of each of
ComBanc and Commercial Bank, enforceable
against each of them in accordance with its
terms, except as such enforceability
may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent
conveyance and other similar laws relating
to or affecting the enforcement of
creditors' rights generally, by general
equitable principles (regardless of
whether enforceability is considered in a
proceeding in equity or at law) and by
an implied covenant of good faith and fair
dealing and except to the extent such
enforceability may be limited by laws
relating to safety and soundness of
insured depository institutions as set
forth in 12 U.S.C. Section 1818(b) or by
appointment of a conservator by the FDIC.
Each of ComBanc and Commercial Bank
has the right, power, authority and
capacity to execute and deliver this
Agreement and, subject to the required
adoption of this Agreement by the ComBanc
stockholders, the obtaining of appropriate
approvals by Regulatory Authorities
and Governmental Authorities and the
expiration of applicable regulatory waiting
periods, to perform its obligations under
this Agreement.
3.06. FINANCIAL STATEMENTS OF COMBANC. Except as set forth in
Section 3.06 of the ComBanc Disclosure
Schedule, the audited consolidated
financial statements of ComBanc, consisting
of consolidated statements of
financial condition as of December 31,
2003, 2002 and 2001, and the related
consolidated statements of earnings,
shareholders' equity and cash flows for the
three years then ended, including the
related notes and the reports thereon of
BKD, LLP, and the unaudited interim
consolidated statements of ComBanc,
consisting of consolidated statements of
financial condition as of June 30, 2004
(the "COMBANC BALANCE
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SHEET DATE"), the related unaudited
consolidated statements of earnings, cash
flows, including the related notes thereto,
for the six months ended June 30,
2004, of ComBanc (collectively, all of such
audited and unaudited consolidated
financial statements are referred to as the
"COMBANC FINANCIAL STATEMENTS"),
copies of which have recently been provided
to FDEF and First Federal, have been
prepared in accordance with United States
generally accepted accounting
principles ("GAAP") applied on a consistent
basis during the periods involved
(except as may be indicated in the notes
thereto) and present fairly, in all
material respects, the consolidated
financial condition, earnings and cash flows
of ComBanc and Commercial Bank for the
periods then ended.
3.07. SEC FILINGS. ComBanc has filed all reports and proxy
materials required to be filed by it with
the SEC pursuant to the Securities
Exchange Act of 1934 (the "EXCHANGE ACT").
All such filings, at the time of
filing, complied in all material respects
as to form and included all exhibits
required to be filed under the applicable
rules of the SEC. None of such
documents, when filed, contained any untrue
statement of a material fact or
omitted to state a material fact required
to be stated therein or necessary in
order to make the statements therein, in
light of the circumstances under which
they were made, not misleading.
3.08. ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth
in the ComBanc Financial Statements or in
Section 3.08 of the ComBanc Disclosure
Schedule, ComBanc and Commercial Bank have
no liabilities or obligations
(whether accrued, absolute, contingent or
otherwise) as of the date hereof,
other than liabilities and obligations that
individually or in the aggregate
could not reasonably be expected to have a
material adverse effect on ComBanc or
Commercial Bank. Except as set forth in
Section 3.08 of the ComBanc Disclosure
Schedule, all debts, liabilities,
guarantees and obligations of ComBanc and
Commercial Bank incurred since the ComBanc
Balance Sheet Date have been incurred
in the ordinary course of business and are
usual and normal in amount both
individually and in the aggregate. Except
as disclosed in Section 3.08 of the
ComBanc Disclosure Schedule, neither
ComBanc nor Commercial Bank is in default
or breach of any material agreement to
which ComBanc or Commercial Bank is a
party other than any such breaches or
defaults that individually or in the
aggregate would not reasonably be expected
to have a material adverse effect on
ComBanc or Commercial Bank. To the
knowledge of ComBanc and Commercial Bank, no
other party to any material agreement to
which ComBanc or Commercial Bank is a
party is in default or breach of such
agreement, which breach or default would
reasonably be expected to have a material
adverse effect on ComBanc or
Commercial Bank.
3.09. ABSENCE OF CHANGES. Except as set forth in Section 3.09
of the ComBanc Disclosure Schedule, since
the ComBanc Balance Sheet Date there
has not been any material adverse change in
the business, operations, assets or
financial condition of ComBanc and
Commercial Bank taken as a whole.
3.10. LOANS. Except for such insufficiencies as would not
reasonably be expected to have a material
adverse effect on ComBanc or
Commercial Bank, the documentation ("LOAN
DOCUMENTATION") governing or relating
to the loan and credit-related assets
("LOAN ASSETS") included in the loan
portfolio of Commercial Bank is legally
sufficient for the purposes intended
thereby and creates enforceable rights of
Commercial Bank in accordance with the
terms of such Loan Documentation, subject
to applicable bankruptcy, insolvency,
reorganization,
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moratorium, fraudulent conveyance and other
similar laws relating to or
affecting the enforcement of creditors'
rights generally. All loans and
extensions of credit that have been made by
Commercial Bank comply in all
material respects with applicable
regulatory limitations and procedures. Except
as set forth in Section 3.10 of the ComBanc
Disclosure Schedule, no debtor under
any of the Loan Documentation has asserted
any claim or defense with respect to
the subject matter thereof. Except as set
forth in Section 3.10 of the ComBanc
Disclosure Schedule, neither ComBanc nor
Commercial Bank is a party to a loan,
including any loan guaranty, with any
director, executive officer or 5%
shareholder of ComBanc or Commercial Bank,
or any person, corporation or
enterprise controlling, controlled by or
under common control with either
ComBanc or Commercial Bank.
3.11. ALLOWANCE FOR LOAN LOSSES. Except as set forth in
Section 3.11 of the ComBanc Disclosure
Schedule, there is no loan which is
reflected as an asset in the ComBanc
Financial Statements that (a) is 90 days or
more delinquent, (b) has been classified as
"substandard," "doubtful" or "loss,"
or (c) has been designated as "special
mention." ComBanc's allowance for loan
losses has been determined in accordance
with GAAP and in accordance with all
rules and regulations applicable to ComBanc
and Commercial Bank and is adequate
to provide for reasonably anticipated
losses on outstanding loans.
3.12. REPORTS AND RECORDS. ComBanc and Commercial Bank have
filed all reports and maintained all
records required to be filed or maintained
by them under the rules and regulations of
the Federal Reserve, the ODFI and the
FDIC. All such documents and reports
complied in all material respects with
applicable requirements of law and rules
and regulations in effect at the time
such documents and reports were filed and
contained in all material respects the
information required to be stated therein.
None of such documents or reports,
when filed, contained any untrue statement
of a material fact or omitted to
state a material fact required to be stated
therein or necessary in order to
make the statements therein, in light of
the circumstances under which they were
made, not misleading.
3.13.
TAXES.
(a) Except as set forth in Section 3.13(a) of the ComBanc
Disclosure Schedule, ComBanc and Commercial
Bank have timely filed all returns,
statements, reports and forms (including,
without limitation, elections,
declarations, disclosures, schedules,
estimates and information returns)
(collectively, the "TAX RETURNS") with
respect to all federal, state, local and
foreign income, gross income, gross
receipts, gains, premium, sales, use, ad
valorem, transfer, franchise, profits,
withholding, payroll, employment, excise,
severance, stamp, occupancy, license,
lease, environmental, customs, duties,
property, windfall profits and all other
taxes (including, without limitation,
any interest, penalties or additions to tax
with respect thereto, individually a
"TAX," and collectively, "TAXES") required
to be filed with the appropriate tax
authority. Such Tax Returns were true,
correct and complete in all material
respects. ComBanc and Commercial Bank have
paid and discharged all Taxes due
(whether reflected on such Tax Returns or
otherwise), other than such Taxes that
are adequately accrued as shown on the
ComBanc Financial Statements or have
arisen in the ordinary course of business
since the ComBanc Balance Sheet Date.
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(b) Except as set forth in Section 3.13(b) of the ComBanc
Disclosure Schedule, neither the Internal
Revenue Service (the "IRS") nor any
other taxing agency or authority, domestic
or foreign, has asserted, is now
asserting or, to the knowledge of ComBanc
or Commercial Bank, is threatening to
assert against ComBanc or Commercial Bank
any deficiency or claim for additional
Taxes. There are no unexpired waivers by
ComBanc or Commercial Bank of any
statute of limitations with respect to
Taxes. The accruals and reserves for
Taxes reflected in the ComBanc Financial
Statements are adequate in all material
respects for the periods covered. ComBanc
and Commercial Bank have withheld or
collected and paid over to the appropriate
Governmental Authorities or are
properly holding for such payment all Taxes
required by law to be withheld or
collected. There are no liens for Taxes
upon the assets of ComBanc or Commercial
Bank, other than liens for current Taxes
not yet due and payable. Neither
ComBanc nor Commercial Bank has agreed to
make, or is required to make, any
adjustment under Section 481(a) of the
Code.
(c) Except as set forth in Section 3.13(c) of the ComBanc
Disclosure Schedule, neither ComBanc nor
Commercial Bank is a party to any
agreement, contract, arrangement or plan
that has resulted, or could result,
individually or in the aggregate, in the
payment of "excess parachute payments"
within the meaning of Section 280G of the
Code.
(d) Neither ComBanc nor Commercial Bank (i) has ever been a
member of an affiliated group of
corporations, within the meaning of Section
1504 of the Code, other than an affiliated
group of which ComBanc is or was the
common parent corporation, or (ii) has any
liability for the Taxes of any other
person or entity under Treasury Department
Regulation Section 1.1502-6 (or any
similar provision of state, local or
foreign law), as a transferee or successor,
by contract or otherwise.
(e) No Tax is required to be withheld pursuant to Section 1445
of the Code as a result of the transactions
contemplated by this Agreement.
3.14. PROPERTY AND TITLE.
(a) Section 3.14(a) of the ComBanc Disclosure Schedule lists
and describes all real property, and any
leasehold interest in real property,
owned or held by ComBanc or Commercial Bank
(collectively, the "COMBANC REAL
PROPERTIES"). Copies of all leases of
ComBanc Real Properties to which ComBanc
or Commercial Bank is a party have been
provided to FDEF. Such leasehold
interests have not been assigned or
subleased. All ComBanc Real Properties which
are owned by ComBanc or Commercial Bank are
free and clear of all mortgages,
liens, security interests, defects,
encumbrances, easements, restrictions,
reservations, conditions, covenants,
agreements, encroachments, rights of way
and zoning laws, except (i) those set forth
in Section 3.14(a) of the ComBanc
Disclosure Schedule; (ii) easements,
restrictions, reservations, conditions,
covenants, rights of way, zoning laws and
other defects and irregularities in
title and encumbrances which do not
materially impair the use thereof for the
purposes for which they are held; and (iii)
liens for current Taxes not yet due
and payable.
(b) ComBanc and Commercial Bank own, and are in rightful
possession of, and have good title to, all
of the other assets indicated in the
ComBanc Financial Statements as being owned
by ComBanc or Commercial Bank, free
and clear of any charge, mortgage,
pledge,
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security interest, hypothecation,
restriction, claim, option, lien, encumbrance
or interest of any persons whatsoever
except (a) those described in Section
3.14(b) of the ComBanc Disclosure Schedule
and (ii) those assets disposed of in
the ordinary course of business consistent
with past practices.
(c) The assets of ComBanc and Commercial Bank, taken as a
whole, are adequate to continue to conduct
the businesses of ComBanc and
Commercial Bank as such businesses are
presently being conducted.
3.15. LEGAL PROCEEDINGS. Except as set forth in Section 3.15
of the ComBanc Disclosure Schedule and
other than routine foreclosure and
collection matters where ComBanc or
Commercial Bank are only plaintiffs, there
are no actions, suits, proceedings, claims
or investigations pending or, to the
knowledge of ComBanc or Commercial Bank,
threatened in any court, before any
governmental agency or instrumentality or
in any arbitration proceeding against
or by ComBanc or Commercial Bank.
3.16.
COMPLIANCE WITH LAWS AND REGULATIONS.
(a) Except as set forth in Section 3.16(a) of the ComBanc
Disclosure Schedule, neither ComBanc,
Commercial Bank nor their respective
properties is a party to or subject to any
order, judgment, decree, agreement,
memorandum of understanding or similar
arrangement with, or a commitment letter
or similar submission to, or extraordinary
supervisory letter from, any court or
federal or state governmental agency or
authority, including any such agency or
authority charged with the supervision or
regulation of financial institutions
(or their holding companies) or issuers of
securities (including, without
limitation, the Federal Reserve, the ODFI,
the FDIC, and the SEC) or the
supervision or regulation of ComBanc or
Commercial Bank (collectively, the
"REGULATORY AUTHORITIES"). Neither ComBanc
nor Commercial Bank has been advised
by any Regulatory Authority that such
Regulatory Authority is contemplating
issuing or requesting (or is considering
the appropriateness of issuing or
requesting) any new or additional order,
judgment, decree, agreement, memorandum
of understanding, commitment letter,
supervisory letter or similar submission.
(b) Each of ComBanc and Commercial Bank has been in compliance
with all applicable federal, state, local
and foreign statutes, laws,
regulations, ordinances, rules, judgments,
orders or decrees applicable thereto
or to the employees conducting such
business, including, without limitation, the
Equal Credit Opportunity Act, as amended,
the Fair Housing Act, as amended, the
Federal Community Reinvestment Act, as
amended, the Home Mortgage Disclosure
Act, as amended, and all other applicable
fair lending laws and other laws
relating to discriminatory business
practices, except for failures to be in
compliance which, individually or in the
aggregate, have not had or would not
reasonably be expected to have a material
adverse effect on ComBanc or
Commercial Bank.
(c) Each of ComBanc and Commercial Bank has all permits,
licenses, authorizations, orders and
approvals of, and has made all filings,
applications and registrations with, each
Regulatory Authority and
administrative agency or commission or
other federal, state or local government
authority or instrumentality (each, a
"GOVERNMENTAL AUTHORITY") that is required
in order to permit it to own or lease its
properties and to conduct its business
as
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presently conducted, except where the
failure to obtain any of the foregoing or
to make any such filing, application or
registration has not had or would not
reasonably be expected to have a material
adverse effect on ComBanc or
Commercial Bank; and all such permits,
licenses, certificates of authority,
orders and approvals are in full force and
effect and no suspension or
cancellation of any of them has been
threatened in writing.
(d) The savings accounts and deposits of Commercial Bank are
insured up to applicable limits by the FDIC
in accordance with the Federal
Deposit Insurance Act, and Commercial Bank
has paid all assessments and filed
all reports required by the Federal Deposit
Insurance Act.
3.17. NO CONFLICT. Except as set forth in the ComBanc
Disclosure Schedule, subject to the
required adoption of this Agreement by the
stockholders of ComBanc, receipt of the
required approvals of Governmental and
Regulatory Authorities, expiration of
applicable regulatory waiting periods, and
required filings under federal and state
securities laws, the execution,
delivery and performance of this Agreement,
and the consummation of the
transactions contemplated hereby, by
ComBanc and Commercial Bank does not and
will not (a) conflict with, or result in a
violation of, or result in the breach
of or a default (or which with notice or
lapse of time would result in a
default) under, any provision of: (i) any
federal, state or local law,
regulation, ordinance, order, rule or
administrative ruling of any Governmental
Authority applicable to ComBanc or
Commercial Bank or any of their respective
properties; (ii) the certificate of
incorporation or bylaws of ComBanc, or the
articles of incorporation, code of
regulations or other governing instruments of
Commercial Bank; (iii) any material
agreement, indenture or instrument to which
ComBanc or Commercial Bank is a party or by
which either of their properties or
assets may be bound; or (iv) any order,
judgment, writ, injunction or decree of
any court, arbitration panel or any
Governmental Authority applicable to ComBanc
or Commercial Bank; (b) result in the
creation or acceleration of any security
interest, mortgage, option, claim, lien,
charge or encumbrance upon or interest
in any property of ComBanc or Commercial
Bank; or (c) violate the terms or
conditions of, or result in the
cancellation, modification, revocation or
suspension of, any material license,
approval, certificate, permit or
authorization held by ComBanc or Commercial
Bank.
3.18. BROKERS, FINDERS AND OTHERS. Except for $266,000 in
aggregate fees and expenses that are
payable to Keefe, Bruyette and Woods, Inc.
("COMBANC'S FINANCIAL ADVISOR") and the
ordinary and customary legal and
accounting fees, there are no fees or
commissions of any sort whatsoever claimed
by, or payable by ComBanc or Commercial
Bank to, any broker, finder,
intermediary, attorney, accountant or any
other similar person in connection
with effecting this Agreement or the
transactions contemplated hereby.
3.19. EMPLOYMENT AGREEMENTS. Neither ComBanc nor Commercial
Bank is a party to any employment, change
in control, severance or consulting
agreement. Neither ComBanc nor Commercial
Bank is a party to, bound by or
negotiating, any collective bargaining
agreement, nor are any of their
respective employees represented by any
labor union or similar organization.
Each of ComBanc and Commercial Bank is in
compliance with all applicable laws
respecting employment and employment
practices, terms and conditions of
employment and wages and hours other than
with respect to any noncompliance that
individually or in the aggregate would not
reasonably be expected to have a
material adverse effect on ComBanc or
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Commercial Bank. Neither ComBanc nor
Commercial Bank has engaged in any unfair
labor practice, other than practices that
individually or in the aggregate would
not reasonably be expected to have a
material adverse effect on ComBanc or
Commercial Bank.
3.20.
EMPLOYEE BENEFIT PLANS.
(a) Section 3.20(a) of the ComBanc Disclosure Schedule
contains a complete and accurate list of
all bonus, incentive, deferred
compensation, pension (including, without
limitation, Pension Plans defined
below), retirement, profit-sharing, thrift,
savings, employee stock ownership,
stock bonus, stock purchase, restricted
stock, stock option, severance, welfare
(including, without limitation, "welfare
plans" within the meaning of Section
3(1) of the Employee Retirement Income
Security Act of 1974, as amended
("ERISA")), fringe benefit plans,
employment or severance agreements and all
similar practices, policies and
arrangements maintained or contributed to
(currently or within the last six years) by
(i) ComBanc or Commercial Bank and
in which any employee or former employee
(the "EMPLOYEES"), consultant or former
consultant (the "CONSULTANTS"), officer or
former officer (the "OFFICERS"), or
director or former director (the
"DIRECTORS") of ComBanc or Commercial Bank
participates or to which any such
Employees, Consultants, Officers or Directors
are parties or (ii) any ERISA Affiliate (as
defined below) (collectively, the
"COMPENSATION AND BENEFIT PLANS"). Neither
ComBanc nor Commercial Bank has any
commitment to create any additional
Compensation and Benefit Plan or to modify
or change any existing Compensation and
Benefit Plan, except to the extent
required by law.
(b) Each Compensation and Benefit Plan has been operated and
administered substantially in accordance
with its terms and with applicable law,
including, but not limited to, ERISA, the
Code, the Securities Act of 1933, as
amended (the "SECURITIES ACT"), the
Exchange Act, the Age Discrimination in
Employment Act, or any regulations or rules
promulgated thereunder, and all
filings, disclosures and notices required
by ERISA, the Code, the Securities
Act, the Exchange Act, the Age
Discrimination in Employment Act and any other
applicable law have been timely made. The
prototype plan sponsor of the
Compensation and Benefit Plan which is an
"employee pension benefit plan" within
the meaning of Section 3(2) of ERISA (a
"PENSION PLAN") and which is intended to
be qualified under Section 401(a) of the
Code has received a favorable opinion
letter from the IRS and neither ComBanc nor
Commercial Bank (i) has obtained a
determination letter from the IRS or (ii)
is aware of any circumstances likely
to result in revocation of such prototype
plan sponsor's favorable opinion
letter. There is no material pending or, to
the knowledge of ComBanc or
Commercial Bank, threatened, legal action,
suit or claim relating to the
Compensation and Benefit Plans other than
routine claims for benefits
thereunder. Neither ComBanc nor Commercial
Bank has engaged in a transaction, or
omitted to take any action, with respect to
any Compensation and Benefit Plan
that would reasonably be expected to
subject ComBanc or Commercial Bank to a tax
or penalty imposed by either Section 4975
of the Code or Section 502 of ERISA,
assuming for purposes of Section 4975 of
the Code that the taxable period of any
such transaction expired as of the date
hereof.
(c) Except as set forth in Section 3.20(c) of the ComBanc
Disclosure Schedule, (i) none of ComBanc or
Commercial Bank, or any entity which
is considered one employer with ComBanc or
Commercial Bank under Section
4001(a)(14) of ERISA or Section 414(b), (c)
or (m) of the Code (an "ERISA
Affiliate"), has ever sponsored, maintained
or
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been obligated to contribute to any Pension
Plan subject to either Title IV of
ERISA or the funding requirements of
Section 412 of the Code; (ii) none of
ComBanc or Commercial Bank, or any ERISA
Affiliate, has contributed, or has been
obligated to contribute, to a multiemployer
plan under Subtitle E of Title IV of
ERISA (as defined in ERISA Sections
3(37)(A) and 4001(a)(3)) at any time since
September 26, 1980; and (iii) there is no
pending investigation or enforcement
action by the PBGC, the Department of
Labor, the IRS or any other Governmental
Authority with respect to any Compensation
and Benefit Plan.
(d) Except as set forth in Section 3.20(d) of the ComBanc
Disclosure Schedule, all contributions
required to be made under the terms of
any Compensation and Benefit Plan or ERISA
Affiliate plan or any employee
benefit arrangements under any collective
bargaining agreement to which ComBanc
or Commercial Bank is a party have been
timely made or have been reflected on
the ComBanc Financial Statements.
(e) Except as disclosed in Section 3.20(e) of the ComBanc
Disclosure Schedule, neither ComBanc nor
Commercial Bank has any obligations to
provide retiree health and retiree life
insurance or other retiree death
benefits under any Compensation and Benefit
Plan, other than benefits mandated
by Section 4980B of the Code.
(f) ComBanc and Commercial Bank do not maintain any foreign
Compensation and Benefit Plans.
(g) With respect to each Compensation and Benefit Plan, if
applicable, ComBanc or Commercial Bank has
provided to FDEF, true and complete
copies of: (i) Compensation and Benefit
Plan documents and all subsequent
amendments thereto; (ii) trust instruments
and insurance contracts and all
subsequent amendments thereto; (iii) the
most recent annual returns (Forms 5500)
and financial statements; (iv) the most
recent summary plan descriptions and all
subsequent summaries of material
modifications; (v) the most recent
determination letter issued by the IRS with
respect to each Compensation and
Benefit Plan that is intended to comply
with Code Section 401(a); and (vi) any
Form 5310, Form 5310A, Form 5300 or Form
5330 filed with the IRS within the
twelve months ending immediately before the
date hereof.
(h) Except as disclosed in Section 3.20(h) of the ComBanc
Disclosure Schedule, the consummation of
the transactions contemplated by this
Agreement would not, directly or indirectly
(including, without limitation, as a
result of any termination of employment
prior to or following the Effective
Time), reasonably be expected to (i)
entitle any Employee, Officer, Consultant
or Director
