AGREEMENT AND PLAN OF
REORGANIZATION
by and among
PCB HOLDING
COMPANY
an Indiana
corporation,
PEOPLES COMMUNITY
BANK,
a federal savings
association,
GERMAN AMERICAN
BANCORP,
an Indiana
corporation,
and
FIRST STATE BANK, SOUTHWEST
INDIANA
an Indiana banking
corporation
May 23, 2005
TABLE OF CONTENTS
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Page
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Article
I. TERMS OF THE MERGERS &
CLOSING
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1
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Section
1.01. The Holding Company Merger
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1
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Section
1.02. Effect of the Holding Company
Merger
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2
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Section
1.03. The Holding Company Merger —
Conversion of Shares.
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2
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Section
1.04. The Holding Company Merger —
Cancellation of Options
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4
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Section
1.05. The Bank Merger
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4
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Section
1.06. The Closing
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4
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Section
1.07. Exchange Procedures; Surrender of
Certificates.
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4
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Section
1.08. The Closing Date
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5
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Section
1.09. Actions At Closing.
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5
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Article
II. REPRESENTATIONS AND WARRANTIES OF PCB
AND PEOPLES
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7
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Section
2.01. Organization and Capital
Stock.
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7
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Section
2.02. Authorization; No Defaults
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8
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Section
2.03. Subsidiaries
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8
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Section
2.04. Financial Information.
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8
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Section
2.05. Absence of Changes
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9
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Section
2.06. Absence of Agreements with Banking
Authorities
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9
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Section
2.07. Tax Matters
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9
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Section
2.08. Absence of Litigation
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9
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Section
2.09. Employment Matters.
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9
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Section
2.10. Reports
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10
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Section
2.11. Investment Portfolio
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10
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Section
2.12. Loan Portfolio
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10
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Section
2.13. ERISA.
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11
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Section
2.14. Title to Properties;
Insurance
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13
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Section
2.15. Environmental Matters.
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14
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Section
2.16. Compliance with Law
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14
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Section
2.17. Brokerage
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14
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Section
2.18. Material Contracts
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14
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Section
2.19. Compliance with Americans with
Disabilities Act
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15
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Section
2.20. Statements True and Correct
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15
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Section
2.21. PCB's Knowledge
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15
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Article
III. REPRESENTATIONS AND WARRANTIES OF
GERMAN AMERICAN AND FIRST STATE
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15
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Section
3.01. Organization and Capital
Stock.
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16
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Section
3.02. Authorization
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16
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Section
3.03. Subsidiaries
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17
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Section
3.04. Financial Information
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17
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Section
3.05. Absence of Changes
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18
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Section
3.06. Reports
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18
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Section
3.07. Absence of Litigation
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18
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Section
3.08. Absence of Agreements with Banking
Authorities
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18
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Section
3.09. Compliance with Law
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18
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Section
3.10. Brokerage
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19
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Section
3.11. Statements True and Correct
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19
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Section
3.12. German American's Knowledge
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19
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Article
IV. COVENANTS OF PCB AND PEOPLES
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19
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Section
4.01. Conduct of Business.
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19
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Section
4.02. Subsequent Discovery of Events or
Conditions
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23
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Section
4.03. Shareholder and Other Approvals;
Cooperation.
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23
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Section
4.04. SEC Registration Matters
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24
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Section
4.05. Environmental Reports
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24
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Section
4.06. Rule 145 Restrictions on
Resales
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25
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Section
4.07. Access to Information.
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25
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Section
4.08. Cooperation in Connection with
Termination of Certain
Executive
Agreements and Exercise of Stock Options
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25
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Section
4.09. Permitted Payments and
Dividends
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25
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Article
V. COVENANTS OF GERMAN AMERICAN AND FIRST
STATE
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26
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Section
5.01. Regulatory Approvals and Registration
Statement.
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26
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Section
5.02. Subsequent Discovery of Events or
Conditions
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26
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Section
5.03. Consummation of Agreement
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27
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Section
5.04. Preservation of Business
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27
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Section
5.05. Representation on First State
Board
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27
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Section
5.06. Appointment of New First State
Officer
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27
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Article
VI. CONDITIONS PRECEDENT TO THE
MERGER
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30
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Section
6.01. Conditions of German American's
Obligations
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30
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Section
6.02. Conditions of PCB's and Peoples'
Obligations
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31
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Article
VII. TERMINATION OR ABANDONMENT
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33
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Section
7.01. Mutual Agreement
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33
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Section
7.02. By Unilateral Action
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33
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Section
7.03. Shareholder Approval Denial
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33
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Section
7.04. Adverse Environmental
Reports
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33
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Section
7.05. Termination Upon Adverse Regulatory
Determination
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34
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Section
7.06. Regulatory Enforcement
Matters
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34
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Section
7.07. Lapse of Time
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34
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Section
7.08. Effect of Termination.
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34
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Article
VIII. MISCELLANEOUS
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35
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Section
8.01. Liabilities
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35
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Section
8.02. Expenses
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35
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Section
8.03. Notices
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36
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Section
8.04. Non-survival of Representations,
Warranties and Agreements
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36
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Section
8.05. Representations Not Affected by
Review
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37
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Section
8.06. Press Releases
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37
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Section
8.07. Entire Agreement
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37
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Section
8.08. Headings and Captions
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37
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Section
8.09. Waiver, Amendment or
Modification
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37
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Section
8.10. Rules of Construction
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37
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Section
8.11. Counterparts
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37
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Section
8.12. Successors
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37
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Section
8.13. Governing Law; Assignment
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38
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AGREEMENT AND PLAN OF
REORGANIZATION
THIS AGREEMENT AND PLAN OF
REORGANIZATION (this "Agreement") is made May 23, 2005, by and
among PCB HOLDING COMPANY, an Indiana corporation ("PCB"), PEOPLES
COMMUNITY BANK, a federal savings association ("Peoples"), GERMAN
AMERICAN BANCORP, an Indiana corporation ("German American"), and
FIRST STATE BANK, SOUTHWEST INDIANA, an Indiana banking corporation
("First State").
Recitals
A. PCB
is a corporation duly organized and existing under the Indiana
Business Corporation Law ("IBCL") that is duly registered as a
savings and loan holding company under the Home Owners Loan Act, as
amended ("HOLA"). PCB owns all of the outstanding capital stock of
Peoples, which operates two banking offices in Tell City, Perry
County, Indiana.
B. German
American is a corporation duly organized and existing under the
IBCL that is duly registered with the Board of Governors of the
Federal Reserve System ("FRB") as a bank holding company under the
Bank Holding Company Act of 1956, as amended (the "BHC Act").
German American owns all of the outstanding capital stock of First
State, which is duly organized and existing as a bank under the
Indiana Financial Institutions Act ("IFIA") and operates two
banking offices in Tell City, Perry County, Indiana.
C. The
parties desire to effect transactions whereby, in consideration of
the payment of cash and the issuance of Common Shares, no par
value, $1 stated value, of German American (such shares, together
with the accompanying preferred share purchase rights, being
hereafter referred to as "German American Common") to the
shareholders of PCB in exchange for their shares of common stock,
$.01 par value, of PCB ("PCB Common"), PCB will be merged with and
into German American and, immediately thereafter, Peoples will be
merged with and into First State (the "Mergers").
D. The
parties intend for the Mergers to qualify as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended, and agree to cooperate and take such actions
as may be reasonably necessary to assure such result.
Agreements
In consideration of the premises and
the mutual terms and provisions set forth in this Agreement, the
parties agree as follows:
ARTICLE I.
TERMS OF THE MERGERS &
CLOSING
Section 1.01.
The
Holding Company Merger . Pursuant to the terms and provisions
of this Agreement, the IBCL and the Plan of Merger attached hereto
as Appendix A and incorporated herein by this reference (the
"Holding Company Plan of Merger"), PCB shall merge with and into
German American (the "Holding Company Merger"). PCB shall be the
"Merging Holding Company" in the Holding Company Merger and its
corporate identity and existence, separate and apart from German
American, shall cease on consummation of the Holding Company
Merger. German American shall be the "Surviving Holding Company" in
the Holding Company Merger, and its name shall not be changed
pursuant to the Holding Company Merger.
Section 1.02.
Effect
of the Holding Company Merger . The Holding Company Merger
shall have all the effects provided by the IBCL.
Section 1.03. The Holding
Company Merger –Conversion of Shares .
(a) At
the time of filing with the Indiana Secretary of State of
appropriate Articles of Merger with respect to the Holding Company
Merger, or at such later time as shall be specified by such
Articles of Merger (the "Effective Time"), each of the shares of
PCB Common that immediately prior to the Effective Time are issued
and outstanding (other than Dissenting Shares, as defined by
Section 1.03(h)) shall, by virtue of the Merger and without any
action on the part of the holders thereof, be converted into the
right to receive (a) a cash payment of $9.00 (the "Cash
Consideration"), subject to adjustment as provided in subsection
(b)(i) of this Section 1.03 , and (b) 0.7143 (the "Exchange
Ratio") shares of German American Common (together, the Cash
Consideration and German American Common is sometimes referred to
in this Agreement as the "Merger Consideration").
(b) The
Cash Consideration shall be decreased by an amount equal to (i) the
amount by which $4,825,000 exceeds the Net Worth (as defined below)
of PCB, divided by (ii) the number of shares of PCB Common issued
and outstanding as of the Effective Time. In the event that the Net
Worth of PCB is equal to or exceeds $4,825,000 at such date, there
shall be no adjustment to the Cash Consideration. For purposes of
this Agreement, "Net Worth" shall mean the consolidated
stockholders' equity of PCB as of the close of business on the last
day of the month before the month in which the Closing Date (as
that term is defined by Section 1.08) occurs, calculated in
accordance with generally accepted accounting principles,
consistently applied, except that Net Worth shall give effect
(regardless of whether such obligations would be accrued as a
liability under generally accepted accounting principles, or under
the historic application of such principles by PCB) to (w)
additional provisions for possible loan losses, if any, that may be
deemed necessary to establish the allowance for loan losses at a
level that is deemed adequate, as of the Closing Date, under
generally accepted accounting principles, consistently applied, (x)
accruals for payables representing all fees and expenses and costs
relating to the Mergers through and including the Effective Time
(including but not limited to those incurred in connection with the
negotiation of the terms of the Mergers, the preparation, execution
and delivery of this Agreement, the obtaining of shareholder
approvals and regulatory approvals, the termination of the People's
contract with Intrieve, Incorporated and the closing of the
Mergers), including those that might not be performed or earned or
become payable until after the Effective Time (and estimated using
best estimates on the Closing Date), such as but not limited to
investment banking fees and similar payments for services performed
prior to the Effective Time that may not be deemed earned unless
and until the Mergers have become effective; (y) payments to be
made (and the costs of benefits to be provided) on and after the
Closing Date pursuant to the Smith Employment Agreement Termination
Agreement and the Blackford Employment Agreement Termination
Agreement (as each is defined herein) and (z) actions taken
pursuant to Section 4.09 or Section 4.01(a)(i) or
(ii) hereof (to the extent not already reflected in the
financial statements of Peoples as of the month end prior to the
Closing Date).
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(c) The
shares of German American issued and outstanding immediately prior
to the Effective Time shall continue to be issued and outstanding
shares of German American.
(d) No
fractional shares of German American Common shall be issued and, in
lieu thereof, holders of shares of PCB Common who would otherwise
be entitled to a fractional share interest (after taking into
account all shares of PCB Common held by such holder) shall be paid
an amount in cash equal to the product of such fractional share and
the average of the NASDAQ Official Closing Price of a share of
German American Common as quoted on the NASDAQ National Market
System on the last trading day before the Closing Date.
(e) At
the Effective Time, each share of PCB Common, if any, held in the
treasury of PCB or by any direct or indirect subsidiary of PCB
(other than shares held in trust accounts for the benefit of others
or in other fiduciary, nominee or similar capacities) immediately
prior to the Effective Time shall be canceled and shall cease to
exist, and no consideration shall be delivered in exchange
therefor.
(f) At
the Effective Time, all of the outstanding shares of PCB Common, by
virtue of the Holding Company Merger and without any action on the
part of the holders thereof, shall no longer be outstanding and
shall be canceled and retired and shall cease to exist, and each
holder of any certificate or certificates which immediately prior
to the Effective Time represented outstanding shares of PCB Common
("Certificates") shall thereafter cease to have any rights with
respect to such shares, except the right of such holders to
receive, without interest, the Merger Consideration upon the
surrender of such Certificate or Certificates in accordance with
Section 1.07 .
(g) If
(i) German American shall hereafter declare a stock dividend or
other distribution of property or securities (other than a cash
dividend) upon the German American Common or shall subdivide, split
up, reclassify or combine the German American Common, and (ii) the
record date for such transaction is prior to the date on which the
Effective Time occurs, appropriate adjustment or adjustments will
be made to the Exchange Ratio.
(h) If
any holders of PCB Common notify PCB, before the vote is taken of
PCB's shareholders on the question of approval of the Holding
Company Merger, of their intent to demand payment for their shares
of PCB Common under IC 23-1-44 if the Holding Company Merger is
effectuated and do not vote in favor of the Holding Company Merger
("Dissenting Shareholders"), then any shares of PCB Common held by
such Dissenting Shareholders ("Dissenting Shares") shall not be
converted as described in this Section 1.03 at the Effective Time
but shall from and after the Effective Time represent only the
right to receive such consideration as may be determined to be due
to such Dissenting Shareholders pursuant to the IBCL; provided,
however, that each Dissenting Shareholder who does not, after the
Effective Time, timely take all additional actions required by IC
23-1-44-13 in order to be eligible to demand payment with respect
to such holder's PCB Common shall, as of the date of such failure
to have taken such actions on a timely basis, be deemed to have
voted in favor of the Holding Company Merger and accordingly no
longer to be a Dissenting Shareholder, and such holder's shares of
PCB Common shall thereupon no longer be deemed to be Dissenting
Shares and shall be deemed to have been exchanged at the Effective
Time into the right to receive (without interest) the Merger
Consideration.
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Section 1.04.
The
Holding Company Merger – Cancellation of Options . Any
outstanding stock options issued by PCB (whether to employees or
directors of Peoples or others) that have not been exercised before
the close of business on the Closing Date shall be cancelled (and
any and all stock option plans or arrangements under which such
options shall have been issued shall at such time be deemed
terminated), and PCB shall not accept any purported notice of
exercise of any such stock option after the close of business on
the Closing Date but shall promptly notify German American of any
such purported notice. German American shall have no obligation to
any employee, director, agent or other person claiming by or
through PCB with respect to any claim arising in respect of any
such option, plan or arrangement.
Section 1.05.
The Bank
Merger . Peoples and PCB shall take all action necessary and
appropriate, including entering into an agreement and plan of
merger (the "Bank Merger Agreement") substantially in the form
attached hereto as Exhibit B, to cause Peoples to merge with and
into First State (the "Bank Merger") in accordance with all
applicable laws and regulations, effective immediately after the
Effective Time.
Section 1.06.
The
Closing . The closing of the Mergers (the "Closing") shall take
place on the Closing Date described in Section 1.08 of this
Agreement, and at such time and at such place as the parties may
determine.
Section 1.07 . Exchange
Procedures; Surrender of Certificates .
(a) German
American shall appoint its transfer agent as exchange agent for the
surrender of Certificates formerly representing PCB Common in
exchange for the Merger Consideration (the "Exchange
Agent").
(b) At
least five business days before the Closing Date, the Exchange
Agent shall provide to each record holder of any Certificate or
Certificates whose shares were converted into the right to receive
a pro rata portion of the Merger Consideration, a letter of
transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only
upon the proper delivery of the Certificates to the Exchange Agent
and shall be in such form and have such other provisions as German
American may reasonably specify) (each such letter the "Merger
Letter of Transmittal") and instructions for use in effecting the
surrender of the Certificates in exchange for the Merger
Consideration. As soon as reasonably practical but in no event more
than fifteen days after surrender to the Exchange Agent of a
Certificate(s), together with a Merger Letter of Transmittal duly
executed and any other required documents, the Exchange Agent shall
deliver to each of the holders of shares of PCB Common (or
representatives of such persons) at the Closing the applicable
aggregate amount of Merger Consideration. No interest on the Merger
Consideration payable or issuable upon the surrender of the
Certificates shall be paid or accrued for the benefit of holders of
Certificates. If the Merger Consideration is to be issued or paid
to a person other than a person in whose name a surrendered
Certificate is registered, it shall be a condition of issuance that
the surrendered Certificate shall be properly endorsed or otherwise
in proper form for transfer and that the person requesting such
issuance or payment shall pay to the Exchange Agent any required
transfer or other taxes or establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not applicable.
German American reserves the right in all cases to require that a
surety bond on terms and in an amount satisfactory to German
American be provided to German American at the expense of the PCB
shareholder in the event that such shareholder claims loss of a
Certificate and requests that German American waive the requirement
for surrender of such Certificate.
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(c) No
dividends that are otherwise payable on shares of German American
Common constituting the Merger Consideration shall be paid to
persons entitled to receive such shares of German American Common
until such persons surrender their Certificates. Upon such
surrender, there shall be paid to the person in whose name the
shares of German American Common shall be issued any dividends
which shall have become payable with respect to such shares of
German American Common (without interest and less the amount of
taxes, if any, which may have been imposed thereon), between the
Effective Time and the time of such surrender.
Section 1.08.
The
Closing Date . The Closing shall take place on the last
business day of the month during which each of the conditions in
Section 6.01 (c) and (e) and Section 6.02 (c) and (e)
are satisfied, or on such later or earlier date as PCB and German
American may agree (the "Closing Date"). The parties shall use
their best efforts to cause the Effective Time of both Mergers to
be as of the first day of the calendar month that follows the month
in which the Closing occurs.
Section 1.09 . Actions At
Closing .
(a) At the
Closing, PCB shall deliver to German American:
(i) a
copy of the Articles of Incorporation certified by the Indiana
Secretary of State as of a date within five (5) days prior to the
Closing Date and Bylaws of PCB certified by PCB's corporate
secretary, each as amended, and a certified copy of the Charter and
Bylaws of Peoples, as amended;
(ii) a
certificate or certificates signed by the chief executive officer
of PCB stating, to the best of his knowledge and belief, after due
inquiry, that the conditions specified in Sections 6.01(a)
and (b) have been met;
(iii) certified
copies of the resolutions of PCB's Board of Directors and
shareholders, approving and authorizing the execution of this
Agreement and the Plan of Merger and authorizing the consummation
of the Holding Company Merger;
(iv) a
certified copy of the resolutions of the Board of Directors of
Peoples and of its shareholder, as required for valid approval of
the execution of this Agreement and the consummation of the Bank
Merger;
(v) a
certificate of the Indiana Secretary of State, dated a recent date,
stating that PCB is duly organized and exists under the
IBCL;
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(vi) a
certificate of the OTS , dated a recent date, stating that
Peoples is duly organized and exists under federal law;
(vii) a
certified list of those holders of PCB Common of record as of the
close of business on the Closing Date who are Dissenting
Shareholders and the number of shares of PCB Common as to which
each of them are Dissenting Shareholders; and
(viii) the
legal opinion of Muldoon Murphy & Aggugia LLP as special
counsel for PCB, to the effect set forth as Exhibit
1.10(a)(ix) .
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(b)
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At the Closing, German American shall deliver to
PCB:
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(i) a
certificate signed by the Chief Executive Officer of German
American stating, to the best of his knowledge and belief, after
due inquiry, that (A) each of the representations and warranties
contained in Article III is true and correct in all material
respects at the time of the Closing with the same force and effect
as if such representations and warranties had been made at Closing
and (B) German American has performed and complied in all material
respects, unless waived by PCB, with all of its obligations and
agreements required to be performed hereunder prior to the Closing
Date;
(ii) a
certified copy of the resolutions of German American's Board of
Directors authorizing the execution of this Agreement and the Plan
of Merger and the consummation of the Holding Company
Merger;
(iii) a
certified copy of the resolutions of First State's Board of
Directors and shareholder, as required for valid approval of the
execution of this Agreement and the consummation of the Bank
Merger;
(iv) the
legal opinion of Ice Miller, counsel for German American, in the
form attached hereto as Exhibit 1.10(b)(iv) ; and
(v) certificates
of the Indiana Secretary of State, dated a recent date, stating
that German American and First State each exist under the IBCL and
IFIA, respectively.
(c) At
the Closing, the parties shall execute and/or deliver to one
another such other documents and instruments, and take such other
actions as shall be necessary or appropriate to consummate the
Mergers, including the execution and the presentation of executed
Articles of Merger (including the Plan of Merger and/or Bank Plan
of Merger with the blank provisions completed in accordance with
the provisions of Article I of this Agreement) to the
Indiana Secretary of State (and, in the case of the Bank Merger, to
the Indiana Department of Financial Institutions) for filing under
the IBCL and the IFIA, accompanied by the appropriate
fees.
6
ARTICLE II.
REPRESENTATIONS AND WARRANTIES
OF
PCB AND
PEOPLES
PCB and Peoples hereby jointly and
severally make the following representations and warranties to
German American and First State:
Section
2.01. Organization and Capital
Stock .
(a) PCB
is a corporation duly organized and validly existing under the IBCL
and has the corporate power to own all of its property and assets,
to incur all of its liabilities and to carry on its business as now
being conducted.
(b) Peoples
is a corporation duly organized and validly existing under federal
law and has the corporate power to own all of its property and
assets, to incur all of its liabilities and to carry on its
business as now being conducted. All of the issued and outstanding
capital stock of Peoples is owned by PCB.
(c) PCB
has authorized capital stock of 4,000,000 shares of PCB Common, of
which, as of the date of this Agreement, 328,265 shares are issued
and outstanding, and 1,000,000 shares of preferred stock, $0.01 par
value, of which, as of the date of this Agreement, no shares are
issued and outstanding. All such shares of PCB Common are duly and
validly issued and outstanding and are fully paid and
non-assessable. None of the outstanding shares of PCB Common has
been issued in violation of any preemptive rights of the current or
past shareholders of PCB or in violation of any applicable federal
or state securities laws or regulations.
(d) Peoples
has authorized capital stock of 1,000 shares of common stock, $1.00
par value, of which, as of the date of this Agreement, 1,000 shares
are issued and outstanding ("Peoples Common"), and 9,000 shares of
serial preferred stock, no par value, of which, as of the date of
this Agreement, no shares are issued and outstanding. All such
shares of Peoples Common are duly and validly issued and
outstanding and are fully paid and nonassessable. None of the
outstanding shares of Peoples Common has been issued in violation
of any preemptive rights of the current or past shareholders of
Peoples or in violation of any applicable federal or state
securities laws or regulations.
(e) There
are no shares of capital stock or other equity securities of PCB or
Peoples authorized, issued or outstanding (except as set forth in
this Section 2.01 ) and, except for outstanding stock
options issued by PCB to employees or directors of Peoples with
respect to the right to purchase 31,734 shares of PCB Common at a
weighted-average exercise price of $10.23 per share, there are no
outstanding options, warrants, rights to subscribe for, calls,
puts, or commitments of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, shares
of the capital stock of PCB or Peoples, or contracts, commitments,
understandings or arrangements by which PCB or Peoples are or may
be obligated to issue additional shares of its capital stock or
options, warrants or rights to purchase or acquire any additional
shares of its capital stock.
7
Section 2.02.
Authorization; No Defaults . The Boards of Directors of PCB
and Peoples have, by all necessary action, approved this Agreement,
the Holding Company Merger or Bank Merger, as applicable and
contemplated thereby, and have authorized the execution of this
Agreement and the applicable Plan of Merger on their behalf by
their duly authorized officers and the performance by PCB and
Peoples of their respective obligations hereunder. Nothing in the
Articles of Incorporation or Bylaws of PCB, as amended, or the
Charter or Bylaws of Peoples, as amended, or in any material
agreement or instrument, or any decree, proceeding, law or
regulation (except as specifically referred to in or contemplated
by this Agreement) by or to which PCB or Peoples is bound or
subject, would prohibit PCB or Peoples from consummating, or would
be violated or breached by PCB's or Peoples' consummation of, this
Agreement, the Mergers and other transactions contemplated herein
on the terms and conditions herein contained. This Agreement has
been duly and validly executed and delivered by PCB and Peoples and
constitutes a legal, valid and binding obligation of PCB and
Peoples, enforceable against PCB and Peoples in accordance with its
terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, and similar laws of general
applicability relating to or affecting creditors' rights or by
general equity principles. No corporate acts or proceedings, other
than those already taken, are required by law to be taken by PCB or
Peoples to authorize the execution, delivery and performance, of
this Agreement. Neither PCB nor Peoples is, nor will be by reason
of the consummation of the transactions contemplated herein, in
material default under or in material violation of any provision
of, nor will the consummation of the transactions contemplated
herein afford any party a right to accelerate any indebtedness
under, its certificate of incorporation, charter or bylaws, any
material promissory note, indenture or other evidence of
indebtedness or security therefor, or any material lease, contract,
or other commitment or agreement to which it is a party or by which
it or its property is bound.
Section 2.03.
Subsidiaries . Except as disclosed on the disclosure
schedule prepared by PCB and Peoples and delivered to German
American and First State concurrently with the execution and
delivery of this Agreement (the "Disclosure Schedule"), and except
for the ownership by PCB of all the capital stock of Peoples, to
the knowledge of PCB, neither PCB nor Peoples has (or has had at
any time in the last five years) any direct or indirect ownership
interest in any corporation, partnership, limited liability
company, joint venture or other business.
Section
2.04 . Financial Information
.
(a) PCB
has furnished to German American the consolidated balance sheets of
PCB as of December 31, 2003 and 2004, and the related consolidated
statements of income, stockholders' equity and cash flows for the
years then ended, together with the unqualified opinion thereon of
Monroe Shine, independent certified public accountants. Such
financial statements were prepared in accordance with generally
accepted accounting principles applied on a consistent basis
(except as may be reflected in the notes thereto), and fairly
present the consolidated financial position and the consolidated
results of operations, changes in shareholders' equity and cash
flows of PCB in all material respects as of the dates and for the
periods indicated.
8
(b) PCB
has furnished to German American the Thrift Financial Reports of
Peoples as filed with the Office of Thrift Supervision ("OTS") for
the quarters ended March 31, 2005 and December 31, 2004 (the
"Thrift Reports"). The Thrift Reports were prepared in accordance
with the applicable regulatory instructions on a consistent basis
with previous such reports, and fairly present the financial
position and results of operations of Peoples in all material
respects as of the dates and for the periods indicated, subject,
however, in the case of the March 31, 2005 Thrift Report, to normal
recurring year-end adjustments, none of which were
material.
(c) Neither
PCB nor Peoples has any material liability, fixed or contingent,
except to the extent set forth in the financial statements and the
Thrift Reports described in subsections (a) and (b)
of this Section 2.04 (collectively, the "PCB Financial
Statements") or incurred in the ordinary course of business since
December 31, 2004.
(d) PCB
does not engage in the lending business (except by and through
Peoples) or any other business or activity other than that which is
incident to its ownership of all the capital stock of Peoples, and
to the knowledge of PCB does not own any investment securities
(except the capital stock of Peoples).
Section 2.05.
Absence
of Changes . Since December 31, 2004, there has not been any
material adverse change in the financial condition, the results of
operations or the business of PCB or Peoples, taken as a
whole.
Section 2.06.
Absence
of Agreements with Banking Authorities . Neither PCB nor
Peoples is subject to any order (other than orders applicable to
bank holding companies or banks generally) and neither is a party
to any agreement or memorandum of understanding with (or resolution
of its Board of Directors adopted at the suggestion of) any federal
or state agency charged with the supervision or regulation of banks
or bank holding companies, including without limitation, the
Federal Deposit Insurance Corporation ("FDIC"), the OTS, the FRB
and the Indiana Department of Financial Institutions
("DFI").
Section 2.07.
Tax
Matters . PCB and Peoples have filed all federal, state and
local tax returns due in respect of any of its business, income and
properties in a timely fashion and have paid or made provision for
all amounts shown due on such returns. All such returns fairly
reflect the information required to be presented therein in all
material respects. All provisions for accrued but unpaid taxes
contained in the PCB Financial Statements were made in accordance
with generally accepted accounting principles.
Section 2.08.
Absence
of Litigation . There is no material litigation, claim or other
proceeding pending or, to the knowledge of PCB, threatened, before
any judicial, administrative or regulatory agency or tribunal, to
which PCB or Peoples is a party or to which any of their properties
are subject.
Section
2.09. Employment Matters
.
(a) Except
as disclosed in the Disclosure Schedule, neither PCB nor Peoples is
a party to or bound by any material contract, arrangement or
understanding (written or otherwise) for the employment, retention
or engagement of any past or present officer, employee, agent,
consultant or other person or entity which, by its terms, is not
terminable by PCB or Peoples, respectively, on thirty (30) days'
written notice or less without the payment of any amount by reason
of such termination.
9
(b) PCB
and Peoples are and have been in material compliance with all
applicable laws respecting employment and employment practices,
terms and conditions of employment and wages and hours, including,
without limitation, any such laws respecting employment
discrimination and occupational safety and health requirements, and
(i) neither PCB nor Peoples is engaged in any unfair labor
practice; (ii) there is no unfair labor practice complaint against
PCB or Peoples pending or, to the knowledge of PCB, threatened
before the National Labor Relations Board; (iii) there is no labor
dispute, strike, slowdown or stoppage actually pending or, to the
knowledge of PCB, threatened against or directly affecting PCB or
Peoples; and (iv) neither PCB nor Peoples has experienced any
material work stoppage or other material labor difficulty during
the past five years.
(c) Except
as set forth in the Disclosure Schedule, neither the execution nor
the delivery of this Agreement, nor the consummation of any of the
transactions contemplated hereby, including, but not limited to,
the Mergers, will (i) result in any payment (including without
limitation severance, unemployment compensation or golden parachute
payment) becoming due to any director or employee of PCB or Peoples
from either of such entities, (ii) increase any benefit otherwise
payable under any of their employee plans or (iii) result in the
acceleration of the time of payment of any such benefit. No amounts
paid or payable by PCB or Peoples to or with respect to any
employee or former employee of PCB or Peoples will fail to be
deductible for federal income tax purposes by reason of Section
280G of the Internal Revenue Code of 1986, as amended ("Code") or
otherwise.
Section 2.10.
Reports . Since January 1, 2003, PCB and Peoples have, to
their knowledge, filed all reports, notices and other statements,
together with any amendments required to be made with respect
thereto, if any, that were required to be filed with (i) the
Securities and Exchange Commission ("SEC"), (ii) the FDIC, (iii)
the OTS, and (iv) any other governmental authority with
jurisdiction over PCB or Peoples. As of their respective dates,
each of such reports and documents, including the financial
statements, exhibits and schedules thereto, complied in all
material respects with the relevant statutes, rules and regulations
enforced or promulgated by the regulatory authority with which they
were filed.
Section 2.11.
Investment Portfolio . All United States Treasury
securities, obligations of other United States Government agencies
and corporations, obligations of States and political subdivisions
of the United States and other investment securities held by
Peoples, as reflected in the Thrift Reports, are carried on the
books of Peoples in accordance with generally accepted accounting
principles, consistently applied. Peoples does not engage in
activities that would require that it establish a trading account
under applicable regulatory guidelines and
interpretations.
Section 2.12.
Loan
Portfolio . All loans shown in the Thrift Reports, or which
were entered into after March 31, 2005, but before the Closing
Date, were and will be made in all material respects for good,
valuable and adequate consideration in the ordinary course of the
business of Peoples, in accordance in all material respects with
Peoples' lending policies and practices unless otherwise approved
by Peoples' Board of Directors, and are not subject to any material
defenses, set offs or counterclaims, including without limitation
any such as are afforded by usury or truth in lending laws, except
as may be provided by bankruptcy, insolvency or similar laws or by
general principles of equity. The notes or other evidences of
indebtedness evidencing such loans and all forms of pledges,
mortgages and other collateral documents and security agreements
are and will be, in all material respects, enforceable, valid, true
and genuine. Peoples has in all material respects complied and will
through the Closing Date continue to comply in all material
respects with all laws and regulations relating to such loans, or
to the extent there has not been such compliance, such failure to
comply will not materially interfere with the collection of any
such loan. Except as disclosed in the Disclosure Schedule, Peoples
has not sold, purchased or entered into any loan participation
arrangement except where such participation is on a pro rata basis
according to the respective contributions of the participants to
such loan amount. PCB has no knowledge that any condition of
property in which Peoples has an interest as collateral to secure a
loan violates the Environmental Laws (defined in Section
2.15 ) in any material respect or obligates PCB, or Peoples, or
the owner or operator of such property to remedy, stabilize,
neutralize or otherwise alter the environmental condition of such
property.
10
Section
2.13. ERISA .
(a) The
Disclosure Schedule lists all "employee benefit plans," as defined
in Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") and all retirement, stock, stock
option, welfare benefit, savings, deferred compensation, incentive
compensation, paid time off, severance pay, salary continuation,
disability, fringe benefit and other employee benefit arrangements,
plans, policies, or practices maintained, contributed to, or
required to be contributed by PCB, Peoples or any ERISA Affiliate
(as hereinafter defined) or with respect to which PCB, Peoples or
any ERISA Affiliate may have any liability (referred to
individually as a "Plan" and collectively as the "Plans," unless
otherwise specifically provided herein). For purposes of this
Section 2.13 , the term "ERISA Affiliate" means any person,
entity, any trade or business (whether or not incorporated) that is
treated as a single employer with PCB or Peoples under Section 414
of the Code. During the past sixty months, neither PCB, Peoples nor
any ERISA Affiliate has maintained any "employee welfare benefit
plan" (within the meaning of Section 3(1) of ERISA) or any
"employee pension benefit plan" (within the meaning of Section 3(2)
of ERISA) except for those Plans listed on the Disclosure Schedule.
Except as disclosed on the Disclosure Schedule, neither PCB nor
Peoples has amended any employee welfare plan or any employee
pension benefit plan listed on the Disclosure Schedule since
December 31, 2003.
(b) As
applicable, with respect to each of the Plans, PCB has delivered to
German American true and complete copies of (i) all plan
documents (including all amendments and modifications thereof) and
in the case of an unwritten Plan, a written description thereof,
and in either case all material related agreements including the
trust agreement and amendments thereto, insurance contracts, and
investment management agreements; (ii) the last three filed
Form 5500 series and all schedules thereto;
(iii) the current summary plan descriptions and all material
modifications thereto; (iv) the three most recent actuarial
reports, financial statements and trustee reports; and
(v) copies of all private letter rulings, requests and
determination letters issued with respect to the Plans and filings,
summaries of self-corrections or applications made under the
Employee Plans Compliance Resolution System (as set forth in
Revenue Procedure 2003-44, and any successor thereto) or the
Voluntary Fiduciary Correction or Delinquent Filer Voluntary
Compliance programs with respect to the Plans within the past five
years.
11
(c) All
Plans listed on the Disclosure Schedule comply in form and in
operation in all material respects with all applicable requirements
of law and regulation, including but not limited to the Code and
ERISA. Except as listed on the Disclosure Schedule, all "employee
pension benefit plans," within the meaning of Section 3(2) of ERISA
("Pension Plan"), maintained by PCB and Peoples and which are
intended to meet the qualification requirements of Section 401(a)
of the Code have met such requirements at all times and have been
and continue to be tax exempt under Section 501(a) of the Code, and
a favorable determination as to the qualification under the Code of
each plan and each amendment thereto has been made by the Internal
Revenue Service. Except as disclosed in the Disclosure Schedule,
neither PCB nor Peoples has (i) become subject to any disallowance
of deductions under Sections 419 or 419(A) of the Code; (ii)
incurred any liability for excise tax under Sections 4972,
4975, or 4976 of the Code or any liability or penalty under ERISA;
or (iii) breached any of the duties or failed to perform any of the
obligations imposed upon the fiduciaries or plan administrators
under Title I or ERISA.
(d) Neither
PCB nor Peoples would have any liability or contingent liability if
any Plan listed on the Disclosure Schedule (including without
limitation the payment by PCB or Peoples of premiums for health
care coverage for active employees or retirees) were terminated or
if PCB or Peoples were to cease its participation therein. Except
as disclosed in the Disclosure Schedule, neither PCB nor Peoples
nor any of their affiliates or persons acting on their behalf have
made any written or oral promises or statements to employees or
retirees who are now living which might reasonably have been
construed by them as promising "lifetime" or other vested rights to
benefits under any Plan that cannot be unilaterally terminated or
modified by Peoples or PCB at their discretion at any time without
further obligation.
(e) Except
as disclosed in the Disclosure Schedule, in the case of each Plan
listed in the Disclosure Schedule which is a defined benefit plan
(within the meaning of Section 3(35) of ERISA), the net fair market
value of the assets held to fund such Plan equals or exceeds the
present value of all accrued benefits thereunder, both vested and
nonvested, as determined in accordance with an actuarial costs
method acceptable under Section 3(31) of ERISA.
(f) On
a timely basis, PCB and Peoples have made all contributions or
payments to or under each Plan listed in the Disclosure Schedule as
required pursuant to each such Plan, any collective bargaining
agreements or other provision for reserves to meet contributions
and payments under such Plans which have not been made because they
are not yet due.
(g) No
Plan listed in the Disclosure Schedule has ever acquired or held
any "employer security" or "employer real property" (each as
defined in Section 407(d) of ERISA).
(h) Neither
PCB nor Peoples has ever contributed or is obligated to contribute
under any "multi-employer plan" (as defined in Section 3(37) of
ERISA). No Plan is (or at any time has been) subject to Title IV of
ERISA or Section 412 of the Code.
(i) PCB
and Peoples have complied with all requirements of the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA") to
the extent so required. Except as listed in the Disclosure
Schedule, neither PCB nor Peoples provides or is obligated to
provide health or welfare benefits to any current or future retired
or former employee other than any benefits required to be provided
under COBRA.
12
(j) There
are no pending audits or investigations by any governmental agency
involving the Plans, and no threatened or pending claims (except
for individual claims for benefits payable in the normal operation
of the Plans), suits or proceedings involving any Plan, any
fiduciary thereof or service provider thereto, nor is there any
reasonable basis for any such claim, suit or proceeding.
(k) Within
the six-month period preceding the Closing Date, there has been no
amendment to, announcement by PCB or Peoples relating to, or change
in employee participation or coverage under, any Plan which would
increase materially the expense of maintaining such Plan above the
level of the expense incurred therefor for the most recent fiscal
year, except for increases directly resulting from an increase in
the number of persons employed by PCB or Peoples or promotions of
existing employees in the ordinary course of business consistent
with past practice.
(l) Except
as disclosed in the Disclosure Schedule, the Mergers will not
result in the payment, vesting or acceleration of any benefit under
any Plan sponsored or contributed to by PCB or Peoples. No Plan
provides for "parachute payments" within the meaning of Section
280G of the Code.
Section 2.14.
Title to
Properties; Insurance . PCB and Peoples have marketable title,
free and clear of all liens, charges and encumbrances (except taxes
which are a lien but not yet payable and liens, charges or
encumbrances reflected in the PCB Financial Statements and
easements, rights-of-way, and other restrictions which are not
material and, in the case of Other Real Estate Owned, as such real
estate is internally classified on the books of Peoples, rights of
redemption under applicable law) to all real properties reflected
on the PCB Financial Statements as being owned by PCB or Peoples,
respectively. All material leasehold interests used by PCB and
Peoples in their respective operations are held pursuant to lease
agreements which are valid and enforceable in accordance with their
terms. All such properties owned by PCB or Peoples comply in all
material respects with all applicable private agreements, zoning
requirements and other governmental laws and regulations relating
thereto and there are no condemnation proceedings pending or, to
the knowledge of PCB, threatened with respect to such properties.
PCB and Peoples have valid title or other ownership or use rights
under licenses to all material intangible personal or intellectual
property used by PCB and Peoples in their respective businesses
free and clear of any claim, defense or right of any other person
or entity which is material to PCB's and/or Peoples' ownership or
use rights to such property, subject only to rights of the licensor
pursuant to applicable license agreements, which rights do not
materially adversely interfere with the use or enjoyment of such
property. The Disclosure Schedule sets forth the material terms and
amounts of all insurance policies held by PCB or Peoples on such
owned properties against fire and other risks insured against by
extended coverage and public liability insurance.
13
Section
2.15. Environmental
Matters.
(a) As
used in this Agreement, "Environmental Laws" means all local, state
and federal environmental laws and regulations in all jurisdictions
in which PCB or Peoples has done business or owned property,
including, without limitation, the Federal Resource Conservation
and Recovery Act, the Federal Comprehensive Environmental Response,
Compensation and Liability Act, the Federal Clean Water Act, and
the Federal Clean Air Act.
(b) Except
as disclosed in the Disclosure Schedule or in the environmental
reports generated pursuant to Section 4.01(a)(xv) or
Section 4.05 , to the knowledge of PCB, neither (i) the
conduct by PCB and Peoples of operations at any property, nor
(ii) any condition of any property owned by PCB or Peoples
within the past ten (10) years and used in their business
operations, nor (iii) the condition of any property owned by them
within the past ten (10) years but not used in their business
operations, nor (iv) the condition of any property held by them as
a trust asset within the past ten (10) years, violates or violated
Environmental Laws in any material respect, and no condition or
event has occurred with respect to any such property that, with
notice or the passage of time, or both, would constitute a material
violation of Environmental Laws or obligate (or potentially
obligate) PCB or Peoples to remedy, stabilize, neutralize or
otherwise alter the environmental condition of any such property.
Neither PCB nor Peoples has received any notice from any person or
entity that PCB or Peoples or the operation of any facilities or
any property owned by either of them, or held as a trust asset, are
or were in violation of any Environmental Laws or that either of
them is responsible (or potentially responsible) for the cleanup of
any pollutants, contaminants, or hazardous or toxic wastes,
substances or materials at, on or beneath any such
property.
Section 2.16.
Compliance with Law . PCB and Peoples each have all material
licenses, franchises, permits and other governmental authorizations
that are legally required to enable them to conduct their
respective businesses as presently conducted and are in compliance
in all material respects with all applicable laws and regulations.
The offer and sale by PCB of the PCB Common that is issued and
outstanding, and the continuing offer of PCB Common pursuant to the
options that are presently outstanding and the sales of PCB Common
pursuant to such options that have occurred and which may prior to
the Closing Date have occurred, have been and will be either
registered or qualified under the Securities Act of 1933, as
amended, and the securities laws of all states or other
jurisdictions that may be applicable, or have been or will be
exempt from such registration and qualification requirements. The
Disclosure Schedule specifies the registrations and exemptions
relied upon (or to be relied upon) in connection with all past (and
future) offers and sales of PCB Common.
Section 2.17.
Brokerage . Except as set forth in the Disclosure Schedule,
there are no claims, agreements, arrangements, or understandings
(written or otherwise) for brokerage commissions, finders' fees or
similar compensation in connection with the Holding Company Merger
and the Bank Merger payable by PCB or Peoples.
14
Section
2.18. Material Contracts
. Except as set forth in the
Disclosure Schedule, neither PCB nor Peoples is a party to or bound
by any oral or written (i) material agreement, contract or
indenture under which it has borrowed or will borrow money (not
including federal funds and money deposited, including without
limitation, checking and savings accounts and certificates of
deposit and borrowings from the FHLBB and the FRB); (ii) material
guaranty of any obligation for the borrowing of money or otherwise,
excluding endorsements made for collection and guarantees made in
the ordinary course of business and letters of credit issued in the
ordinary course of business; (iii) material contract, arrangement
or understanding with any present or former officer, director or
shareholder (except for deposit or loan agreements entered into in
the ordinary course of business); (iv) material license, whether as
licensor or licensee; (v) contract or commitment for the purchase
of materials, supplies or other real or personal property in an
amount in excess of $10,000 or for the performance of services over
a period of more than thirty days and involving an amount in excess
of $10,000; (vi) joint venture or partnership agreement or
arrangement; (vii) material contract, arrangement or understanding
with any present or former consultant, advisor, investment banker,
broker, attorney or accountant; or (viii) contract, agreement or
other commitment not made in the ordinary course of
business.
Section 2.19.
Compliance with Americans with Disabilities Act . (a) To the
best of PCB's knowledge, PCB and Peoples and their respective
properties (including those held by either of them in a fiduciary
capacity) are in compliance with all applicable provisions of the
Americans with Disabilities Act (the "ADA"), and (b) no action
under the ADA against PCB, Peoples or any of its properties has
been initiated nor, to the best of PCB's knowledge, has been
threatened or contemplated.
Section 2.20.
Internal
Control Over Financial Reporting . PCB and its subsidiaries
maintain books of account that accurately and validly reflect all
loans, mortgages, collateral, and other business transactions and
maintain proper and adequate internal control over financial
reporting as defined by Rule 13a-15(f) adopted under the 1934
Act.
Section 2.21.
Statements True and Correct . To the best of the knowledge
of PCB, none of the information supplied or to be supplied by PCB
or Peoples for inclusion in any documents to be filed with the FRB,
the DFI, the FDIC, the OTS, the SEC, or any other regulatory
authority in connection with the Mergers will, at the respective
times such documents are filed, be false or misleading with respect
to any material fact or omit to state any material fact necessary
in order to make the statements therein not misleading.
Section 2.22.
PCB's
Knowledge . With respect to representations and warranties
herein that are made or qualified as being made "to the knowledge
of PCB" or words of similar import, it is understood and agreed
that matters within the knowledge of any of the directors or
executive officers of PCB or Peoples shall be considered to be
within the knowledge of PCB.
ARTICLE III.
REPRESENTATIONS AND
WARRANTIES
OF GERMAN AMERICAN AND FIRST
STATE
German American and First State
hereby jointly and severally make the following representations and
warranties to PCB and Peoples:
15
Section
3.01. Organization and Capital
Stock.
(a) German
American is a corporation duly incorporated and validly existing
under the IBCL and has the corporate power to own all of its
property and assets, to incur all of its liabilities and to carry
on its business as now being conducted.
(b) First
State is a corporation duly incorporated and validly existing under
the IFIA and has the corporate power to own all of its property and
assets, to incur all of its liabilities and to carry on its
business as now being conducted. All of the issued and outstanding
capital stock of First State is owned by German
American.
(c) German
American has authorized capital stock of (i) 20,000,000 shares of
German American Common, of which, as of April 29, 2005, 10,822,948
shares were issued and outstanding and 455,617 shares were reserved
for issuance upon exercise of outstanding stock options (not
including options granted in the current plan year under the 1999
Employee Stock Purchase Plan), and (ii) 500,000 shares of preferred
stock, $10 par value per share, including 400,000 unissued shares
that have been designated "Series A Preferred Shares," of which, as
of the date of this Agreement, no shares are issued and
outstanding. All of the issued and outstanding shares of German
American Common are duly and validly issued and outstanding and are
fully paid and non-assessable.
(d) The
shares of German American Common that are to be issued to the
holders of PCB Common pursuant to the Holding Company Merger have
been duly authorized and, when issued in accordance with the terms
of this Agreement, will be validly issued and outstanding, fully
paid and non-assessable.
Section 3.02.
Authorization . The Boards of Directors of German American
and First State have, by all necessary action, approved this
Agreement and the Mergers and authorized the execution hereof on
their behalf by their duly authorized officers and the performance
by each such entity of its obligations hereunder. Nothing in the
Articles of Incorporation or Bylaws of German American or First
State, as amended, or any other agreement, instrument, decree,
proceeding, law or regulation (except as specifically referred to
in or contemplated by this Agreement) by or to which either of them
or any of their subsidiaries is bound or subject would prohibit
German American from entering into and consummating this Agreement
and the Mergers on the terms and conditions herein contained. This
Agreement has been duly and validly executed and delivered by
German American and First State and constitutes a legal, valid and
binding obligation enforceable against them in accordance with its
terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, and similar laws of general
applicability relating to or affecting creditors' rights or by
general equitable principles. No other corporate acts or
proceedings are required by law to be taken by German American or
First State to authorize the execution, delivery and performance of
this Agreement. Except for any requisite approvals of the FRB, FDIC
and DFI, and the SEC's order declaring effective German American's
registration statement under the Securities Act of 1933, as amended
(the "1933 Act") with respect to the Holding Company Merger, no
notice to, filing with, authorization by, or consent or approval
of, any federal or state regulatory authority is necessary for the
execution and delivery of this Agreement or the consummation of the
Mergers by German American or First State. Neither German American
nor First State is, nor will be by reason of the consummation of
the transactions contemplated herein, in material default under or
in material violation of any provision of, nor will the
consummation of the transactions contemplated herein afford any
party a right to accelerate any indebtedness under, its articles of
incorporation or bylaws, any material promissory note, indenture or
other evidence of indebtedness or security therefor, or any
material lease, contract, or other commitment or agreement to which
it is a party or by which it or its property is bound.
16
Section 3.03.
Subsidiaries . Each of German American's subsidiaries is
duly organized and validly existing under the laws of the
jurisdiction of its incorporation and has the corporate power to
own its respective properties and assets, to incur its respective
liabilities and to carry on its respective business as now being
conducted. All outstanding shares of capital stock of each of
German American's subsidiaries that is a depository institution
have been validly issued and are fully paid and nonassessable and
are owned directly or indirectly by German American. The deposit
accounts of each subsidiary of German American that is a depository
institution are insured by the FDIC to the fullest extent permitted
by law.
Section
3.04. Financial
Information.
(a) The
consolidated balance sheet of German American and its subsidiaries
as of December 31, 2004 and 2003 and related consolidated
statements of income, changes in shareholders' equity and cash
flows for the three years ended December 31, 2004, together with
the notes thereto, included in German American's Annual Report on
Form 10-K, as filed with the SEC on March 16, 2005 (as
subsequently once amended, the "10-K") and the consolidated balance
sheet of German American and its subsidiaries as of March 31, 2005
and related consolidated statements of income, and cash flows for
the three months ended March 31, 2005 and March 31, 2004, together
with the notes thereto, included in German American's Quarterly
Report on Form 10-Q, as filed with the SEC on May 10, 2005 (such
financial statements, together with the financial statements
included in the 10-K, the "German American Financial Statements")
have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis (except as disclosed
therein) and fairly present the consolidated financial position and
the consolidated results of operations, changes in shareholders'
equity and cash flows of German American and its consolidated
subsidiaries as of the dates and for the periods
indicated.
(b) Except
(i) as reflected in German American's balance sheet at March 31,
2005, or liabilities described in any notes thereto (or liabilities
for which neither accrual nor footnote disclosure is required
pursuant to generally accepted accounting principles) or (ii) for
liabilities incurred in the ordinary course of business since March
31, 2005 consistent with past practices or in connection with this
Agreement or the transactions contemplated hereby, neither German
American nor any of its subsidiaries has any material liabilities
or obligations of any nature.
(c) Crowe
Chizek and Company LLC is and has been (i) since September 24,
2003, a registered public accounting firm (as defined in Section
2(a)(12) of the Sarbanes-Oxley Act of 2002), and (ii) throughout
the periods covered by the German American Financial Statements,
"independent" with respect to German American within the meaning of
Regulation S-X.
17
Section 3.05.
Absence
of Changes . Since March 31, 2005, there has not been any
material adverse change in the consolidated financial condition or
the consolidated results of operations or the business of German
American and its subsidiaries, taken as a whole.
Section
3.06. Reports; SEC Filings and the
Sarbanes-Oxley Act.
(a) Since
January 1, 2003 (or, in the case of subsidiaries of German
American, the date of acquisition thereof by German American, if
later), German American and each of its subsidiaries have filed all
reports, notices and other statements, together with any amendments
required to be made with respect thereto, that it was required to
file with (i) the SEC, (ii) the FRB, (iii) the FDIC, (iv) the DFI,
(v) any applicable state securities or banking authorities, and
(vi) any other governmental authority with jurisdiction over German
American or any of its subsidiaries. As of their respective dates,
each of such reports and documents, as amended, including the
financial statements, exhibits and schedules thereto, complied in
all material respects with the relevant statutes, rules and
regulations enforced or promulgated by the regulatory authority
with which they were filed. As of its filing date, each such
document filed by German American with the SEC pursuant to the
Securities Exchange Act of 1934 (the "1934 Act") did not, and each
such document filed subsequent to the date hereof will not, contain
any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were
made, not misleading. Each such document filed by German American
with the SEC that is a registration statement, as amended or
supplemented, if applicable, f
