AGREEMENT AND PLAN OF REORGANIZATION

Exhibit 2.1

 

AGREEMENT AND PLAN OF REORGANIZATION

DATED AS OF APRIL 28, 2009

AMONG

FIRST SAVINGS FINANCIAL GROUP, INC.

FIRST SAVINGS BANK, F.S.B.

MERGER SUB (as herein defined)

COMMUNITY FIRST FINANCIAL GROUP, INC.

AND

COMMUNITY FIRST BANK

 

TABLE OF CONTENTS

 

 

i

EXHIBIT

 

 

ii

Agreement and Plan of Reorganization

This is an Agreement and Plan of Reorganization , dated as of the 28 ^th day of April, 2009, among First Savings Financial Group, Inc., an Indiana corporation with its home office located at 501 E. Lewis & Clark Parkway, Clarksville, Indiana (“ FSFG ”), First Savings Bank, F.S.B., a Federally-chartered stock savings association with its home office located at 501 E. Lewis & Clark Parkway, Clarksville, Indiana (“ First Savings ”), Community First Financial Group, Inc., an Indiana corporation with its home office located at 900 Highway 62 N.W., Corydon, Indiana (“ CFFG ”), Community First Bank, an Indiana-chartered commercial bank with its home office located at 900 Highway 62 N.W., Corydon, Indiana (“ CFB ”), and, from and after its accession to this Agreement in accordance with Section 5.13 , Merger Sub, a Federally-chartered interim stock savings association with its home office located at 501 E. Lewis & Clark Parkway, Clarksville, Indiana.

Introductory Statement

The board of directors of each of FSFG, First Savings, CFFG and CFB has determined that this Agreement and the business combination and related transactions contemplated hereby are advisable and in the best interests of FSFG, First Savings, CFFG and CFB, as the case may be, and in the best long-term interests of the shareholders of FSFG, First Savings, CFFG or CFB, as the case may be.

The parties hereto intend that the Merger as defined herein shall qualify as a reorganization under the provisions of Section 368(a) of the IRC for federal income tax purposes.

FSFG, First Savings, CFFG and CFB each desire to make certain representations, warranties and agreements in connection with the business combination and related transactions provided for herein and to prescribe various conditions to such transactions.

In consideration of their mutual promises and obligations hereunder, the parties hereto adopt and make this Agreement and prescribe the terms and conditions hereof and the manner and basis of carrying it into effect, which shall be as follows:

ARTICLE I

D EFINITIONS

The following terms are defined in this Agreement in the Section indicated:

 

 

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In addition, for purposes of this Agreement:

“ Acquisition Proposal ” means any proposal or offer with respect to any of the following (other than the transactions contemplated hereunder): (i) any merger, consolidation, share exchange, business combination, or other similar transaction involving CFB; (ii) any sale, lease, exchange, mortgage, pledge (other than the Stock Pledge), transfer or other disposition of all or substantially all of CFB’s consolidated assets in a single transaction or series of transactions; (iii) any tender offer or exchange offer for 25% or more of the outstanding shares of CFB’s capital stock or the filing of a registration statement or similar document under applicable law in connection therewith; or (v) any public announcement of a proposal, plan or intention to do any of the foregoing or any agreement to engage in an any of the foregoing.

 

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“ Agreement ” means this Agreement, as amended, modified or amended and restated from time to time in accordance with its terms.

“Bankruptcy Law” means Title 11 of the United States Code, or any similar federal, state, local or foreign law providing for insolvency, reorganization, receivership, dissolution, winding up or liquidation of a debtor.

“Business Day” shall mean any day other than a Saturday, a Sunday or any other day that First Savings is authorized or required to be closed.

“ CFB Common Stock ” means the common stock, par value $5.00 per share, of CFB.

“ CFFG Indebtedness ” means the indebtedness of CFFG to financial institutions unaffiliated with either CFFG or CFB, which is secured by the Stock Pledge and other collateral.

“ COBRA ” means the Consolidated Omnibus Budget Reconciliation Act, as amended.

“ CRA ” means the Community Reinvestment Act, as amended.

“Custodian” means any receiver, trustee, conservator, assignee, liquidator, custodian or similar official under any Bankruptcy Law or banking law.

“ DFI ” means the Indiana Department of Financial Institutions.

“ Environmental Law ” means any federal, state or local law, statute, ordinance, rule, regulation, code, license, permit, authorization, approval, consent, order, directive, executive or administrative order, judgment, decree, injunction, or agreement with any Governmental Entity relating to (i) the protection, preservation or restoration of the environment (which includes, without limitation, air, water vapor, surface water, groundwater, drinking water supply, soil, surface land, subsurface land, plant and animal life or any other natural resource), or to human health or safety as it relates to Hazardous Materials, or (ii) the exposure to, or the use, storage, recycling, treatment, generation, transportation, processing, handling, labeling, production, release or disposal of, Hazardous Materials, in each case as amended and as now in effect. The term Environmental Law includes, without limitation, the Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Superfund Amendments and Reauthorization Act of 1986, the Federal Water Pollution Control Act of 1972, the Federal Clean Air Act, the Federal Clean Water Act, the Federal Resource Conservation and Recovery Act of 1976, the Federal Solid Waste Disposal and the Federal Toxic Substances Control Act, the Federal Insecticide, Fungicide and Rodenticide Act, the Federal Occupational Safety and Health Act of 1970 as it relates to Hazardous Materials, the Federal Hazardous Substances Transportation Act, the Emergency Planning and Community Right-To-Know Act, the Safe Drinking Water Act, the Endangered Species Act, the National Environmental Policy Act, the Rivers and Harbors Appropriation Act or any so-called “Superfund” or “Superlien” law, each as amended and as now in effect.

 

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“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

“ ERISA Affiliate ” means any entity that is considered one employer with CFB under Section 4001(b)(1) of ERISA or Section 414 of the IRC.

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

“ Excluded Shares ” shall consist of (i) Dissenters’ Shares and (ii) shares held directly or indirectly by First Savings (other than shares held in a fiduciary capacity or in satisfaction of a debt previously contracted).

“ FDIC ” means the Federal Deposit Insurance Corporation.

“ FRB ” means the Board of Governors of the Federal Reserve System.

“ GAAP ” means generally accepted accounting principles in the United States.

“ Government Regulator ” means any federal or state governmental authority charged with the supervision or regulation of depository institutions or depository institution holding companies or engaged in the insurance of bank deposits.

“ Governmental Entity ” means any court, administrative agency or commission or other governmental authority or instrumentality.

“ Hazardous Material ” means any substance (whether solid, liquid or gas) which is or could be detrimental to human health or safety or to the environment, currently or hereafter listed, defined, designated or classified as hazardous, toxic, radioactive or dangerous, or otherwise regulated, under any Environmental Law, whether by type or by quantity, including any substance containing any such substance as a component. Hazardous Material includes, without limitation, any toxic waste, pollutant, contaminant, hazardous substance, toxic substance, hazardous waste, special waste, industrial substance, oil or petroleum, or any derivative or by-product thereof, radon, radioactive material, asbestos, asbestos-containing material, urea formaldehyde foam insulation, lead and polychlorinated biphenyl.

“ HOLA ” means the Home Owners’ Loan Act, as amended.

“ IFIA ” means the Indiana Financial Institutions Act, as amended.

“ IRC ” means the Internal Revenue Code of 1986, as amended.

“ Knowledge ” means, with respect to a party hereto, actual knowledge of the members of the board of directors of that party or any executive officer of that party with the title ranking not less than vice president.

 

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“ Lien ” means any charge, mortgage, pledge, security interest, claim, lien or encumbrance.

“ Loan ” means a loan, lease, advance, credit enhancement, guarantee or other extension of credit.

“ Loan Property ” means any property in which the applicable party (or a subsidiary of it) holds a security interest and, where required by the context, includes the owner or operator of such property, but only with respect to such property.

“ Material Adverse Effect ” means an effect which is material and adverse to the business, financial condition or results of operations of First Savings and its Subsidiaries, taken as a whole, or CFB, as the context may dictate; provided , however , that any such effect resulting from any (i) changes in laws, rules or regulations or in GAAP or regulatory accounting requirements or interpretations thereof that apply to both First Savings and CFB, or to financial and/or depository institutions generally, (ii) changes in economic conditions affecting financial institutions generally, including but not limited to, changes in the general level of market interest rates, (iii) actions and omissions of First Savings or CFB taken with the prior written consent of the other, (iv) direct effects of compliance with this Agreement on the operating performance of the parties, including expenses incurred by the parties in consummating the transactions contemplated by this Agreement, (v) military or terrorist attack within the United States or any of its possessions, or (vi) the impact of the announcement of this Agreement and compliance with this Agreement on the business, financial condition or results of operations of First Savings or CFB, shall not be considered in determining if a Material Adverse Effect has occurred.

“ OTS ” means the Office of Thrift Supervision.

“ Participation Facility ” means any facility in which the applicable party (or a Subsidiary of it) participates in the management (including all property held as trustee or in any other fiduciary capacity) and, where required by the context, includes the owner or operator of such property, but only with respect to such property.

“ Person ” means an individual, corporation, limited liability company, partnership, association, trust, unincorporated organization or other entity.

“ Securities Act ” means the Securities Act of 1933, as amended.

“ Stock Pledge ” means the pledge by CFFG of shares of CFB Common Stock owned beneficially or of record by CFFG as security for indebtedness of CFFG.

“ Subsidiary ” means a corporation, partnership, joint venture or other entity in which First Savings or CFB, as the case may be, has, directly or indirectly, an equity interest representing 50% or more of any class of the capital stock thereof or other equity interests therein.

 

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“ Superior Proposal ” means an unsolicited, bona fide written offer made by a third party to consummate an Acquisition Proposal with respect to CFB that (i) CFB’s board of directors determines in good faith, after consulting with its outside legal counsel and its financial advisor, would, if consummated, result in a transaction that is more favorable to the shareholders of CFB than the transactions contemplated hereby (taking into account all legal, financial, regulatory and other aspects of the proposal and the entity making the proposal), (ii) is not conditioned on obtaining financing (and with respect to which First Savings has received written evidence of such person’s ability to fully finance its Acquisition Proposal), (iii) is for 100% of the outstanding shares of CFB Common Stock and (iv) is, in the written opinion of CFB’s financial advisor, more favorable to the shareholders of CFB from a financial point of view than the transactions contemplated hereby (including any adjustments to the terms and conditions of such transactions proposed by First Savings in response to such Acquisition Proposal).

“ Tax(es) ” means all income, franchise, gross receipts, real and personal property, real property transfer and gains, wage and employment taxes.

ARTICLE II

T HE M ERGER

2.1 The Merger . Upon the terms and subject to the conditions set forth in this Agreement, Merger Sub will merge with and into CFB (the “ Merger ”) at the Effective Time. At the Effective Time, the separate corporate existence of Merger Sub shall cease. CFB shall be the surviving corporation (hereinafter sometimes referred to in such capacity as the “ Surviving Corporation ”) in the Merger and shall continue to be governed by the IFIA and its name, location of home office and all other offices, and separate corporate existence, with all of its rights, privileges, immunities, powers and franchises, shall continue unaffected by the Merger.

2.2 Closing . The closing of the Merger (the “ Closing ”) will take place in the offices of Kilpatrick Stockton LLP, 607 14th Street, NW, Suite 900, Washington, DC, or at such other location as is agreed to by the parties hereto, as soon as practicable following satisfaction or waiver of the conditions to Closing set forth in Article VI (other than those conditions that by their nature are to be satisfied at the Closing) (the “ Closing Date ”).

2.3 Effective Time . In connection with the Closing, Merger Sub and CFB shall duly execute and deliver articles of merger (the “ Articles of Merger ”) to the DFI and the Indiana Secretary of State for filing pursuant to the IFIA. The Merger shall become effective at such time as the Articles of Merger are duly filed with the DFI and the Indiana Secretary of State or at such later date or time as Merger Sub and CFB agree and specify in the Articles of Merger (the date and time the Merger becomes effective being the “ Effective Time ”).

2.4 Effects of the Merger . The Merger will have the effects set forth in the IFIA.

 

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2.5 Effect on Outstanding Shares of CFB Common Stock.

(a) By virtue of the Merger, automatically and without any action on the part of the holder thereof, each share of CFB Common Stock issued and outstanding at the Effective Time, other than Excluded Shares, shall become and be converted into, as provided in and subject to the limitations set forth in this Agreement, the right to receive from First Savings $17.13 in cash, without interest (the “ Merger Consideration ”), provided, however , that the Merger Consideration may be decreased (but under no circumstances increased) in the following circumstance only:

(i) If the aggregate fair market value of the CFB Private Label Portfolio (based on the prices supplied by Interactive Data Corp. as reported in the National City Bank Bond Accounting Report as of the end of the month immediately before the Closing Date) is less than thirty-five percent (35%) of the aggregate par value of the CFB Private Label Portfolio on such date, then the Merger Consideration shall be decreased by an amount (rounded down to the nearest penny) equal to the quotient resulting from the amount by which the aggregate fair market value of the CFB Private Label Portfolio is less than thirty-five percent (35%) of the aggregate par value of the CFB Private Label Portfolio, divided by the number of shares of CFB Common Stock issued and outstanding at the Effective Time. This calculation shall be made on a tax-effected basis using a forty percent (40%) effective tax rate.

(A) If the Merger Consideration is decreased in the circumstance described immediately above, then the term “Merger Consideration” shall mean such decreased amount for purposes of this Agreement.

(b) As of the Effective Time, each Excluded Share, other than Dissenters’ Shares, shall be canceled and retired and shall cease to exist, and no exchange or payment shall be made by First Savings with respect thereto.

2.6 Exchange Procedures.

(a) Appropriate transmittal materials (“ Letter of Transmittal ”) in a form satisfactory to First Savings and CFB shall be mailed by Registrar and Transfer Company (the “ Exchange Agent ”) as soon as practicable after the Closing Date but no later than five (5) business days thereafter, to each holder of record of CFB Common Stock as of the Effective Time for the purpose of surrendering their certificates evidencing CFB Common Stock (each a “ Certificate ”) in exchange for the Merger Consideration. A Letter of Transmittal will be deemed properly completed only if accompanied by Certificates representing all shares of CFB Common Stock to be exchanged thereby.

(b) At and after the Effective Time, each Certificate shall represent only the right to receive the Merger Consideration.

(c) Before the Effective Time, First Savings shall deposit, or cause to be deposited, with the Exchange Agent, for the benefit of the holders of shares of CFB Common Stock, for exchange in accordance with this Section 2.6 , an amount of cash sufficient to pay the aggregate Merger Consideration.

 

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(d) The Letter of Transmittal shall (i) specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates to the Exchange Agent, (ii) be in a form and contain any other provisions as First Savings may reasonably determine and (iii) include instructions for use in effecting the surrender of the Certificates in exchange for the Merger Consideration. Upon the proper surrender of the Certificates to the Exchange Agent, together with a properly completed and duly executed Letter of Transmittal, the holder of such Certificates shall be entitled to receive in exchange therefor a check in the amount equal to the cash that such holder has the right to receive pursuant to Section 2.5 . Certificates so surrendered shall forthwith be canceled. As soon as practicable following receipt of the properly completed Letter of Transmittal and any necessary accompanying documentation, the Exchange Agent shall distribute the Merger Consideration as provided herein (CFFG may request and receive a wire transfer of the Merger Consideration to which it is entitled). If there is a transfer of ownership of any shares of CFB Common Stock not registered in the transfer records of CFB, the Merger Consideration shall be issued to the transferee thereof if the Certificates representing such CFB Common Stock are presented to the Exchange Agent, accompanied by all documents required, in the reasonable judgment of First Savings and the Exchange Agent, to evidence and effect such transfer and to evidence that any applicable stock transfer taxes have been paid.

(e) The stock transfer books of CFB shall be closed immediately upon the Effective Time and from and after the Effective Time there shall be no transfers on the stock transfer records of CFB of any shares of CFB Common Stock. If, after the Effective Time, Certificates are presented to First Savings, they shall be canceled and exchanged for the Merger Consideration deliverable in respect thereof pursuant to this Agreement in accordance with the procedures set forth in this Section 2.6 .

(f) Any portion of the aggregate Merger Consideration to be paid pursuant to Section 2.5 or any proceeds from any investments thereof that remains unclaimed by the shareholders of CFB for six (6) months after the Effective Time shall be repaid by the Exchange Agent to First Savings upon the written request of First Savings. After such request is made, any holders of CFB Common Stock who have not theretofore complied with this Section 2.6 shall look only to First Savings for the Merger Consideration deliverable in respect of each share of CFB Common Stock such holder holds, as determined pursuant to Section 2.5 of this Agreement, without any interest thereon. If outstanding Certificates are not surrendered before the date on which such payments would otherwise escheat to or become the property of any governmental unit or agency, the unclaimed items shall, to the extent permitted by any abandoned property, escheat or other applicable laws, become the property of First Savings (and, to the extent not in its possession, shall be paid over to it), free and clear of all claims or interest of any person previously entitled to such claims. Notwithstanding the foregoing, neither the Exchange Agent nor any party to this Agreement (or any affiliate thereof) shall be liable to any former holder of CFB Common Stock for any amount delivered to a public official pursuant to applicable abandoned property, escheat or similar laws.

 

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(g) First Savings and the Exchange Agent shall be entitled to rely upon CFB’s stock transfer books to establish the identity of those persons entitled to receive the Merger Consideration, which books shall be conclusive with respect thereto. If there is a dispute with respect to ownership of CFB Common Stock represented by any Certificate, First Savings and the Exchange Agent shall be entitled to deposit any Merger Consideration represented thereby in escrow with an independent third party and thereafter be relieved with respect to any claims thereto.

(h) If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such Certificate to be lost, stolen or destroyed and, if required by the Exchange Agent or First Savings, the posting by such person of a bond in such amount as the Exchange Agent may direct as indemnity against any claim that may be made against it with respect to such Certificate, the Exchange Agent will issue in exchange for such lost, stolen or destroyed Certificate the Merger Consideration deliverable in respect thereof pursuant to Section 2.5 .

2.7 Effect on Outstanding Shares of Merger Sub . At the Effective Time, each share of common stock of Merger Sub issued and outstanding immediately before the Effective Time shall be converted into an issued and outstanding share of common stock, par value $5.00 per share, of the Surviving Corporation.

2.8 Directors of Surviving Corporation After Effective Time . Immediately after the Effective Time, until their respective successors are duly elected or appointed and qualified, the directors of the Surviving Corporation shall consist of the directors of CFB serving immediately before the Effective Time.

2.9 Articles of Incorporation and Bylaws . The articles of incorporation of CFB, as in effect immediately before the Effective Time, shall be the articles of incorporation of the Surviving Corporation until thereafter amended in accordance with applicable law. The bylaws of CFB, as in effect immediately before the Effective Time, shall be the bylaws of the Surviving Corporation until thereafter amended in accordance with applicable law.

2.10 Dissenters’ Rights . Notwithstanding any other provision of this Agreement to the contrary, shares of CFB Common Stock that are outstanding immediately before the Effective Time and which are held by shareholders who shall have not voted in favor of the Merger or consented thereto in writing and who properly shall have demanded payment of the fair value for such shares in accordance with the IFIA (collectively, the “ Dissenters’ Shares ”) shall not be converted into or represent the right to receive the Merger Consideration. Such shareholders instead shall be entitled to receive payment of the fair value of such shares held by them in accordance with the provisions of the IFIA, except that all Dissenters’ Shares held by shareholders who shall have failed to perfect or who effectively shall have withdrawn or otherwise lost their rights as dissenting shareholders under the IFIA shall thereupon be deemed to have been converted into and to have become exchangeable, as of the Effective Time, for the right to receive, without any interest thereon, the Merger Consideration upon surrender in the manner provided in Section 2.6 of the Certificate(s) that, immediately before the Effective Time,

 

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evidenced such shares. CFB shall give First Savings (i) prompt written notice of any written demands for payment of fair value of any shares of CFB Common Stock, attempted withdrawals of such demands and any other instruments served pursuant to the IFIA and received by CFB relating to shareholders’ dissenters’ rights and (ii) the opportunity to participate in all negotiations and proceedings with respect to demands under the IFIA consistent with the obligations of CFB thereunder. CFB shall not, except with the prior written consent of First Savings, (x) make any payment with respect to such demand, (y) offer to settle or settle any demand for payment of fair value or (z) waive any failure to timely deliver a written demand for payment of fair value or timely take any other action to perfect payment of fair value rights in accordance with the IFIA.

2.11 Subsidiary Bank Merger . Concurrently with or as soon as practicable after the execution and delivery of this Agreement, First Savings and the Surviving Corporation shall enter into the Subsidiary Bank Merger Agreement, substantially in the form attached hereto as Exhibit A , pursuant to which the Surviving Corporation will merge with and into First Savings (the “ Subsidiary Bank Merger ”). Subject to the consent of the individuals selected, the Plan of Subsidiary Bank Merger shall provide that the directors of First Savings (the resulting institution of the Subsidiary Bank Merger) upon the effective date of the Subsidiary Bank Merger shall consist of the directors of First Savings immediately before the effective date of the Subsidiary Bank Merger, plus four (4) directors of CFB as of the date of this Agreement selected by First Savings in its sole discretion in consultation with CFB; provided, however, that First Savings reserves the right to appoint less than four (4) directors of CFB should one or more of the initially selected directors decline appointment to the board of directors of First Savings. Those directors of CFB who will not remain directors of the Surviving Corporation shall tender their resignations effective as of the effective date of the Subsidiary Bank Merger. The parties intend that the Subsidiary Bank Merger will become effective simultaneously with or immediately following the Effective Time.

2.12 Alternative Structure . Notwithstanding anything to the contrary contained in this Agreement, before the Effective Time, First Savings may specify that the structure of the transactions contemplated by this Agreement be revised and the parties shall enter into such alternative transactions as First Savings may reasonably determine to effect the purposes of this Agreement; provided, however, that such revised structure shall not (i) alter or change the amount or kind of the Merger Consideration, (ii) adversely affect the intent of the parties hereto that the Merger qualify as a reorganization under the provisions of Section 368(a) of the IRC for federal income tax purposes, or (iii) materially impede or delay the receipt of any regulatory approval referred to in, or the consummation of the transactions contemplated by, this Agreement. If First Savings elects to make such a revision, the parties agree to execute promptly appropriate documents to reflect the revised structure.

2.13 Absence of Control . Subject to any specific provisions of this Agreement, it is the intent of the parties hereto that First Savings by reason of this Agreement shall not be deemed (until consummation of the transactions contemplated hereby) to control, directly or indirectly, CFB or to exercise, directly or indirectly, a controlling influence over the management or policies of CFB.

 

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ARTICLE III

R EPRESENTATIONS AND W ARRANTIES

3.1 Disclosure Letters . Before the execution and delivery of this Agreement, First Savings, on the one hand, and CFFG and CFB, on the other hand, have each delivered to the other a letter (each, its “ Disclosure Letter ”) setting forth, among other things, facts, circumstances and events the disclosure of which is required or appropriate either in response to an express disclosure requirement contained in a provision hereof or as an exception to one or more of their respective representations and warranties (and making specific reference to the Section of this Agreement to which they relate).

3.2 Representations and Warranties of CFFG and CFB . CFFG and CFB, jointly and severally, represent and warrant to First Savings that, except as disclosed in CFFG’s/CFB’s joint Disclosure Letter:

(a) Organization and Qualification .

(i) CFB is a commercial bank duly organized and validly existing under the laws of the State of Indiana. CFB’s deposits are insured by the FDIC to the fullest extent permitted by law. CFB is a member in good standing of the Federal Reserve Bank of St. Louis and the Federal Home Loan Bank of Indianapolis. CFB has all requisite corporate power and authority to own, lease and operate its properties and to conduct the business currently being conducted by it. CFB is duly qualified or licensed as a foreign corporation to transact business and is in good standing in each jurisdiction in which the character of the properties owned or leased by it or the nature of the business conducted by it makes such qualification or licensing necessary, except where the failure to be so qualified or licensed and in good standing would not have a Material Adverse Affect on CFB. CFB engages only in activities (and holds properties only of the types) permitted to commercial banks by the IFIA and the rules and regulations of the Indiana Department of Financial Institutions promulgated thereunder and to member banks of the Federal Reserve System by the Federal Reserve Act and the rules and regulations of the FRB promulgated thereunder.

(ii) CFFG is a corporation duly organized and validly existing under the laws of the State of Indiana.

(b) Subsidiaries . CFB does not have any Subsidiaries.

(c) Capital Structure .

(i) The authorized capital stock of CFB consists solely of 1,500,000 shares of CFB Common Stock.

(ii) As of the date of this Agreement, 1,197,046 shares of CFB Common Stock are issued and outstanding, all of which are validly issued, fully paid and nonassessable and were issued in full compliance with all applicable federal and state securities laws.

 

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(iii) As of the date of this Agreement, 889,724 shares of CFB Common Stock are held of record by CFFG, free and clear of any Liens other than the Stock Pledge, and CFFG has, and will have at the time of the Shareholder Meeting, full power and authority to vote such shares, and none of such is subject to any voting trust or other agreement, arrangement or restriction that would limit the ability of CFFG to perform its obligations under Section 5.14 .

(iv) No bonds, debentures, notes or other indebtedness having the right to vote on any matters on which shareholders of CFB may vote are issued or outstanding.

(v) Except as set forth in this Section 3.2(c) , as of the date of this Agreement, (A) no shares of capital stock or other voting securities of CFB are issued, reserved for issuance or outstanding and (B) CFB has not been and is not bound by any outstanding subscriptions, options, warrants, calls, rights, convertible securities, commitments or agreements of any character obligating CFB to issue, deliver or sell, or cause to be issued, delivered or sold, any additional shares of capital stock of CFB or obligating CFB to grant, extend or enter into any such option, warrant, call, right, convertible security, commitment or agreement. As of the date hereof, there are no outstanding contractual obligations of CFB to repurchase, redeem or otherwise acquire any shares of capital stock of CFB.

(d) Authority . CFFG and CFB each has all requisite corporate power and authority to enter into this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated by this Agreement. The execution and delivery of this Agreement and the consummation of the transactions contemplated by this Agreement have been duly authorized by all necessary corporate actions on the part of the board of directors of each of CFFG and CFB, and no other corporate proceedings on the part of CFFG or CFB are necessary to authorize this Agreement or to consummate the transactions contemplated by this Agreement other than (i) the approval and adoption of this Agreement by the affirmative vote of the holders of a majority of the outstanding shares of CFB Common Stock and (ii) the release of the Stock Pledge. This Agreement has been duly and validly executed and delivered by CFFG and CFB and constitutes a valid and binding obligation of CFFG and CFB, enforceable against CFFG and CFB in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights and remedies generally and to general principles of equity, whether applied in a court of law or a court of equity.

(e) No Violations . The execution, delivery and performance of this Agreement by CFFG and CFB do not, and the consummation of the transactions contemplated by this Agreement will not, (i) assuming all required governmental approvals have been obtained and the applicable waiting periods have expired, violate any law, rule or regulation or any judgment, decree, order, governmental permit or license to which CFFG or CFB (or any of their respective properties) is subject, (ii) violate the charter or bylaws of CFFG or CFB or (iii) constitute a breach or violation of, or a default under (or an event which, with due notice or lapse of time or both, would constitute a default under), or result in the termination of, accelerate the

 

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performance required by, or result in the creation of any Lien upon any of the properties or assets of CFFG or CFB under, any of the terms, conditions or provisions of any note, bond, indenture, deed of trust, loan agreement or other agreement, instrument or obligation to which CFFG or CFB is a party, or to which any of their respective properties or assets may be subject except, in the case of (i) and (iii), for any such breaches, violations or defaults that would not, individually or in the aggregate, have a Material Adverse Effect on CFFG or CFB.

(f) Consents and Approvals. No consents or approvals of, or filings or registrations with, any Governmental Entity or any third party are required to be made or obtained in connection with the execution and delivery by CFFG and CFB of this Agreement or the consummation by CFB of the Merger and the other transactions contemplated by this Agreement, including the Subsidiary Bank Merger, except for filings of applications and notices with, receipt of approvals or non-objections from, and expiration of the related waiting period required by, federal and state banking authorities and except for such other consents and approvals disclosed in CFFG’s/CFB’s joint Disclosure Letter. As of the date of this Agreement, neither CFFG nor CFB has any knowledge of any reason pertaining to CFFG or CFB why any of the approvals referred to in this Section 3.2(f) should not be obtained without the imposition of any material condition or restriction described in Section 6.1(b) .

(g) Governmental Filings . CFB has filed all reports, schedules, registration statements and other documents that it has been required to file since December 31, 2005 with the Indiana Department of Financial Institutions, the FDIC, the FRB or any other Governmental Regulator (collectively, “ CFB’s Reports ”). No administrative actions have been taken or threatened or orders issued in connection with any of CFB’s Reports. As of their respective dates, each of CFB’s Reports complied in all material respects with all laws or regulations under which it was filed (or was amended so as to be in compliance promptly following discovery of such noncompliance). Any financial statement contained in any of CFB’s Reports fairly presented in all material respects the financial position of CFB and was prepared in accordance with GAAP or applicable regulations.

(h) Financial Statements . CFFG’s/CFB’s joint Disclosure Letter contains copies of (i) the balance sheets of CFB as of December 31, 2008 and 2007 and related statements of income, cash flows and changes in stockholders’ equity for each of the years in the two-year period ended December 31, 2008, together with the notes thereto, accompanied by the audit report of CFB’s independent public auditors and (ii) the unaudited balance sheet of CFB and its as of March 31, 2009 and the related statements of income and changes in stockholders’ equity for the three months ended March 31, 2009. Such financial statements were prepared from the books and records of CFB, fairly present the financial position of CFB in each case at and as of the dates indicated and the results of operations, retained earnings and cash flows of CFB for the periods indicated, and, except as otherwise set forth in the notes thereto, were prepared in accordance with GAAP consistently applied throughout the periods covered thereby; provided , however , that the unaudited financial statements for interim periods are subject to normal year-end adjustments (which will not be material individually or in the aggregate) and lack a statement of cash-flows and footnotes. The books and records of CFB have been, and are being, maintained in all respects in accordance with GAAP and any other legal and accounting requirements and reflect only actual transactions.

 

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(i) Undisclosed Liabilities . CFB has not incurred any debt, liability or obligation of any nature whatsoever (whether accrued, contingent, absolute or otherwise and whether due or to become due) other than liabilities reflected on or reserved against in the balance sheet of CFB as of December 31, 2008, except for (i) liabilities incurred since December 31, 2008 in the ordinary course of business consistent with past practice that, either alone or when combined with all similar liabilities, have not had, and would not reasonably be expected to have, a Material Adverse Effect on CFB and (ii) liabilities incurred for legal, accounting, financial advising fees and out-of-pocket expenses in connection with the transactions contemplated by this Agreement.

(j) Absence of Certain Changes or Events . Since December 31, 2008:

(i) CFB has conducted its business only in the ordinary and usual course of such business consistent with their past practices;

(ii) there has not been any event or occurrence that has had, or is reasonably expected to have, a Material Adverse Effect on CFB;

(iii) CFB has not declared, paid or set aside any dividends or distributions with respect to the CFB Common Stock other than the declaration on March 30, 2009 of a dividend of twenty-two cents ($0.22) per share for the quarter ended March 31, 2009, and, after the date of this Agreement, other than as permitted by Section 4.1(c)(ii) ;

(iv) except for supplies or equipment purchased in the ordinary course of business, CFB has not made any capital expenditures exceeding $25,000 individually or $75,000 in the aggregate;

(v) there has not been any write-down by CFB in excess of $25,000 with respect to any of its Loans, real estate owned, or investment securities;

(vi) there has not been any sale, assignment or transfer of any assets by CFB in excess of $10,000 other than in the ordinary course of business or pursuant to a contract or agreement disclosed in CFFG’s/CFB’s joint Disclosure Letter;

(vii) there has been no increase in the salary, compensation, pension or other benefits payable or to become payable by CFB to any of its directors, officers or employees, other than in conformity with the policies and practices of CFB in the usual and ordinary course of its business and consistent with past practice;

(viii) CFB has not paid or made any accrual or arrangement for payment of bonuses or special compensation of any kind or any severance or termination pay to any of its directors, officers or employees, other than the payments to be made upon a change in control of CFB as provided in Section 5.11(e) , normal and customary accruals of bonuses for such persons, and the retention bonus pool as provided in Section 4.1(j)(i) ; and

 

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(ix) there has been no change in any accounting principles, practices or methods of CFB other than as required by GAAP.

(k) Litigation. Other than for routine matters incidental to the business of CFB, which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on CFB, there are no suits, actions or legal, administrative or arbitration proceedings pending or, to the Knowledge of CFB, threatened against or affecting CFB or any property or asset of CFB. There are no investigations, reviews or inquiries by any court or Governmental Entity pending or, to the Knowledge of CFB, threatened against CFB. There are no judgments, decrees, injunctions, orders or rulings of any Governmental Entity or arbitrator outstanding against CFB that have not been satisfied or that enjoin CFB from taking any action.

(l) Absence of Regulatory Actions . Since December 31, 2005, neither CFFG nor CFB has been a party to any cease and desist order, written agreement or memorandum of understanding with, or any commitment letter or similar undertaking to, or has been subject to any action, proceeding, order or directive by any Government Regulator, or has adopted any board resolutions at the request of any Government Regulator, or has been advised by any Government Regulator that it is contemplating issuing or requesting (or is considering the appropriateness of issuing or requesting) any such action, proceeding, order, directive, written agreement, memorandum of understanding, commitment letter, board resolutions or similar undertaking. There are no unresolved violations, criticisms or exceptions by any Government Regulator with respect to any report or statement relating to any examinations of CFFG or CFB.

(m) Compliance with Laws . CFB conducts its business in all material respects in compliance with all statutes, laws, regulations, ordinances, rules, judgments, orders or decrees applicable to it. CFB has all material permits, licenses, certificates of authority, orders and approvals of, and has made all filings, applications and registrations with, all Governmental Entities that are required in order to permit it to carry on its business as it is presently conducted; all such permits, licenses, certificates of authority, orders and approvals are in full force and effect, and no suspension or cancellation of any of them is threatened. CFB has not been given notice or been charged with any violation of, any law, ordinance, regulation, order, writ, rule, decree or condition to approval of any Governmental Entity which, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect on CFB.

(n) Taxes . All federal, state, local and foreign Tax returns required to be filed by or on behalf of CFB have been timely filed or requests for extensions have been timely filed and any such extension shall have been granted and not have expired, and all such filed returns are complete and accurate in all material respects. All Taxes shown on such returns, all Taxes required to be shown on returns for which extensions have been granted and all other taxes required to be paid by CFB have been paid in full or adequate provision has been made for any such Taxes on CFB’s balance sheet (in accordance with GAAP). There is no pending audit examination, deficiency assessment, tax investigation or refund litigation with respect to any

 

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Taxes of CFB, and no claim has been made in writing by any authority in a jurisdiction where CFB does not file Tax returns that CFB is subject to taxation in that jurisdiction. All Taxes, interest, additions and penalties due with respect to completed and settled examinations or concluded litigation relating to CFB have been paid in full or adequate provision has been made for any such Taxes on CFB’s balance sheet (in accordance with GAAP). CFB has not executed an extension or waiver of any statute of limitations on the assessment or collection of any Tax due that is currently in effect. CFB has withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, shareholder or other third party, and CFB has timely complied with all applicable information reporting requirements under Part III, Subchapter A of Chapter 61 of the IRC and similar applicable state and local information reporting requirements. CFB is not a party to any agreement, contract, arrangement or plan that has resulted or would result, individually or in the aggregate, in connection with this Agreement in the payment of any “excess parachute payments” within the meaning of Section 280G of the IRC and CFB has not made any payments and is not a party to any agreement, and does not maintain any plan, program or arrangement, that could require it to make any payments that would not be fully deductible by reason of Section 162(m) of the IRC.

(o) Agreements .

(i) CFFG’s/CFB’s joint Disclosure Letter lists, and contains a complete and correct copy of, any contract, arrangement, commitment or understanding (whether written or oral) to which CFB is a party or is bound:

(A) with any executive officer or other key employee of CFB the benefits of which are contingent, or the terms of which are materially altered, upon the occurrence of a transaction involving CFB of the nature contemplated by this Agreement;

(B) with respect to the employment of any directors, officers, employees or consultants;

(C) any of the benefits of which will be increased, or the vesting or payment of the benefits of which will be accelerated, by the occurrence of any of the transactions contemplated by this Agreement, or the value of any of the benefits of which will be calculated on the basis of any of the transactions contemplated by this Agreement (including any stock option plan, phantom stock or stock appreciation rights plan, restricted stock plan or stock purchase plan);

(D) containing covenants that limit the ability of CFB to compete in any line of business or with any person, or that involve any restriction on the geographic area in which, or method by which, CFB (including any successor thereof) may carry on its business (other than as may be required by law or any regulatory agency);

(E) pursuant to which CFB may become obligated to invest in or contribute capital to any entity;

 

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(F) that relates to borrowings of money (or guarantees thereof) by CFB in excess of $25,000, other than reverse repurchase agreements and advances from the Federal Home Loan Bank of Indianapolis or the Federal Reserve Bank of St. Louis; or

(G) which is a lease or license with respect to any property, real or personal, whether as landlord, tenant, licensor or licensee, involving a liability or obligation as obligor in excess of $25,000 annually.

(ii) Neither CFFG nor CFB is in default under (and no event has occurred which, with due notice or lapse of time or both, would constitute a default under) or is in violation of any provision of any note, bond, indenture, mortgage, deed of trust, loan agreement, lease or other agreement to which it is a party or by which it is bound or to which any of its respective properties or assets is subject and, to the Knowledge of CFFG and CFB, no other party to any such agreement (excluding any loan or extension of credit made by CFB) is in default in any respect thereunder, except for such defaults or violations that would not, individually or in the aggregate, have a Material Adverse Effect on CFFG or CFB.

(iii) Each arrangement of CFB that is a “nonqualified deferred compensation plan” within the meaning of Section 409A(d)(1) of the IRC and any award thereunder, in each case that is subject to Section 409A of the IRC, complies as to form with Section 409A of the IRC and has been operated in compliance in all material respects with Section 409A of the IRC since January 1, 2005, the regulations issued thereunder and applicable guidance from the Internal Revenue Service.

(p) Intellectual Property . CFB owns or possesses valid and binding licenses and other rights to use without payment all patents, copyrights, trade secrets, trade names, service marks and trademarks material to its business. CFFG’s/CFB’s joint Disclosure Letter sets forth a complete and correct list of all material trademarks, trade names, service marks and copyrights owned by or licensed to CFB for use in its business, and all licenses and other agreements relating thereto and all agreements relating to third party intellectual property that CFB is licensed or authorized to use in its business, including without limitation any software licenses (other than licenses for commercially available, off-the-shelf software) (collectively, the “ Intellectual Property ”). With respect to each item of Intellectual Property owned by CFB, CFB possesses all right, title and interest in and to the item, free and clear of any Lien. With respect to each item of Intellectual Property that CFB is licensed or authorized to use, the license, sublicense or agreement covering such item is legal, valid, binding, enforceable and in full force and effect. CFB has not received any charge, complaint, claim, demand or notice alleging any interference, infringement, misappropriation or violation with or of any intellectual property rights of a third party (including any claims that CFB must license or refrain from using any intellectual property rights of a third party). To the Knowledge of CFB, CFB has not interfered with, infringed upon, misappropriated or otherwise come into conflict with any intellectual property rights of third parties and no third party has interfered with, infringed upon, misappropriated or otherwise come into conflict with any intellectual property rights of CFB.

 

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(q) Labor Matters . CFB is in material compliance with all applicable laws respecting employment, retention of independent contractors, employment practices, terms and conditions of employment, and wages and hours. CFB is not and has never been a party to, and has not and never been bound by, any collective bargaining agreement, contract or other agreement or understanding with a labor union or labor organization with respect to its employees, nor is CFB the subject of any proceeding asserting that it has committed an unfair labor practice or seeking to compel it to bargain with any labor organization as to wages and conditions of employment nor has any such proceeding been threatened, nor is there any strike, other labor dispute or organizational effort involving CFB pending or, to the knowledge of CFB, threatened.

(r) Employee Benefit Plans .

(i) CFFG’s/CFB’s joint Disclosure Letter contains a complete and accurate list of all pension, retirement, stock option, restricted stock, stock purchase, stock ownership, savings, stock appreciation right, profit sharing, deferred compensation, consulting, bonus, group insurance, severance and other benefit plans, contracts, agreements, policies and arrangements, including, but not limited to, “employee benefit plans,” as defined in Section 3(3) of ERISA, incentive and welfare policies, contracts, plans and arrangements and all trust agreements related thereto, which are maintained by CFB or to which CFB is a party and which cover any present or former directors, officers or other employees of CFB (hereinafter referred to collectively as the “ CFB Employee Plans ”). CFB has previously delivered or made available to First Savings true and complete copies of each agreement, plan and other documents referenced in CFFG’s/CFB’s joint Disclosure Letter, along with, where applicable, copies of the IRS Form 5500 or 5500-C for the most recently completed year. There has been no announcement or commitment by CFFG or CFB to create an additional CFB Employee Plan, or to amend any CFB Employee Plan, except for amendments required by applicable law which do not materially increase the cost of such CFB Employee Plan.

(ii) There is no pending or threatened litigation, administrative action or proceeding relating to any CFB Employee Plan. All of the CFB Employee Plans comply in all material respects with all applicable requirements of ERISA, the IRC and other applicable laws. Neither CFFG nor CFB has engaged in a “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of the IRC) with respect to the CFB Employee Plans nor, to the Knowledge of CFFG or CFB, has there occurred a “prohibited transaction” with respect to the CFB Employee Plans, which is likely to result in the imposition of any penalties or taxes upon CFB under Section 502(i) of ERISA or Section 4975 of the IRC.

(iii) No CFB Employee Plan is or has been subject to Title IV of ERISA or the minimum funding requirements of Section 412 of the IRC. Neither CFB nor any ERISA Affiliate has contributed to any “multiemployer plan,” as defined in Section 3(37) of ERISA, on or after September 26, 1980.

 

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(iv) Each CFB Employee Plan that is an “employee pension benefit plan” (as defined in Section 3(2) of ERISA) and which is intended to be qualified under Section 401(a) of the IRC (a “ CFB Qualified Plan ”) has received a favorable determination or opinion letter from the IRS, and CFB is not aware of any circumstances likely to result in revocation of any such favorable determination or opinion letter.

(v) With respect to each CFB Employee Plan that is a “multiple employer plan” (as defined in Section 4063 of ERISA): (A) neither CFB nor any of its ERISA Affiliates has received any notification, nor has any knowledge, that if CFB or any of its ERISA Affiliates were to experience a withdrawal or partial withdrawal from such plan it would incur withdrawal liability that would be reasonably likely to have a Material Adverse Effect on CFB; and (B) neither CFB nor any of its ERISA Affiliates has received any notification, nor has any reason to believe, that any CFB Employee Plan is in reorganization, has been terminated, is insolvent, or may be in reorganization, become insolvent or be terminated.

(vi) CFB does not have any obligations for post-retirement or post-employment benefits under any CFB Employee Plan that cannot be amended or terminated upon 60 days’ notice or less without incurring any liability thereunder, except for coverage required by Part 6 of Title I of ERISA or Section 4980B of the IRC, or similar state laws, the cost of which is borne by the insured individuals.

(vii) Each CFB Employee Plan, including without limitation the 401(k) Plan in which CFB’s employees are eligible to participate, is and at all times has been maintained, funded, operated and administered, and CFB has performed all of its obligations under each CFB Employee Plan, in each case in accordance with the terms of such CFB Employee Plan and is in compliance in all material respects with all applicable laws, including ERISA and the IRC. CFB has complied in all material respects with the provisions of COBRA, the Health Insurance Portability and Accountability Act of 1996 and the Family Medical Leave Act of 1993. All contributions required to be made to any CFB Employee Plan by applicable law and the terms of such CFB Employee Plan, and all premiums due or payable with respect to insurance policies funding any CFB Employee Plan, for any period through the Closing Date, have been timely made or paid in full or, to the extent not required to be made or paid on or before the Closing Date, have been fully accrued for by CFB. All returns, reports and filings required by any Governmental Entity or which must be furnished to any person with respect to each CFB Employee Plan have been filed or furnished.

(s) Properties .

(i) A list and description of all real property owned or leased by CFB (including any property acquired in a judicial foreclosure proceeding or by way of a deed in lieu of foreclosure or similar transfer) (collectively, the “ Real Property ”), is set forth in CFFG’s/CFB’s joint Disclosure Letter. CFB has good and marketable title to all Real Property owned by it, in each case free and clear of any Liens except (i) liens for taxes not yet due and payable and (ii) such easements, restrictions and encumbrances, if any, as are not material in character, amount or extent, and do not materially detract from the value, or materially interfere with the present use of the properties subject thereto or affected thereby. Each lease pursuant to which CFB, as lessee, leases real or personal property is valid and in full force and effect and

 

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neither CFB, nor, to CFB’s knowledge, any other party to any such lease, is in default or in violation of any material provisions of any such lease. A complete and correct copy of each such lease is attached as an exhibit to CFFG’s/CFB’s joint Disclosure Letter. All Real Property owned or leased by CFB are in a good state of maintenance and repair (normal wear and tear excepted), conform in all material respects with all applicable ordinances, regulations and zoning laws and are considered by CFB to be adequate for the current business of CFB. To the knowledge of CFB, none of the buildings, structures or other improvements located on any Real Property owned or leased by CFB encroaches upon or over any adjoining parcel or real estate or any easement or right-of-way.

(ii) CFB has good and marketable title to all tangible personal property owned by it, free and clear of all Liens except such Liens, if any, as are not material in character, amount or extent, and do not materially detract from the value, or materially interfere with the present use of the properties subject thereto or affected thereby. With respect to personal property used in the business of CFB that is leased rather than owned, CFB is not in default under the terms of any such lease.

(t) Fairness Opinion . CFB has received the opinion of Sandler O’Neill & Partners, L.P., to the effect that, as of the date hereof, the Merger Consideration is fair, from a financial point of view, to the holders of CFB Common Stock.

(u) Fees . Other than for financial advisory services performed for CFFG or CFB by Sandler O’Neill & Partners, L.P. pursuant to a written agreement dated October 13, 2008, a true and complete copy of which is attached as an exhibit to CFFG’s/CFB’s joint Disclosure Letter, neither CFB nor any of its respective officers, directors, employees or agents, has employed any broker or finder or incurred any liability for any financial advisory fees, brokerage fees, commissions or finder’s fees, and no broker or finder has acted directly or indirectly for CFB in connection with this Agreement or the transactions contemplated hereby.

(v) Environmental Matters .

(i) Each of CFB, the Participation Facilities, and, to the knowledge of CFB, the Loan Properties are, and have been, in substantial compliance with all Environmental Laws.

(ii) There is no suit, claim, action, demand, executive or administrative order, directive, investigation or proceeding pending or, to the Knowledge of CFB, threatened, before any court, governmental agency or board or other forum against CFB or any Participation Facility (A) for alleged noncompliance (including by any predecessor) with, or liability under, any Environmental Law or (B) relating to the presence of or release into the environment of any Hazardous Material, whether or not occurring at or on a site owned, leased or operated by CFB or any Participation Facility.

 

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(iii) To the Knowledge of CFB, there is no suit, claim, action, demand, executive or administrative order, directive, investigation or proceeding pending or threatened before any court, governmental agency or board or other forum relating to or against any Loan Property (or CFB in respect of such Loan Property) (A) relating to alleged noncompliance (including by any predecessor) with, or liability under, any Environmental Law or (B) relating to the presence of or release into the environment of any Hazardous Material, whether or not occurring at a Loan Property.

(iv) CFB has not received any notice, demand letter, executive or administrative order, directive or request for information from any Governmental Entity or any third party indicating that it may be in violation of, or liable under, any Environmental Law.

(v) There are no underground storage tanks at any properties owned or operated by CFB or any Participation Facility. Neither CFB nor, to the Knowledge of CFB, any other person or entity, has closed or removed any underground storage tanks from any properties owned or operated by CFB or any Participation Facility.

(vi) During the period of (A) CFB’s ownership or operation of any Real Property or (B) CFB’s participation in the management of any Participation Facility, there has been no release of Hazardous Materials in, on, under or affecting such properties. To the Knowledge of CFB, before the period of (A) CFB’s ownership or operation of any of its Real Property or (B) CFB’s participation in the management of any Participation Facility, there was no contamination by or release of Hazardous Material in, on, under or affecting such properties.

(w) Loan Portfolio; Allowance for Loan Losses .

(i) With respect to each Loan owned by CFB in whole or in part:

(A) to the Knowledge of CFB, the note and the related security documents are each legal, valid and binding obligations of the maker or obligor thereof, enforceable against such maker or obligor in accordance with their terms;

(B) neither CFB nor any prior holder of a Loan has modified the note or any of the related security documents in any material respect or satisfied, canceled or subordinated the note or any of the related security documents except as otherwise disclosed by documents in the applicable Loan file;

(C) CFB is the sole holder of legal and beneficial title to each Loan (or CFB’s applicable participation interest), except as otherwise referenced on the books and records of CFB;

(D) the original note and the related security documents are included in the Loan files, and copies of any documents in the Loan files are true and correct copies of the documents they purport to be and have not been suspended, amended, modified, canceled or otherwise changed except as otherwise disclosed by documents in the applicable Loan file; and

 

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(E) with respect to a Loan held in the form of a participation, to the Knowledge of CFB, the participation documentation is legal, valid, binding and enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent conveyance and other laws of general applicability relating to or affecting creditors’ rights and to general equity principles.

(ii) Neither the terms of any Loan, any of the documentation for any Loan, the manner in which any Loans have been administered and serviced, nor CFB’s practices of approving or rejecting Loan applications, violate in any material respect any federal, state, or local law, rule or regulation applicable thereto, including, without limitation, the Truth In Lending Act, Regulations O and Z of the Federal Reserve Board, the CRA, the Equal Credit Opportunity Act, and any state laws, rules and regulations relating to consumer protection, installment sales and usury.

(iii) The allowance for loan losses reflected in CFB’s audited balance sheet at December 31, 2008 was, and the allowance for loan losses shown on the balance sheets in CFB’s Reports for periods ending after such date, in the opinion of management, was or will be adequate, as of the dates thereof, under GAAP. CFFG’s/CFB’s joint Disclosure Letter details CFB’s calculation of its allowance for loan losses as of March 31, 2009.

(x) Anti-takeover Provisions Inapplicable . CFFG and CFB have taken all actions required, if any, to exempt FSFG, First Savings, the Agreement, the Plan of Subsidiary Bank Merger, the Merger and the Subsidiary Bank Merger from any provisions of an anti-takeover nature contained in their organizational documents, and the provisions of any federal or state “anti-takeover,” “fair price,” “moratorium,” “control share acquisition” or similar laws or regulations.

(y) Material Interests of Certain Persons . No current or former officer or director of CFFG or CFB, or any family member or affiliate of any such person, has any material interest, directly or indirectly, in any contract or property (real or personal), tangible or intangible, used in or pertaining to the business of CFB, except for deposit or loan relationships entered into in the ordinary course of CFB’s business.

(z) Insurance . CFB is presently insured for amounts deemed reasonable by CFB’s management against such risks as companies engaged in a similar business would, in accordance with good business practice, customarily be insured. CFFG’s/CFB’s joint Disclosure Letter contains a list of all policies of insurance carried and owned by CFB showing the name of the insurance company and agent, the nature of the coverage, the policy limit, the annual premiums and the expiration date. All of the insurance policies and bonds maintained by CFB are in full force and effect, CFB is not in default thereunder, all premiums and other payments due under any such policy have been paid, and all material claims thereunder have been filed in due and timely fashion.

 

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(aa) Investment Securities; Derivatives .

(i) CFFG’s/CFB’s joint Disclosure Letter contains a complete and accurate list of CFB’s investment securities portfolio (other than those securities disclosed pursuant to Section 3.2(aa)(ii) ) as of the most recent practicable date before the date of this Agreement, identifying each security by issuer name and CUSIP number and setting forth the cost basis, par value, book value and fair market value of each security.

(ii) CFFG’s/CFB’s joint Disclosure Letter contains a complete and accurate list of CFB’s non-agency mortgage and asset backed securities portfolio (the “ CFB Private Label Portfolio ”) as of the most recent practicable date before the date of this Agreement, identifying each security by issuer name and CUSIP number and setting forth the cost basis, par value, book value and fair market value of each security.

(iii) Except for restrictions that exist for securities that are classified as “held to maturity,” none of the investment securities held by CFB is subject to any restriction (contractual or statutory) that would materially impair the ability of the entity holding such investment freely to dispose of such investment at any time.

(iv) CFB is not a party to and has not agreed to enter into an exchange-traded or over-the-counter equity, interest rate, foreign exchange or other swap, forward, future, option, cap, floor or collar or any other contract that is a derivative contract (including various combinations thereof) or owns securities that (A) are referred to generically as “structured notes,” “high risk mortgage derivatives,” “capped floating rate notes” or “capped floating rate mortgage derivatives” or (B) are likely to have changes in value as a result of interest or exchange rate changes that significantly exceed normal changes in value attributable to interest or exchange rate changes.

(bb) Indemnification . Except as provided in the charter or bylaws of CFB, CFB is not a party to any agreement that provides for the indemnification of any of its present or former directors, officers or employees, or other persons who serve or served as a director, officer or employee of another corporation, partnership or other enterprise at the request of CFB and, to the Knowledge of CFB, there are no claims for which any such person would be entitled to indemnification under the charter or bylaws of CFB, under any applicable law or regulation or under any indemnification agreement.

(cc) Corporate Documents and Records . CFFG’s/CFB’s joint Disclosure Letter includes a complete and correct copy of the charter and bylaws of CFB as in effect as of the date of this Agreement. CFB is not in violation of its charter or bylaws. The minute books of CFB constitute a complete and correct record of all actions taken by its board of directors (and each committee thereof) and its shareholders. CFB maintains accounting records that fairly and accurately reflect, in all material respects, its transactions, and accounting controls exist sufficient to provide reasonable assurances that such transactions are, in all material respects, (i) executed in accordance with management’s general or specific authorization and (ii) recorded as necessary to permit the preparation of financial statements in accordance with GAAP.

 

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(dd) CFB Information . The information regarding CFB included in the Proxy Statement, and all amendments thereto, will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. The information supplied, or to be supplied, by CFB for inclusion in applications to Governmental Entities to obtain all permits, consents, approvals and authorizations necessary or advisable to consummate the transactions contemplated by the Agreement shall be accurate in all material respects.

(ee) CRA, Anti-Money Laundering, OFAC and Customer Information Security . CFB has received a rating of “Satisfactory” in its most recent examination or interim review with respect to the CRA. CFB is not aware of, has not been advised of, and has no reason to believe that any facts or circumstances exist that would cause it: (i) to be deemed not to be in satisfactory compliance in any material respect with the CRA, and the regulations promulgated thereunder, or to be assigned a rating for CRA purposes by federal or state bank regulators of lower than “satisfactory”, (ii) to be deemed to be operating in violation in any material respect of the Bank Secrecy Act, the Patriot Act, any order issued with respect to anti-money laundering by the U.S. Department of the Treasury’s Office of Foreign Assets Control, or any other applicable anti-money laundering statute, rule or regulation, or (iii) to be deemed not to be in satisfactory compliance in any material respect with the applicable privacy of customer information requirements contained in any federal and sate privacy laws and regulations, including without limitation, in Title V of the Gramm-Leach-Bliley Act of 1999 and the regulations promulgated thereunder, as well as t