AGREEMENT OF MERGER

Agreement and Plan of Merger

You are currently viewing:

This Agreement and Plan of Merger involves

PREMIER FINANCIAL BANCORP INC | CITIZENS FIRST BANK, INC

. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here.

Title: AGREEMENT OF MERGER
Governing Law: West Virginia Date: 10/25/2007
Industry: Regional Banks Sector: Financial

Exhibit 10.1

AGREEMENT OF MERGER

DATED AS OF OCTOBER 24, 2007

among

PREMIER FINANCIAL BANCORP, INC.

and

CITIZENS FIRST BANK, INC.

and

CFB INTERIM BANK, INC.

Exhibit 10.1 - continued

TABLE OF CONTENTS

		Page
Section 1.	Merger

1.1	General Effect of Merger; Assets	2
1.2	Liabilities of Surviving Bank	2
1.3	Name, Directors and Officers of Surviving Bank	2
1.4	Offices, Policies of Surviving Bank	3
1.5	Capital Structure of Surviving Bank	3
1.6	Change in Method of Effecting Acquisition	3


Section 2.	Conversion, Exchange and Cancellation of Shares

2.1	General	4
2.2	Stock Consideration and Cash Consideration	4
2.3	Manner of Exchange	4
2.4	Fractional Shares	5
2.5	Lost Certificates	5


Section 3.	Representations, Warrantis and Covenants of Premier

3.1	Organization, Standing and Authority	6
3.2	Capital Structure	6
3.3	Premier Subsidiaries	6
3.4	Authority	7
3.5	Premier Financial Statements	8
3.6	Allowance for Possible Loan Losses	8
3.7	Accuracy of Annual Reports	8
3.8	Absence of Undisclosed Liabilities	8
3.9	Tax Matters	9
3.10	Loans	9
3.11	Properties	10
3.12	Compliance with Laws	10
3.13	Employee Benefit Plans	10
3.14	Commitments and Contracts	11
3.15	Labor	11
3.16	Material Contracts Furnished	12
3.17	Material Contracts	12
3.18	Material Contract Defaults	12
3.19	Legal Proceedings	12
3.20	Absence of Certain Changes or Events	12
3.21	Reports	13
3.22	Investments	13

Exhibit 10.1 - continued

3.23	Securities Portfolio	13
3.24	Environmental Matters	13
3.25	Accuracy of Proxy Statement	13
3.26	Interim Bank Formation; Adoption Agreement	14
3.27	Filing of Application to Merge	14
3.28	Best Efforts	14
3.29	Conduct of Business - Acquisitions	14
3.30	Conduct of Business - Affirmative Covenants of Premier	14



Section 4.	Representations, Warranties and Covenants of Bank

4.1	Organization, Standing and Authority	16
4.2	Capital Structure	16
4.3	No Subsidiaries	16
4.4	Authority	16
4.5	Bank Financial Statements	16
4.6	Accuracy of Annual Reports	17
4.7	Allowance for Possible Loan Losses	17
4.8	Absence of Undisclosed Liabilities	17
4.9	Tax Matters	18
4.10	Loans	18
4.11	Properties	18
4.12	Compliance with Laws	19
4.13	Employee Benefit Plans	19
4.14	Commitments and Contracts	20
4.15	Labor	20
4.16	Material Contracts Furnished	20
4.17	Material Contracts	20
4.18	Material Contract Defaults	21
4.19	Legal Proceedings	21
4.20	Absence of Certain Changes or Events	21
4.21	Reports	21
4.22	Accuracy of Proxy Statement	22
4.23	Investments	22
4.24	Securities Portfolio	22
4.25	Environmental Matters	22
4.26	Best Efforts	22
4.27	Conduct of Business – Negative Covenants of Bank	22
4.28	Conduct of Business – Affirmative Covenants of Bank	24


Section 5.	Indemnification and Confidentiality

5.1	Access and Information	26
5.2	Furnishing Information and Indemnification	26
5.3	Confidentiality	27
5.4	Updates to Information	27

Exhibit 10.1 - continued


Section 6.	Conditions Precedent

(a)	Governmental Approvals	28
(b)	Shareholder Approval	28
(c)	Registration Statement	28
(d)	Affiliates	28
(e)	No Divestiture or Adverse Condition	29
(f)	Accuracy of Representations and Warranties; Performance of Obligations and Covenants - Premier	29
(g)	Accuracy of Representations and Warranties; Performance of Obligations and Covenants – Bank	29
(h)	Opinion of Counsel for Bank	29
(i)	Opinion of Counsel for Premier	30
(j)	Less than 20% Dissenters	32
(k)	Tax Ruling or Opinion Letter	32
(l)	Absence of Material Adverse Changes - Premier	32
(m)	Absence of Material Adverse Changes – Bank	33


Section 7.	Closing Date and Effective Time

7.1	Closing Date	34
7.2	Effective Time	34



Section 8.	Termination of Agreement

8.1	Grounds for Termination	35
8.2	Effect of Termination	35
8.3	Lost Opportunity Costs	35
8.4	Return of Information	37



Section 9.	Waiver and Amendment	38


Section 10.	Meeting of Shareholders of Bank	39


Section 11.	Rights of Dissenting Shareholders	40


Section 12.	Indemnification

12.1	Indemnification	41
12.2	Insurance	41
12.3	Consolidation or Merger	41

12.4

Survival



Section 13.	Operations after the Closing Date

13.1	Employees of the Bank	42
13.2	Severance	42
13.3	Survival	42

Exhibit 10.1 - continued


Section 14.	Miscellaneous

14.1	Public Announcements	43
14.2	Brokers and Finders	43
14.3	Disclosed In Writing	43
14.4	Entire Agreement	43
14.5	Counterparts	43
14.6	Invalid Provisions	43
14.7	Notices	43
14.8	Headings	44
14.9	Expenses	44
14.10	Governing Law	44
14.11	No Assignment	44
14.12	Effectiveness of Agreement	44
14.13	Further Acts	45
14.14	Representations and Warranties Not to Survive	45
14.15	Individual Directors	45

Exhibit 10.1 - continued

AGREEMENT OF MERGER

THIS AGREEMENT OF MERGER (hereinafter sometimes referred to as the "Agreement"), made and entered into as of the 24th day of October, 2007, by and between PREMIER FINANCIAL BANCORP INC. ("Premier") and CITIZENS FIRST BANK, INC. ("Bank"), and its directors, or a majority of them;

W I T N E S S E T H:

WHEREAS, Premier is a corporation duly organized and validly existing under the laws of the Commonwealth of Kentucky and a registered bank holding company, with its principal office and place of business located in the City of Huntington, County of Cabell and State of West Virginia, with authorized capital stock consisting of 10,000,000 common shares, no par value per share ("Premier Common Stock"), of which 5,236,899 shares are currently outstanding and 1,000,000 preferred shares, no par value per share, none of which are currently outstanding ("Premier Preferred Stock"); and

WHEREAS, Bank is a state banking corporation, duly organized and validly existing under the laws of the State of West Virginia, with its principal office and place of business located in Ravenswood, County of Jackson, State of West Virginia, with capital accounts as of December 31, 2006 consisting of authorized capital stock of $750,000 divided into 750,000 authorized shares of common stock, of which 400,000 shares are currently outstanding, having a par value of $1 per share ("Bank Common Stock"), surplus of $3,600,000 and retained earnings of $1,589,000; and

WHEREAS, Premier and Bank have agreed to the merger of Bank with and into a wholly-owned subsidiary of Premier, to be organized under the laws of the State of West Virginia, so that upon consummation of the merger Bank will be a wholly-owned subsidiary of Premier; and

WHEREAS, the Board of Directors of Premier has approved this agreement and has authorized the execution hereof in counterparts; and

WHEREAS, the Board of Directors of Bank has approved this agreement, authorized the execution hereof in counterparts, and directed that it be submitted to its shareholders for approval, ratification and confirmation; and

WHEREAS, Premier has agreed to cause a new West Virginia corporation to be organized which shall be named CFB Interim Bank, Inc. ("Interim Bank"), with its principal office and place of business to be located in Ravenswood, County of Jackson, State of West Virginia, and all shares of its capital stock to be owned by Premier; and

WHEREAS, Premier has agreed to cause Interim Bank to approve this Agreement and authorize the execution of an Adoption Agreement substantially in the form attached hereto as "Exhibit A" which is incorporated herein by reference.

Exhibit 10.1 - continued

NOW, THEREFORE, in consideration of the foregoing premises, which are not mere recitals but an integral part hereof, and in consideration of the mutual agreements hereinafter set forth, the parties hereto agree as follows:

Section 1. Merger

1.1 General Effect of Merger; Assets. At the Effective Time (hereinafter defined in Section 7.2) and subject to the terms and conditions hereof and of the attendant Plan of Merger ("Plan of Merger") attached hereto as "Exhibit B", Bank shall merge with and into Interim Bank (the "Merger") under the charter of Interim Bank pursuant to the provisions of and with the effect provided in the West Virginia Business Corporation Act, Chapter 31D. Interim Bank shall be (and is hereinafter called when reference is made to it at and after the consummation of the Merger) the Surviving Bank and shall take the name and title of "Citizens First Bank, Inc.". At the Effective Time of the Merger, the corporate existence of Bank shall, as provided in the West Virginia Business Corporation Act, Chapter 31D, Article 11 of the West Virginia Code, be merged with and into Interim Bank and continued in the Surviving Bank and the separate existence of Bank shall cease. The Surviving Bank shall thereupon and thereafter possess all of the rights, privileges, immunities and franchises, of a public as well as of a private nature, of the Interim Bank and Bank; and all property, real, personal and mixed, and all debts due on whatever account, including subscriptions to shares, if any, and all other choses in action, and all and every other interest of or belonging to or due to the Interim Bank and Bank, and each of them, shall be deemed to be transferred to and vested in the Surviving Bank without further act or deed; and the title to any real estate, or any interest therein, vested in the Interim Bank and Bank and each of them, before the Merger, shall not revert or in any way be impaired by reason of the Merger.

1.2 Liabilities of Surviving Bank . From and after the Effective Time of the Merger, the Surviving Bank shall be liable for all liabilities of Bank and Interim Bank and all deposits, debts, liabilities, obligations and contracts of Bank and Interim Bank, respectively, matured or unmatured, whether accrued, absolute, contingent or otherwise, and whether or not reflected or reserved against on balance sheets, books of account or records of Bank or Interim Bank, as the case may be, shall be those of and are hereby expressly assumed by the Surviving Bank and shall not be released or impaired by the Merger, and all rights of creditors and other obligees and all liens on property of either Bank or Interim Bank shall be preserved unimpaired, and the Surviving Bank shall have all rights and shall be liable for all obligations of Bank under all employee benefit plans and arrangements of Bank and such plans and related trusts shall continue in effect without any interruption or termination unless and until changed as therein or by law provided or permitted or as mutually agreed to by the parties hereto.

1.3 Name, Directors and Officers of Surviving Bank . From and after the Effective Time, the name of the Surviving Bank shall be "Citizens First Bank, Inc.". The Articles of Incorporation and the By-laws of Interim Bank in effect immediately prior to the Effective Time (which shall be substantially the same as the Articles of Incorporation and By-laws of Bank) shall be the Articles of Incorporation and By-laws of the Surviving Bank until changed as therein or by law provided. The directors and officers of the Surviving Bank at the Effective Time shall be those persons who are directors and officers respectively of Bank immediately before the Effective Time. The committees of the Board of Directors of the Surviving Bank at the Effective Time shall be the same as and shall be composed of the same persons who are serving on committees appointed by the Board of Directors of Bank as they exist immediately before the Effective Time. The committees of officers of the Surviving Bank at the Effective Time shall be the same as and shall be composed of the same officers who are serving on the committees of officers of Bank as they exist immediately before the Effective Time.

Exhibit 10.1 - continued

1.4 Offices, Policies of Surviving Bank . From and after the Effective Time, the business and location of the Surviving Bank shall be the same as that of Bank. Unless contrary to law, all corporate acts, plans, policies, applications, agreements, loan commitments, orders, registrations, licenses, approvals and authorizations of Bank and Interim Bank, their respective shareholders, boards of directors, committees elected or appointed by their boards of directors, officers and agents, which were valid and effective immediately before the Effective Time shall be taken for all purposes at and after the Effective Time as the acts, plans, policies, applications, agreements, orders, registrations, licenses, approvals, and authorizations of Surviving Bank and shall be effective and binding thereon as the same were with respect to Bank and Interim Bank immediately before the Effective Time.

1.5 Capital Structure of Surviving Bank. The capital structure of the Surviving Bank shall be the same as the capital structure of Interim Bank.

1.6 Change in Method of Effecting Acquisition. Premier may at any time prior to the Effective Time change the method of effecting the combination with Bank (including, without limitation, the provisions of this Section 1 if and to the extent it deems such change to be necessary, appropriate or desirable; however, that no such change shall (i) cause the approval of the stockholders of Premier to be required as a condition to the Merger, (ii) alter or change the amount or kind of Merger Consideration (as hereinafter defined), or the relative proportions of cash and Premier Common Stock included therein, (iii) adversely affect the tax treatment of Bank's stockholders as a result of receiving the Merger Consideration or (iv) materially impede or delay consummation of the transactions contemplated by this Agreement; and provided further, that Premier shall provide Bank prior written notice of such change and the reasons therefore.

Exhibit 10.1 - continued

Section 2. Conversion, Exchange and Cancellation of Shares

2.1 General . The manner of converting and exchanging Bank Common Stock, all of which is represented by outstanding share certificates, into Premier Common Stock and cash shall be as hereinafter provided in this Section 2.

2.2 Stock Consideration and Cash Consideration.

(a) Each holder of a share of Bank Common Stock (other than those shares of Bank Common Stock for which appraisal rights have been perfected pursuant to the West Virginia Business Corporation Act), shall receive in respect thereof, subject to the limitations set forth in this Agreement, (i) 1.20 shares of Premier Common Stock (the "Stock Consideration") and (ii) an amount of cash without interest to be determined as follows (the "Cash Consideration"). The Cash Consideration and the Stock Consideration are sometimes referred to herein collectively as the "Merger Consideration." The Cash Consideration is based upon each share of Bank Common Stock being entitled to receive up to $29.25 in Merger Consideration per share with the Stock Consideration being fixed at 1.20 shares of Premier Common Stock. The actual amount of Cash Consideration will be determined by taking the volume-weighted average of the closing price of Premier Common Stock for the five (5) trading days ending with the fifth business day before the Effective Time multiplied by 1.20 (the “Stock Consideration Amount”) and subtracting that sum from $29.25. The difference shall be the Cash Consideration; in no event, however, shall the Cash Consideration exceed $13.25 per share. Attached hereto as Exhibit “C” is a chart showing the Cash Consideration relative to various assumed Stock Consideration Amounts.

(b) Outstanding Premier Stock . Each share of Premier Common Stock issued and outstanding immediately prior to the Effective Time shall remain issued and outstanding and unaffected by the Merger.

(c) Treasury Shares . Each share of Bank Common Stock held as Treasury Stock immediately prior to the Effective Time shall be canceled and retired at the Effective Time and no consideration shall be issued in exchange therefore.

(d) Merger Sub . Each share of capital stock of Interim Bank issued and outstanding immediately prior to the Effective Time shall remain outstanding and unaffected by the Merger, and no consideration shall be issued in exchange therefor.

2.3 Manner of Exchange . After the Effective Time of the Merger, except for persons exercising their rights as dissenting shareholders of Bank, each holder of a certificate theretofore evidencing outstanding shares of Bank Common Stock, upon surrender of such certificate, accompanied by a Letter of Transmittal, to Premier shall be entitled to receive in exchange therefor a certificate or certificates representing the number of full shares of Premier Common Stock for which shares of Bank Common Stock theretofore represented by the certificate or certificates so surrendered shall have been exchanged as provided in this Section 2, plus cash as provided in Section 2.2(a), without interest. Until so surrendered, each outstanding certificate which, prior to the Effective Time of the Merger, represented Bank Common Stock will be deemed to evidence the right to receive the Cash Consideration (without interest) plus the number of full shares of Premier Common Stock into which the shares of Bank Common Stock represented thereby may be converted, and will be deemed for all corporate purposes of Premier to evidence ownership of the number of full shares of Premier Common Stock and Cash Consideration into which the shares of Bank Common Stock represented thereby were converted. Until such outstanding certificates formerly representing Bank Common Stock are surrendered, no dividend payable to holders of record of Premier Common Stock for any period as of any date subsequent to the Effective Time of the Merger shall be paid to the holder of such outstanding certificates in respect thereof and no interest will be paid on the Cash Consideration. After the Effective Time of the Merger there shall be no further registry of transfers on the records of Bank of shares of Bank Common Stock. Upon surrender of certificates of Bank Common Stock for exchange for Premier Common Stock, there shall be paid to the record holder of the certificates of Premier Common Stock issued in exchange therefor (i) the Cash Consideration, (ii) the amount of dividends theretofore paid with respect to such full shares of Premier Common Stock as of any date subsequent to the Effective Time of the Merger which have not yet been paid to a public official pursuant to abandoned property laws and (iii) at the appropriate payment date the amount of dividends with a record date after the Effective Time of the Merger, but prior to surrender and a payment date subsequent to surrender. No interest shall be payable with respect to such dividends or Cash Consideration upon surrender of outstanding certificates.

Exhibit 10.1 - continued

2.4 Fractional Shares. Premier will not issue fractional shares or fractional share certificates, but in lieu of the issuance of fractional shares will pay cash, without interest, to any Bank shareholder otherwise entitled to receive such fractional shares. The amount of such cash payment will be determined by multiplying the fractional share interest to which a Bank shareholder would otherwise be entitled by the volume-weighted average of the closing price of Premier Common Stock for the five trading days ending with the fifth business day before the Effective Time. Payment for fractional shares will be made with respect to each shareholder at the time such shareholder's certificates of Bank Common Stock are exchanged.

2.5 Lost Certificates . If a certificate evidencing outstanding shares of Bank Common Stock is lost, stolen or destroyed, the registered owner thereof shall be entitled to receive the Premier certificate and cash, without interest, to which he would otherwise be entitled on exchange of such certificate, by notifying Premier in writing of such lost, stolen or destroyed certificate and giving Premier evidence of loss and a bond sufficient to indemnify Premier against any claim that may be made against it on account of the alleged lost, stolen and destroyed certificate and the issuance of the certificate and cash.

Exhibit 10.1 - continued

Section 3. Representations, Warranties and Covenants of Premier

Except as disclosed in writing, Premier hereby represents and warrants to and covenants with Bank that:

3.1 Organization, Standing and Authority . Premier is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Kentucky, and is a duly registered bank holding company under the provisions of the Bank Holding Company Act of 1956, as amended. Premier has the corporate power to execute and deliver this Agreement, and has taken all action required by law, its Articles of Incorporation, its By-laws or otherwise, to authorize such execution and delivery, the Merger and the consummation of the transactions contemplated hereby, and this Agreement is a valid and binding agreement of Premier in accordance with its terms. No action of Premier 's shareholders is or will be required to approve this Agreement or the Merger. At the Effective Time, Premier will have corporate power to carry on its business as then to be conducted and will be qualified to do business in every jurisdiction in which the character and location of the assets to be owned by it or the nature of the business to be transacted by it require qualification.

3.2 Capital Structure. The authorized capital stock of Premier consists of 10,000,000 shares of Premier Common Stock, of which 5,236,899 shares are currently issued and outstanding and 1,000,000 shares of Premier Preferred Stock, none of which are currently issued and outstanding. All of such shares are fully paid and non-assessable. Premier does not have any other shares of Premier Common Stock or Premier Preferred Stock or any other capital stock issued or outstanding. Premier does not have any outstanding subscriptions, options or other agreements or commitments obligating it to issue shares of its capital stock except that Premier has reserved 511,000 shares of Premier Common Stock to be issued upon the exercise of stock options granted to certain Premier employees. As of June 30, 2007 156,248 option grants were outstanding, of which 85,764 were immediately exercisable. Neither the holders of Premier Common Stock or Premier Preferred Stock have any preemptive rights with respect to the issuance of additional authorized shares of Premier Common Stock. Nothing in this Agreement shall prohibit or impair the ability and right of Premier to increase its authorized capital stock, or issue or agree to commit to issue additional shares of its capital stock, and any increase in authorized capital stock, or issuance, or agreement or commitment to issue, additional shares of Premier Common Stock (other than an issuance, or agreement or commitment to issue, resulting from a stock dividend, stock split, or reverse stock split) shall not alter or affect the Merger Consideration set forth in Section 2.2 hereof.

3.3 Premier Subsidiaries . At the date of this Agreement, Premier has five (5) state bank subsidiaries, and one (1) non-banking/non-holding company subsidiary, as follows:

(a) Premier State Banks:

Citizens Deposit Bank and Trust, Inc.;

Farmers Deposit Bank, Eminence, Kentucky;

Ohio River Bank, Inc.;

First Central Bank, Inc.; and

Boone County Bank, Inc.

hereinafter referred to as "Premier State Banks".

Exhibit 10.1 - continued

(b) Premier has one (1) non-bank/non-bank holding company subsidiary:

Mt. Vernon Financial Holdings, Inc.

hereinafter referred to as the “Premier Non-Bank Subsidiary”.

The Premier State Banks and Premier Non-Bank Subsidiary are hereinafter jointly referred to as the “Premier Subsidiaries”.

Except for the Premier State Banks and Premier Non-Bank Subsidiary, Premier has no subsidiaries.

Each of the Premier State Banks is a banking corporation, duly organized, validly existing under the laws of either the State of West Virginia or Ohio, or the Commonwealth of Kentucky, and has the corporate power and is duly authorized to own all of its properties and assets and to carry on its business as is now being conducted. The Premier Non-Bank Subsidiary is a corporation, validly existing under the laws of the Commonwealth of Kentucky, and has the corporate power and is duly authorized to own all of its properties and assets and to carry on its business as is now being conducted. Premier owns all of the issued and outstanding capital stock of each of the Premier Subsidiaries, free and clear of any liens, claims, security interest, encumbrances, charges or rights of third parties of any kind whatsoever, except that (i) all Premier’s 100% interest in Boone County Bank is pledged as collateral for a $7,000,000 loan from First Guaranty Bank of Hammond, Louisiana and (ii) all of Premier’s 100% interest in Farmers Deposit Bank and Citizens Deposit Bank are pledged as collateral for a $6,500,000 loan from The Bankers’ Bank of Kentucky, Inc. of Frankfort, Kentucky.

Nothing in this Agreement shall prohibit or impair the ability and right of Premier or any Premier Subsidiary to create or acquire, or agree to create or acquire, any other subsidiaries or entities or to acquire, consolidate or merge with any other company, corporation, bank or banking association, or to acquire or establish any branch prior to the Effective Time.

3.4 Authority . The execution and delivery of this Agreement do not, and the consummation of the Merger and transactions contemplated hereby will not, violate any provision of the Articles of Incorporation or By-laws of Premier, or any provision of, or result in the acceleration of any obligation under, any material mortgage, deed of trust, note, lien, lease, franchise, license, permit, agreement, instrument, order, arbitration award, judgment, injunction or decree, or result in the termination of any material license, franchise, lease, or permit to which Premier is a party or by which it is bound, and will not violate or conflict with any other material restriction of any kind or character to which Premier is subject.

Exhibit 10.1 - continued

3.5 Premier Financial Statements. Premier has delivered to Bank prior to the execution of this Agreement copies of the following financial statements of Premier (which, together with all future financial statements to be furnished are collectively referred to herein as the "Premier Financial Statements"): the audited Consolidated Balance Sheets of Premier as of December 31, 2006, December 31, 2005 and December 31, 2004, and the related Consolidated Statements of Income, Consolidated Statements of Cash Flows and of Consolidated Statements of Changes in Shareholders' Equity for the years then ended, and the notes thereto. The Premier Financial Statements (as of the dates thereof and for the periods covered thereby):

(a) are in accordance with the books and records of Premier, which are complete and correct in all material respects that are required by generally accepted accounting principles (except as otherwise required or approved by applicable regulatory authorities or by applicable law) and which have been maintained in accordance with good business practices; and

(b) present fairly, in all material respects, the financial position and results of operations and cash flows of Premier as of the dates and for the periods indicated, in accordance with generally accepted accounting principles (except as otherwise required or approved by applicable regulatory authorities or by applicable law), applied on a basis consistent with prior years, and do not fail to disclose any material extraordinary or out-of-period items.

Premier’s unaudited Balance Sheet and the related unaudited Statement of Income and Statement of Changes in Stockholders’ Equity, for the calendar quarter ended June 30, 2007, and for each calendar quarter thereafter until the Effective Time, all of which Premier shall deliver to Bank as soon as practicable, will be prepared in accordance with accounting principals consistently applied and will fairly present Premier’s financial condition and results of operations as of such date and for such period, except for footnote disclosures, which generally do not include all of the disclosures normally required for annual financial statements.

3.6 Allowance for Possible Loan Losses . The allowance for possible loan losses shown on the Consolidated Balance Sheet of Premier as of December 31, 2006, has been established and are adequate in all material respects under the requirements of generally accepted accounting principles to provide for possible losses, net of recoveries relating to loans previously charged off, on loans outstanding (including accrued interest receivable) as of December 31, 2006.

3.7 Accuracy of Annual Reports . The annual report of Premier to its shareholders for the years 2006, 2005 and 2004 heretofore delivered to Bank do not contain as of the dates thereof any untrue statement of material fact or omit to state any material fact necessary to make the statements therein not misleading.

3.8 Absence of Undisclosed Liabilities . At December 31, 2006, none of Premier or the Premier Subsidiaries had any obligation or liability (contingent or otherwise) which was material, or which when combined with all similar obligations or liabilities would have been material, to Premier (i) except as disclosed in the Premier Financial Statements or as disclosed to Bank in writing and (ii) except, in the case of any of the Premier Banks, for unfunded loan commitments made in the ordinary course of their respective businesses and consistent with generally accepted banking practices; nor does there exist a set of circumstances resulting from transactions effected or events occurring on or prior to December 31, 2006, or from any action omitted to be taken during such period that, to the knowledge of Premier, could reasonably be expected to result in any such material obligation or liability, except as previously disclosed to Bank in writing, or as disclosed or provided for in the Premier Financial Statements. The amounts set up as liabilities for taxes in the Premier Financial Statements are sufficient for the payment of all respective taxes (including, without limitation, federal, state, local and foreign excise, franchise, property, payroll, income, capital stock and sales and use taxes) accrued in accordance with generally accepted accounting principles and unpaid at December 31, 2006. Since December 31, 2006, none of Premier or the Premier Subsidiaries has incurred or paid any obligation or liability which would be material (on a consolidated basis) to Premier, except for obligations incurred or paid in connection with transactions by it in the ordinary course of its business consistent with generally accepted banking practices and except as disclosed herein.

Exhibit 10.1 - continued

3.9 Tax Matters.

(a) All federal, state, local and foreign tax returns, (including, without limitation, estimated tax returns, withholding tax returns with respect to employees, and FICA and FUTA returns) required to be filed by or on behalf of any of Premier or the Premier Subsidiaries have been timely filed or requests for extensions have been timely filed, granted and have not expired and all returns filed are complete and accurate to the best information and belief of Premier management. All taxes shown on filed returns have been paid. As of the date hereof, and as of the Effective Time, there is no audit examination, deficiency or refund litigation or matter in controversy with respect to any taxes that might result in a determination adverse to any of Premier or the Premier Subsidiaries, except as reserved against in the Premier Financial Statements, or as previously disclosed to Bank in writing. Except as disclosed by Premier in writing, all taxes, interest, additions and penalties due with respect to completed and settled examinations or concluded litigation have been paid.

(b) None of Premier or the Premier Subsidiaries has executed an extension or waiver of any statute of limitations on the assessment or collection of any tax due that is currently in effect.

(c) To the extent any federal, state, local or foreign taxes are due from any of Premier or the Premier Subsidiaries for the period or periods beginning January 1, 2007, or thereafter through and including the Effective Time, adequate provision on an estimated basis has been or will be made for the payment of such taxes by establishment of appropriate tax liability accounts on the last monthly financial statements of Premier or the Premier Subsidiaries prepared before the Effective Time.

(d) Deferred taxes of Premier or the Premier Subsidiaries have been provided for in accordance with generally accepted accounting principles.

3.10 Loans . Except as previously disclosed to Bank in writing or as disclosed or provided for in the Premier Financial Statements, to the best knowledge and belief of its management, each loan reflected as an asset of any Premier Bank in the Premier Financial Statements as of December 31, 2006, or acquired since that date, is the legal, valid and binding obligation of the obligor named therein, enforceable in accordance with its terms, was made in the ordinary course of business, was not known to be uncollectible at the time it was made and was made in accordance with the standard loan policies of such lending bank, and no loan having an unpaid balance (principal and accrued interest) in excess of $500,000.00 is subject to any asserted defense, offset or counterclaim known to Premier.

Exhibit 10.1 - continued

3.11 Properties . Except as previously disclosed to Bank in writing, or disclosed in the Premier Financial Statements, Premier and the Premier Subsidiaries have good and marketable title, free and clear of all material liens, encumbrances, charges, defaults or equities of whatever character, to all of the respective properties and assets, tangible or intangible, whether real, personal or mixed, reflected in the Premier Financial Statements as being owned by them at December 31, 2006 or acquired by them after December 31, 2006. To the best knowledge and belief of Premier management, all buildings, and all fixtures, equipment and other property and assets which in the opinion of management are material to its business on a consolidated basis, held under leases or subleases by any of Premier and the Premier Subsidiaries, as the case may be, are held under valid instruments enforceable in accordance with their respective terms (except as previously disclosed in writing to Bank and except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors' rights generally and except that the availability of the equitable remedy of specific performance or injunctive relief is subject to the discretion of the court before which any proceedings may be brought).

3.12 Compliance with Laws. Premier and each of the respective Premier Subsidiaries, to Premier 's best knowledge and belief:

(a) is in compliance with all laws, regulations, reporting and licensing requirements and orders applicable to its business or any of its employees (because of such employee's activities on behalf of it), the breach or violation of which could have a material adverse effect on such business; and

(b) has received no notification (not previously disclosed to Bank in writing) from any agency or department of federal, state or local government or regulatory authorities or the staff thereof asserting that any such entity is not in compliance with any of the statutes, regulations, rules or ordinances which such governmental authority or regulatory authority enforces, or threatening to revoke any license, franchise, permit or governmental authorization, and is subject to no agreement with any regulatory authorities with respect to its assets or business.

3.13 Employee Benefit Plans . With respect to any plan or arrangement of Premier or any Premier Subsidiary which constitutes an employee benefit within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"):

(a) All "employee benefit plans", as defined in Section 3(3) of ERISA, which cover one or more employees employed by any of Premier or any Premier Subsidiary (each individually, a "Plan", and collectively, the "Plans") comply in all material respects with ERISA and, where applicable for tax-qualified or tax-favored treatment, with the Internal Revenue Code of 1986. As of December 31, 2006, none of Premier or any Premier Subsidiary had any material liability under any Plan that is not reflected on the audited statements of financial condition of Premier or the unaudited balance sheets of the Premier Subsidiaries, as of such date, or in the notes thereto (other than such normally unrecorded liabilities under the Plans for sick leave, holiday, education, bonus, vacation, incentive compensation and anniversary awards, provided that such liabilities are not in any event material). Neither the Plans nor any trustee or administrator thereof has engaged in a "prohibited transaction" within the meaning of Section 406 of ERISA or, where applicable, Section 4975 of the Internal Revenue Code of 1986 for which no exemption is applicable, nor have there been any "reportable events" within the meaning of Section 4043 of ERISA for which the 30-day notice therefor has not been waived.

(b) No litigation is pending against any Plan or plan fiduciary seeking the payment of benefits or alleging a breach of trust or fiduciary duty by any plan fiduciary.

(c) Neither Premier nor any Premier Subsidiary is a party to any multiemployer pension plan as defined in Section 414(f) of the Internal Revenue Code of 1986 and Section 3(37) of ERISA.

Exhibit 10.1 - continued

3.14 Commitments and Contracts. Neither Premier nor any Premier Subsidiary is a party or subject to any of the following (whether written or oral, express or implied):

(i) any employment contract or understanding (including any understandings or obligations with respect to severance or termination pay liabilities or fringe benefits) with any present or former officer, director, employee or consultant;

(ii) any plan, contract or understanding providing for bonuses, pensions, options, deferred compensation, retirement payments, profit sharing or similar understandings with respect to any present or former officer, director or consultant;

(iii) any contract or agreement with any labor union;

(iv) any contract not made in the ordinary course of business containing covenants limiting the freedom of Premier or any Premier Subsidiary to compete in any line of business or with any person or involving any restriction of the area in which, or method by which, Premier or any Premier Subsidiary will carry on its business (other than as may be required by law or applicable regulatory authorities).

3.15 Labor. No work stoppage involving Premier or any Premier Subsidiary is pending or, to the best Premier 's knowledge, threatened. Neither Premier nor any Premier Subsidiary is involved in, or threatened with or affected by, any labor dispute, arbitration, lawsuit or administrative proceeding which could materially and adversely affect the business of Premier or any Premier Subsidiary. Employees of Premier or any Premier Subsidiary are not represented by any labor union nor are any collective bargaining agreements otherwise in effect with respect to such employees.

Exhibit 10.1 - continued

3.16 Material Contracts Furnished . Premier has made available to Bank true and complete copies of all material contracts, leases and other agreements to which Premier or any Premier Subsidiary are parties or by which they are bound and of all employment, pension, retirement, stock option, profit sharing and deferred compensation, consultant, bonus, group insurance or similar plans with respect to any of the directors, officers, or other employees of Premier or any Premier Subsidiary.

3.17 Material Contracts . Except as previously disclosed to Bank in writing and except as is otherwise provided in this Agreement, none of Premier or the Premier Subsidiaries, nor any of their respective assets, businesses or operations is, as of the date hereof, a party to, or is bound or affected by, or receives benefits under, (i) any material agreement, arrangement or commitment not cancellable by it without penalty, other than agreements, arrangements or commitments entered into in the ordinary course of its business and negotiated on an arms-length basis, or (ii) any material agreement, arrangement or commitment relating to the employment, election or retention in office of any director or officer other than agreements, arrangements or commitments entered into in the ordinary course of its business and negotiated on an arms-length basis.

3.18 Material Contract Defaults . None of Premier or the Premier Subsidiaries is in default in any material respect under any material contract, agreement, commitment, arrangement, lease, insurance policy or other instrument to which it is a party or by which its respective assets, business or operations may be bound or affected or under which it or its respective assets, business or operations receive benefits, and there has not occurred any event which with the lapse of time or the giving of notice or both would constitute such a default, except as previously disclosed to Bank in writing.

3.19 Legal Proceedings . Except as previously disclosed by Premier to Bank in writing, there are no actions, suits or proceedings instituted or pending, or to the best knowledge of Premier, threatened (or unasserted but considered probable of assertion and which if asserted would have at least a reasonable probability of an unfavorable outcome), including eminent domain proceedings, against or relating to any of Premier or the Premier Subsidiaries, respectively, or against any property, asset, interest or right of any of them, that could have a material and adverse effect on the condition (financial or other, present or prospective), business, properties, assets, operations, liabilities or prospects of Premier or any of the Premier Subsidiaries, respectively, or that threaten or would impede the consummation of the transactions contemplated by this Agreement. None of Premier or the Premier Subsidiaries is a party to any agreement or instrument or is subject to any charter or other corporate restriction or any judgment, order, writ, injunction, stay, decree, rule, regulation, code or ordinance that threatens or might impede the consummation of the transactions contemplated by this Agreement.

Exhibit 10.1 - continued

3.20 Absence of Certain Changes or Events . Since December 31, 2006, none of Premier or the Premier Subsidiaries has: (i) incurred any material liability, except in the ordinary course of its business, and except as permitted pursuant to this Agreement; (ii) suffered any material adverse change in its business, operations, assets or condition (financial or other); or (iii) failed to operate its business consistent with generally acceptable banking practice.

3.21 Reports. Since January 1, 2006, each of Premier and the Premier Subsidiaries has filed all reports and statements, together with any amendments required to be made with respect thereto, which they were required to file with: (i) the Securities and Exchange Commission, including, but not limited to, Forms 10-K, Forms 10-Q, Forms 8-K and proxy statements; (ii) the Board of Governors of the Federal Reserve System; (iii) the Office of the Comptroller of the Currency; (iv) the Federal Deposit Insurance Corporation; (v) the West Virginia Department of Banking; (vi) the Kentucky Office of Financial Institutions; (vii) the Ohio Department of Banking; and (viii) any other governmental agency or regulatory authority having jurisdiction over its operations. Each of such reports and documents, including the financial statements, exhibits and schedules thereto, and each other document delivered to Bank by Premier does not contain any statement which, at the time and in the light of the circumstances under which it was made, is false or misleading with respect to any material fact or which omits to state any material fact necessary in order to make the statements contained therein not false or misleading.

3.22 Investments. Except as incurred in the ordinary course of business as heretofore conducted or as previously disclosed to Bank in writing, all securities owned by Premier and the Premier Subsidiaries of record and beneficially are free and clear of all mortgages, liens, pledges and encumbrances. Any securities owned of record by Premier and the Premier Subsidiaries in an amount equal to 5% or more of the issued and outstanding voting securities of the issuer have been previously disclosed to Bank in writing. There are no voting trusts or other agreements or undertakings with respect to the voting of such securities.

3.23 Securities Portfolio . Since December 31, 2006, there have been no significant changes in the quality of Premier 's or any of the Premier Banks' portfolios of securities except as previously disclosed to Bank in writing.

3.24 Environmental Matters . To the knowledge of Premier, neither Premier nor any Premier Subsidiary nor any properties owned or operated by Premier or any Premier Subsidiary has been or is in violation of or liable under any Environmental Law (as hereinafter defined). There are no actions, suits or proceedings, or demands, claims, notices or investigations (including, without limitation notices, demand letters or requests for information from any environmental agency) instituted or pending, or to the best knowledge of Premier 's management, threatened relating to the liability of any properties owned or operated by Premier or any Premier Subsidiary under any Environmental Law. "Environmental Law" means any federal, state, local or foreign law, statute, ordinance, rule, regulation, code, license, permit, authorization, approval, consent, order, judgment, decree, injunction or agreement with any regulatory authority relating to (i) the protection, preservation or restoration of the environment (including, without limitation, air, water vapor, surface water, ground water, drinking water supply, surface soil, sub-surface soil, plant and animal life or any other natural resource) and/or (ii) the use, storage, recycling, treatment, generation, transportation, processing, handling, labeling, production, release or disposal of any substance presently listed, defined, designated or classified as hazardous, toxic, radioactive or dangerous, or otherwise regulated, whether by type or by quantity, including any material containing any such substance as a component.

3.25 Accuracy of Proxy Statement . The material which refers to Premier and which will be submitted by Premier for inclusion in the proxy statement referred to in Section 10 hereof, or in any amendment or supplement thereto, mailed to the holders of Bank Common Stock will not contain any untrue statements of material fact or omit to state any material fact required to be stated therein or necessary to make the statements contained therein not misleading.

Exhibit 10.1 - continued

3.26 Interim Bank Formation; Adoption Agreement . Premier at its sole cost and expense shall cause to be organized Interim Bank as a West Virginia banking corporation and shall cause Interim Bank to execute and enter into an Adoption Agreement in substantially the form attached hereto as "Exhibit A" and a Plan of Merger in substantially the form annexed hereto as "Exhibit B" and cause Interim Bank to take such action as is provided in this Agreement or in said Adoption Agreement or Plan of Merger upon Interim Bank's part to be taken. Immediately prior to the Effective Time, Premier will own all of the issued and outstanding shares of Interim Bank's capital stock.

3.27 Filing of Application to Merge. Premier at its sole cost and expense shall cause to be filed with the Federal Reserve Board, Federal Deposit Insurance Corporation and West Virginia Board of Banking and Financial Institutions an application to merge Bank and Interim Bank, and shall cause Interim Bank to take such action as is provided in this Agreement upon Interim Bank's part to be taken.

3.28 Best Efforts . On or prior to the Closing Date (hereinafter defined in Section 7.1 hereof), Premier will, to the extent permitted by applicable laws, rules and regulations, take such actions, and execute and deliver all such agreements, documents, certificates or amendments to this Agreement as may be necessary or desirable to effectuate the provisions and intent of this Agreement.

3.29 Conduct of Business - Acquisitions. Premier and Bank have agreed in principle that continued growth of Premier through the acquisition of, or consolidation or merger with, one or more banks or bank holding companies, and the payment of cash, the issuance of additional shares of Premier, or both, as consideration therefor, all upon proper terms and conditions, will inure to the benefit of Premier and to Bank in the event the Merger is effected. Bank has agreed that in the event the Merger is effected, such contemplated actions will inure to the benefit of Bank as well as to Premier, and has generally approved, in principle, such acts. Bank hereby consents to, and agrees that Premier, without obtaining any further consent or approval of Bank, may acquire, consolidate or merge with any other company, corporation, bank or banking association, or acquire any assets of any other company, corporation, bank or banking association, and no agreement to issue Premier Common Stock or issuance thereof in connection with any such act shall alter or affect the Merger Consideration set forth in Section 2.2 hereof.

3.30 Conduct of Business - Affirmative Covenants of Premier . Premier covenants and agrees that:

(a) Subsequent to the date of this Agreement and prior to the Effective Time, Premier and the Premier Subsidiaries will operate their respective businesses only in the normal course and manner.

(b) Immediately upon the execution of this Agreement, Premier will direct its accountants to give Bank access to all information, documents and working papers pertaining to Premier;

(c) From and after the execution of this Agreement, Premier will promptly advise Bank of any material adverse change in its or any Premier Subsidiary's respective financial conditions, assets, business operations or key personnel and of any material breach of any representation or warranty made by Premier in this Agreement;

(d) Subsequent to the date of this Agreement and prior to the Effective Time Premier shall maintain in full force and effect adequate fire, casualty, public liability, employee fidelity and other insurance coverage in effect on the date of this Agreement in order to protect Premier against losses for which insurance protection can reasonably be obtained;

(e) Premier will use its best efforts in good faith to take or cause to be taken all actions required under this Agreement on its part to be taken as promptly as practicable so as to permit the consummation of the Merger and the transactions contemplated hereby at the earliest possible date and cooperate fully with Bank to that end.

Exhibit 10.1 - continued

Section 4. Representations, Warranties and Covenants of Bank

Bank hereby represents and warrants to and covenants with Premier that:

4.1 Organization, Standing and Authority. Bank is a state banking corporation duly organized, validly existing and in good standing under the laws of the State of West Virginia. Bank has the corporate power to execute and deliver this Agreement, and has taken all action required by law, its Articles of Incorporation, its By-laws or otherwise, to authorize such execution and delivery, the Merger and the consummation of the transactions contemplated hereby, and this Agreement is a valid and binding agreement of Bank in accordance with its terms, subject only to the requirement of ratification, confirmation and approval by Bank's shareholders. At the Effective Time, Bank will have corporate power to carry on its business as then to be conducted and will be qualified to do business in every jurisdiction in which the character and location of the assets to be owned by it or the nature of the business to be transacted by it require qualification.

4.2 Capital Structure . The au

SITE SEARCH

AGREEMENTS / CONTRACTS

CLAUSES

Search Contract Clauses >>

Browse Contract Clause Library>>

Get Email Updates