EXHIBIT 2
---------
AGREEMENT AND PLAN OF MERGER
dated as of
August 2, 2004
by and among
PARK NATIONAL CORPORATION
and
PARK MERGER CORP.
and
FIRST FEDERAL BANCORP, INC.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE ONE -- THE MERGER
2
1.01. Merger; Surviving Corporation
2
1.02. Effective Time
2
1.03. Effects of the Merger
2
ARTICLE TWO -- CONVERSION OF SHARES;
SURRENDER OF CERTIFICATES
3
2.01. Conversion of First Federal Shares
3
2.02. Surrender of Certificates
3
2.03. Merger Corp. Shares
6
ARTICLE THREE -- REPRESENTATIONS AND
WARRANTIES OF FIRST FEDERAL
7
3.01. Corporate Status
7
3.02. Capitalization of First Federal
8
3.03. First Federal Subsidiaries
10
3.04. Corporate Proceedings
10
3.05. Authorized and Effective Agreement
11
3.06. Financial Statements of First
Federal
11
3.07. Absence of Undisclosed Liabilities
12
3.08. Absence of Changes
12
3.09. Loan Documentation
13
3.10. Allowance for Loan Losses
13
3.11. Reports and Records
13
3.12. Taxes
14
3.13. Property and Title
15
3.14. Legal Proceedings
16
3.15. Regulatory Matters
16
3.16. No Conflict
16
3.17. Brokers, Finders and Others
17
3.18. Employment Agreements
17
3.19. Employee Benefit Plans
17
3.20. Compliance with Laws
21
3.21 Insurance
22
3.22. Governmental and Third-Party
Proceedings
22
3.23. Contracts
23
3.24. Environmental Matters
23
3.25. Takeover Laws
25
3.26. Risk Management Instruments
25
3.27. Repurchase Agreements
25
3.28. Investment Securities
25
3.29. SEC Filings
26
3.30. Fiduciary Responsibilities
26
<PAGE> i
3.31. Intellectual Property
26
3.32. First Federal Books and Records
27
3.33. CRA Compliance
28
3.34. Ownership of Park Shares
28
3.35. Fairness Opinion
28
ARTICLE FOUR -- REPRESENTATIONS AND
WARRANTIES OF PARK AND
MERGER CORP.
28
4.01. Corporate Status
28
4.02. Corporate Proceedings
29
4.03. Authorized and Effective Agreement
29
4.04. No Conflict
29
4.05. SEC Filings
30
4.06. Brokers, Finders and Others
30
4.07. Governmental and Third-Party
Proceedings
30
4.08. Financial Ability to Perform;
Compliance with Regulations
30
4.09. Ownership of First Federal Shares
30
4.10. Absence of Changes
31
4.11. Takeover Law
31
ARTICLE FIVE -- FURTHER COVENANTS OF FIRST
FEDERAL
31
5.01. Operation of Business
31
5.02. Notification
37
5.03. Acquisition Proposal
37
5.04. Delivery of Information
38
5.05. Takeover Laws
38
5.06. Merger of Subsidiaries
38
5.07. Accounting Policies
38
ARTICLE SIX -- FURTHER COVENANTS OF PARK
39
6.01. Access to Information
39
6.02. Employees; Employee Benefits
39
6.03. Notification
41
6.04. Officers' and Directors'
Indemnification
41
6.05. Century Board of Directors
42
ARTICLE SEVEN -- FURTHER OBLIGATIONS OF THE
PARTIES
43
7.01. Necessary Further Action
43
7.02. Press Releases
43
7.03. Proxy Statement; First Federal
Meeting
43
7.04. Regulatory Applications
44
7.05. Confidentiality
45
7.06. No Conflicting Actions
45
<PAGE> ii
ARTICLE EIGHT -- CONDITIONS PRECEDENT TO
THE OBLIGATIONS OF
THE PARTIES
46
8.01. Conditions to the Obligations of
Park and Merger Corp.
46
8.02. Conditions to the Obligations of
First Federal
47
8.03. Mutual Conditions
48
ARTICLE NINE -- CLOSING
49
9.01. Closing
49
9.02. Closing Deliveries Required of
Park and Merger Corp.
49
9.03. Closing Deliveries Required of
First Federal
49
ARTICLE TEN -- NON-SURVIVAL OF
REPRESENTATIONS, WARRANTIES
AND COVENANTS
50
10.01. Non-Survival of Representations,
Warranties and Covenants
50
ARTICLE ELEVEN -- TERMINATION
50
11.01. Termination
50
11.02. Effect of Termination
52
ARTICLE TWELVE -- MISCELLANEOUS
53
12.01. Notices
53
12.02. Counterparts
53
12.03. Entire Agreement
53
12.04. Successors and Assigns
53
12.05. Captions
54
12.06. Governing Law
54
12.07. Payment of Fees and Expenses
54
12.08. Amendment
54
12.09. Waiver
54
12.10. Disclosure Schedule
54
12.11. No Third Party Rights
55
12.12. Waiver of Jury Trial
55
12.13. Severability
55
<PAGE> iii
GLOSSARY OF DEFINED TERMS
The
following terms, when used in this Agreement, have the meanings
ascribed to them in the corresponding
Sections of this Agreement listed
below:
"Acquisition Proposal"
-- Section 5.03
"Agreement"
-- Preamble
"BHCA"
-- Section 4.01
"CERCLA"
-- Section 3.24
"CRA"
-- Section 3.20(a)
"Cash Amount"
-- Section 2.01(a)
"Century"
-- Preamble
"Closing"
-- Section 9.01
"Closing Date"
-- Section 9.01
"Code"
-- Section 3.12
"Compensation and Benefit Plans"
-- Section 3.19(a)
"Constituent Corporations
-- Preamble
"Consultants"
-- Section 3.19(a)
"Continuing Employees"
--
Section 6.02(a)
"Costs"
-- Section 6.04(a)
"DOL"
-- Section 3.19(a)
"Directors"
-- Section 3.19(a)
"ERISA"
-- Section 3.19(a)
"ERISA Affiliate"
-- Section 3.19(c)
"ERISA Affiliate Plan"
-- Section 3.19(c)
"Effective Time"
-- Section 1.02
"Employees"
-- Section 3.19(a)
"Environmental Law"
-- Section 3.24
"Exchange Act"
-- Section 3.19(b)
"Exchange Agent"
-- Section 2.02(a)
"Exchange Fund"
-- Section 2.02(a)
"FDIC"
-- Section 3.01(b)
"FFSB"
-- Preamble
"FHLB"
--
Section 3.01(b)
"First Federal"
-- Preamble
"First Federal Balance Sheet Date"
-- Section 3.06
"First Federal Certificates"
-- Section 2.02(a)
"First Federal Disclosure Schedule"
-- Preamble
"First Federal Dissenting Share"
-- Section 2.02(i)
"First Federal Financial Statements"
-- Section 3.06
"First Federal Meeting"
-- Section 3.04(b)
"First Federal Real Estate Collateral"
-- Section 3.24(b)
"First Federal Real Properties"
-- Section 3.13
"First Federal Shares"
-- Preamble
"First Federal Stock Option Plans"
-- Section 3.02(a)
"First Federal Stock Options"
-- Section 3.02(a)
"First Federal Subsidiaries"
-- Section 3.01(b)
"First Federal's Financial Advisors"
-- Section 3.17
<PAGE> iv
"GAAP"
-- Section 3.06
"Governmental Authority"
-- Section 3.16
"HOLA"
-- Section 3.01(a)
"Hazardous Substances"
-- Section 3.24
"IRS"
-- Section 3.12
"Indemnified Party"
-- Section 6.04(a)
"Information"
-- Section 7.05
"Intellectual Property"
-- Section 3.31
"knowledge"
-- Section 3.08
"Loan Assets"
-- Section 3.09
"Loan Documentation"
-- Section 3.09
"material"
-- Section 3.01(c)
"material adverse effect"
-- Section 3.01(c)
"Merger"
-- Preamble
"Merger Consideration"
-- Section 2.01(a)
"Merger Corp."
-- Preamble
"Merger Corp. Shares"
-- Section 2.03
"OGCL"
-- Section 1.01
"OTS"
-- Section 3.01(b)
"Officers"
-- Section 3.19(a)
"Ohio Secretary of State"
-- Section 1.02
"Outside First Federal Director"
-- Section 6.05
"PBGC"
-- Section 3.19(c)
"PCBs"
-- Section 3.24
"Park"
-- Preamble
"Pension Plan"
-- Section 3.19(b)
"Proxy Statement"
-- Section 7.03(a)
"Regulatory Authorities"
--
Section 3.15
"SEC"
-- Section 3.03
"Securities Act"
-- Section 3.19(b)
"Subsidiary"
-- Section 3.03
"Surviving Corporation"
-- Section 1.01
"Takeover Laws"
-- Section 3.25
"Tax"
-- Section 3.12
"Tax Returns"
-- Section 3.12
"Updated First Federal Disclosure Schedule"
--
Section 5.02
<PAGE> v
AGREEMENT AND PLAN OF MERGER
----------------------------
THIS
AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of
August 2, 2004, is made and entered into by
and among Park National
Corporation, an Ohio corporation ("Park");
Park Merger Corp., an Ohio
corporation ("Merger Corp."); and First
Federal Bancorp, Inc., an Ohio
corporation ("First Federal") (Merger Corp.
and First Federal are sometimes
hereinafter collectively referred to as the
"Constituent Corporations").
W I T N E S S E T H:
WHEREAS,
the Boards of Directors of First Federal, Merger Corp. and
Park have each determined that it is in the
best interests of their
respective corporations and shareholders
for Merger Corp. to merge with and
into First Federal (the "Merger"), and
immediately thereafter for the
surviving corporation to merge with and
into Park, upon the terms and
subject to the conditions set forth in and
pursuant to the terms of this
Agreement; and
WHEREAS,
the Boards of Directors of First Federal, Merger Corp. and
Park have each approved this Agreement and
the consummation of the
transactions contemplated hereby; and
WHEREAS,
as a result of the Merger, in accordance with the terms of
this Agreement, Merger Corp. will cease to
have a separate corporate
existence, Park will acquire all of the
issued and outstanding shares of
First Federal as the surviving corporation
and shareholders of First
Federal will receive from Park in exchange
for each common share, without
par value, of First Federal (the "First
Federal Shares"), an amount in cash
calculated in accordance with the terms of
this Agreement; and
WHEREAS, promptly following the
merger of the surviving corporation
in the Merger with and into Park, First
Federal Savings Bank of Eastern
Ohio, a stock federal savings bank now
wholly owned by First Federal
("FFSB"), will merge with and into Century
National Bank, a national
banking association wholly owned by Park
("Century"); and
WHEREAS,
First Federal has previously provided to Park a schedule
disclosing additional information about
First Federal (the "First Federal
Disclosure Schedule");
NOW,
THEREFORE, in consideration of the premises and the respective
representations, warranties, covenants,
agreements and conditions
hereinafter set forth, First Federal,
Merger Corp. and Park, intending to
be legally bound hereby, agree as
follows:
<PAGE> 1
ARTICLE ONE
THE MERGER
1.01.
Merger; Surviving
Corporation
Upon the
terms and subject to the conditions of this Agreement, at
the Effective Time (as defined in Section
1.02), Merger Corp. shall merge
with and into First Federal in accordance
with the General Corporation Law
of the State of Ohio (the "OGCL").
First Federal shall be
the continuing
and surviving corporation in the Merger,
shall continue to exist under the
laws of the State of Ohio, and shall be the
only one of the Constituent
Corporations to continue its separate
corporate existence after the
Effective Time. As used in this Agreement, the
term "Surviving
Corporation" refers to First Federal
immediately after the Effective Time.
As a result of the Merger, the outstanding
shares of capital stock and the
treasury shares of the Constituent
Corporations shall be converted in the
manner provided in Article Two.
1.02.
Effective Time
The Merger
shall become effective upon the later of: (a) the filing
of the appropriate certificate of merger
with the Secretary of State of the
State of Ohio (the "Ohio Secretary of
State") or (b) such time thereafter
as is agreed to in writing by Park, Merger
Corp. and First Federal and so
provided in the certificate of merger.
The date and time at
which the
Merger shall become effective is referred
to in this Agreement as the
"Effective Time."
1.03.
Effects of the
Merger
At the
Effective Time:
(a)
the articles of
incorporation, as amended, of First Federal as
in effect immediately prior to the Effective Time shall be the
articles of incorporation of the Surviving Corporation;
(b)
the amended and
restated code of regulations of First Federal
as in effect immediately prior to the Effective Time shall be
the regulations of the Surviving Corporation, except that the
number of directors of the Surviving Corporation shall be three
and each such individual shall serve as a director of the
Surviving Corporation for a term expiring at the next annual
meeting of the shareholders of the Surviving Corporation to be
held after the Effective Time;
(c)
the directors of
the Surviving Corporation shall be the
directors of Merger Corp. immediately prior to the Effective
Time;
(d)
each individual
who is an officer of Merger Corp. immediately
prior to the Effective Time shall be an officer of the
Surviving Corporation holding the same office as held with
Merger Corp. immediately prior to the Effective Time and no
other individual shall be an officer of the Surviving
Corporation after the Effective Time; and
<PAGE> 2
(e)
the Merger shall
have the effects prescribed in the OGCL.
ARTICLE TWO
CONVERSION OF SHARES; SURRENDER OF CERTIFICATES
2.01.
Conversion of First
Federal Shares
At the
Effective Time, by virtue of the Merger and without any action
on the part of the holder thereof:
(a)
Purchase Price.
Subject to Section
2.02, each First Federal
Share issued and outstanding immediately prior to the Effective
Time (except for First Federal Dissenting Shares) shall be
converted into the right to receive in cash $13.25 (the "Cash
Amount"). The "Merger
Consideration" shall be equal to the
product of:
(i) $13.25;
and
(ii) the number of
First Federal Shares issued and outstanding
immediately prior to the Effective Time.
(b) Cancellation of Shares.
After the Effective
Time, all such
First Federal Shares shall no longer be outstanding and each
certificate previously representing any First Federal Shares
shall be surrendered for the Cash Amount in consideration
therefor in accordance with Section 2.02, without interest.
(c)
Stock Options.
All First Federal
Stock Options outstanding
immediately before the Effective Time shall be cancelled and
extinguished and converted into the right to receive an amount
of cash equal to the product of (i) (A) $13.25 minus (B) the
exercise price of the First Federal Stock Option, multiplied by
(ii) the number of First Federal Shares subject to the
unexercised portion of such First Federal Stock Option.
2.02.
Surrender of
Certificates
(a)
Exchange Agent.
At or prior to the
Effective Time, Park shall
deposit, or shall cause to be deposited, with The First-Knox
National Bank of Mount Vernon (the "Exchange Agent"), for the
benefit of the holders of certificates which immediately prior
to the Effective Time evidenced First Federal Shares (the
"First Federal Certificates"), for exchange in accordance with
this Article Two, cash in the amount of the Merger
Consideration calculated in accordance with Section 2.01 (such
cash being hereinafter referred to as the "Exchange Fund")
payable pursuant to Section 2.01 in substitution and exchange
for such First Federal Shares.
<PAGE> 3
(b)
Surrender
Procedures. As soon as
reasonably practicable after
the
Effective Time, Park shall cause the Exchange Agent to mail
to each holder of record of First Federal Shares immediately
prior to the Effective Time, (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss
and title to the First Federal Certificates shall pass, only
upon delivery of such First Federal Certificates to the
Exchange Agent, and which shall be in such form and have such
other provisions as Park may reasonably specify) and (ii)
instructions for use in effecting the surrender of the First
Federal Certificates in exchange for the Cash Amount. Upon
surrender by such holder of a First Federal Certificate or
Certificates evidencing all First Federal Shares standing in
such holder's name for cancellation to the Exchange Agent
together with such letter of transmittal, duly executed, the
holder of such First Federal Certificate or Certificates shall
be entitled to receive in exchange therefor the Cash Amount by
a check, which such holder has the right to receive in respect
of the First Federal Certificate or Certificates surrendered
pursuant to the provisions of this Article Two (after taking
into account all First Federal Shares then held by such
holder), and the First Federal Certificate or Certificates so
surrendered shall forthwith be canceled. Park shall cause the
Exchange Agent to mail the exchange check by U.S. mail, postage
prepaid, within seven days following receipt of all required
documentation. In the
event of a transfer of ownership of
First Federal Shares which is not registered in the transfer
records of First Federal, a check in respect of the Cash Amount
may be issued to a transferee if the First Federal Certificate
representing such First Federal Shares is presented to the
Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and by evidence that any
applicable share transfer taxes have been paid. Until
surrendered as contemplated by this Section 2.02, each First
Federal Certificate shall be deemed at any time after the
Effective Time for all corporate purposes (except as provided
in Section 2.02(c)) to represent only the right to receive upon
such surrender the Cash Amount as contemplated by this Section
2.02, without interest.
(c)
No Further
Ownership Rights in First Federal Shares. The Cash
Amount paid pursuant to this Section 2.02 shall be deemed to
have been issued in full satisfaction of all rights pertaining
to such First Federal Shares, subject, however, to the
Surviving Corporation's obligation to pay any dividends or make
any other distributions with a record date prior to the
Effective Time which may have been declared or made by First
Federal on such First Federal Shares in accordance with the
terms of this Agreement on or prior to the Effective Time and
which remain unpaid at the Effective Time. If, after the
Effective Time, First Federal Certificates are presented to
Park for any reason, they shall be canceled and exchanged as
provided in this Article Two.
<PAGE> 4
(d)
Termination of
Exchange Fund. Any
portion of the Exchange Fund
which remains undistributed to the shareholders of First
Federal for six months after the Effective Time shall be
delivered to Park, upon demand, and any shareholders of First
Federal who have not theretofore complied with this Article Two
shall thereafter look only to Park for payment of their claim
for the Cash Amount, in each case without interest.
(e)
No Liability.
None of Park, First
Federal, the Exchange Agent
or the Surviving Corporation shall be liable to any former
holder of First Federal Shares for cash delivered to a public
official pursuant to any applicable abandoned property, escheat
or similar law.
(f)
Share Transfer
Books. Unless
otherwise required by Section
1701.85 of the OGCL, after the Effective Time there shall be no
further registration of transfers on the share transfer books
of the Surviving Corporation of the First Federal Shares which
were outstanding immediately prior to the Effective Time.
(g)
Lost
Certificates. If there
shall be delivered to the Exchange
Agent by any person who is unable to produce any First Federal
Certificate for First Federal Shares for surrender to the
Exchange Agent in accordance with this Section 2.02:
(i) Evidence to
the satisfaction of the Surviving Corporation
or Park that such First Federal Certificate has been
lost, wrongfully taken or destroyed;
(ii) Such security or
indemnity as may be requested by the
Surviving Corporation or Park to save them harmless
(which may include the requirement to obtain a third
party bond or surety); and
(iii) Evidence to the satisfaction of the Surviving Corporation
or Park that such person was the owner of the First
Federal Shares theretofore represented by each such First
Federal Certificate claimed by such person to be lost,
wrongfully taken or destroyed and that such person is the
person who would be entitled to present such First
Federal Certificate for exchange pursuant to this
Agreement;
then the Exchange Agent, in the absence of actual notice to it
that any First Federal Shares theretofore represented by any
such First Federal Certificate have been acquired by a bona
fide purchaser, shall deliver to such person the Cash Amount
that such person would have been entitled to receive upon
surrender of each such lost, wrongfully taken or destroyed
First
Federal Certificate.
(h)
Waiver.
The Surviving
Corporation or Park may from time to
time, in the case of one or more persons, waive one or more of
the rights provided to it
<PAGE> 5
in this Article Two to withhold certain payments, deliveries
and distributions; and no such waiver shall constitute a waiver
of the Surviving Corporation's rights thereafter to withhold
any such payment, delivery or distribution in the case of any
person.
(i)
First Federal
Shareholders' Dissenters' Rights. Anything
contained in this Agreement or elsewhere to the contrary
notwithstanding, if any holder of an outstanding First Federal
Share shall properly exercise dissenters' rights with respect
thereto in accordance with Section 1701.85 of the OGCL (a
"First Federal Dissenting Share"), then:
(i) Each such
First Federal Dissenting Share shall
nevertheless be deemed to be extinguished at the
Effective Time as provided elsewhere in this Agreement;
and
(ii) Each person
perfecting such dissenters' rights shall
thereafter have only such rights (and shall have such
obligations) as are provided in Section 1701.85 of the
OGCL, and neither Park nor the Surviving Corporation
shall be required to deliver any cash payments to such
person in substitution for each such First Federal
Dissenting Share in accordance with this Agreement;
provided, however, that, if any such person shall have
failed to perfect or shall withdraw or lose such holder's
rights under Division (D) of Section 1701.85 of the OGCL,
each such holder's First Federal Dissenting Shares shall
thereupon be deemed to have been converted as of the
Effective Time into the right to receive the Cash Amount,
without any interest thereon, pursuant to Section 2.01.
No holder of First Federal Dissenting Shares shall be entitled
to submit a letter of transmittal, and any letter of
transmittal submitted by a holder of First Federal Dissenting
Shares shall be invalid.
2.03.
Merger Corp.
Shares
Each
common share of Merger Corp. ("Merger Corp. Shares") issued and
outstanding immediately prior to the
Effective Time shall be converted into
and thereafter evidence one common share,
without par value, of the
Surviving Corporation.
<PAGE> 6
ARTICLE
THREE
REPRESENTATIONS AND WARRANTIES OF FIRST FEDERAL
First
Federal represents and warrants to Park that each of the
following statements is true and
accurate:
3.01.
Corporate Status
(a)
First Federal is
an Ohio corporation and a unitary savings and
loan holding company registered under the Home Owners' Loan
Act, as amended (the "HOLA"). First Federal is duly
organized,
validly existing and in good standing under the laws of the
State of Ohio and has the full corporate power and authority to
own its property, to carry on its business as presently
conducted, and to enter into and, subject to the required
adoption of this Agreement by the First Federal shareholders
and the obtaining of appropriate approvals of Governmental
Authorities and Regulatory Authorities, perform its obligations
under this Agreement and consummate the transactions
contemplated by this Agreement. First Federal is not qualified
to do business in any other jurisdiction or required to be so
qualified to do business in any other jurisdiction except where
the failure to be so qualified individually or in the aggregate
would not reasonably be expected to have a material adverse
effect on First Federal. True and complete copies of
the
articles of incorporation and amended and restated code of
regulations of First Federal, in each case as amended to the
date of this Agreement, have been delivered to Park by First
Federal in Section 3.01(a) of the First Federal Disclosure
Schedule.
(b)
FFSB, Firstfedco
Agency, Inc. ("Firstfedco") and MCT
Development Corporation ("MCT" and collectively with FFSB and
Firstfedco, the "First Federal Subsidiaries") are the only
Subsidiaries (as that term is defined in Section 3.03 below) of
First Federal. FFSB is
a stock federal savings bank, is a
member of the Federal Home Loan Bank (the "FHLB") of Cincinnati
and is subject to regulation by the Office of Thrift
Supervision (the "OTS") and the Federal Deposit Insurance
Corporation (the "FDIC"). FFSB is duly organized,
validly
existing and in good standing under the laws of the United
States of America and has full corporate power and authority to
own its property and to carry on its business as presently
conducted. Each of
Firstfedco and MCT is an Ohio corporation;
is duly organized, validly existing and in good standing under
the laws of the State of Ohio; and has full corporate power and
authority to own its property and to carry on its business as
presently conducted.
No First Federal Subsidiary has taken
action to qualify to do business in any other jurisdiction or
is required to be qualified to do business in any other
jurisdiction, except where the failure to be so qualified would
not reasonably be expected to have a material adverse effect on
such First Federal Subsidiary. Copies of the articles of
incorporation, code of regulations, charter and bylaws of each
First Federal Subsidiary and all
<PAGE> 7
amendments thereto have been delivered to Park in Section
3.01(b) of the First Federal Disclosure Schedule.
(c)
As used in this
Agreement, (i) any reference to any event,
change, effect, development, circumstance or occurrence being
"material" with respect to any entity means an event, change,
effect, development, circumstance or occurrence that is or is
reasonably likely to be material in relation to the financial
condition, properties, assets, liabilities, businesses or
results of operations of such entity and its subsidiaries taken
as a whole, and (ii) the term "material adverse effect" means,
with respect to any entity, an event, change, effect,
development, circumstance or occurrence that, individually or
together with any other event, change, effect, development,
circumstance or occurrence, (A) has or would be reasonably
likely to have a material adverse effect on the business,
condition (financial or otherwise), capitalization, assets
(tangible or intangible), liabilities (accrued, contingent or
otherwise), operations, regulatory affairs, financial
performance or prospects of such entity and its subsidiaries,
taken as a whole, or (B) materially impairs the ability of such
entity to perform its obligations under this Agreement or to
consummate the Merger and the other transactions contemplated
by this Agreement; provided that "material adverse effect"
shall not be deemed to include the impact of (1) actions and
omissions of Park or Merger Corp., on the one hand, or First
Federal, on the other, taken with the prior written consent of
the other in contemplation of the transactions contemplated
hereby; (2) the direct effects of compliance with this
Agreement on the operating performance or financial condition
of the parties, including expenses incurred by the parties in
consummating the transactions contemplated by this Agreement,
any modifications or changes to valuation policies and
practices in connection with the Merger to the extent requested
by Park, and restructuring charges requested by Park and taken
in connection with the Merger; (3) changes after the date of
this Agreement in banking and similar laws of general
applicability or interpretations thereof by any Regulatory
Authority or Governmental Authority; or (4) changes after the
date hereof affecting depository institutions generally,
including
changes in general economic conditions or prevailing
interest or deposit rates (except to the extent that such
changes affect Park and its Subsidiaries or First Federal and
the First Federal Subsidiaries, as the case may be, in a manner
disproportionate to the effect on depository institutions
generally).
3.02.
Capitalization of
First Federal
(a)
The authorized
capital of First Federal consists solely of (i)
9,000,000 First Federal Shares, of which 3,286,221 First
Federal Shares are issued and outstanding and 17,179 First
Federal Shares are held in treasury by First Federal; and (ii)
1,000,000 preferred shares, $100 par value, none of which is
issued. All
outstanding First Federal Shares have been duly
authorized and are validly issued, fully paid and non-
assessable, and were
<PAGE> 8
not issued in violation of the preemptive rights of any person.
All First Federal Shares issued have been issued in compliance
with all applicable federal and state securities laws. As of
the date of this Agreement, 335,925 First Federal Shares were
reserved for issuance upon the exercise of outstanding stock
options (the "First Federal Stock Options") granted under the
First Federal Bancorp, Inc. 1992 Stock Option Plan for Officers
and Key Employees, the First Federal Bancorp, Inc. 1992 Stock
Option Plan for Non-Employee Directors, the First Federal
Bancorp, Inc. 1994 Stock Option Plan for Officers and Key
Employees, the First Federal Bancorp, Inc. 1994 Stock Option
Plan for Non-Employee Directors, the First Federal Bancorp,
Inc. 1997 Performance Stock Option Plan for Senior Executive
Officers and Outside Directors and the First Federal Bancorp,
Inc. 2002 Stock Option and Incentive Plan (collectively, the
"First Federal Stock Option Plans"). First Federal has
furnished to Park, as part of Section 3.02(a) of the First
Federal Disclosure Schedule, a true, complete and correct copy
of each of the First Federal Stock Option Plans, and a list of
all participants in each of the First Federal Stock Option
Plans as of the date of this Agreement, which list identifies
the number of First Federal Shares subject to First Federal
Stock Options held by each such participant, the exercise price
of each such First Federal Stock Option and the dates each such
First Federal Stock Option was granted, becomes exercisable and
expires.
(b)
As of the date
of this Agreement, except for this Agreement and
the First Federal Stock Options, there are no options,
warrants, calls, rights, commitments or agreements of any
character to which First Federal is a party or by which it is
bound, obligating First Federal to issue, deliver or sell, or
cause to be issued, delivered or sold, any additional First
Federal Shares or obligating First Federal to grant, extend or
enter into any such option, warrant, call, right, commitment or
agreement. As of the
date of this Agreement, there are no
outstanding contractual obligations of First Federal to
repurchase, redeem or otherwise acquire any First Federal
Shares except for such obligations arising under the First
Federal Stock Option Plans.
(c)
Except as
disclosed in Section 3.02(c) of the First Federal
Disclosure Schedule, since September 30, 2003, First Federal
has not (i) issued or permitted to be issued any First Federal
Shares, or securities exercisable for or convertible into
First Federal Shares, other than upon exercise of the First
Federal Stock Options granted prior to the date hereof under
the First Federal Stock Option Plans; (ii) repurchased,
redeemed or otherwise acquired, directly or indirectly through
any Subsidiary or otherwise, any First Federal Shares; or (iii)
declared, set aside, made or paid to the shareholders of First
Federal dividends or other distributions on or in respect of
the outstanding First Federal Shares.
<PAGE> 9
(d)
As of the date
of this Agreement, there are no bonds,
debentures, notes or other indebtedness of First Federal, and
no securities or other instruments or obligations of First
Federal, the value of which is in any way based upon or derived
from any capital or voting stock of First Federal, having the
right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which
First Federal shareholders may vote are issued or outstanding.
3.03.
First Federal
Subsidiaries
The First
Federal Subsidiaries are the only Subsidiaries of First
Federal. First Federal owns beneficially
and of record all of the issued
and outstanding equity securities of FFSB
and FFSB owns beneficially and of
record all of the issued and outstanding
equity securities of each of
Firstfedco and MCT. There are no options, warrants,
calls, rights,
commitments or agreements of any character
to which First Federal or any
First Federal Subsidiary is a party or by
which any of them is bound
obligating any First Federal Subsidiary to
issue, deliver or sell, or cause
to be issued, delivered or sold, any
additional equity securities of any
First Federal Subsidiary (other than to
First Federal or FFSB), or
obligating First Federal or any First
Federal Subsidiary to grant, extend
or enter into any such option, warrant,
call, right, commitment or
agreement. There are no contracts,
commitments, understandings or
arrangements relating to First Federal's or
FFSB's rights to vote or to
dispose of the equity securities of any
First Federal Subsidiary which it
owns and all of the equity securities of
the First Federal Subsidiaries
held by First Federal or FFSB are fully
paid and non-assessable and are
owned by First Federal or FFSB free and
clear of any charge, mortgage,
pledge, security interest, hypothecation,
restriction, claim, option, lien,
encumbrance or interest of any persons
whatsoever. Except as
disclosed in
Section 3.03 of the First Federal
Disclosure Schedule, First Federal does
not own of record or beneficially, directly
or indirectly, any equity
securities or similar interests of any
person, or any interest in a
partnership or joint venture of any kind,
other than the First Federal
Subsidiaries.
For
purposes of this Agreement, "Subsidiary" has the meaning
ascribed
to such term in Rule 1-02 of Regulation S-X
promulgated by the Securities
and Exchange Commission (the "SEC").
3.04.
Corporate
Proceedings
(a)
This Agreement
has been (i) duly executed and delivered by duly
authorized officers of First Federal and (ii) approved by the
board of directors of First Federal.
(b)
The board of
directors of First Federal has duly adopted
resolutions (i) declaring that it is in the best interests of
First Federal's shareholders that First Federal enter into this
Agreement and consummate the Merger on the terms and subject to
the conditions set forth in this Agreement, (ii) confirming the
intention on the date of such adoption to recommend the
adoption
of this Agreement by the shareholders of First Federal
and (iii) directing the President to call a Special Meeting of
Shareholders for
<PAGE> 10
the purpose of considering and acting upon a proposal to
approve and adopt the Merger Agreement (the "First Federal
Meeting"), which resolutions have not been subsequently
rescinded, modified or withdrawn in any way as of the date of
execution of this Agreement and which will not be subsequently
rescinded, modified or withdrawn in any way prior to the
Closing Date, except that the resolutions set forth in clauses
(b)(i) and (ii) above may be rescinded if and to the extent
that the board of directors of First Federal reasonably
determines in good faith after consultation with First
Federal's Financial Advisors and upon written advice of counsel
to First Federal that consummation of the transactions
contemplated by this Agreement could reasonably be expected to
constitute a breach of the board of directors' fiduciary duties
to the shareholders of First Federal.
(c)
Subject to the
adoption of this Agreement by the First Federal
shareholders (by a majority of the outstanding First Federal
Shares, unless the board of directors of First Federal
recommends against the adoption of this Agreement, in which
case, by 75% of the outstanding First Federal Shares) and to
the filing of all requisite applications with Regulatory
Authorities and the receipt of all requisite approvals by
Governmental Authorities and Regulatory Authorities, First
Federal has all requisite corporate power and authority to
enter into this Agreement and to perform all of its obligations
hereunder.
3.05.
Authorized and
Effective Agreement
Assuming
the due authorization, execution and delivery by Park and
Merger Corp., this Agreement constitutes
the legal, valid and binding
obligation of First Federal, enforceable
against First Federal in
accordance with its terms, except as such
enforceability may be limited by
bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance
and other similar laws relating to or
affecting the enforcement of
creditors' rights generally, by general
equitable principles (regardless of
whether enforceability is considered in a
proceeding in equity or at law)
and by an implied covenant of good faith
and fair dealing. First Federal
has the right, power, authority and
capacity to execute and deliver this
Agreement and, subject to the required
adoption of this Agreement by the
First Federal shareholders, the obtaining
of appropriate approvals by
Regulatory Authorities and Governmental
Authorities and the expiration of
applicable regulatory waiting periods, to
perform its obligations under
this Agreement.
3.06.
Financial Statements
of First Federal
(a)
The audited
consolidated financial statements of First Federal
consisting of consolidated balance sheets
as of September 30, 2003 and
2002, and the related consolidated
statements of income, stockholders'
equity and cash flows for the years ended
September 30, 2003, 2002 and
2001, including the related notes and the
report thereon of BKD LLP and (b)
the unaudited consolidated balance sheet as
of March 31, 2004 (the "First
Federal Balance Sheet Date") and the
related unaudited consolidated
statements of income and cash flows for the
three months and six months
ended March 31, 2004, of First Federal
(collectively, all of such
<PAGE> 11
consolidated financial statements are
referred to as the "First Federal
Financial Statements"), copies of which are
included in Annual Reports on
Form 10-KSB and Quarterly Reports on Form
10-QSB filed by First Federal
with the SEC, comply as to form in all
material respects with applicable
accounting requirements and have been
prepared in accordance with United
States generally accepted accounting
principles ("GAAP") applied on a
consistent basis during the periods
involved (except as may be indicated in
the notes thereto) and present fairly, in
all material respects, the
consolidated financial condition of First
Federal as of the dates thereof
and its consolidated results of operations
and cash flows for the periods
then ended (subject, in the case of
unaudited statements, to normal year-
end audit adjustments which are not
expected to be, individually or in the
aggregate, materially adverse to First
Federal in the absence of full
footnotes).
3.07. Absence of
Undisclosed Liabilities
Except as
set forth in the First Federal Financial Statements or in
Section 3.07 of the First Federal
Disclosure Schedule and except as arising
under this Agreement, neither First Federal
nor any First Federal
Subsidiary has any debts, liabilities,
guarantees or obligations (whether
accrued, absolute, contingent or otherwise)
as of the date hereof, other
than debts, liabilities, guarantees and
obligations which, individually or
in the aggregate, do not exceed $10,000.
Except as set forth in
Section
3.07 of the First Federal Disclosure
Schedule, all debts, liabilities,
guarantees and obligations of First Federal
and the First Federal
Subsidiaries incurred since the First
Federal Balance Sheet Date have been
incurred in the ordinary course of business
and are usual and normal in
amount both individually and in the
aggregate.
3.08.
Absence of Changes
Except (a)
as otherwise publicly disclosed in press releases issued
by First Federal, or (b) as set forth in
Section 3.08 of the First Federal
Disclosure Schedule, since the First
Federal Balance Sheet Date: (i) there
has not been any material adverse change in
the business, operations,
assets or financial condition of First
Federal and the First Federal
Subsidiaries taken as a whole and, to the
knowledge of First Federal, no
fact or condition exists which First
Federal believes will cause a material
adverse effect in the future; and (ii)
First Federal has not taken or
permitted any of the actions described in
Section 5.01(b) of this
Agreement. For purposes of this Agreement, an
individual will be deemed to
have "knowledge" of a particular fact or
other matter if:
(x)
such individual
is actually aware of such fact or other matter;
or
(y)
a prudent
individual would be expected to discover or otherwise
become aware of such fact or other matter in the course of
conducting a reasonably comprehensive investigation concerning
the existence of such fact or other matter.
First Federal or Park will be deemed to
have "knowledge" of a particular
fact or other matter if any individual who
is serving as a director or
executive officer of such corporation or of
a Subsidiary of such
corporation, has, or at any time had,
knowledge of such fact or other
matter.
<PAGE> 12
3.09.
Loan Documentation
The
documentation ("Loan Documentation") governing or relating to
the
loan and credit-related assets ("Loan
Assets") included in the loan
portfolio of each First Federal Subsidiary
is legally sufficient for the
purposes intended thereby and creates
enforceable rights of such First
Federal Subsidiary in accordance with the
terms of such Loan Documentation,
subject to applicable bankruptcy,
insolvency, reorganization, moratorium,
fraudulent conveyance and other similar
laws relating to or affecting the
enforcement of creditors' rights generally,
by general equitable principles
(regardless of whether enforceability is
considered in a proceeding in
equity or at law) and by an implied
covenant of good faith and fair
dealing, except to the extent such
enforceability may be limited by laws
relating to safety and soundness of insured
depository institutions as set
forth in 12 U.S.C. [SECTION] 1818(b) or by
appointment of a conservator by
the FDIC, and except for such
insufficiencies as would not reasonably be
expected to have a material adverse effect
on First Federal and the First
Federal Subsidiaries taken as a whole.
Except as set forth in
Section 3.09
of the First Federal Disclosure Schedule,
no debtor under any of the Loan
Documentation has asserted any claim or
defense with respect to the subject
matter thereof. Except as set forth in Section
3.09 of the First Federal
Disclosure Schedule, none of the First
Federal Subsidiaries is a party to a
loan, including any loan guaranty, with any
director, executive officer or
5% shareholder of First Federal or any
First Federal Subsidiary, or any
person, corporation or enterprise
controlling, controlled by or under
common control with either First Federal or
any First Federal Subsidiary.
To the knowledge of First Federal and FFSB,
all loans and extensions of
credit that have been made by a First
Federal Subsidiary comply with
applicable regulatory limitations and
procedures.
3.10.
Allowance for Loan
Losses
Except as
set forth in Section 3.10 of the First Federal Disclosure
Schedule, there is no loan which was made
by any First Federal Subsidiary
and which is reflected as an asset of First
Federal or any First Federal
Subsidiary on the First Federal Financial
Statements that (a)(i) is 90 days
or more delinquent, (ii) has been
classified by examiners (regulatory or
internal) as "Substandard," "Doubtful" or
"Loss" or (iii) has been
designated by management of First Federal
or such First Federal Subsidiary
as "special mention," and (b) the default
by the borrower under which would
reasonably be expected to have a material
adverse effect on First Federal
or FFSB. The allowance for loan losses
reflected on the First Federal
Financial Statements was, as of each
respective date, determined in
accordance with GAAP and in accordance with
all rules and regulations
applicable to First Federal and the First
Federal Subsidiaries and was
adequate as of the respective date thereof
to provide for reasonably
anticipated losses on outstanding loans,
except for such failures and
inadequacies that would not reasonably be
expected to have a material
adverse effect on First Federal or
FFSB.
3.11.
Reports and
Records
First
Federal and the First Federal Subsidiaries have filed all
reports and maintained all books and
records required to be filed or
maintained by them under the rules and
regulations of the OTS, the FHLB of
Cincinnati, the FDIC and the SEC, except
for such reports and records the
failure to file or maintain which would not
reasonably be expected to have
a material adverse effect on First Federal.
The books and records
of First
Federal and the First
<PAGE> 13
Federal Subsidiaries have been fully,
properly and accurately maintained in
all material respects and have been
maintained in accordance with sound
business practices and the requirements of
Section 13(b)(2) of the Exchange
Act, there are no material inaccuracies or
discrepancies of any kind
contained or reflected therein, and they
fairly reflect the substance of
events and transactions included therein.
All such documents and
reports
complied in all material respects with
other applicable requirements of law
and rules and regulations in effect at the
time such documents and reports
were filed and contained in all material
respects the information required
to be stated therein.
3.12.
Taxes
Except as
set forth in Section 3.12 of the First Federal Disclosure
Schedule, First Federal and the First
Federal Subsidiaries have timely
filed all returns, statements, reports and
forms (including, without
limitation, elections, declarations,
disclosures, schedules, estimates and
information returns) (collectively, the
"Tax Returns") with respect to all
federal, state, local and foreign income,
gross income, gross receipts,
gains, premium, sales, use, ad valorem,
transfer, franchise, profits,
withholding, payroll, employment, excise,
severance, stamp, occupancy,
license, lease, environmental, customs,
duties, property, windfall profits
and all other taxes (including, without
limitation, any interest, penalties
or additions to tax with respect thereto,
individually a "Tax," and
collectively, "Taxes") required to be filed
with the appropriate tax
authority. Such Tax Returns were true,
correct and complete in all
material respects. First Federal and the First
Federal Subsidiaries have
paid and discharged all Taxes due (whether
reflected on such Tax Returns or
otherwise), other than such Taxes that are
adequately reserved as shown on
the First Federal Financial Statements
(excluding any reserve for deferred
Taxes established to reflect timing
differences between book and Tax
income) or have arisen in the ordinary
course of business since the First
Federal Balance Sheet Date. Except as set forth in Section
3.12 of the
First Federal Disclosure Schedule, neither
the Internal Revenue Service
(the "IRS") nor any other taxing agency or
authority, domestic or foreign,
has asserted, is now asserting or, to the
knowledge of First Federal, is
threatening to assert against First Federal
or any First Federal Subsidiary
any deficiency or claim for additional
Taxes. There are no
unexpired
waivers by First Federal or any First
Federal Subsidiary of any statute of
limitations with respect to Taxes.
No extension of time
within which to
file any Tax Return (for a period with
respect to which the statute of
limitations has not expired) has been
filed, or has been requested or
granted. The accruals and reserves for
Taxes reflected in the First
Federal Financial Statements (excluding any
reserve for deferred Taxes
established to reflect timing differences
between book and Tax income) are
adequate for the periods covered.
First Federal and the
First Federal
Subsidiaries have withheld or collected and
paid over to the appropriate
Governmental Authorities or are properly
holding for such payment all Taxes
required by law to be withheld or
collected. There are
no liens for Taxes
upon the assets of First Federal or any
First Federal Subsidiary, other
than liens for current Taxes not yet due
and payable. Neither
First
Federal nor any First Federal Subsidiary
has agreed to make, or is required
to make, any adjustment under Section
481(a) of the Internal Revenue Code
of 1986, as amended (the "Code").
Except as set forth in
Section 3.12 of
the First Federal Disclosure Schedule,
neither First Federal nor any First
Federal Subsidiary is a party to any
agreement, contract, arrangement or
plan that has resulted, or could result,
individually or in the aggregate,
in the payment of "excess parachute
payments" within the meaning of Section
280G of the Code. Neither First Federal nor any
First Federal Subsidiary
has ever been a member of an affiliated
group of corporations, within the
meaning of
<PAGE> 14
Section 1504 of the Code, other than an
affiliated group of which First
Federal is or was the common parent
corporation. Neither
First Federal nor
any First Federal Subsidiary has any
liability for the Taxes of any other
person or entity under Treasury Department
Regulation Section 1.1502-6 (or
any similar provision of state, local or
foreign law), as a transferee or
successor, by contract or otherwise.
None of the assets of
First Federal
or any First Federal Subsidiary is property
which First Federal or the
First Federal Subsidiary is required to
treat as being owned by any other
person pursuant to the so-called "safe
harbor lease" provisions of former
Section 168(f)(8) of the Code. None of the assets of First
Federal or any
First Federal Subsidiary directly or
indirectly secures any debt the
interest on which is tax-exempt under
Section 103(a) of the Code. None of
the assets of First Federal or any First
Federal Subsidiary is "tax-exempt
use property" within the meaning of Section
168(h) of the Code.
Neither
First Federal nor any First Federal
Subsidiary is, and none have been, a
United States real property holding
corporation (as defined in Section
897(c)(2) of the Code) during the
applicable period specified in Section
897(c)(1)(A)(ii) of the Code. No Tax is required to be withheld
pursuant
to Section 1445 of the Code as a result of
the transactions contemplated by
this Agreement. Neither First Federal nor any
First Federal Subsidiary is
a party to any joint venture, partnership
or other entity, agreement or
contract that could be treated as a
partnership for federal income tax
purposes. First Federal has not made, nor is
it bound by, any election
under Section 197 of the Code. Neither First Federal nor any
First Federal
Subsidiary has any excess loss account (as
defined in Treasury Department
Regulation Section 1.1502-19) with respect
to the stock of any First
Federal Subsidiary. First Federal has disclosed on its
federal income Tax
Returns all positions taken therein that
could give rise to a substantial
understatement of federal income tax within
the meaning of Section 6662 of
the Code.
3.13.
Property and Title
Section
3.13 of the First Federal Disclosure Schedule lists and
describes all real property, and any
leasehold interest in real property,
owned or held by First Federal or any First
Federal Subsidiary and used in
the business of First Federal or any First
Federal Subsidiary
(collectively, the "First Federal Real
Properties"). True and
complete
copies of all leases of First Federal Real
Properties to which First
Federal or any First Federal Subsidiary is
a party have been provided to
Park in Section 3.13 of the First Federal
Disclosure Schedule.
Such
leasehold interests have not been assigned
or subleased. All
First Federal
Real Properties which are owned by First
Federal or any First Federal
Subsidiary are free and clear of all
mortgages, liens, security interests,
defects, encumbrances, easements,
restrictions, reservations, conditions,
covenants, agreements, encroachments,
rights of way and zoning laws, except
(a) those set forth in Section 3.13 of the
First Federal Disclosure
Schedule; (b) easements, restrictions,
reservations, conditions, covenants,
rights of way, zoning laws and other
defects and irregularities in title
and encumbrances which do not materially
impair the use thereof for the
purposes for which they are held; and (c)
liens for current Taxes not yet
due and payable. First Federal and the First
Federal Subsidiaries own, and
are in rightful possession of, and have
good title to, all of the other
assets indicated in the First Federal
Financial Statements as being owned
by First Federal or any First Federal
Subsidiary, free and clear of any
charge, mortgage, pledge, security
interest, hypothecation, restriction,
claim, option, lien, encumbrance or
interest of any persons whatsoever
except (x) those described in the Section
3.13 of the First Federal
Disclosure Schedule and (y) those assets
disposed of in the ordinary course
of business consistent with past practices.
All of the assets of
First
Federal and the First Federal Subsidiaries
are in good operating condition,
<PAGE> 15
except for normal maintenance and routine
repairs, and are reasonably
adequate to continue to conduct the
respective businesses of First Federal
and the First Federal Subsidiaries as such
businesses are presently being
conducted.
3.14.
Legal Proceedings
Except as
set forth in Section 3.14 of the First Federal Disclosure
Schedule, there are no actions, suits,
proceedings, claims or
investigations pending or appealable or, to
the knowledge of First Federal
and the First Federal Subsidiaries,
threatened in any court, before any
governmental agency or instrumentality or
in any arbitration proceeding
against or by First Federal or any First
Federal Subsidiary.
3.15.
Regulatory Matters
None of
First Federal, the First Federal Subsidiaries and their
respective properties is a party to or
subject to any order, judgment,
decree, agreement, memorandum of
understanding or similar arrangement with,
or a commitment letter or similar
submission to, or extraordinary
supervisory letter from, any court or
federal or state governmental agency
or authority, including any such agency or
authority charged with the
supervision or regulation of financial
institutions (or their holding
companies) or issuers of securities or
engaged in the insurance of deposits
(including, without limitation, the OTS,
the FHLB of Cincinnati, the FDIC
and the SEC) or the supervision or
regulation of First Federal or FFSB
(collectively, the "Regulatory
Authorities"). Neither
First Federal nor
any First Federal Subsidiary has been
advised by any Regulatory Authority
that such Regulatory Authority is
contemplating issuing or requesting (or
is considering the appropriateness of
issuing or requesting) any such
order, judgment, decree, agreement,
memorandum of understanding or similar
arrangement, commitment letter, supervisory
letter or similar submission.
3.16.
No Conflict
Except as
set forth in Section 3.16 of the First Federal Disclosure
Schedule, subject to the required adoption
of this Agreement by the
shareholders of First Federal, receipt of
the required approvals of
Governmental Authorities and Regulatory
Authorities and expiration of
applicable regulatory waiting periods, the
execution, delivery and
performance of this Agreement, and the
consummation of the transactions
contemplated hereby, by First Federal do
not and will not (a) conflict
with, or result in a violation of, or
result in the breach of or a default
(or which with notice or lapse of time
would result in a default) under,
any provision of: (i) any federal, state or local
law, regulation,
ordinance, order, rule or administrative
ruling of any administrative
agency or commission or other federal,
state or local governmental
authority or instrumentality (each, a
"Governmental Authority") applicable
to First Federal or any First Federal
Subsidiary or any of their respective
properties; (ii) the articles of
incorporation or amended and restated code
of regulations of First Federal or the
governing instruments of any First
Federal Subsidiary; (iii) any material
agreement, indenture or instrument
to which First Federal or any First Federal
Subsidiary is a party or by
which any of them or of their respective
properties or assets may be bound;
or (iv) any order, judgment, writ,
injunction or decree of any court,
arbitration panel or any Governmental
Authority applicable to First Federal
or any First Federal Subsidiary; (b) result
in the creation or acceleration
of any security interest, mortgage,
<PAGE> 16
option, claim, lien, charge or encumbrance
upon or interest in any property
of First Federal or any First Federal
Subsidiary, except to the extent that
such creation or acceleration will not have
a material adverse effect on
First Federal; or (c) violate the terms or
conditions of, or result in the
cancellation, modification, revocation or
suspension of, any material
license, approval, certificate, permit or
authorization held by First
Federal or any First Federal
Subsidiary.
3.17.
Brokers, Finders and
Others
Except for
the fees paid or payable to Keefe, Bruyette & Woods, Inc.
("First Federal's Financial Advisors"),
there are no fees or commissions of
any sort whatsoever claimed by, or payable
by, First Federal or any First
Federal Subsidiary to, any broker, finder,
intermediary, attorney,
accountant or any other similar person in
connection with effecting this
Agreement or the transactions contemplated
hereby, except for ordinary and
customary legal and accounting fees.
3.18.
Employment
Agreements
Except as
disclosed in Section 3.18 of the First Federal Disclosure
Schedule, neither First Federal nor any
First Federal Subsidiary is a party
to any employment, change in control,
severance or consulting agreement not
terminable at will or obligated to pay any
severance bonus or other
compensation as a result of the Merger.
Neither First Federal
nor any
First Federal Subsidiary is a party to,
bound by or negotiating, any
collective bargaining agreement, nor are
any of their respective employees
represented by any labor union or similar
organization. First
Federal and
the First Federal Subsidiaries are in
compliance in all material respects
with all applicable laws respecting
employment and employment practices,
terms and conditions of employment and
wages and hours, and neither First
Federal nor any First Federal Subsidiary
has engaged in any unfair labor
practice, other than practices that
individually or in the aggregate would
not reasonably be expected to have a
material adverse effect on First
Federal.
3.19.
Employee Benefit
Plans
(a)
Section 3.19(a)
of the First Federal Disclosure Schedule
contains a complete and accurate list of all bonus, incentive,
deferred compensation, pension (including, without limitation,
Pension Plans as defined below), retirement, profit-sharing,
thrift, savings, employee stock ownership, stock bonus, stock
purchase, restricted stock, stock option, severance, welfare
(including, without limitation, "welfare plans" within the
meaning of Section 3(1) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), fringe benefit
plans, employment or severance agreements and all similar
practices, policies and arrangements maintained or contributed
to (currently or within the last six years), other than those
described in Department of Labor ("DOL") Reg.
[SECTION][SECTION] 2510.3-1(b) through (k), 2510.3-2(d),
2510.3-3(b), by (i) First Federal or any First Federal
Subsidiary and in which any employee or former employee (the
"Employees"), consultant or former consultant (the
"Consultants"), officer or former officer (the "Officers"), or
director or former director
<PAGE> 17
(the "Directors") of First Federal or any First Federal
Subsidiary participates or to which any such Employees,
Consultants, Officers or Directors are parties or (ii) any
ERISA Affiliate (as defined below) (collectively, the
"Compensation and Benefit Plans"). Neither First Federal nor
any First Federal Subsidiary has any commitment to create any
additional Compensation and Benefit Plan or to modify or change
any existing Compensation and Benefit Plan, except to the
extent required
by applicable law.
(b)
Except as
described in Section 3.19(b) of the First Federal
Disclosure Schedule, each Compensation and Benefit Plan has
been operated and administered in all material respects in
accordance with its terms and with applicable law, including,
but not limited to, ERISA, the Code, the Securities Act of
1933, as amended (the "Securities Act"), the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), the Age
Discrimination in Employment Act, or any regulations or rules
promulgated thereunder, and all filings, disclosures and
notices required by ERISA, the Code, the Securities Act, the
Exchange Act, the Age Discrimination in Employment Act and any
other applicable law have been timely made. Each Compensation
and Benefit Plan which is an "employee pension benefit plan"
within the meaning of Section 3(2) of ERISA (a "Pension Plan")
and which is intended to be qualified under Section 401(a) of
the Code has received a favorable determination letter
(including a determination that the related trust under such
Compensation and Benefit Plan is exempt from tax under Section
501(a) of the Code) from the IRS and First Federal is not aware
of any circumstances likely to result in revocation of any such
favorable determination letter. There is no material pending
or, to the knowledge of First Federal, threatened, legal
action, suit or claim relating to the Compensation and Benefit
Plans other than routine claims for benefits thereunder.
Neither First Federal nor any First Federal Subsidiary has,
directly or indirectly, engaged in a transaction, or omitted to
take any action, with respect to any Compensation and Benefit
Plan that would reasonably be expected to subject First Federal
or any First Federal Subsidiary to a tax or penalty imposed by
either Section 4975 of the Code or Section 502 of ERISA.
(c)
No liability
(other than for payment of premiums to the Pension
Benefit Guaranty Corporation ("PBGC") which have been made or
will be made on a timely basis) under Title IV of ERISA has
been or is expected to be incurred by First Federal or any
First
Federal Subsidiary with respect to any ongoing, frozen or
terminated "single-employer plan," within the meaning of
Section 4001(a)(15) of ERISA, currently or formerly maintained
by either of them, or any single-employer plan of any entity
(an "ERISA Affiliate Plan") which is considered one employer
with First Federal under Section 4001(a)(14) of ERISA or
Section 414(b), (c) or (m) of the Code (an "ERISA Affiliate").
None of First Federal, any First Federal Subsidiary or any
ERISA Affiliate has contributed, or has been
<PAGE> 18
obligated to contribute, to a multiemployer plan under Subtitle
E of Title IV of ERISA (as defined in ERISA Sections 3(37)(A)
and 4001(a)(3)) at any time since September 26, 1980. No
notice of a "reportable event", within the meaning of Section
4043 of ERISA, for which the 30-day reporting requirement has
not been waived, has been required to be filed for any
Compensation and Benefit Plan or by any ERISA Affiliate Plan
within the 12-month period ending on the date hereof, and no
such notice will be required to be filed as a result of the
transactions contemplated by this Agreement. The PBGC has not
instituted proceedings to terminate any Pension Plan or ERISA
Affiliate Plan and, to First Federal's knowledge, no condition
exists that presents a material risk that such proceedings will
be instituted. There
is no pending investigation or
enforcement action by the PBGC, the DOL, the IRS or any other
Governmental Authority with respect to any Compensation and
Benefit Plan. Under
each Pension Plan and ERISA Affiliate
Plan, as of the date of the most recent actuarial valuation
performed prior to the date of this Agreement, the actuarially
determined present value of all "benefit liabilities", within
the meaning of Section 4001(a)(16) of ERISA (as determined on
the basis of the actuarial assumptions contained in such
actuarial valuation of such Pension Plan or ERISA Affiliate
Plan), did not exceed the then current value of the assets of
such Pension Plan or ERISA Affiliate Plan and since such date
there has been neither an adverse change in the financial
condition of such Pension Plan or ERISA Affiliate Plan nor any
amendment or other change to such Pension Plan or ERISA
Affiliate Plan that would increase the amount of benefits
thereunder which reasonably could be expected to change such
result.
(d)
All
contributions required to be made under the terms of any
Compensation and Benefit Plan or ERISA Affiliate Plan have been
timely made or have been reflected on the First Federal
Financial Statements.
Neither any Pension Plan nor any ERISA
Affiliate Plan has an "accumulated funding deficiency" (whether
or not waived) within the meaning of Section 412 of the Code or
Section 302 of ERISA and all required payments to the PBGC with
respect to each Pension Plan or ERISA Affiliate Plan have been
made on or before their due dates. None of First Federal, any
First Federal Subsidiary and/or any ERISA Affiliate (i) has
provided, or would reasonably be expected to be required to
provide, security to any Pension Plan or to any ERISA Affiliate
Plan pursuant to Section 401(a)(29) of the Code and (ii) has
taken any action, or omitted to take any action, that has
resulted, or would reasonably be expected to result, in the
imposition of a lien under Section 412(n) of the Code or
pursuant to ERISA.
(e)
Except as
disclosed in Section 3.19(e) of the First Federal
Disclosure Schedule, neither First Federal nor any First
Federal Subsidiary has any obligations to provide retiree
health or retiree life insurance or other retiree death
benefits under any Compensation and Benefit Plan, other
<PAGE> 19
than benefits mandated by Section 4980B of the Code. Except as
disclosed in Section 3.19(e) of the First Federal Disclosure
Schedule, there has been no communication to Employees by First
Federal or any First Federal Subsidiary that would reasonably
be expected to promise or guarantee such Employees retiree
health or retiree life insurance or other retiree death
benefits on a permanent basis.
(f)
First Federal
and the First Federal Subsidiaries do not
maintain any Compensation and Benefit Plans covering foreign
Employees.
(g)
With respect to
each Compensation and Benefit Plan, if
applicable, First Federal has provided or made available to
Park, true and complete copies of: (i) the most recently
restated version of each plan document and all subsequent
amendments thereto; (ii) the most recently restated version of
each trust instrument and insurance contract and all subsequent
amendments thereto; (iii) the two most recent annual returns
(Forms 5500) and financial statements; (iv) the most recently
restated summary plan descriptions and all subsequent summaries
of material modifications; (v) forms filed with the PBGC within
the twelve consecutive months ending immediately before the
date hereof (other than for premium payments); (vi) the most
recent determination letter issued by the IRS with respect to
each Compensation and Benefit Plan that is intended to comply
with Code [SECTION] 401(a); (vii) any Form 5310, Form 5310A,
Form 5300 or Form 5330 filed with the IRS within the twenty-
four consecutive months ending immediately before the date
hereof; and (viii) the most recent nondiscrimination tests
performed under ERISA and the Code (including but not limited
to Code Section 401(k) and 401(m) tests).
(h)
Except as
disclosed in Section 3.19(h) of the First Federal
Disclosure Schedule, the consummation of the transactions
contemplated by this Agreement would not, directly or
indirectly (including, without limitation, as a result of any
termination of employment prior to or following the Effective
Time), reasonably be expected to (i) entitle any Employee,
Officer, Consultant or Director to any payment (including
severance pay or similar compensation) or any increase in
compensation,
(ii) result in the vesting or acceleration of any
benefits under any Compensation and Benefit Plan, except as
required by law or (ii
