Dinsmore & Shohl LLP has rendered an opinion that the Peoples common shares to be issued to the ASB shareholders in connection with
the Merger have been duly authorized and, if issued as contemplated by the Merger Agreement, will be validly issued, fully paid and
non-assessable
under the laws of the State of Ohio. Certain U.S. federal
income tax consequences relating to the Merger will also be passed upon for ASB by Vorys, Sater, Seymour and Pease LLP.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows Peoples to incorporate certain information into this document by
reference to other information that has been filed with the SEC. The information incorporated by reference is deemed to be part of this document, except for any information that is superseded by information in this document. The documents that are
incorporated by reference contain important information about the companies and you should read this document together with any other documents incorporated by reference in this document.
This document incorporates by reference the following documents that have previously been filed with the SEC by Peoples (File
No. 000-16772):
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Annual Report on Form
10-K
for the year ended December 31, 2016, filed with the SEC on February 27, 2017;
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Quarterly Reports on Form
10-Q
for the quarters ended March 31, 2017, June 30, 2017 and September 30, 2017 filed with the SEC on April 27, 2017, July 27,
2017 and October 26, 2017, respectively;
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Definitive Proxy Statement on Schedule 14A filed with the SEC on March 8, 2017;
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Current Reports on Form
8-K
filed with the SEC on each of January 18, 2017, January 23, 2017, January 27, 2017, February 24, 2017, March 30, 2017,
April 25, 2017, April 28, 2017, June 27, 2017, July 25, 2017, September 27, 2017, October 24, 2017 and January 9, 2018 (other than the portions of those documents not deemed to be filed); and
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58
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The description of Peoples common shares, no par value, contained in Peoples Registration Statement on Form
8-A
dated July 20, 1993 and any amendment or report filed
with the SEC for the purpose of updating such description.
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In addition, Peoples is incorporating by reference any documents
it may file under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended after the date of this document and prior to the date of the special meeting of ASB shareholders.
Peoples files annual, quarterly and special reports, proxy statements and other business and financial information with the SEC. You may
obtain the information incorporated by reference and any other materials Peoples files with the SEC without charge by following the instructions in the section entitled
WHERE YOU CAN FIND MORE INFORMATION
in the forepart of this
document.
Neither Peoples nor ASB has authorized anyone to give any information or make any representation about the Merger or its
companies that is different from, or in addition to, that contained in this document or in any of the materials that have been incorporated into this document. Therefore, if anyone does give you information of this sort, you should not rely on it.
If you are in a jurisdiction where offers to exchange or sell, or solicitations of offers to exchange or purchase, the securities offered by this document or the solicitation of proxies is unlawful, or if you are a person to whom it is unlawful to
direct these types of activities, then the offer presented in this document does not extend to you. The information contained in this document speaks only as of the date of this document unless the information specifically indicates that another
date applies.
59
ANNEX A
AGREEMENT AND PLAN OF MERGER
dated as of
October 23,
2017
by and between
PEOPLES BANCORP INC.
and
ASB FINANCIAL CORP.
TABLE OF CONTENTS
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Page
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ARTICLE I CERTAIN DEFINITIONS
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A-1
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1.01
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Certain Definitions
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A-1
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ARTICLE II THE MERGER
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A-9
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2.01
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The Parent Merger
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A-9
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2.02
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The Subsidiary Merger
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A-10
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2.03
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Effectiveness of Parent Merger
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A-10
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2.04
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Effective Date and Effective Time
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A-10
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2.05
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Absence of Control
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A-11
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ARTICLE III MERGER CONSIDERATION
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A-11
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3.01
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Merger Consideration
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A-11
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3.02
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Rights as Shareholders; Share Transfers
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A-12
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3.03
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Election, Exchange and Payment Procedures
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A-12
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ARTICLE IV ACTIONS PENDING CONSUMMATION OF MERGER
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A-18
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4.01
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Forbearances of ASB
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A-18
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4.02
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Dissolution of ASB Financial Services
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A-21
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4.03
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Forbearances of Peoples
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A-22
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ARTICLE V REPRESENTATIONS AND WARRANTIES
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A-22
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5.01
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Disclosure Schedules
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A-22
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5.02
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Standard
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A-22
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5.03
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Representations and Warranties of ASB
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A-23
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5.04
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Representations and Warranties of Peoples
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A-41
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ARTICLE VI COVENANTS
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A-47
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6.01
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Reasonable Best Efforts
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A-47
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6.02
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Shareholder Approval
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A-47
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6.03
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Registration Statement; Proxy Statement/Prospectus
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A-48
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6.04
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Press Releases
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A-48
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6.05
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Access; Information
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A-48
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6.06
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Acquisition Proposals
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A-49
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6.07
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Takeover Laws
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A-50
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6.08
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Certain Policies
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A-50
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6.09
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Regulatory Applications
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A-51
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6.10
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Employment Matters; Employee Benefits
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A-51
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6.11
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Notification of Certain Matters
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A-53
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6.12
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No Breaches of Representations and Warranties
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A-53
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6.13
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Consents
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A-53
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6.14
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Insurance Coverage
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A-53
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6.15
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Correction of Information
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A-53
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6.16
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Confidentiality
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A-54
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A-i
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6.17
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Regulatory Matters
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A-54
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6.18
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Indemnification
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A-54
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6.19
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Environmental Assessments
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A-55
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6.20
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Advisory Board
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A-55
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6.21
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NASDAQ Listing
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A-55
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6.22
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Tax Treatment
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A-55
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ARTICLE VII - CONDITIONS TO CONSUMMATION OF THE MERGER; CLOSING
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A-55
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7.01
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Conditions to Each Partys Obligation to Effect the Merger
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A-55
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7.02
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Conditions to Obligation of ASB
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A-56
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7.03
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Conditions to Obligation of Peoples
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A-57
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7.04
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Closing
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A-58
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ARTICLE VIII TERMINATION
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A-58
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8.01
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Termination
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A-58
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8.02
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Effect of Termination and Abandonment; Enforcement of Agreement
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A-60
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ARTICLE IX MISCELLANEOUS
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A-60
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9.01
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Survival
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A-60
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9.02
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Waiver; Amendment
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A-61
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9.03
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Counterparts
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A-61
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9.04
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Governing Law
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A-61
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9.05
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Expenses; Breakup Fee
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A-61
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9.06
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Notices
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A-61
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9.07
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Entire Understanding; No Third Party Beneficiaries
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A-62
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9.08
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Interpretation; Effect
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A-62
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9.09
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Waiver of Jury Trial
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A-62
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9.10
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Successors and Assigns; Assignment
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A-63
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EXHIBIT A Form of Voting Agreement
A-ii
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER
(this
Agreement
), dated as of October 23, 2017 (the
Agreement
Date
), is entered into by and between
PEOPLES BANCORP INC.
, an Ohio corporation (
Peoples
), and
ASB FINANCIAL CORP.
, an Ohio corporation (
ASB
).
WITNESSETH
WHEREAS
, Peoples is a registered financial holding company and owns all of the outstanding shares of Peoples Bank, an Ohio chartered
commercial bank (
Peoples Bank
);
WHEREAS
, ASB is a registered savings and loan holding company and owns all of
the outstanding shares of American Savings Bank, fsb, a federal stock savings bank (
American Savings Bank
);
WHEREAS
, the Boards of Directors of Peoples and ASB believe that the merger of ASB with and into Peoples, followed by the merger of
American Savings Bank with and into Peoples Bank, each in accordance with the terms and subject to the conditions of this Agreement, would be in the best interests of the shareholders of Peoples and ASB;
WHEREAS
, the Boards of Directors of Peoples and ASB have each approved this Agreement and the transactions contemplated hereby; and
WHEREAS
, the parties intend that (a) the merger qualify as a reorganization within the meaning of
Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the
Code
), and (b) this Agreement be, and parties adopt this Agreement as, a plan of reorganization for purposes of Sections 354 and 361
of the Code.
NOW, THEREFORE
, in consideration of the premises and of the mutual covenants, representations, warranties and
agreements contained herein, Peoples and ASB, intending to be legally bound, hereby agree as follows:
ARTICLE I
Certain Definitions
1.01
Certain Definitions
.
The following terms are used in this Agreement with the meanings set forth below:
ACDC
has the meaning set forth in Section 4.02.
Affiliate
or
Affiliates
has the meaning set forth in Rule
12b-2
under the Exchange Act.
Aggregate Consideration
has the meaning
set forth in Section 3.01(b)(i).
Aggregate Cash Consideration
has the meaning set forth in
Section 3.01(b)(ii).
A-1
Aggregate Stock Consideration
has the meaning set forth in
Section 3.01(b)(iii).
Agreement
means this Agreement and Plan of Merger, as amended or modified
from time to time in accordance with Section 9.02.
Agreement Date
has the meaning set forth in the
preamble to this Agreement.
Agreement to Merge
has the meaning set forth in Section 2.02.
American Savings Bank
has the meaning set forth in the recitals to this Agreement.
American Savings Banks Territory
means, for purposes of this Agreement, the geographic area comprising
(i) the State of Ohio, (ii) a 50 mile radius surrounding the City of South Shore, Kentucky and (iii) a 50 mile radius surrounding the City of Cincinnati, Ohio.
ASB
has the meaning set forth in the preamble to this Agreement.
ASB Articles
means the Articles of Incorporation of ASB, as amended.
ASB Board
means the Board of Directors of ASB.
ASB Common Shares
means the common shares, without par value, of ASB.
ASB ESOP
& 401(k) Plan
has the meaning set forth in Section 6.10(c).
ASB Financial Services
has the meaning set forth in Section 4.02.
ASB Group
has the meaning set forth in Section 5.03(q)(vii).
ASB Meeting
has the meaning set forth in Section 6.02.
ASB Preferred Shares
has the meaning set forth in Section 5.03(b)(i).
ASB Regulations
means the regulations of ASB, as amended.
ASB Shareholder Adoption
has the meaning set forth in Section 5.03(d).
ASB Shares
has the meaning set forth in Section 5.03(b)(i).
ASBs Financial Statements
has the meaning set forth in Section 5.03(g)(i).
Associate
has the meaning set forth in Rule
12b-2
under the Exchange
Act.
BHCA
means the Bank Holding Company Act of 1956, as amended.
Cash Election Shares
has the meaning set forth in Section 3.03(b).
A-2
COBRA
means the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended.
Code
has the meaning set forth in the Recitals.
Competing Proposal
means any of the following involving ASB and/or American Savings Bank: (a) any
inquiry, proposal or offer from any Person relating to any direct or indirect acquisition or purchase by such Person of (i) ASB and/or American Savings Bank, (ii) any business line of American Savings Bank that constitutes 20% or more of
the net revenues, net income or assets of ASB, on a consolidated basis, or (iii) 20% or more of outstanding ASB Shares or shares in American Savings Bank, (b) any tender offer or exchange offer that if consummated would result in any Person
beneficially owning 20% or more of any ASB Shares or shares of American Savings Bank, or (c) any merger, consolidation, business combination, recapitalization, liquidation, dissolution or similar transaction involving ASB and/or American
Savings Bank, other than the transactions contemplated by this Agreement.
Compensation and Benefit
Plans
has the meaning set forth in Section 5.03(m)(i).
Consultants
has the meaning set
forth in Section 5.03(m)(i).
CRA
has the meaning set forth in Section 5.03(bb).
D&O Policy
has the meaning set forth in Section 6.18(b).
Determination Date
has the meaning set forth in 8.01(f).
Determination Letter
has the meaning set forth in Section 6.10(c).
Directors
has the meaning set forth in Section 5.03(m)(i).
Disclosure Schedule
has the meaning set forth in Section 5.01.
Dissenting Shares
means any ASB Common Shares held by a holder who properly demands and perfects rights as a
dissenting shareholder with respect to such shares in accordance with applicable provisions of the OGCL.
Effective Date
means the date on which the Effective Time occurs.
Effective Time
means the effective time of the Parent Merger, as provided for in Section 2.04.
Election Deadline
has the meaning set forth in Section 3.03(c).
Election Form
has the meaning set forth in Section 3.03(b).
Employees
has the meaning set forth in Section 5.03(m)(i).
A-3
Environmental Laws
means all applicable local, state and
federal environmental, health and safety laws and regulations, including, without limitation, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act, the Clean Water Act, the Federal
Clean Air Act, and the Occupational Safety and Health Act, each as amended, regulations promulgated thereunder, and state counterparts.
ERISA
means the Employee Retirement Income Security Act of 1974, as amended.
ERISA Affiliate
has the meaning set forth in Section 5.03(m)(iii).
ERISA Affiliate Plan
has the meaning set forth in Section 5.03(m)(iii).
Exchange Act
means the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
Exchange Agent
has the meaning set forth in Section 3.03(a).
Exchange Fund
has the meaning set forth in Section 3.03(f).
Exchange Ratio
shall mean 0.5920.
Final Index Price
has the meaning set forth in 8.01(f).
FDIA
means the Federal Deposit Insurance Act, as amended.
FDIC
means the Federal Deposit Insurance Corporation.
FRB
means the Board of Governors of the Federal Reserve System.
GAAP
means generally accepted accounting principles in the United States, consistently applied.
Governmental Authority
means any court, arbitration panel, administrative agency or commission or other
federal, state or local governmental authority or instrumentality (including, without limitation, any Regulatory Authority).
Hazardous Materials
means, collectively, (a) any hazardous substance as defined by the
Comprehensive Environmental Response, Compensation and Liability Act, as amended, and regulations promulgated thereunder; (b) any hazardous waste as defined by the Resource Conservation and Recovery Act, as amended through the date
hereof, or regulations promulgated thereunder; and (c) any hazardous, dangerous or toxic chemical, material or substance within the meaning of any applicable federal, state or local law relating to or imposing liability or standards of conduct
concerning any hazardous, toxic or dangerous waste, substance or material.
HOLA
means the Home
Owners Loan Act, as amended.
A-4
Index
has the meaning set forth in 8.01(f).
Index Ratio
has the meaning set forth in 8.01(f).
Information
has the meaning set forth in Section 6.16.
Initial Index Price
has the meaning set forth in 8.01(f).
IRS
has the meaning set forth in Section 5.03(m)(ii).
Knowledge
means, with respect to Peoples, the Knowledge of any officer of Peoples with the title of
Chairman, Chief Executive Officer, President or Chief Financial Officer, and with respect to ASB, the Knowledge of any officer of ASB with the title of Chairman, Chief Executive Officer, President, Executive Vice President, Chief Financial Officer,
Bank Secrecy Act Officer, Compliance Officer, and Vice President of Correspondent Lending. An officer of Peoples or ASB shall be deemed to have Knowledge of a particular fact or matter if such officer is actually aware of such fact or
matter or a prudent individual would be reasonably expected to become aware of such fact or matter in the ordinary course of such officers duties.
Letter of Transmittal
has the meaning set forth in Section 3.03(g)(i).
Lien
means any charge, mortgage, pledge, security interest, restriction, claim, lien, or encumbrance.
Material Adverse Effect
means, with respect to Peoples or ASB, as the context may require, any effect that
(i) is or is reasonably likely to (A) be material and adverse to the financial position, results of operations or business of Peoples and its Subsidiaries, taken as a whole, or (B) be material and adverse to the financial position,
results of operations or business of ASB and its Subsidiaries, taken as a whole, and that would in aggregate result or likely result in a reduction in the consolidated tangible net worth of ASB and its Subsidiaries, as measured as of June 30,
2017 (subject to the exclusion of transaction expenses pursuant to clause (b) of the following proviso), or (ii) would materially impair the ability of either Peoples or ASB to perform its obligations under this Agreement or otherwise
materially threaten or materially impede the consummation of the Merger and the other transactions contemplated by this Agreement and that would in aggregate result or likely result in a reduction in the consolidated tangible net worth of ASB and
its Subsidiaries, as measured as of June 30, 2017;
provided
,
however
, that Material Adverse Effect shall not be deemed to include the impact of (a) changes in banking and similar laws of general applicability or
interpretations thereof by courts or Governmental Authorities or other changes affecting depository institutions generally, including changes in general economic conditions, changes in prevailing interest and deposit rates and GAAP or regulatory
accounting requirements; (b) changes resulting from expenses (such as legal, accounting, investment banking, financial advisory and termination fees (including any termination fees for data processing and related services that have been
Previously Disclosed)), incurred in connection with this Agreement; (c) actions or omissions of a party which are required hereunder or which have been waived
A-5
in accordance with Section 9.02 hereof; (d) changes in policies and procedures of ASB or American Savings Bank taken pursuant to Section 6.08 of this Agreement or other acts or
omissions taken or omitted upon the request or with the consent of Peoples; (e) acts of war, sabotage or terrorism, military actions or the escalation thereof or natural disasters or acts of God; or (f) changes resulting from the
announcement of this Agreement and the transactions contemplated hereby.
Material Contracts
has the
meaning set forth in Section 5.03(k)(ii).
Merger
collectively refers to the Parent Merger and the
Subsidiary Merger, as set forth in Section 2.02.
No Election Shares
has the meaning set forth in
Section 3.03(b).
OCC
means the Office of the Comptroller of the Currency.
ODFI
means the Ohio Division of Financial Institutions.
OGCL
means the Ohio General Corporation Law.
Old Certificates
has the meaning set forth in Section 3.03(c).
OSS
means the Office of the Secretary of State of the State of Ohio.
Parent Merger
has the meaning set forth in Section 2.01(a).
PBGC
means the Pension Benefit Guaranty Corporation.
Peoples
has the meaning set forth in the preamble to this Agreement.
Peoples Articles
means the Articles of Incorporation of Peoples, as amended.
Peoples Board
means the Board of Directors of Peoples.
Peoples Common Shares
means shares of common stock, without par value, of Peoples.
Peoples Board Deferred Compensation Plan
means the Second Amended and Restated Deferred Compensation Plan
for Directors of Peoples and its Subsidiaries, as amended.
Peoples Equity Plan
means the Peoples
Second Amended and Restated 2006 Equity Plan, as amended.
Peoples Market Price
has the meaning set
forth in 8.01(f).
Peoples Market Value
has the meaning set forth in 8.01(f).
A-6
Peoples Regulations
means the regulations of Peoples, as
amended.
Pension Plan
has the meaning set forth in Section 5.03(m)(ii).
Peoples Bank
has the meaning set forth in the recitals to this Agreement.
Per Share Cash Consideration
has the meaning set forth in Section 3.01(a)(ii).
Per Share Stock Consideration
has the meaning set forth in Section 3.01(a)(i).
Person
means any individual, financial institution, corporation, partnership, association, joint-stock
company, business trust or unincorporated organization.
Phase I
has the meaning set forth in
Section 4.01(u).
Previously Disclosed
by a party shall mean information set forth in such
partys Disclosure Schedule.
Proxy Statement/Prospectus
has the meaning set forth in
Section 6.03(a).
Reallocated Stock Shares
has the meaning set forth in Section 3.03(d)(i)(2).
Registration Statement
means the Registration Statement on Form
S-4
pursuant to the Securities Act filed by Peoples to register with the SEC the Peoples Common Shares that make up a portion of the Aggregate Consideration, which also will include ASBs proxy statement
seeking the adoption by its shareholders of this Agreement.
Regulatory Authorities
has the meaning set
forth in Section 5.03(i)(i).
Regulatory Orders
has the meaning set forth in
Section 5.03(i)(i).
Related Parties
has the meaning set forth in Section 5.03(cc).
Related Party Agreements
has the meaning set forth in 5.03(cc).
Representatives
means, with respect to any Person, such Persons directors, officers, employees,
accountants, consultants, legal counsel, investment bankers, financial and other advisors and/or agents.
Resulting Bank
has the meaning set forth in Section 2.02.
Rights
means, with respect to any Person, all securities and obligations convertible into or exercisable or
exchangeable for, or giving any Person any right to subscribe for or acquire, and any options, calls or commitments relating to, and any stock appreciation right or other instrument the value of which is determined in whole or in part by reference
to the market price or value of, shares of capital stock of such Person.
SEC
means the United States
Securities and Exchange Commission.
A-7
SEC Reports
has the meaning set forth in
Section 5.04(g)(ii).
Securities Act
means the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder.
Stock Election Shares
has the meaning set forth in
Section 3.03(b).
Subsidiary
or
Subsidiaries
has the meaning set forth in Rule
1-02
of Regulation
S-X
of the SEC. For purposes of this Agreement, the Title Agency is not a Subsidiary of ASB.
Subsidiary Divestitures
has the meaning set forth in Section 4.02.
Subsidiary Merger
has the meaning set forth in Section 2.02.
Superior Competing Transaction
means any of the following involving ASB and/or American Savings Bank: any
proposal made by a third party to acquire, directly or indirectly, including pursuant to a tender offer, exchange offer, merger, consolidation, business combination, recapitalization, liquidation, dissolution or similar transaction, for
consideration consisting of cash and/or securities, more than 50% of the combined voting power of ASB and/or American Savings Bank or all or substantially all the assets of ASB and/or American Savings Bank, and otherwise on terms which the ASB Board
determines in its good faith judgment (based on the opinion of a financial advisor) to be more favorable to its shareholders than the Merger (taking into account all legal, financial, regulatory and other aspects of the proposal and the Person
making the proposal) and for which financing, to the extent required, is then committed or which if not committed is, in the good faith judgment of the ASB Board, reasonably capable of being obtained by such third party, and is reasonably likely to
be completed on the terms proposed, in each case taking into account all legal, financial, regulatory and other aspects of the proposal.
Surviving Corporation
has the meaning set forth in Section 2.01(a).
Takeover Laws
has the meaning set forth in Section 5.03(o).
Tax
and
Taxes
means all federal, state, local or foreign net income, gross income,
commercial activity, gains, gross receipts, sales, use, ad valorem, goods and services, capital, production, transfer, franchise, windfall profits, license, withholding, payroll, employment, disability, employer health, excise, estimated, severance,
stamp, occupation, property, environmental, unemployment and all other taxes, custom duties, fees, assessments or other similar charges imposed, assessed or collected by or under the authority of any Governmental Authority, together with any
interest and any penalties, additions to tax or additional amounts imposed by the Governmental Authority and any transferee liability in respect of any such items.
Tax Representation Letters
has the meaning set forth in Section 6.22.
A-8
Tax Returns
means any return, amended return, statement, form,
claim for refund or other report (including elections, declarations, disclosures, schedules, estimates and information returns) with respect to any Tax, including any amendments thereof that is supplied, or required to be supplied, to a Governmental
Authority.
Title Agency
means Bankers Alliance Title Agency, LLC.
Total Cash Consideration
has the meaning set forth in Section 3.03(o).
Total Consideration
has the meaning set forth in Section 3.03(o).
Total Share Consideration
has the meaning set forth in Section 3.03(o).
Treasury
means the United States Department of Treasury.
Treasury Shares
means ASB Shares held by ASB or any of its Subsidiaries other than in a fiduciary capacity
or as a result of debts previously contracted in good faith.
Voting Agreement
means the Voting
Agreement in the form attached hereto as
Exhibit A
entered into as of the date hereof by and among Peoples and certain shareholders of ASB.
ARTICLE II
The Merger
2.01
The Parent Merger
.
(a)
The Parent Merger
. Upon the terms and subject to the conditions of this Agreement, at the Effective Time, ASB shall merge
with and into Peoples (the
Parent Merger
). Peoples shall survive the Parent Merger and continue to exist as an Ohio corporation (Peoples, as the surviving corporation in the Parent Merger, is sometimes referred to herein as the
Surviving Corporation
), and the separate corporate existence of ASB shall cease. At the Effective Time:
(i) The Peoples Articles, as in effect immediately prior to the Effective Time, shall be the articles of incorporation of the
Surviving Corporation until amended in accordance with the OGCL;
(ii) The Peoples Regulations, as in effect immediately
prior to the Effective Time, shall be the regulations of the Surviving Corporation until amended in accordance with the OGCL; and
(iii) Each individual serving as a director of Peoples immediately prior to the Effective Time shall remain a director of the
Surviving Corporation for the balance of the term for which such individual was elected and shall serve as such until his or her successor is duly elected and qualified in the manner provided for in the Peoples Articles and the Peoples Regulations
or as otherwise provided by the OGCL or until his or her earlier death, resignation or removal in the manner provided in the Peoples Articles or the Peoples Regulations or as otherwise provided by the OGCL.
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(b)
Option to Change Method of Merger
. Peoples may at any time prior to the
Effective Time change the method of effecting the Parent Merger and/or the Subsidiary Merger (including, without limitation, changing the provisions of this Article II), if and to the extent Peoples deems such change to be necessary, appropriate or
desirable;
provided
,
however
, that no such change shall:
(i) alter or change the amount or kind of
consideration to which the holders of ASB Common Shares are entitled in accordance with the terms and subject to the conditions of this Agreement;
(ii) impede or delay consummation of the transactions contemplated by this Agreement;
(iii) adversely affect the Tax consequences to the holders of ASB Common Shares resulting from receiving the consideration in
the Merger as set forth in Article III, including by causing the Merger to fail to qualify as a reorganization under Section 368(a)(1)(A) of the Code, or
(iv) otherwise adversely affect the holders of ASB Shares.
Subject to the foregoing, ASB, if reasonably requested by Peoples, shall enter into one or more amendments to this Agreement in order to effect any such
change.
2.02
The Subsidiary Merger
.
At the time specified by Peoples Bank in its certificate of merger filed with the
OSS (which shall not be earlier than the Effective Time), American Savings Bank shall merge with and into Peoples Bank (the
Subsidiary Merger
) pursuant to an agreement to merge (the
Agreement to Merge
) to be
executed by American Savings Bank and Peoples Bank. Upon the consummation of the Subsidiary Merger, the separate corporate existence of American Savings Bank shall cease and Peoples Bank shall survive the Subsidiary Merger and continue to exist as
an Ohio banking corporation (Peoples Bank, as the resulting bank in the Subsidiary Merger, is sometimes referred to herein as the
Resulting Bank
) and the separate corporate existence of American Savings Bank shall cease. The
Parent Merger and the Subsidiary Merger are sometimes collectively referred to herein as the
Merger
.
2.03
Effectiveness of Parent Merger
. Subject to the satisfaction or waiver of the conditions set forth in Article VII of this Agreement, the Parent Merger shall become effective upon the latest to occur of the following: (a) the
filing of the certificate of merger with the OSS; or (b) such later date and time as may be set forth in such certificate of merger. The Parent Merger shall have the effects prescribed in the OGCL.
2.04
Effective Date and Effective Time
. Subject to the satisfaction or waiver of the conditions set forth in Article VII of this
Agreement, Peoples and ASB shall cause the effective date of the Parent Merger (the
Effective Date
) to occur as soon as practicable after the last of
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the conditions set forth in Article VII shall have been satisfied or waived in accordance with the terms of this Agreement;
provided
,
however
, that the Effective Date shall not fall
after the date specified in Section 8.01(c) or after the date or dates on which any Regulatory Authority approval or any extension thereof expires. The time on the Effective Date when the Parent Merger shall become effective is referred to
herein as the
Effective Time
.
2.05
Absence of Control
. It is the intent of the parties to this Agreement
that Peoples, by reason of this Agreement, shall not be deemed (until consummation of the transactions contemplated herein) to control, directly or indirectly, ASB or any of its Subsidiaries and shall not exercise or be deemed to exercise, directly
or indirectly, a controlling influence over the management or policies of ASB or any of its Subsidiaries.
ARTICLE III
Merger Consideration.
3.01
Merger Consideration
.
At the Effective Time, by virtue of the Parent Merger and without any action on the part of the holder thereof:
(a)
Conversion of ASB Common Shares
. Subject to Sections 3.01 and 3.03, each ASB Common Share issued and outstanding
immediately prior to the Effective Time shall be converted into the right to receive, at the election of the holder thereof, the following:
(i) a number of Peoples Common Shares equal to the Exchange Ratio (the
Per Share Stock Consideration
); or
(ii) cash in the amount of $20.00 (the
Per Share Cash Consideration
).
(b)
Aggregate Consideration
.
(i) The
Aggregate Consideration
shall mean the Aggregate Cash Consideration and Aggregate Stock
Consideration.
(ii) The
Aggregate Cash Consideration
for purposes of this Agreement shall be a dollar
amount equal to the Per Share Cash Consideration multiplied by the total number of Cash Election Shares (subject to adjustment pursuant to Article III);
provided
,
however
, the Aggregate Cash Consideration shall be no more than 15% of
the sum of (A) the Aggregate Cash Consideration and (B) the Aggregate Stock Consideration.
(iii) The
Aggregate Stock Consideration
for purposes of this Agreement shall be a dollar amount equal to (A) the Exchange Ratio multiplied by the sum of the Stock Election Shares (subject to adjustment pursuant to Article III) plus the
Reallocated Stock Shares, if any, (B) multiplied by the Peoples Market Price;
provided
,
however
, the Aggregate Stock Consideration shall be no less than 85% of the sum of (1) the Aggregate Cash Consideration and (2) the
Aggregate Stock Consideration.
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(iv) If the number of ASB Common Shares issued and outstanding immediately prior
to the Effective Time exceeds the number of ASB Common Shares issued and outstanding as of the date hereof, except to the extent such increase is due to the issuance of ASB Common Shares pursuant to the dividend reinvestment feature of the ASB
ESOP & 401(k) Plan, the Aggregate Consideration will not be adjusted as a result of such excess, though appropriate adjustments will be made to the Per Share Stock Consideration and the Per Share Cash Consideration.
(c)
Treasury Shares
. All Treasury Shares shall be canceled and retired at the Effective Time and no consideration
shall be issued in exchange therefor.
(d)
Dissenting Shares
. Notwithstanding anything contained in this
Agreement or elsewhere to the contrary, any holder of an outstanding ASB Common Share that seeks relief as a dissenting shareholder under Section 1701.85 of the OGCL shall thereafter have only such rights (and shall have such obligations) as
are provided therein, and the Surviving Corporation shall be required to deliver only such cash payments to which the Dissenting Shares are entitled pursuant to 1701.85 of the OGCL. If any holder of Dissenting Shares shall forfeit such right to
payment of the fair value under Section 1701.85 of the OGCL, each holders Dissenting Shares shall thereupon be deemed to have been converted as of the Effective Time into the right to receive the Aggregate Consideration, without interest.
3.02
Rights as Shareholders; Share Transfers
. At the Effective Time, holders of ASB Common Shares shall cease to be, and
shall have no rights as, shareholders of ASB, other than (a) to receive any dividend or other distribution with respect to such ASB Common Shares with a record date occurring prior to the Effective Time, (b) to receive the Aggregate
Consideration, or (c) appraisal rights in the case of Dissenting Shares. After the Effective Time, there shall be no transfers on the stock transfer books of ASB or the Surviving Corporation of any ASB Common Shares.
3.03
Election, Exchange and Payment Procedures
.
(a)
Exchange Agent
. Wells Fargo Shareowner Services will act as agent (the
Exchange Agent
) for purposes of
conducting the exchange and payment procedures as described in this Section 3.03.
(b)
Election Procedure
. No later than
forty (40) business days prior to the anticipated Election Deadline, Peoples shall cause the Exchange Agent to mail to each record holder of ASB Common Shares an election form in such form as Peoples and ASB shall mutually agree (the
Election Form
);
provided
,
however
, that the Registration Statement shall have been declared effective by the SEC before the Exchange Agent shall mail the Election Forms to the holders of ASB Common Shares, and if
such effectiveness is less than forty (40) business days prior to the anticipated Election Deadline, immediately following such effectiveness. Each Election Form shall permit the holder (or in the case of nominee record
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holders, the beneficial owner through proper instructions and documentation) of the ASB Common Shares (i) to elect to receive Peoples Common Shares with respect to all of such holders
ASB Common Shares, (ii) to elect to receive cash with respect to all of such holders ASB Common Shares, (iii) to elect to receive cash with respect to some of such holders ASB Common Shares and to receive Peoples Common Shares
with respect to such holders remaining ASB Common Shares, or (iv) to indicate that such holder makes no such election with respect to such holders ASB Common Shares. Any ASB Common Shares with respect to which the holder has elected
to receive cash are referred to as
Cash Election Shares
. Any ASB Common Shares with respect to which the holder has elected to receive Peoples Common Shares are referred to as
Stock Election Shares
. Any ASB
Common Shares with respect to which the holder has indicated that such holder makes no such election are referred to as
No Election Shares
. Any ASB Common Shares with respect to which the holder thereof shall not have made, as of
the Election Deadline, an effective election by submission to the Exchange Agent of a properly completed Election Form shall be deemed to be No Election Shares. Any Dissenting Shares shall be deemed to be Cash Election Shares for purposes of the
allocation provisions of Section 3.03(d) below, but in no event shall such shares be classified as Reallocated Stock Shares.
(c)
Election Deadline; Revocation or Modification of Election
. For purposes of this Agreement, the term
Election Deadline
shall mean 5:00 p.m. Eastern Time on the fifteenth (15th) business day prior to the Effective
Date, but not including, the date of mailing of the Election Form, or such other date upon which Peoples and ASB shall mutually agree to prior to the Effective Time. Any election to receive cash, Peoples Common Shares or a combination of cash and
Peoples Common Shares shall have been properly made only if the Exchange Agent shall have actually received a properly completed Election Form by the Election Deadline, accompanied with the certificates representing ASB Common Shares (the
Old Certificates
) covered by such Election Form, together with duly executed transmittal materials included with the Election Form. Any submitted Election Form may be revoked or changed by written notice to the Exchange Agent only
if such notice of revocation or change is actually received by the Exchange Agent prior to the Election Deadline. The Exchange Agent shall be required to make all determinations as to when any election, modification or revocation has been received
and whether any such election, modification or revocation has been properly made.
(d)
Reallocation of Peoples Common Shares and
Cash
. No later than the fifth (5th) business day prior to the Effective Date, the Exchange Agent shall effect the proper allocation among holders of ASB Common Shares of rights to receive cash, Peoples Common Shares, or a combination of cash
and Peoples Common Shares in accordance with the Election Forms and as follows:
(i) If the number of Cash Election Shares
multiplied by the Per Share Cash Consideration is greater than 15% of the Aggregate Consideration, then:
(1) each of the
Stock Election Shares and No Election Shares shall have the right to receive the Per Share Stock Consideration;
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(2) the Exchange Agent will designate among the Cash Election Shares (other than
Dissenting Shares) (by the method described in Section 3.03(e) below), a sufficient number of such shares to receive the Per Share Stock Consideration (such redesignated shares referred to as
Reallocated Stock Shares
) such
that the sum of (a) the product of (1) the number of remaining Cash Election Shares multiplied by (2) the Per Share Cash Consideration equals 15% of the Aggregate Consideration, and each of the Reallocated Stock Shares shall be
converted into the right to receive the Per Share Stock Consideration; and
(3) each of the Cash Election Shares (other
than Dissenting Shares) that are not Reallocated Stock Shares shall have the right to receive the Per Share Cash Consideration.
(ii) If the number of Cash Election Shares multiplied by the Per Share Cash Consideration is less than 15% of the Aggregate
Consideration, then subparagraph (i) above shall not apply, all No Election Shares and all Stock Election Shares shall be converted into the right to receive the Per Share Stock Consideration and all Cash Election Shares shall be converted into
the right to receive the Per Share Cash Consideration.
(e)
Method of Designation
.
(i) If the Exchange Agent is required pursuant to Section 3.03(d) to designate from among all No Election Shares the
Reallocated Cash Shares to receive the Per Share Cash Consideration, each holder of No Election Shares shall have a pro rata portion (based on such holders No Election Shares relative to all No Election Shares) of such holders No
Election Shares designated as Reallocated Cash Shares.
(ii) If the Exchange Agent is required pursuant to
Section 3.03(d) to designate from among all Stock Election Shares the Reallocated Cash Shares to receive the Per Share Cash Consideration, each holder of Stock Election Shares shall have a pro rata portion (based on such holders Stock
Election Shares relative to all Stock Election Shares) of such holders Stock Election Shares designated as Reallocated Cash Shares.
(iii) If the Exchange Agent is required pursuant to Section 3.03(d) to designate from among all Cash Election Shares the
Reallocated Stock Shares to receive the Per Share Stock Consideration, each holder of Cash Election Shares (except Dissenting Shares) shall have a pro rata portion (based on such holders Cash Election Shares relative to all Cash Election
Shares) of such holders Cash Election Shares designated as Reallocated Stock Shares.
(f)
Exchange Fund
. At or prior to
the Effective Time, Peoples shall deposit, or shall cause to be deposited, with the Exchange Agent
,
for the benefit of the holders of Old Certificates,
for exchange in accordance with this Article III, (i) certificates
representing Peoples Common Shares (subject to Section 3.03(l)) and (ii) cash in an aggregate amount sufficient to
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make appropriate payment of (A) the Per Share Cash Consideration, (B) cash in lieu of fractional shares pursuant to Section 3.03(i), and (C) any dividends or distributions on
account of Peoples Common Shares to be exchanged for ASB Common Shares with a record date occurring on or after the Effective Time, and without any interest on any such cash, dividends or distributions (the
Exchange Fund
)
to be paid pursuant to this Article III in exchange for outstanding ASB Common Shares. Promptly after the Effective Time, the Exchange Agent shall distribute Peoples Common Shares and make payment of the Exchange Fund as provided herein. The
Exchange Agent shall not be entitled to vote or to exercise any rights of ownership with respect to the Peoples Common Shares held by it from time to time hereunder, except that it shall receive and hold in trust for the recipients of the Peoples
Common Shares until distributed thereto pursuant to the provision of this Agreement all dividends or other distributions paid or distributed with respect to such Peoples Common Shares for the account of the persons entitled thereto.
(g)
Surrender of Old Certificates Following the Election Deadline
.
(i) Appropriate transmittal materials (the
Letter of Transmittal
) in a form satisfactory to Peoples and ASB
shall be mailed by the Exchange Agent as soon as practicable after the Election Deadline to each holder of record of ASB Common Shares as of the Election Deadline who did not previously submit a completed Election Form. A Letter of Transmittal will
be deemed properly completed only if accompanied by the Old Certificates to be converted thereby.
(ii) The Letter of
Transmittal shall (A) specify that delivery shall be effected, and risk of loss and title to the Old Certificates shall pass, only upon delivery of the Old Certificates to the Exchange Agent; (B) be in a form and contain any other
provisions as Peoples and ASB may reasonably determine; (C) include information concerning procedures in the case of lost, stolen or destroyed Old Certificates; and (D) include instructions for use in effecting the surrender of the Old
Certificates in exchange for the Aggregate Consideration. Upon the effective surrender of the Old Certificates to the Exchange Agent, together with a properly completed and duly executed Letter of Transmittal, the holder of such Old Certificates
shall be entitled to receive in exchange therefor a certificate representing that number of whole shares of Peoples Common Shares that such holder has the right to receive pursuant to Sections 3.01 and 3.03, if any, and a check in the amount equal
to the cash that such holder has the right to receive pursuant to Sections 3.01 and 3.03, if any (including any cash in lieu of fractional Peoples Common Shares, if any, that such holder has the right to receive pursuant to Sections 3.01 and 3.03,
and any dividends or other distributions to which such holder is entitled pursuant to Section 3.03). Old Certificates so surrendered shall be canceled. As soon as practicable following receipt of the properly completed Letter of Transmittal and
any necessary accompanying documentation, but in any event not more than five (5) business days, the Exchange Agent shall distribute Peoples Common Shares and cash as provided herein. If there is a transfer of ownership of any shares of ASB
Common Shares not registered in the transfer records of ASB, the applicable portion of the Aggregate Consideration shall be issued to the transferee thereof only if the Old Certificates representing such ASB Common Shares are presented to the
Exchange Agent, accompanied by all documents required, in the reasonable judgment of Peoples and the Exchange Agent, to evidence and effect such transfer and to evidence that any applicable stock transfer taxes have been paid.
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(iii) No dividends or other distributions declared or made after the Effective
Time with respect to Peoples Common Shares issued pursuant to this Agreement shall be remitted to any person entitled to receive shares of Peoples Common Shares hereunder until such person surrenders his or her Old Certificates in accordance with
this Section 3.03. Upon the surrender of such persons Old Certificates, such person shall be entitled to receive any dividends or other distributions, without interest thereon, which subsequent to the Effective Time had become payable but
not paid with respect to shares of Peoples Common Shares represented by such persons Old Certificates.
(h)
Release of Exchange
Fund
. Any portion of the Exchange Fund that remains unclaimed by the shareholders of ASB for six months after the Effective Time shall be paid to Peoples. Any shareholders of ASB who have not theretofore complied with this Article III shall
thereafter look only to Peoples for payment of the Aggregate Consideration.
(i)
No Fractional Peoples Common Shares
.
(i) No certificates or scrip representing fractional Peoples Common Shares shall be issued upon the surrender for exchange of
Old Certificates, and such fractional Peoples Common Share interests will not entitle the owner thereof to vote or to any rights of a shareholder of the Surviving Corporation.
(ii) Each holder of ASB Common Shares who would otherwise be entitled to receive a fractional Peoples Common Share shall
receive from the Exchange Agent an amount of cash equal to the product obtained by multiplying (A) the fractional Peoples Common Share interest to which such holder (after taking into account all ASB Common Shares held at the Effective Time by
such holder) would otherwise be entitled by (B) the Per Share Cash Consideration. For the avoidance of doubt, payments made pursuant to this Section 3.03(i) shall not be included in determining the Aggregate Cash Consideration or any
limits on the amount thereof.
(j)
No Liability
. None of Peoples, ASB, the Exchange Agent or the Surviving Corporation shall
be liable to any former holder of ASB Common Shares for any payment of the Per Share Stock Consideration, the Per Share Cash Consideration, any cash in lieu of a fractional Peoples Common Share interest, or any dividends or distributions with
respect to Peoples Common Shares delivered to a public official if required by any applicable abandoned property, escheat or similar law.
(k)
Withholding Rights
. Peoples or the Exchange Agent shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of ASB Common Shares such amounts as Peoples or the Exchange Agent is required to deduct and withhold with respect to the making of such payment under the Code or any other provision of domestic or
foreign tax law (whether national, federal, state, provincial, local or otherwise). To the extent that amounts are so withheld and paid over to the appropriate taxing authority by Peoples or the Exchange Agent, such withheld amounts shall be treated
for all purposes of this Agreement as having been paid to the holder of the ASB Common Shares.
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(l)
Book Entry
. All shares of Peoples Common Shares to be issued pursuant to this
Agreement may be issued in book entry form without physical certificates in Peoples discretion.
(m)
Waiver
. The
Surviving Corporation may from time to time, in the case of one or more Persons, waive one or more of the rights provided to it in this Article III to withhold certain payments, deliveries and distributions; and no such waiver shall constitute a
waiver of its rights to withhold any such payment, delivery or distribution in the case of any Person.
(n)
Stock Splits,
Recapitalization, etc
.
If, prior to the Effective Time, the outstanding Peoples Common Shares or ASB Common Shares shall have been increased, decreased, or changed into or exchanged for a different number or kind of shares or
securities, in any such case as a result of a reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split, or other similar change in capitalization, or there shall be any extraordinary dividend or
distribution, an appropriate and proportionate adjustment shall be made to the Per Share Stock Consideration and the Per Share Cash Consideration to give holders of ASB Common Shares the same economic effect as contemplated by this Agreement prior
to such event.
(o)
Reorganization Adjustment
.
Notwithstanding anything in this Agreement to the contrary, to preserve
the status of the Merger as a reorganization within the meaning of Section 368(a) of the Code, if the aggregate value of the Peoples Common Shares to be issued in connection with the Merger (for the avoidance of doubt, excluding the
value of fractional shares for which cash is to be paid pursuant to Section 3.03(i)), based upon the closing price of the Peoples Common Shares as reported on The NASDAQ Global Select Market on the trading day immediately preceding the
Effective Date (the
Total Share Consideration
), would be less than 40% of the sum of (i) the Total Cash Consideration and (ii) the Total Share Consideration (collectively, the
Total Consideration
),
then Peoples shall increase the Aggregate Stock Consideration and decrease the Aggregate Cash Consideration proportionately and to the minimum extent necessary for the Total Share Consideration to be equal to 40% of the Total Consideration
(calculated using such increased Aggregate Stock Consideration and decreased Aggregate Cash Consideration). For purposes of this Agreement, the
Total Cash Consideration
shall be the sum of (i) the total amount of Aggregate
Cash Consideration paid pursuant to Section 3.03(d)(i)(3) or 3.03(d)(ii); (ii) cash paid in lieu of fractional Peoples Common Shares pursuant to Section 3.03(i); and (iii) cash paid to holders of Dissenting Shares.
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ARTICLE IV
Actions Pending Consummation of Merger
4.01
Forbearances of ASB
. From the date hereof until the Effective Time, except as expressly contemplated or permitted by this
Agreement, requested by Peoples, or required by applicable law, regulation or policy of a Governmental Authority or an applicable Regulatory Order, without the prior written consent of Peoples, which consent shall not be unreasonably withheld, ASB
shall not, and shall cause its Subsidiaries not to:
(a)
Ordinary Course
.
Except as set forth in Section 4.01(a)
of ASBs Disclosure Schedule, (i) conduct the business of ASB and its Subsidiaries other than in the ordinary and usual course or fail to use commercially reasonable efforts to preserve intact their respective business organizations and
assets, (ii) fail to use reasonable best efforts to maintain their respective rights, franchises and existing relations with customers, suppliers, vendors, employees and business associates, (iii) voluntarily take any action which, at the
time taken, is reasonably likely to have a Material Adverse Effect, or (iv) enter into any new line of business or materially change its lending, investment, underwriting, risk, asset liability management or other banking and operating
policies.
(b)
Capital Stock
.
(i) Issue, sell or otherwise permit to become outstanding, or authorize the creation of,
any additional ASB Common Shares, other capital stock of ASB or any Rights except ASB Common Shares held in the ASB ESOP & 401(k) Plan; (ii) enter into any agreement with respect to the foregoing; (iii) permit any additional ASB
Common Shares to become subject to new grants of employee or director stock options, other Rights or similar stock-based employee rights; or (iv) effect any recapitalization, reclassification, stock split, or similar change in capitalization.
(c)
Dividends; Distributions; Adjustments
.
(i) Make, declare, pay or set aside for payment any dividend or
distribution on any shares of its capital stock, except for (A) dividends from American Savings Bank to ASB, (B) ASB may pay to its shareholders its usual and customary cash dividend of no greater than $0.18 per share per quarter until the
quarter in which the Effective Date occurs, and (C) ASB may pay to its shareholders a special cash dividend in the quarter in which the Effective Date occurs equal to the difference between (1) ASBs usual and customary dividend of no
greater than $0.18 per share and (2)(i) the per share dividend Peoples has declared to be paid during that quarter and after the Effective Time, multiplied by (ii) the Exchange Ratio; or (ii) directly or indirectly adjust, split, combine,
redeem, reclassify, purchase or otherwise acquire any shares of its capital stock other than transactions in ASB Common Shares required by ASB Compensation and Benefit Plans.
(d)
Compensation; Employment Agreements
.
Except as set forth in Section 4.01(d) of ASBs Disclosure Schedule,
enter into, modify, amend, renew or terminate any employment, consulting, severance, retention, change in control, or similar agreements or arrangements with any director, consultant, officer or employee of ASB or its Subsidiaries, hire or engage
any full-time employee or consultant, other than as replacements for positions existing on the Agreement Date, or grant any salary or wage increase or bonus or increase any employee benefit (including incentive or bonus payments), except for
(i) changes that are required by applicable law, (ii) the payment in ASBs third fiscal quarter of 2018 of prorated annual bonuses for ASBs four senior executive officers for the 2018 fiscal year based on ASBs return on
average assets annualized for the remaining portion of the 2018 fiscal year based on the Executive Incentive Compensation Plan previously disclosed to Peoples (provided that the calculation of such annual bonuses shall not include the impact of
legal, accounting, investment
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banking, financial advisory and termination fees incurred in connection with this Agreement or the impact of other acts or omissions taken or omitted upon the request or with the consent of
Peoples), (iii) bonuses paid in the first calendar quarter of 2018 to all employees (excluding ASBs four senior executive officers) for the 2017 calendar year not to exceed in the aggregate 5% of such employees total annual compensation for
2017, (iv) annual salary increases for 2018 for all employees not to exceed in the aggregate 3% of such employees 2017 annual compensation, (v) the allocation of profit sharing amounts during the first calendar quarter of 2018 to
participant accounts under the ASB ESOP & 401(k) for the 2017 calendar year in an aggregate amount not to exceed $75,000; (vi) retention or similar payments to be paid at or prior to the Effective Time by ASB, at its discretion, to certain
employees,
provided
, that the aggregate amount of any such retention or similar payments shall not exceed $100,000; and (vii) the annual renewal of the employment, change in control and severance agreements with officers of ASB and/or
American Savings Bank in existence on the Agreement Date;
provided
, that the terms of such employment, change in control and severance agreements are not otherwise modified.
(e)
Benefit Plans
.
Except as set forth in Section 4.01(e) of ASBs Disclosure Schedule,
enter into,
establish, adopt, amend, modify or terminate (except (i) as may be required by applicable law, (ii) as contemplated by this Agreement or (iii) the regular annual renewal of insurance contracts) any pension, retirement, stock option,
phantom stock, stock purchase, savings, profit sharing, deferred compensation, change in control, salary continuation, consulting, bonus, group insurance or other employee benefit, incentive or welfare contract (including related administrative
services contracts), plan or arrangement, or any trust agreement (or similar arrangement) related thereto, in respect of any director, consultant, officer or employee of ASB or its Subsidiaries, or take any action to accelerate the payment of
benefits or the vesting or exercisability of stock options, restricted stock, phantom stock or other compensation or benefits payable thereunder.
(f)
Dispositions
. Except as set forth in Section 4.01(f) of ASBs Disclosure Schedule and excluding sales of loans in
the secondary market in the ordinary course of business, sell, transfer, mortgage, pledge, encumber or otherwise dispose of or discontinue any of its assets, deposits, business or properties except in the ordinary and usual course of business for
full and fair consideration actually received.
(g)
Acquisitions
. Acquire (other than by way of foreclosures or acquisitions
of control in a bona fide fiduciary capacity or in satisfaction of debts previously contracted in good faith or otherwise in the ordinary and usual course of business consistent with past practice) all or any portion of the assets, business,
deposits or properties of any other Person.
(h)
Governing Documents
.
Amend the ASB Articles, the ASB Regulations or
the charter, articles of association or bylaws of American Savings Bank.
(i)
Accounting Methods
. Implement or adopt any
change in its accounting principles, practices or methods, other than as may be required by GAAP.
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(j)
Material Contracts
.
Except as set forth in Section 4.01(j) of
ASBs Disclosure Schedule, enter into any new contract or agreement that would otherwise be required to be disclosed under Section 5.03(k), terminate any existing Material Contract, amend or modify any existing Material Contract in any
material respect, or renew or extend any existing Material Contract (excluding expirations of Material Contracts pursuant to their terms).
(k)
Claims
.
Settle any claim, action or proceeding, except for any claim, action or proceeding which does not involve
precedent for other material claims, actions or proceedings and which involves solely money damages in an amount individually not to exceed $25,000 and in the aggregate not to exceed $50,000 for all such settlements.
(l)
Risk Management
.
Except pursuant to applicable law or as required by any Governmental Authority, (i) implement or
adopt any material change in its interest rate and other risk management policies, procedures or practices; (ii) fail to follow its existing policies or practices with respect to managing its exposure to interest rate and other risk;
(iii) fail to use commercially reasonable means to avoid any material increase in its aggregate exposure to interest rate risk; or (iv) fail to follow its existing policies or practices with respect to managing its fiduciary risks.
(m)
Borrowings
.
Except as set forth in Section 4.01(m) of ASBs Disclosure Schedule, borrow or agree to borrow
any funds, including but not limited to pursuant to repurchase transactions, or directly or indirectly guarantee or agree to guarantee any obligations of any other Person, except in each case in the ordinary course of business and with a final
maturity of less than one year and Fed funds purchased to fund ordinary course lending operations.
(n)
Indirect Loans;
Participations
. (i) Make or purchase any indirect or brokered loans or (ii) purchase from or sell to any financial institution or other
non-depository
lender any interest in a loan and/or
other type of credit facility held in American Savings Banks portfolio, except for such credit facilities made to borrowers in American Savings Banks Territory which are secured by collateral located in American Savings Banks
Territory in the ordinary course and consistent with past practices.
(o)
Capital Expenditures
. Except as set forth in
Section 4.01(o) of ASBs Disclosure Schedule, make any capital expenditure or capital addition or improvement or purchase other assets outside of the ordinary course of business which individually exceeds $15,000 or in the aggregate exceed
$30,000.
(p)
Lending
. (i) Establish any new lending programs or make any changes in the policies of any Subsidiary of
ASB concerning which Persons may approve loans, (ii) price or reprice any loans inconsistent with American Savings Banks current pricing methodology, (iii) originate or issue any loans except in accordance with existing lending
policies, lending limits and authorities, or (iv) originate or issue a commitment to originate any loan in a principal amount in excess of $500,000, unless such loan is originated and eligible for sale in the secondary market based on Federal
Home Loan Bank underwriting standards.
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(q)
Taxes
. (i) Fail to prepare or file or cause to be prepared or filed in a
timely manner consistent with past practice all Tax Returns that are required to be filed (with extensions) at or before the Effective Time; (ii) fail to timely pay any Tax due (whether or not required to be shown on any such Tax Returns),
except for any Taxes ASB contests in good faith and establishes adequate reserves therefor; (iii) make, change or revoke any Tax election or Tax accounting method; (iv) file any amended Tax return; (v) settle any Tax claim or
assessment; (vi) consent to the extension or waiver of any statute of limitations with respect to any Tax; (vii) offer or agree to do any of the foregoing; or (viii) surrender its rights to do any of the foregoing or to claim any
refund of any Tax or file any amended Tax Return.
(r)
Offices and Facilities
. Except as set forth in Section 4.01(r) of
ASBs Disclosure Schedule, (i) open, close or relocate any offices at which its business is conducted (including any ATMs) or (ii) fail to use commercially reasonable efforts to maintain and keep its respective properties and
facilities in their present condition and working order, ordinary wear and tear excepted.
(s)
Interest Rates
. Except as set
forth in Section 4.01(s) of ASBs Disclosure Schedule, increase or decrease the rate of interest paid on time deposits, certificates of deposit, or any other type of deposit accounts, except in a manner consistent with past practices in
relation to rates prevailing in the relevant market.
(t)
Foreclosures
. Except as set forth in Section 4.01(t) of
ASBs Disclosure Schedule, foreclose upon or otherwise cause ASB or any of its Subsidiaries to take title to or possession or control of any real property or entity thereon without first obtaining a Phase I Environmental Site Assessment in
accordance with the requirements of ASTM
E1527-13
Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process (
Phase I
) on such real
property which indicates that the property is free of Hazardous Material;
provided
,
however
, that no such report shall be required to be obtained with respect to single-family residential real property of five acres or less to be
foreclosed upon unless ASB or any of its Subsidiaries has reason to believe such real property may contain any such Hazardous Material.
(u)
Deposit Liabilities
. Cause or permit any material change in the amount or general composition of deposit liabilities,
excluding withdrawals of deposits in the ordinary course of business and the maturity of certificates of deposit.
(v)
Commitments
. Agree or commit to do any of the foregoing.
4.02
Dissolution of Certain Subsidiaries
. On or
before the Effective Date, ASB or American Savings Bank shall (i) dissolve ASB Financial Services, LLC, an Ohio limited liability company (
ASB Financial Services
), (ii) dissolve ASB Community Development Corp., an Ohio
corporation (
ACDC
), and (iii) divest all of ASBs interest in the Title Agency. The dissolution of ASB Financial Services, the dissolution of ACDC, and the divestiture of the Title Agency as contemplated by this
Section 4.02 are collectively referred to herein as the
Subsidiary Divestitures
. ASB shall take, or cause to be taken, all such actions necessary to ensure that the Subsidiary Divestitures comply with all applicable laws. Any
and all documentation relating to the Subsidiary Divestitures shall be provided to Peoples for its review and reasonable
non-objection
prior to filing.
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4.03
Forbearances of Peoples
. From the date hereof until the Effective Time, except
as expressly contemplated or permitted by this Agreement, requested by ASB, or required by applicable law, regulation or policy of a Governmental Authority or an applicable Regulatory Order, without the prior written consent of ASB, which consent
shall not be unreasonably withheld, shall not, and shall cause its Subsidiaries not to:
(a)
Governing Documents
. Amend the
Peoples Articles or the Peoples Regulations in a material manner that adversely impacts the rights or obligations of holders of Peoples Common Shares;
(b)
Delay
. Knowingly take any action or fail to take any action that is intended to or would reasonably be likely to adversely
affect or materially delay the ability of ASB, Peoples or their Subsidiaries to obtain any necessary approvals of any Governmental Authority required for the transactions contemplated hereby or to perform its covenants and agreements under this
Agreement or to consummate the transactions contemplated hereby; or
(c)
Agreements to Take Action
. Agree to take, make any
commitment to take, or adopt any resolutions of its Board of Directors or similar governing body in support of, any of the actions prohibited by this Section 4.03.
ARTICLE V
Representations and Warranties
5.01
Disclosure Schedules
. On or prior to the Agreement Date, ASB delivered to Peoples a schedule, and Peoples delivered to ASB
a schedule (each respectively, its
Disclosure Schedule
), setting forth, among other things, items the disclosure of which are necessary or appropriate either in response to an express disclosure requirement contained in a
provision hereof, as an exception to one or more representations or warranties contained in Section 5.03 or 5.04 or to one or more of its respective covenants contained in Article IV or Article VI;
provided
,
however
, that the mere
inclusion of an item in a Disclosure Schedule as an exception to a representation or warranty shall not be deemed an admission by a party that such item represents a material exception or fact, event or circumstance or that such item is reasonably
likely to have or result in a Material Adverse Effect on the party making the representation; and
provided
,
further
, that any disclosures made with respect to a section of this Article V shall be deemed to qualify (a) any other
section of this Article V specifically referenced or cross-referenced and (b) any other sections of this Article V to the extent it is reasonably apparent and obvious from a reading of the disclosure that such disclosure applies to such other
sections (notwithstanding the absence of a specific cross reference).
5.02
Standard
.
No party hereto shall be deemed
to have breached a representation or warranty as a consequence of the existence of any fact, event or circumstance unless such fact, circumstance or event, individually or taken together with all other facts, events or circumstances inconsistent
with any representation or warranty contained in Section 5.03 or 5.04, has had or is reasonably likely to have, a Material Adverse Effect without giving effect to any qualification as to materiality or Material Adverse Effect set forth in such
representations and warranties.
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5.03
Representations and Warranties of ASB
.
Subject to Sections 5.01 and
5.02 and except as Previously Disclosed in a Section of its Disclosure Schedule corresponding to the relevant Section below, ASB hereby represents and warrants to Peoples that the following are true and correct:
(a)
Organization, Standing and Authority
.
(i) ASB is a corporation duly organized, validly existing and in good standing under the laws of the State of Ohio and is duly
qualified to do business and is in good standing in any foreign jurisdictions where its ownership or leasing of property or assets or the conduct of its business requires it to be so qualified. The foreign jurisdictions in which ASB conducts
business are set forth in Section 5.03(a)(i) of ASBs Disclosure Schedule. ASB is registered as a savings and loan holding company under HOLA with the FRB.
(ii) American Savings Bank is a federal stock savings bank duly organized and validly existing under the laws of the United
States, and has all the requisite power and is duly qualified to do business and is in good standing in any foreign jurisdictions where its ownership or leasing of property or assets or the conduct of its business requires it to be so qualified.
(iii) ASB Financial Services is a limited liability company duly organized, validly existing and in good standing under
the laws of the State of Ohio and is duly qualified to do business and is in good standing in any foreign jurisdiction where its ownership or leasing of property or assets or the conduct of its business requires it to be so qualified.
(b)
Capital Structure of ASB
.
(i) The authorized capital stock of ASB consists of 4,000,000 ASB Common Shares and 1,000,000 shares of preferred stock, with no par value
(
ASB Preferred Shares
). The ASB Common Shares and ASB Preferred Shares are collectively referred to herein as
ASB Shares
. As of the date hereof, there are: (A) 1,979,034 ASB Common Shares issued and outstanding,
including 110,683 shares held by ASB ESOP & 401(k) Plan; and (B) 264,392 Treasury Shares held by ASB. No ASB Preferred Shares are issued and outstanding or reserved for issuance. All of the issued and outstanding ASB Shares have been duly
authorized and validly issued and are fully paid, nonassessable and free of preemptive rights. Except as set forth in this subsection (i), and ASB does not have and is not bound by any outstanding or issued Rights with respect to any ASB Shares.
(ii) Neither ASB nor any of its Subsidiaries have any authorized, issued, or outstanding bonds, debentures, notes or other indebtedness
for which the holders thereof have the right to vote on any matters on which the shareholders have the right to vote. There are no registration rights, and there is no voting trust, proxy, rights agreement, poison pill anti-takeover plan
or other agreement or understanding to which ASB or any of its Subsidiaries is a party or by which any of them are bound or with respect to any equity security, membership interest or similar ownership interest of ASB or any of its Subsidiaries.
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(c)
Subsidiaries
.
(i)(A) The only Subsidiaries of ASB are American Savings Bank and ASB Financial Services and ACDC, (B) ASB owns all of the
issued and outstanding equity securities of American Savings Bank, (C) American Savings Bank owns all of the issued and outstanding membership interests of ASB Financial Services and ACDC, (D) no equity securities of any of ASBs
Subsidiaries are or may become required to be issued (other than to ASB) by reason of any Right or otherwise, (E) there are no contracts, commitments, understandings or arrangements by which any of ASBs Subsidiaries are or may be bound to
sell or otherwise transfer any equity securities of any of ASBs Subsidiaries (other than to ASB), (F) there are no contracts, commitments, understandings, or arrangements relating to ASBs rights to vote or to dispose of American
Savings Banks equity securities, (G) there are no contracts, commitments, understandings, or arrangements relating to American Savings Banks rights to vote or to dispose of the membership interests of ASB Financial Services or the
shares of ACDC, (H) all of the equity securities of American Savings Bank held by ASB are fully paid and nonassessable and are owned by ASB free and clear of any Liens, and (I) all of the membership interests of ASB Financial Services and
shares of ACDC are fully paid and nonassessable and are owned by American Savings Bank free and clear of any Liens.
(ii)
ASB and American Savings Bank do not own 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 (A) ASBs ownership of
American Savings Bank, (B) American Savings Banks ownership of ASB Financial Services, (C) American Savings Banks ownership of ACDC, and (D) ASBs ownership of a 24.5% membership interest in the Title Agency.
(iii) With respect to ASB Financial Services, ACDC, and the Title Agency, neither ASB nor American Savings Bank shall have any
remaining obligation, responsibility or liability, of any kind or nature, for any actions pertaining to, arising from or related to ASB Financial Services, ACDC, or the Title Agency upon consummation of the Subsidiary Divestitures.
(d)
Corporate Power
. Each of ASB and its Subsidiaries has full corporate power and authority to carry on its business as it is
now being conducted and to own all of its properties and assets. ASB has the corporate power and authority to execute, deliver and perform its obligations under this Agreement, subject to certain required approvals of ASBs shareholders (the
ASB Shareholder Adoption
) and applicable Regulatory Authorities, and American Savings Bank has the corporate power and authority to consummate the Subsidiary Merger in accordance with the terms of this Agreement, subject to
certain required approvals of applicable Regulatory Authorities.
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(e)
Corporate Authority; Authorized and Effective Agreement
. Subject to the ASB
Shareholder Adoption, this Agreement and the transactions contemplated hereby have been authorized by all necessary corporate action of ASB and the ASB Board prior to the Agreement Date. The Agreement to Merge, when executed by American Savings
Bank, shall have been approved by the board of directors of American Savings Bank and by ASB, as the sole shareholder of American Savings Bank. Assuming due authorization, execution and delivery by Peoples, this Agreement is a valid and legally
binding obligation of ASB, enforceable against ASB in accordance with its terms, except as enforcement may be limited by receivership, conservatorship and supervisory powers of Regulatory Authorities generally, as well as bankruptcy, insolvency,
reorganization, moratorium or other laws of general applicability relating to or affecting creditors rights, or the limiting effect of rules of law governing specific performance, equitable relief and other equitable remedies or the waiver of
rights or remedies.
(f)
Regulatory Approvals; No Defaults
.
(i) No consents or approvals of, or filings or registrations with, any Governmental Authority or with any third party are
required to be made or obtained by ASB or American Savings Bank in connection with the execution, delivery or performance by ASB of this Agreement or the consummation of the transactions contemplated hereby, including the Merger, except for
(A) those set forth in Section 5.03(f)(i) of ASBs Disclosure Schedule, (B) the filings of applications, notices and the Agreement to Merge, as applicable, with Regulatory Authorities to approve the transactions contemplated by
the Agreement; (C) the filing of the certificate of merger with the OSS pursuant to the OGCL; (D) the filing with the SEC and declaration of effectiveness of the Registration Statement; (E) the ASB Shareholder Adoption; and
(F) the receipt of the approvals set forth in Section 7.01(b).
(ii) As of the date hereof, ASB has no Knowledge
of any reason why the approvals set forth in Section 7.01(b) will not be received without the imposition of a condition, restriction or requirement of the type described in Section 7.01(b).
(iii) Subject to the consents and approvals noted in Section 5.03(f)(i) and the expiration of related regulatory waiting
periods, the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, including the Merger, do not and will not, except as set forth in Section 5.03(f)(iii) of ASBs Disclosure
Schedule, (A) result in a breach or violation of, or a default under, or give rise to any Lien, any acceleration of remedies or any right of termination under, any material law, rule or regulation or any judgment, decree, order, governmental
permit or license, or agreement, indenture or instrument of ASB or any of its Subsidiaries or to which ASB or any of its Subsidiaries or any of their respective properties are subject or bound; (B) constitute a breach or violation of, or a
default under, the ASB Articles or the ASB Regulations; or (C) require any consent or approval under any law, rule, regulation, judgment, decree, order, governmental permit or license, agreement, indenture or instrument.
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(g)
Financial Statements; Material Adverse Effect; Internal Controls
.
(i) ASB has delivered or will deliver to Peoples (A) audited consolidated financial statements for each of the fiscal
years ended June 30, 2017, 2016 and 2015, respectively, consisting of consolidated balance sheets and the related consolidated statements of income and shareholders equity and cash flows for the fiscal years ended on such dates, including
the footnotes thereto and the reports prepared with respect thereto by BKD LLP, ASBs independent registered public accounting firm; (B) unaudited consolidated financial statements for the interim period ended September 30, 2017 and
each subsequent quarter thereafter, consisting of balance sheets and the related statements of income; and
(C) unaudited monthly financial statements for each subsequent month thereafter, consisting of balance sheets and the related
statements of income (collectively,
ASBs Financial Statements
). ASBs Financial Statements, as of the dates thereof and for the periods covered thereby, have been prepared in conformity with GAAP, consistently applied
throughout the periods indicated, and fairly present the financial position of ASB as of the dates thereof and the results of operations and cash flows for the periods indicated, subject in the case of the interim financial statements to normal
year-end
adjustments and the absence of notes thereto. Except as set forth in ASBs Financial Statements, ASB and its Subsidiaries have no material liabilities or obligations as of the date of such Financial
Statements.
(ii) Since June 30, 2017, except as set forth in Section 5.03(g)(ii) of ASBs Disclosure
Schedule, (A) ASB and its Subsidiaries have conducted their respective businesses in the ordinary and usual course consistent with past practice in all material respects and (B) no event has occurred or circumstance arisen that,
individually or taken together with all other facts, circumstances and events is reasonably likely to have a Material Adverse Effect.
(iii) Management of ASB has established and maintains a system of internal accounting controls sufficient to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP, including policies and procedures that (A) pertain to the maintenance of records that in
reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of ASB and its Subsidiaries in all material respects; (B) provide reasonable assurance that transactions are recorded as necessary to facilitate
preparation of financial statements in conformity with GAAP, and that receipts and expenditures of ASB and its Subsidiaries are being made only in accordance with authorizations of management and directors of ASB and its Subsidiaries; and
(C) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the assets of ASB and its Subsidiaries that could have a material effect on their financial statements. Management of
ASB has evaluated the effectiveness of ASBs and its Subsidiaries internal controls over financial reporting as of the end of the periods covered by ASBs Financial Statements and, based on such evaluations, has Previously Disclosed
to Peoples (Y) all significant deficiencies and material weaknesses in the design or operation of the internal controls over financial reporting which are reasonably likely to adversely affect ASBs ability to record, process,
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summarize and report financial information and (Z) to ASBs Knowledge, any fraud, whether or not material, that involves management or other employees of ASB or its Subsidiaries. ASB
has provided to Peoples access to all documentation related to ASBs internal control over financial reporting. Since June 30, 2015, to ASBs Knowledge, except as set forth in Section 5.03(g)(iii) of ASBs Disclosure
Schedule, there has been no complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of ASB or any of its Subsidiaries or their respective internal
accounting controls, including any complaint, allegation, assertion or claim that ASB or any of its Subsidiaries has engaged in questionable accounting or auditing practices.
(h)
Litigation
. Except as set forth in Section 5.03(h) of ASBs Disclosure Schedule, there is no suit, action or claim
pending, or, to ASBs Knowledge, proceeding, review or investigation pending, and, to ASBs Knowledge, there is no suit, action, claim, proceeding, review or investigation threatened against ASB or any of its Subsidiaries or any of the
current or former directors or executive officers of ASB or any of its Subsidiaries based upon their service with ASB or its Subsidiaries (i) that involves a Governmental Authority (other than any bank regulatory authority), or (ii) that,
individually or in the aggregate, is (A) material to ASB and its Subsidiaries, taken as a whole, or is reasonably likely to result in a material restriction on its or American Savings Banks businesses or, after the Effective Time, the
business of Peoples or any of its Affiliates, or (B) reasonably likely to prevent or delay it from performing its obligations under, or consummating the transactions contemplated by, this Agreement. There is no injunction, order, award,
judgment, settlement or decree imposed upon or entered into by ASB with any third party or Governmental Authority (other than any bank regulatory authority), any of its Subsidiaries or the assets of ASB or any of its Subsidiaries (or that, upon
consummation of the Merger, would apply to Peoples or any of its Affiliates) that is or could reasonably be expected to have a Material Adverse Effect.
(i)
Regulatory Matters
.
(i) Neither ASB nor any of its Subsidiaries nor any of their respective properties is a party to or is subject to any order,
decree, formal or informal agreement, memorandum of understanding or similar arrangement with, or a commitment letter, board resolution or similar submission to, or extraordinary supervisory letter (any of the foregoing, a
Regulatory
Order
) from any federal or state governmental 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 OCC, the FDIC and the FRB) or the supervision or regulation of it or any of its Subsidiaries (collectively, the
Regulatory Autho
rities); provided, however, that Regulatory Order shall not be
deemed to include any of the foregoing that is subject to confidentiality restrictions of any Regulatory Authority prohibiting its disclosure to third parties under applicable law, rule or regulation.
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(ii) Neither ASB nor any of its Subsidiaries 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, decree, formal or informal agreement, memorandum of understanding, commitment letter,
board resolution, supervisory letter or similar submission, other than any of the foregoing that is subject to regulatory restrictions prohibiting its disclosure to third parties under applicable law, rule or regulation.
(j)
Compliance with Laws
. ASB and each of its Subsidiaries have all licenses, franchises, permits and authorizations which are
necessary for the lawful conduct of their respective businesses and ownership of their respective properties, rights and assets under and pursuant to applicable law, except where the failure to hold such license, franchise, permit or authorization
or to pay such fees or assessments has not had and would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect on ASB. To the Knowledge of ASB, there is no basis to expect any suspension or cancellation of
any such necessary license, franchise, permit or authorization. ASB and each of its Subsidiaries have complied in all material respects with, and are not in default or violation in any material respect of, any applicable law relating to ASB or any
of its Subsidiaries.
(k)
Material Contracts; Defaults
.
(i) Except as set forth in Section 5.03(k) of ASBs Disclosure Schedule, neither ASB nor any of its Subsidiaries is a
party to or is bound by any contract or agreement (whether written or verbal) of the following types as of the Agreement Date, and no such contract or agreement is presently being negotiated or discussed:
(A) any contract involving commitments to others to make capital expenditures or purchases or sales in excess of $25,000 in any
one case or $50,000 in the aggregate during any period of 12 consecutive months;
(B) any contract relating to any direct
or indirect indebtedness of ASB or any of its Subsidiaries for borrowed money (including loan agreements, lease purchase arrangements, guarantees, agreements to purchase goods or services or to supply funds or other undertakings relating to the
extension of credit), or any conditional sales contracts, equipment lease agreements and other security arrangements with respect to personal property with an obligation in excess of $10,000 in any one case or $50,000 in the aggregate during any
period of 12 consecutive months, other than outstanding advances from the Federal Home Loan Bank of Cincinnati;
(C)
any employment, severance, consulting or management services contract or any confidentiality or nondisclosure contract with any director, officer, employee or consultant of ASB or its Subsidiaries;
(D) any contract containing covenants limiting the freedom of ASB or any of its Subsidiaries to compete in any line of business
or with any Person or in any area or territory;
(E) any partnership, joint venture, limited liability company arrangement
or other similar agreement;
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(F) any profit sharing, phantom stock award, stock option, stock purchase, stock
appreciation, deferred compensation, issuance, or other plan or arrangement for the benefit of ASBs or its Subsidiaries current or former directors, officers, employees or consultants;
(G) any license agreement, either as licensor or licensee, or any other contract of any type relating to any intellectual
property, except for license agreements relating to
off-the-shelf
software or software components pursuant to a
non-negotiable
standard form or shrink wrap license agreement and other than licenses in connection with American Savings Banks data processing service providers;
(H) any arrangement under which ASB or American Savings Bank has advanced or loaned any amount to any of their respective
directors, officers, employees, insiders or consultants, or any Associate or immediate family member of any of the foregoing (the terms insider and immediate family member have the meanings given to them under Regulation O
(12 C.F.R. Part 215) as promulgated by the FRB);
(I) any contract, whether exclusive or otherwise, with any sales agent,
representative, franchisee or distributor;
(J) other than this Agreement and any ancillary agreements being executed in
connection with this Agreement and the Subsidiary Divestitures, any contract providing for the acquisition or disposition of any portion of the assets, properties or securities of ASB or its Subsidiaries, excluding contracts or agreements regarding
sales of loans or securities in the ordinary course of business;
(K) any contract that requires the payment of royalties;
(L) any contract pursuant to which ASB or its Subsidiaries has any obligation to share revenues or profits derived from
ASB or its Subsidiaries with any other Person other than the ASB Compensation and Benefits Plans;
(M) any contract between
(i) ASB or its Subsidiaries, on the one hand, and any officer, director, employee or consultant of ASB or its Subsidiaries, on the other hand; and (ii) ASB or its Subsidiaries, on the one hand, and any Associate or other Affiliate of any
director, officer, employee or consultant of ASB or its Subsidiaries, on the other hand; and
(N) any other legally binding
contract not of the type covered by any of the other items of this Section 5.03(k) involving money or property and having an obligation in excess of $25,000 in the aggregate during any period of 12 consecutive months other than in the ordinary
course of business.
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(ii)
Material Contracts
shall mean those contracts set forth
on ASBs Disclosure Schedule Section 5.03(k) and the Related Party Agreements. True, complete and correct copies of all of the Material Contracts have been made available to Peoples. All of the Material Contracts are in full force and
effect and are legal, valid, binding and enforceable in accordance with their terms (A) as to ASB or its Subsidiary, as the case may be, and (B) to the Knowledge of ASB, as to the other parties to such Material Contracts. Except as
disclosed in Section 5.03(k)(ii) of ASBs Disclosure Schedule, ASB or its Subsidiary, as applicable, and to the Knowledge of ASB, each other party to the Material Contracts, has performed and is performing all material obligations,
conditions and covenants required to be performed by it under the Material Contracts. Neither ASB nor its Subsidiaries, and to the Knowledge of ASB, no other party, is in violation, breach or default of any material obligation, condition or covenant
under any of the Material Contracts, and neither ASB nor its Subsidiaries, and to the Knowledge of ASB, no other party, has received any notice that any of the Material Contracts will be terminated or will not be renewed (if renewable per its
terms). Neither ASB nor its Subsidiaries has received from or given to any other Person any notice of default or other violation under any of the Material Contracts, nor, to the Knowledge of ASB, does any condition exist or has any event occurred
which with notice or lapse of time or both would constitute a default under any of the Material Contracts.
(l)
Brokerage and
Finders Fees
. Except for Boenning & Scattergood, Inc., neither ASB nor its Subsidiaries has engaged or employed any broker, finder, or agent, or agreed to pay or incurred any brokerage fee, finders fee, commission or
other similar form of compensation (including any
break-up
or termination fee) in connection with this Agreement or the transactions contemplated hereby.
(m)
Employee Benefit Plans
.
(i) Section 5.03(m)(i) of ASBs Disclosure Schedule contains a complete and accurate list of all bonus, incentive,
deferred compensation, pension, retirement, profit-sharing, thrift, savings, employee stock ownership, stock bonus, stock purchase, restricted stock, stock option, severance, welfare and fringe benefit plans, employment, retention, change in
control, severance agreements, and all similar practices, policies and arrangements, whether written or unwritten, that are currently effective or were in effect at any time in the previous three years, in which any employee or former employee (the
Employees
), consultant or former consultant (the
Consultants
) or director or former director (the
Directors
) of ASB or its Subsidiaries or any ERISA Affiliate participates, sponsors or
contributes, or to which any such Employees, Consultants or Directors are a party or under which ASB or its Subsidiaries or any ERISA Affiliate has any present or future liability (the
Compensation and Benefit Plans
). Neither ASB
nor its Subsidiaries nor any ERISA Affiliate has any commitment to create any additional Compensation and Benefit Plan or to modify or change any existing Compensation and Benefit Plan. Other than the ASB ESOP & 401(k) Plan, no Compensation
and Benefit Plan holds any ASB Common Shares.
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(ii) To ASBs Knowledge, 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, the Exchange Act, the Age Discrimination in Employment Act, and 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 either received a favorable determination letter from the Internal Revenue Service (
IRS
), and to ASBs Knowledge, no circumstances exist which are likely to result in revocation of any such favorable determination letter
or (B) has been adopted on a prototype plan which has received a current opinion letter from the national office of the IRS. There is no pending or, to the ASBs Knowledge, threatened legal action, suit or claim relating to any of the
Compensation and Benefit Plans. To the Knowledge of ASB, neither ASB nor its Subsidiaries nor any ERISA Affiliate has engaged in any transaction, or omitted to take any action, with respect to any Compensation and Benefit Plan that would reasonably
be expected to subject ASB or its Subsidiaries or any ERISA Affiliate to a tax or penalty imposed by either Section 4975 of the Code or Section 502 of ERISA. To ASBs Knowledge, no event has occurred or circumstance exists, other than
changes in applicable law or regulation that could result in a material increase in premium cost of a Compensation and Benefit Plan that is insured, or a material increase in benefit cost of a Compensation and Benefit Plan that is self-insured,
except as set forth in Section 5.03(m)(ii) of ASBs Disclosure Schedule.
(iii) None of the Compensation and
Benefit Plans is subject to Title IV of ERISA. No liability under Title IV of ERISA has been or is expected to be incurred by ASB or any of its Subsidiaries with respect to any terminated single-employer plan (within the
meaning of Section 4001(a)(15) of ERISA) formerly maintained by any of them, or any single-employer plan of any entity (an
ERISA Affiliate
) which is considered one employer with ASB under Section 4001(a)(14) of ERISA or
Section 414(b) or (c) of the Code (an
ERISA Affiliate Plan
). None of ASB, any of its Subsidiaries or any ERISA Affiliate has contributed, or has been obligated to contribute, to either a defined benefit pension plan
subject to Title IV of ERISA or to a multiemployer plan under Subtitle E of Title IV of ERISA at any time. To ASBs Knowledge, no notice of a reportable event (within the meaning of Section 4043 of ERISA) has been required to
be filed for any Compensation and Benefit Plan or by any ERISA Affiliate Plan. To the Knowledge of ASB, there is no pending investigation or enforcement action by the U.S. Department of Labor or the IRS or any other Governmental Authority with
respect to any Compensation and Benefit Plan.
(iv) All contributions required to be made under the terms of any
Compensation and Benefit Plan or ERISA Affiliate Plan or any employee benefit arrangements under any collective bargaining agreement to which ASB or any of its Subsidiaries was or is a party have been timely made or have been reflected on ASBs
Financial Statements.
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(v) Except as set forth in Section 5.03(m)(v) of ASBs Disclosure
Schedule, (A) neither ASB nor its Subsidiaries has any obligation to provide retiree health and life insurance or other retiree death benefits under any Compensation and Benefit Plan, other than benefits mandated by Section 4980B of the
Code, (B) each such Compensation and Benefit Plan may be amended or terminated without incurring liability thereunder, and (C) there has been no communication to Employees by ASB or its Subsidiaries that would reasonably be expected to
promise or guarantee such Employees retiree health or life insurance or other retiree death benefits on a permanent basis.
(vi) ASB and its Subsidiaries do not maintain any Compensation and Benefit Plans covering leased or foreign (
i.e.
,
non-United
States) Employees, independent contractors or
non-employees.
(vii) With respect to each Compensation and Benefit Plan, if applicable, ASB has provided or made available to Peoples, true
and complete copies of: (A) Compensation and Benefit Plan documents and amendments thereto, including a written description of any Compensation and Benefit Plan or any other employee benefit obligation that is not otherwise in writing, and all
board actions approving the same; (B) trust instruments and insurance contracts, including renewal notices; (C) the three most recent Forms 5500 filed with the IRS (including all schedules thereto and the opinions of independent
accountants); (D) the most recent actuarial report and financial statement; (E) the most recent summary plan description or wrap document and summaries of material modifications; (F) notices or forms filed with the PBGC (other than
for premium payments); (G) the most recent determination letter issued by the IRS; (H) any Form 5310 or Form 5330 filed with the IRS; (I) the most recent nondiscrimination tests performed under ERISA and the Code, including
401(k) and 401(m) tests; and (J) all contracts with third party administrators, actuaries, investment managers, compensation consultants and other independent contractors that relate to a Compensation and Benefit Plan.
(viii) Except as set forth in Section 5.03(m)(viii) of ASBs 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 (A) entitle any
Employee, Consultant or Director to any payment (including severance pay or similar compensation) or any increase in compensation, (B) result in the vesting or acceleration of any benefits under any Compensation and Benefit Plan or
(C) result in any material increase in benefits payable under any Compensation and Benefit Plan.
(ix) Neither ASB nor
its Subsidiaries maintains any compensation plans, programs or arrangements the payments under which would not reasonably be expected to be deductible as a result of the limitations under Section 162(m) of the Code and the Treasury regulations
promulgated thereunder.
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(x) As a result, directly or indirectly, of the transactions contemplated by this
Agreement (including, without limitation, as a result of any termination of employment prior to or following the Effective Time), none of Peoples, ASB, the Surviving Corporation, or any of their respective Subsidiaries will be obligated to make a
payment that would be characterized as an excess parachute payment to an individual who is a disqualified individual (as such terms are defined in Section 280G of the Code and applicable regulations thereunder) of ASB on
a consolidated basis or which would violate 12 U.S.C. Section 1828(k) or regulations thereunder.
(n)
Labor Matters
.
Neither ASB nor any of its Subsidiaries is a party to or is bound by any collective bargaining agreement, contract or other agreement or understanding with a labor union or labor organization, nor is ASB or any of its Subsidiaries the subject of a
proceeding asserting that it or any such Subsidiary has committed an unfair labor practice (within the meaning of the National Labor Relations Act) or seeking to compel ASB or any of its Subsidiaries to bargain with any labor organization as to
wages or conditions of employment, nor is there any strike or other labor dispute involving ASB or any of its Subsidiaries pending or, to ASBs Knowledge, threatened, nor does ASB have Knowledge of any activity involving its or any of its
Subsidiaries employees seeking to certify a collective bargaining unit or engaging in other organizational activity. ASB and its Subsidiaries are in compliance with all applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours.
(o)
Takeover Laws
. ASB has taken all action required to be taken by ASB in
order to exempt this Agreement and the transactions contemplated hereby from, and this Agreement and the transactions contemplated hereby are exempt from, (i) the requirements of any moratorium, control share, fair
price, affiliate transaction, business combination or other antitakeover laws and regulations of the State of Ohio (
Takeover Laws
) and (ii) any applicable provisions of the ASB Articles, the ASB
Regulations or the governing documents of American Savings Bank.
(p)
Environmental Matters
. To ASBs Knowledge, neither
the conduct nor the operation of ASB or its Subsidiaries nor the condition of any property presently or previously owned, leased or operated by any of them (including, without limitation, in a fiduciary or agency capacity), or on which any of them
holds a Lien, violates or violated any Environmental Law, and to ASBs Knowledge, no condition exists or has existed or event has occurred with respect to any of them or any such property that is reasonably likely to result in liability under
any Environmental Law. Neither ASB nor its Subsidiaries has received any notice from any Person that ASB or any of its Subsidiaries or the operation or condition of any property owned, leased, operated, or held as collateral or in a fiduciary
capacity by any of them are or were in violation of or otherwise are alleged to have liability under any Environmental Law, including, but not limited to, responsibility or potential responsibility for the cleanup or other remediation of any
Hazardous Materials at, on, beneath, or originating from any such property.
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(q)
Tax Matters
.
Except as set forth in Section 5.03(q)(i) of ASBs Disclosure Schedule, (i)(A) All Tax Returns that were or are
required to be filed by or with respect to ASB and its Subsidiaries have been duly and timely filed, or an appropriate extension has been granted, and all such Tax Returns are true, correct and complete in all material respects; (B) all Taxes
due (whether or not required to be shown to be due on the Tax Returns referred to in Section 5.03(q)(i)(A)) have been paid in full; and (C) no unexpired waivers of statutes of limitation have been given by or requested with respect to any
Taxes of ASB or its Subsidiaries that remains in effect. ASB has made available to Peoples true and correct copies of the United States federal income Tax Returns filed by ASB and its Subsidiaries for each of the three most recent fiscal years.
Neither ASB nor its Subsidiaries has any liability with respect to any Taxes in excess of the amounts accrued with respect thereto that are reflected in ASBs Financial Statements or that have arisen in the ordinary and usual course of business
since September 30, 2017. The accruals and reserves for Taxes reflected in ASBs Financial Statements are adequate for the periods covered. There are no Liens for Taxes upon the assets of ASB or any of its Subsidiaries other than Liens for
current Taxes not yet due and payable.
(ii) Except as set forth in Section 5.03(q)(ii) of ASBs Disclosure
Schedule, ASB and its Subsidiaries have withheld or collected and paid over to the appropriate Governmental Authorities, or are properly holding for such payment, all material Taxes required by law to be withheld or collected.
(iii) No unresolved claim has been made since December 31, 2011, by any Governmental Authority in a jurisdiction where ASB
or its Subsidiaries do not file Tax Returns that ASB or its Subsidiary is or may be subject to taxation by that jurisdiction.
(iv) Neither ASB nor its Subsidiaries has applied for any ruling from any Governmental Authority with respect to Taxes nor
entered into a closing agreement (or similar arrangement) with any Governmental Authority since December 31, 2011.
(v) Neither ASB nor its Subsidiaries has been audited by any Governmental Authority for taxable years ending on or subsequent
to December 31, 2011. No audit or administrative or judicial proceedings of any Governmental Authority relating to Taxes are pending or being conducted with respect to ASB or its Subsidiaries and, to ASBs Knowledge, no such audit or other
proceeding has been threatened in writing. To ASBs Knowledge, no Governmental Authority has asserted or has threatened in writing to assert against ASB or its Subsidiaries any deficiency or claim for additional Taxes.
(vi) Neither ASB nor its Subsidiaries (A) is a party to any Tax allocation or sharing agreement other than any such
agreement exclusively between or among ASB and its Subsidiaries, copies of which have been made available to Peoples, (B) has ever been a member of an affiliated group of corporations (within the meaning of Section 1504 of the Code) other
than an affiliated group of which ASB is or was the common parent corporation (the
ASB Group
), or (C) has any liability for the Taxes of any person (other than members of the ASB Group) as a transferee or successor, by
contract, or otherwise.
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(vii) Except as set forth in Section 5.03(q)(vii) of ASBs Disclosure
Schedule, neither ASB nor its Subsidiaries has agreed to any extension of time to file any Tax Return, which Tax Return has not been filed.
(viii) Neither ASB nor its Subsidiaries will be required to include any material item of income in, or to exclude any material
item of deduction from, taxable income in any taxable period (or portion thereof) ending after the Closing Date as a result of any adjustment under Section 481(a) of the Code by reason of a change in accounting method or otherwise.
(ix) Except as set forth in Section 5.03(q)(ix) of ASBs Disclosure Schedule, there are no joint ventures,
partnerships, limited liability companies, or other arrangements or contracts to which ASB or any of its Subsidiaries is a party that are treated as a partnership for Tax purposes.
(x) Neither ASB nor its Subsidiaries 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.
(xi) None of the assets of ASB or its Subsidiaries are tax exempt use property or tax exempt bond financed
property within the meaning of Section 168 of the Code and neither ASB nor its Subsidiaries are a party to a long-term contract within the meaning of Section 460 of the Code.
(r)
Risk Management Instruments
. Except as set forth in Section 5.03(r) of ASBs Disclosure Schedule, neither ASB nor
its Subsidiaries is a party to or otherwise bound by any interest rate swaps, caps, floors, option agreements, futures or forward contracts or other similar risk management arrangements.
(s)
Books and Records
. Except for minutes and actions related to the process leading up to this Agreement and the transactions
contemplated hereby, or related to meetings held in the month prior to the date of this Agreement, which have not yet been prepared, approved, executed and/or placed in ASBs minute books, the books of account, minute books, stock record books,
and other records of ASB and its Subsidiaries, all of which have been made available to Peoples, are complete and correct in all material respects and have been maintained in accordance with sound business practices and accurately and fairly reflect
the transactions and dispositions of the assets of ASB and its Subsidiaries. The minute books of ASB and its Subsidiaries contain materially accurate and complete records of all meetings held of, and corporate action taken by, the shareholders of
ASB, the ASB Board and the board of directors of American Savings Bank, and the committees of the ASB Board and the board of directors of American Savings Bank, and no meeting of any such shareholders, ASB Board and board of directors of American
Savings Bank, or committee thereof has been held for which minutes have been prepared and are not contained in such minute books.
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(t)
Insurance
. Section 5.03(t) of ASBs Disclosure Schedule sets forth
all of the insurance policies, binders, or bonds maintained by ASB or its Subsidiaries. ASB and its Subsidiaries are insured with reputable insurers against such risks and in such amounts as is prudent in accordance with safe and sound industry
practices. (i) All such insurance policies are in full force and effect, (ii) ASB and its Subsidiaries are not in default thereunder, and (iii) all claims thereunder have been filed in due and timely fashion.
(u)
Title to Real Property and Assets
.
(i) Section 5.03(u)(i) of ASBs Disclosure Schedule lists and describes all real property, and any leasehold interest in
real property, owned or held by ASB or its Subsidiaries. ASB and its Subsidiaries have good and marketable title, free and clear of all Liens, to all of the properties and assets, real and personal, reflected on ASBs Financial Statements as
being owned by ASB as of June 30, 2017 or acquired after such date, except (A) statutory Liens for amounts not yet due and payable, (B) pledges to secure deposits, pledges to secure Federal Home Loan Bank borrowings and other Liens
incurred in the ordinary course of banking business, (C) with respect to real property, such imperfections of title, easements, encumbrances, Liens, charges, defaults or equitable interests, if any, as do not affect the use of properties or
assets subject thereto or affected thereby or otherwise materially impair business operations at such properties, and (iv) dispositions and encumbrances in the ordinary course of business.
(ii) (A) Each lease agreement set forth in Section 5.03(u)(ii)(A) of ASBs Disclosure Schedule is valid, legally
binding, in full force and effect, and enforceable in accordance with its terms. Other than as Previously Disclosed, there is not under any such lease agreements any default by ASB or its Subsidiaries, or to ASBs Knowledge, to the other party
under any such lease agreement which with notice or lapse of time, or both, would constitute a default. (B) Except as set forth in Section 5.03 (u)(ii)(B) of ASBs Disclosure Schedule, (1) the consummation of the transactions
contemplated hereby will not result in a breach or default under any such lease agreement, and (2) neither ASB nor its Subsidiaries has received written notice that the landlord or tenants under such lease agreements, as applicable, would
refuse to renew such lease agreement upon expiration of the period thereof upon substantially the same terms, except for rent increases consistent with past experience or market rentals.
(iii) All leases pursuant to which ASB or its Subsidiaries, as lessee, leases personal property (except for leases that have
expired by their terms or that ASB or its Subsidiaries has agreed to terminate since the date hereof) are valid without default thereunder by the lessee or, to ASBs Knowledge, the lessor.
A-36
(v)
Loans; Certain Transactions
. As of the date hereof:
(i) All loans owned by American Savings Bank, or in which American Savings Bank has an interest, have been made or acquired in
accordance with currently effective policies and procedures approved by the board of directors of American Savings Bank and comply in all material respects with all laws, including, but not limited to, applicable usury statutes, underwriting and
recordkeeping requirements and the Truth in Lending Act, the Equal Credit Opportunity Act, the Real Estate Settlement Procedures Act, and other applicable consumer protection statutes and the regulations promulgated thereunder;
(ii) All loans owned by American Savings Bank, or in which American Savings Bank has an interest, have been made in good faith;
are evidenced by notes, agreements or other evidences of indebtedness which are true, genuine and what they purport to be; and are the legal, valid and binding obligation of the obligor named therein, enforceable in accordance with its terms.
American Savings Bank holds mortgages contained in its loan portfolio for its own benefit to the extent of its interest shown therein; such mortgages evidence liens having the priority indicated by the terms of such mortgages, including the
associated loan documents, and, to the Knowledge of ASB, were subject, as of the date of recordation or filing of applicable security instruments, only to such exceptions as are discussed in the title insurance policies in the mortgage files
relating to the loans secured by real property or are not material as to the collectability of such loans; and all loans owned by American Savings Bank are with full recourse to the borrowers subject to limitations imposed by applicable laws, and
neither ASB nor American Savings Bank have taken action which would result in a waiver or negation of any rights or remedies available against the borrower or guarantor, if any, on any loan. All applicable remedies available pursuant to the
applicable loan documents against all borrowers and guarantors are enforceable except as may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting creditors rights and except as may be limited by the exercise of
judicial discretion. All loans purchased or originated by American Savings Bank and subsequently sold by American Savings Bank have been sold without recourse to ASB and without any liability under any yield maintenance or similar obligation. True,
correct and complete copies of loan delinquency reports as of June 30, 2017 prepared by American Savings Bank, which reports include all loans delinquent or otherwise in default, have been furnished to Peoples. True, correct and complete copies
of the currently effective lending policies and practices of American Savings Bank also have been furnished to Peoples.
(iii) Each outstanding loan participation sold by American Savings Bank was sold with the risk of
non-payment
of all or any portion of that underlying loan to be shared by each participant (including ASB) proportionately to the share of such loan represented by such participation without any recourse of such
other lender or participant to ASB for payment or repurchase of the amount of such loan represented by the participation or liability under any yield maintenance or similar obligation. American Savings Bank has properly fulfilled in all material
respects its contractual responsibilities and duties in any loan in which it acts as the lead lender or servicer and has complied in all material respects with its duties as required under applicable regulatory requirements.
A-37
(iv) American Savings Bank has properly perfected or caused to be properly
perfected all security interests, liens, or other interests in any collateral securing any loans made by it, if applicable.
(v) Section 5.03(v)(v) of ASBs Disclosure Schedule sets forth a list of all loans or other extensions of credit to
all directors, officers and employees, or any other Person covered by Regulation O of the FRB and have been made in compliance therewith.
(w)
Allowance for Loan Losses
. Except as set forth in Section 5.03(w) of ASBs Disclosure Schedule
Section 5.03(w), there is no loan which was made by American Savings Bank and which is reflected as an asset of ASB or American Savings Bank on ASBs Financial Statements that (i) is 90 days or more delinquent, (ii) has been
classified by examiners (regulatory or internal) or by management of American Savings Bank as substandard, doubtful, loss or special mention, or (iii) has been identified by accountants or
auditors (regulatory or internal) as having a significant risk of uncollectability. The allowance for loan losses reflected on ASBs Financial Statements was, as of each respective date, determined in accordance with GAAP and in accordance with
all rules and regulations applicable to ASB and American Savings Bank and was, as of the respective date thereof, adequate in all material respects under the requirements of GAAP and applicable regulatory requirements and guidelines to provide for
reasonably anticipated losses on outstanding loans, net of recoveries as determined by the management of American Savings Bank. Neither ASB nor American Savings Bank has been notified by the OCC, or ASBs independent auditor, in writing or
otherwise, that such reserves are inadequate or that the practices and policies of American Savings Bank in establishing its reserves for the periods reflected in ASBs Financial Statements, and in accounting for delinquent and classified
assets, generally fail to comply with applicable accounting or regulatory requirements, or that the OCC or ASBs independent auditor believes such reserves to be inadequate or inconsistent with the historical loss experience of American Savings
Bank.
(x)
Repurchase Agreements
. Except as set forth in Section 5.03(x) of ASBs Disclosure Schedule, with respect
to all agreements pursuant to which ASB or American Savings Bank has purchased securities subject to an agreement to resell, if any, ASB or American Savings Bank, as the case may be, has a valid, perfected first Lien on or evidence of ownership in
book entry form of the government securities or other collateral securing the repurchase agreement, and the value of such collateral equals or exceeds the amount of the debt secured thereby.
(y)
Investment Portfolio
. All investment securities held by ASB or its Subsidiaries, as reflected in ASBs Financial
Statements, are carried in accordance with GAAP and in a manner materially consistent with the applicable guidelines issued by the Regulatory Authorities. Except as set forth in Section 5.03(y) of ASBs Disclosure Schedule
Section 5.03(y), ASB or its Subsidiaries, as applicable, have good, valid and marketable title to all securities held by them, respectively, except securities held in any fiduciary or agency capacity, free and clear of any Lien, except as set
forth in ASBs Financial Statements and except to the extent any such securities are pledged in the ordinary course of business consistent with prudent banking practices to secure obligations of ASB or its Subsidiaries.
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(z)
Deposit Insurance
. The deposit accounts of American Savings Bank are insured by
the FDIC to the fullest extent permitted by and in accordance with the FDIA, and American Savings Bank has timely paid all assessments and filed all reports required by the FDIA. All interest has been properly accrued on the deposit accounts of
American Savings Bank, and American Savings Banks records accurately reflect such accrual of interest. Except as Previously Disclosed, the deposit accounts of American Savings Bank have been originated and administered in accordance with the
terms of their respective governing documents in all material respects. Neither ASB nor American Savings Bank has received written notice of any loss or potential loss of any material business or customers related to the deposit accounts of American
Savings Bank, other than ordinary course runoff upon the maturity of certificates of deposit.
(aa)
Bank Secrecy Act, Anti-Money
Laundering, OFAC and Customer Information
. To ASBs Knowledge, it is not, and has no reason to believe that any facts or circumstances exist which would cause ASB or its Subsidiaries to be deemed to be, (i) operating in violation of the
Bank Secrecy Act, the Patriot Act, any order issued with respect to anti-money laundering by the Treasurys Office of Foreign Assets Control, or any other applicable anti-money laundering law or (ii) not in compliance in any material
respect with the applicable privacy and customer information requirements contained in any federal and state privacy laws, including without limitation, in Title V of the Gramm-Leach-Bliley Act. Except as set forth in Section 5.03(aa) of
ASBs Disclosure Schedule, ASB has no Knowledge of any facts or circumstances that would cause ASB to believe that any
non-public
customer information has been disclosed to or accessed by an unauthorized
third party in a manner that would cause ASB or its Subsidiaries to undertake any material remedial action. The ASB Board or, where appropriate, the board of directors of American Savings Bank, has adopted and implemented an anti-money laundering
program that meets the requirements of the Patriot Act and the regulations thereunder, and ASB and its Subsidiaries have complied in all material respects with any requirements to file reports and other necessary documents as required by the Patriot
Act and the regulations promulgated thereunder.
(bb)
CRA Compliance
. To ASBs Knowledge, it is not, and has no reason
to believe that any facts or circumstances exist which would cause ASB or its Subsidiaries to be deemed to be, operating in violation of the applicable provisions of the Community Reinvestment Act (
CRA
) and the regulations
promulgated thereunder, and American Savings Bank has received a CRA rating of satisfactory or better as a result of its most recent CRA examination. Neither ASB nor American Savings Bank has Knowledge of any fact or circumstance or set
of facts or circumstances which could cause ASB or American Savings Bank to receive notice of
non-compliance
with such provisions or cause the CRA rating of American Savings Bank to fall below
satisfactory.
(cc)
Related Party Transactions
. Except for the loans set forth in Section 5.03(cc) of
ASBs Disclosure Schedule, neither ASB nor its Subsidiaries has entered into any transactions with any Affiliate of ASB or its Subsidiaries or any Affiliate of any director or officer of ASB or its Subsidiaries (the
Related
Parties
). None of the Related Parties (i) owns, directly or indirectly, any interest in (except not more than 5% stock holdings for investment
A-39
purposes in securities of publicly held and traded companies), or is an officer, director, employee or consultant of, any Person which is, or is engaged in business as, a competitor, lessor,
lessee, customer, distributor, sales agent, or supplier of ASB or its Subsidiaries; (ii) owns, directly or indirectly, in whole or in part, any tangible or intangible property that ASB or its Subsidiaries uses or the use of which is necessary
for conduct of their respective business; (iii) has brought any action against ASB or its Subsidiaries; or (iv) on behalf of ASB or its Subsidiaries, has made any payment or commitment to pay any commission, fee or other amount to, or
purchase or obtain or otherwise contract to purchase or obtain any goods or services from, any other Person of which any officer or director of ASB or its Subsidiaries is a partner or stockholder (except stock holdings solely for investment purposes
in securities of publicly held and traded companies). Section 5.03(cc) of ASBs Disclosure Schedule contains a complete list of all contracts between ASB, its Subsidiaries and any Related Party (the
Related Party
Agreements
) entered into on or prior to the Agreement Date or contemplated under this Agreement to be entered into before Closing (other than those contracts entered into after the Agreement Date for which Peoples has given its prior
written consent) but excluding contracts regarding and loans disclosed in Section 5.03(v)(v) of ASBs Disclosure Schedule. American Savings Bank is not party to any transaction with any Related Party on other than arms-length terms.
(dd)
Prohibited Payments
. ASB and its Subsidiaries have not, directly or indirectly: (i) made or agreed to make any
contribution, payment or gift to any government official, employee or agent where either the contribution, payment or gift or the purpose thereof was illegal under the laws of any federal, state, local or foreign jurisdiction; (ii) established
or maintained any unrecorded fund or asset for any purpose or made any false entries on the books and records of ASB or its Subsidiaries for any reason; (iii) (A) made or agreed to make any contribution, or reimbursed any political gift or
contribution made by any other Person, to any candidate for federal, state, local or foreign public office or (B) paid or delivered any fee, commission or other sum of money or item of property, however characterized, to any finder, agent,
government official or other party, in the United States or any other country, which in the case of (A) or (B) in any manner relates to the assets, business or operations of ASB or its Subsidiaries, which ASB or its Subsidiaries knows, or has
reason to believe, has been illegal under any federal, state or local laws of the United States or any other country having jurisdiction.
(ee)
Fairness Opinion
. The ASB Board has received the opinion of Boenning & Scattergood, Inc. to the effect that, as of
the Agreement Date, the Aggregate Consideration to be received by the holders of ASB Common Shares in the Merger is fair to the holders of ASB Common Shares from a financial point of view.
(ff)
Absence of Undisclosed Liabilities
. Neither ASB nor its Subsidiaries has any liability (whether accrued, absolute,
contingent or otherwise) that, either individually or when combined with all liabilities as to similar matters, would have a Material Adverse Effect on ASB and its Subsidiaries on a consolidated basis, except as disclosed in ASBs Financial
Statements.
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(gg)
Material Adverse Effect
. ASB and its Subsidiaries have not, on a consolidated
basis, suffered a change in its business, financial condition or results of operations since June 30, 2017, that has had or would reasonably be expected to have a Material Adverse Effect on ASB or American Savings Bank.
5.04
Representations and Warranties of Peoples
.
Subject to Section 5.01 and 5.02 and except as Previously Disclosed
in a Section of its Disclosure Schedule corresponding to the relevant Section below, Peoples hereby represents and warrants to ASB that the following are true and correct:
(a)
Organization, Standing and Authority
.
(i) Peoples is a corporation duly organized, validly existing and in good standing under the laws of the State of Ohio. Peoples
is duly qualified to do business and is in good standing in any foreign jurisdictions where its ownership or leasing of property or assets or the conduct of its business requires it to be so qualified. Peoples is registered as a financial holding
company under the BHCA.
(ii) Peoples Bank is an Ohio banking corporation duly organized, validly existing and in good
standing under the laws of the State of Ohio. Peoples Bank has all the requisite power and is duly qualified to do business and is in good standing in any foreign jurisdictions where its ownership or leasing of property or assets or the conduct of
its business requires it to be so qualified.
(b)
Capital Structure of Peoples
. As of September 30, 2017, the authorized
capital stock of Peoples consists of 24,000,000 Peoples Common Shares, of which 18,948,358 shares are outstanding and 50,000 shares of preferred stock, without par value, none of which are outstanding. The outstanding Peoples Common Shares have been
duly authorized, are validly issued and outstanding, fully paid and nonassessable, and were not issued in violation of any preemptive rights. As of the Agreement Date, Peoples has reserved the following number of Peoples Common Shares for issuance
(i) 456,806 for the Peoples Equity Plan, (ii) 482,938 for its dividend reinvestment plan, (iii) 63,951 for the Peoples Board Deferred Compensation Plan
,
and
(iv) 259,415 for the Peoples Employee Stock Purchase Plan. As of
September 30, 2017, 703,530 Peoples Common Shares were held in treasury by Peoples.
(c)
Subsidiaries
.
(i)(A) Section 5.04(c) of Peoples Disclosure Schedule contains a list of Peoples Subsidiaries;
(B) Peoples owns all of the issued and outstanding equity securities of its Subsidiaries; (C) no equity securities of its Subsidiaries are or may become required to be issued (other than to Peoples) by reason of any Right or otherwise;
(D) there are no contracts, commitments, understandings or arrangements by which any of Peoples Subsidiaries is or may be bound to sell or otherwise transfer any equity securities of such Subsidiaries (other than to Peoples); (E) there
are no contracts, commitments, understandings, or arrangements relating to Peoples rights to vote or to dispose of such securities; and (F) all of the equity securities of the Subsidiaries held by Peoples are owned by Peoples free and
clear of any Liens.
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(ii) Except as Previously Disclosed, Peoples does not own 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 its Subsidiaries.
(d)
Ownership of ASB Common Shares
. As of the Agreement Date, Peoples and its Subsidiaries do not beneficially own any of the
outstanding ASB Common Shares.
(e)
Corporate Power
. Each of Peoples and its Subsidiaries has full corporate power and
authority to carry on its business as it is now being conducted and to own all its properties and assets. Subject to the approval of this Agreement and the Merger by applicable Regulatory Authorities, Peoples has the corporate power and authority to
execute, deliver and perform its obligations under this Agreement and the Voting Agreement and to consummate the transactions contemplated hereby and thereby.
(f)
Corporate Authority; Authorized and Effective Agreement
. This Agreement and the transactions contemplated hereby, including
the Merger, have been authorized by all necessary corporate action of Peoples and the Peoples Board prior to the Agreement Date, and no further corporate action or approval by the shareholders of Peoples is required to approve this Agreement and the
transactions contemplated hereby. The Agreement to Merge, when executed by Peoples Bank, shall have been approved by the board of directors of Peoples Bank and by Peoples as the sole shareholder of Peoples Bank. This Agreement is a valid and legally
binding agreement of Peoples, enforceable against Peoples in accordance with its terms, except as enforcement may be limited by receivership, conservatorship and supervisory powers of bank regulatory agencies generally, as well as bankruptcy,
insolvency, reorganization, moratorium or other laws of general applicability relating to or affecting creditors rights, or the limiting effect of rules of law governing specific performance, equitable relief and other equitable remedies or
the waiver of rights or remedies.
(g)
SEC Reports
.
(i) Peoples has timely filed all reports, registration statements, proxy statements and other materials, together with any
amendments required to be made with respect thereto, that it was required to file with the SEC, and all such reports, registration statements, proxy statements, other materials and amendments have complied in all material respects with all legal
requirements relating thereto, and has paid all fees and assessments due and payable in connection therewith.
(ii) An
accurate and complete copy of each final registration statement, prospectus, report, schedule and definitive proxy statement filed with or furnished to the SEC by Peoples pursuant to the Securities Act or the Exchange Act prior to the date of this
Agreement (the
Peoples SEC Reports
) is publicly available. No such SEC Report, at the time filed, furnished or communicated (and, in the case of registration statements and proxy statements, on the dates of effectiveness and
the dates of the relevant meetings, respectively), and considering all amendments to any Peoples SEC Report filed prior to the date hereof, contained any untrue statement of a material fact or omitted to state any material fact required to be
stated therein or necessary in order to make the statements
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made therein, in light of the circumstances in which they were made, not misleading, except that information filed as of a later date (but before the date of this Agreement) shall be deemed to
modify information as of an earlier date. As of their respective dates, all Peoples SEC Reports complied as to form in all material respects with the published rules and regulations of the SEC with respect thereto.
(h)
Financial Statements; Material Adverse Effect; Internal Controls
.
(i) The financial statements of Peoples and its Subsidiaries included (or incorporated by reference) in Peoples SEC
filings (including the related notes, where applicable) (i) have been prepared from, and are in accordance with, the books and records of Peoples and its Subsidiaries, (ii) fairly present in all material respects the consolidated results
of operations, cash flows, changes in shareholders equity and consolidated financial position of Peoples and its Subsidiaries for the respective fiscal periods or as of the respective dates therein set forth (subject in the case of unaudited
statements to recurring
year-end
audit adjustments normal in nature and amount), (iii) complied as to form, as of their respective dates of filing with the SEC, in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC with respect thereto, and (iv) have been prepared in accordance with GAAP during the periods involved, except, in each case, as indicated in such statements or in
the notes thereto. As of the date hereof, the books and records of Peoples and its Subsidiaries have been maintained in all material respects in accordance with GAAP and any other applicable legal and accounting requirements and reflect only actual
transactions. As of the date hereof, Ernst & Young LLP has not resigned (or informed Peoples that it intends to resign) or been dismissed as independent public accountants of Peoples as a result of or in connection with any disagreements
with Peoples on a matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure.
(ii) Neither Peoples nor any of its Subsidiaries has incurred any material liability or obligation of any nature whatsoever,
except for (A) those liabilities that are reflected or reserved against on the consolidated balance sheet of Peoples included in its Annual Report on Form
10-K
for the fiscal year ended December 31,
2016 (including any notes thereto), (B) liabilities incurred in the ordinary course of business consistent in nature and amount with past practice since December 31, 2016 or (C) in connection with this Agreement and the transactions
contemplated hereby.
(iii) Since June 30, 2017, (A) Peoples and its Subsidiaries have conducted their respective
businesses in the ordinary course consistent with past practice, and (B) no event has occurred or circumstance arisen that, individually or taken together with all other facts, circumstances and events is reasonably likely to have a Material
Adverse Effect with respect to Peoples or any of its Subsidiaries.
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(iv) Peoples and each of its Subsidiaries maintains a system of disclosure
controls and procedures (as defined in Rules
13a-15(e)
and
15d-15(e)
promulgated under the Exchange Act) reasonably designed and maintained to ensure that all
information (both financial and
non-financial)
required to be disclosed by Peoples in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to Peoples management as appropriate to allow timely decisions regarding required disclosure and to make the certifications of the
Chief Executive Officer and Chief Financial Officer of Peoples required under the Exchange Act with respect to such reports. Peoples has disclosed, based on its most recent evaluation prior to the date of this Agreement, to Peoples outside
auditors and the audit committee of the Peoples Board (i) any significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting (as defined in Rule
13a-15(f)
of the Exchange Act) that would be reasonably likely to adversely affect Peoples ability to accurately record, process, summarize and report financial information, and (ii) any fraud,
whether or not material, that involves management or other employees who have a significant role in Peoples internal controls over financial reporting. Since December 31, 2016, neither Peoples, its Subsidiaries nor any director, officer,
employee, auditor, accountant or representative of Peoples or its Subsidiaries has received or otherwise had or obtained Knowledge of any material complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or
auditing practices, procedures, methodologies or methods of Peoples or its Subsidiaries or their respective internal accounting controls, including any material complaint, allegation, assertion or claim that Peoples or its Subsidiaries has engaged
in questionable accounting or auditing practices.
(i)
Agreements with Regulatory Authorities
. Neither Peoples nor Peoples
Bank is subject to any Regulatory Order that restricts the conduct of its business or that in any manner relates to its capital adequacy, its credit policies, its management or its business, nor has Peoples or Peoples Bank been advised in writing by
any Regulatory Authority that it is considering issuing or requesting any Regulatory Order.
(j)
Litigation
. Except as has
not had and would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect on Peoples, no litigation, claim or other proceeding before any court or governmental agency is pending against Peoples or Peoples
Bank, and, to Peoples Knowledge, no such litigation, claim or other proceeding has been threatened, and there is no judgment, decree, injunction, rule or order of any Governmental Authority outstanding against Peoples.
(k)
Compliance with Laws
. Peoples and each of its Subsidiaries have all licenses, franchises, permits and authorizations which
are necessary for the lawful conduct of their respective businesses and ownership of their respective properties, rights and assets under and pursuant to applicable law, except where the failure to hold such license, franchise, permit or
authorization or to pay such fees or assessments has not had and would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect on Peoples and, to the Knowledge of Peoples, no suspension or cancellation of any
such necessary license, franchise, permit or authorization has been threatened in writing. Peoples and each of its Subsidiaries have complied in all material respects with, and are not in default or violation in any material respect of, any
applicable law relating to Peoples or any of its Subsidiaries.
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(l)
Deposit Insurance
. The deposit accounts of Peoples Bank are insured by the FDIC
to the fullest extent permitted by and in accordance with the FDIA, and Peoples Bank has timely paid all assessments and filed all reports required by the FDIA. All interest has been properly accrued on the deposit accounts of Peoples Bank, and
Peoples Banks records accurately reflect such accrual of interest. Except as Previously Disclosed, the deposit accounts of Peoples Bank have been originated and administered in accordance with the terms of the respective governing documents.
Neither Peoples nor Peoples Bank has received written notice of any loss or potential loss of any material business or customers related to the deposit accounts of Peoples Bank.
(m)
Absence of Undisclosed Liabilities
. Neither Peoples nor any of its Subsidiaries has any liability, whether accrued, absolute,
contingent or otherwise that, either individually or when combined with all liabilities as to similar matters, would have a Material Adverse Effect on Peoples and Peoples Bank on a consolidated basis, except as disclosed in the SEC Reports.
(n)
Regulatory Approvals; No Defaults
.
(i) No consents or approvals of, or filings or registrations with, any Governmental Authority or with any third party are
required to be made or obtained by Peoples or any of its Subsidiaries in connection with the execution, delivery or performance by Peoples of this Agreement or to consummate the Merger except for (A) the filing of applications, notices, this
Agreement and the Agreement to Merge, as applicable, with the federal and state banking authorities to approve the transactions contemplated by this Agreement; (B) the filing of the certificate of merger with the OSS pursuant to the OGCL; and
(C) receipt of the approvals set forth in Section 7.01(b). As of the date hereof, Peoples is not aware of any reason why the approvals set forth in Section 7.01(b) will not be received without the imposition of a condition,
restriction or requirement of the type described in Section 7.01(b).
(ii) Subject to the approvals set forth in
Section 7.01(b) and the expiration of related regulatory waiting periods, the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby do not and will not (A) result in a breach or
violation of, or a default under, or give rise to any Lien, any acceleration of remedies or any right of termination under any law, rule or regulation or any judgment, decree, order, governmental permit or license, or agreement, indenture or
instrument of Peoples or of any of its Subsidiaries or to which Peoples or any of its Subsidiaries or properties is subject or bound; (B) constitute a breach or violation of, or a default under, the Peoples Articles or Peoples Regulations; or
(C) require any consent or approval under any such law, rule, regulation, judgment, decree, order, governmental permit or license, agreement, indenture or instrument.
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(o)
Brokerage and Finders Fees
. Except for Raymond James &
Associates, Inc., neither Peoples nor its Subsidiaries has engaged or employed any broker, finder, or agent, or agreed to pay or incurred any brokerage fee, finders fee, commission or other similar form of compensation (including any
break-up
or termination fee) in connection with this Agreement or the transactions contemplated hereby.
(p)
Fairness Opinion
. Peoples Board has received the written opinion of Raymond James & Associates, Inc., as of the date
hereof, as to the fairness from a financial point of view to Peoples of the Aggregate Consideration to be paid by Peoples in the Merger.
(q)
Peoples Common Shares Matters
. There are a sufficient number of authorized but unissued Peoples Common Shares to satisfy
Peoples obligation to issue Peoples Common Shares under this Agreement. The Peoples Common Shares to be issued in the Merger have been duly authorized and, when issued in the Merger, will be (i) validly issued, fully paid and
non-assessable,
(ii) registered under the Securities Act pursuant to the Registration Statement, and (iii) listed for trading on the NASDAQ Global Select Market.
(r)
Takeover Laws
. Peoples has taken all action required to be taken by Peoples in order to exempt this Agreement and the
transactions contemplated hereby and thereby from, and this Agreement, and the transactions contemplated hereby and thereby are exempt from, (i) the requirements of any Takeover Laws; and (ii) any applicable provisions of the Peoples
Articles, the Peoples Regulations and/or the governing documents of Peoples Bank.
(s)
Sufficient Funds
. Peoples has
available to it, and will have available to it immediately prior to the Effective Date, all funds necessary to satisfy its obligations hereunder, and Peoples acknowledges that Peoples obligations under this Agreement are not subject to any
financing contingency.
(t)
Tax Matters
.
(i)(A) All Tax Returns that were or are required to be filed by or with respect to Peoples and its Subsidiaries have been duly
and timely filed, or an appropriate extension has been granted, and all such Tax Returns are true, correct and complete in all respects; (B) all Taxes due (whether or not required to be shown to be due on the Tax Returns referred to in
Section 5.04(q)(i)(A)) have been paid in full; and (C) no unexpired waivers of statutes of limitation have been given with respect to any Taxes of Peoples or its Subsidiaries. Neither Peoples nor its Subsidiaries has any liability with
respect to any Taxes in excess of the amounts accrued with respect thereto that are reflected in the financial statements of Peoples and its Subsidiaries included (or incorporated by reference) in Peoples SEC filings, or that have arisen in
the ordinary and usual course of business since September 30, 2017. The accruals and reserves for Taxes reflected in such financial statements are adequate for the periods covered. There are no Liens for Taxes upon the assets of Peoples or any
of its Subsidiaries other than Liens for current Taxes not yet due and payable.
(ii) No audit or administrative or
judicial proceedings of any Governmental Authority related to Taxes are pending or being conducted with respect to ASB or its Subsidiaries and no such audit or other proceeding has been, to Peoples Knowledge, threatened in writing. To
Peoples Knowledge, no Governmental Authority has asserted or has threatened in writing to assert, against Peoples or its Subsidiaries any deficiency or claim for additional Taxes.
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(u)
Peoples Information
. The information provided in writing by Peoples relating to
Peoples and its Subsidiaries that is to be contained in the Registration Statement, the Proxy Statement/Prospectus, any filings or approvals under applicable state securities laws, any filing pursuant to Rule 165 or Rule 425 under the Securities Act
or Rule
14a-12
under the Exchange Act, or in any other document filed with any other Governmental Authorities in connection herewith, will not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the circumstances in which they are made, not misleading and will comply in all material respects with the provisions of the Securities Act, the Exchange Act, the rules and
regulations thereunder, and any other governing laws or regulations, as applicable.
(v)
Books and Records.
Except for
minutes and actions related to the process leading up to this Agreement and the transactions contemplated hereunder, which have not yet been prepared, approved, executed and/or placed in Peoples minute books, (i) the books of account, minute
books, stock record books, and other financial and corporate records of Peoples and its Subsidiaries, which have been made available to ASB, are complete and correct in all material respects and have been maintained in accordance with sound business
practices and, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of Peoples and its Subsidiaries; and (b) the minute books of Peoples and its Subsidiaries contain accurate and complete records
of all meetings held of, and corporate action taken by, the shareholders, the Peoples Board and the governing bodies of its Subsidiaries, and committees of the Peoples Board and the governing bodies of its Subsidiaries, and no meeting of any such
shareholders, Peoples Board and the governing bodies of its Subsidiaries, or committee has been held for which minutes have been prepared and are not contained in such minute books.
ARTICLE VI
Covenants
6.01
Reasonable Best Efforts
. Subject to the terms and conditions of this Agreement, each of ASB, American Savings Bank, Peoples, and Peoples Bank shall use its reasonable best efforts in good faith to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper or advisable under applicable laws, so as to permit the consummation of the Merger as promptly as practicable and otherwise to enable consummation of the transactions contemplated
hereby. Each party shall cooperate fully with the other party hereto to that end.
6.02
Shareholder Approval
.
ASB, in
consultation with Peoples, shall take, in accordance with applicable law and the ASB Articles and the ASB Regulations, all actions necessary to convene an appropriate meeting of its shareholders as soon as practicable after the Registration
Statement relating to this transaction has been declared effective by the SEC and under all applicable state securities laws, to consider and vote upon the adoption of this Agreement and any other matters required to be approved or adopted by the
ASB shareholders for consummation of the Parent Merger (including any adjournment or postponement, the
ASB Meeting
). The ASB Board shall inform the shareholders of ASB in the Proxy
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Statement/Prospectus that all ASB directors executed the Voting Agreement, substantially in the form attached to this Agreement as
Exhibit A
, evidencing their intent to vote all ASB Common
Shares which they own of record in favor of approving this Agreement and any other necessary documents or actions. ASBs Board of Directors will recommend approval of this Agreement to the other shareholders of ASB, subject to its fiduciary
obligations.
6.03
Registration Statement; Proxy Statement/Prospectus.
(a) Peoples will promptly prepare and file a Registration Statement with the SEC to register a sufficient number of shares of Peoples Common
Shares which the shareholders of ASB will receive pursuant to Section 3.01 at the Effective Time. Peoples will use its best efforts to cause such Registration Statement to become effective. Peoples and ASB agree that none of the information
supplied or to be supplied by each of them for inclusion or incorporation by reference in (i) the Registration Statement, including the proxy statement and prospectus (the
Proxy Statement/Prospectus
) constituting a part
thereof, will, at the time the Registration Statement becomes effective under the Securities Act, or (ii) the Proxy Statement/Prospectus and any amendment or supplement thereto will, at the date of mailing to the ASB shareholders and at the
time of the ASB Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not
misleading.
(b) Peoples and ASB each agree to use commercially reasonable best efforts and to cooperate with the other party in all
reasonable respects to prepare the Proxy Statement/Prospectus for filing with the SEC and, when the Registration Statement is effective, for delivery to the ASB shareholders.
(c) If either party becomes aware prior to the Effective Time of any information that would cause any of the statements in the Proxy
Statement/Prospectus to be false or misleading with respect to any material fact, or to omit to state any material fact necessary to make the statements therein not false or misleading, that party shall promptly inform the other thereof and take the
necessary steps to correct the Proxy Statement/Prospectus.
6.04
Press Releases
. Upon the Agreement Date, Peoples and ASB
shall issue a joint press release regarding this Agreement and the transactions contemplated hereby, which joint press release shall be subject to the prior approval of Peoples and ASB. Neither Peoples nor ASB will, without the prior approval of the
other party, issue any other press release or written statement for general circulation relating to the transactions contemplated hereby, except as otherwise may be required to be made by applicable law or regulation before such consent can be
obtained.
6.05
Access; Information
.
(a) ASB shall afford, upon reasonable notice and subject to applicable laws relating to the exchange of information, Peoples and its
Representatives, reasonable access during normal business hours throughout the period prior to the Effective Time to the books, records (including, without limitation, Tax Returns and work papers of independent auditors), properties, personnel and
such other information as Peoples may reasonably request and, during
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such period and subject to applicable laws regarding the disclosure and use of Information, ASB (i) shall promptly furnish to Peoples a copy of each material report, schedule and other
document filed by it or American Savings Bank pursuant to federal or state securities or banking laws, to the extent permitted by applicable law and regulations; and (ii) shall grant access to all other information concerning the business,
properties and personnel of ASB and American Savings Bank as Peoples may reasonably request. ASB shall invite two Representatives of Peoples, as selected by Peoples from time to time, to attend, solely as observers, all meetings of the ASB Board and
the American Savings Bank board of directors (and all committees of such boards) after the Agreement Date;
provided
,
however
, that in no event shall such Peoples Representatives be invited to or permitted to attend any executive
session of ASBs or American Savings Banks boards or any meeting at which this Agreement or the transactions contemplated hereof are being discussed, any meeting at which ASB reasonably determines that such attendance is inconsistent with
the fiduciary obligations, guidance of the applicable Governmental Authorities or confidentiality requirements of the ASB Board or American Savings Bank board, as applicable.
(b) Neither ASB nor Peoples will, nor shall either parties Representatives, use any information obtained pursuant to this
Section 6.05, as well as any other information obtained prior to the Agreement Date in connection with the entering into of this Agreement, for any purpose unrelated to the consummation of the transactions contemplated by this Agreement. All
such information will be subject to the confidentiality provisions of Section 6.16.
(c) In the event that this Agreement is
terminated or the transactions contemplated by this Agreement shall otherwise fail to be consummated, each party shall promptly cause all copies of documents or extracts thereof containing information and data as to another party hereto to be
returned to the party which furnished the same. No investigation by either party of the business and affairs of the other shall affect or be deemed to modify or waive any representation, warranty, covenant or agreement in this Agreement, or the
conditions to either partys obligation to consummate the transactions contemplated by this Agreement.
(d) During the period from the
Agreement Date to the Effective Time, ASB shall deliver to Peoples (i) the monthly and quarterly unaudited consolidated financial statements of ASB prepared for its internal use and (ii) the report of condition and income of American
Savings Bank and its Subsidiaries for each quarterly period completed prior to the Effective Date, promptly as the same shall become available.
6.06
Acquisition Proposals
. ASB shall not, and shall cause its Subsidiaries and their respective Representatives, not to,
directly or indirectly, continue or otherwise maintain, initiate, solicit or encourage (including by way of furnishing information or assistance), or take any other action to facilitate, any inquiries or the making of any proposal that constitutes,
or reasonably may be expected to lead to, any Competing Proposal, or enter into or maintain discussions or negotiate with any Person in furtherance of or relating to such inquiries or to obtain a Competing Proposal, or agree to or endorse any
Competing Proposal, or authorize or permit any Representative of ASB or its Subsidiaries to take any such action, and ASB shall use its reasonable best efforts to cause the Representatives of ASB not to take any such action, and ASB shall promptly
notify Peoples if any such inquiries or proposals are made regarding a Competing
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Proposal, and ASB shall keep Peoples informed, on a current basis, of the status and terms of any such proposals;
provided
,
however
, that prior to the ASB Shareholder Adoption,
nothing contained in this Section shall prohibit ASB from, in connection with a Superior Competing Transaction, furnishing information to, or entering into discussions or negotiations with, any Person that makes an unsolicited bona fide
proposal to acquire ASB and/or American Savings Bank pursuant to a merger, consolidation, share exchange, business combination or other similar transaction if, and only to the extent that, (A) the ASB Board, after consultation with and based
upon the advice of legal counsel, determines in good faith that such action is reasonably required for the ASB Board to comply with its fiduciary duties to shareholders imposed by OGCL, (B) prior to furnishing such information to, or entering
into discussions or negotiations with, such Person, ASB provides written notice to Peoples to the effect that it is furnishing information to, or entering into discussions or negotiations with, such Person, (C) prior to furnishing such
information to such Person, ASB receives from such Person an executed confidentiality agreement with terms no less favorable to ASB than those governing confidentiality between Peoples and ASB, and (D) ASB keeps Peoples informed, on a current
basis, of the status and details of any such discussions or negotiations.
6.07
Takeover Laws
. No party hereto shall take any
action that would cause the transactions contemplated by this Agreement or the Voting Agreement to be subject to requirements imposed by the Takeover Laws, and each of them shall take all necessary steps within its control to exempt (or ensure the
continued exemption of) this Agreement, the Voting Agreement and the transactions contemplated by this Agreement from, or if necessary, challenge the validity or applicability of, the Takeover Laws, as now or hereafter in effect.
6.08
Certain Policies
. Before the Effective Time, ASB shall, upon the request of Peoples, (i) modify and change its loan,
investment portfolio, asset liability management and real estate valuation policies and practices (including, but not limited to, loan classifications and levels of reserves) so that such policies and practices may be applied on a basis that is
consistent with those of Peoples and (ii) evaluate the need for any reserves including, but not limited to, reserves relating to any outstanding litigation, any Tax audits or any liabilities to be incurred upon cancellation of any contracts as
a result of the Merger;
provided
,
however
, that ASB shall not be obligated to take any such action pursuant to this Section 6.08 unless and until Peoples (A) acknowledges that all conditions to its obligation to consummate
the Merger have been satisfied (including, but not limited to, the receipt of the regulatory approvals required by Section 7.01(b)), (B) certifies to ASB that Peoples representations and warranties, subject to Section 5.01, are true
and correct as of such date, and (C) certifies to ASB that Peoples is otherwise in material compliance with this Agreement;
provided
further
,
however
, that ASB shall not be obligated to take any such action pursuant to this
Section 6.08 if such action would be inconsistent with GAAP. ASBs representations, warranties and covenants contained in this Agreement shall not be deemed to be untrue or breached in any respect for any purpose as a consequence of any
modifications or changes undertaken solely on account of this Section 6.08. Further, any modifications, changes or reserves made, omitted or taken by ASB pursuant to this Section 6.08 shall not impact the calculation of any payments due,
or whether any accompanying thresholds or targets have been satisfied, under any of the ASB Compensation and Benefit Plans.
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6.09
Regulatory Applications
.
(a) Peoples and ASB and their respective Subsidiaries shall cooperate and use their respective reasonable best efforts to allow Peoples to
prepare, submit and file all applications and/or requests for regulatory approval, to timely effect all filings and to obtain all consents, approvals and authorizations of all the Regulatory Authorities necessary to consummate the transactions
contemplated by this Agreement. In exercising the rights under this Section, each of the parties hereto agrees to act reasonably and as promptly as practicable. Peoples agrees that it will consult with ASB with respect to the obtaining of all
consents, approvals and authorizations from the Regulatory Authorities necessary to consummate the transactions contemplated by this Agreement and to keep ASB apprised of the status of material matters relating to obtainment of such consents,
approvals and/or authorizations from the Regulatory Authorities. ASB shall have the right to review in advance, subject to applicable laws relating to the exchange of Information, all material written information submitted to the Regulatory
Authorities in connection with the transactions contemplated by this Agreement. Notwithstanding the foregoing sentence, neither ASB nor American Savings Bank shall have any right to review or inspect any proprietary information submitted by Peoples
to any Regulatory Authority with a request for confidential treatment, including, but not limited to, any business plan and/or financial data or analysis prepared by Peoples in relation to such consents, approvals and/or authorizations from the
Regulatory Authorities.
(b) ASB agrees, upon request, to furnish Peoples with all information concerning itself, American Savings Bank,
and each of their respective directors, officers, shareholders, employees, Subsidiaries and such other matters as may be reasonably necessary, advisable and/or required in connection with any filing, notice or application made by or on behalf of
Peoples or any of its Subsidiaries to any Regulatory Authority.
6.10
Employment Matters; Employee Benefits.
(a)
General
. It is understood and agreed that nothing in this Section 6.10 or elsewhere in this Agreement shall be deemed to
be a contract of employment or be construed to give any ASB or American Savings Bank employees any rights other than as employees at will under applicable law, and ASB and American Savings Bank employees shall not be deemed to be third-party
beneficiaries of this Agreement. Employees of ASB or American Savings Bank who become employees of Peoples as a result of the Merger shall participate in either ASBs Compensation and Benefit Plans (for so long as Peoples determines necessary
or appropriate) or in the employee benefit plans sponsored by Peoples for Peoples employees. Peoples shall use commercially reasonable efforts to provide credit to such employees for their years of service with ASB or American Savings Bank for
participation and vesting purposes under Peoples applicable employee benefit plans, to the extent such plans permit, including credit for years of service and seniority under vacation and sick pay plans and programs, but subject to other terms
of such plans. In addition, to the extent ASB or American Savings Bank employees participate in Peoples group health plan instead of continued participation in ASBs group health plan, Peoples agrees to waive all restrictions and
limitations for
pre-existing
conditions under Peoples group health plan and provide each such employee and their eligible dependents with credit for any deductibles paid prior to the Effective Time under
ASBs group health plan (to the same extent that such credit was given under such plan prior to the Effective Time) in satisfying any applicable deductible or maximum
out-of-pocket
requirements under any Peoples group health plan.
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(b)
Employee Severance
.
Subject to any applicable regulatory restrictions:
(i) Peoples shall pay to each employee of ASB or American Savings Bank who (A) is not subject to an existing contract
providing for severance and/or a change in control payment, (B) is an employee of ASB or American Savings Bank immediately before the Effective Time, (C) has been an employee of ASB or American Savings Bank for at least six months prior to
the Effective Time, and (D) is not offered continued employment in a similar position by Peoples or any of its Subsidiaries for at least six months after the Effective Time, a severance amount equal to two weeks base pay multiplied by the
number of whole years of service of such employee with ASB or American Savings Bank, less applicable local, state and federal tax withholding;
provided
,
however
, that the minimum severance payment shall equal four weeks of base pay,
and the maximum severance payment shall not exceed 26 weeks of base pay; and provided further, that the base pay for any hourly employee shall be determined based on such employees rate of pay at the Effective Time and the average hours worked
by such employee over the 12 months preceding the Effective Time, or such shorter period of time that such employee was employed by ASB or American Savings Bank. Such severance pay shall be paid in a lump sum within 30 days following the termination
of such employee,
provided
,
that
such employee has not been terminated for cause. For any employee of ASB or American Savings Bank participating in ASB or American Savings Banks group health program at the Effective Time who is
entitled to a severance payment, the employee will be able to purchase health insurance coverage at the full premium rate for the entire COBRA period.
(ii) In exchange for the severance pay described in Subsection (i), terminated employees will be required to execute a final
and binding general release in which such employee releases and waives any and all claims the employee may have against Peoples and its Affiliates.
(iii) With regard to the employment, severance and change in control agreements listed in Section 6.10(b)(iii) of
ASBs Disclosure Schedule, Peoples will pay to each employee identified on such schedule the amount set forth beside his or her name in a single lump sum payment within five (5) business days after the Effective Date and otherwise in
accordance with the terms and conditions of such agreements. Notwithstanding the prior sentence, the parties acknowledge and agree that such agreements shall remain in full force and effect until terminated in accordance with their terms.
(c)
ASB ESOP
& 401(k) Plan
. Prior to the Effective Date, but after the receipt of the last
to be obtained of either the ASB Shareholder Adoption or the regulatory approvals required by Section 7.01(b) of this Agreement, the ASB Board shall adopt a resolution approving the termination of its ASB Financial Corp. Employee Stock
Ownership Plan & 401(k) Plan (the
ASB ESOP
& 401(k) Plan
) effective as of a date immediately preceding the Effective Date, conditioned upon the closing of the transactions contemplated by this
Agreement. In addition, the ASB Board shall approve the adoption of any amendments to the ASB ESOP & 401(k) Plan
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sufficient to terminate the ASB ESOP & 401(k) Plan immediately preceding the Effective Date and to provide for distributions in cash to plan participants. Following the Effective Date,
Peoples, as the successor in interest to ASB, shall begin the process of (i) requesting from the IRS a determination that the termination of the ASB ESOP & 401(k) Plan is in compliance with Section 401(a) of the Code (the
Determination Letter
) and (ii) facilitating the distribution, transfer, or merging of benefits under the ASB ESOP & 401(k) Plan. Peoples agrees to take all commercially reasonable steps necessary or appropriate to
accept roll-overs of benefits from the ASB ESOP & 401(k) Plan to the Peoples 401(k) plan for employees of ASB and American Savings Bank who continue as employees of Peoples or its Subsidiaries after the Effective Time, subject to the
provisions of the Peoples 401(k) Plan.
(d)
Paid Time Off
. Each ASB or American Savings Bank employee will receive a lump sum
cash payment within 10 days after the earlier of such employees termination of employment or the Effective Date, equal to the product of (i) such employees hourly rate of pay on the Effective Date, multiplied by (ii) the
difference between (A) the number of hours of accrued and unused
paid-time-off
and vacation for such employee as of that date, and (B) for any such employee who continues to be employed by Peoples
after the Effective Date, the number of hours of
paid-time-off
and vacation such employee would be credited with under Peoples plans.
6.11
Notification of Certain Matters
.
Each party shall give prompt notice to the other of any fact, event or circumstance
known to the disclosing party that (i) is reasonably likely, individually or taken together with all other facts, events and circumstances known to it, to result in any Material Adverse Effect with respect to the disclosing party or any of its
Subsidiaries, (ii) would cause or constitute a material breach of any of the disclosing partys representations, warranties, covenants or agreements contained herein, or (iii) is necessary to provide material updates or corrections to
disclosures set forth in the partys Disclosure Schedule or to information provided pursuant to a specific requirement of this Agreement.
6.12
No Breaches of Representations and Warranties
. Between the Agreement Date and the Effective Time, without the written
consent of Peoples, ASB will not do any act or suffer any omission of any nature whatsoever which would cause any of the representations or warranties made in Article V to become untrue or incorrect in any material respect. Between the Agreement
Date and the Effective Time, without the written consent of ASB, Peoples will not do any act or suffer any omission of any nature whatsoever which would cause any of the representations or warranties made in Article V to become untrue or incorrect
in any material respect.
6.13
Consents
. ASB and Peoples shall each use its best efforts to obtain any required consents to
the transactions contemplated by this Agreement.
6.14
Insurance Coverage
. ASB shall cause the policies of insurance listed
in ASBs Disclosure Schedule to remain in effect between the Agreement Date and the Effective Date.
6.15
Correction of
Information
. ASB and Peoples shall each promptly correct and supplement any information furnished by it under this Agreement so that such information shall be correct and complete at all times, and shall include all facts necessary to make
such information correct and complete at all times.
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6.16
Confidentiality
. Except for the use of information in connection with the
Proxy Statement/Prospectus described in Section 6.03 and any other governmental filings required in order to complete the transactions contemplated by this Agreement, all information (collectively, the
Information
) received
by each of ASB and Peoples pursuant to the terms of this Agreement (i) shall be kept in strictest confidence, (ii) shall not be disclosed directly or indirectly except when, after and to the extent such Information (A) is or becomes
generally available to the public other than through the failure of ASB or Peoples to fulfill its obligations hereunder, (B) is demonstrated as already known to the party receiving the Information on a nonconfidential basis prior to the
disclosure, or (C) is subsequently disclosed to the party receiving the Information on a nonconfidential basis by a third party having no obligation of confidentiality to the party disclosing the Information, and (iii) not used for any
purpose other than a mutually acceptable transaction contemplated hereby;
provided
that
,
subsequent to the mailing of the Proxy Statement/Prospectus to the shareholders of each party, this Section 6.16 shall not apply to
Information included in the Proxy Statement/Prospectus to be sent to the shareholders of each party under Section 6.03. In the event the transactions contemplated by this Agreement are not consummated, ASB and Peoples agree to promptly return
all copies of the Information (including all copies, summaries, memorandum thereof) provided to the other and promptly destroy all electronic copies of such Information, provided no litigation preservation obligation exists and prevents destruction.
In that case, Information shall be preserved until the preservation obligation ceases.
6.17
Regulatory Matters
. Peoples, ASB
and each of their Subsidiaries shall use its reasonable best efforts to remediate to the satisfaction of such Regulatory Authority (i) any order, decree, formal or informal agreement, memorandum of understanding or similar agreement by ASB or
its Subsidiaries with any Regulatory Authority; (ii) any commitment letter, board resolution or similar submission by ASB or its Subsidiaries to any Regulatory Authority; or (iii) any supervisory letter from any Regulatory Authority to ASB
or its Subsidiaries.
6.18
Indemnification
.
(a) For a period of six years after the Effective Time, Peoples shall indemnify each Person who served as a director or officer of ASB on or
after the Agreement Date and before the Effective Time, to the fullest extent provided by the ASB Articles and the ASB Regulations, from and against all expenses, including reasonable attorneys fees, judgments, fines and amounts paid in
settlement in connection with any threatened, pending or completed action, suit or proceeding by reason of the fact that such Person was a director or officer of ASB;
provided
,
however
, that any such indemnification by Peoples shall be
subject to compliance with the provisions of applicable state and federal laws, but any such compliance shall not prevent or limit any indemnification available under the terms of the D&O Policy, subject to the specific terms of such D&O
Policy.
(b) Before the Effective Time, ASB shall purchase a policy of directors and officers and company liability insurance
(the
D&O Policy
) to be effective for a period of six years following the Effective Date, on terms no less advantageous than those contained in ASBs existing directors and officers and company liability
insurance policy;
provided
,
however
, that the premium on the D&O Policy shall not exceed 150% of the annual premium currently paid by ASB for similar insurance coverage;
provided
,
further
, that if a D&O Policy for
a period of six years on terms no less advantageous than those contained in ASBs existing policy cannot be obtained at a premium not in excess of 150% of ASBs current annual premium, then ASB shall purchase a D&O Policy for a shorter
period of years and/or on such lesser terms as determined by ASB.
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6.19
Environmental Assessments
.
ASB hereby agrees to permit Peoples to
engage, in Peoples discretion and at Peoples expense, a qualified consultant, mutually agreeable to ASB and Peoples, to conduct a Phase I of each parcel of real estate owned by ASB or its Subsidiaries, including real estate acquired by
American Savings Bank or its Subsidiaries upon foreclosure.
6.20
Advisory Board
.
At the Effective Time and for a
period of one year
thereafter, Peoples shall establish and maintain an advisory board to Peoples Bank to be comprised of all of the directors of ASB at the Effective Time who desire to participate on such advisory board. The advisory
board shall meet every other month during such
one-year
period for the purpose of advising Peoples Bank on client relations and post-acquisition transition matters. The compensation of the members of the
advisory board shall be $500 per member per meeting.
6.21
NASDAQ Listing
.
Peoples shall cause the Peoples Common
Shares to be issued in the Merger to be approved for listing on The NASDAQ Global Select Market
®
as of the Effective Time.
6.22
Tax Treatment
.
Each of Peoples and ASB agrees not to take any action or knowingly fail to take any action where such
action or failure to act could reasonably be expected to prevent or impede the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code, and each of Peoples and ASB agrees to take such action as
may be reasonably required, if such action may be reasonably taken, to reverse the impact of past actions which would adversely impact the ability of the Merger to be characterized as a
tax-free
reorganization
under Section 368(a) of the Code. Officers of Peoples and ASB shall execute and deliver to Vorys, Sater, Seymour and Pease LLP, as tax counsel to ASB, tax representation letters (the
Tax Representation Letters
) substantially
in such form agreed to by the parties at such time as may be reasonably requested by Vorys, Sater, Seymour and Pease LLP in connection with their delivery of its opinion pursuant to Sections 7.02(e) of this Agreement.
ARTICLE VII
Conditions
to Consummation of the Merger; Closing
7.01
Conditions to Each Party
s Obligation to Effect
the Merger
. The respective obligation of each of Peoples and ASB to consummate the Merger is subject to the fulfillment or written waiver by Peoples and ASB prior to the Effective Time of each of the following conditions:
(a)
Shareholder Approval
. The ASB Shareholder Adoption shall have been duly obtained.
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(b)
Regulatory Approvals
. All regulatory approvals required to consummate the
transactions contemplated hereby shall have been obtained and shall remain in full force and effect and all statutory waiting periods in respect thereof shall have expired and no such approvals shall contain (i) any conditions, restrictions or
requirements which the Peoples Board reasonably determines would, either before or after the Effective Time, have a Material Adverse Effect on Peoples and its Subsidiaries taken as a whole after giving effect to the consummation of the Merger or
(ii) any conditions, restrictions or requirements that are not customary and usual for approvals of such type and which the Peoples Board reasonably determines would, either before or after the Effective Time, be unduly burdensome. For purposes
of this Section 7.01(b), any regulatory approval that does not result in the termination of all outstanding Regulatory Orders applicable to ASB and/or its Subsidiaries, if any, prior to or at the Effective Time shall be deemed to have a
Material Adverse Effect on Peoples and its Subsidiaries taken as a whole after giving effect to the consummation of the Merger.
(c)
No Injunction
. No Governmental Authority of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any statute, rule, regulation, judgment, decree, injunction or other order (whether temporary, preliminary
or permanent) which is in effect and prohibits consummation of the transactions contemplated by this Agreement.
(d)
Effectiveness of
Registration Statement
. The Registration Statement shall have been declared effective by the SEC and shall not be subject to any stop order or any threatened stop order, and the issuance of the Peoples Common shares pursuant to the Merger
shall have been qualified in every state where such qualification is required under applicable state securities laws.
7.02
Conditions to Obligation of ASB
. The obligation of ASB to consummate the Merger is also subject to the fulfillment or written waiver by ASB prior to the Effective Time of each of the following conditions:
(a)
Representations and Warranties
. The representations and warranties of Peoples set forth in this Agreement shall not be in
breach, subject to Section 5.02, as of the date of this Agreement and as of the Effective Time as though made on and as of the Effective Time (except that representations and warranties that by their terms speak as of the date of this Agreement
or some other date shall not be in breach as of such specified date), and ASB shall have received a certificate, dated the Effective Date, signed on behalf of Peoples, by the chief executive officer of Peoples to such effect.
(b)
Performance of Obligations of Peoples
. Peoples shall have performed in all material respects all obligations required to be
performed by Peoples under this Agreement at or prior to the Effective Time, and ASB shall have received a certificate, dated as of the Effective Date, signed on behalf of Peoples by the chief executive officer of Peoples to such effect.
(c)
Listing of Peoples Common Shares
. The Peoples Common Shares to be issued in the Merger shall have been authorized for listing
on The NASDAQ Global Select Market
®
.
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(d)
No Material Adverse Effect
. From the date of this Agreement, there shall not
have occurred any event, circumstance or development that has had or could reasonably be expected to have a Material Adverse Effect on Peoples.
(e)
Federal Tax Opinion
. ASB shall have received the opinion of Vorys, Sater, Seymour and Pease LLP, in form and substance
reasonably satisfactory to ASB, dated as of the Closing Date, to the effect that, on the basis of facts, representations and assumptions set forth or referred to in such opinion, the Merger will qualify as a reorganization within the
meaning of Section 368(a) of the Code. In rendering such opinion, counsel shall require and rely upon, and ASB and Peoples shall supply, the Tax Representation Letters.
7.03
Conditions to Obligation of Peoples
. The obligation of Peoples to consummate the Merger is also subject to the fulfillment
or written waiver by Peoples prior to the Effective Time of each of the following conditions:
(a)
Representations and
Warranties
. The representations and warranties of ASB set forth in this Agreement shall not be in breach, subject to Section 5.02, as of the date of this Agreement and as of the Effective Time as though made on and as of the Effective
Time (except that representations and warranties that by their terms speak as of the date of this Agreement or some other date shall not be in breach as of such specified date) and Peoples shall have received a certificate, dated the Effective Date,
signed on behalf of ASB, by the chief executive officer of ASB to such effect.
(b)
Performance of Obligations of ASB
. ASB
shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Effective Time, and Peoples shall have received a certificate, dated as of the Effective Date, signed on behalf of
ASB by the chief executive officer of ASB to such effect.
(c)
Consents
. ASB shall have obtained the consent or approval of
each person (other than Governmental Authorities) whose consent or approval shall be required in connection with the transactions contemplated hereby under any loan or credit agreement, note, mortgage, indenture, lease, license or other agreement or
instrument, except those for which failure to obtain such consents and approvals would not, individually or in the aggregate, have a Material Adverse Effect, after the Effective Time, on the Surviving Corporation.
(d)
FIRPTA Certification
. Peoples shall have received a statement executed on behalf of ASB, dated as of the Effective Date,
satisfying the requirements of Treasury Regulations
Section 1.1445-2(c)(3)
and complying with Treasury Regulations
Section 1.897-2(h)
in a form reasonably
acceptable to Peoples certifying that the ASB Common Shares do not represent United States real property interests within the meaning of Section 897 of the Code and the Treasury regulations promulgated thereunder.
(e)
Dissenting Shares
. The holders of not more than 10% of the outstanding ASB Common Shares shall have perfected their
dissenters rights under Section 1701.84 of the OGCL in connection with the transactions contemplated by this Agreement.
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(f)
Real Estate
. There shall have been no condemnation, eminent domain or similar
proceedings commenced or threatened in writing by any Government Authority with respect to any real estate owned by ASB or its Subsidiaries, including real estate acquired in connection with foreclosure. Either (i) the results of each Phase I
as reported shall be reasonably satisfactory to Peoples or (ii) any violation or potential violation of the representations and warranties contained in Section 5.03(p) disclosed in any Phase I report shall have been remedied by ASB or its
Subsidiaries to the reasonable satisfaction of Peoples.
(g)
D&O Policy
. ASB shall have procured the D&O Policy in
accordance with the terms and subject to the conditions of Section 6.18(b).
(h)
Subsidiary Divestitures
. The Subsidiary
Divestitures shall have been completed.
(i)
No Material Adverse Effect
. From the Agreement Date, there shall not have
occurred any event, circumstance or development that has had or could reasonably be expected to have a Material Adverse Effect on ASB or its Subsidiaries.
7.04
Closing.
Subject to the provisions of Article VII, the consummation of the transactions contemplated by this
Agreement shall be held at the offices of Dinsmore & Shohl LLP in Columbus, Ohio, or such other place as the parties may mutually agree, on the Effective Date.
ARTICLE VIII
Termination
8.01
Termination
. This Agreement may be terminated, and the Merger may be abandoned:
(a) At any time prior to the Effective Time,
by the mutual written consent of Peoples and ASB, if the board of directors of each so determines by vote of a majority of the members of its board.
(b) At any time prior to the Effective Time, by Peoples or ASB upon written notice to the other party, if its board of directors so determines
by vote of a majority of the members of its board, in the event of either (i) a breach by the other party of any representation or warranty contained herein (subject to the standard set forth in Section 5.02), which breach cannot be or has
not been cured within 30 calendar days after the giving of written notice to the breaching party of such breach; or (ii) a breach by the other party of any of the covenants or agreements contained herein, which breach cannot be or has not been
cured within 30 calendar days after the giving of written notice to the breaching party of such breach;
provided
,
however
, that such breach (whether under subsection (i) or (ii)) would be reasonably likely, individually or in the
aggregate with all other breaches, in the reasonable opinion of the
non-breaching
party, to result in a Material Adverse Effect.
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(c) At any time prior to the Effective Time, by Peoples or ASB upon written notice to the other
party, if its board of directors so determines by vote of a majority of the members of its board, in the event that the Parent Merger is not consummated by September 30, 2018, except to the extent that the failure of the Parent Merger to be
consummated arises out of or results from the knowing action or inaction of the party seeking to terminate pursuant to this Section 8.01(c).
(d) By Peoples or ASB upon written notice to the other party, if its board of directors so determines by a vote of a majority of the members of
its board, in the event (i) the approval of any Governmental Authority required for consummation of the Merger and the other transactions contemplated by this Agreement shall have been denied, (ii) the ASB Shareholder Adoption is not
obtained at the ASB Meeting or (iii) Peoples or ASB has been advised that the SEC will not declare the Registration Statement to be effective.
(e) By either Peoples or ASB, if ASB has complied with Section 6.06, and ASB has given written notice to Peoples that ASB desires to enter
into a Superior Competing Transaction subject to termination of this Agreement in accordance with its terms, or that the ASB Board has determined to change its recommendation in favor of the transactions contemplated hereby;
provided
,
however
,
that such termination under this Section 8.01(e) shall not be effective unless and until ASB shall have complied with breakup fee provisions of Section 9.05, but shall be effective immediately upon compliance
therewith.
(f) By written notice of ASB to Peoples if, and only if, both of the following conditions are satisfied at any time during the
five-day
period commencing on the Determination Date, such termination to be effective on the tenth day following the Determination Date:
(i) the Peoples Market Value on the Determination Date is less than the Peoples Market Price multiplied by 0.80; and
(ii) the number obtained by dividing the Peoples Market Value on the Determination Date by the Peoples Market Price shall be
less than the Index Ratio minus 0.20;
subject, however, to the following three sentences: If ASB elects to exercise its termination right pursuant to
this Section 8.01(f), it shall give prompt written notice thereof to Peoples. During the five business day period commencing with Peoples receipt of such notice, Peoples shall have the option to increase the Exchange Ratio to equal a
quotient, the numerator of which is equal to the product of the Peoples Market Price, the Exchange Ratio (as then in effect), and the Index Ratio minus 0.20 and the denominator of which is equal to the Peoples Market Value on the Determination Date.
If within such five business day period, Peoples delivers written notice to ASB that it intends to proceed with the Parent Merger by paying such additional consideration as contemplated by the preceding sentence, and notifies ASB of the revised
Exchange Ratio, then no termination shall have occurred pursuant to this Section 8.01(f), and this Agreement shall remain in full force and effect in accordance with its terms (except that the Exchange Ratio shall have been so modified).
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For purposes of this Section 8.01(f), the following terms shall have the meanings indicated
below:
Determination Date
shall mean any date following the first date on which all regulatory approvals (and waivers,
if applicable) necessary for consummation of the Merger have been received (disregarding any waiting period) and prior to the Effective Date.
Final Index Price
means the average of the daily closing value of the Index for the ten consecutive trading days
immediately preceding the Determination Date.
Index
means the NASDAQ Bank Index or, if such Index is not available,
such substitute or similar index as substantially replicates the NASDAQ Bank Index.
Index Ratio
means the Final Index
Price divided by the Initial Index Price.
Initial Index Price
means $3,974.02, the closing value of the Index on
October 20, 2017.
Peoples Market Price
shall mean the volume average weighted closing sale price of a Peoples
Common Share on The NASDAQ Global Select Market
®
during the 20 consecutive trading days immediately preceding the date of this Agreement.
Peoples Market Value
means, as of any specified date, the average of the volume weighted daily closing sales prices of a
share of Peoples Common Shares as reported on The NASDAQ Global Select Market
®
for the ten consecutive trading days immediately preceding such specified date.
8.02
Effect of Termination and Abandonment; Enforcement of Agreement
. In the event of termination of this Agreement and the
abandonment of the Merger pursuant to this Article VIII, none of the representations, warranties, covenants or agreements of the parties herein shall survive such termination, and no party to this Agreement shall have any liability or further
obligation to any other party hereunder, except (i) as set forth in Sections 6.04, 6.16 and 9.01 and (ii) that termination will not relieve a breaching party from liability for any willful breach of this Agreement giving rise to such
termination. Notwithstanding anything contained herein to the contrary, the parties hereto agree that irreparable damage will occur in the event that a party breaches any of its obligations, duties, covenants and agreements contained herein. It is
accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches or threatened breaches of this Agreement and to specifically enforce the terms and provisions of this Agreement in any court of the United
States or any state having jurisdiction, this being in addition to any other remedy to which the
non-breaching
party is entitled by law or in equity.
ARTICLE IX
Miscellaneous
9.01
Survival
. None of the representations, warranties, covenants and agreements in this Agreement or in any instrument delivered pursuant to this Agreement shall survive the Effective Time, except for those covenants and agreements in
Section 6.10, 6.18 and 6.20 and this Article IX, which shall survive the Effective Time.
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9.02
Waiver; Amendment
. Prior to the Effective Time, any provision of this
Agreement may be (a) waived by the party benefited by the provision or (b) amended or modified at any time, by an agreement in writing between the parties hereto executed in the same manner as this Agreement;
provided
,
however
, that after the ASB Meeting, this Agreement may not be amended if it would void the approval of this Agreement under the OGCL.
9.03
Counterparts
. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered,
shall constitute an original, but all of which together shall constitute but one instrument. Signatures transmitted by facsimile or electronic transmission (such as an email of a .pdf or scanned signature) shall have the same effect as original
signatures.
9.04
Governing Law
. This Agreement shall be governed by, and interpreted in accordance with, the laws of the
State of Ohio applicable to contracts made and to be performed entirely within the State of Ohio.
9.05
Expenses; Breakup
Fee
. Each party hereto will bear all expenses incurred by it in connection with this Agreement and the transactions contemplated hereby. In the event that this Agreement is terminated pursuant to Section 8.01(e), ASB shall pay Peoples a
breakup fee of $1,500,000. In the event that ASB owes the breakup fee to Peoples pursuant to this Section 9.05, then the payment of such amount shall be the sole and exclusive remedy for those termination events and any other breaches hereof,
and shall constitute liquidated damages and neither Peoples nor any of its Subsidiaries will have any other rights or claims against ASB or any of its Subsidiaries, or their respective affiliates, officers, directors, agents, representatives,
advisors, attorneys and financial advisors under this Agreement
9.06
Notices
.
All notices, requests and other
communications hereunder to a party shall be in writing and shall be deemed given if personally delivered, telecopied (with confirmation) or mailed by registered or certified mail (return receipt requested) to such party at its address set forth
below or such other address as such party may specify by notice to the parties hereto.
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If to ASB, to:
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ASB Financial Corp.
503 Chillicothe Street
Portsmouth, Ohio 45662
Attention: John J. Kuntz,
President & CEO
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With a copy to:
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Vorys, Sater, Seymour and Pease LLP
301 East
Fourth Street
Suite 3500, Great American Tower
Cincinnati,
Ohio 45201
Attention: Jason L. Hodges
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If to Peoples, to:
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Peoples Bancorp Inc.
138 Putnam Street
Marietta, Ohio 45750
Attention: Charles W. Sulerzyski,
President & CEO
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With a copy to:
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Peoples Bancorp Inc.
138 Putnam Street
Marietta, Ohio 45750
Attention: M. Ryan Kirkham, General
Counsel
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9.07
Entire Understanding; No Third Party Beneficiaries
.
This Agreement, the Voting
Agreement, the Agreement to Merge, and any separate agreement entered into by the parties in connection with this Agreement and on even date herewith represent the entire understanding of the parties hereto with reference to the transactions
contemplated hereby and thereby and this Agreement supersedes any and all other oral or written agreements heretofore made (other than such Voting Agreement or any such separate agreement), including superseding that certain letter of intent between
Peoples and ASB dated October 9, 2017. Nothing in this Agreement, whether express or implied, is intended to confer upon any Person, other than the parties hereto or their respective permitted successors and assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
9.08
Interpretation; Effect
.
When a reference is
made in this Agreement to Sections, Exhibits or Schedules, such reference shall be to a Section of, or Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for
reference purposes only and are not part of this Agreement. Whenever the words include, includes or including are used in this Agreement, they shall be deemed to be followed by the words without
limitation.
9.09
Waiver of Jury Trial
. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL
BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
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9.10
Successors and Assigns; Assignment
.
This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective successors and assigns;
provided
,
however
, that this Agreement may not be assigned by either party hereto without the prior written consent of the other
party.
[R
EMAINDER
OF
P
AGE
I
NTENTIONALLY
L
EFT
B
LANK
]
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AGREEMENT AND PLAN OF MERGER