(Address, including zip code and telephone number,
including area code, of principal executive offices)
(Name, address, including zip code, and telephone number, including area code, of agent for service)
If the securities being registered on this Form are being offered in connection with the formation of a holding
company and there is compliance with General Instruction G, check the following box. ☐
If this Form is filed to register
additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same
offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the
following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, a smaller reporting company, or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting
company, and emerging growth company in Rule
12b-2
of the Exchange Act.
If an emerging growth company, indicate by check mark if the registrant has elected not to use the
extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:
THE MERGER
1.01
The Merger
.
(a)
General
Description
.
Upon the terms and subject to the conditions of this Agreement, at the Effective Time (as defined in
Article IX
) hereof, LFCB shall merge with and into Horizon (the
Merger
), and Horizon
shall survive the Merger (sometimes hereinafter referred to as the
Surviving Corporation
) and shall continue its corporate existence under the laws of the State of Indiana pursuant to the provisions of and with the effect provided
in the Indiana Business Corporation Law, as amended (the
IBCL
).
(b)
Name,
Officers and Directors
.
The name of the Surviving Corporation shall be
Horizon Bancorp
. Its principal office shall be located at 515 Franklin Street, Michigan
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City, Indiana 46360. The officers of Horizon serving at the Effective Time shall continue to serve as the officers of the Surviving Corporation, until such time as their successors shall have
been duly elected and have qualified or until their earlier resignation, death, or removal from office. The directors of the Surviving Corporation following the Effective Time shall be those individuals serving as directors of Horizon at the
Effective Time, until such time as their successors have been duly elected and have qualified or until their earlier resignation, death, or removal as a director.
(c)
Articles of Incorporation and Bylaws
.
The Articles of Incorporation and Bylaws
of Horizon in existence at the Effective Time shall remain the Articles of Incorporation and Bylaws of the Surviving Corporation following the Effective Time, until such Articles of Incorporation and Bylaws shall be further amended as provided by
applicable law.
(d)
Effect of the Merger
.
At the Effective Time, the title to
all assets, real estate, and other property owned by LFCB shall vest in Surviving Corporation as set forth in Indiana Code
Section 23-1-40-6,
as amended, without reversion or impairment. At the Effective Time, all liabilities of LFCB shall become
liabilities of the Surviving Corporation as set forth in Indiana Code
Section 23-1-40-6,
as amended.
(e)
Integration
.
At the Effective Time and subject to the terms and conditions of
this Agreement, the parties hereto currently intend to effectuate, or cause to be effectuated, the Merger, pursuant to the terms of this Agreement and the IBCL, and this Agreement shall also constitute the plan of merger pursuant to
Indiana Code
Section 23-1-40-1.
If required, the parties agree to enter into a separate short-form plan of merger evidencing
the terms required by Indiana Code
Section 23-1-40-1.
The parties agree to cooperate and to take all reasonable actions
prior to or following the Effective Time, including executing all requisite documentation, as may be reasonably necessary to effect the Merger in accordance with the terms and conditions hereof.
1.02
Reservation of Right to Revise Structure
. At Horizons
election, the Merger may alternatively be structured so that (a) LFCB is merged with and into any other direct or indirect wholly-owned subsidiary of Horizon or (b) any direct or indirect wholly-owned subsidiary of Horizon is merged with
and into LFCB;
provided, however,
that no such change shall: (1) alter or change the amount or kind of the Merger Consideration (as defined in
Section
2.01
) or the treatment of the holders of common stock, no
par value per share, of LFCB (the
LFCB Common Stock
), (2) prevent the parties from obtaining the opinions of counsel referred to in
Sections 7.01(h)
and
7.02(h)
or otherwise cause the transaction to fail to qualify
for the tax treatment described in
Section
1.03
, or (3) materially impede or delay consummation of the transactions contemplated by this Agreement. In the event of such an election, the parties agree to execute an
appropriate amendment to this Agreement (to the extent such amendment only changes the method of effecting the business combination and does not substantively affect this Agreement or the rights and obligations of the parties or their respective
shareholders) in order to reflect such election.
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1.03
Tax Free
Reorganization
. Horizon and LFCB intend for the Merger to qualify as a reorganization within the meaning of Section 368(a) and related sections of the Internal Revenue Code of 1986, as amended (the
Code
), and
that this Agreement shall constitute a plan of reorganization for purposes of Sections 354 and 361 of the Code, and agree to cooperate and to take such actions as may be reasonably necessary to assure such result.
1.04
Absence of Control
. Subject to any specific provisions of the
Agreement, it is the intent of the parties to this Agreement that neither Horizon nor LFCB by reason of this Agreement shall be deemed (until consummation of the transactions contemplated here) to control, directly or indirectly, the other party or
any of its respective Subsidiaries (as defined in the introductory paragraphs to
Article III
and
Article IV
) and shall not exercise or be deemed to exercise, directly or indirectly, a controlling influence over the management or
policies of such other party or any of its respective Subsidiaries.
1.05
Bank
Merger
. The parties will cooperate and use reasonable best efforts to effect the merger of LCB with and into Horizon Bank (the
Bank Merger
) immediately after the Effective Time of the Merger pursuant to a merger
agreement substantially in the form of the Bank Merger Agreement attached hereto as
Exhibit 1.05
. At the effective time of the Bank Merger, the separate corporate existence of LCB will terminate. Horizon Bank will be the surviving bank and
will continue its corporate existence under applicable law. The Articles of Association of Horizon Bank, as then in effect, will be the Articles of Association of the surviving bank, the Bylaws of Horizon Bank, as then in effect, will be the Bylaws
of the surviving bank, and the Board of Directors and officers of Horizon Bank will continue as the Board of Directors and officers of the surviving bank.
1.06
Dissenters
Rights
. Notwithstanding anything to
the contrary contained in this Agreement, to the extent appraisal rights are available to holders of LFCB Common Stock pursuant to the provisions of any applicable Law (as defined in
Section 3.05(a)
), including Chapter 44 of the
IBCL, any shares of LFCB Common Stock held by a Person (as defined in
Section
2.04(f)
) who objects to the Merger, whose shares were not voted in favor of the Merger and who complies with and satisfies all of the provisions
of the applicable Law concerning the rights of such Person to dissent from the Merger and to require appraisal of such Persons shares and who has not withdrawn such objection or waived such rights prior to the Effective Time (collectively with
respect to all such LFCB shareholders, the
Dissenting Shares
), shall not be converted pursuant to
Section
2.01
, but shall become the right to receive such consideration as may be determined to be due
the holder of such Dissenting Shares pursuant to applicable Law;
provided, however,
that each Dissenting Share held by a Person at the Effective Time who shall, after the Effective Time, withdraw the demand for appraisal or lose the right of
appraisal, in either case pursuant to applicable Law, shall be deemed to have been converted, as of the Effective Time, into the right to receive the consideration as is determined in accordance with
Article II
.
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ARTICLE II.
MANNER AND BASIS OF EXCHANGE OF STOCK
2.01
Merger Consideration
. Subject to the terms and conditions of this
Agreement, at the Effective Time, each share of LFCB Common Stock issued and outstanding immediately prior to the Effective Time (other than Dissenting Shares, shares held as treasury stock of LFCB, and shares held directly or indirectly by Horizon,
except shares held in a fiduciary capacity or in satisfaction of a debt previously contracted, if any; collectively, the
Exempt LFCB Stock
) shall become and be converted into the right to receive in accordance with this
Article
II
, both: (i) 0.5878 shares of Horizon common stock (the
Exchange Ratio
) (as adjusted in accordance with the terms of this Agreement), without par value (the aggregate stock consideration to be paid in the Merger is referred
to herein as the
Stock Consideration
), and (ii) $1.73 in cash (the aggregate cash consideration to be paid in the Merger is referred to herein as the
Cash Consideration
) (with the Stock Consideration and
the Cash Consideration collectively referred to herein as the
Merger Consideration
);
provided, however,
that the LFCB stockholders owning less than 100 shares of LFCB Common Stock as of the Effective Time will only be
entitled to receive $17.25 per share in cash and will not be entitled to receive any of the Stock Consideration.
2.02
LFCB Options
.
(a)
Option Cancellation
Agreement.
Simultaneously with the execution of this Agreement, LFCB shall secure an option cancellation agreement from each holder of an LFCB Option (as defined in
Section
3.03
) providing that, as of the Effective
Time, all outstanding and unexpired LFCB Options will become fully vested and be converted into the right to receive an amount of cash equal to
the product of:
(i) the difference (if positive) between (A) $17.25 and (B) the exercise price of such
LFCB Option,
multiplied
by
(ii) the number of shares of LFCB Common Stock subject to such LFCB Option.
(b)
Payments pursuant to Option Cancellation Agreements.
At or prior to the Effective Time, LFCB shall pay the
LFCB Option holders the cash payments described in
Section
2.02(a)
less such amounts as are required to be withheld or deducted under the Code or any provision of state, local or foreign tax law with respect to the making
of such payment.
2.03
Anti-Dilution Adjustments
. If Horizon changes (or
establishes a record date for changing) the number of shares of Horizon common stock issued and outstanding prior to the Effective Time by way of a stock split, stock dividend, or similar transaction with respect to the outstanding Horizon common
stock, and the record date therefor shall be prior to the Effective Time, the Exchange Ratio shall be adjusted so the shareholders of LFCB at the
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Effective Time shall receive, in the aggregate, such number of shares of Horizon common stock representing the same percentage of the outstanding shares of Horizon common stock as would have been
represented by the number of shares of Horizon common stock the shareholders of LFCB would have received if any of the foregoing actions had not occurred. No adjustment shall be made under this
Section
2.02
solely as a
result of Horizon changing its cash dividend levels or issuing additional shares of Horizon common stock provided it receives value for such shares or such shares are issued in connection with a Horizon employee benefit plan or similar plan.
2.04
No Fractional Shares
. Notwithstanding any other provision in this Agreement,
no fractional shares of Horizon common stock and no certificates or scrip therefor, or other evidence of ownership thereof, will be issued in the Merger; instead, Horizon shall pay to each holder of LFCB Common Stock who otherwise would be entitled
to a fractional share of Horizon common stock an amount in cash (without interest) determined by multiplying such fraction by the average of the daily closing sales prices of a share of Horizons common stock, rounded to the nearest cent,
during the fifteen (15) consecutive trading days immediately preceding the second business day prior to the Closing Date;
provided, however,
that closing sales prices shall only be used for days during which such shares are actually
traded on the NASDAQ Global Select Market.
2.05
Exchange Procedures
.
(a) At and after the Effective Time, each physical certificate or
book-entry
account statement evidencing outstanding shares of LFCB Common Stock (each an
Old Certificate
) (other than the Exempt LFCB Stock) shall represent only the right to receive the
Merger Consideration in accordance with the terms of this Agreement. At or prior to the Effective Time, Horizon shall reserve a sufficient number of shares of Horizon common stock to be issued as part of the Merger Consideration.
(b) As promptly as practicable after the Effective Time (and provided LFCB has delivered to the Exchange
Agent all information which is necessary for the Exchange Agent to perform its obligations hereunder), the Exchange Agent shall mail to each holder of LFCB Common Stock who did not surrender, or who improperly surrendered, such shareholders
Old Certificates to the Exchange Agent, a letter of transmittal providing instructions as to the transmittal to the Exchange Agent of the Old Certificates in exchange for the issuance of the Stock Consideration, and the Cash Consideration in
exchange for the Old Certificates pursuant to the terms of this Agreement.
(c) Horizon shall cause a
book-entry
account statement representing that number of whole shares of Horizon common stock that each holder of LFCB Common Stock has the right to receive and a check in the amount of such holders
proportionate share of the Cash Consideration, as applicable, and any cash in lieu of fractional shares or dividends or distributions which such holder shall be entitled to receive, if any, to be delivered to such shareholder as soon as reasonably
practicable after delivery to Horizon of the Old Certificates (or bond or other indemnity satisfactory to Horizon if any of such certificates are lost, stolen
A-5
or destroyed) owned by such shareholder accompanied by a properly completed and executed letter of transmittal, in the form and substance satisfactory to Horizon, and any other documents required
by this Agreement or reasonably requested by Horizon or the Exchange Agent. No interest will be paid on any Merger Consideration that any such holder shall be entitled to receive pursuant to this
Article II
upon such delivery.
(d) No dividends or other distributions on Horizon common stock with a record date occurring after the
Effective Time shall be paid to the holder of any unsurrendered Old Certificate representing shares of LFCB Common Stock converted in the Merger into the right to receive shares of Horizon common stock until the holder thereof surrenders such Old
Certificates in accordance with this
Article II
. After becoming so entitled in accordance with this
Section
2.04
, the record holder thereof also shall be entitled to receive any such dividends or other distributions,
without any interest thereon, which theretofore had become payable with respect to shares of Horizon common stock such holder had the right to receive upon surrender of the Old Certificate.
(e) The stock transfer books of LFCB shall be closed immediately prior to the Effective Time and from and
after the Effective Time there shall be no transfers on the stock transfer records of LFCB of any shares of LFCB Common Stock. If, after the Effective Time, Old Certificates are presented to Horizon, they shall be canceled and exchanged for the
Merger Consideration deliverable in respect thereof pursuant to this Agreement in accordance with the procedures set forth in this
Article II
.
(f) Horizon shall be entitled to rely upon LFCBs stock transfer books to establish the identity of
those individuals, partnerships, corporations, trusts, joint ventures, organizations, or other entities (each, a
Person
) entitled to receive the Merger Consideration, which books shall be conclusive with respect thereto. In the
event of a dispute with respect to ownership of stock represented by any Old Certificate, Horizon shall be entitled to deposit any Merger Consideration represented thereby in escrow with an independent third party selected by Horizon and thereafter
be relieved from any and all liability with respect to any claims thereto.
(g) If any Old Certificate
shall have been lost, stolen, or destroyed, upon the making of an affidavit of that fact by the Person claiming such Old Certificate to be lost, stolen, or destroyed and, if required by Horizon, the posting by such Person of a bond or other
indemnity satisfactory to Horizon as indemnity against any claim that may be made against it with respect to such Old Certificate, Horizon will issue in exchange for such affidavit of lost, stolen, or destroyed Old Certificate, the Merger
Consideration deliverable in respect thereof pursuant to, and in accordance with, the other terms and conditions of this
Article II
.
(h) Notwithstanding anything in this Agreement to the contrary, at the Effective Time, all shares of LFCB
Common Stock that are held as treasury stock of LFCB or owned by Horizon (other than shares held in a fiduciary capacity or in satisfaction of a debt previously contracted) shall be cancelled and shall cease to exist, and no stock of Horizon or
other consideration shall be exchanged therefor.
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(i) Notwithstanding the foregoing, no party hereto shall be
liable to any former holder of LFCB Common Stock for any amount properly delivered to a public official pursuant to applicable abandoned property, escheat, or similar laws.
(j) If outstanding Old Certificates are not surrendered or the payment for them is not claimed prior to the
date on which the Merger Consideration payable therefor would otherwise escheat to, or become the property of any governmental unit or agency, the unclaimed Merger Consideration shall, to the extent permitted by abandoned property and any other
applicable law, become the property of Horizon (and to the extent not in its possession shall be delivered to it), free and clear of all claims or interest of any Person previously entitled thereto. Neither the Exchange Agent nor any party to this
Agreement shall be liable to any holder of shares of LFCB Common Stock for any Merger Consideration paid to a public official pursuant to applicable abandoned property, escheat or similar laws.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF LFCB
On or prior to the date hereof, LFCB has delivered to Horizon a schedule (the
LFCB Disclosure Schedule
) setting forth,
among other things, items the disclosure of which is necessary or appropriate either in response to an express disclosure requirement contained in a provision hereof or as an exception to one or more representations or warranties contained in this
Article III
or to one or more of its covenants contained in
Article V
.
For the purpose of this Agreement, and in relation
to LFCB, a
Material Adverse Effect
means any effect that (i) is material and adverse to the results of operations, properties, assets, liabilities, conditions (financial or otherwise), value, or business of LFCB and its
Subsidiaries (as defined below in this introduction to
Article III
) on a consolidated basis, or (ii) would materially impair the ability of LFCB or any of its Subsidiaries to perform its obligations under this Agreement or any related
agreement or otherwise materially threaten or materially impede the consummation of the Merger and the other transactions contemplated by this Agreement;
provided, however,
that Material Adverse Effect on LFCB shall not be deemed to include
the impact of (a) changes in banking and similar laws of general applicability to banks or their holding companies or interpretations thereof by courts or governmental authorities, (b) changes in GAAP or regulatory accounting requirements
applicable to banks or their holding companies generally, (c) effects of any action or omission taken with the prior written consent of Horizon or at the direction of Horizon, (d) changes resulting from professional expenses (such as
legal, accounting, and investment bankers fees) incurred in connection with this Agreement or the transactions contemplated herein, (e) the impact of the announcement of this Agreement and the transactions contemplated hereby, and
compliance with this Agreement on the business, financial condition, or results of operations of LFCB and its Subsidiaries, (f) changes in general economic conditions to the extent such changes do not materially disproportionately affect LFCB
and its Subsidiaries; and (g) the occurrence of any military or terrorist attack within the United States or any of its possessions or offices.
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For the purpose of this Agreement, and in relation to LFCB and its Subsidiaries,
knowledge
means those facts that are actually known by the executive officers of LFCB and its Subsidiaries. Additionally, for the purpose of this Agreement, and in relation to LFCB, its
Subsidiaries
shall mean
any entity which is required to be consolidated with LFCB for financial reporting purposes pursuant to United States generally accepted accounting principles (
GAAP
).
Accordingly, LFCB hereby represents and warrants to Horizon as follows, except as set forth in the LFCB Disclosure Schedule:
3.01
Organization and Authority
.
(a) LFCB is a corporation duly organized and validly existing under the laws of the state of Indiana and is
a registered bank holding company under the BHC Act. LFCB has full power and authority (corporate and otherwise) to own and lease its properties as presently owned and leased and to conduct its business in the manner and by the means utilized as of
the date hereof. LFCB has previously provided Horizon with a complete list of its Subsidiaries. Except for LCB, LFCB owns directly no voting stock or equity securities of any corporation, partnership, association, or other entity.
(b) LCB is an Indiana state chartered bank existing under the laws of the State of Indiana. LCB has full
power and authority (corporate and otherwise) to own and lease its properties as presently owned and leased and to conduct its business in the manner and by the means utilized as of the date hereof. LCB owns no voting stock or equity securities of
any corporation, partnership, association, or other entity.
3.02
Authorization
.
(a) LFCB has the requisite corporate power and authority to enter into this Agreement and to perform its
obligations hereunder, subject to the fulfillment of the conditions precedent set forth in
Sections 7.02(e)
and
(f)
hereof. This Agreement and its execution and delivery by LFCB have been duly authorized and approved by the Board
of Directors of LFCB and, assuming due execution and delivery by Horizon, constitutes a valid and binding obligation of LFCB, subject to the terms and conditions hereof, and is enforceable in accordance with its terms, except to the extent limited
by general principles of equity and public policy and by bankruptcy, insolvency, fraudulent transfer, reorganization, liquidation, moratorium, readjustment of debt, or other laws of general application relating to or affecting the enforcement of
creditors rights.
(b) Neither the execution of this Agreement nor consummation of the Merger
contemplated hereby: (i) conflicts with or violates the articles of incorporation or bylaws of LFCB or the charter documents of any of LFCBs Subsidiaries; (ii) conflicts with or violates any local, state, federal or foreign law,
statute, ordinance, rule, or regulation (provided that the approvals of or filings with applicable government regulatory agencies or authorities required for consummation of the Merger are obtained) or any court or administrative judgment, order,
injunction, writ, or decree; (iii) conflicts with, results in a breach of, constitutes a default
A-8
under, or requires any notice or consent under, any note, bond, indenture, mortgage, deed of trust, license, lease, contract, agreement, arrangement, commitment, or other instrument to which LFCB
or any of its Subsidiaries is a party or by which LFCB or any of its Subsidiaries is subject or bound; (iv) results in the creation of or gives any Person the right to create any lien, charge, claim, encumbrance, or security interest, or
results in the creation of any other rights or claims of any other party (other than Horizon) or any other adverse interest, upon any right, property, or asset of LFCB or any of its Subsidiaries; or (v) terminates or gives any Person the right
to terminate, accelerate, amend, modify, or refuse to perform under any note, bond, indenture, mortgage, agreement, contract, lease, license, arrangement, deed of trust, commitment, or other instrument to which LFCB or any of its Subsidiaries is
bound or with respect to which LFCB or any of its Subsidiaries is to perform any duties or obligations or receive any rights or benefits.
(c) Other than in connection or in compliance with the provisions of the applicable federal and state
banking, securities, antitrust, and corporation statutes, all as amended, and the rules and regulations promulgated thereunder, no notice to, filing with, exemption by, or consent, authorization, or approval of any governmental agency or body is
necessary for consummation of the Merger by LFCB.
3.03
Capitalization
.
(a) As of the date of this Agreement, the authorized capital stock of LFCB consists of 10,000,000 shares of
LFCB Common Stock, no par value per share, and 1,000,000 shares of preferred stock, of which 1,948,000 shares of LFCB Common Stock are issued and outstanding, no shares of preferred stock are issued and outstanding, and options to purchase 107,500
shares of LFCB Common Stock are outstanding (the
LFCB Options
), which number of LFCB Options shall be reduced to 97,500 immediately prior to the Effective Time as described in
Section
3.03(a)
of the LFCB
Disclosure Schedule. As of immediately prior to the Effective Time, there shall be 1,948,000 shares of LFCB Common Stock outstanding. Such issued and outstanding shares of LFCB Common Stock have been duly and validly authorized by all necessary
corporate action of LFCB, are validly issued, fully paid and nonassessable, and have not been issued in violation of any
pre-emptive
or similar rights. All of the LFCB Options have been duly and validly
authorized by all necessary corporate action of LFCB, are validly issued, and have not been issued in violation of any
pre-emptive
or similar rights. LFCB has no capital stock authorized, issued, or
outstanding other than as described in this
Section
3.03(a)
and has no intention or obligation to authorize or issue any other capital stock or any additional shares of stock or securities convertible into stock. Each share
of LFCB Common Stock is entitled to one vote per share.
(b) All of the issued and outstanding shares
of capital stock or other equity ownership interests of each Subsidiary of LFCB are owned by LFCB, directly or indirectly, free and clear of all liens, pledges, charges, claims, encumbrances, restrictions, security interests, options and
pre-emptive
rights, and of all other rights or claims of any other Person with respect thereto.
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(c) Other than the LFCB Options, there are no options,
warrants, commitments, calls, puts, agreements, understandings, arrangements, or subscription rights relating to any shares of LFCB Common Stock or any shares of capital stock of LFCBs Subsidiaries, or any securities convertible into or
representing the right to purchase or otherwise acquire any common stock or debt securities of LFCB or its Subsidiaries, by which LFCB is or may become bound. LFCB does not have any outstanding contractual or other obligation to repurchase, redeem,
or otherwise acquire any of the issued and outstanding shares of LFCB Common Stock. To LFCBs knowledge, there are no voting trusts, voting arrangements,
buy-sell
agreements, or similar arrangements
affecting the capital stock of LFCB or its Subsidiaries.
3.04
Organizational
Documents
. The articles of incorporation and bylaws of LFCB and any similar governing documents for each of LFCBs Subsidiaries, represent true, accurate, and complete copies of such corporate documents in effect as of the date of this
Agreement, and are attached to and included in
Section
3.04
of the LFCB Disclosure Schedule.
3.05
Compliance with Law
.
(a) None of LFCB or any of its Subsidiaries is currently in material violation of, and during the preceding
five (5) years, none has been in material violation of, any local, state, federal, or foreign law, statute, regulation, rule, ordinance, order, restriction, or requirement, and none is in violation of any order, injunction, judgment, writ, or
decree of any court or government agency or body (collectively, the
Law
). LFCB and its Subsidiaries possess and hold all licenses, franchises, permits, certificates, and other authorizations necessary for the continued conduct of
their business without interference or interruption, except where the failure to possess and hold the same would not have a Material Adverse Effect, and such licenses, franchises, permits, certificates, and authorizations are transferable (to the
extent required) to Horizon at the Effective Time without any restrictions or limitations thereon or the need to obtain any consents of government agencies or other third parties other than as set forth in this Agreement.
(b)
Section 3.05(b)
of the LFCB Disclosure Schedule sets forth, as of the date hereof, a schedule of
all officers (vice presidents and higher) and directors of LFCB who have outstanding loans from LFCB or any of its Subsidiaries, and there has been no default on, or forgiveness or waiver of, in whole or in part, any such loan during the two
(2) years immediately preceding the date hereof.
(c) All of the existing offices and branches of
LCB have been legally authorized and established in accordance with all applicable federal, state, and local laws, statutes, regulations, rules, ordinances, orders, restrictions, and requirements. LCB has no approved but unopened offices or
branches.
3.06
Accuracy of Information Provided to Horizon
. LFCB agrees that
the information concerning LFCB or any of its Subsidiaries that is provided or to be provided by
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LFCB to Horizon for inclusion or that is included in the Registration Statement or Proxy Statement (each as defined in
Section
6.02
), and any other documents to be filed
with any regulatory authority or governmental entity in connection with the Merger and the other transactions contemplated by this Agreement will: (a) at the respective times such documents are filed and, in the case of the Registration
Statement, when it becomes effective and, with respect to the Proxy Statement, when mailed, not be false or misleading with respect to any material fact, or omit to state any material fact necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading; or (b) in the case of the Proxy Statement or any amendment thereof or supplement thereto, at the time of the LFCB Shareholders Meeting, not be false or misleading with
respect to any material fact, or omit to state any material fact necessary to correct any statement in any earlier communication with respect to the solicitation of any proxy for the meeting in connection with which the Proxy Statement shall be
mailed. Notwithstanding the foregoing, LFCB shall have no responsibility for the truth or accuracy of any information with respect to Horizon or any of its Subsidiaries or any of their affiliates contained in the Registration Statement or the Proxy
Statement or in any document submitted to, or other communication with, any regulatory agency or governmental body.
3.07
Litigation and Pending Proceedings
.
(a) Except for lawsuits
involving collection of delinquent accounts, there are no claims, actions, suits, proceedings, mediations, arbitrations, or investigations pending or threatened against LFCB or any of its Subsidiaries, and to LFCBs knowledge there is no basis
for any claim, action, suit, proceeding, litigation, arbitration, or investigation against LFCB or any of its Subsidiaries.
(b) Neither LFCB nor any of its Subsidiaries is: (i) subject to any outstanding judgment, order, writ,
injunction, or decree of any court, arbitration panel, or governmental agency or authority; (ii) presently charged with or under governmental investigation with respect to, any actual or alleged violations of any law, statute, rule, regulation,
or ordinance; or (iii) the subject of any pending or threatened proceeding by any government regulatory agency or authority having jurisdiction over their respective business, assets, capital, properties, or operations.
3.08
Financial Statements and Reports
.
(a) LFCB has delivered to Horizon copies of the following financial statements and reports of LFCB and its
Subsidiaries, including the notes thereto (collectively, the
LFCB Financial Statements
):
(i) consolidated balance sheets and the related consolidated statements of earnings,
consolidated statements of cash flows, and consolidated statements of changes in shareholders equity of LFCB as of and for the fiscal years ended December 31, 2014, 2015 and 2016;
(ii) an internal unaudited consolidated balance sheet and income statement as of and for
the three months ended March 31, 2017 (without footnotes); and
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(iii) Call Reports (Call Reports)
for LCB for the periods ending on December 31, 2014, 2015, and 2016, and March 31, 2017.
(b) The LFCB Financial Statements present fairly, in all material respects, the consolidated financial
position of LFCB as of and at the dates shown and the consolidated results of operations, (if presented) cash flows, and (if presented) changes in shareholders equity for the periods covered thereby and are complete, correct, represent bona
fide transactions, and have been prepared from the books and records of LFCB and its Subsidiaries. The LFCB Financial Statements described in clause (i) above are audited financial statements and have been prepared in conformance with GAAP,
except as may otherwise be indicated in any accountants notes or reports with respect to such financial statements.
(c) Since December 31, 2016, on a consolidated basis, LFCB and its Subsidiaries have not incurred any
material liability other than in the ordinary course of business consistent with past practice.
3.09
Material Contracts
.
(a) As of the date of this Agreement, and except as disclosed by
Section
3.09(a)
of the LFCB Disclosure Schedule, neither LFCB nor any of its Subsidiaries, nor any of their respective assets, businesses, or operations, is a party to, or is bound or affected by, or receives benefits under the following material contracts
(collectively, the
Material Contracts
):
(b) any contract relating to the borrowing
of money in excess of $50,000 by LFCB or any of its Subsidiaries or the guarantee by LFCB or any of its Subsidiaries of any such obligation (other than contracts pertaining to fully-secured repurchase agreements, and trade payables, and contracts
relating to borrowings or guarantees made in the ordinary course of business),
(c) any contract
containing covenants that limit the ability of LFCB or any of its Subsidiaries to compete in any line of business or with any Person, or to hire or engage the services of any Person, or that involve any restriction of the geographic area in which,
or method by which, LFCB or any of its Subsidiaries may carry on its business (other than as may be required by Law (as defined in
Section
3.05(a)
) or any Governmental Authority (as defined in
Section
5.13
)), or any contract that requires it or any of its Subsidiaries to deal exclusively or on a sole source basis with another party to such contract with respect to the subject matter of such contract,
(d) any contract for, with respect to, or that contemplates, a possible merger, consolidation,
reorganization, recapitalization, joint venture, or other business combination, or asset sale or sale of equity securities not in the ordinary course of business consistent with past practice, with respect to LFCB or any of its Subsidiaries,
(e) any contract deemed material by LFCB or LCB for the continued operations of LFCB and/or LCB by Horizon
or any of its Subsidiaries after the Effective Time,
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(f) any lease of real or personal property providing for total
aggregate lease payments by or to LFCB or its Subsidiaries during the remaining term of the agreement in excess of $50,000 or having a remaining term in excess of two (2) years, other than financing leases entered into in the ordinary course of
business in which LFCB or any of its Subsidiaries is the lessor,
(g) any contract (other than an
extension of credit extended by LCB that is made in the ordinary course of business to unrelated third parties and in compliance with
Section
5.03
) that involves total aggregate expenditures or receipts by LFCB or any of
its Subsidiaries in excess of $50,000 during the remaining term of the agreement or having a remaining term in excess of two (2) years, or
(h) each licensing agreement or other contract with respect to patents, trademarks, copyrights, or other
intellectual property, including software agreements and including agreements with current or former employees, consultants, or contractors regarding the appropriation or the nondisclosure of any of its intellectual property or confidential
information.
(i) With respect to each of LFCBs Material Contracts: (i) each Material
Contract is in full force and effect; (ii) neither LFCB nor any of its Subsidiaries is in breach or default thereunder, as such terms or concepts are defined in each Material Contract; (iii) neither LFCB nor any of its Subsidiaries has
repudiated or waived any material provision of any Material Contract; (iv) to LFCBs knowledge, no other party to any Material Contract is in default; and (v) a true and complete copy of each Material Contract has been previously
delivered to Horizon.
(j) Neither LFCB nor any of its Subsidiaries have entered into any interest rate
swaps, caps, floors, option agreements, futures and forward contracts, or other similar risk management arrangements, whether entered into for LFCBs own account or for the account of one or more of its Subsidiaries or their respective
customers.
3.10
Absence of Undisclosed Liabilities
. Except as provided in
the LFCB Financial Statements and except for unfunded loan commitments and obligations on letters of credit to customers of LFCBs Subsidiaries made in the ordinary course of business, except for trade payables incurred in the ordinary course
of such Subsidiaries business, and except for the transactions contemplated by this Agreement or taken with the prior written consent of Horizon, none of LFCB or any of its Subsidiaries has, nor will have at the Effective Time, any obligation,
agreement, contract, commitment, liability, lease, or license made outside of the ordinary course of business, nor, to LFCBs knowledge, does there exist any circumstances resulting from transactions effected or events occurring on or prior to
the date of this Agreement or from any action omitted to be taken during such period which could reasonably be expected to result in any such obligation, agreement, contract, commitment, liability, lease, or license. None of LFCB or any of its
Subsidiaries is delinquent in the payment of any amount due pursuant to any trade payable, and each has properly accrued for such payables in accordance with GAAP.
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3.11
Title to Properties
.
(a)
Section 3.11(a)
of the LFCB Disclosure Schedule includes a list of all real property owned
(including other real estate owned (
OREO
)) and leased by LFCB or any Subsidiary. LFCB or one of its Subsidiaries, as the case may be, has marketable title in fee simple to all owned real property (including, without limitation,
all real property used as bank premises and all OREO); marketable title to all personal property reflected in the LFCB Financial Statements as of December 31, 2016, other than personal property disposed of in the ordinary course of business
since December 31, 2016; the right to use by valid and enforceable written lease or contract all other real property which LFCB or any of its Subsidiaries uses in its respective business; marketable title to, or right to use by terms of a valid
and enforceable written lease or contract, all other tangible and intangible property used in its respective business to the extent material thereto; and marketable title to all material property and assets acquired (and not disposed of) or leased
since December 31, 2016. All of such owned properties and assets are owned by LFCB or its Subsidiaries free and clear of all land or conditional sales contracts, mortgages, liens, pledges, restrictions, options, security, interests, charges,
claims, rights of third parties, or encumbrances of any nature except: (i) as set forth in
Section
3.11(a)
of the LFCB Disclosure Schedule; (ii) as specifically noted in reasonable detail in the LFCB Financial
Statements; (iii) statutory liens for taxes not yet delinquent or being contested in good faith by appropriate proceedings; (iv) pledges or liens required to be granted in connection with the acceptance of government deposits or granted in
connection with repurchase or reverse repurchase agreements; and (v) easements, encumbrances and liens, and other matters of record, imperfections of title, and other limitations which are not material in amount and which do not detract from
the value or materially interfere with the present or contemplated use of any of the properties subject thereto or otherwise materially impair the use thereof for the purposes for which they are held or used. All real property owned or leased by
LFCB or its Subsidiaries is in compliance in all respects with all applicable zoning and land use laws and there are no encroachments or other violations of law with respect to any such property. All such properties also comply, in all material
respects, with all applicable private agreements, zoning requirements, and other governmental laws and regulations relating thereto, and there are no condemnation proceedings pending or threatened with respect to such properties. All real property,
machinery, equipment, furniture, and fixtures owned or leased by LFCB or its Subsidiaries that is material to its respective business is in good operating condition for its intended purpose (ordinary wear and tear excepted) and has been and is being
maintained and repaired in the ordinary course of business.
(b) After the date hereof, Horizon shall
be entitled, at its own cost, to obtain new commitments for, and policies of title insurance or surveys in respect of, any real property owned or leased by LFCB or its Subsidiaries. Within thirty (30) days after the later of Horizons
receipt of all such surveys and title commitments, Horizon shall notify LFCB of any objections to any exceptions, conditions or other matters contained in or set forth in any survey or title commitment other than Standard Permitted Exceptions (the
Unpermitted Exceptions
). The term
Standard Permitted Exceptions
shall include (i) liens for real estate taxes and assessments not yet delinquent; and (ii) utility, access, and other easements,
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rights of way, restrictions, and exceptions existing on the real estate owned or leased by LFCB as shown in the title commitments or surveys, none of which impair such real property for the use
and business being conducted thereon in any material respect. Within ten (10) days after receipt of such written notice of Unpermitted Exceptions from Horizon, LFCB shall commence using its reasonable best efforts to cure any such Unpermitted
Exceptions to the satisfaction of Horizon prior to the Closing. If LFCB agrees to cure the Unpermitted Exceptions but is unable to cure the Unpermitted Exceptions to the reasonable satisfaction of Horizon prior to the Closing, or does not agree to
do so, Horizon may either: (i) waive the uncured Unpermitted Exceptions and close the transactions contemplated by this Agreement; or (ii) if such Unpermitted Exceptions decrease the value of the property by more than $175,000 in the
reasonable and good faith estimate of Horizon or would require the expenditure of monies (including legal fees and costs) in excess of $175,000 to cure such Unpermitted Exceptions, reduce the Merger Consideration by the amount Horizon reasonably and
in good faith determines will be required to remove or cure the Unpermitted Exceptions (or provide a reasonable alternative thereto). Such reduction in the Merger Consideration shall be adjusted for any tax savings resulting from the expenditure of
such amount (assuming a 35% tax rate).
(c) With respect to all real property presently or formerly
owned, leased, or used by LFCB or any of its Subsidiaries, LFCB, its Subsidiaries, and to the knowledge of LFCB, each of the prior owners, have conducted their respective business in material compliance with all applicable federal, state, county,
and municipal laws, statutes, regulations, rules, ordinances, orders, directives, restrictions, and requirements relating to, without limitation, responsible property transfer, underground storage tanks, petroleum products, air pollutants, water
pollutants, or storm water or process waste water or otherwise relating to the environment, air, water, soil, or toxic or hazardous substances or to the manufacturing, recycling, handling, processing, distribution, use, generation, treatment,
storage, disposal, or transport of any hazardous or toxic substances or petroleum products (including polychlorinated biphenyls, whether contained or uncontained, and asbestos-containing materials, whether friable or not), including, without
limitation, the Federal Solid Waste Disposal Act, the Hazardous and Solid Waste Amendments, the Federal Clean Air Act, the Federal Clean Water Act, the Occupational Health and Safety Act, the Federal Resource Conservation and Recovery Act, the Toxic
Substances Control Act, the Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, and the Superfund Amendments and Reauthorization Act of 1986, all as amended, and regulations of the Environmental Protection Agency,
the Nuclear Regulatory Agency, the Army Corps of Engineers, the Department of Interior, the United States Fish and Wildlife Service, and any state department of natural resources or state environmental protection agency now or at any time thereafter
in effect (collectively,
Environmental Laws
). There are no pending or threatened claims, actions, or proceedings by any local municipality, sewage district, or other governmental entity against LFCB or any of its Subsidiaries with
respect to the Environmental Laws, and, to LFCBs knowledge, there is no reasonable basis or grounds for any such claim, action, or proceeding. No environmental clearances are required for the conduct of the business of LFCB or any of its
Subsidiaries as currently conducted or the consummation of the Merger or any of the other transactions
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contemplated hereby. Neither LFCB nor any of its Subsidiaries is the owner, or to the knowledge of LFCB, has been in the chain of title or the operator or lessee, of any property on which any
substances have been used, stored, deposited, treated, recycled, or disposed of, other than in compliance with Environmental Laws and which substances, if known to be present on, at or under such property, would require
clean-up,
removal, treatment, abatement, response costs, or any other remedial action under any Environmental Law. Neither LFCB nor any of its Subsidiaries has any liability for any
clean-up
or remediation under any of the Environmental Laws with respect to any real property.
3.12
Loans and Investments
.
(a)
Section 3.12(a)
of the LFCB
Disclosure Schedule contains (i) a list of each loan by LCB that has been classified by regulatory examiners or management as Other Loans Especially Mentioned, Substandard, Doubtful, or Loss or
that has been identified by accountants or auditors (internal or external) as having a significant risk of uncollectability as of December 31, 2016, (ii) the most recent loan watch list of LCB and a list of all loans which have been determined
to be thirty (30) days or more past due with respect to principal or interest payments, have been placed on nonaccrual status, or have been designated as Troubled Debt Restructuring (
TDR
) loans, and (iii) a description
of all unfunded loan commitments (and loans currently under consideration) of the types and amounts described in
Section
5.03(a)(iv)
of this Agreement. LFCB and LCB have not sold, purchased, or entered into any loan
participation arrangement which was outstanding at December 31, 2016, except where such participation is on a pro rata basis according to the respective contributions of the participants to such loan amount.
Section
3.12(a)
of the LFCB Disclosure Schedule also contains a true, accurate, and complete list of all loans in which LCB has any participation interest or which have been made with or through another financial
institution on a recourse basis against LCB.
(b) All loans reflected in the LFCB Financial Statements
as of December 31, 2016 and which have been made, extended, renewed, restructured, approved, amended, or acquired since December 31, 2016: (i) have been made for good, valuable, and adequate consideration in the ordinary course of
business; (ii) constitute the legal, valid, and binding obligation of the obligor and any guarantor named therein, except to the extent limited by general principles of equity and public policy or by bankruptcy, insolvency, fraudulent transfer,
reorganization, liquidation, moratorium, readjustment of debt, or other laws of general application relative to or affecting the enforcement of creditors rights; (iii) are evidenced by notes, instruments, or other evidences of
indebtedness which are true, genuine, and what they purport to be; and (iv) are secured by perfected security interests or recorded mortgages naming LCB as the secured party or mortgagee (unless by written agreement to the contrary).
(c) The allowance for loan and lease losses and the carrying value for OREO which are shown on the LFCB
Financial Statements are, in the judgment of management of LFCB, adequate in all respects under the requirements of GAAP to provide for possible losses on items for which reserves were made, on loans and leases outstanding and OREO as of the
respective dates.
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(d) None of the investments reflected in the LFCB Financial
Statements as of and for the twelve months ended December 31, 2016, and none of the investments made by any Subsidiary of LFCB since December 31, 2016 are subject to any restriction, whether contractual or statutory, which materially
impairs the ability of such Subsidiary to dispose freely of such investment at any time. Neither LFCB nor any of its Subsidiaries is a party to any repurchase agreements with respect to securities. All United States Treasury securities, obligations
of other United States Government agencies and corporations, obligations of states of the United States and their political subdivisions, and other investment securities classified as held to maturity held by LFCB and LCB, as reflected
in the latest balance sheet in the LFCB Financial Statements, are carried in the aggregate at no more than cost adjusted for amortization of premiums and accretion of discounts. All United States Treasury securities, obligations of other United
States Government agencies and corporations, obligations of states of the United States and their political subdivisions, and other investment securities classified as available for sale held by LFCB and LCB, as reflected in the latest
balance sheet in the LFCB Financial Statements, are carried in the aggregate at market value. Provisions for losses have been made on all such securities that have had a decline in value deemed other than temporary as defined in SEC
Staff Accounting Bulletin No. 59.
3.13
Indebtedness
. Except as set forth in
Section
3.13
of the LFCB Disclosure Schedule and except for customer deposits and ordinary trade payables and FHLBI advances, neither LFCB nor any of its Subsidiaries has, and none will have at the Effective Time, any
indebtedness for borrowed money.
3.14
No Shareholder Rights
Plan
. LFCB has no outstanding shareholder rights plan or any other plan, program or agreement involving, restricting, prohibiting, or discouraging a change in control or merger of LFCB or which reasonably could be considered an
anti-takeover mechanism.
3.15
Employee Benefit Plans
.
(a) With respect to the employee benefit plans, as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended (
ERISA
), sponsored or otherwise maintained by any member of a controlled group of corporations under Code Section 414(b) of which LFCB is or was a member, and any trade or business
(whether or not incorporated) which is or was under common control with LFCB under Code Section 414(c), and all other entities which together with LFCB are or were prior to the date hereof treated as a single employer under Code
Section 414(m) or 414(o) (an
ERISA Affiliate
), whether written or oral, in which LFCB or any ERISA Affiliate participates as a participating employer, or to which LFCB or any ERISA Affiliate contributes, or any nonqualified
employee benefit plans or deferred compensation, bonus, stock, performance share, phantom stock or incentive plans or arrangements, or other employee benefit or fringe benefit programs for the benefit of former or current employees or directors (or
their beneficiaries or dependents) of LFCB or any ERISA Affiliate, and including any such plans which have been terminated, merged into another plan, frozen, or discontinued since January 1, 2011
A-17
(individually,
LFCB Plan
and collectively,
LFCB Plans
), LFCB represents and warrants, except as set forth in
Section
3.15(a)
of the
LFCB Disclosure Schedule:
(i) All such LFCB Plans have, on a continuous basis since
their adoption, been, in all material respects, maintained in compliance with their respective terms and with the requirements prescribed by all applicable statutes, orders, and governmental rules or regulations, including without limitation, ERISA
and the Department of Labor (Department) Regulations promulgated thereunder and the Code and Treasury Regulations promulgated thereunder.
(ii) All LFCB Plans intended to constitute
tax-qualified
plans under Code Section 401(a) have complied in form since their adoption and have been timely amended to comply in all material respects with all applicable requirements of the Code and
the Treasury Regulations and each such Plan either (A) has received a determination letter from the Internal Revenue Service upon which LFCB may rely regarding such plans tax qualified status under the Code, or (B) is a
pre-approved
volume submitter or prototype plan that is the subject of an opinion letter issued by the Internal Revenue Service.
(iii) All LFCB Plans that provide for payments of nonqualified deferred
compensation (as defined in Code Section 409A(d)(1)) have, in all material respects, been (A) operated in good faith compliance with the applicable requirements of Code Section 409A and applicable guidance thereunder since
January 1, 2005, and (B) amended to comply in written form with Code Section 409A and the Treasury Regulations promulgated thereunder.
(iv) No LFCB Plan allows for the granting of any awards over or with respect to any stock
or other securities of LFCB. All shares of LFCB Common Stock owned by the Lafayette Community Bank 401(k) Plan (the LFCB 401(k) Plan) are and have at all times constituted qualifying employer securities as defined in
Section 407(d)(5) of ERISA.
(v) Neither LFCB, an ERISA Affiliate, nor any other
fiduciary as defined in ERISA Section 3(21)(A) of a LFCB Plan has engaged in any transaction that may subject LFCB, any ERISA Affiliate, or any LFCB Plan to a civil penalty imposed by ERISA Section 502 or any other provision of ERISA or
excise taxes under Code Section 4971, 4975, 4976, 4977, 4979, or 4980B.
(vi) All
obligations required to be performed by LFCB or any ERISA Affiliate under any provision of any LFCB Plan have been performed by it in all material respects and, neither LFCB nor any ERISA Affiliate is, in any material respect, in default under or in
violation of any provision of any LFCB Plan.
(vii) All required reports and
descriptions for the LFCB Plans have, in all material respects, been timely filed and distributed to participants and beneficiaries, and all notices required by ERISA or the Code with respect to all LFCB Plans have been proper as to form and timely
given.
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(viii) No event has occurred which would
reasonably constitute grounds for an enforcement action by any party under Part 5 of Title I of ERISA with respect to any LFCB Plan.
(ix) There are no examinations, audits, enforcement actions or proceedings, or
any other investigations pending or threatened by any governmental agency involving any LFCB Plan.
(x) There are no actions, suits, proceedings, or claims pending (other
than routine claims for benefits) or threatened against LFCB or any ERISA Affiliate in connection with any LFCB Plan or the assets of any LFCB Plan.
(xi) Any LFCB Plan may be amended and terminated at any time without any
material liability and these rights have always been maintained by LFCB and its ERISA Affiliates.
(b) LFCB has provided or made available to Horizon true, accurate, and complete copies and, in the case of
any plan or program which has not been reduced to writing, a materially complete summary, of all of the following LFCB Plans, as applicable:
(i) All current pension, retirement, profit-sharing, savings, stock
purchase, stock bonus, stock ownership, stock option, restricted stock, restricted stock unit, phantom stock, performance share, and stock appreciation right plans, all amendments thereto, and, if required under the reporting and disclosure
requirements of ERISA, all current summary plan descriptions thereof (including any modifications thereto);
(ii) All current employment, deferred compensation (whether funded or
unfunded), salary continuation, change in control, consulting, bonus, severance, and collective bargaining, agreements, arrangements, or understandings;
(iii) All current executive and other incentive compensation plans, programs,
and agreements;
(iv) All current group insurance, medical, and
prescription drug arrangements, policies, or plans;
(v) All other
current incentive, welfare, or employee benefit plans, understandings, arrangements, or agreements, maintained or sponsored, participated in, or contributed to by LFCB for its current or former directors, officers, or employees;
(vi) All reports filed with the Internal Revenue Service or the Department
within the preceding three (3) years by LFCB or any ERISA Affiliate with respect to any LFCB Plan;
(vii) All current participants in such plans and programs and all participants with benefit
entitlements under such plans and programs; and
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(viii) Valuations or allocation
reports for any defined contribution and defined benefit plans as of the most recent allocation and valuation dates.
(c) Except as disclosed in
Section
3.15(c)
of the LFCB Disclosure Schedule, no
current or former director, officer, or employee of LFCB or any ERISA Affiliate (i) is entitled to or may become entitled to any benefit under any LFCB Plans that are welfare benefit plans (as defined in ERISA Section 3(1)) after
termination of employment with LFCB or any ERISA Affiliate, except to the extent such individuals may be entitled to continue their group health care coverage pursuant to Code Section 4980B, or (ii) is currently receiving, or entitled to
commence receiving, a disability benefit under a long-term or short-term disability plan that is a LFCB Plan maintained by LFCB or an ERISA Affiliate.
(d) With respect to all LFCB Plans that are group health plans as defined in ERISA Section 607(1),
sponsored or maintained by LFCB or any ERISA Affiliate, no director, officer, employee, or agent of LFCB or any ERISA Affiliate has engaged in any action or failed to act in such a manner that, as a result of such action or failure to act, would
cause a tax to be imposed on LFCB or any ERISA Affiliate under Code Section 4980B(a), or would cause a penalty to be imposed under ERISA and the regulations promulgated thereunder. With respect to all such plans, all applicable provisions of
Code Section 4980B and ERISA Sections
601-606
have been complied with by LFCB or any ERISA Affiliate, and all other provisions of ERISA and the regulations promulgated thereunder have been complied with
in all material respects.
(e) Except as disclosed in
Section
3.15(e)
of the
LFCB Disclosure Schedule, there are no collective bargaining, employment, management, consulting, deferred compensation, change in control, reimbursement, indemnity, retirement, early retirement, severance, or similar plans or agreements,
commitments, or understandings, or any employee benefit or retirement plan or agreement, binding upon LFCB or any ERISA Affiliate, and no such agreement, commitment, understanding, or plan is under discussion or negotiation by management with any
employee or group of employees, any member of management, or any other Person.
(f) No Voluntary
Employees Beneficiary Association (
VEBA
), as defined in Code Section 501(c)(9), is sponsored or maintained by LFCB or any ERISA Affiliate.
(g) Except as contemplated in this Agreement or as disclosed in
Section
3.15(g)
of the LFCB Disclosure Schedule, there are no benefits or liabilities under any employee benefit plan or program that will be accelerated or otherwise come due as a result of the transactions contemplated by the terms of this Agreement.
(h) Neither LFCB nor any of its ERISA Affiliates has ever sponsored, maintained, participated in,
contributed to, or had any obligation with respect to any plan that is subject to Code Section 412 or Title IV of ERISA, that is or has been subject to Sections 4063 or 4064 of ERISA, or that is a multiple employer welfare
arrangement, as defined in Section 3(40) of ERISA. Neither LFCB nor any of its ERISA Affiliates has ever participated in or had any obligation to contribute to a multiemployer plan, as defined in Section 3(37) of ERISA.
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(i) As a result, directly or indirectly, of the transactions
contemplated by this Agreement (including without limitation any termination of employment relating thereto and occurring prior to, at or following the Effective Time), LFCB, its ERISA Affiliates, and their respective successors will not 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 Code Section 280G.
(j) Except as contemplated by this Agreement, neither LFCB nor any ERISA Affiliate has made any promises or
commitments, whether legally binding or not, to create any new plan, agreement, or arrangement, or to modify or change in any material way LFCB Plans.
3.16
Labor and Employment Matters
. LFCB is and has been in compliance
with all applicable Laws relating to labor and employment, including those relating to wages, hours, collective bargaining, unemployment compensation, workers compensation, equal employment opportunity, age and disability discrimination,
immigration control, employee classification, information privacy and security, payment, and withholding of taxes. To the knowledge of LFCB, no employee with annual compensation of $40,000 or more plans to terminate his or her employment with LFCB
or any Subsidiary. Within the past three (3) years, there has not been, and as of the date of this Agreement there is not pending or threatened, any labor dispute, work stoppage, labor strike, or lockout against LFCB. No employee of LFCB or any
of its Subsidiaries is covered by an effective or pending collective bargaining agreement or similar labor agreement. To LFCBs knowledge, there has not been any activity on behalf of any labor organization or employee group to organize any
such employees. Except as set forth on
Section
3.16
of the LFCB Disclosure Schedule, no employee or independent contractor of LFCB or any of its Subsidiaries is a party to any employment agreement, confidentiality, non
-
disclosure, or proprietary information agreement,
non-compete
agreement,
non-solicitation
agreement, or any similar agreement
with LFCB or any of its Subsidiaries (the
Employee Agreements
), and neither LFCB, any Subsidiary or any employee or independent contractor is in violation of any such Employee Agreement. LFCB is in compliance with all notice
and other requirements under the Worker Adjustment and Retraining Notification Act of 1988, and any other similar applicable foreign, state, or local laws relating to facility closings and layoffs.
3.17
Obligations to Employees
. All material obligations and
liabilities of and all payments by LFCB or any ERISA Affiliate and all LFCB Plans, whether arising by operation of law, by contract, or by past custom, for payments to trusts or other funds, to any government agency or authority or to any present or
former director, officer, employee, or agent (or his or her heirs, legatees, or legal representatives) have been and are being paid to the extent required by applicable law or by the plan, trust, contract, or past custom or practice, and adequate
actuarial accruals and reserves for such payments have been and are being made by LFCB or an ERISA Affiliate in accordance with GAAP and applicable law applied on a consistent basis and sound actuarial methods with respect to the following:
(a) withholding taxes or unemployment compensation; (b) LFCB Plans; (c) employment, salary continuation, change in control, consulting, retirement, early retirement, severance, or reimbursement; and
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(d) collective bargaining plans and agreements. All accruals and reserves referred to in this
Section
3.17
are correctly and accurately reflected and accounted for
in the LFCB Financial Statements and the books, statements, and records of LFCB.
3.18
Taxes, Returns and Reports
. Each of LFCB and its Subsidiaries has
since January 1, 2010 (a) duly and timely filed all federal, state, local, and foreign tax returns of every type and kind required to be filed, and each such return is true, accurate, and complete; (b) paid or otherwise adequately reserved
in accordance with GAAP for all taxes, assessments, and other governmental charges due or claimed to be due upon it or any of its income, properties, or assets; and (c) not requested an extension of time for any such payments (which extension
is still in force). LFCB has established, and shall establish in the Subsequent LFCB Financial Statements (as defined in
Section
5.11
), in accordance with GAAP, a reserve for taxes in the LFCB Financial Statements adequate
to cover all of LFCBs and its Subsidiaries tax liabilities (including, without limitation, income taxes, payroll taxes and withholding, and franchise fees) for the periods then ending. Neither LFCB nor any of its Subsidiaries has, nor
will any of them have, any liability for taxes of any nature for or with respect to the operation of its business, from the date hereof up to and including the Effective Time, except to the extent set forth in the Subsequent LFCB Financial
Statements (as defined in
Section
5.11
) or as accrued or reserved for on the books and records of LFCB or its Subsidiaries. Neither LFCB nor any of its Subsidiaries is currently under audit by any state or federal taxing
authority. No federal, state, or local tax returns of LFCB or any of its Subsidiaries have been audited by any taxing authority during the past five (5) years.
3.19
Deposit Insurance
. The deposits of LCB are insured by the Federal
Deposit Insurance Corporation in accordance with the Federal Deposit Insurance Act, as amended, to the fullest extent provided by applicable law, and LFCB or LCB has paid, prepaid, or properly reserved or accrued for all current premiums and
assessments with respect to such deposit insurance.
3.20
Insurance
.
Section
3.20
of the LFCB
Disclosure Schedule contains a true, accurate, and complete list of all policies of insurance (including, without limitation, bankers blanket bond, directors and officers liability insurance, property and casualty insurance, group
health or hospitalization insurance, and insurance providing benefits for employees) owned or held by LFCB or any of its Subsidiaries on the date hereof or with respect to which LFCB or any of its Subsidiaries pays any premiums. Each such policy is
in full force and effect and all premiums due thereon have been paid when due.
3.21
Books and Records
. The books of account, minute books, stock
record books, and other records of LFCB and its Subsidiaries are complete and correct in all material respects and have been maintained in accordance with the LFCBs business practices and all applicable Laws, including the maintenance of an
adequate system of internal controls required by such Laws. The minute books of LFCB and each of its Subsidiaries contain accurate and complete records, in all material respects, of all meetings held of, and corporate action taken by, its respective
shareholders, boards of directors, and committees of the boards of directors. At the Closing, all of those books and records will be in the possession of LFCB and its Subsidiaries.
A-22
3.22
Broker
s,
Finder
s or Other Fees
. Except for reasonable fees and expenses of LFCBs attorneys and accountants and the contractually-agreed fees and expenses of Renninger & Associates LLC
(
Renninger
), LFCBs investment banker under the agreement identified on
Section
3.22
of the LFCB Disclosure Schedule, all of which shall be paid or accrued by LFCB at or prior to the Effective Time,
no agent, broker, or other Person acting on behalf of LFCB or any of its Subsidiaries or under any authority of LFCB or any of its Subsidiaries is or shall be entitled to any commission, brokers or finders fee, or any other form of
compensation or payment from any of the parties hereto relating to this Agreement or the Merger or other transactions contemplated hereby.
3.23
Interim Events
. Except as otherwise permitted hereunder or
disclosed in
Section
3.23
of the LFCB Disclosure Schedule, since December 31, 2016, neither LFCB nor any of its Subsidiaries has:
(a) Experienced any events, changes, developments or occurrences which have had, or are reasonably likely
to have, a Material Adverse Effect on LFCB;
(b) Suffered any damage, destruction, or loss to any of
its properties, not fully paid by insurance proceeds, in excess of $100,000 individually or $250,000 in the aggregate;
(c) Declared, distributed or paid any dividend or other distribution to its shareholders;
(d) Repurchased, redeemed, or otherwise acquired shares of its common stock, issued any shares of its
common stock or stock appreciation rights, or sold or agreed to issue or sell any shares of its common stock, including the issuance of any stock options, or any right to purchase or acquire any such stock or any security convertible into such stock
or taken any action to reclassify, recapitalize, or split its stock;
(e) Granted or agreed to grant
any increase in benefits payable or to become payable under any pension, retirement, profit sharing, change in control, health, bonus, insurance, or other welfare benefit plan or agreement to employees, officers, or directors of LFCB or a
Subsidiary;
(f) Increased the salary of (or granted any bonus to) any director, officer, or employee,
except for normal increases in the ordinary course of business and in accordance with past practices, or entered into any employment contract, indemnity agreement, or understanding with any officer or employee or installed or amended any existing
employee welfare, pension, retirement, change in control, stock option, stock appreciation, stock dividend, profit sharing, or other similar plan or arrangement;
(g) Leased, sold, or otherwise disposed of any of its assets except in the ordinary course of business or
leased, purchased, or otherwise acquired from third parties any assets except in the ordinary course of business;
(h) Except for the Merger and other transactions contemplated by this Agreement, merged, consolidated, or
sold shares of its (or any of its Subsidiaries) common stock, agreed
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to merge or consolidate LFCB or any of its Subsidiaries with or into any third party, agreed to sell any shares of its (or any of its Subsidiaries) common stock, or acquired or agreed to
acquire any stock, equity interest, assets, or business of any third party;
(i) Incurred, assumed, or
guaranteed any material obligation or liability (fixed or contingent) other than obligations and liabilities incurred in the ordinary course of business;
(j) Mortgaged, pledged or subjected to a lien, security interest, option, or other encumbrance any of its
assets except for tax and other liens which arise by operation of law and with respect to which payment is not past due and except for pledges or liens: (i) required to be granted in connection with acceptance by LCB of government deposits; or
(ii) granted in connection with repurchase or reverse repurchase agreements;
(k) Canceled, released, or
compromised any loan, debt, obligation, claim, or receivable other than in the ordinary course of business;
(l) Entered into any transaction, contract, or commitment other than in the ordinary course of business;
(m) Agreed to enter into any transaction for the borrowing or loaning of monies, other than in the ordinary
course of its lending business;
(n) Amended their articles of incorporation, charter, or bylaws or
adopted any resolutions by their board of directors or shareholders with respect to the same; or
(o) Conducted its business in any manner other than substantially as it was being conducted prior to
December 31, 2016.
3.24
Ins
i
der Transactions
. During the preceding five
(5) years, no officer or director of LFCB or any of its Subsidiaries or member of the immediate family or related interests (as such terms are defined in Regulation O) of any such officer or director has currently,
or has had during such time period, any direct or indirect interest in any property, assets, business, or right which is owned, leased, held, or used by LFCB or any Subsidiary or in any liability, obligation, or indebtedness of LFCB or any
Subsidiary, except for deposits of LCB, securities issued by LFCB, and interests in compensatory arrangements.
3.25
Indemnification Agreements
.
(a) Neither LFCB nor any of its
Subsidiaries is a party to any indemnification, indemnity, or reimbursement agreement, contract, commitment or understanding to indemnify any present or former director, officer, employee, shareholder, or agent against liability or hold the same
harmless from liability other than as expressly provided in the articles of incorporation or bylaws of LFCB or the charter documents of a Subsidiary.
(b) During the preceding five (5) years, no claims have been made against or filed with LFCB or any of
its Subsidiaries nor have any claims been threatened against LFCB or a Subsidiary, for indemnification against liability or for reimbursement of any costs or expenses incurred in connection with any legal or regulatory proceeding by any present or
former director, officer, shareholder, employee, or agent of LFCB or any of its Subsidiaries.
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3.26
Shareholder
Approval
. The affirmative vote of the holders of a majority of the LFCB Common Stock (which are issued and outstanding on the record date relating to the meeting of shareholders contemplated by
Section
5.01
of this Agreement) is required for shareholder approval of this Agreement and the Merger.
3.27
Intellectual Property
.
(a) LFCB and its Subsidiaries own, or are licensed or otherwise possess sufficient legally enforceable
rights to use, all material Intellectual Property (as defined in
Section
3.27(g)
) that is used by LFCB or its Subsidiaries in their respective businesses as currently conducted. Neither LFCB nor any of its Subsidiaries has
(i) licensed any Intellectual Property owned by it or its Subsidiaries to any third party, or (ii) entered into any exclusive agreements relating to Intellectual Property owned by it.
(b) LFCB and its Subsidiaries have not infringed or otherwise violated any material Intellectual Property
rights of any third party during the preceding five (5) years. There is no claim asserted or threatened against LFCB and/or its Subsidiaries or any indemnitee thereof concerning the ownership, validity, registerability, enforceability,
infringement, use, or licensed right to use any Intellectual Property.
(c) To LFCBs knowledge,
no third party has infringed, misappropriated, or otherwise violated LFCBs or any of its Subsidiaries Intellectual Property rights during the preceding five (5) years. There are no claims asserted or threatened by LFCB or any of its
Subsidiaries, nor has LFCB or any of its Subsidiaries decided to assert or threaten a claim, that (i) a third party infringed or otherwise violated any of their Intellectual Property rights; or (ii) a third partys owned or claimed
Intellectual Property interferes with, infringes, dilutes, or otherwise harms any of their Intellectual Property rights.
(d) To the extent LFCB has designated any of its information, materials, or processes a trade secret, LFCB
and its Subsidiaries have taken reasonable measures to protect the confidentiality of all trade secrets that are owned, used, or held by them.
(e) None of the Software (as defined in subsection
(g)
below: (i) contains any bug, defect, or
error that materially and adversely affects the use, functionality, or performance of such Software or any system containing or used in conjunction with such Software (collectively,
Defective Code
) or (ii) fails to comply
with any applicable warranty or other contractual commitment relating to the use, functionality, or performance of such Software or system.
(f) No Software contains any back door, drop dead device, time bomb,
Trojan Horse, virus, worm, spyware, or adware (as such terms are commonly understood in the software industry) or any other code designed or intended to have, or capable of performing or
facilitating, any of the following functions: (i) disrupting, disabling, harming or otherwise impeding in any manner the operation of, or providing unauthorized access to, a computer system or network or other device on which such code is
stored or installed, or (ii) compromising the privacy or data security of any user or damaging or destroying any data file without the users consent; (collectively,
Malicious Code
).
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(g) For purposes of this Agreement,
Intellectual
Property
shall mean all patents, trademarks, trade names, service marks, domain names, social media handles and related accounts, database rights, copyrights and any applications therefor, mask works, technology,
know-how,
trade secrets, ideas, algorithms, processes, computer software programs or applications (in both source code and object code form) (collectively,
Software
), and tangible or intangible
proprietary information or material and all other intellectual property or proprietary rights of any kind, whether or not registered.
3.28
Information Technology
. The computers, Software, computer programs, in source code and object code forms, servers, workstations, routers, hubs, switches, circuits, networks, data communications
lines, repair and refurbishment equipment and all other information technology equipment owned, used, or held for use by LFCB or LCB (collectively,
LFCB IT Assets
) (i) operate and perform in all material respects in accordance
with their documentation and functional specifications and otherwise as required for the conduct of LFCBs and LCBs businesses and have not materially malfunctioned or failed within the past three (3) years; and (ii) do not
contain any Defective Code, Malicious Code, or open source code. LFCB and LCB take commercially reasonable actions, consistent with current banking industry standards, to protect the confidentiality, integrity and security of the IT Assets (and all
third party and customer information and transactions stored or contained therein or transmitted thereby) against any unauthorized use, access, interruption, modification or corruption, including, but not limited to, (A) the use of robust
encryption technology, and (B) the implementation of a comprehensive security plan which (x) promptly identify any and all internal and external risks to the security of LFCBs and/or LCBs confidential information or that of
third parties or customers, and (y) implements, monitors, and improves adequate and effective safeguards to control those risks. LFCB and its Subsidiaries have achieved a baseline maturity level in all domains of its information
systems according to the Federal Financial Institutions Examination Council (
FFIEC
) Cybersecurity Assessment Tool. Seller has implemented commercially reasonable data backup, data storage, system redundancy, and disaster avoidance
and recovery procedures, as well as a commercially reasonable business continuity plan, in each case consistent with banking industry practices. No claims are pending or threatened in writing against LFCB or LCB alleging a violation of any
Persons privacy rights or rights regarding the protection of personally identifiable information or other
non-public
information.
3.29
Community Reinvestment Act
. LCB received a rating of
satisfactory or better in its most recent examination or interim review with respect to the Community Reinvestment Act.
3.30
Bank Secrecy and Anti-Money Laundering Compliance
. Neither LFCB nor any of its Subsidiaries has received any notice or communication from any regulatory authority alleging violation of, or
noncompliance with, any legal requirement concerning bank secrecy or anti-money laundering, including the Currency and Foreign Transactions Reporting Act, the Money Laundering Control Act of 1986,
Annunzio-Wylie
Anti-Money Laundering Act, the Money Laundering Suppression Act of 1994, and the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act
of
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2001 (also known as the USA PATRIOT Act) (each such legal requirement and the rules promulgated thereunder, a
BSA/AML Law
). LFCB and its Subsidiaries have not been cited,
fined, or otherwise notified of any failure by it to comply with a BSA/AML Law in the past five (5) years. To the knowledge of LFCB and its Subsidiaries, there are no facts or circumstances that could form the basis for assertion of any
proceeding against LFCB or its Subsidiaries under any BSA/AML Law that, if determined adversely to LFCB or its Subsidiaries, could reasonably be expected to adversely affect LFCB or its Subsidiaries.
3.31
Agreements with Regulatory Agencies
. Neither LFCB nor
any of its Subsidiaries is subject to any
cease-and-desist,
consent order or other order, or enforcement action issued by, or is a party to any written agreement,
consent agreement, or memorandum of understanding with, or is a party to any commitment letter or similar undertaking to, or is subject to any order or directive by, or has been ordered to pay any civil money penalty by, or has been, during the
preceding five (5) years, a recipient of any supervisory letter from, or, during the preceding five (5) years, has adopted any policies, procedures, or board resolutions at the request or suggestion of any regulatory agency or other
governmental entity that currently restricts (or restricted), in any material respect, the conduct of its business or that in any material manner relates to its capital adequacy, its ability to pay dividends, its credit or risk management policies,
its management, or its business, other than those of general application that apply to similarly situated bank holding companies or their subsidiaries (a
LFCB Regulatory Agreement
), nor has LFCB or any of its Subsidiaries been
advised, during the preceding five (5) years, by any regulatory agency or other governmental entity that it is considering issuing, initiating, ordering, or requesting any such LFCB Regulatory Agreement. There are no refunds or restitutions
required to be paid or corrective actions (including items designated as matters requiring attention) required to be taken as a result of any criticism of any regulatory agency or body cited in any examination report of LFCB or any of
its Subsidiaries as a result of an examination by any regulatory agency or body, or set forth in any accountants or auditors report to LFCB or any of its Subsidiaries.
3.32
Approval Delays
. To LFCBs knowledge, there is no reason why
the granting of any of the Regulatory Approvals (as defined in
Section
7.01(e)
) would be denied or unduly delayed.
3.33
Internal Controls
. LFCB and its Subsidiaries have devised and maintain a system of
internal accounting controls sufficient, in the reasonable opinion of management of LFCB and LCB, to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with GAAP. During the preceding three (3) years, (i) through the date hereof, neither LFCB nor any of 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 LFCB or any of its Subsidiaries or their respective internal accounting controls, including any material complaint, allegation,
assertion, or claim that LFCB or any of its Subsidiaries has engaged in questionable accounting or auditing practices, and (ii) no attorney representing LFCB or any of its Subsidiaries, whether or not employed by LFCB or any of its
Subsidiaries, has reported
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evidence of a violation of securities laws, breach of fiduciary duty or similar violation by LFCB or any of its officers, directors, employees, or agents to the Board of Directors of LFCB or any
committee thereof or to any director or officer of LFCB.
3.34
Fiduciary
Accounts
. LFCB and each of its Subsidiaries has properly administered all accounts for which it acts as a fiduciary, including, without limitation, accounts for which it serves as a trustee, agent, custodian, personal representative,
guardian, conservator, or investment advisor, in accordance with the terms of the governing documents and applicable laws and regulations. Neither LFCB nor any of its Subsidiaries, nor any of their respective directors, officers, or employees, has
committed any breach of trust with respect to any fiduciary account, and the records for each such fiduciary account are true and correct and accurately reflect the assets of such fiduciary account.
3.35
Fairness Opinion
. LFCB has received an opinion from Renninger to
the effect that, as of the date of this Agreement, the Merger Consideration to be received by the stockholders of LFCB pursuant to this Agreement is fair for such stockholders from a financial point of view. Such opinion has not been amended or
rescinded as of the date of this Agreement.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF HORIZON
On or prior to the date hereof, Horizon has delivered to LFCB a schedule (the
Horizon Disclosure Schedule
) setting forth,
among other things, items the disclosure of which is necessary or appropriate either in response to an express disclosure requirement contained in a provision hereof or as an exception to one or more representations or warranties contained in this
Article IV
or to one or more of its covenants contained in
Article V
or
Article VI
.
For the purpose of this
Agreement, and in relation to Horizon and its Subsidiaries (as defined in this introduction to
Article IV
), a
Material Adverse Effect on Horizon
means any effect that (i) is material and adverse to the results of
operations, properties, asset, liabilities, condition (financial or otherwise), value, or business of Horizon and its Subsidiaries on a consolidated basis, or (ii) would materially impair the ability of Horizon or any of its Subsidiaries to
perform its obligations under this Agreement or any related agreement or otherwise materially threaten or materially impede the consummation of the Merger and the other transactions contemplated by this Agreement;
provided, however,
that
Material Adverse Effect on Horizon shall not be deemed to include the impact of (a) changes in banking and similar laws of general applicability to banks or savings associations or their holding companies or interpretations thereof by courts or
governmental authorities, (b) changes in GAAP or regulatory accounting requirements applicable to banks, savings associations, or their holding companies generally, (c) the impact of the announcement of this Agreement and the transactions
contemplated hereby, and compliance with this Agreement on the business, financial condition, or results of operations of Horizon and its Subsidiaries, (d) changes resulting from professional expenses (such as legal, accounting, and investment
bankers fees)
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incurred in connection with this Agreement or the transactions contemplated herein, (e) changes in general economic conditions to the extent such changes do not materially disproportionately
affect Horizon and its Subsidiaries, and (f) the occurrence of any military or terrorist attack within the United States or any of its possessions or offices; provided that in no event shall a change in the trading price of the shares of
Horizon common stock, by itself, be considered to constitute a Material Adverse Effect on Horizon and its Subsidiaries taken as a whole (it being understood that the foregoing proviso shall not prevent or otherwise affect a determination that any
effect underlying or caused by such decline has resulted in a Material Adverse Effect).
For the purpose of this Agreement, and in
relation to Horizon and its Subsidiaries,
knowledge
means those facts that are actually known by the executive officers of Horizon. Additionally, for the purpose of this Agreement, and in relation to Horizon, its
Subsidiaries
shall mean any entity which is required to be consolidated with Horizon for financial reporting purposes pursuant to GAAP.
Accordingly, Horizon represents and warrants to LFCB as follows, except as set forth in the Horizon Disclosure Schedule:
4.01
Organization and Authority
.
(a) Horizon is a corporation duly organized and validly existing under the laws of the State of Indiana and
is a registered bank holding company under the BHC Act. Horizon has full power and authority (corporate and otherwise) to own and lease its properties as presently owned and leased and to conduct its business in the manner and by the means utilized
as of the date hereof.
(b) Horizon Bank is a national bank chartered and existing under the laws of
the United States. Horizon Bank has full power and authority (corporate and otherwise) to own and lease its properties as presently owned and leased and to conduct its business in the manner and by the means utilized as of the date hereof.
(c) Each of Horizons Subsidiaries other than Horizon Bank is duly organized and validly existing
under the laws of its jurisdiction of organization, and has full power and authority (corporate and otherwise) to own and lease its properties as presently owned and leased and to conduct its business in the manner and by the means utilized as of
the date hereof.
4.02
Authorization
.
(a) Horizon has the requisite corporate power and authority to enter into this Agreement and to perform its
obligations hereunder, subject to the fulfillment of the conditions precedent set forth in
Sections 7.01(d)
,
(e)
,
(f)
, and
(k)
hereof. This Agreement and its execution and delivery by Horizon have been duly
authorized and approved by the Board of Directors of Horizon and, assuming due execution and delivery by LFCB, constitutes a valid and binding obligation of Horizon, subject to the terms and conditions hereof, and is
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enforceable in accordance with its terms, except to the extent limited by general principles of equity and public policy and by bankruptcy, insolvency, fraudulent transfer, reorganization,
liquidation, moratorium, readjustment of debt, or other laws of general application relating to or affecting the enforcement of creditors rights.
(b) Neither the execution of this Agreement nor consummation of the Merger contemplated hereby:
(i) conflicts with or violates the Articles of Incorporation or Bylaws of Horizon or the charter documents of any of its Subsidiaries; (ii) conflicts with or violates any local, state, federal, or foreign law, statute, ordinance, rule or
regulation (provided that the approvals of or filings with applicable government regulatory agencies or authorities required for consummation of the Merger are obtained) or any court or administrative judgment, order, injunction, writ, or decree;
(iii) conflicts with, results in a breach of, constitutes a default under, or requires any notice or consent under, any note, bond, indenture, mortgage, deed of trust, license, lease, contract, agreement, arrangement, commitment, or other
instrument to which Horizon or any of its Subsidiaries is a party or by which Horizon or any of its Subsidiaries is subject or bound; (iv) results in the creation of or gives any Person the right to create any lien, charge, claim, encumbrance,
or security interest, or results in the creation of any other rights or claims of any other party (other than LFCB) or any other adverse interest, upon any right, property, or asset of Horizon or any of its Subsidiaries; or (v) terminates or
gives any Person the right to terminate, accelerate, amend, modify, or refuse to perform under any note, bond, indenture, mortgage, agreement, contract, lease, license, arrangement, deed of trust, commitment, or other instrument to which Horizon or
any of its Subsidiaries is bound or with respect to which Horizon or any of its Subsidiaries is to perform any duties or obligations or receive any rights or benefits.
(c) Other than in connection or in compliance with the provisions of the applicable federal and state
banking, securities, antitrust and corporation statutes, all as amended, and the rules and regulations promulgated thereunder, no notice to, filing with, exemption by or consent, authorization or approval of any governmental agency or body is
necessary for consummation of the Merger by Horizon.
4.03
Capitalization
. As of the date of this Agreement, the authorized
capital stock of Horizon consists of (i) 66,000,000 shares of Horizon common stock, 22,195,715 shares of which are issued and outstanding (and which includes shares of restricted stock), and (ii) options to purchase 363,538 shares of Horizon
common stock. Such issued and outstanding shares have been duly and validly authorized by all necessary corporate action of Horizon, are validly issued, fully paid, and nonassessable, and have not been issued in violation of any
pre-emptive
rights. Each share of Horizon common stock is entitled to one vote per share.
4.04
Compliance with Law
.
(a) None of Horizon or any of its
Subsidiaries is currently in violation of, and during the preceding five (5) years, none has been in violation of any Law, except where such violation would not have a Material Adverse Effect on Horizon. Horizon and its Subsidiaries
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possess and hold all licenses, franchises, permits, certificates, and other authorizations necessary for the continued conduct of their business without interference or interruption, except where
the failure to possess and hold the same would not have a Material Adverse Effect on Horizon.
(b) Horizon is not subject to any understandings or commitments with, and there are no orders or directives
of, any government regulatory agencies or authorities with respect to the financial condition, results of operations, business, assets, or capital of Horizon or its Subsidiaries. There are no refunds or restitutions required to be paid as a result
of any criticism of any regulatory agency or body cited in any examination report of Horizon or any of its Subsidiaries as a result of an examination by any regulatory agency or body, or set forth in any accountants or auditors report to
Horizon or any of its Subsidiaries.
(c) Since the enactment of the Sarbanes-Oxley Act of 2002 (the
Sarbanes-Oxley Act
), Horizon, to its knowledge, has been and is in compliance in all material respects with the applicable provisions of the Sarbanes-Oxley Act.
(d) All of the existing offices and branches of Horizon Bank have been legally authorized and established
in accordance with all applicable federal, state, and local laws, statutes, regulations, rules, ordinances, orders, restrictions, and requirements, except such as would not have a Material Adverse Effect on Horizon.
4.05
Absence of Undisclosed Liabilities
. Except (i) as provided
in the Horizon financial statements included in its SEC Reports (as defined in
Section
4.15
), (ii) for unfunded loan commitments and obligations on letters of credit to customers of Horizons Subsidiaries made in the
ordinary course of business, (iii) for trade payables incurred in the ordinary course of business, (iv) for the transactions contemplated by this Agreement, and (v) any other transactions which would not result in a material
liability, none of Horizon or any of its Subsidiaries has any obligation, agreement, contract, commitment, liability, lease, or license except where the aggregate of the amount due under such obligations, agreements, contracts, commitments,
liabilities, leases, or licenses would not have a Material Adverse Effect on Horizon, nor, to Horizons knowledge, does there exist any circumstances resulting from transactions effected or events occurring on or prior to the date of this
Agreement or from any action omitted to be taken during such period which could reasonably be expected to result in any such obligation, agreement, contract, commitment, liability, lease, or license. None of Horizon or any of its Subsidiaries is
delinquent in the payment of any material amount due pursuant to any trade payable, and each has properly accrued for such payables in accordance with GAAP, except where the failure to so accrue would not constitute a Material Adverse Effect on
Horizon.
4.06
Accuracy of Information Provided to LFCB
. Horizon
agrees that the information concerning Horizon or any of its Subsidiaries that is provided or to be provided by Horizon to LFCB for inclusion or that is included in the Registration Statement or Proxy Statement and any other documents to be filed
with any regulatory authority or governmental entity in connection with the Merger and the other transactions contemplated by this
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Agreement will at the respective times such documents are filed and, in the case of the Registration Statement, when it becomes effective and, with respect to the Proxy Statement, when mailed,
not be false or misleading with respect to any material fact, or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Notwithstanding the
foregoing, Horizon shall have no responsibility for the truth or accuracy of any information with respect to LFCB or any of its Subsidiaries or any of their affiliates contained in the Registration Statement or the Proxy Statement or in any document
submitted to, or other communication with, any regulatory authority or governmental entity.
4.07
Financial Statements and Reports
.
(a) The following financial statements and reports of Horizon and its Subsidiaries, including the notes
thereto (collectively, the
Horizon Financial Statements
)
are publicly available:
(i) consolidated balance sheets and the related consolidated statements of income,
consolidated statements of cash flows, and consolidated statements of changes in shareholders equity of Horizon as of and for the fiscal years ended December 31, 2014, 2015, and 2016;
(ii) internal (unaudited) consolidated balance sheet and income statement as of and for the
three months ended March 31, 2017 (without footnotes); and
(iii) Call Reports for
Horizon Bank as of the close of business on December 31, 2014, 2015, and 2016, and March 31, 2017.
(b) The Horizon Financial Statements present fairly, in all material respects, the consolidated financial
position of Horizon as of and at the dates shown and the consolidated results of operations for the periods covered thereby and are complete, correct, represent bona fide transactions, and have been prepared from the books and records of Horizon and
its Subsidiaries. The Horizon Financial Statements described in clause (i) above are audited financial statements and have been prepared in conformance with GAAP, except as may otherwise be indicated in any accountants notes or reports
with respect to such financial statements.
4.08
Adequacy of
Reserves
. The reserves, the allowance for loan and lease losses, and the carrying value for real estate owned which are shown on the Horizon Financial Statements are, in the judgment of management of Horizon, adequate, in all material
respects, under the requirements of GAAP to provide for possible losses on items for which reserves were made, on loans and leases outstanding and real estate owned as of the respective dates.
4.09
Litigation and Pending Proceedings
.
(a) There are no claims, actions, suits, proceedings, mediations, arbitrations, or investigations pending
and served against Horizon or any of its Subsidiaries or threatened in
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any court or before any government agency or authority, arbitration panel, or otherwise against Horizon or any of its Subsidiaries which, if determined adversely to Horizon or any of its
Subsidiaries, would have a Material Adverse Effect on Horizon.
(b) Neither Horizon nor any of its
Subsidiaries is: (i) subject to any outstanding judgment, order, writ, injunction, or decree of any court, arbitration panel, or governmental agency or authority, except in the ordinary course of business regarding customer and fiduciary
accounts; (ii) presently charged with or under governmental investigation with respect to, any actual or alleged violations of any law, statute, rule, regulation, or ordinance; or (iii) the subject of any pending or threatened proceeding
by any government regulatory agency or authority having jurisdiction over their respective business, assets, capital, properties, or operations.
4.10
Taxes, Returns and Reports
. Each of Horizon and its
Subsidiaries has since January 1, 2010 (a) duly and timely filed all material federal, state, local, and foreign tax returns of every type and kind required to be filed, and each such return is true, accurate, and complete in all material
respects; (b) paid or otherwise adequately reserved in accordance with GAAP for all taxes, assessments, and other governmental charges due or claimed to be due upon it or any of its income, properties, or assets, unless being contested in good
faith; and (c) not requested an extension of time for any such payments (which extension is still in force). Horizon has established, and shall establish in future publicly-filed financial statements, in accordance with GAAP, a reserve for
taxes in the Horizon Financial Statements adequate to cover all of Horizons and its Subsidiaries tax liabilities (including, without limitation, income taxes, payroll taxes and withholding, and franchise fees) for the periods then ending.
Neither Horizon nor any of its Subsidiaries, to their knowledge, has, nor will any of them have, any liability for material taxes of any nature for or with respect to the operation of its business, from the date hereof up to and including the
Effective Time, except to the extent set forth in Horizons future publicly-filed financial statements and as accrued or reserved for on the books and records of Horizon or its Subsidiaries. Neither Horizon nor any of its Subsidiaries is
currently under audit by any state or federal taxing authority. Except as disclosed in
Section
4.10
of the Horizon Disclosure Schedule, no federal, state, or local tax returns of Horizon or any of its Subsidiaries have been
audited by any taxing authority during the past five (5) years.
4.11
Deposit Insurance
. The deposits of Horizon Bank are
insured by the Federal Deposit Insurance Corporation in accordance with the Federal Deposit Insurance Act, as amended, to the fullest extent provided by applicable law, and Horizon or Horizon Bank has paid or properly reserved or accrued for all
current premiums and assessments with respect to such deposit insurance.
4.12
Bank Secrecy and Anti
-Money
Laundering Compliance
. Neither Horizon nor any of its Subsidiaries has received any notice or communication from any regulatory authority alleging violation of, or noncompliance with, any BSA/AML Law. Horizon and its Subsidiaries have
not been cited, fined, or otherwise notified of any failure by it to comply with a BSA/AML Law which has not been cured. To the knowledge of Horizon and its
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Subsidiaries, there are no facts or circumstances that could form the basis for assertion of any proceeding against Horizon or its Subsidiaries under any BSA/AML Law that, if determined adversely
to Horizon or its Subsidiaries, could reasonably be expected to adversely affect Horizon or its Subsidiaries.
4.13
Community Reinvestment Act
. Horizon Bank received a
rating of satisfactory or better in its most recent examination or interim review with respect to the Community Reinvestment Act.
4.14
Approval Delays
. To the knowledge of Horizon, there is no reason
why the granting of any of the Regulatory Approvals would be denied or unduly delayed.
4.15
Horizon Securities and Exchange Commission Filings
. Horizon has
filed all material reports and other filings with the Securities and Exchange Commission (the
SEC
) required to be filed by it (
SEC Reports
). All such SEC Reports were true, accurate, and complete in all material
respects as of the dates of the SEC Reports, and no such filings contained any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements, at the time and in the light of the circumstances under
which they were made, not false or misleading. As of the date of this Agreement, there are no outstanding or unresolved comments in any comment letters received by Horizon, and to the knowledge of Horizon, none of the SEC Reports is the subject of
any ongoing review by the SEC.
4.16
No Shareholder
Approval
. No vote or consent of any of the holders of Horizons capital stock is required by law, stock purchase agreement, or NASDAQ listing requirements for Horizon to enter into this Agreement and to consummate the
Merger.
4.17
Agreements with Regulatory
Agencies
. Neither Horizon nor any of its Subsidiaries is subject to any
cease-and-desist,
consent order, or other order or enforcement action
issued by, or is a party to any written agreement, consent agreement, or memorandum of understanding with, or is a party to any commitment letter or similar undertaking to, or is subject to any order or directive by, or has been ordered to pay any
civil money penalty by, or has been, during the preceding five (5) years, a recipient of any supervisory letter from, or, during the preceding five (5) years, has adopted any policies, procedures, or board resolutions at the request or
suggestion of any regulatory agency or other governmental entity that currently restricts in any material respect the conduct of its business or that in any material manner relates to its capital adequacy, its ability to pay dividends, its credit or
risk management policies, its management, or its business, other than those of general application that apply to similarly situated bank holding companies or their subsidiaries, whether or not set forth in the Horizon Disclosure Schedule (a
Horizon Regulatory Agreement
), nor has Horizon or any of its Subsidiaries been advised, during the preceding five (5) years, by any regulatory agency or other governmental entity that it is considering issuing, initiating,
ordering, or requesting any such Horizon Regulatory Agreement. There are no refunds or restitutions required to be paid as a result of any criticism of any regulatory agency or body cited in any examination report of Horizon or any of its
Subsidiaries as a result of an
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examination by any regulatory agency or body, or set forth in any accountants or auditors report to Horizon or any of its Subsidiaries.
ARTICLE V.
CERTAIN COVENANTS
LFCB
covenants and agrees with Horizon and covenants and agrees to cause its Subsidiaries to act as follows (and Horizon covenants and agrees with LFCB as follows):
5.01
Shareholder Approval
. LFCB shall submit this Agreement to its
shareholders for approval and adoption at a meeting to be called and held in accordance with applicable law and the articles of incorporation and bylaws of LFCB (the
LFCB Shareholders
Meeting
) as soon as
reasonably practicable after the date of this Agreement and the effectiveness of the Registration Statement. Subject to
Section
5.06
hereof, the Board of Directors of LFCB shall recommend to LFCBs shareholders that
such shareholders approve and adopt this Agreement and the Merger contemplated hereby and will solicit proxies voting in favor of this Agreement from LFCBs shareholders. Additionally, each director of LFCB and LCB shall agree to vote any
shares of LFCB Common Stock he or she owns, beneficially or of record, in favor of the Merger pursuant to the agreement attached hereto as
Exhibit 5.01
.
5.02
Other Approvals
.
(a) LFCB shall proceed expeditiously, cooperate fully, and use commercially reasonable efforts to assist
Horizon in procuring, upon terms and conditions consistent with the condition set forth in
Section
7.01(e)
hereof, all consents, authorizations, approvals, registrations, and certificates, in completing all filings and
applications, and in satisfying all other requirements prescribed by law which are necessary for consummation of the Merger on the terms and conditions provided in this Agreement at the earliest possible reasonable date.
(b) LFCB will use commercially reasonable efforts to obtain any required third party consents to
agreements, contracts, commitments, leases, instruments, and documents described in
Section
3.02(b)
of the LFCB Disclosure Schedule.
(c) Any written materials or information provided by LFCB to Horizon for use by Horizon in any filing with
any state or federal regulatory agency or authority shall not contain any untrue or misleading statement of material fact or shall omit to state a material fact necessary to make the statements contained therein, in light of the circumstances in
which they are made, not false or misleading.
5.03
Conduct of Business
.
(a) After the date of this Agreement and until the Effective Time or until this Agreement is terminated as
herein
provided
, each of LFCB and its Subsidiaries shall: (1) carry on its business diligently, substantially in the manner as is presently being conducted, and in the ordinary course of business; (2) use commercially reasonable
efforts to preserve its business organization intact, keep available the services of the present officers and employees, and preserve its present relationships with customers and Persons having business dealings
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with it; (3) use commercially reasonable efforts to maintain all of the properties and assets that it owns or utilizes in the operation of its business as currently conducted in good
operating condition and repair, reasonable wear and tear excepted; (4) maintain its books, records, and accounts in the usual, regular, and ordinary manner, on a basis consistent with prior years and in compliance in all material respects with
all statutes, laws, rules, and regulations applicable to them and to the conduct of its business; and (5) not knowingly do or fail to do anything which will cause a breach of, or default in, any contract, agreement, commitment, obligation,
understanding, arrangement, lease, or license to which it is a party or by which it is or may be subject or bound. Specifically, by way of example but not limitation, after the date of this Agreement and until the Effective Time or until this
Agreement is terminated as herein
provided
, LFCB will not, and will cause its Subsidiaries to not, without the prior written consent of Horizon:
(i) make any changes in its capital stock (including, without limitation, any stock
issuance, stock split, stock dividend, recapitalization, or reclassification), authorize a class of stock, or issue any stock, issue or grant any warrant, option, right, or other agreement of any character relating to its authorized or issued
capital stock or any securities convertible into shares of such stock, or redeem any of its outstanding shares of common stock or other securities;
(ii) distribute or pay any dividends on its shares of common stock, or authorize a stock
split, or make any other distribution to its shareholders;
provided, however,
LCB may pay cash dividends to LFCB in the ordinary course of business for payment of reasonable and necessary business and operating expenses of LFCB, including
expenses of the Merger;
provided further
, at Horizons request pursuant to
Section
7.01(i)
and except to the extent prohibited by Law or any bank regulatory agency, LCB shall pay dividends to LFCB.
(iii) purchase or otherwise acquire any investment security for their own account that
exceeds $1,000,000 individually or purchase or otherwise acquire any security other than U.S. Treasury or other governmental obligations or asset-backed securities issued or guaranteed by United States governmental or other governmental agencies, in
either case having an average remaining life of three (3) years or less, or sell any investment security owned by them other than sales made in the ordinary course of business as previously conducted during the past three (3) years and in
accordance with applicable laws and regulations, or engage in any activity that would be inconsistent with the classification of investment securities as either held to maturity or available for sale;
(iv) make, renew or otherwise modify any loan, loan commitment, letter of credit or other
extension of credit (individually, a Loan and collectively, Loans) to any Person if the Loan is an existing credit on the books of LFCB or any Subsidiary and classified as Other Loans Especially Mentioned,
Substandard, Doubtful, or Loss in an amount in excess of $250,000. LCB also shall not make, purchase, renew, modify, amend, or extend the maturity of (1) any new commercial Loan in excess of
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$1,000,000;
provided
, that LCB may, without the consent of Horizon, renew, modify, amend, or extend the maturity of existing performing commercial loans (which are not classified or
non-accrual)
with existing principal balances of $1,000,000 or less; and,
provided further
, that any previously approved and committed commercial loans by LCB are not subject to this
Section
5.03
, (2) any 1 to 4 family, residential mortgage Loan with a loan to value in excess of 85% (unless private mortgage insurance is obtained) or 100% in the event of a qualified Doctors Only Loan
Program (which, for purposes of this Agreement, shall only include licensed medical doctors and dentists);
provided
, that in the event the loan is to be investor sold, such loans will not be subject to this subsection if the loan meets
the criteria of the investor, or (3) any consumer Loan in excess of $75,000, (4) any home equity Loan or line of credit in excess of $150,000, or (5) any Loan participation; provided, that LFCB may take any such action in respect of any
such Loan or Loans if the Chief Credit Officer of Horizon shall be provided with notice of the proposed action in writing and Horizon shall not provide written objection to the taking of such proposed action within three (3) business days of
being provided with such notice (the lack of such objection being deemed prior written consent of Horizon for purposes of this Section);
(v) acquire any assets of any other Person by any means (other than personal property
acquired in foreclosure or otherwise in the ordinary course of collection of indebtedness owed to LCB) or foreclose upon or otherwise take title to or possession or control of, any real property without first obtaining a Phase I environmental report
thereon, prepared by a reliable and qualified Person acceptable to Horizon, which indicates that the real property is free of pollutants, contaminants, or hazardous materials;
provided, however,
that neither LFCB nor LCB shall be required to
obtain such a report with respect to single family,
non-agricultural
residential property of one acre or less to be foreclosed upon unless LFCB has reason to believe that such property might contain such
hazardous materials or otherwise might be contaminated;
(vi) except as contemplated by
this Agreement (including severance and change in control payments anticipated to be paid as described in
Section
5.22
and
Section
6.03(h)
hereof), pay or agree to pay, conditionally or otherwise,
any additional compensation (including bonuses) or severance benefit, take any action that would give rise to an acceleration of the right to payment, or otherwise make any changes with respect to the fees or compensation payable (or to become
payable) to consultants, directors, officers, or salaried employees or, except as required by law and except as contemplated by this Agreement, adopt or make any change in any LFCB Plan or other arrangement (including any agreement for
indemnification) or payment made to, for, or with any of such consultants, directors, officers, or employees;
(vii) fail to accrue, pay, discharge and satisfy all debts, liabilities, obligations, and
expenses, including, without limitation, trade payables, incurred in the regular and ordinary course of business as such debts, liabilities, obligations, and expenses become due, unless the same are being contested in good faith;
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(viii) except for obligations disclosed in
this Agreement, short-term FHLBI advances, federal funds purchased by LCB, trade payables and similar liabilities, and obligations incurred in the ordinary course of business and the payment, discharge, or satisfaction in the ordinary course of
business of liabilities reflected in the LFCB Financial Statements or the Subsequent LFCB Financial Statements, borrow any money or incur any indebtedness in an aggregate amount exceeding $100,000;
(ix) change in its accounting methods, except as may be necessary and appropriate to
conform to (1) changes in tax law requirements, (2) changes in GAAP or regulatory accounting principles, as required by LFCBs independent auditors or its regulatory authorities, or (3) changes requested by Horizon pursuant to
this Agreement;
(x) make, change, or revoke any material tax election, file any
material amended tax return, enter into any closing agreement with respect to a material amount of taxes, settle any material tax claim or assessment, or surrender any right to claim a refund of a material amount of taxes;
(xi) make application for the opening or closing of any, or open or close any, branch or
automated banking facility;
(xii) waive, release, grant, or transfer any material
rights of value or enter into, amend, or terminate any contract, agreement, lease, commitment, understanding, arrangement, or transaction or incur any liability or obligation (other than as contemplated by
Section
5.03(a)(iv)
hereof, and legal, accounting, and investment banking or financial advisory fees related to the Merger) requiring payments by LFCB or any of its Subsidiaries which exceed $50,000, whether individually or
in the aggregate (other than trade payables or otherwise incurred in the ordinary course of business) or which contain any financial commitment extending more than twelve (12) months following the date of this Agreement;
(xiii) except as already committed in writing as of the date of this Agreement, make any
capital expenditures in excess of $50,000 individually or $250,000 in the aggregate (for purposes of clarification, the costs associated with the construction of the new Greenbush Street branch in Lafayette, Indiana have already been committed in
writing as of the date of this Agreement);
(xiv) except as required by applicable law
or regulation: (1) implement or adopt any material change in its interest rate risk management or hedging policies, procedures, or practices; (2) fail to follow its existing policies or practices with respect to managing its exposure to
interest rate risk; or (3) fail to use commercially reasonable means to avoid any material increase in its aggregate exposure to interest rate risk;
(xv) take any action that would change LCBs loan loss reserves that is not in
compliance with LCBs policy and past practices consistently applied and in compliance with GAAP;
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(xvi) except as already committed in writing
as of the date of this Agreement, cancel, release, or compromise any indebtedness in excess of $50,000 owing to LFCB or any Subsidiary or any claims which LFCB or any Subsidiary may possess, or voluntarily waive any material rights with respect
thereto;
(xvii) pay, discharge, settle, or compromise any litigation, claim, action,
arbitration, or other proceeding against LFCB or any Subsidiary unless such payment, discharge, settlement, or compromise does not require LFCB or any Subsidiary to pay any monies, incur any obligation, or admit any wrongdoing or liability;
(xviii) take any action that is intended or is reasonably likely to result in (A) any of its
representations or warranties set forth in this Agreement being or becoming untrue at any time at or prior to the Effective Time, (B) any of the conditions to the Merger set forth in this Agreement not being satisfied, or (C) a breach of
any provision of this Agreement; except, in each case, as may be required by applicable Law;
(xix) maintain the rate of interest paid by LCB on any deposit product, including, without limitation,
on certificates of deposit, in a manner and pursuant to policies inconsistent with past practices;
(xx) amend the articles of incorporation or bylaws of LFCB, or similar governing documents
of any of its Subsidiaries;
(xxi) maintain an allowance for loan and lease losses which is not
adequate in all material respects under the requirements of GAAP to provide for possible losses, net of recoveries, relating to Loans previously charged off, on Loans and leases outstanding;
(xxii) take any action or fail to take any action that would, or would be likely to, prevent, impede or
delay the Merger from qualifying as a reorganization as defined by Section 368(a) of the Code; or
(xxiii) agree or commit to do, or enter into any contract regarding, anything that would be precluded
by this
Section
5.03
.
5.04
Insurance
. LFCB and its Subsidiaries shall maintain, or cause to
be maintained, in full force and effect, insurance on its assets, properties, and operations, fidelity coverage and directors and officers liability insurance in such amounts and with regard to such liabilities and hazards as are
currently insured by LFCB or its Subsidiaries as of the date of this Agreement.
5.05
Accruals for Loan Loss Reserve and Expenses
.
(a) Prior to the Effective Time, LFCB shall and shall cause its Subsidiaries to make, consistent with GAAP
and applicable banking laws and regulations, such appropriate
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accounting entries in its books and records and use commercially reasonable efforts to take such other actions as LFCB and its Subsidiaries shall deem to be necessary or desirable in anticipation
of the Merger including, without limitation, accruals or the creation of reserves for employee benefits and Merger-related expenses.
(b) LFCB recognizes that Horizon may have adopted different loan and accounting policies and practices
(including loan classifications and levels of loan loss allowances). Subject to applicable law (including, without limitation, applicable banking laws and regulations and GAAP), from and after the date hereof LFCB shall consult and cooperate in good
faith with Horizon with respect to conforming the loan and accounting policies and practices of LFCB to those policies and practices of Horizon for financial accounting and/or income tax reporting purposes, as reasonably specified in each case in
writing from Horizon to LFCB, based upon such consultation and subject to the conditions in
Section
5.05(d)
.
(c) Subject to applicable Law (including without limitation applicable banking laws and regulations and
GAAP), LFCB shall consult and cooperate in good faith with Horizon with respect to determining, as reasonably specified in a written notice from Horizon to LFCB, based upon such consultation and subject to the conditions in
Section
5.05(d)
, the amount and the timing for recognizing for financial accounting and/or income tax reporting purposes of LFCBs expenses of the Merger.
(d) Subject to applicable Law (including without limitation applicable banking laws and regulations and
GAAP), LFCB and LCB shall make such conforming changes and entries as contemplated in
Section
5.05(b)
and
Section
5.05(c)
above, but in no event prior to the 5th day next preceding the Closing Date
and only after Horizon acknowledges that all conditions to its obligation to consummate the Merger have been satisfied and certifies to LFCB that Horizon will at the Effective Time deliver to LFCB the certificate contemplated in
Section
7.02(g)
.
(e) LFCBs 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 at Horizons request in compliance with
Section
5.05(d)
.
5.06
Acquisition Proposals
.
(a) LFCB will, and will cause each of its Subsidiaries to, and its and their respective officers, directors
and representatives (including Renninger) to, immediately cease and cause to be terminated any existing solicitations, discussions, or negotiations with any Person concerning an Acquisition Proposal (as defined in
Section
5.06(e)
). During the period from the date of this Agreement through the Effective Time, LFCB shall not terminate, amend, modify, or waive any material provision of any confidentiality or similar agreement to which
LFCB or any of its Subsidiaries is a party (other than any involving Horizon).
(b) Except as permitted
in this
Section
5.06
, LFCB shall not, and shall cause its Subsidiaries and any of their respective directors, officers and representatives (including
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Renninger) not to, (i) solicit, initiate, or knowingly encourage or facilitate, or take any other action designed to, or that could reasonably be expected to facilitate (including by way of
furnishing
non-public
information) any inquiries with respect to an Acquisition Proposal, or (ii) initiate, participate in, or knowingly encourage any discussions or negotiations or otherwise knowingly
cooperate in any way with any Person regarding an Acquisition Proposal;
provided, however,
that, at any time prior to obtaining the approval of the Merger by LFCBs shareholders, if LFCB receives a bona fide Acquisition Proposal that the
LFCB Board of Directors determines in good faith constitutes a Superior Proposal (as defined in
Section
5.06(f)
) that was not solicited after the date hereof and did not otherwise result from a breach of LFCBs
obligations under this
Section
5.06
, LFCB may furnish, or cause to be furnished,
non-public
information with respect to LFCB and its Subsidiaries to the Person who made such proposal
(provided that all such information has been provided to Horizon prior to or at the same time it is provided to such Person) and may participate in discussions and negotiations regarding such proposal if (A) the LFCB Board of Directors
determines in good faith, and following consultation with financial advisors and outside legal counsel, that failure to do so would be reasonably likely to result in a breach of its fiduciary duties to LFCBs shareholders under applicable law
and (B) prior to taking such action, LFCB has used its reasonable best efforts to enter into a confidentiality agreement with respect to such proposal that contains a standstill agreement on customary terms. Without limiting the foregoing, it
is agreed that any violation of the restrictions contained in the first sentence of this
Section
5.06(b)
by any representative (including Renninger) of LFCB or its Subsidiaries shall be a breach of this
Section
5.06
by LFCB.
(c) Neither the LFCB Board of Directors nor any
committee thereof shall (or shall agree or resolve to) (i) fail to make, withdraw, or modify in a manner adverse to Horizon or propose to withdraw or modify in a manner adverse to Horizon (or take any action inconsistent with) the
recommendation by such LFCB Board of Directors or any such committee of this Agreement or the Merger, or approve or recommend, or propose to recommend, the approval or recommendation of any Acquisition Proposal (any of the foregoing being referred
to herein as an
Adverse Recommendation Change
), or (ii) cause or permit LFCB or LCB to enter into any letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, merger agreement, option
agreement, joint venture agreement, partnership agreement, or other agreement (each, an
Acquisition Agreement
) constituting or related to, or which is intended to or would be reasonably likely to lead to, any Acquisition Proposal
(other than a confidentiality agreement referred to in
Section
5.06(b)
). Notwithstanding the foregoing, at any time prior to the special meeting of LFCBs shareholders to approve the Merger, the LFCB Board of Directors
may, in response to a Superior Proposal, effect an Adverse Recommendation Change,
provided
, that the LFCB Board of Directors determines in good faith, after consultation with its outside legal counsel and financial advisors, that the failure
to do so would be reasonably likely to result in a breach of its fiduciary duties to the shareholders of LFCB under applicable Law, and
provided, further
, that the LFCB Board of Directors may not effect such an Adverse Recommendation Change
unless (A) the LFCB Board shall have first provided prior written notice to Horizon (an
Adverse Recommendation Change Notice
) that it is prepared to effect an Adverse Recommendation Change in response to a Superior Proposal,
which notice shall, in the case of
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a Superior Proposal, attach the most current version of any proposed written agreement or letter of intent relating to the transaction that constitutes such Superior Proposal (it being understood
that any amendment to the financial terms or any other material term of such Superior Proposal shall require a new notice and a new ten (10) business day period) and (B) Horizon does not make, within ten (10) business days after
receipt of such notice, a proposal that would, in the reasonable good faith judgment of the LFCB Board of Directors (after consultation with financial advisors and outside legal counsel), cause the offer previously constituting a Superior Proposal
to no longer constitute a Superior Proposal or that the Adverse Recommendation Change is no longer required to comply with the LFCB Boards fiduciary duties to the shareholders of LFCB under applicable law. LFCB agrees that, during the ten
(10) business day period prior to its effecting an Adverse Recommendation Change, LFCB and its officers, directors, and representatives shall negotiate in good faith with Horizon and its officers, directors, and representatives regarding any
revisions to the terms of the transactions contemplated by this Agreement proposed by Horizon.
(d) In
addition to the obligations of LFCB set forth in paragraphs (a), (b), and (c) of this
Section
5.06
, LFCB shall as promptly as possible, and in any event within two (2) business days after LFCB first obtains
knowledge of the receipt thereof, advise Horizon orally and in writing of (i) any Acquisition Proposal or any request for information that LFCB reasonably believes could lead to or contemplates an Acquisition Proposal or (ii) any inquiry
LFCB reasonably believes could lead to any Acquisition Proposal, the terms and conditions of such Acquisition Proposal, request, or inquiry (including any subsequent amendment or other modification to such terms and conditions), and the identity of
the Person making any such Acquisition Proposal or request, or inquiry. In connection with any such Acquisition Proposal, request or inquiry, if there occurs or is presented to LFCB any offer, material change, modification, or development to a
previously made offer, letter of intent, or any other material development, LFCB (or its outside counsel) shall (A) advise and confer with Horizon (or its outside counsel) regarding the progress of negotiations concerning any Acquisition
Proposal, the material resolved and unresolved issues related thereto and the material terms (including material amendments or proposed amendments as to price and other material terms) of any such Acquisition Proposal, request, or inquiry, and
(B) promptly upon receipt or delivery thereof provide Horizon with true, correct, and complete copies of any document or communication related thereto.
(e) For purposes of this Agreement,
Acquisition Proposal
shall mean (i) any
inquiry, proposal, or offer from any Person or group of Persons (other than as contemplated by this Agreement) relating to, or that could reasonably be expected to lead to, any direct or indirect acquisition or purchase, in one transaction or a
series of transactions, of (A) assets or businesses that constitute 20% or more of the revenues, net income, or assets of LFCB and its Subsidiaries, taken as a whole, or (B) 20% or more of any class of equity securities of LFCB or any of its
Subsidiaries; (ii) any tender offer or exchange offer that, if consummated, would result in any Person beneficially owning 20% or more of any class of equity securities of LFCB or any of its Subsidiaries; (iii) any merger, consolidation,
business combination, recapitalization, liquidation, dissolution, joint venture, binding share exchange, or similar transaction involving LFCB, LCB, or any of its other Subsidiaries pursuant to which any
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Person or the shareholders of any Person would own 20% or more of any class of equity securities of LFCB, LCB, or any of LFCBs other Subsidiaries or of any resulting parent company of LFCB
or LCB; or (iv) any other transaction the consummation of which could reasonably be expected to impede, interfere with, prevent, or materially delay the Merger or that could reasonably be expected to dilute materially the benefits to Horizon of
the transactions contemplated hereby, other than the transactions contemplated hereby. For purposes of this
Section
5.06
, a
Person
shall include a natural Person, or any legal, commercial, or Governmental
Authority, including, a corporation, general partnership, joint venture, limited partnership, limited liability company, trust, business association, group acting in concert, or any Person acting in a representative capacity.
(f) For purposes of this Agreement,
Superior Proposal
shall mean any Acquisition
Proposal (but changing the references to 20% or more in the definition of
Acquisition Proposal
to 50% or more) that the LFCB Board determines in good faith (after having received the advice of its financial
advisors), to be (i) materially more favorable to the shareholders of LFCB from a financial point of view and its other constituencies than the Merger (taking into account all the terms and conditions of such proposal and this Agreement
(including any
break-up
fees, expense reimbursement provisions and conditions to consummation, and any changes to the financial terms of this Agreement proposed by Horizon in response to such offer or
otherwise)) and (ii) reasonably capable of being completed without undue delay taking into account all financial, legal, regulatory, and other aspects of such proposal.
5.07
Press Releases
. Horizon and LFCB shall use reasonable efforts
(i) to develop a joint communications plan with respect to this Agreement and the transactions contemplated hereby, (ii) to ensure that all press releases and other public statements with respect to this Agreement and the transactions
contemplated hereby shall be consistent with such joint communications plan, and (iii) except where (and to the extent that) such prior consultation is not reasonably possible due to time considerations in respect of any announcement required
by applicable law or by obligations pursuant to any listing agreement with or rules of the NASDAQ Global Select Market, to consult with each other before issuing any press release or otherwise making any public statement with respect to this
Agreement or the transactions contemplated hereby.
5.08
Changes and Supplements
to Disclosure Schedules
. LFCB shall promptly supplement, amend, and update, upon the occurrence of any change prior to the Effective Time, and as of the Effective Time, the LFCB Disclosure Schedule with respect to any matters or
events hereafter arising which, if in existence or having occurred as of the date of this Agreement, would have been required to be set forth or described in the LFCB Disclosure Schedule or this Agreement and including, without limitation, any fact
which, if existing or known as of the date hereof, would have made any of the representations or warranties of LFCB contained herein incorrect, untrue or misleading. No such supplement, amendment, or update shall have any effect for the purposes of
determining satisfaction of the conditions set forth in
Article VII
or become part of the LFCB Disclosure Schedule unless Horizon shall have first consented in writing with respect thereof.
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5.09
Failure to Fulfill
Conditions
. In the event LFCB determines that a condition to its obligation to complete the Merger cannot be fulfilled, it will promptly notify Horizon.
5.10
Access; Information
.
(a) Horizon and LFCB, and their representatives and agents, shall, upon reasonable notice to the other
party, at all times during normal business hours prior to the Effective Time, have full and continuing access to the properties, facilities, operations, books, and records of the other party. Horizon and LFCB, and their representatives and agents
may, prior to the Effective Time, make or cause to be made such reasonable investigation of the operations, books, records, and properties of the other party and their Subsidiaries and of their financial and legal condition as deemed necessary or
advisable to familiarize themselves with such operations, books, records, properties, and other matters;
provided, however,
that such access or investigation shall not interfere unnecessarily with the normal business operations of LFCB or
Horizon or either of their Subsidiaries. In addition, after receipt of all Regulatory Approvals, LFCB shall cooperate with Horizon to facilitate introductions to LCBs customers and key business partners and referral sources.
(b) No investigation by Horizon or LFCB shall affect the representations and warranties made by LFCB or
Horizon herein.
(c) Any confidential information or trade secrets received by Horizon, LFCB, or their
representatives or agents in the course of such examination will be treated confidentially, and any correspondence, memoranda, records, copies, documents, and electronic or other media of any kind containing such confidential information or trade
secrets or both shall be destroyed by Horizon or LFCB, as applicable, or at Horizons or LFCBs request, returned to Horizon or LFCB, as applicable, in the event this Agreement is terminated as provided in
Article VIII
hereof;
provided, however,
that the parties may retain such received confidential information to comply with applicable law or regulation or professional standard or bona fide internal compliance policy requirements. Additionally, any confidential
information or trade secrets received by Horizon or LFCB, or either of their agents or representatives in the course of their examinations (whether conducted prior to or after the date of this Agreement) shall be treated confidentially and in
accordance with the Confidentiality Agreement (as defined in
Section
11.09
). This
Section
5.10
will not require the disclosure of any information to Horizon or LFCB which would be prohibited by
law.
(d) Except to the extent prohibited by Law or any bank regulatory agency, in order to provide for
a smooth transition after the Closing, beginning on the date of this Agreement, the Chairman of Horizon, or his designees, shall be entitled to receive notice of and a representative of Horizon shall be entitled to attend as an observer, all regular
and special meetings of the Board of Directors and all committees of LFCB and any of its Subsidiaries, including, without limitation, the loan committee, asset/liability committee, investment committee, the executive committee, and any other
committee of LFCB or its Subsidiaries;
provided, however,
LFCB shall not be required to permit any Horizon representative to remain present during any discussion of this Agreement and the transactions contemplated hereby or
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during any other matter that the respective Board of Directors has reasonably determined to be confidential with respect to the participation of Horizon. LFCB shall also provide Horizon with
copies of minutes and consents from all such Board and committee meetings no later than fourteen (14)
days thereafter.
5.11
Financial Statements
. As soon as
internally available after the date of this Agreement, LFCB will deliver to Horizon any additional audited consolidated financial statements which are prepared on its behalf or at its direction, the monthly consolidated unaudited balance sheets and
profit and loss statements of LFCB prepared for its internal use, LCBs Call Reports for each quarterly period completed prior to the Effective Time, all other financial reports or statements submitted to regulatory authorities after the date
hereof, and all other financial statements and financial information reasonably requested by Horizon (collectively,
Subsequent LFCB Financial Statements
). The Subsequent LFCB Financial Statements will be prepared on a basis
consistent with past accounting practices and GAAP (to the extent applicable) and shall present fairly the financial condition and results of operations as of the dates and for the periods presented (except in the case of unaudited financial
statements or Call Report information for the absence of notes and/or
year-end
adjustments).
5.12
Environmental
.
(a) If requested by Horizon, LFCB will cooperate
with an environmental consulting firm designated by Horizon (the
Designated Environmental Consultant
) in connection with the conduct, at any time after the date hereof (the
Investigation Period
), by the
Designated Environmental Consultant of Phase I environmental site assessments and any other investigation reasonably requested by Horizon on all real property owned or leased by LFCB or any of its Subsidiaries as of the date of this Agreement or
acquired thereafter, including OREO. Horizon will proceed with such assessments, testing, and investigations as soon as reasonably practicable after the date of this Agreement and will diligently work to pursue such assessments, testing, and
investigations through completion. Horizon shall furnish true and complete copies of any reports of the Designated Environmental Consultant that it receives with respect to any LFCB property, promptly upon Horizons receipt of such reports.
Horizon shall be responsible for the costs of the Phase I environmental site assessments, and Horizon and LFCB shall each bear 50% of the costs of any additional environmental investigation or testing as determined to be advisable or recommended by
the Designated Environmental Consultant.
(b) If the Designated Environmental Consultants good
faith estimate, based upon the results of the Phase I environmental studies and other diligence and investigation conducted by the Designated Environmental Consultant, of the dollar amount, if any, that LFCB and its Subsidiaries would be required to
expend due to a violation of applicable Environmental Laws for all of the LFCB properties (the
Environmental Liabilities
) for
clean-up
and remediation relating to pollutants, contaminants,
wastes, toxic substances, petroleum, petroleum products, and any other materials regulated under the Environmental Laws with respect to LFCBs or its Subsidiaries owned or leased real properties (including OREO) or any adjoining
properties (the
Estimated
Clean-Up
Costs
, as further adjusted
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pursuant to this
Section
5.12
), is in excess of $50,000 (the
Environmental Liability Threshold
), Horizon shall deliver to LFCB (not later than ten
(10) business days of its receipt of the Designated Environmental Consultants good faith estimate) a written notice (an
Environmental Cost Notice
) describing the nature of such Environmental Liabilities and the course
of action proposed to be taken by Horizon or its Subsidiaries (if it were to become the owner of such properties as a result of the Merger) to remediate or otherwise address the environmental problems and providing an estimate of the out of pocket
cost of such remediation expected to be incurred (if different from the Estimated
Clean-Up
Costs). If LFCB disagrees with Horizons estimate of the amount of out of pocket costs of such remediation or the
course of action proposed by Horizon, LFCB shall deliver to Horizon a written notice of such objection (an
Environmental Cost Objection
) within five (5) business days of LFCBs receipt of the Environmental Cost Notice.
No later than five (5) business days following Horizons receipt of an Environmental Cost Objection, one or more members of senior management of Horizon and LFCB having authority to resolve the dispute shall meet (in person or by
telephone) and shall negotiate in good faith in an attempt to resolve the difference set forth in the Environmental Cost Objection. Regardless of whether the parties reach a resolution of the dispute within two (2) business days of the first
such meeting, subsection
(c)
shall apply.
(c) The Estimated
Clean-up
Costs shall be deemed to have been established for purposes of this
Section
5.12
: (i) if Horizon does not receive an Environmental Cost Objection, as of the last date that an
Environmental Cost Objection would have been timely under subsection
(b)
above, or (ii) if an Environmental Cost Objection is delivered to Horizon and finally resolved as set forth in subsection
(b)
hereof or if it
remains unresolved under such subsection (in which event the Estimated
Clean-Up
Costs shall be as set forth in the Environmental Cost Notice), then as of the date of such resolution or on the third (3
rd
) business day if unresolved (as the case may be) (as applicable, the
Environmental Costs Determination Date
). Following the establishment of the Estimated
Clean-up
Costs, if the Estimated
Clean-Up
Costs are (A) between $50,000 and $350,000, then Horizon shall have the right to reduce the Cash Consideration by the Estimated
Clean-up
Costs, or (B) more than $350,000, then Horizon shall have the right to either (1) reduce the Cash Consideration by the Estimated
Clean-up
Costs or
(2) terminate this Agreement pursuant to
Section
8.01(c)(iv)
, which termination right shall be Horizons sole remedy in such event. Any reduction in the Cash Consideration shall be adjusted for any tax savings
resulting from the expenditure of such amount (assuming a 35% tax rate).
5.13
Governmental Reports and Shareholder
Information
. Promptly upon its becoming available, LFCB shall furnish to Horizon one (1) copy of each financial statement, report, notice, or proxy statement sent by LFCB to any Governmental Authority or to
LFCBs shareholders, and of any order issued by any Governmental Authority in any proceeding to which LFCB is a party. For purposes of this Agreement,
Governmental Authority
shall mean any government (or any political
subdivision or jurisdiction thereof), court, bureau, agency, or other governmental entity having or asserting jurisdiction over the applicable party or its business, operations, or properties.
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5.14
Adverse
Actions
. LFCB shall not knowingly take any action that is intended or is reasonably likely to result in (a) any of its representations and warranties set forth in this Agreement being or becoming untrue in any respect at any time
at or prior to the Effective Time, (b) any of the conditions to the Merger set forth in
Article VII
not being satisfied, (c) a material violation of any provision of this Agreement, or (d) a material delay in the consummation
of the Merger except, in each case, as may be required by applicable law or regulation.
5.15
Employee Benefits and Employees
.
(a) Neither the terms of
Section
6.03
hereof nor the provision of any employee
benefits by Horizon or any of its Subsidiaries to employees of LFCB or any of its Subsidiaries shall: (a) create any employment contract, agreement, or understanding with or employment rights for, or constitute a commitment or obligation of
employment to, any of the officers or employees of LFCB or any of its Subsidiaries; or (b) prohibit or restrict Horizon or its Subsidiaries, whether before or after the Effective Time, from changing, amending, or terminating any employee
benefits provided to its employees from time to time.
(b) Before the date that is
forty-five
(45) days after the public announcement of the Merger, Horizon will use its reasonable best efforts to notify LFCB of the employees Horizon intends to retain after the Effective Time. Prior to the
Closing Date, LFCB shall be responsible for timely giving any notices to, and terminating, any employees whose employment will not be continued by Horizon, and LFCB shall pay any and all amounts which are then due and payable to such employees in
connection with the termination of their employment, including, without limitation, all accrued vacation and sick pay and the severance amounts contemplated by
Section
6.03(h)
of this Agreement.
(c) Before Closing, with LFCBs prior consent (which consent shall not be unreasonably withheld),
Horizon may conduct such training and other programs as it may, in its reasonable discretion and at its sole expense, elect to provide for those employees who will be continuing employment with Horizon;
provided, however,
that such training
and other programs shall not materially interfere with or prevent the performance of the normal business operations of LFCB.
5.16
Noncompetition Agreements
. Concurrently with the execution of this Agreement, LFCB shall cause to be delivered to Horizon a
non-competition,
non-solicitation,
and
non-disclosure
agreement executed by each of Bradley W. Marley, Steve Hickman, and Richard Murray in a form acceptable to Horizon (the
Noncompetition Agreements
).
5.17
Termination of LFCB 401(k)
Plan
.
(a) LFCB maintains the LFCB 401(k) Plan. LFCB shall make contributions to the LFCB 401(k)
Plan between the date hereof and the Effective Time consistent with the terms of the LFCB 401(k) Plan and past practices, including, without limitation, elective deferral contributions of those LFCB 401(k) Plan participants who are employed by LFCB
or its Subsidiaries.
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(b) On or before the Effective Time, the trustee of the LFCB
401(k) Plan shall (i) provide to the LFCB 401(k) Plan participants similar notices and materials provided to other LFCB shareholders with respect to those matters requiring a vote of the shareholders under this Agreement; (ii) obtain
direction from the LFCB 401(k) Plans participants as to how to vote those shares of LFCB Common Stock allocated to the accounts of the LFCB 401(k) Plans participants with respect to those matters for which shareholder vote is required
under this Agreement; (iii) vote those shares of LFCB Common Stock in accordance with the direction of the LFCB 401(k) Plans participants and in accordance with the LFCB 401(k) Plan; and (iv) vote the shares of LFCB Common Stock for
which no participant investment direction has been timely received by the trustee in accordance with the LFCB 401(k) Plan.
(c) No later than ten (10) days prior to the Closing Date, LFCB, pursuant to the provisions of the
LFCB 401(k) Plan, shall, subject to review and approval by Horizon: (i) adopt resolutions to terminate, subject to the consummation of the Merger, the LFCB 401(k) Plan, consistent with the provisions of Code Section 401(k)(10), effective
as of a date that is not later than the day before the Effective Time (the
Plan Termination Date
) and (ii) amend the LFCB 401(k) Plan effective as of a date not later than the Plan Termination Date to freeze participation in
and benefit accruals under the LFCB 401(k) Plan and to provide that no distributions of accrued benefits shall be made from the LFCB 401(k) Plan, or its related employee benefit trust, subsequent to the Plan Termination Date until such time as the
Internal Revenue Service issues a favorable determination letter to the effect that the plan termination does not adversely affect the LFCB 401(k) Plans qualification for favorable income tax treatment under the Code, other than distributions
required by the terms of the LFCB 401(k) Plan to be made upon retirement, death, disability, or termination of employment, or any other event, other than the plan termination, that requires a distribution from the LFCB 401(k) Plan.
(d) At a time to be mutually agreed upon by LFCB and Horizon, LFCB will file, or cause to be filed, with
the Internal Revenue Service an application for a favorable determination letter upon termination of the LFCB 401(k) Plan (IRS Form 5310 and related attachments) requesting the issuance to LFCB of the favorable determination letter described in the
preceding subsection
(c)
. A copy of the completed and filed IRS Form 5310 shall be provided to Horizon at least five (5) business days prior to the Effective Time.
(e) Any contributions due to the LFCB 401(k) Plan for the period prior to the Plan Termination Date, and
not yet paid on the Plan Termination Date, will be contributed by LFCB as soon as administratively feasible following the Plan Termination Date.
(f) LFCB shall continue in full force and effect, until the Effective Time: (i) the fidelity bond, if
any, issued to LFCB as described in ERISA Section 412; and (ii) the ERISA fiduciary liability insurance policy currently in effect, if any, for the benefit of the covered fiduciaries of the LFCB 401(k) Plan.
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5.18
Disposition of Welfare Benefit and
Sec. 125 Plans
.
(a) All fully insured welfare benefit (health, dental/vision, life/AD&D, LTD),
and Internal Revenue Code Section 125, or cafeteria, plans currently sponsored by LFCB or LCB shall be terminated as of the Effective Time, unless Horizon determines that any such plan shall be continued past the Effective Time.
LFCB shall take, or cause to be taken, all actions necessary to terminate all of LFCBs and any Subsidiarys group insurance policies as of the Effective Time, unless otherwise instructed by Horizon.
(b) As of the Effective Time, and to the extent not prohibited by applicable law, LFCB shall take, or cause
to be taken, all actions necessary to assign any and all applicable group insurance policies to Horizon and to provide Horizon all necessary financial, enrollment, eligibility, contractual, and other information related to its welfare benefit and
cafeteria plans to assist Horizon in the administration of such plans, unless Horizon determines that any or all of the group insurance policies should be terminated as of the Effective Time.
(c) From the date of this Agreement through the Effective Time, LFCB shall continue to: (i) pay the
applicable insurance premiums necessary to continue the benefits under LFCBs fully insured welfare benefit plans; (ii) contribute to the cafeteria plan the
pre-tax
amounts which the cafeteria plan
participants elect to defer from compensation; and (iii) pay all eligible claims incurred, in accordance with the terms and conditions of such plan, under the cafeteria plans health and dependent care flexible spending accounts prior to
the Effective Time.
5.19
Bank Merger
. Prior to the Effective
Time, LFCB shall, and cause LCB to, cooperate with Horizon and take such action as reasonably requested by Horizon and necessary to (i) merge LCB with and into Horizon Bank as of the Effective Time, and/or (ii) reconstitute the directors
and officers of LCB as of the Effective Time to be the same as the directors and officers of Horizon Bank at the Effective Time, and amend the articles of incorporation and bylaws of LCB as of the Effective Time or make such other changes as Horizon
Bank may request if necessary to accomplish the same.
5.20
Cooperation on
Conversion of Systems
. LFCB agrees to commence immediately after the date of this Agreement (and continue until Closing or completed) using its reasonable best efforts to ensure an orderly transfer of information,
processes, systems, and data to Horizon and to otherwise assist Horizon in facilitating the conversion of all of LFCBs systems into, or to conform with, Horizons systems (including cooperating with Horizon in the training of LFCBs
and its Subsidiaries employees on Horizons systems), so that, as of the Closing, the systems of LFCB are readily convertible to Horizons systems to the fullest extent possible without actually converting them prior to the Closing.
LFCB and Horizon shall meet on a regular basis to discuss and plan for the conversion of LFCBs data processing and related electronic informational systems to those used by Horizon, which planning shall include, without limitation:
(i) discussion of possible termination by LFCB of third-party service provider arrangements effective at or following the Effective Time;
(ii) non-renewal
of
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personal property leases and software licenses used by LFCB in connection with its systems operations; and (iii) retention of outside consultants and additional employees to assist with the
conversion and outsourcing, as appropriate, of proprietary or self-provided system services.
5.21
Installation/Conversion of Equipment
. Prior to Closing, at times
mutually agreeable to Horizon and LFCB, Horizon may, at Horizons sole expense, install teller equipment, platform equipment, security equipment, and computers, at the LFCB and LCB offices, branches, and ATM locations, and LFCB shall cooperate
with Horizon in connection with such installation;
provided, however,
that such installations shall not interfere with the normal business activities and operations of LFCB or LCB or require material alterations to LFCBs or LCBs
facilities.
5.22
Employment Agreements
. LFCB agrees to pay out
all amounts payable pursuant to the Employment Agreement between LCB and Bradley W. Marley dated November 29, 2013 (the
Employment Agreement
), as identified in the LFCB Disclosure Schedule, as if the change in control
payments contemplated by the Employment Agreement had been triggered by the Merger, provided that such agreement shall be amended with the written consent of Bradley W. Marley prior to the Effective Time, if necessary, to ensure and expressly
provide that no payment shall be made under such agreement or under any other plan, arrangement, or agreement applicable to the individual that would constitute an excess parachute payment (as such term is defined in Section 280G of
the Code), and to the extent any such payment would constitute an excess parachute payment, the payment will be reduced to $1.00 less than the amount that would be considered an excess parachute payment. The payment of such
amounts shall be contingent upon Mr. Marley entering into a mutual termination of employment agreement in a form acceptable to Horizon (the
Mutual Termination of Employment Agreements
), and Mr. Marley entering into the
Noncompetition Agreement referenced in
Section
5.16
. Such payment will be made in a lump sum no later than the Closing Date.
ARTICLE VI.
COVENANTS OF HORIZON
Horizon covenants and agrees with LFCB and covenants and agrees to cause its Subsidiaries to act as follows (and LFCB covenants and agrees
with Horizon as follows):
6.01
Approvals
. Horizon shall have
primary responsibility of the preparation, filing, and costs of all bank regulatory applications required for consummation of the Merger, and all parties shall file such applications as promptly as practicable after the execution of this Agreement
not to exceed 60 days. Horizon and LFCB shall provide to the others counsel copies of all applications filed and copies of all material written communications with all state and federal bank regulatory agencies relating to such applications.
Horizon and LFCB shall cooperate fully and use commercially reasonable efforts to procure, upon terms and conditions reasonably acceptable to each of them, all consents, authorizations, approvals, registrations, and certificates, to complete all
filings and applications, and to satisfy all other requirements prescribed by law which are necessary for consummation of the Merger on the terms and conditions provided in this Agreement.
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6.02
SEC Registration
.
(a) As soon as practicable following the date of this Agreement, LFCB (with the assistance of Horizon as
appropriate) shall prepare the required proxy disclosures, in accordance with the rules and regulations of the SEC, to be used in connection with the LFCB shareholders meeting to obtain approval for the merger (the
Proxy
Statement
), and Horizon shall prepare and file with the SEC a joint registration and proxy statement on an appropriate form under the Securities Act of 1933, as amended (the
1933 Act
) covering the shares of Horizon
Common Stock to be issued pursuant to this Agreement and containing the Proxy Statement to be used for the LFCB Shareholders Meeting. Such joint registration and proxy statement and any amendments and supplements thereto are referred to in
this Agreement as the
Registration Statement
. Horizon shall use its reasonable best efforts to cause the same to become effective and thereafter, until the Effective Time or termination of this Agreement, to keep the same
effective and, if necessary, amend and supplement the same. Horizon shall, as soon as practicable after filing the Registration Statement (but not to exceed 75 days), make all filings required to obtain all blue sky exemptions, authorizations,
consents, or approvals required for the issuance of Horizon common stock.
(b) The parties shall use
reasonable best efforts to respond (with the assistance of the other party) as promptly as practicable to any comments of the SEC with respect to the Registration Statement. If prior to the Effective Time any event occurs with respect to LFCB,
Horizon, or any Subsidiary of LFCB or Horizon, respectively, or any change occurs with respect to information supplied by or on behalf of LFCB or Horizon, respectively, for inclusion in the Proxy Statement or the Registration Statement that, in each
case, is required to be described in an amendment of, or a supplement to, the Proxy Statement or the Registration Statement, LFCB or Horizon, as applicable, shall promptly notify the other of such event, and LFCB or Horizon, as applicable, shall
cooperate in the prompt filing with the SEC of any necessary amendment or supplement to the Proxy Statement and the Registration Statement and, as required by applicable Law, in disseminating the information contained in such amendment or supplement
to LFCBs shareholders.
(c) Horizon will use reasonable best efforts to list for trading on the
NASDAQ Global Select Market (subject to official notice of issuance) prior to the Effective Time, the shares of Horizon common stock to be issued in the Merger.
6.03
Employee Benefit Plans and Employee Payments
.
(a) Horizon shall make available to the officers and employees of LFCB or any Subsidiary who continue as
employees of Horizon or any Subsidiary after the Effective Time (
Continuing Employees
), substantially the same employee benefits as are generally available to all Horizon employees, except where different benefits are required by
other provisions of this Agreement.
(b) Horizon and LFCB agree to address any issues related to the
differences between the vacation and paid time off policies of LFCB and any Subsidiary (including,
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without limitation, any banked paid time) and the vacation and paid time off policies of Horizon, and communicate the proposed reconciliation of the policies to the Continuing Employees prior to
the Effective Time. Effective as of the later of the Effective Time or the date on which the Horizon vacation and paid time off policies are made available to the Continuing Employees, such Continuing Employees will be subject to the terms and
conditions of the Horizon vacation/paid time off policy in place for similarly situated employees of Horizon, with credit given for all prior years of service with LFCB or any Subsidiary for purposes of determining vacation pay eligibility and the
amount of such vacation pay.
(c) Continuing Employees will receive credit for prior service with LFCB
or its Subsidiaries, or their predecessors, for purposes of eligibility and vesting (but not benefit accrual) under the employee benefit plans of Horizon and its Subsidiaries.
(d) To the extent a LFCB employee benefit plan is terminated at or prior to the Effective Time, Continuing
Employees shall become eligible to participate in Horizons similar employee benefit plans as of the Effective Time. Horizon will use its reasonable best efforts to: (i) avoid subjecting Continuing Employees to any waiting periods or
additional
pre-existing
condition limitations under the health and dental plans of Horizon or its Subsidiaries in which they are eligible to participate than they otherwise would have been subject to under the
health and dental plans of LFCB; and (ii) give credit under the applicable plan for any deductibles and
co-insurance
payments made by such Continuing Employees under the corresponding LFCB plan during the
balance of the then current
12-month
period of coverage.
(e) To the extent permitted under the terms of any
tax-qualified
retirement plan maintained by Horizon after the Effective Time and subject to the terms and conditions thereof, such plan shall accept eligible rollover distributions (within the meaning of Code Section 402(c)(4)) of cash amounts
received from the LFCB 401(k) Plan with respect to any Continuing Employees.
(f) Horizon may elect to
continue to maintain all fully insured employee welfare benefit and cafeteria plans currently in effect at the Effective Time until such time as Horizon determines, in its sole discretion, to modify or terminate any or all of those plans. Claims
incurred under the employee welfare benefit and cafeteria plans prior to plan termination shall be paid in accordance with the applicable plans claim submission procedures and deadlines.
(g) Until the Effective Time, LFCB or a Subsidiary of LFCB, whichever is applicable, shall be liable for
all obligations for continued health coverage pursuant to Section 4980B of the Code and Sections 601 through 609 of ERISA (
COBRA
) for eligible employees who incur a qualifying event before the Effective Time. Horizon or a
Horizon Subsidiary, whichever is applicable, shall, after the Effective Time, be liable for (i) all obligations for continued health coverage under COBRA with respect to each qualified beneficiary of LFCB or a Subsidiary of LFCB who incurs a
termination on and after the Effective Time, and (ii) for continued health coverage under COBRA from and after the
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Effective Time for each qualified beneficiary of LFCB or a Subsidiary of LFCB who incurs a qualifying event before the Effective Time.
(h) Except for Mr. Marley and any other employee receiving a separate change in control, severance, or
similar payment in connection with the Closing of the Merger, those employees of LCB as of the Effective Time (i) who are still employed by LCB and who Horizon or its Subsidiaries elect not to employ after the Effective Time or who are
terminated, other than for cause, within twelve (12) months after the Effective Date; and (ii) who sign and deliver a termination and release agreement in a form acceptable to Horizon, shall be entitled to severance pay equal to one
(1) week of pay, at their base rate of pay in effect at the time of termination, for each full year of continuous service with LCB with a minimum of four (4) weeks and a maximum of
twenty-six
(26) weeks. Such employees will receive their severance in a
lump-sum
payment. Furthermore, any of such terminated employees shall be entitled to continuation coverage under Horizon Banks group
health plans as required by COBRA, subject to timely election and payment of the applicable COBRA premium by such terminated employees. In addition, Horizon, at its expense will provide group career counseling for LCB employees who will not be
continuing with Horizon and will make professional career counseling services available through its internal employee assistance program of up to four (4) visits per employee. Nothing in this
Section
6.03(h)
shall be
deemed to limit or modify Horizons or Horizon Banks
at-will
employment policy or any employees at will employment status.
6.04
Adverse Actions
. Horizon shall not knowingly take any action that
is intended or is reasonably likely to result in (a) any of its representations and warranties set forth in this Agreement being or becoming untrue in any respect at any time at or prior to the Effective Time, (b) any of the conditions to
the Merger set forth in
Article VII
not being satisfied, or (c)
a material violation of any provision of this Agreement.
6.05
D&O Insurance
and Indemnification
.
(a) Subject to the limits of applicable federal banking law and
regulations, Horizon shall indemnify and hold harmless (including the advancement of expenses as incurred) each present and former director and officer of LFCB and its Subsidiaries, including LCB (each, an
Indemnified Party
) for a
period of six (6) years following the Effective Time, against any costs or expenses (including reasonable attorneys fees), judgments, fines, losses, claims, damages, or liabilities incurred in connection with any claim, action, suit,
proceeding, or investigation, whether civil, criminal, administrative, or investigative, arising out of or pertaining to matters existing or occurring at or prior to the Effective Time, whether asserted or claimed prior to, at, or after the
Effective Time, to the same extent (and subject to the making of the same findings as to eligibility for such indemnification and/or advancement of expenses) that such Indemnified Party would have been indemnified (or entitled to advancement of
expenses) as a director or officer of LFCB or any of its Subsidiaries under applicable Indiana law or LFCBs or any such Subsidiaries articles of incorporation or bylaws as in effect as of the date of this Agreement.
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(b) Provided LFCB has historically carried directors and
officers liability insurance, Horizon shall use its reasonable best efforts to cause the persons serving as officers and directors of LFCB and LCB immediately prior to the Effective Time to be covered for a period of six (6) years after
the Effective Time by the directors and officers liability insurance policy currently maintained by LFCB (the
Existing Policy
) or by a comparable or better policy (the
Replacement Policy
). Prior to
the Effective Time, as instructed by Horizon, LFCB shall cause the applicable broker of record for its Existing Policy and its Financial Institution Bond (or similar policy) to be assigned to Horizons designee. Such assignments in favor of
Horizons designee shall be executed by LFCB with sufficient time to allow Horizon and its designee to place the insurance required by this Section. The Existing Policy or Replacement Policy, subject to policy terms and conditions, shall
provide coverage with respect to covered acts or omissions occurring prior to the Effective Time;
provided, however,
that Horizon shall not be required to pay annual premiums for the Existing Policy (or for any Replacement Policy) in excess
of 150% of the annual premium for the current annual term of the Existing Policy (the
Maximum Amount
); and,
provided, further, however
, that, if notwithstanding the use of reasonable efforts to do so, Horizon is unable to
maintain or obtain the insurance called for by this
Section
6.05(b)
, Horizon shall obtain as much comparable insurance as is available for the Maximum Amount. Horizons obligations within this
Section
6.05(b)
apply solely and exclusively to the Existing Policy and the existing Financial Institution Bond at each policys current limits of insurance, as well as its other terms, conditions, exclusions and
annual premiums as of the date of this Agreement, and which must be continuously maintained in force by LFCB without interruption, cancellation, or amendment until the Effective Time or Horizons obligations within this Section shall cease.
(c) The provisions of this
Section
6.05
shall survive the Effective Time and
are intended to be for the benefit of, and shall be enforceable by, each Indemnified Party and his or her heirs and personal representatives.
(d) In the event that either Horizon or any of its successors or assigns (i) consolidates with or
merges into any other Person and shall not be the continuing or surviving entity of such consolidation or merger, or (ii) transfers all or substantially all of its properties and assets to any Person, then, and in each such case, proper
provision shall be made so that the successors and assigns of Horizon shall assume the obligations set forth in this
Section
6.05
.
6.06
Changes and Supplements to Horizon Disclosure Schedules
. Horizon
shall promptly supplement, amend, and update, upon the occurrence of any change prior to the Effective Time, and as of the Effective Time, the Horizon Disclosure Schedule with respect to any matters or events hereafter arising which, if in existence
or having occurred as of the date of this Agreement, would have been required to be set forth or described in the Horizon Disclosure Schedule or this Agreement and including, without limitation, any fact which, if existing or known as of the date
hereof, would have made any of the representations or warranties of Horizon contained herein materially incorrect, untrue or misleading. No such supplement, amendment, or update shall have any effect for the purposes of determining
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satisfaction of the conditions set forth in
Article VII
or become part of the Horizon Disclosure Schedule unless LFCB shall have first consented in writing with respect thereof.
6.07
Tippecanoe County Advisory Board
. As soon as reasonably practical
after the Closing Date, Horizon agrees to form a Tippecanoe County Advisory Board comprised of three to five members and add representatives to the advisory board from the communities served by LCB, as mutually agreed upon.
6.08
Issuance of Horizon Common
Stock
. The Horizon
Common Stock to be issued by Horizon to the shareholders of LFCB pursuant to this Agreement will, on the issuance and delivery to such shareholders pursuant to this Agreement, be duly authorized, validly issued, fully paid, and nonassessable. The
Horizon common stock to be issued to the shareholders of LFCB pursuant to this Agreement are and will be free of any preemptive rights of the shareholders of Horizon or any other Person, firm, or entity. The Horizon common stock to be issued to the
shareholders of LFCB pursuant to this Agreement will not be subject to any restrictions on transfer arising under the 1933 Act, except for Horizon common stock issued to any shareholder of LFCB who may be deemed to be an affiliate (under
the Securities Act) of Horizon after completion of the Merger pursuant to Rule 145 of the Securities Act.
ARTICLE VII.
CONDITIONS PRECEDENT TO THE MERGER
7.01
Conditions Precedent to Horizon
s
Obligations
. The obligation of Horizon to consummate the Merger is subject to the satisfaction and fulfillment of each of the following conditions on or prior to the Effective Time, unless waived in writing by Horizon:
(a)
Representations and Warranties at Effective Time
.
Each of the representations
and warranties of LFCB contained in this Agreement shall be true, accurate, and correct at and as of the Effective Time as though such representations and warranties had been made or given on and as of the Effective Time (except that representations
and warranties that by their express terms speak as of the date of this Agreement or some other date shall be true and correct only as of such date).
(b)
Covenants
.
Each of the covenants and agreements of LFCB shall have been
fulfilled or complied with, in all material respects, from the date of this Agreement through and as of the Effective Time.
(c)
Deliveries at Closing
.
Horizon shall have received from LFCB at the Closing
(as defined in
Section
10.01
) the items and documents, in form and content reasonably satisfactory to Horizon, set forth in
Section
10.02(b)
.
(d)
Registration Statement Effective
.
Horizon shall have registered its shares of
Horizon Common Stock to be issued to shareholders of LFCB in accordance with this Agreement with the SEC pursuant to the 1933 Act, and all state securities and blue sky
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approvals, authorizations, and exemptions required to offer and sell such shares shall have been received by Horizon. The Registration Statement with respect thereto shall have been declared
effective by the SEC, and no stop order shall have been issued or threatened.
(e)
Regulatory
Approvals
.
All regulatory approvals required to consummate the transactions contemplated hereby (
Regulatory Approvals
) 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 any conditions, restrictions, or requirements which the Board of Directors of Horizon reasonably determines in good faith would (i) following the
Effective Time, have a Material Adverse Effect on LFCB or (ii) reduce the benefits of the transactions contemplated hereby to such a degree that Horizon would not have entered into this Agreement had such conditions, restrictions, or
requirements been known at the date hereof.
(f)
Shareholder Approval
.
The
shareholders of LFCB shall have approved and adopted this Agreement as required by applicable law and approved the Merger. The total number of the Dissenting Shares shall be no greater than 7.5% of the number of shares of LFCB Common Stock
outstanding as of the date of this Agreement.
(g)
Officers
Certificate
.
LFCB shall have delivered to Horizon a certificate signed by its CEO and its Secretary, dated as of the Effective Time, certifying that: (i) the representations and warranties of LFCB contained in
Article
III
are true, accurate, and correct on and as of the Effective Time, subject to the standard specified in
Section
7.01(a)
; (ii) all the covenants of LFCB have been complied with, in all material respects, from the date
of this Agreement through and as of the Effective Time; and (iii) LFCB has satisfied and fully complied with all conditions necessary to make this Agreement effective as to it.
(h)
Tax Opinion
.
The Board of Directors of Horizon shall have received a written
opinion of the law firm of Barnes & Thornburg LLP, dated as of the Effective Time, in form and content reasonably satisfactory to Horizon, to the effect that the Merger to be effected pursuant to this Agreement will constitute a
tax-free
reorganization under the Code (as described in
Section
1.03
hereof) to each party hereto and to the shareholders of LFCB, except with respect to the Cash Consideration and the cash
received by the shareholders of LFCB for fractional shares resulting from application of the Exchange Ratio and pursuant to
Section
2.02
hereof. In rendering such opinion, counsel may require and rely upon customary
representation letters of the parties hereto and rely upon customary assumptions.
(i)
Special
Dividend
.
At the request of Horizon and subject to bank regulatory approval, LCB shall dividend its excess capital to LFCB at least ten (10) days prior to the Effective Time. LFCB and LCB shall file all necessary
applications, requests, and notices with the bank regulatory authorities to obtain approval for any such requested dividend prior to the Effective Time and pursue the same as expeditiously as possible and in good faith.
(j)
Material Proceedings
.
None of Horizon, LFCB, or any of their Subsidiaries,
shall be subject to any statute, rule, regulation, injunction, order or decree, which shall have
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been enacted, entered, promulgated, or enforced, which prohibits, prevents or makes illegal the completion of the Merger, and no material claim, litigation or proceeding shall have been initiated
or threatened relating to the Agreement or the Merger or seeking to prevent the completion of the Merger.
(k)
Listing
.
The shares of Horizon common stock to be issued in the Merger shall
have been approved for listing on the NASDAQ Global Select Market, subject to official notice of issuance.
(l)
Notice of Termination of Data Processing Agreement
.
LCB shall have provided
notice of termination to Computer Services, Inc. under that certain Data Processing Agreement, dated July 30, 2010 (including related exhibits and schedules) (the
Data Processing Agreement
).
(m)
Noncompetition Agreements
.
Messrs. Marley, Murray, and Hickman shall have
executed and delivered the Noncompetition Agreements to Horizon.
(n)
Termination of Existing
Employment Agreement
.
Mr. Marley shall have executed and delivered the Mutual Termination of Employment Agreement to Horizon.
(o)
LFCB Adjusted Consolidated Shareholder
s Equity
.
As of the
end of the month prior to the Effective Time, the LFCB Adjusted Consolidated Shareholders Equity (as defined in this
Section
7.01(o)
), shall not be less than $19.902 million.
LFCB Adjusted Consolidated
Shareholders
Equity
shall be the consolidated shareholders equity of LFCB and LCB determined in accordance with GAAP consistently applied for prior periods;
provided, however,
that (A) any accruals
established by LFCB pursuant to
Section
5.05(b)
; (B) any changes to the valuation of the LFCB investment portfolio attributed to ASC 320, whether upward or downward, from December 31, 2016 until the measurement date;
(C) the aggregate expenses of attorneys, accountants, consultants, financial advisors, and other professional advisors incurred by LFCB in connection with this Agreement or the transactions contemplated hereby; (D) any amounts paid or
payable to any director, officer, or employee of LFCB or any Subsidiary of LFCB under any contract, severance arrangement, benefit plan or employment practice of LFCB, or at the direction of or with the written consent of Horizon, and all other
payroll and
non-payroll
related costs and expenses; (E) costs associated with the termination of the LFCB 401(k) Plan; (F) costs associated with the termination of the Data Processing Agreement set
forth in
Section
7.01(l)
; and, (G) the aggregate expenses of attorneys, accountants, consultants, financial advisors, and other professional advisors incurred by LFCB in connection with any lawsuit filed involving this
Agreement or the transactions contemplated hereby; in each case incurred or to be incurred by LFCB through the Effective Time in connection with this Agreement and the transactions contemplated hereby, will not reduce or impact the calculation of
the LFCB Adjusted Consolidated Shareholders Equity for purposes of this Section. All such excluded amounts shall also be determined in accordance with GAAP. To the extent the actual consolidated shareholders equity of LFCB is less than
the LFCB Adjusted Consolidated Shareholders Equity, the Merger Consideration shall be reduced dollar for dollar.
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(p)
Consents
.
LFCB shall have
obtained or caused to be obtained (a) all written consents, if any, required under the Material Contracts, and (b) all permits, authorizations, other written consents, permissions, and approvals as required for the lawful consummation of
this Merger and as required under all agreements, contracts, appointments, indentures, plans, trusts, or other arrangements with third parties required to effect the transactions contemplated by this Agreement.
(q)
LFCB Option Cancellation Agreements
.
Horizon shall have received executed
copies of the cancellation agreements with respect to the LFCB Options, as contemplated by
Section
2.02
, all of which shall be in full force and effect.
7.02
Conditions Precedent to LFCB
s
Obligations
. The obligation of LFCB to consummate the Merger is subject to the satisfaction and fulfillment of each of the following conditions on or prior to the Effective Time, unless waived in writing by LFCB:
(a)
Representations and Warranties at Effective Time
.
Each of the representations
and warranties of Horizon contained in this Agreement shall be true, accurate, and correct on and as of the Effective Time as though the representations and warranties had been made or given at and as of the Effective Time (except that
representations and warranties that by their express terms speak as of the date of this Agreement or some other date shall be true and correct only as of such date).
(b)
Covenants
.
Each of the covenants and agreements of Horizon shall have been
fulfilled or complied with, in all material respects, from the date of this Agreement through and as of the Effective Time.
(c)
Deliveries at Closing
.
LFCB shall have received from Horizon at the Closing
the items and documents, in form and content reasonably satisfactory to LFCB, listed in
Section
10.02(a)
hereof.
(d)
Registration Statement Effective
.
Horizon shall have registered its shares of
Horizon Common Stock to be issued to shareholders of LFCB in accordance with this Agreement with the SEC pursuant to the 1933 Act, and all state securities and blue sky approvals, authorizations, and exemptions required to offer and sell such shares
shall have been received by Horizon. The Registration Statement with respect thereto shall have been declared effective by the SEC, and no stop order shall have been issued or threatened.
(e)
Regulatory Approvals
.
All Regulatory Approvals shall have been obtained and
shall remain in full force and effect and all statutory waiting periods in respect thereof shall have expired.
(f)
Shareholder Approval
.
The shareholders of LFCB shall have approved and adopted
this Agreement as required by applicable Law and approved the Merger.
(g)
Officers
Certificate
.
Horizon shall have delivered to LFCB
a certificate signed by its CEO and its Secretary, dated as of the Effective Time, certifying that: (i) the
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representations and warranties of Horizon contained in
Article IV
are true, accurate, and correct on and as of the Effective Time subject to the standard specified in
Section
7.02(a)
above; (ii) all the covenants of Horizon have been complied with, in all material respects, from the date of this Agreement through and as of the Effective Time; and (iii) Horizon has satisfied and
fully complied with all conditions necessary to make this Agreement effective as to it.
(h)
Tax
Opinion
.
The Board of Directors of LFCB shall have received a written opinion of the law firm of Barnes & Thornburg LLP, dated as of the Effective Time, in form and content reasonably satisfactory to LFCB, to the
effect that the Merger to be effected pursuant to this Agreement will constitute a
tax-free
reorganization under the Code (as described in
Section
1.03
hereof) to each party hereto
and to the shareholders of LFCB, except with respect to the Cash Consideration and the cash received by the shareholders of LFCB for fractional shares resulting from application of the Exchange Ratio and pursuant to
Section
2.02
hereof. In rendering such opinion, counsel may require and rely upon customary representation letters of the parties hereto and rely upon customary assumptions.
(i)
Listing
.
The shares of Horizon Common Stock to be issued in the Merger shall
have been approved for listing on the NASDAQ Global Select Market, subject to official notice of issuance.
(j)
Material Proceedings
.
None of Horizon, LFCB, or any Subsidiary of Horizon or
LFCB, shall be subject to any statute, rule, regulation, injunction, order, or decree, which shall have been enacted, entered, promulgated, or enforced, which prohibits, prevents, or makes illegal the completion of the Merger, and no material claim,
litigation, or proceeding shall have been initiated or threatened relating to this Agreement or the Merger or seeking to prevent the completion of the Merger.
ARTICLE VIII.
TERMINATION OF MERGER
8.01
Termination
. This Agreement may be terminated and abandoned at
any time prior to the Closing Date, only as follows:
(a) by the mutual written consent of Horizon and
LFCB;
(b) by either of LFCB or Horizon by written notice to the other:
(i) if this Agreement and the Merger are not approved by the requisite vote of the
shareholders of LFCB at the LFCB Shareholders Meeting contemplated in
Section
5.01
;
(ii) (x) if any Governmental Authority of competent jurisdiction shall have issued an order,
decree, judgment, or injunction or taken any other action that permanently restrains, enjoins, or otherwise prohibits or makes illegal the
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consummation of the Merger, and such order, decree, judgment, injunction, or other action shall have become final and
non-appealable,
or (y) if any
consent or approval of any Governmental Authority whose consent or approval is required to consummate the Merger has been denied and such denial (despite the reasonable best efforts of the parties hereto to appeal or reverse such denial) has become
final and
non-appealable;
or (z) any application, filing, or notice for a regulatory approval has been withdrawn at the request or recommendation of the applicable Governmental Authority;
provided,
however
,
that the right to terminate this Agreement under this
Section
8.01(b)(ii)
shall not be available to a party whose failure (or the failure of any of its affiliates) to fulfill any of its obligations
(excluding warranties and representations) under this Agreement has been the cause of or resulted in the occurrence of any event described in clauses (x), (y) and (z) above;
(iii) if the consummation of the Merger shall not have occurred on or before December 31,
2017 (the Outside Date); provided that the right to terminate this Agreement under this
Section
8.01(b)(iii)
shall not be available to any party whose breach of any provision of this Agreement causes the failure
of the Merger to occur on or before the Outside Date; or
(c) by written notice from Horizon to LFCB,
if:
(i) any event shall have occurred which is not capable of being cured prior to the
Outside Date and would result in any condition set forth in
Section
7.01
not being satisfied prior to the Outside Date;
(ii) LFCB breaches or fails to perform any of its representations, warranties, or covenants
contained in this Agreement, which breach or failure to perform would give rise to the failure of a condition set forth in
Section
7.01
, and such condition is incapable of being satisfied by the Outside Date or such breach
has not been cured by LFCB within twenty (20) business days after LFCBs receipt of written notice of such breach from Horizon;
(iii) there shall have occurred after the date of this Agreement any event, change, condition,
circumstance, or state of facts, or aggregation of events, changes, conditions, circumstance, or state of facts, that has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, whether or not
covered by insurance, on LFCB; or
(iv) Horizon elects to exercise its right to terminate pursuant
to
Section
5.12
.
(d) by written notice from LFCB to Horizon if:
(i) any event shall have occurred which is not capable of being cured prior to the Outside
Date and would result in any condition set forth in
Section
7.02
not being satisfied prior to the Outside Date;
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(ii) Horizon breaches or fails to perform any of its
representations, warranties, or covenants contained in this Agreement, which breach or failure to perform would give rise to the failure of a condition set forth in
Section
7.02
and such condition is incapable of being
satisfied by the Outside Date or such breach has not been cured by Horizon within twenty (20) business days after Horizons receipt of written notice of such breach from LFCB; or
(iii) there shall have occurred after the date of this Agreement any event, change, condition,
circumstance, or state of facts, or aggregation of events, changes, conditions, circumstances, or state of facts that has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, whether or not
covered by insurance, on Horizon.
(e) by written notice from Horizon to LFCB:
(i) if the LFCB Board of Directors shall fail to include its recommendation to approve the
Merger in the Proxy Statement;
(ii) in the event of an Adverse Recommendation Change or an
Adverse Recommendation Change Notice;
(iii) if the LFCB Board shall approve any Acquisition
Proposal or publicly recommend that the holders of LFCB Common Stock accept or approve any Acquisition Proposal; or
(iv) if LFCB shall have entered into, or publicly announced its intention to enter into, a definitive
agreement, agreement in principle, or letter of intent with respect to any Acquisition Proposal.
(f) by written notice by Horizon to LFCB if a quorum could not be convened at the LFCB Shareholders
Meeting contemplated in
Section
5.01
or at a reconvened meeting held at any time prior to or on the Outside Date.
(g) by written notice by LFCB to Horizon at any time during the five (5) day period commencing on the
Determination Date if, and only if both of the following conditions are satisfied, such termination to be effective on the tenth (10
th
) day following the Determination Date:
(i) the Horizon Market Value (as determined on the Determination Date), is less than
$21.57; and
(ii) the number obtained by dividing the Horizon Market Value by the Initial
Horizon Market Value shall be less than the number obtained by dividing ( (A) the Final Index Price by (B) the Initial Index Price ) minus 0.15;
subject
,
however
, to the following three sentences. If LFCB elects to exercise its termination right pursuant to this
Section
8.01(g)
, it shall give prompt written notice thereof to Horizon.
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During the five (5) business day period commencing with its receipt of such notice, Horizon shall have the option to increase the Exchange Ratio to equal the lesser of (i) a quotient,
the numerator of which is equal to the product of the Initial Horizon Market Value, the Exchange Ratio (as then in effect), and the [Index Ratio minus 0.15] and the denominator of which is equal to the Horizon Market Value (as determined on the
Determination Date); or (ii) the quotient determined by dividing the Initial Horizon Market Value by the Horizon Market Value (as determined on the Determination Date), and multiplying the quotient by the product of the Exchange Ratio (as then
in effect) and 0.85. If within such five (5) business day period, Horizon delivers written notice to LFCB that it intends to proceed with the Merger by paying such additional consideration as contemplated by the preceding sentence, and notifies
LFCB of the revised Exchange Ratio, then no termination shall have occurred pursuant to this
Section
8.01(g)
, 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).
For purposes of this
Section
8.01(g)
, the following terms shall have the
meanings indicated below:
Determination Date
shall mean the first date on which all Regulatory Approvals (and waivers,
if applicable) and all other approvals and consents necessary for consummation of the Merger have been received.
Final Index
Price
means the average of the daily closing value of the Index for the fifteen (15) consecutive trading days immediately preceding the Determination Date.
Index
means the SNL Small Cap U.S. Bank and Thrift Index or, if such Index is not available, such substitute or similar
Index as substantially replicates the SNL Small Cap U.S. Bank and Thrift Index.
Index Ratio
means the Final Index
Price divided by the Initial Index Price.
Initial Horizon Market Value
means $26.28, adjusted as indicated in the last
sentence of this
Section
8.01(g)
.
Initial Index Price
means the closing value of the Index
on the date of this Agreement.
Horizon Market Value
means the average of the daily closing sales prices of a share of
Horizons common stock, rounded to the nearest cent, during the fifteen (15) consecutive trading days immediately preceding the Determination Date;
provided, however,
that closing sales prices shall only be used for days during
which Horizons shares are actually traded on the NASDAQ Global Select Market.
If Horizon or any company belonging to the Index
declares or effects a stock dividend,
split-up,
combination, exchange of shares, or similar transaction between the date of this Agreement and the Determination Date, the prices for the common stock of such
company shall be appropriately adjusted for the purposes of applying this
Section
8.01(g)
.
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8.02
Effect of Termination
.
(a) Subject to the remainder of this
Section
8.02
, in the event of the
termination of this Agreement pursuant to
Section
8.01
, this Agreement shall forthwith become null and void and have no effect, without any liability on the part of Horizon or LFCB and each of their respective Subsidiaries,
directors, officers, employees, advisors, agents, or shareholders and all rights and obligations of any party under this Agreement shall cease, except for the agreements contained in
Sections 5.06
and
8.02
and
Article XI
, which
shall remain in full force and effect and survive any termination of this Agreement;
provided, however,
that nothing contained in this Agreement, including this
Section
8.02
, except for the amounts payable pursuant
to subsections
(b)
,
(c)
, or
(d)
, shall relieve any party hereto from liabilities or damages arising out of any fraud or intentional breach by such party of any of its representations, warranties, covenants, or other agreements
contained in this Agreement or any related agreement.
(b) LFCB shall pay to Horizon an amount in
cash equal to $1,280,000 (the
Termination Fee
) if:
(i) this
Agreement is terminated by Horizon pursuant to
Section
8.01(e)
; or
(ii) this Agreement is terminated by either party pursuant to
Section
8.01(b)(i)
as a result of the failure of LFCBs shareholders to approve the Agreement and the Merger by the requisite vote or by Horizon pursuant to
Section
8.01(f)
and, in each case,
prior to the date that is twelve (12) months after such termination LFCB or any of its Subsidiaries enters into any Acquisition Agreement or any Acquisition Proposal is consummated (regardless of whether such Acquisition Proposal is made or
consummated before or after termination of this Agreement); or
(iii) this Agreement is terminated
by either LFCB or Horizon pursuant to
Section
8.01(b)(iii)
and (A) prior to the date of such termination, an Acquisition Proposal was made, and (B) prior to the date that is twelve (12) months after such
termination, LFCB, or any of its Subsidiaries enters into any Acquisition Agreement or any Acquisition Proposal is consummated.
(iv) this Agreement is terminated by Horizon pursuant to
Section
8.01(c)(i)
,
(ii)
or
(iii)
as a result of an intentional, willful, or grossly negligent breach or nonperformance by LFCB of any representation, warranty, or covenant contained in this Agreement.
(c) Any fee due under
Section
8.02(b)
shall be paid by LFCB by wire transfer of
same day funds:
(i) in the case of
Section
8.02(b)(i)
or
(iv)
, concurrently with such termination; and
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(ii) in the case of
Section
8.02(b)(ii)
or
Section
8.02(b)(iii)
, on the earlier of the date LFCB enters into such Acquisition Agreement or consummates such Acquisition Proposal.
(d) In the event Horizon would be entitled to the Termination Fee pursuant to
Section
8.02(b)
, then Horizon may elect, in its sole discretion, to (i) terminate this Agreement and require the payment of such Termination Fee, in which event the Termination Fee shall be the sole and exclusive
remedy for such termination event and such fee shall constitute liquidated damages;
provided, however,
this Agreement shall not be terminated until the Termination Fee is paid in full, or (ii) not terminate this Agreement and institute a
proceeding at law or in equity to specifically enforce this Agreement and/or recover all of its damages arising hereunder, including all of its costs, fees, and expenses (including reasonable attorneys and accountants fees and expenses).
LFCB acknowledges that the agreements contained in this
Section
8.02
are an integral part of the transactions contemplated by this Agreement, and that, without these agreements, Horizon would not have entered into this
Agreement. Accordingly, if LFCB fails promptly to pay the Termination Fee, and, in order to obtain such payment, Horizon commences a suit that results in a judgment against LFCB for the Termination Fee, LFCB shall also pay to Horizon its reasonable
costs and expenses (including attorneys and accountants fees and expenses) in connection with such suit and any appeal relating thereto, together with interest at the national prime rate in effect on the date such payment was required to
be made.
ARTICLE IX.
EFFECTIVE TIME OF THE MERGER
Upon the terms and subject to the conditions specified in this Agreement, the Merger shall become effective on the day and at the time
specified in the Articles of Merger of Horizon and LFCB as filed with the Indiana Secretary of State (the
Effective Time
). Unless otherwise mutually agreed to by the parties hereto, the parties shall cause the Effective Time
to occur within ten (10) business days after the later to occur of (a) all conditions precedent to the Merger set forth in this Agreement have been fulfilled, and (b) all waiting periods in connection with the bank regulatory
applications filed for the approval of the Merger have expired.
ARTICLE X.
CLOSING
10.01
Closing Date and Place
. So long as all conditions precedent set
forth in
Article VII
hereof have been satisfied and fulfilled, the closing of the Merger (the
Closing
) will take place on the date determined to be the date of the Effective Time by
Article IX
hereof (the
Closing Date
) at a location to be reasonably determined by Horizon.
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10.02
Deliveries
.
(a) At the Closing, Horizon will deliver to LFCB the following:
(i) the officers certificate contemplated by
Section
7.02(g)
hereof;
(ii) copies of all Regulatory Approvals
necessary to consummate the Merger;
(iii) copies of the resolutions adopted by the Board of
Directors of Horizon, certified by the Secretary of Horizon relative to the approval of this Agreement and the Merger;
(iv) the tax opinion required by
Section
7.02(h)
hereof;
(v) to the extent applicable, evidence of the purchase of director and officer liability
insurance for the benefit of the Indemnified Parties in accordance with
Section
6.05
; and
(vi) such other documents and information as LFCB or its legal counsel may reasonably request.
(b) At the Closing, LFCB will deliver to Horizon the following:
(i) the officers certificate contemplated by
Section
7.01(g)
hereof;
(ii) copies of the resolutions adopted by
the Board of Directors and shareholders of LFCB certified by the Secretary of LFCB relative to the approval of this Agreement and the Merger;
(iii) the LFCB Options cancellations required by
Section
7.01(q)
hereof; and
(iv) such other documents and information as Horizon or its legal counsel may reasonably request.
ARTICLE XI.
MISCELLANEOUS
11.01
No Assignment
. This Agreement and the recitals hereof shall be binding upon and inure to the benefit of and be enforceable by the respective parties hereto and their respective successors and assigns;
provided, however,
that neither this Agreement nor any of the rights, interests, or obligations of the respective parties hereto under this Agreement may be assigned by any party hereto without the prior written consent of the other parties
hereto. Except as provided by
Section
6.05
(dealing with rights to indemnification and advancements of expenses, and the rights to insurance coverage, provided to certain persons) and
Sections 6.03(a)-(e)
(dealing
with the Continuing Employees employee benefit plans) and
Section
6.03(h)
(dealing with severance commitments to employees), the representations,
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warranties, covenants, and agreements contained in this Agreement, as well as the documents and instruments referred to herein, are for the sole benefit of the parties hereto and their successors
and assigns, and they will not be construed as conferring any rights on any other Persons, other than the right of LFCB, on behalf of its shareholders, to pursue damages in the event of fraud or an intentional breach of this Agreement as provided in
Section
8.02(a)
hereof.
11.02
Waiver; Amendment
.
(a) The parties hereto may by an instrument in writing: (i) extend the time for the
performance of or otherwise amend any of the covenants, conditions, or agreements of the other parties under this Agreement; (ii) waive any inaccuracies in the representations or warranties of the other parties contained in this Agreement or in
any document delivered pursuant hereto or thereto; (iii) waive the performance by the other parties of any of the covenants or agreements to be performed by it or them under this Agreement; or (iv) waive the satisfaction or fulfillment of
any condition, the nonsatisfaction or nonfulfillment of which is a condition to the right of the party so waiving to consummate the Merger. The waiver by any party hereto of a breach of or noncompliance with any provision of this Agreement will not
operate or be construed as a continuing waiver or a waiver of any other or subsequent breach or noncompliance hereunder.
(b) This Agreement may be amended, modified, or supplemented only by a written agreement
executed by the parties hereto.
11.03
Notices
. All notices, requests, and
other communications hereunder will be in writing and will be deemed to have been duly given if delivered by hand and receipted for, delivered by certified United States Mail, return receipt requested, first class postage
pre-paid,
or delivered by overnight express receipted delivery service as follows:
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If to Horizon:
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with a copy (which shall not constitute notice) to:
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Horizon Bancorp
515 Franklin Street
Michigan City, IN 46360
Attn: Craig M. Dwight
CEO
and Chairman
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Barnes & Thornburg LLP
11 South Meridian Street
Indianapolis, IN 46204-3535
Attn: Curt W. Hidde
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And
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If to LFCB:
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with a copy (which shall not constitute notice) to:
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Lafayette Community Bancorp
301 South Street
Lafayette, IN 4799901
Attn: Bradley W. Marley,
President and CEO
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SmithAmundsen LLC
Capital Center, South Tower
201 North Illinois Street, Suite 1400
Indianapolis, Indiana 46204
Attn: John W. Tanselle
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or such substituted address or Person as any of them has given to the other in writing. All such notices, requests, or other
communications shall be effective: (a) if delivered by hand, when
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delivered; (b) if mailed in the manner provided herein, five (5) business days after deposit with the United States Postal Service; or (c) if delivered by overnight express
delivery service, on the next business day after deposit with such service.
11.04
Headings
. The headings in this Agreement have been inserted solely for
ease of reference and should not be considered in the interpretation or construction of this Agreement.
11.05
Severability
. In case any one or more of the provisions contained herein
shall, for any reason, be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision of this Agreement, but this Agreement shall be construed as if such
invalid, illegal, or unenforceable provision or provisions had never been contained herein.
11.06
Counterparts; Facsimile
. This Agreement may be executed in any number of
counterparts and by facsimile, each of which will be an original, but such counterparts shall together constitute one and the same instrument.
11.07
Governing Law; Enforcement; Specific Performance; Jury Trial
. This
Agreement (and any and all other documents, agreements, and instruments entered into in connection with the Merger and any related transaction; collectively, the
Related Agreements
) shall be governed by and construed in accordance
with the laws of the State of Indiana and applicable federal laws, without regard to principles of conflicts of law. The parties agree that irreparable damage would occur in the event that any provision of this Agreement or any Related Agreement was
not performed in accordance with its specific terms on a timely basis or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or other equitable relief to prevent breaches of this Agreement or any
Related Agreement and to enforce specifically the terms and provisions of this Agreement or any Related Agreement, this being in addition to any other remedy to which they are entitled at law or in equity.
11.08
WAIVER OF JURY TRIAL
. EACH OF THE PARTIES HEREBY WAIVES TRIAL BY JURY IN
ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY, IN ANY MATTERS (WHETHER SOUNDING IN TORT, CONTRACT, OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR ANY RELATED AGREEMENT.
11.09
Entire Agreement
. This Agreement and the Exhibits hereto supersede all
other prior or contemporaneous understandings, commitments, representations, negotiations, or agreements, whether oral or written, among the parties hereto relating to the Merger or matters contemplated herein and constitute the entire agreement
between the parties hereto, except as otherwise provided herein and except for the confidentiality letter agreement dated March 14, 2017, by and between the parties (the
Confidentiality Agreement
). Upon the execution of this
Agreement by all the parties hereto, any and all other prior writings of either party relating to the Merger, will terminate and will be rendered of no further force or effect.
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The parties hereto agree that each party and its counsel reviewed and revised this Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against
the drafting party will not be employed in the interpretation of this Agreement or any amendments or exhibits hereto.
11.10
Survival of Representations, Warranties or Covenants
. Except as set forth in the following sentence, none of the representations, warranties, or covenants of the parties will survive the Effective
Time or the earlier termination of this Agreement, and thereafter the parties will have no further liability with respect thereto. The covenants contained in
Sections 5.06
,
5.07
, and
8.02
and this
Article XI
shall survive
termination of this Agreement and remain in full force and effect. The covenants contained in
Sections 1.01
,
1.05
,
1.06
,
2.05
,
5.17
,
5.18
,
5.19
,
5.22
,
6.03
,
6.05
,
6.07
, and
all of the provisions of this
Article XI
shall survive the Effective Time.
11.11
Expenses
. Except as provided elsewhere in this Agreement, each
party to this Agreement shall pay its own expenses incidental to the Merger contemplated hereby.
11.12
Certain References
. Whenever in this Agreement a singular word
is used, it also will include the plural wherever required by the context and
vice-versa,
and the masculine or neuter gender shall include the masculine, feminine, and neuter genders. Except expressly stated
otherwise, all references in this Agreement to periods of days shall be construed to refer to calendar, not business, days. The term
business day
will mean any day except Saturday and Sunday when Horizon Bank, in Michigan City,
Indiana, is open for the transaction of business.
[
S
IGNATURE
P
AGE
F
OLLOWS
.]
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I
N
W
ITNESS
W
HEREOF
, Horizon and LFCB have made and
entered into this Agreement as of the day and year first above written and have caused this Agreement to be executed, attested in counterparts, and delivered by their duly authorized officers.
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H
ORIZON
B
ANCORP
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By:
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/s/ Craig M. Dwight
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Craig M. Dwight, CEO & Chairman
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L
AFAYETTE
C
OMMUNITY
B
ANCORP
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By:
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/s/ Bradley W. Marley
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Bradley W. Marley, President and CEO
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