0000950152-01-505439.txt : 20011112
0000950152-01-505439.hdr.sgml : 20011112
ACCESSION NUMBER: 0000950152-01-505439
CONFORMED SUBMISSION TYPE: PREM14A
PUBLIC DOCUMENT COUNT: 1
CONFORMED PERIOD OF REPORT: 20011116
FILED AS OF DATE: 20011105
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: BANCFIRST OHIO CORP
CENTRAL INDEX KEY: 0000868572
STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021]
IRS NUMBER: 311294136
STATE OF INCORPORATION: OH
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: PREM14A
SEC ACT: 1934 Act
SEC FILE NUMBER: 000-18840
FILM NUMBER: 1774696
BUSINESS ADDRESS:
STREET 1: 422 MAIN ST
STREET 2: PO BOX 4658
CITY: ZANESVILLE
STATE: OH
ZIP: 43702
BUSINESS PHONE: 6144528444
MAIL ADDRESS:
STREET 1: 422 MAIN STREET
CITY: ZANESVILLE
STATE: OH
ZIP: 43701
FORMER COMPANY:
FORMER CONFORMED NAME: BANCFIRST CORP /OH/
DATE OF NAME CHANGE: 19600201
PREM14A
1
l91106aprem14a.txt
BANCFIRST OHIO CORP.--PRELIM PROXY (MERGER)
================================================================================
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12.
BancFirst Ohio Corp.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[X] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: common
stock, no par value, of UNB Corp. ("UNB common stock")
(2) Aggregate number of securities to which transaction applies: 11,582,930
shares, the projected number of shares of UNB common stock to be issued
in connection with the merger described herein
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): $17.08,
which is the average of the bid and asked price for UNB common stock on
Nov. 1, 2001
(4) Proposed maximum aggregate value of transaction: $197,836,444
(5) Total fee paid: $39,567.28 (all offset as described below)
[ ] Fee paid previously with preliminary materials.
[X] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: $64,574.83
(2) Form, Schedule or Registration Statement No.: Form S-4 (333-71614)
(3) Filing Party: UNB Corp.
(4) Date Filed: October 15, 2001
================================================================================
SUBJECT TO COMPLETION, DATED OCTOBER 15, 2001
JOINT PROXY STATEMENT
OF
UNB CORP
AND
BANCFIRST OHIO CORP.
--------------------
PROSPECTUS
OF
UNB CORP.
FOR 11,582,930 SHARES OF COMMON STOCK
--------------------
UNB Corp. and BancFirst Ohio Corp. have agreed to combine pursuant to the terms
of an Agreement of Merger and Plan of Reorganization providing for the merger of
BancFirst with UNB and structured as a merger of equals. The merger cannot be
completed unless the shareholders of both companies approve it.
The boards of directors of UNB Corp. and BancFirst Ohio Corp. are furnishing
this joint proxy statement and prospectus to you as a shareholder of either UNB
or BancFirst to solicit your proxy to vote at a special meeting of the
shareholders of UNB or BancFirst to be held on _________ and __________,
respectively, and at any adjournment or postponement of those meetings. At the
special meetings, shareholders of UNB and BancFirst will vote upon the adoption
of the Agreement of Merger and Plan of Reorganization between UNB and BancFirst
and their respective banking subsidiaries, and the approval of the transactions
contemplated thereby.
If the merger is completed, BancFirst will merge into UNB and UNB will issue
1.325 shares of UNB common stock in exchange for each share of BancFirst's
common stock and pay cash for any fractional shares of BancFirst Common Stock.
As a result of the merger, former BancFirst shareholders will hold approximately
52% and current UNB shareholders will hold approximately 48% of the outstanding
common stock of UNB. Upon completion of the merger, UNB's name will be changed
to ______________________.
Following the merger, the board of directors of UNB, as the surviving
corporation, will consist of 14 members, composed of an equal number of UNB and
BancFirst directors, and senior management of UNB will be comprised of executive
officers of both UNB and BancFirst.
The boards of directors of UNB and BancFirst each believe that the merger is in
the best interests of its shareholders and recommend that their respective
shareholders vote FOR adoption of the merger agreement.
The joint proxy statement and prospectus is dated ____________ and will be first
mailed to shareholders of UNB and BancFirst on or about ______________.
Shares of UNB common stock are quoted on the National Market System of the
Nasdaq Stock Market under the symbol "UNBO." UNB common stock is not a savings
account, deposit or other obligation of any bank or nonbank subsidiary of UNB
and is not insured by the Federal Deposit Insurance Corporation or any other
governmental agency. UNB common stock is subject to investment risks, including
possible loss of value.
YOU SHOULD RELY ONLY ON INFORMATION PROVIDED IN OR ATTACHED TO THIS DOCUMENT.
NEITHER UNB NOR BANCFIRST HAS AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT
INFORMATION. EXCEPT AS OTHERWISE EXPRESSLY STATED IN THIS INFORMATION STATEMENT,
YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THIS DOCUMENT IS ACCURATE AS OF
ANY DATE OTHER THAN THE DATE STATED ON THE COVER PAGE OF THIS DOCUMENT.
==============================================================================
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
REGULATOR HAS APPROVED OR DISAPPROVED OF THE SHARES OF UNB COMMON STOCK OR
PASSED UPON THE ADEQUACY OR ACCURACY OF THE JOINT PROXY STATEMENT AND
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
=============================================================================
UNB CORP.
220 MARKET AVENUE SOUTH
CANTON, OHIO 44702
(330) 438-1212
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
(IN LIEU OF THE ANNUAL MEETING)
Notice is hereby given that a special meeting of shareholders of UNB Corp. will
be held on ______________, ______ at _______ a.m. at _______________ Canton,
Ohio for the purpose of considering and voting upon:
1. the adoption of the Agreement of Merger and Plan of
Reorganization among UNB Corp., The United National Bank &
Trust Co., BancFirst Ohio Corp. and The First National Bank of
Zanesville, N.A. dated September 5, 2001;
2. such other business as may properly come before the special
meeting, including adjournment of the special meeting if
necessary to permit further solicitation of proxies in the
event that there are not sufficient votes at the time of the
special meeting to adopt the merger agreement.
Shareholders of record at the close of business on _______________ are entitled
to notice of and to vote at the special meeting and any adjournment thereof.
Adoption of the merger agreement will require the affirmative vote of the
holders of two-thirds of the shares of UNB common stock entitled to vote at the
special meeting.
Whether or not you plan to attend the special meeting, please complete, date and
sign the enclosed proxy card and return it in the enclosed postage paid
envelope.
The Board of Directors of UNB unanimously recommends that you vote "FOR" the
adoption of the Merger Agreement.
By Order of the Board of Directors
Canton, Ohio
____________, 200_
BANCFIRST OHIO CORP.
422 MAIN STREET, P.O. BOX 4658
ZANESVILLE, OHIO 43702
(740) 452-8444
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
Notice is hereby given that a special meeting of shareholders of BancFirst Ohio
Corp. will be held on ______________, ______ at _______ a.m. at _______________
Zanesville, Ohio for the purpose of considering and voting upon:
1. the adoption of the Agreement of Merger and Plan of
Reorganization among UNB Corp., The United National Bank &
Trust Co., BancFirst Ohio Corp. and The First National Bank of
Zanesville, N.A. dated September 5, 2001;
2. such other business as may properly come before the special
meeting, including adjournment of the special meeting if
necessary to permit further solicitation of proxies in the
event that there are not sufficient votes at the time of the
special meeting to adopt the merger agreement.
Shareholders of record at the close of business on _______________ are entitled
to notice of and to vote at the special meeting and any adjournment thereof.
Adoption of the merger agreement will require the affirmative vote of the
holders of a majority of the shares of BancFirst common stock entitled to vote
at the special meeting.
Whether or not you plan to attend the special meeting, please complete, date and
sign the enclosed proxy card and return it in the enclosed postage paid
envelope.
The Board of Directors of BancFirst unanimously recommends that you vote "FOR"
the adoption of the Merger Agreement.
By Order of the Board of Directors
Zanesville, Ohio
____________, 200_
TABLE OF CONTENTS
PAGE PAGE
SUMMARY 1 Material Federal Income Tax Consequences 45
The Companies 1 Accounting Treatment 45
The Merger 2 Restrictions on BancFirst Affiliates 46
Directors and Management after the Merger 46
SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA 8 Dissenters' Rights 48
Selected Historical Financial Data 9 Articles of Incorporation and Code of Regulations 50
Selected Unaudited Pro Forma Condensed Indemnification and Insurance 50
Combined Financial Information 11 DESCRIPTION OF UNB COMMON STOCK 50
Comparative Unaudited Per Share STOCK OPTION AGREEMENTS 51
Information 12 COMPARISON OF SHAREHOLDERS' RIGHTS 54
RISK FACTORS 14 STATE ANTI-TAKEOVER LAWS 58
FORWARD LOOKING STATEMENTS 15 INTERESTS OF CERTAIN DIRECTORS AND
EXECUTIVE OFFICERS IN THE MERGER 59
SPECIAL MEETING OF UNB SHAREHOLDERS 16 SECURITY OWNERSHIP 62
Date, Time, and Place of the Special Meeting 16 EXPERTS 64
Purpose of the Special Meeting 16 LEGAL OPINIONS 65
Shareholder Special Meeting Record Date 16 WHERE YOU CAN FIND MORE INFORMATION 65
Vote Required for Adoption of the UNAUDITED PRO FORMA CONDENSED
Merger Agreement 16 COMBINED CONSOLIDATED FINANCIAL
Proxies and Effect on Vote 16 STATEMENTS 67
Revocation of Proxies 17
Solicitation of Proxies 17 Agreement of Merger and Plan of
Reorganization Appendix A
SPECIAL MEETING OF BANCFIRST SHAREHOLDERS 18 Stock Option Agreements Appendix B-1
Date, Time, and Place of the Special Meeting 18 and B-2
Purpose of the Special Meeting 18 Opinion of UNB's Financial Advisor Appendix C
Shareholder Special Meeting Record Date 18 Opinion of BancFirst's Financial Advisor Appendix D
Vote Required for Adoption of the ss.1701.85 Ohio Revised Code Appendix E
Merger Agreement 18
Proxies and Effect on Vote 18
Revocation of Proxies 19
Solicitation of Proxies 19
THE MERGER AND MERGER AGREEMENT 19
What BancFirst Shareholders Will
Receive in the Merger 20
Background of the Merger 20
Merger Recommendations and Reasons for
the Merger 22
Opinion of UNB's Financial Advisor 23
Opinion of BancFirst's Financial Advisor 30
Completion and Effectiveness of the Merger 39
Merger of Banking Subsidiaries 39
Regulatory Approvals 40
Distribution of UNB Common Stock 40
Effect on Shares of UNB Common Stock 41
Coordination of Dividends 41
Nasdaq Stock Market Quotation 41
No Shopping Provisions 41
Conduct of Businesses Pending the Merger 42
Conditions to Closing the Merger 43
Termination 44
SUMMARY
The following summary highlights certain information, some of which is found in
greater detail elsewhere in this document. Even though we have highlighted what
we feel is the information most important to you, we encourage you to read this
entire document and the documents referenced herein carefully for a complete
understanding of the matters discussed in this document.
THE COMPANIES
UNB CORP.
220 MARKET AVENUE SOUTH
CANTON, OHIO 44702
(330) 438-1212
UNB is a bank holding company headquartered in Canton, Ohio. UNB has one banking
subsidiary and two non-banking subsidiaries. The United National Bank & Trust
Company, the banking subsidiary, has 21 retail banking locations in northeast
Ohio. As of June 30, 2001, UNB had, on a consolidated basis, assets of $1.1
billion, deposits of $806.9 million, a total loan portfolio of $884.9 million,
and shareholders' equity of $81.2 million.
UNB's subsidiaries offer a wide range of banking, fiduciary and other financial
services. These include commercial, mortgage and retail loans, aircraft
financing, deposit products, corporate pension and personal trust services, and
investment and wealth management services.
BANCFIRST OHIO CORP.
422 MAIN STREET
ZANESVILLE, OHIO 43702
(740) 452-8444
BancFirst Ohio Corp. is a bank holding company headquartered in Zanesville, Ohio
that conducts a full-service commercial and retail banking business through its
wholly-owned subsidiary, The First National Bank of Zanesville, N.A. It has 27
retail banking locations across central Ohio, in addition to seven business
lending centers in Ohio, Michigan, Indiana and Kentucky. BancFirst also offers
complete trust services and financial planning services through its
subsidiaries, First Financial Services Group, N.A. and Chornyak & Associates,
Inc.
As of June 30, 2001, BancFirst had, on a consolidated basis, assets of $1.5
billion, deposits of $1.1 billion, a total loan portfolio of $1.1 billion and
shareholders' equity of $112.0 million.
1
THE MERGER
WHAT BANCFIRST SHAREHOLDERS WILL RECEIVE IN THE MERGER (SEE PAGE 20)
If the merger is completed as planned, you will receive 1.325 shares of UNB
common stock for each share of BancFirst common stock that you own. No
certificates representing fractional shares will be issued. Instead, you will
receive a check in payment for any fractional shares, based on the market value
of UNB common stock.
RECOMMENDATION OF THE BOARD OF DIRECTORS (SEE PAGE 22)
UNB Shareholders. The board of directors of UNB believes that the merger is in
the best interests of UNB's shareholders and unanimously recommends that you
vote FOR adoption of the merger agreement. BancFirst Shareholders. The board of
directors of BancFirst believes that the merger is in the best interests of
BancFirst's shareholders and unanimously recommends that you vote FOR adoption
of the merger agreement.
OPINIONS OF FINANCIAL ADVISORS (SEE PAGES 23 AND 30)
UNB's Financial Advisor's Opinion. Stifel, Nicholaus & Company Incorporated has
delivered to UNB's board of directors its opinion that, as of the date of the
merger agreement, the Exchange Ratio was fair to the UNB shareholders from a
financial point of view. That opinion is attached as Appendix C to this
document.
BancFirst's Financial Advisor's Opinion. Sandler O'Neill & Partners, L.P. has
delivered to BancFirst's board of directors its opinion that, as of the date of
the merger agreement, the Exchange Ratio was fair to the BancFirst shareholders
from a financial point of view. That opinion is attached as Appendix D to this
document.
BOARD OF DIRECTORS AND OFFICERS AFTER THE MERGER (SEE PAGE 46)
We have agreed that after the merger, the UNB board of directors will consist of
14 directors with seven of the directors designated by UNB and seven of the
directors designated by BancFirst. The directors so designated are identified on
page 46. We have agreed to maintain this equal membership until December 31,
2005.
Following the merger, Gary N. Fields, President and Chief Executive Officer of
BancFirst, will become Chairman; Roger L. Mann, Chairman, President and Chief
Executive Officer of UNB, will become President and Chief Executive Officer;
James H. Nicholson, Executive Vice President and Secretary of BancFirst will
become Executive Vice President and Chief Operating Officer; and James J.
Pennetti, Executive Vice President and Chief Financial Officer of UNB, will
become Executive Vice President and Chief Financial Officer.
INTERESTS OF DIRECTORS AND OFFICERS IN THE MERGER (SEE PAGE 59)
Some of the directors and officers of UNB and BancFirst may be considered to
have interests in the merger in addition to their interests generally as
shareholders of UNB or BancFirst. These interests include the right of certain
directors and officers to receive severance payments and
2
extended insurance benefits under the terms of existing employment and
change-of-control agreements and the acceleration of vesting of stock options as
a result of the merger.
Upon completion of the merger, each unexercised option outstanding under
BancFirst's stock option plans will become an option to purchase a number of
shares of UNB common stock equal to the number of shares of BancFirst common
stock subject to such option multiplied by the Exchange Ratio at an exercise
price per share equal to the exercise price per share for BancFirst common stock
divided by the Exchange Ratio. As of August 31, 2001, executive officers and
directors of BancFirst as a group held options to purchase a total of shares of
238,350 BancFirst common stock.
TAX CONSEQUENCES OF THE MERGER (SEE PAGE 45)
The merger has been structured so as to qualify as a tax-free reorganization for
U.S. federal income tax purposes. If the merger qualifies as a tax-free
reorganization, BancFirst shareholders will not recognize gain or loss for U.S.
federal income tax purposes in the merger except to the extent they receive cash
for fractional shares or exercise dissenters' rights.
ACCOUNTING TREATMENT OF THE MERGER (SEE PAGE 45)
We will account for the merger under the purchase method of accounting for
business combinations. For accounting purposes, BancFirst is treated as the
acquirer and will record the fair value of UNB's assets and liabilities in its
financial statements. Any differences between the purchase price and fair value
of the identified net assets will be recorded as goodwill. The income statement
will include the income of UNB beginning at the date the merger is completed.
TIME AND LOCATION OF THE UNB SHAREHOLDER MEETING (SEE PAGE 16)
UNB will hold a special meeting of its shareholders to vote on the adoption of
the merger agreement. The special meeting will be held:
____________________
_________ local time
Canton, Ohio
TIME AND LOCATION OF THE BANCFIRST SHAREHOLDER MEETING (SEE PAGE 18)
BancFirst will hold a special meeting of its shareholders to vote on the
adoption of the merger agreement. This special meeting will be held:
_________________
_________ local time
Zanesville, Ohio
VOTE REQUIRED TO ADOPT THE AGREEMENT
3
UNB Shareholders. (See Page 16) Only holders of record of UNB common stock on
______________, 2001 have the right to vote on the merger agreement.
To adopt the merger agreement, the holders of at least two-thirds of the shares
of UNB common stock issued and outstanding as of the record date must vote FOR
adoption of the merger agreement. As of the record date, UNB's directors,
executive officers, and their affiliates beneficially owned ____________ shares
(excluding shares subject to options), or approximately _____% of the shares of
UNB common stock entitled to vote on the merger agreement. UNB's directors,
executive officers and their affiliates are expected to vote these shares in
favor of the merger agreement.
As of the record date, none of UNB's directors, executive officers or their
affiliates owned any BancFirst common stock.
BancFirst Shareholders. (See Page 18) Only holders of record of BancFirst common
stock on _____________, 2001 have the right to vote on adoption of the merger
agreement.
To adopt the merger agreement, the holders of at least a majority of the shares
of BancFirst common stock issued and outstanding as of the record date must vote
FOR adoption of the merger agreement.
As of the record date, BancFirst's directors, executive officers, and their
affiliates beneficially owned _____________ shares (excluding shares subject to
options), or approximately ___________% of the shares of BancFirst common stock
entitled to vote on the merger agreement. BancFirst's directors, executive
officers and their affiliates are expected to vote these shares in favor of
approval of the merger agreement.
As of the record date, none of BancFirst's directors, executive officers or
their affiliates owned any UNB common stock
HOW TO CAST YOUR VOTE IF YOUR SHARES ARE HELD BY A BROKER OR OTHER NOMINEE IN
STREET NAME
If your shares are held by your broker or other nominee in street name, your
broker may not have authority to vote your shares unless you provide your broker
instructions on how you want to vote. Your broker should send a request for such
instructions to you or you may request them from your broker.
UNB Shareholders. Your shares will not be voted if you do not provide your
broker with voting instructions. Failure to vote your UNB shares on the proposal
to adopt the merger agreement will have the same effect as voting against the
merger agreement.
BancFirst Shareholders. Your shares will not be voted if you do not provide your
broker with voting instructions. Failure to vote your BancFirst shares will have
the same effect as voting against adoption of the merger agreement.
4
HOW TO CHANGE YOUR VOTE
If you want to change your vote, just send the Secretary of UNB or BancFirst, as
appropriate, a later-dated, signed proxy card before the special meeting or
attend and vote at your company's special meeting. You may also revoke your
proxy by sending written notice of revocation to the Secretary of UNB or
BancFirst, as appropriate, before your company's special meeting.
UNB Shareholders. (See Page 16) UNB's shareholders should send any later-dated
proxy or notice of revocation to:
UNB Corp.
220 Market Avenue South
Canton, Ohio 44702
Attention: Secretary
BancFirst Shareholders. (See Page 18) BancFirst's shareholders should send any
later-dated proxy or notice of revocation to:
BancFirst Ohio Corp.
422 Main Street
Zanesville, Ohio 43702
Attention: Secretary
CONDITIONS TO THE COMPLETION OF MERGER (SEE PAGE 43)
There are a number of conditions that must be met before UNB and BancFirst will
be required to complete the merger, including those listed below:
- adoption of the merger agreement by both the UNB shareholders and the
BancFirst shareholders;
- approval of the merger by the Board of Governors of the Federal Reserve
System and the approval of the merger of our banking subsidiaries by the
Office of the Controller of the Currency; and
- receipt from UNB's and BancFirst's tax counsel of opinions that the merger
should qualify as a tax-free reorganization.
In addition, UNB and BancFirst have certain termination rights discussed below.
TERMINATION OF THE MERGER AGREEMENT (SEE PAGE 44)
5
UNB and BancFirst can agree at any time to terminate the merger agreement
without completing the merger, even if the shareholders of both companies have
approved it. In addition, either UNB or BancFirst can terminate the merger
agreement, without the consent of the other, for reasons including if:
- any governmental agency denies an approval needed to complete the merger or
if any governmental authority issues an order blocking the merger;
- the merger is not completed by September 30, 2002, unless the failure to
complete the merger by that time is due to the failure to perform the
agreements contained in the merger agreement by the party seeking to
terminate;
- if the shareholders of either company fail to adopt the merger agreement
because the required vote is not obtained at the special meetings or any
adjournment or postponement thereof;
- the board of directors of either UNB or BancFirst withdraws, modifies or
changes its recommendation that its shareholders vote in favor of adoption
of the merger agreement; or
- if the other company fails to perform its obligations under the merger
agreement.
NO SHOPPING PROVISIONS (SEE PAGE 41)
Under the terms of the merger agreement, UNB and BancFirst are prohibited from
seeking an alternative transaction. Each company has agreed that it will not
initiate, solicit or encourage any offers or proposals from third parties for a
business combination or for the acquisition of a substantial equity interest or
a substantial portion of the assets or business of such company. Each company is
also obligated to use its reasonable best efforts to ensure that its directors,
officers, employees and agents refrain from engaging in any such action.
In addition, the merger agreement prohibits each company from participating in
any negotiations or discussions with, or providing any nonpublic information to,
any third party relating to an alternative transaction, except to the extent
required for the discharge of the fiduciary duties of its board of directors.
UNB AND BANCFIRST HAVE ENTERED INTO STOCK OPTION AGREEMENTS (SEE PAGE 51)
To increase the likelihood that the merger will be completed, each of UNB and
BancFirst has granted the other company an option to purchase up to 14.9% of its
outstanding shares. UNB's exercise price for shares of BancFirst is $20.95 per
share and BancFirst's exercise price for shares of UNB is $18.50 per share.
These options are intended to discourage third parties from acquiring a
significant stake in UNB or BancFirst. The options are not exercisable until the
occurrence of certain events relating to the acquisition by a third party of a
significant interest in the voting stock or assets of UNB or BancFirst.
6
The stock option agreements are attached as Appendix B-1 and Appendix B-2 to
this document.
DISSENTERS' RIGHTS (SEE PAGE 48)
The shareholders of both companies will be entitled to exercise dissenters'
rights under Ohio law by complying with Section 1701.85 of the Ohio Revised
Code. Dissenters' rights entitle shareholders of UNB and BancFirst to receive
the fair cash value of their shares of UNB or BancFirst.
COMPARATIVE MARKET PRICE INFORMATION
Shares of UNB common stock and BancFirst common stock are quoted on the National
Market System of the Nasdaq Stock Market.
The following table sets forth the closing prices per share of UNB common stock
and BancFirst common stock (i) on September 5, 2001, the day preceding the
public announcement that UNB and BancFirst had entered into the merger
agreement, and (ii) ___________, 2001, the last trading day for which closing
prices were available at the time of printing this document.
UNB BancFirst
Date Common Stock Common Stock Equivalent Per Share
----- ------------ ------------- --------------------
September 5, 2001 $18.50 $20.95 $24.51
________ __, 2001 $ $ $
---------------------------- ----------------------------- ------------------------------ ----------------------------
The equivalent per share price reflects the dollar value of the UNB common stock
that BancFirst shareholders would receive for each share of their BancFirst
common stock, based on the price shown in the table.
7
SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA
The following tables present (1) selected historical financial data of each of
UNB and BancFirst and (2) selected unaudited pro forma condensed combined
consolidated financial information giving effect to the merger.
SELECTED HISTORICAL FINANCIAL DATA
The selected historical financial data of UNB and BancFirst is derived from
UNB's and BancFirst's audited financial statements for 1996 through 2000 and
their unaudited financial statements for the six months ended June 30, 2000 and
2001. This information is only a summary. You should read it in conjunction with
the historical financial statements and related notes contained in UNB's and
BancFirst's annual reports on Form 10-K, quarterly reports on Form 10-Q and
other information filed with the Securities and Exchange Commission. See "Where
You Can Find More Information" below.
8
UNB CORP.
SELECTED CONSOLIDATED FINANCIAL DATA
AT OR FOR THE SIX MONTHS
Ended June 30,
------------------------------
2001 2000
------------- -------------
(Dollars in Thousands Except per Share Data)
STATEMENT OF INCOME DATA:
Interest income $ 41,296 $ 38,728
Interest expense 20,640 20,041
Net interest income 20,656 18,687
Provision for possible loan losses 973 370
Non-interest income 7,903 6,897
Non-interest expense 15,429 13,888
------------- -------------
Income before income taxes and effect of 12,157 11,326
accounting method change
Provision for federal income tax 4,139 3,890
------------- -------------
Income before accounting method change 8,018 7,436
Accounting method change - adoption of FAS 133 14 --
------------- -------------
Net income $ 8,004 $ 7,436
============= =============
PER SHARE DATA: (1)
Earnings per share:
Basic $ 0.77 $ 0.70
Diluted 0.76 0.70
Dividends 0.250 0.240
Book value 7.76 6.75
Tangible book value 7.54 6.48
BALANCE SHEET DATA:
Total assets $ 1,078,695 $ 1,011,990
Loans 884,900 836,243
Allowance for possible loan losses 12,835 12,720
Securities 123,540 126,136
Deposits 806,891 810,897
Borrowings 183,697 123,658
Shareholders' equity 81,265 70,784
PERFORMANCE RATIOS:
Return on average assets (5) 1.52% 1.51%
Return on average equity (5) 20.42 21.10
Net interest margin 4.13 3.97
Non-interest income to average assets (2)(5) 1.24 1.19
Non-interest expense to average assets (3)(5) 2.84 2.71
Efficiency ratio (4) 55.09 54.51
ASSET QUALITY RATIOS:
Non-performing loans to total loans 0.21% 0.20%
Non-performing assets to total assets 0.35 0.35
Allowance for possible loan losses to total Loans 1.45 1.52
Allowance for possible loan losses to non-
Performing loans 676.24 756.24
Net charge-offs to average loans 0.10 0.10
CAPITAL RATIOS:
Avg. shareholders' equity to avg. total assets 7.45% 7.17%
Tier 1 capital to average total assets 7.31 6.83
Total capital to risk-weighted assets 10.12 9.80
AT OR FOR THE YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------
2000 1999 1998 1997 1996
------------- ------------- ------------- ------------- -------------
(Dollars in Thousands Except per Share Data)
STATEMENT OF INCOME DATA:
Interest income $ 80,676 $ 67,770 $ 64,860 $ 62,249 $ 58,122
Interest expense 42,740 31,440 30,583 30,322 27,826
Net interest income 37,936 36,330 34,277 31,927 30,296
Provision for possible loan losses 1,046 2,425 2,748 2,929 3,140
Non-interest income 12,627 15,169 12,079 8,310 7,425
Non-interest expense 27,704 27,487 27,018 23,505 22,153
------------- ------------- ------------- ------------- -------------
Income before income taxes and effect of 21,813 21,587 16,590 13,803 12,428
accounting method change
Provision for federal income tax 7,543 7,532 5,690 4,797 4,273
------------- ------------- ------------- ------------- -------------
Income before accounting method change 14,270 14,055 10,900 9,006 8,155
Accounting method change - adoption of FAS 133 -- -- -- -- --
------------- ------------- ------------- ------------- -------------
Net income $ 14,270 $ 14,055 $ 10,900 $ 9,006 $ 8,155
============= ============= ============= ============= =============
PER SHARE DATA: (1)
Earnings per share:
Basic $ 1.36 $ 1.30 $ 0.96 $ 0.78 $ 0.71
Diluted 1.35 1.28 0.94 0.77 0.69
Dividends 0.480 0.470 0.365 0.325 0.295
Book value 7.27 6.57 6.46 6.62 6.17
Tangible book value 7.04 6.26 6.07 6.15 5.62
BALANCE SHEET DATA:
Total assets $ 1,053,947 $ 970,529 $ 868,743 $ 826,313 $ 809,979
Loans 875,448 775,491 678,205 632,608 617,602
Allowance for possible loan losses 12,760 13,174 11,172 9,650 8,335
Securities 130,891 133,677 134,449 140,838 132,886
Deposits 827,641 764,234 685,494 649,481 600,664
Borrowings 143,167 128,439 102,882 92,161 131,011
Shareholders' equity 75,928 70,674 71,702 76,520 71,335
PERFORMANCE RATIOS:
Return on average assets (5) 1.41% 1.56% 1.27% 1.11% 1.08%
Return on average equity (5) 19.76 19.95 14.19 12.20 11.89
Net interest margin 3.93 4.23 4.24 4.16 4.24
Non-interest income to average assets (2)(5) 1.15 1.23 1.32 1.02 .93
Non-interest expense to average assets (3)(5) 2.66 2.94 3.04 2.77 2.72
Efficiency ratio (4) 53.98 55.88 57.03 55.83 54.85
ASSET QUALITY RATIOS:
Non-performing loans to total loans 0.36% 0.26% 0.22% 0.15% 0.14%
Non-performing assets to total assets 0.21 0.24 0.17 0.11 0.10
Allowance for possible loan losses to total Loans 1.46 1.70 1.66 1.53 1.35
Allowance for possible loan losses to non-
Performing loans 406.24 662.34 751.31 1021.16 994.63
Net charge-offs to average loans 0.18 0.06 0.19 0.26 0.35
CAPITAL RATIOS:
Avg. shareholders' equity to avg. total assets 7.16% 7.83% 8.99% 9.10% 9.07%
Tier 1 capital to average total assets 6.97 7.02 7.41 8.24 7.55
Total capital to risk-weighted assets 9.99 10.38 11.46 13.28 13.00
(1) Per share data has been restated to reflect all stock dividends and stock
splits.
(2) Excludes securities gains.
(3) Excludes amortization of intangibles and $593 in 1996 related to the
special one-time Savings Association Insurance Fund assessment.
(4) The efficiency ratio is equal to non-interest expense (excluding
non-recurring charge) less amortization of intangible assets divided by net
interest income determined on a fully tax equivalent basis plus
non-interest income less gains or losses on securities transactions.
(5) These ratios are shown on an annualized basis.
9
BANCFIRST OHIO CORP.
SELECTED CONSOLIDATED FINANCIAL DATA
AT OR FOR THE SIX MONTHS
ENDED JUNE 30,
--------------------------------
2001 2000
-------------- --------------
STATEMENT OF INCOME DATA:
Interest income $ 59,958 $ 49,974
Interest expense 37,414 30,770
-------------- --------------
Net interest income 22,544 19,204
Provision for possible loan losses 960 900
Non-interest income 6,836 5,970
Non-interest expense 16,786 15,247
-------------- --------------
Income before income taxes and
extraordinary item 11,634 9,027
Provision for federal income tax 3,824 2,806
-------------- --------------
Income before extraordinary item 7,810 6,221
Extraordinary item-prepayment charges on
early repayment of Federal Home Loan Bank
Advances, net of tax -- --
-------------- --------------
Net income $ 7,810 $ 6,221
============== ==============
PER SHARE DATA: (1)
Income before extraordinary item:
Basic $ 0.89 $ 0.78
Diluted 0.89 0.78
Net income:
Basic 0.89 0.78
Diluted 0.89 0.78
Dividends 0.290 0.276
Book value 12.82 10.81
Tangible book value 10.43 8.12
BALANCE SHEET DATA:
Total assets $ 1,520,960 $ 1,622,928
Loans 1,085,848 1,103,821
Allowance for possible loan losses 10,263 9,908
Securities 324,613 393,626
Deposits 1,131,366 1,038,427
Borrowings 264,770 473,800
Shareholders' equity 112,040 95,075
PERFORMANCE RATIOS: (4)
Return on average assets 1.01% 0.95%
Return on average equity 14.30 15.58
Net interest margin 3.16 3.21
Interest rate spread 2.80 2.92
Non-interest income to average assets 0.88 0.91
Non-interest expense to average assets(2) 2.03 2.20
Efficiency ratio(3) 53.37 56.46
ASSET QUALITY RATIOS: (4)
Non-performing loans to total loans 0.87% 0.62%
Non-performing assets to total assets 0.74 0.45
Allowance for possible loan losses to total 0.95 0.90
loans
Allowance for possible loan losses to non-
performing loans 108.49 144.54
Net charge-offs to average loans 0.16 0.04
CAPITAL RATIOS: (4)
Shareholders' equity to total assets 7.37% 5.86%
Tier 1 capital to average total assets 7.24 7.48
Tier 1 capital to risk-weighted assets 10.46 9.51
AT OR FOR THE YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------------
2000 1999 1998 1997 1996
-------------- -------------- -------------- -------------- --------------
(Dollars in Thousands Except per Share Data)
STATEMENT OF INCOME DATA:
Interest income $ 111,725 $ 88,114 $ 86,657 $ 84,692 $ 53,177
Interest expense 70,946 49,647 50,150 48,256 28,630
-------------- -------------- -------------- -------------- --------------
Net interest income 40,779 38,467 36,507 36,436 24,547
Provision for possible loan losses 1,800 1,580 1,225 1,221 1,257
Non-interest income 13,121 10,753 9,948 7,768 6,258
Non-interest expense 31,617 29,651 29,827 26,677 21,235
-------------- -------------- -------------- -------------- --------------
Income before income taxes and
extraordinary item 20,483 17,989 15,403 16,306 8,313
Provision for federal income tax 6,552 5,685 4,835 5,536 2,354
-------------- -------------- -------------- -------------- --------------
Income before extraordinary item 13,931 12,304 10,568 10,770 5,959
Extraordinary item-prepayment charges on
early repayment of Federal Home Loan Bank
Advances, net of tax -- -- 400 -- --
-------------- -------------- -------------- -------------- --------------
Net income $ 13,931 $ 12,304 $ 10,168 $ 10,770 $ 5,959
============== ============== ============== ============== ==============
PER SHARE DATA: (1)
Income before extraordinary item:
Basic $ 1.67 $ 1.50 $ 1.26 $ 1.29 $ .85
Diluted 1.66 1.50 1.26 1.29 .85
Net income:
Basic 1.67 1.50 1.22 1.29 .85
Diluted 1.66 1.50 1.22 1.29 .85
Dividends .56 .54 .52 .50 .49
Book value 12.20 10.05 10.56 10.21 9.32
Tangible book value 9.71 8.47 9.12 8.70 7.63
BALANCE SHEET DATA:
Total assets $ 1,559,601 $ 1,274,206 $ 1,181,011 $ 1,081,618 $ 1,056,920
Loans 1,089,651 849,767 777,063 761,027 721,855
Allowance for possible loan losses 10,150 7,431 6,643 6,617 6,599
Securities 330,246 331,235 327,615 271,521 284,576
Deposits 1,113,555 799,176 789,622 747,047 732,689
Borrowings 325,368 385,498 296,750 239,449 236,609
Shareholders' equity 107,142 80,108 87,535 85,333 77,894
PERFORMANCE RATIOS: (4)
Return on average assets 0.96% 1.02% 0.89% 0.98% 0.85%
Return on average equity 15.42 14.29 11.55 13.20 10.05
Net interest margin 3.09 3.47 3.48 3.55 3.78
Interest rate spread 2.78 3.12 3.05 3.08 3.22
Non-interest income to average assets 0.90 0.89 0.88 0.71 0.90
Non-interest expense to average assets(2) 2.06 2.33 2.36 2.30 2.59
Efficiency ratio(3) 54.66 56.56 56.81 56.67 57.33
ASSET QUALITY RATIOS: (4)
Non-performing loans to total loans 0.91% 0.42% 0.48% 0.29% 0.35%
Non-performing assets to total assets 0.67 0.30 0.37 0.28 0.29
Allowance for possible loan losses to total 0.93 0.87 0.85 0.87 0.91
loans
Allowance for possible loan losses to non-
performing loans 102.27 208.97 178.29 298.33 257.97
Net charge-offs to average loans 0.09 0.10 0.16 0.16 0.19
CAPITAL RATIOS: (4)
Shareholders' equity to total assets 6.87% 6.29% 7.41% 7.89% 7.37%
Tier 1 capital to average total assets 6.88 7.77 6.52 6.52 6.06
Tier 1 capital to risk-weighted assets 10.13 11.37 10.34 10.37 10.08
(1) Per share data has been restated to reflect all stock dividends and stock
splits.
(2) Excludes amortization of intangibles and non-recurring charges totaling
$1,629 in 1998 for merger, restructuring and branch closing costs and
$2,632 in 1996 related to the special one-time Savings Association
Insurance Fund assessment and restructuring costs.
(3) The efficiency ratio is equal to non-interest expense (excluding
non-recurring charges) less amortization of intangible assets divided by
net interest income determined on a fully tax equivalent basis plus
non-interest income less gains or losses on securities transactions and
non-recurring income.
(4) Ratios are shown on an annualized basis.
10
SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL INFORMATION
The following table sets forth selected consolidated financial information for
UNB and BancFirst on an unaudited pro forma condensed combined basis giving
effect to the merger applying the purchase method of accounting. This
information has been derived from, and should be read in conjunction with, the
historical consolidated financial statements and related notes contained in
UNB's and BancFirst's annual reports on Form 10-K and quarterly reports and
incorporated herein by reference. The pro forma condensed combined financial
information may not be indicative of what actual results would have been if the
merger had been in effect on the dates indicated or that may be attained in the
future. In addition, there may be restructuring and related merger expenses as
well as certain costs savings that will result from the merger. These expenses
and costs savings are not reflected in the historical financial information and
are not reflected in the pro forma condensed combined statement of income.
At June 30,
2001
Pro Forma Condensed Combined Consolidated Balance Sheet (In Thousands)
Total assets $2,717,395
Loans 1,971,455
Deposits 1,939,839
Borrowings 449,031
Total shareholders' equity 287,145
For the six months
ended June 30, 2001
(In thousands,
Pro Forma Condensed Combined Consolidated Statement of Income except per share
data)
Net interest income after provision for loan losses $40,482
Net income before accounting method changes 14,428
Earnings per common share
Basic 0.65
Diluted 0.65
For the twelve
months ended
December 31, 2000
Net interest income after provision for loan losses $74,299
Net income 25,429
Earnings per common share
Basic 1.18
Diluted 1.17
11
COMPARATIVE UNAUDITED PER SHARE INFORMATION
The following summarizes the per share information for UNB and BancFirst on an
historical, unaudited pro forma combined and pro forma equivalent basis. The
"BancFirst pro forma equivalent" amounts are calculated by multiplying the UNB
"pro forma combined" per share amounts by 1.325--the number of shares of UNB
common stock that BancFirst shareholders will receive in exchange for each share
of BancFirst common stock.
The pro forma data does not show what the actual results would have been had the
merger occurred at the beginning of the period presented or the results of
future operations. In addition, there may be restructuring and merger related
expenses as well as certain cost savings that will result from the merger. These
expenses and cost savings are not reflected in the historical financial
information or in the pro forma per share data below.
At or for the six months
ended June 30, 2001
Basic earnings per share (1):
UNB Corp. $ 0.77
BancFirst 0.89
Consolidated pro forma 0.65
BancFirst pro forma equivalent 0.86
Diluted earnings per share (1):
UNB Corp. $ 0.76
BancFirst 0.89
Consolidated pro forma 0.65
BancFirst pro forma equivalent 0.86
Cash dividends declared per share (2):
UNB Corp. $ 0.25
BancFirst 0.29
Consolidated pro forma 0.25
BancFirst pro forma equivalent 0.33
Book value per share at period end (3):
UNB Corp. $ 7.76
BancFirst 12.82
Consolidated pro forma 13.02
BancFirst pro forma equivalent 17.25
Tangible book value per share at period end (3):
UNB Corp. $ 7.54
BancFirst 10.43
Consolidated pro forma 7.69
BancFirst pro forma equivalent 10.19
At or for the twelve months
ended December 31, 2000
Basic earnings per share (1):
UNB Corp. $ 1.36
BancFirst 1.67
Consolidated pro forma 1.18
BancFirst pro forma equivalent 1.56
12
Diluted earnings per share (1):
UNB Corp. $ 1.35
BancFirst 1.66
Consolidated pro forma 1.17
BancFirst pro forma equivalent 1.55
Cash dividends declared per share (2):
UNB Corp. $ 0.48
BancFirst 0.56
Consolidated pro forma 0.48
BancFirst pro forma equivalent 0.64
(1) The pro forma combined net income per share of UNB Corp. common stock is
based upon the combined historical net income for UNB Corp. and BancFirst
for the periods indicated divided by the average pro forma fully diluted
common shares of the combined companies. BancFirst's proforma equivalent
earnings per share represent such amounts multiplied by the Exchange ratio
of 1.325.
(2) UNB Corp. pro forma cash dividends per share represent historical cash
dividends declared by UNB Corp. and assumes no changes in cash dividend per
share. BancFirst pro forma cash dividends per share represent such amounts
multiplied by the exchange ratio of 1.325.
(3) UNB Corp. pro forma stated and tangible book value per share amounts are
based on the historical total stockholders' equity of the combined
companies divided by the total pro forma common shares of the combined
companies based on the exchange ratio of 1.325. The BancFirst pro forma
equivalent stated book value and tangible book value per share amounts are
computed by multiplying the UNB Corp. pro forma amounts by the exchange
ratio of 1.325.
13
RISK FACTORS
In addition to the other information contained in this joint proxy statement and
prospectus, you should carefully consider the following risk factors in deciding
whether to vote for the merger agreement.
THE VALUE OF UNB SHARES RECEIVED BY BANCFIRST SHAREHOLDERS MAY BE LESS THAN THE
VALUE OF THEIR BANCFIRST SHARES DUE TO FLUCTUATING MARKET PRICES.
Upon completion of the merger, the shares of BancFirst common stock will be
exchanged for shares of UNB common stock. The ratio at which the shares will be
exchanged is fixed, and there will be no adjustment for changes in the market
price of UNB common stock or BancFirst common stock. Any change in the price of
UNB common stock will affect the value that BancFirst shareholders will receive
in the merger. The value of the shares of UNB common stock received by BancFirst
shareholders may increase or decrease as the market price of UNB common stock
rises or declines. Changes in stock prices may result from a variety of factors
that are beyond the control of UNB or BancFirst, including changes in interest
rates, the regulatory environment and general market, competitive and economic
conditions. Neither party is permitted to abandon or withdraw from the merger
solely because of changes in the market price of either party's common stock.
THE VALUE OF UNB SHARES ISSUED TO BANCFIRST SHAREHOLDERS MAY BE GREATER THAN THE
VALUE OF THE BANCFIRST SHARES RECEIVED.
If the market price of BancFirst common stock declines in relation to the market
price of UNB common stock, UNB will still be obligated to issue 1.325 shares of
UNB common stock for each share of BancFirst common stock. Thus, the fixed
exchange ratio may result in UNB issuing shares having a greater aggregate value
than the aggregate value of the BancFirst shares received.
WE MAY FAIL TO REALIZE THE ANTICIPATED BENEFITS OF THE MERGER.
After the merger, our earnings, financial condition and future growth will
depend in part on the successful integration of the operations and personnel of
UNB and BancFirst. There can be no assurance that such integration will not
result in the loss of customers, deposits or key personnel, the disruption of
business operations, the impairment of internal controls, the malfunctioning of
data processing and other systems, inconsistent standards, procedures and
policies or unexpected costs or time delays in integrating the operations of the
companies.
MERGER COULD ADVERSELY AFFECT THE COMBINED COMPANIES' FINANCIAL RESULTS
Although we expect to achieve significant cost savings as a result of the
merger, we may be unable to fully realize any of the potential cost savings
expected. If so, the combined financial results, including earnings per share,
could be adversely affected. We expect to incur substantial expenses related to
the merger and annual amortization charges related to identifiable intangible
assets and other purchase accounting adjustments.
14
IF THE MERGER FAILS TO QUALIFY AS A REORGANIZATION, YOU WILL RECOGNIZE GAIN OR
LOSS ON YOUR SHARES
We have attempted to structure the merger to qualify as a reorganization under
Section 368(a) of the Internal Revenue Code of 1986, as amended. The Internal
Revenue Service has not provided a ruling on the merger. If the merger fails to
qualify as a reorganization, BancFirst shareholders would generally recognize
gain or loss on each BancFirst share surrendered in the amount of the difference
between their basis in such share and the fair market value (as determined by
the IRS) of the UNB shares they receive in exchange for such BancFirst shares in
the merger.
STOCK OPTION AGREEMENTS MAY DISCOURAGE ALTERNATIVE OFFERS BY THIRD PARTIES
The existence of the stock option agreements described herein could
significantly increase the cost to a potential third party purchaser of
acquiring UNB or BancFirst, and accordingly discourage alternative offers.
FORWARD LOOKING STATEMENTS
Certain statements made in this joint proxy statement and prospectus under the
captions entitled "Risk Factors," "the Merger and Merger Agreement" and those
preceded by, followed by or that otherwise include the statements "should,"
"believe," "expect," "anticipate," "intend," "will," "continue," and "estimate"
are forward looking statements. These forward looking statements are based upon
our current expectations and projections about future events. These forward
looking statements are subject to risks, uncertainties and assumptions. Various
factors could cause actual results to differ materially from the results
anticipated or projected. These factors include, but are not limited to, the
following:
- expected cost savings and synergies from the merger might not be
realized within the expected time frame
- revenues following the merger could be lower than expected
- costs or difficulties related to the integration of the businesses of
UNB and BancFirst might be greater than expected
- deposit attrition, operating costs, customer loss and business
disruption after the merger may be greater than expected
- competitive pressures among depository and other financial services
companies may increase significantly
- changes in the interest rate environment and the demand for new loans
- general economic conditions, either nationally or in the markets in
which the combined companies will be doing business, may be less
favorable than expected
- new legislation or regulatory changes may adversely affect the
businesses of the combined companies
- changes in accounting principles, policies or guidelines.
15
SPECIAL MEETING OF UNB SHAREHOLDERS
DATE, TIME, AND PLACE OF THE SPECIAL MEETING
The special meeting of shareholders of UNB is scheduled to be held as follows:
Canton, Ohio
PURPOSE OF THE SPECIAL MEETING
The UNB special meeting is being held so that shareholders of UNB may consider
and vote upon (1) a proposal to adopt the merger agreement, and (2) any other
business that properly comes before the special meeting or any adjournment or
postponement of that meeting. Approval of the merger agreement will also
constitute approval of the merger and the other transactions contemplated by the
merger agreement.
SHAREHOLDER SPECIAL MEETING RECORD DATE
UNB has fixed the close of business on ___________, ______ as the record date
for determination of its shareholders entitled to receive notice of and to vote
at the special meeting. On the record date, there were ________ shares of UNB
common stock outstanding, held by approximately _______ holders of record.
VOTE REQUIRED FOR ADOPTION OF THE MERGER AGREEMENT
Under Ohio law, the affirmative vote of the holders of at least two-thirds of
the shares of UNB common stock outstanding on the record date is required to
approve the merger agreement. You are entitled to one vote for each share of UNB
common stock held by you on the record date.
As of the record date for the special meeting, directors and executive officers
of UNB and their affiliates beneficially owned _________ shares of UNB common
stock, which represents approximately ______% of all outstanding shares of UNB
common stock entitled to vote at the special meeting.
PROXIES AND EFFECT ON VOTE
All shares of UNB common stock represented by properly completed proxies
received before or at the special meeting and not revoked will be voted
according to the instructions indicated on the proxy card. If a properly
completed proxy is returned and no instructions are indicated, the UNB common
stock represented by the proxy will be (1) considered present at the special
meeting for purposes of determining a quorum and for purposes of calculating the
vote, and (2) voted FOR adoption of the merger agreement. You are urged to mark
the boxes on the proxy to indicate how to vote your shares.
If a properly completed proxy is returned and the shareholder has specifically
abstained from voting on the proposal to adopt the merger agreement, the UNB
common stock represented by the proxy will not be considered to have been voted
in favor of the proposal. If a broker or other nominee holding shares of UNB
common stock in street name signs and returns a proxy but
16
indicates on the proxy that it does not have discretionary authority to vote
certain shares on the proposal, those shares will not be considered to have been
voted for adoption of the merger agreement.
Because adoption of the merger agreement requires the affirmative vote of at
least two-thirds of all shares of UNB common stock outstanding as of the record
date, abstentions, failures to vote, and broker non-votes will have the same
effect as a vote against the adoption of the proposed merger agreement.
REVOCATION OF PROXIES
You may revoke your proxy at any time before it is voted at the special meeting
by:
- notifying the Secretary of UNB in writing that the proxy is revoked;
- sending a later-dated proxy to the Secretary of UNB or giving a
later-dated proxy to a person who attends the special meeting; or
- appearing in person and voting at the special meeting.
Attendance at the special meeting will not in and of itself constitute
revocation of a proxy. You should send any later-dated proxy or notice of
revocation of a proxy to:
UNB Corp.
220 Market Avenue South
Canton, Ohio 44702
Attention: Secretary
SOLICITATION OF PROXIES
For UNB shareholders, the proxy that accompanies this document is being
solicited by the board of directors of UNB. In addition to solicitations by
mail, directors, officers, and regular employees of UNB and its subsidiaries may
solicit proxies from shareholders personally or by telephone or other electronic
means. Such individuals will not receive any additional compensation for doing
so. UNB will bear its own costs of soliciting proxies. UNB also will make
arrangements with brokers and other custodians, nominees and fiduciaries to send
this document to beneficial owners of UNB common stock and, upon request, will
reimburse those brokers and other custodians for their reasonable expenses in
forwarding these materials. If deemed necessary, UNB may retain the services of
a commercial investor communications firm to assist in the solicitation of
proxies.
SPECIAL MEETING OF BANCFIRST SHAREHOLDERS
DATE, TIME, AND PLACE OF THE SPECIAL MEETING
The special meeting of shareholders of BancFirst is scheduled to be held as
follows:
17
Zanesville, Ohio
PURPOSE OF THE SPECIAL MEETING
The BancFirst special meeting is being held so that shareholders of BancFirst
may consider and vote upon (1) a proposal to adopt the merger agreement and (2)
any other business that properly becomes before the special meeting or any
adjournment or postponement of that meeting. Approval of the merger agreement
will also constitute approval of the merger and the other transactions
contemplated by the merger agreement.
If the holders of a majority of the outstanding shares of BancFirst common
shares adopt the merger agreement, and other requirements are met, BancFirst
will merge with and into UNB. You will receive 1.325 shares of UNB common stock
for each share of BancFirst common stock that you hold plus cash (without
interest) in lieu of any fraction of a share of UNB common stock that you would
be entitled to receive.
SHAREHOLDER SPECIAL MEETING RECORD DATE
BancFirst has fixed the close of business on __________, 2001 as the record date
for the determination of BancFirst's shareholders entitled to receive notice of
and to vote at the special meeting. On the record date, there were __________
shares of BancFirst common stock outstanding, held by approximately _____holders
of record.
VOTE REQUIRED FOR ADOPTION OF THE MERGER AGREEMENT
Under the Articles of Incorporation of BancFirst, the affirmative vote of the
holders of at least a majority of the shares of BancFirst common stock
outstanding on the record date is required to adopt the merger agreement. You
are entitled to one vote for each share of BancFirst common stock held by you on
the record date.
As of the record date for the special meeting, directors and executive officers
of BancFirst and their affiliates beneficially owned approximately _________
shares of BancFirst common stock, which represents approximately _______% of all
outstanding shares of BancFirst common stock entitled to vote at the special
meeting.
PROXIES AND EFFECT ON VOTE
All shares of BancFirst common stock represented by properly completed proxies
received before or at the special meeting and not revoked will be voted in
accordance with the instructions indicated on the proxy card. If a properly
completed proxy is returned and no instructions are indicated, the BancFirst
common stock represented by the proxy will be (1) considered present at the
special meeting for purposes of determining a quorum and for purposes of
calculating the vote, and (2) will be voted FOR adoption of the merger
agreement. You are urged to mark the boxes on the proxy to indicate how to vote
your shares.
If a properly completed proxy is returned and the shareholder has specifically
abstained from voting on the proposal to adopt the merger agreement, the common
stock represented by the proxy will not be considered to have been voted for
adoption of the merger agreement. If a broker or other nominee holding shares of
BancFirst common stock in street name signs and returns a proxy but indicates on
the proxy that it does not have discretionary authority to vote
18
certain shares on the approval of the merger agreement, those shares will not be
considered to have voted for adoption of the merger agreement.
Because adoption of the merger agreement requires the affirmative vote of at
least a majority of all shares of BancFirst common stock outstanding as of the
record date, abstentions, failures to vote, and broker non-votes will have the
same effect as a vote against the adoption of the merger agreement.
REVOCATION OF PROXIES
You may revoke your proxy at any time before it is voted at the special meeting
by:
- notifying the Secretary of BancFirst in writing that the proxy is
revoked;
- sending a later-dated proxy to the Secretary of BancFirst or giving a
later-dated proxy to a person who attends the special meeting; or
- appearing in person and voting at the special meeting.
Attendance at the special meeting will not in and of itself constitute
revocation of a proxy. You should send any later-dated proxy or notice of
revocation of a proxy to:
BancFirst Ohio Corp.
422 Main Street
P.O. Box 4658
Zanesville, Ohio 43702
Attention: Secretary
SOLICITATION OF PROXIES
For BancFirst shareholders, the proxy that accompanies this document is being
solicited by the board of directors of BancFirst. In addition to solicitations
by mail, directors, officers, and regular employees of BancFirst and its
subsidiaries may solicit proxies from shareholders personally or by telephone or
other electronic means. Such individuals will not receive any additional
compensation for doing so. BancFirst will bear its own costs of soliciting
proxies. BancFirst also will make arrangements with brokers and other
custodians, nominees and fiduciaries to send this document to beneficial owners
of BancFirst common stock and, upon request, will reimburse those brokers and
other custodians for their reasonable expenses in forwarding these materials. If
deemed necessary, BancFirst may retain the services of a commercial investor
communications firm to assist in the solicitation of proxies.
You should NOT send in any stock certificates with your proxies. A transmittal
form with instructions for the exchange of your BancFirst stock certificates
will be mailed to you as soon as practicable after completion of the merger.
THE MERGER AND MERGER AGREEMENT
19
This section describes material terms of the proposed merger. While we believe
that the description covers the material terms of the merger and the related
transactions, this summary may not contain all of the information that is
important to UNB or BancFirst shareholders. The Agreement of Merger and Plan of
Reorganization attached as Appendix A (the "merger agreement"), including the
exhibits thereto, is incorporated in this document by reference. You should read
the entire merger agreement, and the other documents referred to herein,
carefully and in their entirety for a more complete understanding of the merger.
WHAT BANCFIRST SHAREHOLDERS WILL RECEIVE IN THE MERGER
If UNB's and BancFirst's shareholders approve the merger agreement and the
merger is completed, BancFirst will merge with and into UNB and, as a result,
UNB will own all the assets and assume all the liabilities of BancFirst. In
exchange, BancFirst shareholders will receive 1.325 shares of UNB common stock
for each of their shares of BancFirst common stock (referred to as the "Exchange
Ratio"). UNB will not issue fractional shares of UNB common stock in the merger.
Instead, if a BancFirst shareholder would otherwise be entitled to receive a
fraction of a share of UNB common stock, the shareholder instead will receive an
amount of cash determined by multiplying the amount of the fractional share by
the closing price per share of UNB common stock on The Nasdaq Stock Market on
the last trading day before the closing of the merger.
The Exchange Ratio is subject to certain upward or downward adjustments based
upon the occurrence of certain events between the date of the merger agreement
and the completion of the merger that would result in changes in the number of
shares of UNB common stock outstanding. The purpose of any such adjustment is to
prevent dilution of the respective interests of the shareholders of BancFirst.
If UNB declares a stock dividend or stock split and the record date occurs
before the completion of the merger, the parties will adjust the Exchange Ratio
to reflect such stock dividend or stock split.
At the effective time of the merger, UNB will assume all outstanding options to
purchase shares of BancFirst common stock. As a result, such options will then
represent the right to purchase a number of shares of UNB common stock equal to
the number of shares of BancFirst common stock that were subject to such options
multiplied by the Exchange Ratio and rounded to the nearest whole share. The
exercise price per share of UNB common stock under each such option shall be
equal to the exercise price per share of the BancFirst common stock that could
have been purchased under that option divided by the Exchange Ratio. This right
to purchase the amount stated above only applies to those options that are
outstanding at the effective time of the merger and that remain unexercised at
and after the completion of the merger.
BACKGROUND OF THE MERGER
UNB and BancFirst have from time to time considered possibilities of combining
with, acquiring, or being acquired by other financial institutions. Managements
of both organizations have from time to time had casual discussions with
management of other financial institutions regarding the trend toward
consolidation among financial institutions generally and among similarly sized
and situated financial institutions specifically.
20
Roger L. Mann, Chairman, President and Chief Executive Officer of UNB, and Gary
N. Fields, President and Chief Executive Officer of BancFirst, have known each
other since at least 1998. Mr. Mann and Mr. Fields met in August, 2000, and
discussed the impact on financial institutions of industry consolidation,
continuing deterioration of interest margins, common regulatory issues and
changes in stock prices and earning multiples. They also discussed the prospects
common to all financial institutions of remaining independent in the future.
Mr. Mann and Mr. Fields again met in March, 2001, and informally explored the
potential benefits of a possible combination. The discussions centered on the
similarity of goals of the two institutions: growth in earnings per share,
increased efficiency of operations, and the importance of increasing fee income.
Both agreed that a subsequent meeting to continue discussions informally would
be beneficial.
A subsequent meeting was held in May, 2001. At that meeting, Mr. Mann and Mr.
Fields discussed in more detail the general strengths and weaknesses and the
commonality of culture and corporate priorities of their institutions. Both
agreed that a subsequent meeting to discuss the potential of combining the
institutions would be beneficial.
In June, 2001, Mr. Mann and Mr. Fields met for one-half day to discuss issues
regarding a potential combination, including those involving combining boards
and management teams, the potential efficiencies that could result from
consolidation, and the potential impact on earnings. They also discussed the
need for a single, clearly defined chief executive officer to lead the combined
institutions after any combination. Both agreed to expand discussions at the
next meeting to include James J. Pennetti, Executive Vice President and Chief
Financial Officer of UNB and James H. Nicholson, President of BancFirst's
banking subsidiary, The First National Bank of Zanesville. At or about this time
and from time to time thereafter, Messrs. Mann and Fields informally advised
certain members of their respective institution's board of directors of the
discussions.
On August 2, 2001, Messrs. Mann, Fields, Pennetti, and Nicholson met and agreed
to an outline of the potential terms and structure of such a possible
combination as a merger of equals. Each party agreed to contact its legal
counsel and potential financial advisors in connection with the potential
combination with the goal of beginning preliminary due diligence by each party
of the other on August 16, 2001. UNB contacted Stifel, Nicolaus & Company,
Incorporated as its potential financial advisor, and BancFirst contacted Sandler
O'Neill & Partners, LP as its potential financial advisor.
Thereafter, each party's senior management and representatives of each party's
legal counsel and financial advisors conducted due diligence investigations of
the business and operations of the other party. Discussions continued between
Mr. Mann and senior management of UNB, on one part, and Mr. Fields and senior
management of BancFirst, on the other part, as issues arose during these
investigations. Also during this time period, senior management of both parties
together with their legal counsel began negotiations of the terms on the merger
agreement, including the structural and financial terms of the merger.
On August 15, 2001, Messrs. Mann and Pennetti met informally with members of the
boards of BancFirst and its banking subsidiary, The First National Bank of
Zanesville.
21
At a regularly scheduled meeting of the BancFirst board held on August 23, 2001,
Mr. Fields reviewed the status of the discussions with UNB and the structure of
the transaction as a merger of equals. Mr. Nicholson reviewed the status of the
due diligence investigations. The board discussed both the structural and
financial terms of the merger and authorized the retention of Sandler O'Neill &
Partners, L.P. as BancFirst's financial advisor.
On August 30, 2001, there was a special meeting of UNB board of directors. Legal
counsel reviewed the directors' duties and responsibilities related to the
merger transaction and answered the directors questions related to those duties
and responsibilities. Messrs. Fields and Nicholson then made a presentation to
the UNB directors and discussed BancFirst and The First National Bank of
Zanesville. During this period the terms of the merger agreement, including the
Exchange Ratio, and the stock option agreements were finalized on the basis of
arm's-length negotiation between the parties.
At a special meeting of UNB board of directors held on September 5, 2001, legal
counsel discussed the principal legal terms of the transaction including the
merger agreement and the stock option agreements and reviewed the impact of the
merger on the executive officers' change of control agreements and other benefit
programs. Representatives of UNB's financial advisor discussed strategic
alternatives for the company and reviewed the concept of a merger of equals.
Representatives of the financial advisor then made a presentation regarding the
financial terms and fairness, from a financial point of view, of the Exchange
Ratio to holders of UNB common stock. The directors asked numerous questions of
the representatives of the financial advisor. After discussion and consideration
of numerous factors including those discussed under "Merger Recommendations and
Reasons for Merger," the UNB board unanimously adopted resolutions approving and
authorizing for execution the merger agreement and the stock option agreements
and directing submission of the merger agreement for adoption by the
shareholders of UNB with the recommendation that it be adopted.
At a special meeting of the BancFirst board held on September 5, 2001, Mr.
Fields reviewed the process of negotiations, background on the reasons for the
merger, and the principal financial terms of the merger. Legal counsel
summarized the principal legal terms of the transaction, including the merger
agreement and stock option agreements. BancFirst's financial advisor made a
presentation regarding the financial terms and fairness, from a financial point
of view, of the Exchange Ratio to holders of BancFirst common stock. The
directors asked numerous questions of the representatives of the financial
advisor. After discussion and consideration of numerous factors including those
discussed under "Merger Recommendations and Reasons for the Merger," the
BancFirst board unanimously adopted resolutions approving and authorizing for
execution the merger agreement and the stock option agreements and directing
submission of the merger agreement for adoption by shareholders with the
recommendation that it be adopted.
The merger agreement and option agreements were entered into on September 5,
2001.
MERGER RECOMMENDATIONS AND REASONS FOR THE MERGER
The merger will create a financial services holding company with total assets of
$2.7 billion, deposits of $1.9 billion and shareholders' equity of $287 million.
We believe that the
22
combination of our companies will be a complementary strategic fit of our
businesses and enable us to compete more effectively with other financial
institutions in our markets. The merger will also expand our market area and
permit us to offer a broader range of products.
After careful consideration, the boards of directors of UNB and BancFirst have
unanimously concluded that the merger will be in the best interests of UNB and
BancFirst and their respective shareholders for the following reasons:
- expands market area and creates critical mass
- enhances ability to compete and broadens product range
- results in estimated annual cost savings of approximately $4.3 million
- accretive to per share earnings of both companies
- increases liquidity for the sale of common stock
- provides an additional platform for further growth and improves cross
selling opportunities.
OPINION OF UNB'S FINANCIAL ADVISOR
UNB has retained Stifel, Nicolaus & Company, Incorporated as its financial
advisor in connection with the merger because Stifel is a nationally recognized
investment-banking firm with substantial expertise in transactions similar to
the merger. Stifel is an investment banking and securities firm with membership
on all principal United States' securities exchanges. As part of its investment
banking activities, Stifel is regularly engaged in the independent valuation of
businesses and securities in connection with mergers, acquisitions,
underwritings, sales and distributions of listed and unlisted securities,
private placements and valuations for estate, corporate and other purposes.
In connection with the September 5, 2001 meeting of the board of directors of
UNB, Stifel rendered its opinion that, as of such date, the exchange ratio
pursuant to the merger agreement was fair to the holders of UNB common stock
from a financial point of view. Stifel has confirmed its September 5, 2001
opinion by delivery of its written opinion to the UNB board of directors, dated
the date of this joint proxy statement and prospectus, that, based upon and
subject to the various considerations set forth therein, as of the date hereof
the exchange ratio pursuant to the merger agreement is fair to the holders of
UNB common stock from a financial point of view.
The full text of Stifel's opinion as of the date hereof, which sets forth the
assumptions made, matters considered and limitations of the review undertaken,
is attached as Annex C to this joint proxy statement and prospectus and is
incorporated herein by reference, and should be read in its entirety. The
summary of the opinion of Stifel set forth in this document is qualified in its
entirety by reference to the full text of such opinion.
No limitations were imposed by UNB on the scope of Stifel's investigation or the
procedures to be followed by Stifel in rendering its opinion. Stifel was not
requested to and did not make any recommendation to UNB's board of directors as
to the form or amount of the consideration to be
23
paid to BancFirst or its shareholders, which was determined through arm's length
negotiations between the parties. In arriving at its opinion, Stifel did not
ascribe a specific range of values to UNB. Its opinion is based on the financial
and comparative analyses described below. Stifel's opinion was directed solely
to UNB's board of directors for its use in connection with its consideration of
the merger. Stifel's opinion addressed only the fairness of the exchange ratio
from a financial point of view, did not address any other aspect of the merger,
and was not intended to be and does not constitute a recommendation to any
shareholder of UNB as to how such shareholder should vote with respect to the
merger. Stifel was not requested to opine as to, and its opinion does not
address, UNB's underlying business decision to proceed with or effect the merger
or the relative merits of the merger compared to any alternative transaction
that might be available to UNB.
In connection with its September 5, 2001 opinion and its written opinion dated
the date hereof, Stifel, among other things:
- reviewed the form of the merger agreement as executed on September 5, 2001;
- reviewed the financial statements of UNB and BancFirst included in their
respective 10-Ks for the five years ended December 31, 2000 and their
respective 10-Qs for the quarter ended June 30, 2001;
- reviewed certain internal financial analyses and forecasts for UNB and
BancFirst prepared by their respective managements;
- conducted conversations with UNB's and BancFirst's senior management
regarding their business plans and financial forecasts;
- compared certain financial and securities data of UNB and BancFirst with
various other companies whose securities are traded in public markets and
reviewed the historical stock prices and trading volumes of the common
stock of UNB and BancFirst;
- reviewed the financial terms of certain other business combinations; and
- conducted such other financial studies, analyses and investigations as it
deemed appropriate for purposes of its opinion.
Stifel also took into account its assessment of general economic, market and
financial conditions and its experience in other transactions, as well as its
experience in securities valuations and its knowledge of the commercial banking
industry generally.
In rendering its opinion, Stifel relied upon and assumed, without independent
verification, the accuracy and completeness of all of the financial and other
information that was provided to it or that was otherwise reviewed by it and did
not assume any responsibility for independently verifying any of such
information. With respect to the financial forecasts supplied to Stifel
(including without limitation, projected cost savings and operating synergies
resulting from the merger), Stifel assumed that they were reasonably prepared on
the basis reflecting the best currently available estimates and judgments of the
management of UNB and BancFirst as to the future operating and financial
performance of UNB and BancFirst, that they would be realized in the amounts and
time periods estimated and that they provided a reasonable basis upon which
Stifel could form its opinion. Stifel also assumed that there were no material
changes in the
24
assets, liabilities, financial condition, results of operations, business or
prospects of either UNB or BancFirst since the date of the last financial
statements made available to it. Stifel also assumed, without independent
verification and with UNB's consent, that the aggregate allowances for loan
losses set forth in the financial statements of UNB and BancFirst are in the
aggregate adequate to cover all such losses. Stifel did not make or obtain any
independent evaluation, appraisal or physical inspection of UNB's or BancFirst's
assets or liabilities, the collateral securing any of such assets or
liabilities, or the collectibility of any such assets nor did it review loan or
credit files of UNB or BancFirst. Stifel relied on advice of UNB's counsel and
information from UNB's accountants as to all legal and accounting matters with
respect to UNB, the agreement and the transactions and other matters contained
or contemplated therein. Stifel assumed, with UNB's consent, that there are no
factors that would delay or subject to any adverse conditions any necessary
regulatory or governmental approval and that all conditions to the merger will
be satisfied and not waived.
In rendering its opinion, Stifel assumed that the merger will be consummated as
provided in the merger agreement, will constitute a tax-free reorganization as
contemplated by the merger agreement and will be accounted for under the
purchase accounting method. Stifel's opinion was necessarily based on economic,
market, financial and other conditions as they existed on, and on the
information made available to it as of, the date of its opinion, and does not
imply any conclusion as to the price or trading range of the UNB common stock or
the BancFirst common stock, which may vary depending upon various factors,
including changes in interest rates, dividend rates, market conditions, economic
conditions and other factors that influence the price of securities.
The financial forecasts furnished to Stifel for UNB and BancFirst and estimates
of cost savings and operating synergies resulting from the merger were prepared
by the managements of UNB and BancFirst and constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. As a matter of policy, UNB and BancFirst do not publicly disclose internal
management forecasts, projections or estimates of the type furnished to Stifel
in connection with its analysis of the financial terms of the merger, and such
forecasts and estimates were not prepared with a view towards public disclosure.
These forecasts and estimates were based on numerous variables and assumptions
which are inherently uncertain and which may not be within the control of the
management of either UNB or BancFirst, including, without limitation, factors
related to the integration of UNB and BancFirst and general economic, regulatory
and competitive conditions. Accordingly, actual results could vary materially
from those set forth in such forecasts and estimates.
In connection with rendering its September 5, 2001 opinion, Stifel performed a
variety of financial analyses that are summarized below. Such summary does not
purport to be a complete description of such analyses. Stifel believes that its
analyses and the summary set forth herein must be considered as a whole and that
selecting portions of such analyses and the factors considered therein, without
considering all factors and analyses, could create an incomplete view of the
analyses and processes underlying its opinions. The preparation of a fairness
opinion is a complex process involving subjective judgments and is not
necessarily susceptible to partial analysis or summary description. In its
analyses, Stifel made numerous assumptions with respect to industry performance,
business and economic conditions, and other matters, many of which are beyond
the control of UNB or BancFirst. Any estimates contained in Stifel's analyses
are not
25
necessarily indicative of actual future values or results, which may be
significantly more or less favorable than suggested by such estimates. Estimates
of values of companies do not purport to be appraisals or necessarily reflect
the actual prices at which companies or their securities actually may be sold.
No company or transaction utilized in Stifel's analyses was identical to UNB or
BancFirst or the merger. Accordingly, an analysis of the results described below
is not mathematical; rather, it involves complex considerations and judgments
concerning differences in financial and operating characteristics of the
companies and other facts that could affect the public trading value of the
companies to which they are being compared. None of the analyses performed by
Stifel was assigned a greater significance by Stifel than any other. The
analyses described below does not purport to be indicative of actual future
results, or to reflect the prices at which UNB common stock or BancFirst common
stock may trade in the public markets.
The following is a summary of the financial analyses performed by Stifel in
connection with providing its opinion on September 5, 2001. In connection with
its written opinion dated as of the date of this joint proxy statement and
prospectus, Stifel performed procedures to update certain of its analyses and
review the assumptions on which such analyses were based and the factors
considered in connection therewith. In updating its opinion, Stifel did not
utilize any methods of analysis in addition to those described.
Comparison of Selected Comparable Companies. Stifel reviewed and compared
certain multiples and ratios relating to each of UNB and BancFirst to the
publicly available corresponding data for a peer group of selected banks which
Stifel deemed to be relevant. The group of selected comparable companies
consisted of the 57 banks under Stifel's research coverage at June 30, 2001.
Stifel presented a comparison of UNB and BancFirst on the basis of various
financial ratios and other indicators, including among other things, market
price to earnings per share based on GAAP earnings per share ratios for the
twelve month periods ended December 31, 2001 and December 31, 2002, and
historical price to stated book and tangible stated book values per share.
Stifel compared estimated ratios of price to GAAP earnings per share for the
twelve month periods ended December 31, 2001 and December 31, 2002 for UNB and
BancFirst based on each companies respective management's estimated earnings per
share. The price to GAAP earnings per share ratios for the twelve month periods
ended December 31, 2001 for UNB, BancFirst and the median of the comparable
companies were 12.4x, 12.2x and 13.4x respectively. The price to GAAP earnings
per share ratios for December 31, 2002 for UNB, BancFirst and the median of the
comparable companies were 11.6x, 10.6x and 11.7x respectively. The price to book
value per share ratios for UNB, BancFirst and the median of the comparable
companies were 246.0%, 175.0% and 198.9% respectively. The price to tangible
book value per share ratios for UNB, BancFirst and the median of the comparable
companies were 253.1%, 215.1% and 223.5% respectively. This analysis did not
purport to reflect the prices at which shares of UNB or BancFirst common stock
may trade.
Pro Forma Effect of the Merger. Stifel reviewed certain estimated future
operating and financial information developed by UNB and BancFirst and certain
estimated future operating and financial information for the pro forma combined
companies resulting from the merger for the twelve month periods ended December
31, 2002 and December 31, 2003. Based on this analysis, Stifel compared certain
of UNB's estimated future per share results with such estimated figures for the
pro forma combined companies. Stifel compared UNB's estimated future stand-alone
GAAP and cash earnings per share with such estimated figures for the pro forma
combined
26
companies. On a pro forma basis, the merger is forecast to be accretive
to the combined companies' GAAP and cash earnings per share for the twelve month
periods ended December 31, 2002 and December 31, 2003. Stifel also reviewed
certain historical financial information in order to determine the effect of the
merger on UNB's book value and tangible book value. Based on this analysis, at
June 30, 2001, on a pro forma basis the merger is forecast to be accretive to
the surviving company's book value per share and dilutive to the combined
companies' tangible book value per share.
Contribution Analysis. Stifel reviewed certain financial information for UNB and
BancFirst for the six month period ended June 30, 2001 including among other
things net interest income, provision for loan losses, non-interest income,
non-interest expense, net income, cash net income, total assets, total loans,
loan loss reserves, total deposits, total equity, total tangible equity and
market value. In addition, Stifel reviewed projected net income for the twelve
month periods ended December 31, 2001 and December 31, 2002 and projected cash
net income for the twelve month period ended December 31, 2002 for UNB and
BancFirst prepared by their respective managements. Stifel then compared the
financial information for UNB to the pro forma combined figures for UNB and
BancFirst. The contribution analysis for these financials indicated that UNB
would contribute between 42% and 56% of the pro forma combined figures for UNB
and BancFirst. These contributions were compared to the approximately 48%
continuing ownership stake that UNB's shareholders would have in the combined
companies following the merger.
Selected Comparable Transaction Analysis. Stifel analyzed certain information
relating to recent transactions in the banking industry, consisting of 14
mergers of equals announced in the U.S. between April 13, 1998 and June 13,
2001. The selected transactions included the following parties (Survivor /
Partner): Virginia Financial Corporation / Virginia Commonwealth Financial
Corporation, MB Financial, Inc. / MidCity Financial Corporation, New York
Community Bancorp, Inc. / Richmond County Financial Corp., Chemical Financial
Corporation / Shoreline Financial Corporation, First Place Financial Corp. / FFY
Financial Corp., National Commerce Bancorporation / CCB Financial Corporation,
BankIllinois Financial Corporation / First Decatur Bancshares, Incorporated,
Fleet Financial Group Inc. / BankBoston Corporation, Santa Barbara Bancorp /
Pacific Capital Bancorp, Star Banc Corporation / Firstar Holdings Corporation,
Norwest Corporation / Wells Fargo & Company, First Hawaiian Inc. / Bank of the
West, Citizens Bancshares Inc. / Mid Am, Inc. and Banc One Corporation / First
Chicago NBD Corporation.
Stifel compared certain terms of the merger to the terms of the selected
transactions. Such analysis indicated, among other things, that for the selected
transactions the premium represented by the exchange ratio in such transactions
to market prices ranged from approximately 3.7% to 34.1%, as compared to 10.7%
represented by the exchange ratio in the merger. In addition, Stifel also noted
the allocation of common stock ownership between the merging companies in the
selected transactions ranged from approximately 40% / 60% to 66% / 34% as
compared to 48% / 52% in the merger, the pro forma board composition in the
selected transactions ranged from approximately 47% / 53% to 73% / 27% compared
to 50% / 50% in the merger, and that the proposed arrangements with respect to
the management of the combined companies and certain other non-financial issues
in the merger were comparable to those of the selected transactions.
27
Selected Bank Acquisition Analysis. In addition, Stifel analyzed certain
information relating to recent acquisitions in the banking industry, consisting
of 25 acquisitions announced between August 29, 2000 and August 29, 2001,
involving sellers in all regions of the United States with announced transaction
values between $100 million and $500 million. Stifel calculated the following
ratios with respect to the merger and the selected transactions:
UNB/ Selected Bank Acquisitions
BancFirst
Ratios Median
------ ------
Deal Price Per Share/ Book Value Per 193.8% 241.0%
Share
Deal Price Per Share/Tangible Book 238.2% 247.6%
Value Per Share
Adjusted Deal Price/6.50% 206.3% 292.4%
Equity
Deal Price Per Share/Last 12 13.9x 19.1x
Months Earnings Per Share
Deal Price/Assets 16.1% 21.7%
Premium over Tangible Book 11.1% 15.9%
Value/Deposits
Deal Price/Deposits 21.7% 27.0%
This analysis resulted in a range of imputed values for BancFirst common stock
of between $25.62 and $34.34 based on the median multiples for the selected bank
acquisitions.
Present Value Analysis. Applying discounted cash flow analysis to the
theoretical future earnings and dividends of UNB and BancFirst, Stifel compared
the calculated value of an UNB share to the calculated value of the combined
companies. The analysis was based upon management's projected earnings growth, a
range of assumed price/earnings ratios, and a 15.0%, 17.5% and 20.0% discount
rate. Stifel selected the range of terminal price/earnings ratios on the basis
of past and current trading multiples for other publicly traded comparable
commercial banks. The stand-alone present value of UNB common stock calculated
on this basis ranged from $12.00 to $19.00 per share. The present value of one
share of common stock in the combined companies under the terms of the agreement
calculated on this basis ranged from $13.00 to $20.00 per share.
Discounted Cash Flow Analysis - UNB. Using a discounted cash flow analysis,
Stifel estimated the net present value of the future streams of after-tax cash
flow that UNB could produce on a stand-alone basis and distribute to UNB's
shareholders, referred to below as dividendable net income. In this analysis,
Stifel assumed that UNB would perform in accordance with management's estimates
and calculated assumed after-tax distributions to a potential acquiror such that
its tangible common equity ratio would be maintained at 6.5 percent of assets.
Stifel
28
calculated the sum of the assumed perpetual dividendable net income
streams per share beginning in the year 2001, discounted to present values at
assumed discount rates ranging from 13.0% to 17.0%. This discounted cash flow
analysis indicated an implied equity value reference range of $19.00 to $25.00
per share of UNB's common stock. This analysis did not purport to be indicative
of actual future results and did not purport to reflect the prices at which
shares of UNB's common stock may trade in the public markets. A discounted cash
flow analysis was included because it is a widely used valuation methodology,
but the results of such methodology are highly dependent upon the numerous
assumptions that must be made, including earnings growth rates, dividend payout
rates and discount rates.
Discounted Cash Flow Analysis - BancFirst. Using a discounted cash flow
analysis, Stifel estimated the net present value of the future streams of
after-tax cash flow that BancFirst could produce on a stand-alone basis and
distribute to BancFirst's shareholders, referred to below as dividendable net
income. In this analysis, Stifel assumed that BancFirst would perform in
accordance with management's estimates and calculated assumed after-tax
distributions to a potential acquiror such that its tangible common equity ratio
would be maintained at 6.5 percent of assets. Stifel calculated the sum of the
assumed perpetual dividendable net income streams per share beginning in the
year 2001, discounted to present values at assumed discount rates ranging from
13.0% to 17.0%. This discounted cash flow analysis indicated an implied equity
value reference range of $27.00 to $35.00 per share of BancFirst's common stock.
This analysis did not purport to be indicative of actual future results and did
not purport to reflect the prices at which shares of BancFirst's common stock
may trade in the public markets.
Discounted Cash Flow Analysis - Combined Companies. In addition, using a
discounted cash flow analysis, Stifel estimated the net present value of the
future streams of after-tax cash flow that the pro forma combined companies
could produce including estimated cost savings and distribute to the combined
companies' shareholders, referred to below as dividendable net income. In this
analysis, Stifel assumed that the combined companies would perform in accordance
with management's estimates and calculated assumed after-tax distributions to a
potential acquiror such that its tangible common equity ratio would be
maintained at 6.5 percent of assets. Stifel calculated the sum of the assumed
perpetual dividendable net income streams per share beginning in the year 2001,
discounted to present values at assumed discount rates ranging from 13.0% to
17.0%. This discounted cash flow analysis indicated an implied equity value
reference range of $22.00 to $28.00 per share of the combined companies' common
stock. This analysis did not purport to be indicative of actual future results
and did not purport to reflect the prices at which shares of the combined
companies' common stock may trade in the public markets.
As described above, Stifel's opinion was among the many factors taken into
consideration by the UNB board of directors in making its determination to
approve the merger.
Pursuant to the terms of Stifel's engagement, UNB paid Stifel a nonrefundable
cash fee of $150,000 upon the signing of the definitive agreement and a
nonrefundable cash fee of $150,000 at the time of mailing of this joint proxy
statement and prospectus. In addition, UNB has agreed to pay Stifel an
additional fee of 0.50% of the total aggregate consideration paid in the
transaction, less the fees already paid, subject to and conditioned upon
consummation of the merger. UNB has also agreed to reimburse Stifel for certain
out-of-pocket expenses and has agreed to indemnify Stifel, its affiliates and
their respective partners, directors, officers, agents,
29
consultants, employees and controlling persons against certain liabilities,
including liabilities under the federal securities laws.
In the ordinary course of its business, Stifel actively trades equity securities
of UNB and BancFirst for its own account and for the accounts of its customers
and, accordingly, may at any time hold a long or short position in such
securities.
OPINION OF BANCFIRST'S FINANCIAL ADVISOR
By letter agreement dated as of August 22, 2001, BancFirst retained
Sandler O'Neill as an independent financial advisor in connection with
BancFirst's consideration of a possible business combination with UNB. Sandler
O'Neill is a nationally recognized investment banking firm whose principal
business specialty is financial institutions. In the ordinary course of its
investment banking business, Sandler O'Neill is regularly engaged in the
valuation of financial institutions and their securities in connection with
mergers and acquisitions and other corporate transactions. Sandler O'Neill has
acted as an independent financial advisor to BancFirst in connection with
BancFirst's general strategic planning and analyses since 1995.
Pursuant to the terms of the August 22, 2001 agreement, Sandler O'Neill
acted as financial advisor to BancFirst in connection with the proposed merger
with UNB and, at the request of the BancFirst board, representatives of Sandler
O'Neill attended the September 5, 2001 meeting at which the board considered and
approved the merger agreement. At that meeting, Sandler O'Neill delivered to the
board its written opinion that, as of such date, the exchange ratio was fair to
BancFirst shareholders from a financial point of view. Sandler O'Neill has
confirmed its September 5th opinion by delivering to the BancFirst board of
directors an updated written opinion dated the date of this proxy statement and
prospectus, which is substantially identical to the September 5, 2001 opinion.
In rendering its updated opinion, Sandler O'Neill confirmed the appropriateness
of its reliance on the analyses used to render its earlier opinion by reviewing
the assumptions upon which their analyses were based, performing procedures to
update certain of their analyses and reviewing the other factors considered in
rendering its opinion. The full text of Sandler O'Neill's updated opinion is
attached as Appendix D to this joint proxy statement and prospectus. The opinion
outlines the procedures followed, assumptions made, matters considered and
qualifications and limitations on the review undertaken by Sandler O'Neill in
rendering its opinion. The description of the opinion set forth below is
qualified in its entirety by reference to the full text of the opinion. We urge
you to read the entire opinion carefully in connection with your consideration
of the proposed merger.
Sandler O'Neill's opinion speaks only as of the date of the opinion.
The opinion was directed to the BancFirst board of directors for its use in
consideration of the merger and is directed only to the fairness of the exchange
ratio to BancFirst shareholders from a financial point of view. It does not
address the underlying business decision of BancFirst to engage in the merger or
any other aspect of the merger and is not a recommendation to any BancFirst
shareholder as to how such shareholder should vote at the special meeting with
respect to the merger or any other matter.
In connection with rendering its September 5, 2001 opinion, Sandler
O'Neill reviewed and considered, among other things:
30
(1) the merger agreement and certain of the exhibits thereto;
(2) the stock option agreements between BancFirst and UNB;
(3) certain publicly available financial statements and other historical
financial information of BancFirst that they deemed relevant;
(4) certain publicly available financial statements and other historical
financial information of UNB that they deemed relevant;
(5) projected earnings per share estimates for BancFirst for the years
ending December 31, 2001 and 2002 provided by management of BancFirst,
earnings per share estimates for BancFirst for the years ending December
31, 2001 and 2002 published by I/B/E/S, and the views of senior management
of BancFirst, based on limited discussions with members of senior
management, regarding BancFirst's business, financial condition, results of
operations and future prospects;
(6) projected earnings per share estimates for UNB for the years ending
December 31, 2001 and 2002 provided by management of UNB, earnings per
share estimates for UNB for the years ending December 31, 2001 and 2002
published by I/B/E/S, and the views of the senior management of UNB, based
on limited discussions with members of senior management, regarding UNB's
business, financial condition, results of operations and future prospects;
(7) the pro forma financial impact of the merger, based on assumptions
relating to transaction expenses, purchase accounting adjustments and cost
savings determined by senior managements of BancFirst and UNB;
(8) the relative contributions of assets, liabilities, equity and earnings
of BancFirst and UNB to the resulting institution;
(9) the publicly reported historical price and trading activity for
BancFirst's and UNB's common stock, including a comparison of certain
financial and stock market information for BancFirst and UNB with similar
publicly available information for certain other companies the securities
of which are publicly traded;
(10) the terms of certain recent business combinations in the financial
institutions industry, particularly with respect to business combinations
structured as "mergers of equals," to the extent publicly available;
(11) the current market environment generally and the banking environment
in particular; and
(12) such other information, financial studies, analyses and investigations
and financial, economic and market criteria as they considered relevant.
Sandler O'Neill was not asked to, and did not, solicit indications of
interest in a potential transaction from other third parties. The BancFirst
board of directors did not limit the investigations made or the procedures
followed by Sandler O'Neill in giving its opinion.
31
In performing its reviews and analyses and in rendering its opinion,
Sandler O'Neill assumed and relied upon the accuracy and completeness of all the
financial information, analyses and other information that was publicly
available or otherwise furnished to, reviewed by or discussed with it and
further relied on the assurances of management of BancFirst and UNB that they
were not aware of any facts or circumstances that would make such information
inaccurate or misleading. Sandler O'Neill was not asked to and did not
independently verify the accuracy or completeness of any of such information and
they did not assume any responsibility or liability for the accuracy or
completeness of any of such information. Sandler O'Neill did not make an
independent evaluation or appraisal of the assets, the collateral securing
assets or the liabilities, contingent or otherwise, of BancFirst or UNB or any
of their respective subsidiaries, or the collectibility of any such assets, nor
was it furnished with any such evaluations or appraisals. Sandler O'Neill is not
an expert in the evaluation of allowances for loan losses and it did not made an
independent evaluation of the adequacy of the allowance for loan losses of
BancFirst or UNB, nor did it review any individual credit files relating to
BancFirst or UNB. With BancFirst's consent, Sandler O'Neill assumed that the
respective allowances for loan losses for both BancFirst and UNB were adequate
to cover such losses and will be adequate on a pro forma basis for the combined
companies. In addition, Sandler O'Neill did not conduct any physical inspection
of the properties or facilities of BancFirst or UNB. Sandler O'Neill is not an
accounting firm and they relied, with BancFirst's consent, on the reports of the
independent accountants of BancFirst and UNB for the accuracy and completeness
of the audited financial statements furnished to them.
Sandler O'Neill's opinion was necessarily based upon market, economic
and other conditions as they existed on, and could be evaluated as of, the date
of its opinion. Sandler O'Neill assumed, in all respects material to its
analysis, that all of the representations and warranties contained in the merger
agreement and all related agreements are true and correct, that each party to
such agreements will perform all of the covenants required to be performed by
such party under such agreements and that the conditions precedent in the merger
agreement are not waived. Sandler O'Neill also assumed that there has been no
material change in BancFirst's and UNB's assets, financial condition, results of
operations, business or prospects since the date of the last financial
statements made available to them, that BancFirst and UNB will remain as going
concerns for all periods relevant to its analyses, and that the merger will be
accounted for as a purchase transaction and will qualify as a tax-free
reorganization for federal income tax purposes.
In rendering its September 5, 2001 opinion, Sandler O'Neill performed a
variety of financial analyses. The following is a summary of the material
analyses performed by Sandler O'Neill, but is not a complete description of all
the analyses underlying Sandler O'Neill's opinion. The summary includes
information presented in tabular format. In order to fully understand the
financial analyses, these tables must be read together with the accompanying
text. The tables alone do not constitute a complete description of the financial
analyses. The preparation of a fairness opinion is a complex process involving
subjective judgments as to the most appropriate and relevant methods of
financial analysis and the application of those methods to the particular
circumstances. The process, therefore, is not necessarily susceptible to a
partial analysis or summary description. Sandler O'Neill believes that its
analyses must be considered as a whole and that selecting portions of the
factors and analyses considered without considering all factors and
32
analyses, or attempting to ascribe relative weights to some or all such factors
and analyses, could create an incomplete view of the evaluation process
underlying its opinion. Also, no company included in Sandler O'Neill's
comparative analyses described below is identical to BancFirst or UNB and no
transaction is identical to the merger. Accordingly, an analysis of comparable
companies or transactions involves complex considerations and judgments
concerning differences in financial and operating characteristics of the
companies and other factors that could affect the public trading values or
merger transaction values, as the case may be, of BancFirst or UNB and the
companies to which they are being compared.
The earnings projections used and relied upon by Sandler O'Neill in its
analyses were based upon internal projections of BancFirst and UNB. With respect
to all such financial projections and estimates and all projections of
transaction costs, purchase accounting adjustments and expected cost savings
relating to the merger, BancFirst's and UNB's managements confirmed to Sandler
O'Neill that they reflected the best currently available estimates and judgments
of such managements of the future financial performance of BancFirst and UNB,
respectively, and Sandler O'Neill assumed for purposes of its analyses that such
performance would be achieved. Sandler O'Neill expressed no opinion as to such
financial projections or the assumptions on which they were based. The financial
projections furnished to Sandler O'Neill by BancFirst and UNB were prepared for
internal purposes only and not with a view towards public disclosure. These
projections, as well as the other estimates used by Sandler O'Neill in its
analyses, were based on numerous variables and assumptions which are inherently
uncertain and, accordingly, actual results could vary materially from those set
forth in such projections.
In performing its analyses, Sandler O'Neill also made numerous
assumptions with respect to industry performance, business and economic
conditions and various other matters, many of which cannot be predicted and are
beyond the control of BancFirst, UNB and Sandler O'Neill. The analyses performed
by Sandler O'Neill are not necessarily indicative of actual values or future
results, which may be significantly more or less favorable than suggested by
such analyses. Sandler O'Neill prepared its analyses solely for purposes of
rendering its opinion and provided such analyses to the BancFirst board of
directors at the September 5th meeting. Estimates on the values of companies do
not purport to be appraisals or necessarily reflect the prices at which
companies or their securities may actually be sold. Such estimates are
inherently subject to uncertainty and actual values may be materially different.
Accordingly, Sandler O'Neill's analyses do not necessarily reflect the value of
BancFirst's or UNB's common stock or the prices at which BancFirst's or UNB's
common stock may be sold at any time.
SUMMARY OF PROPOSAL. Sandler O'Neill reviewed the financial terms of
the proposed transaction. Based upon the closing price of UNB's common stock on
September 4, 2001 of $18.60 and assuming an exchange ratio of 1.325, Sandler
O'Neill calculated an implied transaction value of $24.65 per share. The
aggregate transaction value was approximately $215 million, based upon 8.79
million fully diluted shares of BancFirst common stock outstanding, which was
determined using the treasury stock method at the implied per share transaction
value. Sandler O'Neill noted that the transaction value represented a 11.7%
premium over the September 4, 2001 closing price of BancFirst's common stock.
STOCK TRADING HISTORY. Sandler O'Neill reviewed the history of the
reported trading prices and volume of BancFirst's common stock and UNB's common
stock and the relationship between the movements in the prices of BancFirst's
common stock and UNB's common stock,
33
respectively, to movements in certain stock indices, including the Standard &
Poor's 500 Index, the Nasdaq Bank Index and the median performance of a
composite peer group of publicly traded regional commercial banks selected by
Sandler O'Neill. During the one year period ended September 4, 2001, BancFirst's
and UNB's common stock outperformed all the indices to which they were compared.
Beginning Index Value Ending Index Value
September 1, 2000 September 4, 2001
----------------- -----------------
BancFirst 100.00% 158.45%
Nasdaq Bank Index 100.00 124.75
Regional Group (1) 100.00 125.42
S&P 500 Index 100.00 74.59
(1) The Regional Group consisted of the 12 commercial banks listed under
Comparable Group Analysis below.
Beginning Index Value Ending Index Value
September 1, 2000 September 4, 2001
----------------- -----------------
UNB 100.00% 137.78%
Nasdaq Bank Index 100.00 124.75
Regional Group (1) 100.00 125.51
S&P 500 Index 100.00 74.59
(1) The Regional Group consisted of the following companies: Allegiant Bancorp,
Inc., Baylake Corporation, Farmers Capital Bank Corporation, German American
Bancorp, Great Southern Bancorp, Inc., Hills Bancorporation, Lakeland Financial
Corporation, Main Street Trust, Inc., Peoples Bancorp Inc., PrivateBancorp,
Inc., State Financial Services Corporation and S.Y. Bancorp, Inc.
COMPARABLE COMPANY ANALYSIS. Sandler O'Neill used publicly available
information to compare selected financial and market trading information for
BancFirst, UNB and two groups of selected financial institutions. The first
group consisted of BancFirst, UNB and the following twelve publicly traded
regional commercial banks (the "Regional Group"):
Independent Bank Corporation Mid-America Bancorp First Merchants Corporation
Midwest Banc Holdings, Inc. Second Bancorp Inc. Republic Bancorp, Inc.
Heartland Financial USA, Inc. MBT Financial Corporation First Busey Corporation
First Oak Brook Bancshares, Inc. Old Second Bancorp, Inc. Indiana United Bancorp
34
Sandler O'Neill also compared BancFirst and UNB to a group of eleven
publicly traded commercial banks that had a return on average equity (based on
last twelve months' earnings) greater than 16% and a price-to-tangible book
value greater than 230% (the "Highly Valued Group"). The Highly Valued Group was
comprised of the following eleven institutions:
Independent Bank Corp. United National Bancorp Sandy Spring Bancorp, Inc.
Frontier Financial Corp. Independent Bank Corp. CCBT Financial Cos.
Midwest Banc Holdings Inc. Tompkins Trustco Inc. Arrow Financial Corp.
Great Southern Bancorp Inc. Suffolk Bancorp
The analysis compared publicly available financial information for
BancFirst, UNB and the median data for each of the Regional Group and Highly
Valued Group as of and for each of the years ended December 31, 1996 through
December 31, 2000 and as of and for the twelve months ended June 30, 2001. The
table below sets forth the comparative data as of and for the twelve months
ended June 30, 2001, with pricing data as of September 4, 2001.
BANCFIRST UNB REGIONALGROUP HIGHLYVALUEDGROUP
Total assets $1,520,960 $1,078,695 $1,520,960 $1,606,545
Tangible equity/total assets 5.99% 7.32% 7.24% 6.67%
Intangible assets/total equity 18.65% 2.84% 4.14% 8.15%
Net loans/total assets 70.72% 80.84% 67.12% 63.23%
Gross loans/total deposits 95.98% 109.67% 92.67% 89.54%
Total borrowings/total assets 16.09% 17.03% 15.73% 18.85%
Non-performing assets/total assets 0.73% 0.33% 0.38% 0.24%
Loan loss reserve/gross loans 0.95% 1.45% 1.05% 1.18%
Net interest margin 3.07% 4.00% 3.65% 4.05%
Non-interest income/average assets 0.86% 1.18% 1.02% 1.03%
Non-interest expense/average assets 2.11% 2.80% 2.80% 2.82%
Efficiency ratio 53.22% 54.28% 59.67% 55.65%
Return on average assets 0.99% 1.42% 1.03% 1.30%
Return on average equity 14.75% 19.45% 13.44% 18.16%
35
Price/tangible book value per share 215.63% 245.76% 188.36% 256.47%
Price/earnings per share 12.71x 13.14x 14.75x 14.35x
Dividend yield 2.55% 2.64% 2.66% 2.39%
Dividend payout ratio 32.38% 34.75% 38.12% 34.23%
DISCOUNTED DIVIDEND STREAM AND TERMINAL VALUE ANALYSIS. Sandler O'Neill
performed an analysis which estimated the future stream of after-tax dividend
flows of BancFirst through December 31, 2004 under various circumstances,
assuming BancFirst's projected dividend stream and that BancFirst performed in
accordance with the earnings projections reviewed with management. For periods
after 2002, Sandler O'Neill assumed an annual growth rate on earning assets of
approximately 5%. To approximate the terminal value of BancFirst common stock at
December 31, 2004, Sandler O'Neill applied price/earnings multiples ranging from
9x to21x and multiples of tangible book value ranging from 150% to 350%. The
dividend income streams and terminal values were then discounted to present
values using different discount rates ranging from 9% to 15% chosen to reflect
different assumptions regarding required rates of return of holders or
prospective buyers of BancFirst common stock. As illustrated in the following
table, this analysis indicated an imputed range of values per share of BancFirst
common stock of $15.69 to $40.99 when applying the price/earnings multiples and
$16.21 to $42.44 when applying multiples of tangible book value. The implied
transaction value of the merger as calculated by Sandler O'Neill was $24.65.
Earnings Per Share Tangible Book
------------------ -------------
Discount 9x 15x 21x 150% 225% 350%
---------
Unit Rate
---------
9% $18.78 $29.89 $40.99 $19.40 $28.04 $42.44
12 17.14 27.24 37.35 17.71 25.57 38.67
15 15.69 24.90 34.11 16.21 23.37 35.31
Sandler O'Neill performed a similar analysis which estimated the future
stream of after-tax dividend flows of UNB through December 31, 2004 under
various circumstances, assuming UNB's projected dividend stream and that UNB
performed in accordance with the earnings projections reviewed with management.
For periods after 2002, Sandler O'Neill assumed an annual growth rate on earning
assets of approximately 5%. To approximate the terminal value of UNB common
stock at December 31, 2004, Sandler O'Neill applied price/earnings multiples
ranging from 9x to 21x and multiples of tangible book value ranging from 150% to
350%. The dividend income streams and terminal values were then discounted to
present values using different discount rates ranging from 9% to 15% chosen to
reflect different assumptions
36
regarding required rates of return of holders or prospective buyers of UNB
common stock. As illustrated in the following table, this analysis indicated an
imputed range of values per share of UNB common stock of $11.54 to $30.14 when
applying the price/earnings multiples and $11.71 to $30.62 when applying
multiples of tangible book value.
Earnings Per Share Tangible Book
------------------ -------------
Discount Unit Rate 9x 14x 21x 150% 200% 350%
------------------
9% $13.81 $20.61 $30.14 $14.01 $18.17 $30.62
12 12.60 18.79 27.45 12.79 16.57 27.90
15 11.54 17.18 25.08 11.71 15.15 25.48
In connection with its analyses, Sandler O'Neill considered and
discussed with the BancFirst board of directors how the present value analyses
would be affected by changes in the underlying assumptions, including variations
with respect to the growth rate of assets, net income and dividend payout ratio.
Sandler O'Neill noted that the discounted dividend stream and terminal value
analysis is a widely used valuation methodology, but the results of such
methodology are highly dependent upon the numerous assumptions that must be
made, and the results thereof are not necessarily indicative of actual values or
future results.
CONTRIBUTION ANALYSIS. Sandler O'Neill reviewed the relative
contributions to be made by BancFirst and UNB to the combined companies, based
on financial information at and for the twelve months ended June 30, 2001. The
percentage of pro forma shares owned was determined using the exchange ratio of
1.325. This analysis indicated that the implied contributions to the combined
entity were as follows:
BancFirst UNB
--------- ---
Total assets 58.5% 41.5%
Total cash and securities 69.4 30.6
Total net loans 55.2 44.8
Total goodwill 90.1 9.9
Total deposits 58.4 41.6
Total borrowings 57.1 42.9
Tangible equity 53.6 46.4
Total equity 58.0 42.0
37
Net income 51.1 48.9
2001 estimated net income 52.7 47.3
Percentage of pro forma shares owned 52.5 47.5
PRO FORMA MERGER ANALYSIS. Sandler O'Neill analyzed certain potential
pro forma effects of the merger, based upon (1) an exchange ratio of 1.325, (2)
the earnings per share estimates and projections of BancFirst and UNB referred
to above, and (3) assumptions regarding the economic environment, accounting and
tax treatment of the merger, charges and transaction costs associated with the
merger and cost savings determined by the senior managements of BancFirst and
UNB. The actual results achieved by the combined companies may vary from
projected results and the variations may be material.
38
BancFirst UNB
--------- ---
Stand-Alone Pro Forma(1) Stand Alone Pro Forma
----------- ------------ ----------- ---------
Projected 2002 GAAP EPS $2.10 $2.08 $1.56 $1.57
Projected 2002 Cash EPS 2.12 2.24 1.56 1.69
Projected tangible book value at December
31, 2002 12.60 11.78 9.06 8.89
--------------------
(1) Determined by multiplying the BancFirst value by the exchange ratio.
BancFirst has agreed to pay Sandler O'Neill a transaction fee of
approximately $1.1 million in connection with the merger, of which approximately
$265,000 has been paid and the balance of which is contingent, and payable, upon
closing of the merger. Sandler O'Neill has also received a fee of $100,000 for
rendering its opinion, which will be credited against that portion of the fee
due upon the closing of the merger. BancFirst has also agreed to indemnify
Sandler O'Neill and its affiliates and their respective partners, directors,
officers, employees, agents, and controlling persons against certain expenses
and liabilities, including liabilities under securities laws.
Sandler O'Neill has in the past provided certain other investment
banking services to BancFirst and has received compensation for such services.
In the ordinary course of its business as a broker-dealer, Sandler O'Neill may
also purchase securities from and sell securities to BancFirst and UNB and may
actively trade the debt and equity securities of BancFirst and UNB for its own
account and for the accounts of customers and, accordingly, may at any time hold
a long or short position in such securities.
COMPLETION AND EFFECTIVENESS OF THE MERGER
The merger will be completed when all of the conditions to completion of the
merger are satisfied or waived, including the adoption of the merger agreement
by the shareholders of UNB and BancFirst, and the receipt of the necessary
regulatory approvals. The merger will become effective upon the filing of the
certificate of merger with the Ohio Secretary of State. Upon such filing, the
name of UNB will be changed to _________________________.
We are working toward completing the merger as quickly as possible. We expect to
complete the merger during the first quarter of calendar year 2002.
MERGER OF BANKING SUBSIDIARIES
In connection with the merger, UNB's banking subsidiary, United National Bank &
Trust Co., and BancFirst's banking subsidiary, The First National Bank of
Zanesville, have entered into a plan of merger pursuant to which The First
National Bank of Zanesville will merge with and into
39
United National Bank & Trust Co., with United National Bank & Trust Co. being
the surviving institution. United National Bank & Trust Co. will change its name
to __________________. The plan of merger may be terminated by mutual consent of
the parties at any time and will be terminated automatically in the event the
merger agreement is terminated.
REGULATORY APPROVALS
Before UNB and BancFirst may complete the merger, UNB must receive the approval
of the Federal Reserve Board. In addition, if and when the Federal Reserve Board
approves the merger, UNB and BancFirst must wait an additional 30 days before
completing the merger to allow the U.S. Department of Justice to take further
action to delay or block the merger. However, if the Department of Justice does
not issue adverse comments during the first 15 days of this period and consents
to the shorter waiting period, UNB and BancFirst may complete the merger at that
time. UNB filed its application for approval of the merger with the Federal
Reserve Board on October 4, 2001. In addition, before the merger of UNB and
BancFirst can be completed, the merger of the banking subsidiaries must be
approved by the Office of the Comptroller of the Currency. An application for
approval of the banking subsidiaries was filed with the Comptroller of the
Currency on October 4, 2001.
While UNB expects to receive such approvals, no assurance can be made as to
whether or when the approvals will be given.
DISTRIBUTION OF UNB COMMON STOCK
At the time the merger becomes effective, BancFirst will merge into UNB which
will be the surviving corporation with its name changed to ____________ and
BancFirst will cease to have shareholders. Certificates that represented shares
of BancFirst common stock outstanding immediately before the merger (referred to
as the "BancFirst Certificates") will then represent the right to receive 1.325
shares of UNB common stock and cash in lieu of a fractional share.
As soon as practicable after the merger, UNB will send former BancFirst
shareholders transmittal materials to be used to exchange the BancFirst
Certificates. The transmittal materials will contain instructions with respect
to the surrender of BancFirst Certificates. You will receive UNB common stock
certificates in its new name for your BancFirst Certificates and the amount of
cash payable for fractional shares in the merger. Until surrendered, BancFirst
Certificates will be deemed to evidence ownership of the whole shares of UNB
common stock issuable in exchange therefor. BancFirst common stock held in book
entry form will be exchanged automatically.
If UNB declares a dividend on the UNB common stock payable to shareholders of
record of UNB as of a record date after the merger, holders of BancFirst
Certificates will be entitled to receive that dividend. However, except for the
first quarter dividend anticipated to be declared in March 2002, holders of
BancFirst Certificates will not actually receive dividends declared by UNB
thereafter until they physically deliver the BancFirst Certificates with
properly submitted transmittal materials. Upon physical exchange of the
BancFirst Certificates, former BancFirst shareholders will be entitled to
receive from UNB an amount equal to all such dividends declared and paid with
respect to those shares (without interest and less the amount of taxes, if any,
that may have been imposed or paid).
40
After the merger, ownership of shares represented by BancFirst Certificates may
be transferred only on the stock transfer records of UNB. After the merger, UNB
will not transfer any shares of BancFirst common stock that were issued and
outstanding immediately before the merger on the stock transfer books of
BancFirst. If, after the merger, a former BancFirst shareholder properly
presents BancFirst Certificates to UNB for transfer, UNB will cancel the
BancFirst Certificates and issue in exchange certificates for shares of UNB
common stock in its new name as provided in the merger agreement.
EFFECT ON SHARES OF UNB COMMON STOCK
Upon completion of the merger, each share of UNB common stock then issued and
outstanding (other than UNB shares held by dissenting shareholders) will
continue to be one share of UNB common stock. Since the name of UNB will be
changed to _________________ upon completion of the merger, certificates for
shares of UNB common stock issued after the merger will be issued in the name of
________________. After the merger, UNB shareholders will be required to
surrender and exchange their UNB stock certificates for certificates in its new
name. Until surrendered, their UNB stock certificates will continue to represent
for all corporate purposes an equal number of shares of common stock of the
surviving corporation. However, except for the first quarter dividend
anticipated to be declared in March 2002, UNB shareholders will not receive
dividends payable to holders of record of UNB common stock declared thereafter
until they physically deliver their old certificates in exchange for
certificates in UNB's new name. You should not send in any stock certificates
with your proxies. A transmittal form with instructions for the exchange of your
UNB stock certificates for certificates in its new name will be mailed to you as
soon as practicable after the merger.
COORDINATION OF DIVIDENDS
Until the completion of the merger, UNB and BancFirst will coordinate with each
other regarding the declaration of any dividend or other distributions with
respect to their common stock, the record dates and the payment dates, with the
intention that neither party will declare more than one dividend or fail to
receive one dividend for any single calendar quarter on their respective shares
of common stock.
NASDAQ STOCK MARKET QUOTATION
UNB common stock is quoted on the National Market System of the Nasdaq Stock
Market. UNB has agreed to cause the shares of UNB common stock to be issued in
the merger to be authorized for quotation on the Nasdaq Stock Market. The
obligations of both parties to complete the merger are subject to obtaining such
authorization.
NO SHOPPING PROVISIONS
Each of UNB and BancFirst have agreed that it will not, and will use its
reasonable best efforts to ensure that its directors, officers, employees and
agents do not, directly or indirectly:
- initiate, solicit or encourage or take any action to facilitate the
making of any offer or proposal from any third party or a business
combination or for the acquisition of a substantial equity interest or
a substantial portion of its assets or business (referred to as a
"Competing Transaction");
41
- enter into any agreement with respect to an unsolicited Competing
Transaction; or
- engage in negotiations or discussions with, or provide any non-public
information, to any third party relating to any such transaction,
unless its board of directors determines in good faith (having
considered the advice of legal counsel and its financial advisors)
that it is necessary to do so in order to discharge its fiduciary
duties to shareholders.
If either UNB or BancFirst receives, prior to the approval of the merger by its
shareholders, an unsolicited proposal or offer for a Competing Transaction which
its board of directors determines to be a "Superior Proposal," its board of
directors may withdraw its recommendation to shareholders to adopt the merger
agreement or recommend the Superior Proposal to its shareholders. A "Superior
Proposal" means an unsolicited offer or proposal by a third party for a
Competing Transaction which the board of directors of UNB or BancFirst
determines in good faith after consultation with its legal counsel and financial
advisors is more favorable to the shareholders of UNB or BancFirst, as the case
may be, and is reasonably expected to result in a completed transaction.
In the event the board of directors of UNB or BancFirst withdraws its
recommendation to shareholders to approve the merger agreement or recommends a
Superior Proposal to its shareholders, the other company shall be entitled to
(i) terminate the merger agreement, (ii) receive a payment of $1,000,000 as
liquidated damages, and (iii) retain its rights under the Stock Option Agreement
(see "Stock Option Agreements" below).
CONDUCT OF BUSINESSES PENDING THE MERGER Except as expressly provided in the
merger agreement, the stock option agreements or the merger agreement between
our subsidiaries, each of UNB and BancFirst has agreed that until the
completion of the merger it will carry on its business in the ordinary course.
UNB and BancFirst have each agreed to use all reasonable efforts to preserve
intact its business organization and assets and maintain its rights, franchises
and existing relations with customers, suppliers, employees and business
associates.
In addition, each of UNB and BancFirst has agreed that, without the approval of
the other, it will not:
- make any change in its articles of incorporation, regulations or
capital stock except as permitted by the merger agreement;
- sell or pledge any of its capital stock or the capital stock of any
subsidiary except pursuant to existing stock option plans;
- repurchase or redeem any shares of its capital stock or the capital
stock of any subsidiary;
- cancel, release or modify any material indebtedness of any person
other than in the ordinary and usual course of business;
42
- increase the salary, severance or other compensation payable to, or
pay any bonus to, any officer or director, or any other employees,
except as consistent with past practice;
- enter into or amend any employment agreement or severance agreement;
- borrow money, except in the ordinary course of business; or to sell,
mortgage, or otherwise dispose of any material amount of its property
or assets,;
- make any material acquisition of, or investment in the stock or assets
of any other entity not in the ordinary and usual course of business;
- implement or adopt any change in accounting principles, practices or
methods except as required by generally accepted accounting
principles; and
- introduce or change any employee benefit plan, or other plan for the
benefit of any of its directors, officers or employees.
CONDITIONS TO CLOSING THE MERGER
The obligations of each of UNB and BancFirst to complete the merger are subject
to the fulfillment of certain conditions, including the following:
- the shareholders of UNB and BancFirst must have adopted the merger
agreement;
- each company's representations and warranties to the other in the
merger agreement must have been true as of the date of the merger
agreement and must be true as of the closing, except where the failure
of such representations and warranties to be true, individually or in
the aggregate, does not or would not result in a "Material Adverse
Effect" (as defined below) with respect to the breaching party;
- each company must have performed in all material respects all of the
agreements, conditions, and covenants to be completed at or before the
closing made by that company in the merger agreement;
- the shares of UNB common stock to be issued in the merger must have
been authorized for quotation on the Nasdaq Stock Market;
- all regulatory approvals required to complete the merger must have
been obtained;
- UNB and BancFirst must not be subject to any order, decree, or
injunction by any court or governmental authority that enjoins or
prohibits the completion of the merger;
- the registration statement of which this prospectus and joint proxy
statement is a part must have been declared effective by the
Securities and Exchange Commission and must not be subject to a stop
order or threatened stop order; and
43
- each company must have received from its legal counsel an opinion to
the effect that the merger will constitute a tax free reorganization
for federal income tax purposes.
The term "Material Adverse Effect" is defined to mean any effect that has a
material negative impact on the financial position, results of operations or
business of UNB and its subsidiaries, taken as a whole, or, as the case may be,
BancFirst and its subsidiaries, taken as a whole; or impair the ability of UNB
or BancFirst, as the case may be, to complete the merger or perform its
obligations under the merger agreement. The following will not be included in
any determination of a Material Adverse Effect: (1) changes in generally
accepted accounting principles or regulatory accounting requirements that are
applicable to depository institutions and their holding companies; (2) actions
and omissions of a party taken with the prior written consent of the other
party; (3) changes in economic conditions (including a change in the level of
interest rates) applicable to depository institutions; (4) changes in banking
and similar laws of general applicability or interpretations thereof by courts
or governmental authorities; and (5) any changes to valuation policies and
practices or restructuring charges in connection with the merger.
TERMINATION
Prior to the completion of the merger, the merger agreement may be terminated by
mutual consent of UNB and BancFirst or may be terminated by either of them if:
- any governmental agency denies an approval needed to complete the
merger or any governmental authority issues an order blocking the
merger;
- the shareholders of either company fail to adopt the merger agreement
because the required vote was not obtained at the special meetings or
any adjournment or postponement thereof;
- the merger has not been completed by September 30, 2002, unless the
failure to complete the merger by that date was caused by the failure
of the party seeking to terminate the merger to perform its
obligations under the merger agreement;
- any of the conditions to the obligations of UNB or BancFirst to
complete the merger have not been met, provided that the party seeking
to terminate has not breached any of its representations, warranties
or agreements;
- the other company fails to perform its obligations under the merger
agreement or fails to cure a material breach of any of its
representations or warranties in the merger agreement; or
- the board of directors of the other company withdraws its
recommendation to shareholders to adopt the merger agreement or
recommends a Superior Proposal.
If either UNB or BancFirst terminates the merger agreement in accordance with
its terms, neither generally will be liable to the other, unless the merger
agreement is terminated by one company because the board of directors of the
other company withdraws its recommendation to shareholders to adopt the merger
agreement or recommends a Superior Proposal, in which case the other company is
obligated to pay the terminating party the sum of $1,000,000 as liquidated
44
damages. Neither company will be released from liability to the other for any
damages arising out of its willful breach of the merger agreement, and the
option agreements will remain in force and effect pursuant to their terms.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following summarizes the material federal income tax consequences of the
merger and is based on the Internal Revenue Code, the regulations issued under
the Internal Revenue Code, existing administrative interpretations, and court
decisions. Future legislation, regulations, administrative interpretations, or
court decisions could significantly change such authorities either prospectively
or retroactively. This summary does not address all aspects of federal income
taxation that may be important to you in light of your particular circumstances
or if you are subject to special rules, such as rules regarding shareholders who
are not citizens or residents of the United States, or who are institutions, or
tax-exempt organizations. This discussion also assumes that BancFirst
shareholders hold their shares of BancFirst stock as capital assets within the
meaning of Section 1221 of the Internal Revenue Code.
It is a condition to the obligations of UNB and BancFirst to complete the merger
that UNB shall have received an opinion from Black, McCuskey, Souers & Arbaugh
and BancFirst shall have received an opinion from Bricker & Eckler LLP regarding
material federal income tax consequences of the merger. UNB and BancFirst
believe, based on these opinions, that the merger will have the following
federal income tax consequences:
- the merger will constitute a "reorganization" within the meaning of
Section 368(a)(1) of the Internal Revenue Code and UNB and BancFirst
will each be a "party to a reorganization" within the meaning of
Section 368(b);
- no gain or loss will be recognized by BancFirst shareholders who
receive solely shares of UNB; and
- no gain or loss will be recognized by BancFirst or UNB as a result of
the merger.
Due to the complexities of federal, state and local income tax laws, BancFirst
shareholders should consult their tax advisors as to the particular tax
consequences to them of the merger.
ACCOUNTING TREATMENT
The merger will be accounted for under the purchase method of accounting in
accordance with generally accepted accounting principles. This means that UNB
and BancFirst will be treated as one company as of the date the merger is
completed. For accounting purposes, BancFirst has been determined to be the
acquiror and will record the fair value of UNB's assets and liabilities in its
financial statements. Any difference between the purchase price and fair value
of the identified net assets will be recorded as goodwill. The income statement
will include the income of UNB beginning at the date the merger is completed.
The unaudited pro forma condensed combined consolidated financial information
contained in this joint proxy statement and prospectus has been prepared using
the purchase accounting method to account for the merger. See "Unaudited Pro
Forma Condensed Combined Consolidated Financial Statements."
RESTRICTIONS ON BANCFIRST AFFILIATES
45
All shares of UNB common stock received by BancFirst shareholders in the merger
will be freely transferable, except that shares of UNB common stock received by
persons who are deemed to be "affiliates" (as such term is defined under the
Securities Act of 1933) of BancFirst before the merger may only be resold in
transactions permitted by the resale provisions of Rule 145 under the Securities
Act or as otherwise permitted under the Securities Act. Persons who may be
deemed to be affiliates of BancFirst generally include individuals or entities
that control, are controlled by, or are under common control with, BancFirst and
may include certain officers, directors, and principal shareholders of
BancFirst.
This joint proxy statement and prospectus covers UNB common stock to be issued
in connection with the merger. It does not cover any resales of UNB common stock
to be received by affiliates of BancFirst upon completion of the merger, and no
person is authorized to make any use of this joint proxy statement and
prospectus in connection with any such resale.
DIRECTORS AND MANAGEMENT AFTER THE MERGER
BOARD OF DIRECTORS OF UNB. The merger agreement provides that the board of
directors of UNB following the merger shall consist of 14 persons, seven of whom
shall be designated by UNB and seven of whom shall be designated by BancFirst.
The board of directors of UNB will be divided into three classes as nearly equal
in number as possible. Each director shall hold office for a term of three years
with the term of the classes ending in successive years.
The following table shows each person named by UNB and BancFirst to serve on the
board of directors of UNB following the completion of the merger. The table also
shows the year in which each director's term of office will expire. Additional
information about such persons, as well as the executive officers of UNB and The
United National Bank & Trust Co. upon completion of the merger as set forth
below, is contained in the respective Annual Reports on Form 10-K of UNB and
BancFirst for the year ended December 31, 2000, which reports are incorporated
by reference in this document. See "Where You Can Find More Information."
Name Initial Term to Expire Designee of:
Louis V. Bockius, III 2003 UNB
William T. Stewart 2003 BancFirst
Marc L. Schneider 2003 UNB
James L. Nichols 2003 BancFirst
Jane Murphy Timken 2003 UNB
William F. Randles 2004 BancFirst
E. Lang D'Atri 2004 UNB
Karl C. Saunders 2004 BancFirst
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Russell W. Maier 2004 UNB
John W. Straker, Jr. 2004 BancFirst
Roger L. Mann 2005 UNB
Gary N. Fields 2005 BancFirst
George M. Smart 2005 UNB
Phillip E. Burke 2005 BancFirst
Until December 31, 2005, a committee consisting of two directors designated by
BancFirst and one director designated by UNB shall recommend nominees for
positions on the board of directors occupied or vacated by a director designated
by BancFirst, and a committee consisting of two directors designated by UNB and
one director designated by BancFirst shall recommend nominees for positions on
the board of directors occupied or vacated by a director designated by UNB. A
two-thirds vote of the Nominating Committee is required for a nominee to be
recommended for a position on the board of directors. Nominations of directors
after December 31, 2005 may be made by the board of directors, subject to
compliance with the nomination procedure set forth in the Code of Regulations.
MANAGEMENT. Upon completion of the merger the executive officers of UNB will
include executive officers of BancFirst. The executive officers of UNB upon
completion of the merger will be as follows:
Executive Officers Position
------------------ --------
Gary N. Fields Chairman of the Board of Directors
Roger L. Mann President and Chief Executive Officer
James H. Nicholson Executive Vice President and Chief Operating Officer
James J. Pennetti Executive Vice President and Chief Financial Officer
BOARD OF DIRECTORS OF THE BANK. UPON COMPLETION OF THE MERGER, THE FIRST
NATIONAL BANK OF ZANESVILLE, N.A. WILL MERGE WITH AND INTO THE UNITED NATIONAL
BANK & TRUST CO. WHICH WILL BE THE SURVIVING BANK. ITS INITIAL BOARD OF
DIRECTORS WILL CONSIST OF TWELVE (12) MEMBERS, WITH UNB AND BANCFIRST EACH
DESIGNATING SIX (6) MEMBERS. THE BANCFIRST DESIGNEES ARE JAMES H. NICHOLSON,
WILLIAM F. RANDLES, SUSAN S. HENDERSON, FRANK J. DOSCH, JAMES M. MATESICH AND
WARREN W. TYLER. THE UNB DESIGNEES ARE ROGER L. DEVILLE, EDGAR W. JONES, JR.,
ROGER L. MANN, E. SCOTT ROBERTSON, GEORGE M. SMART AND JANE MURPHY TIMKEN.
MANAGEMENT OF THE BANK. UPON COMPLETION OF THE MERGER OF UNB'S AND BANCFIRST'S
BANKING SUBSIDIARIES, THE EXECUTIVE OFFICERS OF THE SURVIVING BANK WILL BE AS
FOLLOWS:
Executive Officers Position
------------------ --------
Roger L. Mann Chairman
47
James H. Nicholson President and Chief Executive Officer
James J. Pennetti Executive Vice President and Chief Financial Officer
James B. Baemel Executive Vice President, Corporate Banking
Scott E. Dodds Executive Vice President, Retail Banking
Edward N. Cohn Executive Vice President, Systems & Operations;
President, Columbus Division
Thomas J. Selock Executive Vice President, Regional Sales Management
Leo E. Doyle Executive Vice President, Commercial Loan & Aircraft
Gary L. McLaughlin Senior Vice President, Credit Administration
Pursuant to the terms of the merger agreement, the Code of Regulations of UNB
following the merger and until December 31, 2005 will require the affirmative
vote of three-fourths of the directors then in office to:
- remove Mr. Mann, Mr. Fields, Mr. Nicholson or Mr. Pennetti from any of
their executive positions;
- change the size of the board of directors or the number of directors
to be designated by former BancFirst directors or the number of
directors to be designated by UNB directors; or
- effect any amendment to the Code of Regulations that would conflict
with the provisions regarding the removal of the above-named
executives, the classification, number or terms of office of directors
or the procedure for nominating directors for the board of directors.
DISSENTERS' RIGHTS
The shareholders of UNB and BancFirst will be entitled to dissenters' rights. A
shareholder entitled to relief as a dissenting shareholder must comply with the
requirements set forth in Section 1701.85 of the Ohio Revised Code. The
following summary does not purport to be a complete statement of the method of
compliance with Section 1701.85 and is qualified in its entirety by reference to
Section 1701.85, the text of which is attached hereto as Appendix E.
A shareholder who wishes to perfect his rights as a dissenting shareholder in
the event the merger agreement is adopted must (a) have been the holder of
record of the shares as to which he seeks relief as of the record date for the
special meeting of UNB shareholders, if he holds UNB shares, or the record date
for the special meeting of BancFirst shareholders, if he holds BancFirst shares,
(b) not have voted his shares in favor of adopting the merger agreement and (c)
deliver to UNB, not later than ten days after the application special meeting, a
written demand for payment to him of the fair cash value of the shares as to
which he seeks relief. Such written demand must state the name of the
shareholder, his address, the number of shares as to which he seeks relief and
the amount claimed as the fair cash value thereof.
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A vote against adoption of the merger agreement will not satisfy the
requirements of a written demand for payment as described above. Any written
demand for payment should be mailed or delivered to UNB Corp., 220 Market Avenue
South, Canton, Ohio 44702, Attention: Secretary.
If UNB sends to a dissenting shareholder, at the address specified in his
written demand, a request for the certificates representing the shares as to
which he seeks relief, the dissenting shareholder must within fifteen days
thereafter deliver the certificates requested. UNB will then endorse the
certificates with a legend to the effect that a demand for the fair cash value
of the shares represented thereby has been made and promptly return such
certificates to the dissenting shareholder. Failure on the part of the
dissenting shareholder to deliver such certificates terminates his rights as a
dissenting shareholder, at the option of UNB, exercised by written notice of
such termination delivered to him within twenty days after the expiration of the
fifteen-day period, unless a court, for good cause shown, otherwise directs.
Nevertheless, upon such termination, a holder of BancFirst shares will be
entitled to receive the shares of UNB common stock issuable to him pursuant to
the merger agreement.
Unless the dissenting shareholder and UNB agree on the fair cash value per share
as to which relief is sought, either may, within three months after service of
the shareholder's written demand, file a complaint in the Court of Common Pleas
of Stark County, Ohio. If the court finds that the shareholder is entitled to be
paid the fair cash value of any shares, the court may appoint one or more
appraisers to receive evidence and to recommend a decision on the amount of the
fair cash value.
Fair cash value will be determined as of the day prior to the applicable special
meeting, will be the amount a willing seller and willing buyer would accept or
pay with neither being under the compulsion to sell or buy, will not exceed the
amount specified in the shareholder's written demand, and will exclude any
appreciation or depreciation in the market value resulting from the merger. The
court will make a finding as to the fair cash value of a share and render
judgment against UNB for its payment with interest at such rate and from such
date as the court considers equitable. The cost of the proceedings, including
reasonable compensation to the appraisers to be fixed by the court, shall be
assessed or apportioned as the court considers equitable.
The rights of any dissenting shareholder will terminate if (a) he has not
complied with Section 1701.85 of the Ohio Revised Code, unless UNB by action of
its board of directors waives such failure, (b) UNB abandons or is finally
enjoined or prevented from carrying out the merger or the shareholders rescind
their adoption of the merger agreement, (c) the shareholder withdraws his
demand, with the consent of UNB by action of its board of directors, or (d) UNB
and the dissenting shareholder shall not have come to an agreement as to the
fair cash value per share, and neither UNB nor the shareholder shall have timely
filed or joined in a complaint in an appropriate court for a determination of
the fair cash value of the shares.
Because a proxy which does not contain voting instructions will, unless revoked,
be voted FOR adoption of the merger agreement, a shareholder who wishes to
exercise his dissenters' rights must either not sign or return his proxy or, if
he signs his proxy, vote against or abstain from voting on adoption of the
merger agreement.
ARTICLES OF INCORPORATION AND CODE OF REGULATIONS
49
The Articles of Incorporation and the Code of Regulations of UNB as amended and
restated will be the governing documents of UNB after the merger. The amended
and restated Articles of Incorporation and Code of Regulations were agreed upon
by UNB and BancFirst in the merger agreement. Ohio law permits a merger
agreement to include the Articles of Incorporation and Code of Regulations (or
amendment thereto) of the surviving corporation. Shareholders of UNB and
BancFirst will be approving the amended and restated Articles of Incorporation
and Code of Regulations of UNB by adopting the merger agreement.
INDEMNIFICATION AND INSURANCE. UNB has agreed to indemnify, defend and hold
harmless those directors, officers and employees of BancFirst or any of its
subsidiaries who held such positions prior to the completion of the merger
against all expenses, judgments, fines, losses, claims, damages or liabilities
arising from acts or omissions occurring at or before the effective date, to the
fullest extent permitted by Ohio law.
UNB has also agreed that, for a period of six years from the effective date of
the merger, it will use its reasonable best efforts to provide directors' and
officers' insurance for the present and former officers and directors of
BancFirst with respect to claims arising from events occurring prior to the
effective date. The insurance provided by UNB must contain at least the same
coverage and amounts with terms and conditions no less advantageous than
BancFirst's current policy; provided, however, that UNB is not required to
expend more than 300% of the current amount expended by BancFirst to maintain or
obtain that insurance coverage. If UNB cannot maintain or obtain the required
insurance coverage within the 300% limit, it is required to use its reasonable
best efforts to obtain as much comparable insurance as is available for that
amount. Finally, if UNB merges into or consolidates with any other entity or
sells substantially all its assets to another entity, UNB must cause its
successors or assigns to assume these obligations.
DESCRIPTION OF UNB COMMON STOCK
UNB's authorized capital stock consists of 50 million shares of common stock,
without par value. Upon completion of the merger, UNB's authorized capital stock
will be increased from 50 million shares of common stock to 100 million shares
of common stock. As of August 31, 2001, a total of 10,487,094 shares of UNB
common stock were outstanding. UNB expects to issue 11,582,930 shares of UNB
common stock in the merger.
Holders of UNB common stock are entitled to dividends out of funds legally
available for that purpose when, as, and if declared by UNB's board of
directors.
In the case of any liquidation, dissolution or winding up of the affairs of UNB,
holders of UNB common stock would be entitled to receive, pro rata, any assets
distributable to common shareholders in proportion to the number of shares held
by them.
All outstanding shares of UNB common stock are, and the shares to be issued
pursuant to the merger will be, when issued, fully paid and non-assessable.
STOCK OPTION AGREEMENTS
The following is a summary of certain provisions of stock option agreements.
This summary is subject to, and qualified in its entirety by, the complete text
of the stock option agreements,
50
which are incorporated by reference and attached as Appendix B-1 and Appendix
B-2 to this document.
In connection with the execution and delivery of the merger agreement, UNB and
BancFirst entered into:
- the BancFirst stock option agreement, under which BancFirst granted to
UNB an irrevocable option to purchase up to 1,302,533 shares of
BancFirst common stock at a price of $20.95 per share; and
- the UNB stock option agreement, under which UNB granted BancFirst an
irrevocable option to purchase up to 1,561,064 shares of UNB common
stock at a price of $18.50 per share.
Exercise of the Options.
Among other conditions, the UNB stock option and the BancFirst stock option are
each only exercisable upon the occurrence of a Purchase Event. A "Purchase
Event" will occur if:
- Without the prior written consent of the party holding the option, the
party granting the option has authorized, recommended or
publicly-proposed, or publicly announced an intention to authorize,
recommend or propose, or entered into an agreement with any third
person to effect (A) a merger, consolidation or similar transaction
involving the party granting the option or any of its subsidiaries,
(B) the disposition, by sale, lease, exchange or otherwise, of assets
of the party granting the option or any of its subsidiaries
representing in either case 25% or more of its consolidated assets, or
(C) the issuance, sale or other disposition of (including by way of
merger, consolidation, share exchange or any similar transaction)
securities representing 20% or more of the voting power of party
granting the option or any of its subsidiaries (any of the foregoing
an "Acquisition Transaction"); or
- Any third person or group shall have acquired beneficial ownership of
or the right to acquire beneficial ownership of 20% or more of the
then outstanding shares of the party granting the option.
Expiration of the Options
Pursuant to each stock option agreement, each option will expire upon the
earliest of: (i) consummation of the merger; (ii) termination of the merger
agreement in accordance with its terms prior to the occurrence of a Purchase
Event (as defined above) or a Preliminary Purchase Event (as defined below);
(iii) if the party granting the option has defaulted in its obligations under
the merger agreement, 12 months after the termination of the merger agreement by
the party holding the option; and (iv) 12 months after termination of the merger
agreement following the occurrence of a Purchase Event or a Preliminary Purchase
Event regardless of whether the granting party is in default. A "Preliminary
Purchase Event" will occur if:
- A third person has commenced a tender or exchange offer, or has filed
a registration statement under the Securities Act with respect
thereto, for purchase of any of the granting party's shares such that,
upon consummation of such offer, such person
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would own or control 15% or more of the granting party's then
outstanding shares (such an offer being referred to as a "Tender
Offer" and an "Exchange Offer," respectively); or
- (A) The merger agreement is not approved by the granting party's
shareholders, or (B) a meeting for such purpose is not held or is
canceled prior to termination of the merger agreement or (C) granting
party's board of directors has withdrawn or significantly modified its
recommendation to vote for the merger agreement; in each case after it
has been publicly announced that a third person has (x) made, or
disclosed an intention to make, a proposal to engage in an Acquisition
Transaction, (y) commenced a Tender Offer or filed a registration
statement under the Securities Act with respect to an Exchange Offer,
or (z) filed an application (or given notice), whether in draft or
final form, under an applicable banking law for approval to engage in
an Acquisition Transaction; or
- The party granting the option has defaulted in its obligations under
the merger agreement entitling the other party to terminate the merger
agreement in accordance with its terms after (x) a bona fide proposal
is made by any third person to granting party or its shareholders to
engage in an Acquisition Transaction, (y) any third person states its
intention to the granting party or its shareholders to make a proposal
to engage in an Acquisition Transaction if the merger agreement
terminates or (z) any third person has filed an application or notice
with any applicable governmental entity to engage in an Acquisition
Transaction.
Neither party may exercise its option at any time when it is in material breach
of the merger agreement such that the other party would be entitled to terminate
the merger agreement pursuant to its terms.
Manner of Exercise
If an option becomes exercisable, the party holding the option may exercise it
in whole or in part by giving notice following the applicable purchase event and
prior to the expiration of the option. The right to exercise the options and
certain other rights under the stock option agreement are subject to an
extension to obtain required regulatory approvals and comply with applicable
regulatory waiting periods. The application filed with the Federal Reserve Board
for approval of the merger included a request for approval of the exercise of
each Stock Option Agreement pursuant to its terms. See "The Merger" and the
"Merger Agreement - Regulatory Approval".
Repurchase and Surrender of the Option
The stock option agreements also provide that at any time after the occurrence
of a "Repurchase Event," and upon a request delivered by the holder of the
option before the option expires, the party granting the option must repurchase
the option and all or any part of the shares received upon the full or partial
exercise of the option ("Option Shares"). The term "Repurchase Event" means the
sale of assets of the party granting the option representing more than 50% of
its consolidated assets or the merger of the party granting the option with a
third party in which the party granting the option is not the survivor or its
shareholders own less than 50% of the outstanding shares of the survivor after
the merger.
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The repurchase of an option by the party granting the option will be at a price
equal to the amount by which the "Applicable Price" exceeds the option price
multiplied by the number of shares for which the option may be exercised. A
repurchase of Option Shares will be at a price per share equal to the purchase
price paid by the party holding the option. The term "Applicable Price" means
the highest of (1) the highest price paid per share of common stock of the party
granting the option in connection with the acquisition of 50% or more of such
party's outstanding common stock, (2) the price per share of common stock of the
party granting the option received by its shareholders in connection with a
merger or business combination, or (3) the highest closing sales price per share
of common stock of the party granting the option on the Nasdaq Stock Market
during the 60 business days immediately preceding the date that notice of the
required repurchase is given.
The stock option agreements limit the total profit that the holder of an option
may realize in connection with the sale of the Option Shares or the repurchase
of the option to $11 million dollars. If a Repurchase Event occurs and the total
profit realized by the holder of an option from the sale of the Option Shares or
the repurchase of the option is less than $8 million, the party granting the
option is obligated to pay the holder the amount by which $8 million exceeds the
holder's total profit.
If, before an option expires: (1) the party granting the option enters into a
transaction in which it is not the surviving corporation, (2) as a result of a
merger or plan of exchange, the capital stock of the party granting the option
is exchanged for securities of any other entity or into cash or any other
property or represents less than 50% of the outstanding shares and share
equivalents of the merged or acquiring company, or (3) the party granting the
option sells all or a substantial part of its or its subsidiaries' assets; the
option shall be converted into a substitute option, with terms similar to those
of the option, to purchase capital stock of the entity that acquires or is the
effective successor to the party granting the option or any entity that controls
such acquiring or successor entity.
Adjustment for Certain Events
The number of shares issuable upon exercise of each option (the "option shares")
is subject to adjustment in the event that any shares of the granting party are
issued or otherwise become outstanding or are redeemed, repurchased or retired
or otherwise cease to be outstanding after the date of the option agreement so
that after such action the number of option shares equals 14.9% of the number of
shares of granting party's then outstanding shares (without giving effect to any
shares issued or issuable upon exercise of the option). In addition, the number
of shares subject to each option will be adjusted in the event of any change in
the number of shares of granting party's then outstanding shares by reason of
any stock dividend, stock split, split-up, recapitalization, combination,
exchange of shares or similar transaction.
Objectives of the Stock Option Agreement
The objectives of the stock option agreements include:
- increasing the likelihood that the merger will be completed in
accordance with the terms set forth in the merger agreement; and
53
- compensating the party holding the option for its expenses, losses,
and opportunity costs incurred if the merger is not completed in the
event a third person seeks to acquire control of the party granting
the option while the merger is pending.
The existence of the options could significantly increase the cost to a
potential third party purchaser of acquiring UNB or BancFirst compared to the
cost had UNB and BancFirst not entered into the stock option agreements. As a
result, the stock option agreements may have the effect of discouraging offers
by third parties to acquire UNB or BancFirst, even if such a third party was
prepared to offer to pay consideration to BancFirst shareholders that has a
higher current market value than the shares of UNB common stock to be received
by BancFirst shareholders pursuant to the merger agreement, or a consideration
for UNB shares in excess of the current market value of the BancFirst shares for
which they are to be exchanged.
To the best knowledge of UNB and BancFirst, as of the date of this joint proxy
statement and prospectus, no event creating a right to exercise either option
has occurred.
COMPARISON OF SHAREHOLDERS' RIGHTS
Both UNB and BancFirst are Ohio corporations and the rights of their respective
shareholders are governed by Ohio law. Nevertheless, the shareholders of UNB and
BancFirst are subject to certain different corporate governance requirements
under the respective Articles of Incorporation and Code of Regulations of UNB
and BancFirst. Upon completion of the merger, UNB's Articles of Incorporation
and Code of Regulations, as amended and restated, will govern the continuing
corporation. The following discussion compares BancFirst's Articles of
Incorporation and Code of Regulations to UNB's Articles of Incorporation and
Code of Regulations as currently in effect and as amended and restated pursuant
to the merger agreement (the "Restated Articles of Incorporation" and the
"Restated Code of Regulations"). The following summary is not intended to be
complete and is qualified by reference to the Articles of Incorporation and Code
of Regulations of BancFirst, the Articles of Incorporation and Code of
Regulations of UNB as currently in effect and the Restated Articles of
Incorporation and the Restated Code of Regulations of UNB. Copies of these
documents are available upon request. See "Where You Can Find More Important
Information" below.
AUTHORIZED CAPITAL
The authorized capital stock of BancFirst consists of 20 million shares of
common stock. On the record date, there were ______ shares of BancFirst common
stock outstanding.
The authorized capital stock of UNB consists of 50 million shares of common
stock. On the record date, there were ______ shares of UNB common stock
outstanding.
After the merger, the authorized capital stock of UNB will consist of 100
million shares of common stock without par value.
VOTING AND PREEMPTIVE RIGHTS
Holders of UNB common stock and BancFirst common stock are entitled to one vote
for each share on each matter submitted for shareholder action, except that
BancFirst shares have cumulative voting rights in the election of directors.
Holders of UNB common stock and
54
BancFirst common stock have no preemptive rights. After the merger,
shareholders will have cumulative voting rights in the election of directors but
will not have preemptive rights to purchase or subscribe to shares. When shares
are voted cumulatively, you multiply the number of shares you own by the number
of directors to be elected to determine the total number of votes you may cast.
You may give any one or more of the nominees any portion of the total number of
your votes.
SIZE AND CLASSIFICATION OF THE BOARD OF DIRECTORS
The board of directors of each of UNB and BancFirst is divided into three
classes, as nearly equal in number as possible. The directors serve three year
terms. The term of office of one class of directors expires each year. The
number of directors of BancFirst may not be less than nine nor more than fifteen
with the exact number to be fixed by resolution adopted by the affirmative vote
of the holders of a majority of the outstanding common stock. Currently,
BancFirst's board of directors is composed of nine members. Under UNB's Code of
Regulations, the number of directors is fixed at fourteen until changed by the
affirmative vote of a majority of the board of directors. UNB's board of
directors is currently fixed at thirteen.
After the merger, the board of directors will continue to be divided into three
classes, with directors in each class serving staggered three-year terms, so
that directors of only one class are elected each year. The Restated Code of
Regulations fixes the number of directors at fourteen. Prior to December 31,
2005, the size of the board of directors may be changed by the affirmative vote
of three-fourths of the directors then in office, and thereafter by the holders
of a majority of the shares present in person or by proxy at a meeting called
for the purpose of electing directors.
REMOVAL OF DIRECTORS
Because BancFirst's Code of Regulations contains no express provision with
respect to the removal of directors, Ohio law governs the removal of BancFirst
directors. Under Ohio law, all the directors may generally be removed without
cause by the vote of the holders of a majority of the voting power of the
corporation. A single director may be removed without cause by the vote of the
holders of a majority of the corporation unless sufficient votes are cast
against his removal as would be sufficient to elect one director if voted
cumulatively.
Under UNB's current Code of Regulations, a director may be removed from office
at any time without cause, by vote of the holders of three-fourths of the
outstanding common stock.
After the merger, the removal of a director will continue to require the vote of
the holders of three-fourths of the outstanding common stock, except as
otherwise provided by law.
SHAREHOLDER NOMINATIONS OF DIRECTORS
Under BancFirst's Code of Regulations, director nominations at any annual
meeting of shareholders or at any special meeting of shareholders called for
election of directors may be made by BancFirst's board of directors, or by a
shareholder who is entitled to vote at the meeting under the following
circumstances.
A BancFirst shareholder may make a nomination at a meeting called for the
election of directors if, and only if, the shareholder has delivered a notice
both to the President of BancFirst and to the
55
Chairman of the Federal Reserve Board setting forth with respect to each
proposed nominee: (1) the nominee's name and address; (2) the nominee's
principal occupation; (3) the number of shares of BancFirst capital stock that
are owned by the notifying shareholder; (4) the name and address of the
notifying shareholder and (5) the total number of shares of BancFirst that will
be voted for the proposed nominee or nominees. The notice must be delivered not
less than 14 days before the date of the election meeting and not more than 50
days prior to the election meeting.
Neither UNB's current Articles of Incorporation nor its current Code of
Regulations contain provisions specifically dealing with shareholder nominations
of directors.
The Restated Code of Regulations of UNB which will be in effect after the merger
contains provisions regarding shareholder nominations of directors that are
substantially identical to those of BancFirst's Code of Regulations.
SHAREHOLDER PROPOSALS
There are no provisions in the Articles of Incorporation or Code of Regulations
of BancFirst or UNB or in the Restated Articles of Incorporation or Restated
Code of Regulations specifically dealing with shareholder proposals.
APPROVAL OF MERGERS, CONSOLIDATIONS AND SALE OF ASSETS
The Articles of Incorporation of BancFirst require a merger, consolidation or
substantial asset sale involving BancFirst to be approved by the vote of the
holders of a majority of its outstanding common stock, unless the transaction is
a "business combination" with a person or entity owning 10% or more of
BancFirst's common stock. "Business combination" includes any merger,
consolidation, share exchange, sale of assets, stock issuance, liquidation or
reclassification of securities. The Articles of Incorporation of UNB require the
vote of the holders of two-thirds of its outstanding common stock to approve any
merger, consolidation or substantial asset sale, unless the transaction is a
business combination with a person or entity owning 10% or more of UNB's common
stock. The BancFirst Articles of Incorporation require a business combination
with a 10% shareholder to be approved by the vote of the holders of
three-fourths of its outstanding common stock unless (i) the business
combination has been approved by two-thirds of the Continuing Directors
(generally the directors who are unaffiliated with the 10% shareholder) or (ii)
certain "fair price" provisions are satisfied. Unless certain "fair price"
provisions are satisfied or the business combination with the 10% shareholder is
approved by a majority of Continuing Directors, the Articles of Incorporation of
UNB requires a business combination with a 10% shareholder to be approved by the
affirmative vote of the holders of (i) three-fourths of its outstanding common
stock and (ii) two-thirds of its outstanding common stock excluding the shares
owned by the 10% shareholder.
The Restated Articles of Incorporation of UNB will require a merger,
consolidation or substantial asset sale not involving a 10% shareholder to be
approved by the affirmative vote of the holders of two-thirds of its outstanding
common stock. A business combination with a 10% shareholder will require the
affirmative vote of the holders of (i) three-fourths of UNB's outstanding common
stock and (ii) two-thirds of UNB's outstanding common stock, excluding
56
the shares owned by the 10% shareholder, unless (i) the business combination has
been approved by two-thirds of the Continuing Directors or (ii) certain "fair
price" provisions are satisfied.
AMENDMENT OF ARTICLES OF INCORPORATION AND CODE OF REGULATIONS
The Articles of Incorporation of BancFirst may be amended by the vote of the
holders of shares entitling them to exercise a majority of the voting power of
the corporation, except for the amendment of the provisions relating to the
indemnification of directors and officers and to business combinations with 10%
shareholders, which will require the vote of the holders of three-fourths of the
outstanding common stock. To amend the Code of Regulations of BancFirst requires
the vote of the holders of a majority of the outstanding common stock of
BancFirst. The Articles of Incorporation of UNB may be amended by the vote of
the holders of two-thirds of the outstanding shares of its common stock, except
for the amendment of the provisions relating to business combinations with a 10%
shareholder, which will require the vote of the holders of (i) three-fourths of
its outstanding common stock and (ii) two-thirds of its outstanding common
stock, excluding the shares owned by the 10% shareholder, unless the amendment
is approved by a majority of the Continuing Directors. The Code of Regulations
of UNB may be amended by the vote of the holders of a majority of its
outstanding common stock.
To amend the Restated Articles of Incorporation of UNB which will be in effect
after the merger requires the vote of the holders of two-thirds of its
outstanding common stock, except for the amendment of the provisions relating to
indemnification of directors and officers, business combinations with 10%
shareholders and the vote required to amend such indemnification and business
combination provisions, which will require the vote of the holders of
three-fourths of its outstanding common stock. The Restated Code of Regulations
of UNB may be amended by the vote of the holders of a majority of its
outstanding common stock, except that no amendment prior to December 31, 2005,
which would conflict with the provisions relating to the number or
classification of directors, nominees for election to the board of directors,
the composition of committees of the board or the removal of certain executive
officers will be effective unless approved by the vote of (i) three-fourths of
the directors then in office and (ii) the holders of a majority of its common
stock.
SHAREHOLDER RIGHTS AGREEMENT
UNB entered into a Rights Agreement on October 15, 1998 for the benefit of the
holders of its common stock. Pursuant to the Rights Agreement, each outstanding
share of UNB common stock entitles the record holder to one Right to purchase
one share of UNB common stock if either of the following occur:
- there is a public announcement that a person or group of
affiliated or associated persons (excluding, among other persons,
UNB, any subsidiary of UNB or any employee benefit plan of UNB or
any such subsidiary) have acquired beneficial ownership of 15% or
more of the outstanding UNB common stock (an "Acquiring Person")
other than pursuant to certain permitted offerings; or
- there is commencement of, or announcement of an intention to make,
a tender offer or exchange offer the consummation of which would
result in a person or group becoming an Acquiring Person.
57
Within 10 business days following the occurrence of one of the foregoing events,
separate Right certificates will be issued evidencing the rights associated with
each such share, and thereafter the Rights will be transferable pursuant to the
Right certificates separately from the common stock. Until then, the Rights are
transferable only with the associated shares of UNB common stock.
Following the distribution of Right certificates, each Right will be exercisable
to purchase one share of UNB common stock for $60.00. Once a person becomes an
Acquiring Person by acquiring beneficial ownership of 15% or more of UNB's
outstanding common stock, the rights would permit holders of UNB common stock,
other than the Acquiring Person, to purchase for $60.00 additional shares of UNB
common stock having a then market value of $120.00. In addition, if, after any
person has acquired such beneficial ownership, (i) UNB is involved in a merger
or other business combination with the Acquiring Person or (ii) UNB sells or
otherwise transfers assets or earning power aggregating more than 50% of the
assets or earning power of UNB to the acquiring person, then each right will
entitle the holder to purchase for $60.00 a number of shares of common stock of
the other party to such business combination or sale having a then market value
of $120.00.
The shares of UNB common stock to be issued in the merger will be issued with
these Rights, and the stock certificates evidencing the common stock will
contain a legend referring to the Rights Agreement. The Rights will expire on
October 26, 2008 unless extended or earlier redeemed pursuant to the terms of
the Rights Agreement.
STATE ANTI-TAKEOVER LAWS
CONTROL SHARE ACQUISITION STATUTE
Ohio has enacted a control share acquisition statute which provides that any
acquisition of at least twenty percent (20%) of the voting power of a
corporation, by tender offer or otherwise, including open market purchases,
shall be made only with the prior authorization of the shareholders of the
corporation after the corporation has received an acquiring person's statement
at the corporation's executive offices. Within 10 days after the receipt of the
acquiring person's statement, the board of directors of the corporation is
required to call a special meeting of shareholders to vote on the acquisition
within 50 days of the receipt of the acquiring person's statement. The
acquisition must be approved by the holders of a majority of the outstanding
voting shares of the corporation represented at such meeting and by the holders
of a majority of the portion of such shares outstanding excluding the shares of
the acquiring person, and must be consummated within 360 days after shareholder
approval. Thus, because of this statute, it may be more difficult for persons
seeking to acquire more than twenty percent (20%) of stock to do so.
MERGER MORATORIUM STATUTE
The Ohio Merger Moratorium Statute governs business combinations and other
transactions between an Ohio public company (such as UNB and BancFirst) and an
"interested shareholder." An interested shareholder is a person who beneficially
owns or has the right to vote 10% or more of the company's outstanding shares
and who acquired the shares or voting rights without the prior approval of its
board of directors. For three years after a person becomes an interested
58
shareholder, the following transactions between the company and the interested
shareholder or persons related to that shareholder are prohibited:
- the sale or merger of any interest in assets;
- mergers and similar transactions;
- a voluntary dissolution;
- the issuance or transfer of shares or any rights to acquire
shares in excess of 5% of the company's outstanding shares;
- a transaction that increases the interested shareholder's
proportionate ownership of the company; and
- any other benefit that is not shared proportionately by all
shareholders.
After three years, transactions between the company and an interested
shareholder generally require:
- approval by at least two-thirds shareholder vote, and by a
majority of shares not owned or controlled by the interested
shareholder; or
- satisfaction of the statutory fair price requirements that apply
to shares held by persons other than the interested shareholder.
INTERESTS OF CERTAIN DIRECTORS AND
EXECUTIVE OFFICERS IN THE MERGER
UNB CHANGE IN CONTROL AGREEMENTS
UNB has severance agreements with Roger L. Mann, James J. Pennetti, Leo E.
Doyle, Robert M. Sweeney and Scott E. Dodds which entitle each of them to
receive severance benefits in the event of the termination of his employment by
UNB other than for "cause" (as defined therein) or his resignation in response
to a reduction in responsibilities, authority, position or compensation or
relocation of his place of work within three years following a change in
control. In addition, each of them is entitled to receive severance benefits if
he resigns in response to a change in control during the ninety day period
beginning six months after a change in control of UNB.
Upon such termination of employment, UNB would be obligated to make a lump sum
payment to the terminated officer equal to 300% of (i) his then current base
salary, plus (ii) the average of the bonuses or incentive compensation awarded
for the three calendar years immediately preceding the year in which the change
in control occurred. In addition, each would be entitled to receive an
additional payment (the "gross up") sufficient to cover any tax imposed by
Section 280G of the Internal Revenue Code on the severance payments or other
benefits. UNB would also be required to continue to provide life, health and
insurance coverage for a period of 36 months following such termination of
employment. The merger constitutes a change in control under the severance
agreements.
59
The United National Bank & Trust Co. has salary continuation agreements with
Messrs. Mann, Pennetti, Doyle and Dodds that provide supplementary retirements
upon retirement at or after normal retirement age. The payment of these
supplemental retirement benefits is accelerated upon termination of employment
within three years following a change in control of UNB. No benefits are payable
under the salary continuation agreements if the officer's employment is
terminated for "cause" (as defined in the severance agreements) or he is removed
from office pursuant to an order issued under the Federal Deposit Insurance Act,
or if a receiver is appointed for the bank under the Federal Deposit Insurance
Act or the Federal Deposit Insurance Corporation enters into an agreement to
provide assistance to the bank under the Federal Deposit Insurance Act. If an
officer becomes entitled to receive benefits upon termination of employment
following a change in control such as the merger, the bank would be obligated to
make a lump sum payment of $1,441,874 to Mr. Mann, $652,190 to Mr. Pennetti,
$668,473 to Mr. Doyle and from $311,000 to $326,280 to Mr. Dodds, depending upon
the year in which such termination of employment occurred. Each of Messrs. Mann
and Pennetti has agreed to waive his right to receive benefits under the
severance and salary continuation agreements if he voluntarily terminates his
employment following the merger for any reason other than a reduction in
responsibilities, authority or compensation or relocation of his place of work.
BANCFIRST EXECUTIVE RETENTION PLAN
Certain BancFirst executives participate in an Executive Retention Plan, the
purpose of which is to retain executives in the management of BancFirst through
a change in control. Participating executives who remain in employment through a
change in control will be entitled to a severance benefit if their employment is
terminated within 24 months after the change in control. For this purpose,
termination includes a severance of employment, a reduction in base salary, a
material reduction in fringe benefits, or a material breach by the company of
any employment related agreement with the executive. The merger will constitute
a change in control within the meaning of the Executive Retention Plan. The
severance benefit is the smaller of 200 percent of annual base salary or the
maximum amount that may be paid without incurring an excise tax imposed by
section 280G or 4999 of the Internal Revenue Code. Participating executives
include Gary N. Fields, James H. Nicholson, Edward N. Cohn, Kim M. Taylor, James
B. Baemel, Gary L. McGlaughlin and Thomas J. Selock.
STOCK OPTIONS
Under the terms of UNB's stock option plans, certain previously awarded but
unvested stock options and performance units will vest at the time the merger is
completed. The vesting of stock options for shares of UNB common stock granted
to Messrs. Mann, Pennetti, Doyle, Sweeney and Dodds would accelerate as to
138,422 shares, 71,351 shares, 58,057 shares, 5,800 shares and 35,970 shares,
respectively.
On October 5, 2001, the compensation committee of BancFirst's board of directors
took action modifying outstanding, unvested awards under BancFirst's 1997
Omnibus Stock Incentive Plan and amending BancFirst's 1997 Bonus Shares Program
to vest awards and matching bonus shares thereunder upon the effective time of
the merger in order to retain employees through the merger and to correct
differences between BancFirst's employee stock programs and UNB employee stock
programs after the merger. UNB consented to the action taken.
60
SECURITY OWNERSHIP
UNB SHARE OWNERSHIP INFORMATION
The following table sets forth information as of August 31, 2001 with respect to
each person known to UNB to be beneficial owners of more than 5% of UNB's
outstanding common stock.
Name and Address Number of Shares Percent of Class
---------------- ---------------- ----------------
The United National Bank & Trust Co., Trustee 1,953,818(1) 18.6%
220 Market Avenue South
Canton, Ohio 44702
-----------------
(1)Has sole investment power as to ______ shares, sole voting power as to ______
shares, shared investment power as to ______ shares and shared voting power as
to _______ shares.
The following table sets forth information as of August 31, 2001 with respect to
the shares of UNB common stock owned beneficially by each director, each of the
named executive officers and all directors and executive officers of UNB as a
group.
Name Number of Shares(1) Percent of Class
Louis V. Bockius, III 81,528(1) (3)
E. Lang D'Atri 77,444(1) (3)
Roger L. DeVille 59,754 (3)
Scott E. Dodds 12,340 (3)
Leo E. Doyle 98,979 (3)
Robert J. Gasser 136,873(1) 1.30%
Nan B. Johnston 4,572 (3)
Edgar W. Jones, Jr. 170,333(2) 1.62%
Russell W. Maier 25,432 (3)
Robert L. Mang 263,989 2.51%
Roger L. Mann 47,373 (3)
James Pennetti 115,556 1.10%
E. Scott Robertson 12,928 (3)
Marc L. Schneider 39,210 (3)
61
Robert M. Sweeney 106,881 1.01%
George M. Smart 5,456 (3)
Jane M. Timken 2,071 (3)
All Directors and Executive Officers as a Group 1,260,719 12.02%
---------------
(1)Includes shares subject to options exercisable within 60 days by Mr. Bockius
as to 3,000 shares, Mr. D'Atri as to 6,000 shares, Mr. DeVille as to 2,000
shares, Mr. Dodds as to 10,313 shares, Mr. Doyle as to 37,175 shares, Mr. Gasser
as to 4,400 shares, Mrs. Johnston as to 4,400 shares, Mr. Jones as to 6,000
shares, Mr. Maier as to 5,400 shares, Mr. Mang as to 142,472 shares, Mr. Mann as
to 37,842 shares, Mr. Pennetti as to 65,789 shares, Mr. Robertson as to 4,400
shares, Mr. Schneider as to 4,400 shares, Mr. Sweeney as to 71,879 shares, Mr.
Smart as to 2,000 shares and Mrs. Timken as to 2,000 shares.
(2)Includes 10,332 held in trust as to which Mr. Jones has voting power.
(3)Percentage ownership is less than 1%.
BANCFIRST SHARE OWNERSHIP INFORMATION
The following table sets forth information as of September 30, 2001 with respect
to each person known to BancFirst to be beneficial owners of more than 5% of
BancFirst's outstanding common stock.
Name and Address Number of Shares Percent of Class
---------------- ---------------- ----------------
First Financial Services Group, N.A., Trustee 685,052(1) 7.84%
422 Main Street
Zanesville, Ohio 43702-2668
J. W. Straker, Sr. 500,000 5.72%
4120 Harbor Oaks Court
Bonita Springs, Florida 34134
---------------
(1)Has sole investment power as to 282,373 shares and sole voting power as to
127,740 shares.
The following table sets forth information as of September 30, 2001 with respect
to the shares of BancFirst common stock beneficially owned by each director, the
five most highly compensated executive officers and all directors and executive
officers as a group.
62
Name Number of Shares Percent of Class
---- ---------------- ----------------
Phillip E. Burke 20,149 (2)
Gary N. Fields 68,079(1) (2)
James M. Matesich 6,132 (2)
James L. Nichols 16,797 (2)
James H. Nicholson 64,143(1) (2)
William F. Randles 30,109 (2)
Karl C. Saunders 26,594 (2)
William T. Stewart 37,682 (2)
John W. Straker, Jr. 510,984 5.85%
Edward N. Cohn 66,627(1) (2)
Kim M. Taylor 30,821(1) (2)
Gary L. McLaughlin 33,890(1) (2)
All Directors and Executive Officers as a Group 957,162 10.95%
(21 Persons)
---------------
(1)Includes shares subject to options exercisable within 60 days by Mr. Fields
as to 43,365 shares, Mr. Nicholson as to 42,813 shares, Mr. Cohn as to 37,340
shares, Mr. Taylor as to 15,294 shares and Mr. McLaughlin as to 14,324 shares.
(2)Percentage ownership is less than 1%.
EXPERTS
The consolidated financial statements of UNB at December 31, 2000 and 1999, and
for each of the three years in the period ended December 31, 2000, incorporated
by reference in this document and elsewhere in the Registration Statement of
which this document is a part, have been audited by Crowe, Chizek and Company
LLP, independent auditors, as stated in their report and are incorporated by
reference in this document in reliance upon the report of such firm given upon
their authority as experts in accounting and auditing.
The consolidated financial statements of BancFirst at December 31, 2000 and
1999, and for each of the three years in the period ended December 31, 2000,
incorporated by reference in this joint proxy statement and prospectus and
elsewhere in the Registration Statement of which this joint proxy statement and
prospectus is a part, have been audited by PricewaterhouseCoopers LLP,
independent accountants, as set forth in their report and are incorporated by
reference in this
63
document in reliance upon such report given on the authority of that firm as
experts in accounting and auditing.
LEGAL OPINIONS
Certain legal matters in connection with the proposed merger will be passed upon
for UNB by Black, McCuskey, Souers & Arbaugh of Canton, Ohio, and for BancFirst
by Bricker & Eckler LLP of Columbus, Ohio.
WHERE YOU CAN FIND MORE INFORMATION
UNB has filed a registration statement on Form S-4 to register with the
Securities and Exchange Commission ("SEC") the offering of UNB common stock to
be issued by UNB in the merger. This joint proxy statement and prospectus is a
part of that registration statement. As allowed by Securities and Exchange
Commission rules, this joint proxy statement and prospectus does not contain all
of the information contained in the registration statement or the exhibits to
the registration statement. This means that this joint proxy statement and
prospectus incorporates important business and financial information about UNB
and BancFirst that is not included in or delivered with this document.
UNB and BancFirst are subject to the informational requirements of the
Securities Exchange Act of 1934. Accordingly, each files annual, quarterly and
current reports, proxy statements, and other information with the SEC. You may
read and copy any reports, statements, or other information that UNB or
BancFirst files at the SEC's Public Reference Room at 450 Fifth Street N.W.,
Washington, DC 20549. You may call the SEC at 1-800-SEC-0330 for further
information on the operation of the Public Reference Room. UNB's and BancFirst's
SEC filings are also available to the public from commercial document retrieval
services and at the web site maintained by the Securities and Exchange
Commission at HTTP://WWW.SEC.GOV. That web site provides access to reports,
proxy and information statements, and other information regarding companies that
file electronically with the SEC.
The SEC allows UNB and BancFirst to incorporate by reference information into
this joint proxy statement and prospectus. This means that UNB and BancFirst can
disclose important information by referring to another document filed separately
with the SEC. The information incorporated by reference is considered to be part
of this joint proxy statement and prospectus, except for any information
superseded by information in this joint proxy statement and prospectus. This
joint proxy statement and prospectus incorporates by reference the documents set
forth below that UNB and BancFirst have previously filed with the SEC. These
documents contain important information about UNB and BancFirst and their
finances.
UNB SEC Filings (File NO. 0-13270) Period
---------------------------------- ------
Annual Report on Form 10-K Year ended December 31, 2000
Quarterly Reports on Form 10-Q Quarters ended March 31, 2001 and June 30, 2001
64
Current Report on Form 8-K Dated June 15, 2001
Current Report on Form 8-K Dated September 5, 2001
BancFirst SEC Filings (File No. 0-18840) Period
---------------------------------------- ------
Annual Report on Form 10-K Year ended December 31, 2000
Quarterly Reports on Form 10-Q Quarters ended March 31 and June 30, 2001
Current Reports on Form 8-K Filed on September 6, 2001
All documents subsequently filed by UNB and BancFirst with the Securities and
Exchange Commission pursuant to Sections 13(a), 13(c), 14, and 15 of the
Securities Exchange Act of 1934 between the date of this joint proxy statement
and prospectus and the date of the later of the special meeting of shareholders
of UNB or BancFirst are also incorporated by reference into this joint proxy
statement and prospectus.
Documents incorporated by reference are available from UNB and BancFirst without
charge to UNB and BancFirst shareholders. You may obtain documents incorporated
by reference in this joint proxy statement and prospectus by requesting them in
writing or by telephone from the appropriate party at the following addresses:
UNB Corp. BancFirst Ohio Corp.
Attention: Attention:
220 Market Avenue South 422 Main Street
Canton, Ohio 44702 Zanesville, Ohio 43702
Telephone: (330) 438-1212 Telephone: (740) 452-8444
To obtain timely delivery of this information, you must request the information
no later than five business days before the date of the UNB or BancFirst special
meeting at which you are requested to vote.
You should rely only on the information contained or incorporated by reference
in this joint proxy statement and prospectus to vote on the merger. Neither UNB
nor BancFirst has authorized anyone to provide you with information that is
different from what is contained in this joint proxy statement and prospectus.
This joint proxy statement and prospectus is dated as of the date set forth on
the cover page. You should not assume that the information contained in this
joint proxy statement and prospectus is accurate as of any date other than that
date, and neither the mailing of this joint proxy statement and prospectus to
you nor the issuance of UNB common stock in the merger will create any
implication to the contrary.
65
UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS
The following statements contain selected consolidated financial information for
UNB and BancFirst, on an unaudited pro forma condensed combined consolidated
basis giving effect to the merger applying the purchase method of accounting.
The unaudited pro forma condensed combined consolidated balance sheet presents
the combined financial position of UNB and BancFirst as of June 30, 2001 and
assumes the merger was completed on June 30, 2001 and reflects certain
adjustments that are directly attributable to the merger, including the
allocation of the purchase price for the merger.
The pro forma condensed combined consolidated statements of income for the six
months ended June 30, 2001 and the year ended December 31, 2000 assume that the
merger was completed on January 1, 2000.
The unaudited pro forma condensed financial statements have been prepared based
upon currently available information and assumptions deemed appropriate by UNB
and BancFirst. This pro forma information may not be indicative of what actual
results would have been if the merger had been in effect on the dates indicated
or that may be attained in the future. In addition, there may be restructuring
and related merger expenses as well as certain cost savings that will result
from the merger. These expenses and cost savings are not reflected in the pro
forma condensed combined statements of income.
66
U N B C O R P.
BANCFIRST OHIO CORP.
PRO FORMA CONDENSED COMBINED CONSOLIDATED
BALANCE SHEET
(UNAUDITED)
AT JUNE 30,
2001
Historical Historical Pro Forma Footnote Pro Forma
UNB Corp. BancFirst Adjustments Reference Combined
Debit/(Credit)
(In thousands except per share data)
ASSETS
Cash and due from banks $34,325 $32,100 $ -- $66,425
Federal funds sold -- 1,708 -- 1,708
Securities held-to-maturity 3,003 11,808 33 (1) 14,844
Securities available for sale 120,537 312,805 -- 433,342
Loans receivable, net 872,065 1,075,585 23,805 (2) 1,971,455
Premises and equipment, net 11,098 18,313 (438) (3) 28,973
Goodwill 1,834 18,893 71,726 (4) 92,453
Other identified intangible assets 475 1,997 22,614 (5) 25,086
Accrued interest receivable and other assets 35,358 47,751 -- 83,109
TOTAL ASSETS $1,078,695 $1,520,960 $117,740 $2,717,395
LIABILITIES
Deposits $806,891 $1,131,366 ($1,582) (6) $1,939,839
Borrowings 183,697 264,770 (564) (7) 449,031
Accrued taxes, expenses and other liabilities 6,842 12,784 (21,754) (8) 41,380
TOTAL LIABILITIES 997,430 1,408,920 (23,900) 2,430,250
SHAREHOLDERS' EQUITY
Common stock 11,646 87,051 76,638 (9) 22,059
Paid-in capital 28,989 -- (193,133) (9) 222,122
Retained earnings 61,622 44,159 61,622 (9) 44,159
Treasury stock (21,543) (17,975) (39,518) (9) 0
Accumulated other comprehensive income 551 (1,195) 551 (9) (1,195)
TOTAL SHAREHOLDERS' EQUITY 81,265 112,040 (93,840) 287,145
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,078,695 $1,520,960 ($117,740) $2,717,395
U N B C O R P.
BANCFIRST OHIO CORP.
PRO FORMA CONDENSED COMBINED CONSOLIDATED
STATEMENT OF INCOME
(UNAUDITED)
(In thousands except per share data) SIX MONTHS ENDED JUNE 30,
2001
Historical Historical Pro Forma Footnote Pro Forma
UNB Corp. BancFirst Adjustments Reference Combined
Debit/(Credit)
Interest income $41,296 $59,958 $1,717 (1), (2) $99,537
Interest expense 20,640 37,414 (932) (6), (7) 57,122
Net interest income 20,656 22,544 785 42,415
Provision for loan losses 973 960 -- 1,933
Net interest income after provision 19,683 21,584 785 40,482
for loan losses
Non-interest income 7,903 6,836 -- 14,739
Non-interest expense 15,429 16,786 1,348 (3), (5) 33,563
Income before income taxes 12,157 11,634 2,133 21,658
Provision for income taxes 4,139 3,824 (747) (10) 7,216
Income before accounting method changes 8,018 7,810 1,386 14,442
Accounting method change - adoption of 14 -- -- 14
FAS 133
Net Income $8,004 $7,810 $1,386 $14,428
EARNINGS PER SHARE:
Basic $0.77 $0.89
Diluted $0.76 $0.89
PRO FORMA EARNINGS PER COMMON SHARE:
Basic (11) $0.65
Diluted (12) $0.65
(In thousands except per share data) YEAR ENDED DECEMBER 31,
2000
Historical Historical Pro Forma Footnote Pro Forma
UNB Corp. BancFirst Adjustments Reference Combined
Debit/(Credit)
Interest income $80,676 $111,725 $3,434 (1), (2) $188,967
Interest expense 42,740 70,946 (1,864) (6), (7) 111,822
Net interest income 37,936 40,779 1,570 77,145
Provision for loan losses 1,046 1,800 -- 2,846
Net interest income after provision 36,890 38,979 1,570 74,299
for loan losses
Non-interest income 12,627 13,121 -- 25,748
Non-interest expense 27,704 31,617 2,695 (3), (5) 62,016
Income before income taxes 21,813 20,483 4,265 38,031
Provision for income taxes 7,543 6,552 (1,493) (10) 12,602
Income before accounting method changes 14,270 13,931 2,772 25,429
Accounting method change - adoption of -- -- -- --
FAS 133
Net Income $14,270 $13,931 $2,772 $25,429
EARNINGS PER SHARE:
Basic $1.36 $1.67
Diluted $1.35 $1.66
PRO FORMA EARNINGS PER COMMON SHARE:
Basic (13) $1.18
Diluted (14) $1.17
(1) Represents the estimated fair market value adjustment related to the
securities portfolio and is assumed to amortize into interest income on
a level yield basis over the estimated life of the portfolio of 1 year.
(2) Represents the estimated fair market value adjustment related to the
loan portfolio and is assumed to amortize into interest income on a
level yield basis over the estimated life of the portfolio of 7 years.
(3) Represents the estimated fair market value adjustment related to the
office properties and is assumed to amortize on a straight line basis
over the estimated life of the assets of 23 years.
(4) Represents the estimate of the excess of the total direct acquisition
costs over the estimated fair value of the net assets acquired.
(5) Represents the estimate of the core deposit intangibles related to
deposits and is assumed to amortize into non-interest expense on an
accelerated basis over 10 years.
(6) Represents the estimated fair market value adjustment related to
deposits and is assumed to amortize into interest expense on a level
yield basis over the estimated life of the deposits of 1 year.
(7) Represents the estimated fair market value adjustment related to other
borrowings and is assumed to amortize into interest expense on a level
yield basis over the estimated life of the liabilities of 2 years.
(8) Represents accrual of certain acquisition costs of $6,400 and deferred
tax liability of $15,354 on purchase accounting adjustments.
(9) Represents the elimination of UNB Corp. equity on an historical cost
basis and recording of UNB Corp. equity on a market value basis.
(10) Represents the income tax effects of the estimated purchase accounting
adjustments at an estimated tax rate of 35%.
(11) Pro forma basic earnings per share is based on 22,079,393 weighted
average shares outstanding for the six months ended June 30, 2001.
(12) Pro forma diluted earnings per share is based on 22,249,883 weighted
average shares outstanding for the six months ended June 30, 2001.
(13) Pro forma basic earnings per share is based on 21,608,890 weighted
average shares outstanding for the year ended December 31, 2000.
(14) Pro forma diluted earnings per share is based on 21,709,467 weighted
average shares outstanding for the year ended December 31, 2000.
69
Appendix A
AGREEMENT OF MERGER
AND
PLAN OF REORGANIZATION
BY AND BETWEEN
UNB CORP.
THE UNITED NATIONAL BANK & TRUST COMPANY
BANCFIRST OHIO CORP.
AND
THE FIRST NATIONAL BANK OF ZANESVILLE, N.A.
SEPTEMBER 5, 2001
TABLE OF CONTENTS
PAGE
----
Article I. THE MERGERS.....................................................................................1
---------- -----------
Article II. CORPORATE GOVERNANCE OF THE SURVIVING CORPORATION...............................................3
----------- -------------------------------------------------
Article III. EXCHANGE OF SHARE CERTIFICATES..................................................................6
------------ ------------------------------
Article IV. REPRESENTATIONS AND WARRANTIES OF BANCFIRST AND BANCFIRST BANK..................................9
----------- --------------------------------------------------------------
Article V. REPRESENTATIONS AND WARRANTIES OF UNB AND UNB BANK.............................................29
---------- --------------------------------------------------
Article VI. COVENANTS......................................................................................47
----------- ---------
Article VII. ADDITIONAL AGREEMENTS..........................................................................53
------------ ---------------------
Article VIII. CONDITIONS PRECEDENT...........................................................................60
------------- --------------------
Article IX. TERMINATION AND AMENDMENT......................................................................62
----------- -------------------------
Article X. GENERAL PROVISIONS.............................................................................64
---------- ------------------
ANNEX A 1
-------
EXHIBITS
Exhibit 1, Option Agreements...................................................
Exhibit 2, Bank Merger Agreement...............................................
Exhibit 1.5, Articles of Incorporation and Code of Regulations of the
Surviving Corporation..........................................................
Exhibit 2.3, Executive Retention Agreements and Severance Agreements...........
i
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION
THIS AGREEMENT OF MERGER AND PLAN OF REORGANIZATION (this "Agreement")
is made and entered into this 5th day of September, 2001, by and among UNB
Corp., an Ohio corporation ("UNB"); The United National Bank & Trust Company, a
national banking association organized under the laws of the United States of
America ("UNB Bank"); BancFirst Ohio Corp., an Ohio corporation ("BancFirst");
and The First National Bank of Zanesville, N.A., a national banking association
organized under the laws of the United States of America ("BancFirst Bank").
WITNESSETH:
WHEREAS, the Boards of Directors of UNB, UNB Bank, BancFirst and
BancFirst Bank have determined that it is in the best interests of their
respective companies and their respective shareholders to enter into certain
business combination transactions in which BancFirst will merge with and into
UNB (the "Merger"); and BancFirst Bank will merge with and into UNB Bank (the
"Bank Merger") in a merger-of-equals transaction; and
WHEREAS, as an inducement for each to complete such process, UNB and
BancFirst are each granting to the other an option to purchase common shares on
terms and conditions specified in option agreements of even date, attached
hereto as Exhibit 1 (the "Option Agreements");
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, UNB, UNB Bank, BancFirst and
BancFirst Bank, each intending to be legally bound, hereby agree as follows:
ARTICLE I THE MERGERS
1.1 The Mergers.
(a) Subject to the terms and conditions of this Agreement, and pursuant
to the provisions of the Ohio General Corporation Law (the "OGCL") and
applicable federal laws and regulations, BancFirst shall merge with and into UNB
in accordance with the provisions of Section 1701.78 of the OGCL; and the
separate corporate existence of BancFirst shall cease at the Effective Time(1).
UNB shall be the surviving corporation of the Merger (the "Surviving
Corporation") and shall continue its corporate existence under the laws of the
State of Ohio. From and after the Effective Time, the Surviving Corporation
shall possess all assets and property of every description, and every interest
in the assets and property, wherever located, and the rights, privileges,
immunities, powers, franchises and authority, of a public as well as a private
nature, of BancFirst and all obligations belonging or due to BancFirst.
(b) Concurrently with, or as soon as possible after, the Merger, UNB
and BancFirst shall cause the Bank Merger to be completed in accordance with the
Agreement and Plan of Merger attached hereto as Exhibit 2 (the "Bank Merger
Agreement").
--------
(1) All capitalized terms (that are not proper nouns) not defined herein shall
have the meanings ascribed to them in attached Annex A.
1
(c) BancFirst and UNB, by action of their respective Boards of
Directors, may at any time change the method of effecting the combinations of
BancFirst and UNB and BancFirst Bank and UNB Bank (including, without
limitation, the provisions of this Article I) if and to the extent BancFirst and
UNB deem such change to be desirable; provided, however, that no such change
shall (i) alter or change the amount or composition of the Per Share Merger
Consideration, or (ii) be likely to materially delay or jeopardize receipt of
any required regulatory approvals or materially delay or prevent the
satisfaction of any conditions to the Closing.
1.2 CONVERSION AND CANCELLATION OF BANCFIRST SHARES. At the Effective Time
and as a result of the Merger, automatically and without further act of UNB, UNB
Bank, BancFirst, BancFirst Bank or the holders of the voting common stock of
BancFirst (the "BancFirst Shares"), the following shall occur:
(a) Each BancFirst Share issued and outstanding shall be canceled and
extinguished and, in substitution and exchange therefor, the holders thereof
shall be entitled, subject to and upon compliance with Article III of this
Agreement, to receive from UNB One and 325/1000 (1.325) shares of voting common
stock of UNB ("UNB Shares") (the "Per Share Merger Consideration").
(i) The Per Share Merger Consideration shall be adjusted to
reflect any stock split, stock dividend or distributions in,
or combinations or subdivisions of, UNB Shares, which is
paid, or for which a record date occurs, between the date
hereof and the Effective Time.
(ii) No fractional shares will be issued, and cash will be paid in
lieu of fractional shares based on the average of the bid and
asked price quotes of the UNB common shares as reported on
the Nasdaq National Market System ("NASDAQ") by a mutually
agreed upon authoritative source on the last day of trading
of UNB Shares prior to the Effective Time (the "UNB Market
Value").
(b) Any treasury shares held by BancFirst and any BancFirst Shares
owned by UNB for its own account shall be canceled and retired at the Effective
Time, and no consideration shall be issued in exchange therefor.
1.3 BANCFIRST OPTIONS.
(a) At the Effective Time, each outstanding option under the 1997
Omnibus Stock Option and Incentive Plan (the "BancFirst Option Plan") shall be
converted into an option to purchase shares of the Surviving Corporation in an
amount equal to the Merger Consideration which would have been payable had the
shares which are the subject of the option been outstanding, equal to the
exercise price per BancFirst Share under the BancFirst Option Plan divided by
the Per Share Merger Consideration.
(b) At the Effective Time, each outstanding option under the UNB Bank
1987 Stock Option Plan (the "UNB Plan I") and the UNB Bank 1997 Stock Option
Plan (the "UNB
2
Plan II") shall be converted into an option to purchase shares of the Surviving
Corporation in an amount equal to one share for each share purchasable under the
option.
1.4 CLOSING AND EFFECTIVE TIME. The closing of the Merger pursuant to
this Agreement (the "Closing") shall take place, unless another date is agreed
upon by UNB and BancFirst, thirty (30) days after the satisfaction or waiver of
the last of the conditions to the Merger set forth in Section 8.1 of this
Agreement to be satisfied. On the day of the Closing, UNB and BancFirst shall
cause a Certificate of Merger in respect of the Merger to be filed in the Office
of the Ohio Secretary of State. The Merger shall become effective at the date
and time indicated on such filing (the "Effective Time").
1.5 ARTICLES OF INCORPORATION AND CODE OF REGULATIONS. The Articles of
Incorporation and Code of Regulations attached as Exhibit 1.5 hereto shall be
the Articles of Incorporation and Code of Regulations of the Surviving
Corporation.
1.6 TAXES; TAX AND ACCOUNTING CONSEQUENCES. It is intended that the
Merger shall constitute a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code"), and that this
Agreement shall constitute a "plan of reorganization" for the purposes of
Sections 354 and 361 of the Code.
1.7 NAME OF SURVIVING CORPORATION, BANK. The name of the Surviving
Corporation shall be jointly determined by the boards of directors of UNB and
BancFirst prior to October 31, 2001, and holders of BancFirst Shares and UNB
Shares shall be entitled to receive shares of voting common stock in the new
name of the Surviving Corporation pursuant to Article III hereof. The name of
the Surviving Bank shall be jointly determined by the boards of directors of UNB
and BancFirst prior to October 31, 2001.
1.8 HEADQUARTERS OF SURVIVING CORPORATION, BANK. At the Effective Time,
the location of the headquarters and principal executive offices of the
Surviving Corporation shall be that of the headquarters and principal executive
offices of UNB as of the date of this Agreement. At the Effective Time, the
location of the headquarters and principal executive offices of the Surviving
Bank shall be that of the headquarters and principal executive offices of UNB
Bank as of the date of this Agreement.
ARTICLE II CORPORATE GOVERNANCE OF THE SURVIVING CORPORATION
2.1 SURVIVAL OF ARTICLE II. Notwithstanding any other provision in this
Agreement, the provisions of this Article II shall survive the Effective Time
and remain continuously in effect until December 31, 2005 (the "Termination
Date"), on which date the provisions of this Article II shall terminate. This
Section 2.1 shall not affect the term of any Change of Control Agreements
referred to in this Article II.
2.2 BOARD OF DIRECTORS OF SURVIVING CORPORATION.
(a) COMPOSITION. The Board of Directors will consist of fourteen (14)
members, seven (7) of whom shall be designated by BancFirst ("Former BancFirst
Directors") and seven (7) of whom shall be designated by UNB ("Former UNB
Directors"), in each case such designation to occur within 30 days of the date
hereof. BancFirst and UNB will designate
3
not less than two (2) directors each to classes one, two and three,
respectively, of directors of the Surviving Corporation.
(b) CERTAIN MEMBERS OF THE BOARD OF DIRECTORS. Mr. Gary N. Fields of
BancFirst will be a member of the Board of Directors and will serve as its
Chairman. The current Chairman, President and Chief Executive Officer of UNB,
Mr. Roger L. Mann, will be a member of the Board of Directors.
(c) NOMINATION OF DIRECTORS.
(i) Nominees to the Board of Directors will be recommended to the
Board of Directors by a Nominating Committee (A) for election
to the Board of Directors at the shareholder meetings at
which directors are to be elected; and (B) to fill vacancies
on the Board of Directors in between such shareholder
meetings (a "Nominating Committee"). For any position on the
Board of Directors occupied, or vacated, as the case may be,
by a Former BancFirst Director, the Nominating Committee
shall consist of two Former BancFirst Directors and one
Former UNB Director; for any position on the Board of
Directors occupied, or vacated, as the case may be, by a
Former UNB Director, the Nominating Committee shall consist
of two Former UNB Directors and one Former BancFirst
Director. A nominee shall need a two-thirds (2/3) vote of the
Nominating Committee to be recommended for a position on the
Board of Directors. Former BancFirst Directors on the
Nominating Committee will be appointed at the recommendation
of Mr. Fields; Former UNB Directors on the Nominating
Committee will be appointed at the recommendation of Mr.
Mann; provided, that, should Mr. Fields or Mr. Mann be
otherwise unable to appoint such members of the Nominating
Committee, the Former BancFirst Directors will be appointed
at the recommendation of the most senior (in service) Former
BancFirst Director then on the Board of Directors and the
Former UNB Directors will be appointed at the recommendation
of the most senior (in service) Former UNB Director then on
the Board of Directors.
(ii) Any person filling a membership position on the Board of
Directors previously occupied or vacated by a Former
BancFirst Director and nominated in accordance with the
previous paragraph shall be considered a "Former BancFirst
Director"; any person filling a membership position on the
Board of Directors previously occupied or vacated by a Former
UNB Director and nominated in accordance with the previous
paragraph shall be considered a "Former UNB Director."
4
(d) SUBSIDIARIES AND COMMITTEES.
(i) The initial board of directors of the Surviving Bank will
consist of twelve (12) members, six (6) of whom shall be
designated by BancFirst and six (6) of whom shall be
designated by UNB, in each case such designation to occur
within thirty (30) days of the date hereof.
(ii) The boards of directors of Subsidiaries of the Surviving
Corporation and of committees of the board of directors of
the Surviving Corporation and its Subsidiaries shall be
composed equally of former BancFirst Directors and former UNB
Directors and, except as otherwise agreed by Messrs. Fields
and Mann there shall be an equal division and equitable
allocation of chairmanships as between the former BancFirst
Directors and former UNB Directors.
2.3 OFFICERS OF THE SURVIVING CORPORATION AND THE SURVIVING BANK.
(a) COMPOSITION. Mr. Mann shall be President and Chief Executive
Officer of the Surviving Corporation and Chairman of the Surviving Bank as of
the Effective Time. Mr. James Nicholson shall be Executive Vice President and
Chief Operating Officer of the Surviving Corporation and President and Chief
Executive Officer of the Surviving Bank as of the Effective Time. Mr. James
Pennetti shall be Executive Vice President and Chief Financial Officer of the
Surviving Corporation and the Surviving Bank as of the Effective Time. Mr. Mann,
Mr. Nicholson and Mr. Pennetti shall serve in the positions described in this
Section 2.3(a) until the Termination Date or until otherwise determined in
accordance with Section 2.4.
(b) CHANGE OF CONTROL AGREEMENTS. The Surviving Corporation will assume
all obligations of BancFirst and BancFirst Bank and UNB and UNB Bank under those
certain Executive Retention Agreements and Severance Agreements executed by
certain members of management of each organization which are identified on
Exhibit 2.3 (each of these agreements, or any successor agreement, a "Change of
Control Agreement"). During the terms of their respective Change of Control
Agreements, such persons shall have the respective powers, and perform the
respective duties, set forth in each of their respective Change of Control
Agreements, along with the duties of their offices as described in this Article
II and the Articles of Incorporation or Code of Regulations of the Surviving
Corporation. The Change of Control Agreements of Messrs. Mann and Pennetti shall
be amended to waive their right to severance and termination benefits should
they voluntarily terminate their employment with the Surviving Corporation six
(6) months following the Effective Date of the merger of BancFirst and UNB
without "Good Reason" as that term is defined in Article III of their respective
Severance Agreements dated May 8, 2001. All other terms and provisions of said
Severance Agreements, including Mr. Mann's and Mr. Pennetti's right to
voluntarily terminate their employment for any reason after six (6) months upon
a Change of Control, as that term is defined in their Severance Agreements dated
May 8, 2001, other than the merger of BancFirst and UNB, as described in this
Agreement of Merger and Plan of Reorganization, shall remain in full force and
effect and be binding upon Messrs. Mann, Pennetti and the Surviving Corporation.
5
2.4 MODIFICATIONS TO CORPORATE GOVERNANCE PROVISIONS.
(a) A "Special Majority" shall mean three-fourths (3/4) of the
directors of the Surviving Corporation. The Articles of Incorporation or Code of
Regulations of the Surviving Corporation will provide that, until the
Termination Date, the following actions will require the approval of a Special
Majority:
(i) The removal of Mr. Mann, Mr. Fields, Mr. Nicholson, or Mr.
Pennetti from any of such person's executive positions with
the Surviving Corporation, including by modification of the
succession arrangements described above;
(ii) Any change in the size of the Board of Directors or number of
directors to be Former BancFirst Directors or the number of
directors to be Former UNB Directors; and
(iii) Any change or amendment to the Articles of Incorporation or
Code of Regulations relating to or affecting the arrangements
discussed in this Article II or Exhibit 2.2.
(b) The Articles of Incorporation or Code of Regulations of the
Surviving Corporation shall also provide that any officer or other person acting
on behalf of the Surviving Corporation in its capacity as sole shareholder of
the Surviving Bank may not make any changes or amendment to the Governing
Documents of any subsidiary of the Surviving Corporation relating to or altering
those provisions mirroring the provisions discussed in this Article II, without
the vote of a Special Majority.
2.5 ARTICLES OF INCORPORATION AND CODE OF REGULATIONS. As contemplated
by Section 2.2, the Articles of Incorporation and Code of Regulations will
contain appropriate provisions giving effect to Sections 2.1 through 2.4.
ARTICLE III. EXCHANGE OF SHARE CERTIFICATES
3.1 SHARE CERTIFICATES IN THE MERGER.
(a) As soon as practicable after the Effective Time, the Surviving
Corporation shall mail to each holder of record of BancFirst Shares (and UNB
Shares, should the name of the Surviving Corporation be other than UNB), a form
letter of transmittal (the "Transmittal Letter") including instructions for use
in effecting the surrender for exchange of the certificates formerly evidencing
the BancFirst Shares canceled and extinguished as a result of the Merger and UNB
shares affected by the change in name of the Surviving Corporation
(collectively, the "Certificates" and individually, the "Certificate"). The
Transmittal Letter shall specify that the risk of loss and title to Certificates
shall pass only upon delivery of the Certificates as specified in the
Transmittal Letter. Upon surrender of a Certificate for cancellation
representing shares of BancFirst, together with such Transmittal Letter, duly
executed, the holder of such Certificate shall be entitled to receive in
exchange therefor the Per Share Merger Consideration, and the Certificate so
surrendered shall thereafter be canceled forthwith. Upon surrender of a
certificate representing shares of UNB, together with such Transmittal Letter,
duly executed, the holder of
6
such certificate shall be entitled to receive in exchange therefore a
certificate representing the same number of shares in the new name of the
Surviving Corporation. UNB may, at its election, designate an exchange agent to
discharge its duties pursuant to this Section 3.1.
(b) In the event that any holder of BancFirst Shares is unable to
deliver the Certificate, the Surviving Corporation, in the absence of actual
notice that any BancFirst Shares theretofore represented by any such Certificate
have been acquired by a bona fide purchaser, shall deliver to such holder the
Per Share Merger Consideration to which such holder is entitled in accordance
with the provisions of this Agreement upon the presentation of all of the
following:
(i) Evidence to the reasonable satisfaction of the Surviving
Corporation that any such Certificate has been lost,
wrongfully taken or destroyed;
(ii) Such security or indemnity as may be reasonably requested by
the Surviving Corporation to indemnify and hold the Surviving
Corporation and the exchange agent harmless; and
(iii) Evidence to the reasonable satisfaction of the Surviving
Corporation that such person is the owner of the BancFirst
Shares theretofore represented by each Certificate claimed by
him to be lost, wrongfully taken or destroyed and that he is
the person who would be entitled to present each such
Certificate for exchange pursuant to this Agreement.
(c) In the event that delivery of the Per Share Merger Consideration
provided for herein is to be made to a person other than the person in whose
name the Certificate surrendered is registered, the Certificate so surrendered
shall be properly endorsed or otherwise in proper form for transfer; and the
person requesting such issuance or payment shall pay any transfer or other taxes
required by reason of the issuance or payment to a person other than the
registered holder of the Certificate surrendered or establish to the
satisfaction of the Surviving Corporation that such tax has been paid or is not
applicable. Until surrendered in accordance with the provisions of this Section
3.1, each Certificate representing ownership of BancFirst Shares shall represent
for all purposes only the right to receive the Per Share Merger Consideration.
(d) No dividends or other distributions declared after the Effective
Time with respect to the Surviving Corporation Shares and payable to the holders
of record thereof after the Effective Time shall be paid to the holder of any
unsurrendered Certificate until the holder thereof shall surrender such
Certificate. After the subsequent surrender and exchange of a Certificate, the
record holder thereof shall be entitled to receive any such dividends or other
distributions, without any interest thereon, which theretofore had become
payable with respect to the Surviving Corporation Shares represented by such
Certificate.
7
(e) No consideration provided for herein shall be delivered by the
Surviving Corporation to any former holder of BancFirst Shares in accordance
with this Agreement until such holder shall have complied with this Section 3.1.
(f) If outstanding Certificates are not surrendered or the payment for
them is not claimed prior to the date on which such payment would otherwise
escheat to or become the property of any governmental entity, the unclaimed
items shall, to the extent permitted by abandoned property and any other
applicable law, become the property of the Surviving Corporation (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 to such property. Neither
the exchange agent nor any party to this Agreement shall be liable to any holder
of any Certificate for any consideration paid to a public official pursuant to
applicable abandoned property, escheat or similar laws. The Surviving
Corporation and the exchange agent shall be entitled to rely upon the stock
transfer books of BancFirst to establish the identity of those persons entitled
to receive the Per Share Merger Consideration, which books shall be conclusive
with respect thereto. In the event of a dispute with respect to ownership of
BancFirst Shares, the Surviving Corporation and the exchange agent shall be
entitled to deposit any Per Share Merger Consideration represented thereby in
escrow with an independent third party and thereafter be relieved with respect
to any claims thereto.
3.2 PAYMENT IN SATISFACTION OF RIGHTS. All payments made upon the surrender
of Certificates pursuant to this Article III shall be deemed to have been made
in full satisfaction of all rights pertaining to the BancFirst Shares or UNB
Shares, as the case may be, theretofore evidenced by such Certificates.
3.3 NO FURTHER REGISTRATION OR TRANSFER. After the Effective Time, there
shall be no further registration or transfer of BancFirst Shares on the stock
transfer books of BancFirst. In the event that, after the Effective Time,
Certificates evidencing such BancFirst Shares are presented for transfer, they
shall be canceled and exchanged as provided in this Article III.
3.4 DISSENTING BANCFIRST SHARES.
(a) Any holder of BancFirst or UNB Shares who seeks relief as a
dissenting shareholder under Section 1701.85 of the OGCL (a "Dissenting
Shareholder") shall be entitled to payment for such BancFirst Shares and UNB
Shares only to the extent permitted by and in accordance with the provisions of
the OGCL; provided, however, that if, in accordance with the OGCL, any
Dissenting Shareholder shall forfeit such right to payment of the fair value of
the BancFirst Shares or UNB Shares held by such Dissenting Shareholder, such
BancFirst Shares or UNB Shares shall thereupon be deemed to have been converted
into and to have become exchangeable for, as of the Effective Time, the right to
receive the Per Share Merger Consideration. Dissenting Shareholders shall not,
after the Effective Time, be entitled to vote for any purpose or receive any
dividends or other distributions and shall be entitled only to such rights as
are afforded pursuant to the OGCL.
8
(b) BancFirst and UNB shall give each other:
(i) Prompt notice of any written objections to the Merger and any
written demands for the payment of the fair value of any
shares, withdrawals of such demands, and any other
instruments served pursuant to the OGCL received by either;
and
(ii) The opportunity to participate in all negotiations and
proceedings with respect to such demands under the OGCL.
(c) BancFirst and UNB shall not voluntarily make any payment with
respect to any demands for payment of fair value and shall not settle or offer
to settle any such demands, except with the prior written consent of the other.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF BANCFIRST AND BANCFIRST BANK
BancFirst and the BancFirst Bank represent and warrant to UNB that each
of the following statements is true and accurate in all material respects,
except as otherwise disclosed in a schedule provided by BancFirst and the
BancFirst Bank to UNB prior to the execution of this Agreement (the "BancFirst
Disclosure Schedule"). The BancFirst Disclosure Schedule shall be arranged in
paragraphs corresponding to the lettered Sections and Subsections contained in
this Article IV, and the disclosure in any letter paragraph shall qualify only
the corresponding Section or Subsection in this Article IV.
4.1 ORGANIZATION AND STANDING.
(a) BancFirst is a corporation duly organized, validly existing and in
good standing under the laws of the State of Ohio and has the corporate power
and authority to own or hold under lease all of its properties and assets and to
conduct its business and operations as presently conducted. BancFirst is
registered as a bank holding company under the Bank Holding Company Act of 1956,
as amended (the "BHCA"). BancFirst has filed an election to become, and
presently is, a "financial holding company" under 12 C.F.R. Section 225.82, has
not received any notice from the Federal Reserve Board pursuant to 12 C.F.R.
Section 225.82(e)(1), continues to satisfy all requirements for financial
holding company status under 12 C.F.R. Section 225.81, and is not subject to any
limitation under 12 C.F.R. Sections 225.83 or 225.84. BancFirst is in compliance
in all material respects with all applicable local, state or federal laws and
regulations.
(b) BancFirst Bank is a national banking association duly organized and
validly existing under the National Bank Act, as amended (the "NBA") and has the
corporate power and authority to own or hold under lease all of its properties
and assets and to conduct its business and operations as presently conducted.
The deposit accounts of BancFirst Bank are insured up to applicable limits by
the Bank Insurance Fund of the FDIC (the "BIF") or the Savings Association
Insurance Fund of the FDIC, and BancFirst Bank has paid all deposit insurance
premiums and assessments required by applicable law. BancFirst Bank is in
compliance in all material respects with all applicable local, state or federal
laws and regulations, including without limitation, the Equal Credit Opportunity
Act, the Fair Housing Act, the
9
Community Reinvestment Act, the Home Mortgage Disclosure Act and all other
applicable fair lending laws and other laws relating to discriminatory business
practices.
4.2 SUBSIDIARIES.
(a) First Financial Services Group, N.A., is a limited purpose trust
bank duly organized and validly existing under the NBA (the "Trust Company").
Chornyak & Associates, Inc., is a corporation duly organized and validly
existing under the laws of the State of Ohio ("Chornyak"). Bankers Title
Services, Inc., is a corporation duly organized and validly existing under the
laws of the State of Ohio ("Title Agency"). BFOH Capital Trust I ("Capital
Trust") is a statutory business trust duly organized and validly existing under
the laws of the State of Delaware. The Trust Company, Chornyak, the Title Agency
and Capital Trust are collectively referred to hereafter as the "BancFirst
Subsidiaries". Additional subsidiaries of BancFirst are listed in Section 4.2(a)
of the BancFirst Disclosure Schedule.
(b) Each BancFirst Subsidiary has the full corporate power, right,
authority and governmental authorizations to own or lease its properties and
assets and to carry on its business as it now is being conducted in all material
respects. Each BancFirst Subsidiary is in compliance in all material respects
with all applicable local, state or federal laws and regulations. Except, in the
case of the Trust Company, for securities and other interests held in a
fiduciary capacity and beneficially owned by third parties and for stock in the
Federal Reserve Bank of Cleveland, none of the BancFirst Subsidiaries holds,
directly or indirectly, any legal or beneficial interest in any shares,
membership units or other equity interest in any Person.
(c) The authorized capital of each BancFirst Subsidiary, the number of
shares of each which are issued and outstanding and the legal and beneficial
owner of each such share is set forth in Section 4.2(c) of the BancFirst
Disclosure Schedule. Except as set forth in Section 4.2 of the BancFirst
Disclosure Schedule, either BancFirst or BancFirst Bank owns, beneficially and
of record, all of the outstanding common shares of each BancFirst Subsidiary.
All of the outstanding common shares of each BancFirst Subsidiary are
authorized, validly issued, fully paid and nonassessable; were issued in full
compliance with all applicable laws and regulations; and were not issued in
violation of the preemptive right of any shareholder thereof. None of the
BancFirst Subsidiaries has any outstanding class of capital stock other than
common shares as set forth in Section 4.2(c) of the BancFirst Disclosure
Schedule. There are no outstanding subscription rights, options, conversion
rights, warrants or other agreements or commitments of any nature whatsoever
(either firm or conditional) obligating any BancFirst Subsidiary, or BancFirst
or BancFirst Bank, (i) to issue, deliver or sell, cause to be issued, delivered
or sold, any share of such BancFirst Subsidiary, or restricting such BancFirst
Subsidiary from selling any additional shares or (ii) to grant, extend or enter
into any such agreement or commitment.
4.3 QUALIFICATION. BancFirst, BancFirst Bank, and the BancFirst
Subsidiaries are each duly qualified to do business and in good standing in each
jurisdiction in which such qualification is required or the failure to so
qualify would not have a material adverse effect on the business of BancFirst,
BancFirst Bank, or such BancFirst Subsidiary. BancFirst Bank does not maintain
any branch outside of Ohio or loan production office outside of the States of
Ohio, Michigan, Indiana and Kentucky. The Trust Company does not operate any
trust office or trust representative office outside of the State of Ohio.
10
4.4 AUTHORITY.
(a) This Agreement has been:
(i) Duly executed and delivered by BancFirst and BancFirst Bank;
and
(ii) Approved by the Boards of Directors of BancFirst and
BancFirst Bank.
(b) The Bank Merger Agreement has been:
(i) Duly executed and delivered by BancFirst Bank; (ii) Approved
by the Board of Directors of BancFirst Bank; and (iii)
Adopted by BancFirst as the sole shareholder of BancFirst
Bank.
(c) Subject to the adoption of this Agreement by the BancFirst
shareholders and to the filing of all requisite Regulatory Applications and the
receipt of all Requisite Regulatory Approvals:
(i) BancFirst Bank has all requisite corporate power and
authority to enter into this Agreement and the Bank Merger
Agreement and, to perform all of its obligations hereunder
and thereunder;
(ii) The execution and delivery of this Agreement and the Bank
Merger Agreement and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by
all necessary corporate action by BancFirst and BancFirst
Bank; and
(iii) Subject to applicable bankruptcy, insolvency, reorganization
and moratorium laws and other laws of general applicability
affecting the enforcement of creditors' rights generally, and
the effect of rules of law governing specific performance,
injunctive relief and other equitable remedies on the
enforceability of such documents, and except to the extent
such enforceability may be limited by laws relating to safety
and soundness of insured depository institutions as set forth
in 12 U.S.C. Section 1818(b) or by the appointment of a
conservator by the FDIC, (A) this Agreement is the valid and
binding agreement of BancFirst, enforceable against BancFirst
in accordance with its terms, and (B) this Agreement and the
Bank Merger Agreement are the valid and binding agreements of
BancFirst Bank, enforceable against BancFirst Bank in
accordance with their terms.
4.5 GOVERNING DOCUMENTS. BancFirst and BancFirst Bank have delivered to UNB
true and accurate copies of the Articles of Incorporation and Code of
Regulations of BancFirst
11
and the Articles of Association and Bylaws of BancFirst Bank and have granted
UNB access to (a) the Articles of Incorporation and Code of Regulations or
Articles of Association and Bylaws of each BancFirst Subsidiary and (b) all
records of all meetings and other corporate actions by the shareholders, Boards
of Directors and Committees of the Boards of Directors of BancFirst, BancFirst
Bank, and each BancFirst Subsidiary, other than records of meetings relating to
the consideration of transactions related to this Agreement. The minute books of
BancFirst and BancFirst Bank contain, in all material respects, complete and
accurate records of all meetings and other corporate actions of the BancFirst
and BancFirst Bank shareholders, Boards of Directors and Committees of the
Boards of Directors, other than records of meetings relating to the
consideration of transactions related to this Agreement.
4.6 NO CONFLICTS. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, including the Merger and
the Bank Merger, will not:
(a) Subject to the approval of this Agreement by the requisite vote of
the BancFirst shareholders, conflict with or violate any provision of or result
in the breach of any provision of the Articles of Incorporation or Code of
Regulations of BancFirst or the Articles of Association or Bylaws of BancFirst
Bank;
(b) Conflict with or violate any provision of or result in the breach
or the acceleration of or entitle any party to accelerate (whether upon or after
the giving of notice of lapse of time or both) any obligation under, or
otherwise materially affect the terms of, any mortgage, Lien, lease, agreement,
license, instrument, order, arbitration award, judgment or decree to which
either BancFirst or BancFirst Bank is a party or by which BancFirst, BancFirst
Bank or their property or assets is bound;
(c) Require the consent of any party to any agreement or commitment to
which either BancFirst or BancFirst Bank is a party or by which BancFirst,
BancFirst Bank or their property or assets is bound, the failure to obtain which
could, individually or in the aggregate with all the other failures to obtain
required consents, have a material adverse effect on the business, operations or
financial condition of BancFirst and BancFirst Bank, taken as a whole;
(d) Result in the creation or imposition of any Lien, charge, pledge,
security interest or other encumbrance upon any property or assets of either
BancFirst or BancFirst Bank or give rise to any meritorious cause of action
against either BancFirst or BancFirst Bank; or,
(e) Subject to the receipt of all Requisite Regulatory Approvals and
the requisite vote of the BancFirst shareholders, violate or conflict with any
applicable law, ordinance, rule or regulation, including, without limitation,
the rules and regulations of the Board of Governors of the Federal Reserve
System ("FRB") or the OCC.
4.7 CONSENTS. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required by
BancFirst, BancFirst Bank, or any BancFirst Subsidiary in connection with the
execution and delivery of this Agreement by BancFirst or BancFirst Bank or the
consummation by BancFirst or BancFirst Bank of the
12
transactions contemplated hereby, including the Merger and the Bank Merger,
except for filings, authorizations, notices, consents or approvals required by
the SEC, the FRB, the OCC, the FDIC, the Ohio Secretary of State and the Ohio
Department of Insurance.
4.8 BANCFIRST AND BANCFIRST BANK SHARES.
(a) BANCFIRST CAPITAL. The authorized capital of BancFirst consists of
twenty million (20,000,000) common shares, each without par value, 8,741,834 of
which are issued and outstanding and 837,660 of which are reserved for issuance
upon exercise of options granted in accordance with the BancFirst Option Plan.
All of the issued and outstanding common shares of BancFirst are duly
authorized, validly issued, fully paid and nonassessable and were issued in full
compliance with all applicable laws. BancFirst has no outstanding class of
capital stock other than such common shares.
(i) Except for the options to purchase at the per share prices
shown in Section 4.8(a)(i) of the BancFirst Disclosure
Schedule an aggregate of 441,278 BancFirst Shares granted in
accordance with the BancFirst Option Plan and except for the
option contained in the Option Agreement, there are no
outstanding subscription rights, options, conversion rights,
warrants or other agreements, plans or commitments of any
nature whatsoever (either firm or conditional) obligating
BancFirst (i) to issue, deliver or sell, cause to be issued,
delivered or sold, or restricting BancFirst from selling any
additional BancFirst Shares; or (ii) to grant, extend or
enter into any such agreement, plan or commitment. There are
no outstanding stock appreciation, phantom stock or similar
rights in respect of BancFirst Shares.
(ii) In accordance with the 1997 Bonus Shares Program (hereinafter
referred to as the "Bonus Plan"), an aggregate of 20,797
BancFirst Shares were awarded to Bonus Plan participants
(hereinafter referred to as the "Awarded Bonus Plan Shares").
Of the Awarded Bonus Plan Shares, none have been vested on
the date hereof (hereinafter referred to as the "Unvested
Bonus Plan Shares").
(b) BANCFIRST BANK CAPITAL. The authorized capital of BancFirst Bank
consists of 3,236,250 common shares, $10.00 par value, all of which are issued
and outstanding and held of record by BancFirst. All of the outstanding common
shares of BancFirst Bank are duly authorized, validly issued, fully paid and
nonassessable; were issued in full compliance with all applicable laws; and were
not issued in violation of the preemptive right of any depositor or shareholder
of BancFirst Bank. BancFirst Bank has no outstanding class of capital stock
other than such common shares. There are no outstanding subscription rights,
options, conversion rights, warrants or other agreements or commitments of any
nature whatsoever (either firm or conditional) obligating BancFirst Bank (i) to
issue, deliver or sell, cause to be issued, delivered or sold, or restricting
BancFirst Bank from selling any additional BancFirst Bank shares or (ii) to
grant, extend or enter into any such agreement or commitment.
13
4.9 FINANCIAL STATEMENTS.
(a) The consolidated statements of financial condition as of December
31, 1999 and 2000, of BancFirst and the related consolidated statements of
income, shareholders' equity and cash flows for each of the three years then
ended, examined and reported upon by PricewaterhouseCoopers, LLP, certified
public accountants, complete copies of which have previously been delivered to
UNB (hereinafter referred to as the "BancFirst Audited Financials"), have been
prepared in conformity with generally accepted accounting principles applied on
a consistent basis and fairly present the consolidated financial position of
BancFirst at such dates and the consolidated results of its operations and cash
flows for such periods. The books and records of BancFirst and BancFirst Bank
have been, and are being, maintained in accordance with generally accepted
accounting principles and with any other applicable legal and accounting
requirements and reflect only actual transactions.
(b) The unaudited balance sheet as of June 30, 2001, of BancFirst and
the related unaudited income statement for the six (6) months then ended,
complete copies of which have previously been delivered to UNB (hereinafter
referred to as the "BancFirst Interim Financials"), fairly present the financial
position of BancFirst at such date and the results of its operations for such
period and in all material respects have been prepared in accordance with
generally accepted accounting principles as applicable to condensed consolidated
financial statements, e.g., without footnotes and certain accruals normally made
at year end, and as applied on a consistent basis with the BancFirst Audited
Financials. All adjustments which are necessary for a fair statement of the
BancFirst Interim Financials have been made.
(c) The Consolidated Statements of Condition and Income of BancFirst
Bank for the three-month periods ended March 31 and June 30, 2001, together with
the schedules and supplements attached thereto, each as filed with the OCC and
copies of which were previously delivered to UNB by BancFirst (hereinafter
referred to as the "BancFirst Consolidated Statements"), have been prepared in
accordance with accounting practices permitted by the OCC applied on a
consistent basis and fairly present the financial position of BancFirst Bank at
such dates.
(d) Except as disclosed in the BancFirst Interim Financials, the
BancFirst Consolidated Statements and Section 4.9 of the BancFirst Disclosure
Schedule, as of June 30, 2001, BancFirst had no liabilities or obligations
material to the financial condition of BancFirst, whether accrued, absolute,
contingent or otherwise, and whether due or to become due.
4.10 CONDUCT OF BUSINESSES. Between June 30, 2001, and the date of this
Agreement, each of BancFirst and BancFirst Bank conducted its businesses only in
the ordinary and usual course, there were no material adverse changes in the
financial condition, assets, liabilities, obligations, properties or business of
BancFirst or BancFirst Bank, and, except as set forth in any of the BancFirst
Audited Financials, the BancFirst Interim Financials, the BancFirst Consolidated
Statements or Section 4.10 of the BancFirst Disclosure Schedule, neither
BancFirst nor BancFirst Bank:
14
(a) Authorized the creation or issuance of, issued, sold or disposed
of, or created any obligation to issue, sell or dispose of, any stock, notes,
bonds or other securities or any obligation convertible into or exchangeable
for, any shares of its capital stock;
(b) Except for a per share dividend in the amount of $.145 payable by
BancFirst on September 18, 2001, declared, set aside, paid or made any dividend
or other distributions on its capital stock or directly or indirectly redeemed,
purchased or acquired any shares or entered into any agreement in respect of the
foregoing;
(c) Effected any stock split, recapitalization, combination, exchange
of shares, readjustment or other reclassification;
(d) Amended its Articles of Incorporation or Code of Regulations, or,
in the case of BancFirst Bank, its Articles of Association or Bylaws;
(e) Purchased, sold, assigned or transferred any material tangible
asset or any material patent, trademark, trade name, copyright, license,
franchise, design or other intangible asset or property;
(f) Mortgaged, pledged or granted or suffered to exist any Lien or
other encumbrance or charge on any assets or properties, tangible or intangible,
except for i) pledges of assets to the Federal Home Loan Bank ("FHLB"); ii)
ordinary course of business restrictions on public funds on deposit; iii) Liens
for taxes not yet due and payable; and iv) such other Liens, encumbrances or
charges which do not materially adversely affect its financial position;
(g) Waived any rights of material value or canceled any material debts
or claims;
(h) Incurred any material obligation or liability (absolute or
contingent), including, without limitation, any tax liability or any liability
for borrowings from the FRB of Cleveland or the FHLB of Cincinnati, or paid any
material liability or obligation (absolute or contingent), other than
liabilities and obligations incurred in the ordinary course of business;
(i) Entered into or amended any employment contract with any of its
officers or increased the compensation payable to any officer or director,
except compensation increases and employment contract renewals made in the
ordinary course;
(j) Incurred any damage, destruction or similar loss, not covered by
insurance, materially affecting its businesses or properties;
(k) Acquired any stock or other equity interest in any corporation,
partnership, trust, joint venture or other entity;
(l) Made any (i) material investment (except investments made in the
ordinary course of business) or (ii) material capital expenditure or commitment
for any material addition to property, plant or equipment; or
15
(m) Agreed, whether in writing or otherwise, to take any action
described in this Section 4.10.
4.11 PROPERTIES.
(a) A description of all fixed assets which are material to BancFirst
and its Subsidiaries considered as a whole owned by each of BancFirst and
BancFirst Bank (directly or through the BancFirst Subsidiaries) has been
delivered to UNB (hereinafter referred to as the "BancFirst Personal Property").
All BancFirst Personal Property has been maintained in good working order,
ordinary wear and tear excepted. BancFirst, BancFirst Bank, or a BancFirst
Subsidiary owns and has good title to all of the BancFirst Personal Property,
free and clear of any mortgage, Lien, pledge, charge, claim, conditional sales
or other agreement, lease, right or encumbrance, except:
(i) As set forth in Section 4.11(a) of the BancFirst Disclosure
Schedule;
(ii) To the extent stated or reserved against in the BancFirst
Audited Financials or the BancFirst Interim Financials; and
(iii) Such other exceptions which are not material in character or
amount and do not materially detract from the value of or
interfere with the use of the properties or assets subject
thereto or affected thereby.
(b) A description of each parcel of real property owned by BancFirst,
BancFirst Bank, or a BancFirst Subsidiary (other than real property taken by
BancFirst Bank in consideration of debts previously contracted) is set forth in
Section 4.11(b) of the BancFirst Disclosure Schedule (hereinafter referred to
individually as a "BancFirst Parcel" and collectively as the "BancFirst Real
Properties"). Either BancFirst, BancFirst Bank, or a BancFirst Subsidiary is the
owner of each BancFirst Parcel in fee simple and has good and marketable title
to each such BancFirst Parcel, free of any Liens, claims, charges, encumbrances
or security interests of any kind, except:
(i) As set forth in Section 4.11(b) of the BancFirst Disclosure
Schedule;
(ii) Liens for real estate taxes and assessments not yet
delinquent; and
(iii) Utility, access and other easements, rights of way,
restrictions and exceptions, none of which impair the
BancFirst Real Properties for the use and business being
conducted thereon.
(c) A description of all real property leased by BancFirst, BancFirst
Bank, or a BancFirst Subsidiary is set forth in Section 4.11(c) of the BancFirst
Disclosure Schedule (hereinafter referred to as the "BancFirst Leased Real
Property"). Except as set forth in Section 4.11(c) of the BancFirst Disclosure
Schedule, the Real Property Leases create, in accordance with their terms,
valid, binding and assignable leasehold interests of either BancFirst or
16
BancFirst Bank, or a BancFirst Subsidiary, in all of the BancFirst Leased Real
Property, free and clear of all Liens, claims, charges, encumbrances or security
interests of any kind.
(d) A description of all personal property leased by BancFirst,
BancFirst Bank, or a BancFirst Subsidiary which requires payment of rentals in
excess of $50,000 per annum is set forth in Section 4.11(d) of the BancFirst
Disclosure Schedule.
(e) The documentation (hereinafter referred to as "BancFirst Loan
Documentation") governing or relating to the loan and credit-related assets
(hereinafter referred to as the "BancFirst Loan Assets") included within the
loan portfolio of BancFirst Bank is legally sufficient in all material respects
for the purposes intended thereby and creates enforceable rights in favor of
BancFirst Bank in accordance with the terms of such BancFirst Loan
Documentation, subject to applicable bankruptcy, insolvency, reorganization and
moratorium laws and other laws of general applicability affecting the
enforcement of creditors' rights generally, and the effect of rules of law
governing specific performance, injunctive relief and other equitable remedies
on the enforceability of such documents. Each loan included in the BancFirst
Loan Assets has been serviced in all material respects in accordance with
customary lending standards in the ordinary course of business.
4.12 ALLOWANCE FOR LOAN LOSSES. Except as set forth in a schedule dated
June 30, 2001, as previously delivered to UNB by BancFirst, there was no loan
which was made by either BancFirst or BancFirst Bank and which is reflected as
an asset of either BancFirst or BancFirst Bank on the BancFirst Audited
Financials or the BancFirst Interim Financials that (i) was ninety (90) days or
more delinquent or (ii) has been classified by examiners (regulatory or
internal) as "Substandard," "Doubtful", "Loss" or "Special Mention" (or words of
similar import) as of the date of such Schedule. The allowance for loan losses
as reflected on the BancFirst Audited Financials and the BancFirst Interim
Financials is, in the opinion of BancFirst's management, adequate in all
material respects as of their respective dates under the requirements of
generally accepted accounting principles to provide for reasonably anticipated
losses on outstanding loans, net of recoveries.
4.13 INVESTMENTS.
(a) Section 4.13(a) of the BancFirst Disclosure Schedule contains a
true, accurate and complete list of all investments, other than investments in
the BancFirst Loan Assets and the BancFirst Real Properties, and other than
securities and other interests held in a fiduciary capacity and beneficially
owned by third parties or taken in consideration of debts previously contracted,
owned by BancFirst, BancFirst Bank, or a BancFirst Subsidiary (hereinafter
referred to as the "BancFirst Investments") as of June 30, 2001. Except as set
forth in Section 4.13(a) of the BancFirst Disclosure Schedule, the BancFirst
Investments, other than any such investments disposed of in the ordinary course
of business prior to the date hereof, are owned by BancFirst, BancFirst Bank, or
a BancFirst Subsidiary free and clear of all Liens, pledges, claims, security
interests, encumbrances, charges or restrictions of any kind (other than such as
arise in the ordinary course of business from FHLB borrowings or acceptance of
public funds) and may be freely disposed of by BancFirst, BancFirst Bank, or
such BancFirst Subsidiary at any time. Except as set forth in Section 4.13(a) of
the BancFirst Disclosure
17
Schedule, neither BancFirst nor BancFirst Bank, nor any BancFirst Subsidiary, is
a party to, nor has any interest in:
(i) Any repurchase agreement, reverse repurchase agreement,
collateralized mortgage obligation or any other derivative
security; or
(ii) Any interest rate swaps, caps, floors, option agreements or
any other interest rate risk management agreements.
(b) Except as set forth in Section 4.13(b) of the BancFirst Disclosure
Schedule, and other than the BancFirst Subsidiaries, neither BancFirst nor
BancFirst Bank owns of record or beneficially the outstanding shares of, or any
equity interest in, any corporation or other business entity, other than
securities and other interests taken in consideration of debts previously
contracted.
4.14 REPORTS AND RECORDS.
(a) Each of BancFirst and BancFirst Bank, and each BancFirst
Subsidiary, has filed all reports and maintained all records required to be
filed or maintained by it under various rules and regulations of the SEC, the
FRB, the OCC, the FDIC, the Ohio Department of Insurance and other regulatory
agencies with jurisdiction over BancFirst, BancFirst Bank or any BancFirst
Subsidiary. All such documents and reports complied in all material respects
with applicable requirements of law and regulations in effect at the time of
filing such documents and contained in all material respects the information
required to be stated therein.
(b) BancFirst has delivered to UNB copies of the following documents,
each of which has been filed with the SEC (hereinafter referred to as the
"BancFirst SEC Filings"):
(i) The BancFirst Annual Reports on Form 10-K for the fiscal
years ended December 31, 2000 and 1999;
(ii) The BancFirst Annual Reports to Shareholders for the fiscal
years ended December 31, 2000 and 1999;
(iii) The BancFirst Proxy Statements for use in connection with the
2000 and 1999 Annual Meetings of Shareholders;
(iv) The BancFirst Quarterly Reports on Form 10-Q for the quarters
ended March 31 and June 30, 2001; and
(v) All Form 8-K's filed in 2001.
The BancFirst SEC Filings did not, as of the dates on which such
reports were filed with the SEC, contain any untrue statement of a material fact
or omit any material fact required to be stated therein or necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading.
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4.15 TAXES.
(a) Except as set forth in Section 4.15(a) of the BancFirst Disclosure
Schedule, each of BancFirst and BancFirst Bank, and each BancFirst Subsidiary,
has duly and timely filed all federal, state, county and local income, profits,
franchise, excise, sales, customs, property, use, occupation, withholding,
social security and other tax and information returns and reports required to
have been filed by each through the date hereof, and has paid or accrued all
taxes and duties (and all interest and penalties with respect thereto) due or
claimed to be due. Neither BancFirst nor BancFirst Bank, nor any BancFirst
Subsidiary, has any liability for any taxes or duties (or interest or penalties
with respect thereto) of any nature whatsoever and there is no basis for any
additional material claims or assessments, other than with respect to
liabilities for taxes and duties which are reflected in the BancFirst Interim
Financials or which may have accrued since June 30, 2001, in the ordinary course
of business.
(b) No deficiencies for any taxes, assessments or governmental charges
have been proposed, asserted or assessed in writing by any governmental or
taxing authority against BancFirst or BancFirst Bank, or against any BancFirst
Subsidiary, that have not been settled or would not be covered by existing
reserves. Except as set forth in Section 4.15(b) of the BancFirst Disclosure
Schedule, neither BancFirst nor BancFirst Bank, nor any BancFirst Subsidiary:
(i) Is a party to any agreement providing for the allocation or
sharing of taxes; or
(ii) Is required to include in income any adjustment pursuant to
Section 481(a) of the Code by reason of the voluntary change
in accounting method, nor has any taxing authority proposed
in writing any such adjustment or change of accounting
method.
(c) Any amount that will become receivable (whether in cash or property
or the vesting of property) as a result of any of the transactions contemplated
by this Agreement by any employee, officer or director of BancFirst or BancFirst
Bank, or of any BancFirst Subsidiary, who is a "Disqualified Individual," as
such term is defined in proposed Treasury Regulation Section 1.280G-1, under any
employment, severance or termination agreement, other compensation arrangements
or BancFirst Benefit Plan currently in effect will not be characterized as an
"excess parachute payment," as such term is defined in Section 1.280G-1 of the
Code.
4.16 MATERIAL CONTRACTS.
(a) Except as set forth in Section 4.16(a) of the BancFirst Disclosure
Schedule, as of the date hereof neither BancFirst nor BancFirst Bank, nor any
BancFirst Subsidiary, is a party to or bound by any written or oral:
(i) Contract or commitment for capital expenditures in excess of
two hundred thousand dollars ($200,000) for any one project
or five hundred thousand dollars ($500,000) in the aggregate;
19
(ii) Contract or commitment made in the ordinary course of
business for the purchase of materials or supplies or for the
performance of services involving payments to or by either
BancFirst or BancFirst Bank, or any BancFirst Subsidiary, of
an amount exceeding two hundred thousand dollars ($200,000)
in the aggregate or extending for more than six (6) months
from the date hereof;
(iii) Contract or option for the purchase of any real property;
(iv) Letter of credit or indemnity calling for payment, upon the
conditions stated therein, of more than three hundred
thousand dollars ($300,000);
(v) Guarantee agreement;
(vi) Instrument granting any person (other than employees acting
in the ordinary course of business) authority to transact
business on behalf of either BancFirst or BancFirst Bank, or
on behalf of a BancFirst Subsidiary;
(vii) Contracts or commitments relating to outstanding loans and/or
commitments to make loans (including unfunded commitments and
lines of credit) to any one person or entity (together with
"affiliates" of such person or entity) in excess of one
million dollars ($1,000,000);
(viii) Employment, management, consulting, deferred compensation,
severance or other similar contract with any director,
officer or employee of either BancFirst or BancFirst Bank, or
of a BancFirst Subsidiary;
(ix) Note, debenture or loan agreement pursuant to which either
BancFirst or BancFirst Bank, or a BancFirst Subsidiary, has
incurred indebtedness, other than deposit liabilities and
advances from the FRB of Cleveland or the FHLB of Cincinnati;
(x) Loan agreement with any director, executive officer or ten
percent (10%) or greater shareholder of BancFirst, BancFirst
Bank, or any BancFirst Subsidiary, or to the knowledge of
BancFirst and BancFirst Bank, any Person controlling,
controlled by or under common control with, or a member of
the immediate family of, any of the foregoing;
(xi) Any contract which would constitute or involves a "covered
transaction" with an "affiliate" under Sections 23A or 23B of
the Federal Reserve Act; or
20
(xii) Commitment or agreement to do any of the foregoing. Contracts
set forth in Section 4.16 of the BancFirst Disclosure
Schedule are hereinafter collectively referred to as the
"BancFirst Contracts."
(b) None of BancFirst, BancFirst Bank, or any BancFirst Subsidiary is
in material default under any of the BancFirst Contracts, nor has there occurred
any event that, with the lapse of time or the giving of notice or both, would
constitute such a default.
4.17 INSURANCE. All material properties and operations of each of BancFirst
and BancFirst Bank are adequately insured for its benefit. The performance by
the officers and employees of each of BancFirst and BancFirst Bank of their
duties is bonded in such amounts and against such risks as are usually insured
against or bonded by entities similarly situated, under valid and enforceable
policies of insurance or bonds issued by insurers or bonding companies of
recognized responsibility, financial or otherwise.
4.18 ACTIONS AND SUITS. Except as set forth in Section 4.18 of the
BancFirst Disclosure Schedule, and except for routine claims and foreclosure
litigation arising in the ordinary course of business, there are no actions,
suits or proceedings or investigations pending or, to the knowledge of
BancFirst, threatened against or affecting the business, operations or financial
condition of either BancFirst or BancFirst Bank, or of any BancFirst Subsidiary,
in any court or before any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, and neither
BancFirst or BancFirst Bank has any knowledge of any basis for any such action,
suit, proceeding or investigation.
4.19 PERMITS AND LICENSES. Each of BancFirst and BancFirst Bank, and each
BancFirst Subsidiary, has all material permits, licenses, orders and approvals
of all federal, state or local governmental or regulatory bodies required for
BancFirst, BancFirst Bank and each BancFirst Subsidiary to conduct its business
as presently conducted, and all such material permits, licenses, orders and
approvals are in full force and effect, without the threat of suspension or
cancellation. None of such permits, licenses, orders or approvals will be
adversely affected by the consummation of the transactions contemplated by this
Agreement.
4.20 EMPLOYEE BENEFIT PLANS; ERISA.
(a) Section 4.20 of the BancFirst Disclosure Schedule contains a true
and complete list of all qualified pension or profit-sharing plans, deferred
compensation, consulting, bonus, group insurance plans or agreements and all
other incentive, welfare or employee benefit plans or agreements, including, but
not limited to, all "employee benefit plans," as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended (hereinafter
referred to as "ERISA"), which covers any employee or former employee of
BancFirst or BancFirst Bank, or of any BancFirst Subsidiary or any affiliate or
under which BancFirst or BancFirst Bank, or of any BancFirst Subsidiary or any
affiliate has any liability (hereinafter collectively referred to as the
"BancFirst Benefit Plans"). For purposes of this Section 4.20, "affiliate" of
any person or entity means any other person or entity which, together with such
person or entity, would be treated as a single employer under Section 414 of the
Code or is an "affiliate," whether or not incorporated, as defined in Section
407(d)(7) of ERISA, of such
21
person or entity. With respect to such BancFirst Benefit Plans, BancFirst has
made available true and complete copies of all:
(i) BancFirst Benefit Plan documents and amendments thereto;
(ii) Trust agreements and amendments thereto;
(iii) All written interpretations and summaries;
(iv) The three most recent annual reports on IRS Form 5500;
(v) The most recent IRS determination letters (and any pending
request for such) for each BancFirst Benefit Plan which is
intended to be qualified under Section 401(a) of the Code
have been delivered to UNB;
(vi) A copy of the most recent summary plan description required
under ERISA with respect thereto, and all supplements or
modifications thereto; and
(vii) A copy of the three most recent annual reports prepared by an
accountant, actuary or other similar expert with respect to
any disclosure regarding (i) pensions in accordance with
Statement of Financial Accounting Standards No. 87, (ii)
other post-retirement benefits in accordance with Statement
of Financial Accounting Standards No. 106, and (iii)
stock-based compensation in accordance with Statement of
Financial Accounting Standards No. 123.
(b) None of the reports or other materials delivered pursuant to
Sections 4.20(a)(iv) and 4.20(a)(vii) includes any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements, in the light of the circumstances under which they were made, not
misleading.
(c) Each BancFirst Benefit Plan which constitutes an "employee pension
plan," as defined in Section 3(2) of ERISA, is and has been administered in
material compliance with its governing documents and the applicable provisions
of ERISA and any such employee pension plan which is intended to be qualified
under the provisions of Section 401(a) of the Code, is and has been administered
in material compliance with the applicable provisions of the Code.
(d) Each BancFirst Benefit Plan which constitutes an "employee welfare
benefit plan," as defined in Section 3(1) of ERISA, is and has been administered
in material compliance with its governing documents and the applicable
provisions of ERISA and each BancFirst Benefit Plan which constitutes a "group
health plan," as defined in Section 5000(b)(1) of the Code, is and has been
administered in material compliance with the continuation of coverage provisions
contained in Section 4980B of the Code.
22
(e) Each BancFirst Benefit Plan which is not an "employee benefit
plan," as defined in Section 3(3) of ERISA, is and has been administered in
material compliance with its Governing Documents and with any and all state or
federal laws applicable to such BancFirst Benefit Plan. Nothing done or omitted
to be done and no transaction or holding of any asset under or in connection
with any BancFirst Benefit Plan has or will make BancFirst, BancFirst Bank, a
BancFirst Subsidiary or any affiliate liable for any tax pursuant to Sections
4971-4980E of the Code. There is no pending or threatened litigation,
arbitration, disputed claim, adjudication, audit, examination or other
proceeding with respect to any BancFirst Benefit Plan or any fiduciary or
administrator thereof in their capacities as such (other than the submission of
participant claims for benefits in the ordinary course of operation of such
BancFirst Benefit Plans).
(f) The market value of assets under each "employee pension plan" (as
defined above) which is subject to the provisions of Title IV of ERISA, equals
or exceeds the present value of all vested and nonvested liabilities thereunder
determined in accordance with Pension Benefit Guaranty Corporation (hereafter
referred to as the "PBGC") methods, factors and assumptions applicable to an
employee pension plan terminating on the date for determination. No "accumulated
funding deficiency," as defined in Section 412 of the Code, has been incurred
with respect to any BancFirst Benefit Plan, whether or not waived. Full payment
has been made of all amounts which BancFirst or BancFirst Bank or any affiliate
is required to have paid as contributions to or benefits under any BancFirst
Benefit Plan as of the end of the most recent plan year thereof and there are no
unfunded obligations under any BancFirst Benefit Plan. No condition exists and
no event has occurred that could constitute grounds for termination of any
BancFirst Benefit Plan, and neither BancFirst, BancFirst Bank, a BancFirst
Subsidiary nor any affiliate has incurred any material liability under Title IV
of ERISA arising in connection with the termination of any BancFirst Benefit
Plan covered or previously covered by Title IV of ERISA.
(g) BancFirst does not maintain any BancFirst Benefit Plan which
provides post-retirement medical, dental or life insurance benefits to any
former employee of BancFirst, BancFirst Bank or any BancFirst Subsidiary nor is
BancFirst obligated to provide any such benefit to any current employee upon his
or her retirement, except for the continuation coverage required under Section
4980B of the Code.
(h) Neither BancFirst nor BancFirst Bank, nor any BancFirst Subsidiary,
participates in, or has ever been obligated to contribute to, any multi-employer
plan as such term is defined in Section 3(37) of ERISA.
(i) None of BancFirst, BancFirst Bank, a BancFirst Subsidiary nor any
BancFirst Benefit Plan maintained by any of BancFirst, BancFirst Bank, or a
BancFirst Subsidiary, nor any fiduciary of any such BancFirst Benefit Plan, has
incurred any material liability to the PBGC, the United States Department of
Labor or to the IRS with respect to a BancFirst Benefit Plan.
23
(j) No prohibited transaction (which shall mean any transaction
prohibited by Section 406 of ERISA and not exempt under Section 408 of ERISA)
has occurred with respect to any "employee benefit plan" (as defined above)
maintained by either BancFirst, BancFirst Bank or any BancFirst Subsidiary;
(i) Which would result in the imposition, directly or indirectly,
of an excise tax under Section 4975 of the Code; or
(ii) The correction of which would have a material adverse effect
on the financial condition, results of operations or business
of BancFirst. No "reportable event," within the meaning of
Section 4043 of ERISA, and no event described in Section
4041, 4042, 4062 or 4063 of ERISA has occurred in connection
with any BancFirst Benefit Plan.
(k) Each employee pension plan (as defined above) which is intended to
be an employee stock ownership plan, as defined in Section 4975(e)(7) of the
Code, is and has been administered in substantial compliance with the applicable
provisions of Sections 4975 and 409 of the Code and the regulations promulgated
by the IRS thereunder and, any outstanding loan to which any such employee stock
ownership plan is a party constitutes an "exempt loan," as described in Section
54.4975-7 of the regulations promulgated by the IRS.
(l) There has been no amendment to, written interpretation or
announcement (whether or not written) relating to, or change in employee
participation or coverage under, any BancFirst Benefit Plan, which would
increase the expense of maintaining such BancFirst Benefit Plan above the level
of the expense incurred in respect thereof for the plan year ended immediately
prior to the date hereof.
(m) Except as set forth in the BancFirst Disclosure Schedule or as
expressly provided in this Agreement, the consummation of the transactions
contemplated by this Agreement will not (A) entitle any current or former
employee or officer of BancFirst or any affiliate to severance pay, unemployment
compensation or any other payment, or (B) accelerate the time of payment or
vesting, or increase the amount of compensation or benefits due any such
employee or officer.
(n) With respect to each BancFirst Benefit Plan, no "reportable event"
within the meaning of Section 4043 of ERISA (excluding any such event for which
the thirty (30) day notice requirement has been waived under the regulations to
Section 4043 of ERISA) nor any event described in Section 4062, 4063 or 4041 of
ERISA has occurred.
(o) No amounts payable under the BancFirst Benefit Plans will fail to
be deductible for federal income tax purposes by virtue of section 280G of the
Code.
24
4.21 ENVIRONMENTAL PROTECTION
(a) Except as set forth in Section 4.21 of the BancFirst Disclosure
Schedule:
(i) To the knowledge of BancFirst, each of BancFirst, BancFirst
Bank, and the BancFirst Property is, and has been at all
times, in material compliance with all applicable
Environmental Laws;
(ii) No investigations, inquiries, orders, hearings, actions or
other proceedings by or before any court or governmental
agency have been issued, are pending or, to the knowledge of
BancFirst or BancFirst Bank, threatened against either
BancFirst or BancFirst Bank, or in connection with the
BancFirst Property;
(iii) No claims have been made or, to the knowledge of BancFirst or
BancFirst Bank, threatened at any time against either
BancFirst or BancFirst Bank, with respect to the BancFirst
Property relating to actual or alleged violation of any
Environmental Law with respect to the BancFirst Property or
relating to damage, contribution, cost recovery,
compensation, loss or injury resulting from any Hazardous
Substance with respect to the BancFirst Property;
(iv) To the knowledge of BancFirst, no Hazardous Substances have
been integrated into any BancFirst Property or any component
thereof in violation of Environmental Laws;
(v) [INTENTIONALLY LEFT BLANK];
(vi) The BancFirst Property has not been used by BancFirst or
BancFirst Bank for the storage, disposal or treatment of
Hazardous Substances, except as allowed by applicable law,
has not been contaminated by Hazardous Substances in material
violation of any applicable Environmental Laws, nor has been
used for the storage or use of any underground or aboveground
storage tanks in material violation of any applicable
Environmental Laws; and
(vii) Material permits, registrations and other authorizations
necessary for either BancFirst or BancFirst Bank, or the
BancFirst Property to operate in material compliance with all
Environmental Laws are currently in force and are identified
in Section 4.21 of the BancFirst Disclosure Schedule.
(b) As used in this Agreement:
(i) "BancFirst Property" means all real and personal property now
or previously owned, leased, occupied or managed by either
BancFirst or BancFirst Bank or any Subsidiary of either or
any Person or entity whose liability for any matter has or
may have
25
been related or assumed by BancFirst either contractually or
are by operation of law.
(ii) "Environmental Laws" means all federal, state, local and
other laws, regulations, rules, standards, ordinances,
orders, decrees, and judgments relating to pollution, the
environment, occupational health and safety, or the
protection of human health, all as may be from time to time
amended.
(iii) "Hazardous Substances" means any and all substances or
materials which are classified or considered to be hazardous
or toxic to human health or the environment under any
applicable Environmental Laws and shall include, without
limitation, any "hazardous substances" as defined in Section
101(14) of CERCLA (42 USC Section 9601(14)) or regulations
promulgated thereunder, any "toxic and hazardous substances"
as defined in 29 CFR Part 1910, petroleum and its byproducts,
asbestos, polychlorinated biphenyls, nuclear fuel or
materials, lead and lead-containing substances, and
urea-formaldehyde.]
4.22 EMPLOYMENT MATTERS. Each of BancFirst and BancFirst Bank is in
material compliance with all federal, state or other applicable laws respecting
employment and employment practices, terms and conditions of employment and
wages and hours. No unfair labor practice complaint against either BancFirst or
BancFirst Bank is pending before any governmental agency or court and there is
no labor strike, dispute, slowdown or stoppage actually pending or, to the
knowledge of either BancFirst or BancFirst Bank, threatened against or involving
either BancFirst or BancFirst Bank. No representation question exists in respect
of the employees of either BancFirst or BancFirst Bank and no labor grievance
which might have a material adverse effect upon either BancFirst or BancFirst
Bank, or the conduct of its businesses is pending or, to the knowledge of
BancFirst, threatened. No arbitration proceeding arising out of or under any
collective bargaining agreement is pending and no claim therefore has been
asserted against either BancFirst or BancFirst Bank. No collective bargaining
agreement is currently in effect or is currently being negotiated by either
BancFirst or BancFirst Bank. 4.23 BROKERS. All negotiations relating to this
Agreement and the transactions contemplated hereby have been carried on without
the intervention of any person, other than Sandler, O'Neill & Partners, acting
on behalf of BancFirst or BancFirst Bank pursuant to an agreement disclosed in
the BancFirst Disclosure Schedule or in such manner as to give rise to any valid
claim against BancFirst or BancFirst Bank for any broker's or finder's fee or
similar compensation.
4.24 STOCK OWNERSHIP. Except as set forth in Section 4.24 of the BancFirst
Disclosure Schedule, neither BancFirst nor any of its "affiliates" or
"associates," as the terms "affiliates" and "associates" are defined in Section
1704.01(C)(1) of the ORC, are "beneficial owners," as the term "beneficial
owners" is defined in Section 1704.01(C)(4) of the ORC, of any of the UNB
Shares.
26
4.25 REGULATORY MATTERS. Except as set forth in Section 4.25 of the
BancFirst Disclosure Schedule, neither BancFirst nor BancFirst Bank, nor any
BancFirst Subsidiary, is subject or is party to, or has received any notice or
advice that it may become subject or party to, any investigation with respect
to, any cease-and-desist order, agreement, consent agreement, memorandum of
understanding or other regulatory enforcement action, proceeding or order with
or by, or is a party to any commitment letter or similar undertaking to, or is
subject to any directive by, any regulatory agency that currently restricts the
conduct of its business or that currently affects its capital adequacy, credit
policies, management or business (hereinafter referred to as a "Regulatory
Agreement"), nor has BancFirst, BancFirst Bank, or any BancFirst Subsidiary,
been advised by any regulatory agency that it is considering issuing or
requesting any such Regulatory Agreement. Except as set forth in Section 4.25 of
the BancFirst Disclosure Schedule, there is no unresolved violation, with
respect to any report or statement relating to any examinations of BancFirst,
BancFirst Bank, or any BancFirst Subsidiary. BancFirst, BancFirst Bank and each
BancFirst Subsidiary has paid all assessments made or imposed by any
Governmental Entity.
4.26 NON-BANKING ACTIVITIES. BancFirst is not engaged in any activity,
either directly or indirectly through one or more of the BancFirst Subsidiaries
or other equity investments, which is not permitted to be engaged in by a
financial holding company or by a subsidiary or other enterprise through which
such activity is conducted. BancFirst Bank is not engaged in any activity,
either directly or indirectly through one or more of the BancFirst Subsidiaries
or other equity investments, which is not permitted to be engaged in by a
national banking association or by a subsidiary or other enterprise through
which such activity is conducted.
4.27 FIDUCIARY RESPONSIBILITY. During the applicable statute of limitations
period:
(a) Each of BancFirst Bank and the Trust Company has properly
administered all accounts for which it acts as a fiduciary or agent, including,
but not limited to, 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 state and
federal law and regulations and common law; and
(b) Neither BancFirst Bank nor the Trust Company, nor any director,
officer or employee of BancFirst Bank or the Trust Company acting on behalf of
BancFirst Bank or the Trust Company, has committed any breach of trust with
respect to any such fiduciary or agency account, and the accountings for each
such fiduciary or agency account are true and correct and accurately reflect the
assets of such fiduciary or agency account.
(c) To the knowledge of BancFirst or BancFirst Bank, there is no
investigation or inquiry by any regulatory agency pending or threatened against
or affecting BancFirst Bank or the Trust Company relating to the compliance by
BancFirst Bank or the Trust Company with sound fiduciary principles and
applicable regulations.
4.28 EMPLOYMENT AGREEMENTS. Section 4.16 of the BancFirst Disclosure
Schedule lists each agreement, arrangement, commitment or contract (whether
written or oral) for the employment, retention or engagement, or with respect to
the severance, of any present or former officer, director, employee, agent,
consultant or other person or entity to which BancFirst or
27
BancFirst Bank, or any BancFirst Subsidiary, is a party to or bound by and
which, by its terms, is not terminable by BancFirst or BancFirst Bank, or a
BancFirst Subsidiary, on thirty (30) days written notice or less without the
payment of any amount by reason of such termination. Copies of each written
agreement, arrangement, commitment or contract listed in Section 4.16 of the
BancFirst Disclosure Schedule have been previously made available to UNB.
4.29 CERTAIN OPERATIONAL MATTERS.
(a) Neither BancFirst nor BancFirst Bank is a party to any agreement or
subject to any arrangement which would prevent, limit or restrict it from the
sale, lease or other disposition of its main offices or any branch office.
(b) Except as set forth in Section 4.29 of the BancFirst Disclosure
Schedule, the consummation of the Merger or the Bank Merger shall not result in
the termination or cancellation before its stated expiration of any contract to
which BancFirst or BancFirst Bank is a party or cause them to incur any
financial penalty, liquidated damages, assessment or other costs solely by
reason of such mergers.
(c) All interest rate swaps, caps, floors and option agreements and
other interest rate risk management arrangements, whether entered into for the
account of BancFirst or for the account of a customer of BancFirst or one of its
Subsidiaries, were entered into in the ordinary course of business and, to
BancFirst's knowledge, in accordance with prudent banking practice and
applicable rules, regulations and policies of any regulatory authority having
jurisdiction over the same and with counter parties believed to be financially
responsible at the time and are legal, valid and binding obligations of
BancFirst or one of its Subsidiaries enforceable in accordance with their terms
(except as may be limited by bankruptcy, insolvency, moratorium, reorganization
or similar laws affecting the rights of creditors generally and the availability
of equitable remedies), and are in full force and effect. BancFirst and each of
its Subsidiaries have duly performed in all material respects all of their
material obligations thereunder to the extent that such obligations to perform
have accrued; and, to BancFirst's knowledge, there are no material breaches,
violations or defaults or allegations or assertions of such by any party
thereunder.
4.30 INTELLECTUAL PROPERTY. BancFirst, BancFirst Bank and each BancFirst
Subsidiary owns or possesses valid and binding licenses and other rights to use
without payment of any material amount all material patents, copyrights, trade
secrets, trade names, service marks and trademarks and software used in its
businesses, all of which are set forth in Section 4.30 of the BancFirst
Disclosure Schedule, and none of BancFirst, BancFirst Bank or any BancFirst
Subsidiary has received any notice of conflict with respect thereto that asserts
the right of others.
4.31 TRANSACTIONS WITH AFFILIATES. All "covered transactions" between
BancFirst Bank and an "affiliate" thereof within the meaning of Sections 23A and
23B of the Federal Reserve Act have been in compliance with such provisions. All
"covered transactions" between the Trust Company and an "affiliate" thereof
within the meaning of Sections 23A and 23B of the Federal Reserve Act have been
in compliance with such provisions.
28
4.32 STATEMENTS. None of the information supplied or to be supplied by
BancFirst and BancFirst Bank for inclusion in this Agreement or in any documents
filed with any regulatory agency in connection with the transactions
contemplated by this Agreement shall, at the respective times such documents are
filed, and at the time of the BancFirst shareholders' meeting to consider the
Merger, contain any untrue statement of a material fact, or omit to state any
material fact necessary in order to make the statements made therein, in light
of the circumstances under which they are made, not misleading.
4.33 BROKERED DEPOSITS. BancFirst Bank holds no brokered deposits.
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF UNB AND UNB BANK
UNB and the UNB Bank represent and warrant to BancFirst that each of
the following statements is true and accurate in all material respects, except
as otherwise disclosed in a schedule provided by UNB and the UNB Bank to
BancFirst prior to the execution of this Agreement (the "UNB Disclosure
Schedule"). The UNB Disclosure Schedule shall be arranged in paragraphs
corresponding to the lettered Sections and Subsections contained in this Article
V, and the disclosure in any letter paragraph shall qualify only the
corresponding Section or Subsection in this Article V.
5.1 ORGANIZATION AND STANDING.
(a) UNB is a corporation duly organized, validly existing and in good
standing under the laws of the State of Ohio and has the corporate power and
authority to own or hold under lease all of its properties and assets and to
conduct its business and operations as presently conducted. UNB is registered as
a bank holding company under the BHCA. UNB has filed an election to become, and
presently is, a "financial holding company" under 12 C.F.R. Section 225.82, has
not received any notice from the FRB pursuant to 12 C.F.R. Section 225.82(e)(1),
continues to satisfy all requirements for financial holding company status under
12 C.F.R. Section 225.81, and is not subject to any limitation under 12 C.F.R.
Sections 225.83 or 225.84. UNB is in compliance in all material respects with
all applicable local, state or federal laws and regulations.
(b) UNB Bank is a national banking association duly organized and
validly existing under the NBA and has the corporate power and authority to own
or hold under lease all of its properties and assets and to conduct its business
and operations as presently conducted. Except as set forth in Section 5.1(b) of
the UNB Disclosure Schedule, the deposit accounts of UNB Bank are insured up to
applicable limits by the BIF or the Savings Association Insurance Fund of the
FDIC, and UNB Bank has paid all deposit insurance premiums and assessments
required by applicable law. UNB Bank is in compliance in all material respects
with all applicable local, state or federal laws and regulations, including
without limitation, the Equal Credit Opportunity Act, the Fair Housing Act, the
Community Reinvestment Act, the Home Mortgage Disclosure Act and all other
applicable fair lending laws and other laws relating to discriminatory business
practices.
5.2 SUBSIDIARIES.
(a) United Banc Financial Services, Inc. is a corporation duly
organized and validly existing under the laws of the State of Ohio ("UNB
Financial"). United Financial
29
Advisors, Inc. is a corporation duly organized and validly existing under the
laws of the State of Ohio ("UNB Advisors"). United Portfolio Management
Corporation is a corporation duly organized and validly existing under the laws
of the State of Delaware ("UNB Management"). UNB Financial, UNB Advisors and UNB
Management are collectively referred to hereafter as the "UNB Subsidiaries".
(b) Each UNB Subsidiary has the full corporate power, right, authority
and governmental authorizations to own or lease its properties and assets and to
carry on its business as it now is being conducted in all material respects.
Each UNB Subsidiary is in compliance in all material respects with all
applicable local, state or federal laws and regulations. None of the UNB
Subsidiaries holds, directly or indirectly, any legal or beneficial interest in
any shares, membership units or other equity interest in any Person.
(c) The authorized capital of each UNB Subsidiary, the number of shares
of each which are issued and outstanding and the legal and beneficial owner of
each such share is set forth in Section 5.2 of the UNB Disclosure Schedule.
Either UNB or UNB Bank owns, beneficially and of record, all of the outstanding
common shares of each UNB Subsidiary. All of the outstanding common shares of
each UNB Subsidiary are authorized, validly issued, fully paid and
nonassessable; were issued in full compliance with all applicable laws and
regulations; and were not issued in violation of the preemptive right of any
shareholder thereof. None of the UNB Subsidiaries has any outstanding class of
capital stock other than common shares as set forth in Section 5.2(c) of the UNB
Disclosure Schedule. There are no outstanding subscription rights, options,
conversion rights, warrants or other agreements or commitments of any nature
whatsoever (either firm or conditional) obligating any UNB Subsidiary, or UNB or
UNB Bank, (i) to issue, deliver or sell, cause to be issued, delivered or sold,
any share of such UNB Subsidiary, or restricting such UNB Subsidiary from
selling any additional shares or (ii) to grant, extend or enter into any such
agreement or commitment.
5.3 QUALIFICATION. UNB, UNB Bank and the UNB Subsidiaries are each duly
qualified to do business and in good standing in each jurisdiction in which such
qualification is required or the failure to so qualify would not have a material
adverse effect on the business of UNB, UNB Bank or such UNB Subsidiary. UNB Bank
does not maintain any branch, loan production office or trust representative
office outside of the State of Ohio.
5.4 AUTHORITY.
(a) This Agreement has been:
(i) Duly executed and delivered by UNB and UNB Bank; and
(ii) Approved by the Boards of Directors of UNB and UNB Bank.
(b) The Bank Merger Agreement has been:
(i) Duly executed and delivered by UNB Bank;
(ii) Approved by the Board of Directors of UNB Bank; and
30
(iii) Adopted by UNB as the sole shareholder of UNB Bank.
(c) Subject to the adoption of this Agreement by the UNB shareholders
and to the filing of all requisite Regulatory Applications and the receipt of
all Requisite Regulatory Approvals:
(i) UNB Bank has all requisite corporate power and authority to
enter into this Agreement and the Bank Merger Agreement and,
to perform all of its obligations hereunder and thereunder;
(ii) The execution and delivery of this Agreement and the Bank
Merger Agreement and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by
all necessary corporate action by UNB and UNB Bank; and
(iii) Subject to applicable bankruptcy, insolvency, reorganization
and moratorium laws and other laws of general applicability
affecting the enforcement of creditors' rights generally, and
the effect of rules of law governing specific performance,
injunctive relief and other equitable remedies on the
enforceability of such documents, and except to the extent
such enforceability may be limited by laws relating to safety
and soundness of insured depository institutions as set forth
in 12 U.S.C. Section 1818(b) or by the appointment of a
conservator by the FDIC, (A) this Agreement is the valid and
binding agreement of UNB, enforceable against UNB in
accordance with its terms, and (B) this Agreement and the
Bank Merger Agreement are the valid and binding agreements of
UNB Bank, enforceable against UNB Bank in accordance with
their terms.
5.5 GOVERNING DOCUMENTS. UNB and UNB Bank have delivered to BancFirst true
and accurate copies of the Articles of Incorporation and Code of Regulations of
UNB and the Articles of Association and Bylaws of UNB Bank and have granted
BancFirst access to (a) the Articles of Incorporation and Code of Regulations of
each UNB Subsidiary and (b) all records of all meetings and other corporate
actions by the shareholders, Boards of Directors and Committees of the Boards of
Directors of UNB, UNB Bank, and each UNB Subsidiary, other than records of
meetings relating to the consideration of transactions related to this
Agreement. The minute books of UNB and UNB Bank contain, in all material
respects, complete and accurate records of all meetings and other corporate
actions of the UNB and UNB Bank shareholders, Boards of Directors and Committees
of the Boards of Directors, other than records of meetings relating to the
consideration of transactions related to this Agreement.
5.6 NO CONFLICTS. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, including the Merger and
the Bank Merger, will not:
31
(a) Subject to the approval of this Agreement by the requisite vote of
the UNB shareholders, conflict with or violate any provision of or result in the
breach of any provision of the Articles of Incorporation or Code of Regulations
of UNB or the Articles of Association or Bylaws of UNB Bank;
(b) Conflict with or violate any provision of or result in the breach
or the acceleration of or entitle any party to accelerate (whether upon or after
the giving of notice of lapse of time or both) any obligation under, or
otherwise materially affect the terms of, any mortgage, Lien, lease, agreement,
license, instrument, order, arbitration award, judgment or decree to which
either UNB or UNB Bank is a party or by which UNB, UNB Bank or their property or
assets is bound;
(c) Require the consent of any party to any agreement or commitment to
which either UNB or UNB Bank is a party or by which UNB, UNB Bank or their
property or assets is bound, the failure to obtain which could, individually or
in the aggregate with all the other failures to obtain required consents, have a
material adverse effect on the business, operations or financial condition of
UNB and UNB Bank, taken as a whole;
(d) Result in the creation or imposition of any Lien, charge, pledge,
security interest or other encumbrance upon any property or assets of either UNB
or UNB Bank or give rise to any meritorious cause of action against either UNB
or UNB Bank; or,
(e) Subject to the receipt of all requisite regulatory approvals and
the requisite vote of the UNB shareholders, violate or conflict with any
applicable law, ordinance, rule or regulation, including, without limitation,
the rules and regulations of the FRB or the OCC.
5.7 CONSENTS. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required by
UNB, UNB Bank or any UNB Subsidiary in connection with the execution and
delivery of this Agreement by UNB or UNB Bank or the consummation by UNB or UNB
Bank of the transactions contemplated hereby, including the Merger and the Bank
Merger, except for filings, authorizations, notices, consents or approvals
required by the SEC, the FRB, the OCC, the FDIC, the Ohio Secretary of State and
the Ohio Department of Insurance.
5.8 UNB AND UNB BANK SHARES.
(a) UNB CAPITAL. The authorized capital of UNB consists of fifty
million (50,000,000) common shares, each without par value, 10,476,941 of which
are issued and outstanding and 1,254,583 of which are reserved for issuance upon
exercise of options granted in accordance with UNB Plan I and UNB Plan II. All
of the issued and outstanding common shares of UNB are duly authorized, validly
issued, fully paid and nonassessable and were issued in full compliance with all
applicable laws. UNB has no outstanding class of capital stock other than such
common shares.
(i) Except for the options to purchase at the per share prices
shown in the UNB Disclosure Schedule an aggregate of 928,624
UNB Shares granted in accordance with the UNB Plan I and the
UNB Plan II and except for the option contained in the Option
32
Agreement, there are no outstanding subscription rights,
options, conversion rights, warrants or other agreements,
plans or commitments of any nature whatsoever (either firm or
conditional) obligating UNB (i) to issue, deliver or sell,
cause to be issued, delivered or sold, or restricting UNB
from selling any additional UNB common shares; or (ii) to
grant, extend or enter into any such agreement, plan or
commitment. There are no outstanding stock appreciation,
phantom stock or similar rights in respect of UNB Shares.
(b) UNB BANK CAPITAL. The authorized capital of UNB Bank consists of
__________ common shares, each without par value, 269,325 of which are issued
and outstanding and held of record by UNB. All of the outstanding common shares
of UNB Bank are duly authorized, validly issued, fully paid and nonassessable;
were issued in full compliance with all applicable laws; and were not issued in
violation of the preemptive right of any depositor or shareholder of UNB Bank.
UNB Bank has no outstanding class of capital stock other than such common
shares. There are no outstanding subscription rights, options, conversion
rights, warrants or other agreements or commitments of any nature whatsoever
(either firm or conditional) obligating UNB Bank (i) to issue, deliver or sell,
cause to be issued, delivered or sold, or restricting UNB Bank from selling any
additional UNB Bank shares or (ii) to grant, extend or enter into any such
agreement or commitment.
5.9 FINANCIAL STATEMENTS.
(a) The consolidated statements of financial condition as of December
31, 1999 and 2000, of UNB and the related consolidated statements of income,
shareholders' equity and cash flows for each of the three years then ended,
examined and reported upon by Crowe, Chizek & Company, LLP, certified public
accountants, complete copies of which have previously been delivered to
BancFirst (hereinafter referred to as the "UNB Audited Financials"), have been
prepared in conformity with generally accepted accounting principles applied on
a consistent basis and fairly present the consolidated financial position of UNB
at such dates and the consolidated results of its operations and cash flows for
such periods. The books and records of UNB and UNB Bank have been, and are
being, maintained in accordance with generally accepted accounting principles
and with any other applicable legal and accounting requirements and reflect only
actual transactions.
(b) The unaudited balance sheet as of June 30, 2001, of UNB and the
related unaudited income statement for the six (6) months then ended, complete
copies of which have previously been delivered to BancFirst (hereinafter
referred to as the "UNB Interim Financials"), fairly present the financial
position of UNB at such date and the results of its operations for such period
and in all material respects have been prepared in accordance with generally
accepted accounting principles as applicable to condensed consolidated financial
statements, e.g., without footnotes and certain accruals normally made at year
end, and as applied on a consistent basis with the UNB Audited Financials. All
adjustments which are necessary for a fair statement of the UNB Interim
Financials have been made.
33
(c) The Consolidated Statements of Condition and Income of UNB Bank for
the three-month periods ended March 31 and June 30, 2001, together with the
schedules and supplements attached thereto, each as filed with the OCC and
copies of which were previously delivered to BancFirst by UNB (hereinafter
referred to as the "UNB Consolidated Statements"), have been prepared in
accordance with accounting practices permitted by the OCC applied on a
consistent basis and fairly present the financial position of UNB Bank at such
dates.
(d) Except as disclosed in the UNB Interim Financials, the UNB
Consolidated Statements and Section 5.9 of the UNB Disclosure Schedule, as of
June 30, 2001, UNB had no liabilities or obligations material to the financial
condition of UNB, whether accrued, absolute, contingent or otherwise, and
whether due or to become due.
5.10 CONDUCT OF BUSINESSES. Between June 30, 2001, and the date of this
Agreement, each of UNB and UNB Bank conducted its businesses only in the
ordinary and usual course, there were no material adverse changes in the
financial condition, assets, liabilities, obligations, properties or business of
UNB or UNB Bank, and, except as set forth in any of the UNB Audited Financials,
the UNB Interim Financials, the UNB Consolidated Statements or Section 5.10 of
the UNB Disclosure Schedule, neither UNB nor UNB Bank:
(a) Authorized the creation or issuance of, issued, sold or disposed
of, or created any obligation to issue, sell or dispose of, any stock, notes,
bonds or other securities or any obligation convertible into or exchangeable
for, any shares of its capital stock;
(b) Except for a per share dividend in the amount of $.125 payable by
UNB on September 14, 2001, declared, set aside, paid or made any dividend or
other distributions on its capital stock or directly or indirectly redeemed,
purchased or acquired any shares or entered into any agreement in respect of the
foregoing;
(c) Effected any stock split, recapitalization, combination, exchange
of shares, readjustment or other reclassification;
(d) Amended its Articles of Incorporation or Code of Regulations, or,
in the case of UNB Bank, its Articles of Association or Bylaws;
(e) Purchased, sold, assigned or transferred any material tangible
asset or any material patent, trademark, trade name, copyright, license,
franchise, design or other intangible asset or property;
(f) Mortgaged, pledged or granted or suffered to exist any Lien or
other encumbrance or charge on any assets or properties, tangible or intangible,
except for i) pledges of assets to the FHLB; ii) ordinary course of business
restrictions on public funds on deposit; iii) Liens for taxes not yet due and
payable; and iv) such other Liens, encumbrances or charges which do not
materially adversely affect its financial position;
(g) Waived any rights of material value or canceled any material debts
or claims;
34
(h) Incurred any material obligation or liability (absolute or
contingent), including, without limitation, any tax liability or any liability
for borrowings from the FRB of Cleveland or the FHLB, or paid any material
liability or obligation (absolute or contingent), other than liabilities and
obligations incurred in the ordinary course of business;
(i) Entered into or amended any employment contract with any of its
officers or increased the compensation payable to any officer or director,
except compensation increases and employment contract renewals made in the
ordinary course;
(j) Incurred any damage, destruction or similar loss, not covered by
insurance, materially affecting its businesses or properties;
(k) Acquired any stock or other equity interest in any corporation,
partnership, trust, joint venture or other entity;
(l) Made any (i) material investment (except investments made in the
ordinary course of business) or (ii) material capital expenditure or commitment
for any material addition to property, plant or equipment; or
(m) Agreed, whether in writing or otherwise, to take any action
described in this Section 5.10.
5.11 PROPERTIES.
(a) A description of all fixed assets which are material to UNB and its
subsidiaries considered as a whole owned by each of UNB and UNB Bank (directly
or through the UNB Subsidiaries) has been delivered to BancFirst (hereinafter
referred to as the "UNB Personal Property"). All UNB Personal Property has been
maintained in good working order, ordinary wear and tear excepted. UNB, UNB Bank
or a UNB Subsidiary owns and has good title to all of the UNB Personal Property,
free and clear of any mortgage, Lien, pledge, charge, claim, conditional sales
or other agreement, lease, right or encumbrance, except:
(i) As set forth in Section 5.11(a) of the UNB Disclosure
Schedule;
(ii) To the extent stated or reserved against in the UNB Audited
Financials or the UNB Interim Financials; and
(iii) Such other exceptions which are not material in character or
amount and do not materially detract from the value of or
interfere with the use of the properties or assets subject
thereto or affected thereby.
(b) A description of each parcel of real property owned by UNB, UNB
Bank, or a UNB Subsidiary (other than real property taken by UNB Bank in
consideration of debts previously contracted) is set forth in Section 5.11(b) of
the UNB Disclosure Schedule (hereinafter referred to individually as a "UNB
Parcel" and collectively as the "UNB Real Properties"). Either UNB, UNB Bank or
a UNB Subsidiary is the owner of each UNB Parcel in
35
fee simple and has good and marketable title to each such UNB Parcel, free of
any Liens, claims, charges, encumbrances or security interests of any kind,
except:
(i) As set forth in Section 5.11(b) of the UNB Disclosure
Schedule;
(ii) Liens for real estate taxes and assessments not yet
delinquent; and
(iii) Utility, access and other easements, rights of way,
restrictions and exceptions, none of which impair the UNB
Real Properties for the use and business being conducted
thereon.
(c) A description of all real property leased by UNB, UNB Bank or any
UNB Subsidiary is set forth in Section 5.11(c) of the UNB Disclosure Schedule
(hereinafter referred to as the "UNB Leased Real Property"). Except as set forth
in Section 5.11(c) of the UNB Disclosure Schedule, the Real Property Leases
create, in accordance with their terms, valid, binding and assignable leasehold
interests of either UNB or UNB Bank, or a UNB Subsidiary, in all of the UNB
Leased Real Property, free and clear of all Liens, claims, charges, encumbrances
or security interests of any kind.
(d) A description of all personal property leased by UNB, UNB Bank or a
UNB Subsidiary which requires payment of rentals in excess of $50,000 per annum
is set forth in Section 5.11(d) of the UNB Disclosure Schedule.
(e) The documentation (hereinafter referred to as "UNB Loan
Documentation") governing or relating to the loan and credit-related assets
(hereinafter referred to as the "UNB Loan Assets") included within the loan
portfolio of UNB Bank is legally sufficient in all material respects for the
purposes intended thereby and creates enforceable rights in favor of UNB Bank in
accordance with the terms of such UNB Loan Documentation, subject to applicable
bankruptcy, insolvency, reorganization and moratorium laws and other laws of
general applicability affecting the enforcement of creditors' rights generally,
and the effect of rules of law governing specific performance, injunctive relief
and other equitable remedies on the enforceability of such documents. Each loan
included in the UNB Loan Assets has been serviced in all material respects in
accordance with customary lending standards in the ordinary course of business.
5.12 ALLOWANCE FOR LOAN LOSSES. Except as set forth in a schedule
dated June 30, 2001, as previously delivered to BancFirst by UNB, there was no
loan which was made by UNB, UNB Bank or UNB Financial and which is reflected as
an asset of UNB, UNB Bank or UNB Financial on the UNB Audited Financials or the
UNB Interim Financials that (i) was ninety (90) days or more delinquent or (ii)
has been classified by examiners (regulatory or internal) as "Substandard,"
"Doubtful", "Loss" or "Special Mention" (or words of similar import). The
allowance for loan losses as reflected on the UNB Audited Financials and the UNB
Interim Financials is, in the opinion of UNB's management, adequate in all
material respects as of their respective dates under the requirements of
generally accepted accounting principles to provide for reasonably anticipated
losses on outstanding loans, net of recoveries.
5.13 INVESTMENTS.
36
(a) Section 5.13(a) of the UNB Disclosure Schedule contains a true,
accurate and complete list of all investments, other than investments in the UNB
Loan Assets and the UNB Real Properties, and other than securities and other
interests held in a fiduciary capacity and beneficially owned by third parties
or taken in consideration of debts previously contracted, owned by UNB, UNB
Bank, or a UNB Subsidiary (hereinafter referred to as the "UNB Investments") as
of July 31, 2001. Except as set forth in Section 5.13(a) of the UNB Disclosure
Schedule, the UNB Investments, other than any such investments disposed of in
the ordinary course of business prior to the date hereof, are owned by UNB, UNB
Bank, or a UNB Subsidiary free and clear of all Liens, pledges, claims, security
interests, encumbrances, charges or restrictions of any kind (other than such as
arise in the ordinary course of business from FHLB borrowings or acceptance of
public funds) and may be freely disposed of by UNB, UNB Bank or such UNB
Subsidiary at any time. Except as set forth in Section 5.13(a) of the UNB
Disclosure Schedule, neither UNB nor UNB Bank, nor any UNB Subsidiary, is a
party to, nor has any interest in:
(i) Any repurchase agreement, reverse repurchase agreement,
collateralized mortgage obligation or any other derivative
security; or
(ii) Any interest rate swaps, caps, floors, option agreements or
any other interest rate risk management agreements.
(b) Except as set forth in Section 5.13(a) of the UNB Disclosure
Schedule, and other than the UNB Subsidiaries, neither UNB nor UNB Bank owns of
record or beneficially the outstanding shares of, or any equity interest in, any
corporation or other business entity, other than securities and other interests
taken in consideration of debts previously contracted.
5.14 REPORTS AND RECORDS.
(a) Each of UNB and UNB Bank, and each UNB Subsidiary, has filed all
reports and maintained all records required to be filed or maintained by it
under various rules and regulations of the SEC, the FRB, the OCC, the FDIC, the
Ohio Department of Insurance, the Ohio Division of Commerce and other regulatory
agencies with jurisdiction over UNB, UNB Bank or any UNB Subsidiary. All such
documents and reports complied in all material respects with applicable
requirements of law and regulations in effect at the time of filing such
documents and contained in all material respects the information required to be
stated therein.
(b) UNB has delivered to BancFirst copies of the following documents,
each of which has been filed with the SEC (hereinafter referred to as the "UNB
SEC Filings"):
(i) The UNB Annual Reports on Form 10-K for the fiscal years
ended December 31, 2000 and 1999;
(ii) The UNB Annual Reports to Shareholders for the fiscal years
ended December 31, 2000 and 1999;
(iii) The UNB Proxy Statements for use in connection with the 2000
and 1999 Annual Meetings of Shareholders;
37
(iv) The UNB Quarterly Reports on Form 10-Q for the quarters ended
March 31 and June 30, 2001; and
(v) All Form 8-K's filed in 2001.
The UNB SEC Filings did not, as of the dates on which such reports were filed
with the SEC, contain any untrue statement of a material fact or omit any
material fact required to be stated therein or necessary to make the statements
contained therein, in light of the circumstances under which they were made, not
misleading.
5.15 TAXES.
(a) Except as set forth in Section 5.15(a) of the UNB Disclosure
Schedule, each of UNB and UNB Bank, and each UNB Subsidiary, has duly and timely
filed all federal, state, county and local income, profits, franchise, excise,
sales, customs, property, use, occupation, withholding, social security and
other tax and information returns and reports required to have been filed by
each through the date hereof, and has paid or accrued all taxes and duties (and
all interest and penalties with respect thereto) due or claimed to be due.
Neither UNB nor UNB Bank, nor any UNB Subsidiary, has any liability for any
taxes or duties (or interest or penalties with respect thereto) of any nature
whatsoever and there is no basis for any additional material claims or
assessments, other than with respect to liabilities for taxes and duties which
are reflected in the UNB Interim Financials or which may have accrued since June
30, 2001, in the ordinary course of business.
(b) No deficiencies for any taxes, assessments or governmental charges
have been proposed, asserted or assessed in writing by any governmental or
taxing authority against UNB or UNB Bank, or against any UNB Subsidiary, that
have not been settled or would not be covered by existing reserves. Except as
set forth in Section 5.15(b) of the UNB Disclosure Schedule, neither UNB nor UNB
Bank, nor any UNB Subsidiary:
(i) Is a party to any agreement providing for the allocation or
sharing of taxes; or
(ii) Is required to include in income any adjustment pursuant to
Section 481(a) of the Code by reason of the voluntary change
in accounting method, nor has any taxing authority proposed
in writing any such adjustment or change of accounting
method.
(c) Any amount that will become receivable (whether in cash or property
or the vesting of property) as a result of any of the transactions contemplated
by this Agreement by any employee, officer or director of UNB or UNB Bank, or of
any UNB Subsidiary, who is a Disqualified Individual under any employment,
severance or termination agreement, other compensation arrangements or UNB
Benefit Plan currently in effect will not be characterized as an "excess
parachute payment," as such term is defined in Section 1.280G-1 of the Code.
38
5.16 MATERIAL CONTRACTS.
(a) Except as set forth in Section 5.16(a) of the UNB Disclosure
Schedule, neither UNB nor UNB Bank, nor any UNB Subsidiary, as of the date
hereof is a party to or bound by any written or oral:
(i) Contract or commitment for capital expenditures in excess of
two hundred thousand dollars ($200,000) for any one project
or five hundred thousand dollars ($500,000) in the aggregate;
(ii) Contract or commitment made in the ordinary course of
business for the purchase of materials or supplies or for the
performance of services involving payments to or by either
UNB or UNB Bank, or any UNB Subsidiary, of an amount
exceeding two hundred thousand dollars ($200,000) in the
aggregate or extending for more than six (6) months from the
date hereof;
(iii) Contract or option for the purchase of any real property;
(iv) Letter of credit or indemnity calling for payment, upon the
conditions stated therein, of more than three hundred
thousand dollars ($300,000);
(v) guarantee agreement;
(vi) Instrument granting any person ( other than employees acting
in the ordinary course of business) authority to transact
business on behalf of either UNB or UNB Bank, or on behalf of
a UNB Subsidiary;
(vii) Contracts or commitments relating to outstanding loans and/or
commitments to make loans (including unfunded commitments and
lines of credit) to any one person or entity (together with
"affiliates" of such person or entity) in excess of one
million dollars ($1,000,000);
(viii) Employment, management, consulting, deferred compensation,
severance or other similar contract with any director,
officer or employee of either UNB or UNB Bank, or of a UNB
Subsidiary;
(ix) Note, debenture or loan agreement pursuant to which either
UNB or UNB Bank, or a UNB Subsidiary, has incurred
indebtedness, other than deposit liabilities and advances
from the FRB of Cleveland and the FHLB;
(x) Loan agreement with any director, executive officer or ten
percent (10%) or greater shareholder of UNB, UNB Bank, or any
UNB Subsidiary, or to the knowledge of UNB and UNB Bank, any
39
Person controlling, controlled by or under common control
with, or a member of the immediate family of, any of the
foregoing;
(xi) Any contract which would constitute or involves a "covered
transaction" with an "affiliate" under Sections 23A or 23B of
the Federal Reserve Act; or
(xii) Commitment or agreement to do any of the foregoing. Contracts
set forth in Section 5.16 of the UNB Disclosure Schedule are
hereinafter collectively referred to as the "UNB Contracts."
(b) None of UNB, UNB Bank, or any UNB Subsidiary is in material default
under any of the UNB Contracts, nor has there occurred any event that, with the
lapse of time or the giving of notice or both, would constitute such a default.
5.17 INSURANCE. All material properties and operations of each of UNB and
UNB Bank are adequately insured for its benefit. The performance by the officers
and employees of each of UNB and UNB Bank of their duties is bonded in such
amounts and against such risks as are usually insured against or bonded by
entities similarly situated, under valid and enforceable policies of insurance
or bonds issued by insurers or bonding companies of recognized responsibility,
financial or otherwise.
5.18 ACTIONS AND SUITS. Except as set forth in Section 5.18 of the UNB
Disclosure Schedule, and except for routine claims and foreclosure litigation
arising in the ordinary course of business, there are no actions, suits or
proceedings or investigations pending or, to the knowledge of UNB, threatened
against or affecting the business, operations or financial condition of either
UNB or UNB Bank, or of any UNB Subsidiary, in any court or before any federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality, and neither UNB or UNB Bank has any knowledge of any
basis for any such action, suit, proceeding or investigation.
5.19 PERMITS AND LICENSES. Each of UNB and UNB Bank, and each UNB
Subsidiary, has all material permits, licenses, orders and approvals of all
federal, state or local governmental or regulatory bodies required for UNB, UNB
Bank and each UNB Subsidiary to conduct its business as presently conducted, and
all such material permits, licenses, orders and approvals are in full force and
effect, without the threat of suspension or cancellation. None of such permits,
licenses, orders or approvals will be adversely affected by the consummation of
the transactions contemplated by this Agreement.
5.20 EMPLOYEE BENEFIT PLANS; ERISA.
(a) Section 5.20 of the UNB Disclosure Schedule contains a true and
complete list of all qualified pension or profit-sharing plans, deferred
compensation, consulting, bonus, group insurance plans or agreements and all
other incentive, welfare or employee benefit plans or agreements, including, but
not limited to, all "employee benefit plans," as defined in Section 3(3) of
ERISA, which covers any employee or former employee of UNB or UNB Bank, or of
any UNB Subsidiary or any affiliate or under which UNB or UNB Bank, or of any
UNB
40
Subsidiary or any affiliate has any liability (hereinafter collectively referred
to as the "UNB Benefit Plans"). For purposes of this Section 5.20, "affiliate"
of any person or entity means any other person or entity which, together with
such person or entity, would be treated as a single employer under Section 414
of the Code or is an "affiliate," whether or not incorporated, as defined in
Section 407(d)(7) of ERISA, of such person or entity. With respect to such UNB
Benefit Plans, UNB has made available true and complete copies of all:
(i) UNB Benefit Plan documents and amendments thereto;
(ii) Trust agreements and amendments thereto;
(iii) all written interpretations and summaries;
(iv) The three most recent annual reports on IRS Form 5500;
(v) The most recent IRS determination letters (and any pending
request for such) for each UNB Benefit Plan which is intended
to be qualified under Section 401(a) of the Code have been
delivered to BancFirst;
(vi) A copy of the most recent summary plan description required
under ERISA with respect thereto, and all supplements or
modifications thereto; and
(vii) A copy of the three most recent annual reports prepared by an
accountant, actuary or other similar expert with respect to
any disclosure regarding (i) pensions in accordance with
Statement of Financial Accounting Standards No. 87, (ii)
other post-retirement benefits in accordance with Statement
of Financial Accounting Standards No. 106, and (iii)
stock-based compensation in accordance with Statement of
Financial Accounting Standards No. 123.
(b) None of the reports or other materials delivered pursuant to
Sections 5.20(a)(iv) and 5.20(a)(vii) includes any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements, in the light of the circumstances under which they were made, not
misleading.
(c) Each UNB Benefit Plan which constitutes an "employee pension plan,"
as defined in Section 3(2) of ERISA, is and has been administered in material
compliance with its Governing Documents and the applicable provisions of ERISA
and any such employee pension plan which is intended to be qualified under the
provisions of Section 401(a) of the Code, is and has been administered in
material compliance with the applicable provisions of the Code.
(d) Each UNB Benefit Plan which constitutes an "employee welfare
benefit plan," as defined in Section 3(1) of ERISA, is and has been administered
in material compliance with its Governing Documents and the applicable
provisions of ERISA and each UNB Benefit Plan which constitutes a "group health
plan," as defined in Section 5000(b)(1) of the Code, is and
41
has been administered in material compliance with the continuation of coverage
provisions contained in Section 4980B of the Code.
(e) Each UNB Benefit Plan which is not an "employee benefit plan," as
defined in Section 3(3) of ERISA, is and has been administered in material
compliance with its Governing Documents and with any and all state or federal
laws applicable to such UNB Benefit Plan. Nothing done or omitted to be done and
no transaction or holding of any asset under or in connection with any UNB
Benefit Plan has or will make UNB, UNB Bank, a UNB Subsidiary or any affiliate
liable for any tax pursuant to Sections 4971-4980E of the Code. There is no
pending or threatened litigation, arbitration, disputed claim, adjudication,
audit, examination or other proceeding with respect to any UNB Benefit Plan or
any fiduciary or administrator thereof in their capacities as such (other than
the submission of participant claims for benefits in the ordinary course of
operation of such UNB Benefit Plans).
(f) The market value of assets under each "employee pension plan" (as
defined above) which is subject to the provisions of Title IV of ERISA, equals
or exceeds the present value of all vested and nonvested liabilities thereunder
determined in accordance with PBGC methods, factors and assumptions applicable
to an employee pension plan terminating on the date for determination. No
"accumulated funding deficiency," as defined in Section 412 of the Code, has
been incurred with respect to any UNB Benefit Plan, whether or not waived. Full
payment has been made of all amounts which UNB or UNB Bank or any affiliate is
required to have paid as contributions to or benefits under any UNB Benefit Plan
as of the end of the most recent plan year thereof and there are no unfunded
obligations under any UNB Benefit Plan. No condition exists and no event has
occurred that could constitute grounds for termination of any UNB Benefit Plan,
and neither UNB, UNB Bank, a UNB Subsidiary nor any affiliate has incurred any
material liability under Title IV of ERISA arising in connection with the
termination of any UNB Benefit Plan covered or previously covered by Title IV of
ERISA.
(g) UNB does not maintain any UNB Benefit Plan which provides
post-retirement medical, dental or life insurance benefits to any former
employee of either UNB, UNB Bank or any UNB Subsidiary nor is UNB obligated to
provide any such benefit to any current employee upon his or her retirement,
except for the continuation coverage required under Section 4980B of the Code.
(h) Neither UNB nor UNB Bank, nor any UNB Subsidiary participates in,
or has ever been obligated to contribute to, any multi-employer plan as such
term is defined in Section 3(37) of ERISA.
(i) None of UNB, UNB Bank, a UNB Subsidiary nor any UNB Benefit Plan
maintained by any of UNB, UNB Bank, or a UNB Subsidiary, nor any fiduciary of
any such UNB Benefit Plan, has incurred any material liability to the PBGC, the
United States Department of Labor or to the IRS with respect to a UNB Benefit
Plan.
(j) No prohibited transaction (which shall mean any transaction
prohibited by Section 406 of ERISA and not exempt under Section 408 of ERISA)
has occurred with respect to any "employee benefit plan" (as defined above)
maintained by either UNB, UNB Bank or any UNB Subsidiary;
42
(i) Which would result in the imposition, directly or indirectly,
of an excise tax under Section 4975 of the Code; or
(ii) The correction of which would have a material adverse effect
on the financial condition, results of operations or business
of UNB. No "reportable event," within the meaning of Section
4043 of ERISA, and no event described in Section 4041, 4042,
4062 or 4063 of ERISA has occurred in connection with any UNB
Benefit Plan.
(k) Each employee pension plan (as defined above) which is intended to
be an employee stock ownership plan, as defined in Section 4975(e)(7) of the
Code, is and has been administered in substantial compliance with the applicable
provisions of Sections 4975 and 409 of the Code and the regulations promulgated
by the Internal Revenue Service (hereinafter referred to as the "IRS")
thereunder and, any outstanding loan to which any such employee stock ownership
plan is a party constitutes an "exempt loan," as described in Section 54.4975-7
of the regulations promulgated by the IRS.
(l) There has been no amendment to, written interpretation or
announcement (whether or not written) relating to, or change in employee
participation or coverage under, any UNB Benefit Plan, which would increase the
expense of maintaining such UNB Benefit Plan above the level of the expense
incurred in respect thereof for the plan year ended immediately prior to the
date hereof.
(m) Except as set forth in the UNB Disclosure Schedule or as expressly
provided in this Agreement, the consummation of the transactions contemplated by
this Agreement will not (A) entitle any current or former employee or officer of
UNB or any affiliate to severance pay, unemployment compensation or any other
payment, or (B) accelerate the time of payment or vesting, or increase the
amount of compensation or benefits due any such employee or officer.
(n) With respect to each UNB Benefit Plan, no "reportable event" within
the meaning of Section 4043 of ERISA (excluding any such event for which the
thirty (30) day notice requirement has been waived under the regulations to
Section 4043 of ERISA) nor any event described in Section 4062, 4063 or 4041 of
ERISA has occurred.
(o) No amounts payable under the UNB Benefit Plans will fail to be
deductible for federal income tax purposes by virtue of section 280G of the
Code.
5.21 ENVIRONMENTAL PROTECTION.
(a) Except as set forth in Section 5.21 of the UNB Disclosure Schedule:
(i) To the knowledge of UNB, each of UNB, UNB Bank, and the UNB
Property is, and has been at all times, in material
compliance with all applicable Environmental Laws;
43
(ii) No investigations, inquiries, orders, hearings, actions or
other proceedings by or before any court or governmental
agency have been issued, are pending or, to the knowledge of
UNB or UNB Bank, threatened against either UNB or UNB Bank,
or in connection with the UNB Property;
(iii) No claims have been made or, to the knowledge of UNB or UNB
Bank, threatened at any time against either UNB or UNB Bank,
with respect to the UNB Property, relating to actual or
alleged violation of any Environmental Law with respect to
the UNB Property or relating to damage, contribution, cost
recovery, compensation, loss or injury resulting from any
Hazardous Substance with respect to the UNB Property;
(iv) To the knowledge of UNB, no Hazardous Substances have been
integrated into any UNB Property or any component thereof in
violation of Environmental Laws;
(v) [INTENTIONALLY LEFT BLANK];
(vi) The UNB Property has not been used by UNB or UNB Bank for the
storage, disposal or treatment of Hazardous Substances,
except as allowed by applicable law, has not been
contaminated by Hazardous Substances, in material violation
of any applicable Environmental Laws, nor has been used for
the storage or use of any underground or aboveground storage
tanks in material violation of any applicable Environmental
Laws; and
(vii) Material permits, registrations and other authorizations
necessary for either UNB or UNB Bank, or the UNB Property to
operate in material compliance with all Environmental Laws
are currently in force and are identified in Section 5.21 of
the UNB Disclosure Schedule.
(b) As used in this Agreement, "UNB Property" means all real and
personal property now or previously owned, leased, occupied or managed by either
UNB or UNB Bank or any Subsidiary of either or any person or entity whose
liability for any matter has or may have been related or assumed by UNB either
contractually or are by operation of law.
5.22 EMPLOYMENT MATTERS. Each of UNB and UNB Bank is in material compliance
with all federal, state or other applicable laws respecting employment and
employment practices, terms and conditions of employment and wages and hours. No
unfair labor practice complaint against either UNB or UNB Bank is pending before
any governmental agency or court and there is no labor strike, dispute, slowdown
or stoppage actually pending or, to the knowledge of either UNB or UNB Bank,
threatened against or involving either UNB or UNB Bank. No representation
question exists in respect of the employees of either UNB or UNB Bank and no
labor grievance which might have a material adverse effect upon either UNB or
UNB Bank, or
44
the conduct of its businesses is pending or, to the knowledge of UNB,
threatened. No arbitration proceeding arising out of or under any collective
bargaining agreement is pending and no claim therefore has been asserted against
either UNB or UNB Bank. No collective bargaining agreement is currently in
effect or is currently being negotiated by either UNB or UNB Bank.
5.23 BROKERS. All negotiations relating to this Agreement and the
transactions contemplated hereby have been carried on without the intervention
of any person, other than Stifel Nicolaus, acting solely on behalf of UNB and
UNB Bank pursuant to an agreement disclosed in the UNB Disclosure Schedule, or
in such manner as to give rise to any valid claim against BancFirst or BancFirst
Bank for any broker's or finder's fee or similar compensation. 5.24 STOCK
OWNERSHIP. Except as set forth in Section 5.24 of the UNB Disclosure Schedule,
neither UNB nor any of its "affiliates" or "associates," as the terms
"affiliates" and "associates" are defined in Section 1704.01(C)(1) of the ORC,
are "beneficial owners," as the term "beneficial owners" is defined in Section
1704.01(C)(4) of the ORC, of any of the BancFirst Shares.
5.25 REGULATORY MATTERS. Except as set forth in Section 5.25 of the UNB
Disclosure Schedule, neither UNB nor UNB Bank, nor any UNB Subsidiary, is
subject or is party to, or has received any notice or advice that it may become
subject or party to, any investigation with respect to, any Regulatory
Agreement, or is a party to, or is subject to, or has been a recipient of, or
has adopted any board resolutions at the request of, any Regulatory Agreement,
nor has UNB, UNB Bank, or any UNB Subsidiary been advised by any regulatory
agency that it is considering issuing or requesting any such Regulatory
Agreement. Except as set forth in Section 5.25 of the UNB Disclosure Schedule,
there is no unresolved violation, with respect to any report or statement
relating to any examinations of UNB, UNB Bank, or any UNB Subsidiary. UNB, UNB
Bank and each UNB Subsidiary has paid all assessments made or imposed by any
Governmental Entity.
5.26 NON-BANKING ACTIVITIES. UNB is not engaged in any activity, either
directly or indirectly through one or more of the UNB Subsidiaries or other
equity investments, which is not permitted to be engaged in by a financial
holding company or by a subsidiary or other enterprise through which such
activity is conducted. UNB Bank is not engaged in any activity, either directly
or indirectly through one or more of the UNB Subsidiaries or other equity
investments, which is not permitted to be engaged in by a national banking
association or by a subsidiary or other enterprise through which such activity
is conducted.
5.27 FIDUCIARY RESPONSIBILITY. During the applicable statute of
limitations period:
(a) UNB Bank has properly administered all accounts for which it acts
as a fiduciary or agent, including, but not limited to, 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 state and federal law and regulations and common law;
and
(b) Neither UNB Bank, nor any director, officer or employee of UNB Bank
acting on behalf of UNB Bank, has committed any breach of trust with respect to
any such
45
fiduciary or agency account, and the accountings for each such fiduciary or
agency account are true and correct and accurately reflect the assets of such
fiduciary or agency account.
(c) To the knowledge of UNB or UNB Bank, there is no investigation or
inquiry by any regulatory agency pending or threatened against or affecting UNB
Bank relating to the compliance by UNB Bank with sound fiduciary principles and
applicable regulations.
5.28 EMPLOYMENT AGREEMENTS. Section 5.16 of the UNB Disclosure Schedule
lists each agreement, arrangement, commitment or contract (whether written or
oral) for the employment, retention or engagement, or with respect to the
severance, of any present or former officer, director, employee, agent,
consultant or other person or entity to which UNB or UNB Bank, or any UNB
Subsidiary, is a party to or bound by and which, by its terms, is not terminable
by UNB or UNB Bank, or a UNB Subsidiary, on thirty (30) days written notice or
less without the payment of any amount by reason of such termination. Copies of
each written agreement, arrangement, commitment or contract listed in Section
5.16 of the UNB Disclosure Schedule have been previously made available to
BancFirst.
5.29 CERTAIN OPERATIONAL MATTERS.
(a) Neither UNB nor UNB Bank is a party to any agreement or subject to
any arrangement which would prevent, limit or restrict it from the sale, lease
or other disposition of its main offices or any branch office.
(b) Except as set forth in Section 5.29 of the UNB Disclosure Schedule,
the consummation of the Merger or the Bank Merger shall not result in the
termination or cancellation before its stated expiration of any contract to
which UNB or UNB Bank is a party or cause them to incur any financial penalty,
liquidated damages, assessment or other costs solely by reason of such mergers.
(c) All interest rate swaps, caps, floors and option agreements and
other interest rate risk management arrangements, whether entered into for the
account of UNB or for the account of a customer of UNB or one of its
Subsidiaries, were entered into in the ordinary course of business and, to UNB's
knowledge, in accordance with prudent banking practice and applicable rules,
regulations and policies of any regulatory authority having jurisdiction over
the same and with counter parties believed to be financially responsible at the
time and are legal, valid and binding obligations of UNB or one of its
Subsidiaries enforceable in accordance with their terms (except as may be
limited by bankruptcy, insolvency, moratorium, reorganization or similar laws
affecting the rights of creditors generally and the availability of equitable
remedies), and are in full force and effect. UNB and each of its Subsidiaries
have duly performed in all material respects all of their material obligations
thereunder to the extent that such obligations to perform have accrued; and, to
UNB's knowledge, there are no material breaches, violations or defaults or
allegations or assertions of such by any party thereunder.
5.30 INTELLECTUAL PROPERTY. UNB, UNB Bank and each UNB Subsidiary owns
or possesses valid and binding licenses and other rights to use without payment
of any material amount all material patents, copyrights, trade secrets, trade
names, service marks and trademarks and software used in its businesses, all of
which are set forth in Section 5.30 of the UNB
46
Disclosure Schedule, and none of UNB, UNB Bank or any UNB Subsidiary has
received any notice of conflict with respect thereto that asserts the right of
others.
5.31 TRANSACTIONS WITH AFFILIATES. All "covered transactions" between
UNB Bank and an "affiliate" thereof within the meaning of Sections 23A and 23B
of the Federal Reserve Act have been in compliance with such provisions. All
"covered transactions" between the Trust Company and an "affiliate" thereof
within the meaning of Sections 23A and 23B of the Federal Reserve Act have been
in compliance with such provisions.
5.32 STATEMENTS. None of the information supplied or to be supplied by
UNB and UNB Bank for inclusion in this Agreement or in any documents filed with
any regulatory agency in connection with the transactions contemplated by this
Agreement shall, at the respective times such documents are filed, and at the
time of the UNB shareholders' meeting to consider the Merger, contain any untrue
statement of a material fact, or omit to state any material fact necessary in
order to make the statements made therein, in light of the circumstances under
which they are made, not misleading.
5.33 BROKERED DEPOSITS. UNB Bank holds no brokered deposits.
ARTICLE VI. COVENANTS
6.1 CONDUCT OF BUSINESS PENDING THE EFFECTIVE TIME. Each of BancFirst,
BancFirst Bank, UNB, and UNB Bank agrees as to itself and the BancFirst
Subsidiaries and the UNB Subsidiaries, as applicable, that, from and after the
date hereof until the Effective Time, except insofar as the other party shall
otherwise consent in writing (such consent not to be unreasonably withheld or
delayed) or except as otherwise expressly contemplated by this Agreement, the
Bank Merger Agreement or the Option Agreements:
(a) The business of it and the BancFirst Subsidiaries or the UNB
Subsidiaries, as applicable, will be conducted only in the ordinary and usual
course and, to the extent consistent therewith, it and the BancFirst
Subsidiaries or the UNB Subsidiaries, as applicable, will use all reasonable
efforts to preserve intact their business organizations and assets and maintain
their rights, franchises and existing relations with customers, suppliers,
employees and business associates and to take no action that would:
(i) Adversely affect the ability of any of them to obtain any
necessary approvals of Governmental Entities required for the
transactions contemplated hereby;
(ii) Adversely affect its ability to perform its obligations under
this Agreement, the Bank Merger Agreement or the Option
Agreements; or
(iii) Be reasonably likely to result in a Material Adverse Effect.
(b) It will not:
47
(i) Sell or pledge or agree to sell or pledge or permit any Lien
to exist on any stock owned by it of any of the BancFirst
Subsidiaries or the UNB Subsidiaries, as applicable;
(ii) Amend its Articles of Incorporation or Code of Regulations or
By-laws;
(iii) Split, combine or reclassify any outstanding capital stock;
(iv) Other than as permitted by Section 6.2, declare, set aside or
pay any dividend payable in cash, stock or other property
with respect to any of its capital stock; or
(v) Repurchase, redeem or otherwise acquire, or permit any
BancFirst Subsidiary or UNB Subsidiary to purchase or
otherwise acquire, directly or indirectly, any shares of its
capital stock or any securities convertible into or
exercisable for any shares of its capital stock.
(c) Neither it nor any of the BancFirst Subsidiaries or the UNB
Subsidiaries, as applicable, will:
(i) Issue, sell, pledge, dispose of or encumber, or authorize or
propose the issuance, sale, pledge, disposition or
encumbrance of, any shares of, or securities convertible or
exchangeable for, or options, warrants, calls, commitments or
rights of any kind to acquire, any shares of its capital
stock of any class, with the exception of BancFirst Shares or
UNB Shares issuable as of the date hereof pursuant to the
BancFirst Option Plan or UNB Plan I and UNB Plan II,
respectively, consistent with past practice, and the Option
Agreements;
(ii) Transfer, lease, license, guarantee, sell, mortgage, pledge
or dispose of any other material property or assets or
encumber any property or assets other than to a direct or
indirect wholly owned Subsidiary of it;
(iii) Cancel, release, assign or modify any material amount of
indebtedness of any other individual, corporation or other
entity (collectively, a "Person") other than in the ordinary
and usual course of business; or
(iv) Authorize capital expenditures other than in the ordinary and
usual course of business.
(d) Except as expressly contemplated in this Agreement and except for
internal reorganizations involving existing Subsidiaries, as applicable, neither
it nor any of the BancFirst Subsidiaries or the UNB Subsidiaries, as applicable,
will make any material
48
acquisition of, or investment in, assets or stock of any other Person not in the
ordinary and usual course of business.
(e) Other than in the ordinary course of business consistent with past
practice, it will not incur or permit any of the BancFirst Subsidiaries or the
UNB Subsidiaries, as applicable, to incur any indebtedness for borrowed money or
assume, guarantee, endorse or otherwise as an accommodation become responsible
for the obligations of any other Person or make any loan or advance.
(f) Except as required by agreements or arrangements Previously
Disclosed or as provided in Section 6.1(k) or as contemplated by Article II and
Section 7.7, neither it nor any of the BancFirst Subsidiaries or the UNB
Subsidiaries, as applicable, will:
(i) Grant any increase in compensation or benefits to its
Employees or to its officers, except for normal increases
consistent with past practice or as required by law;
(ii) Pay any bonus except as consistent with past practice;
(iii) Grant any severance or termination pay to any director,
officer or other of its Employees except as consistent with
past practice;
(iv) Enter into or amend any employment or severance agreement
with any director, officer or other of its Employees
(provided that this clause 6.1(f)(iv) shall not prohibit
either party from approving a renewal or other extension of
an existing employment or severance agreement in accordance
with its terms and in the ordinary course of business);
(v) Grant any increase in fees or other increases in compensation
or other benefits to any of its present or former directors;
or
(vi) Effect any change in retirement benefits for any class of its
Employees or officers (unless such change is required by
applicable law or, in the written opinion of counsel, is
necessary or advisable to maintain the tax qualification of
any plan under which the retirement benefits are provided).
(g) Except as provided in Section 6.1(k) and as may be required to
satisfy contractual obligations existing as of the date hereof and the
requirements of applicable law, neither it nor any of the BancFirst Subsidiaries
or the UNB Subsidiaries, as applicable, will establish, adopt, enter into or
make any new, or amend any existing, collective bargaining, bonus, profit
sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, employee stock ownership, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any directors, officers or employees.
49
(h) Neither it nor any of the BancFirst Subsidiaries or the UNB
Subsidiaries, as applicable, will implement or adopt any change in its
accounting principles, practices or methods, other than as may be required by
generally accepted accounting principles.
(i) Neither it nor any of the BancFirst Subsidiaries or the UNB
Subsidiaries, as applicable, shall make any tax election, other than in the
ordinary course of business.
(j) Neither it nor any of the BancFirst Subsidiaries or the UNB
Subsidiaries, as applicable, will authorize or enter into an agreement to take
any of the actions referred to in paragraphs 6.1(a) through 6.1(i) above.
(k) Notwithstanding the provisions of Sections 6.1(f) and 6.1(g)
herein, each party hereto shall be permitted to take, or authorize or agree to
take, any of the actions contemplated in such Sections without the consent of
the other party, if such action:
(i) Is reasonably necessary to qualify for, or preserve, an
exemption of certain transactions from the operation of
Section 16(b) of the Exchange Act in accordance with the
provisions of SEC Rule 16b-3, as amended, or
(ii) Is Previously Disclosed.
6.2 DIVIDENDS. After the date of this Agreement, each of BancFirst and UNB
shall coordinate with the other the declaration of any dividends in respect of
BancFirst Shares and UNB Shares and the record dates and payment dates relating
thereto, it being the intention of the parties hereto that holders of BancFirst
Shares or UNB Shares shall not receive two dividends, or fail to receive one
dividend, for any quarter with respect to their shares of BancFirst Shares
and/or UNB Shares and any Surviving Corporation Shares any such holder receives
in exchange therefor in the Merger.
Unless BancFirst and UNB otherwise agree in writing, neither BancFirst
nor UNB will declare or pay any dividend or distribution on shares of their
capital stock, whether payable in cash, stock or other property, other than:
(a) Dividends from Subsidiaries to BancFirst or UNB or to another
Subsidiary of BancFirst or UNB consistent with past practice; or (b) Regular
quarterly dividends or distributions, provided that:
(i) Such dividends or distributions, and their corresponding
record dates and payment dates, are coordinated between the
parties and are in the ordinary course consistent with past
practice; and
(ii) Such dividends or distributions are not in amounts exceeding
$.145 per quarter in the case of UNB and $.125 per quarter in
the case of BancFirst, subject to and consistent with each
party's normal practice for scheduled increases in the rate
of dividends paid on its common stock.
50
6.3 ACQUISITION PROPOSALS; NO SOLICITATION.
(a) Each of BancFirst and UNB ("Such Company") will immediately
cease all existing activities, discussions and negotiations with any parties
conducted heretofore with respect to any proposal for a Competing Transaction
and request the return of all confidential information regarding Such Company
provided to any such parties prior to the date hereof pursuant to the terms of
any confidentiality agreement or otherwise.
(b) Such Company agrees that during the term of this Agreement it
will not, and will use its reasonable best efforts to ensure that its officers,
directors, employees, investment bankers, attorneys, accountants and other
agents and representatives do not, directly or indirectly:
(i) Initiate, solicit or encourage, or take any action to
facilitate the making of, any offer or proposal which
constitutes or is reasonably likely to lead to any
Competing Transaction;
(ii) Enter into any agreement with respect to any Competing
Transaction; or
(iii) In the event of an unsolicited written Competing
Transaction for Such Company, engage in negotiations or
discussions with, or provide any information or data
(except for information which has been previously
publicly disseminated by Such Company) to, any Person
relating to any Competing Transaction; provided,
however, that if at any time prior to the approval of
the Merger by the shareholders of Such Company, the
Board of Directors of Such Company determines in good
faith, after consultation with its outside counsel (who
may be its regularly engaged outside counsel) and its
financial advisors that it is necessary to do so in
order to act in a manner consistent with its fiduciary
duties to Such Company's shareholders under the OGCL,
Such Company may, in response to a Superior Proposal and
pursuant to a customary confidentiality agreement with
terms not substantially more favorable to such third
party than the Confidentiality Agreement, furnish
information to and negotiate or otherwise engage in
discussions with any third party who delivers a written
proposal for a superior proposal which was not
solicited, initiated, knowingly facilitated or
encouraged after the date of this Agreement.
(c) In the event that prior to the approval of the Merger by the
Shareholders of Such Company:
(i) The Board of Directors of Such Company receives a
Superior Proposal that was not solicited, initiated,
knowingly facilitated or encouraged after the date of
this Agreement (except as otherwise
51
permitted pursuant to the proviso contained in the first
sentence of Section 6.3(a)); and
(ii) The Board of Directors of Such Company (subject to this
and the following sentences) determines in the exercise
of its fiduciary obligations under the OGCL in good
faith, after consultation with its outside counsel (who
may be its regularly engaged outside counsel) and its
financial advisors, to withdraw, modify or change, in a
manner adverse to the other of Such Companies not
receiving such proposal (the "Other Company"), the
recommendation of the Board of Directors of Such Company
of this Agreement or recommend a Superior Proposal to
the shareholders of Such Company, then the Board of
Directors of Such Company may provide such information
or access or engage in such discussions or negotiations
with respect to a Competing Transaction; provided,
however, that the foregoing shall in no way limit or
otherwise affect the Other Company's right to terminate
this Agreement pursuant to Section 9.1(f) at such time
as the requirements of such subsection have been met.
Any such withdrawal, modification or change in the
recommendation of the Board of Directors of Such Company
of this Agreement shall not change the approval of the
Board of Directors of Such Company for purposes of
causing any Anti-Takeover Statute or other state law to
be inapplicable to the Merger.
(iii) From and after the execution of this Agreement, Such
Company will notify the Other Company if any proposals
are received by, any information is requested from, or
any negotiations or discussions are sought to be
initiated or continued with Such Company or its
officers, directors, employees, investment bankers,
attorneys, accountants or other agents or
representatives, in each case in connection with any
Competing Transaction indicating, in connection with
such notice the name of the Person initiating such
Competing Transaction and the terms and conditions of
any proposals or offers. In addition, Such Company shall
notify the Other Company in writing, if the Board of
Directors of Such Company shall make any determination
as to a Competing Transaction as contemplated by the
provision to the first sentence of Section 6.3(a).
(d) As used in this Agreement, "Competing Transaction" means any
proposal for a merger, consolidation or other business combination involving
either BancFirst or UNB, any proposal or offer to acquire in any manner a
substantial equity interest in, or a substantial portion of the business or
assets of, either BancFirst or UNB, any proposal or offer with respect to any
recapitalization or restructuring with respect to either BancFirst or UNB or any
proposal or offer with respect to any other transaction similar to any of the
foregoing with respect to either BancFirst or UNB, other than pursuant to the
Merger. As used in this Agreement, "Superior
52
Proposal" means a Competing Transaction regarding which the Board of Directors
of Such Company determines in good faith after consultation with its outside
counsel (who may be its regularly engaged outside counsel) and its financial
advisors that:
(i) Is necessary for the Board of Directors of Such Company
to consider in order to act in a manner consistent with
its fiduciary duties to Such Company's shareholders
under the OGCL;
(ii) Is more favorable to the shareholders of Such Company
than the Merger; and
(iii) It is reasonable to expect a transaction pursuant to
such proposal could be consummated.
(e) Nothing contained in this Section 6.3. shall prohibit any Such
Company from taking and disclosing to its shareholders a position contemplated
by Rule 14e-2(a) promulgated under the Exchange Act.
ARTICLE VII ADDITIONAL AGREEMENTS
7.1 REGULATORY MATTERS.
(a) BancFirst and UNB shall promptly prepare and file with the SEC
the Joint Proxy Statement and UNB shall promptly prepare and file with the SEC
the Form S-4, in which the Joint Proxy Statement will be included as a
prospectus. BancFirst and UNB shall use all reasonable efforts to have the S-4
declared effective under the Securities Act as promptly as practicable after
such filing, and BancFirst and UNB shall thereafter mail or deliver the Joint
Proxy Statement to their respective shareholders. UNB shall also use all
reasonable efforts to obtain all necessary state securities law or "Blue Sky"
permits and approvals required to carry out the transactions contemplated by
this Agreement, and BancFirst shall furnish all information concerning BancFirst
and the holders of BancFirst Shares as may be reasonably requested in connection
with any such action.
(b) The parties hereto shall cooperate with each other and use
their best efforts to promptly prepare and file all necessary documentation, to
effect all applications, notices, petitions and filings, to obtain as promptly
as practicable all permits, consents, approvals and authorizations of all third
parties and Governmental Entities which are necessary or advisable to consummate
the transactions contemplated by this Agreement and to comply with the terms and
conditions of all such permits, consents, approvals and authorizations of all
such Governmental Entities. BancFirst and UNB shall have the right to review in
advance, and to the extent practicable each will consult the other on, in each
case subject to applicable laws relating to the exchange of information, all the
information relating to BancFirst or UNB, as the case may be, and BancFirst
Bank, UNB Bank or any of the BancFirst Subsidiaries or the UNB Subsidiaries, as
applicable, which appear in any filing made with, or written materials submitted
to, any third party or any Governmental Entity in connection with the
transactions contemplated by this Agreement. In exercising the foregoing right,
each of the parties hereto shall act reasonably and as promptly as practicable.
The parties hereto agree that they will consult with each other with respect to
the obtaining of all permits, consents, approvals and authorizations of all
third parties
53
and Governmental Entities necessary or advisable to consummate the transactions
contemplated by this Agreement; and each party will keep the other apprised of
the status of matters relating to completion of the transactions contemplated
herein.
(c) BancFirst and UNB shall, upon request, furnish each other with
all information concerning themselves, BancFirst Bank, UNB Bank, the BancFirst
Subsidiaries or the UNB Subsidiaries, as applicable, directors, officers and
shareholders and such other matters as may be reasonably necessary or advisable
in connection with the Joint Proxy Statement, the Form S-4 or any other
statement, filing, notice or application made by or on behalf of BancFirst, UNB,
BancFirst Bank, UNB Bank or any of the BancFirst Subsidiaries or the UNB
Subsidiaries, as applicable, to any Governmental Entity in connection with the
Merger, the Bank Merger and the other transactions contemplated by this
Agreement.
(d) BancFirst and UNB shall promptly advise each other upon
receiving any communication from any Governmental Entity whose consent or
approval is required for consummation of the transactions contemplated by this
Agreement which causes such party to believe that there is a reasonable
likelihood that any Requisite Regulatory Approval will not be obtained or that
the receipt of any such approval will be materially delayed.
7.2 ACCESS TO INFORMATION.
(a) Upon reasonable notice and subject to applicable laws relating
to the exchange of information, each of BancFirst and UNB, for the purposes of
verifying the representations and warranties of the other and preparing for the
Merger, the Bank Merger and the other matters contemplated by this Agreement,
shall, and shall cause each of BancFirst Bank, UNB Bank, the BancFirst
Subsidiaries or the UNB Subsidiaries, as applicable, to, afford to the officers,
employees, accountants, counsel and other representatives of the other party,
access, during normal business hours during the period prior to the Effective
Time, to all its properties, books, contracts, commitments and records; and
during such period each of BancFirst and UNB shall, and shall cause BancFirst
Bank, UNB Bank, the BancFirst Subsidiaries or the UNB Subsidiaries, as
applicable, to, make available to the other party:
(i) A copy of each report, schedule, registration statement
and other document filed or received by it during such
period pursuant to the requirements of federal
securities laws or federal or state banking laws,
savings and loan or savings association laws (other than
reports or documents which BancFirst, BancFirst Bank,
UNB or UNB Bank, as the case may be, is not permitted to
disclose under applicable law); and
(ii) All other information concerning its business,
properties and personnel as such party may reasonably
request.
(b) Neither BancFirst, UNB, BancFirst Bank, UNB Bank, nor any of
the BancFirst Subsidiaries or the UNB Subsidiaries, as applicable, shall be
required to provide access to or to disclose information where such access or
disclosure would violate or prejudice the rights of BancFirst's or UNB's, as the
case may be, customers, jeopardize the attorney-client
54
privilege of the institution in possession or control of such information or
contravene any law, rule, regulation, order, judgment, decree, fiduciary duty or
binding agreement entered into prior to the date of this Agreement. The parties
hereto will make appropriate substitute disclosure arrangements under
circumstances in which the restrictions of the preceding sentence apply.
(c) Each of BancFirst and UNB shall hold all information furnished
by or on behalf of the other party or any of such party's Subsidiaries or
representatives pursuant to Section 7.2(a) in confidence the extent required by,
and in accordance with, the provisions of the confidentiality agreement, dated
June 27, 2001, between BancFirst and UNB (the "Confidentiality Agreement").
(d) No investigation by either BancFirst or UNB or their respective
representatives shall affect the representations and warranties of the other set
forth herein.
7.3 SHAREHOLDERS' APPROVALS. Each of BancFirst and UNB shall call a
meeting of its shareholders to be held as soon as reasonably practicable for the
purpose of voting upon the requisite shareholder approvals required in
connection with this Agreement and the Merger; and each shall use its best
efforts to cause such meetings to occur on the same date. The Board of Directors
of each of BancFirst and UNB shall recommend to its shareholders the approval of
the Merger, this Agreement and the transactions contemplated hereby.
7.4 LEGAL CONDITIONS TO MERGER. Each of BancFirst and UNB shall, and
shall cause BancFirst Bank, UNB Bank, the BancFirst Subsidiaries or the UNB
Subsidiaries, as applicable, to, use its best efforts:
(a) To take, or cause to be taken, all actions necessary, proper or
advisable to comply promptly with all legal requirements which may be imposed on
such party or BancFirst Bank, UNB Bank, the BancFirst Subsidiaries or the UNB
Subsidiaries, as applicable, with respect to the Merger and the Bank Merger and,
subject to the conditions set forth in Article VIII hereof, to consummate the
transactions contemplated by this Agreement; and
(b) To obtain (and to cooperate with the other party to obtain) any
consent, authorization, order or approval of, or any exemption by, any
Governmental Entity and any other third party which is required to be obtained
by UNB or BancFirst or any of BancFirst Bank, UNB Bank, the BancFirst
Subsidiaries or the UNB Subsidiaries, as applicable, in connection with the
Merger or the Bank Merger and the other transactions contemplated by this
Agreement, the Bank Merger Agreement or the Option Agreements.
7.5 [INTENTIONALLY LEFT BLANK].
7.6 NASDAQ QUOTATION. UNB shall cause the Surviving Corporation Shares
issued in the Merger to be authorized for quotation on NASDAQ, subject to
official notice of issuance, prior to the Effective Time.
7.7 EMPLOYMENT AND COMPENSATION PROVISIONS. Following the Closing Date,
the Board of Directors of the Surviving Corporation shall use its best efforts
to resolve any material differences in terms and conditions of employment and
compensation, including but not limited to benefits, if any, payable because of
the occurrence of a Change of Control, taking into account
55
that the Merger is to be a merger-of-equals transaction that treats each party's
directors and executive officers who are similarly situated on a substantially
equivalent basis, taking into account all relevant factors, including, without
limitation, duties, geographic location, tenure, qualifications and abilities,
and does not discriminate in favor of or against directors and executives solely
because they are directors or executives of one party and not the other. This
shall be accomplished as soon as reasonably practicable without impairing vested
rights or causing the Surviving Corporation to implement short-term arrangements
which are inconsistent with orderly development of a policy consistent with this
Section 7.7.
7.8 EMPLOYEE BENEFIT PLANS; CERTAIN INSURANCE.
(a) From and after the Effective Time, unless otherwise mutually
determined, the UNB Benefit Plans and BancFirst Benefit Plans in effect as of
the date of this Agreement shall remain in effect with respect to employees of
UNB or BancFirst (or BancFirst Bank, UNB Bank, the BancFirst Subsidiaries or the
UNB Subsidiaries, as applicable), respectively, covered by such plans at the
Effective Time until such time as the Surviving Corporation shall, subject to
applicable law, the terms of this Agreement and the terms of such plans, adopt
new benefit plans with respect to employees of the Surviving Corporation and its
Subsidiaries (the "New Benefit Plans"). Prior to the Closing Date, UNB and
BancFirst shall cooperate in reviewing, evaluating and analyzing the BancFirst
Benefit Plans and UNB Benefit Plans with a view toward developing appropriate
New Benefit Plans for the employees covered thereby subsequent to the Merger. It
is the intention of UNB and BancFirst to develop New Benefit Plans, as soon as
reasonably practicable after the Effective Time, which, among other things:
(i) Treat similarly situated employees on a substantially
equivalent basis, taking into account all relevant
factors, including, without limitation, duties,
geographic location, tenure, qualifications and
abilities; and
(ii) Do not discriminate between employees of the Surviving
Corporation who were covered by UNB Benefit Plans, on
the one hand, and those covered by BancFirst Benefit
Plans, on the other, at the Effective Time.
(b) The foregoing notwithstanding, the Surviving Corporation agrees
to honor in accordance with their terms all benefits vested as of the date
hereof under the BancFirst Benefit Plans or the UNB Benefit Plans or under other
contracts, arrangements, commitments, or understandings described in the
BancFirst Disclosure Schedule and the UNB Disclosure Schedule.
(c) Nothing in this Section 7.8 shall be interpreted as preventing
the Surviving Corporation from amending, modifying or terminating any BancFirst
Benefit Plans, UNB Benefit Plans, or other contracts, arrangements, commitments
or understandings, in accordance with their terms and applicable law.
(d) From and after the Effective Time, the Surviving Corporation
shall purchase an extended reporting period endorsement ("Reporting Tail
Coverage") under
56
BancFirst's and BancFirst Bank's existing directors' and officers' liability
insurance coverage for all persons who served as directors and officers of
BancFirst or BancFirst Bank or any of BancFirst Bank, UNB Bank, the BancFirst
Subsidiaries or the UNB Subsidiaries, as applicable, prior to the Effective Time
in a form acceptable to BancFirst (which acceptance shall not be unreasonably
withheld) which shall provide such directors and officers with coverage for six
years following the Effective Time of not less than the existing coverage under,
and have other terms not materially less favorable to the insured persons than,
the directors' and officers' liability insurance coverage presently maintained
by BancFirst and BancFirst Bank.
(e) Certain additional agreements of BancFirst and UNB with respect
to compensation and benefits matters are set forth on Schedule 7.8(e) hereto.
7.9 INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE.
(a) In the event of any threatened or actual claim, action, suit,
proceeding or investigation, whether civil, criminal or administrative,
including, without limitation, any such claim, action, suit, proceeding or
investigation in which any individual who is now, or has been at any time prior
to the date of this Agreement, or who becomes prior to the Effective Time, a
director or officer or employee of BancFirst, UNB, any of BancFirst Bank, UNB
Bank, the BancFirst Subsidiaries or the UNB Subsidiaries, as applicable,
including any entity specified in the BancFirst Disclosure Schedule or the UNB
Disclosure Schedule (the "Indemnified Parties"), is, or is threatened to be,
made a party based in whole or in part on, or arising in whole or in part out
of, or pertaining to:
(i) The fact that he is or was a director, officer or
employee of BancFirst, UNB, any of BancFirst Bank, UNB
Bank, the BancFirst Subsidiaries or the UNB
Subsidiaries, or any entity specified in the BancFirst
Disclosure Schedule or the UNB Disclosure Schedule or
any of their respective predecessors; or
(ii) This Agreement, the Option Agreements or any of the
transactions contemplated hereby or thereby,
whether in any case asserted or arising before or after the Effective Time, and
the parties hereto agree to cooperate and use their best efforts to defend
against and respond thereto.
(b) It is understood and agreed that after the Effective Time, the
Surviving Corporation shall indemnify and hold harmless, as and to the fullest
extent permitted by law, each such Indemnified Party against any losses, claims,
damages, liabilities, costs, expenses (including reasonable attorney's fees and
expenses in advance of the final disposition of any claim, suit, proceeding or
investigation to each Indemnified Party to the fullest extent permitted by law
upon receipt of any undertaking required by applicable law), judgments, fines
and amounts paid in settlement in connection with any such threatened or actual
claim, action, suit, proceeding or investigation, and in the event of any such
threatened or actual claim, action, suit, proceeding or investigation (whether
asserted of arising before or after the Effective Time); and the Surviving
Corporation, after consultation with an Indemnified Party, shall retain counsel
and direct the defense thereof; provided, however, that by virtue of the
obligations herein set forth,
57
the Surviving Corporation shall not be liable to any Indemnified Party for any
legal expenses of other counsel or any other expenses incurred by any
Indemnified Party in connection with the defense thereof, except that, if the
Surviving Corporation fails or elects not to assume such defense or counsel for
the Indemnified Parties reasonably advises the Indemnified Parties that there
are issues which raise conflicts of interest between the Surviving Corporation
and the Indemnified Parties,
(i) The Indemnified Parties may retain counsel reasonably
satisfactory to them after consultation with the
Surviving Corporation, and the Surviving Corporation
shall pay the reasonable fees and expenses of such
counsel for the Indemnified Parties;
(ii) The Surviving Corporation shall be obligated pursuant to
this paragraph to pay for only one firm of counsel for
all Indemnified Parties, unless an Indemnified Party
shall have reasonably concluded, based on the advice of
counsel and after consultation with the Surviving
Corporation, that in order to be adequately represented,
separate counsel is necessary for such Indemnified
Party, in which case, the Surviving Corporation shall be
obligated to pay for such separate counsel;
(iii) The Surviving Corporation shall not be liable for any
settlement effected without its prior written consent
(which consent shall not be unreasonably withheld); and
(iv) The Surviving Corporation shall have no obligation
hereunder to any Indemnified Party when and if a court
of competent jurisdiction shall ultimately determine,
and such determination shall have become final and
nonappealable, that indemnification of such Indemnified
Party in the manner contemplated hereby is prohibited by
applicable law. Any Indemnified Party wishing to claim
indemnification under this Section 7.9, upon learning of
any such claim, action, suit, proceeding or
investigation, shall notify the Surviving Corporation
thereof, provided that the failure to so notify shall
not affect the obligations of the Surviving Corporation
under this Section 7.9 except to the extent such failure
to notify materially prejudices the Surviving
Corporation. The Surviving Corporation's obligations
under this Section 7.9 continue in full force and effect
for a period of six years from the Effective Time (or
the period of the applicable statute of limitations, if
longer); provided, however, that all rights to
indemnification in respect of any claim (a "Claim")
asserted or made within such period shall continue until
the final disposition of such Claim.
(c) BancFirst (and the Surviving Corporation, from and after the
Effective Time) shall use its best efforts to cause the individuals serving as
officers and directors of BancFirst, BancFirst Bank, the BancFirst Subsidiaries
or any entity specified in the BancFirst
58
Disclosure Schedule immediately prior to the Effective Time to be covered for a
period of six (6) years from the Effective Time (or the period of the applicable
statute of limitations, if longer) by the directors' and officers' liability
insurance policy maintained by BancFirst (provided that the Surviving
Corporation may substitute therefor policies of at least the same coverage and
amounts containing terms and conditions which are not less advantageous than
such policy) with respect to acts or omissions occurring prior to the Effective
Time which were committed by such officers and directors in their capacity as
such; provided, however, that in no event shall the Surviving Corporation be
required to expend more than three hundred percent (300%) of the current amount
expended by BancFirst (the "Insurance Amount") to maintain or procure insurance
coverage pursuant hereto and provided further that if the Surviving Corporation
is unable to maintain or obtain the insurance called for by this Section 7.9(b),
the Surviving Corporation shall use its best efforts to obtain as much
comparable insurance as available for the Insurance Amount.
(d) In the event the Surviving Corporation or any of its successors
or assigns:
(i) Consolidates with or merges into any other person and
shall not be the continuing or Surviving Corporation or
entity of such consolidation or merger; or
(ii) Transfers or conveys all or substantially all of its
properties and assets to any Person,
then, and in each such case, to the extent necessary, proper provision shall be
made so that the successors and assigns of the Surviving Corporation assume the
obligations set forth in this section.
(e) The provisions of this Section 7.9 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and his or her
heirs and representatives.
7.10 ADDITIONAL AGREEMENTS. In case at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
this Agreement (including, without limitation, the Bank Merger or any other
merger between a Subsidiary of UNB, on the one hand, and a Subsidiary of
BancFirst on the other) or to vest the Surviving Corporation with full title to
all properties, assets, rights, approvals, immunities and franchises of any of
the parties to the Merger, the proper officers and directors of each party to
this Agreement and the BancFirst Subsidiaries or the UNB Subsidiaries, as
applicable, shall take all such necessary action as may be reasonably requested
by, and at the sole expense of, the Surviving Corporation.
7.11 ADVICE OF CHANGES. BancFirst and UNB shall each promptly advise
the other party of any change or event:
(a) Having a Material Adverse Effect on it; or
(b) Which it believes would or would be reasonably likely to cause
or constitute a material breach of any of its representations, warranties or
covenants contained herein.
59
ARTICLE VIII CONDITIONS PRECEDENT
8.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligations of the parties to effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of the following conditions:
(a) SHAREHOLDER APPROVAL. This Agreement and the transactions
contemplated hereby shall have been approved and adopted by the respective
requisite affirmative votes of the holders of UNB Shares and BancFirst Shares
entitled to vote thereon.
(b) NASDAQ QUOTATION. The Surviving Corporation's Shares which
shall be issued to the shareholders of BancFirst upon consummation of the Merger
shall have been authorized for quotation on NASDAQ as contemplated by Section
7.6, subject to official notice of issuance.
(c) OTHER APPROVALS. All regulatory approvals required to
consummate the transactions contemplated hereby shall have been obtained and
shall remain in full force and effect and all statutory waiting periods in
respect thereof shall have expired (all such approvals and the expiration of all
such waiting periods being referred to herein as the "Requisite Regulatory
Approvals").
(d) FORM S-4 REGISTRATION STATEMENT. The Form S-4 Registration
Statement for filing with the SEC under the Securities Act shall have become
effective under the Securities Act and no stop order suspending the
effectiveness of the Form S-4 shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the SEC.
(e) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No order, injunction
or decree issued by any court or agency of competent jurisdiction or other legal
restraint or prohibition (an "Injunction") preventing the consummation of the
Merger, the Bank Merger or any of the other transactions contemplated by this
Agreement shall be in effect. No statute, rule, regulation, order, injunction or
decree shall have been enacted, entered, promulgated or enforced by any
Governmental Entity which prohibits, materially restricts or makes illegal
consummation of the Merger or the Bank Merger.
(f) FEDERAL TAX OPINION. UNB shall have received an opinion of
Black, McCuskey, Souers & Arbaugh, in form and substance reasonably satisfactory
to UNB and BancFirst shall have received an opinion of Bricker & Eckler LLP in
form and substance reasonably satisfactory to BancFirst, in each case and dated
the Closing Date, substantially to the effect that, on the basis of facts,
representations and assumptions set forth in such opinion which are consistent
with the state of facts existing at the Effective Time:
(i) The Merger will constitute a reorganization under
Section 368(a) of the Code; BancFirst and UNB will each
be a party to the reorganization in respect of the
Merger;
(ii) No gain or loss will be recognized by BancFirst or UNB
as a result of the Merger; and
60
(iii) No gain or loss will be recognized by shareholders of
BancFirst who receive solely UNB Shares for their
BancFirst Shares pursuant to the Merger.
In rendering such opinion, counsel may require and rely upon representations
contained in certificates of officers of BancFirst, UNB and others.
8.2 CONDITIONS TO OBLIGATIONS OF BANCFIRST. The obligations of
BancFirst to effect the Merger are also subject to the satisfaction or waiver by
BancFirst, at or prior to the Effective Time, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of UNB and UNB Bank set forth in this Agreement shall be true and
correct in all material respects as of the date of this Agreement and (except to
the extent such representations and warranties speak as of an earlier date) as
of the Closing Date as though made on and as of the Closing Date; provided,
however, that for purposes of this paragraph, such representations and
warranties shall be deemed to be true and correct unless the failure or failures
of such representations and warranties to be so true and correct, individually
or in the aggregate, and without giving effect to any qualification as to
materiality set forth in such representations or warranties, would have a
Material Adverse Effect on UNB. BancFirst shall have received a certificate
signed on behalf of UNB by the Chief Executive Officer and the Chief Financial
Officer of UNB to the foregoing effect.
(b) PERFORMANCE OF OBLIGATIONS OF UNB. UNB shall have performed in
all material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date, and BancFirst shall have received a
certificate signed on behalf of UNB by the Chief Executive Officer and the Chief
Financial Officer of UNB to such effect.
8.3 CONDITIONS TO OBLIGATIONS OF UNB. The obligation of UNB to effect
the Merger is also subject to the satisfaction or waiver by UNB at or prior to
the Effective Time of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of BancFirst and BancFirst Bank set forth in this Agreement shall be
true and correct in all material respects as of the date of this Agreement and
(except to the extent such representations and warranties speak as of an earlier
date) as of the Closing Date as though made on and as of the Closing Date;
provided, however, that for purposes of this paragraph, such representations and
warranties shall be deemed to be true and correct unless the failure or failures
of such representations and warranties to be so true and correct, individually
or in the aggregate, and without giving effect to any qualification as to
materiality set forth in such representations or warranties, would have a
Material Adverse Effect on BancFirst. UNB shall have received a certificate
signed on behalf of BancFirst by the Chief Executive Officer and the Chief
Financial Officer of BancFirst to the foregoing effect.
(b) PERFORMANCE OF OBLIGATIONS OF BANCFIRST. BancFirst shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and UNB shall have
received a certificate signed on behalf of
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BancFirst by the Chief Executive Officer and the Chief Financial Officer of
BancFirst to such effect.
ARTICLE IX TERMINATION AND AMENDMENT
9.1 TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of the matters presented in
connection with the Merger by the shareholders of BancFirst or UNB:
(a) By mutual consent of BancFirst and UNB in a written instrument,
if the Board of Directors of each so determines by a vote of a majority of the
members of its entire Board;
(b) By either the Board of Directors of BancFirst or the Board of
Directors of UNB if any Governmental Entity which must grant a Requisite
Regulatory Approval has denied approval of the Merger or any Governmental Entity
of competent jurisdiction shall have issued an order permanently enjoining or
otherwise prohibiting the consummation of the transactions contemplated by this
Agreement;
(c) By either the Board of Directors of BancFirst or the Board of
Directors of UNB if the Merger shall not have been consummated on or before
September 30, 2002, unless the failure of the Closing to occur by such date
shall be due to the failure of the party seeking to terminate this Agreement to
perform or observe the covenants and agreements of such party set forth herein;
(d) By either the Board of Directors of BancFirst or the Board of
Directors of UNB (provided that the terminating party is not then in breach of
any representation, warranty, covenant or other agreement contained herein) if
there shall have been a breach of any of the covenants or agreements or any of
the representations or warranties set forth in this Agreement on the part of
UNB, in the case of a termination by BancFirst or, on the part of BancFirst, in
the case of a termination by UNB, which breach, individually or together with
other such breaches, would constitute, if occurring or continuing on the Closing
Date, the failure of the conditions set forth in Section 8.2 or 8.3, as the case
may be, and which is not cured within forty-five (45) days following written
notice to the party committing such breach or by its nature or timing cannot be
cured prior to the Closing Date; or
(e) By either BancFirst or UNB if any approval of the shareholders
of BancFirst or UNB required for the consummation of the Merger shall not have
been obtained by reason of the failure to obtain the required vote at a duly
held meeting of shareholders or at any adjournment or postponement thereof.
(f) By either BancFirst or UNB if the Other Company makes the
determination described in Section 6.3(c)(ii).
9.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement by either BancFirst or UNB as provided in Section 9.1, this Agreement
shall forthwith become void and have no effect, and none of BancFirst, UNB, any
of their respective Subsidiaries or any of the
62
officers or directors of any of them shall have any liability of any nature
whatsoever hereunder, or in connection with the transactions contemplated
hereby, except that:
(i) Sections 7.2(c) 9.2 and 10.3 shall survive any
termination of this Agreement,
(ii) The Option Agreements remain in full force and effect
until terminated as provided therein; and
(iii) Notwithstanding anything to the contrary contained in
this Agreement, neither BancFirst nor UNB shall be
relieved or released from any liabilities or damages
arising out of its willful breach of any provision of
this Agreement.
9.3 AMENDMENT. Subject to compliance with applicable law, this
Agreement may be amended by the parties hereto, by action taken or authorized by
their respective Boards of Directors, at any time before or after approval of
the matters presented in connection with the Merger by the shareholders of
BancFirst and UNB; provided, however, that after any approval of the
transactions contemplated by this Agreement by the respective shareholders of
BancFirst or UNB, there may not be, without further approval of such
shareholders, any amendment of this Agreement which changes the amount or the
form of the consideration to be delivered hereunder to the holders of UNB
Shares, or into which BancFirst Shares shall be converted pursuant to the
Merger, other than as contemplated by this Agreement. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
9.4 EXTENSION; WAIVER. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Board of
Directors, may, to the extent legally allowed:
(a) Extend the time for the performance of any of the obligations
or other acts of the other parties hereto;
(b) Waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto; and
(c) Waive compliance with any of the agreements or conditions
contained herein; provided, however, that after any approval of the transactions
contemplated by this Agreement by the respective shareholders of BancFirst or
UNB, there may not be, without further approval of such shareholders, any
extension or waiver of this Agreement or any portion thereof which reduces the
amount or changes the form of the consideration to be delivered to the holders
of BancFirst Shares hereunder, or into which BancFirst Shares shall be converted
pursuant to the Merger, other than as contemplated by this Agreement. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in a written instrument signed on behalf of such party,
but such extension or waiver or failure to insist on strict compliance with an
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.
63
ARTICLE X GENERAL PROVISIONS
10.1 CLOSING. Subject to the terms and conditions of this Agreement and
the Option Agreements, the Closing will take place at 10:00 a.m. on the date
specified in Section 1.4 (the "Closing Date") and at a place to be specified by
the parties.
10.2 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. None of
the representations, warranties, covenants and agreements in this Agreement or
in any instrument delivered pursuant to this Agreement (other than the Option
Agreements and the Confidentiality Agreement, which shall each terminate in
accordance with its terms) shall survive the Effective Time, except for those
covenants and agreements contained herein and therein which by their terms apply
in whole or in part after the Effective Time.
10.3 EXPENSES.
(a) All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expense; provided, however, that the costs and expenses of
printing and mailing the Joint Proxy Statement, and all filing and other fees
paid to the SEC in connection with the Merger, shall be borne equally by
BancFirst and UNB.
(b) Notwithstanding the provisions of Section 10.3(a), in the event
that BancFirst or UNB makes the determination described in Section 6.3(c)(ii),
then Such Company shall within ten (10) days pay to the Other Company the sum of
$1,000,000 as liquidated damages.
10.4 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, telecopied (with
confirmation), mailed by registered or certified mail (return receipt requested)
or delivered by an express courier (with confirmation) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) If to BancFirst:
BancFirst Ohio Corp.
422 Main Street
P.O. Box 4658
Zanesville, OH 43702-46588
Attention: Gary N. Fields
With a copy to:
Michael F. Sullivan, Esq.
Bricker & Eckler LLP
100 South Third Street
Columbus, Ohio 43215-4291
64
(b) If to UNB:
UNB Corp.
220 Market Avenue South
Canton, Ohio 44701
Attention: Roger L. Mann
With a copy to:
Ronald K. Bennington, Esq.
Black, McCuskey, Souers & Arbaugh
1000 United Bank Plaza
220 Market Avenue South
Canton, Ohio 44702-2116
10.5 INTERPRETATION. When a reference is made in this Agreement to
Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation." No provision of this Agreement shall be construed to require UNB,
BancFirst or any of BancFirst Bank, UNB Bank, the BancFirst Subsidiaries or the
UNB Subsidiaries, as applicable, or affiliates to take any action which would
violate any applicable law, rule or regulation.
10.6 COUNTERPARTS. This Agreement may be executed in counterparts, all
of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each of the parties and
delivered to the other parties, it being understood that all parties need not
sign the same counterpart.
10.7 ENTIRE AGREEMENT. This Agreement (including the documents and the
instruments referred to herein) constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof other than the Bank Merger
Agreement, Option Agreements and the Confidentiality Agreement.
10.8 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Ohio, without regard to any applicable
conflicts of law (except to the extent that mandatory provisions of federal law
or of the OGCL are applicable).
10.9 SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
65
10.10 PUBLICITY. Except as otherwise required by applicable law,
neither of BancFirst nor UNB shall, or shall permit any of its Subsidiaries to,
issue or cause the publication of any press release or other public announcement
with respect to, or otherwise make any public statement concerning, the
transactions contemplated by this Agreement without the consent of UNB, in the
case of a proposed announcement or statement by BancFirst, or without the
consent of BancFirst, in the case of a proposed announcement or statement by
UNB, which consent shall not be unreasonably withheld.
10.11 ASSIGNMENT; THIRD PARTY BENEFICIARIES. Neither this Agreement nor
any of the rights, interests or obligations shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns. Except as otherwise
specifically provided in Article II and Section 7.7, this Agreement (including
the documents and instruments referred to herein) is not intended to confer upon
any person other than the parties hereto any rights or remedies hereunder.
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IN WITNESS WHEREOF, BancFirst, BancFirst Bank, UNB and UNB Bank have
caused this Agreement to be executed by their respective officers thereunto duly
authorized as of the date first above written.
UNB CORP
By: /s/ Roger L. Mann
---------------------------------------
Its: Chairman and CEO
---------------------------------------
THE UNITED NATIONAL BANK & TRUST COMPANY
By: /s/ Roger L. Mann
---------------------------------------
Its: Chairman and CEO
---------------------------------------
BANCFIRST OHIO CORP.
By: /s/ Gary N. Fields
---------------------------------------
Its: President and CEO
---------------------------------------
THE FIRST NATIONAL BANK OF ZANESVILLE, N.A.
By: /s/ James H. Nicholson
---------------------------------------
Its: President and CEO
---------------------------------------
67
ANNEX A
DEFINED TERMS
"Agreement" is defined in the Preamble.
"Anti-Takeover Statute" shall mean any of OGCL Section 1701.831, Chapter 1704 or
Section 1707.043, or any other provision in the OGCL that delays or
prevents unsolicited third party takeover attempts.
"Awarded Bonus Plan Shares" is defined in Section 4.8(a)(ii).
"BancFirst" is defined in the Preamble.
"BancFirst Audited Financials" is defined in Section 4.9(a).
"BancFirst Bank" is defined in the Preamble.
"BancFirst Benefit Plans" is defined in Section 4.20(a).
"BancFirst Consolidated Statements" is defined in Section 4.9(c).
"BancFirst Contracts" is defined in Section 4.16(a)(xii).
"BancFirst Disclosure Schedule" is defined in the preamble to Article IV.
"BancFirst Interim Financials" is defined in Section 4.9(b).
"BancFirst Investments" is defined in Section 4.13(a).
"BancFirst Leased Real Property" is defined in Section 4.11(c).
"BancFirst Loan Assets" is defined in Section 4.11(e).
"BancFirst Loan Documentation" is defined in Section 4.11(e).
"BancFirst Option Plan" is defined in Section 1.3(a).
"BancFirst Parcel" is defined in Section 4.11(b).
"BancFirst Personal Property" is defined in Section 4.11(a).
"BancFirst Property" is defined in Section 4.21(b)(i).
"BancFirst Real Properties" is defined in Section 4.11(b).
ANNEX A-1
"BancFirst SEC Filings" is defined in Section 4.14(b).
"BancFirst Shares" is defined in Section 1.2.
"BancFirst Subsidiaries" is defined in Section 4.2(a).
"Bank Merger" is defined in the Recitals.
"Bank Merger Agreement" is defined in Section 1.1(b).
"BHCA" is defined in Section 4.1(a).
"BIF" is defined in Section 4.1(b).
"Bonus Plan" is defined in Section 4.8(a)(ii).
"Capital Trust" is defined in Section 4.2(a).
"Certificates" is defined in Section 3.1(a).
"Chornyak" is defined in Section 4.2(a).
"Claim" is defined in Section 7.9(b)(iv).
"Closing" is defined in Section 1.4.
"Closing Date" is defined in Section 10.1.
"Code" is defined in Section 1.6.
"Competing Transaction" is defined in Section 6.3(d).
"Confidentiality Agreement" is defined in Section 7.2(c).
"Disqualified Individual" is defined in Section 4.15(c).
"Dissenting Shareholder" is defined in Section 3.4(a).
"Effective Time" is defined in Section 1.4.
"Employees" shall mean current or former employees, directors or independent
contractors (and their spouses, dependents or beneficiaries) of BancFirst,
UNB or their Subsidiaries.
"Environmental Laws" is defined in Section 4.21(b)(ii).
"ERISA" is defined in Section 4.20(a).
ANNEX A-2
"ExchangeAct" shall mean the Securities Exchange Act of 1934, as amended
(including the rules and regulations thereunder).
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"FHLB" shall mean Federal Home Loan Bank.
"Former BancFirst Directors" is defined in Section 2.2(a).
"Former UNB Directors" is defined in Section 2.2(a).
"Form S-4" shall mean the registration statement to be filed with the SEC in
connection with the issuance of Surviving Corporation Shares.
"FRB" is defined in Section 4.6(e).
"Governing Documents" shall mean the Articles of Incorporation, Articles of
Association, Code of Regulations or Bylaws of an entity.
"Governmental Entity" shall mean any governmental or regulatory authority,
agency, court, commission or other entity, domestic or foreign.
"Hazardous Substances" is defined in Section 4.21(b)(iii).
"Indemnified Parties" is defined in Section 7.9(a).
"Injunction" is defined in Section 8.1(e).
"Insurance Amount" is defined in Section 7.9(c).
"IRS" shall mean the Internal Revenue Service.
"Joint Proxy Statement" shall mean the joint proxy statement and prospectus and
other proxy solicitation materials of BancFirst and UNB constituting a
part of the Form S-4.
"Lien" shall include any lien, pledge, security interest, claim, proxy,
preemptive or subscriptive right or other encumbrance or restriction of
any kind.
"Material Adverse Effect" shall mean with respect to BancFirst, UNB or the
Surviving Corporation any effect that (1) is material and adverse to the
financial position, results of operations or business of BancFirst and its
Subsidiaries taken as a whole, UNB and its Subsidiaries taken as a whole
or the Surviving Corporation and its Subsidiaries taken as a whole,
respectively, or (2) would materially impair the ability of either
BancFirst or UNB to perform its obligations under this Agreement or
otherwise materially threaten or
ANNEX A-3
materially impede the consummation of the Merger and the other
transactions contemplated by this Agreement; provided, however, that
Material Adverse Effect shall not be deemed to include the impact of (A)
changes in banking and similar laws of general applicability or
interpretations thereof by courts or governmental authorities, (B) changes
in generally accepted accounting principles or regulatory accounting
requirements applicable to depository institutions and their holding
companies generally, (C) actions or omissions of BancFirst or UNB taken
with the prior written consent of UNB or BancFirst, as applicable, in
contemplation of the transactions contemplated hereby, (D) any
modifications or changes to valuation policies and practices in connection
with the Merger or restructuring charges taken in connection with the
Merger, in each case in accordance with generally accepted accounting
principles and (E) the effects of any change attributable to or resulting
from changes in economic conditions applicable to depository institutions
or their holding companies generally or in general levels of interest
rates, except to the extent that the effect of such change is materially
more severe for BancFirst, UNB or the Surviving Corporation, as the case
may be, than for depository institutions or their holding companies
generally.
"Merger" is defined in the Recitals.
"NASDAQ" is defined in Section 1.2(a)(ii).
"NBA" is defined in Section 4.1(b).
"New Benefit Plans" is defined in Section 7.8(a).
"Nominating Committee" is defined in Section 2.2(c)(i).
"OCC" shall mean the Office of the Comptroller of the Currency.
"OGCL" is defined in Section 1.1(a).
"Option Agreements" is defined in the Recitals.
"ORC" shall mean the Ohio Revised Code.
"Other Company" is defined in Section 6.3(c)(ii).
"OTS" shall mean the Office of Thrift Supervision.
"PBGC" is defined in Section 4.20(f).
"Per Share Merger Consideration" is defined in Section 1.2(a).
"Person" is defined in Section 6.1(c)(iii).
ANNEX A-4
"Previously Disclosed" by a party shall mean information set forth on its
Disclosure Schedule corresponding to the provision of this Agreement to
which such information relates; provided that information which, on its
face, reasonably should indicate to the reader that it relates to another
provision of this Agreement shall also be deemed to be Previously
Disclosed with respect to such other provision.
"Real Property Leases" shall mean all leases for BancFirst or UNB Leased Real
Property.
"Regulatory Agreement" is defined in Section 4.25.
"Regulatory Applications" shall mean such applications, notices or other
instruments as may be required for approval of the Merger.
"Reporting Tail Coverage" is defined in Section 7.8(d).
"Requisite Regulatory Approvals" is defined in Section 8.1(c).
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended (including
the rules and regulations thereunder).
"Special Majority" is defined in Section 2.4(a).
"Subsidiary" shall mean UNB Bank or BancFirst Bank or any other organization or
entity which is consolidated or is eligible to be consolidated with a
party to this Agreement for financial reporting purposes.
"Such Company" is defined in Section 6.3(a).
"Superior Proposal" is defined in Section 6.3(d).
"Surviving Bank" shall mean the surviving bank of the Bank Merger.
"Surviving Corporation" is defined in Section 1.1(a).
"Termination Date" is defined in Section 2.1.
"Title Agency" is defined in Section 4.2(a).
"Transmittal Letter" is defined in Section 3.1(a).
"Trust Company" is defined in Section 4.2(a).
"UNB" is defined in the Preamble.
"UNB Audited Financials" is defined in Section 5.9(a).
"UNB Bank" is defined in the Preamble.
ANNEX A-5
"UNB Benefit Plans" is defined in Section 5.20(a).
"UNB Consolidated Statements" is defined in Section 5.9(c).
"UNB Contracts" is defined in Section 5.16(a)(xii).
"UNB Disclosure Schedule" is defined in preamble to Article V.
"UNB Interim Financials" is defined in Section 5.9(b).
"UNB Investments" is defined in Section 5.13(a).
"UNB Leased Real Property" is defined in Section 5.11(c).
"UNB Loan Assets" is defined in Section 5.11(e).
"UNB Loan Documentation" is defined in Section 5.11(e).
"UNB Market Value" is defined in Section 1.2(a)(ii).
"UNB Plan I" is defined in Section 1.3.
"UNB Plan II" is defined in Section 1.3.
"UNB Parcel" is defined in Section 5.11(b).
"UNB Personal Property" is defined in Section 5.11(a).
"UNB Property" is defined in Section 5.21(b).
"UNB Real Properties" is defined in Section 5.11(b).
"UNB SEC Filings" is defined in Section 5.14(b).
"UNB Shares" is defined in Section 1.2(a).
"UNB Subsidiaries" is defined in Section 5.2(a).
"Unvested Bonus Plan Shares" is defined in Section 4.8(a)(ii).
ANNEX A-6
Appendix B-1
STOCK OPTION AGREEMENT
Stock Option Agreement, dated as of September 5, 2001, (the "Agreement
"), between BancFirst Ohio Corporation, an Ohio corporation ("Grantee"), and UNB
Corp., an Ohio corporation ("Issuer").
WITNESSETH:
WHEREAS, Issuer and Grantee have entered into an Agreement of Merger
and Plan of Reorganization, dated as of September 5, 2001 (the "Plan"),
providing for, among other things, the merger of Grantee with and into Issuer
(the "Merger"), with Issuer as the surviving corporation; and
WHEREAS, as a condition and inducement to Grantee's execution of the
Plan, Grantee has required that Issuer agree, and Issuer has agreed, to grant to
Grantee the Option (as hereinafter defined);
NOW THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Plan, and intending to be legally bound hereby, Issuer and Grantee agree as
follows:
1. DEFINED TERMS. Capitalized terms which are used but not defined
herein shall have the meanings ascribed to such terms in the Plan.
2. GRANT OF OPTION. Subject to the terms and conditions set forth
herein, Issuer hereby grants to Grantee an irrevocable option (the "Option") to
purchase up to 1,561,064 shares (as adjusted as set forth herein) (the "Option
Shares," which shall include the Option Shares before and after any transfer of
such Option Shares) of Common Stock, without par value ("Issuer Common Stock"),
of Issuer at a purchase price per Option Share (as adjusted as set forth
herein, the "Purchase Price") of $18.50, provided, however, that in no event
shall the number of Option Shares for which the Option may be exercisable, when
added to aggregate of all Issuer voting securities (as hereinafter defined) in
respect of which the Grantee and each Holder (as hereinafter defined) may then
exercise or direct the exercise of voting power in the election of Issuer's
directors, exceed 19.9% of the aggregate such voting power then exercisable by
the holders of all Issuer voting securities then issued and outstanding as
determined without giving effect to any shares subject to or issued pursuant to
the Option.
3. EXERCISE OF OPTION.
(a) Provided that:
(i) Grantee or Holder (as hereinafter defined), as applicable,
shall not be in material breach of the agreements or covenants
contained in this Agreement or the Plan; and
(ii) No preliminary or permanent injunction or other order against
the delivery of shares covered by the Option issued by any
court of competent jurisdiction in the United States shall be
in effect, Holder may exercise the Option, in whole or in
part,
1
at any time and from time to time following the occurrence of
a Purchase Event (as hereinafter defined); provided that the
Option shall terminate and be of no further force and effect
upon the earliest to occur of (A) the Effective Time of the
Merger, (B) termination of the Plan in accordance with the
terms thereof prior to the occurrence of a Purchase Event or a
Preliminary Purchase Event, other than a termination of the
Plan by Grantee pursuant to Section 9.1(d) thereof (a "Default
Termination"), (C) 12 months after the termination of the Plan
by Grantee pursuant to a Default Termination, and (D) 12
months after termination of the Plan (other than pursuant to a
Default Termination) following the occurrence of a Purchase
Event or a Preliminary Purchase Event; and provided, further,
that any purchase of shares upon exercise of the Option shall
be subject to compliance with applicable laws, including
without limitation the Bank Holding Company Act of 1956, as
amended (the "BHCA"). The term "Holder" shall mean the holder
or holders of the Option from time to time, and which is
initially Grantee. The rights set forth in Section 8 hereof
shall terminate when the right to exercise the Option
terminates (other than as a result of a complete exercise of
the Option) as set forth above.
(b) As used herein, a "Purchase Event" means any of the
following events:
(i) Without Grantee's prior written consent, Issuer shall
have authorized, recommended or publicly-proposed, or
publicly announced an intention to authorize,
recommend or propose, or entered into an agreement
with any person (other than Grantee or any subsidiary
of Grantee) to effect (A) a merger, consolidation or
similar transaction involving Issuer or any of its
Subsidiaries, (B) the disposition, by sale, lease,
exchange or otherwise, of assets of Issuer or any of
its Subsidiaries representing in either case 25% or
more of the consolidated assets of Issuer and its
Subsidiaries, or (C) the issuance, sale or other
disposition of (including by way of merger,
consolidation, share exchange or any similar
transaction) securities representing 20% or more of
the voting power of Issuer or any of its Subsidiaries
(any of the foregoing an "Acquisition Transaction");
or
(ii) Any person (other than Grantee or any subsidiary of
Grantee) shall have acquired beneficial ownership (as
such term is defined in Rule 131-3 promulgated under
the Exchange Act) of or the right to acquire
beneficial ownership of, or any "group" (as such term
is defined in Section 13(d)(3) of the Exchange Act)
shall have been formed which beneficially owns or has
the right to acquire beneficial ownership of, 20% or
more of the then outstanding shares of Issuer Common
Stock.
(c) As used herein, a "Preliminary Purchase Event" means any of the
following events:
(i) Any person (other than Grantee or any subsidiary of
Grantee) shall have commenced (as such term is defined in Rule 14d-2
under the Exchange Act), or shall have filed a registration statement
under the Securities Act with respect to, a tender offer or exchange
offer to purchase any shares of Issuer Common Stock such that, upon
consummation of such offer, such person would own or control 15% or
more of the then outstanding shares of Issuer Common Stock (such an
offer being referred to herein as a "Tender Offer" and an "Exchange
Offer," respectively); or
2
(ii) (A) the holders of Issuer Common Stock shall not have
approved the Plan at the meeting of such stockholders held for the
purpose of voting on the Plan, (B) such meeting shall not have been
held or shall have been canceled prior to termination of the Plan or
(C) Issuer's Board of Directors shall have withdrawn or modified in a
manner adverse to Grantee the recommendation of Issuer's Board of
Directors with respect to the Plan; in each case after it shall have
been publicly announced that any person (other than Grantee or any
subsidiary of Grantee) shall have (x) made, or disclosed an intention
to make, a proposal to engage in an Acquisition Transaction, (y)
commenced a Tender Offer or filed a registration statement under the
Securities Act with respect to an Exchange Offer, or (z) filed an
application (or given notice), whether in draft or final form, under
the BHCA, the Home Owners Loan Act, as amended, the Bank Merger Act, as
amended, the Change in Bank Control Act of 1978, as amended or any
similar state banking law, for approval to engage in (or notice with
respect to) an Acquisition Transaction; or
(iii) Issuer shall have breached any representation, warranty,
covenant or obligation contained in the Plan and such breach would
entitle Grantee to terminate the Plan under Section 9.1(d) thereof
(without regard to the cure period provided for therein unless such
cure is promptly effected without jeopardizing consummation of the
Merger pursuant to the terms of the Plan) after (x) a bona fide
proposal is made by any person (other than Grantee or any subsidiary of
Grantee) to Issuer or its stockholders to engage in an Acquisition
Transaction, (y) any person (other than Grantee or any subsidiary of
Grantee) states its intention to Issuer or its stockholders to make a
proposal to engage in an Acquisition Transaction if the Plan terminates
or (z) any person (other than Grantee or any subsidiary of Grantee)
shall have filed an application or notice with any Governmental Entity
to engage in an Acquisition Transaction.
As used in this Agreement, "person" shall have the meaning specified in
Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
(d) Issuer shall notify Grantee promptly in writing of the occurrence
of any Preliminary Purchase Event or Purchase Event, it being understood that
the giving of such notice by Issuer shall not be a condition to the right of
Holder to exercise the Option.
(e) In the event Holder wishes to exercise the Option, it shall send to
Issuer a written notice (the date of which being herein referred to as the
"Notice Date") specifying (i) the total number of Option Shares it intends to
purchase pursuant to such exercise, and (ii) a date not earlier than three
business days nor later than 15 business days from the Notice Date for the
closing (the "Closing") of such purchase (the "Closing Date"), provided that the
first notice of exercise shall be sent to Issuer within 180 days after the first
Purchase Event of which Grantee has been notified and, provided further, that if
prior notification to or approval of the Board of Governors of the Federal
Reserve System (the "Federal Reserve Board"), the Office of the Comptroller of
the Currency ("OCC") or any other Governmental Entity is required in connection
with such purchase, Holder shall promptly file the required notice or
application for approval and shall expeditiously process the same and the three
business day and 15 business day period of time that otherwise would run
pursuant to this sentence shall run instead from the date on which any required
notification periods have expired or been terminated or such
3
approvals have been obtained and any requisite waiting period or periods shall
have passed. Any exercise of the Option shall be deemed to occur on the Notice
Date relating thereto.
4. PAYMENT AND DELIVERY OF CERTIFICATES.
(a) On each Closing Date, Holder shall:
(i) Pay to Issuer, in immediately available funds by wire
transfer to a bank account designated by Issuer, an amount equal to the
Purchase Price multiplied by the number of Option Shares to be
purchased on such Closing Date; and
(ii) Present and surrender this Agreement to Issuer at the
address of Issuer specified in Section 13(f) hereof.
(b) At each Closing, simultaneously with the delivery of immediately
available funds and surrender of this Agreement as provided in Section 4(a),
(i) Issuer shall deliver to Holder (A) a certificate or
certificates representing the Option Shares to be purchased
at such Closing, which Option Shares shall be free and clear of all
liens, claims, charges and encumbrances of any kind whatsoever and
subject to no preemptive rights, and (B) if the Option is exercised in
part only, an executed new agreement with the same terms as this
Agreement evidencing the right to purchase the balance of the shares of
Issuer Common Stock purchasable hereunder; and
(ii) Holder shall deliver to Issuer a letter agreeing that
Holder shall not offer to sell or otherwise dispose of such Option
Shares in violation of applicable federal and state law or of the
provisions of this Agreement.
(c) In addition to any other legend that is required by applicable law,
certificates for the Option Shares delivered at each Closing shall be endorsed
with a restrictive legend which shall read substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS
OF SEPTEMBER ___, 2001. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO
THE HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT BY ISSUER OF A WRITTEN
REQUEST THEREFOR.
It is understood and agreed that the above legend shall be removed by
delivery of substitute certificate(s) without such legend if Holder shall have
delivered to Issuer a copy of a letter from the staff of the Commission, or an
opinion of counsel in form and substance reasonably satisfactory to Issuer and
its counsel, to the effect that such legend is not required for purposes of the
Securities Act.
(d) Upon the giving by Holder to Issuer of the written notice of
exercise of the Option provided for under Section 3(e), the tender of the
applicable Purchase Price in immediately
4
available funds and the tender of this Agreement to Issuer, Holder shall be
deemed to be the holder of record of the shares of Issuer Common Stock issuable
upon such exercise, notwithstanding that the stock transfer books of Issuer
shall then be closed or that certificates representing such shares of Issuer
Common Stock shall not then be actually delivered to Holder.
(e) Issuer agrees:
(i) That it shall at all times maintain, free from preemptive
rights, sufficient authorized but unissued or treasury shares of Issuer
Common Stock so that the Option may be exercised without additional
authorization of Issuer Common Stock after giving effect to all other
options, warrants, convertible securities and other rights to purchase
Issuer Common Stock;
(ii) That it will not, by charter amendment or through
reorganization, consolidation, merger, dissolution or sale of assets,
or by any other voluntary act, avoid or seek to avoid the observance or
performance of any of the covenants, stipulations or conditions to be
observed or performed hereunder by Issuer;
(iii) Promptly to take all action as may from time to time be
required (including (A) complying with all premerger notification,
reporting and waiting period requirements and (B) in the event prior
approval of or notice to any Governmental Entity is necessary before
the Option may be exercised, cooperating fully with Holder in preparing
such applications or notices and providing such information to such
Governmental Entity as it may require) in order to permit Holder to
exercise the Option and Issuer duly and effectively to issue shares of
Issuer Common Stock pursuant hereto; and
(iv) Promptly to take all action provided herein to protect
the rights of Holder against dilution.
5. REPRESENTATIONS AND WARRANTIES OF ISSUER. Issuer hereby represents
and warrants to Grantee (and Holder, if different than Grantee) as follows:
(a) DUE AUTHORIZATION. Issuer has all requisite corporate power and
authority to enter into this Agreement, and subject to any approvals referred to
herein, to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Issuer, and this Agreement has been duly executed and delivered by Issuer.
(b) NO VIOLATIONS. The execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and compliance by Issuer
with any of the provisions hereof will not (i) conflict with or result in a
breach of any provision of its Articles of Incorporation or Code of Regulations
or a default (or give rise to any right of termination, cancellation or
acceleration) under any of the terms, conditions or provisions of any note,
bond, debenture, mortgage, indenture, license, material agreement or other
material instrument or obligation to which Issuer is a party, or by which it or
any of its properties or assets may be
5
bound, or (ii) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Issuer or any of its properties or assets.
(c) AUTHORIZED STOCK. Issuer has taken all necessary corporate and
other action to authorize and reserve and to permit it to issue, and at all
times from the date hereof until the obligation to deliver Issuer Common Stock
upon the exercise of the Option terminates, will have reserved for issuance upon
exercise of the Option that number of shares of Issuer Common Stock equal to the
maximum number of shares of Issuer Common Stock at any time and from time to
time purchasable upon exercise of the Option, and all such shares, upon issuance
pursuant to the Option, will be duly and validly issued, fully paid and
nonassessable, and will be delivered free and clear of all liens, claims,
charges and encumbrances of any kind or nature whatsoever and not subject to any
preemptive rights.
6. REPRESENTATIONS AND WARRANTIES OF GRANTEE. Grantee hereby represents
and warrants to Issuer as follows:
(a) DUE AUTHORIZATION. Grantee has all requisite corporate power and
authority to enter into this Agreement and, subject to any approvals or consents
referred to herein, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Grantee, and this Agreement has been duly
executed and delivered by Grantee.
(b) NO VIOLATIONS. The execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and compliance by Grantee
with any of the provisions hereof will not:
(i) Conflict with or result in a breach of any provision of
its Articles of Incorporation or Code of Regulations or a default (or
give rise to any right of termination, cancellation or acceleration)
under any of the terms, conditions or provisions of any note, bond,
debenture, mortgage, indenture, license, material agreement or other
material instrument or obligation to which Grantee is a party, or by
which it or any of its properties or assets may be bound; or
(ii) Violate any order, writ, injunction, decree, statute,
rule or regulation applicable to Grantee or any of its properties or
assets.
7. ADJUSTMENT UPON CHANGES IN ISSUER CAPITALIZATION, ETC.
(a) In the event of any change in Issuer Common Stock by reason of a
stock dividend, stock split, split-up, recapitalization, combination, exchange
of shares or similar transaction, the type and number of shares or securities
subject to the Option, and the Purchase Price therefor, shall be adjusted
appropriately, and proper provision shall be made in the agreements governing
such transactions so that Holder shall receive, upon exercise of the Option, the
number and class of shares or other securities or property that Holder would
have received in respect of Issuer Common Stock if the Option had been exercised
immediately prior to such event, or the record date therefor, as applicable. If
any additional shares of Issuer Common Stock are issued after the date of this
Agreement (other than pursuant to an event described in the first sentence of
this
6
Section 7(a)), the number of shares of Issuer Common Stock for which the
Option may be exercisable shall be adjusted so that, after such adjustment, it,
together with any shares of Issuer Common Stock previously issued pursuant
hereto, would entitle the holders thereof after full exercise of the Option to
exercise 14.9% of the aggregate voting power then exercisable in the election of
the Issuer's directors by the holders of all Issuer voting securities then
issued and outstanding as determined without giving effect to any shares subject
to or issued pursuant to the Option.
(b) In the event that Issuer shall enter in an agreement:
(i) To consolidate with or merge into any person, other than
Grantee or one of its Subsidiaries, and shall not be the continuing or
surviving corporation of such consolidation or merger;
(ii) To permit any person, other than Grantee or one of its
Subsidiaries, to merge into Issuer and Issuer shall be the continuing
or surviving corporation, but, in connection with such merger, the then
outstanding shares of Issuer Common Stock shall be changed into or
exchanged for stock or other securities of Issuer or any other person
or cash or any other property or the outstanding shares of Issuer
Common Stock immediately prior to such merger shall after such merger
represent less than 50% of the outstanding shares and share equivalents
of the merged company; or
(iii) To sell or otherwise transfer assets representing more
than 50% of the consolidated assets of Issuer and its Subsidiaries to
any person, other than Grantee or one of its Subsidiaries, then, and in
each such case (but at the election of the Holder in the case of clause
(iii)), the agreement governing such transaction shall make proper
provisions so that the Option shall, upon the consummation of any such
transaction and upon the terms and conditions set forth herein, be
converted into, or exchanged for, an option (the "Substitute Option"),
at the election of Holder, of any of (x) the Acquiring Corporation (as
hereinafter defined), (y) any person that controls the Acquiring
Corporation or (z) in the case of a merger described in clause (ii),
Issuer (such person being referred to as "Substitute Option Issuer").
(c) The Substitute Option shall have the same terms as the Option,
provided that, if the terms of the Substitute Option cannot, for legal reasons,
be the same as the Option, such terms shall be as similar as possible and in no
event less advantageous to Holder. Substitute Option Issuer also shall enter
into an agreement with Holder in substantially the same form as this Agreement,
which shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of
shares of Substitute Common Stock (as hereinafter defined) as is equal to the
Assigned Value (as hereinafter defined) multiplied by the number of shares of
Issuer Common Stock for which the Option was theretofore exercisable, divided by
the Average Price (as hereinafter defined). The exercise price of the Substitute
Option per share of Substitute Common Stock (the "Substitute Option Price")
shall then be equal to the Purchase Price multiplied by a fraction of which the
numerator is the number of shares of Issuer Common Stock for which the Option
was theretofore exercisable and
7
the denominator is the number of shares of the Substitute Common Stock for which
the Substitute Option is exercisable.
(e) The following terms have the meanings indicated:
(1) "Acquiring Corporation" shall mean (i) the continuing or
surviving corporation of a consolidation or merger with Issuer (if
other than Issuer), (ii) Issuer in a merger in which Issuer is the
continuing or surviving person, or (iii) the transferee of assets
representing more than 50% of the consolidated assets of Issuer and its
Subsidiaries.
(2) "Issuer voting securities" means at any time any class of
securities, including any shares of capital stock, issued by the Issuer
entitling the holder thereof at such time to exercise voting power in
the election of the Issuer's directors.
(3) "Substitute Common Stock" shall mean the shares of capital
stock (or similar equity interest) with the greatest voting power in
respect of the election of directors (or persons similarly responsible
for the direction of the business and affairs) of the Substitute Option
Issuer.
(4) "Assigned Value" shall mean the highest of (w) the price
per share of Issuer Common Stock at which a Tender Offer or an Exchange
Offer therefor has been made, (x) the price per share of Issuer Common
Stock to be paid by any third party pursuant to an agreement with
Issuer, (y) the highest closing price for shares of Issuer Common Stock
within the six-month period immediately preceding the consolidation,
merger or sale in question and (z) in the event of a sale of assets
representing more than 50% of the consolidated assets of Issuer and its
Subsidiaries or deposits, an amount equal to (i) the sum of the price
paid in such sale for such assets (and/or deposits) and the current
market value of the remaining assets of Issuer, as determined by a
nationally-recognized investment banking firm selected by Holder,
divided by (ii) the number of shares of Issuer Common Stock outstanding
at such time. In the event that a Tender Offer or an Exchange Offer is
made for Issuer Common Stock or an agreement is entered into for a
merger or consolidation involving consideration other than cash, the
value of the securities or other property issuable or deliverable in
exchange for Issuer Common Stock shall be determined by a
nationally-recognized investment banking firm selected by Holder.
(5) "Average Price" shall mean the average closing price of a
share of Substitute Common Stock for the one year immediately preceding
the consolidation, merger or sale in question, but in no event higher
than the closing price of the shares of Substitute Common Stock on the
day preceding such consolidation, merger or sale; provided that if
Issuer is the issuer of the Substitute Option, the Average Price shall
be computed with respect to a share of common stock issued by Issuer,
the person merging into Issuer or by any company which controls such
person, as Holder may elect.
(f) In no event, pursuant to any of the foregoing paragraphs, shall the
number of shares of Substitute Common Stock or other Issuer voting securities
subject to the Substitute
8
Option, when added to aggregate of all Issuer voting securities in respect of
which the Grantee and each Holder may exercise or direct the exercise of voting
power in the election of Issuer's directors, exceed 19.9% of the aggregate of
such voting power then exercisable by the holders of all Issuer voting
securities then issued and outstanding, as determined without giving effect to
any shares subject to or issued pursuant to the Substitute Option.
(g) Issuer shall not enter into any transaction described in Section
7(b) unless the Acquiring Corporation and any person that controls the Acquiring
Corporation assume in writing all the obligations of Issuer hereunder and take
all other actions that may be necessary so that the provisions of this Section 7
are given full force and effect (including, without limitation, any action that
may be necessary so that the holders of the other shares of common stock issued
by Substitute Option Issuer are not entitled to exercise any rights by reason of
the issuance or exercise of the Substitute Option and the shares of Substitute
Common Stock are otherwise in no way distinguishable from or have lesser
economic value (other than any diminution in value resulting from the fact that
the shares of Substitute Common Stock are restricted securities, as defined in
Rule 144 under the Securities Act or any successor provision) than other shares
of common stock issued by Substitute Option Issuer).
8. REPURCHASE AT THE OPTION OF HOLDER.
(a) Subject to the last sentence of Section 3(a), at the request of
Holder at any time commencing upon the first occurrence of a Repurchase Event
(as defined in Section 8(d)) and ending 12 months immediately thereafter, Issuer
shall repurchase from Holder (i) the Option and (ii) all shares of Issuer Common
Stock purchased by Holder pursuant hereto with respect to which Holder then has
beneficial ownership. The date on which Holder exercises its rights under this
Section 8 is referred to as the "Request Date." Such repurchase shall be at an
aggregate price (the "Section 8 Repurchase Consideration") equal to the sum of:
(i) The aggregate Purchase Price paid by Holder for any shares
of Issuer Common Stock acquired pursuant to the Option with respect to
which Holder then has beneficial ownership;
(ii) The excess, if any, of (x) the Applicable Price (as
defined below) for each share of Issuer Common Stock over (y) the
Purchase Price (subject to adjustment pursuant to Section 7),
multiplied by the number of shares of Issuer Common Stock with respect
to which the Option has not been exercised; and
(iii) The excess, if any, of the Applicable Price over the
Purchase Price (subject to adjustment pursuant to Section 7) paid (or,
in the case of Option Shares with respect to which the Option has been
exercised but the Closing Date has not occurred, payable) by Holder for
each share of Issuer Common Stock with respect to which the Option has
been exercised and with respect to which Holder then has beneficial
ownership, multiplied by the number of such shares.
(b) If Holder exercises its rights under this Section 8, Issuer shall,
within 10 business days after the Request Date, pay the Section 8 Repurchase
Consideration to Holder in immediately available funds, and contemporaneously
with such payment Holder shall surrender
9
to Issuer the Option and the certificates evidencing the shares of Issuer Common
Stock purchased thereunder with respect to which Holder then has beneficial
ownership, and shall warrant that it has sole record and beneficial ownership of
such shares and that the same are then free and clear of all liens, claims,
charges and encumbrances of any kind whatsoever. Notwithstanding the foregoing,
to the extent that prior notification to or approval of the Federal Reserve
Board, the OCC or any other Governmental Entity is required in connection with
the payment of all or any portion of the Section 8 Repurchase Consideration,
Holder shall have the ongoing option to revoke its request for repurchase
pursuant to Section 8, in whole or in part, or to require that Issuer deliver
from time to time that portion of the Section 8 Repurchase Consideration that it
is not then so prohibited from paying and promptly file the required notice or
application for approval and expeditiously process the same (and each party
shall cooperate with the other in the filing of any such notice or application
and the obtaining of any such approval), in which case the ten-day period
referred to in the first sentence of this Section 8(b) shall run instead from
the date on which any required notification periods have expired or been
terminated or such approvals have been obtained and any requisite waiting period
or periods shall have passed. If the Federal Reserve Board, the OCC or any other
Governmental Entity disapproves of any part of Issuer's proposed repurchase
pursuant to this Section 8, Issuer shall promptly give notice of such fact to
Holder. If the Federal Reserve Board, the OCC or any other Governmental Entity
prohibits the repurchase in part but not in whole, then Holder shall have the
right (i) to revoke the repurchase request or (ii) to the extent permitted by
the Federal Reserve Board, the OCC or other Governmental Entity, determine
whether the repurchase should apply to the Option and/or Option Shares and to
what extent to each, and Holder shall thereupon have the right to exercise the
Option as to the number of Option Shares for which the Option was exercisable at
the Request Date less the sum of the number of shares covered by the Option in
respect of which payment has been made pursuant to Section 8(a)(ii) and the
number of shares covered by the portion of the Option (if any) that has been
repurchased. Holder shall notify Issuer of its determination under the preceding
sentence within five business days of receipt of notice of disapproval of the
repurchase.
Notwithstanding anything herein to the contrary, all of Grantee's and
any Holder's rights under this Section 8 shall terminate on the date of
termination of the Option pursuant to Section 3(a).
(c) For purposes of this Agreement, the "Applicable Price" means the
highest of:
(i) The highest price per share of Issuer Common Stock paid
for any such share by the person or groups described in Section
8(d)(i);
(ii) The price per share of Issuer Common Stock received by
holders of Issuer Common Stock in connection with any merger or other
business combination transaction described in Sections 7(b)(i),
7(b)(ii) or 7(b)(iii); or
(iii) The highest closing sales price per share of Issuer
Common Stock quoted on the NASDAQ Stock Market's National Market
("NASDAQ/NMS") (or if Issuer Common Stock is not quoted on NASDAQ/NMS,
the highest bid price per share as quoted on the principal trading
market or securities exchange on which such shares are
10
traded, as reported by a recognized source chosen by Holder) during the
60 business days preceding the Request Date;
provided, however, that in the event of a sale of less than all of Issuer's
assets, the Applicable Price shall be the sum of the price paid in such sale for
such assets and the current market value of the remaining assets of Issuer as
determined by a nationally-recognized investment banking firm selected by
Holder, divided by the number of shares of Issuer Common Stock outstanding at
the time of such sale. If the consideration to be offered, paid or received
pursuant to either of the foregoing clauses (i) or (ii) shall be other than in
cash, the value of such consideration shall be determined in good faith by an
independent nationally-recognized investment banking firm selected by Holder and
reasonably acceptable to Issuer, which determination shall be conclusive for all
purposes of this Agreement.
(d) As used herein, a "Repurchase Event" shall occur if:
(i) Any person (other than Grantee or any subsidiary of
Grantee) shall have acquired beneficial ownership of (as such term is
defined in Rule 13d-3 promulgated under the Exchange Act), or the right
to acquire beneficial ownership of, or any "group" (as such term is
defined in Section 13(d)(3) of the Exchange Act) shall have been formed
which beneficially owns or has the right to acquire beneficial
ownership of, 50% or more of the then outstanding shares of Issuer
Common Stock; or
(ii) Any of the transactions described in Section 7(b)(i),
Section 7(b)(ii) or Section 7(b)(iii) shall be consummated.
9. REGISTRATION RIGHTS.
(a) DEMAND REGISTRATION RIGHTS. Issuer shall, subject to the conditions
of Section 9(c), if requested by any Holder, as expeditiously as possible
prepare and file a registration statement under the Securities Act if such
registration is necessary in order to permit the sale or other disposition of
any or all shares of Issuer Common Stock or other securities that have been
acquired by or are issuable to Holder upon exercise of the Option in accordance
with the intended method of sale or other disposition stated by Holder in such
request, including without limitation a "shelf" registration statement under
Rule 415 under the Securities Act or any successor provision, and Issuer shall
use its best efforts to qualify such shares or other securities for sale under
any applicable state securities laws.
(b) ADDITIONAL REGISTRATION RIGHTS. If Issuer at any time after the
exercise of the Option proposes to register any shares of Issuer Common Stock
under the Securities Act in connection with an underwritten public offering of
such Issuer Common Stock, Issuer will promptly give written notice to Holder of
its intention to do so and, upon the written request of Holder given within 30
days after receipt of any such notice (which request shall specify the number of
shares of Issuer Common Stock intended to be included in such underwritten
public offering by Holder), Issuer will cause all such shares for which a Holder
shall have requested participation in such registration to be so registered and
included in such underwritten public offering; provided, however, that Issuer
may elect to not cause any such shares to be so registered (i) if the
underwriters in good faith object for valid business reasons, or (ii) in the
case
11
of a registration solely to implement an employee benefit plan or a registration
filed on Form S-4 under the Securities Act or any successor form; provided,
further, however, that such election pursuant to clause (i) may only be made one
time. If some but not all the shares of Issuer Common Stock with respect to
which Issuer shall have received requests for registration pursuant to this
Section 9(b) shall be excluded from such registration, Issuer shall make
appropriate allocation of shares to be registered among Holders permitted to
register their shares of Issuer Common Stock in connection with such
registration pro rata in the proportion that the number of shares requested to
be registered by each such Holder bears to the total number of shares requested
to be registered by all such Holders then desiring to have Issuer Common Stock
registered for sale.
(c) CONDITIONS TO REQUIRED REGISTRATION. Issuer shall use all
reasonable efforts to cause each registration statement referred to in Section
9(a) to become effective and to obtain all consents or waivers of other parties
which are required therefor and to keep such registration statement effective;
provided, however, that Issuer may delay any registration of Option Shares
required pursuant to Section 9(a) for a period not exceeding 90 days if Issuer
shall in good faith determine that any such registration would adversely affect
an offering or contemplated offering of other securities by Issuer, and Issuer
shall not be required to register Option Shares under the Securities Act
pursuant to Section 9(a):
(i) Prior to the earliest of (A) termination of the Plan
pursuant to Article VII thereof, and (B) a Purchase Event or a
Preliminary Purchase Event;
(ii) On more than one occasion during any calendar year and on
more than two occasions in total;
(iii) Within 90 days after the effective date of a
registration referred to in Section 9(b) pursuant to which the Holder
or Holders concerned were afforded the opportunity to register such
shares under the Securities Act and such shares were registered as
requested; and
(iv) Unless a request therefor is made to Issuer by the Holder
or Holders of at least 25% or more of the aggregate number of Option
Shares (including shares of Issuer Common Stock issuable upon exercise
of the Option) then outstanding.
In addition to the foregoing, Issuer shall not be required to maintain
the effectiveness of any registration statement after the expiration of nine
months from the effective date of such registration statement. Issuer shall use
all reasonable efforts to make any filings, and take all steps, under all
applicable state securities laws to the extent necessary to permit the sale or
other disposition of the Option Shares so registered in accordance with the
intended method of distribution for such shares, provided, however, that Issuer
shall not be required to consent to general jurisdiction or to qualify to do
business in any state where it is not otherwise required to so consent to such
jurisdiction or to so qualify to do business.
(d) EXPENSES. Issuer will pay all expenses (including without
limitation registration fees, qualification fees, blue sky fees and expenses,
accounting expenses, legal expenses and printing expenses incurred by it) in
connection with each registration pursuant to Section 9(a) or
12
(b) and all other qualifications, notifications or exemptions pursuant to
Section 9(a) or (b); provided, however, that underwriting discounts and
commissions relating to Option Shares, fees and disbursements of counsel to the
Holder(s) of Option Shares being registered and any other expenses incurred by
such Holder(s) in connection with any such registration shall be borne by such
Holder(s)
(e) Indemnification. In connection with any registration under Section
9(a) or (b), Issuer hereby indemnifies each Holder, and each underwriter
thereof, including each person, if any, who controls such Holder or underwriter
within the meaning of Section 15 of the Securities Act, against all expenses,
losses, claims, damages and liabilities caused by any untrue, or alleged untrue,
statement of a material fact contained in any registration statement or
prospectus or notification or offering circular (including any amendments or
supplements thereto) or any preliminary prospectus, or caused by any omission,
or alleged omission, to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such expenses, losses, claims, damages or liabilities of such
indemnified party are caused by any untrue statement or alleged untrue statement
that was included by Issuer in any such registration statement or prospectus or
notification or offering circular (including any amendments or supplements
thereto) in reliance upon, and in conformity with, information furnished in
writing to Issuer by such indemnified party expressly for use therein, and
Issuer and each officer, director and controlling person of Issuer shall be
indemnified by such Holder, or by such underwriter, as the case may be, for all
such expenses, losses, claims, damages and liabilities caused by any untrue, or
alleged untrue, statement that was included by Issuer in any such registration
statement or prospectus or notification or offering circular (including any
amendments or supplements thereto) in reliance upon, and in conformity with,
information furnished in writing to Issuer by such Holder or such underwriter,
as the case may be, expressly fort such use.
Promptly upon receipt by a party indemnified under this Section 9(e) of
notice of the commencement of any action against such indemnified party in
respect of which indemnity or reimbursement may be I sought against any
indemnifying party under this Section 9(e), such indemnified party shall notify
the indemnifying party in writing of the commencement of such action, but,
except to the extent of any actual prejudice to the indemnifying party, the
failure so to notify the indemnifying party shall not relieve it of any
liability which it may otherwise have to any indemnified party under this
Section 9(e). In case notice of commencement of any such action shall be given
to the indemnifying party as above provided, the indemnifying party shall be
entitled to participate in and, to the extent it my wish, jointly with any other
indemnifying party similarly notified, to assume the defense of such action at
its own expense, with counsel chosen by it and reasonably satisfactory to such
indemnified party. The indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel (other than reasonable costs of investigation)
shall be paid by the indemnified party unless (i) the indemnifying party agrees
to pay the same, (ii) the indemnifying party fails to assume the defense of such
action with counsel reasonably satisfactory to the indemnified party, or (iii)
the indemnified party has been advised by counsel that one or more legal
defenses may be available to the indemnifying party that may be contrary to the
interest of the indemnified party, in which case the indemnifying party shall be
entitled to assume the defense of such action notwithstanding its obligation to
bear fees and expenses of
12
such counsel. No indemnifying party shall be liable for any settlement entered
into without its consent, which consent may not be unreasonably withheld.
If the indemnification provided for in this Section 9(e) is unavailable
to a party otherwise entitled to be indemnified in respect of any expenses,
losses, claims, damages or liabilities referred to herein, then the indemnifying
party, in lieu of indemnifying such party otherwise entitled to be indemnified,
shall contribute to the amount paid or payable by such party to be indemnified
as a result of such expenses, losses, claims, damages or liabilities in such
proportion as is appropriate to reflect the relative fault of Issuer, the
selling Holders and the underwriters in connection with the statement or
omissions which results in such expenses, losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The amount
paid or payable by a party as a result of the expenses, losses, claims, damages
and liabilities referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim; provided, however, that in no
case shall the selling Holders be responsible, in the aggregate, for any amount
in excess of the net offering proceeds attributable to its Option Shares
included in the offering. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(g) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. Any obligation by any Holder to indemnify shall be several
and not joint with other Holders.
In connection with any registration pursuant to Section 9(a) or (b)
above, Issuer and each selling Holder (other than Grantee) shall enter into an
agreement containing the indemnification provisions of this Section 9(e).
(f) Miscellaneous Reporting. Issuer shall comply with all reporting
requirements and will do all such other things as may be necessary to permit the
expeditious sale at any time of any Option Shares by the Holder(s) in accordance
with and to the extent permitted by any rule or regulation permitting
nonregistered sales of securities promulgated by the Commission from time to
time, including, without limitation, Rule 144A. Issuer shall at its expense
provide the Holder with any information necessary in connection with the
completion and filing of any reports or forms required to be filed by them under
the Securities Act or the Exchange Act, or required pursuant to any state
securities laws or the rules of any stock exchange.
(g) Issue Taxes. Issuer will pay all stamp taxes in connection with the
issuance and the sale of the Option Shares and in connection with the exercise
of the Option, and will save any Holder harmless, without limitation as to time,
against any and all liabilities, with respect to all such taxes.
10. QUOTATION; LISTING. If Issuer Common Stock or any other securities
to be acquired upon exercise of the Option are then authorized for quotation or
trading or listing on NASDAQ/NMS or any securities exchange, Issuer, upon the
request of Holder, will promptly file an application, if required, to authorize
for quotation or trading or listing the shares of Issuer Common Stock or other
securities to be acquired upon exercise of the Option on NASDAQ/NMS or such
other securities exchange and will use its best efforts to obtain approval, if
required, of such quotation or listing as soon as practicable.
14
11. DIVISION OF OPTION. Upon the occurrence of a Purchase Event or a
Preliminary Purchase Event, this Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of Holder, upon presentation and
surrender of this Agreement at the principal office of the Issuer for other
Agreements providing for Options of different denominations entitling the holder
thereof to purchase in the aggregate the same number of shares of Issuer Common
Stock purchasable hereunder. The terms "Agreement" and "Option" as used herein
include any other Agreements and related Options for which this Agreement (and
the Option granted hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
12. LIMITATION OF GRANTEE PROFIT; MINIMUM PROFIT.
(a) Notwithstanding any other provision herein, in no event shall
Grantee's Total Profit (as defined below) exceed $11,000,000 (the "Maximum
Profit") and, if it otherwise would exceed such amount, Grantee, at its sole
discretion, shall either:
(i) Reduce the number of Option Shares;
(ii) Deliver to Issuer for cancellation shares of Issuer
common stock (or other securities) into which such Option Shares are
converted or exchanged;
(iii) Pay cash to Issuer; or
(iv) Any combination of the foregoing, so that Grantee's
actually realized Total Profit shall not exceed the Maximum Profit
after taking into account the foregoing actions.
(b) If a Repurchase Event occurs, notwithstanding any other provision
herein, in no event shall Grantee's Total Profit be less than $8,000,000 (the
"Minimum Profit") and, if it otherwise would be less than such amount, Issuer
shall pay cash to Grantee in an amount equal to the excess of Minimum Profit
over Total Profit.
(c) For purposes of this Agreement, "Total Profit" shall mean: The
aggregate amount of (A) any excess of (x) the net cash amounts received by
Grantee pursuant to a sale of Option Shares (or securities into which such
shares are converted or exchanged) (including amounts paid to Grantee in respect
of Option Shares repurchased by Issuer pursuant to Section 8) over (y) the
Grantee's aggregate purchase price for such Option Shares (or other securities),
plus (B) any amounts received by Grantee on the repurchase of the Option by
Issuer pursuant to Section 8, plus (C) any cash previously paid by Grantee to
Issuer pursuant to this Section 12 and the value of the Option Shares (or other
securities) previously delivered by Grantee to Issuer for cancellation pursuant
to this Section 12.
15
(d) Notwithstanding any other provision of this Agreement, nothing in
this Agreement shall affect the ability of Grantee to receive, nor relieve
Issuer's obligation to pay, the liquidated damages provided for in Section
10.3(b) of the Plan.
13. MISCELLANEOUS.
(a) EXPENSES. Except as otherwise provided in Section 9, each of the
parties hereto shall bear and pay all costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated hereunder, including
fees and expenses of its own financial consultants, investment bankers,
accountants and counsel.
(b) WAIVER AND AMENDMENT. Any provision of this Agreement may be waived
at any time by the party that is entitled to the benefits of such provision by
written instrument signed by a duly authorized executive officer of such party.
This Agreement may not be modified, amended, altered or supplemented except upon
the execution and delivery of a written agreement executed by the parties
hereto.
(c) ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES; SEVERABILITY. This
Agreement, together with the Plan and the other documents and instruments
referred to herein and therein, between Grantee and Issuer (i) constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof,
and (ii) is not intended to confer upon any person other than the parties hereto
(other than the indemnified parties under Section 9(e) and any transferee of the
Option Shares or any permitted transferee of this Agreement pursuant to Section
13(h)) any rights or remedies hereunder. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or a
federal or state regulatory agency to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that the Option does not permit Holder to acquire, or does not require Issuer to
repurchase, the full number of shares of Issuer Common Stock as provided in
Sections 3 and 8 (as adjusted pursuant to Section 7), it is the express
intention of Issuer to allow Holder to acquire or to require Issuer to
repurchase such lesser number of shares as may be permissible without any
amendment or modification hereof.
(d) GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Ohio without regard to any applicable
conflicts of law rules.
(e) DESCRIPTIVE HEADINGS. The descriptive headings contained herein are
for convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
(f) NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation) or sent by overnight mail service or mailed by registered or
certified mail (return receipt requested) postage prepaid, to the parties at the
following address (or at such other address for a party as shall be specified by
like notice).
16
If to Issuer:
UNB Corp..
220 Market Avenue South
Canton, Ohio 44701
Attention: Roger L. Mann
With a required copy to:
Ronald K. Bennington, Esq.
Black, McCuskey, Souers & Arbaugh
1000 United Bank Plaza
220 Market Avenue South
Canton, Ohio 44702-2116
If to Grantee:
BancFirst Ohio Corp.
422 Main Street
P.O. Box 4658
Zanesville, OH 43702-4658
Attention: Gary Fields
President and Chief Executive Officer
Fax: (740) 455-5705
With a required copy to:
Michael F. Sullivan
Bricker & Eckler LLP
100 South Third Street
Columbus, Ohio 43215-4291
Fax: (614) 227-2390
(g) COUNTERPARTS. This Agreement and any amendments hereto may be
executed in two counterparts, each of which shall be considered one and the same
agreement and shall become effective when both counterparts have been signed, it
being understood that both parties need not sign the same counterpart.
(h) ASSIGNMENT. Neither this Agreement nor any of the rights, interests
or obligations hereunder or under the Option shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other party, except that Holder may assign this Agreement
to a wholly-owned subsidiary of Holder and Holder may assign its rights
hereunder in whole or in part after the occurrence of a Purchase Event. Subject
to the preceding sentence, this Agreement shall be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns.
17
(i) FURTHER ASSURANCES. In the event of any exercise of the Holder,
Issuer and Holder shall execute and deliver all other and instruments and take
all other action that may be reasonably in order to consummate the transactions
provided for by such
(j) SPECIFIC PERFORMANCE. The parties hereto agree that this Agreement
may be enforced by either party through specific performance, injunctive relief
and other equitable relief. Both parties further agree to waive any requirement
for the securing or posting of any bond in connection with the obtaining of any
such equitable relief and that this provision is without prejudice to any other
rights that the parties hereto may have for any failure to perform this
Agreement.
IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the day and year first written above.
GRANTEE:
ATTEST: BANCFIRST OHIO CORP.
By: /s/ James H. Nicholson By: /s/ Gary N. Fields
----------------------- -------------------------
Name: James H. Nicholson Name: Gary N. Fields
----------------------- -------------------------
Title: EVP & Secretary Title: President & CEO
----------------------- -------------------------
ISSUER:
ATTEST: UNB CORP.
By: /s/ James J. Pennetti By: /s/ Roger L. Mann
----------------------- -------------------------
Name: James J. Pennetti Name: Roger L. Mann
----------------------- -------------------------
Title: EVP & CFO Title: Chairman & CEO
----------------------- -------------------------
18
Appendix B-2
STOCK OPTION AGREEMENT
Stock Option Agreement, dated as of September 5, 2001, (the
"Agreement"), between BancFirst Ohio Corporation, an Ohio corporation
("Issuer"), and UNB Corp., an Ohio corporation ("Grantee").
WITNESSETH:
WHEREAS, Issuer and Grantee have entered into an Agreement of Merger
and Plan of Reorganization, dated as of September 5, 2001 (the "Plan"),
providing for, among other things, the merger of Issuer with and into Grantee
(the "Merger"), with Grantee as the surviving corporation; and
WHEREAS, as a condition and inducement to Grantee's execution of the
Plan, Grantee has required that Issuer agree, and Issuer has agreed, to grant to
Grantee the Option (as hereinafter defined);
NOW THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Plan, and intending to be legally bound hereby, Issuer and Grantee agree as
follows:
1. DEFINED TERMS. Capitalized terms which are used but not defined
herein shall have the meanings ascribed to such terms in the Plan.
2. GRANT OF OPTION. Subject to the terms and conditions set forth
herein, Issuer hereby grants to Grantee an irrevocable option (the "Option") to
purchase up to 1,302,533 shares (as adjusted as set forth herein) (the "Option
Shares," which shall include the Option Shares before and after any transfer of
such Option Shares) of Common Stock, without par value ("Issuer Common Stock"),
of Issuer at a purchase price per Option Share (as adjusted as set forth
herein, the "Purchase Price") of $20.95, provided, however, that in no event
shall the number of Option Shares for which the Option may be exercisable, when
added to aggregate of all Issuer voting securities (as hereinafter defined) in
respect of which the Grantee and each Holder (as hereinafter defined) may then
exercise or direct the exercise of voting power in the election of Issuer's
directors, exceed 19.9% of the aggregate such voting power then exercisable by
the holders of all Issuer voting securities then issued and outstanding as
determined without giving effect to any shares subject to or issued pursuant to
the Option.
3. EXERCISE OF OPTION.
(a) Provided that:
(i) Grantee or Holder (as hereinafter defined), as applicable,
shall not be in material breach of the agreements or covenants
contained in this Agreement or the Plan; and (ii) No preliminary or
permanent injunction or other order against the delivery of shares
covered by the Option issued by any court of competent jurisdiction in
the United States shall be in effect, Holder may exercise the Option,
in whole or in part, at
any time and from time to time following the occurrence of a Purchase
Event (as hereinafter defined); provided that the Option shall
terminate and be of no further force and effect upon the earliest to
occur of (A) the Effective Time of the Merger, (B) termination of the
Plan in accordance with the terms thereof prior to the occurrence of a
Purchase Event or a Preliminary Purchase Event, other than a
termination of the Plan by Grantee pursuant to Section 9.1(d) thereof
(a "Default Termination"), (C) 12 months after the termination of the
Plan by Grantee pursuant to a Default Termination, and (D) 12 months
after termination of the Plan (other than pursuant to a Default
Termination) following the occurrence of a Purchase Event or a
Preliminary Purchase Event; and provided, further, that any purchase of
shares upon exercise of the Option shall be subject to compliance with
applicable laws, including without limitation the Bank Holding Company
Act of 1956, as amended (the "BHCA"). The term "Holder" shall mean the
holder or holders of the Option from time to time, and which is
initially Grantee. The rights set forth in Section 8 hereof shall
terminate when the right to exercise the Option terminates (other than
as a result of a complete exercise of the Option) as set forth above.
(b) As used herein, a "Purchase Event" means any of the following
events:
(i) Without Grantee's prior written consent, Issuer shall have
authorized, recommended or publicly-proposed, or publicly announced an
intention to authorize, recommend or propose, or entered into an
agreement with any person (other than Grantee or any subsidiary of
Grantee) to effect (A) a merger, consolidation or similar transaction
involving Issuer or any of its Subsidiaries, (B) the disposition, by
sale, lease, exchange or otherwise, of assets of Issuer or any of its
Subsidiaries representing in either case 25% or more of the
consolidated assets of Issuer and its Subsidiaries, or (C) the
issuance, sale or other disposition of (including by way of merger,
consolidation, share exchange or any similar transaction) securities
representing 20% or more of the voting power of Issuer or any of its
Subsidiaries (any of the foregoing an "Acquisition Transaction"); or
(ii) Any person (other than Grantee or any subsidiary of
Grantee) shall have acquired beneficial ownership (as such term is
defined in Rule 131-3 promulgated under the Exchange Act) of or the
right to acquire beneficial ownership of, or any "group" (as such term
is defined in Section 13(d)(3) of the Exchange Act) shall have been
formed which beneficially owns or has the right to acquire beneficial
ownership of, 20% or more of the then outstanding shares of Issuer
Common Stock.
(c) As used herein, a "Preliminary Purchase Event" means any of the
following events:
(i) Any person (other than Grantee or any subsidiary of
Grantee) shall have commenced (as such term is defined in Rule 14d-2
under the Exchange Act), or shall have filed a registration statement
under the Securities Act with respect to, a tender offer or exchange
offer to purchase any shares of Issuer Common Stock such that, upon
consummation of such offer, such person would own or control 15% or
more of the then outstanding shares of Issuer Common Stock (such an
offer being referred to herein as a "Tender Offer" and an "Exchange
Offer," respectively); or
2
(ii) (A) the holders of Issuer Common Stock shall not have
approved the Plan at the meeting of such stockholders held for the
purpose of voting on the Plan, (B) such meeting shall not have been
held or shall have been canceled prior to termination of the Plan or
(C) Issuer's Board of Directors shall have withdrawn or modified in a
manner adverse to Grantee the recommendation of Issuer's Board of
Directors with respect to the Plan; in each case after it shall have
been publicly announced that any person (other than Grantee or any
subsidiary of Grantee) shall have (x) made, or disclosed an intention
to make, a proposal to engage in an Acquisition Transaction, (y)
commenced a Tender Offer or filed a registration statement under the
Securities Act with respect to an Exchange Offer, or (z) filed an
application (or given notice), whether in draft or final form, under
the BHCA, the Home Owners Loan Act, as amended, the Bank Merger Act, as
amended, the Change in Bank Control Act of 1978, as amended or any
similar state banking law, for approval to engage in (or notice with
respect to) an Acquisition Transaction; or
(iii) Issuer shall have breached any representation, warranty,
covenant or obligation contained in the Plan and such breach would
entitle Grantee to terminate the Plan under Section 9.1(d) thereof
(without regard to the cure period provided for therein unless such
cure is promptly effected without jeopardizing consummation of the
Merger pursuant to the terms of the Plan) after (x) a bona fide
proposal is made by any person (other than Grantee or any subsidiary of
Grantee) to Issuer or its stockholders to engage in an Acquisition
Transaction, (y) any person (other than Grantee or any subsidiary of
Grantee) states its intention to Issuer or its stockholders to make a
proposal to engage in an Acquisition Transaction if the Plan terminates
or (z) any person (other than Grantee or any subsidiary of Grantee)
shall have filed an application or notice with any Governmental Entity
to engage in an Acquisition Transaction.
As used in this Agreement, "person" shall have the meaning specified in
Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
(d) Issuer shall notify Grantee promptly in writing of the occurrence
of any Preliminary Purchase Event or Purchase Event, it being understood that
the giving of such notice by Issuer shall not be a condition to the right of
Holder to exercise the Option.
(e) In the event Holder wishes to exercise the Option, it shall send to
Issuer a written notice (the date of which being herein referred to as the
"Notice Date") specifying (i) the total number of Option Shares it intends to
purchase pursuant to such exercise, and (ii) a date not earlier than three
business days nor later than 15 business days from the Notice Date for the
closing (the "Closing") of such purchase (the "Closing Date"), provided that the
first notice of exercise shall be sent to Issuer within 180 days after the first
Purchase Event of which Grantee has been notified and, provided further, that if
prior notification to or approval of the Board of Governors of the Federal
Reserve System (the "Federal Reserve Board"), the Office of the Comptroller of
the Currency ("OCC") or any other Governmental Entity is required in connection
with such purchase, Holder shall promptly file the required notice or
application for approval and shall expeditiously process the same and the three
business day and 15 business day period of time that otherwise would run
pursuant to this sentence shall run instead from the date on which any required
notification periods have expired or been terminated or such
3
approvals have been obtained and any requisite waiting period or periods shall
have passed. Any exercise of the Option shall be deemed to occur on the Notice
Date relating thereto.
4. PAYMENT AND DELIVERY OF CERTIFICATES.
(a) On each Closing Date, Holder shall:
(i) Pay to Issuer, in immediately available funds by wire
transfer to a bank account designated by Issuer, an amount equal to the
Purchase Price multiplied by the number of Option Shares to be
purchased on such Closing Date; and
(ii) Present and surrender this Agreement to Issuer at the
address of Issuer specified in Section 13(f) hereof.
(b) At each Closing, simultaneously with the delivery of immediately
available funds and surrender of this Agreement as provided in Section 4(a),
(i) Issuer shall deliver to Holder (A) a certificate or
certificates representing the Option Shares to be purchased at such
Closing, which Option Shares shall be free and clear of all liens,
claims, charges and encumbrances of any kind whatsoever and subject to
no preemptive rights, and (B) if the Option is exercised in part only,
an executed new agreement with the same terms as this Agreement
evidencing the right to purchase the balance of the shares of Issuer
Common Stock purchasable hereunder; and
(ii) Holder shall deliver to Issuer a letter agreeing that
Holder shall not offer to sell or otherwise dispose of such Option
Shares in violation of applicable federal and state law or of the
provisions of this Agreement.
(c) In addition to any other legend that is required by applicable law,
certificates for the Option Shares delivered at each Closing shall be endorsed
with a restrictive legend which shall read substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS
OF SEPTEMBER ___, 2001. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO
THE HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT BY ISSUER OF A WRITTEN
REQUEST THEREFOR.
It is understood and agreed that the above legend shall be removed by
delivery of substitute certificate(s) without such legend if Holder shall have
delivered to Issuer a copy of a letter from the staff of the Commission, or an
opinion of counsel in form and substance reasonably satisfactory to Issuer and
its counsel, to the effect that such legend is not required for purposes of the
Securities Act.
(d) Upon the giving by Holder to Issuer of the written notice of
exercise of the Option provided for under Section 3(e), the tender of the
applicable Purchase Price in immediately
4
available funds and the tender of this Agreement to Issuer, Holder shall be
deemed to be the holder of record of the shares of Issuer Common Stock issuable
upon such exercise, notwithstanding that the stock transfer books of Issuer
shall then be closed or that certificates representing such shares of Issuer
Common Stock shall not then be actually delivered to Holder.
(e) Issuer agrees:
(i) That it shall at all times maintain, free from preemptive
rights, sufficient authorized but unissued or treasury shares of Issuer
Common Stock so that the Option may be exercised without additional
authorization of Issuer Common Stock after giving effect to all other
options, warrants, convertible securities and other rights to purchase
Issuer Common Stock;
(ii) That it will not, by charter amendment or through
reorganization, consolidation, merger, dissolution or sale of assets,
or by any other voluntary act, avoid or seek to avoid the observance or
performance of any of the covenants, stipulations or conditions to be
observed or performed hereunder by Issuer;
(iii) Promptly to take all action as may from time to time be
required (including (A) complying with all premerger notification,
reporting and waiting period requirements and (B) in the event prior
approval of or notice to any Governmental Entity is necessary before
the Option may be exercised, cooperating fully with Holder in preparing
such applications or notices and providing such information to such
Governmental Entity as it may require) in order to permit Holder to
exercise the Option and Issuer duly and effectively to issue shares of
Issuer Common Stock pursuant hereto; and
(iv) Promptly to take all action provided herein to protect
the rights of Holder against dilution.
5. REPRESENTATIONS AND WARRANTIES OF ISSUER. Issuer hereby represents
and warrants to Grantee (and Holder, if different than Grantee) as follows:
(a) DUE AUTHORIZATION. Issuer has all requisite corporate power and
authority to enter into this Agreement, and subject to any approvals referred to
herein, to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Issuer, and this Agreement has been duly executed and delivered by Issuer.
(b) NO VIOLATIONS. The execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and compliance by Issuer
with any of the provisions hereof will not (i) conflict with or result in a
breach of any provision of its Articles of Incorporation or Code of Regulations
or a default (or give rise to any right of termination, cancellation or
acceleration) under any of the terms, conditions or provisions of any note,
bond, debenture, mortgage, indenture, license, material agreement or other
material instrument or obligation to which Issuer is a party, or by which it or
any of its properties or assets may be
5
bound, or (ii) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Issuer or any of its properties or assets.
(c) AUTHORIZED STOCK. Issuer has taken all necessary corporate and
other action to authorize and reserve and to permit it to issue, and at all
times from the date hereof until the obligation to deliver Issuer Common Stock
upon the exercise of the Option terminates, will have reserved for issuance upon
exercise of the Option that number of shares of Issuer Common Stock equal to the
maximum number of shares of Issuer Common Stock at any time and from time to
time purchasable upon exercise of the Option, and all such shares, upon issuance
pursuant to the Option, will be duly and validly issued, fully paid and
nonassessable, and will be delivered free and clear of all liens, claims,
charges and encumbrances of any kind or nature whatsoever and not subject to any
preemptive rights.
6. REPRESENTATIONS AND WARRANTIES OF GRANTEE. Grantee hereby represents
and warrants to Issuer as follows:
(a) DUE AUTHORIZATION. Grantee has all requisite corporate power and
authority to enter into this Agreement and, subject to any approvals or consents
referred to herein, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Grantee, and this Agreement has been duly
executed and delivered by Grantee.
(b) NO VIOLATIONS. The execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and compliance by Grantee
with any of the provisions hereof will not:
(i) Conflict with or result in a breach of any provision of
its Articles of Incorporation or Code of Regulations or a default (or
give rise to any right of termination, cancellation or acceleration)
under any of the terms, conditions or provisions of any note, bond,
debenture, mortgage, indenture, license, material agreement or other
material instrument or obligation to which Grantee is a party, or by
which it or any of its properties or assets may be bound; or
(ii) Violate any order, writ, injunction, decree, statute,
rule or regulation applicable to Grantee or any of its properties or
assets.
7. ADJUSTMENT UPON CHANGES IN ISSUER CAPITALIZATION, ETC.
(a) In the event of any change in Issuer Common Stock by reason of a
stock dividend, stock split, split-up, recapitalization, combination, exchange
of shares or similar transaction, the type and number of shares or securities
subject to the Option, and the Purchase Price therefor, shall be adjusted
appropriately, and proper provision shall be made in the agreements governing
such transactions so that Holder shall receive, upon exercise of the Option, the
number and class of shares or other securities or property that Holder would
have received in respect of Issuer Common Stock if the Option had been exercised
immediately prior to such event, or the record date therefor, as applicable. If
any additional shares of Issuer Common Stock are issued after the date of this
Agreement (other than pursuant to an event described in the first sentence of
this
6
Section 7(a)), the number of shares of Issuer Common Stock for which the Option
may be exercisable shall be adjusted so that, after such adjustment, it,
together with any shares of Issuer Common Stock previously issued pursuant
hereto, would entitle the holders thereof after full exercise of the Option to
exercise 14.9% of the aggregate voting power then exercisable in the election of
the Issuer's directors by the holders of all Issuer voting securities then
issued and outstanding as determined without giving effect to any shares subject
to or issued pursuant to the Option.
(b) In the event that Issuer shall enter in an agreement:
(i) To consolidate with or merge into any person, other than
Grantee or one of its Subsidiaries, and shall not be the continuing or
surviving corporation of such consolidation or merger;
(ii) To permit any person, other than Grantee or one of its
Subsidiaries, to merge into Issuer and Issuer shall be the continuing
or surviving corporation, but, in connection with such merger, the then
outstanding shares of Issuer Common Stock shall be changed into or
exchanged for stock or other securities of Issuer or any other person
or cash or any other property or the outstanding shares of Issuer
Common Stock immediately prior to such merger shall after such merger
represent less than 50% of the outstanding shares and share equivalents
of the merged company; or
(iii) To sell or otherwise transfer assets representing more
than 50% of the consolidated assets of Issuer and its Subsidiaries to
any person, other than Grantee or one of its Subsidiaries, then, and in
each such case (but at the election of the Holder in the case of clause
(iii)), the agreement governing such transaction shall make proper
provisions so that the Option shall, upon the consummation of any such
transaction and upon the terms and conditions set forth herein, be
converted into, or exchanged for, an option (the "Substitute Option"),
at the election of Holder, of any of (x) the Acquiring Corporation (as
hereinafter defined), (y) any person that controls the Acquiring
Corporation or (z) in the case of a merger described in clause (ii),
Issuer (such person being referred to as "Substitute Option Issuer").
(c) The Substitute Option shall have the same terms as the Option,
provided that, if the terms of the Substitute Option cannot, for legal reasons,
be the same as the Option, such terms shall be as similar as possible and in no
event less advantageous to Holder. Substitute Option Issuer also shall enter
into an agreement with Holder in substantially the same form as this Agreement,
which shall be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number of
shares of Substitute Common Stock (as hereinafter defined) as is equal to the
Assigned Value (as hereinafter defined) multiplied by the number of shares of
Issuer Common Stock for which the Option was theretofore exercisable, divided by
the Average Price (as hereinafter defined). The exercise price of the Substitute
Option per share of Substitute Common Stock (the "Substitute Option Price")
shall then be equal to the Purchase Price multiplied by a fraction of which the
numerator is the number of shares of Issuer Common Stock for which the Option
was theretofore exercisable and
7
the denominator is the number of shares of the Substitute Common Stock for which
the Substitute Option is exercisable.
(e) The following terms have the meanings indicated:
(1) "Acquiring Corporation" shall mean (i) the continuing or
surviving corporation of a consolidation or merger with Issuer (if
other than Issuer), (ii) Issuer in a merger in which Issuer is the
continuing or surviving person, or (iii) the transferee of assets
representing more than 50% of the consolidated assets of Issuer and its
Subsidiaries.
(2) "Issuer voting securities" means at any time any class of
securities, including any shares of capital stock, issued by the Issuer
entitling the holder thereof at such time to exercise voting power in
the election of the Issuer's directors.
(3) "Substitute Common Stock" shall mean the shares of capital
stock (or similar equity interest) with the greatest voting power in
respect of the election of directors (or persons similarly responsible
for the direction of the business and affairs) of the Substitute Option
Issuer.
(4) "Assigned Value" shall mean the highest of (w) the price
per share of Issuer Common Stock at which a Tender Offer or an Exchange
Offer therefor has been made, (x) the price per share of Issuer Common
Stock to be paid by any third party pursuant to an agreement with
Issuer, (y) the highest closing price for shares of Issuer Common Stock
within the six-month period immediately preceding the consolidation,
merger or sale in question and (z) in the event of a sale of assets
representing more than 50% of the consolidated assets of Issuer and its
Subsidiaries or deposits, an amount equal to (i) the sum of the price
paid in such sale for such assets (and/or deposits) and the current
market value of the remaining assets of Issuer, as determined by a
nationally-recognized investment banking firm selected by Holder,
divided by (ii) the number of shares of Issuer Common Stock outstanding
at such time. In the event that a Tender Offer or an Exchange Offer is
made for Issuer Common Stock or an agreement is entered into for a
merger or consolidation involving consideration other than cash, the
value of the securities or other property issuable or deliverable in
exchange for Issuer Common Stock shall be determined by a
nationally-recognized investment banking firm selected by Holder.
(5) "Average Price" shall mean the average closing price of a
share of Substitute Common Stock for the one year immediately preceding
the consolidation, merger or sale in question, but in no event higher
than the closing price of the shares of Substitute Common Stock on the
day preceding such consolidation, merger or sale; provided that if
Issuer is the issuer of the Substitute Option, the Average Price shall
be computed with respect to a share of common stock issued by Issuer,
the person merging into Issuer or by any company which controls such
person, as Holder may elect.
(f) In no event, pursuant to any of the foregoing paragraphs, shall the
number of shares of Substitute Common Stock or other Issuer voting securities
subject to the Substitute
8
Option, when added to aggregate of all Issuer voting securities in respect of
which the Grantee and each Holder may exercise or direct the exercise of voting
power in the election of Issuer's directors, exceed 19.9% of the aggregate of
such voting power then exercisable by the holders of all Issuer voting
securities then issued and outstanding, as determined without giving effect to
any shares subject to or issued pursuant to the Substitute Option.
(g) Issuer shall not enter into any transaction described in Section
7(b) unless the Acquiring Corporation and any person that controls the Acquiring
Corporation assume in writing all the obligations of Issuer hereunder and take
all other actions that may be necessary so that the provisions of this Section 7
are given full force and effect (including, without limitation, any action that
may be necessary so that the holders of the other shares of common stock issued
by Substitute Option Issuer are not entitled to exercise any rights by reason of
the issuance or exercise of the Substitute Option and the shares of Substitute
Common Stock are otherwise in no way distinguishable from or have lesser
economic value (other than any diminution in value resulting from the fact that
the shares of Substitute Common Stock are restricted securities, as defined in
Rule 144 under the Securities Act or any successor provision) than other shares
of common stock issued by Substitute Option Issuer).
8. REPURCHASE AT THE OPTION OF HOLDER.
(a) Subject to the last sentence of Section 3(a), at the request of
Holder at any time commencing upon the first occurrence of a Repurchase Event
(as defined in Section 8(d)) and ending 12 months immediately thereafter, Issuer
shall repurchase from Holder (i) the Option and (ii) all shares of Issuer Common
Stock purchased by Holder pursuant hereto with respect to which Holder then has
beneficial ownership. The date on which Holder exercises its rights under this
Section 8 is referred to as the "Request Date." Such repurchase shall be at an
aggregate price (the "Section 8 Repurchase Consideration") equal to the sum of:
(i) The aggregate Purchase Price paid by Holder for any shares
of Issuer Common Stock acquired pursuant to the Option with respect to
which Holder then has beneficial ownership;
(ii) The excess, if any, of (x) the Applicable Price (as
defined below) for each share of Issuer Common Stock over (y) the
Purchase Price (subject to adjustment pursuant to Section 7),
multiplied by the number of shares of Issuer Common Stock with respect
to which the Option has not been exercised; and
(iii) The excess, if any, of the Applicable Price over the
Purchase Price (subject to adjustment pursuant to Section 7) paid (or,
in the case of Option Shares with respect to which the Option has been
exercised but the Closing Date has not occurred, payable) by Holder for
each share of Issuer Common Stock with respect to which the Option has
been exercised and with respect to which Holder then has beneficial
ownership, multiplied by the number of such shares.
(b) If Holder exercises its rights under this Section 8, Issuer shall,
within 10 business days after the Request Date, pay the Section 8 Repurchase
Consideration to Holder in immediately available funds, and contemporaneously
with such payment Holder shall surrender
9
to Issuer the Option and the certificates evidencing the shares of Issuer Common
Stock purchased thereunder with respect to which Holder then has beneficial
ownership, and shall warrant that it has sole record and beneficial ownership of
such shares and that the same are then free and clear of all liens, claims,
charges and encumbrances of any kind whatsoever. Notwithstanding the foregoing,
to the extent that prior notification to or approval of the Federal Reserve
Board, the OCC or any other Governmental Entity is required in connection with
the payment of all or any portion of the Section 8 Repurchase Consideration,
Holder shall have the ongoing option to revoke its request for repurchase
pursuant to Section 8, in whole or in part, or to require that Issuer deliver
from time to time that portion of the Section 8 Repurchase Consideration that it
is not then so prohibited from paying and promptly file the required notice or
application for approval and expeditiously process the same (and each party
shall cooperate with the other in the filing of any such notice or application
and the obtaining of any such approval), in which case the ten-day period
referred to in the first sentence of this Section 8(b) shall run instead from
the date on which any required notification periods have expired or been
terminated or such approvals have been obtained and any requisite waiting period
or periods shall have passed. If the Federal Reserve Board, the OCC or any other
Governmental Entity disapproves of any part of Issuer's proposed repurchase
pursuant to this Section 8, Issuer shall promptly give notice of such fact to
Holder. If the Federal Reserve Board, the OCC or any other Governmental Entity
prohibits the repurchase in part but not in whole, then Holder shall have the
right (i) to revoke the repurchase request or (ii) to the extent permitted by
the Federal Reserve Board, the OCC or other Governmental Entity, determine
whether the repurchase should apply to the Option and/or Option Shares and to
what extent to each, and Holder shall thereupon have the right to exercise the
Option as to the number of Option Shares for which the Option was exercisable at
the Request Date less the sum of the number of shares covered by the Option in
respect of which payment has been made pursuant to Section 8(a)(ii) and the
number of shares covered by the portion of the Option (if any) that has been
repurchased. Holder shall notify Issuer of its determination under the preceding
sentence within five business days of receipt of notice of disapproval of the
repurchase.
Notwithstanding anything herein to the contrary, all of Grantee's and
any Holder's rights under this Section 8 shall terminate on the date of
termination of the Option pursuant to Section 3(a).
(c) For purposes of this Agreement, the "Applicable Price" means the
highest of:
(i) The highest price per share of Issuer Common Stock paid
for any such share by the person or groups described in Section
8(d)(i);
(ii) The price per share of Issuer Common Stock received by
holders of Issuer Common Stock in connection with any merger or other
business combination transaction described in Sections 7(b)(i),
7(b)(ii) or 7(b)(iii); or
(iii) The highest closing sales price per share of Issuer
Common Stock quoted on the NASDAQ Stock Market's National Market
("NASDAQ/NMS") (or if Issuer Common Stock is not quoted on NASDAQ/NMS,
the highest bid price per share as quoted on the principal trading
market or securities exchange on which such shares are
10
traded, as reported by a recognized source chosen by Holder) during the
60 business days preceding the Request Date;
provided, however, that in the event of a sale of less than all of Issuer's
assets, the Applicable Price shall be the sum of the price paid in such sale for
such assets and the current market value of the remaining assets of Issuer as
determined by a nationally-recognized investment banking firm selected by
Holder, divided by the number of shares of Issuer Common Stock outstanding at
the time of such sale. If the consideration to be offered, paid or received
pursuant to either of the foregoing clauses (i) or (ii) shall be other than in
cash, the value of such consideration shall be determined in good faith by an
independent nationally-recognized investment banking firm selected by Holder and
reasonably acceptable to Issuer, which determination shall be conclusive for all
purposes of this Agreement.
(d) As used herein, a "Repurchase Event" shall occur if:
(i) Any person (other than Grantee or any subsidiary of
Grantee) shall have acquired beneficial ownership of (as such term is
defined in Rule 13d-3 promulgated under the Exchange Act), or the right
to acquire beneficial ownership of, or any "group" (as such term is
defined in Section 13(d)(3) of the Exchange Act) shall have been formed
which beneficially owns or has the right to acquire beneficial
ownership of, 50% or more of the then outstanding shares of Issuer
Common Stock; or
(ii) Any of the transactions described in Section 7(b)(i),
Section 7(b)(ii) or Section 7(b)(iii) shall be consummated.
9. REGISTRATION RIGHTS.
(a) DEMAND REGISTRATION RIGHTS. Issuer shall, subject to the conditions
of Section 9(c), if requested by any Holder, as expeditiously as possible
prepare and file a registration statement under the Securities Act if such
registration is necessary in order to permit the sale or other disposition of
any or all shares of Issuer Common Stock or other securities that have been
acquired by or are issuable to Holder upon exercise of the Option in accordance
with the intended method of sale or other disposition stated by Holder in such
request, including without limitation a "shelf" registration statement under
Rule 415 under the Securities Act or any successor provision, and Issuer shall
use its best efforts to qualify such shares or other securities for sale under
any applicable state securities laws.
(b) ADDITIONAL REGISTRATION RIGHTS. If Issuer at any time after the
exercise of the Option proposes to register any shares of Issuer Common Stock
under the Securities Act in connection with an underwritten public offering of
such Issuer Common Stock, Issuer will promptly give written notice to Holder of
its intention to do so and, upon the written request of Holder given within 30
days after receipt of any such notice (which request shall specify the number of
shares of Issuer Common Stock intended to be included in such underwritten
public offering by Holder), Issuer will cause all such shares for which a Holder
shall have requested participation in such registration to be so registered and
included in such underwritten public offering; provided, however, that Issuer
may elect to not cause any such shares to be so registered (i) if the
underwriters in good faith object for valid business reasons, or (ii) in the
case
11
of a registration solely to implement an employee benefit plan or a registration
filed on Form S-4 under the Securities Act or any successor form; provided,
further, however, that such election pursuant to clause (i) may only be made one
time. If some but not all the shares of Issuer Common Stock with respect to
which Issuer shall have received requests for registration pursuant to this
Section 9(b) shall be excluded from such registration, Issuer shall make
appropriate allocation of shares to be registered among Holders permitted to
register their shares of Issuer Common Stock in connection with such
registration pro rata in the proportion that the number of shares requested to
be registered by each such Holder bears to the total number of shares requested
to be registered by all such Holders then desiring to have Issuer Common Stock
registered for sale.
(c) CONDITIONS TO REQUIRED REGISTRATION. Issuer shall use all
reasonable efforts to cause each registration statement referred to in Section
9(a) to become effective and to obtain all consents or waivers of other parties
which are required therefor and to keep such registration statement effective;
provided, however, that Issuer may delay any registration of Option Shares
required pursuant to Section 9(a) for a period not exceeding 90 days if Issuer
shall in good faith determine that any such registration would adversely affect
an offering or contemplated offering of other securities by Issuer, and Issuer
shall not be required to register Option Shares under the Securities Act
pursuant to Section 9(a):
(i) Prior to the earliest of (A) termination of the Plan
pursuant to Article VII thereof, and (B) a Purchase Event or a
Preliminary Purchase Event;
(ii) On more than one occasion during any calendar year and on
more than two occasions in total;
(iii) Within 90 days after the effective date of a
registration referred to in Section 9(b) pursuant to which the Holder
or Holders concerned were afforded the opportunity to register such
shares under the Securities Act and such shares were registered as
requested; and
(iv) Unless a request therefor is made to Issuer by the Holder
or Holders of at least 25% or more of the aggregate number of Option
Shares (including shares of Issuer Common Stock issuable upon exercise
of the Option) then outstanding.
In addition to the foregoing, Issuer shall not be required to maintain
the effectiveness of any registration statement after the expiration of nine
months from the effective date of such registration statement. Issuer shall use
all reasonable efforts to make any filings, and take all steps, under all
applicable state securities laws to the extent necessary to permit the sale or
other disposition of the Option Shares so registered in accordance with the
intended method of distribution for such shares, provided, however, that Issuer
shall not be required to consent to general jurisdiction or to qualify to do
business in any state where it is not otherwise required to so consent to such
jurisdiction or to so qualify to do business.
(d) EXPENSES. Issuer will pay all expenses (including without
limitation registration fees, qualification fees, blue sky fees and expenses,
accounting expenses, legal expenses and printing expenses incurred by it) in
connection with each registration pursuant to Section 9(a) or
12
(b) and all other qualifications, notifications or exemptions pursuant to
Section 9(a) or (b); provided, however, that underwriting discounts and
commissions relating to Option Shares, fees and disbursements of counsel to the
Holder(s) of Option Shares being registered and any other expenses incurred by
such Holder(s) in connection with any such registration shall be borne by such
Holder(s)
(e) Indemnification. In connection with any registration under Section
9(a) or (b), Issuer hereby indemnifies each Holder, and each underwriter
thereof, including each person, if any, who controls such Holder or underwriter
within the meaning of Section 15 of the Securities Act, against all expenses,
losses, claims, damages and liabilities caused by any untrue, or alleged untrue,
statement of a material fact contained in any registration statement or
prospectus or notification or offering circular (including any amendments or
supplements thereto) or any preliminary prospectus, or caused by any omission,
or alleged omission, to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such expenses, losses, claims, damages or liabilities of such
indemnified party are caused by any untrue statement or alleged untrue statement
that was included by Issuer in any such registration statement or prospectus or
notification or offering circular (including any amendments or supplements
thereto) in reliance upon, and in conformity with, information furnished in
writing to Issuer by such indemnified party expressly for use therein, and
Issuer and each officer, director and controlling person of Issuer shall be
indemnified by such Holder, or by such underwriter, as the case may be, for all
such expenses, losses, claims, damages and liabilities caused by any untrue, or
alleged untrue, statement that was included by Issuer in any such registration
statement or prospectus or notification or offering circular (including any
amendments or supplements thereto) in reliance upon, and in conformity with,
information furnished in writing to Issuer by such Holder or such underwriter,
as the case may be, expressly fort such use.
Promptly upon receipt by a party indemnified under this Section 9(e) of
notice of the commencement of any action against such indemnified party in
respect of which indemnity or reimbursement may be I sought against any
indemnifying party under this Section 9(e), such indemnified party shall notify
the indemnifying party in writing of the commencement of such action, but,
except to the extent of any actual prejudice to the indemnifying party, the
failure so to notify the indemnifying party shall not relieve it of any
liability which it may otherwise have to any indemnified party under this
Section 9(e). In case notice of commencement of any such action shall be given
to the indemnifying party as above provided, the indemnifying party shall be
entitled to participate in and, to the extent it my wish, jointly with any other
indemnifying party similarly notified, to assume the defense of such action at
its own expense, with counsel chosen by it and reasonably satisfactory to such
indemnified party. The indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel (other than reasonable costs of investigation)
shall be paid by the indemnified party unless (i) the indemnifying party agrees
to pay the same, (ii) the indemnifying party fails to assume the defense of such
action with counsel reasonably satisfactory to the indemnified party, or (iii)
the indemnified party has been advised by counsel that one or more legal
defenses may be available to the indemnifying party that may be contrary to the
interest of the indemnified party, in which case the indemnifying party shall be
entitled to assume the defense of such action notwithstanding its obligation to
bear fees and expenses of
13
such counsel. No indemnifying party shall be liable for any settlement entered
into without its consent, which consent may not be unreasonably withheld.
If the indemnification provided for in this Section 9(e) is unavailable
to a party otherwise entitled to be indemnified in respect of any expenses,
losses, claims, damages or liabilities referred to herein, then the indemnifying
party, in lieu of indemnifying such party otherwise entitled to be indemnified,
shall contribute to the amount paid or payable by such party to be indemnified
as a result of such expenses, losses, claims, damages or liabilities in such
proportion as is appropriate to reflect the relative fault of Issuer, the
selling Holders and the underwriters in connection with the statement or
omissions which results in such expenses, losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The amount
paid or payable by a party as a result of the expenses, losses, claims, damages
and liabilities referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim; provided, however, that in no
case shall the selling Holders be responsible, in the aggregate, for any amount
in excess of the net offering proceeds attributable to its Option Shares
included in the offering. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(g) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. Any obligation by any Holder to indemnify shall be several
and not joint with other Holders.
In connection with any registration pursuant to Section 9(a) or (b)
above, Issuer and each selling Holder (other than Grantee) shall enter into an
agreement containing the indemnification provisions of this Section 9(e).
(f) Miscellaneous Reporting. Issuer shall comply with all reporting
requirements and will do all such other things as may be necessary to permit the
expeditious sale at any time of any Option Shares by the Holder(s) in accordance
with and to the extent permitted by any rule or regulation permitting
nonregistered sales of securities promulgated by the Commission from time to
time, including, without limitation, Rule 144A. Issuer shall at its expense
provide the Holder with any information necessary in connection with the
completion and filing of any reports or forms required to be filed by them under
the Securities Act or the Exchange Act, or required pursuant to any state
securities laws or the rules of any stock exchange.
(g) Issue Taxes. Issuer will pay all stamp taxes in connection with the
issuance and the sale of the Option Shares and in connection with the exercise
of the Option, and will save any Holder harmless, without limitation as to time,
against any and all liabilities, with respect to all such taxes.
10. QUOTATION; LISTING. If Issuer Common Stock or any other securities
to be acquired upon exercise of the Option are then authorized for quotation or
trading or listing on NASDAQ/NMS or any securities exchange, Issuer, upon the
request of Holder, will promptly file an application, if required, to authorize
for quotation or trading or listing the shares of Issuer Common Stock or other
securities to be acquired upon exercise of the Option on NASDAQ/NMS or such
other securities exchange and will use its best efforts to obtain approval, if
required, of such quotation or listing as soon as practicable.
14
11. DIVISION OF OPTION. Upon the occurrence of a Purchase Event or a
Preliminary Purchase Event, this Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of Holder, upon presentation and
surrender of this Agreement at the principal office of the Issuer for other
Agreements providing for Options of different denominations entitling the holder
thereof to purchase in the aggregate the same number of shares of Issuer Common
Stock purchasable hereunder. The terms "Agreement" and "Option" as used herein
include any other Agreements and related Options for which this Agreement (and
the Option granted hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
12. LIMITATION OF GRANTEE PROFIT; MINIMUM PROFIT.
(a) Notwithstanding any other provision herein, in no event shall
Grantee's Total Profit (as defined below) exceed $11,000,000 (the "Maximum
Profit") and, if it otherwise would exceed such amount, Grantee, at its sole
discretion, shall either:
(i) Reduce the number of Option Shares;
(ii) Deliver to Issuer for cancellation shares of Issuer
common stock (or other securities) into which such Option Shares are
converted or exchanged;
(iii) Pay cash to Issuer; or
(iv) Any combination of the foregoing, so that Grantee's
actually realized Total Profit shall not exceed the Maximum Profit
after taking into account the foregoing actions.
(b) If a Repurchase Event occurs, notwithstanding any other provision
herein, in no event shall Grantee's Total Profit be less than $8,000,000 (the
"Minimum Profit") and, if it otherwise would be less than such amount, Issuer
shall pay cash to Grantee in an amount equal to the excess of Minimum Profit
over Total Profit.
(c) For purposes of this Agreement, "Total Profit" shall mean: The
aggregate amount of (A) any excess of (x) the net cash amounts received by
Grantee pursuant to a sale of Option Shares (or securities into which such
shares are converted or exchanged) (including amounts paid to Grantee in respect
of Option Shares repurchased by Issuer pursuant to Section 8) over (y) the
Grantee's aggregate purchase price for such Option Shares (or other securities),
plus (B) any amounts received by Grantee on the repurchase of the Option by
Issuer pursuant to Section 8, plus (C) any cash previously paid by Grantee to
Issuer pursuant to this Section 12 and the value of the Option Shares (or other
securities) previously delivered by Grantee to Issuer for cancellation pursuant
to this Section 12.
15
(d) Notwithstanding any other provision of this Agreement, nothing in
this Agreement shall affect the ability of Grantee to receive, nor relieve
Issuer's obligation to pay, the liquidated damages provided for in Section
10.3(b) of the Plan.
13. MISCELLANEOUS.
(a) EXPENSES. Except as otherwise provided in Section 9, each of the
parties hereto shall bear and pay all costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated hereunder, including
fees and expenses of its own financial consultants, investment bankers,
accountants and counsel.
(b) WAIVER AND AMENDMENT. Any provision of this Agreement may be waived
at any time by the party that is entitled to the benefits of such provision by
written instrument signed by a duly authorized executive officer of such party.
This Agreement may not be modified, amended, altered or supplemented except upon
the execution and delivery of a written agreement executed by the parties
hereto.
(c) ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES; SEVERABILITY. This
Agreement, together with the Plan and the other documents and instruments
referred to herein and therein, between Grantee and Issuer (i) constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof,
and (ii) is not intended to confer upon any person other than the parties hereto
(other than the indemnified parties under Section 9(e) and any transferee of the
Option Shares or any permitted transferee of this Agreement pursuant to Section
13(h)) any rights or remedies hereunder. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or a
federal or state regulatory agency to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that the Option does not permit Holder to acquire, or does not require Issuer to
repurchase, the full number of shares of Issuer Common Stock as provided in
Sections 3 and 8 (as adjusted pursuant to Section 7), it is the express
intention of Issuer to allow Holder to acquire or to require Issuer to
repurchase such lesser number of shares as may be permissible without any
amendment or modification hereof.
(d) GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Ohio without regard to any applicable
conflicts of law rules.
(e) DESCRIPTIVE HEADINGS. The descriptive headings contained herein are
for convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
(f) NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation) or sent by overnight mail service or mailed by registered or
certified mail (return receipt requested) postage prepaid, to the parties at the
following address (or at such other address for a party as shall be specified by
like notice).
16
If to Grantee:
UNB Corp..
220 Market Avenue South
Canton, Ohio 44701
Attention: Roger L. Mann
With a required copy to:
Ronald K. Bennington, Esq.
Black, McCuskey, Souers & Arbaugh
1000 United Bank Plaza
220 Market Avenue South
Canton, Ohio 44702-2116
If to Issuer:
BancFirst Ohio Corp.
422 Main Street
P.O. Box 4658
Zanesville, OH 43702-4658
Attention: Gary Fields
President and Chief Executive Officer
Fax: (740) 455-5705
With a required copy to:
Michael F. Sullivan
Bricker & Eckler LLP
100 South Third Street
Columbus, Ohio 43215-4291
Fax: (614) 227-2390
(g) COUNTERPARTS. This Agreement and any amendments hereto may be
executed in two counterparts, each of which shall be considered one and the same
agreement and shall become effective when both counterparts have been signed, it
being understood that both parties need not sign the same counterpart.
(h) ASSIGNMENT. Neither this Agreement nor any of the rights, interests
or obligations hereunder or under the Option shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other party, except that Holder may assign this Agreement
to a wholly-owned subsidiary of Holder and Holder may assign its rights
hereunder in whole or in part after the occurrence of a Purchase Event. Subject
to the preceding sentence, this Agreement shall be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns.
17
(i) FURTHER ASSURANCES. In the event of any exercise of the Holder,
Issuer and Holder shall execute and deliver all other and instruments and take
all other action that may be reasonably in order to consummate the transactions
provided for by such
(j) SPECIFIC PERFORMANCE. The parties hereto agree that this Agreement
may be enforced by either party through specific performance, injunctive relief
and other equitable relief. Both parties further agree to waive any requirement
for the securing or posting of any bond in connection with the obtaining of any
such equitable relief and that this provision is without prejudice to any other
rights that the parties hereto may have for any failure to perform this
Agreement.
IN WITNESS WHEREOF, Issuer and Grantee have caused this Stock Option
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the day and year first written above.
ISSUER:
ATTEST: BANCFIRST OHIO CORP.
By: /s/ James H. Nicholson By: /s/ Gary N. Fields
----------------------------- --------------------------------
Name: James H. Nicholson Name: Gary N. Fields
--------------------------- ------------------------------
Title: EVP & Secretary Title: President & CEO
-------------------------- -----------------------------
GRANTEE:
ATTEST: UNB CORP.
By: /s/ James J. Pennetti By: /s/ Roger L. Mann
----------------------------- --------------------------------
Name: James J. Pennetti Name: Roger L. Mann
--------------------------- ------------------------------
Title: EVP & CFO Title: Chairman & CEO
-------------------------- -----------------------------
18
Appendix C
[STIFEL, NICOLAUS & COMPANY, INCORPORATED]
September 5, 2001
Board of Directors
UNB Corp.
220 Market Avenue, South
Canton, OH 44702
Members of the Board:
You have requested our opinion as to the fairness from a financial point of view
to the shareholders of UNB Corp. ("UNB") of the exchange ratio (the "Exchange
Ratio") of 1.325 shares of common stock, without par value per share, of UNB
(the "UNB Common Stock") to be exchanged for each share of common stock, without
par value per share, of BancFirst Ohio Corp. ("BancFirst") pursuant to the terms
of the Agreement of Merger and Plan of Reorganization by and between UNB and
BancFirst, dated as of September 5, 2001 (the "Agreement"). The Agreement
provides for the merger (the "Merger") of BancFirst with and into UNB, with UNB
as the surviving corporation. For the purposes of our opinion, we have assumed
that the Merger will be consummated pursuant to the terms of the Agreement and
will constitute a tax-free reorganization.
Stifel, Nicolaus & Company, Incorporated ("Stifel"), as part of its investment
banking services, is regularly engaged in the independent valuation of
businesses and securities in connection with mergers, acquisitions,
underwritings, sales and distributions of listed and unlisted securities,
private placements and valuations for estate, corporate and other purposes. We
have been retained by UNB to render a fairness opinion to the Board in
connection with the Agreement. We will receive a fee for our services under the
terms of our engagement letter with UNB dated August 13, 2001, as previously
provided to and approved by UNB's Board of Directors, a significant portion of
which fees is contingent upon consummation of the transaction. However, the
portion of such fees which is payable upon delivery of this opinion to UNB's
Board of Directors is not contingent upon the approval or consummation of the
transaction. In addition, UNB has agreed to indemnify us for certain liabilities
that may arise out of the rendering of this opinion and to reimburse us for our
reasonable expenses incurred in connection with the performance of our services.
In the ordinary course of its business, Stifel actively trades equity securities
of UNB for its own account and for the accounts of its
Board of Directors - UNB Corp.
September 5, 2001
Page 2
customers and, accordingly, may at any time hold a long or short position in
such securities. In addition, Stifel may trade equity securities of BancFirst
for the accounts of its customers.
In rendering our opinion, we have reviewed, among other things: the form of the
Agreement; the financial statements of UNB and BancFirst included in their
respective 10-Ks for the 5 years ended December 31, 2000 and their respective
10-Qs for the quarter ended June 30, 2001; and certain internal financial
analyses and forecasts for UNB and BancFirst prepared by their respective
management. We have conducted conversations with UNB's and BancFirst's senior
management regarding their business plans and financial forecasts. We have also
compared certain financial and securities data of UNB and BancFirst with various
other companies whose securities are traded in public markets, reviewed the
historical stock prices and trading volumes of the common stock of UNB and
BancFirst, reviewed the financial terms of certain other business combinations
and conducted such other financial studies, analyses and investigations as we
deemed appropriate for purposes of this opinion. We also took into account our
assessment of general economic, market and financial conditions and our
experience in other transactions, as well as our experience in securities
valuations and our knowledge of the commercial banking industry generally.
In rendering our opinion, we have relied upon and assumed, without independent
verification, the accuracy and completeness of all of the financial and other
information that was provided to us or that was otherwise reviewed by us and
have not assumed any responsibility for independently verifying any of such
information. With respect to the financial forecasts supplied to us (including
without limitation, projected cost savings and operating synergies resulting
from the Merger), we have assumed that they were reasonably prepared on the
basis reflecting the best currently available estimates and judgments of the
management of UNB and BancFirst as to the future operating and financial
performance of UNB and BancFirst, that they would be realized in the amounts and
time periods estimated and that they provided a reasonable basis upon which we
could form our opinion. We assume no responsibility for, and express no view as
to such financial forecasts or the assumptions on which they are based. We also
assumed that there were no material changes in the assets, liabilities,
financial condition, results of operations, business or prospects of either UNB
or BancFirst since the date of the last financial statements made available to
us. We have also assumed, without independent verification and with your
consent, that the aggregate allowances for loan losses set forth in the
financial statements of UNB and BancFirst are in the aggregate adequate to cover
all such losses. We did not make or obtain any independent evaluation, appraisal
or physical inspection of UNB's or BancFirst's assets or liabilities, the
collateral securing any of such assets or liabilities, or the collectibility of
any such assets nor did we review loan or credit files of UNB or BancFirst. We
relied on advice of UNB's counsel and accountants as to certain legal and
accounting matters with respect to UNB, the Agreement and the transactions and
other matters contained or contemplated therein. We have assumed, with your
consent, that there are no factors that would delay or subject to any adverse
conditions any necessary regulatory or governmental approval and that all
conditions to the Merger will be satisfied and not waived.
Board of Directors - UNB Corp.
September 5, 2001
Page 3
Our opinion is necessarily based on economic, market, financial and other
conditions as they exist on, and on the information made available to us as of,
the date of this letter. Our opinion is directed to the Board of Directors of
UNB for its information and assistance in connection with its consideration of
the financial terms of the Merger and does not in any manner address UNB's
underlying business decision to proceed with or consummate the Merger.
Furthermore, our opinion does not constitute a recommendation to any shareholder
as to how such shareholder should vote on the proposed transaction, nor have we
expressed any opinion as to the prices at which any securities of UNB or
BancFirst might trade in the future. Except as required by applicable law,
including without limitation federal securities laws, our opinion may not be
published or otherwise used or referred to, nor shall any public reference to
Stifel be made, without our prior written consent.
Based upon the foregoing and such other factors as we deem relevant, we are of
the opinion, as of the date hereof, that the Exchange Ratio pursuant to the
Agreement is fair to the holders of UNB Common Stock from a financial point of
view.
Very truly yours,
/s/ Stifel, Nicolaus & Company, Incorporated
STIFEL, NICOLAUS & COMPANY, INCORPORATED
Appendix D
DRAFT
_________________, 2001
Board of Directors
BancFirst Ohio Corp.
422 Main Street
Zanesville, OH 43702-4658
Ladies and Gentlemen:
BancFirst Ohio Corp. ("BancFirst") and its wholly-owned subsidiary, The
First National Bank of Zanesville, N.A., and UNB Corp. ("UNB") and its
wholly-owned subsidiary, The United National Bank & Trust Company, have entered
into an Agreement of Merger and Plan of Reorganization, dated as of September 5,
2001 (the "Agreement"), pursuant to which BancFirst will be merged with and into
UNB (the "Merger"). Upon consummation of the Merger, each share of BancFirst
common stock, no par value, issued and outstanding immediately prior to the
Merger (the "BancFirst Shares"), other than certain shares specified in the
Agreement, will be converted into 1.325 shares (the "Exchange Ratio") of UNB
common stock, stated value $1.00 per share. The terms and conditions of the
Merger are more fully set forth in the Agreement. You have requested our opinion
as to the fairness, from a financial point of view, of the Exchange Ratio to the
holders of BancFirst Shares.
Sandler O'Neill & Partners, L.P., as part of its investment banking
business, is regularly engaged in the valuation of financial institutions and
their securities in connection with mergers and acquisitions and other corporate
transactions. In connection with this opinion, we have reviewed, among other
things: (i) the Agreement and certain of the exhibits thereto; (ii) the Stock
Option Agreements dated September 5, 2001 by and between BancFirst and UNB;
(iii) certain publicly available financial statements and other historical
financial information of BancFirst that we deemed relevant; (iv) certain
publicly available financial statements and other historical financial
information of UNB that we deemed relevant; (v) projected earnings per share
estimates for BancFirst for the years ending December 31, 2001 and 2002 provided
by BancFirst, earnings per share estimates for BancFirst for the years ending
December 31, 2001 and 2002 published by I/B/E/S and the views of senior
management of BancFirst, based on limited discussions with members of senior
management, regarding BancFirst's past and present business, financial
condition, results of operations and future prospects; (vi) projected earnings
per share estimates for UNB for the years ending December 31, 2001 and 2002
provided by UNB, earnings per share estimates for UNB for the years ending
December 31, 2001 and 2002 published by I/B/E/S and the views of senior
management of UNB,
Board of Directors
BancFirst Ohio Corp.
_________________, 2001
Page 2
based on limited discussions with members of senior management, regarding UNB's
past and present business, financial condition, results of operations and future
prospects; (vii) the pro forma financial impact of the Merger, based on
assumptions relating to transaction expenses, purchase accounting adjustments
and cost savings determined by senior managements of BancFirst and UNB; (viii)
the relative contributions of assets, liabilities, equity and earnings of
BancFirst and UNB to the resulting institution; (ix) the publicly reported
historical price and trading activity for BancFirst's and UNB's common stock,
including a comparison of certain financial and stock market information for
BancFirst and UNB with similar publicly available information for certain other
companies the securities of which are publicly traded; (x) the terms of certain
recent business combinations in the financial institutions industry,
particularly with respect to business combinations structured as "mergers of
equals," to the extent publicly available; (xi) the current market environment
generally and the banking environment in particular; and (xii) such other
information, financial studies, analyses and investigations and financial,
economic and market criteria as we considered relevant. In connection with our
engagement, we were not asked to, and did not, solicit indications of interest
in a potential transaction from other third parties.
In performing our review, we have relied upon the accuracy and
completeness of all of the financial and other information that was available to
us from public sources, that was provided to us by BancFirst or UNB or their
respective representatives or that was otherwise reviewed by us and have assumed
such accuracy and completeness for purposes of rendering this opinion. We have
further relied on the assurances of management of BancFirst and UNB that they
are not aware of any facts or circumstances that would make any of such
information inaccurate or misleading. We have not been asked to and have not
undertaken an independent verification of any of such information and we do not
assume any responsibility or liability for the accuracy or completeness thereof.
We did not make an independent evaluation or appraisal of the specific assets,
the collateral securing assets or the liabilities (contingent or otherwise) of
BancFirst or UNB or any of their subsidiaries, or the collectibility of any such
assets, nor have we been furnished with any such evaluations or appraisals. We
did not make an independent evaluation of the adequacy of the allowance for loan
losses of BancFirst or UNB nor have we reviewed any individual credit files
relating to BancFirst or UNB. We have assumed, with your consent, that the
respective allowances for loan losses for both BancFirst and UNB are adequate to
cover such losses and will be adequate on a pro forma basis for the combined
entity. We are not accountants and have relied upon the reports of the
independent accountants for each of BancFirst and UNB for the accuracy and
completeness of the audited financial statements made available to us. With your
consent, the earnings projections for BancFirst and UNB used by Sandler O'Neill
in its analyses were based on earnings estimates provided to us by the
respective managements of BancFirst and UNB. With respect to such estimates and
with respect to the timing and amounts of all projected transaction costs,
purchase accounting adjustments and expected cost savings reviewed with the
managements of BancFirst and UNB and used by Sandler O'Neill in its analyses,
Sandler O'Neill assumed, with your consent, that they reflected the
Board of Directors
BancFirst Ohio Corp.
_________________, 2001
Page 3
best currently available estimates and judgments of the respective managements
of the respective future financial performances of BancFirst and UNB and that
such performances will be achieved. We express no opinion as to such estimates
or projections or the assumptions on which they are based. We have also assumed
that there has been no material change in BancFirst's or UNB's assets, financial
condition, results of operations, business or prospects since the date of the
most recent financial statements made available to us. We have assumed in all
respects material to our analysis that BancFirst and UNB will remain as going
concerns for all periods relevant to our analyses, that all of the
representations and warranties contained in the Agreement and all related
agreements are true and correct, that each party to such agreements will perform
all of the covenants required to be performed by such party under such
agreements, that the conditions precedent in the Agreement are not waived and
that the Merger will be accounted for using the purchase method of accounting
and will qualify as a tax-free reorganization for federal income tax purposes.
Our opinion is necessarily based on financial, economic, market and
other conditions as in effect on, and the information made available to us as
of, the date hereof. Events occurring after the date hereof could materially
affect this opinion. We have not undertaken to update, revise, reaffirm or
withdraw this opinion or otherwise comment upon events occurring after the date
hereof. We are expressing no opinion herein as to what the value of UNB's common
stock will be when issued to BancFirst's shareholders pursuant to the Agreement
or the prices at which BancFirst's or UNB's common stock will trade at any time.
We have acted as BancFirst's financial advisor in connection with the
Merger and will receive a fee for our services, a significant portion of which
is contingent upon consummation of the Merger. We have also received a fee for
rendering this opinion. In the past, we have also provided certain other
investment banking services for BancFirst and have received compensation for
such services.
In the ordinary course of our business as a broker-dealer, we may
purchase securities from and sell securities to BancFirst and UNB. We may also
actively trade the debt and/or equity securities of BancFirst and UNB for our
own account and for the accounts of our customers and, accordingly, may at any
time hold a long or short position in such securities.
Our opinion is directed to the Board of Directors of BancFirst in
connection with its consideration of the Merger and does not constitute a
recommendation to any shareholder of BancFirst as to how such shareholder should
vote at any meeting of shareholders called to consider and vote upon the Merger.
Our opinion is directed only to the fairness of the Exchange Ratio to BancFirst
shareholders from a financial point of view and does not address the underlying
business decision of BancFirst to engage in the Merger, the relative merits of
the Merger as compared to any other alternative business strategies that might
exist for BancFirst or the effect of any other
Board of Directors
BancFirst Ohio Corp.
_________________, 2001
Page 4
transaction in which BancFirst might engage. Our opinion is not to be quoted or
referred to, in whole or in part, in a registration statement, prospectus, proxy
statement or in any other document, nor shall this opinion be used for any other
purposes, without Sandler O'Neill's prior written consent consent; provided,
however, that we hereby consent to the inclusion of this opinion as an appendix
to the Joint Proxy Statement/Prospectus of BancFirst and UNB dated the date
hereof and to the references to this opinion therein.
Based upon and subject to the foregoing, it is our opinion, as of the
date hereof, that the Exchange Ratio is fair, from a financial point of view, to
the holders of BancFirst Shares.
Very truly yours,
Appendix E
1701.85 QUALIFICATIONS OF AND PROCEDURES FOR DISSENTING SHAREHOLDERS
(A)(1) A shareholder of a domestic corporation is entitled to relief as
a dissenting shareholder in respect of the proposals described in sections
1701.74, 1701.76, and 1701.84 of the Revised Code, only in compliance with this
section.
(2) If the proposal must be submitted to the shareholders of the
corporation involved, the dissenting shareholder shall be a record holder of
the shares of the corporation as to which he seeks relief as of the date fixed
for the determination of shareholders entitled to notice of a meeting of the
shareholders at which the proposal is to be submitted, and such shares shall
not have been voted in favor of the proposal. Not later than ten days after the
date on which the vote on the proposal was taken at the meeting of the
shareholders, the dissenting shareholder shall deliver to the corporation a
written demand for payment to him of the fair cash value of the shares as to
which he seeks relief, which demand shall state his address, the number and
class of such shares, and the amount claimed by him as the fair cash value of
the shares.
(3) The dissenting shareholder entitled to relief under division (C) of
section 1701.84 of the Revised Code in the case of a merger pursuant to section
1701.80 of the Revised Code and a dissenting shareholder entitled to relief
under division (E) of section 1701.84 of the Revised Code in the case of a
merger pursuant to section 1701.801 of the Revised Code shall be a record
holder of the shares of the corporation as to which he seeks relief as of the
date on which the agreement of merger was adopted by the directors of that
corporation. Within twenty days after he has been sent the notice provided in
section 1701.80 or 1701.801 of the Revised Code, the dissenting shareholder
shall deliver to the corporation a written demand for payment with the same
information as that provided for in division (A)(2) of this section.
(4) In the case of a merger or consolidation, a demand served on the
constituent corporation involved constitutes service on the surviving or the
new entity, whether the demand is served before, on, or after the effective
date of the merger or consolidation.
(5) If the corporation sends to the dissenting shareholder, at the
address specified in his demand, a request for the certificates representing
the shares as to which he seeks relief, the dissenting shareholder, within
fifteen days from the date of the sending of such request, shall deliver to the
corporation the certificates requested so that the corporation may forthwith
endorse on them a legend to the effect that demand for the fair cash value of
such shares has been made. The corporation promptly shall return such endorsed
certificates to the dissenting shareholder. A dissenting shareholder's failure
to deliver such certificates terminates his rights as a dissenting shareholder,
at the option of the corporation, exercised by written notice sent to the
dissenting shareholder within twenty days after the lapse of the fifteen-day
period, unless a court or good cause shown otherwise directs. If shares
represented by a certificate on which such a legend has been endorsed are
transferred, each new certificate issued for them shall bear a similar legend,
together with the name of the original dissenting holder of such shares. Upon
receiving a demand for payment from a
dissenting shareholder who is the record holder of uncertificated securities,
the corporation shall make an appropriate notation of the demand for payment in
its shareholder records. If uncertificated shares for which payment has been
demanded are to be transferred, any new certificate issued for the shares shall
bear the legend required for certificated securities as provided in this
paragraph. A transferee of the shares so endorsed, or of uncertificated
securities where such notation has been made, acquires only such rights in the
corporation as the original dissenting holder of such shares had immediately
after the service of a demand for payment of the fair cash value of the shares.
A request under this paragraph by the corporation is not an admission by the
corporation that the shareholder is entitled to relief under this section.
(B) Unless the corporation and the dissenting shareholder have come to an
agreement on the fair cash value per share of the shares as to which the
dissenting shareholder seeks relief, the dissenting shareholder or the
corporation, which in case of a merger or consolidation may be the surviving or
new entity, within three months after the service of the demand by the
dissenting shareholder, may file a compliant in the court of common pleas of the
county in which the principal office of the corporation that issued the shares
is located or was located when the proposal was adopted by the shareholders of
the corporation, or, if the proposal was not required to be submitted to the
shareholders, was approved by the directors. Other dissenting shareholders,
within that three-month period, may join as plaintiffs or may be joined as
defendants in any such proceeding, and any two or more such proceedings may be
consolidated. The complaint shall contain a brief statement of the facts,
including the vote and the facts entitling the dissenting shareholder to the
relief demanded. No answer to such a complaint is required. Upon the filing of
such a compliant, the court, on motion of the petitioner, shall enter an order
fixing a date for a hearing on the complaint and requiring that a copy of the
complaint and a notice of the filing and of the date for hearing be given to
the respondent or defendant in the manner in which summons is required to be
served or substituted service is required to be made in other cases. On the
day fixed for the hearing on the complaint or any adjournment of it, the court
shall determine from the complaint and from such evidence as is submitted by
either party whether the dissenting shareholder is entitled to be paid the
fair cash value of any shares and, if so, the number and class of such shares.
If the court finds that the dissenting shareholder is so entitled, the court may
appoint one or more persons as appraisers to receive evidence and to recommend
a decision on the amount of the fair cash value. The appraisers have
such power and authority as is specified in the order of their appointment.
The court thereupon shall make a finding as to the fair cash value of a share
and shall render judgment against the corporation for the payment of it with
interest at such rate and from such date as the court considers equitable. The
costs of the proceeding, including reasonable compensation to the appraisers to
be fixed by the court, shall be assessed or apportioned as the court considers
equitable. The proceeding is a special proceeding and final orders in it may be
vacated, modified, or reversed on appeal pursuant to the Rules of Appellate
Procedure and, to the extent not in conflict with those rules, Chapter 2505. of
the Revised Code. If, during the pendency of any proceeding instituted under
this section, a suit or proceeding is or has been instituted to enjoin or
otherwise to prevent the carrying out of the action as to which the shareholder
has dissented, the proceeding instituted under this section shall be stayed
until the final determination of the other suit or proceeding. Unless any
provision in division (D) of this section is applicable, the fair cash value of
the shares that is agreed upon by the parties or fixed under this section shall
be paid within thirty days after the date of final determination of such value
under this division, the effective date of the amendment to the articles, or
the consummation of the other action involved, whichever occurs last. Upon the
occurrence of the last such event, payment shall be made immediately to a
holder of uncertificated securities entitled to such payment. In the *28641
case of holders of shares represented by certificates, payment shall be made
only upon and simultaneously with the surrender to the corporation of the
certificates representing the shares for which the payment is made.
(C) If the proposal was required to be submitted to the shareholders of the
corporation, fair cash value as to those shareholders shall be determined as of
the day prior to the day on which the vote by the shareholders was taken and,
in the case of a merger pursuant to section 1701.80 or 1701.801 of the Revised
Code, fair cash value as to shareholders of a constituent subsidiary
corporation shall be determined as of the day before the adoption of the
agreement of merger by the directors of the particular subsidiary corporation.
The fair cash value of a share for the purposes of this section is the amount
that a willing seller who is under no compulsion to sell would be willing to
accept and that a willing buyer who is under no compulsion to purchase would be
willing to pay, but in no event shall the fair cash value of a share exceed the
amount specified in the demand of the particular shareholder. In computing such
fair cash value, any appreciation or depreciation in market value resulting
from the proposal submitted to the
directors or to the shareholders shall be excluded.
(D)(1) The right and obligation of a dissenting shareholder to receive such
fair cash value and to sell such shares as to which he seeks relief, and the
right and obligation of the corporation to purchase such shares and to pay the
fair cash value of them terminates if any of the following applies:
(a) The dissenting shareholder has not complied with this section, unless
the corporation by its directors waives such failure;
(b) The corporation abandons the action involved or is finally enjoined or
prevented from carrying it out, or the shareholders rescind their adoption of
the action involved;
(c) The dissenting shareholder withdraws his demand, with the consent of the
corporation by its directors;
(d) The corporation and the dissenting shareholder have not come to an
agreement as to the fair cash value per share, and neither the shareholder nor
the corporation has filed or joined in a complaint under division (B) of this
section within the period provided in that division.
(2) For purposes of division (D)(1) of this section, if the merger or
consolidation has become effective and the surviving or new entity is not a
corporation, action required to be taken by the directors of the corporation
shall be taken by the general partners of a surviving or new partnership or the
comparable representatives of any other surviving or new entity.
(E) From the time of the dissenting shareholder's giving of the demand until
either the termination of the rights and obligations arising from it or the
purchase of the shares by the corporation, all other rights accruing from such
shares, including voting and dividend or distribution rights, are suspended. If
during the suspension, any dividend or distribution is paid in money upon shares
of such class or any dividend, distribution, or interest is paid in money upon
any securities issued in extinguishment of or in substitution for such shares,
an amount equal to the dividend, distribution, or interest which, except for the
suspension, would have been payable upon such shares or securities, shall be
paid to the holder of record as a credit upon the fair cash value of the shares.
If the right to receive fair cash value is terminated other than by the purchase
of the shares by the corporation, all rights of the holder shall be restored and
all distributions which, except for the suspension, would have been made shall
be made to the holder of record of the shares at the time of termination.
UNB CORP.
REVOCABLE PROXY
The undersigned hereby appoints the Board of Directors of UNB Corp. as
proxies to vote all shares of Common Stock of UNB Corp. which the undersigned is
entitled to vote at the Special Meeting of Shareholders of UNB Corp. to be held
on __________, 2002 and at any adjournments and postponements thereof, with all
the powers the undersigned would possess if personally present, as follows:
1. To adopt the merger agreement
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. To vote, in their discretion, upon such other business as may properly
come before the meeting, including adjournment of the meeting to permit
further solicitation of proxies.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" ADOPTION OF
THE MERGER AGREEMENT.
(Continued, and to be signed on the other side)
----------------------------------------------------------------------
(Continued from other side)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND WILL BE
VOTED FOR ADOPTION OF THE MERGER AGREEMENT IF NO INSTRUCTIONS TO THE
CONTRARY ARE INDICATED.
The undersigned hereby acknowledges receipt of the Notice of Special
Meeting and Joint Proxy Statement and Prospectus accompanying this
proxy, and hereby revokes any proxy or proxies heretofore given.
Please sign exactly as name(s) appears below: Date:
--------------------
--------------------------------------------
Signature
--------------------------------------------
Signature
Joint owners should each sign. When signing
as attorney, executor, administrator,
trustee or guardian, please add your full
title to the signature. If a corporation or
partnership, please sign in the
corporation's or partnership's name by an
authorized officer or partner.
PLEASE ACT PROMPTLY
SIGN, DATE AND MAIL YOUR PROXY CARD TODAY
USING THE ENCLOSED ENVELOPE
BANCFIRST OHIO CORP.
REVOCABLE PROXY
The undersigned hereby appoints the Board of Directors of BancFirst
Ohio Corp. as proxies to vote all shares of Common Stock of BancFirst Ohio Corp.
which the undersigned is entitled to vote at the Special Meeting of Shareholders
of BancFirst Ohio Corp. to be held on __________, 2002 and at any adjournments
and postponements thereof, with all the powers the undersigned would possess if
personally present, as follows:
1. To adopt the merger agreement
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. To vote, in their discretion, upon such other business as may properly
come before the meeting, including adjournment of the meeting to permit
further solicitation of proxies.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" ADOPTION OF
THE MERGER AGREEMENT.
(Continued, and to be signed on the other side)
---------------------------------------------------------------------
(Continued from other side)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND WILL BE
VOTED FOR ADOPTION OF THE MERGER AGREEMENT IF NO INSTRUCTIONS TO THE
CONTRARY ARE INDICATED.
The undersigned hereby acknowledges receipt of the Notice of Special
Meeting and Joint Proxy Statement and Prospectus accompanying this
proxy, and hereby revokes any proxy or proxies heretofore given.
Please sign exactly as name(s) appears below: Date:
--------------------
--------------------------------------------
Signature
--------------------------------------------
Signature
Joint owners should each sign. When signing
as attorney, executor, administrator,
trustee or guardian, please add your full
title to the signature. If a corporation or
partnership, please sign in the
corporation's or partnership's name by an
authorized officer or partner.
PLEASE ACT PROMPTLY
SIGN, DATE AND MAIL YOUR PROXY CARD TODAY
USING THE ENCLOSED ENVELOPE