EXECUTION COPY

 

 

 

 

 

 

 

 

 

 

 

 

 

Agreement to Purchase Assets and Assume Liabilities

Between

First Federal Savings Bank of Elizabethtown, Inc.

and

First Savings Bank, F.S.B.

 

 

 

 

Dated: February 8, 2012

 

 

 

 

 

 

 

 

 

 

 

  

AGREEMENT TO PURCHASE ASSETS AND ASSUME LIABILITIES

 

This Agreement to Purchase Assets and Assume Liabilities (the “Agreement”) is
made and entered into this 8th day of February, 2012, by and between First
Federal Savings Bank of Elizabethtown, Inc. (the “Seller”), a Kentucky-chartered
commercial bank, with its home office at 2323 Ring Road, Elizabethtown,
Kentucky, and First Savings Bank, F.S.B. (the “Buyer”), a federally chartered
savings bank, with its principal office at 501 E. Lewis & Clark Parkway,
Clarksville, Indiana.

 

WHEREAS, Buyer desires to purchase certain assets from, and assume certain
liabilities of, Seller, and Seller desires to sell such assets and transfer such
liabilities to Buyer, as described herein;

 

NOW, THEREFORE, in consideration of the foregoing and the representations,
covenants and agreements set forth in this Agreement, the parties agree as
follows:

 

ARTICLE 1

DEFINITIONS

 

1.1 Defined Terms. As used in this Agreement the following terms have the
definitions indicated:

 

“ACH” means automated clearing house.

 

“ACH Items” means ACH debits and credits, including but not limited to Social
Security payments, Federal recurring payments, and other payments debited and/or
credited on a regularly scheduled basis to or from deposit accounts pursuant to
arrangements between the owner of the account and a third party directly making
the credits or debits.

 

“Affiliate” of a party means any person, partnership, corporation, association
or other legal entity directly or indirectly controlling, controlled by or under
common control with that party.

 

“Agreement” means this Agreement to Purchase Assets and Assume Liabilities, and
all Schedules and Exhibits hereto as the same may from time to time be amended
or supplemented by the parties hereto.

 

“ATM” means automated teller machine.

 

“Branches” means the four banking offices of Seller located at: 2030 Highway 337
Northwest, Corydon, Indiana (the “Corydon Branch”); 8160 Beech Street,
Elizabeth, Indiana (the “Elizabeth Branch”); 6500 State Highway 64, Georgetown,
Indiana (the “Georgetown Branch”); and 7340 Main Street, Lanesville, Indiana
(the “Lanesville Branch”).

 

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“Business Day” means a day on which Seller is open for business and which is not
a Saturday, Sunday, or Federal holiday.

 

“Cash on Hand” means all vault cash, ATM cash, teller cash and similar cash
items located at the Branches.

 

“Closing” means the consummation of the transactions contemplated hereby on the
Closing Date.

 

“Closing Date” means the date on which the Closing occurs pursuant to Article IV
hereof. The parties intend to schedule the Closing on a Friday, effective as of
the Closing Time, after processing Friday night’s business (which will cut off
at 3:00 p.m.), with Seller delivering the needed data processing files to Buyer
on Saturday to facilitate the computer conversion. Unless the parties agree that
the conversion of the data processing with respect to the Assets and the Deposit
Liabilities will be performed other than on the weekend immediately following
the Closing Date, the Closing Date shall be on a Friday and such conversion will
be completed on the weekend before the open of business on the following Monday.

 

“Closing Time” means 11:59 p.m., Eastern time, on the Closing Date.

 

“Deposit Liabilities” means all of Seller’s obligations, duties, and liabilities
of every type and character relating to all deposit accounts which, as reflected
on the books of Seller as of the Closing Time, are attributable to the Branches;
provided, however, that Deposit Liabilities do not include (i) deposits held in
accounts for which Seller or its Affiliates act as fiduciary, (ii) deposits
subject to legal process, (iii) deposits which have been reported as abandoned
property under the abandoned property laws of any jurisdiction, (iv) deposits of
the Seller or any of its Affiliates, (v) funds maintained in brokerage accounts
opened by Seller or any of its Affiliates, (vi) brokered deposits as defined in
12 C.F.R. §337.6(a)(2), (vii) deposit products not otherwise offered by Buyer,
(viii) deposit accounts securing any loan of Seller that is not purchased by
Buyer; (ix) deposit accounts that have been overdrawn for more than 30 days as
of the Closing Date, except where the overdraft has been charged off, and (x)
deposits representing repurchase agreements. The deposit accounts referred to in
the immediately preceding sentence (hereinafter the “Deposit Accounts”) include,
without limitation, passbook, statement savings, checking, Money Market, and NOW
accounts, certificates of deposit, and Individual Retirement Accounts (“IRAs”)
for which Seller has not received, on or before the Closing Date, the written
advice from the account holder of such account holder’s objection or failure to
accept Buyer as successor custodian.

 

“Deposit-Related Loans” means overdrafts in respect of Deposit Liabilities,
whether documented by a formal line of credit or by courtesy overdraft.

 

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“Encumbrances” means all security interests, mortgages, claims, charges, liens,
encumbrances, easements, restrictions, options, pledges, calls, commitments,
conditional sales agreements, title retention agreements and other material
restrictions of any kind.

 

“Federal Funds Rate” means the closing bid price for federal funds as quoted in
The Wall Street Journal for the date in question.

 

“FDIC” means the Federal Deposit Insurance Corporation.

 

“GAAP” means generally accepted accounting principles in the United States of
America, consistently applied.

 

“IRS” means the Internal Revenue Service.

 

“KDFI” means the State of Kentucky Department of Financial Institutions.

 

“Loan Documents” means the evidence of the notes, leases and/or other evidences
of any indebtedness, including without limitation the applicable loan
agreements, loan participation agreements and certificates, control agreements,
security agreements, mortgages, guarantees, UCC financing statements and similar
documents evidencing collateral or other financial accommodations relating to
the Loans and the Deposit-Related Loans (as each is defined herein).

 

“OCC” means the Office of the Comptroller of the Currency.

 

“Premium-Based Deposit Liabilities” means all Deposit Liabilities except (i)
deposits held by government depositors as described in 12 C.F.R. §330.15
(including deposits held by hospitals, school corporations, parks departments,
and other facilities owned or operated by such government entities) and (ii)
deposits held by financial institutions.

 

“Records” means the records and original documents specifically pertaining to
the Branches, the Assets, the Segregated Fixed Assets and the Deposit
Liabilities.

 

1.2 Other Definitional Provisions. The terms defined in Section 1.1 hereof do
not comprise all the defined terms contained herein. Capitalized terms used
herein but not defined in Section 1.1 hereof shall have the meanings ascribed to
them elsewhere herein. Accounting terms used in this Agreement but not defined
herein shall have the respective meanings given to them under GAAP. The words
“hereof”, “herein” and “hereunder” and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and shall not be limited to
any particular provision.

 

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ARTICLE II

PURCHASE OF ASSETS; ASSUMPTION OF LIABILITIES

 

2.1 Purchase of Assets. Seller agrees, subject to Section 2.2 hereof and the
other terms and conditions of this Agreement, to sell, transfer, convey, assign
and deliver to Buyer, and Buyer agrees to purchase, accept and receive from
Seller, on the Closing Date, the following assets, properties and rights free
and clear of all Encumbrances (collectively, the “Assets”):

 

(a)Overdrafts. Seller’s right, title and interest to receive payment for
Deposit-Related Loans and other overdrafts (but only if such Deposit-Related
Loans and other overdrafts are less than thirty (30) days outstanding)
associated with the Deposit Liabilities assumed by Buyer under Section 2.3
hereof;

 

(b)Furniture and Equipment. All right, title and interest in and to:

 

(i)all personal property, furniture, leasehold improvements, fixtures and
equipment located at the Branches, and owned by Seller, as listed on Schedule
2.1(b)(i) hereto, other than the Segregated Fixed Assets (as defined below) (the
“Fixed Assets”), together with any manufacturer’s warranties and maintenance or
service agreements thereon which are in effect on the Closing Date and are
assignable to Buyer; and

 

(ii)the personal property, furniture, leasehold improvements, fixtures and
equipment located at the Branches, and owned by Seller, as listed on Schedule
2.1(b)(ii) hereto, other than the Fixed Assets (the “Segregated Fixed Assets”),
together with any manufacturer’s warranties and maintenance or service
agreements thereon which are in effect on the Closing Date and are assignable to
Buyer;

 

(c)Equipment Leases. All rights as lessee under any and all leases listed on
Schedule 2.1(c) hereto (the “Equipment Leases”) pertaining to the personal
property, furniture, machinery and equipment located at the Branches, so long as
the Lease is assignable and the lessor has consented to such assignment (the
“Leased Equipment”);

 

(d)Corydon Lease. All rights of Seller as lessee under the Lease Agreement dated
as of January 1, 2009 between Seller, as tenant, and Richard U. and Delores J.
Pflanz, as landlord, pertaining to the Corydon Branch (the “Corydon Lease”);

 

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(e)Cash on Hand. All Cash on Hand maintained at the Branches as of the close of
business on the Closing Date;

 

(f)Loans. The loans and other extensions of credit originated at the Branches,
listed in Schedule 2.1(f) hereto, together with all security interests,
mortgages, guaranties and collateral related thereto at their respective
outstanding principal amounts, together with all unpaid interest thereon and
fees, as of the close of business on the Closing Date (the “Loans”); provided,
however, that the Loans shall not include (i) the Loan specified in Confidential
Schedule 2.1(f)(i); (ii) any Loan which is on a nonaccrual basis as of the
Closing Date (which term shall include loans which the collateral securing same
has been repossessed or in which collection efforts have been instituted or any
Loan upon which insurance has been force-placed); (iii) any Loan that is thirty
(30) days or more past due as of the Closing Date; (iv) any Loan that has been
or becomes classified consistent with Seller’s past practice regarding loan
classifications as “watch,” “special mention,” “substandard,” “doubtful,” or
“loss”, and remains classified as of the Closing Date; (v) any modified or
restructured Loan classified as a troubled debt restructuring according to GAAP
(“TDR”), either at the time of or after the modification or restructuring, as of
the Closing Date; (vi) any Loan as to which the borrower has filed a petition
for relief under the United States Bankruptcy Code on or before the Closing
Date; (vii) any Loan as to which the borrower is deceased as of the Closing
Date, (viii) any Loan originated by Seller for sale in the secondary market and
classified as held-for-sale by the Seller as of the Closing Date; and (ix) any
Loan originated or renewed on or before the Closing Date that was not originated
or renewed in conformance with Section 8.2(b)(vii) hereof;

 

(g)Contracts. Seller’s rights under, or created by, the contracts relating to
the operation or maintenance of the Branches that are assignable by Seller to
Buyer, which contracts are identified on Schedule 2.1(g) hereto (the “Assumed
Contracts”);

 

(h)Safe Deposits. All of Seller’s rights under safe deposit contracts and leases
for safe deposit boxes located at the Branches;

 

(i)Records. All Records, including Loan Documents, related to the Assets
acquired or liabilities assumed by Buyer hereunder, including but not limited to
the Deposit Liabilities and Loans; and

 

(j)Real Estate. The real property owned in fee by Seller and described in
Schedule 2.1(j) and all improvements to such property purchased, installed or
constructed by or on behalf of Seller and used in connection with the operation
or maintenance of such real property, including, without limitation, buildings,
structures, parking facilities and drive-in teller facilities (the “Real
Property”).

 

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2.2 Excluded Assets. All assets, properties and rights of Seller not expressly
included in the Assets are excluded from the transactions contemplated by this
Agreement, including, without limitation, the following items (the “Excluded
Assets”):

 

(a)all trademarks, servicemarks, tradenames, copyrights, medallion program
stamps, signs, logos, proprietary information, stationery, forms, labels,
shipping materials, brochures, advertising and marketing materials or slogans
and similar property of Seller and its Affiliates, whether or not any such
property is copyrighted or otherwise registered with any federal, state or local
governmental authority (the “Seller’s Intellectual Property”); and Buyer shall
not acquire any license or similar right in any of the Seller’s Intellectual
Property; and Buyer shall not acquire any license or similar rights in any of
the Seller’s Intellectual Property;

 

(b)all assets, properties and rights of Seller and its Affiliates used, relating
to, located at or attributed to all operations, branches and facilities of
Seller and its Affiliates other than the Branches or the Assets;

 

(c)all investment securities owned by Seller;

 

(d)all routing numbers of the Seller used in connection with the Deposit
Liabilities or the Branches; and

 

(e)all records of the Seller unrelated to the transactions contemplated by this
Agreement.

 

2.3 Assumption of Liabilities. Buyer agrees, subject to Section 2.4 hereof and
the other terms and conditions of this Agreement, that on and after the Closing
Date it shall assume and fully and timely perform, discharge and pay, in
accordance with their respective terms, all of the following liabilities and
obligations of the Seller (including those liabilities and obligations of Seller
arising from and after the Closing relating to same):

 

(a)the Deposit Liabilities, together with all accrued but unpaid interest
relating to such accounts;

 

(b)the Equipment Leases, if any;

 

(c)the Corydon Lease;

 

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(d)the Assumed Contracts;

 

(e)the Loans (which shall include, without limitation, an advance requested
under a Loan on or before the Closing Date pursuant to the terms and provisions
of such Loan that Seller is not obligated to fund until after the Closing Date),
including funding commitments under the Loans and servicing obligations with
respect to the Loans and all obligations relating to escrow funds with respect
to the Loans;

 

(f)the Deposit-Related Loans;

 

(g)the operation of the Branches in the ordinary course of business, including,
without limitation, the payment of salary, compensation and employee benefits to
the Transferred Employees (as hereinafter defined); and

 

(h)any liability and obligation which is expressly identified elsewhere in this
Agreement as being assumed, performed, discharged or paid by Buyer.

 

The liabilities and obligations described in this Section 2.3 that are assumed
by Buyer are referred to collectively in this Agreement as the “Assumed
Liabilities.”

 

2.4 Excluded Liabilities. All liabilities and obligations of Seller not
expressly included in the Assumed Liabilities are excluded from the transactions
contemplated in this Agreement, including, without limitation, the following
items (the “Excluded Liabilities”):

 

(a)all liabilities associated with cashier’s checks or other official bank
checks and traveler’s checks issued by Seller before the Closing Date;

 

(b)all liabilities and obligations of Seller relative to the Employees with
respect to periods before the Closing Date;

 

(c)all claims associated with fraud or misconduct alleged to have occurred
before the Closing Date or items that were re-presented or dishonored before the
Closing Date; and

 

(d)all liabilities and obligations of Seller relating to the Branches that are
not expressly included in the Assumed Liabilities.

 

2.5 Safe Deposit Business.

 

(a)  At the Closing, Buyer will assume and discharge Seller’s obligations with
respect to the safe deposit business at the Branches in accordance with the
terms and conditions of contracts or rental agreements related to such business,
and Buyer will maintain all facilities necessary for the use of such safe
deposit boxes by persons entitled to use them pursuant to the terms of such
contracts. Schedule 2.5 sets forth the payment status of all safe deposit
contracts at the Branches as of the month end before the date of this Agreement,
which schedule shall be updated as of the end of the month before the Closing
Date.

 

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(b)  At the Closing, Seller shall transfer the records and keys related to such
safe deposit box business to Buyer in the method as the parties shall mutually
agree, and Buyer shall be responsible for maintaining and safeguarding all such
records and keys and for granting access to and protecting the contents of the
safe deposit boxes at the Branches.

 

ARTICLE III

TERMS OF PURCHASE

 

3.1 Purchase Price. In consideration of the assumption by Buyer of the Assumed
Liabilities, Seller shall transfer the Assets to Buyer and shall pay Buyer by
wire transfer of immediately available funds on the Closing Date an amount equal
to the Deposit Liabilities determined in accordance with Section 2.3(a) hereof
reduced by the sum of:

 

(a)the book value (net of accumulated depreciation) of the Fixed Assets as shown
on the books and records of Seller on the last day of the month end immediately
preceding the Closing Date;

 

(b)one dollar ($1.00), representing the agreed upon value of the Segregated
Fixed Assets;

 

(c)the face amount of Cash on Hand maintained at the Branches on the Closing
Date;

 

(d)the book value (net of accumulated depreciation) of the Leased Equipment as
shown on the books and records of Seller on the last day of the month end
immediately preceding Closing Date;

 

(e)3.65% of the Premium-Based Deposit Liabilities outstanding as of the Closing
Date, excluding accrued but unpaid interest;

 

(f)99.2% of the outstanding principal balance of the Loans as of the Closing
Date;

 

(g)the aggregate interest receivable but unpaid on the Loans; and

 

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(h)the net book value (net of accumulated depreciation) of the Real Property as
shown on the books and records of Seller on the last day of the month end
immediately preceding Closing Date.

 

Such payment formula shall be further adjusted in accordance with Sections 3.2
and 11.6 hereof. The payment formula referred to above is for the sole purpose
of determining the amount of cash transferable at the Closing Date and shall not
constitute an allocation of the purchase price to any particular asset being
transferred or liability being assumed pursuant hereto.

 

3.2 Prorations. The parties hereto intend that Seller shall operate the Branches
and perform the obligations of the Deposit Liabilities for its own account until
the Closing Time and that Buyer shall operate the Branches and perform the
obligations under the Deposit Liabilities for its own account from and after the
Closing Time. Therefore, except as otherwise specifically provided in this
Agreement, items of expense directly attributable to the operation of the
Branches (which shall not include any general overhead expenses of Seller) shall
be prorated as of the close of business on the Closing Date, whether or not such
adjustment would normally be made as of such time, including, without
limitation, (i) telephone, electric, gas, water, and other utility services (to
the extent it is not possible to transfer such services into the name of Buyer
as of the Closing Date), (ii) taxes and similar charges and expenses associated
with the Fixed Assets or the Segregated Fixed Assets, (iii) assessments
(including, without limitation, assessments attributable to FDIC deposit
insurance, provided that Buyer’s portion of the prepaid FDIC deposit insurance
assessment shall be based on the assessment rate charged Buyer for the relevant
period), (iv) payments due on the Equipment Leases and Assumed Contracts, (v)
any unearned non-interest income associated with the safe deposit box business
at the Branches, and (vi) similar expenses related to the Assets transferred
hereunder. To the extent any such item has been prepaid by Seller for a period
extending beyond the Closing Date, there shall be a proportionate adjustment in
favor of Seller.

 

3.3 Allocation of Purchase Price. The purchase price for the Assets being
purchased by the Buyer and the Assumed Liabilities being assumed by Buyer
pursuant to this Agreement, as set forth in Section 3.1 hereof and as adjusted
pursuant to Section 3.2 hereof, shall be allocated on an allocation schedule to
be agreed upon by Buyer and Seller within thirty (30) days after the Closing
Date. This allocation is intended to comply with the allocation method required
by Section 1060 of the Internal Revenue Code of 1986, as amended (“Section
1060”). Buyer and Seller shall cooperate to comply with all substantive and
procedural requirements of Section 1060 and any regulations thereunder, and the
allocation shall be adjusted if and to the extent necessary to comply with the
requirements of Section 1060. The parties shall: (i) each report the federal,
state and local and other tax consequences of the purchase and assumption
contemplated hereby (including the filing of Internal Revenue Service Form 8594)
in a manner consistent with such allocation schedule; and (ii) take no position
in any tax filing, return, proceeding, audit or otherwise which is inconsistent
with such allocation.

 

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3.4 Transfer Taxes. Buyer shall pay all transfer and conveyance taxes and all
recording fees in connection with the transfer of the Assets to Buyer.

 

ARTICLE IV

CLOSING

 

4.1 Closing. The Closing shall take place at such location as the parties may
agree, or via the electronic exchange of documents, at a time and on a date
mutually agreed upon by the parties hereto, which shall be within thirty (30)
days following (i) satisfaction or waiver of all of the pre-closing conditions
and conditions precedent to Closing set forth in Article IX hereof, (ii)
satisfaction or waiver of all of the pre-closing conditions contained in any
approval of the OCC or any other state or federal regulatory approval required
to be obtained with respect to the transactions contemplated by this Agreement;
and (iii) expiration of all applicable waiting periods. The Closing shall be
deemed to occur, and the transaction contemplated hereby shall be deemed to be
effective, at the Closing Time.

 

4.2 Closing Payment. The Closing Payment (as defined herein) between Buyer and
Seller shall be made as follows:

 

(a)  Amount. Seller shall pay to Buyer an amount (the “Closing Payment”) equal
to the amount specified in Section 3.1, as adjusted for pro rata payments
pursuant to Section 3.2.

 

(b)  Method of Payment. Because the parties acknowledge that certain amounts to
be paid may not be finally determinable until after the Closing Date, the
Closing Payment will be paid as follows:

 

(1)Not less than two (2) Business Days before the Closing Date, Seller shall
deliver to Buyer a proposed preliminary closing statement in substantially the
form set forth in Exhibit A as of a date not more than five (5) Business Days
before the Closing Date. The parties shall agree upon the preliminary closing
statement before the Closing Date. On the Closing Date, Seller will transfer to
Buyer, by wire transfer of immediately available funds, the estimated Closing
Payment as reflected on the preliminary closing statement (the “Estimated
Closing Payment”). Seller agrees to effect the wire transfer payment provided
for hereunder by no later than 2:00 p.m. (all times stated in this Agreement
shall refer to Eastern Standard Time) on the Closing Date, provided all other
conditions required for consummating the Closing have been satisfied by no later
than 12:00 noon on the Closing Date, and, in the event all other conditions
required for consummating the Closing have not been satisfied by 12:00 noon on
the Closing Date, Seller agrees to make a good faith reasonable effort to effect
the wire transfer payment provided for hereunder within one hour following the
satisfaction on the Closing Date of such other conditions.

 

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(2)Not later than ten (10) calendar days following the Closing Date (the “Final
Settlement Date”), Seller and Buyer shall determine the actual Closing Payment
and, based on such determination, Seller shall pay to Buyer, or Buyer shall pay
to Seller, as appropriate, in immediately available funds no later than 2:00
p.m. on the date of payment, by wire transfer effected in accordance with the
written instructions of the party entitled to receive payment, an amount equal
to the difference between the Estimated Closing Payment and the actual Closing
Payment plus interest on such difference for the number of days elapsed from but
excluding the Closing Date to and including the Final Settlement Date, at the
Federal Funds Rate on the Closing Date.

 

4.3 Deliveries by Buyer and Seller. Delivery of the instruments of assignment
and transfer to be delivered by Seller, delivery of the instruments of
assumption to be delivered by Buyer, and the other transactions herein
contemplated to take place concurrently with such deliveries, assumptions, and
payments shall take place at the Closing. Any deliveries, assignments or
transfers required under this Agreement, other than the foregoing, shall be made
at the time and date specified in this Agreement or, where not specified, in the
manner and place as may be reasonably requested in writing by the party that is
to receive such delivery, assignment, or transfer.

 

4.4 Documentation of Assumption. At the Closing, Buyer shall deliver to Seller
an undertaking under which Buyer will assume and agree to perform, discharge and
pay the Assumed Liabilities. An acceptable form of such Assignment and
Assumption Agreement is attached as Exhibit B hereto and made a part hereof.

 

4.5 Transfers. At the Closing, Seller shall deliver to Buyer a Bill of Sale in
substantially the form of Exhibit C, an Assignment, Transfer and Appointment of
Successor Trustee for IRA Accounts in substantially the form of Exhibit D, and
such other documents and instruments as Buyer or its counsel may reasonably
request from time to time on or after the Closing Date to transfer the Assets to
Buyer.

 

4.6 Buyer’s Actions at Closing. At the Closing, Buyer shall:

 

(a)execute, acknowledge, and deliver to Seller to evidence the assumption of the
liabilities and obligations of Seller in connection with the Deposit
Liabilities, an instrument or instruments of assumption in the form of Exhibit
B;

 

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(b)receive, accept and acknowledge delivery of the Assets, and (except in the
case of Loan Files for which physical possession may be delivered post-Closing)
all records and documentation relating thereto, sold, assigned, transferred,
conveyed or delivered to Buyer by Seller hereunder (in whatever form or medium
such records and documentation are then maintained by Seller);

 

(c)execute and deliver to Seller such written receipts for the Assets assigned,
transferred, conveyed or delivered to Buyer hereunder as Seller may reasonably
have requested at or before the Closing;

 

(d)deliver evidence of Governmental Approvals necessary for the consummation of
the transactions contemplated hereby;

 

(e)execute and deliver the officer’s certificate under Section 9.1(d);

 

(f)execute and deliver an assignment and assumption agreement with respect to
the Corydon Lease in substantially the form attached hereto as Exhibit E (the
“Lease Assumption Agreement”) duly executed by Buyer; and

 

(g)execute and deliver such other documents as the parties may determine are
reasonably necessary to consummate the transactions contemplated hereby.

 

4.7 Seller’s Actions at Closing. At Closing, Seller shall:

(a)assign to Buyer Seller’s rights in and to the Equipment Leases, which are
assignable and which constitute a part of the Assets;

 

(b)deliver (except in the case of Loan Files for which physical possession may
be delivered post-Closing) to Buyer the Assets purchased hereunder which are
capable of physical or electronic delivery, and a Bill of Sale in substantially
the form of Exhibit C hereto and other instruments of title as Buyer may
reasonably request to vest in Buyer good and marketable title thereto, free and
clear of all encumbrances;

 

(c)assign, transfer, and deliver to Buyer the records and original documents,
including all signature cards, (if available) pertaining to Assets and the
Deposit Liabilities (in whatever form or medium then maintained by Seller);

 

(d)execute and deliver to Buyer an instrument which shall assign and transfer
IRAs attributable to the Branches to Buyer in substantially the form of Exhibit
D hereto and which shall additionally appoint Buyer as a successor or trustee
for such accounts;

 

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(e)deliver to Buyer a letter from the Federal Home Loan Bank of Cincinnati (the
“FHLB”) releasing any liens that may have been created by Seller that may exist
on the Loans;

 

(f)pay the amount owing to Buyer under Section 4.2(a) in the manner set forth in
Section 4.2(b);

 

(g)execute and deliver the officer’s certificate under Section 9.2(d);

 

(h)execute and deliver a special warranty deed with respect to the Real Property
in substantially the form attached hereto as Exhibit F (the “Warranty Deed”)
duly executed by Seller;

 

(i)execute and deliver the Lease Assumption Agreement duly executed by Seller
and consented to by the landlord for the Corydon Branch;

 

(j)execute and deliver a certificate, in form and substance reasonably
satisfactory to Buyer, as to the non-foreign status of Seller pursuant to
section 1.1445-2(b)(2) of the United States Treasury Regulations, duly executed
by Seller; and

 

(k)execute and deliver such other documents as the parties may determine are
reasonably necessary to consummate the transactions contemplated hereby.

 

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF BUYER

 

Buyer represents and warrants to Seller as follows:

 

5.1 Organization. Buyer is a savings bank duly organized, validly existing and
in good standing under the laws of the United States, with full power and
authority to carry on its business as now being conducted and to assume the
liabilities being transferred and to effect the transactions contemplated
hereby.

 

5.2 Authority. The execution, delivery and performance by Buyer of this
Agreement are within Buyer’s corporate power and have been duly authorized by
all necessary corporate action on the part of Buyer. This Agreement has been
duly and validly executed and delivered by the Buyer and constitutes the legal,
valid and binding obligation of Buyer enforceable against Buyer in accordance
with its terms, except as enforceability may be limited under any applicable law
pertaining to bankruptcy, receivership, reorganization, fraudulent transfer or
insolvency or similar laws affecting creditors’ rights generally and to general
principles of equity.

 

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5.3 Non-Contravention. The execution, delivery and performance by Buyer of this
Agreement do not constitute a breach or violation of or constitute a default
under (i) any provision of applicable law or regulation, (ii) Buyer’s charter or
bylaws, (iii) any judgment, injunction, order, decree, governmental permit or
license, or (iv) any agreement, indenture or instrument to which Buyer is a
party.

 

5.4 Litigation. There is no action, suit or proceeding pending or, to the
knowledge of Buyer, threatened against Buyer before any court or arbitrator or
any governmental body, agency or official that could materially affect the
ability of Buyer to perform its obligations under this Agreement.

 

5.5 Governmental Notices. Buyer has received no notice and has no reason to
believe that any federal, state or other governmental agency would oppose or not
grant or issue its consent or approval, if required, with respect to the
transactions contemplated hereby.

 

5.6 Brokers, Finders and Advisors. Buyer will pay the costs related to any
broker, finder, financial advisor, legal counsel, accountant or similar agent
engaged by Buyer in connection with this Agreement and the transactions
contemplated herein and Buyer will indemnify Seller from any such costs.

 

5.7 Government Proceedings. Buyer is not subject to, and has not received any
notice or advice that it may be subject to, any order, agreement, memorandum of
understanding or other regulatory enforcement action or proceeding with or by
any federal or state agency charged with the supervision or regulation of banks
or engaged in the insurance of the deposits of banks or any other governmental
agency having supervisory or regulatory authority with respect to Buyer that
could affect Buyer’s ability to obtain the required regulatory approvals or to
satisfy any of the other conditions required to be satisfied in order to
consummate the transactions contemplated hereby.

 

5.8 Community Reinvestment Act. The most recent Community Reinvestment Act
rating received by Buyer was not less than “satisfactory.”

 

5.9 Regulatory Capital Compliance. Buyer is, and on a pro forma basis giving
effect to the transactions contemplated herein will be, (a) at least “adequately
capitalized”, as defined for purposes of the Federal Deposit Insurance Act and
the rules and regulations promulgated thereunder as the date hereof, and (b) in
compliance as of the date hereof with all capital requirements, standards and
ratios required by each regulator with jurisdiction over Buyer, including,
without limitation, any such higher requirement, standard or ratio as shall
apply to institutions engaging in the acquisition of insured institution
deposits, assets or branches, and, to the knowledge of Buyer, no such regulator
is likely to, or, as of the date hereof has indicated that it will, condition
any of the governmental or regulatory approvals necessary to the consummation of
the transactions contemplated hereby upon an increase in Buyer’s capital or
compliance with any capital requirement, standard or ratio.

 

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5.10 No Financing. Buyer’s ability to consummate the transactions contemplated
hereby is not contingent upon raising any equity capital, obtaining specific
financing therefor, obtaining the consent of any lender or any other similar
matter.

 

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF SELLER

 

Seller represents and warrants to Buyer as follows:

 

6.1 Organization. Seller is a commercial bank duly organized, validly existing
and in good standing under the laws of the State of Kentucky, with full power
and authority to carry on its business as now being conducted at the Branches
and to effect the transactions contemplated hereby.

 

6.2 Authority. The execution, delivery and performance by Seller of this
Agreement are within Seller’s corporate power and have been duly authorized by
all necessary corporate action on the part of Seller. This Agreement has been
duly and validly executed and delivered by Seller and constitutes the legal,
valid and binding obligation of Seller enforceable against Seller in accordance
with its terms, except as enforceability may be limited under any applicable law
pertaining to bankruptcy, receivership, reorganization, fraudulent transfer or
insolvency or similar laws affecting creditors’ rights generally and to general
principles of equity.

 

6.3 Non-Contravention. The execution, delivery and performance by Seller of this
Agreement do not constitute a breach or violation of or constitute a default
under (i) any provision of applicable law or regulation, (ii) Seller’s charter
or bylaws, (iii) any judgment, injunction, order, decree, governmental permit or
license, or (iv) any agreement, indenture or instrument to which Seller is a
party or to which any of the assets to be transferred hereby are subject.

 

6.4 Litigation. Except as otherwise disclosed to Buyer, there is no action, suit
or proceeding pending or, to the knowledge of Seller, threatened against Seller
before any court or arbitrator or any governmental body, agency or official that
relates to the Branches (including the Assets and the Assumed Liabilities) or
that could materially affect the ability of Seller to perform its obligations
under this Agreement.

 

6.5 Title to and Condition of Assets. The personal property subject to the
Equipment Leases and the Fixed Assets and the Segregated Fixed Assets are in
good operating condition and repair, giving consideration to its age and use and
subject to ordinary wear and tear. Seller has good and marketable title to the
assets comprising the Assets. The Assets located at and associated with the
Branches are in good operating condition and repair (in all cases giving
consideration to the item’s age and use, and excepting normal wear and tear), do
not have any material defects and are served by all reasonably necessary
utilities. Seller enjoys peaceful possession of the Branches. The Branches are
in conformity in all material respects with all zoning ordinances, building or
fire codes or other laws, statutes, ordinances, codes or regulations applicable
to them and all certificates, licenses and permits required for the lawful use
and occupancy of such property have been obtained and are in full force and
effect. Seller has received no written notice of any pending or threatened, nor
is it aware of any contemplated, condemnation proceeding affecting or relating
to any of the Branches. Buyer shall acquire all of the personal property subject
to the Equipment Leases, if any, and purchase the Fixed Assets and the
Segregated Fixed Assets in “AS IS, WHERE IS” CONDITION, WITHOUT ANY WARRANTIES
OR GUARANTEES BY SELLER AS TO FUTURE PERFORMANCE, FITNESS FOR A PARTICULAR
PURPOSE, MERCHANTABILITY OR OTHERWISE, EXCEPT THOSE WARRANTIES RELATED TO TITLE
AND THOSE SET FORTH IN THIS SECTION 6.5.

 

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6.6 Governmental Notices. Except as otherwise disclosed to Buyer, Seller has
received no notice and has no reason to believe that any federal, state or other
governmental agency would oppose or not grant or issue its consent or approval,
if required, with respect to the transactions contemplated hereby.

 

6.7 Brokers, Finders and Other Advisors. Seller will pay the costs related to
any broker, finder, financial advisor, legal counsel, accountant or similar
agent engaged by Seller in connection with this Agreement and the transactions
contemplated herein and Seller will indemnify Buyer from any such costs.

 

6.8 Compliance with Law. Seller has all licenses, franchises, permits and other
governmental authorizations that are legally required to enable it to conduct
its business at the Branches as presently conducted in all material respects.
Except as disclosed in the FDIC/KDFI Consent Order dated January 24, 2011 and in
Confidential Schedule 6.8, the business and operations of the Branches are being
conducted in all material respects in accordance with all applicable laws,
rules, and regulations of all authorities.

 

6.9 Deposit Liabilities. The deposit records of the Branches accurately reflect
the Deposit Liabilities and are and shall be sufficient to enable Buyer to
conduct a banking business with respect to the Branches. All of the Deposit
Liabilities were originated and are in material compliance with the documents
governing the relevant type of deposit account and all applicable federal and
state laws, rules, regulations, orders, judgments, injunctions, decrees and
awards. None of the Deposit Liabilities are brokered deposits. Seller has
properly accrued and reconciled interest on the Deposit Liabilities and the
records respecting the Deposit Liabilities accurately reflect such accruals of
interest. Seller has delivered to Buyer a true and complete copy of each of the
documents governing the Deposit Liabilities and a true and correct copy of the
current account forms for each of the types of Deposit Liabilities offered by
Seller out of the Branches.

 

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6.10 Deposit Insurance. The deposit accounts of Seller are insured up to
applicable limits by the FDIC, as provided by law.

 

6.11 Government Proceedings. Except for the FDIC/KDFI Consent Order dated
January 24, 2011, and except as set forth in Confidential Schedule 6.11, Seller
is not subject to, and has not received any notice or advice that it may be
subject to, any order, agreement, memorandum of understanding or other
regulatory enforcement action or proceeding with or by any federal or state
agency charged with the supervision or regulation of banks or engaged in the
insurance of the deposits of banks or any other governmental agency having
supervisory or regulatory authority with respect to Seller that could have a
material adverse effect on the operation of the Branches after the Closing Date
or that could affect Seller’s ability to obtain the required regulatory
approvals or to satisfy any of the other conditions required to be satisfied in
order to consummate the transactions contemplated hereby.

 

6.12 Community Reinvestment Act. The most recent Community Reinvestment Act
rating received by Seller was not less than “satisfactory.”

 

6.13 Environmental Matters. There is no legal, administrative, arbitral or other
proceeding, claim, action, cause of action or governmental investigation pending
or, to the knowledge of Seller, threatened which seeks to impose on Seller or
any predecessor of Seller in connection with the Branches any liability arising
under any Environmental Laws (as hereinafter defined), nor is there, to the
knowledge of Seller, any basis for any of the foregoing. Seller is not subject
to any agreement, order, judgment, decree or memorandum by or with any court,
governmental authority, regulatory agency or third party imposing any such
liability with respect to the Branches. To the knowledge of Seller, there are no
environmental conditions such as above ground or under ground storage tanks,
discharges or emissions or releases of Hazardous Materials (as hereinafter
defined), which constitute a violation of any Environmental Laws present at, on,
under, or above the Branches. As used herein the term “Environmental Laws” means
any laws (including, without limitation, the Comprehensive Environmental
Response, Compensation, and Liability Act), including any plans, other criteria,
or guidelines promulgated pursuant to such laws, now or hereafter in effect
relating to the generation, production, installation, use, storage, treatment,
transportation, release, threatened release, or disposal of Hazardous Materials.
As used herein, the term “Hazardous Materials” means any wastes, substances,
radiation, or materials (whether solids, liquids, or gases): (i) which are
hazardous, toxic, infectious, explosive, radioactive, carcinogenic, or
mutagenic; and (ii) which are defined as “pollutants,” “contaminants,”
“hazardous materials,” “hazardous wastes,” “hazardous substances,” “toxic
substances,” “radioactive materials,” “solid wastes,” or other similar
designations in, or otherwise subject to regulations under, any Environmental
Laws.

 

6.14 Employee Matters. The names, positions, dates of hire and current salary
levels of the current personnel of the Branches (the “Employees”) are set forth
in Schedule 6.14. There are no employment contracts between Seller and any of
the Employees. Seller is not a party to any contract or arrangement with any
union relating to the business conducted at the Branch, and Seller is not aware
of any pending organizational efforts at the Branches. To the best of Seller’s
knowledge, there has been no indication to Seller that a union organizational
effort or labor disturbance is likely at the Branches before the Closing Date.

 

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6.15 Loans. Each Loan was made in the ordinary course of business, was not known
to be uncollectible at the time it was made, accrues interest in accordance with
the terms of the Loan and was made in accordance with Seller’s customary lending
standards and written loan policies and in compliance with all applicable laws
and regulations. Seller’s files for the Loans contain all Loan Documents
relating to the Loans. All Loan Documents are correct in amount, and, to the
knowledge of Seller, genuine as to signatures of the parties thereto, including,
but not limited to makers and endorsers and of Seller, and were given for valid
consideration, and none of the obligations represented by the Loan Documents
have been modified, altered, forgiven, discharged or otherwise disposed of
except as indicated by the Loan Documents contained among the Loan Files or as a
result of bankruptcy or other debtor’s relief laws of general application. To
the knowledge of Seller, no maker, signatory or guarantor on any Loan is in
bankruptcy and none of the Loans are subject to any offsets or claims of offset,
or claims of other liability on the part of Seller. Except for FHA or similar
government guaranteed loans, no Loans have been sold subject to an agreement to
repurchase. No borrower, customer or other party in connection with the Loans
has notified Seller, or has asserted against Seller, in each case in writing,
any “lender liability” or similar claim, and, to the knowledge of Seller, no
borrower, customer or other third party in connection with the Loans has given
Seller any oral notification of, or orally asserted to or against Seller, any
such claim. Each Loan to be purchased pursuant to Section 2.1 hereof, was made,
funded and remains in material compliance with all applicable laws, orders and
regulations. To the knowledge of Seller, the records of Seller regarding all
Loans outstanding are accurate in all material respects and the risk
classifications for the Loans outstanding are, in the reasonable best judgment
of the management of Seller, appropriate. Each Loan is the legal, valid and
binding obligation of the obligor and any guarantor, subject to bankruptcy,
insolvency, fraudulent conveyance and other law of general applicability
relating to or affecting creditors’ rights and to general principles of equity,
and no defense, offset or counterclaim has been asserted with respect to any
such Loan. Seller is the sole owner of each Loan, no participation therein
having been sold; the Loan is not pledged or encumbered or will not be as of the
Closing Date; the principal balance of the Loan as shown on Seller’s books and
records is true and correct as of the last date shown thereon; no Loan has been
adversely classified in any regulatory examination or by Seller’s internal
classification system; no Loan has been classified as a TDR; and no Loan is 30
days or more past due, has been restructured or is classified as nonaccrual.
There are no material uncured violations or violations with respect to which
material refunds or restitution may be required with respect to the Loans that
have been cited in any compliance report to Seller as a result of examination by
any regulatory authority. Seller has properly perfected or caused to be properly
perfected valid and enforceable security interests, liens, or other interests in
any collateral securing the Loans (if and to the extent that such Loans are
represented on Schedule 2.1(e) to be secured Loans and then to the extent of the
indicated collateral) and such proper perfection continues to be in effect, such
security interests, liens, or other interests are assignable and have the
priority reflected in the Seller’s books and records. Except as otherwise set
forth in this Section 6.15, Seller makes no representation or warranty of any
kind to Buyer relating to the Loans. Without limiting the generality of the
foregoing, each of the Loans is transferred to the Buyer without recourse, and
Seller shall not be responsible for (i) the sufficiency, value or collectability
of the Loans or any Loan Documents, (ii) any representation, warranty or
statement made by an obligor or other party in or in connection with any Loan,
(iii) the financial condition or credit worthiness of any primary or secondary
obligor under any Loan or any guarantor or surety or other obligor thereof, (iv)
the performance by any guarantor, surety or other obligor or compliance with any
of the terms or provisions of any of the documents, instruments and agreements
relating to any Loan, (v) inspecting any of the property, books or records of
any guarantor, surety or other obligor, or (vi) the value of any collateral
securing the Loans.

 

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6.16 Real Estate Matters. With respect to the Real Property, Seller is the owner
of a fee simple interest in the Real Property. Subject only to the exceptions
permitted by this Agreement, Seller has good and marketable title to the Real
Property, free and clear of all mortgages, liens and other encumbrances, but
subject to all taxes not yet due and payable, applicable zoning ordinances,
matters which would be shown by a survey and all easements, rights-of-way and
other matters of record at the time of conveyance. To the knowledge of Seller,
no fact or condition exists that would result in the termination or impairment
of access to the Real Property from adjoining public or private streets or ways
or which could result in discontinuation of necessary sewer, water, electric,
gas, telephone or other utilities or services.

 

ARTICLE VII

COVENANTS OF BUYER

 

7.1 Assistance in Obtaining Regulatory Approvals. Buyer agrees to use all
reasonable efforts to assist Seller in obtaining any regulatory approval
necessary for Seller to transfer the Assets and the Assumed Liabilities being
transferred hereunder, and Buyer will provide to Seller or the appropriate
regulatory authorities all information within its possession reasonably required
to be submitted by Seller in connection with such approvals.

 

7.2 Regulatory Approvals and Consents. As soon as is practicable after the
execution of this Agreement, Buyer, at its expense, shall apply for approval of
all the transactions contemplated by this Agreement to all governmental agencies
having jurisdiction of either Buyer or the transactions contemplated by this
Agreement; provided, however, that if Seller is required to apply or give notice
to any governmental agency having jurisdiction of Seller, then Seller shall make
such application or notice at its expense. Buyer agrees to (i) make draft copies
of the applications (except for any confidential portions thereof) available to
Seller and its counsel at least three (3) Business Days before the filing
thereof, (ii) cooperate with Seller to include any required notice or
application by Seller to the FDIC and/or the KDFI in Buyer’s application to the
OCC, (iii) request confidential treatment by the appropriate federal and state
regulatory authorities of all non-public information submitted in the
applications, and (iv) provide Seller and its counsel promptly with a copy of
the applications as filed (except for any confidential portions thereof) and all
approvals, denials, notices, orders, opinions, correspondence and other
documents with respect thereto. Buyer will use its best efforts to obtain all
consents, approvals or authorizations of all governmental authorities or
agencies or third parties required for the execution, delivery and performance
by Buyer of this Agreement and the consummation by it of all transactions
contemplated hereby.

 

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7.3 Further Assurances. On and after the Closing Date, Buyer shall give such
further assurances to Seller and upon Seller’s request shall execute,
acknowledge and deliver all such acknowledgments and other instruments and take
such further action as may be necessary and appropriate to effectively relieve
and discharge Seller from any obligations remaining with respect to the Deposit
Liabilities, the Equipment Leases, the Corydon Lease and the Assumed Contracts
assumed by Buyer.

 

7.4 Use of Seller’s Name. On and after the Closing Date, Buyer shall not use the
name of Seller in any manner in connection with the operation of the Branches
except when necessary or appropriate to indentify the Seller as the seller of
the Branches. No activity conducted by Buyer on or after the Closing Date shall
state or imply that Seller is in any way involved as a partner or joint venturer
in the business of Buyer.

 

7.5 Communications with Customers. Buyer shall not, except as otherwise set
forth or contemplated herein or with the prior written consent of Seller,
communicate directly or indirectly with the customers of the Branches in any
manner before the Closing Date.

 

7.6 Confidentiality. Buyer shall, and shall cause its directors, officers,
employees, agents and representatives to, hold in strict confidence and not
disclose to any other person or entity without the prior written consent of
Seller all information received by Buyer or its directors, officers, employees,
agents or representatives from or with respect to Seller, the Branches, the
Assets, the Assumed Liabilities or the transactions contemplated hereby, except
such information (i) as may be publicly available other than through a breach of
this Agreement or the wrongful dissemination of such information by Buyer or its
directors, officers, employees, agents or representatives or (ii) as may be
required to be disclosed by applicable law, and Buyer shall, and cause its
directors, officers, employees, agents and representatives to, comply in all
material respects with the Confidentiality Agreement dated as of January 26,
2011 (the “Confidentiality Agreement”).

 

7.7 Breaches. In the event Buyer has knowledge of the occurrence, or impending
or threatened occurrence, of any event or condition which would cause or
constitute a breach (or would have caused or constituted a breach had such event
occurred or been known before the date hereof) of any of its representations or
agreements contained or referred to in the Confidentiality Agreement, Buyer
shall give prompt written notice thereof to Seller and use its commercially
reasonable best efforts to prevent or promptly remedy the same.

 

7.8 Consummation of Transactions. Buyer shall use its commercially reasonable
best efforts to perform and fulfill all conditions and obligations on Buyer’s
part to be performed or fulfilled under this Agreement and to effect the
transactions contemplated by this Agreement in accordance with the terms and
conditions hereof.

 

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7.9 Access to Information. Buyer shall disclose and make available to Seller
such information of Buyer in which Seller may reasonably require in furtherance
of the transactions contemplated by this Agreement. Seller will hold any such
information which is nonpublic in confidence in accordance with the provisions
of the Confidentiality Agreement as if the obligations of the Confidentiality
Agreement are applicable to Seller.

 

ARTICLE VIII

COVENANTS OF SELLER

 

8.1 Access to Records and Information; Personnel; Customers. Between the date of
this Agreement and the Closing Date, and subject to Section 7.6 hereof, Seller
shall: (i) afford to Buyer and its authorized agents and representatives full
access, upon prior notice, during normal business hours, to the properties,
operations, books, Records, contracts, documents and other information of, or
relating to, the Deposit Liabilities, the Loans, the Deposit-Related Loans, the
Fixed Assets, the Segregated Fixed Assets and the Branches. Seller shall cause
its personnel to provide assistance to Buyer in Buyer’s investigation of matters
relating to the Deposit Liabilities, the Loans, the Deposit-Related Loans, the
Fixed Assets, the Segregated Fixed Assets and the Branches; provided, however,
that Buyer’s investigations shall be conducted in a manner which does not
unreasonably interfere with Seller’s normal operations, customers and employee
relations.

 

8.2 Conduct of Business Before Closing.

 

(a) Seller will carry on the business of the Branches diligently and
substantially in the same manner as on the date hereof, and Seller will not,
with respect to the Branches, engage in any one or more activities or
transactions that are outside the ordinary course of the business of the
Branches, as conducted as of the date hereof, except for activities or
transactions contemplated by this Agreement or necessary to obtain any
regulatory or governmental approval of the transactions contemplated by this
Agreement or otherwise to comply with any requirement of any applicable law,
rule or regulation or any order of any court or other governmental authority. In
addition, Seller shall use its commercially reasonable efforts: (i) to preserve
its business operations as conducted at the Branches, (ii) to preserve for Buyer
the goodwill of its customers and others doing business with the Branches; (iii)
to maintain and preserve intact its relationship with the personnel of the
Branches; and (iv) to cooperate with and assist in assuring the orderly
transition of such business from Seller to Buyer. Nothing herein shall be
construed as requiring Seller to engage in any activities or efforts outside the
ordinary course of business as presently conducted.

 

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(b) Except as may be required by any regulatory or other governmental
authorities or as necessary to comply with any applicable law, rule or
regulation or any order of any court or other governmental authority, Seller
shall not, without the prior written consent of Buyer, which consent shall not
be unreasonably withheld:

 

(i) transfer to Seller’s other branches any Assets;

 

(ii) transfer to Seller’s other branches any Deposit Accounts at the Branches
except upon the unsolicited request of a depositor in the ordinary course of
business;

 

(iii) transfer, assign, encumber or otherwise dispose of or enter into any
contract, agreement or understanding, or negotiate with any party with respect
to entering into a contract, agreement or understanding, to transfer, assign,
encumber or otherwise dispose of any or all of the Assets or Deposit Liabilities
except in the ordinary course of business or pursuant to this Agreement;

 

(iv) except for improvements to ATMs at the Branches required for compliance
with the Americans With Disabilities Act of 1990, as amended, invest in any
fixed assets or improvements to the Branches which requires aggregate future
payments in excess of five thousand dollars ($5,000);

 

(v) enter into any new contract, commitment, lease or other transaction relating
to the Branches which requires aggregate future payments in excess of five
thousand dollars ($5,000);

 

(vi) except as consistent with past practice, offer to pay or pay any Deposit
Account at the Branches (including upon renewal of any Deposit Accounts) any
rate that would deviate materially from Seller’s historical pricing practices
(considered to be the offering of rates consistent with those publically posted
and/or offered to all depositors by the Seller) and which is higher than that
generally offered by Seller on similar deposit products at other offices of
Seller;

 

(vii) originate or renew any Loan with an original principal balance of fifty
thousand dollars ($50,000) or more (except for any Loan originated for sale in
the secondary market and classified as held-for-sale by the Seller);

 

(viii) agree to increase the salary, remuneration or compensation (including
insurance, pension or other benefit plan) payable or to become payable to the
Employees other than in accordance with Seller’s customary policies and/or
bank-wide changes, or pay or agree to pay any uncommitted bonus to any such
employees other than regular bonuses granted based on historical practice;

 

(ix) hire any new employees, or terminate any current employees other than for
cause, at the Branches;

 

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(x) fail to classify any Loan that should be classified consistent with Seller’s
past practice regarding loan classifications as “watch,” “special mention,”
“substandard,” “doubtful,” “loss,” or TDR;

 

(xi) enter into any employment, agency or other contract or arrangement for the
performance of personal services at the Branches, which is not terminable within
thirty (30) days without liability to Buyer;

 

(xii) originate or renew any Deposits Liabilities from financial institutions;

 

(xiii) originate or renew at the Branches any brokered deposits as defined in 12
C.F.R. §337.6(a)(2); or

 

(xiv) originate at the Branches any new “jumbo” certificate of deposit (those
with a principal balance of $100,000 or more) for any potential depositor
located or residing outside of the Buyer’s primary market area of Clark, Floyd,
Harrison, Crawford and Washington Counties in Indiana.

 

(c) For each month end between the date hereof and the Closing Date, the Seller
shall provide the Buyer, within fifteen (15) calendar days of each such month
end, a detailed schedule of all Loans originated during the preceding month.

 

(d) For each month end between the date hereof and the Closing Date, the Seller
shall provide the Buyer, within fifteen (15) calendar days of each such month
end, a detailed schedule of all Deposit Accounts transferred from the Branches
to another banking office of the Seller pursuant to Section 8.2(b)(ii) hereof
during the preceding month.

 

(e) Between the date hereof and the Closing Date, Seller shall promptly advise
Buyer in writing of any fact that, if existing or known as of the date hereof,
would have made any of the representations contained herein inaccurate or untrue
in any material respect.

 

8.3 Assistance in Obtaining Regulatory Approvals. Seller agrees to use all
reasonable efforts to assist Buyer in obtaining all regulatory approvals
necessary to complete the transactions contemplated hereby, and Seller will
provide to Buyer or to the appropriate regulatory authorities all information
within its possession reasonably required to be submitted by Buyer in connection
with such approvals.

 

8.4 Regulatory Approvals and Consents. Seller shall cooperate with Buyer to
apply for regulatory approval of the transactions contemplated by this Agreement
as set forth in Section 7.2 of this Agreement. Further, Seller will use its best
efforts to obtain all consents, approvals or authorizations of all governmental
authorities or agencies or third parties required for the execution, delivery
and performance by Seller of this Agreement and the consummation by it of all
transactions contemplated hereby or for the assumption by Buyer of the Assumed
Contracts.

 

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8.5 Records. Seller shall retain all Records relating to the Deposit Liabilities
which are not ordinarily maintained at the Branches and are not otherwise
required to be transferred to Buyer under this Agreement and Buyer shall receive
possession of, and right, title and interest to, and in, all Records which are
ordinarily maintained at the Branches. In each case, copies of the Records
directly relating to Branch operations, assets and liabilities before the
Closing Time which are retained by Seller shall be provided, within five (5)
Business Days after a request is received for such Records, to Buyer and its
authorized agents, representatives and regulators during regular business hours
after the Closing Time. All Records relating to the Deposit Liabilities before
the Closing Time shall be maintained for the period required by law. Should one
party’s audit or inspection of records in another party’s possession result in
the second party’s employees or agents having to devote any substantial amount
of time or such party having to allocate facilities or equipment or having to
incur any substantial costs, then the second party shall be entitled to
reasonable reimbursement for all such costs incurred; provided, however, that no
there shall be no reimbursement for requests made within thirty (30) calendar
days of the Closing Date.

 

8.6 Signs. Seller shall remove, at its own cost, any or all interior and
exterior signs (excluding structural sign posts and cabinets) at the Branches
identifying Seller by 5:00 p.m. on the Closing Date. Seller shall cooperate to
allow Buyer to start installation of signs at the Branches within seven (7) days
before the Closing Date. Buyer’s sign shall remain covered until the Closing
Date.

 

8.7 Transfer of Data. Seller acknowledges that Buyer may either manually convert
all of the account data regarding the Deposit Liabilities or with the mutual
consent of the parties, electronically transfer the data. From the date hereof
through the Closing Date, Seller shall reasonably cooperate and work with Buyer
to complete the tasks required to facilitate the conversion of the Deposit
Liabilities and the Loans. Such tasks include, but are not limited to, providing
Buyer with updated reports, application data files, and any other items as are
necessary to complete the conversion process and related testing procedures.
Seller will facilitate and assist Buyer, as needed, with any communication or
interaction with existing data processors, vendors, and related third parties.
Seller shall provide, at Seller’s sole cost and expense: (i) a written report to
Buyer, in a format acceptable to Buyer, detailing account data regarding the
Deposit Liabilities and Loans on the Closing Date; and (ii) within thirty (30)
calendar days from the date hereof, Seller shall provide Buyer with initial
reports and related documentation of the Deposit Accounts and Loans in a format
acceptable to Buyer. Seller agrees to facilitate the orderly transfer of all
data processing information from all third parties. Seller agrees to reasonably
cooperate in resolving any conversion-related issues arising from the conversion
of the Deposit Liabilities and Loans for a period of ninety (90) calendar days
following the date that the conversion is completed.

 

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8.8 Forms. Within thirty (30) calendar days from the date of this Agreement,
Seller will provide Buyer with copies of the forms of signature cards, deposit
account forms, Regulation E disclosures, Truth-in-Savings disclosures, deposit
account agreements, and IRA trust agreements and beneficiary designations, as
well as the forms of any other instruments or agreements presently in use at the
Branches in connection with the Deposit Liabilities. For purposes of this
paragraph, all referenced documents shall be the forms used by Seller as of the
date of this Agreement for new customers.

 

8.9 Post-Closing Delivery of Loan Files and Recording and Assignment Matters;
Retention of and Access to Files Following the Closing Date.

 

(a) Not later than five (5) business days following the Closing Date, Seller
shall deliver to Buyer the Loan Documents and related Loan files (reasonably
organized and cataloged), in the medium (including imaged documents) then
maintained by Seller; provided, however, that Buyer understands that the FHLB
may take approximately thirty (30) days to return to Seller original Loan
Documents pertaining to Loans now pledged to the FHLB by Seller as collateral
security for advances made to Seller by the FHLB (but to be released on the
Closing Date), and that Buyer shall arrange for physical delivery of such
original Loan Documents to Buyer when and as received by Seller from the FHLB;

(b) Promptly after the execution of this Agreement, Buyer shall provide Seller
in writing with the exact name to which the Loans are to be endorsed, or whether
any Loans should be endorsed in blank. Not later than five (5) business days
following the Closing Date (except with respect to those items as Buyer shall
reasonably request be delivered in advance of such date, which items Seller
shall use its best efforts to deliver at or immediately after the Closing Date),
Seller shall complete such endorsements and deliver the Loan Documents, along
with assignments of real property security instruments in recordable form and
assignments of financing statements, in a form reasonably satisfactory to Buyer,
including, but not limited to the following:

(i)For each of the Loans, a notice of transfer of Loan in form reasonably
satisfactory to Buyer’s counsel, informing each borrower under each of the Loans
of the transfer of the Loans and related servicing to Buyer;

(ii)For each of the original notes, an endorsement (made pursuant to a label
adhered to the note or pursuant to a separate allonge), in form reasonably
satisfactory to Buyer’s counsel, which states “Pay to the order of First Savings
Bank, F.S.B., without recourse”;

(iii)For each of the Loans, an assignment for the Loan Documents and related
rights and liens, in form reasonably satisfactory to Buyer’s counsel with all
blanks appropriately completed; and

(iv)For each of the Loans, one or more UCC-3 Assignments of Financing Statements
to be filed with the Secretary of State where each borrower is formed or
domiciled and/or in the county where each real property is located, as
applicable, evidencing the assignment to Buyer of all Seller’s right, title and
interest in and to any security interests in personal property and fixtures
created by the Loan Documents and held by Seller which are in effect on the
Closing Date.

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(c) Seller shall take all such reasonable actions as requested by Buyer to
assist Buyer in (i) obtaining the valid perfection of a lien or security
interest in the collateral, if any, securing each Loan sold on the Closing Date
in favor of Buyer or its designated assignee as secured party, or (ii) notifying
other banks or financial institutions in respect of the transfer or assignment
of any participation agreement with respect to Loans, or (iii) otherwise
transferring of record or beneficially the interests of Seller in Loans or the
collateral therefor. Any such action shall be the responsibility of Buyer and at
Buyer’s sole expense, and Buyer shall promptly reimburse Seller for all
reasonable third party costs incurred in connection therewith.

(d) Buyer agrees that it will preserve and safely keep, for as long as may be
required by applicable law, all of the files, books of account and records of
the Branches referred to in this Agreement for the joint benefit of itself and
Seller, and that it will permit Seller or its representatives, at any reasonable
time and at Seller’s expense, to inspect, make extracts from or copies of, any
such files, books of account or records as Seller shall deem necessary of the
files, books of accounts or records of the Branches before the Closing Date.

(e) If some of Seller’s records concerning the Deposit Liabilities cannot
reasonably be segregated from Seller’s records regarding accounts not
transferred pursuant to this Agreement, Seller will not deliver such records to
the Buyer but will preserve and safely keep such records for as long as may be
required by applicable law. For a period of thirty-six (36) calendar months
after the Closing Date, Seller shall permit Buyer reasonable access during
Seller’s normal business hours to any applicable Records in its possession
relating to matters arising on or before the Closing Date and reasonably
necessary in connection with any claim, action, litigation or other proceeding
involving Buyer or in connection with any legal obligation owed by Buyer to any
present or former depositor or other customer; provided, however, that Seller
shall be entitled to fees, for the level of service requested, for any research
of Records required by Buyer after the Closing Date, provided that the charge
for research shall not exceed $30.00 per hour and $5.00 per check copy; provided
further that there shall be no charge for research requests within the first
thirty (30) days following the Closing Date. Moreover, following the Closing
Date, Buyer agrees to maintain database information cross referencing Seller’s
account number for transferred customers in order to facilitate any post Closing
research to be performed by Seller at Buyer’s request or as required by law.
Following such 36-month period, Seller will permit the Buyer or Buyer’s
representatives, at reasonable times during Seller’s normal business hours and
at the Buyer’s expense, to inspect, make extracts from or copies of such records
which relate to the Deposit Liabilities.

 

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8.10 Further Assurances. On and after the Closing Date, Seller shall give such
further reasonable assistance to Buyer and, upon Buyer’s request, shall execute,
acknowledge and deliver all such acknowledgments and other instruments and take
such further action as may be necessary and appropriate to effectively transfer
the Assets and the Deposit Liabilities to Buyer.

 

8.11 Best Efforts to Satisfy Conditions. Seller covenants and agrees that it:
(a) will use its commercially reasonable best efforts to satisfy the conditions
to which the obligations of Buyer are subject pursuant to this Agreement on or
before the Closing Date; and (b) will fully cooperate to facilitate the
consummation of the transactions contemplated by this Agreement.

 

8.12 Covenants Not to Compete. Seller hereby covenants and agrees that:

 

(a) For a period of three (3) years commencing as of the Closing Date, neither
Seller nor any Affiliate shall establish a de novo branch office or purchase or
acquire a branch office from another depository institution or financial
institution for the purpose of accepting or soliciting any deposits within any
county in which any of the Branches is located. Nothing in this Section 8.12(a),
however, shall prevent the acquisition of Seller by a depository institution or
financial institution (or its holding company) having a branch facility then
operating under its separate name within any county in which any of the Branches
is located, or the acquisition by Seller of a depository institution or
financial institution (or its holding company) having a branch facility then
operating under its separate name within any county in which any of the Branches
is located.

 

(b) For a period of three (3) years commencing as of the Closing Date, neither
Seller nor any Affiliate shall directly solicit by direct mail or telephone any
persons who on or before the Closing Date had a deposit account with any of the
Branches; provided, however, that the foregoing provisions shall not limit the
right of Seller to advertise or solicit for banking business from the public
generally or from customers at other branch offices of Seller, provided that
Seller may not use the customer lists from the Branches for any purpose.

 

(c) For a period of three (3) years commencing as of the Closing Date, Buyer
shall not, without the prior written consent of Seller, directly or indirectly,
solicit to employ any officer or employee of Seller employed by Seller at the
Closing Date and continuing to be employed by Seller, provided, however, that
the term “solicit to employ” shall not be deemed to include general
solicitations of employment not specifically directed towards employees of
Seller, nor inquiries for employment initiated by such officers or employees.

 

(d) For a period of three (3) years commencing as of the Closing Date, Seller
shall not, without the prior written consent of Buyer, directly or indirectly,
solicit to employ any person who is a Transferred Employee and who continues to
be employed by Buyer, provided, however, that the term “solicit to employ” shall
not be deemed to include general solicitations of employment not specifically
directed towards employees of Buyer, nor inquiries for employment initiated by
such employees.

 

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8.13 Real Property, Title, Surveys and Inspections.

 

(a) Seller will convey good and marketable title to the Real Property to Buyer,
subject to Permitted Exceptions (as hereinafter defined).

 

(b) Not more than sixty (60) calendar days after the date hereof, Seller shall
deliver to Buyer, at Buyer’s expense, a Commitment for an ALTA Owner’s Form B
Title Insurance Policy (the “Title Policy”) issued by a title insurer reasonably
approved by Buyer (the “Title Insurer”), with respect to the Real Property and
designating Buyer as the proposed insured (the “Title Commitment”). The Title
Commitment shall be subject only to Permitted Exceptions. For purposes of the
Title Commitment, “Permitted Exceptions” shall mean any exceptions shown on the
Title Commitment to which Buyer does not object in writing within ten (10)
Business Days of its receipt of the Title Commitment. If the Title Commitment
delivered pursuant to this Section 8.13 discloses title exceptions other than
Permitted Exceptions, Seller shall have thirty (30) calendar days from the date
of receipt of notice thereof (and the parties shall postpone the Closing Date,
if necessary to enable Seller to undertake such activities ) to have such
exceptions cleared, or to have the Title Insurer commit to insure against loss
or damage that may be occasioned by such exceptions by an endorsement in form
and substance satisfactory to Buyer. If the exceptions are not removed or
endorsements over the exceptions are not obtained, Buyer, upon notice to Seller
within fifteen (15) calendar days after the expiration of the 30-day cure
period, may elect (i) to lease the Real Property for a period of five years on
market terms mutually agreeable to Buyer and Seller; or (ii) to take title
notwithstanding the exception and such exception shall be deemed a Permitted
Exception.

 

(c) Not more than sixty (60) calendar days after the date hereof, Seller shall
deliver to Buyer a current survey of the Real Property (the “Survey”), which
current survey (i) shall include easements, if any, that are for the benefit of
all or any portion of the Real Property; (ii) shall be dated on or after the
date hereof; (iii) shall be prepared and certified to Buyer, the Title Insurer
and such other persons as Buyer shall reasonably request by a registered Indiana
land surveyor as having been prepared in accordance with the current Minimum
Standard Detail Requirements for ALTA/ACSM Land Surveys as adopted by the
American Land Title Association and American Congress on Surveying and Mapping
for Class A-Urban Surveys; and (iv) shall confirm that the Real Property is in a
Zone C-Area of Minimal Flood Hazard according to the Flood Insurance Rate Maps
prepared by the Federal Emergency Management Agency, except as disclosed in
Schedule 8.13(c). The Buyer shall pay for the cost of the Survey.

 

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(d) Within sixty (60) days after the date of this Agreement, Buyer may, at
Buyer’s sole cost and expense, obtain a completed Phase I environmental report
(“Phase I”) of the Real Property conducted by an independent environmental
investigation and testing firm selected by Buyer and reasonably acceptable to
Seller. If the Phase I discloses any potential environmental condition that in
the reasonable belief of Buyer warrants further review or investigation, Buyer
shall give notice of the same to Seller within ten (10) Business Days of its
receipt of the Phase I. Buyer shall purchase the Real Property on the terms set
forth in this Agreement if notice is not provided within such ten (10) Business
Day period. Upon giving such notice, Buyer may, within an additional thirty (30)
day period, at Seller’s sole cost and expense, obtain a completed Phase II
environmental report (“Phase II”). Buyer shall purchase the Real Property on the
terms set forth in this Agreement if (a) the Phase I or Phase II report reveals
potential levels of environmental contaminants not in excess of federal or state
action limits, or (b) the Buyer shall have been provided confirmation from
governmental authorities with applicable jurisdiction that no action with
respect to the Real Property is required. If the Phase II report reveals levels
of environmental contaminants in excess of federal or state action limits on any
Real Property, and if the Buyer shall not have received written confirmation,
acceptable to the Buyer in its sole discretion, from governmental authorities
with applicable jurisdiction that no remedial action with respect to the Real
Property is required, warranted or advisable, Buyer shall not be obligated to
purchase the Real Property under the terms set forth in this Agreement, but may
purchase the Real Property on terms mutually agreeable to Buyer and Seller if
Seller does not agree to pay for the costs of remediating the affected Real
Property. In the event that Buyer and Seller fail to reach such agreement within
thirty (30) days following receipt of the Phase II, Buyer shall lease the Real
Property for a period of five years on market terms mutually agreeable to Buyer
and Seller. Buyer shall provide copies of the Phase I and Phase II reports, if
any, to Seller within the time periods required above for obtaining the same.

 

8.14 Breaches. In the event Seller has knowledge of the occurrence, or impending
or threatened occurrence, of any event or condition which would cause or
constitute a breach (or would have caused or constituted a breach had such event
occurred or been known before the date hereof) of any of its representations or
agreements contained or referred to in the Confidentiality Agreement, Seller
shall give prompt written notice thereof to Buyer and use its commercially
reasonable best efforts to prevent or promptly remedy the same.

 

ARTICLE IX

CONDITIONS TO CLOSING

 

9.1 Conditions to the Obligations of Seller. Unless waived in writing by Seller,
the obligations of Seller to consummate the transactions contemplated by this
Agreement are subject to the satisfaction at or before the Closing of the
following conditions:

 

(a) Performance. Each of the acts and undertakings of Buyer to be performed at
or before the Closing pursuant to this Agreement shall have been duly performed
in all material respects;

 

(b) Representations and Warranties. The representations and warranties of Buyer
contained in Article V hereof shall be true and correct in all material respects
(except that the representations and warranties contained in Sections 5.1, 5.2
and 5.9 shall be true and correct without any qualification as to materiality)
on and as of the Closing Date, with the same effect as though made on and as of
the Closing Date.

 

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(c) Regulatory Approvals and Third Party Consents. All required licenses,
approvals and consents of any relevant state, federal or other regulatory
agencies or third parties necessary for the consummation of the transactions
contemplated by this Agreement shall have been obtained; all applicable waiting
periods shall have expired; and all necessary pre-closing conditions of those
licenses, approvals and consents shall have been fully satisfied.

 

(d) Officer’s Certificate. Seller shall have received a certificate in the form
of Exhibit G signed by an authorized officer of Buyer stating that the
conditions set forth in Sections 9.1(a) and (b) have been fulfilled.

 

(e) No Restraints. No temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or other
legal restraint or prohibition preventing the consummation of the purchase and
assumption transaction contemplated by this Agreement shall be in effect nor
shall any proceeding by any bank regulatory authority or other governmental
agency seeking any of the foregoing be pending. There shall not be any action
taken, or any statute, rule, regulation or order enacted, entered, enforced or
deemed applicable to the purchase and assumption transaction contemplated by
this Agreement which makes the consummation of such transaction illegal.

 

(f) Receipt of Documents. Seller shall have received all documents required to
be received from Buyer on or before the Closing Date, all in form and substance
reasonably satisfactory to Seller.

 

9.2 Conditions to the Obligations of Buyer. Unless waived in writing by Buyer,
the obligations of Buyer to consummate the transactions contemplated by this
Agreement are subject to the satisfaction at or before the Closing of the
following conditions:

 

(a) Performance. Each of the acts and undertakings of Seller to be performed at
or before the Closing pursuant to this Agreement shall have been duly performed
in all material respects.

 

(b) Representations and Warranties. The representations and warranties of Seller
contained in Article VI of this Agreement shall be true and correct in all
material respects (except that the representations and warranties contained in
Sections 6.1, 6.2, 6.5, 6.9, 6.14, 6.15 and 6.16 shall be true and correct
without any qualification as to materiality) on and as of the Closing Date, with
the same effect as though made on and as of the Closing Date.

 

(c) Regulatory Approvals and Third Party Consents. All required licenses,
approvals and consents of any relevant state, federal or other regulatory
agencies or other third parties necessary for the consummation of the
transactions contemplated by this Agreement shall have been obtained; all
applicable waiting periods shall have expired; and all necessary pre-closing
conditions of those licenses, approvals and consents shall have been fully
satisfied.

 

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(d) Officer’s Certificate. Buyer shall have received a certificate in the form
of Exhibit H signed by an authorized officer of Seller stating that the
conditions set forth in Sections 9.2(a) and (b) have been fulfilled.

 

(e) No Adverse Litigation. On the Closing Date no action, suit or proceeding
shall be threatened or pending against Buyer or Seller which might reasonably be
expected to materially and adversely affect the business, properties and assets
of the Branches or materially and adversely affect the transactions contemplated
by this Agreement.

(f) No Material Damage. From the date of this Agreement until the Closing Date
there shall have been no material damage to or destruction of the physical
condition of the Branches.

(g) No Restraints. No temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or other
legal restraint or prohibition preventing the consummation of the purchase and
assumption transaction contemplated by this Agreement shall be in effect nor
shall any proceeding by any bank regulatory authority or other governmental
agency seeking any of the foregoing be pending. There shall not be any action
taken, or any statute, rule, regulation or order enacted, entered, enforced or
deemed applicable to the purchase and assumption transaction contemplated by
this Agreement which makes the consummation of such transaction illegal.

(h) Receipt of Documents. Buyer shall have received all documents required to be
received from Seller on or before the Closing Date, all in form and substance
reasonably satisfactory to Buyer.

ARTICLE X

TERMINATION

 

(a) This Agreement shall terminate and be of no further force or effect as
between the parties, except as to liability for breach of any duty or obligation
arising before the date of termination, upon the occurrence of any of the
following:

 

(i) if any governmental (federal or state) agency shall have denied or refused
to grant the approvals or consents required to be obtained pursuant to this
Agreement;

 

(ii) the expiration of thirty (30) days from the date that either party has
given notice to the other party of such other party’s material breach or
misrepresentation of any condition, warranty, representation or covenant in this
Agreement; provided, however, that no such termination shall take effect if
within said thirty (30) day period the party so notified shall have fully and
completely corrected the grounds for termination as specified in such notice; or

 

(iii) upon mutual consent of the parties in writing at any time on or before the
Closing Date.

 

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(b) The parties hereto may, by mutual written consent, terminate this Agreement
upon the failure to close the transactions contemplated by this Agreement on or
before September 30, 2012.

 

(c) Notwithstanding anything to the contrary herein contained in this Agreement,
neither party hereto shall have the right to terminate this Agreement on account
of its own breach or any immaterial breach by the other party.

 

ARTICLE XI

EMPLOYEES

 

11.1 Continuing Employees. Seller shall introduce Buyer to the Employees as soon
as practicable after the execution of this Agreement. Subject to review of such
information as Buyer may request of such Employees and interviews with the
Employees, Buyer shall determine which Employees to whom it shall make an offer
of employment. Any Employees who receive such an offer and accept it are
referred to as “Transferred Employees.” Any Employees who do not receive such an
offer are referred to as “Non-Transferred Employees.” Buyer shall notify and
identify to Seller its selection of such Transferred Employees as soon as the
selection is made and shall use its best efforts to make such selection no later
than thirty (30) days before Closing, but in no event later than fifteen (15)
days before Closing.

11.2 Filings by Seller. Seller shall be responsible for the filing of Forms W-2
with the Internal Revenue Service and any required filing with state tax
authorities with respect to wages and benefits paid to each such Employee for
periods ending on or before the close of business on the Closing Date.

 

11.3 Benefits Matters. Buyer shall grant service credit to each Transferred
Employee for his or her service with Seller on or before the Closing Date
(including service credited by Seller as a successor in interest by its
acquisition of the former Farmers State Bank) for purposes of determining the
Transferred Employee’s eligibility to participate and vested rights (but not for
purposes of benefit accrual) in any pension, thrift, profit-sharing, life
insurance, disability, or other employee benefit plan or program now in effect
or hereafter maintained by or on behalf of Buyer and with regard to any medical
benefit plan covering Buyer’s employees. Notwithstanding the immediately
preceding sentence, each Transferred Employee shall be treated as a new employee
for all purposes under the Buyer’s employee stock ownership plan. There shall be
an open enrollment period for the Transferred Employees without regard to any
preexisting conditions of such Transferred Employees or their dependents,
consistent with the requirements of the Health Insurance Portability and
Accountability Act of 1996.

 

11.4 Access to Employees. Before the Closing Date, Seller shall afford the
officers and authorized representatives of Buyer access to the Employees for
interviews and training purposes, at Buyer’s sole expense, at reasonable times
without interfering with the Branches’ normal business and operations.

 

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11.5 COBRA Notifications. To the extent required by law, Seller will provide all
required notification under the Consolidated Omnibus Budget Reconciliation Act
of 1985 (“COBRA”) to all former employees of Seller at the Branches after the
Closing Date and to all other persons who became “qualified beneficiaries” under
COBRA with respect to any group health plans maintained by Seller for its
employees, and Seller will have provided any required COBRA coverage to all such
former employees and other qualified beneficiaries of Seller who elect COBRA
coverage within the time period specified by COBRA and the regulations
promulgated thereunder.

 

11.6 Paid Time Off. Buyer shall assume all accrued paid time off, vacation or
sick days, severance benefits, or other benefits owed to any Employee by Seller
as of (and including) the Closing Date (the “Seller Employee PTO”); provided
that Seller shall pay to Buyer, at the Closing, the amount that any such
Employees would be owed through the close of business on the Closing Date for
such Seller Employee PTO. In determining the length of a Transferred Employee’s
vacation benefits for the purpose of this Section 11.6, Buyer shall treat the
Transferred Employee’s service with Seller (including service credited by Seller
as a successor in interest by its acquisition of the former Farmers State Bank)
as if it were service with Buyer.

 

11.7 Severance. Any Non-Transferred Employees, and any Transferred Employees who
Buyer terminates within ninety (90) days after the Closing Date (other than for
Cause), shall receive from the Buyer a lump-sum cash severance payment equal to
one week of “base compensation” for each year of service with the Seller
(including service credited by Seller as the successor in interest by its
acquisition of the former Farmers State Bank), up to a maximum of twenty (20)
weeks of base compensation. In the case of any Non-Transferred Employees, Buyer
shall make such payment on or before the Closing Date. In the case of any such
Transferred Employees, Buyer shall make such payment on the termination date.
“Cause” means a good faith finding by the Buyer of (i) a conviction of the
employee of, or a plea of guilty or nolo contendere by the employee to, any
felony; (ii) a material violation by the employee of federal or state laws or
any other laws involving moral turpitude, as determined by a court or other
governmental body of competent jurisdiction; (iii) willful misconduct or gross
negligence by the employee; or (iv) fraud, embezzlement, theft or material
dishonesty by the employee against the Seller or any of its customers or
vendors. “Base compensation” means: (i) for salaried employees, the employee’s
annual base salary at the rate in effect on his or her termination date or, if
greater, the rate in effect on the date immediately preceding the Closing Date;
and (ii) for hourly employees, the employee’s total hourly wages for the twelve
(12) calendar months preceding his or her termination date or, if greater, the
twelve (12) full calendar months preceding the Closing Date.

 

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ARTICLE XII

OTHER AGREEMENTS

 

12.1 Checking Deposit Account Owners.

 

(a) Customer Notification. After receipt of regulatory approval of the
transactions contemplated by this Agreement but before to the Closing Date,
Buyer and Seller through a joint communication will notify all holders of
Deposit Accounts at the Branches that checks or drafts written after thirty (30)
calendar days after the Closing Date on Seller’s check or draft forms will not
be honored. Such notice shall be made at Buyer’s expense.

 

(b) Customers’ New Check and Draft Forms. On or within five (5) Business Days
before the Closing Date, Buyer will supply holders of Deposit Liabilities which
may be accessed by checks with Buyer’s own check or draft forms. At least twenty
(20) calendar days before the Closing Date, Seller will provide Buyer all
necessary information for Buyer to supply such checks and drafts. Buyer will be
fully responsible for all costs of the new check and draft forms, including
postage and notifications.

 

12.2 Seller and Buyer Processing Duties.

 

(a) Checks, Drafts, and Negotiable Orders of Withdrawal. For a period not to
exceed ninety (90) calendar days after the Closing Date, Seller agrees to act as
Buyer’s limited correspondent for the processing of checks, drafts, and
Negotiable Orders of Withdrawal (“NOW”) drawn before or after the Closing on
forms provided by Seller on any such accounts assumed by Buyer hereunder.

 

(b) Holds and Stop Payments. Seller will deliver to Buyer at Closing a schedule
of holds and stop-payments placed on particular accounts or individual checks at
the Branches and the terms of such holds. Except as otherwise required by
applicable law, Buyer will continue such holds and stop-payments under the same
terms Seller shows on the schedule of holds and stop-payments.

 

(c) Risk of Loss. After the Closing, any risk of loss with respect to stop
payments and funds availability and other holds shall be the sole responsibility
of Buyer, provided that: (i) in the case of stop-payments instituted before
Closing, Seller has advised Buyer of the existence and terms of such
stop-payments at the Closing; and (ii) in the case of funds availability and
other holds instituted before Closing, Seller has advised Buyer of the existence
and terms of such holds at the Closing.

 

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(d) Processing of Electronic Items. Seller will provide Buyer, at least twenty
(20) Business Days before Closing, the list of all ACH entries for electronic
transfer accounts domiciled at the Branches. Buyer shall continue such ACH
arrangements and such recurring debit arrangements as are originated and
administered by third parties and for which Buyer need act only as processor.
Buyer shall have no obligation to continue any such arrangements that were
originated and administered by Seller and Seller shall terminate such
arrangements on or before the Closing Date. Within five (5) days after the
Closing, Buyer shall notify ACH originators with respect to Deposit Liabilities
to change the routing numbers and account numbers from those of Seller to those
of Buyer in compliance with NACHA rules and regulations. Seller will continue to
accept and transmit to Buyer ACH entries and corresponding funds for ninety (90)
calendar days following Closing. Seller, at Buyer’s expense, agrees for a period
of ninety (90) calendar days after the Closing Date to provide electronic “ACH
format” transmissions to Buyer no later than 2:00 p.m. on each Business Day of
all such ACH transfers received by Seller on the previous Business Day for same
day settlement. After the ninety (90) day period, Seller may discontinue
accepting and forwarding ACH entries and funds and return them to the
originators marked “Account Closed.” In the case of FED Wires intended for
Deposit Accounts, Seller shall remit and transfer to Buyer no later than 3:00
p.m. (EST) on each business day all FED Wire received for such Deposit Accounts.
Compensation for FED Wires not delivered to Buyer will be the sole
responsibility of Seller. Seller may discontinue accepting and forwarding FED
Wires after the ninety (90) day period and return them to the originators marked
“Account Closed”.

 

(e) Account Statements. Within thirty (30) calendar days after the Closing Date,
Seller, at its own expense, shall mail to each holder of a Deposit Liability in
respect of a checking account, NOW account, money market account or other
account which permits deposits to be transferred to third parties by means of
drafts drawn on such deposit account, a final account statement as of the
Closing Time.

 

(f) Escheatable Deposits. Seller will escheat to the State of Indiana all
escheatable Deposit Accounts and safe deposit box contents eligible for
escheatment within thirty (30) days before the Closing Date. Seller will provide
to Buyer within thirty (30) days of the Closing Date a listing of all Deposit
Accounts and safe deposit boxes that were escheated subsequent to the date of
this Agreement and a report that details the last date of customer contact.

 

12.3 Returned Items. An appropriate allocation or adjustment between Buyer and
Seller shall be made for any items that were credited for deposit to or cashed
against an account at the Branches and are returned unpaid within ninety (90)
calendar days after the Closing (the “Returned Items”), if after reasonable
diligence payment for the Returned Item cannot be recovered, including by offset
against an account of obligor. Such allocation and adjustment shall be made by
appropriate payment from Buyer to Seller or Seller to Buyer as soon as feasible.
Seller will provide a daily listing of all returned deposited items (RDI) no
later than 8:30 a.m. on each Business Day. Seller agrees to assume liability for
any RDI returned as fraudulent up to one hundred and eighty (180) days after the
Closing Date.

 

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12.4 Settlement. In settlement of the transactions described in Sections 12.2
and 12.3, Buyer and Seller agree that by 1:00 p.m. on each Business Day, Seller
shall provide Buyer with a daily net settlement figure for all such transactions
then pending to the knowledge of Seller and Buyer shall provide an equivalent
figure for all such transactions then pending to the knowledge of Buyer. The
parties agree that the party obligated to remit any funds thereunder shall do so
by 3:00 p.m. of such day. Any such settlement shall be provisional pending
receipt by Buyer of the physical items relating to such settlement; Buyer shall
adjust the next daily settlement to reflect any adjustments resulting from its
receipt of the physical items. In order to facilitate the settlement
transactions contemplated by this Agreement, Buyer shall establish an account
(the “Correspondent Account”) with Seller for purposes of accepting credits to
and absorbing debits against, the cash balances transferred or transferable as a
result of adjustments made pursuant to this Agreement. The Correspondent Account
shall provide authorization to Seller, without signature of Buyer, for the
deposits and withdrawals authorized in, but only such deposits and withdrawals
as are authorized in this Agreement with respect to the Correspondent Account.
The Correspondent Account shall be settled on a daily basis with a transfer of
funds to Buyer or Seller, as appropriate, so that the overnight balance in the
Correspondent Account is $0.

 

12.5 Interest Reporting and Withholding.

 

(a) Interest Reporting. Unless otherwise agreed to by the parties, Seller will
report to applicable taxing authorities and holders of Deposit Liabilities, with
respect to the period from January 1 of the year in which the Closing occurs
through the Closing Date, all interest (including dividends and other
distributions with respect to money market accounts) credited to, withheld from
and any early withdrawal penalties imposed upon the Deposit Liabilities. Buyer
will report to the applicable taxing authorities and holders of Deposit
Liabilities, with respect to all periods from the day after the Closing Date,
all such interest credited to, withheld from and any early withdrawal penalties
imposed upon the Deposit Liabilities. Any amounts required by any governmental
entity to be withheld from any of the Deposit Liabilities through the Closing
Date will be withheld by Seller in accordance with appropriate legal
requirements or appropriate notice from any governmental entity and will be
remitted by Seller to the appropriate agency on or before the applicable due
date. Any such withholding required to be made subsequent to the Closing Date
will be withheld by Buyer in accordance with appropriate legal requirements or
appropriate notice from any governmental entity and will be remitted by Buyer to
the appropriate agency on or before the applicable due date.

 

(b) IRS Notices. Unless otherwise agreed by the parties, Seller shall be
responsible for delivering to payees all IRS notices with respect to information
reporting and tax identification numbers required to be delivered through the
Closing Date with respect to the Deposit Liabilities, and Buyer shall be
responsible for delivering to payees all such notices required to be delivered
following the Closing Date with respect to the Deposit Liabilities.

 

(c) Loan Interest and Points. Unless otherwise agreed by the parties, Seller
will timely make all required reports to applicable taxing authorities and to
obligors on Loans and Deposit-Related Loans, with respect to the period from
January 1 of the year in which the Closing occurs through the Closing Date
concerning all interest and points received by Seller, and Buyer will timely
make all required reports to applicable taxing authorities and to obligors on
Loans and Deposit-Related Loans, with respect to all periods from the day after
the Closing Date, concerning all such interest and points received by Buyer.

 

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12.6 Notices to Depositors. Seller shall provide Buyer with an intermediate
customer list on the Deposit Liabilities together with information regarding
those customers’ accounts as of a date that is mutually agreed to by Buyer and
Seller and that is before the mailing referred to in this Section 12.6. At such
time as shall be mutually agreeable to Buyer and Seller, but in no event later
than thirty (30) calendar days before the anticipated Closing Date, Seller and
Buyer shall notify, at Buyer’s expense, the holders of the Deposit Accounts
that, subject to closing requirements, Buyer will be assuming liability for the
Deposit Liabilities and Buyer shall disclose the details of Buyer’s
administration of the assumed accounts following the Closing Time. Each party
shall obtain the approval of the other on its notification letter and each party
shall be solely responsible for any additional costs or expenses incurred by
such party in performing the actions required by this Section 12.6. No
communications by Buyer, and no communications by Seller, outside the ordinary
course of business, to any customer shall be made before the Closing Date,
except as provided in this Agreement or otherwise agreed to by the parties in
writing.

 

12.7 Deposit Histories. In the case of any dispute with or inquiry by an account
holder whose deposit account is subject to this Agreement, which dispute or
inquiry relates to the servicing of such deposit account by Seller before the
date for which a deposit account history has been provided to Buyer, Seller will
provide Buyer with the appropriate information regarding the deposit account and
copies of pertinent documents or instruments with respect to such dispute or
inquiry so as to permit Buyer to respond to the account holder within ten (10)
Business Days (unless otherwise agreed to by the parties) and in a manner which
would comply with standard banking practices and customs. Any services provided
by Seller pursuant to this Section 12.7 shall be subject to the reimbursement
provisions set forth in Section 8.9(e) of this Agreement.

 

12.8 ATM Cards. After the receipt of regulatory approval of the transactions
contemplated by this Agreement but at least fifteen (15) calendar days before
the Closing Date, Seller shall notify depositors at the Branches that their
existing ATM access/debit cards may not be used to access deposit accounts at
the Branches as of the Closing Time. Not earlier than thirty (30) calendar days
nor later than seven (7) calendar days before the Closing Date, Buyer shall
mail, or cause to be mailed, new ATM access/debit cards to depositors of any
Deposit Liabilities, which cards shall be effective as of the day following the
Closing Date. Buyer and Seller agree to settle any and all ATM transactions and
point of sale transactions effected on or before the Closing Date, but processed
after the Closing Date, as soon as practicable following the processing thereof.
At no time shall Seller be required to disclose to Buyer customers’ PINs or
algorithms or logic used to generate PINs.

 

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12.9 Backup Withholding. Any amounts required by any governmental agencies to be
withheld from any of the Deposit Liabilities (the “Withholding Obligations”)
will be handled as follows:

 

(a) Any Withholding Obligations required to be remitted to a governmental agency
on or before the Closing Time will be withheld and remitted by Seller before the
Closing Date.

 

(b) Any Withholding Obligations with respect to interest payments posted on or
before the Closing Time, which are not required to be remitted to a government
agency until after the Closing Time, shall be remitted by Buyer. At the Closing,
Seller will remit to Buyer all sums withheld by Seller pursuant to Withholding
Obligations which funds are or may be required to be remitted to a governmental
agency on or after the Closing Time.

 

(c) Any Withholding Obligations with respect to interest payments posted after
the Closing Time will be remitted by Buyer.

 

(d) Any penalties described on “B” notices from the IRS or any similar penalties
that relate to Deposit Liabilities opened by Seller before the Closing Time will
be paid by Seller promptly upon receipt of the notice, provided such penalty
assessment resulted from Seller’s acts, policies or omissions.

 

12.10 Electronic Installation. Buyer shall have a reasonable right to enter the
Branches in the thirty (30) calendar day period before the Closing Date for the
purpose of installing necessary wiring for Buyer’s teller terminals, ATMs and
data processing equipment to be utilized after the Closing, subject to
satisfaction by Buyer of the following conditions:

 

(a) reasonable advance notice of such entry shall be given to Seller, such entry
shall comply with Seller’s security procedures and Seller shall have the right
to have its employees or contractors present to inspect the work being done;

 

(b) all such work shall be done at such times and in a manner so as not to
unreasonably interfere with Seller’s business in the Branches; and

 

(c) all such work will be done in compliance with the laws and applicable
governmental regulations and Buyer shall be responsible for the procurement, at
Buyer’s expense, of all required governmental or administrative permits and
approvals.

 

Buyer agrees that if for any reason the transactions contemplated hereunder are
not consummated, Buyer will, at its sole cost and expense, remove any
installations it shall have made in the Branches and shall repair and restore
the Branches to its condition immediately before such installation.

 

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12.11 Actions With Respect to IRA and Keogh Plan Deposit Liabilities. Seller
shall (i) resign as of the Closing Time as the Trustee/Custodian of each IRA
Deposit Liability and as the Trustee/Custodian of each Keogh Plan Deposit
Liability of which it is the Trustee/Custodian, if any, (ii) to the extent
permitted by the documentation governing each such IRA or Keogh Plan, appoint
Buyer as successor Trustee/Custodian of each such IRA or Keogh Plan, and Buyer
agrees to accept each such trusteeship/custodianship and assume all fiduciary
obligations with respect thereto as of the Closing Time, and (iii) deliver to
the grantor or named fiduciary of each such IRA or Keogh Plan, respectively,
such notice of the foregoing as is required by the documentation governing each
IRA or Keogh Plan, all at Buyer’s expense.

 

12.12 Assumption of Risks

 

(a) On and after the Closing Date, Seller shall discontinue all casualty,
liability and other insurance coverage maintained with respect to the Branches
and the Assets. Buyer shall be solely responsible for all casualty losses and
liability claims relating to the Branches arising on and after the Closing Date.

 

(b) On and after the Closing Date, Seller shall discontinue providing any
security for persons and property at the Branches. Buyer shall be solely
responsible for all liabilities arising out of injury or damage to persons and
property on or at the Branches on and after the Closing Date.

 

(c) On and after the Closing Date, Buyer shall maintain adequate insurance with
respect to the losses described in (a) and (b) above and otherwise with respect
to the operation of the Branches.

 

12.13 Loan Payments and Information Received After the Closing Date.

(a) At such time as shall be mutually agreeable to Buyer and Seller, but in no
event later than thirty (30) calendar days before the anticipated Closing Date,
Seller and Buyer shall notify, at Buyer’s expense, the holders of the Loans
that, subject to closing requirements, Buyer will be acquiring the Loans. Each
party shall obtain the approval of the other on its notification letter and each
party shall be solely responsible for any additional costs or expenses incurred
by such party in performing the actions required by this Section 12.13. In
addition, in order to enhance the transition of the Loan payment collection
process after Closing, Buyer agrees, at its cost and expense, to notify each
Loan debtor in writing, within five (5) calendar days after the Closing Date, of
the Buyer’s assumption of the Loan and that the debtor should make payments on
the Loan directly to Buyer rather than making payment to the Seller. When giving
such notice, Buyer shall furnish each debtor with a new coupon book for the
Loan, where applicable.

 

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(b) Seller agrees that for the first sixty (60) days following the Closing Date,
it shall forward promptly (which shall mean delivery electronically and/or by an
overnight courier service at Seller’s expense) to the Buyer:

 

(i)any payments which are received by the Seller on or after the Closing Date
that relate to the Loans and to provide sufficient information so that any such
payments may be properly applied to the extent such information is available to
the Seller; and

(ii)any notices or other correspondence received on or after the Closing Date
that relate to the Loans or other Assets.

(c) For a period of sixty (60) days following the Closing Date, Seller shall
have the right to chargeback any dishonored Loan payment to the extent that it
has collected and credited such Loan payment for payment on the Loan account.

 

12.14 Payment of Instruments. Following the Closing, Buyer agrees to pay in
accordance with law all checks, drafts, and withdrawal orders which are properly
drawn by depositors with respect to the Deposit Liabilities assumed by Buyer,
which are duly endorsed (or for which necessary endorsements are deemed supplied
by applicable law) and otherwise properly payable, in light of credit balances
and overdraft privileges, if any, applicable to such depositors, and presented
to Buyer by mail, over its counters, or through the check-clearing system of the
banking industry, and in all other respects to discharge, in the usual course of
the banking business, the duties and obligations of the Seller with respect to
the balances due and owing to the depositors whose Deposit Liabilities are
assumed by Buyer. If any depositors, instead of accepting the obligation of
Buyer to pay the Deposit Liabilities, shall demand payment from Seller for all
or any part of any such Deposit Liabilities, Seller shall not be liable or
responsible for making such payment.

 

ARTICLE XIII

GENERAL PROVISIONS

 

13.1 Survival. The representations and warranties made by the parties in this
Agreement shall survive until the eighteenth (18th) month anniversary of the
Closing Date, and thereafter neither party may claim any loss or damage in
relation to a breach thereof, except that the representations and warranties
contained in Sections 5.1, 5.2, 5.6, 6.1, 6.2 and 6.7 shall survive the Closing
indefinitely. The agreements and covenants contained in this Agreement shall
survive the Closing until fully performed or fulfilled.

 

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13.2 Indemnification.

 

(a) Subject to Section 13.1, Seller shall indemnify, hold harmless and defend
Buyer (and its Affiliates) from and against any and all damage, loss, liability,
cost, penalty, claim or expense (including legal fees and expenses) incurred or
suffered by Buyer (or its Affiliates) in connection with:

 

(1)any misrepresentation or breach of warranty, covenant or agreement made or to
be performed by Seller pursuant to this Agreement, or

 

(2)any action taken or omitted to be taken by Seller, or any transaction or any
event occurring before the Closing Time, relating to the operations of the
Branches (including but not limited to claims for personal injuries arising from
incidents occurring before the close of business on the Closing Date) or the
administration of any of the Deposit Liabilities or the Loans by Seller before
close of business on the Closing Date, and any suits or proceedings commenced in
connection therewith, or

 

(3)the Fixed Assets, the Segregated Fixed Assets, the Equipment Leases, the
Corydon Lease, the Assumed Contracts, the safe deposit business or the Real
Property, insofar as the basis for such action, suit, or other proceedings,
claim or demand arose before the close of business on the Closing Date, or

 

(4)any liability of Seller not assumed by Buyer pursuant to Section 2.3.

 

(b) Subject to Section 13.1, Buyer shall indemnify, hold harmless and defend
Seller (and its Affiliates) from and against any and all damage, loss,
liability, cost, penalty, claim or expense (including legal fees and expenses)
incurred or suffered by Seller (or its Affiliates) in connection with:

 

(1)any misrepresentation or breach of warranty, covenant or agreement made or to
be performed by Buyer pursuant to this Agreement, or

 

(2)any action taken or omitted to be taken by Buyer, or any transaction or any
event occurring from or after the Closing Time, relating to the operations of
the Branches (including but not limited to claims for personal injuries arising
from incidents occurring after the close of business on the Closing Date) or the
administration of any of the Deposit Liabilities or the Loans by Buyer
subsequent to the close of business on the Closing Date, and any suits or
proceedings commenced in connection therewith; or

 

(3)the Fixed Assets, the Segregated Fixed Assets, the Equipment Leases, the
Corydon Lease, the Assumed Contracts, the safe deposit business or the Real
Property, insofar as the basis for such action, suit, or other proceedings,
claim or demand arises subsequent to the Closing Date, or

 

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(4)the payment or performance of any of the Assumed Liabilities subsequent to
the close of business on the Closing Date.

 

(c) A party seeking indemnification pursuant to this Section 13.2 (an
“indemnified party”) shall give prompt notice to the party from whom such
indemnification is sought (the “indemnifying party”) of the assertion of any
claim, or the commencement of any action or proceeding, in respect of which
indemnity may be sought hereunder; provided, however, in no event shall an
original claim for indemnification under this Agreement be given later than the
eighteenth (18th) month anniversary of the Closing Date. The indemnified party
shall assist the indemnifying party in the defense of any such action or
proceeding. The indemnifying party shall have the right to, and shall at the
request of the indemnified party, assume the defense of any such action or
proceeding at its own expense. In any such action or proceeding, the indemnified
party shall have the right to retain its own counsel, but the fees and expenses
of such counsel shall be at its own expense unless:

 

(1)the indemnifying party and the indemnified party shall have mutually agreed
to the retention of such counsel; or

 

(2)the named parties to any such suit, action or proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified party
and, in the reasonable judgment of the indemnified party, representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them.

 

(d) An indemnifying party shall not be liable under this Section 13.2 for any
settlement effected without its consent of any claim, litigation or proceeding
in respect of which indemnity may be sought hereunder. The indemnifying party
may settle any claim without the consent of the indemnified party, but only if
the sole relief awarded is monetary damages that are paid in full by the
indemnifying party, and includes as an unconditional term thereof the giving by
the claimant or plaintiff of a release of the indemnified party, in form and
substance satisfactory to the indemnified party and its counsel, from all
liability with respect to such claim, action suit or proceeding. An indemnified
party shall, subject to its reasonable business needs, use reasonable efforts to
minimize the indemnification sought from the indemnifying party hereunder.
Notwithstanding the foregoing, no investigation by an indemnified party at or
before the Closing shall relieve an indemnifying party of any liability
hereunder, unless the indemnified party seeks indemnity in respect of a
representation or warranty which it actually had reason to believe to be
incorrect as a result of its investigation before the Closing and the
indemnified party intentionally failed to bring such belief to the attention of
the indemnifying party before the Closing.

 

(e) After the Closing, Section 13.2 shall provide the exclusive remedy for any
misrepresentation, breach of warranty, covenant or other agreement or other
claim arising out of this Agreement or the transactions contemplated hereby.

 

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13.3 Public Announcements. Neither Buyer nor Seller shall cause to be made any
advertisement, solicitation or public announcement (including, without
limitation any advertisement, solicitation or announcement to the depositors
whose accounts have been maintained at the Branches at any time beginning with
the date of this Agreement) regarding this Agreement or the transactions
contemplated hereby between the date hereof and the Closing Date without the
prior approval of the other party, except as may otherwise be provided in this
Agreement or as may be required by law. In either such event, the other party to
this Agreement shall be provided a reasonable opportunity to review and comment
upon such advertisement, solicitation or public announcement before its
dissemination. Any consent or approval required by this Section 13.3 shall not
be unreasonably withheld.

 

13.4 Incorporation of Schedules and Exhibits. All schedules and exhibits
attached hereto and referred to herein are incorporated in this Agreement as
though fully set forth herein.

 

13.5 Expenses. Except as otherwise stated herein , each party shall bear the
cost of its own attorney’s fees, data processing and other expenses incurred in
connection with the preparation of this Agreement and consummation of the
transactions described herein. Notwithstanding the foregoing, in any action
between the parties seeking enforcement of any of the terms and provisions of
this Agreement or in connection with any of the property described herein, the
prevailing party in such action shall be awarded, in addition to damage,
injunctive or other relief, its reasonable costs and expenses, not limited to
taxable costs and reasonable attorney fees. Neither party hereto shall be liable
to the other party for such other party’s consequential or special damages,
including, without limitation, lost profits.

 

13.6 Notices. All notices, requests, demands and other communication given or
required to be given under this Agreement shall be in writing, duly addressed to
the parties as follows:

 

To Buyer: First Savings Bank, F.S.B.   501 E. Lewis & Clark Parkway  
Clarksville, IN 47129   Attention: Larry W. Myers, President and Chief Executive
Officer

 

To Seller: First Federal Savings Bank of Elizabethtown, Inc.   2323 Ring Road  
Elizabethtown, KY 42701   Attention: Gregory S. Schreacke, President

 

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Any such notice sent by registered or certified mail, return receipt requested,
shall be deemed to have been duly given and received forty-eight (48) hours
after the same is so addressed and mailed with postage prepaid. Notice sent by
any other manner shall be effective only upon actual receipt thereof.

 

13.7 Assignment. This Agreement may not be assigned by either party without the
prior written consent of the other party and any attempted assignment in
violation of this section is void.

 

13.8 Successors and Assigns. This Agreement shall be binding upon the parties
hereto and their respective heirs, successors, representatives, or permitted
assigns.

 

13.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Indiana, except to the extent
superseded by the laws of United States of America.

 

13.10 Entire Agreement. This Agreement contains all of the agreements of the
parties to it with respect to the matters contained herein and no prior or
contemporaneous agreement or understanding, oral or written, pertaining to any
such matters shall be effective for any purpose. No provision of this Agreement
may be amended or added to except by an agreement in writing signed by the
parties hereto or their respective successors in interest and expressly stating
that it is an amendment of this Agreement.

 

13.11 Headings. The headings of this Agreement are for purposes of reference
only and shall not limit or define the meaning of the provisions of this
Agreement.

 

13.12 Severability. If any paragraph, section, sentence, clause or phrase
contained in this Agreement shall become illegal, null or void or against public
policy, for any reason, or shall be held by any court of competent jurisdiction
to be illegal, null or void or against public policy, the remaining paragraphs,
sections, sentences, clauses or phrases contained in this Agreement shall not be
affected thereby.

 

13.13 Waiver. The waiver of any breach of any provision under this Agreement by
any party hereto shall not be deemed to be a waiver of any preceding or
subsequent breach under this Agreement.

 

13.14 Amendment. This Agreement may not be amended except by an instrument in
writing, signed by duly authorized officers, on behalf of the parties hereto.
Any duly authorized officer of Seller or Buyer may make, execute and deliver
such amendment or amendments, modifications or supplements to this Agreement as
any one of such officers signing any such amendment, modification or supplement
on behalf of a party may approve, as shall be conclusively evidenced by his
signature to any such amendment, modification or supplement in such manner as
may be agreed upon by them in writing at any time.

 

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13.15 Singular and Plural. Whenever the context of this Agreement so requires,
the singular includes the plural, the plural includes the singular, and the
whole includes any part thereof.

 

13.16 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which shall
constitute one and the same instrument.

 

13.17 Third Parties. Nothing in this Agreement, whether expressed or implied, is
intended to confer any rights or remedies under or by reason of this Agreement
on any persons other than the parties to it and their respective successors and
assigns, nor is anything in this Agreement intended to relieve or discharge the
obligation or liability of any third persons to any party to this Agreement, nor
shall any provision give any third persons any right of subrogation or action
over against any party to this Agreement.

 

[Signature page follows]

 

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IN WITNESS WHEREOF, the parties hereto have duly authorized and executed this
Agreement as of the date first above written.

 

 

Attest:     FIRST FEDERAL SAVINGS BANK OF ELIZABETHTOWN, INC. /s/Greg Schreacke
  By: /s/B. Keith Johnson Name: Greg Schreacke     B. Keith Johnson Title:
President     Chief Executive Officer

 

 

 

Attest:     FIRST SAVINGS BANK, F.S.B. /s/John P. Lawson, Jr.   By: /s/Larry W.
Myers Name: John P. Lawson, Jr.     Larry W. Myers Title: COO and Corporate
Secretary     President and Chief Executive Officer

 

Signature Page to Agreement to Purchase Assets and Assume Liabilities

 

 

 

LIST OF SCHEDULES AND EXHIBITS

 

Schedules

 

    2.1(b)(i) Fixed Assets     2.1(b)(ii) Segregated Fixed Assets     2.1(c)
Equipment Leases     2.1(f) Loans     2.1(g) Assumed Contracts     2.1(j) Real
Property     2.5 Safe Deposit Contracts     6.14 List of Seller’s Employees at
Branches     8.13(c) Real Property Flood Zone Status

 

Confidential Schedules

 

2.1(f)(i) Specified Excluded Loan     6.8 Compliance With Law     6.11 Seller’s
Government Proceedings

 

Exhibits

 

A Preliminary Closing Statement     B Assignment and Assumption Agreement     C
Bill of Sale     D Assignment, Transfer and Appointment of Successor Trustee    
E Assignment and Assumption Agreement for Corydon Lease     F Form of Special
Warranty Deed     G Buyer’s Officer’s Certificate     H Seller’s Officer’s
Certificate

  

 

 

 

 

Confidential Schedule 2.1(f)(i)

 

Specified Excluded Loan

 

 

The Loan identified by Seller’s account no. 702082600 (known to Buyer and Seller
as the “Burns Note”).