On
March 10, 2016, the boards of directors of LaPorte Bancorp, Inc. (LaPorte) and Horizon Bancorp (Horizon) approved an Agreement and Plan of Merger (which is referred to herein as the Merger Agreement) that
provides for LaPorte to merge with and into Horizon. Immediately following the merger, The LaPorte Savings Bank (LaPorte Savings Bank), the wholly-owned subsidiary of LaPorte, will merge with and into Horizon Bank, National Association
(Horizon Bank), the wholly-owned subsidiary of Horizon, with Horizon Bank as the surviving entity.
If the merger contemplated
by the Merger Agreement is completed, each outstanding share of LaPorte common stock (other than shares then held of record by Horizon) will be converted into the right to receive, at the election of the stockholder, (i) 0.629 shares of Horizon
common stock (subject to certain adjustments as described in the Merger Agreement), or (ii) $17.50 in cash, subject to limitations and prorations such that 65% of the outstanding shares of LaPorte common stock will be converted into the stock
consideration and 35% of the outstanding LaPorte shares will be converted into the cash consideration. A LaPorte stockholder may elect to receive the stock consideration for some of his or her shares and the cash consideration for some of his or her
shares, subject to these limitations and prorations. Each LaPorte stockholder also will receive cash in lieu of any fractional shares of Horizon common stock that such stockholder would otherwise receive in the merger. Additionally, as described in
more detail elsewhere in this proxy statement/prospectus, under the terms of the Merger Agreement LaPorte would have the right to terminate the Merger Agreement during the five-day period following the date on which all regulatory approvals and
other approvals required for the merger are received if Horizons average common stock closing price over a specified period of time decreases below $20.58 per share, and the percentage decrease is more than 15% greater than the percentage
decrease in the SNL Small Cap U.S. Bank and Thrift Index during the same period. If LaPorte elects to exercise its termination rights, Horizon has the right to prevent LaPortes termination under those circumstances by agreeing to increase the
exchange ratio pursuant to a formula set forth in the Merger Agreement.
Horizon common stock is traded on the NASDAQ Global Select Market
under the trading symbol HBNC. On March 9, 2016, the last business day prior to the public announcement of the merger, the closing price of a share of Horizon common stock was $24.21, which, after giving effect to the 0.629 exchange
ratio, results in an implied value of approximately $15.23 per share of LaPorte common stock as of such date. Based on this price with respect to the stock consideration and the cash consideration of $17.50 per share, upon completion of the merger,
a LaPorte stockholder who receives stock for 65% of his or her shares of common stock and receives cash for 35% of his or her shares would receive total merger consideration with an implied value of approximately $16.02 per LaPorte share. On May 27,
2016, the latest practicable date before the date of this document, the closing price of a share of Horizon common stock was $24.91, which, after giving effect to the 0.629 exchange ratio, results in an implied value of approximately $15.67 per
LaPorte share as of such date. Based on this price with respect to the stock consideration and the cash consideration of $17.50 per share, upon completion of the merger a LaPorte stockholder who receives stock for 65% of his or her shares and
receives cash for 35% of his or her shares would receive total merger consideration with an implied value of approximately $16.31 per LaPorte share. You should obtain current market quotations for Horizon before you vote and before you make an
election to receive the merger consideration.
LaPorte common stock is traded on the NASDAQ Capital Market
under the trading symbol LPSB. Based on the 5,580,115 shares of LaPorte common stock outstanding as of May 16, 2016, Horizon will issue an aggregate of 2,281,430 shares of common stock for the stock consideration and pay an aggregate of
$34,178,203 in cash for the cash consideration. Subject to the adjustments described in the Merger Agreement and based on Horizons closing stock price of $24.91 on May 27, 2016, the value of the aggregate consideration that
LaPortes stockholders will receive in the merger is approximately $95.7 million.
You should carefully read this entire proxy statement/prospectus, including the appendices hereto and the documents incorporated by reference
herein, because it contains important information about the merger and the related transactions.
In particular, you should carefully read the information under the section entitled
Risk Factors
beginning on page
20.
You can also obtain information about Horizon and LaPorte from documents that each has filed with the Securities and Exchange Commission.
As permitted by Securities and Exchange Commission rules, this document incorporates certain important business and financial information
about Horizon and LaPorte from other documents that are not included in or delivered with this document. These documents are available to you without charge upon your written or oral request.
Your requests for documents from Horizon should be directed to the following:
Your requests for
documents from LaPorte should be directed to the following:
Attn: Michele M. Thompson, President and Chief Financial Officer
You also can obtain documents incorporated by reference in this document through the SECs website at www.sec.gov. See
Where You
Can Find More Information
.
All information in this proxy statement/prospectus concerning Horizon and its subsidiaries has been
supplied by Horizon, and all information in this proxy statement/prospectus concerning LaPorte and its subsidiaries has been supplied by LaPorte. You should rely only on the information contained or incorporated by reference in this proxy
statement/prospectus to vote on the proposals to LaPortes stockholders in connection with the merger. We have not authorized anyone to provide you with information that is different from what is contained in this proxy statement/prospectus.
This proxy statement/prospectus is dated June 3, 2016. You should not assume that the information contained in this proxy
statement/prospectus is accurate as of any date other than such date, and neither the mailing of this proxy statement/prospectus to stockholders nor the issuance of Horizon shares as contemplated by the Merger Agreement shall create any implication
to the contrary. You should assume that the information incorporated by reference into this document is accurate as of the date of such document.
Merger-Related Executive Compensation for LaPorte s Named Executive Officers
The following table sets forth the estimated potential severance benefits to LaPortes named executive officers on termination of
employment in connection with a change in control and assumes a change in control occurs on July 1, 2016. This table does not include the value of benefits that the named executive officers are vested in without regard to the occurrence of
a change in control:
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Executive
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Cash ($)
(1)
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Equity ($)
(2)
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Pension/
NQDC ($)
(3)
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Perquisites/
Benefits ($)
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Tax
Reimbursements
($)
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Other ($)
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Total ($)
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Lee A. Brady
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917,666
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720,207
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1,637,873
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Michele M. Thompson
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913,329
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616,587
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212,506
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1,742,422
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Patrick W. Collins
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350,000
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328,882
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678,882
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(1)
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In connection with the merger agreement, each of the named executive officers entered into a mutual termination of employment agreement which quantifies and settles the benefits owed to the executives under their
employment agreements. Under these agreements, the named executive officers are entitled to the lump-sum cash payment set forth in the table. The payments will be made at the effective time of the merger in full satisfaction of the obligations to
them under their employment agreements; provided the executive executes a general release of claims. Each mutual termination of employment agreement provides that the cash payments made at closing under the agreement (or, in the case of
Ms. Thompson, under her supplemental executive retirement plan) will be limited so that the payments with respect to each executive do not result in an excess parachute payment within the meaning of Section 280G of the Internal
Revenue Code. Accordingly, the cash severance payable to Mr. Brady reflects an estimated reduction of $180,073 and the value of Ms. Thompsons supplemental executive retirement plan benefit reflects an estimated reduction of $780,778,
so that the payments with respect to each executive do not result in an excess parachute payment within the meaning of Section 280G of the Internal Revenue Code. The cash severance payable to Mr. Brady, Ms. Thompson and
Mr. Collins under the mutual termination of employment agreements is considered a single trigger benefit, since it is payable upon a change in control of LaPorte and provided the executive executes a general release of claims.
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(2)
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All unvested equity-based awards held by LaPortes named executive officers will become vested at the effective time of the merger. Restricted stock awards will be settled for the merger consideration and stock
options will be cashed out at a price equal to the option payment amount ($17.50) less the option exercise price multiplied by the number of options held. Set forth below are the values of each type of equity-based award outstanding as of the date
hereof that would become vested upon the effective time. The value of the stock options is based on a price per share of LaPorte common stock of $17.50, and the value of the restricted stock awards is based on $15.27, which is the average closing
market price of LaPorte common stock over the first five business days following the first public announcement of the merger. Messrs. Brady and Collins and Ms. Thompson hold 10,142, 4,177, and 7,756 unvested stock options, respectively, with an
exercise price $6.44, and 44,400, 19,600 and 36,000 unvested stock options, respectively, with an exercise price of $11.50. Messrs. Brady and Collins and Ms. Thompson hold 22,373, 10,811 and 20,616 unvested shares of restricted stock,
respectively.
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Name
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Non-Vested
Stock Options
($)
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Non-Vested
Restricted Stock
($)
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Lee A. Brady
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378,571
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341,636
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Michele M. Thompson
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301,781
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314,806
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Patrick W. Collins
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163,798
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165,084
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(3)
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This amount represents the estimated payment under the Supplemental Executive Retirement Plan for Ms. Thompson, and the amount will be reduced, as needed, to ensure that the payments to Ms. Thompson do not
result in an excess parachute payment within the meaning of Section 280G of the Internal Revenue Code. In the case of Ms. Thompson, in the event of a change in control followed by her termination of employment within 24 months
thereafter, she will receive the projected accrued balance under the plan, calculated as if she attained her normal retirement age. Neither Messrs. Brady nor Collins will accrue any additional benefit under their Supplement Executive Retirement Plan
in connection with the merger.
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MATERIAL FEDERAL INCOME TAX CONSEQUENCES
General.
The following is a summary of the material anticipated United States federal income tax consequences generally applicable to a
U.S. Holder (as defined below) of LaPorte common stock with respect to the exchange of LaPorte common stock for Horizon common stock pursuant to the merger. This discussion assumes that U.S. Holders hold their LaPorte common stock as capital assets
within the meaning of Section 1221 of the Code. This summary is based on the Code, administrative pronouncements, judicial decisions and Treasury Regulations, each as in effect as of the date of this proxy statement/prospectus. All of the
foregoing is subject to change at any time, possibly with retroactive effect, and all are subject to differing interpretation. No advance ruling has been sought or obtained from the Internal Revenue Service regarding the United States federal income
tax consequences of the merger. As a result, no assurance can be given that the Internal Revenue Service would not assert, or that a court would not sustain, a position contrary to any of the tax consequences set forth below.
This summary does not address any tax consequences arising under United States federal tax laws other than United States federal income tax
laws, nor does it address the income tax consequences applicable to participants in the LaPorte Savings Bank 401(k) plan or with respect to employee benefits generally, nor the laws of any state, local, foreign, or other taxing jurisdiction, nor
does it address any aspect of income tax that may be applicable to non-U.S. Holders of LaPorte common stock. In addition, this summary does not address all aspects of United States federal income taxation that may apply to U.S. Holders of LaPorte
common stock in light of their particular circumstances or U.S. Holders that are subject to special rules under the Code, such as holders of LaPorte common stock that are partnerships or other pass-through entities (and persons holding their LaPorte
common stock through a partnership or other pass-through entity), persons who acquired shares of LaPorte common stock as a result of the exercise of employee stock options or otherwise as compensation or through a tax-qualified retirement plan,
persons subject to the alternative minimum tax, tax-exempt organizations, financial institutions, broker-dealers, traders in securities that have elected to apply a mark to market method of accounting, insurance companies, persons having a
functional currency other than the U.S. dollar and persons holding their LaPorte common stock as part of a straddle, hedging, constructive sale, or conversion transaction.
For purposes of this summary, a U.S. Holder is a beneficial owner of LaPorte common stock that is for United States federal income
tax purposes:
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a United States citizen or resident alien;
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a corporation, or other entity taxable as a corporation for United States federal income tax purposes, created or organized under the laws of the United States or any state therein or the District of Columbia;
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a trust if (1) it is subject to the primary supervision of a court within the United States and one or more United States persons have the authority to control all substantial decisions of the trust, or
(2) it was in existence on August 20, 1996 and has a valid election in effect under applicable Treasury Regulations to be treated as a United States person; and
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an estate, the income of which is subject to United Sates federal income taxation regardless of its source.
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If a partnership (including an entity treated as a partnership for United States federal income tax purposes) holds LaPorte common stock, the
tax treatment of a partner in the partnership will generally depend on the status of such partner and the activities of the partnership.
Horizon and LaPorte intend for the merger to qualify as a reorganization within the meaning of Section 368(a) of the Code. The
obligations of Horizon and LaPorte to consummate the merger are conditioned upon the receipt of an opinion from Barnes & Thornburg LLP, counsel to Horizon, to the effect that the merger will for federal income tax purposes qualify as a
reorganization based upon the assumptions, representations, warranties, and covenants made by Horizon and LaPorte, including those contained in the Merger Agreement. This opinion also will provide that the merger will qualify as a statutory merger
under Indiana state law. If any of the representations or assumptions upon which the opinion is based are inconsistent with the actual facts existing at the effective time of the merger, the tax consequences of the merger could be adversely
affected. The determination by tax advisors as to whether the proposed merger will be treated as a reorganization within the meaning of Section 368(a) of the Code will depend upon the facts and law existing at the effective time of
the proposed merger unless tax counsel
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determines that such determination may be made as of the last business day before the Merger Agreement becomes a binding contract in accordance with Treasury Regulation Section 1.368-1(e).
Horizon and LaPorte have not requested and do not intend to request any ruling from the Internal Revenue Service. Accordingly, each
LaPorte stockholder is urged to consult his, her, or its own tax advisors as to the specific tax consequences resulting from the merger, including tax return reporting requirements, the applicability and effect of federal, state, local, and other
applicable tax laws and the effect of any proposed changes in the tax laws.
Pursuant to the Merger Agreement, Horizon and LaPorte may
exercise their right to terminate the merger if Barnes & Thornburg LLP is unable to render the tax opinion at closing. If the market price of the Horizon common stock as of the effective time declines relative to the market price of LaPorte
common stock to the extent that the value of the Horizon common stock received by the LaPorte stockholders in the merger is less than 40% of the fair market value of the total consideration received in the merger by LaPortes stockholders for
their shares of LaPorte common stock upon the merger, then Horizon and LaPorte will not be obligated to consummate the merger pursuant to the Merger Agreement because Barnes & Thornburg LLP would be unable to render its favorable tax
opinion on the merger.
The material United States federal income tax consequences of the merger to the U.S. Holders are described below.
Exchange of
LaPorte
Common Stock Solely for Horizon Common Stock
.
A stockholder of LaPorte who receives
solely Horizon common stock in exchange for his, her, or its shares of LaPorte common stock in the merger will not recognize any gain or loss upon such exchange, except to the extent that cash is received in lieu of a fractional share of LaPorte
common stock, as discussed below. Section 354 of the Code. The aggregate adjusted tax basis of the shares of Horizon common stock received in such exchange will be equal to the aggregate adjusted tax basis of the shares surrendered therefor, and the
holding period of the Horizon common stock will include the holding period of the shares of LaPorte common stock surrendered therefor provided that the LaPorte common stock was held as a capital asset as of the effective date of the merger. Sections
358 and 1223(l) of the Code.
Exchange of LaPorte Common Stock for Horizon Common Stock and Cash.
As a result of receiving a
combination of Horizon common stock and cash in exchange for shares of LaPorte common stock, a U.S. Holder will recognize gain, but not loss, equal to the lesser of (1) the amount of cash received, or (2) the amount of gain
realized in the merger. The amount of gain a U.S. Holder realizes will equal the amount by which (a) the cash plus the fair market value at the effective time of the merger of the Horizon common stock received, exceeds
(b) the U.S. Holders aggregate adjusted tax basis in the LaPorte common stock surrendered in the merger. Any recognized loss disallowed will be included in the adjusted basis of the Horizon common stock received in the merger, as
discussed below. Any recognized gain will be taxed as a capital gain or a dividend, as described below. The aggregate adjusted tax basis of the shares of Horizon common stock received in the merger will be the same as the aggregate adjusted tax
basis of the shares of LaPorte common stock surrendered in the merger decreased by the amount of cash received in the merger and increased by (i) the gain recognized in the merger, if any, and (ii) the recognized loss disallowed in the
merger, if any. The holding period for shares of Horizon common stock received by such U.S. Holder will include such U.S. Holders holding period for the LaPorte common stock surrendered in exchange for the Horizon common stock, provided that
such shares of LaPorte common stock were held as capital assets of the U.S. Holder at the effective time of the merger. If a U.S. Holder acquired different blocks of LaPorte common stock at different times or at different prices, any gain or loss
will be determined separately with respect to each block of LaPorte common stock, and the cash and shares of Horizon stock received will be allocated pro rata to each such block of stock. U.S. Holders of LaPorte common stock should consult their tax
advisors with regard to identifying the bases or holding periods of the particular shares of Horizon common stock received in the merger.
Exchange of LaPorte Common Stock Solely for Cash.
A U.S. Holder who receives solely cash in exchange for all of his, her, or its shares
of LaPorte common stock (and is not treated as constructively owning Horizon common stock after the merger under the circumstances referred to below under
Potential Recharacterization of Gain as Dividend
) will recognize gain or
loss for federal income tax purposes equal to the difference, if any, between the cash received and such U.S. Holders aggregate adjusted tax basis in the LaPorte common stock surrendered in exchange for the cash. Such gain or loss will be a
capital gain or loss, provided that such shares were held as capital assets of the U.S. Holder at the effective time of the merger. See
Taxation of Capital Gain
below for more information on the rules applicable to capital gains.
The deductibility of capital losses is subject to limitations. See discussion above regarding blocks of stock that were purchased at different times or at different prices.
Taxation of Capital Gain.
Except as described under
Potential Recharacterization of Gain as a Dividend
below, gain
that U.S. Holders recognize in connection with the merger generally will constitute capital gain and will constitute long-term capital gain if such U.S. Holders have held (or are treated as having held) their LaPorte common stock for more than one
year as of the date of the merger. Long-term capital gain of non-corporate U.S. Holders of LaPorte common stock is generally taxed at preferential rates. For non-corporate U.S. Holders, long-term capital gain generally can be taxed at a maximum U.S.
federal income tax rate that is lower than the rate for ordinary income or for short-term capital gains. The maximum U.S. federal income tax rate in effect for long-
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term capital gains recognized during 2016 is 20% for high income taxpayers, i.e., married couples filing joint returns and surviving spouses with taxable income in excess of $466,950, heads of
household with taxable income in excess of $441,000, and other individuals with taxable income in excess of $415,050. The maximum long-term capital gains rate for most other non-high income taxpayers is 15%. In addition, net investment income of
certain high-income taxpayers may be subject to an additional 3.8% tax (i.e., the net investment income tax) under Section 1411 of the Code. The definition of high income taxpayers for purposes of the net investment income tax is
different than as defined above for purposes of the capital gains rate. Because the impact of the net investment income tax depends primarily upon the particular circumstances of a U.S. Holder, U.S. Holders should consult their own tax advisors
regarding the potential impact of these tax rules to them.
Potential Recharacterization of Gain as a Dividend.
Any gain recognized
by a U.S. Holder will be capital gain unless the U.S. Holders receipt of cash has the effect of a distribution of a dividend, in which case the gain will be treated as dividends to the extent of the U.S. Holders ratable share of
accumulated earnings and profits, as calculated for United States federal income tax purposes. For purposes of determining whether a U.S. Holders receipt of cash has the effect of a distribution of a dividend, the U.S. Holder will be treated
as if it first exchanged all of his, her, or its LaPorte common stock solely in exchange for Horizon common stock and then Horizon immediately redeemed a portion or all of that stock for the cash that the U.S. Holder actually received in the merger
(referred to herein as the deemed redemption). Receipt of cash will generally not have the effect of a distribution of a dividend to the U.S. Holder if such receipt is, with respect to the U.S. Holder, not essentially equivalent to
a dividend, substantially disproportionate, or a complete redemption, each within the meaning of Section 302(b) of the Code.
The deemed redemption will not be essentially equivalent to a dividend and, therefore, will not have the effect of a distribution
of a dividend with respect to a U.S. Holder if it results in a meaningful reduction in the U.S. Holders proportionate interest in Horizon. If a U.S. Holder that has a relatively minimal stock interest in Horizon and no right to
exercise control over corporate affairs suffers a reduction in the U.S. Holders proportionate interest in Horizon, the U.S. Holder should be regarded as having suffered a meaningful reduction in the U.S. Holders proportionate interest in
Horizon. For example, the IRS has held in a published ruling that, in the case of a less than 1% stockholder who does not have management control over the corporation, any reduction in the stockholders proportionate interest will constitute a
meaningful reduction. The IRS has also indicated in rulings that any reduction in the interest of a minority stockholder that owns a small number of shares in a publicly and widely held corporation and that exercises no control over
corporate affairs would result in capital gain (as opposed to dividend) treatment.
The deemed redemption will be substantially
disproportionate, and, therefore, will not have the effect of a distribution of a dividend with respect to a U.S. Holder who owns less than 50% of the voting power of the outstanding Horizon common stock if the percentage of the outstanding
Horizon voting (including all classes that carry voting rights) and common stock (both voting and nonvoting) that is actually and constructively owned by the U.S. Holder immediately after the deemed redemption is reduced to less than 80% of the
percentage of the outstanding Horizon common stock that is considered to be actually and constructively owned by the U.S. Holder immediately before the deemed redemption.
The deemed redemption will be a complete redemption, and, therefore, will not have the effect of a distribution of a dividend with
respect to a U.S. Holder, if it results in a complete termination of a U.S. Holders interest in the outstanding Horizon common stock that is considered to be actually and constructively owned by the U.S. Holder immediately before the deemed
redemption.
For purposes of applying the foregoing tests, a U.S. Holder will be deemed to own the stock it actually owns and the stock it
constructively owns under the attribution rules of Section 318 of the Code. Under Section 318 of the Code, a U.S. Holder will be deemed to own the shares of stock owned by certain family members, by certain estates and trusts of which the
U.S. Holder is a beneficiary and by certain affiliated entities, as well as shares of stock subject to an option actually or constructively owned by the U.S. Holder or such other persons. In the event of a complete redemption within the
meaning of Section 302(b)(3) of the Code, a U.S. Holder may elect to waive the attribution rules of Section 318 of the Code pursuant to Section 302(c) of the Code.
The determination of whether a cash payment will be treated as having the effect of a dividend depends primarily upon the facts and
circumstances of each U.S. Holder. U.S. Holders are urged to consult their own tax advisors regarding the tax treatment of the cash received in the merger.
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Taxation of Dividend.
If, after applying the tests described in
Potential
Recharacterization of Gain as a Dividend
above, the deemed redemption results in the gain recognized by a U.S. Holder being classified as a dividend, such dividend will be treated as either ordinary income or qualified dividend income. Any
gain treated as qualified dividend income will be taxable to individual LaPorte U.S. Holders at the long-term capital gains rate, provided that the U.S. Holder held the shares giving rise to such income for more than 60 days during the 121 day
period beginning 60 days before the closing date. The maximum rate on qualified dividends for high income taxpayers is currently 20%. In addition, certain high-income taxpayers may be subject to an additional 3.8% net investment income tax. Any gain
treated as ordinary income will be taxable at ordinary income rates.
Cash Received In Lieu of a Fractional Share of Horizon Common
Stock.
A U.S. Holder who receives cash in lieu of a fractional share of Horizon common stock will be treated as having received the fractional share pursuant to the merger and then as having exchanged the fractional share for cash in a
redemption by Horizon of the fractional share. As a result, such U.S. Holder will generally recognize gain or loss equal to the difference between the amount of cash received and the basis in the U.S. Holders fractional share interest as set
forth above. This gain or loss will generally be capital gain or loss, and will be long-term capital gain or loss if, as of the effective date of the merger, the holding period for such shares is greater than one year. See discussion in
Taxation of Capital Gain
above for information regarding the tax rates applicable to long-term capital gains, including the potential application of the net investment income tax. The deductibility of capital losses is subject to
limitations.
Backup Withholding and Information Reporting.
Payments of cash to a U.S. Holder may, under certain circumstances, be
subject to information reporting and backup withholding at a rate of 28% of the cash payable to the U.S. Holder, unless the U.S. Holder provides proof of an applicable exemption or furnishes his, her, or its taxpayer identification number (Form
W-9), and otherwise complies with all applicable requirements of the backup withholding rules. Any amounts withheld from payments to a U.S. Holder under the backup withholding rules are not additional tax and will be allowed as a refund or credit
against the U.S. Holders U.S. federal income tax liability to the extent that they exceed such U.S. Holders federal income tax liability, provided the required information is furnished to the Internal Revenue Service.
A U.S. Holder will be required to retain records pertaining to the merger with regard to the stock consideration received by such U.S. Holder.
A U.S. Holder who is a significant holder of LaPorte shares and who receives shares of Horizon will be required to retain records pertaining to the merger with regard to the stock consideration received by such U.S. Holder and file a
statement with his, her, or its U.S. federal income tax return in accordance with Treasury Regulation Section 1.368-3 setting forth information regarding the parties to the merger, the date of the merger, such U.S. Holders basis in the
LaPorte common stock surrendered and the fair market value of the Horizon common stock and cash received in the merger. A significant holder is a holder of LaPorte common stock who, immediately before the merger, owned at least 1% of the
outstanding stock of LaPorte or securities of LaPorte with a basis for federal income tax purposes of at least $1 million.
No
Corporate Tax.
No gain or loss will be recognized by Horizon, its subsidiaries, or LaPorte or LaPorte Savings Bank by reason of the merger, if and when consummated in accordance with the Merger Agreement.
The preceding discussion is intended only as a summary of material U.S. federal income tax consequences of the merger. This discussion does
not address tax consequences that may vary with, or are contingent on, individual circumstances. It is not a complete analysis or discussion of all potential tax effects that may be important to you. Thus, LaPorte urges LaPorte stockholders to
consult their own tax advisors as to the specific tax consequences to them resulting from the merger, including tax return reporting requirements, the applicability and effect of federal, state, local, and other applicable tax laws and the effect of
any proposed changes in the tax laws. The foregoing summary of material U.S. federal income tax consequences of the merger is not intended or written to be used, and cannot be used, by any stockholder of LaPorte or any other person for the purpose
of avoiding penalties that may be imposed by the Internal Revenue Service.
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COMPARISON OF THE RIGHTS OF STOCKHOLDERS
Under the Merger Agreement, LaPorte stockholders will exchange their shares of LaPorte common stock for, at the election of the stockholder,
shares of Horizon common stock and/or cash (and cash for fractional share interests). Horizon is organized under the laws of the State of Indiana, and the rights of Horizon shareholders are governed by the laws of the State of Indiana, including the
IBCL, and Horizons articles of incorporation and bylaws. LaPorte is organized under the laws of the State of Maryland, and the rights of LaPorte stockholders are governed by the laws of the State of Maryland, including the Maryland General
Corporation Law (MGCL), and the articles of incorporation of LaPorte, as amended (which we refer to as the LaPorte Articles) and the bylaws of LaPorte (which we refer to as the LaPorte Bylaws). Upon consummation
of the merger, LaPortes stockholders receiving the stock consideration will become Horizon shareholders, and the Amended and Restated Articles of Incorporation of Horizon (which we refer to as the Horizon Articles), the Amended and
Restated Bylaws of Horizon (which we refer to as the Horizon Bylaws), the IBCL will govern their rights as Horizon shareholders.
The following summary discusses some of the material differences between the current rights of Horizon shareholders and LaPorte stockholders
under the Horizon Articles, Horizon Bylaws, LaPorte Articles, and LaPorte Bylaws.
The statements in this section are qualified in their
entirety by reference to, and are subject to, the detailed provisions of the Horizon Articles, the Horizon Bylaws, the LaPorte Articles, and the LaPorte Bylaws, as applicable.
Authorized Capital Stock
Horizon
Horizon currently is authorized
to issue up to 44,000,000 shares of common stock, no par value, of which approximately 12,008,497 shares were outstanding as of May 16, 2016. Horizon also is authorized to issue up to 1,000,000 shares of preferred stock. Horizons board may fix
the preferences, limitations, and relative voting and other rights of the shares of any series of preferred stock that it designates. As of May 16, 2016, options to purchase 233,145 shares of Horizon common stock were outstanding.
LaPorte
LaPorte currently is authorized
to issue up to 100,000,000 shares of capital stock in one class of common stock, $0.01 par value per share. As of May 16, 2016, 5,580,115 shares of common stock were outstanding. Under the MGCL and the articles of incorporation of LaPorte, the board
of directors may increase or decrease the number of authorized shares without stockholder approval. Although no shares of preferred stock are currently outstanding, the board of directors may, without stockholder approval, establish one or more
series of preferred stock and, for any series of preferred stock, to determine the terms and rights of the series, including voting rights, dividend rights, conversion and redemption rights and liquidation preferences. The ability of LaPorte to
issue shares of preferred stock could have an anti-takeover effect. As of May 16, 2016, options to purchase 579,934 shares of LaPorte common stock were outstanding.
Voting Rights and Cumulative Voting
Horizon
Each holder of Horizon common
stock generally has the right to cast one vote for each share of Horizon common stock held of record on all matters submitted to a vote of shareholders of Horizon.
Holders of the Series B Preferred Stock have the right to vote as a separate class on certain matters relating to the rights of holders of
Series B Preferred Stock and on certain corporate transactions, such as amendments to the Horizon Articles that would adversely affect the Series B Preferred Stock, certain fundamental transactions affecting the Series B Preferred Stock, and in
connection with the authorization of stock senior to the Series B Preferred Stock. Except with respect to such matters, the Series B Preferred Stock does not have voting rights. As a result, the holders of the Series B Preferred Stock have no voting
rights with respect to any of the matters to be voted on at the Horizon Annual Meeting, including the merger.
Indiana law provides that
shareholders may not cumulate their votes in the election of directors unless the corporations articles of incorporation so provide. The Horizon Articles do not grant cumulative voting rights to Horizon shareholders.
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LaPorte
Each holder of LaPorte common stock generally has the right to cast one vote for each share of LaPorte common stock held of record on all
matters submitted to a vote of stockholders of LaPorte. The LaPorte Articles prohibit cumulative voting. The LaPorte Articles also provide that in no event will any person who beneficially owns more than 10% of the then-outstanding shares of common
stock, be entitled or permitted to vote any of the shares of common stock held in excess of the 10% limit. This provision has been included in the articles of incorporation in reliance on Section 2-507(a) of the MGCL, which entitles
stockholders to one vote for each share of stock unless the articles of incorporation provide for a greater or lesser number of votes per share or limit or deny voting rights.
Dividends
Horizon
Horizon may pay dividends and make other distributions at such times, in such amounts, to such persons, for such consideration, and upon such
terms and conditions as the Horizon board may determine, subject to all statutory restrictions, including banking law restrictions discussed elsewhere in this proxy statement/prospectus.
Horizon has issued and outstanding shares of preferred stock that take preference in dividend distributions over shares of common stock in
certain circumstances. See
Comparison of the Rights of Stockholders Preferred Stock
below.
LaPorte
Holders of common stock are entitled, when declared by the LaPorte board, to receive dividends, subject to the rights of holders of preferred
stock. Under Maryland law, no dividends, redemptions, stock repurchases or other distributions may be declared or paid if, after giving effect to the dividend, redemption, stock repurchase or other distribution, (1) the corporation would not be
able to pay its debts as they become due in the usual course of business or (2) the corporations total assets would be less than the sum of its total liabilities plus, unless the corporations charter provides otherwise, the amount
that would be needed, if the corporation were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of stockholders whose preferential rights are superior to those receiving the distribution. The board
of directors may base a determination regarding the legality of the declaration or payment of a distribution on financial statements prepared on the basis of accounting practices and principles that are reasonable in the circumstances or on a fair
valuation or other method that is reasonable in the circumstances.
In addition, a Maryland corporation that would be prohibited from
making a distribution because its assets would be less than the sum of its total liabilities and preferences of outstanding preferred stock may also make a distribution from the net earnings of the corporation for the fiscal year in which the
distribution is made, the net earnings of the corporation for the preceding fiscal year, or the sum of the net earnings of the corporation for the preceding eight fiscal quarters.
Liquidation
Horizon
In the event of the liquidation, dissolution, and/or winding-up of Horizon, the holders of shares of Horizon common and preferred
stock, as the case may be, are entitled to receive, after the payment of or provision of payment for Horizons respective debts and other liabilities and of all shares having priority over the common stock, a ratable share of the remaining
assets of Horizon. Horizon has issued and outstanding shares of preferred stock that take preference in liquidation distributions over its shares of common stock. See
Comparison of the Rights of Stockholders Dividends
directly above, and
Preferred Stock
directly below.
LaPorte
In the event of liquidation, dissolution or winding up of LaPorte, the holders of its common stock would be entitled to receive, after payment
or provision for payment of all its debts and liabilities, all of the assets of LaPorte available for distribution. If preferred stock is issued, the holders thereof may have a priority over the holders of the common stock in the event of
liquidation or dissolution.
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Preferred Stock
Horizon
In general, the Horizon board is
authorized to issue preferred stock in series and to fix and state the voting powers, designations, preferences, and other rights of the shares of each such series and the limitations thereof. The Horizon board is authorized to issue up to 1,000,000
shares of preferred stock. Horizon designated 12,500 shares as Series B Preferred Stock and issued those shares to the Treasury pursuant to the Small Business Lending Fund, but Horizon has repurchased all of those shares, so no shares of Horizon
Series B Preferred Stock remain outstanding. Horizon also designated 25,000 shares as Horizon Series A Preferred Stock and issued those shares to the Treasury pursuant to the TARP Capital Purchase Program, but Horizon has repurchased all of those
shares, so no shares of Horizon Series A Preferred Stock remain outstanding. If any other series of preferred stock is issued, the Horizon board may fix the designation, preferences, limitations, relative voting, and other rights of the shares of
that series of preferred stock.
LaPorte
Pursuant to the LaPorte Articles, preferred stock may be issued with preferences and designations as LaPortes board of directors may from
time to time determine. LaPortes board of directors may, without stockholder approval, issue shares of preferred stock with voting, dividend, liquidation and conversion rights that could dilute the voting strength of the holders of the common
stock and may assist management in impeding an unfriendly takeover or attempted change in control.
No Sinking Fund
Provisions
No common or preferred shares of Horizon or LaPorte are subject to any mandatory redemption, sinking fund, or other similar
provisions.
Additional Issuances of Stock
Horizon
Except in connection with the
proposed merger with LaPorte and the previously announced acquisition of KFI, and as otherwise may be provided in this proxy statement/prospectus, Horizon has no specific plans for the issuance of additional authorized shares of its common stock or
for the issuance of any shares of preferred stock. In the future, the authorized but unissued shares of Horizon common and preferred stock will be available for general corporate purposes, including, but not limited to, issuance as stock dividends
or in connection with stock splits, issuance in future mergers or acquisitions, issuance under a cash dividend reinvestment and/or stock purchase plan, issuance under a stock incentive plan, or issuance in future underwritten or other public or
private offerings.
Section 23-1-26-2 of the IBCL permits the board of directors of an Indiana corporation to authorize the issuance
of additional shares, unless the corporations articles of incorporation reserve such a right to the corporations shareholders. Under the Horizon Articles, no stockholder approval will be required for the issuance of these shares. As a
result, the Horizon board may issue preferred stock, without stockholder approval, possessing voting and conversion rights that could adversely affect the voting power of Horizons common shareholders, subject to any restrictions imposed on the
issuance of such shares by the NASDAQ Stock Exchange.
LaPorte
Under the MGCL and LaPortes Articles, LaPortes board of directors may increase or decrease the number of authorized shares without
stockholder approval. LaPorte has no specific plans for the issuance of additional authorized shares of its common stock or for the issuance of any shares of preferred stock.
Number of and Restrictions Upon Directors
Horizon
The Horizon Bylaws state that the
Horizon board shall be composed of five to fifteen members, with the actual number being set by the Horizon board. Currently, the number of directors is set at twelve members. The Horizon board is divided into three classes, as nearly equal in
number as possible, with the term of office of one class expiring each year. Each director holds office for the term for which he or she was elected and until his or her successor is elected and has qualified, whichever period is longer, or until
his or her death, resignation, or removal. The Horizon Bylaws provide that a director shall not qualify to serve as such effective as of the end of the term
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during which he or she becomes 75 years of age, and that a non-incumbent director may not be nominated for election as a director if he or she is 60 years of age at the time of election.
LaPorte
LaPortes Articles require
the board of directors to be divided into three classes and that the members of each class shall be elected for a term of three years and until their successors are elected and qualified, with one class being elected annually. Under LaPortes
Bylaws, any vacancy occurring on the board of directors, including any vacancy created by reason of an increase in the number of directors, may be filled only by the affirmative vote of two-thirds of the remaining directors, and any director so
chosen shall hold office for the remainder of the term to which the director has been elected and until his or her successor is elected and qualified.
Additionally, LaPortes Bylaws provided that a person is not qualified to serve as director if he or she: (1) is under indictment
for, or has ever been convicted of, a criminal offense involving dishonesty or breach of trust and the penalty for such offense could be imprisonment for more than one year, (2) is a person against whom a banking agency has, within the past ten
years, issued a cease and desist order for conduct involving dishonesty or breach of trust and that order is final and not subject to appeal, or (3) has been found either by a regulatory agency whose decision is final and not subject to appeal
or by a court to have (i) breached a fiduciary duty involving personal profit, or (ii) committed a willful violation of any law, rule or regulation governing banking, securities, commodities or insurance, or any final cease and desist
order issued by a banking, securities, commodities or insurance regulatory agency.
Removal of Directors
Horizon
Under Indiana law, directors may
be removed in any manner provided in the corporations articles of incorporation. In addition, the shareholders or directors may remove one or more directors with or without cause, unless the articles of incorporation provide otherwise.
Under the Horizon Articles, any director may be removed, with or without cause, either at a meeting or by written consent, by the affirmative
vote of at least 70% of all of the outstanding shares of capital stock of Horizon entitled to vote on the election of directors. Any director may be removed with cause by the affirmative vote of (i) the holders of a majority of all of the
outstanding shares of capital stock of Horizon entitled to vote on the election of directors at a meeting of stockholders called for that purpose, or (ii) two-thirds or more of the other directors.
LaPorte
Under Maryland law, if a board
of directors has been divided into classes, a director may not be removed without cause. The LaPorte Articles provide that directors may be removed only for cause, and only by the affirmative vote of the holders of at least a majority of the voting
power of all of LaPortes then-outstanding common stock entitled to vote.
Special Meetings of the Board
Horizon
The Horizon Bylaws provide that
special meetings of the Horizon board may be called by, or at the request of, the Chairman, the President or a majority of the directors.
LaPorte
LaPortes Bylaws provide that special meetings of the board of directors may be called by one-third of the directors then in
office, the chairperson of the board, or by the vice chairperson of the board.
Classified Board of Directors
Horizon
The Horizon Articles provide that
Horizons board of directors shall be divided into three classes, with directors in each class elected to staggered three-year terms. Consequently, it could take two annual elections to replace a majority of the Horizon board.
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LaPorte
LaPortes Articles require the board of directors to be divided into three classes and that the members of each class shall be elected for
a term of three years and until their successors are elected and qualified, with one class being elected annually.
Advance
Notice Requirements for Presentation of Business and Nominations of Directors at Annual Meetings of Stockholders
Horizon
Pursuant to the Horizon Bylaws, nominations for election to the Horizon board may be made by the Horizon board or by any Horizon shareholder.
Nominations, other than those made by or on behalf of the existing management of Horizon, must be made in writing and must be delivered or mailed to the President of Horizon not less than 120 calendar days in advance of the date of Horizons
proxy statement released to shareholders in connection with the previous years annual meeting of shareholders. All such shareholder nominations must include the information specified in the Bylaws.
The Horizon Bylaws also provide that shareholders may submit proposals for business to be considered at Horizons annual meeting of
shareholders, and have those proposals included in Horizons proxy and proxy statement delivered to shareholders, if the shareholder has given written notice to Horizons Secretary at least 120 days before the date of Horizons proxy
statement for the prior year. Such proposals must be made in writing, must be received at Horizons principal executive offices not less than 120 calendar days in advance of the date of Horizons proxy statement released to shareholders in
connection with the previous years annual meeting of shareholders and must contain the information specified in the Bylaws.
LaPorte
LaPortes Bylaws provide an advance notice procedure for certain business, or nominations to the board of directors, to be brought before
an annual meeting of stockholders. In order for a stockholder to properly bring business before an annual meeting, or to propose a nominee to the board of directors, LaPortes Secretary must receive written notice not earlier than the close of
business on the 120th day nor later than the 90th day prior to the anniversary date of the proxy statement relating to the preceding years annual meeting. In the event that less than 90 days prior public disclosure of the date of the
meeting is given to stockholders and the date of the annual meeting is advanced by more than 30 days, or delayed by more than 30 days from the anniversary date of the preceding years annual meeting, notice by the stockholder must be received
not later than the 10th day following the day on which public disclosure of the date of such meeting is first made. No adjournment or postponement of a meeting of stockholders will commence a new period for the giving of notice.
Special Meetings of Stockholders
Horizon
The Horizon Bylaws state that
special shareholders meetings may be called by the Chairman, the President, or, by the Secretary, at the request in writing of a majority of the directors.
LaPorte
LaPortes Bylaws provide
that special meetings of the stockholders may be called by the chairperson of the board, the vice chairperson of the board, and the majority of the board of directors and shall be called by LaPortes Secretary upon a request in writing
therefor, signed by a majority of stockholders.
Indemnification
Horizon
Under the IBCL as applicable to
Horizon, an Indiana corporation may indemnify an individual made a party to a proceeding because the individual is or was a director or officer against liability incurred in the proceeding if (i) the individuals conduct was in good faith,
(ii) the individual reasonably believed, in the case of conduct in the individuals official capacity with the corporation, that the individuals conduct was in the best interests of the corporation, and in all other cases, that the
individuals conduct was at least not opposed to the corporations best interests, and (iii) in the case of any criminal proceeding, the individual either had reasonable cause to believe that
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the individuals conduct was lawful, or the individual had no reasonable cause to believe that the individuals conduct was unlawful.
Unless limited by its articles of incorporation, a corporation must indemnify a director who was wholly successful, on the merits or
otherwise, in the defense of any proceeding to which the director was a party because the director is or was a director of the corporation against reasonable expenses incurred by the director in defense of the proceeding.
The Horizon Articles provide that every person who is or was or has agreed to become a director or officer of Horizon shall be indemnified by
Horizon against any and all liability and expense that may be incurred by him or her resulting from any claim, provided that the person acted in good faith and, for civil actions, acted in what he or she reasonably believed to be in or not opposed
to the best interests of Horizon, or, for criminal actions, had reasonable cause to believe his or her conduct was lawful or had no reasonable cause to believe that his conduct was unlawful. Horizon also may, but is not required to, indemnify an
employee or agent under similar circumstances. The indemnification by Horizon extends to attorneys fees, judgments, fines, liabilities, and settlements. Horizon must also advance expenses for the defense of a director or officer upon
determination of eligibility and upon receipt of written affirmation of eligibility and an undertaking by such person to repay such expenses if it should ultimately be determined that he is not entitled to indemnification.
In order for a director or officer to be entitled to indemnification, the Horizon board, special legal counsel or the shareholders must
determine that the director has met the standards of conduct required by the Horizon Articles.
LaPorte
Under Maryland law, directors and officers liability to the corporation or its stockholders for money damages may be expanded or
limited, except that liability of a director or officer may not be limited: (1) to the extent that it is proved that the person actually received an improper benefit or profit in money, property, or services, for the amount of the improper
benefit or profit; (2) to the extent that a final adjudication adverse to the person is entered based on a finding that the persons action or failure to act was the result of active and deliberate dishonesty and was material to the cause
of action in the proceeding; or (3) in an action brought by a state agency against a director or officer of a banking institution, credit union, savings and loan association, or the subsidiary of any such organization. LaPortes Articles
provide that a director of the corporation will not be liable to the corporation or its stockholders for monetary damages, subject to the limitations, described above, under Maryland law.
Under Maryland law, a corporation may not indemnify a director or officer if it is established that: (i) the act or omission of the
director or officer was material to the matter giving rise to the proceeding; and (1) was committed in bad faith or (2) was the result of active and deliberate dishonesty; or (ii) the director or officer actually received an improper
personal benefit in money, property or services; or (iii) in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful.
Under Maryland law, a corporation may not indemnify a director or officer who has been adjudged liable in a suit by or in the right of the
corporation or in which the director or officer was adjudged liable to the corporation or on the basis that a personal benefit was improperly received. A court may order indemnification if it determines that the director is fairly and reasonably
entitled to indemnification, even though the director did not meet the prescribed standard of conduct, was adjudged liable to the corporation or was adjudged liable on the basis that personal benefit was improperly received; however, indemnification
for an adverse judgment in a suit by or in the right of the corporation, or for a judgment of liability on the basis that personal benefit was improperly received, is limited to expenses. Except for a proceeding brought to enforce indemnification or
where a resolution of the board of directors or an agreement approved by the board expressly provides otherwise, a corporation may not indemnify a director for a proceeding brought by the director against the corporation.
The LaPorte Articles provide that it shall indemnify (i) its current and former directors and officers to the fullest extent required or
permitted by Maryland law, including the advancement of expenses and (ii) other employees or agents to such extent as shall be authorized by the board of directors and Maryland law. Maryland law allows LaPorte to indemnify any person for
expenses, liabilities, settlements, judgments and fines in suits in which such person has been made a party by reason of the fact that he or she is or was a director, officer or employee of LaPorte. No such indemnification may be given if the acts
or omissions of the person are adjudged to be in bad faith and material to the matter giving rise to the proceeding, if such person is liable to the corporation for an unlawful
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distribution, or if such person personally received a benefit to which he or she was not entitled. The right to indemnification includes the right to be paid the expenses incurred in advance of
final disposition of a proceeding.
Preemptive Rights
Horizon
Although permitted by the IBCL,
the Horizon Articles do not provide for preemptive rights to subscribe for any new or additional common or preferred stock.
LaPorte
Under the MGCL, unless the articles of incorporation provide otherwise, stockholders have no preemptive rights. LaPortes Articles do not
provide for preemptive rights. Accordingly, LaPortes stockholders do not have preemptive rights.
Amendment of
Articles of Incorporation and Bylaws
Horizon
Except as otherwise provided below, amendments to the Horizon Articles must be approved by a majority vote of the Horizon board and also by a
vote of shareholders entitled to vote on the matter in which more votes are cast in favor of the amendment than against the amendment. The following provisions of the Horizon Articles may not be altered, amended, or repealed without the affirmative
vote of at least 70% of the outstanding shares of Horizon stock entitled to vote on such matter:
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Section 6.3, which establishes a three-tier director class structure; and
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Section 6.4, regarding director removal.
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The Horizon Articles may be amended by the
Horizon board without shareholder approval to designate a new series of preferred shares.
The Horizon Bylaws may be amended only by a
majority vote of the number of directors of the Horizon board in office at the time of the vote.
LaPorte
LaPortes Articles may be amended, upon the submission of an amendment by the board of directors to a vote of the stockholders, by the
affirmative vote of at least two-thirds of the outstanding voting common stock of LaPorte, or by the affirmative vote of a majority of the outstanding shares of common stock if at least two-thirds of the members of the board of directors approves
such amendment. However, approval by at least 80% of the outstanding common stock is required to amend certain provisions regarding, but not limited to, the limitation of voting rights, classification of the board, board vacancies, removal of
directors, amendment of the bylaws, acquisition offers, issuance of preferred stock, a stockholder quorum, indemnification of officers and directors, cumulative voting, advance notice requirements for stockholder proposals and nominations, and the
provision requiring at least 80% outstanding voting stock approval to amend the aforementioned provisions.
Restrictions on
Unsolicited Changes in Control (Anti-Takeover Protections)
Horizon
General
. The Horizon Articles include several provisions that may have the effect of rendering the company less attractive to potential
acquirors, thereby discouraging future takeover attempts that certain shareholders might deem to be in their best interests, or pursuant to which shareholders might receive a substantial premium for their shares over then-current market prices, but
would not be approved by the companys board of directors. These provisions also have the effect of rendering the removal of management and the incumbent board of directors more difficult. However, the Horizon board has concluded that the
potential benefits of these restrictive provisions outweigh the possible disadvantages.
Directors.
Certain provisions in the
Horizon Articles and Horizon Bylaws impede changes in the majority control of the companys board of directors. The Horizon Articles provide that the board will be divided into three classes, with directors in each class elected for staggered
three-year terms. As a result, it would take two annual elections to replace a majority of the Horizon board.
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The Horizon Bylaws provide that any vacancy occurring in the Horizon board, including a vacancy
created by resignation, death, incapacity, or an increase in the number of directors, may be filled for the remainder of the unexpired term by a majority vote of the directors then in office. No decrease in the number of directors of Horizon can
have the effect of shortening the term of any incumbent director.
Finally, the Horizon Bylaws impose certain notice requirements in
connection with the nomination by shareholders of candidates for election to the board of directors, and for proposals by shareholders of business to be acted upon at a meeting of shareholders.
Under the Horizon Articles, any director may be removed, with or without cause, by the affirmative vote of the holders of 70% of all of the
outstanding shares of Horizons capital stock entitled to vote on the election of directors. Any Horizon director may be removed with cause by the affirmative vote of (i) the holders of a majority of all of the outstanding shares of
capital stock of Horizon entitled to vote on the election of directors, or (ii) two-thirds or more of the other directors.
Restrictions on Call of Special Meetings.
The Horizon Bylaws state that special shareholders meetings may be called by the
Chairman, the President, or, at the request in writing of a majority of the directors, by the Secretary.
No Cumulative Voting.
The
Horizon Articles do not provide for cumulative voting rights in the election of directors.
Authorization of Preferred Stock.
Horizon is authorized to issue preferred stock from time to time in one or more series subject to applicable provisions of law, and the board of directors is authorized to fix the designations, powers, preferences, and relative participating,
optional, and other special rights of such shares, including voting rights, if any. In the event of a proposed merger, tender offer, or other attempt to gain control of Horizon not approved by the board of directors, it might be possible for the
Horizon board to authorize the issuance of a series of preferred stock with rights and preferences that would impede the completion of such a transaction. An effect of the possible issuance of preferred stock, therefore, may be to deter a future
takeover attempt. The board of directors of Horizon has no present plans or understandings for the issuance of any preferred stock and it does not intend to issue any preferred stock except on terms that the board may deem to be in the best
interests Horizons shareholders.
Evaluation of Offers
. The IBCL specifically authorizes directors, in considering the best
interests of a corporation, to consider the effects of any action on shareholders, employees, suppliers, and customers of the corporation, the communities in which offices or other facilities of the corporation are located, and any other factors the
directors consider pertinent. Horizons Articles provide that the Horizon board, when evaluating a business combination or tender or exchange offer, in addition to considering the adequacy of the amount to be paid in connection with any such
transactions, may consider all of the following factors and any other factors that it deems relevant: (a) the social and economic effects of the transaction on Horizon and its subsidiaries, and each of their respective employees, depositors,
loan and other customers, creditors, and other elements of the communities in which Horizon and its subsidiaries operate or are located; (b) the business and financial condition and earnings prospects of the acquiring person or persons,
including, but not limited to, debt service and other existing or likely financial obligations of the acquiring person or persons, and the possible effect of such conditions upon Horizon and its subsidiaries and the other elements of the communities
in which Horizon and its subsidiaries operate or are located; and (c) the competence, experience, and integrity of the acquiring person or persons and its or their management.
Procedures for Certain Business Combinations
. The Horizon Articles require the affirmative vote of 70% of the outstanding shares of all
classes of voting stock (reduced to 66
2/3
% under certain conditions), and an independent majority of shareholders, to approve certain business combinations with holders of more than 10% of
Horizons voting shares or their affiliates.
Amendments to Articles and Bylaws
. As noted above, except for certain
exceptions, amendments to the Horizon Articles must be approved by a majority vote of the Horizon board and also by a vote of shareholders in which more votes are cast in favor of the amendment than against the amendment. Additionally, the following
provisions of the Horizon Articles may not be altered, amended or repealed without the affirmative vote of at least 70% of the outstanding shares of Horizon stock entitled to vote on such matter: (i) Section 6.3, which establishes a
three-tier director class structure; and (ii) Section 6.4, regarding director removal.
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The Horizon Articles may be amended by the Horizon board without stockholder approval to
designate a new series of preferred shares.
The Horizon Bylaws may be amended only by a majority vote of the total number of directors of
Horizon.
LaPorte
Directors
. The LaPorte board of directors is divided into three classes. The members of each class are elected for a term of three
years and only one class of directors is elected annually. Thus, it takes at least two annual elections to replace a majority of the board of directors. Further, the LaPorte Bylaws impose notice and information requirements in connection with the
nomination by stockholders of candidates for election to the board of directors or the proposal by stockholders of business to be acted upon at an annual meeting of stockholders. The LaPorte Bylaws also set forth qualifications as to individuals who
can and cannot serve on the board of directors.
Restrictions on Call of Special Meetings.
The LaPorte Articles and LaPorte
Bylaws provide that special meetings of stockholders can be called by the chairperson, vice chairperson, by a majority of the whole board of directors or upon the written request of stockholders entitled to cast at least a majority of all votes
entitled to vote at the meeting.
Prohibition of Cumulative Voting
. The LaPorte Articles prohibit cumulative voting for the
election of directors.
Limitation of Voting Rights
. The LaPorte Articles provide that in no event will any person who
beneficially owns more than 10% of the then-outstanding shares of common stock, be entitled or permitted to vote any of the shares of common stock held in excess of the 10% limit.
Restrictions on Removing Directors from Office
. The LaPorte Articles provide that directors may be removed only for cause, and only by
the affirmative vote of the holders of at least a majority of the voting power of all of our then-outstanding common stock entitled to vote (after giving effect to the limitation on voting rights discussed above in
Limitation of
Voting Rights
).
Authorized but Unissued Shares
. The LaPorte Articles authorize 50,000,000 shares of serial preferred
stock. LaPorte is authorized to issue preferred stock from time to time in one or more series subject to applicable provisions of law, and the board of directors is authorized to fix the designations, and relative preferences, limitations, voting
rights, if any, including without limitation, offering rights of such shares (which could be multiple or as a separate class). In the event of a proposed merger, tender offer or other attempt to gain control of LaPorte that the board of directors
does not approve, it may be possible for the board of directors to authorize the issuance of a series of preferred stock with rights and preferences that would impede the completion of the transaction. An effect of the possible issuance of preferred
stock therefore may be to deter a future attempt to gain control of LaPorte. The board of directors has no present plan or understanding to issue any preferred stock.
Amendments to Articles of Incorporation and Bylaws
. The provisions requiring the affirmative vote of 80% of outstanding shares for
certain stockholder actions have been included in the LaPorte Articles in reliance on Section 2-104(b)(4) of the MGCL. Section 2-104(b)(4) permits the articles of incorporation to require a greater proportion of votes than the proportion
that would otherwise be required for shareholder action under the MGCL.
Business Combinations with Interested
Stockholders
. Under Maryland law, business combinations between LaPorte and an interested stockholder or an affiliate of an interested stockholder are prohibited for five years after the most recent date on which the interested
stockholder becomes an interested stockholder. These business combinations include a merger, consolidation, statutory share exchange or, in circumstances specified in the statute, certain transfers of assets, certain stock issuances and transfers,
liquidation plans and reclassifications involving interested stockholders and their affiliates or issuance or reclassification of equity securities. Maryland law defines an interested stockholder as: (i) any person who beneficially owns 10% or
more of the voting power of LaPortes voting stock after the date on which LaPorte had 100 or more beneficial owners of its stock; or (ii) an affiliate or associate of LaPorte at any time after the date on which LaPorte had 100 or more
beneficial owners of its stock who, within the two-year period prior to the date in question, was the beneficial owner of 10% or more of the voting power of the then-outstanding voting stock of LaPorte. A person is not an interested stockholder
under the statute if the board of directors approved in advance the transaction by which the person otherwise would have become an interested stockholder. However, in approving a transaction, the board of directors may provide that its
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approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by the board.
After the five-year prohibition, any business combination between LaPorte and an interested stockholder generally must be recommended by the
board of directors of LaPorte and approved by the affirmative vote of at least: (i) 80% of the votes entitled to be cast by holders of outstanding shares of voting stock of LaPorte, and (ii) two-thirds of the votes entitled to be cast by
holders of voting stock of LaPorte other than shares held by the interested shareholder with whom or with whose affiliate the business combination is to be effected or held by an affiliate or associate of the interested stockholder. These
super-majority vote requirements do not apply if LaPortes common stockholders receive a minimum price, as defined under Maryland law, for their shares in the form of cash or other consideration in the same form as previously paid by the
interested shareholder for its shares.
Evaluation of Offers
. The LaPorte Articles provide that its board of directors, when
evaluating a transaction that would or may involve a change in control of LaPorte (whether by purchases of its securities, merger, consolidation, share exchange, dissolution, liquidation, sale of all or substantially all of its assets, proxy
solicitation or otherwise), may, in connection with the exercise of its business judgment in determining what is in the best interests of LaPorte and its stockholders and in making any recommendation to the stockholders, give due consideration to
all relevant factors, including, but not limited to:
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the economic effect, both immediate and long-term, upon LaPortes stockholders, including stockholders, if any, who do not participate in the transaction;
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the social and economic effect on the present and future employees, creditors and customers of, and others dealing with, LaPorte and its subsidiaries and on the communities in which LaPorte and its subsidiaries operate
or are located;
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whether the proposal is acceptable based on the historical, current or projected future operating results or financial condition of LaPorte;
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whether a more favorable price could be obtained for LaPortes stock or other securities in the future;
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the reputation and business practices of the other entity to be involved in the transaction and its management and affiliates as they would affect the employees of LaPorte and its subsidiaries;
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the future value of the stock or any other securities of LaPorte or the other entity to be involved in the proposed transaction;
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any antitrust or other legal and regulatory issues that are raised by the proposal;
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the business and historical, current or expected future financial condition or operating results of the other entity to be involved in the transaction, including, but not limited to, debt service and other existing
financial obligations, financial obligations to be incurred in connection with the proposed transaction, and other likely financial obligations of the other entity to be involved in the proposed transaction; and
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the ability of LaPorte to fulfill its objectives as a financial institution holding company and on the ability of its subsidiary financial institution(s) to fulfill the objectives of a federally insured financial
institution under applicable statutes and regulations.
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If the LaPorte board of directors determines that any proposed
transaction should be rejected, it may take any lawful action to defeat such transaction.
State and Federal Law
Indiana State Law
. Several provisions of the IBCL could affect the acquisition of shares of Horizon common stock, or otherwise affect
the control of Horizon. Chapter 43 of the IBCL prohibits certain business combinations, including mergers, sales of assets, recapitalizations, and reverse stock splits, between corporations (assuming the company has over 100 shareholders) and an
interested shareholder (defined as the beneficial owner of 10% or more of the voting power of the outstanding voting shares) for five years following the date on which the shareholder obtained 10% ownership, unless the acquisition was approved in
advance of that date by the board of directors of the company. If prior approval is not obtained, several price and procedural requirements must be met
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before the business combination can be completed. Horizon has elected in the Horizon Articles to not be governed by Chapter 43 of the IBCL.
In addition, the IBCL contains a Control Share Acquisition Statute that may have the effect of discouraging or making more difficult a hostile
takeover of an Indiana corporation. This provision also may have the effect of discouraging premium bids for outstanding shares. The Control Share Acquisition Statute provides that, unless otherwise provided in a corporations articles of
incorporation or by-laws, shares acquired in certain acquisitions of the corporations stock (which take the acquiror over the successive thresholds of 20%, 33%, and 50% of the corporations stock) will be accorded voting rights only if a
majority of the disinterested shareholders approves a resolution granting the potential acquiror the ability to vote such shares. An Indiana corporation is subject to the Control Share Acquisition Statute if it has 100 or more shareholders and its
principal place of business is in Indiana. An Indiana corporation otherwise subject to the Control Share Acquisition Statute may elect not to be covered by the statute by so providing in its articles of incorporation or bylaws. Horizon has elected
not to be governed by the Control Share Acquisition Statute.
The Control Share Acquisition Statute does not apply to a plan of
affiliation and merger, if the corporation complies with the applicable merger provisions and is a party to the plan of merger. Thus, the provisions of the Control Share Acquisition Statute do not apply to the merger.
The IBCL specifically authorizes Indiana corporations to issue options, warrants, or rights for the purchase of shares or other securities of
the corporation or any successor in interest of the corporation. These options, warrants, or rights may, but need not be, issued to shareholders on a pro rata basis.
The IBCL specifically authorizes directors, in considering the best interests of a corporation, to consider the effects of any action on
shareholders, employees, suppliers, and customers of the corporation, and communities in which offices or other facilities of the corporation are located, and any other factors the directors consider relevant. As described above, the Horizon
Articles contain a provision having a similar effect. Under the IBCL, directors are not required to approve a proposed business combination or other corporate action if the directors determine in good faith that such approval is not in the best
interests of the corporation. In addition, the IBCL states that directors are not required to redeem any rights under, or render inapplicable, a shareholder rights plan or to take or decline to take any other action solely because of the effect such
action might have on a proposed change of control of the corporation or the amounts to be paid to shareholders upon such a change of control. The IBCL explicitly provides that the different or higher degree of scrutiny imposed in Delaware and
certain other jurisdictions upon director actions taken in response to potential changes in control will not apply. The Delaware Supreme Court has held that defensive measures in response to a potential takeover must be reasonable in relation
to the threat posed.
In taking or declining to take any action or in making any recommendation to a corporations shareholders
with respect to any matter, directors are authorized under the IBCL to consider both the short-term and long-term interests of the corporation as well as interests of other constituencies and other relevant factors. Any determination made with
respect to the foregoing by a majority of the disinterested directors shall conclusively be presumed to be valid unless it can be demonstrated that such determination was not made in good faith.
Because of the foregoing provisions of the IBCL, the Horizon board has flexibility in responding to unsolicited proposals to acquire Horizon,
and accordingly it may be more difficult for an acquiror to gain control of Horizon in a transaction not approved by its board of directors.
Maryland State Law.
The MGCL provides that control shares of a Maryland corporation acquired in a control share
acquisition have no voting rights except to the extent approved by a vote of two-thirds of the shares entitled to be voted on the matter, excluding shares of stock owned by the acquiror or by officers or directors who are employees of the
corporation. Control shares are voting shares of stock which, if aggregated with all other such shares of stock previously acquired by the acquiror, or in respect of which the acquiror is able to exercise or direct the exercise of voting
power except solely by virtue of a revocable proxy, would entitle the acquiror to exercise voting power in electing directors within one of the following ranges of voting power:
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one-tenth or more but less than one-third;
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ii)
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one-third or more but less than a majority; or
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iii)
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a majority of all voting power.
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Control shares do not include shares the acquiring person is then entitled to vote as a result of
having previously obtained stockholder approval. A control share acquisition means the acquisition of control shares, subject to certain exceptions for shares acquired through descent or distribution, in satisfaction of a pledge or in a
merger, consolidation or share exchange to which the corporation is a party. The control share acquisition statute applies to any Maryland corporation with 100 or more beneficial owners of its stock other than a close corporation or an investment
company.
A person who has made or proposes to make a control share acquisition, upon satisfaction of certain conditions (including an
undertaking to pay expenses and delivery of an acquiring person statement), may compel the corporations board of directors to call a special meeting of stockholders to be held within 50 days of demand to consider the voting rights
of the shares. If no request for a meeting is made, the corporation may itself present the question at any stockholders meeting. If voting rights are not approved at the meeting or if the acquiring person does not deliver an acquiring person
statement within 10 days following a control share acquisition then, subject to certain conditions and limitations, the corporation may redeem any or all of the control shares (except for those which voting rights have previously been approved) for
fair value, determined without regard to the absence of voting rights for the control shares, as of the date of the last control share acquisition or of any meeting of stockholders at which the voting rights of such shares are considered and not
approved. Moreover, if voting rights for control shares are approved at a stockholders meeting and the acquiror becomes entitled to exercise or direct the exercise of a majority or more of all voting power, other stockholders may exercise
appraisal rights. The fair value of the shares as determined for purposes of such appraisal rights may not be less than the highest price per share paid by the acquiror in the control share acquisition. The foregoing provisions may be modified by a
Maryland corporations charter or bylaws. Although our bylaws provide that the Maryland Control Share Acquisition law will be inapplicable to acquisitions of LaPortes common stock, this provision may be repealed at any time by a majority
vote of the whole board of directors, in whole or in part, at any time, whether before or after a control share acquisition and may be applied to any prior or subsequent control share acquisition.
The LaPorte Articles provide that its board of directors, when evaluating a transaction that would or may involve a change in control of
LaPorte (whether by purchases of its securities, merger, consolidation, share exchange, dissolution, liquidation, sale of all or substantially all of its assets, proxy solicitation or otherwise), may, in connection with the exercise of its business
judgment in determining what is in the best interests of LaPorte and its stockholders and in making any recommendation to the stockholders, give due consideration to all relevant factors, including, but not limited to, certain enumerated factors.
For a list of these enumerated factors, see
Evaluation of Offers
above.
Federal Limitations
. Subject to
certain limited exceptions, the Bank Holding Company Act and the Change in Bank Control Act, together with related regulations, require approval of the Federal Reserve Board prior to any person or company acquiring control of a bank
holding company. Control is conclusively presumed to exist if an individual or company acquires 25% or more of any class of voting securities of the bank holding company. Control is rebuttably presumed to exist if a person or company acquires 10% or
more, but less than 25%, of any class of voting securities and either the bank holding company/savings and loan holding company has registered securities under Section 12 of the Securities Exchange Act of 1934 or no other person owns a greater
percentage of that class of voting securities immediately after the transaction.
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NON-BINDING ADVISORY VOTE ON MERGER-RELATED COMPENSATION
(PROPOSAL NO. 2)
As
required by Section 14A of the Exchange Act and Rule 14a-21(c) promulgated thereunder, LaPorte is required to submit a proposal to its stockholders for a non-binding advisory vote to approve the payment of certain compensation to the named
executive officers of LaPorte that is based on or otherwise relates to the merger. This proposal gives LaPorte stockholders the opportunity to express their views on the compensation that certain of LaPortes named executive officers may be
entitled to receive that is based on or otherwise relates to the merger.
The compensation that LaPortes named executive officers
may be entitled to receive that is based on or otherwise relates to the merger is summarized in
Interests of Certain Directors and Officers of LaPorte in the Merger
, beginning on page 85. This summary and the related table include
all compensation and benefits that may be paid or provided in connection with the completion of the merger.
Therefore, LaPorte is
requesting the approval of LaPortes stockholders, on a non-binding advisory basis, of the compensation of the named executive officers of LaPorte based on or related to the merger and the agreements and understandings concerning such
compensation. As required by Rule 14a-21(c) of the Exchange Act, LaPorte is asking its stockholders to adopt the following resolution:
RESOLVED, that the compensation to be paid or become payable to the named executive officers of LaPorte Bancorp, Inc. that is based on or
otherwise relates to the merger of LaPorte Bancorp, Inc. with and into Horizon Bancorp, and the agreements and understandings concerning such compensation, as disclosed in the section captioned
Interests of Certain Directors and Officers of
LaPorte in the Merger
beginning on page 85 and the related table and narratives pursuant to Item 402(t) of Regulation S-K and the associated narrative discussion, are hereby APPROVED.
The vote on this Proposal 2 is a vote separate and apart from the vote on Proposal 1 to approve and adopt the Merger Agreement. Accordingly,
you may vote to approve this Merger-Related Compensation Proposal and vote not to approve Proposal 1 on the Merger Agreement and vice versa. Because the proposal is advisory in nature only, a vote for or against approval will not be binding on
either LaPorte or Horizon regardless of whether the merger is approved. Accordingly, as the compensation to be paid to the named executive officers of LaPorte based on or related to the merger is contractual with the executives, regardless of the
outcome of this vote, such compensation will be payable, subject only to the conditions applicable thereto, if the merger is completed. This proposal includes compensation that would be paid or provided by LaPorte if paid or provided prior to or
upon the closing of the merger, and which would be paid or provided by Horizon if paid or provided following closing of the merger. If the merger is not completed, LaPortes board of directors will consider the results of the vote in making
future executive compensation decisions.
For the Merger-Related Compensation Proposal to be approved, more votes must be cast by
LaPortes stockholders in favor of the proposal than are cast against it. Abstentions and broker non-votes will not be included in the vote count and will have no effect on the outcome of the proposal.
LaPortes board of directors unanimously recommends that stockholders vote FOR the approval of the non-binding advisory
resolution approving the merger-related compensation of LaPortes named executive officers, and the agreements or understandings concerning such compensation.
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ADJOURNMENT OF THE SPECIAL MEETING
(PROPOSAL NO. 3)
The
Special Meeting may be adjourned to another time or place, if necessary, to permit, among other things, further solicitation of proxies if necessary to obtain additional votes in favor of the Merger Agreement proposal.
If, at the Special Meeting, the number of shares of LaPorte common stock present or represented and voting in favor of the Merger Agreement
proposal is insufficient to approve and adopt such proposal, LaPorte intends to move to adjourn the Special Meeting in order to solicit additional proxies for the approval and adoption of the Merger Agreement. In this proposal, LaPorte is asking its
stockholders to authorize the holder of any proxy solicited by the LaPorte board of directors on a discretionary basis to vote in favor of adjourning the Special Meeting to another time and place for the purpose of soliciting additional proxies,
including the solicitation of proxies from LaPorte stockholders who have previously voted. At this time, LaPorte has no reason to believe that an adjournment of the Special Meeting will be necessary.
LaPortes board of directors recommends that stockholders vote FOR the proposal to adjourn or postpone the Special
Meeting, if necessary.
EXPERTS
The consolidated financial statements of Horizon incorporated by reference from Horizons Annual Report on Form 10-K for the three years
ended December 31, 2015, and the effectiveness of Horizons internal control over financial reporting as of December 31, 2015, have been audited by BKD LLP, independent registered public accounting firm, as set forth in their reports thereon
incorporated by reference into this proxy statement/prospectus. Such consolidated financial statements and Horizon managements assessment of the effectiveness of internal control over financial reporting as of December 31, 2015 are
incorporated herein by reference in reliance upon such reports given on the authority of such firm as experts in accounting and auditing.
The consolidated financial statements of LaPorte as of December 31, 2015 and 2014, and for each of the years in the two-year period ended
December 31, 2015 have been incorporated by reference herein and in the registration statement in reliance upon the reports of BKD LLP, an independent registered public accounting firm, incorporated by reference herein, and upon the authority
of said firm as experts in accounting and auditing.
LEGAL MATTERS
Certain matters pertaining to the validity of the authorization and issuance of the Horizon common stock to be issued in the proposed merger
and certain matters pertaining to the federal income tax consequences of the proposed merger will be passed upon by Barnes & Thornburg LLP, Indianapolis, Indiana.
SHAREHOLDER PROPOSALS FOR NEXT YEAR
Horizon
If
the merger is completed, the LaPorte stockholders receiving the stock consideration in the merger will become shareholders of Horizon. To be included in Horizons proxy statement and voted on at Horizons regularly scheduled 2017 annual
meeting of shareholders, shareholder proposals must be submitted in writing by November 15, 2016, to Horizons Secretary, 515 Franklin Square, Michigan City, Indiana 46360, which date is 120 calendar days before the anniversary date of the
release of the proxy statement relating to Horizons 2016 Annual Meeting. If notice of any other shareholder proposal intended to be presented at the 2017 annual meeting is not received by Horizon on or before November 15, 2016, the proxy
solicited by the Horizon board of directors for use in connection with that meeting may confer authority on the proxies to vote in their discretion on such proposal, without any discussion in the Horizon proxy statement for that meeting of either
the proposal or how such proxies intend to exercise their voting discretion. Any such proposals will be subject to the requirements of the proxy rules and regulations adopted under the Securities Exchange Act of 1934, as amended. If the date of the
2017 annual meeting is changed, the dates set forth above may change.
Horizons Bylaws also provide that a shareholder wishing to
nominate a candidate for election as a director or to have any other matter considered by the shareholders at the annual meeting must give Horizon written notice of the nomination not fewer than 120 days in advance of the date that Horizons
proxy statement was released to shareholders in connection with the previous years annual meeting, which nomination or proposal date for the 2017
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annual meeting is November 15, 2016. Shareholder nominations must include the detailed information about the nominee required by the Bylaws and also must comply with the other requirements
set forth in the Bylaws. Proposals to bring other matters before the shareholders must include a brief description of the proposal and the other information required by the Bylaws. Copies of the Bylaws are available to stockholders free of charge
upon request to Horizons Secretary.
LaPorte
If the merger occurs, there will be no LaPorte annual meeting of stockholders for 2016 or thereafter. In that case, stockholder proposals must
be submitted to Horizon in accordance with the procedures described above. If the merger is not completed, LaPorte will provide notice of the record date and annual meeting date for its 2016 annual stockholders meeting.
HOUSEHOLDING
LaPorte stockholders who share the same last name and address may receive only one copy of this proxy statement/prospectus unless we receive
contrary instructions from any stockholder at that address. This is referred to as householding. If you prefer to receive multiple copies of the proxy statement/prospectus at the same address, additional copies will be provided to you
promptly upon written or oral request, and if you are receiving multiple copies of the proxy statement/prospectus, you may request that you receive only one copy. Please direct requests for a copy of the proxy statement/prospectus to LaPorte
Bancorp, Inc., Attention: Eric L. Sommer, Corporate Secretary, 710 Indiana Avenue, LaPorte, Indiana 46350, or by telephone at (219) 362-7511.
WHERE YOU CAN FIND MORE INFORMATION
Horizon and LaPorte file annual, quarterly, and current reports, proxy statements, and other information with the SEC. You may read and copy
any reports, statements, or other information that Horizon and LaPorte file at the SECs public reference room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the
public reference room. Horizons and LaPortes public filings also are available to the public from commercial document retrieval services and on the World Wide Web site maintained by the SEC at http://www.sec.gov. In addition,
you may obtain copies of these documents, free of charge, from Horizon at www.horizonbank.com under the tab About Us Investor Relations Documents SEC Filings, and from LaPorte at www.laportesavingsbank.com under the
tab About Us Investor Relations. Shares of Horizon common stock are listed on the NASDAQ Global Select Market under the symbol HBNC, and shares of LaPorte common stock are listed on the NASDAQ Capital Market under the
symbol LPSB.
Horizon has filed with the SEC a registration statement on Form S-4 under the Securities Act of 1933, as
amended, with respect to the common stock of Horizon being offered in the merger. This proxy statement/prospectus, which constitutes part of the registration statement, does not contain all of the information set forth in the registration statement.
Parts of the registration statement are omitted from the proxy statement/prospectus in accordance with the rules and regulations of the SEC. For further information, your attention is directed to the registration statement. Statements made in this
proxy statement/prospectus concerning the contents of any documents are not necessarily complete, and in each case are qualified in all respects by reference to the copy of the document filed with the SEC.
The SEC allows Horizon and LaPorte to incorporate by reference the information filed by Horizon and LaPorte with the SEC, which
means that Horizon and LaPorte can disclose important information to you by referring you to those documents. The information incorporated by reference is an important part of this proxy statement/prospectus.
Horizon incorporates by reference the following documents and information that it has filed previously with the SEC (excluding any Form 8-K
reports that have not been filed but instead have been furnished to the SEC):
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Horizons Annual Report on Form
10-K
for the year ended December 31, 2015;
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Horizons Quarterly Report on Form 10-Q for the quarter ended March 31, 2016;
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Horizons Current Reports on Form 8-K filed on January 20, February 1, February 5, March 11, April 22, May 10, May 18, and June 1, 2016;
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The information concerning share ownership of principal shareholders, directors, and executive officers of Horizon under the caption Common Share Ownership of Management and Certain Beneficial Owners
in Horizons Proxy Statement for the 2016 Annual Meeting of Shareholders; and
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The description of Horizons common stock under the caption Description of Common Stock in the Registration Statement on Form S-3 filed with the SEC on January 14, 2015, including any
amendment or report filed for the purpose of updating that description.
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LaPorte incorporates by reference the following
documents and information that it has filed previously with the SEC (excluding any Form 8-K reports that have not been filed but instead have been furnished to the SEC):
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LaPortes Annual Report on Form
10-K
for the year ended December 31, 2015;
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LaPortes Quarterly Report on Form 10-Q for the quarter ended March 31, 2016;
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LaPortes Current Reports on Form 8-K filed on January 20, March 14, and April 27, 2016; and
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The description of LaPortes common stock set forth in the registration statement on Form 8-A filed pursuant to Section 12 of the Exchange Act on April 10, 2012, including any amendment or report
filed with the SEC for the purpose of updating such description.
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Horizon and LaPorte are also incorporating by reference
additional documents that they file with the SEC pursuant to Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act between the date hereof and the date of LaPortes Special Meeting. Any statement contained in a document that is incorporated
by reference will be deemed to be modified or superseded for all purposes to the extent that a statement contained in this document (or in any other document that is subsequently filed with the SEC and incorporated by reference) modifies or is
contrary to that previous statement. Notwithstanding the foregoing, unless specifically stated to the contrary, none of the information Horizon or LaPorte discloses under Items 2.02 or 7.01 of any Current Report on Form 8-K that Horizon or
LaPorte may from time to time furnish to the SEC will be incorporated by reference into, or otherwise included in, this proxy statement/prospectus.
These documents, as well as this proxy statement/prospectus, may be obtained as explained above, or you may request a free copy of any or all
of these documents, including exhibits that are specifically incorporated by reference into these documents, by writing to or calling Horizon or LaPorte at the following addresses or telephone numbers or via the Internet at:
Horizon Bancorp
515 Franklin
Square
Michigan City, Indiana 46360
Attn: Investor Relations
(219)
879-0211
Website:
www.horizonbank.com
LaPorte Bancorp, Inc.
710 Indiana
Avenue
LaPorte, Indiana 46350
Attn: Michele Thompson, President and Chief Financial Officer
(219) 362-7511
Website:
www.laportesavingsbank.com
You should rely only on the information contained in this document or to which we have referred you.
We have not authorized anyone to provide you with information that is inconsistent with information contained in this document or any document incorporated by reference. This proxy statement/prospectus is not an offer to sell these securities in any
state where the offer and sale of these securities is not permitted. The information in this proxy statement/prospectus speaks only as of the date of this proxy statement/ prospectus unless the information specifically indicates that another date
applies. If any material change occurs during the period that this proxy statement/prospectus is required to be delivered, this proxy statement/prospectus will be supplemented or amended.
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All information regarding Horizon in this proxy statement/prospectus has been provided by
Horizon, and all information regarding LaPorte in this proxy statement/prospectus has been provided by LaPorte.
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Appendix A
A
GREEMENT
AND
P
LAN
OF
M
ERGER
BY
AND
AMONG
H
ORIZON
B
ANCORP
AND
L
A
P
ORTE
B
ANCORP
, I
NC
.
D
ATED
AS
OF
M
ARCH
10, 2016
A-i
T
ABLE
OF
C
ONTENTS
A-ii
A-iii
A-iv
A
GREEMENT
AND
P
LAN
OF
M
ERGER
THIS AGREEMENT AND PLAN OF MERGER (this
Agreement
) is dated to be
effective as of the 10th day of March, 2016, by and between HORIZON BANCORP, an Indiana corporation (
Horizon
), and LAPORTE BANCORP, INC., a Maryland corporation (
LPB
).
WITNESSETH:
WHEREAS, Horizon
is an Indiana corporation registered as a bank holding company with the Board of Governors of the Federal Reserve System (
FRB
) under the Bank Holding Company Act of 1956, as amended (the
BHC Act
), with its
principal office located in Michigan City, Indiana; and
WHEREAS, LPB is a Maryland corporation registered as a savings and loan holding
company with the FRB under the Home Owners Loan Act of 1933, as amended (the
HOLA
), with its principal office located in La Porte, Indiana; and
WHEREAS, Horizon and LPB seek to consummate a merger whereby LPB will merge with and into Horizon, and immediately following the merger, The
LaPorte Savings Bank, an Indiana-chartered savings bank and wholly-owned subsidiary of LPB (
LPSB
), will be merged with and into Horizon Bank, National Association, a national banking association and wholly-owned subsidiary of
Horizon (
Horizon Bank
); and
WHEREAS, the Boards of Directors of each of the parties hereto have determined that it is
in the best interests of their respective corporations and their respective shareholders to consummate the merger provided for herein; and
WHEREAS, the Board of Directors of each of the parties hereto have approved this Agreement and authorized its execution; and
WHEREAS, the Board of Directors of each of the parties hereto intend this Agreement to be designated a plan of reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended, and a plan of merger; and
WHEREAS, as an inducement for
Horizon to enter into this Agreement, each of the directors and executive officers of LPB has entered into a Voting Agreement with Horizon substantially in the form of
Exhibit 5.01
hereto, dated as of the date hereof (the
Voting
Agreement
), pursuant to which each such director and executive officer has agreed, among other things, to vote all shares of common stock of LPB owned by such person in favor of the approval of this Agreement and the transactions
contemplated hereby, upon the terms and subject to the conditions set forth in such Voting Agreements.
NOW, THEREFORE, in consideration
of the foregoing premises, the representations, warranties, covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE I.
THE MERGER
1.01
The Merger.
(a)
General Description
. Upon the terms and subject to the conditions of this Agreement, at the
Effective Time (as defined in
Article IX
), LPB shall merge with and into Horizon (the
Merger
).
A-1
Horizon shall survive the Merger (sometimes hereinafter referred to as the
Surviving Corporation
) and shall continue its corporate existence under the laws of the State of
Indiana pursuant to the provisions of and with the effect provided in the Indiana Business Corporation Law (the
IBCL
), as amended.
(b)
Name, Officers and Directors
. The name of the Surviving Corporation shall be Horizon Bancorp. Its principal office
shall be located at 515 Franklin Street, Michigan City, Indiana 46360. The officers of Horizon serving at the Effective Time shall continue to serve as the officers of the Surviving Corporation, until such time as their successors shall have been
duly elected and have qualified or until their earlier resignation, death or removal from office. The directors of the Surviving Corporation following the Effective Time shall be those individuals serving as directors of Horizon at the Effective
Time, until such time as their successors have been duly elected and have qualified or until their earlier resignation, death, or removal as a director;
provided, however
, that Horizon shall take all appropriate action so that, as of the
Effective Time and subject to and in accordance with the Bylaws of Horizon, Michele M. Thompson shall be appointed as a director of Horizon.
(c)
Articles of Incorporation and Bylaws
. The Articles of Incorporation and Bylaws of Horizon in existence at the Effective Time shall
remain the Articles of Incorporation and Bylaws of the Surviving Corporation following the Effective Time, until such Articles of Incorporation and Bylaws shall be further amended as provided by applicable law.
(d)
Effect of the Merger
. At the Effective Time, the title to all assets, real estate and other property owned by LPB shall vest in
Surviving Corporation as set forth in Indiana Code Section 23-1-40-6, as amended, without reversion or impairment. At the Effective Time, all liabilities of LPB shall become liabilities of the Surviving Corporation as set forth in Indiana Code
Section 23-1-40-6, as amended.
(e)
Integration
. Subject to the terms and conditions of this Agreement, the parties hereto
intend to effectuate at the Effective Time, or cause to be effectuated at the Effective Time, the Merger, pursuant to the terms of this Agreement and the IBCL, and this Agreement shall also constitute the plan of merger pursuant to
Indiana Code Section 23-1-40-1. If required, the parties agree to enter into a separate short-form plan of merger evidencing the terms required by Indiana Code Section 23-1-40-1. The parties agree to cooperate and to take all reasonable
actions prior to the Effective Time, including executing all requisite documentation, as may be reasonably necessary to effect the Merger in accordance with the terms and conditions hereof.
1.02
Reservation of Right to Revise Structure.
At Horizons election, the Merger may alternatively
be structured so that (a) LPB is merged with and into any other direct or indirect wholly-owned subsidiary of Horizon or (b) any direct or indirect wholly-owned subsidiary of Horizon is merged with and into LPB;
provided, however
,
that no such change shall: (1) alter or change the amount or kind of the Merger Consideration (as defined in
Section 2.01
) or the treatment of the holders of common stock, $0.01 par value per share, of LPB (the
LPB Common
Stock
) or the holders of options for LPB Common Stock, (2) prevent the parties from obtaining the opinions of counsel referred to in
Sections 7.01(h)
and
7.02(h)
or otherwise cause the transaction to fail to qualify for
the tax treatment described in
Section 1.03
or adversely affect the tax treatment of LPBs shareholders pursuant to this Agreement, or (3) materially impede or delay consummation of the transactions contemplated by this
Agreement. In the event of such a revision, the parties agree to execute an appropriate amendment to this Agreement (to the extent such amendment only changes the method of effecting the business combination and does not
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substantively affect this Agreement or the rights and obligations of the parties or their respective shareholders) in order to reflect such revision.
1.03
Tax Free Reorganization.
Horizon and LPB intend for the Merger to qualify as a reorganization within
the meaning of
Section 368(a)
and related sections of the Internal Revenue Code of 1986, as amended (the
Code
), and that this Agreement shall constitute a plan of reorganization for purposes of Sections 354
and 361 of the Code, and agree to cooperate and to take such actions as may be reasonably necessary to assure such result.
1.04
Absence of Control.
Subject to any specific provisions of the Agreement, it is the intent of the parties to this Agreement that neither Horizon nor LPB by reason of this Agreement shall be deemed (until consummation of the
transactions contemplated here) to control, directly or indirectly, the other party or any of its respective Subsidiaries (as defined in the introductory paragraphs to
Article III
and
Article IV
) and shall not exercise or be deemed to
exercise, directly or indirectly, a controlling influence over the management or policies of such other party or any of its respective Subsidiaries.
1.05
Bank Merger.
The parties will cooperate and use reasonable best efforts to effect the merger of LPSB
with and into Horizon Bank (the
Bank Merger
) immediately following the Effective Time pursuant to a merger agreement to be mutually agreed upon between the parties. At the effective time of the Bank Merger, the separate corporate
existence of LPSB will terminate. Horizon Bank will be the surviving bank (the
Surviving Bank
) and will continue its corporate existence under applicable law. The Articles of Association of Horizon Bank, as then in effect, will be
the Articles of Association of the Surviving Bank, the Bylaws of Horizon Bank, as then in effect, will be the Bylaws of the Surviving Bank. The directors of Horizon Bank following the effective time of the Bank Merger shall be those individuals
serving as directors of Horizon Bank at the effective time of the Bank Merger, until such time as their successors have been duly elected and have qualified or until their earlier resignation, death, or removal as a director;
provided,
however
, that Horizon Bank shall take all appropriate action so that, as of the effective time of the Bank Merger, and subject to and in accordance with the Bylaws of Horizon Bank, Michele M. Thompson shall be appointed as a director of Horizon
Bank. The officers of Horizon Bank serving at the effective time of the Bank Merger shall continue to serve as the officers of the Surviving Bank, until such time as their successors shall have been duly elected and have qualified or until their
earlier resignation, death or removal from office.
1.06
Investment Subsidiary Merger.
The parties
will cooperate and use reasonable best efforts to effect the merger of LSB Investments, Inc. (
LSBI
) with and into Horizon Investments, Inc. (
HII
and the
Investment Subsidiary Merger
,
respectively) immediately following the Effective Time pursuant to a merger agreement to be mutually agreed upon between the parties. At the effective time of the Investment Subsidiary Merger, the separate corporate existence of LSBI will terminate.
HII will be the surviving corporation and will continue its corporate existence under applicable law. The Articles of Incorporation of HII, as then in effect, will be the Articles of Incorporation of the surviving corporation, the Bylaws of HII, as
then in effect, will be the Bylaws of the surviving corporation, and the Board of Directors and officers of HII will continue as the Board of Directors and officers of the surviving corporation.
1.07
Real Estate Subsidiary Merger.
The parties will cooperate and use reasonable best efforts to effect
the merger of LSB Real Estate, Inc. (
LSBREI
) with and into Horizon Properties, Inc. (
HPI
and the
Real Estate Subsidiary Merger
, respectively) immediately following the Effective Time pursuant
to a merger agreement to be mutually agreed upon between the parties. At the effective time of the Real Estate Subsidiary Merger, the separate corporate existence of LSBREI will terminate.
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HPI will be the surviving corporation and will continue its corporate existence under applicable law. The Articles of Incorporation of HPI, as then in effect, will be the Articles of
Incorporation of the surviving corporation, the Bylaws of HPI, as then in effect, will be the Bylaws of the surviving corporation, and the Board of Directors and officers of HPI will continue as the Board of Directors and officers of the surviving
corporation.
1.08
Termination of Captive Insurance Program Participation.
Prior to the Effective
Time, LPB will use its commercially reasonable best efforts to take all steps necessary to terminate LPBs and its Subsidiaries participation in the captive insurance program through LSB Risk Management, Inc. (
LSBRMI
)
as of the Effective Time (the
LSBRMI Termination
).
1.09
No Dissenters Rights.
Shareholders of LPB are not entitled to any dissenters rights under Title 3 of the Maryland General Corporation Law, as amended. LPB shall take no action which would result in the loss of such exemption prior to the Effective Time.
ARTICLE II.
MANNER AND BASIS OF EXCHANGE OF STOCK
2.01
Merger Consideration.
Subject to the terms and conditions of this Agreement, at the Effective Time,
each share of LPB Common Stock issued and outstanding immediately prior to the Effective Time (other than shares held directly or indirectly by Horizon, except shares held in a fiduciary capacity or in satisfaction of a debt previously contracted,
if any; collectively, the
Exempt LPB Stock
) shall become and be converted into the right to receive in accordance with this
Article II
, at the election of the holder thereof, either (or a combination of): (i) 0.629
shares of Horizon common stock (the
Exchange Ratio
) (as adjusted in accordance with the terms of this Agreement), without par value (the aggregate stock consideration to be paid in the Merger is referred to herein as the
Stock Consideration
), or (ii) $17.50 in cash (the aggregate cash consideration to be paid in the Merger is referred to herein as the
Cash Consideration
) (with the Stock Consideration and the Cash
Consideration collectively referred to herein as the
Merger Consideration
);
provided, however
, that in the aggregate, sixty-five (65%) of LPBs Common Stock issued and outstanding immediately prior to the
Effective Time will be converted and exchanged for the Stock Consideration and, that in the aggregate, thirty-five (35%) of LPBs Common Stock issued and outstanding immediately prior to the Effective Time will be exchanged for the Cash
Consideration).
2.02
Election Procedures.
(a)
Cash and Stock Elections
. An election form and other appropriate and customary transmittal materials (which shall specify that
delivery shall be effected, and risk of loss and title to certificates shall pass, only upon proper delivery of such certificates to Computershare, Inc., as Horizons stock transfer agent (the
Exchange Agent
)) in such form as
designated by Horizon and the Exchange Agent, and in such form as reasonably acceptable to LPB (the
Election Form
), shall be mailed prior to the anticipated Closing Date on such date as LPB and Horizon shall mutually agree upon
(the
Mailing Date
) to each holder of record of LPB Common Stock as of five (5) business days prior to the Mailing Date. Each Election Form shall permit the holder of record of LPB Common Stock (or in the case of nominee
record holders, the beneficial owner through proper instructions and documentation) to (i) elect to receive the Cash Consideration for all or a portion of such holders shares of LPB Common Stock (a
Cash Election
),
(ii) elect to receive the Stock Consideration for all or a portion of such holders shares of LPB Common Stock (a
Stock Election
), (iii) elect to receive Stock
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Consideration for a portion of such holders LPB Common Stock and Cash Consideration for the remaining portion of such holders LPB Common Stock (the
Cash/Stock
Consideration
) (an election to receive the Cash/Stock Consideration is referred to as a
Mixed Election
), or (iv) make no election with respect to the receipt of the Cash Consideration or the Stock Consideration (a
Non-Election
);
provided, however
, that, notwithstanding any other provision of this Agreement to the contrary, 65% of the outstanding shares of LPB Common Stock (the
Stock Conversion Number
) shall be
converted into the Stock Consideration and the remaining shares of LPB Common Stock issued and outstanding immediately prior to the Effective Time shall be converted into the Cash Consideration (the
Cash Consideration Number
).
Shares of LPB Common Stock as to which a Cash Election (including as part of a Mixed Election) has been made are referred to herein as
Cash Election Shares
. Shares of LPB Common Stock as to which a Stock Election (including as
part of a Mixed Election) has been made are referred to herein as
Stock Election Shares
. Shares of LPB Common Stock as to which no election has been made (or as to which an Election Form is not properly completed and returned in a
timely fashion) are referred to herein as
Non-Election Shares
. The aggregate number of shares of LPB Common Stock with respect to which a Stock Election has been made is referred to herein as the
Stock Election
Number
.
(b)
Delivery of Election
. To be effective, a properly completed Election Form shall be received by the Exchange
Agent on or before 5:00 p.m., Eastern Time, on such date as mutually agreed upon between Horizon and LPB (which date shall be at least five (5) business days prior to the anticipated Closing Date and shall be publicly announced by Horizon as
soon as practicable prior to such date)) (the
Election Deadline
), accompanied by the certificates representing LPB Common Stock as to which such Election Form is being made or by an appropriate guarantee of delivery of such
certificates, as set forth in the Election Form, from a member of any registered national securities exchange or a commercial bank or trust company in the United States;
provided, however
, that any such guarantee shall be subject to the
condition that such certificates are in fact delivered to the Exchange Agent by the time required in such guarantee of delivery and failure to deliver the certificates covered by such guarantee of delivery within the time set forth in such guarantee
shall be deemed to invalidate any otherwise properly made election, unless otherwise determined by Horizon, in its sole discretion. For shares of LPB Common Stock (if any) held in book entry form, Horizon shall establish procedures for delivery of
such shares, which procedures shall be reasonably acceptable to LPB. If a holder of LPB Common Stock either (i) does not submit a properly completed Election Form in a timely fashion or (ii) revokes the holders Election Form prior to
the Election Deadline (without later submitting a properly completed Election Form prior to the Election Deadline), the shares of LPB Common Stock held by such holder shall be designated Non-Election Shares. All Election Forms shall automatically be
revoked, and all certificates returned, if the Exchange Agent is notified in writing by Horizon and LPB that this Agreement has been terminated. Subject to the terms of this Agreement and of the Election Form, the Exchange Agent shall have
reasonable discretion to determine whether any election, revocation or change has been properly or timely made and to disregard immaterial defects in any Election Form, and any good faith decisions of the Exchange Agent regarding such matters shall
be binding and conclusive. Neither Horizon nor the Exchange Agent shall be under any obligation to notify any Person of any defect in an Election Form.
(c)
Allocation
. The allocation among the holders of shares of LPB Common Stock of rights to receive the Cash Consideration and the
Stock Consideration will be made as set forth in this
Section 2.02(c)
(with the Exchange Agent to determine, consistent with
Section 2.02(a)
, whether fractions of
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Cash Election Shares, Stock Election Shares or Non-Election Shares, as applicable, shall be rounded up or down).
(i)
Aggregate Stock Consideration Oversubscribed
. If the Stock Election Number exceeds the Stock Conversion Number, then
all Cash Election Shares and all Non-Election Shares shall be converted into the right to receive the Cash Consideration, and, subject to
Section 2.05
hereof, each holder of Stock Election Shares will be entitled to receive the Stock
Consideration in respect of that number of Stock Election Shares held by such holder equal to the product obtained by multiplying (x) the number of Stock Election Shares held by such holder by (y) a fraction, the numerator of which is the
Stock Conversion Number and the denominator of which is the Stock Election Number, with the remaining number of such holders Stock Election Shares being converted into the right to receive the Cash Consideration;
(ii)
Aggregate Stock Consideration Undersubscribed
. If the Stock Election Number is less than the Stock Conversion
Number (the amount by which the Stock Conversion Number exceeds the Stock Election Number being referred to herein as the
Shortfall Number
), then all Stock Election Shares shall be converted into the right to receive the Stock
Consideration and the Non-Election Shares and the Cash Election Shares shall be treated in the following manner:
(A)
Adjustment to Non-Election Share Allocation Only.
If the Shortfall Number is less than or equal to the number of Non-Election Shares, then all Cash Election Shares shall be converted into the right to receive the Cash Consideration and,
subject to
Section 2.05
hereof, each holder of Non-Election Shares shall receive the Stock Consideration in respect of that number of Non-Election Shares held by such holder equal to the product obtained by multiplying (x) the
number of Non-Election Shares held by such holder by (y) a fraction, the numerator of which is the Shortfall Number and the denominator of which is the total number of Non-Election Shares, with the remaining number of such holders
Non-Election Shares being converted into the right to receive the Cash Consideration; or
(B)
Adjustment to Both
Non-Election Share Allocation and Cash Election Share Allocation.
If the Shortfall Number exceeds the number of Non-Election Shares, then all Non-Election Shares shall be converted into the right to receive the Stock Consideration, and, subject
to
Section 2.05
hereof, each holder of Cash Election Shares shall receive the Stock Consideration in respect of that number of Cash Election Shares equal to the product obtained by multiplying (x) the number of Cash Election Shares
held by such holder by (y) a fraction, the numerator of which is the amount by which the Shortfall Number exceeds the total number of Non-Election Shares and the denominator of which is the total number of Cash Election Shares, with the
remaining number of such holders Cash Election Shares being converted into the right to receive the Cash Consideration.
2.03
Treatment of LPB Equity Awards.
(a) All options to purchase LPB Common Stock outstanding immediately prior to the Election
Deadline, whether or not vested, shall be converted into the right to receive from Horizon, at the Effective Time, an amount in cash equal to $17.50 minus the per share exercise price for each share of LPB Common Stock subject to an option;
provided, however
, that there shall be withheld from such cash payment any taxes required to be withheld by applicable law. LPB shall use its best efforts to
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obtain from each holder of an option or agreement to the treatment of their options in the manner contemplated by this Section on or before the Election Deadline by executing and delivering to
Horizon an agreement in the same form as
Exhibit 2.03
attached hereto, and LPB shall amend any such plan accordingly (or take such other action as is necessary to cause all outstanding LPB options to terminate as of the Effective Time) prior
to the Effective Time. Each such option shall be cancelled and cease to exist by virtue of such payment. Execution by every holder of options shall not be a condition precedent to consummation of the transactions contemplated herein.
(b) At the Effective Time, each award in respect of a share of LPB Common Stock subject to vesting or other lapse restriction granted under a
LPB Plan, whether or not vested, that is outstanding immediately prior to the Effective Time (a
LPB Restricted Stock Award
) shall fully vest and be cancelled and converted automatically into the right to receive the Merger
Consideration in respect of each share of LPB Common Stock underlying such LPB Restricted Stock Award. Horizon shall issue the consideration described in this
Section 2.03(b)
, less applicable tax withholdings, within five
(5) business days following the Closing Date.
2.04
Anti-Dilution Adjustments
.
If
Horizon changes (or establishes a record date for changing) the number of shares of Horizon common stock issued and outstanding prior to the Effective Time by way of a stock split, stock dividend, or similar transaction with respect to the
outstanding Horizon common stock, and the record date therefor shall be prior to the Effective Time, the Exchange Ratio shall be adjusted so the shareholders of LPB at the Effective Time shall receive, in the aggregate, such number of shares of
Horizon common stock representing the same percentage of the outstanding shares of Horizon common stock as would have been represented by the number of shares of Horizon common stock the shareholders of LPB would have received if any of the
foregoing actions had not occurred. No adjustment shall be made under this
Section 2.04
solely as a result of Horizon changing its cash dividend levels or issuing additional shares of Horizon common stock provided it receives value for
such shares or such shares are issued in connection with a Horizon employee benefit plan or similar plan.
2.05
No Fractional Shares.
Notwithstanding any other provision in this Agreement, no fractional shares
of Horizon common stock and no certificates or scrip therefor, or other evidence of ownership thereof, will be issued in the Merger; instead, Horizon shall pay to each holder of LPB Common Stock who otherwise would be entitled to a fractional share
of Horizon common stock an amount in cash (without interest) determined by multiplying such fraction by average of the daily closing sales prices of a share of Horizons common stock, rounded to the nearest cent, during the fifteen
(15) consecutive trading days immediately preceding the second business day prior to the Closing Date;
provided, however
, that closing sales prices shall only be used for days during which such shares are actually traded on the NASDAQ
Global Select Market.
2.06
Exchange Procedures.
(a) At and after the Effective Time, each physical certificate or book entry account statement evidencing outstanding shares of LPB Common
Stock (each an
Old Certificate
) (other than the Exempt LPB Stock) shall represent only the right to receive the Merger Consideration in accordance with the terms of this Agreement. Prior to the Closing Date, Horizon shall provide
the Exchange Agent with the irrevocable authorization to issue a sufficient number of shares of Horizon common stock to be used to issue the aggregate Stock Consideration to holders of LPB Common Stock and deposit, or cause to be deposited, with the
Exchange Agent, an amount in cash sufficient to pay the aggregate Cash
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Consideration payable to holders of LPB Common Stock (together with cash for any fractional shares pursuant to
Section 2.05
).
(b) As promptly as practicable after the Effective Time, but no later than five (5) business days after the Effective Time (and provided
LPB has delivered to the Exchange Agent all information which is necessary for the Exchange Agent to perform its obligations hereunder), the Exchange Agent shall mail to each holder of LPB Common Stock who did not surrender, or who improperly
surrendered, such shareholders Old Certificates to the Exchange Agent, a letter of transmittal providing instructions to the LPB shareholder as to the transmittal to the Exchange Agent of the Old Certificates in exchange for the issuance of
the Merger Consideration applicable thereto in exchange for the Old Certificates pursuant to the terms of this Agreement.
(c) Horizon
shall cause a book entry account statement representing that number of whole shares of Horizon common stock that each holder of LPB Common Stock has the right to receive pursuant to
Section 2.01
and
2.02
and/or a check in the
amount of such holders proportionate share of the Cash Consideration, as applicable, and any cash in lieu of fractional shares or dividends or distributions which such holder shall be entitled to receive, if any, to be delivered to such
shareholder as soon as reasonably practicable after delivery to Horizon of the Old Certificates (or bond or other indemnity satisfactory to Horizon if any of such Old Certificates are lost, stolen or destroyed) owned by such shareholder accompanied
by a properly completed and executed letter of transmittal, in the form and substance satisfactory to Horizon, and any other documents required by this Agreement or reasonably requested by Horizon or the Exchange Agent. No interest will be paid on
any Merger Consideration that any such holder shall be entitled to receive pursuant to this
Article II
upon such delivery.
(d) No
dividends or other distributions on Horizon common stock with a record date occurring after the Effective Time shall be paid to the holder of any unsurrendered Old Certificate representing shares of LPB Common Stock converted in the Merger into the
right to receive shares of Horizon common stock until the holder thereof surrenders such Old Certificates in accordance with this
Article II
. After becoming so entitled in accordance with this
Section 2.06
, the record holder
thereof also shall be entitled to receive any such dividends or other distributions, without any interest thereon, which theretofore had become payable with respect to shares of Horizon common stock such holder had the right to receive upon
surrender of the Old Certificate.
(e) The stock transfer books of LPB shall be closed immediately prior to the Effective Time and from
and after the Effective Time there shall be no transfers on the stock transfer records of LPB of any shares of LPB Common Stock. If, after the Effective Time, Old Certificates are presented to Horizon, they shall be canceled and exchanged for the
Merger Consideration deliverable in respect thereof pursuant to this Agreement in accordance with the procedures set forth in this
Article II
.
(f) Horizon shall be entitled to rely upon LPBs stock transfer books to establish the identity of those individuals, partnerships,
corporations, trusts, joint ventures, organizations or other entities (each, a
Person
) entitled to receive the Merger Consideration, which books shall be conclusive with respect thereto. In the event of a dispute with respect to
ownership of stock represented by any Old Certificate, Horizon shall be entitled to deposit any Merger Consideration represented thereby in escrow with an independent third party selected by Horizon and thereafter be relieved from any and all
liability with respect to any claims thereto.
(g) If any Old Certificate shall have been lost, stolen, or destroyed, upon the making of
an affidavit of that fact by the Person claiming such Old Certificate to be lost, stolen, or destroyed and, if
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required by Horizon, the posting by such Person of a bond or other indemnity satisfactory to Horizon as indemnity against any claim that may be made against it with respect to such Old
Certificate, Horizon will issue in exchange for such affidavit of lost, stolen, or destroyed Old Certificate, the Merger Consideration deliverable in respect thereof pursuant to, and in accordance with, the other terms and conditions of this
Article II
.
(h) Notwithstanding anything in this Agreement to the contrary, at the Effective Time, all shares of LPB Common Stock
that are owned by Horizon (other than shares held in a fiduciary capacity or in satisfaction of a debt previously contracted) shall be cancelled and shall cease to exist, and no stock of Horizon or other consideration shall be exchanged therefor.
(i) Notwithstanding the foregoing, no party hereto shall be liable to any former holder of LPB Common Stock for any amount properly
delivered to a public official pursuant to applicable abandoned property, escheat or similar laws.
(j) If outstanding Old Certificates
are not surrendered or the payment for them is not claimed prior to the date on which the Merger Consideration payable therefor would otherwise escheat to, or become the property of any governmental unit or agency, the unclaimed Merger Consideration
shall, to the extent permitted by abandoned property and any other applicable law, become the property of Horizon (and to the extent not in its possession shall be delivered to it), free and clear of all claims or interest of any Person previously
entitled thereto. Any former shareholder of LPB who has not theretofore complied with this
Article II
shall thereafter look only to the Surviving Corporation for payment of the Merger Consideration and any unpaid dividends and distributions
on Horizons Common Stock deliverable in respect of each former share of LPB Common Stock such shareholder holds as determined pursuant to this Agreement, in each case, without any interest thereon. Neither the Exchange Agent nor any party to
this Agreement shall be liable to any holder of shares of LPB Common Stock for any Merger Consideration paid to a public official pursuant to applicable abandoned property, escheat or similar laws.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF LPB
On or prior to the date hereof, LPB has delivered to Horizon a schedule (the
LPB Disclosure Schedule
) setting forth, among
other things, items the disclosure of which is necessary or appropriate either in response to an express disclosure requirement contained in a provision hereof or as an exception to one or more representations or warranties contained in this
Article III
or to one or more of its covenants contained in
Article V
. However, for purposes of the LPB Disclosure Schedule, any item disclosed on any schedule therein is deemed to be fully disclosed with respect to other sections of
this Agreement under which such item may be relevant but only to the extent that it is reasonably clear on the face of such schedule that such item applies to such other section of this Agreement, and such item is described in sufficient detail to
enable Horizon to identify the items to which it applies.
For the purpose of this Agreement, and in relation to LPB, a
Material
Adverse Effect
means any effect that (i) is material and adverse to the results of operations, properties, assets, liabilities, conditions (financial or otherwise), value or business of LPB and its Subsidiaries (as defined below in
this introduction to
Article III
) on a consolidated basis, or (ii) would materially impair the ability of LPB or any of its Subsidiaries to perform its obligations under this Agreement or any related agreement or otherwise materially
threaten or materially impede the consummation of the Merger and the other
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transactions contemplated by this Agreement;
provided, however
, that Material Adverse Effect on LPB shall not be deemed to include the impact of (a) changes in banking and similar
laws of general applicability to banks or their holding companies or interpretations thereof by courts or governmental authorities, (b) changes in United States generally accepted accounting principles (
GAAP
) or regulatory
accounting requirements applicable to banks or their holding companies generally, (c) effects of any action or omission taken with the prior written consent of Horizon or at the direction of Horizon, (d) the expenses incurred by LPB and
LPSB in negotiating, documenting, effecting and consummating the transactions contemplated by this Agreement, (e) the announcement of this Agreement and the transactions contemplated hereby, and compliance with this Agreement on the business,
financial condition or results of operations of LPB and its Subsidiaries, (f) any changes in general economic or capital market conditions affecting banks and their holding companies generally, including, without limitation, changes in interest
rates, and (g) changes in national or international political or social conditions including the engagement by the United States in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any
military or terrorist attack upon or within the United States, or any of its territories, possessions or diplomatic or consular offices or upon any military installation, equipment or personnel of the United States, unless it uniquely affects either
or both of the parties or any of their Subsidiaries, taken as a whole.
For the purpose of this Agreement, and in relation to LPB and its
Subsidiaries,
knowledge
means those facts that are actually known by the officers of LPB and its Subsidiaries listed on
Section 3.0
of the LPB Disclosure Schedules. Additionally, for the purpose of this Agreement, and
in relation to LPB, its
Subsidiaries
shall mean any entity which is required to be consolidated with LPB for financial reporting purposes pursuant to GAAP.
Accordingly, LPB hereby represents and warrants to Horizon as follows, except as set forth in the LPB Disclosure Schedule:
3.01
Organization and Authority.
(a) LPB is a corporation duly organized and validly existing under the laws of the state of Maryland and is a registered savings and loan
holding company under the HOLA. LPB has full power and authority (corporate and otherwise) to own and lease its properties as presently owned and leased and to conduct its business in the manner and by the means utilized as of the date hereof.
Section 3.01(a)
of the LPB Disclosure Schedules sets forth a complete list of LPBs Subsidiaries. Except as provided in
Section 3.01(a)
of the LPB Disclosure Schedules, LPB owns directly no voting stock or equity
securities of any corporation, partnership, association or other entity.
(b) LPSB is an Indiana state chartered savings bank existing
under the laws of the State of Indiana. LPSB has full power and authority (corporate and otherwise) to own and lease its properties as presently owned and leased and to conduct its business in the manner and by the means utilized as of the date
hereof. Except as set forth in
Section 3.01(b)
of the LPB Disclosure Schedules, no Subsidiary owns voting stock or equity securities of any corporation, partnership, association or other entity.
3.02
Authorization.
(a) LPB has the requisite corporate power and authority to enter into this Agreement and to perform its obligations hereunder, subject to the
fulfillment of the conditions precedent set forth in
Sections 7.02(e)
and
(f)
hereof. This Agreement and its execution and delivery by LPB have been duly authorized and approved by the Board of Directors of LPB and, assuming the
accuracy of the
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representation contained in
Section 4.02(a)
, constitutes a valid and binding obligation of LPB, subject to the terms and conditions hereof, and is enforceable in accordance with its
terms, except to the extent limited by general principles of equity and public policy and by bankruptcy, insolvency, fraudulent transfer, reorganization, liquidation, moratorium, readjustment of debt or other laws of general application relating to
or affecting the enforcement of creditors rights.
(b) Except as set forth in
Section 3.02(b)
of the LPB Disclosure
Schedule, neither the execution of this Agreement nor consummation of the Merger contemplated hereby: (i) conflicts with or violates the Articles of Incorporation or Bylaws of LPB or the charter documents of any of LPBs Subsidiaries;
(ii) conflicts with or violates any applicable local, state, federal or foreign law, statute, ordinance, rule or regulation (provided that the approvals of or filings with applicable government regulatory agencies or authorities required for
consummation of the Merger are obtained) or any court or administrative judgment, order, injunction, writ or decree; (iii) conflicts with, results in a breach of or constitutes a default under any note, bond, indenture, mortgage, deed of trust,
license, lease, contract, agreement, arrangement, commitment or other instrument to which LPB or any of its Subsidiaries is a party or by which LPB or any of its Subsidiaries is subject or bound; (iv) results in the creation of or gives any
Person the right to create any lien, charge, claim, encumbrance or security interest, or results in the creation of any other rights or claims of any other party (other than Horizon) or any other adverse interest, upon any right, property or asset
of LPB or any of its Subsidiaries; or (v) terminates or gives any Person the right to terminate, accelerate, amend, modify or refuse to perform under any note, bond, indenture, mortgage, agreement, contract, lease, license, arrangement, deed of
trust, commitment or other instrument to which LPB or any of its Subsidiaries is bound or with respect to which LPB or any of its Subsidiaries is to perform any duties or obligations or receive any rights or benefits, except for such violations,
conflicts, breaches or defaults under clause (iii), (iv) or (v) hereof that individually or in the aggregate would reasonably be expected to have a Material Adverse Effect on LPB.
(c) Other than in connection or in compliance with the provisions of the applicable federal and state banking, securities, antitrust and
corporation statutes, all as amended, and the rules and regulations promulgated thereunder, no notice to, filing with, exemption by or consent, authorization or approval of any governmental agency or body is necessary for consummation of the Merger
by LPB.
(d) The transactions contemplated by this Agreement are not subject to the requirements of any moratorium,
control share, fair price, affiliate transactions, business combination or other antitakeover laws and regulations of the State of Maryland, including the provisions of the Maryland General Corporation
Law applicable to LPB.
3.03
Capitalization.
(a) As of the date of this Agreement, the authorized capital stock of LPB consists of 100,000,000 shares of LPB Common Stock, $0.01 par value
per share, 5,580,115 shares of which are issued and outstanding (including 119,035.8417 allocated shares of LPB Common Stock and 359,773.3888 unallocated shares of LPB Common Stock held by the LPSB ESOP (as defined in
Section 3.15(k)
,
and 25,152 shares of restricted common stock), and 50,000,000 shares of preferred stock, $0.01 par value, none of which are issued and outstanding. As of the date of this Agreement, and as described in
Section 3.03(a)
of the LPB
Disclosure Schedule, there are options to purchase 579,934 shares of LPB Common Stock outstanding, all of which are vested (or will, as of the Effective Time, be vested) and issuable as shares of LPB Common Stock (the
Options
). As
of the date of this Agreement, the Options have a weighted average exercise price of $9.40 per share. Such issued and outstanding shares of LPB Common Stock and the Options have been duly and validly authorized by all necessary
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corporate action of LPB, are validly issued, fully paid and nonassessable and have not been issued in violation of any pre-emptive rights. LPB has no capital stock authorized, issued or
outstanding other than as described in this
Section 3.03(a)
and has no intention or obligation to authorize or issue any other capital stock or any additional shares of stock or securities convertible into stock. Each share of LPB Common
Stock is entitled to one vote per share.
(b) Except as set forth in
Section 3.03(b)
of the LPB Disclosure Schedule, all of
the issued and outstanding shares of capital stock or other equity ownership interests of each Subsidiary of LPB are owned by LPB, directly or indirectly, free and clear of all liens, pledges, charges, claims, encumbrances, restrictions, security
interests, options and pre-emptive rights and of all other rights or claims of any other Person with respect thereto.
(c) Other than the
Options and except as set forth in
Section 3.03(c)
of the LPB Disclosure Schedule, there are no options, warrants, commitments, calls, puts, plans, agreements, understandings, arrangements or subscription rights relating to any shares of
capital stock of LPB (whether outstanding or to be issued) or any shares of capital stock of LPBs Subsidiaries (whether outstanding or to be issued), or any securities convertible into or representing the right to purchase or otherwise acquire
any common stock or debt securities of LPB or its Subsidiaries, by which LPB is or may become bound or may, or is required to, issue any additional securities of LPB or any Subsidiary. LPB does not have any outstanding contractual or other
obligation to repurchase, redeem or otherwise acquire any of the issued and outstanding shares of LPB Common Stock. To LPBs knowledge, there are no voting trusts, voting arrangements, buy-sell agreements or similar arrangements affecting the
capital stock of LPB or its Subsidiaries.
(d) LPB has no knowledge of any Person which beneficially owns (as defined in Rule 13d-3 under
the Securities Exchange Act of 1934 (the
1934 Act
)) 10% or more of the outstanding shares of LPB Common Stock.
3.04
Organizational Documents.
The Articles of Incorporation and Bylaws of LPB and any similar governing documents for each of LPBs Subsidiaries, representing true, accurate and complete copies of such corporate documents in effect
as of the date of this Agreement have been previously delivered to Horizon.
3.05
Compliance with
Law.
(a) None of LPB or any of its Subsidiaries is currently in material violation of, and since January 1, 2011, none has been
in material violation of, any applicable local, state, federal or foreign law, statute, regulation, rule, ordinance, order, restriction or requirement, and none is in violation of any order, injunction, judgment, writ or decree of any court or
government agency or body (collectively, the
Law
) except where such violation would not have a Material Adverse Effect on LPB. LPB and its Subsidiaries possess and hold all licenses, franchises, permits, certificates and other
authorizations necessary for the continued conduct of their business without interference or interruption, except where the failure to possess and hold the same would not have a Material Adverse Effect on LPB, and such licenses, franchises, permits,
certificates and authorizations are transferable (to the extent required) to Horizon at the Effective Time without any material restrictions or limitations thereon or the need to obtain any consents of government agencies or other third parties
other than as set forth in this Agreement.
(b)
Section 3.05(b)
of the LPB Disclosure Schedule sets forth, as of the date
hereof, a schedule of all officers (vice presidents and higher) and directors of LPB who have outstanding loans
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from LPB or any of its Subsidiaries, and there has been no default on, or forgiveness or waiver of, in whole or in part, any such loan during the two (2) years immediately preceding the date
hereof.
(c) Since the enactment of the Sarbanes-Oxley Act of 2002 (the
Sarbanes-Oxley Act
) and LPBs
incorporation, LPB has been and is in compliance in all material respects with the applicable provisions of the Sarbanes-Oxley Act.
(d)
All of the existing offices and branches of LPSB have been legally authorized and established in accordance with all applicable federal, state and local laws, statutes, regulations, rules, ordinances, orders, restrictions and requirements, except as
would not reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on LPB. LPSB has no approved but unopened offices or branches.
3.06
Accuracy of Information Provided to Horizon.
LPB agrees that the information concerning LPB or any
of its Subsidiaries that is provided or to be provided by LPB to Horizon for inclusion or that is included in the Registration Statement or Proxy Statement (each as defined in
Section 6.02
), and any other documents to be filed with any
regulatory authority or governmental entity in connection with the Merger and the other transactions contemplated by this Agreement will: (a) at the respective times such documents are filed and, in the case of the Registration Statement, when
it becomes effective and, with respect to the Proxy Statement, when mailed, not be false or misleading with respect to any material fact, or omit to state any material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; or (b) in the case of the Proxy Statement or any amendment thereof or supplement thereto, at the time of the LPB Shareholders Meeting, not be false or misleading with respect to
any material fact, or omit to state any material fact necessary to correct any statement in any earlier communication with respect to the solicitation of any proxy for the meeting in connection with which the Proxy Statement shall be mailed.
Notwithstanding the foregoing, LPB shall have no responsibility for the truth or accuracy of any information with respect to Horizon or any of its Subsidiaries or any of their affiliates contained in the Registration Statement or the Proxy Statement
or in any document submitted to, or other communication with, any regulatory agency or governmental entity.
3.07
Litigation and Pending Proceedings.
(a) Except for lawsuits described in
Section 3.07(a)
of the LPB Disclosure Schedule and lawsuits involving collection of delinquent
accounts, there are no material claims, actions, suits, proceedings, mediations, arbitrations or investigations pending or, to the knowledge of LPB, threatened against LPB or any of its Subsidiaries, and to LPBs knowledge there is no basis for
any claim, action, suit, proceeding, litigation, arbitration or investigation against LPB or any of its Subsidiaries that individually or in the aggregate would reasonably be expected to have a Material Adverse Effect on LPB.
(b) Neither LPB nor any of its Subsidiaries is: (i) subject to any outstanding judgment, order, writ, injunction or decree of any court,
arbitration panel or governmental agency or authority; (ii) presently charged with or under governmental investigation with respect to, any actual or alleged violations of any law, statute, rule, regulation or ordinance; or (iii) the
subject of any pending or, to the knowledge of LPB, threatened proceeding by any government regulatory agency or authority having jurisdiction over their respective business, assets, capital, properties or operations.
3.08
Financial Statements and Reports.
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(a) LPB has previously delivered to Horizon copies of the following financial statements and
reports of LPB and its Subsidiaries, including the notes thereto (collectively, the
LPB Financial Statements
):
(i) Consolidated balance sheets and the related consolidated statements of earnings, consolidated statements of cash flows, and
consolidated statements of changes in shareholders equity of LPB as of and for the fiscal years ended December 31, 2012, 2013, and 2014;
(ii) the unaudited interim consolidated financial statements of LPB for the nine months ended September 30, 2015; and
(iii) Call Reports (
Call Reports
) for LPSB for the periods ending on December 31, 2012, 2013, 2014, and
for the three months ended September 30, 2015.
(b) The LPB Financial Statements described in clauses (i) and (ii) above
present fairly in all material respects the consolidated financial position of LPB as of and at the dates shown and the consolidated results of operations, (if presented) cash flows and (if presented) changes in shareholders equity for the
periods covered thereby and are complete, correct, represent bona fide transactions, and have been prepared from the books and records of LPB and its Subsidiaries. The LPB Financial Statements described in clause (i) above are audited financial
statements and have been prepared in conformance with GAAP, except as may otherwise be indicated in any accountants notes or reports with respect to such financial statements.
3.09
Material Contracts.
(a) As of the date of this Agreement, and except as disclosed by
Section 3.09(a)
of the LPB Disclosure Schedule, neither LPB nor
any of its Subsidiaries, nor any of their respective assets, businesses, or operations, is a party to, or is bound or affected by, or receives benefits under (collectively, the
Material Contracts
):
(i) any contract relating to the borrowing of money in excess of $100,000 by LPB or any of its Subsidiaries or the guarantee by
LPB or any of its Subsidiaries of any such obligation (other than FHLB of Indianapolis advances, contracts pertaining to fully-secured securities repurchase agreements, trade payables, bankers acceptances and contracts relating to borrowings
or guarantees made in the ordinary course of business),
(ii) any contract containing covenants that limit the ability of
LPB or any of its Subsidiaries to compete in any line of business or with any Person, or to hire or engage the services of any Person, or that involve any restriction of the geographic area in which, or method by which, LPB or any of its
Subsidiaries may carry on its business (other than as may be required by Law (as defined in
Section 3.05(a)
) or any Governmental Authority (as defined in
Section 5.13)
), or any contract that requires it or any of its
Subsidiaries to deal exclusively or on a sole source basis with another party to such contract with respect to the subject matter of such contract,
(iii) any contract for, with respect to, or that contemplates, a possible merger, consolidation, reorganization,
recapitalization, joint venture, or other business combination, or asset sale or sale of equity securities not in the ordinary course of business consistent with past practice, with respect to LPB or any of its Subsidiaries,
(iv) any lease of real or personal property providing for total aggregate lease payments by or to LPB or its Subsidiaries
during the remaining term of the agreement in excess of $50,000
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or having a remaining term in excess of two years, other than financing leases entered into in the ordinary course of business in which LPB or any of its Subsidiaries is the lessor,
(v) any contract that involves total aggregate expenditures or receipts by LPB or any of its Subsidiaries in excess of $100,000
during the remaining term of the agreement or having a remaining term in excess of two years, excluding agreements relating to loans and deposits with LPSB customers;
(vi) each material licensing agreement or other contract with respect to patents, trademarks, copyrights, or other intellectual
property, including software agreements (other than off the shelf and similar software generally available to the public) and including agreements with current or former employees, consultants or contractors regarding the appropriation or the
nondisclosure of any of its intellectual property;
(vii) all Warehouse Agreements (as defined in
Section 3.09(c)
below); or
(viii) any other document, instrument or agreement that is required to be filed as
an exhibit to any LPB SEC Report (as defined in
Section 3.36
) (pursuant to Items 601(b)(4) or 601(b)(10) of Regulation S K under the 1933 Act) that has not been filed as an exhibit to, or incorporated by reference in, LPBs SEC
Reports filed prior to the date of this Agreement. For purposes of this
Section 3.09
, any document, instrument or agreement that has been, or is required to be, filed as an exhibit to any LPB SEC Report (as described above) shall be
deemed a Material Contract.
(b) With respect to each of LPBs Material Contracts: (i) each such Material Contract
is in full force and effect; (ii) neither LPB nor any of its Subsidiaries is in material default thereunder, as such term or concept is defined in each such Material Contract; (iii) neither LPB nor any of its Subsidiaries has repudiated or
waived any material provision of any such Material Contract; (iv) to LPBs knowledge, no other party to any such Material Contract is in default or otherwise not in compliance with any material term or condition of any such Material
Contract; and (v) a true and complete copy of each such Material Contract has been previously delivered to Horizon.
(c) With respect
to each of LPBs Material Contracts under which LPB provides a revolving credit facility to a borrower for the purpose of originating one to four family residential mortgage loans (each, a
Mortgage Loan
), including but not
limited to, each mortgage loan warehouse agreement, mortgage loan participation purchase and sale agreement, mortgage loan repurchase agreement, and any similar agreement (each, a
Warehouse Agreement
):
(i) to LPBs knowledge, the borrower has not committed fraud in the origination of any Mortgage Loan financed with an
advance made pursuant thereto;
(ii) to LPBs knowledge, each Mortgage Loan funded pursuant thereto is subject to a
valid and enforceable purchase commitment issued by a secondary market purchaser and was originated in accordance with the underwriting standards and investor guidelines of such purchaser, and is otherwise saleable on the secondary market; and
(iii) to LPBs knowledge, the borrower holds a perfected first-lien security interest in the note, mortgage and mortgage
file relating to each Mortgage Loan funded pursuant thereto, subject only to the security interest of LPB in such collateral.
(d) Except
as disclosed in
Section 3.11(a)
of the LPB Disclosure Schedule, neither LPB nor any of its Subsidiaries have entered into any interest rate swaps, caps, floors, option agreements, futures
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and forward contracts, or other similar risk management arrangements, whether entered into for LPBs own account or for the account of one or more of its Subsidiaries or their respective
customers.
3.10
Absence of Undisclosed Liabilities.
Except (i) as provided in the LPB
Financial Statements or LPB SEC Reports (as defined in
Section 3.36), (ii)
for unfunded loan commitments and obligations on letters of credit to customers of LPBs Subsidiaries made in the ordinary course of business,
(iii) for trade payables incurred in the ordinary course of business, (iv) for the transactions contemplated by this Agreement, and (v) any other transactions which would not result in a material liability or have a material impact on
LPB; none of LPB or any of its Subsidiaries has any obligation, agreement, contract, commitment, liability, lease or license made outside of the ordinary course of business, nor, to LPBs knowledge, does there exist any circumstances resulting
from transactions effected or events occurring on or prior to the date of this Agreement or from any action omitted to be taken during such period which could reasonably be expected to result in any such material obligation, agreement, contract,
commitment, liability, lease or license. None of LPB or any of its Subsidiaries is delinquent in the payment of any material amount due pursuant to any trade payable, and each has properly accrued for such payables in accordance with GAAP.
3.11
Title to Properties and Environmental Laws.
(a)
Section 3.11(a)
of the LPB Disclosure Schedule includes a list of all real property owned (including other real estate owned
(
OREO
)) and leased by LPB or any Subsidiary. LPB or one of its Subsidiaries, as the case may be, has marketable title in fee simple to all owned real property (including, without limitation, all real property used as bank premises
and all OREO); marketable title to all material personal property reflected in the LPB Financial Statements as of September 30, 2015, other than personal property disposed of in the ordinary course of business since September 30, 2015; the
right to use by valid and enforceable written lease or contract all other real property which LPB or any of its Subsidiaries uses in its respective business; marketable title to, or right to use by terms of a valid and enforceable written lease or
contract, all other tangible and intangible property used in its respective business to the extent material thereto; and marketable title to all material property and assets acquired (and not disposed of) or leased since September 30, 2015. All
of such owned real estate properties and all other non-real estate assets are owned by LPB or its Subsidiaries free and clear of all land or conditional sales contracts, mortgages, liens, pledges, restrictions, options, security, interests, charges,
claims, rights of third parties or encumbrances of any nature except: (i) as set forth in
Section 3.11(a)
of the LPB Disclosure Schedule; (ii) as specifically noted in reasonable detail in the LPB Financial Statements;
(iii) statutory liens for taxes not yet delinquent or being contested in good faith by appropriate proceedings; (iv) pledges or liens required to be granted in connection with the acceptance of government deposits or granted in connection
with repurchase or reverse repurchase agreements; and (v) easements, encumbrances and liens and other matters of record, imperfections of title and other limitations which are not material in amount and which do not detract from the value or
materially interfere with the present or contemplated use of any of the properties subject thereto or otherwise materially impair the use thereof for the purposes for which they are held or used. To the knowledge of LPB, all real property owned or
leased by LPB or its Subsidiaries is in compliance in all material respects with all applicable zoning and land use laws and there are no encroachments or other violations of law with respect to any such property. To the knowledge of LPB, all such
properties also comply in all material respects with all applicable private agreements, zoning requirements and other governmental laws and regulations relating thereto, and there are no condemnation proceedings pending or threatened with respect to
such properties. To the knowledge of LPB, all real property, machinery, equipment, furniture and fixtures owned or leased by LPB or its Subsidiaries that is material to their respective
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businesses is in good operating condition for its intended purpose (ordinary wear and tear excepted) and has been and is being maintained and repaired in the ordinary condition of business.
(b) After the date hereof, Horizon shall be entitled, at its own cost, to obtain new commitments for, and policies of title insurance or
surveys in respect of, any real property owned or leased by LPB or its Subsidiaries, and LPB and LPSB agree to reasonably cooperate in connection therewith.
(c) With respect to all real property presently or formerly owned, leased or used by LPB or any of its Subsidiaries, LPB, its Subsidiaries and
to LPBs knowledge, each of the prior owners, have conducted their respective business in material compliance with all applicable federal, state, county and municipal laws, statutes, regulations, rules, ordinances, orders, directives,
restrictions and requirements relating to, without limitation, responsible property transfer, underground storage tanks, petroleum products, air pollutants, water pollutants or storm water or process waste water or otherwise relating to the
environment, air, water, soil or toxic or hazardous substances or to the manufacturing, recycling, handling, processing, distribution, use, generation, treatment, storage, disposal or transport of any hazardous or toxic substances or petroleum
products (including polychlorinated biphenyls, whether contained or uncontained, and asbestos-containing materials, whether friable or not), including, without limitation, the Federal Solid Waste Disposal Act, the Hazardous and Solid Waste
Amendments, the Federal Clean Air Act, the Federal Clean Water Act, the Occupational Health and Safety Act, the Federal Resource Conservation and Recovery Act, the Toxic Substances Control Act, the Federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980 and the Superfund Amendments and Reauthorization Act of 1986, all as amended, and regulations of the Environmental Protection Agency, the Nuclear Regulatory Agency, the Army Corps of Engineers, the Department
of Interior, the United States Fish and Wildlife Service and any state department of natural resources or state environmental protection agency now or at any time thereafter in effect (collectively, Environmental Laws). There are no
pending or, to the knowledge of LPB, threatened claims, actions or proceedings by any local municipality, sewage district or other governmental entity against LPB or any of its Subsidiaries with respect to the Environmental Laws, and, to LPBs
knowledge, there is no reasonable basis or grounds for any such claim, action or proceeding. No environmental clearances are required for the conduct of the business of LPB or any of its Subsidiaries as currently conducted or the consummation of the
Merger or any of the other transactions contemplated hereby. Except as disclosed in
Section 3.11(c)
of the LPB Disclosure Schedule, neither LPB nor any of its Subsidiaries is the owner, or has been in the chain of title or the operator
or lessee, of any property on which any substances have been used, stored, deposited, treated, recycled or disposed of, other than in compliance with Environmental Laws and which substances, if known to be present on, at or under such property,
would require clean-up, removal, treatment, abatement, response costs, or any other remedial action under any Environmental Law. Neither LPB nor any of its Subsidiaries has any liability for any clean-up or remediation under any of the Environmental
Laws with respect to any real property.
3.12
Loans and Investments.
(a)
Section 3.12(a)
of the LPB Disclosure Schedule contains (i) a list of each loan by LPSB that has been classified by
regulatory examiners or management as Special Mention, Substandard, Doubtful or Loss or that has been identified by accountants or auditors (internal or external) as having a significant risk of
uncollectability as of September 30, 2015, (ii) the most recent loan watch list of LPSB and a list of all loans which have been determined to be thirty (30) days or more past due with respect to principal or interest payments, have
been placed on nonaccrual status, or have been designated as Troubled Debt Restructuring (
TDR
) loans, (iii) a description of all unfunded loan commitments
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(and loans currently under consideration) of the types and amounts described in
Section 5.03(b)(iv)
of this Agreement, and (iv) a list of each outstanding advance made pursuant
to a Warehouse Agreement that remains unpaid at least 90 days after the funding date of the Mortgage Loan originated with such advance. LPB and LPSB have not sold, purchased or entered into any loan participation arrangement which was outstanding at
September 30, 2015, except where such participation is on a pro rata basis according to the respective contributions of the participants to such loan amount.
Section 3.12(a)
of the LPB Disclosure Schedule also contains a true,
accurate and complete list of all loans in which LPSB has any participation interest or which have been made with or through another financial institution on a recourse basis against LPSB.
(b) All loans originated by LPSB, and to the knowledge of LPSB, all loans purchased by LPSB pursuant to the Warehouse Agreements, and
reflected in the LPB Financial Statements as of September 30, 2015 and which have been made, extended, renewed, restructured, approved, amended or acquired since September 30, 2015: (i) have been made for good, valuable and adequate
consideration in the ordinary course of business; (ii) constitute the legal, valid and binding obligation of the obligor and any guarantor named therein, except to the extent limited by general principles of equity and public policy or by
bankruptcy, insolvency, fraudulent transfer, reorganization, liquidation, moratorium, readjustment of debt or other laws of general application relative to or affecting the enforcement of creditors rights; (iii) are evidenced by notes,
instruments or other evidences of indebtedness which are true, genuine and what they purport to be; and (iv) are secured by perfected security interests or recorded mortgages naming LPSB as the secured party or mortgagee (unless by written
agreement to the contrary).
(c) The allowance for loan and lease losses and the carrying value for OREO which are shown on the LPB
Financial Statements are, in the judgment of management of LPB, adequate in all material respects under the requirements of GAAP as of the respective dates.
(d) None of the investments reflected in the LPB Financial Statements as of and for the nine months ended September 30, 2015, and none of
the investments made by any Subsidiary of LPB since September 30, 2015 are subject to any restriction, whether contractual or statutory, which materially impairs the ability of such Subsidiary to dispose freely of such investment at any time.
Neither LPB nor any of its Subsidiaries is a party to any repurchase agreements with respect to securities. All United States Treasury securities, obligations of other United States Government agencies and corporations, obligations of states of the
United States and their political subdivisions, and other investment securities classified as held to maturity held by LPB and LPSB, as reflected in the latest balance sheet in the LPB Financial Statements, are carried in the aggregate
at no more than cost adjusted for amortization of premiums and accretion of discounts. All United States Treasury securities, obligations of other United States Government agencies and corporations, obligations of states of the United States and
their political subdivisions, and other investment securities classified as available for sale held by LPB and LPSB, as reflected in the latest balance sheet in the LPB Financial Statements, are carried in the aggregate at market value.
Provisions for losses have been made on all such securities that have had a decline in value deemed other than temporary as defined in SEC Staff Accounting Bulletin No. 59.
3.13
Indebtedness.
Except as set forth in
Section 3.13
of the LPB Disclosure Schedule and
except for customer deposits and ordinary trade payables and FHLB advances, neither LPB nor any of its Subsidiaries has any indebtedness for borrowed money.
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3.14
No Shareholder Rights Plan.
LPB has no outstanding
shareholder rights plan or any other plan, program or agreement involving, restricting, prohibiting or discouraging a change in control or merger of LPB or which reasonably could be considered an anti-takeover mechanism.
3.15
Employee Benefit Plans.
(a) With respect to the employee benefit plans, as defined in
Section 3(3)
of the Employee Retirement Income Security Act of 1974,
as amended (
ERISA
), sponsored or otherwise maintained by any member of a controlled group of corporations under Code Section 414(b) of which LPB is or was a member, and any trade or business (whether or not incorporated)
which is or was under common control with LPB under Code Section 414(c), and all other entities which together with LPB are or were prior to the date hereof treated as a single employer under Code Section 414(m) or 414(o) (an
ERISA Affiliate
), whether written or oral, in which LPB or any ERISA Affiliate participates as a participating employer, or to which LPB or any ERISA Affiliate contributes, or any nonqualified employee benefit plans or deferred
compensation, bonus, stock, performance share, phantom stock or incentive plans or arrangements, or other employee benefit or fringe benefit programs for the benefit of former or current employees or directors (or their beneficiaries or dependents)
of LPB or any ERISA Affiliate, and including any such plans which have been terminated, merged into another plan, frozen or discontinued since January 1, 2009 (individually,
LPB Plan
and collectively,
LPB
Plans
), LPB represents and warrants, except as set forth in
Section 3.15(a)
of the LPB Disclosure Schedule:
(i) All such LPB Plans have, on a continuous basis since their adoption, been, in all material respects, maintained in
compliance with their respective terms and with the requirements prescribed by all applicable statutes, orders and governmental rules or regulations, including without limitation, ERISA and the Department of Labor (
Department
)
Regulations promulgated thereunder and the Code and Treasury Regulations promulgated thereunder.
(ii) All LPB Plans
intended to constitute tax-qualified plans under Code Section 401(a) have complied in form since their adoption and have been timely amended to comply in all material respects with all applicable requirements of the Code and the Treasury
Regulations and each such Plan either (A) has received a determination letter from the Internal Revenue Service upon which LPB may rely regarding such plans tax qualified status under the Code, or (B) is a pre-approved volume
submitter or prototype plan that is the subject of an opinion letter issued by the Internal Revenue Service.
(iii) All LPB
Plans that provide for payments of nonqualified deferred compensation (as defined in Code Section 409A(d)(1)) have, in all material respects, been (A) operated in good faith compliance with the applicable requirements of Code
Section 409A and applicable guidance thereunder since January 1, 2005, and (B) amended to comply in written form with Code Section 409A and the Treasury Regulations promulgated thereunder.
(iv) All options to purchase shares of LPB Common Stock were granted with a per share exercise price that was not less than the
fair market value of LPB Common Stock on the date of such grant, as determined in accordance with the terms of the applicable LPB Plan. All LPB stock options, restricted stock units, and shares of restricted stock have, been properly
accounted for in accordance with GAAP, and no change is expected in respect of any prior financial statements relating to expenses for stock-based compensation. There is no pending audit, investigation or inquiry by any governmental agency or
authority or by LPB (directly or indirectly) with respect to LPBs stock option or restricted stock granting practices or other equity compensation practices.
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(v) No LPB Plan (or its related trust) holds any stock or other securities of LPB
and no LPB Plan allows for the granting of any awards over or with respect to any stock or other securities of LPB.
(vi)
Neither LPB, an ERISA Affiliate nor to LPBs knowledge, any other fiduciary as defined in ERISA Section 3(21)(A) of an LPB Plan has engaged in any transaction that may subject LPB, any ERISA Affiliate or any LPB Plan to a civil penalty
imposed by ERISA Section 502 or any other provision of ERISA or excise taxes under Code Section 4971, 4975, 4976, 4977, 4979 or 4980B.
(vii) All obligations required to be performed by LPB or any ERISA Affiliate under any provision of any LPB Plan have been
performed by it in all material respects and, neither LPB nor any ERISA Affiliate is, in any material respect, in default under or in violation of any provision of any LPB Plan.
(viii) All required reports and descriptions for the LPB Plans have, in all material respects, been timely filed and
distributed to participants and beneficiaries, and all notices required by ERISA or the Code with respect to all LPB Plans have been proper as to form and timely given.
(ix) No event has occurred which would reasonably constitute grounds for an enforcement action by any party under Part 5 of
Title I of ERISA with respect to any LPB Plan.
(x) There are no examinations, audits, enforcement actions or proceedings,
or any other investigations, pending or, to LPBs knowledge, threatened by any governmental agency involving any LPB Plan.
(xi) There are no actions, suits, proceedings or claims pending (other than routine claims for benefits) or, to LPBs
knowledge, threatened against LPB or any ERISA Affiliate in connection with any LPB Plan or the assets of any LPB Plan.
(xii) Any LPB Plan may be amended and terminated at any time without any material liability and these rights have always been
maintained by LPB and its ERISA Affiliates.
(b) LPB has provided or made available to Horizon true, accurate and complete copies and, in
the case of any plan or program which has not been reduced to writing, a materially complete summary, of all of the following LPB Plans, as applicable:
(i) All current pension, retirement, profit-sharing, savings, stock purchase, stock bonus, stock ownership, stock option,
restricted stock, restricted stock unit, phantom stock, performance share and stock appreciation right plans, all amendments thereto, and, if required under the reporting and disclosure requirements of ERISA, all current summary plan descriptions
thereof (including any modifications thereto);
(ii) All current employment, deferred compensation (whether funded or
unfunded), salary continuation, change in control, consulting, bonus, severance, and collective bargaining, agreements, arrangements or understandings;
(iii) All current executive and other incentive compensation plans, programs and agreements;
(iv) All current group insurance, medical, and prescription drug arrangements, policies or plans;
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(v) All other current incentive, welfare or employee benefit plans,
understandings, arrangements or agreements, maintained or sponsored, participated in, or contributed to by LPB for its current or former directors, officers or employees;
(vi) All reports filed with the Internal Revenue Service or the Department within the preceding three (3) years by LPB or
any ERISA Affiliate with respect to any LPB Plan;
(vii) All current participants (based on the most current census or
similar report) in the LPSB ESOP, LPB 401(k), or the health and welfare benefit plans; and
(viii) Valuations or allocation
reports for any defined contribution and defined benefit plans as of the most recent allocation and valuation dates.
(c) Except as
disclosed in
Section 3.15(c)
of the LPB Disclosure Schedule, no current or former director, officer or employee of LPB or any ERISA Affiliate (i) is entitled to or may become entitled to any benefit under any LPB Plans that are
welfare benefit plans (as defined in ERISA Section 3(1)) after termination of employment with LPB or any ERISA Affiliate, except to the extent such individuals may be entitled to continue their group health care coverage pursuant to Code
Section 4980B, or (ii) is currently receiving, or entitled to commence receiving, a disability benefit under a long-term or short-term disability plan that is a LPB Plan maintained by LPB or an ERISA Affiliate.
(d) With respect to all LPB Plans that are group health plans as defined in ERISA Section 607(1), sponsored or maintained by LPB or any
ERISA Affiliate, to LPBs knowledge, no director, officer, employee or agent of LPB or any ERISA Affiliate has engaged in any action or failed to act in such a manner that, as a result of such action or failure to act, would cause a tax to be
imposed on LPB or any ERISA Affiliate under Code Section 4980B(a), or would cause a penalty to be imposed under ERISA and the regulations promulgated thereunder. With respect to all such plans, all applicable provisions of Code
Section 4980B and ERISA Sections 601-606 have been complied with by LPB or any ERISA Affiliate, and all other provisions of ERISA and the regulations promulgated thereunder have been complied with in all material respects.
(e) Except as disclosed in
Section 3.15(e)
of the LPB Disclosure Schedule, there are no collective bargaining, employment,
management, consulting, deferred compensation, change in control, reimbursement, indemnity, retirement, early retirement, severance or similar plans or agreements, commitments or understandings, or any employee benefit or retirement plan or
agreement, binding upon LPB or any ERISA Affiliate, and no such agreement, commitment, understanding or plan is under discussion or negotiation by management with any employee or group of employees, any member of management or any other Person.
(f) No Voluntary Employees Beneficiary Association (
VEBA
), as defined in Code Section 501(c)(9), is sponsored or
maintained by LPB or any ERISA Affiliate.
(g) Except as contemplated in this Agreement or as disclosed in
Section 3.15(g)
of
the LPB Disclosure Schedule, there are no material benefits or material liabilities under any employee benefit plan or program that will be accelerated or otherwise come due as a result of the transactions contemplated by the terms of this
Agreement.
(h) Neither LPB nor any of its ERISA Affiliates has ever sponsored, maintained, participated in, contributed to or had any
obligation with respect to any plan that is subject to Code Section 412 or Title IV of ERISA, that is or has been subject to Sections 4063 or 4064 of ERISA or that is a multiple employer welfare arrangement, as defined in
Section 3(40) of ERISA. Neither LPB nor any of its
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ERISA Affiliates has ever participated in or had any obligation to contribute to a multiemployer plan, as defined in Section 3(37) of ERISA.
(i) Except as disclosed in
Section 3.15(i)
of the LPB Disclosure Schedule, as a result, directly or indirectly, of the
transactions contemplated by this Agreement (including without limitation any termination of employment relating thereto and occurring prior to, at or following the Effective Time), LPB, its ERISA Affiliates and their respective successors will not
be obligated to make a payment that would be characterized as an excess parachute payment to an individual who is a disqualified individual, as such terms are defined in Code Section 280G.
(j) Except as contemplated by this Agreement, neither LPB nor any ERISA Affiliate has made any promises or commitments, whether legally
binding or not, to create any new plan, agreement or arrangement, or to modify or change in any material way LPB Plans.
(k) With respect
to the LaPorte Savings Bank Employee Stock Ownership Plan (the
LPSB ESOP
):
(i) The LaPorte Savings
Bank Employee Stock Ownership Plan Committee (the
ESOP Committee
) has been duly appointed in accordance with
Section 12.2
of the LPSB ESOP and has the authority to take the actions under
Section 5.25(d)(iii)
and
Section 5.25(d)(iv)
.
(ii) No event of default has occurred or presently
exists under the ESOP Term Loan Agreement dated October 4, 2012, by and between the LPSB ESOP and LPB (the
ESOP Loan Agreement
), the Term Note dated October 4, 2012 issued by the LPSB ESOP (the
Exempt
Note
) or the Pledge and Security Agreement dated October 4, 2012, by and between the LPSB ESOP and LPB (the
ESOP Pledge Agreement
) (the ESOP Loan Agreement, Exempt Note and ESOP Pledge Agreement referred to
collectively as the
ESOP Loan Documents
).
(iii) The LPSB ESOP has the right under the ESOP Loan
Agreement to prepay at any time the principal amount of the Exempt Note without penalty and subject only to payment of accrued interest through the date of prepayment.
(iv) The LPSB ESOP is now and has been at all times since its inception a qualified employee stock ownership plan within the
meaning of Code Section 4975(e)(7).
(v) All shares of LPB Stock owned by the LPSB ESOP are and have at all times
constituted employer securities as that term is defined in Section 409(l) of the Code and qualifying employer securities as defined in Section 407(d)(5) of ERISA.
(vi) Except for the Indebtedness under the ESOP Loan Documents, there is no existing Indebtedness of the LPSB ESOP, LPB or LPSB
relating to the ESOP.
(vii) The ESOP Trustee has been duly and properly appointed and granted full authority to act as
trustee of the LPSB ESOP and exercise trust powers thereunder.
(viii) With respect to the LaPorte Savings Bank 401(k)
Retirement Plan (the
LPB 401(k) Plan
), Deborah S. Varnak and Joyce Fabisiak have been duly appointed pursuant to the terms of the LPB 401(k) Plan as the sole trustees of the LPB 401(k) Plan (the
401(k) Trustees
)
and have the authority to take the actions necessary under
Section 5.16(f)(iii)
and
Section
5.16(f)(iv)
.
3.16
Labor and Employment Matters.
LPB is and has been in material compliance with
all applicable Laws relating to labor and employment, including those relating to wages, hours, collective
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bargaining, unemployment compensation, workers compensation, equal employment opportunity, age and disability discrimination, immigration control, employee classification, information
privacy and security, payment and withholding of taxes. To the knowledge of LPB, no employee with annual compensation of $75,000 or more plans to terminate his or her employment with LPB or any Subsidiary. Since January 1, 2013, there has not
been, and as of the date of this Agreement there is not pending or, to the knowledge of LPB, threatened, any labor dispute, work stoppage, labor strike or lockout against LPB. No employee of LPB or any of its Subsidiaries is covered by an effective
or pending collective bargaining agreement or similar labor agreement. To LPBs knowledge, there has not been any activity on behalf of any labor organization or employee group to organize any such employees. Except as set forth on
Section 3.16
of the LPB Disclosure Schedule, no employee or independent contractor of LPB or any of its Subsidiaries is a party to any employment agreement, confidentiality, non-disclosure or proprietary information agreement,
non-compete agreement, non-solicitation agreement or any similar agreement with LPB or any of its Subsidiaries (the
Employee Agreements
), and neither LPB, any Subsidiary or any employee or independent contractor is in violation of
any such Employee Agreement. LPB is in material compliance with all notice and other requirements under the Worker Adjustment and Retraining Notification Act of 1988, and any other similar applicable foreign, state, or local laws relating to
facility closings and layoffs.
3.17
Obligations to Employees.
All material obligations and
liabilities of and all payments by LPB or any ERISA Affiliate and all LPB Plans, whether arising by operation of law, by contract or by past custom, for payments to trusts or other funds, to any government agency or authority or to any present or
former director, officer, employee or agent (or his or her heirs, legatees or legal representatives) have been and are being paid to the extent required by applicable law or by the plan, trust, contract or past custom or practice, and adequate
actuarial accruals and reserves for such payments have been and are being made by LPB or an ERISA Affiliate in accordance with GAAP and applicable law applied on a consistent basis and sound actuarial methods with respect to the following:
(a) withholding taxes or unemployment compensation; (b) LPB Plans; (c) employment, salary continuation, change in control, consulting, retirement, early retirement, severance or reimbursement; and (d) collective bargaining plans
and agreements. All accruals and reserves referred to in this
Section 3.17
are correctly and accurately reflected and accounted for in the LPB Financial Statements and the books, statements and records of LPB.
3.18
Taxes, Returns and Reports.
Each of LPB and its Subsidiaries has since January 1, 2012
(a) duly and timely filed or extended (before its due date) all material federal, state, local and foreign tax returns of every type and kind required to be filed, and each such return is true, accurate and complete in all material respects;
(b) paid or otherwise adequately reserved in accordance with GAAP for all taxes, assessments and other governmental charges due or claimed to be due upon it or any of its income, properties or assets, unless being contested in good faith; and
(c) not requested an extension of time for any such payments (which extension is still in force). LPB has established, and shall establish in the Subsequent LPB Financial Statements (as defined in
Section 5.11
), in accordance with
GAAP, a reserve for taxes in the LPB Financial Statements adequate to cover all of LPBs and its Subsidiaries tax liabilities (including, without limitation, income taxes, payroll taxes and withholding, and franchise fees) for the periods then
ending. Neither LPB nor any of its Subsidiaries has, to LPBs knowledge, nor will any of them have, any liability for material taxes of any nature for or with respect to the operation of its business, from the date hereof up to and including
the Effective Time, except to the extent set forth in the Subsequent LPB Financial Statements (as defined in
Section 5.11
) or as accrued or reserved for on the books and records of LPB or its Subsidiaries. Except as set forth in
Section 3.18
of the LPB
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Disclosure Schedule, neither LPB nor any of its Subsidiaries is currently under audit by any state or federal taxing authority. Except as set forth in
Section 3.18
of the LPB
Disclosure Schedule, no federal, state or local tax returns of LPB or any of its Subsidiaries have been audited by any taxing authority since January 1, 2011.
3.19
Deposit Insurance.
The deposits of LPSB are insured by the Federal Deposit Insurance Corporation in
accordance with the Federal Deposit Insurance Act, as amended, to the fullest extent provided by applicable law, and LPB or LPSB has paid, prepaid or properly reserved or accrued for all current premiums and assessments with respect to such deposit
insurance.
3.20
Insurance.
Section 3.20
of the LPB Disclosure Schedule contains a true,
accurate and complete list of all policies of insurance, self-insured arrangements and pooled or shared risk arrangements (including, without limitation, bankers blanket bond, directors and officers liability insurance,
bankers blanket bond for third party mortgage brokers, property and casualty insurance, group health or hospitalization insurance and insurance providing benefits for employees) owned, held or participated in by LPB or any of its Subsidiaries
on the date hereof or with respect to which LPB or any of its Subsidiaries pays any premiums. Each bankers bond for third party brokers satisfies the applicable requirements of
Section 5.04(b)
of this Agreement. LPB has also caused
each borrower under a Warehouse Agreement to maintain in place errors and omissions coverage and fidelity bond coverage that satisfies the applicable requirements of
Section 5.04(b)
of this Agreement. All of the aforementioned policies
and arrangements, and to LPBs knowledge, all policies and arrangements relating to Warehouse Agreements which are required to be maintained by third parties, are in full force and effect and all premiums due thereon have been paid when due.
3.21
Books and Records.
The books of account, minute books, stock record books and other records of
LPB and its Subsidiaries are complete and correct in all material respects and have been maintained in accordance with the LPBs business practices and all applicable Laws, including the maintenance of an adequate system of internal controls
required by such Laws. The minute books of LPB and each of its Subsidiaries contain accurate and complete records in all material respects of all meetings held, and corporate action taken by, its respective shareholders, boards of directors and
committees of the boards of directors. At the Closing, all of those books and records will be in the possession of LPB and its Subsidiaries.
3.22
Brokers, Finders or Other Fees.
Except for reasonable fees and expenses of LPBs
attorneys and accountants and the contractually-agreed fees and expenses of Raymond James & Associates, Inc. (
Raymond James
), LPBs investment banker under the agreement identified on
Section 3.22
of the
LPB Disclosure Schedule, all of which shall be paid or accrued by LPB at or prior to the Effective Time, no agent, broker or other Person acting on behalf of LPB or any of its Subsidiaries or under any authority of LPB or any of its Subsidiaries is
or shall be entitled to any commission, brokers or finders fee or any other form of compensation or payment from any of the parties hereto relating to this Agreement or the Merger or other transactions contemplated hereby.
3.23
Interim Events.
Except as otherwise permitted hereunder or disclosed on
Section 3.23
of
the LPB Disclosure Schedule, since September 30, 2015, neither LPB nor any of its Subsidiaries has:
(a) Experienced any events,
changes, developments or occurrences which have had, or are reasonably likely to have, a Material Adverse Effect on LPB;
(b) Suffered any
damage, destruction or loss to any of its properties, not fully paid by insurance proceeds, in excess of $100,000 individually or $250,000 in the aggregate;
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(c) Declared, distributed or paid any dividend or other distribution to its shareholders, except
for payment of dividends as permitted by
Section 5.03(b)(ii)
hereof;
(d) Repurchased, redeemed or otherwise acquired shares
of its common stock, issued any shares of its common stock or stock appreciation rights or sold or agreed to issue or sell any shares of its common stock (excluding the exercise of any stock options), including the issuance of stock options, or any
right to purchase or acquire any such stock or any security convertible into such stock or taken any action to reclassify, recapitalize or split its stock;
(e) Granted or agreed to grant any increase in benefits payable or to become payable under any pension, retirement, profit sharing, change in
control, health, bonus, insurance or other welfare benefit plan or agreement to employees, officers or directors of LPB or a Subsidiary, except in the ordinary course of business;
(f) Increased the salary of (or granted any bonus to) any director, officer or employee, except for normal increases (and bonuses) in the
ordinary course of business and in accordance with past practices, or entered into any employment contract, indemnity agreement or understanding with any officer or employee or installed or amended any existing employee welfare, pension, retirement,
change in control, stock option, stock appreciation, stock dividend, profit sharing or other similar plan or arrangement;
(g) Leased,
sold or otherwise disposed of any of its assets except in the ordinary course of business or leased, purchased or otherwise acquired from third parties any assets except in the ordinary course of business;
(h) Except for the Merger and other transactions contemplated by this Agreement, merged, consolidated or sold shares of its (or any of its
Subsidiaries) common stock, agreed to merge or consolidate LPB or any of its Subsidiaries with or into any third party, agreed to sell any shares of its (or any of its Subsidiaries) common stock or acquired or agreed to acquire any
stock, equity interest, assets or business of any third party;
(i) Incurred, assumed or guaranteed any material obligation or liability
(fixed or contingent) other than obligations and liabilities incurred in the ordinary course of business;
(j) Mortgaged, pledged or
subjected to a lien, security interest, option or other encumbrance any of its assets except for tax and other liens which arise by operation of law and with respect to which payment is not past due and except for pledges or liens: (i) required
to be granted in connection with acceptance by LPSB of government deposits; or (ii) granted in connection with repurchase or reverse repurchase agreements;
(k) Canceled, released or compromised any material loan, debt, obligation, claim or receivable other than in the ordinary course of business;
(l) Except for this Agreement, entered into any transaction, contract or commitment other than in the ordinary course of business;
(m) Agreed to enter into any transaction for the borrowing or loaning of monies, other than in the ordinary course of its lending business;
(n) Amended their articles of incorporation, charter or bylaws (or other similar governance documents) or adopted any resolutions by
their board of directors or shareholders with respect to the same; or
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(o) Conducted its business in any manner other than substantially as it was being conducted prior
to September 30, 2015.
3.24
Insider Transactions.
Except as set forth in
Section 3.24
of the LPB Disclosure Schedule, since January 1, 2013, no executive officer or director of LPB or any of its Subsidiaries or member of the immediate family or related interests (as such terms are
defined in Regulation O) of any such executive officer or director has currently, or has had during such time period, any direct or indirect interest in any property, assets, business or right which is owned, leased, held or used by LPB or any
Subsidiary or in any liability, obligation or indebtedness of LPB or any Subsidiary, except for deposits of LPSB, securities issued by LPB, and interests in compensatory arrangements.
3.25
Indemnification Agreements.
(a) Except as set forth in
Section 3.25(a)
of the LPB Disclosure Schedule, neither LPB nor any of its Subsidiaries is a party to
any indemnification, indemnity or reimbursement agreement, contract, commitment or understanding to indemnify any present or former director, officer, employee or shareholder against liability or hold the same harmless from liability other than as
expressly provided in the Articles of Incorporation or Bylaws of LPB or the charter documents of a Subsidiary.
(b) Since January 1,
2011, no claims have been made against or filed with LPB or any of its Subsidiaries nor have any claims been, to LPBs knowledge, threatened against LPB or a Subsidiary, for indemnification against liability or for reimbursement of any costs or
expenses incurred in connection with any legal or regulatory proceeding by any present or former director, officer, shareholder, employee or agent of LPB or any of its Subsidiaries.
3.26
Shareholder Approval.
The affirmative vote of the holders of a majority of the LPB Common Stock
(which are issued and outstanding on the record date relating to the meeting of shareholders contemplated by
Section 5.01
of this Agreement) and entitled to vote on this Agreement and the Merger is required for shareholder approval of
this Agreement and the Merger.
3.27
Intellectual Property.
(a) LPB and its Subsidiaries own, or are licensed or otherwise possess sufficient legally enforceable rights to use, all material Intellectual
Property (as defined in
Section 3.27(e)
) that is used by LPB or its Subsidiaries in their respective businesses as currently conducted. Neither LPB nor any of its Subsidiaries has (A) licensed any Intellectual Property owned by it
or its Subsidiaries in source code form to any third party or (B) entered into any exclusive agreements relating to Intellectual Property owned by it.
(b) To LPBs knowledge, LPB and its Subsidiaries have not infringed or otherwise violated any material Intellectual Property rights of
any third party since January 1, 2013. There is no claim asserted or, to LPBs knowledge, threatened against LPB and/or its Subsidiaries or any indemnitee thereof concerning the ownership, validity, registerability, enforceability,
infringement, use or licensed right to use any Intellectual Property.
(c) Since January 1, 2013, to LPBs knowledge, no third
party has infringed, misappropriated or otherwise violated LPB or its Subsidiaries Intellectual Property rights. There are no claims asserted or threatened by LPB or its Subsidiaries, nor has LPB or its Subsidiaries decided to assert or
threaten a claim, that (i) a third party infringed or otherwise violated any of their Intellectual Property rights; or (ii) a third partys owned or claimed Intellectual Property interferes with, infringes, dilutes or otherwise harms
any of their Intellectual Property rights.
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(d) To the extent LPB has designated any of its information, materials or processes a trade
secret, LPB and its Subsidiaries have taken commercially reasonable measures to protect the confidentiality of all trade secrets that are owned, used or held by them.
(e) For purposes of this Agreement,
Intellectual Property
shall mean all patents, trademarks, trade names, service marks,
domain names, database rights, copyrights, and any applications therefor, mask works, technology, know-how, trade secrets, inventory, ideas, algorithms, processes, computer software programs or applications (in both source code and object code
form), and tangible or intangible proprietary information or material and all other intellectual property or proprietary rights.
3.28
Information Security.
No Person has gained unauthorized access to any of the LPB IT Assets which has caused, or is reasonably likely to cause, a Material Adverse Effect for LPB or LPSB. LPB and its Subsidiaries have implemented
reasonable backup and disaster recovery technology consistent with industry practices and as required by Law or any Governmental Authority and are compliant in all material respects with all data protection and privacy laws and regulations as well
as their own policies relating to data protection and the privacy and security of personal data and the non-public personal information of their respective customers and employees, and with their own privacy policies and commitments to their
respective customers and employees relating to the foregoing, except for immaterial failures to comply or immaterial violations. No claims are pending or, to LPBs knowledge, threatened in writing against LPB or any Subsidiary alleging a
violation of any Persons privacy rights or rights regarding the protection of personally identifiable information or other non-public information. For purposes of this Agreement,
LPB IT Assets
means computers, computer
software, firmware, middleware, servers, workstations, routers, hubs, switches, data communications lines, and all other information technology equipment, and all associated documentation owned by LPB or its Subsidiaries or licensed or leased by LPB
or its Subsidiaries (excluding any public networks).
3.29
Community Reinvestment Act.
LPSB received
a rating of satisfactory or better in its most recent examination or interim review with respect to the Community Reinvestment Act.
3.30
Bank Secrecy and Anti-Money Laundering Compliance.
Neither LPB nor any of its Subsidiaries has
received any notice or communication from any regulatory authority alleging violation of, or noncompliance with, any legal requirement concerning bank secrecy or anti-money laundering, including the Currency and Foreign Transactions Reporting Act,
the Money Laundering Control Act of 1986, Annunzio-Wylie Anti-Money Laundering Act, the Money Laundering Suppression Act of 1994, and the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism
Act of 2001 (also known as the USA PATRIOT Act) (each such legal requirement and the rules promulgated thereunder, a
BSA/AML Law
). LPB and its Subsidiaries have not been cited, fined or otherwise notified of any failure by it to
comply with a BSA/AML Law which has not been cured. To the knowledge of LPB and its Subsidiaries, there are no facts or circumstances that could form the basis for assertion of any proceeding against LPB or its Subsidiaries under any BSA/AML Law
that, if determined adversely to LPB or its Subsidiaries, would reasonably be likely, either individually or in the aggregate, to have a Material Adverse Effect on LPB.
3.31
Agreements with Regulatory Agencies.
Neither LPB nor any of its Subsidiaries is subject to any
cease-and-desist, consent order or other order or enforcement action issued by, or is a party to any written agreement, consent agreement or memorandum of understanding with, or is a party to any commitment letter or similar undertaking to, or is
subject to any order or directive by, or has been ordered to pay any civil money penalty by, or has been since January 1, 2013, a recipient of any supervisory letter from, or, since January 1, 2013, has adopted any policies, procedures or
board
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resolutions at the request or suggestion of any regulatory agency or other governmental entity that currently restricts in any material respect the conduct of its business or that in any material
manner relates to its capital adequacy, its ability to pay dividends, its credit or risk management policies, its management or its business, other than those of general application that apply to similarly situated holding companies or their
subsidiaries, whether or not set forth in
Section 3.31
of the LPB Disclosure Schedule (a
LPB Regulatory Agreement
), nor has LPB or any of its Subsidiaries been advised, since January 1, 2013, by any regulatory
agency or other governmental entity that it is considering issuing, initiating, ordering, or requesting any such LPB Regulatory Agreement. There are no refunds or restitutions required to be paid as a result of any criticism of any regulatory agency
or body cited in any examination report of LPB or any of its Subsidiaries as a result of an examination by any regulatory agency or body, or set forth in any accountants or auditors report to LPB or any of its Subsidiaries.
3.32
Approval Delays.
To LPBs knowledge, as of the date hereof, there is no reason why the
granting of any of the Regulatory Approvals (as defined in
Section
7.01(e)
) would be denied or unduly delayed.
3.33
Internal Controls.
LPB and its Subsidiaries
have devised and maintain a system of internal accounting controls sufficient to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
GAAP. Since January 1, 2013, (i) through the date hereof, neither LPB nor any of its Subsidiaries has received or otherwise had or obtained knowledge of any material complaint, allegation, assertion or claim, whether written or oral,
regarding the accounting or auditing practices, procedures, methodologies or methods of LPB or any of its Subsidiaries or their respective internal accounting controls, including any material complaint, allegation, assertion or claim that LPB or any
of its Subsidiaries has engaged in questionable accounting or auditing practices, and (ii) no attorney representing LPB or any of its Subsidiaries, whether or not employed by LPB or any of its Subsidiaries, has reported evidence of a violation
of securities laws, breach of fiduciary duty or similar violation by LPB or any of its officers, directors, employees or agents to the Board of Directors of LPB or any committee thereof or to any director or officer of LPB.
3.34
Fiduciary Accounts.
LPB and each of its Subsidiaries has properly administered all accounts for
which it acts as a fiduciary, including, without limitation, accounts for which it serves as a trustee, agent, custodian, personal representative, guardian, conservator or investment advisor, in accordance with the terms of the governing documents
and applicable laws and regulations. Neither LPB nor any of its Subsidiaries, nor any of their respective directors, officers or employees, has committed any breach of trust, to LPBs knowledge, with respect to any fiduciary account and the
records for each such fiduciary account are true and correct and accurately reflect the assets of such fiduciary account.
3.35
Fairness Opinion.
LPB has received an opinion from Raymond James to the effect that, as of the date of this Agreement, the Merger Consideration to be received by the common stockholders of LPB pursuant to this Agreement is fair for
such common stockholders from a financial point of view. Such opinion has not been amended or rescinded as of the date of this Agreement.
3.36
LPB Securities and Exchange Commission Filings.
LPB has filed all material reports and other
filings with the Securities and Exchange Commission (the
SEC
) required to be filed by it (
LPB SEC Reports
). All such LPB SEC Reports were true, accurate and complete in all material respects as of the dates of
the LPB SEC Reports, and no such filings contained any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements, at the time and
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in the light of the circumstances under which they were made, not false or misleading. As of the date of this Agreement, there are no outstanding or unresolved comments in any comment letters
received by LPB, and to the knowledge of LPB, none of the LPB SEC Reports is the subject of any ongoing review by the SEC.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF HORIZON
On or prior to the date hereof, Horizon has delivered to LPB a schedule (the
Horizon Disclosure Schedule
) setting forth,
among other things, items the disclosure of which is necessary or appropriate either in response to an express disclosure requirement contained in a provision hereof or as an exception to one or more representations or warranties contained in this
Article IV
or to one or more of its covenants contained in
Article V
or
Article VI
. However, for purposes of the Horizon Disclosure Schedule, any item disclosed on any schedule therein is deemed to be fully disclosed with
respect to other sections of this Agreement under which such item may be relevant but only to the extent that it is reasonably clear on the face of such schedule that such item applies to such other section of this Agreement, and such item is
described in sufficient detail to enable LPB to identify the items to which it applies.
For the purpose of this Agreement, and in
relation to Horizon and its Subsidiaries (as defined in this introduction to
Article IV
), a
Material Adverse Effect on Horizon
means any effect that (i) is material and adverse to the results of operations, properties,
assets, liabilities, conditions (financial or otherwise), value or business of Horizon and its Subsidiaries on a consolidated basis, or (ii) would materially impair the ability of Horizon or any of its Subsidiaries to perform its obligations
under this Agreement or any related agreement or otherwise materially threaten or materially impede the consummation of the Merger and the other transactions contemplated by this Agreement;
provided, however
, that Material Adverse Effect on
Horizon shall not be deemed to include the impact of (a) changes in banking and similar laws of general applicability to banks or savings associations or their holding companies or interpretations thereof by courts or governmental authorities,
(b) changes in GAAP or regulatory accounting requirements applicable to banks, savings associations, or their holding companies generally, (c) effects of any action or omission taken with the prior written consent of LPB or at the
direction of LPB, (d) the announcement of this Agreement and the transactions contemplated hereby, and compliance with this Agreement on the business, financial condition or results of operations of Horizon and its Subsidiaries, (e) the
expenses incurred by Horizon or Horizon Bank in negotiating, documenting, effecting and consummating the transactions contemplated by this Agreement, (f) any changes in general economic or capital market conditions affecting banks and their
holding companies generally, including, without limitation, changes in interest rates, and (g) changes in national or international political or social conditions including the engagement by the United States in hostilities, whether or not
pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack upon or within the United States, or any of its territories, possessions or diplomatic or consular offices or upon any military
installation, equipment or personnel of the United States, unless it uniquely affects either or both of the parties or any of their Subsidiaries, taken as a whole.
For the purpose of this Agreement, and in relation to Horizon and its Subsidiaries,
knowledge
means those facts that are
actually known by the officers of Horizon listed on
Section 4.0
of the Horizon
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Disclosure Schedules. Additionally, for the purpose of this Agreement, and in relation to Horizon, its
Subsidiaries
shall mean any entity which is required to be consolidated
with Horizon for financial reporting purposes pursuant to GAAP.
Accordingly, Horizon represents and warrants to LPB as follows, except as
set forth in the Horizon Disclosure Schedule:
4.01
Organization and Authority.
(a) Horizon is a corporation duly organized and validly existing under the laws of the State of Indiana and is a registered bank holding
company under the BHC Act. Horizon has full power and authority (corporate and otherwise) to own and lease its properties as presently owned and leased and to conduct its business in the manner and by the means utilized as of the date hereof.
(b) Horizon Bank is a national bank chartered and existing under the laws of the United States. Horizon Bank has full power and authority
(corporate and otherwise) to own and lease its properties as presently owned and leased and to conduct its business in the manner and by the means utilized as of the date hereof.
(c) Each of Horizons Subsidiaries other than Horizon Bank is duly organized and validly existing under the laws of its jurisdiction of
organization, and has full power and authority (corporate and otherwise) to own and lease its properties as presently owned and leased and to conduct its business in the manner and by the means utilized as of the date hereof.
(d) The Articles of Incorporation and Bylaws of Horizon and Horizon Bank, representing true, accurate and complete copies of such corporate
documents in effect as of the date of this Agreement have been previously delivered to LPB.
4.
02
Authorization.
(a) Horizon has the requisite corporate power and authority to enter into this Agreement and to perform its
obligations hereunder, subject to the fulfillment of the conditions precedent set forth in
Sections 7.01(d)
,
(e)
and
(f)
hereof. This Agreement and its execution and delivery by Horizon have been duly authorized and
approved by the Board of Directors of Horizon and, assuming the accuracy of the representation contained in
Section 3.02(a)
, constitutes a valid and binding obligation of Horizon, subject to the terms and conditions hereof, and is
enforceable in accordance with its terms, except to the extent limited by general principles of equity and public policy and by bankruptcy, insolvency, fraudulent transfer, reorganization, liquidation, moratorium, readjustment of debt or other laws
of general application relating to or affecting the enforcement of creditors rights.
(b) Neither the execution of this Agreement
nor consummation of the Merger contemplated hereby: (i) conflicts with or violates the Articles of Incorporation or Bylaws of Horizon or the charter documents of any of Horizons Subsidiaries; (ii) conflicts with or violates any
local, state, federal or foreign law, statute, ordinance, rule or regulation (provided that the approvals of or filings with applicable government regulatory agencies or authorities required for consummation of the Merger are obtained) or any court
or administrative judgment, order, injunction, writ or decree; (iii) conflicts with, results in a breach of or constitutes a default under any note, bond, indenture, mortgage, deed of trust, license, lease, contract, agreement, arrangement,
commitment or other instrument to which Horizon or any of its Subsidiaries is a party or by which Horizon or any of its Subsidiaries is subject or bound; (iv) results in the creation of or gives any Person the right to create any lien, charge,
claim, encumbrance or security interest, or results in the creation of any other rights or claims of any other party (other than
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LPB) or any other adverse interest, upon any right, property or asset of Horizon or any of its Subsidiaries; or (v) terminates or gives any Person the right to terminate, accelerate, amend,
modify or refuse to perform under any note, bond, indenture, mortgage, agreement, contract, lease, license, arrangement, deed of trust, commitment or other instrument to which Horizon or any of its Subsidiaries is bound or with respect to which
Horizon or any of its Subsidiaries is to perform any duties or obligations or receive any rights or benefits, except for such violations, conflicts, breaches or defaults under clause (iii), (iv) or (v) hereof that individually or in the
aggregate would reasonably be expected to have a Material Adverse Effect on LPB.
(c) Other than in connection or in compliance with the
provisions of the applicable federal and state banking, securities, antitrust and corporation statutes, all as amended, and the rules and regulations promulgated thereunder, no notice to, filing with, exemption by or consent, authorization or
approval of any governmental agency or body is necessary for consummation of the Merger by Horizon.
4.03
Capitalization.
(a) As of the date of this Agreement, the authorized capital stock of Horizon consists of (i) 22,500,000
shares of Horizon common stock, 12,003,564 shares of which are issued and outstanding (and which includes shares of restricted stock), (ii) 1,000,000 shares of preferred stock, none of which are issued and outstanding, and (iii) options to
purchase 165,091 shares of Horizon common stock. Such issued and outstanding shares have been duly and validly authorized by all necessary corporate action of Horizon, are validly issued, fully paid and nonassessable and have not been issued in
violation of any pre-emptive rights. Each share of Horizon common stock is entitled to one vote per share.
(b) Except as set forth in
Section 4.03(b)
of the Horizon Disclosure Schedule, all of the issued and outstanding shares of capital stock or other equity ownership interests of each Subsidiary of Horizon are owned by Horizon, directly or indirectly, free and clear
of all liens, pledges, charges, claims, encumbrances, restrictions, security interests, options and pre-emptive rights and of all other rights or claims of any other Person with respect thereto.
4.04
Compliance with Law.
(a) None of Horizon or any of its Subsidiaries is currently in violation of, and since January 1, 2011, none has been in violation of any
Law, except where such violation would not have a Material Adverse Effect on Horizon. Horizon and its Subsidiaries possess and hold all licenses, franchises, permits, certificates and other authorizations necessary for the continued conduct of their
business without interference or interruption, except where the failure to possess and hold the same would not have a Material Adverse Effect on Horizon.
(b) Horizon is not subject to any understandings or commitments with, and there are no orders or directives of, any government regulatory
agencies or authorities with respect to the financial condition, results of operations, business, assets or capital of Horizon or its Subsidiaries. There are no refunds or restitutions required to be paid as a result of any criticism of any
regulatory agency or body cited in any examination report of Horizon or any of its Subsidiaries as a result of an examination by any regulatory agency or body, or set forth in any accountants or auditors report to Horizon or any of its
Subsidiaries.
(c) Since the enactment of the Sarbanes-Oxley Act, Horizon, to its knowledge, has been and is in compliance in all material
respects with the applicable provisions of the Sarbanes-Oxley Act.
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(d) All of the existing offices and branches of Horizon Bank have been legally authorized and
established in accordance with all applicable federal, state and local laws, statutes, regulations, rules, ordinances, orders, restrictions and requirements, except such as would not have a Material Adverse Effect on Horizon.
4.05
Absence of Undisclosed Liabilities.
Except (i) as provided in the Horizon financial statements
included in its SEC Reports (as defined in
Section 4.15
), (ii) for unfunded loan commitments and obligations on letters of credit to customers of Horizons Subsidiaries made in the ordinary course of business, (iii) for
trade payables incurred in the ordinary course of business, (iv) for the transactions contemplated by this Agreement, and (v) any other transactions which would not result in a material liability or have a material impact on Horizon; none
of Horizon or any of its Subsidiaries has any obligation, agreement, contract, commitment, liability, lease or license made outside of the ordinary course of business nor, to Horizons knowledge, does there exist any circumstances resulting
from transactions effected or events occurring on or prior to the date of this Agreement or from any action omitted to be taken during such period which could reasonably be expected to result in any such material obligation, agreement, contract,
commitment, liability, lease or license. None of Horizon or any of its Subsidiaries is delinquent in the payment of any material amount due pursuant to any trade payable, and each has properly accrued for such payables in accordance with GAAP,
except where the failure to so accrue would not constitute a Material Adverse Effect on Horizon.
4.06
Accuracy of Information Provided to LPB.
Horizon agrees that the information concerning Horizon or any of its Subsidiaries that is provided or to be provided by Horizon to LPB for inclusion or that is included in the Registration Statement or
Proxy Statement (each as defined in
Section 6.02
) and any other documents to be filed with any regulatory authority or governmental entity in connection with the Merger and the other transactions contemplated by this Agreement will:
(a) at the respective times such documents are filed and, in the case of the Registration Statement, when it becomes effective and, with respect to the Proxy Statement, when mailed, not be false or misleading with respect to any material fact,
or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; or (b) in the case of the Proxy Statement or any amendment thereof or supplement
thereto, at the time of the LPB Shareholders Meeting, not be false or misleading with respect to any material fact, or omit to state any material fact necessary to correct any statement in any earlier communication with respect to the
solicitation of any proxy for the meeting in connection with which the Proxy Statement shall be mailed. Notwithstanding the foregoing, Horizon shall have no responsibility for the truth or accuracy of any information with respect to LPB or any of
its Subsidiaries or any of their affiliates contained in the Registration Statement or the Proxy Statement or in any document submitted to, or other communication with, any regulatory agency or governmental entity.
4.07
Financial Statements and Reports.
(a) The following financial statements and reports of Horizon and its Subsidiaries, including the notes thereto (collectively, the
Horizon Financial Statements
) are publicly available:
(i) consolidated balance sheets and the related
consolidated statements of income, consolidated statements of cash flows, and consolidated statements of changes in shareholders equity of Horizon as of and for the fiscal years ended December 31, 2013, 2014 and 2015; and
(ii) Call Reports for Horizon Bank as of the close of business on December 31, 2013, 2014, and 2015.
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(b) The Horizon Financial Statements described in clause (i) present fairly, in all material
respects, the consolidated financial position of Horizon as of and at the dates shown and the consolidated results of operations for the periods covered thereby and are complete, correct, represent bona fide transactions, and have been prepared from
the books and records of Horizon and its Subsidiaries. The Horizon Financial Statements described in clause (i) above are audited financial statements and have been prepared in conformance with GAAP, except as may otherwise be indicated in any
accountants notes or reports with respect to such financial statements.
(c) Since December 31, 2015, on a consolidated basis,
Horizon and its Subsidiaries have not incurred any material liability other than in the ordinary course of business consistent with past practice.
4.08
Adequacy of Reserves.
The reserves, the allowance for loan and lease losses and the carrying value
for real estate owned which are shown on the Horizon Financial Statements are, in the judgment of management of Horizon, adequate, in all material respects, under the requirements of GAAP to provide for possible losses on items for which reserves
were made, on loans and leases outstanding and real estate owned as of the respective dates.
4.09
Litigation and Pending Proceedings.
(a) There are no material claims, actions, suits, proceedings, mediations, arbitrations or
investigations pending or, to the knowledge of Horizon, threatened against Horizon or any of its Subsidiaries, and to Horizons knowledge there is no basis for any claim, action, suit, proceeding, litigation, arbitration or investigation
against Horizon or any of its Subsidiaries that individually or in the aggregate would reasonably be expected to have a Material Adverse Effect on Horizon.
(b) Neither Horizon nor any of its Subsidiaries is: (i) subject to any outstanding judgment, order, writ, injunction or decree of any
court, arbitration panel or governmental agency or authority; (ii) presently charged with or under governmental investigation with respect to, any actual or alleged violations of any law, statute, rule, regulation or ordinance; or
(iii) the subject of any pending or, to the knowledge of Horizon, threatened proceeding by any government regulatory agency or authority having jurisdiction over their respective business, assets, capital, properties or operations.
4.10
Taxes, Returns and Reports.
Each of Horizon and its Subsidiaries has since January 1, 2012
(a) duty and timely filed all material federal, state, local and foreign tax returns of every type and kind required to be filed, and each such return is true, accurate and complete in all material respects; (b) paid or otherwise
adequately reserved in accordance with GAAP for all taxes, assessments and other governmental charges due or claimed to be due upon it or any of its income, properties or assets, unless being contested in good faith; and (c) not requested an
extension of time for any such payments (which extension is still in force). Horizon has established, and shall establish in future publicly-filed financial statements, in accordance with GAAP, a reserve for taxes in the Horizon Financial Statements
adequate to cover all of Horizons and its Subsidiaries tax liabilities (including, without limitation, income taxes, payroll taxes and withholding, and franchise fees) for the periods then ending. Neither Horizon nor any of its Subsidiaries,
to their knowledge, has, nor will any of them have, any liability for material taxes of any nature for or with respect to the operation of its business, from the date hereof up to and including the Effective Time, except to the extent set forth in
Horizons future publicly-filed financial statements and as accrued or reserved for on the books and records of Horizon or its Subsidiaries. Neither Horizon nor any of its Subsidiaries is currently under audit by any state or federal taxing
authority. Except as disclosed in
Section 4.10
of the Horizon Disclosure Schedule, no federal, state or local tax returns of Horizon or any of its Subsidiaries have been audited by any taxing authority since January 1, 2011.
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4.11
Deposit Insurance.
The deposits of Horizon Bank are
insured by the Federal Deposit Insurance Corporation in accordance with the Federal Deposit Insurance Act, as amended, to the fullest extent provided by applicable law, and Horizon or Horizon Bank has paid or properly reserved or accrued for all
current premiums and assessments with respect to such deposit insurance.
4.12
Bank Secrecy and Anti
Money Laundering Compliance.
Neither Horizon nor any of its Subsidiaries has received any notice or communication from any regulatory authority alleging violation of, or noncompliance with, any BSA/AML Law. Horizon and its Subsidiaries have not
been cited, fined or otherwise notified of any failure by it to comply with a BSA/AML Law which has not been cured. To the knowledge of Horizon and its Subsidiaries, there are no facts or circumstances that could form the basis for assertion of any
proceeding against Horizon or its Subsidiaries under any BSA/AML Law that, if determined adversely to Horizon or its Subsidiaries, would reasonably be likely, either individually or in the aggregate, to have a Material Adverse Effect on Horizon.
4.13
Community Reinvestment Act.
Horizon Bank received a rating of satisfactory or
better in its most recent examination or interim review with respect to the Community Reinvestment Act.
4.14
Approval Delays.
To the knowledge of Horizon, as of the date hereof, there is no reason why the
granting of any of the Regulatory Approvals would be denied or unduly delayed.
4.15
Horizon Securities
and Exchange Commission Filings.
Horizon has filed all material reports and other filings with the Securities and Exchange Commission (the
SEC
) required to be filed by it (
SEC Reports
). All such SEC Reports
were true, accurate and complete in all material respects as of the dates of the SEC Reports, and no such filings contained any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements, at the
time and in the light of the circumstances under which they were made, not false or misleading. As of the date of this Agreement, there are no outstanding or unresolved comments in any comment letters received by Horizon, and to the knowledge of
Horizon, none of the SEC Reports is the subject of any ongoing review by the SEC.
4.16
No Shareholder
Approval.
No vote or consent of any of the holders of Horizons capital stock is required by law, agreement, or NASDAQ Global Select Market listing requirements for Horizon to enter into this Agreement and to consummate the Merger.
4.17
Antitakeover Provisions Inapplicable.
The transactions contemplated by this Agreement are not
subject to the requirements of any moratorium, control share, fair price, affiliate transactions, business combination or other antitakeover laws and regulations of the State of Indiana,
including the provisions of the IBCL applicable to Horizon.
4.18
Books and Records.
The books of
account, minute books, stock record books and other records of Horizon and its Subsidiaries are complete and correct in all material respects and have been maintained in accordance with the Horizons business practices and all applicable Laws,
including the maintenance of an adequate system of internal controls required by such Laws. The minute books of Horizon and each of its Subsidiaries contain accurate and complete records, in all material respects, of all meetings held, and corporate
action taken by, its respective shareholders, boards of directors and committees of the boards of directors.
4.19
Environmental Matters.
Horizon and its Subsidiaries are in material compliance with all
Environmental Laws. There are no legal, administrative, arbitral or other proceedings, claims or actions, or to the knowledge of Horizon, any private environmental investigations or remediation
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activities or governmental investigations of any nature seeking to impose, on Horizon or any of its Subsidiaries, any material liability or material obligation arising under any Environmental
Law, pending or to Horizons knowledge, threatened against Horizon. To the knowledge of Horizon, there is no reasonable basis for any such proceeding, claim, action or governmental investigation on Horizon or any of its Subsidiaries of any
material liability or material obligation arising under any Environmental Law.
4.20
Interim Events.
Since December 31, 2015, neither Horizon nor any of its Subsidiaries has experienced any events, changes, developments or occurrences which have had, or are reasonably likely to have, a Material Adverse Effect on Horizon.
4.21
Well-Capitalized.
Horizon Bank is well capitalized (as that term is defined in 12
C.F.R. Section 6.4(c)(1)). Horizon Bank has not been informed that its status as well capitalized will change and has no basis for believing that its status will change due to this Merger.
4.22
Internal Controls.
Horizon and its Subsidiaries have devised and maintain a system of internal
accounting controls sufficient to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Since January 1, 2013, (i) through
the date hereof, neither Horizon nor any of its Subsidiaries has received or otherwise had or obtained knowledge of any material complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or auditing practices,
procedures, methodologies or methods of Horizon or any of its Subsidiaries or their respective internal accounting controls, including any material complaint, allegation, assertion or claim that Horizon or any of its Subsidiaries has engaged in
questionable accounting or auditing practices, and (ii) no attorney representing Horizon or any of its Subsidiaries, whether or not employed by Horizon or any of its Subsidiaries, has reported evidence of a violation of securities laws, breach
of fiduciary duty or similar violation by Horizon or any of its officers, directors, employees or agents to the Board of Directors of Horizon or any committee thereof or to any director or officer of Horizon.
4.23
Information Security.
No Person has gained unauthorized access to any of the Horizon IT Assets
which has caused, or is reasonably likely to cause, a Material Adverse Effect, for Horizon or Horizon Bank. Horizon and its Subsidiaries have implemented reasonable backup and disaster recovery technology consistent with industry practices and as
required by Law or any Governmental Authority and are compliant in all material respects with all data protection and privacy laws and regulations as well as their own policies relating to data protection and the privacy and security of personal
data and the non-public personal information of their respective customers and employees, and with their own privacy policies and commitments to their respective customers and employees relating to the foregoing, except for immaterial failures to
comply or immaterial violations. No claims are pending or to Horizons knowledge, threatened in writing against Horizon or any Subsidiary alleging a violation of any Persons privacy rights or rights regarding the protection of personally
identifiable information or other non-public information. For purposes of this Agreement,
Horizon IT Assets
means computers, computer software, firmware, middleware, servers, workstations, routers, hubs, switches, data
communications lines, and all other information technology equipment, and all associated documentation owned by Horizon or its Subsidiaries or licensed or leased by Horizon or its Subsidiaries (excluding any public networks).
4.24
Employee Benefit Plans.
(a) With respect to the employee benefit plans, as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended (
ERISA
), sponsored or otherwise maintained by any member of a controlled group of corporations under Code Section 414(b) of which Horizon is or
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was a member, and any trade or business (whether or not incorporated) which is or was under common control with Horizon under Code Section 414(c), and all other entities which together with
Horizon are or were prior to the date hereof treated as a single employer under Code Section 414(m) or 414(o) (an
ERISA Affiliate
), whether written or oral, in which Horizon or any ERISA Affiliate participates as a
participating employer, or to which Horizon or any ERISA Affiliate contributes, or any nonqualified employee benefit plans or deferred compensation, bonus, stock, performance share, phantom stock or incentive plans or arrangements, or other employee
benefit or fringe benefit programs for the benefit of former or current employees or directors (or their beneficiaries or dependents) of Horizon or any ERISA Affiliate, and including any such plans which have been terminated, merged into another
plan, frozen or discontinued since January 1, 2009 (individually,
Horizon Plan
and collectively,
Horizon Plans
), Horizon represents and warrants:
(i) All such Horizon Plans have, on a continuous basis since their adoption, been, in all material respects, maintained in
compliance with their respective terms and with the requirements prescribed by all applicable statutes, orders and governmental rules or regulations, including without limitation, ERISA and the Department of Labor (
Department
)
Regulations promulgated thereunder and the Code and Treasury Regulations promulgated thereunder.
(ii) All Horizon Plans
intended to constitute tax-qualified plans under Code Section 401(a) have complied in form since their adoption and have been timely amended to comply in all material respects with all applicable requirements of the Code and the Treasury
Regulations and each such Plan either (A) has received a determination letter from the Internal Revenue Service upon which Horizon may rely regarding such plans tax qualified status under the Code, or (B) is a pre-approved volume
submitter or prototype plan that is the subject of an opinion letter issued by the Internal Revenue Service.
(iii) All
Horizon Plans that provide for payments of nonqualified deferred compensation (as defined in Code Section 409A(d)(1)) have, in all material respects, been (A) operated in good faith compliance with the applicable requirements
of Code Section 409A and applicable guidance thereunder since January 1, 2005, and (B) amended to comply in written form with Code Section 409A and the Treasury Regulations promulgated thereunder.
(iv) All options to purchase shares of Horizon Common Stock were granted with a per share exercise price that was not less than
the fair market value of Horizon Common Stock on the date of such grant, as determined in accordance with the terms of the applicable Horizon Plan. All Horizon stock options, restricted stock units, and shares of restricted stock have,
been properly accounted for in accordance with GAAP, and no change is expected in respect of any prior financial statements relating to expenses for stock-based compensation. There is no pending audit, investigation or inquiry by any governmental
agency or authority or by Horizon (directly or indirectly) with respect to Horizons stock option or restricted stock granting practices or other equity compensation practices.
(v) No Horizon Plan (or its related trust) holds any stock or other securities of Horizon and no Horizon Plan allows for the
granting of any awards over or with respect to any stock or other securities of Horizon.
(vi) Neither Horizon, an ERISA
Affiliate nor to Horizons knowledge, any other fiduciary as defined in ERISA Section 3(21)(A) of a Horizon Plan has engaged in any transaction that may subject Horizon, any ERISA Affiliate or any Horizon Plan to a civil penalty
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imposed by ERISA Section 502 or any other provision of ERISA or excise taxes under Code Section 4971, 4975, 4976, 4977, 4979 or 4980B.
(vii) All obligations required to be performed by Horizon or any ERISA Affiliate under any provision of any Horizon Plan have
been performed by it in all material respects and, neither Horizon nor any ERISA Affiliate is, in any material respect, in default under or in violation of any provision of any Horizon Plan.
(viii) All required reports and descriptions for the Horizon Plans have, in all material respects, been timely filed and
distributed to participants and beneficiaries, and all notices required by ERISA or the Code with respect to all Horizon Plans have been proper as to form and timely given.
(ix) No event has occurred which would reasonably constitute grounds for an enforcement action by any party under Part 5 of
Title I of ERISA with respect to any Horizon Plan.
(x) There are no examinations, audits, enforcement actions or
proceedings, or any other investigations, pending or, to Horizons knowledge, threatened by any governmental agency involving any Horizon Plan.
(xi) There are no actions, suits, proceedings or claims pending (other than routine claims for benefits) or, to Horizons
knowledge, threatened against Horizon or any ERISA Affiliate in connection with any Horizon Plan or the assets of any Horizon Plan.
(b)
Horizon has provided or made available to LPB true, accurate and complete copies and, in the case of any plan or program which has not been reduced to writing, a materially complete summary, of all of the following Horizon Plans, as applicable:
(i) All current pension, retirement, profit-sharing, savings, stock purchase, stock bonus, stock ownership, stock option,
restricted stock, restricted stock unit, phantom stock, performance share and stock appreciation right plans, all amendments thereto, and, if required under the reporting and disclosure requirements of ERISA, all current summary plan descriptions
thereof (including any modifications thereto);
(ii) All current employment, deferred compensation (whether funded or
unfunded), salary continuation, change in control, consulting, bonus, severance, and collective bargaining, agreements, arrangements or understandings;
(iii) All current executive and other incentive compensation plans, programs and agreements;
(iv) All current group insurance, medical, and prescription drug arrangements, policies or plans;
(v) All other current incentive, welfare or employee benefit plans, understandings, arrangements or agreements, maintained or
sponsored, participated in, or contributed to by Horizon for its current or former directors, officers or employees;
(vi)
All reports filed with the Internal Revenue Service or the Department within the preceding three (3) years by Horizon or any ERISA Affiliate with respect to any Horizon Plan; and
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(vii) Valuations or allocation reports for any defined contribution and defined
benefit plans as of the most recent allocation and valuation dates.
(c) Except as contemplated in this Agreement, there are no material
benefits or material liabilities under any employee benefit plan or program that will be accelerated or otherwise come due as a result of the transactions contemplated by the terms of this Agreement.
ARTICLE V.
CERTAIN COVENANTS
LPB covenants and agrees with Horizon and covenants and agrees to cause its Subsidiaries to act as follows (and Horizon covenants and agrees
with LPB as follows):
5.01
Shareholder Approval.
Unless this Agreement has been terminated in
accordance with its terms, LPB shall submit this Agreement to its shareholders for approval (
Stockholder Approval
) and adoption at a meeting to be called and held in accordance with applicable law and the Articles of Incorporation
and Bylaws of LPB (the
LPB Shareholders Meeting
) as soon as reasonably practicable after the effectiveness of the Registration Statement. Subject to
Section 5.06
hereof, the Board of Directors of LPB shall
recommend to LPBs shareholders that such shareholders approve and adopt this Agreement and the Merger contemplated hereby and will solicit proxies voting in favor of this Agreement from LPBs shareholders.
5.02
Other Approvals.
(a) LPB and Horizon shall cooperate fully and use commercially reasonable efforts to procure, upon terms and conditions consistent with the
condition set forth in
Section 7.01(e)
hereof, all consents, authorizations, approvals, registrations and certificates, in completing all filings and applications and in satisfying all other requirements prescribed by law which are
necessary for consummation of the Merger on the terms and conditions provided in this Agreement at the earliest possible reasonable date.
(b) LPB will use commercially reasonable efforts to obtain any required third party consents to agreements, contracts, commitments, leases,
instruments and documents described in the LPB Disclosure Schedule and to which LPB and Horizon agree are material.
(c) Any written
materials or information provided by LPB or Horizon for use in any filing with any state or federal regulatory agency or authority shall not contain any untrue or misleading statement of material fact or shall omit to state a material fact necessary
to make the statements contained therein, in light of the circumstances in which they are made, not false or misleading.
5.03
Conduct of Business.
(a) After the date of this Agreement and until the Effective Time or until this Agreement is
terminated as herein provided, each of LPB and its Subsidiaries shall: (1) carry on its business diligently, substantially in the manner as is presently being conducted and in the ordinary course of business; (2) use commercially
reasonable efforts to preserve its business organization intact in all material respects, keep available the services of the present officers and employees and preserve its present relationships with material customers and Persons having business
dealings with it; (3) use commercially reasonable efforts to maintain all of the properties and assets that it owns or utilizes, and which are material to the operation of its business, in the operation of its business as currently conducted in
good operating
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condition and repair, reasonable wear and tear excepted; (4) maintain its books, records and accounts in the usual, regular and ordinary manner, on a basis consistent with past practice and
in compliance in all material respects with all statutes, laws, rules and regulations applicable to them and to the conduct of its business; and (5) not knowingly do or fail to do anything which will cause a breach of, or default in, any
material contract, agreement, commitment, obligation, understanding, arrangement, lease or license to which it is a party or by which it is or may be subject or bound.
(b) From the date hereof until the Effective Time or until this Agreement is terminated as herein provided, except as expressly contemplated
or permitted by this Agreement or as set forth in
Section 5.03(b)
of the LPB Disclosure Schedule, without the prior written consent (including consent delivered by email) of Horizon which consent shall not be unreasonably withheld (which
prior written consent shall be deemed to have been given, if Horizon has not objected to a proposed action by LPB on or before five (5) business days after written notice thereof by LPB has been received by Horizon), LPB will not and will cause
its Subsidiaries to not:
(i) make any changes in its capital stock (including, without limitation, any stock issuance,
stock split, stock dividend, recapitalization or reclassification), authorize a class of stock, or issue any stock (other than pursuant to the exercise of any Options outstanding as of the date hereof), issue or grant any warrant, option, right, or
other agreement of any character relating to its authorized or issued capital stock or any securities convertible into shares of such stock, or redeem any of its outstanding shares of common stock or other securities;
(ii) distribute or pay any dividends on its shares of common stock, or authorize a stock split, or make any other distribution
to its shareholders;
provided, however
, each of the Subsidiaries may pay cash dividends to LPB or LPSB in the ordinary course of business for payment of reasonable and necessary business and operating expenses of LPB or LPSB and expenses of
the Merger; provided further, to provide funds for LPBs dividends to its shareholders in accordance with this Agreement;
provided further
, LPB may pay its normal quarterly cash dividend of $0.04 per share to its shareholders which shall
not be increased in per share amount;
provided further
, at Horizons request and except to the extent prohibited by Law or any bank regulatory agency, following receipt of Stockholder Approval and all Regulatory Approvals, LPSB shall pay
dividends to LPB;
provided further
, no dividend may be paid by LPB to its shareholders for the quarterly period in which the Merger is scheduled to be consummated or consummated if during such period LPBs shareholders will become
entitled to receive dividends on their shares of Horizon common stock received pursuant to this Agreement;
(iii) except as
consistent with past practice, purchase or otherwise acquire any investment security for their own account that exceeds $2,000,000 individually or purchase or otherwise acquire any security other than U.S. Treasury or other governmental obligations
or asset-backed securities issued or guaranteed by United States governmental or other governmental agencies, in either case having an average remaining life of three (3) years or less, or sell any investment security owned by them other than
sales made in the ordinary course of business as previously conducted during the past three (3) years and in accordance with applicable laws and regulations or engage in any activity that would be inconsistent with the classification of
investment securities as either held to maturity or available for sale;
(iv) except for binding
commitments in effect as of the date of this Agreement, make, renew or otherwise modify any loan, loan commitment, letter of credit or other extension of credit (individually, a
Loan
and collectively,
Loans
) to
any Person if the Loan is an existing
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credit on the books of LPB or any Subsidiary and classified as Other Loans Especially Mentioned, Substandard, Doubtful or Loss in an amount in
excess of $500,000. LPSB also shall not make, purchase, renew, modify, amend, or extend the maturity of (1) any new commercial Loan in excess of $1,250,000;
provided
, that LPSB may, without the consent of Horizon, renew, modify, amend or
extend the maturity of existing performing commercial loans (which are not classified or non-accrual) with existing principal balances of $1,500,000 or less, (2) unless such Mortgage Loan is saleable in the secondary market, any Mortgage Loan
with a loan to value in excess of 80% (unless private mortgage insurance is obtained) or any other Mortgage Loan in excess of $417,000 (excluding any purchase from a borrower under a Warehouse Agreement of a Mortgage Loan originated thereunder in an
amount less than $1,300,000), (3) any consumer Loan in excess of $75,000, (4) any home equity Loan or line of credit in excess of $100,000, (5) any Loan participation, (6) any agreement to purchase Mortgage Loans from any third
party originator, or (7) any Warehouse Agreement with an existing or new borrower, including any amendment to the types of Mortgage Loans that may be originated and funded under any existing Warehouse Agreement;
provided
, that LPB may
take any such action in respect of any such Loan or Loans if the Chief Credit Officer of Horizon shall be provided with notice of the proposed action in writing and Horizon shall not provide written objection to the taking of such proposed action
within three (3) business days of being provided with such notice (except for requests for approval of mortgage warehouse loans, which response shall be provided within four (4) hours of being provided with such notice) (the lack of such
objection being deemed prior written consent of Horizon for purposes of this Section);
(v) acquire any personal property
assets of any other Person by any means (other than personal property acquired in foreclosure or in the ordinary course of business, including through the collection of indebtedness owed to LPSB). Foreclose upon or otherwise acquire, take title to
or take possession or control of, any real property without first obtaining a Phase I environmental report thereon, prepared by a reliable and qualified Person acceptable to Horizon, which indicates that the real property is free of pollutants,
contaminants or hazardous materials;
provided, however
, that neither LPB nor LPSB shall be required to obtain such a report with respect to single family, non-agricultural residential property to be foreclosed upon unless LPB has reason to
believe that such property might contain such hazardous materials or otherwise might be contaminated;
(vi) except
(1) as contemplated by this Agreement (including severance and change in control payments anticipated to be paid as described in
Section 5.22
and
Section 6.03(h)
hereof), (2) as may be required pursuant to
commitments existing on the date hereof or pursuant to any LPB employee benefit plan or arrangement described on
Section 3.15(e)
of the LPB Disclosure Schedules, (3) as to non-executive employees, pay increases in the ordinary
course of business and consistent with past practice, which do not involve increases of more than 4% in connection therewith, and which are typically given on an employees anniversary date of hire or the anniversary date in the current
position, (4) the payment of bonuses for the year ended December 31, 2015, to the extent such bonuses have been accrued in accordance with GAAP through the date hereof and provided that such bonuses are consistent, as to amount and persons
covered, with past practice, all of which are set forth in
Section 5.03(b)(vi)
of the LPB Disclosure Schedule, and (5) the payment of bonuses for the partial year commencing January 1, 2016 and ending on the date of the
Effective Time, to the extent such bonuses have been accrued in accordance with GAAP through the Effective Time and provided that such bonuses are
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consistent, as to amount and persons covered, with past practice, all of which are set forth in
Section 5.03(b)(vi)
of the LPB Disclosure Schedule; pay or agree to pay, conditionally
or otherwise, any additional compensation (including bonuses) or severance benefit, take any action that would give rise to an acceleration of the right to payment, or otherwise make any changes with respect to the fees or compensation payable (or
to become payable) to consultants, directors, officers or salaried employees or, except as required by law and except as contemplated by this Agreement, adopt or make any change in any LPB Plan or other arrangement (including any agreement for
indemnification) or payment made to, for or with any of such consultants, directors, officers or employees;
(vii) fail to
accrue, pay, discharge and satisfy all debts, liabilities, obligations and expenses, including, without limitation, trade payables, incurred in the regular and ordinary course of business as such debts, liabilities, obligations and expenses become
due, unless the same are being contested in good faith;
(viii) except for obligations disclosed in this Agreement and
actions consistent with past practice in the ordinary course of business, incur short-term FHLB advances, federal funds purchased by LPSB, trade payables and similar liabilities and obligations and the payment, discharge or satisfaction of
liabilities reflected in the LPB Financial Statements or the Subsequent LPB Financial Statements, or borrow any money or incur any similar indebtedness in an aggregate amount exceeding $100,000;
(ix) change in its accounting methods, except as may be necessary and appropriate to conform to (1) changes in law and
regulation, (2) changes in GAAP or regulatory accounting principles, (3) changes required by LPBs independent auditors or its regulatory authorities, or (4) changes requested by Horizon pursuant to this Agreement;
(x) make, change or revoke any material tax election, enter into any closing agreement with respect to a material amount of
taxes, settle any material tax claim or assessment or surrender any right to claim a refund of a material amount of taxes;
(xi) make application for the opening or closing of any, or open or close any, branch or automated banking facility, except as
contemplated by any application filed with any bank regulatory authority in connection with the Merger;
(xii) waive,
release, grant or transfer any material rights of value or enter into, amend, or terminate any contract, agreement, lease, commitment, understanding, arrangement or transaction or incur any liability or obligation (other than as contemplated by this
Agreement and legal, accounting and investment banking or financial advisory fees related to the Merger) requiring payments by LPB or any of its Subsidiaries which exceed $100,000, whether individually or in the aggregate (other than trade payables
or otherwise incurred in the ordinary course of business) or which contain any financial commitment extending more than twelve (12) months following the date of this Agreement;
(xiii) except as already committed in writing as of the date of this Agreement and other than expenditures necessary to
maintain existing assets in good repair, make any capital expenditures in excess of $100,000 individually or $250,000 in the aggregate;
(xiv) except as required by applicable law, regulation or its regulatory authorities: (1) implement or adopt any material
change in its interest rate risk management or hedging policies, procedures or practices; (2) fail to follow its existing policies or practices with respect to
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managing its exposure to interest rate risk; or (3) fail to use commercially reasonable means to avoid any material increase in its aggregate exposure to interest rate risk;
(xv) take any action that would change LPSBs loan loss reserves that is not in compliance with LPSBs policy and
past practices consistently applied and in material compliance with GAAP;
(xvi) except as already committed in writing as
of the date of this Agreement, cancel, release or compromise any indebtedness in excess of $100,000 owing to LPB or any Subsidiary or any claims which LPB or any Subsidiary may possess, or voluntarily waive any material rights with respect thereto;
(xvii) pay, discharge, settle or compromise any litigation, claim, action, arbitration or other proceeding against LPB or
any Subsidiary other than (1) any such payment, discharge, settlement or compromise in the ordinary course of business consistent with past practice that involves solely money damages in the amount not in excess of $50,000 individually or
$100,000 in the aggregate, or (2) with regard to a settlement exceeding $50,000 individually or $100,000 in the aggregate, where such settlement is fully covered by insurance; and in all such cases contemplated by (1) and (2) above:
(A) does not create precedent for other pending or potential claims, actions, litigation, arbitration or proceedings, (B) neither LPB nor LPSB consents to the issuance of any injunction, decree, order or judgment restricting or otherwise
affecting its business or operations, and (C) involves a complete and unconditional release from liability with respect to LPB and/or LPSB, as applicable, with no admission of fault;
(xviii) take any action that is intended or is reasonably likely to result in (A) any of its representations or warranties
set forth in this Agreement being or becoming untrue in any material respect at any time at or prior to the Effective Time, (B) any of the conditions to the Merger set forth in this Agreement not being satisfied in any material respect, or
(C) a material breach of any provision of this Agreement; except, in each case, as may be required by applicable law;
(xix) maintain the rate of interest paid by LPSB on any deposit product, including without limitation on certificates of
deposit, in a manner and pursuant to policies inconsistent with past practices;
(xx) amend the Articles of Incorporation
or Bylaws of LPB, or similar governing documents of any of its Subsidiaries;
(xxi) maintain an allowance for loan and
lease losses which is not adequate in all material respects under the requirements of GAAP to provide for possible losses, net of recoveries, relating to Loans previously charged off, on Loans and leases outstanding;
(xxii) knowingly take any action or fail to take any action that would, or would be likely to, prevent, impede or delay the
Merger from qualifying as a reorganization as defined by Section 368(a) of the Code; or
(xxiii) agree or commit to
do, or enter into any contract regarding, anything that would be precluded by this Section.
5.04
Insurance.
(a) LPB and its Subsidiaries shall maintain, or cause to be maintained, in full force and effect, insurance on its
assets, properties and operations, fidelity coverage and directors and officers
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liability insurance in such amounts and with regard to such liabilities and hazards as are currently insured by LPB or its Subsidiaries as of the date of this Agreement.
(b) LPB and its Subsidiaries shall (i) maintain in full force and effect blanket bond insurance coverage against loss or damage relating
to or resulting from any breach of fidelity by any third-party mortgage broker compensated by LPB or any of its Subsidiaries in connection with the origination of any Mortgage Loan, such policy to have a single loss coverage limit of no less than
$5,000,000 and a deductible of no more than $1,000,000, and (ii) cause each borrower who originates a Mortgage Loan with an advance under a Warehouse Agreement to maintain in full force and effect an insurance policy covering against loss or
damage relating to or resulting from any breach of fidelity by such borrower, or any officer, director, employee or agent of such borrower, any loss or destruction of documents (whether written or electronic), fraud, theft, misappropriation and
errors and omissions, which policy shall name LPB as a loss payee with a right of action, and which shall provide coverage in an amount of at least $275,000, and which shall have a deductible that does not exceed $25,000.
5.05
Accruals for Loan Loss Reserve and Expenses.
(a) Prior to the Effective Time, LPB shall and shall cause its Subsidiaries to make, consistent with GAAP and applicable banking laws and
regulations, such appropriate accounting entries in its books and records and use commercially reasonable efforts to take such other actions as LPB and its Subsidiaries shall deem to be necessary or desirable in anticipation of the Merger including,
without limitation, accruals or the creation of reserves for employee benefits and Merger-related expenses.
(b) LPB recognizes that
Horizon may have adopted different loan and accounting policies and practices (including loan classifications and levels of loan loss allowances). Subject to applicable law (including without limitation applicable banking laws and regulations and
GAAP), from and after the date hereof LPB shall consult and cooperate in good faith with Horizon with respect to conforming the loan and accounting policies and practices of LPB to those policies and practices of Horizon for financial accounting
and/or income tax reporting purposes, as reasonably specified in each case in writing from Horizon to LPB, based upon such consultation and subject to the conditions in
Section 5.05(d)
.
(c) Subject to applicable law (including without limitation applicable banking laws and regulations and GAAP), LPB shall consult and cooperate
in good faith with Horizon with respect to determining, as reasonably specified in a written notice from Horizon to LPB, based upon such consultation and subject to the conditions in
Section 5.05(d)
, the amount and the timing for
recognizing for financial accounting and/or income tax reporting purposes of LPBs expenses of the Merger.
(d) Subject to applicable
law (including without limitation applicable banking laws and regulations and GAAP), LPB and LPSB shall make such conforming changes and entries as contemplated in
Section 5.05(a)
,
Section 5.05(b)
and
Section 5.05(c)
above, but in no event prior to the 5th day next preceding the Closing Date and only after Horizon acknowledges that all conditions to its obligation to consummate the Merger have been satisfied and certifies to LPB that
Horizon will at the Effective Time deliver to LPB the certificate contemplated in
Section 7.02(g)
.
(e) LPBs
representations, warranties and covenants contained in this Agreement shall not be deemed to be untrue or breached in any respect for any purpose as a consequence of any modifications or changes undertaken at Horizons request in compliance
with
Section 5.05(d)
.
5.06
Acquisition Proposals.
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(a) LPB will, and will cause each of its Subsidiaries to, and its and their respective officers,
directors and representatives (including Raymond James) to, immediately cease and cause to be terminated any existing solicitations, discussions or negotiations with any Person concerning an Acquisition Proposal (as defined in
Section 5.06(e)
). During the period from the date of this Agreement through the Effective Time, LPB shall not terminate, amend, modify or waive any material provision of any confidentiality or similar agreement to which LPB or any of its
Subsidiaries is a party (other than any involving Horizon).
(b) Except as permitted in this
Section 5.06
, LPB shall not, and
shall cause its Subsidiaries and any of their respective directors, officers and representatives (including Raymond James) not to, (i) solicit, initiate or knowingly encourage or facilitate, or take any other action designed to, or that could
reasonably be expected to facilitate (including by way of furnishing non-public information) any inquiries with respect to an Acquisition Proposal, or (ii) initiate, participate in or knowingly encourage any discussions or negotiations or
otherwise knowingly cooperate in any way with any Person regarding an Acquisition Proposal;
provided, however
, that, at any time prior to obtaining the approval of the Merger by LPBs shareholders, if LPB receives a bona fide Acquisition
Proposal that the LPB Board of Directors determines in good faith constitutes or is reasonably likely to lead to a Superior Proposal (as defined in
Section 5.06(f)
) that was not solicited after the date hereof and did not otherwise
result from a breach of LPBs obligations under this
Section 5.06
, LPB may furnish, or cause to be furnished, non-public information with respect to LPB and its Subsidiaries to the Person who made such proposal (provided that all
such information has been provided to Horizon prior to or at the same time it is provided to such Person) and may participate in discussions and negotiations regarding such proposal if (A) the LPB Board of Directors determines in good faith,
and following consultation with financial advisors and outside legal counsel, that failure to do so would be reasonably likely to result in a breach of its fiduciary duties to LPBs shareholders under applicable law and (B) prior to taking
such action, LPB has used its reasonable best efforts to enter into a confidentiality agreement with such Person containing terms no less favorable to LPB than those contained the Confidentiality Agreement (as defined in
Section 11.08
)
and which confidentiality agreement shall not provide such Person with any exclusive right to negotiate with LPB. Without limiting the foregoing, it is agreed that any violation of the restrictions contained in the first sentence of this
Section 5.06(b)
by any representative (including Raymond James) of LPB or its Subsidiaries shall be a breach of this
Section 5.06
by LPB.
(c) Neither the LPB Board of Directors nor any committee thereof shall (or shall agree or resolve to) (i) fail to make, withdraw or
modify in a manner adverse to Horizon or propose to withdraw or modify in a manner adverse to Horizon (or take any action inconsistent with) the recommendation by such LPB Board of Directors or any such committee of this Agreement or the Merger, or
approve or recommend, or propose to recommend, the approval or recommendation of any Acquisition Proposal (any of the foregoing being referred to herein as an
Adverse Recommendation Change
), or (ii) cause or permit LPB or
LPSB to enter into any letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, merger agreement, option agreement, joint venture agreement, partnership agreement or other agreement (each, an
Acquisition
Agreement
) constituting or related to, or which is intended to or would be reasonably likely to lead to, any Acquisition Proposal (other than a confidentiality agreement referred to in
Section 5.06(b)
). Notwithstanding the
foregoing, at any time prior to the special meeting of LPBs shareholders to approve the Merger, the LPB Board of Directors may, in response to a Superior Proposal, effect an Adverse Recommendation Change,
provided
, that the LPB Board of
Directors determines in good faith, after consultation with its outside legal counsel and financial advisors, that the failure to do so would be reasonably likely to result in a breach of its
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fiduciary duties to the shareholders of LPB under applicable Law, and
provided, further
, that the LPB Board of Directors may not effect such an Adverse Recommendation Change unless
(A) the LPB Board shall have first provided prior written notice to Horizon (an
Adverse Recommendation Change Notice
) that it is prepared to effect an Adverse Recommendation Change in response to a Superior Proposal, which
notice shall, in the case of a Superior Proposal, attach the most current version of any proposed written agreement or letter of intent relating to the transaction that constitutes such Superior Proposal (it being understood that any amendment to
the financial terms or any other material term of such Superior Proposal shall require a new notice and a new five (5) business day period) and (B) Horizon does not make, within five (5) business days after receipt of such notice, a
proposal that would, in the reasonable good faith judgment of the LPB Board of Directors (after consultation with financial advisors and outside legal counsel), cause the offer previously constituting a Superior Proposal to no longer constitute a
Superior Proposal or that the Adverse Recommendation Change is no longer required to comply with the LPB Boards fiduciary duties to the shareholders of LPB under applicable law. LPB agrees that, during the five (5) business day period
prior to its effecting an Adverse Recommendation Change, LPB and its officers, directors and representatives shall negotiate in good faith with Horizon and its officers, directors, and representatives regarding any revisions to the terms of the
transactions contemplated by this Agreement proposed by Horizon.
(d) In addition to the obligations of LPB set forth in paragraphs (a),
(b) and (c) of this
Section 5.06
, LPB shall as promptly as possible, and in any event within two (2) business days after LPB first obtains knowledge of the receipt thereof, advise Horizon orally and in writing of
(i) any Acquisition Proposal or any request for information that LPB reasonably believes could lead to or contemplates an Acquisition Proposal or (ii) any inquiry LPB reasonably believes could lead to any Acquisition Proposal, the terms
and conditions of such Acquisition Proposal, request or inquiry (including any subsequent amendment or other modification to such terms and conditions) and the identity of the Person making any such Acquisition Proposal or request or inquiry. In
connection with any such Acquisition Proposal, request or inquiry, if there occurs or is presented to LPB any offer, material change, modification or development to a previously made offer, letter of intent or any other material development, LPB (or
its outside counsel) shall (A) advise and confer with Horizon (or its outside counsel) regarding the progress of negotiations concerning any Acquisition Proposal, the material resolved and unresolved issues related thereto and the material
terms (including material amendments or proposed amendments as to price and other material terms) of any such Acquisition Proposal, request or inquiry, and (B) promptly upon receipt or delivery thereof provide Horizon with true, correct and
complete copies of any document or communication related thereto.
(e) For purposes of this Agreement,
Acquisition
Proposal
shall mean (i) any inquiry, proposal or offer from any Person or group of Persons (other than as contemplated by this Agreement) relating to, or that could reasonably be expected to lead to, any direct or indirect acquisition
or purchase, in one transaction or a series of transactions, of (A) assets or businesses that constitute 25% or more of the revenues, net income or assets of LPB and its Subsidiaries, taken as a whole, or (B) 25% or more of any class of
equity securities of LPB or any of its Subsidiaries; (ii) any tender offer or exchange offer that, if consummated, would result in any Person beneficially owning 25% or more of any class of equity securities of LPB or any of its Subsidiaries;
(iii) any merger, consolidation, business combination, recapitalization, liquidation, dissolution, joint venture, binding share exchange or similar transaction involving LPB, LPSB or any of its other Subsidiaries pursuant to which any Person or
the shareholders of any Person would own 25% or more of any class of equity securities of LPB, LPSB, or any of LPBs other Subsidiaries or of any resulting parent company of LPB or LPSB; or (iv) any other transaction the
A-45
consummation of which could reasonably be expected to impede, interfere with, prevent or materially delay the Merger or that could reasonably be expected to dilute materially the benefits to
Horizon of the transactions contemplated hereby, other than the transactions contemplated hereby. For purposes of this
Section 5.06
, a
Person
shall include a natural Person, or any legal, commercial, or Governmental
Authority, including, a corporation, general partnership, joint venture, limited partnership, limited liability company, trust, business association, group acting in concert, or any Person acting in a representative capacity.
(f) For purposes of this Agreement,
Superior Proposal
shall mean any Acquisition Proposal (but changing the references to
25% or more in the definition of
Acquisition Proposal
to 50% or more) that the LPB Board determines in good faith (after having received the advice of its financial advisors), to be (i) more favorable
to the shareholders of LPB from a financial point of view and its other constituencies than the Merger (taking into account all the terms and conditions of such proposal and this Agreement (including any break-up fees, expense reimbursement
provisions and conditions to consummation and any changes to the financial terms of this Agreement proposed by Horizon in response to such offer or otherwise)) and (ii) reasonably capable of being completed without undue delay taking into
account all financial, legal, regulatory and other aspects of such proposal.
5.07
Press Releases.
Horizon and LPB shall use reasonable efforts (i) to develop a joint communications plan with respect to this Agreement and the transactions contemplated hereby, (ii) to ensure that all press releases and other public statements with
respect to this Agreement and the transactions contemplated hereby shall be consistent with such joint communications plan, and (iii) except where (and to the extent that) such prior consultation is not reasonably possible due to time
considerations in respect of any announcement required by applicable law or by obligations pursuant to any listing agreement with or rules of the NASDAQ Global Select Market, to consult with each other before issuing any press release or otherwise
making any public statement with respect to this Agreement or the transactions contemplated hereby.
5.08
Changes and Supplements to Disclosure Schedules.
LPB shall promptly supplement, amend and update, upon the occurrence of any change prior to the Effective Time, and as of the Effective Time, the LPB Disclosure
Schedule with respect to any matters or events hereafter arising which, if in existence or having occurred as of the date of this Agreement, would have been required to be set forth or described in the LPB Disclosure Schedule or this Agreement and
including, without limitation, any fact which, if existing or known as of the date hereof, would have made any of the representations or warranties of LPB contained herein materially incorrect, untrue or misleading. No such supplement, amendment or
update shall have any effect for the purposes of determining satisfaction of the conditions set forth in
Article VII
.
5.09
Failure to Fulfill Conditions.
In the event LPB determines that a condition to its obligation to complete the Merger cannot be fulfilled and that it will not waive that condition, it will promptly notify Horizon.
5.10
Access; Information.
(a) Horizon and LPB, and their representatives and agents, shall, upon reasonable notice to the other party, at all times during normal
business hours prior to the Effective Time, have reasonable access to the properties, facilities, operations, books and records of the other party (other than minutes that discuss any of the transactions contemplated by this Agreement). Horizon and
LPB, and their representatives and agents may, prior to the Effective Time, make or cause to be made such reasonable investigation of the operations, books, records and properties of the other party and their Subsidiaries
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and of their financial and legal condition as deemed necessary or advisable to familiarize themselves with such operations, books, records, properties and other matters;
provided, however
,
that such access or investigation shall not interfere unnecessarily with the normal business operations of LPB or Horizon or either of their Subsidiaries;
provided further
, neither LPB, Horizon nor any of their Subsidiaries shall be required
to take any action that would provide access to or to disclose information where such access or disclosure would violate or prejudice the rights of any customer or other person or would result in the waiver by any of them of the privilege protecting
communications between any of them and any of their counsel. In addition, after receipt of all Regulatory Approvals and Stockholder Approval, LPB shall cooperate with Horizon to facilitate introductions to LPSBs customers and key business
partners and referral sources.
(b) No investigation by Horizon or LPB shall affect the representations and warranties made by LPB or
Horizon herein.
(c) Any confidential information or trade secrets received by Horizon, LPB or their representatives or agents in the
course of such examination will be treated confidentially, and any correspondence, memoranda, records, copies, documents and electronic or other media of any kind containing such confidential information or trade secrets or both shall be destroyed
by Horizon or LPB, as applicable, or at Horizons or LPBs request, returned to Horizon or LPB, as applicable, in the event this Agreement is terminated as provided in
Article VIII
hereof;
provided, however
, that the parties
may retain such received confidential information to comply with applicable law or regulation or professional standard or bona fide internal compliance policy requirements and any such retained information must be treated confidentially.
Additionally, any confidential information or trade secrets received by Horizon or LPB, or either of their agents or representatives in the course of their examinations (whether conducted prior to or after the date of this Agreement) shall be
treated confidentially and in accordance with the Confidentiality Agreement (as defined in
Section 11.08
). This
Section 5.10
will not require the disclosure of any information to Horizon or LPB which would be prohibited by
law.
(d) LPB shall also provide Horizon with copies of minutes and consents from all such Board and committee meetings no later than
fourteen (14)
days thereafter (other than minutes that discuss any of the transactions contemplated by this Agreement).
5.11
Financial Statements.
As soon as internally available after the date of this Agreement, LPB will deliver to Horizon any additional audited consolidated financial statements which are prepared on its behalf or at its direction, the monthly
consolidated unaudited balance sheets and profit and loss statements of LPB prepared for its internal use, LPSBs Call Reports for each quarterly period completed prior to the Effective Time, all other financial reports or statements submitted
to regulatory authorities after the date hereof, and all other financial statements and financial information reasonably requested by Horizon (collectively,
Subsequent LPB Financial Statements
). The Subsequent LPB Financial
Statements will be prepared on a basis consistent with past accounting practices and GAAP (to the extent applicable) and shall present fairly the financial condition and results of operations as of the dates and for the periods presented (except in
the case of unaudited financial statements or Call Report information for the absence of notes and/or year-end adjustments).
5.12
Environmental.
(a) If requested by Horizon, LPB will cooperate with an environmental consulting firm designated by Horizon (the
Designated Environmental Consultant
) in connection with the conduct, at any time after the date hereof (the
Investigation Period
), by the Designated Environmental Consultant of Phase I environmental site
assessments and any other investigation reasonably requested
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by Horizon on all real property (except single family, non-agricultural residential property of one acre or less) owned or leased by LPB or any of its Subsidiaries as of the date of this
Agreement or acquired thereafter, including OREO, to the extent not prohibited by any lease governing LPSBs lease of any property. Horizon shall furnish true and complete copies of any reports of the Designated Environmental Consultant that it
receives with respect to any LPB property, promptly upon Horizons receipt of such reports. Horizon shall be responsible for the costs of the Phase I environmental site assessments, and Horizon and LPB shall each bear 50% of the costs of any
additional environmental investigation or testing as determined to be advisable or recommended by the Designated Environmental Consultant as a result of an actual or suspected Recognized Environmental Condition (as such term is defined
by the American Society for Testing Materials).
5.13
Governmental Reports and Shareholder
Information.
Promptly upon its becoming available, LPB shall furnish to Horizon one (1) copy of each financial statement, report, notice, or proxy statement sent by LPB to any Governmental Authority or to LPBs shareholders, and of any
order issued by any Governmental Authority in any proceeding to which LPB is a party. For purposes of this Agreement,
Governmental Authority
shall mean any government (or any political subdivision or jurisdiction thereof), court,
bureau, agency or other governmental entity having or asserting jurisdiction over the applicable party or its business, operations or properties.
5.14
Adverse Actions.
During the period from the date of this Agreement to the Effective Time, except
with the written consent of Horizon, which consent will not be unreasonably withheld, LPB will, and it will cause each of its Subsidiaries to, use commercially reasonable efforts to preserve intact its business organization and assets and maintain
its rights and franchises; and voluntarily take no action that would: (i) adversely affect the ability of the parties to obtain the regulatory approvals or materially increase the period of time necessary to obtain such approvals;
(ii) adversely affect its ability to perform its covenants and agreements under this Agreement in any material respect; or (iii) result in the representations and warranties contained in
Article III
of this Agreement not being true
and correct on the date of this Agreement or at any future date on or prior to the Closing Date (subject to the standards set forth in
Section 7.01(a)
hereof) or in any of the conditions set forth in
Article VII
hereof not being
satisfied;
provided, however
, that the forgoing shall not be deemed to require LPB to take any action which would otherwise violate any other provision of this Agreement.
5.15
Employee Benefits and Employees.
(a) Neither the terms of
Section 6.03
hereof nor the provision of any employee benefits by Horizon or any of its Subsidiaries to
employees of LPB or any of its Subsidiaries shall: (a) create any employment contract, agreement or understanding with or employment rights for, or constitute a commitment or obligation of employment to, any of the officers or employees of LPB
or any of its Subsidiaries; or (b) prohibit or restrict Horizon or its Subsidiaries, whether before or after the Effective Time, from changing, amending or terminating any employee benefits provided to its employees from time to time.
(b) Before the date that is sixty (60) days prior to Closing, Horizon will use its best efforts to notify LPB of the employees Horizon
intends to retain after the Effective Time. Prior to the Closing Date, LPB shall be responsible for timely giving any notices to, and terminating, any employees whose employment will not be continued by Horizon, and LPB shall pay any and all amounts
which are then due and payable to such employees in connection with the termination of their employment, including, without limitation, all accrued paid-time off and the severance amounts contemplated by
Section 6.03(h)
of this
Agreement.
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(c) Before Closing, with LPBs prior consent (which consent shall not be unreasonably
withheld), Horizon may conduct such training and other programs as it may, in its reasonable discretion and at its sole expense, elect to provide for those employees who will be continuing employment with Horizon;
provided, however
, that such
training and other programs shall not materially interfere with or prevent the performance of the normal business operations of LPB.
5.16
Termination of LPB 401(k) Plan.
(a) LPB maintains the LPB 401(k) Plan. LPB shall make contributions to the LPB 401(k) Plan
between the date hereof and the Effective Time consistent with the terms of the LPB 401(k) Plan and past practices, including, without limitation, elective deferral contributions of those LPB 401(k) Plan participants who are employed by LPB or its
Subsidiaries.
(b) As soon as practicable following the execution of this Agreement, LPB, pursuant to the provisions of the LPB 401(k)
Plan, shall, subject to review and approval by Horizon: (i) adopt resolutions to terminate, subject to the consummation of the Merger, the LPB 401(k) Plan effective as of a date that is not later than the day before the Effective Time (the
Plan Termination Date
) and (ii) amend the LPB 401(k) Plan effective as of a date not later than the Plan Termination Date to freeze participation in and benefit accruals under the LPB 401(k) Plan and to provide that no
distributions of accrued benefits shall be made from the LPB 401(k) Plan, or its related employee benefit trust, subsequent to the Plan Termination Date until such time as the Internal Revenue Service issues a favorable determination letter to the
effect that the plan termination does not adversely affect the LPB 401(k) Plans qualification for favorable income tax treatment under the Code, except distributions may be made earlier if required by the terms of the LPB 401(k) Plan upon the
occurrence of retirement, death, disability, or termination of employment, or any other event, other than the plan termination, that requires a distribution from the LPB 401(k) Plan. Notwithstanding the preceding provisions, participants with
outstanding plan loans under the LPB 401(k) Plan as of the Effective Time shall be permitted to continue repaying such outstanding loans (subject to the terms and conditions of such plan and the related loan procedures) on and after the Effective
Time and until such time as plan termination distributions are paid pursuant to the preceding sentence. At such time as the loans are required to be repaid or will be taxed to the borrower if not repaid (the
401(k) Loan Repayment
Date
), Horizon, if any, shall cause loans to be made, outside of any tax qualified retirement plan, to those LPSB employees who had loans outstanding under the 401(k) Plan as of the 401(k) Loan Repayment Date, in an amount not to exceed
the outstanding loan balance as of the 401(k) Loan Repayment Date, provided that any such LPSB employee completes any necessary documentation and is determined to qualify for such loan under applicable loan policies and underwriting standards of
Horizon. Each such refinancing loan shall have a fixed rate of interest not to exceed four percent (4.0%) per annum and shall have an amortization period not to exceed the remaining term of the loan granted under the 401(k) Plan. Horizon agrees
to: (1) maintain the LPB 401(k) Plan employer stock fund (but which shall be frozen to additional investments after the Effective Time) until all assets are distributed from the LPB 401(k) Plan in order to preserve potential net unrealized
appreciation tax treatment, unless and until Horizon ceases offering Horizon stock as an investment option under all qualified retirement plans maintained by Horizon, (2) permit the LPB 401(k) Plan participants to self-direct their investments
after the Plan Termination Date, and (3) not change any of the investment options under the 401(k) Plan unless required by the Code, ERISA or applicable law.
(c) As soon as practicable following the execution of this Agreement, LPB will file, or cause to be filed, with the Internal Revenue Service
an application for a favorable determination letter upon termination of the LPB 401(k) Plan (IRS Form 5310 and related attachments) requesting the issuance to
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LPB of the favorable determination letter described in the preceding subsection (b). A copy of the competed and filed IRS Form 5310 shall be provided to Horizon at least five (5) business
days prior to the Effective Time. Following the Effective Time, Horizon shall use its reasonable best efforts in good faith to obtain the IRS favorable determination letter as promptly as possible, including adopting any amendments to the LPB 401(k)
Plan that may be required by the IRS. As soon as practicable following the receipt of a favorable determination letter from the IRS regarding the tax-qualified status of the LPB 401(k) Plan upon its termination, the remaining account balances in the
LPB 401(k) Plan shall either be distributed to participants and beneficiaries or transferred to an eligible tax-qualified retirement plan or individual retirement account as a participant or beneficiary may direct.
(d) Any contributions due to the LPB 401(k) Plan for the period prior to the Plan Termination Date, and not yet paid on the Plan Termination
Date, will be contributed by LPB as soon as administratively feasible following the Plan Termination Date.
(e) LPB shall continue in full
force and effect, until the Effective Time: (i) the fidelity bond, if any, issued to LPB as described in ERISA Section 412; and (ii) the ERISA fiduciary liability insurance policy currently in effect, if any, for the benefit of the
covered fiduciaries of the LPB 401(k) Plan.
(f) On or before the Effective Time, LPSB shall have directed the 401(k) Trustees to
(i) provide to the LPB 401(k) Plan participants similar notices and materials provided to other LPB shareholders with respect to those matters requiring a vote of the shareholders under this Agreement; (ii) obtain direction from the LPB
401(k) Plan participants as to how to vote those shares of LPB Stock allocated to the accounts of the LPB 401(k) Plan participants with respect to those matters for which shareholder vote is required under this Agreement; (iii) vote those
shares of LPB Stock in accordance with the direction of the LPB 401(k) Plan participants and in accordance with Section 9.06 of the Basic Plan Document for the LPB 401(k) Plan; and (iv) vote the shares of LPB Stock for which no participant
investment direction has been timely received by the Trustee in accordance with Section 9.06 of the Basic Plan Document for the LPB 401(k) Plan and in a manner determined by the Trustees to be for the exclusive benefit of the LPB 401(k)
Plans participants and their beneficiaries.
(g) As soon as practicable following the execution of this Agreement, Horizon will
amend the Horizon Employees Thrift Plan (
Horizon 401(k) Plan
) to permit Continuing Employees to enter the Horizon 401(k) Plan as of the Effective Time, and Continuing Employees will be credited with prior years of service
with LPB for purposes of eligibility and vesting (but not benefit accruals). Horizon agrees to permit LPB 401(k) Plan participants who become employees of Horizon to roll over their account balances in the LPB 401(k) Plan to the Horizon 401(k) Plan.
5.17
Disposition of Welfare Benefit and Sec. 125 Plans.
(a) All fully insured welfare benefit (health, dental, vision, prescription drug, EAP, life/AD&D, LTD), and Internal Revenue Code
Section 125, or cafeteria, plans currently sponsored by LPB or LPSB shall be terminated as of the Effective Time or as soon as administratively practicable after the Effective Time, if directed in writing by Horizon. LPB shall take,
or cause to be taken, all actions necessary to terminate all of LPBs and any Subsidiarys group insurance policies as of the Effective Time, if instructed in writing by Horizon.
(b) As of the Effective Time, and to the extent not prohibited by applicable law, LPB shall take, or cause to be taken, all actions necessary
to assign any and all applicable group insurance policies to Horizon and to provide Horizon all necessary financial, enrollment, eligibility, contractual and other
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information related to its welfare benefit and cafeteria plans to assist Horizon in the administration of such plans, if directed in writing by Horizon.
(c) From the date of this Agreement through the Effective Time, LPB shall continue to: (i) pay the applicable insurance premiums
necessary to continue the benefits under LPBs fully insured welfare benefit plans; (ii) contribute to the cafeteria plan the pre-tax amounts which the cafeteria plan participants elect to defer from compensation; and (iii) pay all
eligible claims incurred, in accordance with the terms and conditions of such plan, under the cafeteria plans health and dependent care flexible spending accounts prior to the Effective Time.
(d) As of the date of the termination of the LPB cafeteria plan, if any, and if directed by Horizon, the balances in the health flexible
spending accounts of Continuing Employees thereunder shall be transferred to the applicable components of the Horizon cafeteria plan. Benefit and compensation deferral elections in effect at that time shall be continued under the Horizon cafeteria
plan, subject to subsequent changes as provided in the Horizon plan. All benefit payments related to the transferred balances shall be made in accordance with the Horizon cafeteria plan.
5.18
Subsidiary Mergers and LSBRMI Termination.
Following receipt of Stockholder Approval and all
Regulatory Approvals, LPB shall, and shall cause each Subsidiary to, use its reasonable best efforts to take such action as necessary to (i) effectuate the LSBRMI Termination as contemplated in
Section 1.08
hereof; and
(ii) effectuate the Subsidiary Mergers.
5.19
Cooperation on Conversion of Systems.
LPB agrees
to commence immediately after the date of this Agreement (and continue until Closing or completed) using its commercially reasonable best efforts to ensure an orderly transfer of information, processes, systems and data to Horizon and to otherwise
assist Horizon in facilitating the conversion of all of LPBs systems into, or to conform with, Horizons systems (including cooperating with Horizon in the training of LPBs and its Subsidiaries employees on Horizons
systems), so that, as of the Closing, the systems of LPB are readily convertible to Horizons systems to the fullest extent possible without actually converting them prior to the Closing. LPB and Horizon shall meet on a regular basis to discuss
and plan for the conversion of LPBs data processing and related electronic informational systems to those used by Horizon, which planning shall include, without limitation: (i) discussion of possible termination by LPB of third-party
service provider arrangements effective at or following the Effective Time; (ii) non-renewal of personal property leases and software licenses used by LPB in connection with its systems operations; and (iii) retention of outside
consultants and additional employees to assist with the conversion and outsourcing, as appropriate, of proprietary or self-provided system services.
5.20
Installation/Conversion of Equipment.
Prior to Closing and after the receipt of Regulatory
Approvals, at times mutually agreeable to Horizon and LPB, Horizon may, at Horizons sole expense, install teller equipment, platform equipment, security equipment, and computers, at the LPB and LPSB offices, branches and ATM locations, and LPB
shall cooperate with Horizon in connection with such installation;
provided, however
, that such installations shall not interfere with the normal business activities and operations of LPB or LPSB or require material alterations to LPBs
or LPSBs facilities.
5.21
Supplemental Life Insurance Agreements (BOLI).
Prior to the
Effective Time, LPB shall, or shall cause LPSB to, take any and all action necessary to terminate in accordance with the terms and conditions thereof and without resulting liability to Horizon or any of its affiliates, The LaPorte Savings Bank Split
Dollar Agreements with each of Michele M. Thompson and Daniel P. Carroll.
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5.22
Employment Agreements and Change of Control Payments.
LPB will pay out all amounts payable upon a change in control pursuant to the employment agreements between LPSB and (i) Lee A. Brady dated February 26, 2008, as amended, and (ii) Michele M. Thompson dated February 26, 2008, as
amended (collectively, the
Employment Agreements
), as identified in the LPB Disclosure Schedule, as if the change in control payments contemplated by the Employment Agreements had been triggered by the Merger, provided that, if
required, all such agreements shall be amended with the written consent of the affected parties prior to the Effective Time to ensure and expressly provide that no payment shall be made under such agreements or under any other plan, arrangement or
agreement applicable to the individual that would constitute an excess parachute payment (as such term is defined in Section 280G of the Code), and to the extent any such payment would constitute an excess parachute
payment, the payment will be reduced to $1.00 less than the amount that would be considered an excess parachute payment. The payment of such amounts shall be contingent upon Ms. Thompson and Mr. Brady entering into a
mutual termination of employment agreement in a form reasonably acceptable to Horizon and executed concurrent with the execution of this Agreement (the
Mutual Termination of Employment Agreements
), and each of them also entering
into the Noncompetition Agreements. Such payments will be made in a lump sum no later than the Effective Time.
5.23
SERP Agreements and Deferred Compensation Agreement.
At the Effective Time, Horizon shall assume those certain Supplemental Executive Retirement Agreements with Lee A. Brady, Michele M. Thompson, Patrick W. Collins, Bruce Fisher, and
Russ Klosinksi and the Deferred Compensation Agreement with Lee A. Brady (the
Brady DCA
and together with the other agreements, collectively, the
SERPs
) and the timing and amount of the payments thereunder will
be made in accordance with the SERP plan documents and which are detailed in
Section 5.23
of the LPB Disclosure Schedule. For purposes of clarity, it is understood that neither Horizon nor LPB will terminate the SERPs and the parties
will not accelerate the timing of the payments thereunder. Horizon and LPB agree that all amounts payable under the SERPs and DCA on behalf of Lee A. Brady, Bruce Fisher and Russ Klosinksi will be deposited into a separate account within
Horizons existing irrevocable grantor trust (which shall meet the requirements of Internal Revenue Service Revenue Procedure 92-65 (as amended or superseded from time to time)) at the Effective Time, and all payments due under such SERPs will
be made by such trust and from such separate account.
5.24
Mortgage Loan Operations.
(a) At the earlier of five days prior to the Effective Time or after receipt of Stockholder Approval and all Regulatory Approvals, LPB will
work to conform its mortgage warehouse operations to Horizons standards, including, but not limited to, adopting and/or adhering to Horizons mortgage warehouse (i) underwriting standards, which may result in the need for LPSB to
exit certain existing relationships; (ii) loan documentation processes and procedures; and (iii) credit underwriting and monitoring processes and procedures.
(b) After Stockholder Approval and all Regulatory Approvals, LPB shall immediately give notice to each mortgage warehouse customer who offers
construction loans terminating such product type;
provided, however
, that if LPB determines that any prior commitments by any such customer commits LPB to make such an advance, LPB shall submit to Horizon for review and approval any such
request at least two (2) business days prior to the contemplated funding date.
(c) At the earlier of five days prior to the
Effective Time or after receipt of Stockholder Approval and all Regulatory Approvals, LPB shall immediately give notice to each mortgage warehouse
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customer to discontinue any future purchases of correspondent Mortgage Loans. After the date of this Agreement and until the Effective Time (or until this Agreement is terminated as herein
provided), LPB will not, and will cause its Subsidiaries to not, enter into any new agreement allowing any correspondent Mortgage Loans to be placed on a mortgage warehouse line.
(d) At the earlier of five days prior to the Effective Time or after receipt of Stockholder Approval and all Regulatory Approvals, LPB shall
give notice to each participant in a mortgage warehouse loan arrangement with LPSB that such participation arrangement will be terminated as of the Effective Time and shall take all steps necessary to terminate all agreements evidencing the same
effective as of the Effective Time.
5.25
Amendment and Termination of LPSB ESOP.
(a) LPB shall make contributions to the LPSB ESOP between the date hereof and the Effective Time consistent with the terms of the LPSB ESOP and
past practices, including, without limitation, any contributions required pursuant to the terms and conditions of the ESOP Loan Documents.
(b) No later than ten (10) days prior to the Closing Date, LPB, pursuant to the provisions of the LPSB ESOP, shall, subject to review and
approval by Horizon: (i) adopt resolutions to terminate, subject to the consummation of the Merger, the LPSB ESOP, effective as of the Closing Date (the
ESOP Termination Date
); (ii) amend the LPSB ESOP effective as of a
date not later than the ESOP Termination Date to freeze participation under the LPSB ESOP and to provide that no distributions of accrued benefits shall be made from the LPSB ESOP, or its related employee benefit trust, subsequent to the ESOP
Termination Date until such time as the Internal Revenue Service issues a favorable determination letter to the effect that the plan termination does not adversely affect the LPSB ESOPs qualification for favorable income tax treatment under
the Code, except distributions may be made earlier if required by the terms of the LPSB ESOP upon the occurrence of retirement, death, disability, or termination of employment, or any other event, other than the plan termination, that requires a
distribution from the LPSB ESOP; (iii) amend the LPSB ESOP to provide that the excess of the proceeds from the sale of shares of LPB Common Stock held by the LPSB ESOP in the ESOPs unallocated suspense account (
Suspense
Shares
) over the unpaid principal and accrued interest of the Exempt Note attributable to the Suspense Shares shall (after repayment of the Exempt Note as contemplated in
Section 5.25
of this Agreement) be allocated to the
accounts of the ESOPs participants according to each participants proportionate ESOP account balance as of the day before the ESOP Termination Date. Except as provided in this
Section 5.25(b)
or except to the extent that
Horizon ceases offering Horizon stock as an investment option under all qualified plans maintained by Horizon, Horizon agrees that the LPSB ESOP will not dispose of the Horizon common stock received by the LPSB ESOP at the Closing Date in order to
preserve potential net unrealized appreciation tax treatment upon the distribution of the Horizon common stock to the LPSB ESOP participants. LPB will file, or cause to be filed, with the Internal Revenue Service an application for a favorable
determination letter upon termination of the LPSB ESOP requesting the issuance to LPB of the favorable determination letter described in this
Section 5.25(b)
. A copy of the competed and filed application shall be provided to Horizon at
least five (5) business days prior to the Effective Time. On or before the Effective Time, LPB shall direct the Trustee of the LPSB ESOP to cause the unpaid principal balance and accrued interest through the Closing Date of the Exempt Note
(such unpaid principal and accrued interest shall be referred to as the
ESOP Loan Balance
) to be repaid to Horizon, as successor in interest to LPB, as of the Closing Date. Repayment of the ESOP Loan Balance shall be made by
transferring to Horizon, as successor in interest to LPB, the sum of (i) cash received by the ESOP for the Suspense Shares equal to
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thirty five percent (35%) of the ESOP Loan Balance, and (ii) a number of shares of Horizon common stock equal to (A) sixty five percent (65%) of the ESOP Loan Balance divided
by (B) the fair market value of Horizon common stock as of the Closing Date.
(c) Following the Effective Time, Horizon shall use its
best efforts in good faith to obtain the IRS favorable determination letter as promptly as possible, including adopting any amendments to the LPSB ESOP that may be required by the IRS. As soon as practicable following the receipt of a favorable
determination letter from the IRS regarding the tax-qualified status of the LPSB ESOP upon its termination, the remaining account balances in the LPSB ESOP shall either be distributed to participants and beneficiaries or transferred to an eligible
tax-qualified retirement plan or individual retirement account as a participant or beneficiary may direct.
(d) On or before the Effective
Time, the ESOP Committee shall have directed Delaware Charter Guarantee & Trust Company (the
ESOP Trustee
), as directed trustee of the ESOP to (i) provide to the ESOP participants similar notices and materials
provided to other LPB shareholders with respect to those matters requiring a vote of the shareholders under this Agreement; (ii) obtain direction from the ESOPs participants as to how to vote those shares of LPB Stock allocated to the
accounts of the ESOPs participants with respect to those matters for which shareholder vote is required under this Agreement; (iii) vote those shares of LPB Stock in accordance with the direction of the ESOPs participants and in
accordance with Section 7.1-1 of the ESOP; and (iv) vote the Suspense Shares and allocated shares of LPB Stock for which no participant investment direction has been timely received by the Trustee in accordance with Section 7.1-1 of
the ESOP.
(e) LPB shall continue in full force and effect, until the Effective Time: (i) the fidelity bond, if any, issued to LPB as
described in ERISA Section 412; and (ii) the ERISA fiduciary liability insurance policy currently in effect, if any, for the benefit of the covered fiduciaries of the LPSB ESOP.
(f) As soon as practicable following the execution of this Agreement, Horizon will amend the Horizon Employee Stock Ownership Plan (the
Horizon ESOP
) to permit Continuing Employees to enter the Horizon ESOP as of the Effective Time, and Continuing Employees will be credited with prior years of service with LPB for purposes of eligibility and vesting (but not
benefit accruals).
5.26
280G Opinion.
Prior to the Effective Time, LPB shall use its reasonable
best efforts to cause LPB and Horizon to receive confirmation, in a form reasonably satisfactory to LPB and Horizon, from an accounting firm, to the effect that as a result, directly or indirectly, of the transactions contemplated by this Agreement
(including without limitation any termination of employment relating thereto and occurring prior to, at or following the Effective Time), LPB, its Subsidiaries and their respective successors will not be obligated to make a payment that would be
characterized as an excess parachute payment to an individual who is a disqualified individual, as such terms are defined in Section 280G of the Code.
ARTICLE VI.
COVENANTS OF HORIZON
Horizon covenants and agrees with LPB and covenants and agrees to cause its Subsidiaries to act as follows (and, where applicable, LPB
covenants and agrees with Horizon as follows):
6.01
Approvals.
Horizon shall have primary
responsibility of the preparation, filing and costs of all bank regulatory applications required for consummation of the Merger (except those only
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applicable to LPB or LPSB, if any), and all parties shall file such applications as promptly as practicable after the execution of this Agreement (provided that each party has timely provided all
information requested in writing by the other party or its counsel), and in no event later than forty five (45) days after the execution of this Agreement. Horizon shall provide LPB and its counsel appropriate opportunity to review and comment
on such bank regulatory applications, including any supplements or amendments to such filings and all responses for additional information and replies to comments, prior to such filings being filed with a bank regulatory agency. Horizon and LPB
shall cooperate fully and use commercially reasonable efforts to procure, upon terms and conditions reasonably acceptable to each of them, all consents, authorizations, approvals, registrations and certificates, to complete all filings and
applications and to satisfy all other requirements prescribed by law which are necessary for consummation of the Merger on the terms and conditions provided in this Agreement. Horizon shall provide to LPBs counsel copies of all applications
filed and copies of all material written communications with all state and federal bank regulatory agencies relating to such applications and agrees that it will consult with LPB with respect to such consents, authorizations, approvals,
registrations and certificates, and agrees that it will keep LPB apprised of the status of matters relating to completion of the transactions contemplated hereby.
6.02
SEC Registration.
(a) For the purposes (x) of registering the Horizon Common Stock to be offered to holders of LPB Common Stock in connection with the
Merger with the SEC under the Securities Act and (y) of holding the LPB shareholders meeting, as soon as practicable following the date of this Agreement, LPB (with the assistance of Horizon as appropriate) shall prepare the required proxy
disclosures, in accordance with the rules and regulations of the SEC, to be used in connection with the LPB shareholders meeting to obtain approval for the Merger (the
Proxy Statement
), and Horizon shall use its reasonable best
efforts to prepare and file with the SEC, no later than 45 days after the date of this Agreement (provided that each party has timely provided all information requested in writing by the other party or its counsel), a registration statement on Form
S-4 under the Securities Act of 1933, as amended (the
1933 Act
) covering the shares of Horizon common stock to be issued pursuant to this Agreement, in which the Proxy Statement will be included as a prospectus. Such registration
statement and any amendments and supplements thereto are referred to in this Agreement as the
Registration Statement
. Horizon shall provide LPB and its counsel with appropriate opportunity to review and comment on the Registration
Statement, and shall incorporate all appropriate comments thereto prior to the time it is initially filed with the SEC or any amendments are filed with the SEC. Horizon shall use its best reasonable efforts to cause the same to become effective and
thereafter, until the Effective Time or termination of this Agreement, to keep the same effective and, if necessary, amend and supplement the same. Horizon shall, as soon as practicable after filing the Registration Statement, make all filings
required to obtain all blue sky exemptions, authorizations, consents or approvals required for the issuance of Horizon common stock.
(b)
The parties shall use reasonable best efforts to respond (with the assistance of the other party) as promptly as practicable to any comments of the SEC with respect thereto. Horizon shall provide LPB and its counsel with appropriate opportunity to
review and comment on such response and shall incorporate all appropriate comments thereto prior to filing its response with the SEC. If prior to the Effective Time any event occurs with respect to LPB, Horizon or any Subsidiary of LPB or Horizon,
respectively, or any change occurs with respect to information supplied by or on behalf of LPB or Horizon, respectively, for inclusion in the Proxy Statement or the Registration Statement that, in each case, is required to be described in an
amendment of, or a supplement to, the Proxy Statement or the
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Registration Statement, LPB or Horizon, as applicable, shall promptly notify the other of such event, and LPB or, Horizon, as applicable, shall cooperate in the prompt filing with the SEC of any
necessary amendment or supplement to the Proxy Statement and the Registration Statement and, as required by applicable Law, in disseminating the information contained in such amendment or supplement to LPBs shareholders and to Horizons
shareholders.
(c) Horizon shall cause the shares of Horizon Common Stock to be issued in the Merger to be approved for listing on the
NASDAQ Global Select Market (subject to official notice of issuance) prior to the Effective Time.
6.03
Employee Benefit Plans and Employee Payments.
(a) Horizon shall make available to the officers and employees of LPB or any
Subsidiary who continue as employees of Horizon or any Subsidiary after the Effective Time (
Continuing Employees
), substantially the same employee benefits as are generally available to all Horizon employees.
(b) Horizon and LPB agree to treat the differences between the vacation and paid time off policies of LPB and any Subsidiary (including,
without limitation, any banked paid time) and the vacation and paid time off policies of Horizon as provided in
Section 6.03(b)
of the LPB Disclosure Schedule, and communicate the proposed reconciliation of the policies to the Continuing
Employees prior to the Effective Time. Effective as of the later of the Effective Time or the date on which the Horizon vacation and paid time off policies are made available to the Continuing Employees, such Continuing Employees will be subject to
the terms and conditions of the Horizon vacation/paid time off policy in place for similarly situated employees of Horizon, with credit given for all prior years of service with LPB or any Subsidiary for purposes of determining vacation pay
eligibility and the amount of such vacation pay.
(c) Continuing Employees will receive credit for prior service with LPB or its
Subsidiaries, or their predecessors, for purposes of eligibility and vesting (but not benefit accrual) under the employee benefit plans of Horizon and its Subsidiaries. The Horizon 401(k) Plan will be amended as provided in
Section 5.16(f)
of this Agreement and the Horizon ESOP will be amended as provided in
Section 5.25(f)
of this Agreement.
(d) To the extent a LPB employee benefit plan is terminated at or prior to the Effective Time, Continuing Employees shall become eligible to
participate in Horizons similar employee benefit plans as of the Effective Time. To the extent a LPB employee benefit plan is terminated after the Effective Time, Continuing Employees shall become eligible to participate in Horizons
similar employee benefit plans on the date of such plan termination. Horizon will: (i) avoid subjecting Continuing Employees to any waiting periods or additional pre-existing condition limitations under the health and dental plans of Horizon or
its Subsidiaries in which they are eligible to participate than they otherwise would have been subject to under the health and dental plans of LPB; and (ii) give credit under the applicable plan for any deductibles and co-insurance payments
made by such Continuing Employees under the corresponding LPB plan during the balance of the then current 12-month period of coverage.
(e) To the extent permitted under the terms of any tax-qualified retirement plan maintained by Horizon after the Effective Time and subject to
the terms and conditions thereof, such plan shall accept eligible rollover distributions (within the meaning of Code Section 402(c)(4)) of cash amounts received from the LPB 401(k) Plan with respect to any Continuing Employees.
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(f) Horizon may elect to continue to maintain all fully insured employee welfare benefit and
cafeteria plans currently in effect at the Effective Time until such time as Horizon determines, in its sole discretion, to modify or terminate any or all of those plans. Claims incurred under the employee welfare benefit and cafeteria plans prior
to plan termination shall be paid in accordance with the applicable plans claim submission procedures and deadlines.
(g) Until the
Effective Time, LPB or a Subsidiary of LPB, whichever is applicable, shall be liable for all obligations for continued health coverage pursuant to Section 4980B of the Code and Sections 601 through 609 of ERISA (
COBRA
) for
eligible employees who incur a qualifying event before the Effective Time. Horizon or a Horizon Subsidiary, whichever is applicable, shall, after the Effective Time, be liable for (i) all obligations for continued health coverage under COBRA
with respect to each qualified beneficiary of LPB or a Subsidiary of LPB who incurs a termination on and after the Effective Time, and (ii) for continued health coverage under COBRA from and after the Effective Time for each qualified
beneficiary of LPB or a Subsidiary of LPB who incurs a qualifying event before the Effective Time.
(h) Except for Lee A Brady, Michele M.
Thompson, Patrick W. Collins, Kevin N. Beres, and Daniel P. Carroll, and any other employee receiving a separate change in control, severance or similar payment in connection with the Closing of the Merger, those employees of LPSB as of the
Effective Time (i) who are still employed by LPSB and who Horizon or its Subsidiaries elect not to employ after the Effective Time or who are terminated other than for cause within twelve (12) months after the Effective Date; and
(ii) who sign and deliver a termination and release agreement in a form substantially similar to the agreement provided in
Section 6.03(h)
of the Horizon Disclosure Schedule, shall be entitled to severance pay equal to one
(1) week of pay, at their base rate of pay in effect at the time of termination, for each full year of continuous service with LPSB with a minimum of four (4) weeks and a maximum of twenty-six (26) weeks. Such employees will receive
their severance in a lump-sum payment. Furthermore, any of such terminated employees shall be entitled to continuation coverage under Horizon Banks group health plans as required by COBRA, subject to timely election and payment of the
applicable COBRA premium by such terminated employees. In addition, Horizon, at its expense will provide group career counseling for the LPSB employees who will not be continuing with Horizon and will make professional career counseling services
available through its internal employee assistance program of up to four (4) visits per employee. Nothing in this Section shall be deemed to limit or modify Horizons or Horizon Banks at-will employment policy or any employees
at will employment status.
6.04
Adverse Actions.
During the period from the date of this Agreement
to the Effective Time, except with the written consent of LPB, which consent will not be unreasonably withheld, Horizon will, and it will cause each of its Subsidiaries to, use commercially reasonable efforts to preserve intact its business
organization and assets and maintain its rights and franchises; and voluntarily take no action that would: (i) reasonably be expected to materially adversely affect the ability of the parties to obtain the regulatory approvals or materially
increase the period of time necessary to obtain such approvals; (ii) adversely affect its ability to perform its covenants and agreements under this Agreement in any material respect; or (iii) result in the representations and warranties
contained in
Article IV
of this Agreement not being true and correct on the date of this Agreement or at any future date on or prior to the Closing Date (subject to the standards set forth in
Section 7.02(a)
hereof) or in any of
the conditions set forth in
Article VII
hereof not being satisfied;
provided, however
, that the forgoing shall not be deemed to require Horizon to take any action which would otherwise violate any other provision of this Agreement.
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6.05
D&O Insurance and Indemnification.
(a) Subject to the limits of applicable federal banking law and regulations, Horizon shall indemnify and hold harmless (including the
advancement of expenses as incurred) each present and former director and officer of LPB and its Subsidiaries, including LPSB (each, an
Indemnified Party
) for a period of six (6) years following the Effective Time, against
any costs or expenses (including reasonable attorneys fees), judgments, fines, losses, claims, damages or liabilities incurred in connection with any claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of or pertaining to matters existing or occurring at or prior to the Effective Time, whether asserted or claimed prior to, at or after the Effective Time, to the same extent (and subject to the making of the same findings
as to eligibility for such indemnification and/or advancement of expenses) that such Indemnified Party would have been indemnified (or entitled to advancement of expenses) as a director or officer of LPB or any of its Subsidiaries under applicable
law or LPBs, or any such Subsidiaries, articles of incorporation or bylaws as in effect as of the date of this Agreement.
(b)
Subject to the terms and conditions of this
Section 6.05(b)
, Horizon shall cause the persons serving as officers and directors of LPB and LPSB immediately prior to the Effective Time to be covered for a period of six (6) years after
the Effective Time by the directors and officers liability insurance policy currently maintained by LPB (the
Existing Policy
) or by a policy of at least the same coverage containing terms and conditions which are not
materially less favorable (the
Replacement Policy
). Prior to the Effective Time, as instructed by Horizon, LPB shall cause the applicable broker of record for its Existing Policy and its existing Crime (Bond) Policy to be assigned
to Horizons designee. Such assignments in favor of Horizons designee shall be executed by LPB with sufficient time to allow Horizon and its designee to place the insurance required by this Section. The Existing Policy or Replacement
Policy, subject to policy terms and conditions, shall provide coverage with respect to covered acts or omissions occurring prior to the Effective Time;
provided, however
, that Horizon shall not be required to pay annual premiums for the
Existing Policy (or for any Replacement Policy) in excess of 150% of the annual premium for the current annual term of the Existing Policy (the
Maximum Amount
); and,
provided, further, however
, that, if notwithstanding the
use of commercially reasonable best efforts to do so, Horizon is unable to maintain or obtain the insurance required by this
Section 6.05(b)
, Horizon shall obtain the most advantageous policy of directors and officers
insurance that is available for the Maximum Amount.
(c) The provisions of this
Section 6.05
shall survive the Effective Time
and the obligations of Horizon provided under this
Section 6.05
are intended to be enforceable against Horizon directly by the Indemnified Parties and his or her heirs and personal representatives. Horizon shall pay all reasonable costs,
including attorneys fees, upon the final disposition of any claim, action, suit, proceeding or investigation by any Indemnified Party in successfully enforcing the indemnity and other obligations provided for in this
Section 6.05
to the fullest extent permitted under applicable law, the articles of incorporation of LPB or the bylaws of LPB;
provided, however
, such payment of costs shall be paid by Horizon in advance of the final disposition of such claim, action,
suit, proceeding or investigation upon receipt of: (i) written affirmation of an Indemnified Partys good faith belief that the Indemnified Party is eligible to receive the indemnification provided for in this
Section 6.05
; and
(ii) an unconditional written undertaking by or on behalf of the Indemnified Party to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by Horizon as authorized in this
Section 6.05
.
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(d) In the event that either Horizon or any of its successors or assigns (i) consolidates
with or merges into any other Person and shall not be the continuing or surviving entity of such consolidation or merger, or (ii) transfers all or substantially all of its properties and assets to any Person, then, and in each such case, proper
provision shall be made so that the successors and assigns of Horizon shall assume the obligations set forth in this
Section 6.05
.
6.06
Changes and Supplements to Horizon Disclosure Schedules.
Horizon shall promptly supplement, amend
and update, upon the occurrence of any change prior to the Effective Time, and as of the Effective Time, the Horizon Disclosure Schedule with respect to any matters or events after the date of this Agreement arising which, if in existence or having
occurred as of the date of this Agreement, would have been required to be set forth or described in the Horizon Disclosure Schedule or this Agreement and including, without limitation, any fact which, if existing or known as of the date hereof,
would have made any of the representations or warranties of Horizon contained herein materially incorrect, untrue or misleading. No such supplement, amendment or update shall have any effect for the purposes of determining satisfaction of the
conditions set forth in
Article VII
.
6.07
La Porte County Advisory Board.
Horizon agrees to
add, as of the Effective Time, two (2) representatives to Horizons La Porte County Advisory Board from the LPB or LPSB Board and/or from the communities served by LPSB, as mutually agreed upon.
6.08
Horizon and Horizon Bank Board.
Horizon and Horizon Bank shall take all appropriate action so
that, as of the Effective Time and subject to and in accordance with the Bylaws of Horizon and Horizon Bank, Michele M. Thompson shall be appointed as a director of Horizon and Horizon Bank. If the term of the class of directors to which
Ms. Thompson is appointed shall expire less than three (3) years of the Effective Time, Horizon and Horizon Bank agree to cause her to be nominated and recommended for election by the shareholders at the next election of directors as long
as she continues to meet all of Horizons and Horizon Banks director qualifications as set forth in their organizational documents, charters, and/or written policies, is otherwise qualified to serve as a director of Horizon and Horizon
Bank under all applicable laws and regulations, and is not prohibited from serving in such a capacity by any bank or securities regulatory authority or similar self-governing body with jurisdiction over Horizon or Horizon Bank.
6.09
Issuance of Horizon Common Stock
.
The Horizon Common Stock to be issued by Horizon to the
shareholders of LPB pursuant to this Agreement will, on the issuance and delivery to such shareholders pursuant to this Agreement, be duly authorized, validly issued, fully paid and nonassessable. The Horizon common stock to be issued to the
shareholders of LPB pursuant to this Agreement are and will be free of any preemptive rights of the shareholders of Horizon or any other person, firm or entity. The Horizon common stock to be issued to the shareholders of LPB pursuant to this
Agreement will not be subject to any restrictions on transfer arising under the 1933 Act, except for Horizon common stock issued to any shareholder of LPB who may be deemed to be an affiliate (under the Securities Act) of Horizon after
completion of the Merger pursuant to Rule 145 of the Securities Act.
6.10
Community Investment.
Horizon agrees that, for a period of five (5) years following the Effective Time, it shall cause Horizon Bank to donate $50,000 annually to nonprofit organizations and/or community schools in the markets served by LPSB. The continuation of
these annual donations will be dependent upon Horizons continued financial performance, and their permissibility under applicable law, including all banking regulations. These donations shall be administered by Horizons La Porte
Countys Advisory Board, subject to oversight by the Horizon Bank Board of Directors and/or Horizons CEO.
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6.11
Commercially Reasonable Efforts.
Subject to the terms
and conditions herein provided, Horizon agrees to use commercially reasonable efforts to take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement. Horizon shall not, and shall not permit any of its Subsidiaries to, knowingly take any action or knowingly fail to take any reasonable action that would, or would be
reasonably likely to, prevent, impede, or delay the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code.
6.12
Merger Consideration Availability.
Horizon agrees at all times from the date of this Agreement
until the Merger Consideration has been paid in full to reserve a sufficient number of shares of Horizon Common Stock to fulfill its obligations under this Agreement. Horizon has no reason to believe it will not have a sufficient amount of cash, or
have access to a sufficient amount of cash, to fulfill its obligations under this Agreement.
6.13
Short-Swing Trading Exemption.
Horizon shall take all steps, as may be necessary or appropriate, to cause the transactions contemplated by
Article II
and any other dispositions of equity securities of LPB (including derivative
securities) or acquisitions of equity securities of Horizon in connection with the consummation of the transactions contemplated by this Agreement to be exempt under Rule 16b-3(d) promulgated under the Exchange Act.
6.14
Conduct of Business.
After the date of this Agreement and until the Effective Time or until this
Agreement is terminated as herein provided, each of Horizon and its Subsidiaries shall: (1) use commercially reasonable efforts to preserve its business organization intact in all material respects and preserve its present relationships with
material customers; (2) use commercially reasonable efforts to maintain all of the properties and assets that it owns or utilizes and which are material to the operation of its business in good operating condition and repair, reasonable wear
and tear excepted; (3) maintain its books, records and accounts in the usual, regular and ordinary manner, on a basis consistent with prior years and in compliance, in all material respects, with all statutes, laws, rules and regulations
applicable to them and to the conduct of its business; and (4) not knowingly do or knowingly fail to do anything which will cause a breach of, or default in, any material contract, agreement, commitment, obligation, understanding, arrangement,
lease or license to which it is a party or by which it is or may be subject or bound.
6.15
Failure to
Fulfill Conditions.
In the event Horizon determines that a condition to its obligation to complete the Merger cannot be fulfilled, and that it will not waive that condition, it will promptly notify LPB.
ARTICLE VII.
CONDITIONS PRECEDENT TO THE MERGER
7.01
Conditions Precedent to Horizons Obligations.
The obligation of Horizon to consummate the
Merger is subject to the satisfaction and fulfillment of each of the following conditions on or prior to the Effective Time, unless waived in writing by Horizon,
provided, however
, that the conditions set forth in
Sections 7.01(d)
,
(e)
,
(f)
,
(i)
and
(j)
cannot be waived by Horizon:
(a)
Representations and Warranties
. The
representations and warranties of LPB set forth in
Sections 3.03(a)
,
3.23(a)
and
3.23(o)
(in each case, after giving effect to the first paragraph of
Article III
) shall be true, accurate and correct (other than, in the
case of
Section 3.03(a)
, such failures to be true,
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accurate and correct as are
de minimis
) in each case as of the date of this Agreement and (except to the extent such representations and warranties speak as of an earlier date) as of the
Closing Date as though made on and as of the Closing Date, and the representations and warranties of LPB set forth in
Sections 3.01
,
3.02(a)
,
3.02(b)(i)
and
(ii)
,
3.03(c)
,
3.08
,
3.22
and
3.35
(in each case, after giving effect to the first paragraph of
Article III
) shall be true, accurate and correct in all material respects as of the date of this Agreement and (except to the extent such representations and warranties speak as of
an earlier date) as of the Closing Date as though made on and as of the Closing Date. All other representations and warranties of LPB set forth in this Agreement (read without giving effect to any qualification as to materiality or Material Adverse
Effect set forth in such representations or warranties but, in each case, after giving effect to the first paragraph of
Article III
) shall be true, accurate and correct in all respects as of the date of this Agreement and (except to the
extent such representations and warranties speak as of an earlier date) as of the Closing Date as though made on and as of the Closing Date,
provided
, that for purposes of this sentence, such representations and warranties shall be deemed to
be true, accurate and correct unless the failure or failures of such representations and warranties to be so true, accurate and correct, either individually or in the aggregate, and without giving effect to any qualification as to materiality or
Material Adverse Effect set forth in such representations or warranties, has had or would reasonably be expected to have a Material Adverse Effect on LPB.
(b)
Covenants
. Each of the covenants and agreements of LPB shall have been fulfilled or complied with, in all material respects, at or
prior to the Effective Time.
(c)
Deliveries at Closing
. Horizon shall have received from LPB at the Closing (as defined in
Section 10.01
) the items and documents, in form and content reasonably satisfactory to Horizon, set forth in
Section 10.02(b)
.
(d)
Registration Statement Effective
. Horizon shall have registered its shares of Horizon common stock to be issued to shareholders of
LPB in accordance with this Agreement with the SEC pursuant to the 1933 Act, and all state securities and blue sky approvals, authorizations and exemptions required to offer and sell such shares shall have been received by Horizon. The Registration
Statement with respect thereto shall have been declared effective by the SEC and no stop order shall have been issued or threatened.
(e)
Regulatory Approvals
. All regulatory approvals required to consummate the transactions contemplated hereby (
Regulatory Approvals
) shall have been obtained and shall remain in full force and effect and all statutory waiting
periods in respect thereof shall have expired and no such approvals shall contain any conditions, restrictions or requirements which would (i) following the Effective Time, have a Material Adverse Effect on Horizon or (ii) reduce the
benefits of the transactions contemplated hereby to such a degree that Horizon would not have entered into this Agreement had such conditions, restrictions or requirements been known at the date hereof.
(f)
Shareholder Approval
. The shareholders of LPB shall have approved and adopted this Agreement as required by applicable law and the
terms of this Agreement.
(g)
Officers Certificate
. LPB shall have delivered to Horizon a certificate signed by its President
and its Secretary, dated as of the Effective Time, certifying that: (i) the representations and warranties of LPB contained in
Article III
are true, accurate and correct subject to the standard specified in
Section 7.01(a)
;
(ii) all the covenants of LPB have been complied with in all material respects at or prior to the Effective Time; and (iii) LPB has satisfied and fully complied with all conditions necessary to make this Agreement effective as to it.
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(h)
Tax Opinion
. The Board of Directors of Horizon shall have received a written opinion
of the law firm of Barnes & Thornburg LLP, dated as of the Closing Date, in form and content reasonably satisfactory to Horizon, to the effect that the Merger to be effected pursuant to this Agreement will constitute a tax-free
reorganization under the Code (as described in
Section 1.03
hereof) to each party hereto and to the shareholders of LPB, except with respect to the Cash Consideration and the cash received by the shareholders of LPB for fractional shares
resulting from application of the Exchange Ratio and pursuant to
Section 2.05
hereof. In rendering such opinion, counsel may require and rely upon customary representation letters of the parties hereto and rely upon customary
assumptions.
(i)
Material Proceedings
. None of Horizon, LPB, or any of their Subsidiaries, shall be subject to any statute, rule,
regulation, injunction, order or decree, which shall have been enacted, entered, promulgated or enforced, which prohibits, prevents or makes illegal the completion of the Merger.
(j)
Listing
. The shares of Horizon common stock to be issued in the Merger shall have been approved for listing on the NASDAQ Global
Select Market, subject to official notice of issuance.
(k)
Notice of Termination of Data Processing Agreement
. LPSB shall have
provided notice of termination to Jack Henry & Associates, Inc. (
JHA
) under that certain Master Software License Maintenance and Services Agreement, dated February 28, 2008 (including related exhibits and schedules),
as amended, between LPSB and JHA.
(l)
LPB Consolidated Shareholders Equity
. As of the end of the month prior to the
Effective Time, the LPB Consolidated Shareholders Equity (as defined in this
Section 7.01(l)
), shall not be less than $84.4 million.
LPB Consolidated Shareholders Equity
shall be the consolidated
shareholders equity of LPB and all of its Subsidiaries determined in accordance with GAAP consistently applied for prior periods;
provided, however
, that (A) any accruals established by LPB or any Subsidiary of LPB pursuant to
Section 5.05(b)
; (B) any changes to the valuation of the LPSB investment portfolio attributed to ASC 320, whether upward or downward, from September 30, 2015 until the measurement date; (C) the aggregate expenses of
attorneys, accountants, consultants, financial advisors and other professional advisors incurred by LPB or any Subsidiary of LPB in connection with this Agreement or the transactions contemplated hereby; (D) any amounts paid or payable to any
director, officer or employee of LPB or any Subsidiary of LPB under any contract, severance arrangement, benefit plan or employment practice of LPB or any Subsidiary of LPB and all other payroll and non-payroll related costs and expenses;
(E) costs associated with the termination of the 401(k) Plan, the ESOP and any other employee benefit plan, except as otherwise expressly provided herein; and, (F) costs associated with the termination of the JHA data processing agreement,
(G) cash dividends permitted to be paid to shareholders of LPB pursuant to
Section 5.03(a)(ii)
and the dividends payable by LSB Real Estate, Inc. on the outstanding 125 shares of 12.5% Series A preferred stock held by investors
other than LSB Investments, Inc.; and (H) any other expenses incurred in connection with the transactions contemplated hereby; in each case incurred or to be incurred by LPB or any LPB Subsidiary through the Effective Time in connection with
this Agreement and the transactions contemplated hereby, will not reduce or impact the calculation of the LPB Consolidated Shareholders Equity for purposes of this Section.
(m)
Consents
. LPB shall have obtained or caused to be obtained (a) all written consents, if any, required under the Material
Contracts, and (b) all permits, authorizations, other written consents, permissions and approvals as required for the lawful consummation of this Merger and as required under
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all agreements, contracts, appointments, indentures, plans, trusts or other arrangements with third parties required to effect the transactions contemplated by this Agreement.
7.02
Conditions Precedent to LPBs Obligations.
The obligation of LPB to consummate the Merger is
subject to the satisfaction and fulfillment of each of the following conditions on or prior to the Effective Time, unless waived in writing by LPB
provided, however
, that the conditions set forth in
Sections 7.02(d)
,
(e)
,
(f)
,
(i)
and
(j)
cannot be waived by LPB:
(a)
Representations and Warranties
. The representations
and warranties of Horizon set forth in
Sections 4.03(a)
and
4.20
(in each case, after giving effect to the first paragraph of
Article IV
) shall be true, accurate and correct (other than, in the case of
Section 4.03(a)
, such failures to be true, accurate and correct as are de minimis) in each case as of the date of this Agreement and (except to the extent such representations and warranties speak as of an earlier date) as of the Closing
Date as though made on and as of the Closing Date, and the representations and warranties of Horizon set forth in
Sections 4.01
,
4.02(a)
,
4.02(b)(i)
and
(ii)
, and
4.07
(in each case, after giving effect to the
first paragraph of
Article IV
) shall be true, accurate and correct in all material respects as of the date of this Agreement and (except to the extent such representations and warranties speak as of an earlier date) as of the Closing Date as
though made on and as of the Closing Date. All other representations and warranties of Horizon set forth in this Agreement (read without giving effect to any qualification as to materiality or Material Adverse Effect set forth in such
representations or warranties but, in each case, after giving effect to the first paragraph of
Article IV
) shall be true, accurate and correct in all respects as of the date of this Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing Date as though made on and as of the Closing Date,
provided
, that for purposes of this sentence, such representations and warranties shall be deemed to be true, accurate and correct
unless the failure or failures of such representations and warranties to be so true, accurate and correct, either individually or in the aggregate, and without giving effect to any qualification as to materiality or Material Adverse Effect set forth
in such representations or warranties, has had or would reasonably be expected to have a Material Adverse Effect on Horizon.
(b)
Covenants
. Each of the covenants and agreements of Horizon shall have been fulfilled or complied with, in all material respects, at or prior to the Effective Time.
(c)
Deliveries at Closing
. LPB shall have received from Horizon at the Closing the items and documents, in form and content reasonably
satisfactory to LPB, listed in
Section 10.02(a)
hereof.
(d)
Registration Statement Effective
. Horizon shall have
registered its shares of Horizon common stock to be issued to shareholders of LPB in accordance with this Agreement with the SEC pursuant to the 1933 Act, and all state securities and blue sky approvals, authorizations and exemptions required to
offer and sell such shares shall have been received by Horizon. The Registration Statement with respect thereto shall have been declared effective by the SEC and no stop order shall have been issued or threatened.
(e)
Regulatory Approvals
. All Regulatory Approvals shall have been obtained and shall remain in full force and effect and all statutory
waiting periods in respect thereof shall have expired.
(f)
Shareholder Approval
. The shareholders of LPB shall have approved and
adopted this Agreement as required by applicable law and the terms of this Agreement.
(g)
Officers Certificate
. Horizon
shall have delivered to LPB a certificate signed by its Chief Executive Officer and its Secretary, dated as of the Closing Date, certifying that: (i) the representations and warranties of Horizon contained in
Article IV
are true,
accurate and correct subject
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to the standard specified in
Section 7.02(a)
above;
(ii)
all the covenants of Horizon have been complied with in all material respects at or prior to the Effective Time;
and (iii) Horizon has satisfied and fully complied with all conditions necessary to make this Agreement effective as of the Closing Date.
(h)
Tax Opinion
. The Board of Directors of LPB shall have received a written opinion of the law firm of Barnes & Thornburg
LLP, dated as of the Effective Time, in form and content reasonably satisfactory to LPB, to the effect that the Merger to be effected pursuant to this Agreement will constitute a tax-free reorganization under the Code (as described in
Section 1.03
hereof) to each party hereto and to the shareholders of LPB, except with respect to the Cash Consideration and the cash received by the shareholders of LPB for fractional shares resulting from application of the Exchange
Ratio and pursuant to
Section 2.05
hereof. In rendering such opinion, counsel may require and rely upon customary representation letters of the parties hereto and rely upon customary assumptions.
(i)
Listing
. The shares of Horizon common stock to be issued in the Merger shall have been approved for listing on the NASDAQ Global
Select Market, subject to official notice of issuance.
(j)
Material Proceedings
. None of Horizon, LPB, or any Subsidiary of
Horizon or LPB, shall be subject to any statute, rule, regulation, injunction, order or decree, which shall have been enacted, entered, promulgated or enforced, which prohibits, prevents or makes illegal the completion of the Merger.
ARTICLE VIII.
TERMINATION OF MERGER
8.01
Termination.
This Agreement may be terminated and abandoned at any time prior to the Closing Date,
only as follows:
(a) by the mutual written consent of Horizon and LPB;
(b) by either of LPB or Horizon by written notice to the other:
(i) if this Agreement and the Merger are not approved by the requisite vote of the shareholders of LPB at the meeting of
shareholders of LPB contemplated in
Section 5.01
;
(ii) (x) if any Governmental Authority of competent
jurisdiction shall have issued an order, decree, judgment or injunction or taken any other action that permanently restrains, enjoins or otherwise prohibits or makes illegal the consummation of the Merger, and such order, decree, judgment,
injunction or other action shall have become final and non-appealable, or (y) if any consent or approval of any Governmental Authority whose consent or approval is required to consummate the Merger has been denied and such denial (despite the
reasonable best efforts of the parties hereto to appeal or reverse such denial) has become final and non-appealable; or (z) any application, filing or notice for a regulatory approval has been withdrawn at the request or recommendation of the
applicable Governmental Authority;
provided, however
, that the right to terminate this Agreement under this
Section 8.01(b)(ii)
shall not be available to a party whose failure (or the failure of any of its affiliates) to fulfill
any of its obligations (excluding warranties and representations) under this Agreement has been the cause of or resulted in the occurrence of any event described in clauses (x), (y) and (z) above;
(iii) if the consummation of the Merger shall not have occurred on or before February 28, 2017 (the
Outside
Date
);
provided
that the right to terminate this Agreement under this
Section 8.01(b)(iii)
shall not be available to any party whose material breach of any
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representation, warranty, covenant or other agreement contained in this Agreement causes the failure of the Merger to occur on or before the Outside Date; or
(c) by written notice from Horizon to LPB, if:
(i) any event shall have occurred which is not capable of being cured prior to or on the Outside Date and would result in any
condition set forth in
Section 7.01
not being satisfied prior to or on the Outside Date (
provided
, that Horizon is not then in material breach of any representation, warranty, covenant or other agreement contained herein);
(ii) LPB breaches or fails to perform any of its representations, warranties or covenants contained in this Agreement, which
breach or failure to perform would give rise to the failure of a condition set forth in
Section 7.01
, and such condition is incapable of being satisfied prior to or on the Outside Date or such breach has not been cured by LPB within
twenty (20) business days after LPBs receipt of written notice of such breach from Horizon (
provided
, that Horizon is not then in material breach of any representation, warranty, covenant or other agreement contained herein); or
(iii) there shall have occurred after the date of this Agreement any event, change, condition, circumstance or state of
facts, or aggregation of events, changes, conditions, circumstance or state of facts, that has had, individually or in the aggregate, a Material Adverse Effect on LPB.
(d) by written notice from LPB to Horizon if:
(i) any event shall have occurred which is not capable of being cured prior to or on the Outside Date and would result in any
condition set forth in
Section 7.02
not being satisfied prior to or on the Outside Date (
provided,
that LPB is not then in material breach of any representation, warranty, covenant or other agreement contained herein);
(ii) Horizon breaches or fails to perform any of its representations, warranties or covenants contained in this Agreement,
which breach or failure to perform would give rise to the failure of a condition set forth in
Section 7.02
and such condition is incapable of being satisfied prior to or on the Outside Date or such breach has not been cured by Horizon
within twenty (20) business days after Horizons receipt of written notice of such breach from LPB (
provided
, that LPB is not then in material breach of any representation, warranty, covenant or other agreement contained herein); or
(iii) there shall have occurred after the date of this Agreement any event, change, condition, circumstance or state of
facts, or aggregation of events, changes, conditions, circumstances or state of facts that has had, individually or in the aggregate, a Material Adverse Effect on Horizon.
(e) by written notice from Horizon to LPB:
(i) if the LPB Board of Directors shall fail to include its recommendation to approve the Merger in the Proxy Statement;
(ii) in the event of an Adverse Recommendation Change;
(iii) if the LPB Board shall approve any Acquisition Proposal or publicly recommend that the holders of LPB Common Stock accept
or approve any Acquisition Proposal; or
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(iv) if LPB shall have entered into, or publicly announced its intention to enter
into, a definitive agreement, agreement in principle or letter of intent with respect to any Acquisition Proposal.
(f) by written notice
by Horizon to LPB if a quorum could not be convened at the meeting of shareholders of LPB contemplated in
Section 5.01
or at a reconvened meeting held at any time prior to or on the Outside Date.
(g) by written notice by LPB to Horizon at any time during the five (5) day period commencing on the Determination Date if, and only if,
both of the following conditions are satisfied, such termination to be effective on the fifth (5th) business day following the date LPB provides notice to Horizon after the Determination Date as set forth below:
(i) the Horizon Market Value on the Determination Date is less than $20.58; and
(ii) the number obtained by dividing the Horizon Market Value by the Initial Horizon Market Value shall be less than the number
obtained by dividing (A) the Final Index Price by (B) the Initial Index Price minus 0.15;
subject, however
, to the following three
sentences. If LPB elects to exercise its termination right pursuant to this
Section 8.01(g)
, it shall give prompt written notice thereof to Horizon. During the five (5) business day period commencing with its receipt of such notice,
Horizon shall have the option to increase the Exchange Ratio to equal the lesser of (i) a quotient, the numerator of which is equal to the product of the Initial Horizon Market Value, the Exchange Ratio (as then in effect), and the Index Ratio
minus 0.15 and the denominator of which is equal to the Horizon Market Value on the Determination Date; or (ii) the quotient determined by dividing the Initial Horizon Market Value by the Horizon Market Value on the Determination Date, and
multiplying the quotient by the product of the Exchange Ratio (as then in effect) and 0.85. If within such five (5) business day period, Horizon delivers written notice to LPB that it intends to proceed with the Merger by paying such additional
consideration as contemplated by the preceding sentence, and notifies LPB of the revised Exchange Ratio, then no termination shall have occurred pursuant to this
Section 8.01(g)
, and this Agreement shall remain in full force and effect
in accordance with its terms (except that the Exchange Ratio shall have been so modified).
For purposes of this
Section 8.01(g)
, the following terms shall have the meanings indicated below:
Determination Date
shall
mean the first date on which all Regulatory Approvals (and waivers, if applicable) and all other approvals and consents necessary for consummation of the Merger have been received (disregarding any waiting period).
Final Index Price
means the average of the daily closing value of the Index for the fifteen (15) consecutive trading
days immediately preceding the Determination Date.
Index
means the SNL Small Cap U.S. Bank and Thrift Index or, if
such Index is not available, such substitute or similar Index as substantially replicates the SNL Small Cap U.S. Bank and Thrift Index.
Index Ratio
means the Final Index Price divided by the Initial Index Price.
A-66
Initial Horizon Market Value
means $24.21, adjusted as indicated in the last
sentence of this
Section 8.01(g)
.
Initial Index Price
means the closing value of the Index on the date
immediately prior to the date of this Agreement.
Horizon Market Value
means the average of the daily closing sales
prices of a share of Horizons common stock, rounded to the nearest cent, during the fifteen (15) consecutive trading days immediately preceding the Determination Date;
provided, however
, that closing sales prices shall only be used
for days during which Horizons shares are actually traded on the NASDAQ Global Select Market.
If Horizon or any company belonging
to the Index declares or effects a stock dividend, split-up, combination, exchange of shares or similar transaction between the date of this Agreement and the Determination Date, the prices for the common stock of such company shall be appropriately
adjusted for the purposes of applying this
Section 8.01(g)
.
8.02
Effect of
Termination.
(a) Subject to the remainder of this
Section 8.02
, in the event of the termination of this Agreement pursuant
to
Section 8.01
, this Agreement shall forthwith become null and void and have no effect, without any liability on the part of Horizon or LPB and each of their respective subsidiaries, directors, officers, employees, advisors, agents, or
shareholders and all rights and obligations of any party under this Agreement shall cease, except for the agreements contained in
Section 5.06
, this
Section 8.02
and
Article XI
, which shall remain in full force and
effect and survive any termination of this Agreement;
provided, however
, that nothing contained in this Agreement, including this
Section 8.02
, except for the amounts payable pursuant to subsections (b), (c) or (d), shall
relieve any party hereto from liabilities or damages arising out of any fraud or intentional breach by such party of any of its representations, warranties, covenants or other agreements contained in this Agreement or any related agreement.
(b) LPB shall pay to Horizon an amount in cash equal to $3,764,000 (the
Termination Fee
) if:
(i) this Agreement is terminated by Horizon pursuant to
Section 8.01(
e); or
(ii) after the occurrence of an Acquisition Proposal, this Agreement is terminated by either party pursuant to
Section 8.01(b)(i)
as a result of the failure of LPBs shareholders to approve the Agreement and the Merger by the requisite vote or by Horizon pursuant to
Section 8.01(f)
; in each case, prior to the date that is twelve
(12) months after such termination, LPB or any of its Subsidiaries enters into any Acquisition Agreement or any Acquisition Proposal is consummated (regardless of whether such Acquisition Proposal is consummated before or after the termination
of this Agreement); or
(iii) this Agreement is terminated by either LPB or Horizon pursuant to
Section 8.01(b)(iii)
and
(A)
prior to the date of such termination, an Acquisition Proposal was made, and (B) prior to the date that is twelve (12) months after such termination LPB or any of its Subsidiaries enters
into any Acquisition Agreement or any Acquisition Proposal is consummated.
A-67
(iv) this Agreement is terminated by Horizon pursuant to
Section 8.01(c)(ii)
after the occurrence of an Acquisition Proposal, and prior to the date that is twelve (12) months after such termination, LPB or any of its Subsidiaries enters into any Acquisition Agreement or such Acquisition
Proposal is consummated.
(c) Any fee due under
Section 8.02(b)
shall be paid by LPB by wire transfer of same day funds within
three business days after written demand for payment is made by Horizon.
(d) In the event Horizon would be entitled to the Termination
Fee pursuant to
Section 8.02(b)
, then Horizon may elect, in its sole discretion, to terminate this Agreement and require the payment of such Termination Fee, in which event the Termination Fee shall be the sole and exclusive remedy for
such termination event and such fee shall constitute liquidated damages;
provided, however
, this Agreement shall not be terminated until the Termination Fee is paid in full. LPB acknowledges that the agreements contained in this
Section 8.02
are an integral part of the transactions contemplated by this Agreement, and that, without these agreements, Horizon would not have entered into this Agreement. Accordingly, if LPB fails promptly to pay the Termination Fee,
and, in order to obtain such payment, Horizon commences a suit that results in a judgment against LPB for the Termination Fee, LPB shall also pay to Horizon its reasonable costs and expenses (including attorneys and accountants fees and
expenses) in connection with such suit and any appeal relating thereto, together with interest at the national prime rate in effect on the date such payment was required to be made.
ARTICLE IX.
EFFECTIVE TIME OF THE MERGER
Upon the terms and subject to the conditions specified in this Agreement, the Merger shall become effective on the day and at the time
specified in the Articles of Merger of Horizon and LPB as filed with the Indiana Secretary of State and the Maryland Department of Assessments and Taxation (the
Effective Time
). Unless otherwise mutually agreed to by the parties
hereto, the parties shall cause the Effective Time to occur on the first day of the month after the later to occur of (a) all conditions precedent to the Merger set forth in this Agreement have been fulfilled, and (b) all waiting periods
in connection with the bank regulatory applications filed for the approval of the Merger have expired.
ARTICLE X.
CLOSING
10.01
Closing Date and Place.
So long as all conditions precedent set forth in
Article VII
hereof have been satisfied and fulfilled, the closing of the Merger (the
Closing
) will take place on the date determined
to be the date of the Effective Time by
Article IX
hereof (the
Closing Date
) at a location to be reasonably determined by Horizon.
10.02
Deliveries.
(a) At the Closing, Horizon will deliver to LPB the following:
(i) the officers certificate contemplated by
Section 7.02(g)
hereof;
(ii) copies of all Regulatory Approvals necessary to consummate the Merger;
A-68
(iii) copies of the resolutions adopted by the Board of Directors of Horizon,
certified by the Secretary of Horizon relative to the approval of this Agreement and the Merger;
(iv) the tax opinion
required by
Section 7.02(h)
hereof;
(v) evidence of the purchase of director and officer liability insurance
for the benefit of the Indemnified Parties in accordance with
Section 6.05
; and
(vi) such other documents and
information as LPB or its legal counsel may reasonably request.
(b) At the Closing, LPB will deliver to Horizon the following:
(i) the officers certificate contemplated by
Section 7.01(g)
hereof;
(ii) copies of the resolutions adopted by the Board of Directors and shareholders of LPB certified by the Secretary of LPB
relative to the approval of this Agreement and the Merger;
(iii) the tax opinion required by
Section 7.01(h)
hereof;
(iv) the 280G opinion required by
Section 5.26
hereof; and
(v) such other documents and information as Horizon or its legal counsel may reasonably request.
ARTICLE XI.
MISCELLANEOUS
11.01
No Assignment.
This Agreement and the recitals hereof shall be binding upon and inure to the benefit of and be enforceable by the respective parties hereto and their respective successors and assigns;
provided, however
, that
neither this Agreement nor any of the rights, interests or obligations of the respective parties hereto under this Agreement may be assigned by any party hereto without the prior written consent of the other parties hereto. Except as provided by
Section 6.05
(dealing with rights to indemnification and advancements of expenses, and the rights to insurance coverage, provided to certain persons), the representations, warranties, covenants and agreements contained in this Agreement,
as well as the documents and instruments referred to herein, are for the sole benefit of the parties hereto and their successors and assigns, and they will not be construed as conferring any rights on any other Persons, other than the right of LPB,
on behalf of its shareholders, to pursue damages in the event of fraud or an intentional breach of this Agreement as provided in
Section 8.02(a)
hereof.
11.02
Waiver; Amendment.
(a) The parties hereto may by an instrument in writing: (i) extend the time for the performance of or otherwise amend any of the
covenants, conditions or agreements of the other parties under this Agreement; (ii) waive any inaccuracies in the representations or warranties of the other parties contained in this Agreement or in any document delivered pursuant hereto or
thereto; (iii) waive the performance by the other parties of any of the covenants or agreements to be performed by it or them under this Agreement; or (iv) waive the satisfaction or fulfillment of any permitted condition, the
nonsatisfaction or nonfulfillment of which is a condition to the right of the party so waiving to consummate the Merger. The waiver by any party hereto of a breach of or noncompliance with any provision of this Agreement will not operate or be
construed as a continuing waiver or a waiver of any other or subsequent breach or noncompliance hereunder.
A-69
(b) This Agreement may be amended, modified or supplemented only by a written agreement executed
by the parties hereto.
11.03
Notices.
All notices, requests and other communications hereunder
will be in writing and will be deemed to have been duly given if delivered by hand and receipted for, delivered by certified United States Mail, return receipt requested, first class postage pre-paid, or delivered by overnight express receipted
delivery service as follows:
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If to Horizon:
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with a copy (which shall not constitute notice) to:
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|
Horizon Bancorp
|
|
Barnes & Thornburg LLP
|
515 Franklin Street
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11 South Meridian Street
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Michigan City, IN 46360
|
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Indianapolis, IN 46204-3535
|
Attn: Craig M. Dwight
|
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Attn: Curt W. Hidde
|
CEO and Chairman
|
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And
|
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If to LPB:
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with a copy (which shall not constitute notice) to:
|
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LaPorte Bancorp, Inc.
|
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710 Indiana Avenue
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Luse Gorman, PC
|
La Porte, IN 46350
|
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5335 Wisconsin Avenue, NW Suite 780
|
Attn: Michele Thompson,
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Washington, DC 20015
|
President and Chief Financial
|
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Attn: Kip A. Weissman
|
Officer
|
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Benjamin M. Azoff
|
or such substituted address or Person as any of them has given to the other in writing. All such notices, requests or other
communications shall be effective: (a) if delivered by hand, when delivered; (b) if mailed in the manner provided herein, five (5) business days after deposit with the United States Postal Service; or (c) if delivered by
overnight express delivery service, on the next business day after deposit with such service.
11.04
Headings.
The headings in this Agreement have been inserted solely for ease of reference and should not be considered in the interpretation or construction of this Agreement.
11.05
Severability.
In case any one or more of the provisions contained herein shall, for any reason,
be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement, but this Agreement shall be construed as if such invalid, illegal or
unenforceable provision or provisions had never been contained herein.
11.06
Counterparts;
Facsimile.
This Agreement may be executed in any number of counterparts and by facsimile, each of which will be an original, but such counterparts shall together constitute one and the same instrument.
11.07
Governing Law; Enforcement; Specific Performance; Jury Trial.
This Agreement (and any and all
other documents, agreements and instruments entered into in connection with the Merger and any related transaction; collectively, the
Related Agreements
) shall be governed by and
A-70
construed in accordance with the laws of the State of Indiana and applicable federal laws, without regard to principles of conflicts of law. The parties hereto hereby agree that all claims,
actions, suits and proceedings between the parties hereto relating to this Agreement or any Related Agreement shall be filed, tried and litigated only in the Circuit or Superior Courts of La Porte County, Indiana or the United States District Court
for the Northern District of Indiana. In connection with the foregoing, the parties hereto consent to the jurisdiction and venue of such courts and expressly waive any claims or defenses of lack of personal jurisdiction of or proper venue by such
courts. The parties agree that irreparable damage would occur in the event that any provision of this Agreement or any Related Agreement was not performed in accordance with its specific terms on a timely basis or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or other equitable relief to prevent breaches of this Agreement or any Related Agreement and to enforce specifically the terms and provisions of this Agreement or any Related
Agreement in any court identified above, this being in addition to any other remedy to which they are entitled at law or in equity.
WAIVER OF JURY TRIAL
. EACH OF THE PARTIES HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING,
DIRECTLY, IN ANY MATTERS (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR ANY RELATED AGREEMENT.
11.08
Entire Agreement.
This Agreement and the Exhibits hereto supersede all other prior or
contemporaneous understandings, commitments, representations, negotiations or agreements, whether oral or written, among the parties hereto relating to the Merger or matters contemplated herein and constitute the entire agreement between the parties
hereto, except as otherwise provided herein and except for the confidentiality letter agreement dated November 23, 2015, by and between the parties (the
Confidentiality Agreement
). Upon the execution of this Agreement by all
the parties hereto, any and all other prior writings of either party relating to the Merger, will terminate and will be rendered of no further force or effect. The parties hereto agree that each party and its counsel reviewed and revised this
Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party will not be employed in the interpretation of this Agreement or any amendments or exhibits hereto.
11.09
Survival of Representations, Warranties or Covenants.
Except as set forth in the following
sentence, none of the representations, warranties or covenants of the parties will survive the Effective Time or the earlier termination of this Agreement, and thereafter the parties will have no further liability with respect thereto. The covenants
contained in
Section 8.02
and this
Article XI
shall survive termination of this Agreement and remain in full force and effect. The covenants contained in
Sections 1.01
,
1.05
,
2.06
,
5.16
,
5.17
,
5.18
,
5.21
,
5.22
,
5.23
,
6.03
,
6.05
,
6.07
, 6.08 and all of the provisions of this
Article XI
shall survive the Effective Time.
11.10
Expenses.
Except as provided elsewhere in this Agreement, each party to this Agreement shall pay
its own expenses incidental to the Merger contemplated hereby.
11.11
Certain References.
Whenever
in this Agreement a singular word is used, it also will include the plural wherever required by the context and vice versa, and the masculine or neuter gender shall include the masculine, feminine and neuter genders. Except expressly stated
otherwise, all references in this Agreement to periods of days shall be construed to refer to calendar, not business, days. The term
business day
will mean any day except Saturday and Sunday when Horizon Bank, in Michigan City,
Indiana, is open for the transaction of business.
[Signature Page Follows]
A-71
I
N
W
ITNESS
W
HEREOF
, Horizon and LPB have made and
entered into this Agreement as of the day and year first above written and have caused this Agreement to be executed, attested in counterparts and delivered by their duly authorized officers.
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H
ORIZON
B
ANCORP
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By:
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/s/ Craig M. Dwight
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Craig M. Dwight
|
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CEO & Chairman
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L
A
P
ORTE
B
ANCORP
, I
NC
.
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By:
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/s/ Lee A. Brady
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Lee A. Brady
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Chief Executive Officer
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A-72
I
NDEX
OF
E
XHIBITS
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Exhibit 2.03
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Option Cancellation Agreement
|
Exhibit 5.01
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Voting Agreement
|
I
NDEX
OF
S
CHEDULES
|
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Schedule 3.0
|
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LPB Knowledge Group
|
Schedule 3.01(a)
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Subsidiaries of LPB
|
Schedule 3.01(b)
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Subsidiaries of LPSB
|
Schedule 3.02(b)
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Conflicts
|
Schedule 3.03(a)
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Options
|
Schedule 3.03(b)
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Liens on Subsidiary Stock
|
Schedule 3.03(c)
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Other Securities and Stock Option and Similar Plans
|
Schedule 3.05(b)
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Insider Loans
|
Schedule 3.07(a)
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Litigation and Pending Proceedings
|
Schedule 3.09(a)
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Material Contracts
|
Schedule 3.11(a)
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Owned and Leased Real Property
|
Schedule 3.12(a)
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Loans
|
Schedule 3.13
|
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Indebtedness
|
Schedule 3.15(a)
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Non-Compliance with Employee Benefit Plans
|
Schedule 3.15(c)
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Former Employee Benefits
|
Schedule 3.15(e)
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Employee Benefit Plans and Agreements
|
Schedule 3.15(g)
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Acceleration of Employee Benefits
|
Schedule 3.15(i)
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280G Payments
|
Schedule 3.16
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Employee Agreements
|
Schedule 3.18
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Tax Audits
|
Schedule 3.20
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|
List of Insurance Policies
|
Schedule 3.22
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Brokers, Finders or Other Fees
|
Schedule 3.23
|
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LPB Interim Events
|
Schedule 3.24
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|
Insider Transactions
|
Schedule 3.25(a)
|
|
Indemnity Agreements
|
Schedule 3.31
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|
LPB and LPSB Agreements with Regulatory Agencies
|
Schedule 4.0
|
|
Horizon Knowledge Group
|
Schedule 4.03(b)
|
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Liens on Horizon Bank Stock
|
Schedule 4.10
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Horizon Tax Audits
|
Schedule 5.03(b)
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Ordinary Conduct of Business Exceptions
|
Schedule 5.03(b)(vi)
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LPSB Bonuses
|
Schedule 5.23
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LPB SERP Payments
|
Schedule 6.03(b)
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Vacation and Paid Time Off Reconciliation
|
Schedule 6.03(h)
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Termination and Release Agreement
|
A-73
E
XHIBIT
2.03
O
PTION
C
ANCELLATION
A
GREEMENT
(See attached)
A-74
O
PTION
C
ANCELLATION
A
GREEMENT
The undersigned represents and warrants that he/she is the legal and beneficial owner of one or more options to purchase shares of common
stock, $0.01 par value, of LAPORTE BANCORP, INC. (
LPB
) which was issued to the undersigned under The LaPorte Bancorp, Inc. 2011 Equity Incentive Plan or The LaPorte Bancorp, Inc. 2014 Equity Incentive Plan are described on
Schedule 1
attached hereto (the
Options
). The Options are evidenced by one or more stock option grant agreements (the
Stock Option Agreements
).
The undersigned acknowledges that LPB has agreed to merge with Horizon Bancorp, and acknowledges and agrees that in connection therewith, the
holders of the LPB stock options are required to convert their stock options into cash pursuant to
Section 2.03
of the Agreement and Plan of Merger dated March 10, 2016.
The undersigned acknowledges and agrees that he/she shall be entitled to receive, in connection with the merger and payable within five
(5) business days after the Closing Date of the merger, a cash payment equal to the difference between $17.50 and the per share exercise price for each share of LPB common stock subject to the Options, including any non-vested options, owned by
the undersigned,
provided, however
, that there shall be withheld from such cash payment any taxes required to be withheld by applicable law, and recognizes and agrees that the Stock Option Agreements (and all other agreements or instruments
evidencing the ownership of the Options held by the undersigned) shall be cancelled and be of no further force and effect upon the payment noted above.
IN WITNESS WHEREOF, the undersigned has executed this Agreement on the day of
, 2016.
|
O
PTIONHOLDER
|
|
|
Signature
|
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Name Printed
|
ACCEPTED AND AGREED to this day of
, 2016.
A-75
S
CHEDULE
1
S
TOCK
O
PTIONS
|
|
|
|
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|
|
|
|
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Date of Grant:
|
|
No. of Options:
|
|
Exercise Price:
|
|
|
Amount of
Payment at
Closing Date
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
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|
T
OTAL
|
|
|
|
|
N/A
|
|
|
$
|
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|
|
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A-76
E
XHIBIT
5.01
V
OTING
A
GREEMENT
(See attached)
A-77
V
OTING
A
GREEMENT
Each of the undersigned, being all of the directors and executive officers of LAPORTE BANCORP, INC. (
LPB
) and THE LAPORTE
SAVINGS BANK, an Indiana state-chartered savings bank and wholly-owned subsidiary of LPB (
LPSB
) having, in the case of the LPB directors, voted for the approval and adoption by LPB of that certain Agreement and Plan of Merger
(
Agreement and Plan of Merger
) among LPB and Horizon Bancorp (
Horizon
), whereby Horizon will acquire all of the outstanding capital stock of LPB in exchange for shares of Horizon common stock, no par value per
share (the
Holding Company Merger
), in consideration of the benefits to be derived from the consummation of such merger and in consideration of the mutual agreements made in the Agreement and Plan of Merger and herein, and in
order to induce Horizon to execute and deliver the Agreement and Plan of Merger to LPB and to proceed with the consummation of the Holding Company Merger and to incur the expenses required in connection therewith, hereby irrevocably (in his or her
individual capacity and not in his or her capacity as a director or officer of LPB and LPSB) covenants and agrees with Horizon that:
(a) will vote all shares of common stock of LPB (
LPB Common Stock
) now or hereafter beneficially owned by
him or her, in person or by proxy, at any meeting of the shareholders of LPB or adjournments thereof, in favor of the approval and adoption of the Agreement and Plan of Merger and the Holding Company Merger (provided that the term LPB Common
Stock shall not include: (1) any securities beneficially owned by the undersigned as a trustee or fiduciary; (2) any shares as to which the undersigned does not have, directly or indirectly, sole voting power; (3) any
unexercised stock options to purchase shares of LPB Common Stock); and
(b) until such time as the Holding Company Merger
has been consummated or the Agreement and Plan of Merger has been duly terminated in accordance with the provisions thereof, will not transfer any shares of LPB Common Stock, or any right or option with respect thereto or any interest therein,
including any shares of restricted stock, other than: (a) to any immediate family member of the undersigned, or to a trust for the benefit of the undersigned or his or her immediate family members or upon the undersigneds death; provided
that, as a precondition to such permitted transfer, the transferee has agreed in writing to abide by the terms of this Agreement in a form reasonably satisfactory to Horizon; (b) transfers by will or operation or law; (c) transfers in
connection with estate planning or similar purposes, including transfers to relatives, trusts, foundations and charitable organizations, subject to the transferee first agreeing in writing to abide by the terms of this Agreement; (d) the
withholding of LPB Common Stock by LPB to satisfy tax obligations upon the vesting of any shares of restricted stock or the exercise of stock options; or (e) such transfers as Horizon may otherwise permit in its sole discretion.
The undersigned represents and warrants that he or she (except to the extent indicated below) is the sole record and/or beneficial owner of
(and has sole rights to vote and to dispose of) the number of shares of LPB Common Stock indicated beside his or her signature below.
This Voting Agreement shall be effective from the date hereof and shall terminate and be of no further force and effect upon the earlier of
(a) the consummation of the Holding Company Merger; (b)
A-78
the termination of the Agreement and Plan of Merger in accordance with its terms; or (c) the taking of such action whereby a majority of LPBs Board of Directors, in accordance with the
terms and conditions of Section 5.06 of the Agreement and Plan of Merger, withdraws its favorable recommendation of the Agreement and Plan of Merger to the shareholders of LPB.
This Voting Agreement may be executed in one or more counterparts and delivered by facsimile, pdf or other means of electronic communication,
each of which shall be deemed an original, but all of which together shall constitute one and the same agreement. This Voting Agreement shall be governed by and construed in accordance with the laws of the State of Indiana and applicable federal
laws, without regard to principles of conflicts of law. The parties hereto hereby agree that all claims, actions, suits and proceedings between the parties hereto relating to this Voting Agreement shall be filed, tried and litigated only in the
Circuit or Superior Courts of La Porte County, Indiana or the United States District Court for the Northern District of Indiana. In connection with the foregoing, the parties hereto consent to the jurisdiction and venue of such courts and expressly
waive any claims or defenses of lack of personal jurisdiction of or proper venue by such courts. The parties agree that irreparable damage would occur in the event that any of the provisions of this Voting Agreement was not performed in accordance
with its specific terms on a timely basis or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or other equitable relief to prevent breaches of this Voting Agreement and to enforce specifically the
terms and provisions of this Voting Agreement in any court identified above, this being in addition to any other remedy to which they are entitled at law or in equity.
WAIVER OF JURY TRIAL
. EACH OF THE PARTIES HEREBY WAIVES TRIAL BY JURY IN
ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY, IN ANY MATTERS (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS VOTING AGREEMENT.
It is understood and agreed that the provisions of this Agreement relate solely to the capacity of the undersigned as a shareholder or other
beneficial owner of shares of LPB Common Stock and is not in any way intended to affect the exercise by the undersigned of the undersigneds responsibilities as a director or executive officer of LPB. It is further understood and agreed that
this Agreement is not in any way intended to affect the exercise by the undersigned of any fiduciary responsibility which the undersigned may have in respect of any shares of LPB Common Stock held or controlled by the undersigned as of the date
hereof.
[R
EMAINDER
OF
P
AGE
I
NTENTIONALLY
L
EFT
B
LANK
.]
A-79
E
XECUTED
A
ND
D
ELIVERED
as of March 10, 2016.
E
XECUTIVE
O
FFICERS
:
|
|
|
|
|
|
|
|
|
(85,476 shares)
|
Lee A. Brady
|
|
|
|
|
|
|
|
|
|
|
|
(67,291 shares)
|
Michele M. Thompson
|
|
|
|
|
|
|
|
|
|
|
|
(29,004 shares)
|
Patrick W. Collins
|
|
|
|
|
|
|
|
|
|
|
|
(44,185 shares)
|
Kevin N. Beres
|
|
|
|
|
|
|
|
|
|
|
|
(19,012 shares)
|
Daniel P. Carroll
|
|
|
|
|
|
|
|
D
IRECTORS
:
|
|
|
|
|
|
|
|
|
|
|
|
(33,574 shares)
|
Paul G. Fenker
|
|
|
|
|
|
|
|
|
|
|
|
(39,399 shares)
|
Ralph F. Howes
|
|
|
|
|
|
|
|
|
|
|
|
(10,568 shares)
|
Mark A. Krentz
|
|
|
|
|
|
|
|
|
|
|
|
(51,532 shares)
|
L. Charles Lukmann, III
|
|
|
|
|
|
|
|
|
|
|
|
(24,064 shares)
|
Jerry L. Mayes
|
|
|
|
|
|
|
|
|
|
|
|
(21,107 shares)
|
Dale A. Parkison
|
|
|
|
|
|
|
|
|
|
|
|
(26,639 shares)
|
Robert P. Rose
|
|
|
|
|
A-80
Appendix B
March 10, 2016
Board
of Directors
LaPorte Bancorp, Inc.
710 Indiana Avenue
LaPorte, IN 46350
Members of the Board of Directors:
We understand that Horizon Bancorp (Horizon or Buyer) and Horizon Bank, National Association (Horizon Bank), a
wholly-owned subsidiary of Horizon, LaPorte Bancorp, Inc. (the Company) and The LaPorte Savings Bank, an Indiana-chartered savings bank and wholly-owned subsidiary of the Company (Company Bank), propose to enter into the
Agreement (defined below) pursuant to which, among other things, (i) the Company will merge with and into Horizon (HC Merger), (ii) immediately following the HC Merger, the Company Bank will be merged into Horizon Bank (the
Bank Merger, and together with the HC Merger, the Transaction), (iii) and that, in connection with the Transaction, each outstanding share of common stock, $0.01 par value per share, of the Company (the Common
Stock) shall become and be converted into the right to receive in accordance with Article II of the Agreement, at the election of the holder thereof, either (or a combination of): (A) 0.629 shares of Horizon common stock, without par
value (the Stock Consideration), or (B) $17.50 in cash (the Cash Consideration) (with the Stock Consideration and the Cash Consideration collectively referred to herein as the Merger Consideration); subject
to certain limit on the election. The Board of Directors of the Company (the Board) has requested that Raymond James & Associates, Inc. (Raymond James) provide an opinion (the Opinion) to the Board as to
whether, as of the date hereof, the Merger Consideration to be received by the holders of the Common Stock in the Transaction pursuant to the Agreement is fair from a financial point of view to such holders. For purposes of this Opinion, and with
your consent, we have assumed the value of the Merger Consideration to be $16.02 per share.
In connection with our review of the proposed Transaction and
the preparation of this Opinion, we have, among other things:
|
1.
|
reviewed the financial terms and conditions as stated in the draft of the Agreement and Plan of Merger by and among Horizon and the Company dated as of March 9, 2016 (the Agreement);
|
|
2.
|
reviewed certain information related to the historical, current and future operations, financial condition and prospects of the Company made available to us by the Company, including, but not limited to, financial
projections prepared by the management of the Company relating to the Company for the periods ending December 31, 2016 - 2020, as approved for our use by the Company (the Projections);
|
B-1
Board of Directors
LaPorte Bancorp, Inc.
March 10, 2016
Page
2
|
3.
|
reviewed the Companys and Buyers recent public filings and certain other publicly available information regarding the Company and Buyer;
|
|
4.
|
reviewed financial, operating and other information regarding the Company and the industry in which it operates;
|
|
5.
|
reviewed the financial and operating performance of the Company and those of other selected public companies that we deemed to be relevant;
|
|
6.
|
considered the publicly available financial terms of certain transactions we deemed to be relevant;
|
|
7.
|
reviewed the current and historical market prices and trading volume for the Common Stock, and reviewed the current market prices of the publicly traded securities of certain other companies that we deemed to be
relevant;
|
|
8.
|
conducted such other financial studies, analyses and inquiries and considered such other information and factors as we deemed appropriate; and
|
|
9.
|
discussed with members of the senior management of the Company certain information relating to the aforementioned and any other matters which we have deemed relevant to our inquiry.
|
With your consent, we have assumed and relied upon the accuracy and completeness of all information supplied by or on behalf of the Company or otherwise
reviewed by or discussed with us, and we have undertaken no duty or responsibility to, nor did we, independently verify any of such information. In addition, we have not made or obtained an independent appraisal of the assets or liabilities
(contingent or otherwise) of the Company or Horizon. With respect to the Projections and any other information and data provided to or otherwise reviewed by or discussed with us, we have, with your consent, assumed that the Projections and such
other information and data have been reasonably prepared in good faith on bases reflecting the best currently available estimates and judgments of management of the Company. We have been authorized by the Company to rely upon such forecasts, and
other information and data, including the Projections for the Company and Horizon, and we express no view as to any such forecasts or other information or data, or the bases or assumptions on which they were prepared. We have assumed that each party
to the Agreement would advise us promptly if any information previously provided became inaccurate or was required to be updated during the period of our review.
We express no opinion with respect to the Projections or the assumptions on which they are based. We have assumed that the final form of the Agreement will be
substantially similar to the draft reviewed by us, and that the Transaction will be consummated in accordance with the terms of the Agreement without waiver or amendment of any conditions thereto. Furthermore, we have assumed, in all respects
material to our analysis, that the representations and warranties of each party contained in the
222 South Riverside Plaza
7
th
Floor // Chicago, IL 606062
T 312.612.7785 // raymondjames.com
Raymond James & Associates, Inc.,
member New York Stock Exchange/SIPC
B-2
Board of Directors
LaPorte Bancorp, Inc.
March 10, 2016
Page
3
Agreement are true and correct and that each such party will perform all of the covenants and agreements required to be performed by it under the Agreement without being waived. We have relied
upon and assumed, without independent verification, that (i) the Transaction will be consummated in a manner that complies in all respects with all applicable international, federal and state statutes, rules and regulations, and (ii) all
governmental, regulatory, and other consents and approvals necessary for the consummation of the Transaction will be obtained and that no delay, limitations, restrictions or conditions will be imposed or amendments, modifications or waivers made
that would have an effect on the Transaction or the Company that would be material to our analyses or this Opinion.
We have relied upon, without
independent verification, the assessment of the Companys management and its legal, tax, accounting and regulatory advisors with respect to all legal, tax, accounting and regulatory matters, including without limitation that the Transaction
will qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended.
Our opinion is based upon
market, economic, financial and other circumstances and conditions existing and disclosed to us as of March 9, 2016 and any material change in such circumstances and conditions would require a reevaluation of this Opinion, which we are under no
obligation to undertake. We have relied upon and assumed, without independent verification, that there has been no change in the business, assets, liabilities, financial condition, results of operations, cash flows or prospects of the Company since
the respective dates of the most recent financial statements and other information, financial or otherwise, provided to us that would be material to our analyses or this Opinion, and that there is no information or any facts that would make any of
the information reviewed by us incomplete or misleading in any material respect.
We express no opinion as to the underlying business decision to effect
the Transaction, the structure or tax consequences of the Transaction or the availability or advisability of any alternatives to the Transaction. We provided advice to the Board with respect to the proposed Transaction. We did not, however,
recommend any specific amount of consideration or that any specific consideration constituted the only appropriate consideration for the Transaction. This letter does not express any opinion as to the likely trading range of Horizon stock following
the Transaction, which may vary depending on numerous factors that generally impact the price of securities or on the financial condition of Horizon at that time. Our opinion is limited to the fairness, from a financial point of view, of the Merger
Consideration to be received by the holders of the Common Stock.
We express no opinion with respect to any other reasons, legal, business, or otherwise,
that may support the decision of the Board of Directors to approve or consummate the Transaction. Furthermore, no opinion, counsel or interpretation is intended by Raymond James on matters that require legal, accounting or tax advice. It is assumed
that such opinions, counsel or interpretations have been or will be obtained from the appropriate professional sources. Furthermore, we have relied, with the consent of the Board, on the fact that the Company has been assisted by legal, accounting
and tax advisors and we
222 South Riverside Plaza
7
th
Floor // Chicago, IL 606063
T 312.612.7785 // raymondjames.com
Raymond James & Associates, Inc.,
member New York Stock Exchange/SIPC
B-3
Board of Directors
LaPorte Bancorp, Inc.
March 10, 2016
Page
4
have, with the consent of the Board, relied upon and assumed the accuracy and completeness of the assessments by the Company and its advisors as to all legal, accounting and tax matters with
respect to the Company and the Transaction.
In formulating our opinion, we have considered only what we understand to be the consideration to be received
by the holders of Common Stock as is described above and we did not consider and we express no opinion on the fairness of the amount or nature of any compensation to be paid or payable to any of the Companys officers, directors or employees,
or class of such persons, whether relative to the compensation received by the holders of the Common Stock or otherwise. We have not been requested to opine as to, and this Opinion does not express an opinion as to or otherwise address, among other
things: (1) the fairness of the Transaction to the holders of any class of securities, creditors, or other constituencies of the Company, or to any other party, except and only to the extent expressly set forth in the last sentence of this
Opinion or (2) the fairness of the Transaction to any one class or group of the Companys or any other partys security holders or other constituencies vis-à-vis any other class or group of the Companys or such other
partys security holders or other constituents (including, without limitation, the allocation of any consideration to be received in the Transaction amongst or within such classes or groups of security holders or other constituents). We are not
expressing any opinion as to the impact of the Transaction on the solvency or viability of the Company or Horizon or the ability of the Company or Horizon to pay their respective obligations when they come due.
The delivery of this opinion was approved by an opinion committee of Raymond James.
Raymond James has been engaged to render financial advisory services to the Company in connection with the proposed Transaction and will receive a fee for
such services, a substantial portion of which is contingent upon consummation of the Transaction. Raymond James will also receive a fee upon the delivery of this Opinion, which is not contingent upon the successful completion of the Transaction or
on the conclusion reached herein. In addition, the Company has agreed to reimburse certain of our expenses and to indemnify us against certain liabilities arising out of our engagement.
In the ordinary course of our business, Raymond James may trade in the securities of the Company and Horizon for our own account or for the accounts of our
customers and, accordingly, may at any time hold a long or short position in such securities. Furthermore, Raymond James may provide investment banking, financial advisory and other financial services to the Company and/or Horizon or other
participants in the Transaction in the future, for which Raymond James may receive compensation.
222 South Riverside Plaza
7
th
Floor // Chicago, IL 606064
T 312.612.7785 // raymondjames.com
Raymond James & Associates, Inc.,
member New York Stock Exchange/SIPC
B-4
Board of Directors
LaPorte Bancorp, Inc.
March 10, 2016
Page
5
It is understood that this letter is for the information of the Board of Directors of the Company (solely in
each directors capacity as such) in evaluating the proposed Transaction and does not constitute a recommendation to any shareholder of the Company regarding how said shareholder should vote on the proposed Transaction. Furthermore, this letter
should not be construed as creating any fiduciary duty on the part of Raymond James to any such party. This Opinion may not be reproduced or used for any other purpose without our prior written consent, except that this Opinion may be disclosed in
and filed with a proxy statement used in connection with the Transaction that is required to be filed with the Securities and Exchange Commission, provided that this Opinion is quoted in full in such proxy statement.
Based upon and subject to the foregoing, it is our opinion that, as of the date hereof, the Merger Consideration to be received by the holders of the Common
Stock in the Transaction pursuant to the Agreement is fair, from a financial point of view, to such holders.
Very truly yours,
RAYMOND JAMES & ASSOCIATES, INC.
222 South Riverside Plaza
7
th
Floor // Chicago, IL 606065
T 312.612.7785 // raymondjames.com
Raymond James & Associates, Inc.,
member New York Stock Exchange/SIPC
B-5
Appendix C
V
OTING
A
GREEMENT
Each of the undersigned, being all of the directors and executive officers of LAPORTE BANCORP, INC. (
LPB
) and THE LAPORTE
SAVINGS BANK, an Indiana state-chartered savings bank and wholly-owned subsidiary of LPB (
LPSB
) having, in the case of the LPB directors, voted for the approval and adoption by LPB of that certain Agreement and Plan of Merger
(
Agreement and Plan of Merger
) among LPB and Horizon Bancorp (
Horizon
), whereby Horizon will acquire all of the outstanding capital stock of LPB in exchange for shares of Horizon common stock, no par value per
share (the
Holding Company Merger
), in consideration of the benefits to be derived from the consummation of such merger and in consideration of the mutual agreements made in the Agreement and Plan of Merger and herein, and in
order to induce Horizon to execute and deliver the Agreement and Plan of Merger to LPB and to proceed with the consummation of the Holding Company Merger and to incur the expenses required in connection therewith, hereby irrevocably (in his or her
individual capacity and not in his or her capacity as a director or officer of LPB and LPSB) covenants and agrees with Horizon that:
(a) will vote all shares of common stock of LPB (
LPB Common Stock
) now or hereafter beneficially owned by
him or her, in person or by proxy, at any meeting of the shareholders of LPB or adjournments thereof, in favor of the approval and adoption of the Agreement and Plan of Merger and the Holding Company Merger (provided that the term LPB Common
Stock shall not include: (1) any securities beneficially owned by the undersigned as a trustee or fiduciary; (2) any shares as to which the undersigned does not have, directly or indirectly, sole voting power; (3) any
unexercised stock options to purchase shares of LPB Common Stock); and
(b) until such time as the Holding Company Merger
has been consummated or the Agreement and Plan of Merger has been duly terminated in accordance with the provisions thereof, will not transfer any shares of LPB Common Stock, or any right or option with respect thereto or any interest therein,
including any shares of restricted stock, other than: (a) to any immediate family member of the undersigned, or to a trust for the benefit of the undersigned or his or her immediate family members or upon the undersigneds death; provided
that, as a precondition to such permitted transfer, the transferee has agreed in writing to abide by the terms of this Agreement in a form reasonably satisfactory to Horizon; (b) transfers by will or operation or law; (c) transfers in
connection with estate planning or similar purposes, including transfers to relatives, trusts, foundations and charitable organizations, subject to the transferee first agreeing in writing to abide by the terms of this Agreement; (d) the
withholding of LPB Common Stock by LPB to satisfy tax obligations upon the vesting of any shares of restricted stock or the exercise of stock options; or (e) such transfers as Horizon may otherwise permit in its sole discretion.
The undersigned represents and warrants that he or she (except to the extent indicated below) is the sole record and/or beneficial owner of
(and has sole rights to vote and to dispose of) the number of shares of LPB Common Stock indicated beside his or her signature below.
C-1
This Voting Agreement shall be effective from the date hereof and shall terminate and be of no
further force and effect upon the earlier of (a) the consummation of the Holding Company Merger; (b) the termination of the Agreement and Plan of Merger in accordance with its terms; or (c) the taking of such action whereby a majority
of LPBs Board of Directors, in accordance with the terms and conditions of Section 5.06 of the Agreement and Plan of Merger, withdraws its favorable recommendation of the Agreement and Plan of Merger to the shareholders of LPB.
This Voting Agreement may be executed in one or more counterparts and delivered by facsimile, pdf or other means of electronic communication,
each of which shall be deemed an original, but all of which together shall constitute one and the same agreement. This Voting Agreement shall be governed by and construed in accordance with the laws of the State of Indiana and applicable federal
laws, without regard to principles of conflicts of law. The parties hereto hereby agree that all claims, actions, suits and proceedings between the parties hereto relating to this Voting Agreement shall be filed, tried and litigated only in the
Circuit or Superior Courts of La Porte County, Indiana or the United States District Court for the Northern District of Indiana. In connection with the foregoing, the parties hereto consent to the jurisdiction and venue of such courts and expressly
waive any claims or defenses of lack of personal jurisdiction of or proper venue by such courts. The parties agree that irreparable damage would occur in the event that any of the provisions of this Voting Agreement was not performed in accordance
with its specific terms on a timely basis or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or other equitable relief to prevent breaches of this Voting Agreement and to enforce specifically the
terms and provisions of this Voting Agreement in any court identified above, this being in addition to any other remedy to which they are entitled at law or in equity.
WAIVER OF JURY TRIAL
. EACH OF THE PARTIES HEREBY WAIVES TRIAL BY JURY IN
ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY, IN ANY MATTERS (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS VOTING AGREEMENT.
It is understood and agreed that the provisions of this Agreement relate solely to the capacity of the undersigned as a shareholder or other
beneficial owner of shares of LPB Common Stock and is not in any way intended to affect the exercise by the undersigned of the undersigneds responsibilities as a director or executive officer of LPB. It is further understood and agreed that
this Agreement is not in any way intended to affect the exercise by the undersigned of any fiduciary responsibility which the undersigned may have in respect of any shares of LPB Common Stock held or controlled by the undersigned as of the date
hereof.
[R
EMAINDER
OF
P
AGE
I
NTENTIONALLY
L
EFT
B
LANK
.]
C-2
E
XECUTED
A
ND
D
ELIVERED
as of March 10, 2016.
|
|
|
|
|
E
XECUTIVE
O
FFICERS
:
|
|
|
|
|
|
|
|
/s/ Lee A. Brady
|
|
|
|
(85,476 shares)
|
Lee A. Brady
|
|
|
|
|
|
|
|
/s/ Michele M. Thompson
|
|
|
|
(67,291 shares)
|
Michele M. Thompson
|
|
|
|
|
|
|
|
/s/ Patrick W. Collins
|
|
|
|
(29,004 shares)
|
Patrick W. Collins
|
|
|
|
|
|
|
|
/s/ Kevin N. Beres
|
|
|
|
(44,185 shares)
|
Kevin N. Beres
|
|
|
|
|
|
|
|
/s/ Daniel P. Carroll
|
|
|
|
(19,012 shares)
|
Daniel P. Carroll
|
|
|
|
|
|
|
|
D
IRECTORS
:
|
|
|
|
|
|
|
|
/s/ Paul G. Fenker
|
|
|
|
(33,574 shares)
|
Paul G. Fenker
|
|
|
|
|
|
|
|
/s/ Ralph F. Howes
|
|
|
|
(39,399 shares)
|
Ralph F. Howes
|
|
|
|
|
|
|
|
/s/ Mark A. Krentz
|
|
|
|
(10,568 shares)
|
Mark A. Krentz
|
|
|
|
|
|
|
|
/s/ L. Charles Lukmann, III
|
|
|
|
(51,532 shares)
|
L. Charles Lukmann, III
|
|
|
|
|
|
|
|
/s/ Jerry L. Mayes
|
|
|
|
(24,064 shares)
|
Jerry L. Mayes
|
|
|
|
|
|
|
|
/s/ Dale A. Parkison
|
|
|
|
(21,107 shares)
|
Dale A. Parkison
|
|
|
|
|
|
|
|
/s/ Robert P. Rose
|
|
|
|
(26,639 shares)
|
Robert P. Rose
|
|
|
|
|
C-3
|
|
|
LAPORTE BANCORP,
INC.
710 INDIANA AVENUE
LAPORTE, IN 46350
|
|
VOTE BY INTERNET -
www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time on July 10, 2016
(July 6, 2016 for participants in The LaPorte Savings Bank 401(k) Retirement Plan 401(k) and The LaPorte Savings Bank Employee Stock Ownership Plan (ESOP)). Have this card in hand when you access the website and follow the
instructions to direct how the shares should be voted.
VOTE BY PHONE -
1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time on July 10, 2016 (July 6,
2016 for 401(k) and ESOP participants). Have this card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it
in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
|
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
E11723-S46578
KEEP THIS PORTION FOR YOUR RECORDS