Item 1.01
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Entry into a Material Definitive Agreement
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On January 7, 2019, HopFed Bancorp, Inc. (
HopFed
) entered into an Agreement and Plan of Merger (the
Merger
Agreement
) with First Financial Corporation, an Indiana corporation (
First Financial
). Pursuant to the Merger Agreement, HopFed will merge with and into First Financial, with First Financial as the surviving corporation
(the
Merger
). Immediately following the Merger, Heritage Bank USA, Inc., a Kentucky commercial bank and wholly-owned subsidiary of HopFed, will merge with and into First Financial Bank, N.A., the wholly-owned national banking
association subsidiary of First Financial (
First Financial Bank
), with First Financial Bank as the surviving bank. The Merger Agreement is filed as Exhibit 2.1 to this Current Report on Form
8-K.
The boards of directors of each of First Financial and HopFed have approved the Merger and
the Merger Agreement. Subject to the approval of the Merger by HopFeds stockholders, regulatory approvals, and other customary closing conditions, the parties anticipate completing the Merger in the second quarter of 2019.
Upon completion of the Merger, each HopFed stockholder may elect to receive either (or a combination of) 0.444 shares of First Financial
common stock or $21.00 in cash for each share of HopFeds common stock, subject to proration provisions specified in the Merger Agreement that provide for an aggregate split of 50% of HopFed shares being exchanged for First Financial common
stock and 50% for cash. Based on First Financials January 4, 2019 closing price of $43.01 per share as reported on the NASDAQ Global Select Market, the transaction has an implied valuation of approximately $128.3 million.
Members of the board of directors of HopFed, in their capacity as stockholders, have entered into voting agreements pursuant to which they
have agreed to vote their shares of HopFed common stock in favor of the approval and adoption of the Merger Agreement and the Merger. The form of voting agreement is filed as Exhibit 10.1 to this Current Report on Form
8-K.
In addition, pursuant to the Merger Agreement and subject to certain terms and conditions, the board of directors of HopFed has agreed to recommend the approval and adoption of the Merger Agreement and
the Merger to the HopFed stockholders and will solicit proxies voting in favor of the Merger Agreement and Merger from HopFeds stockholders.
In connection with the execution of the Merger Agreement, John E. Peck, the current President and Chief Executive Officer of HopFed and
Heritage Bank USA entered into an Employment Agreement, a Retention Bonus Agreement, a Mutual Termination of Employment Agreement and a Non-Disclosure and Non-Solicitation Agreement. Billy C. Duvall, the current Vice President, Chief Financial
Officer and Treasurer of HopFed and Heritage Bank USA, Inc., Michael L. Woolfolk, the current Executive Vice President and Chief Operations Officer of HopFed and Heritage Bank USA, Inc., and Bailey K. Knight, the current Chief Credit Officer of
HopFed and Heritage Bank USA, Inc., each entered into a Mutual Termination of Employment Agreement and a Non-Disclosure and Non-Solicitation Agreement.
First Financial and certain stockholders of HopFed entered into a Standstill Agreement pursuant to which such stockholders agreed to vote in
favor of the approval of the Merger Agreement and the consummation of the transactions contemplated thereby, including the Merger, and any actions required in furtherance thereof. The stockholders who entered into a Standstill Agreement include
Stilwell Activist Fund, L.P., Stilwell Activist Investments, L.P., Stilwell Associates, L.P., Stilwell Value LLC, and Joseph Stilwell. A copy of the Standstill Agreement is filed as Exhibit 10.2 to this Current Report on Form
8-K.
The Merger Agreement contains customary representations and warranties from both First Financial
and HopFed, and each party has agreed to customary covenants, including, among others, in the case of HopFed covenants relating to (1) the conduct of its business during the interim period between the execution of the Merger Agreement and the
effective time of the Merger, (2) its obligation to call a meeting of its stockholders to adopt the Merger Agreement, (3) its obligation, subject to certain exceptions, to recommend that its stockholders approve the Merger Agreement and
the Merger, and (4) its obligations relating to the
non-solicitation
of alternative acquisition proposals.
The Merger Agreement also provides certain termination rights for both First Financial and HopFed, and further provides that upon termination
of the Merger Agreement under certain circumstances, HopFed will be obligated to pay First Financial a termination fee of $5.1 million. Also, HopFed may terminate the Merger Agreement if, during the
seven-day
period following the receipt of all regulatory and stockholder approvals and consents necessary for consummation of the Merger, both (i)