AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of September 12, 2002
("Agreement"), among Laurel Capital Group, Inc. ("Laurel"), a Pennsylvania
corporation, Laurel Savings Bank (the "Bank"), a Pennsylvania-chartered savings
bank and a wholly-owned subsidiary of Laurel, SFSB Holding Company ("SFSB"), a
Pennsylvania corporation, and Xxxxxxx Federal Savings Bank ("Xxxxxxx Savings"),
a federally-chartered savings bank and wholly-owned subsidiary of SFSB.
WITNESSETH:
WHEREAS, the Boards of Directors of Laurel, the Bank, SFSB and Xxxxxxx
Savings have determined that it is in the best interests of their respective
companies and their stockholders to consummate the business combination
transactions provided for herein; and
WHEREAS, the parties desire to provide for certain undertakings,
conditions, representations, warranties and covenants in connection with the
transactions contemplated hereby; and
WHEREAS, as a condition and inducement to the willingness of Laurel to
enter into this Agreement, the directors and executive officers of SFSB (the
"FSB Stockholders") are concurrently entering into a Stockholder Agreement with
Laurel (the "Stockholder Agreement"), in substantially the form attached hereto
as Exhibit A, pursuant to which, among other things, such directors agree to
vote their shares of SFSB Common Stock (as defined below) in favor of this
Agreement and the transactions contemplated hereby.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, representations, warranties and agreements herein contained, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
1.01 The Merger. Subject to the terms and conditions of this Agreement
and subject to and in accordance with an Agreement of Merger, a copy of which is
attached hereto as Exhibit B (the "Agreement of Merger"), between SFSB and SFSB
Acquisition Corp. ("Interim"), a Pennsylvania corporation to be formed as a
wholly-owned subsidiary of Laurel in connection with the transactions
contemplated hereby, at the Effective Time (as defined in Section 1.05 hereof),
Interim shall be merged with and into SFSB in accordance with Chapter 19,
Subchapter C of the Pennsylvania Business Corporation Law ("PBCL") (the
"Merger"), with SFSB as the surviving
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corporation (hereinafter sometimes called the "Surviving Corporation").
Simultaneously with or immediately following consummation of the Merger, the
parties hereto will cause Xxxxxxx Savings to be merged with and into the Bank,
with the Bank as the resulting institution (the "Bank Merger"). Simultaneously
with or as soon as practicable after the Bank Merger, the Surviving Corporation
shall be merged with and liquidated into Laurel (the "Liquidation") in
accordance with a Plan of Complete Liquidation, the form of which is attached
hereto as Exhibit C.
1.02 Effect of the Merger. As of the Effective Time (as defined in
Section 1.05 hereof), the Surviving Corporation shall be considered the same
business and corporate entity as each of SFSB and Interim and thereupon and
thereafter, all the property, rights, powers and franchises of each of SFSB and
Interim shall vest in the Surviving Corporation and the Surviving Corporation
shall be subject to and be deemed to have assumed all of the debts, liabilities,
obligations and duties of each of SFSB and Interim and shall have succeeded to
all of each of their relationships, fiduciary or otherwise, as fully and to the
same extent as if such property rights, privileges, powers, franchises, debts,
obligations, duties and relationships had been originally acquired, incurred or
entered into by the Surviving Corporation. In addition, any reference to either
of SFSB and Interim in any contract or document, whether executed or taking
effect before or after the Effective Time, shall be considered a reference to
the Surviving Corporation if not inconsistent with the other provisions of the
contract or document; and any pending action or other judicial proceeding to
which either of SFSB and Interim is a party, shall not be deemed to have abated
or to have discontinued by reason of the Merger, but may be prosecuted to final
judgment, order or decree in the same manner as if the Merger had not been made;
or the Surviving Corporation may be substituted as a party to such action or
proceeding, and any judgment, order or decree may be rendered for or against it
that might have been rendered for or against either of SFSB and Interim if the
Merger had not occurred. At the Effective Time, the directors and officers of
the Surviving Corporation shall be the persons designated in Section 1.04.
1.03 Articles of Incorporation and Bylaws. As of the Effective Time,
the Articles of Incorporation and Bylaws of SFSB shall be the Articles of
Incorporation and Bylaws of the Surviving Corporation until otherwise amended as
provided by law.
1.04 Directors and Officers. As of the Effective Time, the directors
and officers of Interim shall become the directors and officers of the Surviving
Corporation. If requested by Laurel, the directors of SFSB and/or Xxxxxxx
Savings shall resign as of the Effective Time.
1.05 Effective Time. The Merger shall become effective upon the
occurrence of the filing of Articles of Merger with the Secretary of State of
the Commonwealth of Pennsylvania pursuant to Section 1927 of the PBCL unless a
later date and time is specified as the effective time in such Articles of
Merger ("Effective Time"). A closing (the "Closing") shall take place
immediately prior to the Effective Time at 10:00 a.m., on the fifth business day
following the receipt of all necessary regulatory or governmental approvals and
consents and the expiration of all statutory waiting periods in respect thereof
and the satisfaction or waiver, to the extent permitted hereunder, of the
conditions to the consummation of the Merger specified in Article V of this
Agreement (other than the delivery
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of certificates and other instruments and documents to be delivered at the
Closing), at the offices of Laurel or at such other place, at such other time,
or on such other date as the parties may mutually agree upon. At the Closing,
there shall be delivered to Laurel, the Bank, SFSB and Xxxxxxx Savings the
certificates and other documents required to be delivered under Article V
hereof.
1.06 Modification of Structure. Notwithstanding any provision of this
Agreement to the contrary, Laurel, with the prior written consent of SFSB, which
consent shall not be unreasonably withheld, may elect, subject to the filing of
all necessary applications and the receipt of all required regulatory approvals,
to modify the structure of the transactions contemplated hereby so long as (i)
there are no adverse federal income tax consequences to the stockholders of SFSB
as a result of such modification, (ii) the consideration to be paid to holders
of SFSB Common Stock (as defined below) under this Agreement is not thereby
changed in kind or reduced in amount solely because of such modification and
(iii) such modification will not be likely to materially delay or jeopardize
receipt of any required regulatory approvals or impair or prevent the
satisfaction of any conditions to the Closing.
1.07 Conversion of SFSB Common Stock and Options. As of the Effective
Time, each share of common stock, par value $0.10 per share, of SFSB (the "SFSB
Common Stock"), issued and outstanding immediately prior to the Effective Time
(other than shares (i) as to which dissenters' rights have been asserted and
duly perfected in accordance with the PBCL ("Dissenting Shares"), (ii) under the
Xxxxxxx Federal Savings Bank Restricted Stock Plan ("RSP") which have not been
allocated and (iii) held by SFSB (including treasury shares) or Laurel or the
Bank other than in a fiduciary capacity, which shares shall be cancelled) shall,
by virtue of the Merger and without any action on the part of the holder
thereof, be cancelled and by operation of law be converted into and represent
the right to receive from Laurel, $19.05 in cash (the "Merger Consideration") in
accordance with Section 1.08 hereof. At or immediately prior to the Effective
Time, each outstanding option to purchase SFSB Common Stock issued by SFSB and
as described on Disclosure Schedule 2.02 ("SFSB Option"), shall be cancelled,
and each holder of any such SFSB Option, whether or not then vested or
exercisable, shall be entitled to receive from SFSB immediately prior to the
Effective Time for each SFSB Option an amount determined by multiplying (i) the
excess of the Merger Consideration over the applicable exercise price per share
of such option by (ii) the number of shares of SFSB Common Stock subject to such
SFSB Option ("Option Consideration"). The payment of the Option Consideration
referred to in the immediately preceding sentence to holders of SFSB Options
shall be subject to the execution by any such holder of such instruments of
cancellation as SFSB and Laurel may reasonably deem appropriate. SFSB may make
necessary tax withholdings from the Option Consideration as it deems
appropriate. The aggregate consideration to be paid for the conversion of all
outstanding shares of SFSB Common Stock is hereinafter referred to as the
"Aggregate Merger Consideration."
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All awards under the RSP outstanding immediately prior to the Effective
Time shall be canceled and exchanged for a payment to be made to the recipient
or holder thereof by Xxxxxxx Savings not later than the Effective Time in an
amount equal to the Merger Consideration, less any cash which must be withheld
under federal and state income and employment tax requirements; provided that
such recipient or holder shall deliver to Xxxxxxx Savings a cancellation
agreement in form and substance reasonably satisfactory to Laurel prior to
receipt of such payment.
1.08 Exchange Procedures
(a) Immediately prior to the Effective Time, Laurel shall deposit in trust with
an exchange agent designated by Laurel and reasonably acceptable to SFSB (the
"Exchange Agent") cash in an amount equal to the Aggregate Merger Consideration.
No later than five business days following the Effective Time, Laurel shall
cause the Exchange Agent to mail or make available to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented issued and outstanding shares of SFSB Common Stock a notice and
letter of transmittal (which shall specify that delivery shall be effected and
risk of loss and title to the certificates theretofore representing shares of
SFSB Common Stock shall pass only upon proper delivery of such certificates to
the Exchange Agent) advising such holder of the effectiveness of the Merger and
the procedure for surrendering to the Exchange Agent such certificate or
certificates which immediately prior to the Effective Time represented issued
and outstanding shares of SFSB Common Stock in exchange for the consideration
set forth in Section 1.07 hereof deliverable in respect thereof pursuant to this
Agreement. Within five business days following receipt of surrendered
certificates and a properly completed letter of transmittal, the Exchange Agent
shall deliver the Merger Consideration to each former SFSB stockholder. The
Exchange Agent shall accept such certificates upon compliance with such
reasonable terms and conditions as the Exchange Agent may impose to effect an
orderly exchange thereof in accordance with normal exchange practices.
(b) Each outstanding certificate which prior to the Effective Time
represented SFSB Common Stock (other than Dissenting Shares) and which is not
surrendered to the Exchange Agent in accordance with the procedures provided for
herein shall, except as otherwise herein provided, until duly surrendered to the
Exchange Agent, be deemed to evidence the right to receive the Merger
Consideration. After the Effective Time, there shall be no further transfer on
the records of SFSB of certificates representing shares of SFSB Common Stock and
if such certificates are presented to SFSB for transfer, they shall be cancelled
against delivery of the Merger Consideration as hereinabove provided.
(c) Laurel shall not be obligated to deliver the Merger Consideration
to which a holder of SFSB Common Stock would otherwise be entitled as a result
of the Merger until such holder surrenders the certificate or certificates
representing the shares of SFSB Common Stock for exchange as provided in this
Section 1.08, or, in lieu thereof, an appropriate affidavit of loss and
indemnity agreement and/or a bond as may be required in each case by Laurel. If
payment of the Merger Consideration is to be made in a name other than that in
which the certificate evidencing
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SFSB Common Stock surrendered in exchange therefor is registered, it shall be a
condition of the issuance thereof that the certificate so surrendered shall be
properly endorsed or accompanied by an executed form of assignment separate from
the certificate and otherwise in proper form for transfer and that the person
requesting such payment pay to the Exchange Agent in advance, any transfer or
other tax required by reason of the payment in any name other than that of the
registered holder of the certificate surrendered or otherwise establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
payable.
(d) Any portion of the Merger Consideration delivered to the Exchange
Agent by Laurel pursuant to Section 1.07 that remains unclaimed by the
stockholders of SFSB for six months after the Effective Time (as well as any
proceeds from any investment thereof) shall be delivered by the Exchange Agent
to Laurel. Any stockholders of SFSB who have not exchanged their shares of SFSB
Common Stock for the Merger Consideration in accordance with this Agreement
shall thereafter look only to Laurel for the consideration deliverable in
respect of each share of SFSB Common Stock such stockholder holds as determined
pursuant to this Agreement without any interest thereon. If outstanding
certificates for shares of SFSB Common Stock are not surrendered or the payment
for them is not claimed prior to the date on which payment of the Merger
Consideration would otherwise escheat to or become the property of any
governmental unit or agency, the unclaimed items shall, to the extent permitted
by abandoned property and any other applicable law, become the property of
Laurel (and to the extent not in its possession shall be delivered to it), free
and clear of all claims or interest of any person previously entitled to such
property. Neither the Exchange Agent nor any party to this Agreement shall be
liable to any holder of stock represented by any certificate for any
consideration paid to a public official pursuant to applicable abandoned
property, escheat or similar laws. Laurel and the Exchange Agent shall be
entitled to rely upon the stock transfer books of SFSB to establish the identity
of those persons entitled to receive the Merger Consideration specified in this
Agreement, which books shall be conclusive with respect thereto. In the event of
a dispute with respect to ownership of stock represented by any certificate,
Laurel and the Exchange Agent shall be entitled to deposit any consideration
represented thereby in escrow with an independent third party and thereafter be
relieved with respect to any claims thereto.
1.09 Withholding Rights. Laurel (through the Exchange Agent, if
applicable) shall be entitled to deduct and withhold from any amounts otherwise
payable pursuant to this Agreement to any holder of shares of SFSB Common Stock
such amounts as Laurel is required under the Internal Revenue Code of 1986, as
amended ("Code"), or any provision of state, local or foreign tax law to deduct
and withhold with respect to the making of such payment. Any amounts so withheld
shall be treated for all purposes of this Agreement as having been paid to the
holder of SFSB Common Stock in respect of which such deduction and withholding
was made by Laurel, provided that Laurel or the Exchange Agent shall timely file
such withheld funds with the appropriate taxing authorities.
1.10 Dissenting Shares. Each outstanding share of SFSB Common Stock the
holder of which has perfected his right to dissent under the PBCL and has not
effectively withdrawn or lost such rights as of the Effective Time shall not be
converted into or represent a right to receive the
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Merger Consideration, and the holder thereof shall be entitled only to such
rights as are granted by the PBCL. SFSB shall give Laurel prompt notice upon
receipt by SFSB of any such written demands for payment of their fair value of
such shares of SFSB Common Stock and of withdrawals of such demands and any
other instruments provided pursuant to the PBCL (any stockholder duly making
such demand being hereinafter called a "Dissenting Stockholder"). Any payments
made in respect of Dissenting Shares shall be made by Laurel. If any Dissenting
Stockholder shall effectively withdraw or lose (through failure to perfect or
otherwise) his right to such payment at or prior to the Effective Time, such
holder's shares of SFSB Common Stock shall be converted into a right to receive
the Merger Consideration in accordance with the applicable provisions of this
Agreement.
1.11 Additional Actions. If at any time after the Effective Time the
Surviving Corporation shall consider that any further assignments or assurances
in law or any other acts are necessary or desirable to (i) vest, perfect or
confirm, of record or otherwise, in the Surviving Corporation its rights, title
or interest in, to or under any of the rights, properties or assets of SFSB
acquired or to be acquired by the Surviving Corporation as a result of, or in
connection with, the Merger, or (ii) otherwise carry out the purposes of this
Agreement, SFSB and its proper officers and directors shall be deemed to have
granted to the Surviving Corporation an irrevocable power of attorney to execute
and deliver all such proper deeds, assignments and assurances in law and to do
all acts necessary or proper to vest, perfect or confirm title to and possession
of such rights, properties or assets in the Surviving Corporation and otherwise
to carry out the purposes of this Agreement; and the proper officers and
directors of the Surviving Corporation are fully authorized in the name of SFSB
or otherwise to take any and all such action.
1.12 Interim Shares. Each outstanding share of common stock of Interim,
$.01 par value per share ("Interim Common Stock"), on the Effective Time shall
be converted automatically and without any action on the part of the holder
thereof into an equal number of shares of the Surviving Corporation, which shall
constitute all of the outstanding common stock of the Surviving Corporation.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SFSB
AND XXXXXXX SAVINGS
References to "SFSB Disclosure Schedules" shall mean all of the
disclosure schedules required by this Article II and Article IV hereof, dated as
of the date hereof and referenced to the specific sections and subsections of
this Agreement, which have been delivered by SFSB to Laurel. SFSB and Xxxxxxx
Savings hereby represent and warrant to Laurel and the Bank as follows as of the
date hereof:
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2.01 Corporate Organization.
(a) SFSB is a corporation duly organized, validly existing and in good
standing under the laws of the Commonwealth of Pennsylvania. SFSB has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted and is duly licensed
or qualified to do business and is in good standing in each jurisdiction in
which the nature of the business conducted by it or the character or location of
the properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed, qualified
or in good standing would not have a Material Adverse Effect (as defined below).
SFSB is registered as a savings and loan holding company under the Home Owners'
Loan Act ("HOLA"). SFSB Disclosure Schedule 2.01(a) sets forth true and complete
copies of the Articles of Incorporation and Bylaws of SFSB as in effect on the
date hereof.
For the purposes of this Agreement, the term "Material Adverse Effect"
shall mean any effect that (i) is material and adverse to the financial
condition, results of operations or business of SFSB and Xxxxxxx Savings, either
individually or considered as one enterprise or (ii) materially impairs the
ability of SFSB and/or Xxxxxxx Savings to consummate the transactions
contemplated by this Agreement and the Agreement of Merger, provided, however,
that the term "Material Adverse Effect" shall not be deemed to include (i) the
impact of changes in (a) laws, regulations, or policies of any Federal or state
court, administrative agency, commission or other governmental authority or
interpretations thereof; or (b) generally accepted accounting principles, that
in each case are generally applicable to the banking industry, (ii) actions
taken or to be taken by SFSB or Xxxxxxx Savings upon the written request of
Laurel pursuant to this Agreement or the Agreement of Merger, (iii) actions or
payments contemplated by this Agreement, including as set forth in the SFSB
Disclosure Schedules or (iv) changes attributable to or resulting from changes
in general economic conditions, including changes in the prevailing level of
interest rates.
(b) The only direct or indirect subsidiary of SFSB is Xxxxxxx Savings.
Disclosure Schedule 2.01(b)(i) sets forth true and complete copies of the
Charter and Bylaws of Xxxxxxx Savings as in effect on the date hereof. Xxxxxxx
Savings (i) is duly organized, validly existing and in good standing under the
laws of the United States of America, (ii) has the corporate power and authority
to own or lease all of its properties and assets, and (iii) is duly licensed or
qualified to do business and is in good standing in each jurisdiction in which
the nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed, qualified
or in good standing would not have a Material Adverse Effect. SFSB and Xxxxxxx
Savings have satisfied in all material respects all commitments, financial or
otherwise, as may have been agreed upon with their state and/or federal
regulatory agencies. Other than Xxxxxxx Savings and except as set forth in SFSB
Disclosure Schedule 2.01(b)(ii), SFSB does not own or control, directly or
indirectly, greater than a 5% equity interest in any corporation, company,
association, partnership, joint venture or other entity.
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2.02 Capitalization. The authorized capital stock of SFSB consists of
4,000,000 shares of SFSB Common Stock, of which 494,485 are issued and
outstanding as of the date hereof, and 1,000,000 shares of preferred stock, of
which no shares are issued and outstanding. The 494,485 shares of SFSB Common
Stock issued and outstanding as of the date hereof include 11,500 unallocated
shares of SFSB Common Stock held in the RSP which shares shall be cancelled as
of the Effective Time. All issued and outstanding shares of capital stock of
SFSB have been duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights. Except for an aggregate of 53,724
shares of SFSB Common Stock issuable upon exercise of stock options ("SFSB
Options") granted pursuant to SFSB's 1998 Stock Option Plan (the "Stock Option
Plan") SFSB does not have and is not bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any character calling for
the transfer, purchase or issuance of any shares of capital stock of SFSB or any
securities representing the right to purchase or otherwise receive any shares of
such capital stock or any securities convertible into or representing the right
to purchase or subscribe for any such stock. Disclosure Schedule 2.02 lists each
SFSB Option outstanding as of the date hereof under the Stock Option Plan, as
well as the name of the grantee, the date of grant and the respective exercise
price with respect thereto.
2.03 Authority; No Violation.
(a) Subject to the approval of this Agreement by the stockholders of
SFSB, SFSB and Xxxxxxx Savings have full corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby in accordance with the terms hereof. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly approved by the boards of directors of SFSB
and Xxxxxxx Savings. Except for the adoption by SFSB's stockholders of this
Agreement, no other corporate proceedings on the part of SFSB or Xxxxxxx Savings
are necessary to consummate the Merger. This Agreement has been duly and validly
executed and delivered by SFSB and Xxxxxxx Savings and constitutes the valid and
binding obligation of SFSB and Xxxxxxx Savings, enforceable against them in
accordance with and subject to its terms, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally, and except that the availability of
equitable remedies (including, without limitation, specific performance) is
within the discretion of the appropriate court.
(b) Subject to the approval of this Agreement by the stockholders of
SFSB, SFSB has full corporate power and authority to execute and deliver the
Agreement of Merger and to consummate the transactions contemplated thereby in
accordance with the terms thereof. The execution and delivery of the Agreement
of Merger by SFSB and the consummation of the transactions contemplated thereby
have been duly and validly approved by the Board of Directors of SFSB. The
Agreement of Merger, upon its execution and delivery by SFSB, will constitute a
valid and binding obligation of SFSB, enforceable against it in accordance with
and subject to its terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally, and except that the availability of equitable
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remedies (including, without limitation, specific performance) is within the
discretion of the appropriate court.
(c) None of the execution and delivery of this Agreement by SFSB and
Xxxxxxx Savings, the execution and delivery of the Agreement of Merger by SFSB,
the consummation by SFSB and Xxxxxxx Savings of the transactions contemplated
hereby in accordance with the terms hereof, the consummation by SFSB of the
transactions contemplated by the Agreement of Merger in accordance with the
terms thereof, compliance by SFSB and Xxxxxxx Savings with any of the terms or
provisions hereof or compliance by SFSB with any terms or provisions of the
Agreement of Merger, will (i) violate any provision of the Articles of
Incorporation, Charter or Bylaws of SFSB or Xxxxxxx Savings, (ii) assuming that
the consents and approvals set forth below are duly obtained, violate any
statute, code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to SFSB or Xxxxxxx Savings or any of their respective
properties or assets, or (iii) except as disclosed in Disclosure Schedule
2.03(c), violate, conflict with, result in a breach of any provisions of,
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, result in the termination of, accelerate the
performance required by, or result in the creation of any lien, security
interest, charge or other encumbrance upon any of the properties or assets of
SFSB or Xxxxxxx Savings under any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, deed of trust, license, lease, agreement or
other instrument or obligation to which SFSB or Xxxxxxx Savings are a party, or
by which any of their respective properties or assets may be bound or affected,
except, with respect to (ii) and (iii) above, such as individually or in the
aggregate will not have a Material Adverse Effect and which will not prevent or
delay the consummation of the transactions contemplated hereby. Except as set
forth in Disclosure Schedule 2.03(c) and for any consents and approvals of or
filings or registrations with or notices to the Federal Deposit Insurance
Corporation ("FDIC"), the Secretary of State of the Commonwealth of
Pennsylvania, the Office of Thrift Supervision ("OTS") and the stockholders of
SFSB, no consents or approvals of or filings or registrations with or notices to
any federal, state, municipal or other governmental or regulatory commission,
board, agency, or non-governmental third party are required on behalf of SFSB in
connection with (a) the execution and delivery of this Agreement by SFSB and
Xxxxxxx Savings or the execution and delivery of the Agreement of Merger by
SFSB, and (b) the completion by SFSB and Xxxxxxx Savings of the transactions
contemplated hereby or the completion by SFSB of the transactions contemplated
by the Agreement of Merger.
(d) As of the date hereof, neither SFSB nor Xxxxxxx Savings is aware of
any reasons relating to SFSB or Xxxxxxx Savings why all consents and approvals
shall not be procured from all regulatory agencies having jurisdiction over the
transactions contemplated by this Agreement as shall be necessary for
consummation of the transactions contemplated hereby.
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2.04 Financial Statements.
(a) SFSB has previously delivered to Laurel copies of the consolidated
balance sheet of SFSB as of December 31, 2001 and 2000 and the related
consolidated statements of income, changes in stockholders' equity, and cash
flows for the years ended December 31, 2001, 2000 and 1999, in each case
accompanied by the audit report of S.R. Xxxxxxxxx, X.X., independent public
accountants, as well as the unaudited consolidated balance sheet of SFSB as of
June 30, 2002 and the related unaudited consolidated statements of income,
changes in stockholders' equity, and cash flows for the six months ended June
30, 2002 and 2001. The consolidated balance sheets of SFSB referred to herein,
as well as the financial statements to be delivered pursuant to Section 4.04
hereof, (including the related notes, where applicable) fairly present or will
fairly present, in all material respects, as the case may be, the consolidated
financial condition of SFSB as of the respective dates set forth therein, and
the related consolidated statements of income, changes in stockholders' equity
and cash flows (including the related notes, where applicable) fairly present or
will fairly present, as the case may be, the results of the consolidated income,
changes in stockholders' equity and cash flows of SFSB for the respective
periods or as of the respective dates set forth therein (it being understood
that SFSB's interim financial statements are not audited and are not prepared
with all related notes but have been, or will be, prepared in compliance with
all applicable legal and regulatory accounting requirements and reflect all
adjustments which are, in the opinion of SFSB, necessary for a fair presentation
of such financial statements).
(b) Each of the financial statements referred to in this Section 2.04
(including the related notes, where applicable) has been prepared in accordance
with generally accepted accounting principles consistently applied during the
periods involved. The books and records of SFSB are being maintained in material
compliance with applicable legal and accounting requirements.
(c) Except to the extent reflected, disclosed or reserved against in
the consolidated financial statements referred to in the first sentence of
Section 2.04(a) or the notes thereto, and except for liabilities incurred since
June 30, 2002 in the ordinary course of business and consistent with past
practice, SFSB does not have any obligation or liability, whether absolute,
accrued, contingent or otherwise, material to the business, results of
operations, assets or financial condition of SFSB and Xxxxxxx Savings taken as a
whole.
2.05 Absence of Certain Changes or Events. Except as set forth in SFSB
Disclosure Schedule 2.09, since June 30, 2002, (i) SFSB and Xxxxxxx Savings have
conducted their businesses in the ordinary and usual course and (ii) no event
has occurred or circumstances arisen that, individually or in the aggregate, has
had or is reasonably likely to have a Material Adverse Effect.
2.06 Legal Proceedings. Except as disclosed in SFSB Disclosure Schedule
2.06, neither SFSB nor Xxxxxxx Savings is a party to any, and there are no
pending or, to the best knowledge of SFSB and Xxxxxxx Savings, threatened legal,
administrative, arbitration or other proceedings, claims, actions or
governmental investigations of any nature against SFSB or Xxxxxxx Savings,
except such proceedings, claims, actions or governmental investigations which in
the good faith judgment of
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SFSB and Xxxxxxx Savings will not have a Material Adverse Effect. Neither SFSB
nor Xxxxxxx Savings is a party to any order, judgment or decree which has or
could reasonably be expected to have a Material Adverse Effect.
2.07 Taxes and Tax Returns.
(a) SFSB and Xxxxxxx Savings have duly filed (and until the Effective
Time will so file) all returns, declarations, reports, information returns and
statements ("Returns") required to be filed or sent by or with respect to them
in respect of any Taxes (as hereinafter defined), and have duly paid (and until
the Effective Time will so pay) all Taxes due and payable other than Taxes or
other charges which (i) are being contested in good faith (and disclosed in
writing to Laurel) and (ii) have not finally been determined. SFSB has
established (and until the Effective Time will establish) on its books and
records reserves that are adequate for the payment of all Taxes not yet due and
payable for periods ending on or prior to the Effective Time, whether or not
disputed or accrued. Except as set forth in SFSB Disclosure Schedule 2.07(a),
(i) the federal income tax returns of SFSB have been examined by the Internal
Revenue Service ("IRS") (or are closed to examination due to the expiration of
the applicable statute of limitations), and (ii) the Pennsylvania income tax
returns of SFSB have been examined by applicable authorities (or are closed to
examination due to the expiration of the statute of limitations), and in the
case of both (i) and (ii) no deficiencies were asserted as a result of such
examinations which have not been resolved and paid in full. There are no audits
or other administrative or court proceedings presently pending nor any other
disputes pending, or claims asserted for, Taxes or assessments upon SFSB or
Xxxxxxx Savings, nor has SFSB given any currently outstanding waivers or
comparable consents regarding the application of the statute of limitations with
respect to any Taxes or Returns.
(b) Except as set forth in SFSB Disclosure Schedule 2.07(b), SFSB (i)
has not requested any extension of time within which to file any Return which
Return has not since been filed, (ii) is not a party to any agreement providing
for the allocation or sharing of Taxes, (iii) is not required to include in
income any adjustment pursuant to Section 481(a) of the Code, by reason of a
voluntary change in accounting method initiated by SFSB (nor does SFSB have any
knowledge that the IRS has proposed any such adjustment or change of accounting
method), or (iv) has not filed a consent pursuant to Section 341(f) of the Code
or agreed to have Section 341(f)(2) of the Code apply.
(c) For purposes of this Agreement, "Taxes" shall mean all taxes,
charges, fees, levies or other assessments, including, without limitation, all
net income, gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, withholding, payroll, employment (including
withholding, payroll and employment taxes required to be withheld with respect
to income paid to employees), excise, estimated, severance, stamp, occupation,
property or other taxes, customs duties, fees, assessments or charges of any
kind whatsoever, together with any interest and any penalties, additions to tax
or additional amounts imposed by any taxing authority (domestic or foreign) upon
SFSB and/or Xxxxxxx Savings.
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2.08 Employee Benefit Plans.
(a) SFSB Disclosure Schedule 2.08(a) sets forth all benefit and
compensation plans, contracts, policies or arrangements covering current or
former employees of SFSB and Xxxxxxx Savings (the "Employees") and current or
former directors of SFSB and Xxxxxxx Savings including, but not limited to,
"employee benefit plans" within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and deferred
compensation, stock option, stock purchase, stock appreciation rights,
stock-based, incentive and bonus plans (the "Benefits Plans"). True and complete
copies of all Benefit Plans including, but not limited to, any trust instruments
and insurance contracts forming a part of any Benefit Plans and all amendments
thereto have been provided to Laurel.
(b) All Benefits Plans other than "multiemployer plans" within the
meaning of Section 3(37) of ERISA, covering Employees, to the extent subject to
ERISA, are in compliance with ERISA. Each Benefit Plan which is an "employee
pension benefit plan" within the meaning of Section 3(2) of ERISA ("Pension
Plan") and which is intended to be qualified under Section 401(a) of the Code,
has received a favorable determination letter from the IRS, and SFSB is not
aware of any circumstances likely to result in revocation of any such favorable
determination letter or the loss of the qualification of such Pension Plan under
Section 401(a) of the Code. There is no material pending or, to SFSB's
knowledge, threatened litigation relating to the Benefits Plans. Neither SFSB
nor Xxxxxxx Savings has engaged in a transaction with respect to any Benefit
Plan or Pension Plan that, assuming the taxable period of such transaction
expired as of the date hereof, could subject SFSB or Xxxxxxx Savings to a tax or
penalty imposed by either Section 4975 of the Code or Section 502(i) of ERISA in
an amount which would have a Material Adverse Effect upon SFSB or Xxxxxxx
Savings.
(c) No liability under Subtitle C or D of Title IV of ERISA has been or
is expected to be incurred by SFSB or Xxxxxxx Savings with respect to any
ongoing, frozen or terminated "single-employer plan," within the meaning of
Section 4001(a)(15) of ERISA, currently or formerly maintained by any of them,
or the single-employer plan of any entity which is considered one employer with
SFSB under Section 4001 of ERISA or Section 414 of the Code (an "ERISA
Affiliate"). Neither SFSB nor Xxxxxxx Savings has incurred, and neither expects
to incur, any withdrawal liability with respect to a multiemployer plan under
Subtitle E of Title IV of ERISA (regardless of whether based on contributions of
an ERISA Affiliate). No notice of a "reportable event," within the meaning of
Section 4043 of ERISA for which the 30-day reporting requirement has not been
waived, has been required to be filed for any Pension Plan or by any ERISA
Affiliate within the 12-month period ending on the date hereof or will be
required to be filed in connection with the transactions contemplated by this
Agreement.
(d) All contributions required to be made under the terms of any
Benefit Plan have been timely made or have been reflected on the financial
statements of SFSB. Neither any Pension Plan nor any single-employer plan of an
ERISA Affiliate has an "accumulated funding deficiency" (whether or not waived)
within the meaning of Section 412 of the Code or Section 302 of ERISA
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and no ERISA Affiliate has an outstanding funding waiver. Neither SFSB nor
Xxxxxxx Savings has provided, or is required to provide, security to any Pension
Plan or to any single-employer plan of an ERISA Affiliate pursuant to Section
401(a)(29) of the Code.
(e) Under each Pension Plan which is a single-employer plan, as of the
last day of the most recent plan year ended prior to the date hereof, the
actuarially determined present value of all "benefit liabilities," within the
meaning of Section 4001(a)(16) of ERISA (as determined on the basis of the
actuarial assumptions contained in the Pension Plan's most recent actuarial
valuation), did not exceed the then current value of the assets of such Pension
Plan, and there has been no material change in the financial condition of such
Pension Plan since the last day of the most recent plan year.
(f) Neither SFSB nor Xxxxxxx Savings has any obligations for retiree
health and life benefits under any Benefit Plan other than as may be required
under Section 4980B of the Code or Part 6 of Title I of ERISA, or under the
continuation of coverage provisions of the laws of any state or locality. SFSB
or Xxxxxxx Savings may amend or terminate any such Benefit Plan at any time
without incurring any liability thereunder.
(g) Except as set forth on SFSB Disclosure Schedule 2.08(g), none of
the execution of this Agreement, stockholder approval of this Agreement or
consummation of the transactions contemplated hereby will (A) entitle any
employees of SFSB or Xxxxxxx Savings to severance pay or any increase in
severance pay upon any termination of employment after the date hereof, (B)
accelerate the time of payment or vesting or trigger any payment or funding
(through a grantor trust or otherwise) of compensation or benefits under,
increase the amount payable or trigger any other material obligation pursuant
to, any of the Benefit Plans, (C) result in any breach or violation of, or a
default under, any of the Benefit Plans or (D) result in any payment that would
be a "parachute payment" to a "disqualified individual" as those terms are
defined in Section 280G of the Code, without regard to whether such payment is
reasonable compensation for personal services performed or to be performed in
the future.
2.09 Securities Documents and Regulatory Reports.
(a) SFSB has previously delivered or made available to Laurel a
complete copy of each final registration statement, prospectus, annual,
quarterly or current report and definitive proxy statement or other
communication (other than general advertising materials) filed pursuant to the
Securities Act of 1933, as amended ("1933 Act"), or the Securities Exchange Act
of 1934, as amended ("1934 Act"), or mailed by SFSB to its stockholders as a
class since January 1, 1999, and each such final registration statement,
prospectus, annual, quarterly or current report and definitive proxy statement
or other communication, as of its date, complied in all material respects with
all applicable statutes, rules and regulations and did not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading; provided
that information as of a later date shall be deemed to modify information as of
an earlier date.
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(b) Since January 1, 1999, SFSB and Xxxxxxx Savings have duly filed
with the OTS, in materially correct form the monthly, quarterly and annual
reports required to be filed under applicable laws and regulations, and SFSB has
delivered or made available to Laurel accurate and complete copies of such
reports. SFSB Disclosure Schedule 2.09 lists all examinations of SFSB or Xxxxxxx
Savings conducted by the applicable regulatory authorities since January 1, 1999
and the dates of any responses thereto submitted by SFSB or Xxxxxxx Savings.
Except as set forth in SFSB Disclosure Schedule 2.09, in connection with the
most recent examinations of SFSB or Xxxxxxx Savings by the applicable regulatory
authorities, neither SFSB nor Xxxxxxx Savings were required to correct or change
any action, procedure or proceeding which SFSB or Xxxxxxx Savings believe has
not been now corrected or changed as required other than corrections or changes
which, if not made, either individually or in the aggregate, would not have a
Material Adverse Effect.
2.10 Compliance with Applicable Law.
(a) SFSB and Xxxxxxx Savings have all permits, licenses, certificates
of authority, orders and approvals of, and have made all filings, applications
and registrations with, federal, state, local and foreign governmental or
regulatory bodies that are required in order to permit them to carry on their
respective businesses as they are presently being conducted and the absence of
which could reasonably be expected to have a Material Adverse Effect; all such
permits, licenses, certificates of authority, orders and approvals are in full
force and effect; and to the best knowledge of SFSB and Xxxxxxx Savings, no
suspension or cancellation of any of the same is threatened.
(b) Neither SFSB nor Xxxxxxx Savings is in violation of its Articles of
Incorporation, Charter or Bylaws, or of any applicable federal, state or local
law or ordinance or any order, rule or regulation of any federal, state, local
or other governmental agency or body (including, without limitation, all
banking, securities, municipal securities, safety, health, zoning,
anti-discrimination, antitrust, and wage and hour laws, ordinances, orders,
rules and regulations), or in default with respect to any order, writ,
injunction or decree of any court, or in default under any order, license,
regulation or demand of any governmental agency, any of which violations or
defaults could reasonably be expected to have a Material Adverse Effect, and
neither SFSB nor Xxxxxxx Savings has received any notice or communication from
any federal, state or local governmental authority asserting that SFSB or
Xxxxxxx Savings is in violation of any of the foregoing which could reasonably
be expected to have a Material Adverse Effect. Neither SFSB nor Xxxxxxx Savings
is subject to any regulatory or supervisory cease and desist order, agreement,
written directive, memorandum of understanding or written commitment (other than
those of general applicability to all commercial banks issued by governmental
authorities), and has not received any written communication requesting that it
enter into any of the foregoing.
2.11 Deposit Insurance. The deposit accounts of Xxxxxxx Savings are
insured by the Savings Association Insurance Fund administered by the Federal
Deposit Insurance Corporation ("FDIC") to the maximum extent permitted by the
Federal Deposit Insurance Act, as amended ("FDIA"), and Xxxxxxx Savings has paid
all premiums and assessments required by the FDIA and the regulations
thereunder.
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2.12 Certain Contracts.
(a) Except as disclosed in SFSB Disclosure Schedule 2.12(a), neither
SFSB nor Xxxxxxx Savings is a party to, is bound by, receives, or is obligated
to pay benefits under, (i) any agreement, arrangement or commitment, including
without limitation, any agreement, indenture or other instrument relating to the
borrowing of money by SFSB or Xxxxxxx Savings (other than in the case of
deposits, federal funds purchased and securities sold under agreements to
repurchase in the ordinary course of business) or the guarantee by SFSB or
Xxxxxxx Savings of any obligation, (ii) any agreement, arrangement or commitment
relating to the employment of a consultant or the employment, election or
retention in office of any present or former director or officer of SFSB or
Xxxxxxx Savings, (iii) any contract, agreement or understanding with a labor
union, (iv) any agreement, arrangement or understanding pursuant to which any
payment (whether of severance pay or otherwise) became or may become due to any
director, officer or employee of SFSB or Xxxxxxx Savings upon execution of this
Agreement and the Agreement of Merger or upon or following consummation of the
transactions contemplated by this Agreement or the Agreement of Merger (either
alone or in connection with the occurrence of any additional acts or events),
(v) any agreement, arrangement or understanding to which SFSB or Xxxxxxx Savings
is a party or by which any of the same is bound which limits the freedom of SFSB
or Xxxxxxx Savings to compete in any line of business or with any person, or
(vi) any other agreement, arrangement or understanding to which SFSB or Xxxxxxx
Savings is a party and which is material to the business, results of operations,
assets or financial condition of SFSB and Xxxxxxx Savings taken as a whole
(excluding loan agreements or agreements relating to deposit accounts), in each
of the foregoing cases whether written or oral.
(b) Neither SFSB nor Xxxxxxx Savings is in default or in non-compliance
under any contract, agreement, commitment, arrangement, lease, insurance policy
or other instrument to which it is a party or by which its assets, business or
operations may be bound or affected, whether entered into in the ordinary course
of business or otherwise and whether written or oral, which default or
non-compliance would have a Material Adverse Effect, and there has not occurred
any event that with the lapse of time or the giving of notice, or both, would
constitute such a default or non-compliance.
(c) Neither SFSB nor Xxxxxxx Savings is a party or has agreed to enter
into an exchange traded or over-the-counter equity, interest rate, foreign
exchange or other swap, forward, future, option, cap, floor or collar or any
other contract that is not included in SFSB's audited financial statements at
and for December 31, 2001 and is a derivatives contract (including various
combinations thereof) (each, a "Derivatives Contract") or owns securities that
are referred to generically as "structured notes," "high risk mortgage
derivatives," "capped floating rate notes" or "capped floating rate mortgage
derivatives."
15
2.13 Properties and Insurance.
(a) All real and personal property owned by SFSB or Xxxxxxx Savings or
presently used by them in their respective businesses is in adequate condition
(ordinary wear and tear excepted) and is sufficient to carry on the business of
SFSB and Xxxxxxx Savings in the ordinary course of business consistent with
their past practices. SFSB and Xxxxxxx Savings have good and, as to owned real
property, marketable title to all material assets and properties, whether real
or personal, tangible or intangible, reflected in SFSB's consolidated balance
sheet as of June 30, 2002, or owned and acquired subsequent thereto (except to
the extent that such assets and properties have been disposed of for fair value
in the ordinary course of business since June 30, 2002), subject to no
encumbrances, liens, mortgages, securities interests or pledges, except (i)
those items that secure liabilities that are reflected in said consolidated
balance sheet or the notes thereto or have been incurred in the ordinary course
of business after the date of such consolidated balance sheet, (ii) statutory
liens for current taxes not yet due, (iii) such encumbrances, liens, mortgages,
securities interests, pledges and title imperfections that are not in the
aggregate material to the business, results of operations, assets or financial
condition of SFSB and Xxxxxxx Savings taken as a whole, and (iv) with respect to
owned real property, title imperfections noted in title reports prior to the
date hereof. SFSB and Xxxxxxx Savings as lessees have the right under valid and
subsisting leases to occupy, use, possess and control all property leased by
them in all material respects as presently occupied, used, possessed and
controlled by SFSB and Xxxxxxx Savings and the consummation of the transactions
contemplated hereby and by the Agreement of Merger will not affect any such
right in a way that would have a Material Adverse Effect. SFSB Disclosure
Schedule 2.13(a) sets forth an accurate listing of each lease pursuant to which
SFSB or Xxxxxxx Savings act as lessor or lessee, including the expiration date
and the terms of any renewal options which relate to the same.
(b) The business operations and all insurable properties and assets of
SFSB and Xxxxxxx Savings are insured for its benefit against all risks which, in
the reasonable judgment of the management of SFSB and Xxxxxxx Savings, should be
insured against, in each case under valid, binding and enforceable policies or
bonds issued by insurers of recognized responsibility, in such amounts with such
deductibles and against such risks and losses as are in the opinion of the
management of SFSB and Xxxxxxx Savings adequate for the business engaged in by
SFSB and Xxxxxxx Savings. As of the date hereof, neither SFSB nor Xxxxxxx
Savings has received any notice of cancellation or notice of a material
amendment of any such insurance policy or bond or is in material default under
such policy or bond, no coverage thereunder is being disputed and all material
claims thereunder have been filed in a timely fashion.
2.14 Environmental Matters. For purposes of this Agreement, the
following terms shall have the indicated meaning:
"Environmental Law" means any federal, state or local law, statute,
ordinance, rule, regulation, code, license, permit, authorization, approval,
consent, order, judgment, decree,
16
injunction or agreement with any governmental entity relating to (1) the
protection, preservation or restoration of the environment (including, without
limitation, air, water vapor, surface water, groundwater, drinking water supply,
surface soil, subsurface soil, plant and animal life or any other natural
resource), and/or (2) the use, storage, recycling, treatment, generation,
transportation, processing, handling, labeling, production, release or disposal
of Hazardous Substances. The term Environmental Law includes without limitation
(1) the Comprehensive Environmental Response, Compensation and Liability Act, as
amended, 42 U.S.C. ss.9601, et seq; the Resource Conservation and Recovery Act,
as amended, 42 U.S.C. ss.6901, et seq; the Clean Air Act, as amended, 42 U.S.C.
ss.7401, et seq; the Federal Water Pollution Control Act, as amended, 33 U.S.C.
ss.1251, et seq; the Toxic Substances Control Act, as amended, 15 U.S.C.
ss.9601, et seq; the Emergency Planning and Community Right to Know Act, 42
U.S.C. ss.11001, et seq; the Safe Drinking Water Act, 42 U.S.C. ss.300f, et seq;
and all comparable state and local laws, and (2) any common law (including
without limitation common law that may impose strict liability) that may impose
liability or obligations for injuries or damages due to, or threatened as a
result of, the presence of or exposure to any Hazardous Substance.
"Hazardous Substance" means any substance presently listed, defined,
designated or classified as hazardous, toxic, radioactive or dangerous, or
otherwise regulated, under any Environmental Law, whether by type or by
quantity, including any regulated material containing any such substance as a
component. Hazardous Substances include without limitation petroleum (including
crude oil or any fraction thereof), asbestos, radioactive material, and
polychlorinated biphenyls.
"Loan Portfolio Properties" means those properties which serve as
collateral for loans owned by SFSB or Xxxxxxx Savings.
"Other Properties Owned" means those properties owned, leased or
operated by SFSB or Xxxxxxx Savings which are not Loan Portfolio Properties.
(a) Except as set forth in SFSB Disclosure Schedule 2.14(a), to the
knowledge of SFSB and Xxxxxxx Savings, neither SFSB nor Xxxxxxx Savings has been
and are not in violation of or liable under any Environmental Law.
(b) None of the Other Properties Owned is the subject of liability
under, or, to the knowledge of SFSB and Xxxxxxx Savings, has been in violation
of, any Environmental Law except any such violations or liabilities which would
not, individually or in the aggregate, have a Material Adverse Effect.
(c) To the knowledge of SFSB and Xxxxxxx Savings, none of the Loan
Portfolio Properties has been in violation of, or is the subject of liability
under, any Environmental Law except any such violations or liabilities which
would not, individually or in the aggregate, have a Material Adverse Effect.
17
(d) There are no actions, suits, demands, notices, claims,
investigations or proceedings pending or, to the knowledge of SFSB and Xxxxxxx
Savings, threatened relating to the liability of the Loan Portfolio Properties
and Other Properties Owned under any Environmental Law, including without
limitation any notices, demand letters or requests for information from any
federal or state environmental agency relating to any such liabilities under or
violations of Environmental Law, except such which would not have or result in a
Material Adverse Effect.
(e) SFSB Disclosure Schedule 2.14(e) lists (i) any environmental
studies which have been undertaken by, or on behalf of, SFSB or Xxxxxxx Savings
with respect to the Other Properties Owned and (ii) and correspondence known to
SFSB or Xxxxxxx Savings with respect to the Other Properties Owned and issues
related to Environmental Laws.
2.15 Allowance for Loan Losses and Real Estate Owned. The allowance for
loan losses reflected on SFSB's consolidated balance sheets included in the
consolidated financial statements referred to in Section 2.04 hereof is, in the
opinion of SFSB's management, adequate in all material respects as of their
respective dates under the requirements of generally accepted accounting
principles to provide for reasonably anticipated losses on outstanding loans net
of recoveries. The real estate owned reflected on the consolidated balance
sheets included in the consolidated financial statements referred to in Section
2.04 hereof is carried at the lower of cost or fair value, or the lower of cost
or net realizable value, as required by generally accepted accounting
principles.
2.16 Minute Books. Since January 1, 1998, the minute books of SFSB and
Xxxxxxx Savings contain complete and accurate records of all meetings and other
corporate action held or taken by their Boards of Directors (including
committees of its Board of Directors) and stockholders in all material respects.
2.17 Broker Fees. Except as set forth in SFSB Disclosure Schedule 2.17,
neither SFSB nor Xxxxxxx Savings or any of the respective directors or officers
of such companies has employed any consultant, broker or finder or incurred any
liability for any consultant's, broker's or finder's fees or commissions in
connection with any of the transactions contemplated by this Agreement.
2.18 Proxy Statement Information. None of the information relating to
it which is included in the proxy statement distributed by SFSB to its
stockholders in order to solicit their approval of this Agreement and the
transactions contemplated hereby ("Proxy Statement"), as of the date such Proxy
Statement is mailed to its stockholders and up to and including the date of the
meeting of its stockholders to which such Proxy Statement relates, will contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, provided that information as of a later
date shall be deemed to modify information as of an earlier date.
2.19 Transactions with Affiliates. Except as set forth in SFSB
Disclosure Schedule 2.19, there are no existing or pending transactions, nor are
there any agreements or understandings, with any directors, officers or
employees of SFSB or Xxxxxxx Savings or any person or entity affiliated
18
with it (collectively, "Affiliates"), relating to, arising from or affecting
SFSB and Xxxxxxx Savings, including, without limitation, any transactions,
arrangements or understandings relating to the purchase or sale of goods or
services, the lending of monies or the sale, lease or use of any assets of SFSB
or Xxxxxxx Savings.
2.20 Required Vote; Inapplicability of Antitakeover Statutes; Fairness
Opinion.
(a) This Agreement and the transactions contemplated hereby are
required to be approved on behalf of SFSB by the affirmative vote of the holders
of at least a majority of the votes cast of SFSB Common Stock at a meeting
called for such purpose. No other vote of the stockholders of SFSB is required
by law, SFSB's Articles of Incorporation, SFSB's Bylaws or otherwise to approve
this Agreement and the transactions contemplated hereby.
(b) SFSB has received a written opinion of RP Financial, LC, dated the
date hereof, with respect to the fairness of the Merger Consideration to be
received by the stockholders of SFSB pursuant to this Agreement from a financial
point of view.
2.21 Disclosures. No representation or warranty contained in Article II
of this Agreement, and no statement contained in the SFSB Disclosure Schedules,
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements herein or therein not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF LAUREL AND THE BANK
References to "Laurel Disclosure Schedules" shall mean all of the
disclosure schedules required by this Article III, dated as of the date hereof
and referenced to the specific sections and subsections of Article III of this
Agreement, which have been delivered by Laurel to SFSB. Laurel and the Bank
hereby represent and warrant to SFSB and Xxxxxxx Savings as follows as of the
date hereof:
19
3.01 Corporate Organization.
(a) Laurel is a corporation duly organized, validly existing and in
good standing under the laws of the Commonwealth of Pennsylvania. Laurel has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted and is duly licensed
or qualified to do business and is in good standing in each jurisdiction in
which the nature of the business conducted by it or the character or location of
the properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed, qualified
or in good standing would not have a material adverse effect on the ability of
Laurel to consummate the transactions contemplated hereby. Laurel is registered
as a bank holding company under the Bank Holding Company Act of 1956.
(b) The Bank is duly organized, validly existing and in good standing
under the laws of the Commonwealth of Pennsylvania and is a wholly-owned
subsidiary of Laurel. The Bank has the corporate power and authority to own or
lease all of its properties and assets and to conduct its business as it is now
being conducted and is duly licensed or qualified to do business and is in good
standing in each jurisdiction in which the nature of the business conducted by
it or the character or location of the properties and assets owned or leased by
it makes such licensing or qualification necessary, except where the failure to
be so licensed, qualified or in good standing would not have a material adverse
effect on the ability of Laurel and the Bank to consummate the transactions
contemplated hereby.
(c) Interim will be at the Effective Time an interim stock corporation
duly organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania. Interim will not engage in any business other than
in connection with the transactions contemplated by this Agreement and the
Agreement of Merger and Interim will have no material obligations or liabilities
other than its obligations hereunder.
3.02 Authority; No Violation.
(a) Laurel and the Bank have full corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby in accordance with the terms hereof. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly approved by the Board of Directors of Laurel
and the Bank, and no other corporate proceedings on the part of Laurel or the
Bank are necessary to consummate the transactions so contemplated. This
Agreement has been duly and validly executed and delivered by Laurel and the
Bank and constitutes a valid and binding obligation of Laurel and the Bank,
enforceable against them in accordance with and subject to its terms, except as
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally, and except that the
availability of equitable remedies (including, without limitation, specific
performance) is within the discretion of the appropriate court.
20
(b) At the Effective Time, Interim will have full corporate power and
authority to execute and deliver the Agreement of Merger and to consummate the
transactions contemplated thereby in accordance with the terms thereof. At the
Effective Time, the execution and delivery of the Agreement of Merger by Interim
and the consummation of the transactions contemplated thereby will have been
duly and validly approved by the Board of Directors of Interim and by Bank as
the sole stockholder of Interim, and no other corporate proceedings on the part
of Interim are necessary to consummate the transactions so contemplated. The
Agreement of Merger, upon its execution and delivery by Interim, will constitute
a valid and binding obligation of Interim, enforceable against it in accordance
with and subject to its terms, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally, and except that the availability of equitable
remedies (including, without limitation, specific performance) is within the
discretion of the appropriate court.
(c) None of the execution and delivery of this Agreement by Laurel and
the Bank, the execution and delivery of the Agreement of Merger by Interim, the
consummation by Laurel and the Bank of the transactions contemplated hereby in
accordance with the terms hereof, the consummation by Interim of the
transactions contemplated by the Agreement of Merger, compliance by Laurel or
the Bank with any of the terms or provisions hereof or compliance by Interim
with any terms or provisions of the Agreement of Merger, will (i) violate any
provision of the Articles of Incorporation, Charter or Bylaws of Laurel, the
Bank or Interim, (ii) assuming that the consents and approvals set forth below
are duly obtained, violate any statute, code, ordinance, rule, regulation,
judgment, order, writ, decree or injunction applicable to Laurel, the Bank or
Interim or any of their respective properties or assets, or (iii) violate,
conflict with, result in a breach of any provisions of, constitute a default (or
an event which, with notice or lapse of time, or both, would constitute a
default) under, result in the termination of, accelerate the performance
required by, or result in the creation of any lien, security interest, charge or
other encumbrance upon any of the respective properties or assets of Laurel, the
Bank or Interim under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which Laurel, the Bank or Interim is a party, or by
which any of their respective properties or assets may be bound or affected,
except, with respect to (ii) and (iii) above, such as individually or in the
aggregate will not have a material adverse effect on the business, operations,
assets or financial condition of Laurel and the Bank taken as a whole and which
will not prevent or delay the consummation of the transactions contemplated
hereby. Except for consents and approvals of or filings or registrations with or
notices to the Secretary of State of the Commonwealth of Pennsylvania, the FDIC,
the Pennsylvania Department of Banking and the Board of Governors of the Federal
Reserve System ("Board"), no consents or approvals of or filings or
registrations with or notices to any federal, state, municipal or other
governmental or regulatory commission, board, agency or non-governmental third
party are required on behalf of Laurel, the Bank and Interim in connection with
(a) the execution and delivery of this Agreement by Laurel and the Bank or the
execution and delivery of the Agreement of Merger by Interim and (b) the
completion by Laurel and the Bank of the transactions contemplated hereby or the
completion by Interim of the transactions contemplated by the Agreement of
Merger.
21
(d) As of the date hereof, neither Laurel nor the Bank is aware of any
reasons relating to Laurel or the Bank why all consents and approvals shall not
be procured from all regulatory agencies having jurisdiction over the
transactions contemplated by this Agreement as shall be necessary for
consummation of the transactions contemplated hereby. The Bank's most recent
Community Reinvestment Act rating is not less than satisfactory.
3.03 Financial Statements.
(a) Laurel has previously delivered to SFSB copies of the consolidated
statements of financial condition of Laurel as of June 30, 2002 and 2001, and
the related consolidated statements of earnings, comprehensive income,
stockholders' equity and cash flows for the years ended June 30, 2002, 2001 and
2000, in each case accompanied by the audit report of KMPG LLP, independent
certified public accountants. The consolidated statements of financial condition
of Laurel referred to herein, as well as the financial statements to be
delivered pursuant to Section 4.04 hereof (including the related notes, where
applicable) fairly present or will fairly present, as the case may be, the
consolidated financial condition of Laurel as of the respective dates set forth
therein, and the related consolidated statements of earnings, stockholders'
equity and cash flows (including the related notes, where applicable) fairly
present or will fairly present, as the case may be, the results of the
consolidated earnings, stockholders' equity and cash flows of Laurel for the
respective periods or as of the respective dates set forth therein (it being
understood that Laurel's interim financial statements are not audited and are
not prepared with all related notes but reflect all adjustments which are, in
the opinion of Laurel, necessary for a fair presentation of such financial
statements).
(b) Each of the financial statements referred to in this Section 3.03
(including the related notes, where applicable) has been or will be, as the case
may be, prepared in accordance with generally accepted accounting principles
consistently applied during the periods involved. The books and records of
Laurel and the Bank are being maintained in material compliance with applicable
legal and accounting requirements and reflect only actual transactions.
(c) Except to the extent reflected, disclosed or reserved against in
the consolidated financial statements referred to in the first sentence of this
Section 3.03 or the notes thereto or liabilities incurred since June 30, 2002 in
the ordinary course of business and consistent with past practice, neither
Laurel nor the Bank has any obligation or liability, whether absolute, accrued,
contingent or otherwise, which would have a material adverse effect on the
ability of Laurel and the Bank to consummate the transactions contemplated
hereby.
3.04 Absence of Certain Changes or Events. Since June 30, 2002, (i)
Laurel and the Bank have conducted their businesses in the ordinary and usual
course and (ii) no event has occurred or circumstances arisen that, individually
or in the aggregate, has had or is reasonably likely to have a Material Adverse
Effect.
22
3.05 Ability to Pay Merger Consideration. Laurel will have available to
it, immediately prior to the Effective Time sufficient cash to pay the Aggregate
Merger Consideration to stockholders of SFSB as set forth in Section 1.07.
3.06 Legal Proceedings. Neither Laurel nor the Bank is a party to any,
and there are no pending or, to the best knowledge of Laurel and the Bank,
threatened legal, administrative, arbitration or other proceedings, claims,
actions or governmental investigations of any nature against Laurel or the Bank,
except such proceedings, claims actions or governmental investigations which in
the good faith judgment of Laurel and the Bank will not have a material adverse
effect on the ability of Laurel and the Bank to consummate the transactions
contemplated hereby.
3.07 Broker Fees. Other than fees payable to Xxxxxx & Company, Inc.,
neither Laurel nor the Bank, nor any of their respective directors or officers,
has employed any consultant, broker or finder or incurred any liability for any
consultant's, broker's or finder's fees or commissions in connection with any of
the transactions contemplated by this Agreement.
3.08 Certain Information. None of the information relating to Laurel or
the Bank supplied or to be supplied by Laurel to SFSB expressly for inclusion in
the Proxy Statement, as of the date such Proxy Statement is mailed to
shareholders of SFSB and up to and including the date of the meeting of
shareholders to which such Proxy Statement relates, will contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
3.09 Disclosures. No representation or warranty contained in Article
III of this Agreement, and no statement contained in the Laurel Disclosure
Schedules, contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements herein or therein not
misleading.
3.10 Deposit Insurance. The deposit accounts of the Bank are insured by
the Savings Association Insurance Fund administered by the FDIC to the maximum
extent permitted by the Federal Deposit Insurance Act, as amended ("FDIA"), and
the Bank has paid all premiums and assessments required by the FDIA and the
regulations thereunder.
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ARTICLE IV
COVENANTS OF THE PARTIES
4.01 Conduct of the Business of SFSB and Xxxxxxx Savings. During the
period from the date hereof to the Effective Time, SFSB and Xxxxxxx Savings
shall conduct their respective businesses and engage in transactions permitted
hereunder or only in the ordinary course and consistent with past practice. SFSB
and Xxxxxxx Savings shall use all reasonable efforts to (i) preserve their
business organization intact, (ii) keep available for themselves, Laurel and the
Bank the present services of the employees of SFSB and Xxxxxxx Savings, and
(iii) preserve for themselves, Laurel and the Bank the goodwill of their
customers and others with whom business relationships exist.
4.02 Negative Covenants. SFSB agrees that from the date hereof to the
Effective Time, except as otherwise approved by Laurel in writing or as
permitted or required by this Agreement, SFSB will not and SFSB will not permit
Xxxxxxx Savings to:
(i) amend or change any provision of its Articles of Incorporation,
Charter or Bylaws; unless such amendment shall be necessary to complete the
Merger, Bank Merger or Liquidation;
(ii) change the number of shares of its authorized or issued capital
stock (except upon the exercise of SFSB Options as set forth in SFSB Disclosure
Schedule 2.02) or issue or grant any option, warrant, call, commitment,
subscription, award, right to purchase or agreement of any character relating to
the authorized or issued capital stock of SFSB, or any securities convertible
into shares of such capital stock, or split, combine or reclassify any shares of
its capital stock, or redeem or otherwise acquire any shares of such capital
stock;
(iii) declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
the capital stock of SFSB; provided however, that if the closing occurs after
Xxxxx 00, 0000, XXXX may pay a cash dividend per share of SFSB Common Stock
determined as follows: the sum of (i) $.90 divided by 365 multiplied by (ii) the
number of days between March 31, 2003 and the date of the Closing;
(iv) grant any severance or termination pay (other than pursuant to
binding contracts, plans, or policies of SFSB or Xxxxxxx Savings in effect on
the date hereof and disclosed to Laurel on SFSB Disclosure Schedule 2.12(a)) to,
or enter into or amend any employment, consulting or compensation agreement
with, any of its directors, officers or employees; or award any increase in
compensation or benefits to its directors, officers or employees except for
salary increases and bonuses payable in the ordinary course of business and
consistent with past practices as set forth in SFSB Disclosure Schedule
4.02(iv);
24
(v) enter into or modify (except as may be required by applicable law
or as may be required by Section 4.12 hereof, with the prior written consent of
Laurel, which shall not be unreasonably withheld) any pension, retirement, stock
option, stock purchase, stock grant, stock appreciation right, savings, profit
sharing, deferred compensation, consulting, bonus, group insurance or other
employee benefit, incentive or welfare contract, plan or arrangement, or any
trust agreement related thereto, in respect of any of its directors, officers or
employees; or make any contributions to any defined contribution plan or any
defined benefit pension or retirement plan other than in the ordinary course of
business consistent with past practice and policies;
(vi) purchase or otherwise acquire, or sell or otherwise dispose of,
any assets or incur any liabilities other than in the ordinary course of
business consistent with past practice and policies;
(vii) enter into any new capital commitments or make any capital
expenditures in excess of $25,000 each, and $75,000 in the aggregate, other than
pursuant to binding commitments existing on the date hereof and expenditures
necessary to maintain existing assets in good repair;
(viii) file any applications or make any contract with respect to
branching or site location or relocation;
(ix) make any material change in its accounting methods or practices,
other than changes required by changes in applicable laws or regulations or
generally accepted accounting principles, or change any of its methods of
reporting income and deductions for federal income tax purposes, except as
required by changes in applicable laws or regulations;
(x) change its lending, investment, deposit or asset and liability
management or other banking policies in any material respect except as may be
required by applicable law or regulations;
(xi) enter into any futures contract, option or other agreement or take
any other action for purposes of hedging the exposure of its interest-earning
assets and interest-bearing liabilities to changes in market rates of interest;
(xii) incur any liability for borrowed funds (other than in the case of
deposits, federal funds purchased, securities sold under agreements to
repurchase and FHLB advances in the ordinary course of business) or place upon
or permit any lien or encumbrance upon any of its properties or assets, except
liens of the type permitted in the exceptions to Section 2.13(a).
(xiii) acquire in any manner whatsoever (other than to realize upon
collateral for a defaulted loan) any business or entity;
(xiv) engage in any transaction with an Affiliate;
25
(xv) discharge or satisfy any material lien or encumbrance or pay any
material obligation or liability (absolute or contingent) other than at
scheduled maturity or in the ordinary course of business;
(xvi) enter or agree to enter into any agreement or arrangement
granting any preferential right to purchase any of its assets or rights or
requiring the consent of any party to the transfer and assignment of any such
assets or rights;
(xvii) invest in any investment securities other than United States
government agencies and insured certificates of deposit with a maturity of two
(2) years or less or federal funds;
(xviii) make or commit to make any commercial real estate loan to any
one person or entity (together with "affiliates of such person or entity) in
excess of $300,000 in the aggregate;
(xix) take any action that would result in any of its representations
and warranties contained in Article II of this Agreement not being true and
correct in any material respect at the Effective Time; or
(xx) agree to do any of the foregoing.
4.03 No Solicitation. SFSB and Xxxxxxx Savings agree that neither they
nor any of their respective officers or directors shall, and that they shall
direct and use their reasonable best efforts to cause each of their employees,
agents and representatives not to, directly or indirectly, initiate, solicit,
encourage or otherwise facilitate any inquiries or the making of any proposal or
offer with respect to a merger, reorganization, share exchange, consolidation or
similar transaction involving, or any purchase of all or substantially all of
the assets of SFSB or more than 9.9% of the outstanding equity securities of
SFSB or Xxxxxxx Savings (any such proposal or offer being hereinafter referred
to as an "Acquisition Proposal"). SFSB and Xxxxxxx Savings further agree that
neither SFSB nor Xxxxxxx Savings nor any of their respective officers and
directors shall, and that they shall direct and use their reasonable best
efforts to cause their employees, agents and representatives not to, directly or
indirectly, engage in any negotiations concerning, or provide any confidential
information or data to, or have any discussions with, any person relating to an
Acquisition Proposal, or otherwise facilitate any effort or attempt to make or
implement an Acquisition Proposal; provided, however, that nothing contained in
this Agreement shall prevent SFSB or Xxxxxxx Savings from (A) complying with its
disclosure obligations under federal or state law; (B) providing information in
response to a request therefor by a person who has made an unsolicited bona fide
written Acquisition Proposal if SFSB receives from the person so requesting such
information an executed confidentiality agreement; (C) engaging in any
negotiations or discussions with any person who has made an unsolicited bona
fide written Acquisition Proposal or (D) recommending such an Acquisition
Proposal to the stockholders of SFSB, if and only to the extent that, (i) in
each such case referred to in clauses (B), (C) or (D) above, the SFSB Board of
Directors determines in good faith (after consultation with outside legal
counsel) that such action would be required in order for its directors to comply
with their respective fiduciary duties under applicable law and (ii) in the case
referred to
26
in clause (D) above, the SFSB Board of Directors determines in good faith (after
consultation with its financial advisor) that such Acquisition Proposal, if
accepted, is reasonably likely to be consummated, taking into account all legal,
financial and regulatory aspects of the proposal and the person making the
proposal and would, if consummated, result in a transaction more favorable to
SFSB's stockholders from a financial point of view than the Merger. SFSB and
Xxxxxxx Savings agree that they will immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any parties
conducted heretofore with respect to any Acquisition Proposals. SFSB and Xxxxxxx
Savings agree that they will notify Laurel immediately if any such inquiries,
proposals or offers are received by, any such information is requested from, or
any such discussions or negotiations are sought to be initiated or continued
with, any of its representatives, and the substance thereof and will keep Laurel
informed of any developments with respect thereto immediately following the
occurrence thereof.
4.04 Current Information. During the period from the date hereof to the
Effective Time, each party will cause one or more of its designated
representatives to confer from time to time, as either party may reasonably
request, with representatives of the other party regarding its business,
operations, prospects, assets and financial condition and matters relating to
the completion of the transactions contemplated hereby. Within 25 days after the
end of each month, each party shall provide the other party with a statement of
financial condition and a statement of earnings, without related notes, for such
month prepared in accordance with past practices as presented to its Board of
Directors. On a monthly basis, SFSB and Xxxxxxx Savings shall xxxxxxx Xxxxxx
with a report, in such detail as reasonably requested by Laurel, indicating all
loans which have been originated, purchased or sold during such period as well
as all applications for loans which have been received for processing ("pipeline
report") subject to SFSB and Xxxxxxx Savings maintaining the confidentiality of
the parties associated with such applications.
4.05 Access to Properties and Records; Confidentiality.
(a) SFSB and Xxxxxxx Savings shall permit Laurel and its
representatives reasonable access, upon advance notice, to their properties, and
shall disclose and make available to Laurel all books, papers and records
relating to the assets, stock ownership, properties, operations, obligations and
liabilities of SFSB and Xxxxxxx Savings, including, but not limited to, all
books of account (including the general ledger), tax records, minute books of
directors' and stockholders' meetings (excluding minutes related to the
transactions contemplated by this Agreement or other Acquisition Proposals),
organizational documents, bylaws, material contracts and agreements, filings
with any regulatory authority, accountants' work papers, litigation files, plans
affecting employees, and any other business activities or prospects in which
Laurel may have a reasonable interest. SFSB and Xxxxxxx Savings shall not be
required to provide access to or to disclose information where such access or
disclosure would violate or prejudice the rights of any customer or would
contravene any law, rule, regulation, order or judgment. SFSB and Xxxxxxx
Savings will use their best efforts to obtain waivers of any such restriction
and in any event make appropriate substitute disclosure arrangements under
circumstances in which the restrictions of the preceding sentence apply. SFSB
and Xxxxxxx Savings shall make its directors, officers, employees and agents
27
and authorized representatives (including counsel and independent public
accountants) available to confer with Laurel and its representatives, provided
that such access shall be reasonably related to the transactions contemplated
hereby and not unduly interfere with normal operations.
(b) All information furnished previously in connection with the
transactions contemplated by this Agreement or pursuant hereto shall be treated
as the sole property of the party furnishing the information until consummation
of the Merger and, if such Merger shall not occur, the party receiving the
information shall, at the request of the party which furnished such information,
either return to the party which furnished such information or destroy all
documents or other materials containing, reflecting or referring to such
information; shall use its best effort to keep confidential all such
information; shall use such information only for the purpose of consummating the
transactions contemplated by this Agreement; and shall not directly or
indirectly use such information for any competitive or commercial purposes. The
obligation to keep such information confidential shall continue for three years
from the date the proposed Merger is abandoned but shall not apply to (i) any
information which (A) the party receiving the information can establish by
convincing evidence was already in its possession prior to the disclosure
thereof to it by the party furnishing the information; (B) was then generally
known to the public; (C) became known to the public through no fault of the
party receiving the information; or (D) was disclosed to the party receiving the
information by a third party not bound by an obligation of confidentiality; or
(ii) disclosures pursuant to a legal requirement or in accordance with an order
of a court of competent jurisdiction.
(c) No investigation by either of the parties hereto or their
respective representatives shall affect the representations, warranties,
covenants or agreements of the other party set forth herein
4.06 Regulatory Matters.
(a) Each of SFSB, Xxxxxxx Savings, Laurel and the Bank shall cooperate
with each other and use their best efforts to prepare all necessary
documentation to effect all necessary filings and to obtain all necessary
permits, consents, approvals and authorizations of all third parties and
governmental bodies necessary to consummate the transactions contemplated by
this Agreement as soon as practicable. The parties shall each have the right to
review and approve in advance all information relating to the other, as the case
may be, and any of their respective subsidiaries, which appears in any filing
made with, or written material submitted to, any third party or governmental
body in connection with the transactions contemplated by this Agreement.
(b) Each of the parties will furnish each other with all information
concerning themselves, their directors, officers and stockholders and such other
matters as may be necessary or advisable in connection with any statement or
application made by or on behalf of them to any governmental body in connection
with the Merger and the other transactions, applications or filings contemplated
by this Agreement.
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(c) Each of the parties will promptly furnish each other with copies of
written communications received by them from, or delivered by any of the
foregoing to, any governmental body in connection with the Merger and the other
transactions, applications or filings contemplated by this Agreement.
(d) Each of SFSB and Laurel agrees that if such party shall become aware prior
to the mailing date of the Proxy Statement of any information furnished by such
party that would cause any of the statements in the Proxy Statement to be false
or misleading with respect to any material fact, or to omit to state any
material fact necessary to make the statements therein not false or misleading,
to promptly inform the other parties thereof and to take the necessary steps to
correct the Proxy Statement.
4.07 Approval of Stockholders. SFSB will (a) take all steps necessary
to duly call, give notice of, convene and hold a meeting of its stockholders as
soon as reasonably practicable, but in no event later than January 31, 2003, for
the purposes of securing the adoption of such stockholders of this Agreement and
the Agreement of Merger, (b) unless the Board of Directors of SFSB makes a good
faith determination, upon consideration of the advice of outside counsel that
such recommendation would be deemed to constitute a breach of their fiduciary
duties under applicable Pennsylvania law, recommend to its stockholders the
approval of this Agreement and the Agreement of Merger and the transactions
contemplated hereby and thereby, and use its best efforts to obtain, as promptly
as practicable, such approvals, and (c) cooperate and consult with Laurel and
the Bank with respect to the foregoing matters.
4.08 Further Assurances. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use its best efforts to take, or
cause to be taken, all reasonable action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
satisfy the conditions to closing contained herein and to consummate and make
effective the transactions contemplated by this Agreement and the Agreement of
Merger. In case, at any time after the Effective Time, any further action is
necessary or desirable to carry out the purposes of this Agreement, the proper
officers and directors of each party to this Agreement shall take all such
necessary action. Nothing in this section shall be construed to require any
party to participate in any threatened or actual legal, administrative or other
proceedings (other than proceedings, actions or investigations to which it is a
party or subject or threatened to be made a party or subject) in connection with
consummation of the transactions contemplated by this Agreement unless such
party shall consent in advance and in writing to such participation and the
other party agrees to reimburse and indemnify such party for and against any and
all costs and damages related thereto.
4.09 Disclosure Supplements. From time to time prior to the Effective
Time, each party will promptly supplement or amend its respective Disclosure
Schedules delivered pursuant hereto with respect to any matter hereafter arising
which, if existing, occurring or known as of the date hereof, would have been
required to be set forth or described in such Schedules or which is necessary to
correct any information in such Schedules which has been rendered inaccurate
thereby. No
29
supplement or amendment to such Schedules shall have any effect for the purpose
of determining satisfaction of the conditions set forth in Article V or the
compliance by SFSB and Xxxxxxx Savings with the covenants set forth in Section
4.01 hereof.
4.10 Public Announcements. The parties hereto shall approve in advance
the substance of and cooperate with each other in the development and
distribution of all news releases and other public disclosures with respect to
this Agreement or any of the transactions contemplated hereby, except as may be
otherwise required by law or regulation and as to which the parties releasing
such information have used their best efforts to discuss with the other parties
in advance.
4.11 Failure to Fulfill Conditions. In the event that either of the
parties hereto determines that a condition to its respective obligations to
consummate the transactions contemplated hereby cannot be fulfilled and that it
will not waive that condition, it will promptly notify the other party. Laurel
and SFSB will promptly inform the other of any facts applicable to them, or
their respective directors or officers, that would be likely to prevent or
materially delay approval of the Merger by any governmental authority or which
would otherwise prevent or materially delay completion of the Merger.
4.12 Certain Post-Merger Agreements.
The parties hereto agree to the following arrangements following the
Effective Time:
(a) Transferred Employees. Subject to the provisions of this Section
4.12, all Employees immediately prior to the Effective Time who are employed by
Laurel or the Bank immediately following the Effective Time ("Transferred
Employees") will be covered by the employee benefit plans of Laurel and/or the
Bank on substantially the same basis as any employee of Laurel and/or the Bank
in a comparable position. Notwithstanding the foregoing, Laurel may determine to
continue any of the SFSB or Xxxxxxx Savings' Benefits Plans for Transferred
Employees in lieu of offering participation in the benefit plans of Laurel
and/or the Bank providing similar benefits (e.g., medical and hospitalization
benefits), to terminate any of the SFSB or Xxxxxxx Savings' Benefits Plans, or
to merge any such Benefits Plans with the benefit plans of Laurel and/or the
Bank, provided the result is the provision of benefits to Transferred Employees
that are substantially similar to the benefits provided to the employees of
Laurel and/or the Bank generally. Except as specifically provided in this
Section 4.12 and as otherwise prohibited by law, Transferred Employees' service
with SFSB or Xxxxxxx Savings shall be recognized as service with Laurel or the
Bank for purposes of eligibility to participate and vesting, if applicable (but
not for purposes of benefit accrual) under the benefit plans of Laurel and/or
the Bank subject to applicable break-in-service rules.
(b) Health Plans. Laurel will use its best efforts to cause any
pre-existing condition, limitation or exclusion in its medical, long-term
disability and life insurance plans to not apply to Transferred Employees or
their covered dependents who are covered under a medical or hospitalization
indemnity plan maintained by SFSB or Xxxxxxx Savings on the Effective Time and
30
who then change coverage to the Laurel's or the Bank's medical or
hospitalization indemnity health plan at the time such Transferred Employees are
first given the option to enroll.
(c) Employment, Severance and Change in Control Agreements. Any officer
or employee of SFSB or Xxxxxxx Savings who has an employment, severance or
change in control agreement ("Executive Agreements") with SFSB or Xxxxxxx
Savings (each a "Contract Officer") which is disclosed on SFSB Disclosure
Schedule 2.12(a) shall receive from SFSB or Xxxxxxx Savings as of the Effective
Time, the severance or termination payments provided for in their respective
agreements ("Contract Payments") and as described and quantified in reasonable
detail on SFSB Disclosure Schedule 4.12(c). As a condition to receiving their
Contract Payments, each Contract Officer shall sign and deliver to SFSB and
Laurel a release agreement in the form reasonably requested by Laurel.
Notwithstanding anything contained herein to the contrary, (i) SFSB represents
and warrants that the amounts set forth in SFSB Disclosure Schedule 4.12(c) (A)
have been calculated in a manner consistent with, and according to, the
provisions of the Executive Agreements (copies of which have been furnished by
SFSB to Laurel) and (B) represent good faith estimates of the amounts payable as
of the future date specified therein based upon assumptions regarding interest
rates, compensation or the assumed Effective Time, which have been set forth in
SFSB Disclosure Schedule 4.12(c), and (ii) the amounts payable under such
Executive Agreements will not exceed, individually or in the aggregate, the
amounts set forth in SFSB Disclosure Schedule 4.12(c) (except to the extent that
any good faith estimates set forth in SFSB Disclosure Schedule 4.12(c) change
due to changes in interest rates, compensation or the assumed Effective Time).
To the extent that an employee of SFSB or Xxxxxxx Savings is entitled to the
continued receipt of health insurance, life insurance, disability insurance,
automobile allowance or other similar fringe benefits pursuant to an Executive
Agreement, and such employee becomes a director, officer, employee or consultant
of Laurel or the Bank following the Effective Time and as a result becomes
entitled to receive the same fringe benefits in his or her capacity as a
director, officer, employee or consultant of Laurel or the Bank, then the fringe
benefits provided to such person shall be deemed to be provided in connection
with such person's service as a director, officer, employee or consultant of
Laurel or the Bank for so long as such person serves in such capacity and shall
be in lieu of, and not in addition to (and for the sole purpose to avoid
duplication of benefits), the same fringe benefits that would have otherwise
been provided pursuant to the Executive Agreement.
(d) SFSB ESOP. (i) Each participant in the SFSB Employee Stock
Ownership Plan ("SFSB ESOP") not fully vested will become fully vested in his or
her SFSB ESOP account as of the Effective Time. As soon as practicable after the
execution of this Agreement, to the extent necessary, SFSB, Xxxxxxx Savings and
Laurel will cooperate to cause the SFSB ESOP to be amended and other action
taken in a manner reasonably acceptable to SFSB and Laurel to provide that the
SFSB ESOP will terminate upon the Effective Time in accordance with its terms in
effect as of the date of this Agreement. Upon the repayment of the SFSB ESOP
loan, the remaining shares in the Loan Suspense Account will be allocated (to
the extent permitted by Sections 401(a), 415 or 4975 of the Code and the
applicable laws and regulations including, without limitation, the applicable
provisions of ERISA) to SFSB ESOP participants (as determined under the terms of
the SFSB ESOP). Between the date hereof and the Effective Time, the existing
SFSB ESOP indebtedness
31
shall be paid in the ordinary course of business consistent with past practice
and SFSB or Xxxxxxx Savings shall make such contributions to the SFSB ESOP as
necessary to fund such payments. Any indebtedness of the SFSB ESOP remaining as
of the Effective Time shall be repaid from the Trust associated with the SFSB
ESOP through application of the Merger Consideration received by the SFSB ESOP.
SFSB and Laurel agree that, subject to the conditions described herein, as soon
as practicable after the Effective Time and repayment of the SFSB ESOP loan,
participants in the SFSB ESOP will receive lump sum distributions of their SFSB
ESOP accounts.
(ii) Following the date of this Agreement, SFSB and Xxxxxxx Savings
shall file a request for a favorable determination letter upon SFSB ESOP Plan
termination with the IRS with regard to the qualification of the SFSB ESOP. SFSB
and Laurel will cooperate in submitting appropriate requests for any such
determination letter to the IRS and will use their best efforts to seek the
issuance of such letter as soon as practicable following the date hereof. SFSB
and Laurel will adopt such additional amendments to the SFSB ESOP as may be
reasonably required by the IRS as a condition to granting such determination
letter provided that such amendments do not substantially change the terms
outlined herein or would result in a material adverse change in the business,
operations, assets, financial condition or prospects of SFSB or Xxxxxxx Savings
or result in an additional material liability to Laurel or the Bank.
(iii) As of and following the Effective Time, Laurel shall cause the
SFSB ESOP to be maintained for the exclusive benefit of employees and other
persons who were participants or beneficiaries therein prior to the Effective
Time and proceed with termination of the SFSB ESOP through distribution of its
assets in accordance with its terms subject to the amendments described herein
and as otherwise may be required to comply with applicable law or to obtain a
favorable determination from the IRS as to the continuing qualified status of
the SFSB ESOP, provided, however, that no such distributions of the SFSB ESOP
shall occur until a favorable termination ruling has been received from the IRS.
(e) Advisory Board of Directors. At the Effective Time, the five
directors of SFSB as of the date hereof will be appointed to a newly created
Advisory Board for Laurel for a period of one year. Each advisory board member
shall be compensated for their services in an amount of $750 per month.
(f) Employee Severance. Any person who is currently serving as an
employee of either SFSB or Xxxxxxx Savings and continues as such immediately
prior to the Effective Time (other than those employees covered by a written
employment or severance agreement set forth in SFSB Disclosure Schedule 4.12(c))
whose employment is discontinued by Laurel or the Bank within one year after the
Effective Time (unless termination of such employment is for Cause (as defined
below)) shall be entitled to a severance payment from the Bank in an amount
equal to their then current salary of two weeks for every year of service at
SFSB or Xxxxxxx Savings, up to a maximum severance of twenty-six (26) weeks.
Notwithstanding the foregoing, SFSB or Xxxxxxx Savings shall make such severance
payments to any such employees as of the Effective Time in the event that Laurel
or the Bank notifies SFSB or Xxxxxxx Savings that such notified employees shall
not be
32
employed after the Effective Time. For purposes of this Section 4.12(f), "Cause"
shall mean termination because of the employee's personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform stated duties or willful violation or any
law, rule or regulation (other than traffic violations or similar offenses).
(g) Consulting Agreements. Effective as of the Effective Time, Laurel
agrees that either it and/or the Bank will enter into consulting agreements as
set forth in Exhibit 4.12(g) with each of Xxxxxxx X. Xxxxxx and Xxxxxx X.
Xxxxxxxxx providing for (i) consulting fees payable to each individual as set
forth in SFSB Disclosure Schedule 4.12(g) for a period of one year in equal
monthly installments, and (ii) medical and dental benefits at no cost to the
aforementioned individuals for a period of three years for Xxxxxxx X. Xxxxxx and
a period of one year for Xxxxxx X. Xxxxxxxxx, and, to the extent permissible,
continued eligibility to participate in such medical and dental programs
thereafter until attainment of age 65 at her own expense in the case of Xx.
Xxxxxx.
(h) Retention Bonuses. Following execution of this Agreement in order
to insure an orderly Closing and transition period, SFSB shall identify
individual employees of SFSB (other than employees who have an Executive
Agreement) who will be entitled to receive a "retention" bonus in the event that
such employee remains an employee and satisfactorily fulfills the duties and
responsibilities of his or her position through the Effective Time, to be paid
by SFSB immediately prior to the Effective Time provided, however, that such
bonus payments shall not exceed with respect to a given individual $10,000 and
$50,000 in the aggregate.
(i) SERP. Immediately prior to the Effective Time, Xxxxxxx Savings
shall terminate the Supplemental Executive Retirement Plan (the "SERP") and make
the payments to each of Xx. Xxxxxx and Xx. Xxxxxxxxx set forth on SFSB
Disclosure Schedule 4.12(i). SFSB Disclosure Schedule 4.12(i) details all
amounts payable pursuant to the SERP. Except as indicated on SFSB Disclosure
Schedule 4.12(i), amounts payable under the SERP are accrued on SFSB's financial
statements to the extent required by generally accepted accounting principles.
(j) Directors Retirement Plan. Immediately prior to the Effective Time,
Xxxxxxx Savings shall terminate the Xxxxxxx Savings' Directors Consultation and
Retirement Plan ("Retirement Plan") and make a lump sum payment as of the
Effective Time to each of SFSB's directors equal to the present value of future
benefits due thereunder payable based on the yield on the two-year U.S. Treasury
Xxxx five (5) business days prior to the Effective Time as reported in the Wall
Street Journal, Eastern Edition ("Calculation Rate"). SFSB Disclosure Schedule
4.12(j) details the methodology for determining such payments. Notwithstanding
anything contained herein to the contrary, (i) SFSB represents and warrants that
the amounts set forth in SFSB Disclosure Schedule 4.12(j) (A) have been
calculated in a manner consistent with, and according to, the provisions of the
Retirement Plan (a copy of which has been furnished by SFSB to Laurel) and (B)
represent good faith estimates of the amounts payable as of the future date
specified therein based upon assumptions regarding the Calculation Rate or the
assumed Effective Time, which have been set forth in SFSB Disclosure Schedule
4.12(j), and (ii) the amounts payable under the Retirement Plan will not exceed,
individually or in the aggregate, the amounts set forth in SFSB Disclosure
Schedule 4.12(j) (except
33
to the extent that any good faith estimates set forth in SFSB Disclosure
Schedule 4.12(j) change due to changes in the Calculation Rate or the assumed
Effective Time).
(k) Indemnification. From and after the Effective Time through the
sixth anniversary of the Effective Time, Laurel shall indemnify and hold
harmless each present and former director, officer and employee of SFSB and
Xxxxxxx Savings determined as of the Effective Time (the "Indemnified Parties")
against any costs or expenses (including reasonable attorneys' fees), judgments,
fines, losses, claims, damages or liabilities (collectively, "Costs") incurred
in connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, arising out of matters
existing or occurring at or prior to the Effective Time, whether asserted or
claimed prior to, at or after the Effective Time (collectively, "Claims"), to
the fullest extent to which such Indemnified Parties were entitled under
Pennsylvania law, the Articles of Incorporation, Charter and Bylaws of SFSB and
Xxxxxxx Savings as in effect on the date hereof, provided, however, that all
rights to indemnification in respect to any claim asserted or made within such
period shall continue until the final disposition of such claim.
Any Indemnified Party wishing to claim indemnification under this
Section 4.12(k), upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify Laurel, but the failure to so notify shall
not relieve Laurel of any liability it may have to such Indemnified Party if
such failure does not materially prejudice Laurel. In the event of any such
claim, action, suit, proceeding or investigation (whether arising before or
after the Effective Time), (i) Laurel shall have the right to assume the defense
thereof and Laurel shall not be liable to such Indemnified Parties for any legal
expenses of other counsel or any other expenses subsequently incurred by such
Indemnified Parties in connection with the defense thereof, except that if
Laurel elects not to assume such defense or counsel for the Indemnified Parties
advises that there are issues which raise conflicts of interest between Laurel
and the Indemnified Parties, the Indemnified Parties may retain counsel which is
reasonably satisfactory to Laurel, and Laurel shall pay, promptly as statements
therefor are received, the reasonable fees and expenses of such counsel for the
Indemnified Parties (which may not exceed one firm in any jurisdiction unless
the use of one counsel for such Indemnified Parties would present such counsel
with a conflict of interest), (ii) the Indemnified Parties will cooperate in the
defense of any such matter, and (iii) Laurel shall not be liable for any
settlement effected without its prior written consent, which consent shall not
be withheld unreasonably.
In the event that Laurel or any of its respective successors or assigns
(i) consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers all or substantially all of its properties and assets to any
person, then, and in each such case, the successors and assigns of such entity
shall assume the obligations set forth in this Section 4.12(k), which
obligations are expressly intended to be for the irrevocable benefit of, and
shall be enforceable by, each of the Indemnified Parties.
(l) Insurance. Laurel and the Bank shall maintain a directors' and
officers' liability insurance policy covering the Indemnified Parties' Costs in
connection with any Claims for a period of three (3) years after the Effective
Time at annual premiums no greater than 150% of the annual
34
premium of the directors' and officers' liability insurance maintained by SFSB
and Xxxxxxx Savings as of the date hereof. With the prior written consent of
Laurel, such insurance policy may be acquired by SFSB prior to the Effective
Time.
(m) SFSB Options and Restricted Stock. Immediately upon the Effective
Time, all SFSB Options and shares of SFSB Common Stock awarded under the RSP
shall immediately vest and be canceled and exchanged for a payment to be made to
the recipient in accordance with Section 1.07.
4.13 Vacation. Xx. Xxxxxx and Xx. Xxxxxxxxx shall be paid by Xxxxxxx
Savings for all unused vacation leave as of the Effective Time, in accordance
with SFSB Disclosure Schedule 4.13.
4.14. Certain Policies. Prior to the Effective Time, each of SFSB and
Xxxxxxx Savings shall, consistent with generally accepted accounting principles,
the rules and regulations of the Securities and Exchange Commission and
applicable banking laws and regulations, modify or change its loan, real estate
owned, accrual, reserve, tax, litigation and real estate valuation policies and
practices (including loan classifications and levels of reserves) so as to be
applied on a basis that is consistent with that of Laurel and the Bank;
provided, however, that no such modifications or changes need be made prior to
the satisfaction of the conditions set forth in Section 5.02; and further
provided that in any event, no accrual or reserve made by SFSB or Xxxxxxx
Savings pursuant to this Section 4.13 shall constitute or be deemed to be a
Material Adverse Effect or breach, violation of or failure to satisfy any
representation, warranty, covenant, agreement, condition or other provision of
this Agreement or otherwise be considered in determining whether any such
Material Adverse Effect or breach, violation or failure to satisfy shall have
occurred; and provided, further, that any such changes shall not result in
SFSB's filing of materially inconsistent documents or reports with the
Securities and Exchange Commission or any other governmental authority. The
recording of any such adjustments shall not be deemed to imply any misstatement
of previously furnished financial statements or information and shall not be
construed as concurrence of the SFSB or its management with any such
adjustments.
ARTICLE V
CLOSING CONDITIONS
5.01 Conditions to the Parties' Obligations Under This Agreement. The
respective obligations of the parties under this Agreement shall be subject to
the fulfillment at or prior to the Effective Time of the following conditions:
(a) All necessary regulatory, governmental or third party approvals,
waivers, clearances, authorizations and consents (including without limitation
the requisite approval and/or non-objection, if any, of the Board, the FDIC, the
Department and the OTS required to consummate the transactions contemplated
hereby) shall have been obtained without any term or condition which, in the
reasonable opinion of Laurel, would materially impair the value of SFSB and
Xxxxxxx Savings to Laurel and the Bank or materially adversely affect the terms
of the Merger as they relate to the
35
stockholders of SFSB; all conditions required to be satisfied prior to the
Effective Time by the terms of such approvals and consents shall have been
satisfied; and all waiting periods in respect thereof shall have expired.
(b) All corporate action necessary to authorize the execution and
delivery of this Agreement and the Agreement of Merger and consummation of the
transactions contemplated hereby and thereby shall have been duly and validly
taken by Laurel, the Bank, SFSB and Xxxxxxx Savings, including approval by the
requisite vote of the stockholders of SFSB of this Agreement and the Agreement
of Merger.
(c) No order, judgment or decree shall be outstanding against a party
hereto or a third party that would have the effect of preventing completion of
the Merger; no suit, action or other proceeding shall be pending or threatened
by any governmental body in which it is sought to restrain or prohibit the
Merger; and no suit, action or other proceeding shall be pending before any
court or governmental agency in which it is sought to restrain or prohibit the
Merger or obtain other substantial monetary or other relief against one or more
of the parties hereto in connection with this Agreement and which Laurel, the
Bank, SFSB or Xxxxxxx Savings determines in good faith, based upon the advice of
their respective counsel, makes it inadvisable to proceed with the Merger
because any such suit, action or proceeding has a significant potential to be
resolved in such a way as to deprive the party electing not to proceed of any of
the material benefits to it of the Merger.
5.02. Conditions to the Obligations of Laurel and the Bank Under This
Agreement. The obligations of Laurel and the Bank under this Agreement shall be
further subject to the satisfaction, at or prior to the Effective Time, of the
following conditions, any one or more of which may be waived by Laurel and the
Bank:
(a) Each of the obligations of SFSB and Xxxxxxx Savings required to be
performed by them at or prior to the Closing pursuant to the terms of this
Agreement shall have been duly performed and complied with in all material
respects and the representations and warranties of SFSB and Xxxxxxx Savings
contained in this Agreement shall have been true and correct as of the date
hereof and as of the Effective Time as though made at and as of the Effective
Time, except (i) as to any representation or warranty which specifically relates
to an earlier date, or (ii) where the facts which caused the failure of any
representation or warranty to be so true and correct would not, either
individually or in the aggregate, constitute a Material Adverse Effect, and
Laurel and the Bank shall have received a certificate to that effect signed by
the President of SFSB and Xxxxxxx Savings.
(b) SFSB and Xxxxxxx Savings shall have furnished Laurel and the Bank
with such certificates of its officers or others and such other documents to
evidence fulfillment of the conditions set forth in this Section 5.02 as Laurel
and the Bank may reasonably request.
5.03 Conditions to the Obligations of SFSB and Xxxxxxx Savings Under
this Agreement. The obligations of SFSB and Xxxxxxx Savings under this Agreement
shall be further
36
subject to the satisfaction, at or prior to the Effective Time, of the following
conditions, any one or more of which may be waived by SFSB and Xxxxxxx Savings:
(a) Each of the obligations of Laurel and the Bank required to be
performed by them at or prior to the Closing pursuant to the terms of this
Agreement shall have been duly performed and complied with in all material
respects and the representations and warranties of Laurel and the Bank contained
in this Agreement shall have been true and correct as of the date hereof and as
of the Effective Time as though made at and as of the Effective Time, except (i)
as to any representation or warranty which specifically relates to an earlier
date or (ii) where the facts which caused the failure of any representation or
warranty to be so true and correct would not, either individually or in the
aggregate, constitute a material adverse change in the business, operations,
assets or financial condition of Laurel and the Bank taken as a whole, and SFSB
and Xxxxxxx Savings shall have received a certificate to that effect signed by
the President and Chief Executive Officer of Laurel and the Bank.
(b) Laurel and the Bank shall have furnished SFSB and Xxxxxxx Savings
with such certificates of its officers or others and such other documents to
evidence fulfillment of the conditions set forth in this Section 5.03 as SFSB
and Xxxxxxx Savings may reasonably request.
ARTICLE VI
TERMINATION, AMENDMENT AND WAIVER, ETC.
6.01 Termination. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of this Agreement and the
Agreement of Merger by the stockholders of SFSB:
(a) by mutual written consent of the parties hereto;
(b) by Laurel, the Bank, SFSB or Xxxxxxx Savings (i) if the Effective
Time shall not have occurred on or prior to June 30, 2003, or (ii) if a vote of
the stockholders of SFSB is taken and such stockholders fail to approve this
Agreement and the Agreement of Merger at the meeting of stockholders (or any
adjournment thereof) of SFSB contemplated by Section 4.07 hereof; unless the
failure of such occurrence shall be due to the failure of the party seeking to
terminate this Agreement to perform or observe its agreements in all material
respects set forth herein to be performed or observed by such party at or before
the Effective Time;
(c) by Laurel or SFSB upon written notice to the other 30 or more days
after the date upon which any application for a regulatory or governmental
approval necessary to consummate the Merger and the other transactions
contemplated hereby shall have been denied or withdrawn at the request or
recommendation of the applicable regulatory agency or governmental authority,
unless
37
within such 30-day period a petition for rehearing or an amended application is
filed or noticed, or 30 or more days after any petition for rehearing or amended
application is denied;
(d) by Laurel or the Bank in writing if SFSB or Xxxxxxx Savings has, or
by SFSB or Xxxxxxx Savings in writing if Laurel or the Bank has, breached (i)
any covenant or undertaking contained herein or in the Agreement of Merger, or
(ii) any representation or warranty contained herein, which, in the case of
either (i) or (ii), breach would have a Material Adverse Effect on the business,
operations, assets or financial condition of SFSB and Xxxxxxx Savings taken as a
whole or Laurel and the Bank taken as a whole, or upon the consummation of the
transactions contemplated hereby, in any case if such breach has not been cured
by the earlier of 30 days after the date on which written notice of such breach
is given to the party committing such breach or the Effective Time;
(e) by Laurel or SFSB in writing, if any of the applications for prior
approval referred to in Section 4.06 hereof are denied or are approved
contingent upon the satisfaction of any condition or requirement which, in the
reasonable opinion of the Board of Directors of Laurel or SFSB as applicable,
would materially impair the value of SFSB and Xxxxxxx Savings taken as a whole
to Laurel, or would materially adversely affect the terms of the Merger as they
relate to the stockholders of SFSB and the time period for appeals and requests
for reconsideration has run;
(f) By Laurel if (i) at any time prior to the meeting of stockholders
of SFSB to consider the Agreement, SFSB shall have breached Section 4.03, (ii)
SFSB's Board of Directors shall have failed to make its recommendation referred
to in Section 4.07, withdrawn such recommendation or modified or changed such
recommendation in a manner adverse in any respect to the interests of Laurel and
SFSB stockholders fail to approve this Agreement and the Agreement of Merger at
the meeting of stockholders of SFSB contemplated by Section 4.07 or (iii) SFSB
shall have materially breached its obligations under Section 4.07 by failing to
call, give notice of, convene and hold a meeting of SFSB's stockholders in
accordance with Section 4.07; and
(g) By Laurel if a tender offer or exchange offer for 20% or more of
the outstanding shares of SFSB Common Stock is commenced (other than by Laurel
or the Bank), and the SFSB Board of Directors (i) recommends that the
stockholders of SFSB tender their shares in such tender or exchange offer within
the 10 business day period ("Recommendation Period") specified in Rule 14e-2(a)
under the Exchange Act or (ii) fails to recommend that such stockholders reject
such tender offer or exchange offer within the Recommendation Period and such
stockholders fail to approve this Agreement and the Agreement of Merger at the
meeting of stockholders of SFSB contemplated by Section 4.07.
6.02 Effect of Termination. In the event of termination of this
Agreement by Laurel, the Bank, SFSB or Xxxxxxx Savings as provided above, this
Agreement shall forthwith become void (other than Sections 4.05(b) and 7.01
hereof, which shall remain in full force and effect) and there shall be no
further liability on the part of the parties or their respective officers or
directors except for the liability of the parties under Sections 4.05(b) and
7.01 hereof and except for liability for any breach of this Agreement.
38
6.03 Amendment, Extension and Waiver. Subject to applicable law, at any
time prior to the consummation of the Merger, whether before or after approval
thereof by the stockholders of SFSB, the parties may (a) amend this Agreement
and the Agreement of Merger, (b) extend the time for the performance of any of
the obligations or other acts of the other parties hereto, (c) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto, or (d) waive compliance with any of the
agreements or conditions contained herein; provided, however, that after any
approval of the Merger by the stockholders of SFSB, there may not be, without
further approval of such stockholders, any amendment or waiver of this Agreement
or the Agreement of Merger which modifies the amount of the Merger Consideration
to be delivered to stockholders of SFSB. This Agreement and the Agreement of
Merger may not be amended except by an instrument in writing signed on behalf of
each of the parties hereto. Any agreement on the part of a party hereto to any
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party, but such waiver or failure to insist on strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure.
ARTICLE VII
MISCELLANEOUS
7.01 Expenses; Termination Fee.
(a) Each party hereto shall bear and pay all costs and expenses
incurred by it in connection with the transactions contemplated by this
Agreement, including fees and expenses of its own financial consultants,
accountants and counsel, provided that in the event of a termination of this
Agreement resulting from a willful breach of a representation, warranty,
covenant or undertaking, the party committing such breach shall be liable for
$200,000 to the other party, plus the reasonable expenses of the other party
without prejudice to any other rights or remedies as may be available to the
non-breaching party, including without limitation any rights under Section
7.01(b) hereof.
(b) Notwithstanding anything to the contrary herein, SFSB shall pay
Laurel the sum of $454,000 (the "Termination Fee") if this Agreement is
terminated as follows:
(i) if this Agreement is terminated by Laurel pursuant to
Section 6.01(f)(i) and (iii) or (g); or
(ii) if this Agreement is terminated by (A) Laurel pursuant to
Section 6.01(d) or (B) by either Laurel or SFSB pursuant to Section
6.01(b)(i) or 6.01(f)(ii) and with respect to such termination events
under this Section 7.01(b)(ii) an Acquisition Proposal shall have been
publicly announced or otherwise communicated or made known to the
senior
39
management of SFSB or the SFSB Board of Directors (or any person shall
have publicly announced, communicated or made known an intention,
whether or not conditional, to make an Acquisition Proposal) at any
time after the date of this Agreement and prior to the date of
termination; or
(iii) if this Agreement is terminated by either Laurel or SFSB
pursuant to Section 6.01(b)(ii) and an Acquisition Proposal shall have
been publicly announced or otherwise communicated or made known to the
senior management of SFSB or the SFSB Board of Directors (or any
person shall have publicly announced, communicated or made known an
intention, whether or not conditional, to make an Acquisition
Proposal) at any time after the date of this Agreement and prior to
the taking of the vote of the stockholders of SFSB at a meeting
thereof to consider this Agreement as contemplated by Section 4.07.
Any amount that becomes payable pursuant to Section 7.01(b)(i) or (ii) shall be
paid by wire transfer of immediately available funds to an account designated by
Laurel no later than the second Business Day following such termination. With
respect to the Termination Fee that becomes payable pursuant to Section
7.01(b)(iii), $250,000 shall be paid by wire transfer of immediately available
funds to an account designated by Laurel no later than the second Business Day
following such termination and the remaining $204,000 shall not be paid unless
and until such time that SFSB executes a definitive agreement related to an
Acquisition Proposal within eighteen months of the termination of this
Agreement.
(c) SFSB and Laurel agree that the agreement contained in paragraph (b)
of this Section 7.01 is an integral part of the transactions contemplated by
this Agreement, that without such agreement Laurel and the Bank would not have
entered into this Agreement and that such amounts do not constitute a penalty or
liquidated damages in the event of a breach of this Agreement by SFSB and
Xxxxxxx Savings. If SFSB or Xxxxxxx Savings fail to pay Laurel the amounts due
under paragraph (b) above within the time periods specified therein, SFSB shall
pay the costs and expenses (including reasonable legal fees and expenses)
incurred by Laurel in connection with any action in which Laurel prevails,
including the filing of any lawsuit, taken to collect payment of such amounts,
together with interest on the amount of any such unpaid amounts at the prime
lending rate prevailing during such period as published in The Wall Street
Journal, calculated on a daily basis from the date such amounts were required to
be paid until the date of actual payment.
(d) If this Agreement is terminated by Laurel pursuant to Section
6.01(f)(ii) and no Acquisition Proposal has been made prior to such termination,
SFSB shall pay to Laurel, reasonable documented fees and expenses, but in no
event in excess of $200,000, within five Business Days after written demand for
payment is made by Laurel.
(e) Amounts paid pursuant to Section 7.01(a) or (d) shall not be in
addition to the amounts paid pursuant to Section 7.01(b). The maximum amount
payable to Laurel pursuant to this Agreement shall be $454,000.
40
(f) Due to the expenses, direct and indirect, incurred by SFSB in
negotiating this Agreement and in taking steps to effect the transactions
contemplated hereby, the loss by it of other opportunities, and as a material
inducement for SFSB agreeing to enter into this Agreement, Laurel shall pay to
SFSB, reasonable documented fees and expenses, but in no event in excess of
$200,000, within five Business Days after written demand for payment is made by
SFSB, following the occurrence of termination of this Agreement by either party
if required regulatory approvals are not received on or before June 30, 2003,
provided such failure to receive such regulatory approvals is not either a
result of any breach by SFSB or Xxxxxxx Savings or a consequence of facts or
circumstances relating to SFSB or Xxxxxxx Savings.
If demand for payment of fees and expenses is made pursuant to this
Section 7.01(e) and payment is timely made, then SFSB will not have any other
rights or claims against Laurel under this Agreement, it being agreed that the
acceptance of fees and expenses under this Section 7.01(e) will constitute the
sole and exclusive remedy of SFSB against Laurel.
7.02 Survival. The respective representations, warranties and covenants
of the parties to this Agreement shall not survive the Effective Time but shall
terminate as of the Effective Time, except for the provisions of Sections 1.07,
1.08, 4.12 and 7.01 hereof.
7.03 Notices. All notices or other communications hereunder shall be in
writing and shall be deemed given if delivered personally, sent by overnight
express or mailed by prepaid registered or certified mail (return receipt
requested) or by cable, telegram or telex addressed as follows:
(a) If to Laurel, to:
Laurel Capital Group, Inc.
0000 Xxxxx Xxx Xxxx
Xxxxxxx Xxxx, Xxxxxxxxxxxx 00000-0000
Attn: Xxxxx X. Xxxx
President and Chief Executive Officer
Copy to:
Elias, Matz, Xxxxxxx and Xxxxxxx L.L.P.
000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxx X. Xxxxx, Esq.
Xxxxx X. Xxxxxxxx, Esq.
41
(b) If to SFSB, to:
SFSB Holding Company
000 Xxxxxxxxx Xxxxxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx
President
Copy to:
Xxxxxxx Spidi & Xxxxx, PC
0000 Xxx Xxxx Xxxxxx, XX
Xxxxx 000 Xxxx
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxxx Xxxxx, Esq.
or such other address as shall be furnished in writing by any party, and any
such notice or communication shall be deemed to have been given as of the date
so mailed.
7.04 Parties in Interest. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns; provided, however, that neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any party hereto
without the prior written consent of the other party and, except as provided in
Section 4.12 hereof or as otherwise expressly provided herein, that nothing in
this Agreement is intended to confer, expressly or by implication, upon any
other person any rights or remedies under or by reason of this Agreement.
7.05 Complete Agreement. This Agreement and the Agreement of Merger,
including the documents and other writings referred to herein or therein or
delivered pursuant hereto or thereto, contain the entire agreement and
understanding of the parties with respect to their subject matter and shall
supersede all prior agreements and understandings between the parties, both
written and oral, with respect to such subject matter. There are no
restrictions, agreements, promises, representations, warranties, covenants or
undertakings between the parties other than those expressly set forth herein or
therein.
7.06 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
each of which shall be deemed an original.
7.07 Governing Law. This Agreement shall be governed by the laws of the
Commonwealth of Pennsylvania, without giving effect to the principles of
conflicts of laws thereof.
7.08 Headings. The Article and Section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, Laurel, the Bank, SFSB and Xxxxxxx Savings have
caused this Agreement to be executed by their duly authorized officers as of the
day and year first above written.
LAUREL CAPITAL GROUP, INC.
Attest:
By: /s/Xxxx X. Xxxxxx, Xx. By: /s/Xxxxx X. Xxxx
--------------------------------- -------------------------------------
Xxxx X. Xxxxxx, Xx. Xxxxx X. Xxxx
Secretary President and Chief Executive Officer
LAUREL SAVINGS BANK
Attest:
By: /s/Xxxx X. Xxxxxx, Xx. By: /s/Xxxxx X. Xxxx
--------------------------------- -------------------------------------
Xxxx X. Xxxxxx, Xx. Xxxxx X. Xxxx
Secretary President and Chief Executive Officer
SFSB HOLDING COMPANY
Attest:
By: /s/Xxxxxx X. Xxxxxxxxx By: /s/Xxxxxxx X. Xxxxxx
--------------------------------- -------------------------------------
Xxxxxx X. Xxxxxxxxx Xxxxxxx X. Xxxxxx
Secretary President
XXXXXXX FEDERAL SAVINGS BANK
Attest:
By: /s/Xxxxxx X. Xxxxxxxxx By: /s/Xxxxxxx X. Xxxxxx
--------------------------------- -------------------------------------
Xxxxxx X. Xxxxxxxxx Xxxxxxx X. Xxxxxx
Secretary President
