AGREEMENT AND PLAN OF MERGER
dated as of
December 16, 2007
by and between
S&T Bancorp, Inc.
and
IBT Bancorp, Inc.
TABLE OF CONTENTS
Page
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ARTICLE I CERTAIN DEFINITIONS...................................................................................1
Section 1.01 Certain Definitions....................................................................1
ARTICLE II THE MERGER...........................................................................................8
Section 2.01 The Parent Merger......................................................................8
Section 2.02 The Subsidiary Merger..................................................................9
Section 2.03 Effectiveness of the Parent Merger.....................................................9
Section 2.04 Effective Date and Effective Time......................................................9
ARTICLE III CONSIDERATION; EXCHANGE PROCEDURES..................................................................9
Section 3.01 Merger Consideration...................................................................9
Section 3.02 Rights as Shareholders; Stock Transfers...............................................13
Section 3.03 Fractional Shares.....................................................................13
Section 3.04 Exchange Procedures...................................................................13
Section 3.05 Anti-Dilution Provisions..............................................................14
Section 3.06 Options...............................................................................15
ARTICLE IV ACTIONS PENDING ACQUISITION.........................................................................15
Section 4.01 Forbearances of Seller................................................................15
Section 4.02 Forbearances of Purchaser; Adverse Actions............................................18
ARTICLE V REPRESENTATIONS AND WARRANTIES.......................................................................18
Section 5.01 Disclosure Schedules..................................................................18
Section 5.02 Representations and Warranties of Seller..............................................18
Section 5.03 Representations and Warranties of Purchaser...........................................35
ARTICLE VI COVENANTS...........................................................................................42
Section 6.01 Reasonable Best Efforts...............................................................42
Section 6.02 Shareholder Approval..................................................................43
Section 6.03 Registration Statement................................................................43
Section 6.04 Press Releases........................................................................44
Section 6.05 Access; Information...................................................................44
Section 6.06 Acquisition Proposals.................................................................45
Section 6.07 Takeover Laws.........................................................................46
Section 6.08 Reports...............................................................................46
Section 6.09 Nasdaq Listing........................................................................47
Section 6.10 Regulatory Applications...............................................................47
Section 6.11 Seller Employees; Director and Management; Indemnification............................47
Section 6.12 Notification of Certain Matters.......................................................51
Section 6.13 Dividend Coordination.................................................................51
Section 6.14 Board of Directors; Advisory Board....................................................51
Section 6.15 Tax Treatment.........................................................................51
Section 6.16 No Breaches of Representations and Warranties.........................................52
Section 6.17 Consents..............................................................................52
Section 6.18 Insurance Coverage....................................................................52
Section 6.19 Correction of Information.............................................................52
Section 6.20 Confidentiality.......................................................................52
Section 6.21 Voting Agreement......................................................................53
Section 6.22 Certain Policies......................................................................53
Section 6.23 Brokerage and Finder's Fees...........................................................53
Section 6.24 Section 16(b) Exemption. .............................................................53
ARTICLE VII CONDITIONS TO CONSUMMATION OF THE MERGER...........................................................54
Section 7.01 Conditions to Each Party's Obligation to Effect the Merger............................54
Section 7.02 Conditions to Obligation of Seller....................................................55
Section 7.03 Conditions to Obligation of Purchaser.................................................56
ARTICLE VIII TERMINATION.......................................................................................56
Section 8.01 Termination...........................................................................56
Section 8.02 Effect of Termination and Abandonment; Enforcement of Agreement.......................59
Section 8.03 Termination Fee.......................................................................59
ARTICLE IX MISCELLANEOUS.......................................................................................60
Section 9.01 Survival..............................................................................60
Section 9.02 Waiver; Amendment.....................................................................60
Section 9.03 Counterparts..........................................................................60
Section 9.04 Governing Law.........................................................................61
Section 9.05 Expenses..............................................................................61
Section 9.06 Notices...............................................................................61
Section 9.07 Entire Understanding; No Third Party Beneficiaries....................................62
Section 9.08 Interpretation; Effect................................................................62
Section 9.09 Waiver of Jury Trial..................................................................63
Section 9.10 Severability..........................................................................63
Section 9.11 Assignment............................................................................63
Section 9.12 Time of Essence.......................................................................63
Exhibit A Form of Voting Agreement
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of December 16, 2007 (this
"Agreement"), is by and between S&T Bancorp, Inc. ("Purchaser"), a Pennsylvania
corporation, having its principal place of business at 000 Xxxxxxxxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxxxxxx 00000-0000, and IBT Bancorp, Inc. ("Seller"), a
Pennsylvania corporation, having its principal place of business in 000 Xxxx
Xxxxxx, Xxxxx, Xxxxxxxxxxxx 00000.
RECITALS
A. The Proposed Transaction. The parties intend to effect a
business combination through the merger of Seller with and into Purchaser (the
"Parent Merger").
B. Board Determination. The respective boards of directors of
Purchaser and Seller have each determined that the Parent Merger and the other
transactions contemplated hereby are consistent with and will further their
respective business strategies and goals and are in the best interests of their
respective shareholders and, therefore, have approved the Parent Merger, this
Agreement and the plan of merger contained in this Agreement.
C. Intended Tax Treatment. The parties intend the Parent Merger
to qualify as a reorganization under Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "Code") and intend for this Agreement to constitute a
"plan of reorganization" for purposes of Sections 354 and 361 of the Code.
NOW, THEREFORE, in consideration of the foregoing premises and of the
mutual covenants, representations, warranties and agreements contained herein,
intending to be legally bound hereby, the parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.01 Certain Definitions. The following terms are used in this
Agreement with the meanings set forth below (such meaning to be equally
applicable to both the singular and plural forms of the term defined):
"Acquisition Proposal" has the meaning set forth in Section 6.06(a).
"Affiliate Agreements" has the meaning set forth in Section
5.02(k)(i)(N).
"Agreement" means this Agreement, as amended or modified from time to
time in accordance with Section 9.02.
"Agreement to Merge" has the meaning set forth in Section 2.02.
"All Cash Election" has the meaning set forth in Section 3.01(b)(ii).
"All Stock Election" has the meaning set forth in Section 3.01(b)(i).
"AMEX" means the American Stock Exchange, Inc.
"Bank" means Irwin Bank, a banking corporation organized under the laws
of the Commonwealth of Pennsylvania and a wholly-owned subsidiary of Seller.
"Banking Department" means the Pennsylvania Department of Banking.
"BHC Act" means the Bank Holding Company Act of 1956, as amended.
"Cash Consideration" has the meaning set forth in Section 3.01(a)(i).
"Cash Proration Factor" has the meaning set forth in Section
3.01(i)(ii).
"Claim" has the meaning set forth in Section 6.11(f).
"Closing" has the meaning set forth in Section 2.04.
"Code" has the meaning set forth in Recital C.
"Company-Owned Stock" shall mean shares of Seller Stock held by Seller
or any of its Subsidiaries or by Purchaser or any of its Subsidiaries, in each
case other than in a fiduciary capacity or as a result of debts previously
contracted in good faith.
"Covered Parties" has the meaning set forth in Section 6.11(g).
"Continuing Employees" has the meaning set forth in Section 6.11(a).
"Disclosure Schedule" has the meaning set forth in Section 5.01.
"Effective Date" means the date on which the Effective Time occurs, as
provided for in Section 2.04.
"Effective Termination Date" has the meaning set forth in Section
8.01(g).
"Effective Time" means the time on the Effective Date as provided for
in Section 2.03.
"Election Deadline" has the meaning set forth in Section 3.01(e).
"Election Form" has the meaning set forth in Section 3.01(e).
"Environmental Laws" means all applicable local, state and federal
environmental, health and safety laws and regulations, including, without
limitation, the Resource Conservation and Recovery Act, the Comprehensive
Environmental Response, Compensation and Liability Act,
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the Clean Water Act, the Federal Clean Air Act, and the Occupational Safety and
Health Act, each as amended, the regulations promulgated thereunder, and their
respective state counterparts.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" has the meaning set forth in Section 5.02(m)(i).
"ERISA Affiliate Plan" means any bonus, deferred compensation,
incentive compensation, stock purchase, stock option, employment or consulting,
severance pay or benefit, change in control, savings, medical, life or other
insurance, vacation, welfare benefit, fringe benefit, cafeteria, profit-sharing
or pension benefit plan, program, agreement or arrangement, and each other
employee benefit or compensation plan, program, agreement or arrangement,
sponsored, maintained or contributed to or required to be contributed to by an
ERISA Affiliate.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
"Exchange Agent" has the meaning set forth in Section 3.04(a).
"FDIA" has the meaning set forth in Section 5.02(c)(iv).
"FDIC" means the Federal Deposit Insurance Corporation.
"FRB" means the Board of Governors of the Federal Reserve System.
"GAAP" means accounting principles generally accepted in the United
States.
"Governmental Authority" means any court, administrative agency or
commission or other federal, state or local governmental authority or
instrumentality.
"Hazardous Material" means, collectively, (i) any "hazardous substance"
as defined by CERCLA, (ii) any "hazardous waste" as defined by the Resource
Conservation and Recovery Act, as amended through the date hereof, and (iii)
other than common office supplies, any pollutant or contaminant or hazardous,
dangerous or toxic chemical, material or substance within the meaning of any
other applicable Federal, state or local law, regulation, ordinance or
requirement (including consent decrees and administrative orders) relating to or
imposing liability or standards of conduct concerning any hazardous, toxic or
dangerous waste, substance or material, all as now in effect.
"Indemnified Parties" has the meaning set forth in Section 6.11(f).
"Information" has the meaning set forth in Section 6.20.
"Insurance Amount" has the meaning set forth in Section 6.11(h).
"IRS" means the Internal Revenue Service.
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The term "knowledge" means, with respect to Seller, actual knowledge
after reasonable investigation by any of the following officers: Messrs. Urtin,
Bowell, Finui, & Xxxxxx, and with respect to Purchaser, any officer with the
title of not less than a senior vice president or in-house counsel, if any.
"Letter of Transmittal" has the meaning set forth in Section 3.04(b).
"Lien" means any charge, mortgage, pledge, security interest,
restriction, claim, lien, or encumbrance of any kind.
"Material Adverse Effect" means, with respect to Seller or Purchaser,
any effect that (i) is material and adverse to the financial position, results
of operations or business of Seller and its Subsidiaries taken as a whole, or
Purchaser and its Subsidiaries taken as a whole, respectively, or (ii) would
materially impair the ability of either Seller or Purchaser to perform its
obligations under this Agreement or otherwise materially threaten or materially
impede the consummation of the Merger and the other transactions contemplated by
this Agreement; provided, however, that in determining whether a Material
Adverse Effect has occurred there shall be excluded any effect on the referenced
party due to (i) any change in banking or similar laws, rules or regulations of
general applicability or interpretations thereof by courts or governmental
authorities to the extent not affecting such party to a materially greater
extent than it affects other Persons in the bank business, (ii) any change in
GAAP or regulatory accounting requirements applicable to financial institutions
or their holding companies generally, (iii) any change, circumstance,
development, condition or occurrence in economic, business, or financial
conditions generally or affecting the banking business including changes in
interest rates to the extent not affecting such party to a materially greater
extent than it affects other Persons in the bank business, (iv) actions and
omissions of a party hereto (or any of its Subsidiaries) taken at the direction
of the other party in contemplation of the transactions contemplated hereby or
taken as specifically provided in this Agreement, (v) the direct effects of the
announcement of this Agreement and compliance with its terms on the operating
performance of the party, including expenses incurred by such party in
consummating the transactions contemplated by this Agreement, and (vi) any item
Previously Disclosed in a party's Disclosure Schedule.
"Material Contracts" has the meaning set forth in Section 5.02(k)(ii).
"Merger" collectively refers to the Parent Merger and the Subsidiary
Merger, as described in Section 2.01 and Section 2.02, respectively.
"Merger Consideration" has the meaning set forth in Section 3.01(a).
"Mixed Election" has the meaning set forth in Section 3.01(b)(iii).
"Nasdaq" means The Nasdaq Stock Market, Inc.
"New Certificates" has the meaning set forth in Section 3.04(a).
"Non-Election Proration Factor" has the meaning set forth in Section
3.01(i)(ii)(B).
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"Non-Election Shares" has the meaning set forth in Section 3.01(a)(iv).
"Old Certificates" has the meaning set forth in Section 3.04(a).
"Parent Merger" has the meaning set forth in Recital A.
"PBCL" means the Pennsylvania Business Corporation Law.
"Person" has the meaning set forth in Section 5.02(k)(i)(D).
"Previously Disclosed" by a party shall mean information set forth in
its Disclosure Schedule. Disclosure of any information, agreement, or other item
in a party's Disclosure Schedule referenced by a particular Section in this
Agreement shall, should the existence of such information, agreement, or other
item or its contents be relevant to any other Section, be deemed to be disclosed
with respect to that Section if such information is explicitly discussed in that
Section of the Disclosure Schedule or if such other Section shall be
cross-referenced in another Section of the Disclosure Schedule.
"Proxy/Prospectus" has the meaning set forth in Section 6.03(a).
"Purchaser Articles" means the Articles of Incorporation of Purchaser,
as amended.
"Purchaser Bank" means S&T Bank, a banking corporation organized under
the laws of the Commonwealth of Pennsylvania and a wholly-owned subsidiary of
Purchaser.
"Purchaser Board" means the Board of Directors of Purchaser.
"Purchaser Bylaws" means the Bylaws of Purchaser, as amended.
"Purchaser Common Stock" means the common stock, $2.50 par value, of
Purchaser.
"Purchaser Preferred Stock" means the preferred stock, no par value, of
Purchaser.
"Purchaser Off Balance Sheet Transaction" has the meaning set forth in
Section 5.03(m).
"Purchaser Ratio" has the meaning set forth in Section 8.01(g)(ii).
"Purchaser SEC Documents" has the meaning set forth in Section
5.03(f)(i).
"Purchaser Share Price" has the meaning set forth in Section 3.01(a).
"Purchaser Welfare Plans" has the meaning set forth in Section 6.11(a).
"Registration Statement" has the meaning set forth in Section 6.03(a).
"Regulatory Authority" shall mean any federal or state governmental
agency or authority charged with the supervision or regulation of financial
institutions and their subsidiaries
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(including their holding companies) or issuers of securities (including, without
limitation, the Banking Department, the FRB, the FDIC and the SEC).
"Representatives" has the meaning set forth in Section 6.06(a).
"Rights" means, with respect to any Person, securities or obligations
convertible into or exercisable or exchangeable for, or giving any Person any
right to subscribe for or acquire, or any options, calls or commitments relating
to, or any stock appreciation right or other instrument the value of which is
determined in whole or in part by reference to the market price or value of,
shares of capital stock of such Person.
"Rights Agreement" means the Rights Agreement, dated as of November 18,
2003, by and between Seller and Registrar and Transfer Company, as Rights Agent.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
"Seller" has the meaning set forth in the preamble to this Agreement.
"Seller Articles" means the Articles of Incorporation of Seller, as
amended.
"Seller Board" means the Board of Directors of Seller.
"Seller Bylaws" means the Bylaws of Seller.
"Seller Common Stock" means the common stock, par value $1.25 per
share, of Seller.
"Seller Financial Statements" has the meaning set forth in Section
5.02(g)(i).
"Seller Insiders" has the meaning set forth in Section 6.24.
"Seller Meeting" has the meaning set forth in Section 6.02.
"Seller Off Balance Sheet Transaction" has the meaning set forth in
Section 5.02(u).
"Seller SEC Documents" has the meaning set forth in Section 5.02(gg).
"Seller Section 16 Information" has the meaning set forth in Section
6.24.
"Seller Stock" means Seller Common Stock.
"Seller Stock Option" has the meaning set forth in Section 3.06.
"Seller Stock Plan" means Seller's 2000 Stock Option Plan and the
agreements thereunder pursuant to which rights to purchase Seller Common Stock
are outstanding immediately prior to the Effective Time.
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"Seller Welfare Plans" has the meaning set forth in Section 6.11(a).
"Shortfall Number" has the meaning set forth in Section 3.01(i)(ii).
"Significant Subsidiary" has the meaning set forth in Section 6.06(a).
"Stock Consideration" has the meaning set forth in Section 3.01(a)(ii).
"Stock Conversion Number" has the meaning set forth in Section 3.01(h).
"Stock Election Number" has the meaning set forth in Section
3.01(i)(i).
"Stock Exchange Ratio" has the meaning set forth in Section 3.01(a).
"Subsidiary", "Subsidiaries" and "Significant Subsidiary" have the
meanings ascribed to them in Rule 1-02 of Regulation S-X of the SEC.
"Subsidiary Merger" has the meaning set forth in Section 2.02.
"Superior Proposal" has the meaning set forth in Section 8.01(f).
"Surviving Corporation" has the meaning set forth in Section 2.01.
"Takeover Laws" has the meaning set forth in Section 5.02(o).
"Takeover Provisions" has the meaning set forth in Section 5.02(o).
"Tax" or "Taxes" means any and all federal, state, local or foreign
taxes, charges, fees, levies, duties, tariffs, imposts, other assessments and
other similar fees or similar charges, however denominated (together with any
and all interest, penalties, additions to tax and additional amounts imposed
with respect thereto),the liability for which is imposed by any government or
taxing authority, by contractual agreement, as a result of being a member of any
affiliated, consolidated, combined, unitary or similar group, as a successor to
or transferee of another person, or otherwise including, without limitation, all
income, franchises, windfall or other profits, gross receipts, license,
property, sales, use, service, service use, capital stock, payroll, employment,
social security, disability, severance, workers' compensation, employer health,
unemployment compensation, net worth, excise, withholding, estimated, severance,
occupation, customs, duties, fees, ad valorem, property, environmental, stamp,
transfer, value added, gains, license, registration, recording and documentation
fees or other taxes, custom duties, fees, assessments or charges of any kind
whatsoever.
"Tax Return" or "Tax Returns" means returns, declarations, reports,
statements, elections, estimates, claims for refund, information returns or
other documents (including any related or supporting schedules, exhibits,
statements or information, any amendment to the foregoing, and any sales and use
and resale certificates) filed or required to be filed in connection with the
determination, assessment, payment, deposit, collection or reporting of any
Taxes of any party or the administration of any laws, regulations or
administrative requirements relating to any Taxes.
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"Termination Fee" has the meaning set forth in Section 8.03(a).
ARTICLE II
THE MERGER
Section 2.01 The Parent Merger. At the Effective Time, (i) Seller shall
be merged with and into Purchaser, and (ii) the separate corporate existence of
Seller shall cease and Purchaser shall survive and continue to exist as a
Pennsylvania corporation (Purchaser, as the surviving corporation in the Parent
Merger, sometimes being referred to herein as the "Surviving Corporation"). The
Purchaser Articles, as in effect immediately prior to the Effective Time, shall
be the Articles of Incorporation of the Surviving Corporation, and the Purchaser
Bylaws, as in effect immediately prior to the Effective Time, shall be the
Bylaws of the Surviving Corporation. Purchaser may at any time prior to the
Effective Time change the method of effecting the Merger (including, without
limitation, the provisions of this Article II) if and to the extent it deems
such change to be necessary, appropriate or desirable; provided, however, that
no such change shall (i) alter or change the amount or kind of consideration to
be issued to holders of Seller Stock as provided for in Article III of this
Agreement (subject to adjustment as provided in Sections 3.05), (ii) adversely
affect the tax treatment of the Parent Merger as a reorganization under Section
368(a) of the Code, or (iii) materially impede or delay consummation of the
transactions contemplated by this Agreement.
Section 2.02 The Subsidiary Merger. As soon as practicable after the
execution and delivery of this Agreement, Purchaser Bank and the Bank shall
enter into an agreement (the "Agreement to Merge"), pursuant to which the Bank
will merge with and into Purchaser Bank (the "Subsidiary Merger"). Upon
consummation of the Subsidiary Merger, the separate corporate existence of the
Bank shall cease and Purchaser Bank shall survive and continue to exist as a
Pennsylvania state banking corporation. (The Parent Merger and the Subsidiary
Merger shall sometimes collectively be referred to herein as the "Merger.")
Section 2.03 Effectiveness of the Parent Merger. Subject to the
satisfaction or waiver of the conditions set forth in Article VII, the Parent
Merger shall become effective upon the occurrence of the filing of articles of
merger with the Department of State of the Commonwealth of Pennsylvania in
accordance with Section 1927 of the PBCL, or such later date and time as may be
set forth in such filings (the time the Merger becomes effective on the
Effective Date being referred to as the "Effective Time").
Section 2.04 Effective Date and Effective Time. Subject to the
satisfaction or waiver of the conditions set forth in Article VII, the closing
of the Merger (the "Closing") will take place at such location as the parties
may mutually agree at 11:00 a.m. on (i) the date designated by Purchaser that is
within thirty (30) days following the satisfaction or waiver of the conditions
set forth in Article VII, other than those conditions that by their nature are
to be satisfied at the Closing (the "Effective Date"); provided, however, that
no such election shall cause the Effective Date to fall after the date specified
in Section 8.01(c) hereof or after the date or dates on which any Regulatory
Authority approval or any extension thereof expires, or (ii) such other date to
which the parties may agree in writing.
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ARTICLE III
CONSIDERATION; EXCHANGE PROCEDURES
Section 3.01 Merger Consideration. (a)Subject to the provisions of this
Agreement, at the Effective Time, automatically by virtue of the Parent Merger
and without any action on the part of any Person, each share of Seller Common
Stock (excluding Company-Owned Stock) issued and outstanding immediately prior
to the Effective Time shall be converted at the election of the holder thereof
(in accordance with the election and allocation procedures set forth in Section
3.01(b), (e), (h), (i) and (j)) into either (i) the right to receive $31.00 in
cash without interest (the "Cash Consideration") or (ii) an amount of Purchaser
Common Stock equal to the quotient, carried to four decimal places (the "Stock
Exchange Ratio") of (A) $31.00 divided by (B) the Purchaser Share Price (as
defined below) of a share of Purchaser Common Stock (the "Stock Consideration");
provided, however, that in no event may the Stock Exchange Ratio be less than
0.93 or greater than 0.97. If the Stock Exchange Ratio otherwise would be less
than 0.93 or greater than 0.97, then 0.93 or 0.97, respectively, shall be used.
For purposes of this Agreement, the "Purchaser Share Price" of the Purchaser
Common Stock shall be the average of the high and low sale prices of Purchaser
Common Stock (as reported on Nasdaq or, if not reported thereon, in another
authoritative source) for each of the twenty (20) trading days immediately
preceding the date of the Seller Meeting (as defined in Section 6.02). The Cash
Consideration and the Stock Consideration are sometimes referred to herein
collectively as the "Merger Consideration."
(b) Election as to Outstanding Seller Common Stock. The
Seller shareholders (excluding Seller and Purchaser) will have the following
options in connection with the exchange of their Seller Common Stock in
connection with the Merger:
(i) AT THE OPTION OF THE HOLDER, all of such holder's
Seller Common Stock deposited with the Exchange Agent shall be converted into
and become the Stock Consideration (such election, the "All Stock Election"),
provided that fractional shares will not be issued and cash (payable by check)
will be paid in lieu thereof as provided in Section 3.03; or
(ii) AT THE OPTION OF THE HOLDER, all of such holder's
Seller Common Stock deposited with the Exchange Agent shall be converted into
and become the Cash Consideration (such election, the "All Cash Election"): or
(iii) AT THE OPTION OF THE HOLDER, such holder's
aggregate number of shares of Seller Common Stock deposited with the Exchange
Agent shall be converted into and become any combination of the Stock
Consideration and the Cash Consideration (such election, the "Mixed Election");
or
(iv) IF NO ELECTION (AS DEFINED IN SECTION 3.01(d)) IS
MADE BY THE HOLDER BY THE ELECTION DEADLINE (AS DEFINED IN SECTION 3.01(e)), all
of such holder's shares of Seller Common Stock shall be deemed to be
"Non-Election Shares" and shall be convertible at the discretion of Purchaser
into either the
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Stock Consideration or the Cash Consideration, or a combination thereof, subject
to the allocation and proration provisions in Section 3.01(g)(h) and (i).
(c) Company-Owned Stock. Each share of Seller Common Stock held
as Company-Owned Stock immediately prior to the Effective Time shall be canceled
and retired at the Effective Time and no consideration shall be issued in
exchange therefor.
(d) Outstanding Purchaser Common Stock. Each share of Purchaser
Common Stock issued and outstanding immediately prior to the Effective Time
shall remain issued and outstanding and unaffected by the Merger.
(e) Procedures for Election. An election form and other
appropriate transmittal materials in such form as Seller and Purchaser shall
mutually agree (the "Election Form") shall be mailed to shareholders of Seller
concurrent with or immediately after the mailing of the Proxy/Prospectus. The
"Election Deadline" shall be the business day prior to the date of the Seller
Meeting, after which an Election may not be made.
(f) Perfection of the Election. An Election shall be considered
to have been validly made by a Seller shareholder only if the Exchange Agent (as
defined in Section 3.04) shall have received an Election Form properly completed
and executed by such shareholder prior to the Election Deadline. Holders of
record of shares of Seller Common Stock who hold such shares as nominees,
trustees or in other representative capacities (a "Representative") may submit
multiple Election Forms, provided that such Representative certifies that each
such Election Form covers all the shares of Seller Common Stock held by that
Representative for a particular beneficial owner.
(g) Revocation of Election. Any Seller shareholder may at any
time prior to the Election Deadline revoke such shareholder's election and
submit a new Election Form in accordance with the procedures in Section 3.01(e)
by providing written notice that is received by the Exchange Agent by 5:00 p.m.,
local time for the Exchange Agent, on the business day prior to the Election
Deadline. Elections may be similarly revoked if the Effective Date does not
occur by September 30, 2008.
(h) Limitations on Stock Consideration. Notwithstanding any
other provision contained in this Agreement (other than Section 3.01(j)), 55% of
the total number of shares of Seller Common Stock outstanding at the Effective
Time (excluding shares of Seller Common Stock to be cancelled as provided in
Section 3.01(b)) (the "Stock Conversion Number") shall be converted into the
Stock Consideration and the remaining outstanding shares of Seller Common Stock
(excluding shares of Seller Common Stock to be canceled as provided in Section
3.01(b)) shall be converted into the Cash Consideration.
(i) Allocation and Proration. To the extent necessary to satisfy
the limitations in Section 3.01(g), within three business days after the
Election Deadline, Purchaser shall cause the Exchange Agent to effect the
allocation among holders of Seller Common Stock of rights to receive the Cash
Consideration and the Stock Consideration as follows:
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(i) If the number of shares of Seller Common Stock with
respect to which holders have elected to receive the Stock Consideration
(whether in All-Stock Elections or in Mixed Elections) (the "Stock Election
Number") exceeds the Stock Conversion Number, then all shares with respect to
which holders have made the Cash Election ("Cash Election Shares") and all
Non-Election Shares shall be converted into the right to receive the Cash
Consideration, and each holder of Stock Election Shares will be entitled to
receive (A) the number of shares of Purchaser Common Stock equal to the product
obtained by multiplying (1) the number of Stock Election Shares held by such
holder by (2) the Stock Exchange Ratio by (3) a fraction the numerator of which
is the Stock Conversion Number and the denominator of which is the Stock
Election Number (the "Stock Proration Factor") and (B) cash in an amount equal
to the product obtained by multiplying (1) the number of Stock Election Shares
held by such holder by (2) the Cash Consideration by (3) one minus the Stock
Proration Factor;
(ii) If the Stock Election Number is less than the Stock
Conversion Number (the amount by which the Stock Conversion Number exceeds the
Stock Election Number being referred to herein as the "Shortfall Number"), then
all Stock Election Shares shall be converted into the right to receive the Stock
Consideration and the Non-Election Shares and Cash Election Shares shall be
treated in the following manner:
(A) if the Shortfall Number is less than or
equal to the number of Non-Election Shares, then all Cash Election Shares shall
be converted into the right to receive the Cash Consideration and each holder of
Non-Election Shares shall receive (1) the number of shares of Purchaser Common
Stock equal to the product obtained by multiplying (x) the number of
Non-Election Shares held by such holder by (y) the Stock Exchange Ratio by (z) a
fraction the numerator of which is the Shortfall Number and the denominator of
which is the total number of Non-Election Shares (the "Non-Election Proration
Factor") and (B) cash in an amount equal to the product obtained by multiplying
(x) the number of Non-Election Shares held by such holder by (y) the Cash
Consideration by (z) one minus the Non-Election Proration Factor; or
(B) if the Shortfall Number exceeds the number
of Non-Election Shares, then all Non-Election Shares shall be converted into the
right to receive the Stock Consideration, and each holder of Cash Election
Shares shall receive (1) the number of shares of Purchaser Common Stock equal to
the product obtained by multiplying (x) the number of Cash Election Shares held
by such holder by (y) the Stock Exchange Ratio by (z) a fraction the numerator
of which is the amount by which the Shortfall Number exceeds the number of
Non-Election Shares and the denominator of which is the total number of Cash
Election Shares (the "Cash Proration Factor") and (B) cash in an amount equal to
the product obtained by multiplying (x) the number of Cash Election Shares held
by such holder by (y) the Cash Consideration by (z) one minus the Cash Proration
Factor.
(iii) Notwithstanding the foregoing, the holders of one
hundred (100) or fewer shares of Seller Common Stock of record on the date of
this Agreement who have elected the All Cash Election shall not be required to
have any of their shares of Seller Common Stock converted into Purchaser Common
Stock.
(j) Tax Treatment of the Parent Merger. For federal income tax
purposes, it is intended that the Parent Merger shall qualify as a
reorganization under Section 368(a) of the
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Code and, notwithstanding anything to the contrary contained herein, if
necessary to assure that the Parent Merger will not fail to satisfy continuity
of interest requirements under applicable federal income tax principles relating
to reorganizations under Section 368(a) of the Code, as reasonably determined by
counsel to Purchaser, Purchaser shall increase the number of outstanding Seller
Common Stock that will be converted into Purchaser Common Stock in the Parent
Merger and reduce the number of outstanding Seller Common Stock that will be
converted into the right to receive cash in the Parent Merger.
Section 3.02 Rights as Shareholders; Stock Transfers. At the Effective
Time, holders of Seller Common Stock shall cease to be, and shall have no rights
as, shareholders of Seller, other than to receive any dividend or other
distribution with respect to such Seller Common Stock with a record date
occurring prior to the Effective Time and the consideration provided under this
Article III. After the Effective Time, there shall be no transfers on the stock
transfer books of Seller or the Surviving Corporation of any shares of Seller
Stock.
Section 3.03 Fractional Shares. Notwithstanding any other provision
hereof, no fractional shares of Purchaser Common Stock and no certificates or
scrip therefor, or other evidence of ownership thereof, will be issued in the
Merger; instead, Purchaser shall pay to each holder of Seller Common Stock who
would otherwise be entitled to a fractional share of Purchaser Common Stock
(after taking into account all Old Certificates (as defined below) delivered by
such holder) an amount in cash (without interest) determined by multiplying such
fractional share of Purchaser Common Stock to which the holder would be entitled
by the Purchaser Share Price.
Section 3.04 Exchange Procedures.
(a) At or immediately prior to the Effective Time, Purchaser
shall deposit in an escrow account of American Stock Transfer and Trust Company
(the "Exchange Agent") at Purchaser Bank, for the benefit of the holders of
certificates formerly representing shares of Seller Common Stock ("Old
Certificates") an amount of cash necessary to make payments of cash to be paid
as part of the Merger Consideration (together with any dividends or
distributions with a record date occurring on or after the Effective Date with
respect thereto without any interest on any such cash, dividends or
distributions) and shall provide the Exchange Agent with the irrevocable
authorization to issue sufficient shares of Purchaser Common Stock ("New
Certificates") for those shares of Seller Common Stock being exchanged for
Purchaser Common Stock in accordance with this Article III.
(b) As promptly as practicable after the Effective Date, but in
any event within five business days after the Effective Date, the Exchange Agent
shall mail to each holder of an Old Certificate that has not previously
submitted an Election Form, transmittal materials (the "Letter of Transmittal")
for use in exchanging their Old Certificates for New Certificates and/or cash.
The Letter of Transmittal will contain instructions with respect to the
surrender of the Old Certificates and the receipt of the Merger Consideration in
exchange therefor. Upon the shareholder's delivery to the Exchange Agent of Old
Certificates owned by such shareholder representing shares of Seller Common
Stock (or an indemnity affidavit reasonably satisfactory to Purchaser and the
Exchange Agent, if any, if such certificates are lost, stolen or destroyed), and
the duly completed Letter of Transmittal, the Exchange Agent shall cause New
Certificates into
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which such shares of Seller Common Stock are converted on the Effective Date to
be delivered to such shareholder and/or any check in respect of cash to be paid
as part of the Merger Consideration (and in respect of any fractional share
interests, dividends or distributions that such shareholder shall be entitled to
receive). No interest will be paid on any such cash to be paid in lieu of
fractional share interests or in respect of dividends or distributions that any
such shareholder shall be entitled to receive pursuant to this Article III.
(c) Notwithstanding the foregoing, neither the Exchange Agent
nor any party hereto shall be liable to any former holder of Seller Common Stock
for any amount properly delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.
(d) No dividends or other distributions with respect to
Purchaser Common Stock with a record date occurring on or after the Effective
Date shall be paid to the record holder of any unsurrendered Old Certificate
representing shares of Seller Common Stock converted in the Merger into the
right to receive shares of such Purchaser Common Stock until the holder thereof
receives New Certificates in exchange therefor in accordance with the procedures
set forth in this Section 3.04. After becoming so entitled in accordance with
this Section 3.04, the record holder thereof also shall be entitled to receive
any such dividends or other distributions, without any interest thereon, which
theretofore had become payable with respect to shares of Purchaser Common Stock,
and which such holder had the right to receive upon surrender of the Old
Certificates.
Section 3.05 Anti-Dilution Provisions. In the event Purchaser changes
the number of shares of Purchaser Common Stock issued and outstanding between
the date hereof and the Effective Date as a result of a stock split, stock
dividend, extraordinary dividend, recapitalization, reclassification, split up,
combination, exchange of shares, readjustment or similar transaction and the
record date therefor shall be prior to the Effective Date, the Stock Exchange
Ratio shall be proportionately adjusted. In addition, in the event Purchaser
enters into an agreement pursuant to which shares of Purchaser Common Stock
would be converted into shares or other securities or obligations of another
corporation, proper provision shall be made in such agreement so that each
Seller shareholder entitled to receive shares of Purchaser Common Stock in the
Merger shall be entitled to receive such number of shares or other securities or
amount or obligations of such other corporation as such shareholder would be
entitled to receive if the Effective Date had occurred immediately prior to the
happening of such event. Furthermore, in any such event, the Cash Consideration
shall also be proportionately adjusted.
Section 3.06 Options. On the Effective Date, whether or not then
exercisable, each outstanding option to purchase shares of Seller Common Stock
under the Seller Stock Plan (each, a "Seller Stock Option") shall be cancelled
and each holder of a Seller Stock Option shall receive from Seller, in
consideration of the cancellation all Seller Stock Options held by such option
holder, an amount equal to the difference between $31.00 and the aggregate
exercise price of such Seller Stock Options. Seller agrees to take the actions
contemplated by Section 11(c)(ii) of the Seller Stock Plan to permit the
cancellation of Seller Stock Options contemplated by the immediately preceding
sentence.
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ARTICLE IV
ACTIONS PENDING ACQUISITION
Section 4.01 Forbearances of Seller. From the date hereof until the
Effective Time, except as expressly contemplated by this Agreement and/or
disclosed on the Disclosure Schedule, without the prior written consent of
Purchaser, which consent shall not be unreasonably withheld, Seller will not,
and will cause each of its Subsidiaries not to:
(a) Ordinary Course. (i) Conduct the business of Seller and
its Subsidiaries other than in the ordinary and usual course or fail to use
reasonable efforts to preserve intact their business organizations and assets
and maintain their rights, franchises and existing relations with customers,
suppliers, employees and business associates, or voluntarily take any action
which, at the time taken, has or is reasonably likely to have an adverse affect
upon Seller's ability to perform any of its material obligations under this
Agreement, or (ii) enter into any new material line of business or change its
lending, investment, underwriting, risk, asset liability management or other
banking and operating policies, except as required by applicable law, regulation
or policies imposed by any Governmental Authority.
(b) Capital Stock. Other than pursuant to Rights as Previously
Disclosed and outstanding on the date hereof, (i) issue, sell or otherwise
permit to become outstanding, or authorize the creation of, any additional
shares of Seller Stock or any Rights, (ii) enter into any agreement with respect
to the foregoing, or (iii) permit any additional shares of Seller Stock to
become subject to new grants of employee or director stock options, other Rights
or similar stock-based employee rights.
(c) Dividends, Etc. (i) Make, declare, pay or set aside for
payment any dividend, other than (A) quarterly cash dividends on Seller Stock in
an amount not to exceed the per share amount declared and paid in its most
recent regular quarterly cash dividend, with record and payment dates to be
coordinated with Purchaser as indicated in Section 6.13 hereof and as Previously
Disclosed, and (B) dividends from wholly-owned Subsidiaries to Seller, or (ii)
directly or indirectly adjust, split, combine, redeem, reclassify, purchase or
otherwise acquire, any shares of its capital stock.
(d) Compensation; Employment Agreements; Etc. Enter into or
amend or renew any employment, consulting, severance or similar agreements or
arrangements with any current or former director, officer, employee or other
service provider of or to Seller or its Subsidiaries, or grant any salary or
wage increase or increase any employee benefit (including incentive or bonus
payments), except (i) for normal individual increases in compensation to
employees in the ordinary course of business consistent with past practice, (ii)
for other changes that are required by applicable law, and (iii) to satisfy
Previously Disclosed contractual obligations existing as of the date hereof.
(e) Benefit Plans. Enter into, establish, adopt or amend
(except as may be required by applicable law) or any pension, retirement, stock
option, stock purchase, savings, profit sharing, deferred compensation,
consulting, bonus, group insurance or other employee benefit, incentive or
welfare contract, plan or arrangement, or any trust agreement (or similar
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arrangement) related thereto, in respect of any current or former director,
officer, employee or other service provider of or to Seller or its Subsidiaries,
or, except as contemplated by Section 3.06 hereof, take any action to accelerate
the vesting or exercisability of stock options, restricted stock or other
compensation or benefits payable thereunder.
(f) Dispositions. Sell, transfer, mortgage, encumber or
otherwise dispose of or discontinue any of its assets, deposits, business or
properties except in the ordinary course of business.
(g) Acquisitions. Other than in the ordinary course of business,
acquire (other than by way of foreclosures or acquisitions of control in a bona
fide fiduciary capacity or in satisfaction of debts previously contracted in
good faith) all or any portion of, the assets, business, deposits or properties
of any other entity.
(h) Governing Documents. Amend the Seller Articles of
Incorporation, Seller Bylaws (or similar governing documents) or the Articles of
Incorporation or Bylaws (or similar governing documents) of any of Seller's
Subsidiaries.
(i) Accounting Methods. Implement or adopt any change in
its accounting principles, practices or methods, other than as may be required
by GAAP or regulatory accounting principles.
(j) Contracts. Except in the ordinary course of business
consistent with past practice, enter into or terminate any Material Contract (as
defined in Section 5.02(k)) or amend or modify in any material respect any of
its existing Material Contracts.
(k) Claims. Except in the ordinary course of business
consistent with past practice, settle any claim, action or proceeding, except
for any claim, action or proceeding that does not create precedent for any other
material claim, action or proceeding and that involves solely money damages in
an amount, individually or in the aggregate for all such settlements, that is
not material to Seller and its Subsidiaries.
(l) Adverse Actions. (i) Take any action that would, or is
reasonably likely to, prevent or impede the Parent Merger from qualifying as a
reorganization within the meaning of Section 368(a) of the Code; or (ii)
knowingly take any action that is intended or is reasonably likely to result in
(A) any of its representations and warranties set forth in this Agreement being
or becoming untrue in any material respect at any time at or prior to the
Effective Time, (B) any of the conditions to the Merger set forth in Article VII
not being satisfied, or (C) a material violation of any provision of this
Agreement except, in each case, as may be required by applicable law or
regulation.
(m) Risk Management. Except pursuant to applicable law or
regulation or by the FDIC or other Regulatory Authority, (i) implement or adopt
any material change in its interest rate risk management and other risk
management policies, procedures or practices; (ii) fail to follow its existing
policies or practices with respect to managing its exposure to interest rate and
other risk; or (iii) fail to use commercially reasonable means to avoid any
material increase in its aggregate exposure to interest rate risk and other
risk.
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(n) Indebtedness. Incur any indebtedness for borrowed money
in excess of $100,000 other than in the ordinary course of business consistent
with past practice.
(o) Capital Expenditures. Make any capital expenditure or
commitments with respect thereto in an amount in excess of $25,000 for any item
or project, or $200,000 in the aggregate for any related items or projects,
except as have been previously committed to prior to the date hereof.
(p) New Offices, Office Closures, Etc. Close or relocate any
offices at which business is conducted or open any new offices or ATMs, except
as Previously Disclosed.
(q) Taxes. (1) Fail to prepare and file or cause to be prepared
and filed in a manner consistent with past practice all Tax Returns (whether
separate or consolidated, combined, group or unitary Tax Returns that include
Seller or any of its Subsidiaries) that are required to be filed (with
extensions) on or before the Effective Date, (2) make, change or revoke any
material election in respect of Taxes, enter into any material closing
agreement, settle any material claim or assessment in respect of Taxes or offer
or agree to do any of the foregoing or surrender its rights to do any of the
foregoing or to claim any refund in respect of Taxes, (3) file an amended Tax
Return, or (4) fail to maintain the books, accounts and records of Seller or any
of its Subsidiaries in accordance with past custom and practice, including
without limitation, making the proper accruals for Taxes, bonuses, vacation and
other liabilities and expenses.
(r) Commitments. Agree or commit to do any of the foregoing.
Section 4.02 Forbearances of Purchaser; Adverse Actions. From the date
hereof until the Effective Time, except as expressly contemplated by this
Agreement, without the prior written consent of Seller, which consent shall not
be unreasonably withheld, Purchaser will not, and will cause each of its
Subsidiaries not to: (i) Take any action that would, or is reasonably likely to,
prevent or impede the Parent Merger from qualifying as a reorganization within
the meaning of Section 368(a) of the Code; or (ii) knowingly take any action
that is intended or is reasonably likely to result in (A) any of its
representations and warranties set forth in this Agreement being or becoming
untrue in any material respect at any time at or prior to the Effective Time,
(B) any of the conditions to the Merger set forth in Article VII not being
satisfied, or (C) a material violation of any provision of this Agreement
except, in each case, as may be required by applicable law or regulation.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Section 5.01 Disclosure Schedules. On or prior to the date hereof,
Purchaser has delivered to Seller a schedule and Seller has delivered to
Purchaser a schedule (each respectively, its "Disclosure Schedule") setting
forth, among other things, items, the disclosure of which are necessary or
appropriate either in response to an express disclosure requirement contained in
a provision hereof or as an exception to one or more representations or
warranties contained in Section 5.02 or 5.03 or to one or more of its respective
covenants contained in Article IV and Article VI; provided, however, the mere
inclusion of an item in a Disclosure
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Schedule as an exception to a representation or warranty shall not be deemed an
admission by a party that such item represents a material exception, fact, event
or circumstance, or that such item is reasonably likely to have, or result in, a
Material Adverse Effect on the party making the representation.
Section 5.02 Representations and Warranties of Seller. Subject to
Section 5.01 and except as Previously Disclosed in a paragraph of its Disclosure
Schedule corresponding to the relevant paragraph below, Seller hereby represents
and warrants to Purchaser:
(a) Organization, Standing and Authority. Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the Commonwealth of Pennsylvania and is duly licensed or qualified to do
business in any foreign jurisdictions where its ownership or leasing of property
or assets or the conduct of its business requires it to be so qualified except
where the failure to be so licensed or qualified would not constitute a Material
Adverse Effect. Seller is registered as a financial holding company under the
BHC Act. The Bank is a Pennsylvania state bank chartered under the Pennsylvania
Banking Code of 1965, as amended, is a non-member bank of the Federal Reserve
and is duly organized, validly existing and in good standing under the laws of
the Commonwealth of Pennsylvania.
(b) Capital Structure of Seller. The authorized capital stock
of Seller consists of 50,000,000 shares of Seller Common Stock, par value $1.25
per share, of which 5,852,924 shares are issued and outstanding as of November
30, 2007. The outstanding shares of Seller Common Stock have been duly
authorized, are validly issued and outstanding, fully paid and nonassessable,
and are not subject to any preemptive rights (and were not issued in violation
of any preemptive rights). Except pursuant to this Agreement, the Rights
Agreement, or as Previously Disclosed, as of the date hereof, (i) there are no
shares of Seller Common Stock authorized and reserved for issuance, (ii) Seller
does not have any Rights issued or outstanding with respect to Seller Common
Stock, and (iii) Seller does not have any commitment to authorize, issue or sell
any Seller Common Stock. 142,690 shares of Seller Common Stock are issuable and
reserved for issuance upon exercise of Seller Stock Options as the date hereof.
Seller has taken all action necessary so that the execution of this Agreement
and the consummation of the transactions contemplated hereby do not and will not
result in the grant of any rights to any person under the Rights Agreement or
enable or require the Rights thereunder to be exercised, distributed or
triggered.
(c) Subsidiaries.
(i) (A) Seller has Previously Disclosed a list of
all of its Subsidiaries, together with the jurisdiction of organization of each
such Subsidiary, (B) Seller owns, directly or indirectly, all the issued and
outstanding equity securities of each of its Subsidiaries, (C) no equity
securities of any of Seller's Subsidiaries are or may become required to be
issued (other than to it or its wholly-owned Subsidiaries) by reason of any
Right or otherwise, (D) there are no contracts, commitments, understandings or
arrangements by which any of such Subsidiaries is or may be bound to sell or
otherwise transfer any equity securities of any such Subsidiaries (other than to
it or its wholly-owned Subsidiaries), (E) there are no contracts, commitments,
understandings, or arrangements relating to its rights to vote or to dispose of
such securities and
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(F) all the equity securities of each Subsidiary held by Seller or its
Subsidiaries are fully paid and nonassessable and are owned by Seller or its
Subsidiaries free and clear of any Liens.
(ii) Seller does not own beneficially, directly or
indirectly, any equity securities or similar interests of any Person, or any
interest in a partnership or joint venture of any kind, other than its
Subsidiaries.
(iii) Each of Seller's Subsidiaries has been duly
organized and is validly existing in good standing under the laws of the
jurisdiction of its organization, and is duly qualified to do business and is in
good standing in the jurisdictions where its ownership or leasing of property or
the conduct of its business requires it to be so qualified except where the
failure to be so licensed or qualified would not constitute a Material Adverse
Effect.
(iv) The Bank is an "insured bank" as defined in the
Federal Deposit Insurance Act (the "FDIA") and applicable regulations
thereunder.
(d) Corporate Power. Each of Seller and its Subsidiaries
has the requisite corporate power and authority to carry on its business as it
is now being conducted and to own all its properties and assets. Seller has the
corporate power and authority to execute and deliver and, subject to the
satisfaction of the conditions set forth at Section 7.01(a) - (c), perform its
obligations under this Agreement, including the execution and filing of the
articles of merger with the Department of State of the Commonwealth of
Pennsylvania. The Bank has the corporate power and prior to the effective time
of the Subsidiary Merger will have the corporate authority to consummate the
Subsidiary Merger and the Agreement to Merge in accordance with the terms of
this Agreement.
(e) Corporate Authority; Authorized and Effective Agreement.
Subject to the affirmative vote of 66 2/3% of the outstanding shares of Seller
Common Stock by the holders of Seller Common Stock entitled to vote thereon
(excluding shares of Seller Common Stock held by Purchaser if Purchaser holds 5%
or more of the outstanding shares of Seller Common Stock as of the record date
for the Seller Meeting or as of immediately prior to the Effective Date), which
is the only shareholder vote required to approve this Agreement pursuant to the
PBCL and the Seller Articles, this Agreement and the transactions contemplated
hereby have been authorized by all necessary corporate action of Seller and the
Seller Board prior to the date hereof. This Agreement is a valid and legally
binding obligation of Seller, enforceable in accordance with its terms (except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general equity
principles).
(f) Regulatory Filings; No Defaults.
(i) No consents or approvals of, or filings or
registrations with, any Governmental Authority or with any third party are
required to be made or obtained by Seller or any of its Subsidiaries in
connection with the execution, delivery or performance by Seller of this
Agreement or to consummate the Merger except for (A) filings of applications,
notices and the Agreement to Merge with, or requests for approvals and waivers
from, as applicable, federal and state banking authorities, (B) filings with
state and federal securities authorities, (C) the filing of
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the articles of merger with the Department of State of the Commonwealth of
Pennsylvania pursuant to Section 1927 of the PBCL, (D) the approval of the
Parent Merger by the holders of 66 2/3% of the outstanding shares of Seller
Common Stock entitled to vote thereon (excluding shares of Seller Common Stock
held by Purchaser if Purchaser holds 5% or more of the outstanding shares of
Seller Common Stock as of the record date for the Seller Meeting or as of
immediately prior to the Effective Date), and (E) the third party consents set
forth on the Disclosure Schedule under Section 5.02(f). As of the date hereof,
Seller is not aware of any reason relating to Seller why the approvals set forth
in Section 7.01(b) will not be received without the imposition of a condition,
restriction or requirement of the type described in Section 7.01(b).
(ii) Subject to receipt of the regulatory and
shareholder approvals and third party consents referred to above and the
expiration of certain regulatory waiting periods, and required filings under
federal and state securities laws, the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby do
not and will not (A) constitute a breach or violation of, or a default under, or
give rise to any Lien, any acceleration of remedies or any right of termination
under, any law, rule or regulation or any judgment, decree, order, governmental
permit or license, or agreement, indenture or instrument of Seller or of any of
its Subsidiaries or to which Seller or any of its Subsidiaries or properties is
subject or bound except for any breach, violation, default, Lien, acceleration
or right of termination which would not, individually or in the aggregate,
result in a Material Adverse Effect, (B) constitute a breach or violation of, or
a default under, the Seller Articles or the Seller Bylaws, or (C) require any
consent or approval under any such law, rule, regulation, judgment, decree,
order, governmental permit or license, agreement, indenture or instrument.
(g) Financial Statements; Internal Controls.
(i) Seller has previously delivered to Purchaser
true and complete copies of (A) its balance sheets as of December 31, 2004, 2005
and 2006 and the related statements of operations, stockholders' equity and cash
flows for the fiscal years then ended, including the footnotes thereto, if any,
additional or supplemental information supplied therewith and the report
prepared in connection therewith by the independent certified public accountants
auditing such financial statements; and (B) its interim monthly financial
reports and financial statements for the period beginning after December 31,
2006 and ended on September 30, 2007. The documents described in clauses (A) and
(B) above (collectively, the "Seller Financial Statements"):
1) are true, complete and correct;
2) are in accordance with the books and records of
Seller;
3) present fairly and accurately the assets
liabilities, revenues, expenses and financial
condition of Seller as of the dates thereof, and the
results of operations for the periods then ended;
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4) were prepared on a consistent basis throughout the
periods involved; and
5) have been prepared in accordance with GAAP.
(ii) Neither Seller nor any of its Subsidiaries has
any material liability (whether absolute, accrued, contingent or otherwise and
whether due or to become due), except for those liabilities that are reflected
or reserved against on the consolidated balance sheet of Seller included in its
Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2007
(including any notes thereto) and for liabilities incurred in the ordinary
course of business consistent with past practice since September 30, 2007 or in
connection with this Agreement and the transactions contemplated hereby.
(iii) The records, systems, controls, data and
information of Seller and its Subsidiaries are recorded, stored, maintained and
operated under means (including any electronic, mechanical or photographic
process, whether computerized or not) that are under the exclusive ownership and
direct control of Seller or its Subsidiaries or accountants (including all means
of access thereto and therefrom), except for any non-exclusive ownership and
non-direct control that would not reasonably be expected to have a Material
Adverse Effect on the system of internal accounting controls described below in
this Section 5.02(g)(iii). Seller (A) has implemented and maintains disclosure
controls and procedures (as defined in Rule 13a-15 promulgated under the
Exchange Act) to ensure that material information relating to Seller, including
its consolidated Subsidiaries, is made known to the chief executive officer and
the chief financial officer of Seller by others within those entities, and (B)
has disclosed, based on its most recent evaluation prior to the date hereof, to
Seller's outside auditors and the audit committee of Seller's Board of Directors
(y) any significant deficiencies and material weaknesses in the design or
operation of internal controls over financial reporting (as defined in Rule
13a-15 promulgated under the Exchange Act) that are reasonably likely to
adversely affect Seller's ability to record, process, summarize and report
financial information and (z) any fraud, whether or not material, that involves
management or other employees who have a significant role in Seller's internal
controls over financial reporting. These disclosures were made in writing by
management to Seller's auditors and audit committee and a copy has previously
been made available to Purchaser. As of the date hereof, and except as
Previously Disclosed, Seller knows of no reason related to Seller to believe
that Seller's outside auditors and its chief executive officer and chief
financial officer will not be able to give the certifications and attestations
required pursuant to Sections 302, 404 and 906 of the Xxxxxxxx-Xxxxx Act,
without qualification (except to extent expressly permitted by such rules and
regulations), when next due.
(iv) Since December 31, 2006, (A) through the date
hereof, neither Seller nor any of its Subsidiaries nor, to Seller's knowledge,
any director, officer, employee, auditor, accountant or representative of Seller
or any of its Subsidiaries has received or otherwise had or obtained knowledge
of any material complaint, allegation, assertion or claim, whether written or
oral, regarding the accounting or auditing practices, procedures, methodologies
or methods of Seller or any of its Subsidiaries or their respective internal
accounting controls, including any material complaint, allegation, assertion or
claim that Seller or any of its
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Subsidiaries has engaged in questionable accounting or auditing practices, and
(B) no attorney representing Seller or any of its Subsidiaries, whether or not
employed by Seller or any of its Subsidiaries, has reported evidence of a
material violation of securities laws, breach of fiduciary duty or similar
violation by Seller or any of it Subsidiaries or any of their respective
officers, directors, employees or agents to the Board of Directors of Seller or
any committee thereof or to any director or officer of Seller.
(h) Litigation. Except as Previously Disclosed, there is no
material suit, action, investigation, audit or proceeding (whether judicial,
arbitral, administrative or other) pending or, to Seller's knowledge, threatened
against or affecting Seller or any of its Subsidiaries, nor is there any
judgment, decree, injunction, rule or order of any Governmental Authority or
arbitration outstanding against Seller or any of its Subsidiaries.
(i) Regulatory Matters.
(i) Neither Seller nor any of its Subsidiaries or
properties is a party to or is subject to any order, decree, agreement,
memorandum of understanding or similar arrangement with, or a commitment letter
or similar submission to, or extraordinary supervisory letter from, any
Regulatory Authority charged with the supervision or regulation of financial
institutions and their subsidiaries (including their holding companies) or
issuers of securities.
(ii) Neither Seller nor any of its Subsidiaries has
been advised by any Regulatory Authority that such Regulatory Authority is
contemplating issuing or requesting (or is considering the appropriateness of
issuing or requesting) any such order, decree, agreement, memorandum of
understanding, commitment letter, supervisory letter or similar submission nor
to its knowledge has any Regulatory Authority commenced an investigation in
connection therewith.
(j) Compliance with Laws. Except as Previously Disclosed,
each of Seller and its Subsidiaries:
(i) is in material compliance with all applicable
federal, state, local and foreign statutes, laws, regulations, ordinances,
rules, judgments, orders or decrees applicable thereto or to the employees
conducting such businesses, including, without limitation, the Equal Credit
Opportunity Act, the Fair Housing Act, the Community Reinvestment Act ("CRA")
(which includes a CRA Rating of "satisfactory" or better), the Home Mortgage
Disclosure Act and all other applicable fair lending laws and other laws
relating to discriminatory business practices;
(ii) has all permits, licenses, authorizations,
orders and approvals of, and has made all filings, applications and
registrations with, all Governmental Authorities that are required in order to
permit them to own or lease their properties and to conduct their businesses as
presently conducted except where the failure to make any such filing would not
constitute a Material Adverse Effect; all such permits, licenses, certificates
of authority, orders and approvals are in full force and effect and, to Seller's
knowledge, no suspension or cancellation of any of them is threatened; and
(iii) has not received, since December 31, 2004, any
notification or communication from any Governmental Authority (A) asserting that
Seller or any of its
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Subsidiaries is not in material compliance with any of the statutes,
regulations, or ordinances which such Governmental Authority enforces or (B)
threatening to revoke any license, franchise, permit, or governmental
authorization (nor, to Seller's knowledge, do any grounds for any of the
foregoing exist).
(k) Material Contracts; Defaults.
(i) Except as set forth in Seller's Disclosure
Schedule, neither Seller nor any of its Subsidiaries is a party to or is bound
by any contract of the following types that involve Seller or any of its
Subsidiaries:
(A) Any contract involving commitments to
others to make capital expenditures or purchases or sales in excess of $50,000
in any one case or $200,000 in the aggregate in any period of 12 consecutive
months;
(B) Any contract relating to any direct or
indirect indebtedness for borrowed money except as a creditor in the ordinary
course of business (including loan agreements, lease purchase arrangements,
guarantees, agreements to purchase goods or services or to supply funds or other
undertakings on which others rely in extending credit), or any conditional sales
contracts, chattel mortgages, equipment lease agreements and other security
arrangements with respect to personal property, other than contracts entered
into in the ordinary course of business consistent with past practice and
policies;
(C) Any employment, severance, consulting
or management services contract or any confidentiality or proprietary rights
contract with any employee or other service provider of or to Seller or any of
its Subsidiaries;
(D) Any contract containing covenants limiting
the freedom of Seller or any of its Subsidiaries to compete in any line of
business or with any individual, bank, corporation, partnership, limited
liability company, joint venture, trust, unincorporated association or
organization, government body, agency or instrumentality, or any other entity
(each, a "Person") or in any area or territory;
(E) Any partnership, joint venture, limited
liability company arrangement or other similar agreement;
(F) Any profit sharing, stock option,
stock purchase, stock appreciation, deferred compensation, issuance, or other
plan or arrangement still in effect (or pursuant to which Seller or any of its
Subsidiaries has any remaining obligation to any party) for the benefit of
Seller's or any of its Subsidiaries' current or former directors, officers,
employees, and other service providers;
(G) Any material license agreement, either as
licensor or licensee, or any other contract of any type relating to any patent,
trademark or trade name;
(H) Any material contract with any director,
officer or key employee of Seller or any of its Subsidiaries or any arrangement
under which Seller or any of its
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Subsidiaries has advanced or loaned any amount to any of their directors,
officers, and employees;
(I) Any contract of any kind whatsoever,
whether exclusive or otherwise, with any sales agent, representative, franchisee
or distributor involving money or property, other than contracts entered into in
the ordinary course of business consistent with past practice and policies;
(J) Other than this Agreement and the
ancillary agreements being executed in connection with this Agreement, any
contract providing for the acquisition or disposition of any portion of Seller
or any of its Subsidiaries;
(K) Any contract of any kind whatsoever that
requires the payment of royalties;
(L) Any contract under which the consequences
of a breach, violation or default would reasonably be expected to have a
Material Adverse Effect on Seller or its Subsidiaries as a whole;
(M) Any contract pursuant to which Seller or
any of its Subsidiaries has any obligation to share revenues or profits derived
from Seller or any of its Subsidiaries with any other entity;
(N) Any contract between (i) Seller or any of
its Subsidiaries, on the one hand, and any officer, director, employee or
consultant of Seller or any of its Subsidiaries, or any natural person related
by blood or marriage to such natural person, on the other hand, and (ii) Seller
or any of its Subsidiaries, on the one hand, and any employee of Seller or any
of its Subsidiaries, on the other hand (collectively, "Affiliate Agreements");
and
(O) Any other legally binding contract not of
the type covered by any of the other items of this Section 5.02(k) involving
money or property and having an obligation in excess of $200,000 in the
aggregate in any period of 12 consecutive months.
(ii) "Material Contracts" shall mean those contracts
on Seller's Disclosure Schedule listed under Section 5.02(k) or contracts that
should have been listed by Seller on such Disclosure Schedule pursuant to this
Section 5.02(k). All of the Material Contracts are in full force and effect and
are legal, valid, binding and enforceable in accordance with their terms (except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general equity
principles) (i) as to Seller or any of its Subsidiaries, as the case may be, and
(ii) to the knowledge of Seller, as to the other parties to such Material
Contracts. Except as disclosed in Seller's Disclosure Schedule, Seller and/or
its Subsidiaries, as applicable, and to the knowledge of Seller, each other
party to the Material Contracts, has in all material respects performed and is
performing all obligations, conditions and covenants required to be performed by
it under the Material Contracts. Neither Seller nor any of its Subsidiaries, and
to the knowledge of Seller, no other party, is in violation, breach or default
of any material obligation, condition or covenant under any of the Material
Contracts,
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and neither Seller nor any of its Subsidiaries, and to the knowledge
of Seller, no other party, has received any notice that any of the Material
Contracts will be terminated or will not be renewed. Neither Seller nor any of
its Subsidiaries, has received from or given to any other Person any notice of
default or other violation under any of the Material Contracts, nor, to the
knowledge of Seller, does any condition exist or has any event occurred which
with notice or lapse of time or both would constitute a default thereunder.
(l) No Brokers. Except as Previously Disclosed, no action
has been taken by Seller that would give rise to any valid claim against any
party hereto for a brokerage commission, finder's fee or other like payment with
respect to the transactions contemplated by this Agreement.
(m) Employee Benefit Plans.
(i) Section 5.02(m)(i) to the Seller's Disclosure
Schedule contains a true and complete list of each bonus, deferred compensation,
incentive compensation, stock purchase, stock option, employment or consulting,
severance pay or benefit, change in control, savings, medical, life or other
insurance, vacation, welfare benefit, fringe benefit, cafeteria, profit-sharing
or pension benefit plan, program, agreement or arrangement, and each other
employee benefit or compensation plan, program, agreement or arrangement,
sponsored, maintained or contributed to or required to be contributed to by the
Seller or any Subsidiary or by any trade or business, whether or not
incorporated, that together with the Seller or any Subsidiary would be deemed a
"single employer" under Section 414 of the Code (an "ERISA Affiliate"), or as to
which the Seller, any Subsidiary or any ERISA Affiliate has, or may have, any
liability or obligation, whether written or oral and whether legally binding or
not (collectively, the "Plans"). With respect to each Plan, Section 5.02(m)(i)
to the Seller Disclosure Schedule identifies each entity whose current or former
employees, directors or other service providers are covered by or entitled to
benefits under such Plan. Neither the Seller, nor any Subsidiary has any formal
plan or commitment, whether legally binding or not, to create any additional
plan or modify or change any existing Plan that would affect any current or
former employee, director or other service provider of the Seller or any
Subsidiary.
(ii) With respect to each of the Plans, the Seller
has heretofore delivered to the Purchaser true and complete copies of each of
the following documents: (a) the Plan, the related trust agreement (if any) and
any other related documents (including all amendments to such Plan and related
documents); (b) the three most recent annual reports, actuarial reports, and
financial statements, if any; (c) the most recent summary plan description,
together with each summary of material modifications, required under ERISA with
respect to such Plan, and all material employee communications relating to such
Plan; (d) the most recent determination letter or opinion letter received from
the IRS with respect to each Plan that is intended to be qualified under the
Code; and (e) all material communications to or from the IRS or any other
governmental or regulatory authority relating to each Plan.
(iii) No liability under Title IV of ERISA has been
incurred by the Seller, any Subsidiary or any ERISA Affiliate that has not been
satisfied in full, and no condition exists that presents a material risk to the
Seller, any Subsidiary or any ERISA Affiliate of incurring a liability under
such Title other than liability for the payment of PBGC premiums,
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which have been or will be paid when due. No Plan subject to Section 412 of the
Code or Section 302 of ERISA has incurred an accumulated funding deficiency,
whether or not waived. None of the assets of the Seller or any Subsidiary are
subject to any lien arising under ERISA or Subchapter D of Chapter 1 of the
Code.
(iv) Neither the Seller nor any Subsidiary, nor any
ERISA Affiliate, nor any of the Plans, nor any trust created thereunder, nor any
trustee or administrator thereof has engaged in a transaction in connection with
which the Seller, any Subsidiary, any ERISA Affiliate, any of the Plans or any
such trust could, (either directly or pursuant to any contractual
indemnification or contribution obligation protecting any fiduciary, insurer or
service provider with respect to any Plan), be subject to any civil liability or
penalty pursuant to Title I of ERISA, a tax imposed pursuant to Chapter 43 of
the Code, or any other liability.
(v) All contributions required to have been made under
the terms of any Plan or pursuant to ERISA and the Code have been timely made
and all obligations in respect of each Plan have been properly accrued and
reflected in the Seller Financial Statements.
(vi) As of the Closing Date, the then fair market
value of the assets held under each Plan that is subject to Title IV of ERISA
will be sufficient so as to permit a "standard termination" of each such Plan
under Section 4041(b) of ERISA without the need to make any additional
contributions to such Plans. No reportable event under Section 4043 of ERISA has
occurred or will occur with respect to any Plan on or before the Closing Date
other than any reportable event occurring by reason of the transactions
contemplated by this Agreement.
(vii) None of the Plans is, and neither the Seller, nor
any Subsidiary, nor any ERISA Affiliate has ever contributed to or had an
obligation to contribute to or incurred any liability in respect of, any
"multiemployer plan" (as defined in Section 3(37) of ERISA), a "multiple
employer welfare arrangement" (as defined in Section 3(40) of ERISA), or a
single employer plan that has two or more contributing sponsors, at least two of
whom are not under common control, within the meaning of Section 4063(a) of
ERISA.
(viii) Each of the Plans that is intended to be
"qualified" within the meaning of Section 401(a) of the Code is so qualified and
a favorable determination or opinion letter to that effect has been issued by
the IRS with respect to each such Plan, and nothing has occurred that could
reasonably be expected to adversely affect the qualified status of any Plan
under Section 401(a) of the Code or require the filing of a submission under the
IRS's employee plans compliance resolution system or the taking of other
corrective action pursuant to such system in order to maintain the qualified
status of such Plan. Each of the Plans that is intended to satisfy the
requirements of Section 125, 423 or 501(c)(9) of the Code satisfies such
requirements. Each of the Plans has been operated and administered in all
material respects in accordance with its terms and applicable Laws, including
but not limited to ERISA and the Code.
(ix) To the knowledge of Seller, no payment or
benefit paid or provided, or to be paid or provided, to current or former
employees, directors or other service providers of or to the Seller or any
Subsidiary (including pursuant to this Agreement) will fail to
-25-
be deductible for federal income tax purposes under Section 280G of the Code. To
the knowledge of Seller, each Person who performs services for the Seller or any
Subsidiary has been, and is, properly classified by the Seller or the Subsidiary
as an employee or independent contractor.
(x) There are no claims pending, or, to the knowledge
of the Seller, threatened or anticipated (other than routine claims for
benefits) against any Plan, the assets of any Plans or against the Seller, any
Subsidiary or any ERISA Affiliate with respect to any Plan. There is no
judgment, decree, injunction, rule or order of any Governmental Authority or
arbitrator outstanding against or in favor of any Plan or any fiduciary thereof
(other than rules of general applicability). There are no pending or, to the
knowledge of Seller, threatened audits or investigations by any Governmental
Authority involving any Plan.
(xi) No Plan provides benefits, including without
limitation death or medical benefits (whether or not insured), with respect to
current or former employees, directors or other service providers after
retirement or other termination of service (other than (a) coverage mandated by
applicable law, (b) death benefits or retirement benefits under any "employee
pension benefit plan" (as defined in Section 3(2) of ERISA), (c) deferred
compensation benefits accrued as liabilities in the Seller Financial Statements,
and (d) benefits, the full cost of which is borne by the current or former
employee or director (or his beneficiary)). No Plan is funded through a "welfare
benefit fund" as defined in Section 419 of the Code.
(xii) Each Plan may be amended or terminated without
liability to the Seller or any Subsidiary, other than liability for accrued
benefits through the date of the amendment or termination and administrative
costs of amending or terminating the Plan. Neither the execution of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(whether alone or together with any other event) result in or is a precondition
to (a) any current or former employee, director or other service provider of or
to the Seller or any Subsidiary becoming entitled to severance pay or any
similar payment, (b) the acceleration of the time of payment or vesting of, or
an increase in the amount of, any compensation due to any current or former
employee, director or other service provider of or to the Seller or any
Subsidiary, or (c) the renewal or extension of the term of any agreement
regarding the compensation of any current or former employee, director or other
service provider of the Seller or any Subsidiary.
(xiii) Except as Previously Disclosed, to the knowledge
of Seller, each Plan that provides deferred compensation subject to Section 409A
of the Code complies with Section 409A of the Code (and has so complied for the
entire period during which Section 409A of the Code has applied to such Plan).
To the knowledge of Seller, none of the transactions contemplated by this
Agreement will constitute or result in a violation of Section 409A of the Code.
(xiv) No Plan subject to Title I of ERISA holds any
"employer security" or "employer real property" (each as defined in Section
407(d) of ERISA).
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(xv) All workers' compensation benefits paid or payable
to any current or former employee, director or other service provider of or to
the Seller or any Subsidiary are fully insured against by a third party
insurance carrier.
(n) Labor Matters. Neither Seller nor any of its
Subsidiaries is a party to or is bound by any collective bargaining agreement,
contract or other agreement or understanding with a labor union or labor
organization, nor is Seller or any of its Subsidiaries the subject of a
proceeding asserting that it or any such Subsidiary has committed an unfair
labor practice (within the meaning of the National Labor Relations Act) or
seeking to compel Seller or any such Subsidiary to bargain with any labor
organization as to wages or conditions of employment, nor is there any strike or
other labor dispute involving it or any of its Subsidiaries pending or, to
Seller's knowledge, threatened, nor is Seller aware of any activity involving
its or any of its Subsidiaries' employees seeking to certify a collective
bargaining unit or engaging in other organizational activity.
(o) Takeover Laws. Seller has taken all action required to be
taken by it in order to exempt this Agreement and the transactions contemplated
hereby from, and this Agreement and the transactions contemplated hereby are
exempt from, the requirements of any "moratorium"; "control share", "fair
price", "affiliate transaction", "business combination" or other antitakeover
laws and regulations of any state (collectively, "Takeover Laws"), including,
without limitation, the Commonwealth of Pennsylvania, applicable to it. Seller
has taken all action required to be taken by it in order to make this Agreement
and the transactions contemplated hereby comply with, and this Agreement and the
transactions contemplated hereby do comply with, the requirements of any
Articles, Sections or provisions of Seller's or its Subsidiaries' Articles of
Incorporation or Bylaws concerning "business combination," "fair price," "voting
requirement," "constituency requirement" or other related provisions
(collectively, the "Takeover Provisions").
(p) Environmental Matters. Except as Previously Disclosed, to
Seller's knowledge, neither the conduct nor operation of Seller or its
Subsidiaries nor any condition of any property presently or previously owned,
leased or operated by any of them (including, without limitation, in a fiduciary
or agency capacity), or on which any of them holds a Lien, violates or violated
Environmental Laws and to Seller's knowledge, no condition has existed or event
has occurred with respect to any of them or any such property that, with notice
or the passage of time, or both, is reasonably likely to result in liability
under Environmental Laws. To Seller's knowledge, neither Seller nor any of its
Subsidiaries has used or stored any Hazardous Material in, on, or at any
property presently or previously owned, leased or operated by any of them in
violation of any Environmental Law. To Seller's knowledge, neither Seller nor
any of its Subsidiaries has received any notice from any Person that Seller or
its Subsidiaries or the operation or condition of any property ever owned,
leased, operated, or held as collateral or in a fiduciary capacity by any of
them are or were in violation of or otherwise are alleged to have liability
under any Environmental Law, including, but not limited to, responsibility (or
potential responsibility) for the cleanup or other remediation of any
pollutants, contaminants, or hazardous or toxic wastes, substances or materials
at, on, beneath, or originating from any such property. Neither Seller nor any
of its Subsidiaries is the subject of any action, claim, litigation, dispute,
investigation or other proceeding with respect to violations of, or liability
under, any
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Environmental Law. To Seller's knowledge, Seller and each of its Subsidiaries
has timely filed all reports and notifications required to be filed with respect
to all of its operations and properties presently or previously owned, leased or
operated by any of them and has generated and maintained all required records
and data under all applicable Environmental Laws.
(q) Tax Matters.
(i) Seller and its Subsidiaries have duly and timely
filed all Tax Returns required to be filed with respect to all applicable Taxes,
and all such Tax Returns are true, correct and complete in all material
respects.
(ii) (A) To the knowledge of Seller, Seller and its
Subsidiaries have timely paid all Taxes due and payable, whether or not shown on
any Tax Return and whether or not a Tax Return was required to be filed, (B)
Seller and its Subsidiaries have established reserves in the Seller Financial
Statements for Taxes which are sufficient for the payment of all unpaid Taxes as
of the dates thereof, whether or not such Taxes are disputed or are yet due and
payable, for or with respect to the period, and neither Seller nor its
Subsidiaries shall have any liability for Taxes in excess of such reserves, (C)
To the knowledge of Seller, Seller and its Subsidiaries have withheld and paid
to the proper taxing authority all Taxes required to have been withheld and paid
in connection with amounts paid or owing to any employee, independent
consultant, creditor, member or other third party, (D) To the knowledge of
Seller, Seller and its Subsidiaries have no liability for Taxes payable for or
with respect to any periods prior to and including the Effective Time in excess
of the amounts actually paid prior to the Effective Time or reserved for in the
in the Seller Financial Statements, and (E) no claim has ever been made by any
taxing authority in any jurisdiction in which Seller and/or its Subsidiaries
does not file Tax Returns that Seller and/or its Subsidiaries is or may be
subject to taxation by that jurisdiction.
(iii) Seller and its Subsidiaries have furnished or
otherwise made available to Purchaser true and correct copies of all Tax Returns
and all written communications relating to any such Tax Returns or to any
deficiency or claim proposed and/or asserted, irrespective of the outcome of
such matter, but only to the extent such Tax Returns or items relate to tax
years which are currently subject to an audit, investigation, examination or
other proceeding, or with respect to which the statute of limitations has not
expired.
(iv) (A) All deficiencies asserted or assessments
made as a result of any Tax audit, investigation, examination or other
proceeding have been paid in full, (B) except as Previously Disclosed, there are
no current audits, investigations or examinations with respect to any Tax
Returns of Seller and its Subsidiaries, and Seller has not received any notice
that any such audit, investigation or examination is threatened or pending, and
(C) no waivers of or extensions of the statutes of limitation (with respect to
collection or assessment of Taxes) have been given by or requested with respect
to any Taxes of Seller or its Subsidiaries.
(v) (A) Neither Seller nor any of its Subsidiaries
is a party to any agreement relating to the sharing, allocation or payment of,
or indemnity for, Taxes, and (B) neither Seller nor any of its Subsidiaries is
or has been a member of an affiliated group filing consolidated or combined Tax
Returns (other than a group of which Seller is or was the common
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parent) or otherwise has any liability for the Taxes of any Person under
Treasury Regulations section 1.1502-6 (or similar provision of state, local or
foreign Law).
(vi) (A) Seller and its Subsidiaries have disclosed
on their Tax Returns all positions taken therein that could reasonably be
expected to give rise to a substantial understatement of Tax within the meaning
of Section 6662 of the Code (or any similar provision under any state, local, or
foreign tax law), (B) neither Seller nor any of its Subsidiaries have engaged in
any "reportable transactions" as defined in Section 6707A of the Code, and (C)
To the knowledge of Seller, Seller and its Subsidiaries are in compliance with,
and their records contain all information and documents (including properly
completed IRS Forms W-9) necessary to comply with, all applicable information
reporting and tax withholding requirements under federal, state, and local tax
laws, and such records identify with specificity all accounts subject to backup
withholding under Section 3406 of the Code.
(vii) (A) Neither the Seller nor any of its
Subsidiaries has been a party to any distribution occurring during the last
three years in which the parties to such distribution treated the distribution
as one to which Section 355 of the Code applied, (B) neither the Seller nor any
of its Subsidiaries has entered into a written agreement with any taxing
authority or is subject to an adjustment under Section 481(a) of the Code that
would have a material impact on the calculation of Taxes after the Effective
Time, and (C) Seller is not, has not been within the applicable period set forth
in Section 897(c)(1)(A)(ii) of the Code, and shall not be as of the Closing
Date, a "United States real property holding corporation" (as that term is
defined under Section 897 of the Code),
(viii) As of the date hereof, neither Seller nor
any of its Subsidiaries has any reason to believe that any conditions exist that
might prevent or impede the Merger from qualifying as a reorganization within
the meaning of Section 368(a) of the Code.
(r) Risk Management Instruments. All material interest rate
swaps, caps, floors, option agreements, futures and forward contracts and other
similar risk management arrangements, whether entered into for Seller's own
account, or for the account of one or more of Seller's Subsidiaries or their
customers (all of which are listed on Seller's Disclosure Schedule), were
entered into (i) in accordance with prudent business practices and all
applicable laws, rules, regulations and regulatory policies and (ii) with
counterparties believed to be financially responsible at the time; and each of
them constitutes the valid and legally binding obligation of Seller or one of
its Subsidiaries, enforceable in accordance with its terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general equity
principles), and is in full force and effect. Neither Seller nor its
Subsidiaries, nor to Seller's knowledge any other party thereto, is in breach of
any of its obligations under any such agreement or arrangement.
(s) Books and Records; Minute Books. The books and records
of Seller and its Subsidiaries have been fully, properly and accurately
maintained in all material respects, have been maintained in accordance with
ordinary business practices in the banking industry, and there are no material
inaccuracies or discrepancies of any kind contained or reflected therein and
they fairly reflect the substance of events and transactions included therein.
The minute books of
-29-
Seller and its Subsidiaries contain records, which are accurate in all material
respects, of all corporate actions of its shareholder(s) and Board of Directors
(including committees of its Board of Directors).
(t) Insurance. Section 5.02(t) of Seller's Disclosure
Schedule sets forth all of the insurance policies, binders, or bonds maintained
by Seller or its Subsidiaries. Seller and its Subsidiaries are insured with
reputable insurers against such risks and in such amounts as the management of
Seller reasonably has determined to be prudent in accordance with industry
practices. All such insurance policies are in full force and effect; Seller and
its Subsidiaries are not in material default thereunder; and all claims
thereunder have been filed in due and timely fashion.
(u) Seller Off Balance Sheet Transactions. Section 5.02(u) of
Seller's Disclosure Schedule sets forth a true and complete list of all
affiliated Seller entities, including without limitation all special purpose
entities, limited purpose entities and qualified special purpose entities, in
which Seller or any of its Subsidiaries or any officer or director of Seller or
any of its Subsidiaries has an economic or management interest. Section 5.02(u)
of Seller's Disclosure Schedule also sets forth a true and complete list of all
transactions, arrangements, and other relationships between or among any such
Seller affiliated entity, Seller, any of its Subsidiaries, and any officer or
director of Seller or any of its Subsidiaries that are not reflected in the
consolidated financial statements of Seller (each, a "Seller Off Balance Sheet
Transaction"), along with the following information with respect to each such
Seller Off Balance Sheet Transaction: (i) the business purpose, activities, and
economic substance; (ii) the key terms and conditions; (iii) the potential risk
to Seller or any of its Subsidiaries; (iv) the amount of any guarantee, line of
credit, standby letter of credit or commitment, or any other type of
arrangement, that could require Seller or any of its Subsidiaries to fund any
obligations under any such transaction; and (v) any other information that could
have a Material Adverse Effect on Seller or any of its Subsidiaries.
(v) Disclosure. The representations and warranties contained
in this Section 5.02 do not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements and
information contained in this Section 5.02 not misleading.
(w) Material Adverse Change. Except as Previously Disclosed,
Seller has not, on a consolidated basis, suffered a change in its business,
financial condition or results of operations since December 31, 2006 that has
had a Material Adverse Effect on Seller.
(x) Properties. Seller and its Subsidiaries have good and
marketable title, free and clear of all liens, encumbrances, charges, defaults
or equitable interests to all of the properties and assets, real and personal,
reflected on the Seller Financial Statements (as defined in Section 5.02(g)) as
being owned by Seller as of December 31, 2006 or acquired after such date,
except (i) statutory liens for amounts not yet due and payable, (ii) pledges to
secure deposits and other liens incurred in the ordinary course of banking
business, (iii) such imperfections of title, easements, encumbrances, liens,
charges, defaults or equitable interests, if any, as do not affect the use of
properties or assets subject thereto or affected thereby or otherwise materially
impair business operations at such properties, (iv) dispositions and
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encumbrances in the ordinary course of business, and (v) liens on properties
acquired in foreclosure or on account of debts previously contracted. All leases
pursuant to which Seller or any of its Subsidiaries, as lessee, leases real or
personal property (except for leases that have expired by their terms or that
Seller or any such Subsidiary has agreed to terminate since the date hereof) are
valid without default thereunder by the lessee or, to Seller's knowledge, the
lessor.
(y) Loans. Each loan reflected as an asset in the Seller
Financial Statements (as defined in Section 5.02(g)) and each balance sheet date
subsequent thereto (i) is evidenced by notes, agreements or other evidences of
indebtedness that are true, genuine and what they purport to be, (ii) to the
extent secured, has been secured by valid liens and security interests that have
been perfected, and (iii) is the legal, valid and binding obligation of the
obligor named therein, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent conveyance and other laws of general
applicability relating to or affecting creditors' rights and to general equity
principles. Except as Previously Disclosed, as of December 31, 2006, the Bank is
not a party to a loan, including any loan guaranty, with any director, executive
officer or 5% shareholder of Seller or any of its Subsidiaries or any Person
controlling, controlled by or under common control with any of the foregoing.
All loans and extensions of credit that have been made by the Bank that are
subject either to Section 22(b) of the Federal Reserve Act, as amended, or to
Part 349 of the rules and regulations promulgated by the FDIC, comply therewith.
(z) Allowance for Loan Losses. The allowance for loan losses
reflected on the Seller Financial Statements (as defined in Section 5.02(g)), as
of their respective dates, is adequate in all material respects under the
requirements of GAAP to provide for reasonably estimated losses on outstanding
loans.
(aa) Repurchase Agreements. With respect to all agreements
pursuant to which Seller or any of its Subsidiaries has purchased securities
subject to an agreement to resell, if any, Seller or such Subsidiary, as the
case may be, has a valid, perfected first lien or security interest in or
evidence of ownership in book entry form of the government securities or other
collateral securing the repurchase agreement, and the value of such collateral
equals or exceeds the amount of the debt secured thereby.
(bb) Deposit Insurance. The deposits of the Bank are insured
by the FDIC in accordance with FDIA, and the Bank has paid all assessments and
filed all reports required by the FDIA.
(cc) Annual Disclosure Statement. Seller is in compliance with
Part 350 of the rules and regulations promulgated by the FDIC concerning
disclosure requirements, including the preparation of an annual disclosure
statement, and the signature and attestation requirements provided and to be
provided pursuant to such Part are accurate.
(dd) Bank Secrecy Act, Anti-Money Laundering and OFAC and
Customer Information. Seller is not aware of, has not been advised of, and has
no reason to believe that any facts or circumstances exist, which would cause it
or any of its Subsidiaries to be deemed (i) to be operating in violation in any
material respect of the Bank Secrecy Act, the Patriot Act, any order issued with
respect to anti-money laundering by the U.S. Department of the Treasury's
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Office of Foreign Assets Control, or any other applicable anti-money laundering
statute, rule or regulation; or (ii) not to be in satisfactory compliance in any
material respect with the applicable privacy and customer information
requirements contained in any federal and state privacy laws and regulations,
including, without limitation, in Title V of the Xxxxx-Xxxxx-Xxxxxx Act of 1999
and the regulations promulgated thereunder, as well as the provisions of the
information security program adopted by Seller pursuant to 12 C.F.R. Part 364.
It is not aware of any facts or circumstances that would cause it to believe
that any non-public customer information has been disclosed to or accessed by an
unauthorized third party in a manner that would cause it or any of its
Subsidiaries to undertake any material remedial action. The Seller Board (or,
where appropriate, the board of directors of any of Seller's Subsidiaries) has
adopted and implemented an anti-money laundering program that contains adequate
and appropriate customer identification verification procedures that comply with
Section 326 of the Patriot Act and such anti-money laundering program meets the
requirements in all material respects of Section 352 of the Patriot Act and the
regulations thereunder, and it (or such other of its Subsidiaries) has complied
in all material respects with any requirements to file reports and other
necessary documents as required by the Patriot Act and the regulations
thereunder.
(ee) No Right to Dissent. Nothing in the Articles of
Incorporation or the Bylaws of Seller or any of its Subsidiaries provides or
would provide to any Person, including without limitation the holders of Seller
Common Stock, upon execution of this Agreement and consummation of the
transactions contemplated hereby, rights of dissent and appraisal of any kind.
(ff) Fairness Opinion. The Seller Board has received the
opinion of its financial advisor, Sandler X'Xxxxx & Partners, L.P., to the
effect that the Merger Consideration to be received by the holders of Seller
Common Stock in the Parent Merger is fair to such holders from a financial point
of view. A true and complete copy of such written opinion will be delivered to
Purchaser as soon as practicable.
(gg) SEC Documents. Seller's Annual Reports on Form 10-K for
the fiscal years ended December 31, 2004, 2005 and 2006, and all other reports,
registration statements, definitive proxy statements or information statements
filed by it or any of its Subsidiaries subsequent to December 31, 2003 under the
Securities Act, or under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act,
in the form filed with the SEC (collectively, the "Seller SEC Documents"), as of
the date filed, or if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such amended or superseded filing, (A) were
timely filed and complied with all material respects as to form with the
applicable requirements under the Securities Act or the Exchange Act, as the
case may be, and (B) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
Section 5.03 Representations and Warranties of Purchaser. Subject to
Section 5.01 and except as Previously Disclosed in a paragraph of its Disclosure
Schedule corresponding to the relevant paragraph below, Purchaser hereby
represents and warrants to Seller as follows:
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(a) Organization, Standing and Authority. Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the Commonwealth of Pennsylvania. Purchaser is duly qualified to do business
and is in good standing in the Commonwealth of Pennsylvania and any foreign
jurisdictions where its ownership or leasing of property or assets or the
conduct of its business requires it to be so qualified. Purchaser is registered
as a financial holding company under the BHC Act. Purchaser Bank is a state
banking association duly organized, validly existing and in good standing under
the laws of the Commonwealth of Pennsylvania. Purchaser Bank is duly qualified
to do business and is in good standing in the Commonwealth of Pennsylvania and
any foreign jurisdictions where its ownership or leasing of property or assets
or the conduct of its business requires it to be so qualified. The deposit
accounts of Purchaser Bank are insured by the FDIC to the fullest extent
permitted by law and Purchaser Bank is a member in good standing of the Federal
Home Loan Bank of Pittsburgh.
(b) Purchaser Stock
(i) The authorized capital stock of Purchaser
consists of (i) 10,000,000 shares of preferred stock, without par value, none of
which shares are issued and outstanding, and (ii) 50,000,000 shares of Purchaser
Common Stock, par value $2.50 per share, of which 24,546,277 shares are issued
and outstanding as of December 11, 2007. The outstanding shares of Purchaser
Common Stock have been duly authorized and are validly issued and outstanding,
fully paid and nonassessable, and subject to no preemptive rights (and were not
issued in violation of any preemptive rights).
(ii) The shares of Purchaser Common Stock to be issued
in exchange for shares of Seller Common Stock in the Merger, when issued in
accordance with the terms of this Agreement, will be duly authorized, validly
issued, fully paid and nonassessable, will be listed on the Nasdaq Global Select
Market, will have the same rights as every other share of Purchaser Common Stock
and will be subject to no preemptive rights.
(c) Corporate Power. Each of Purchaser and its Subsidiaries
has the corporate power and authority to carry on its business as it is now
being conducted and to own all its properties and assets; and Purchaser has the
corporate power and authority to execute, deliver and perform its obligations
under this Agreement and to consummate the transactions contemplated hereby.
Subject to the receipt of all requisite regulatory approvals and the expiration
of all waiting periods, Purchaser Bank has the corporate power and authority to
consummate the Subsidiary Merger and the Agreement to Merge in accordance with
the terms of this Agreement.
(d) Corporate Authority; Authorized and Effective Agreement.
This Agreement and the transactions contemplated hereby have been authorized by
all necessary corporate action of Purchaser and the Purchaser Board prior to the
date hereof and no shareholder approval is required on the part of Purchaser.
The Agreement to Merge, when executed by Purchaser Bank, shall have been
approved by the Board of Directors of Purchaser Bank and by Purchaser, as the
sole shareholder of Purchaser Bank. This Agreement is a valid and legally
binding agreement of Purchaser, enforceable in accordance with its terms (except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium,
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fraudulent transfer and similar laws of general applicability relating to or
affecting creditors rights or by general equity principles).
(e) Regulatory Approvals; No Defaults.
(i) No consents or approvals of, or filings or
registrations with, any Governmental Authority or with any third party are
required to be made or obtained by Purchaser or any of its Subsidiaries in
connection with the execution, delivery or performance by Purchaser of this
Agreement or to consummate the Merger except for (A) the filing of applications,
notices or the Agreement to Merge, as applicable, with the federal and state
banking authorities; (B) the filing and declaration of effectiveness of the
Registration Statement; (C) the filing of the articles of merger with the
Department of State of the Commonwealth of Pennsylvania; (D) such filings as are
required to be made or approvals as are required to be obtained under the
securities or "Blue Sky" laws of various states in connection with the issuance
of Purchaser Common Stock in the Merger; and (E) receipt of the approvals set
forth in Section 7.01(b). As of the date hereof, Purchaser is not aware of any
reason why the approvals set forth in Section 7.01(b) will not be received
without the imposition of a condition, restriction or requirement of the type
described in Section 7.01(b).
(ii) Subject to the satisfaction of the requirements
referred to in the preceding paragraph and expiration of the related waiting
periods, and required filings under federal and state securities laws, the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby do not and will not (A) constitute a breach
or violation of, or a default under, or give rise to any Lien, any acceleration
of remedies or any right of termination under, any law, rule or regulation or
any judgment, decree, order, governmental permit or license, or agreement,
indenture or instrument of Purchaser or of any of its Subsidiaries or to which
Purchaser or any of its Subsidiaries or properties is subject or bound, (B)
constitute a breach or violation of, or a default under, the Articles of
Incorporation or Bylaws (or similar governing documents) of Purchaser or any of
its Subsidiaries, or (C) require any consent or approval under any such law,
rule, regulation, judgment, decree, order, governmental permit or license,
agreement, indenture or instrument.
(f) Financial Reports and SEC Documents; Material Adverse
Effect.
(i) Purchaser's Annual Report on Form 10-K for the
fiscal year ended December 31, 2006, and all other reports, registration
statements, definitive proxy statements or information statements filed or to be
filed by it or any of its Subsidiaries with the SEC subsequent to December 31,
2006 under the Securities Act, or under Section 13, 14 or 15(d) of the Exchange
Act, in the form filed or to be filed (collectively, "Purchaser SEC Documents")
as of the date filed, (A) complied or will comply in all material respects with
the applicable requirements under the Securities Act or the Exchange Act, as the
case may be, and (B) did not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; and each of the balance sheets or
statements of condition contained in or incorporated by reference into any such
Purchaser SEC Document (including the related notes and schedules thereto)
fairly presents, or will fairly present, the financial position of Purchaser and
its Subsidiaries as of its date, and each of the
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statements of income or results of operations and changes in shareholders'
equity and cash flows or equivalent statements in such Purchaser SEC Documents
(including any related notes and schedules thereto) fairly presents, or will
fairly present, the results of operations, changes in shareholders' equity and
cash flows, as the case may be, of Purchaser and its Subsidiaries for the
periods to which they relate, in each case in accordance with GAAP consistently
applied during the periods involved, except in each case as may be noted
therein, subject to normal year-end audit adjustments and the absence of
footnotes in the case of unaudited statements.
(ii) Since December 31, 2006, no event has occurred or
circumstance arisen that, individually or taken together with all other facts,
circumstances and events (described in any paragraph of Section 5.03 or
otherwise), is reasonably likely to have a Material Adverse Effect with respect
to Purchaser, except as disclosed in the Purchaser SEC Documents.
(iii) The records, systems, controls, data and
information of Purchaser and its Subsidiaries are recorded, stored, maintained
and operated under means (including any electronic, mechanical or photographic
process, whether computerized or not) that are under the exclusive ownership and
direct control of Purchaser or its Subsidiaries or accountants (including all
means of access thereto and therefrom), except for any non-exclusive ownership
and non-direct control that would not reasonably be expected to have a Material
Adverse Effect on the system of internal accounting controls described below in
this Section 5.03(f)(iii). Purchaser (A) has implemented and maintains
disclosure controls and procedures (as defined in Rule 13a-15 promulgated under
the Exchange Act) to ensure that material information relating to Purchaser,
including its consolidated Subsidiaries, is made known to the chief executive
officer and the chief financial officer of Purchaser by others within those
entities, and (B) has disclosed, based on its most recent evaluation prior to
the date hereof, to Purchaser's outside auditors and the audit committee of
Purchaser's Board of Directors (y) any significant deficiencies and material
weaknesses in the design or operation of internal controls over financial
reporting (as defined in Rule 13a-15 promulgated under the Exchange Act) that
are reasonably likely to adversely affect Purchaser's ability to record,
process, summarize and report financial information and (z) any fraud, whether
or not material, that involves management or other employees who have a
significant role in Purchaser's internal controls over financial reporting.
These disclosures were made in writing by management to Purchaser's auditors and
audit committee and a copy has previously been made available to Seller. As of
the date hereof, and except as Previously Disclosed, Purchaser knows of no
reason related to Purchaser to believe that Purchaser's outside auditors and its
chief executive officer and chief financial officer will not be able to give the
certifications and attestations required pursuant to Sections 302, 404 and 906
of the Xxxxxxxx-Xxxxx Act, without qualification (except to extent expressly
permitted by such rules and regulations), when next due.
(iv) Since December 31, 2006, (A) through the date
hereof, neither Purchaser nor any of its Subsidiaries nor, to Purchaser's
knowledge, any director, officer, employee, auditor, accountant or
representative of Purchaser or any of its Subsidiaries has received or otherwise
had or obtained knowledge of any material complaint, allegation, assertion or
claim, whether written or oral, regarding the accounting or auditing practices,
procedures, methodologies or methods of Purchaser or any of its Subsidiaries or
their respective internal accounting controls, including any material complaint,
allegation, assertion or claim that
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Purchaser or any of its Subsidiaries has engaged in questionable accounting or
auditing practices and (B) no attorney representing Purchaser or any of its
Subsidiaries, whether or not employed by Purchaser or any of its Subsidiaries,
has reported evidence of a material violation of securities laws, breach of
fiduciary duty or similar violation by Purchaser or any of its Subsidiaries or
any of their respective officers, directors, employees, or agents to the Board
of Directors of Purchaser or any committee thereof or to any director or officer
of Purchaser.
(g) Litigation. Except as Previously Disclosed, as of the
date of this Agreement, there is no material suit, action, investigation, audit
or proceeding (whether judicial, arbitral, administrative or other) pending or,
to Purchaser's knowledge, threatened against or affecting Purchaser or any of
its Subsidiaries, nor is there any judgment, decree, injunction, rule or order
of any Governmental Authority or arbitration outstanding against Purchaser or
any of its Subsidiaries.
(h) Regulatory Matters.
(i) Neither Purchaser nor any of its Subsidiaries or
properties is a party to or is subject to any order, decree, agreement,
memorandum of understanding or similar arrangement with, or a commitment letter
or similar submission to, or extraordinary supervisory letter from, any
Regulatory Authority charged with the supervision or regulation of financial
institutions and their subsidiaries (including their holding companies) or
issuers of securities.
(ii) Neither Purchaser nor any of its Subsidiaries
has been advised by any Regulatory Authority that such Regulatory Authority is
contemplating issuing or requesting (or is considering the appropriateness of
issuing or requesting) any such order, decree, agreement, memorandum of
understanding, commitment letter, supervisory letter or similar submission nor
to its knowledge has any Regulatory Authority commenced an investigation in
connection therewith.
(i) Compliance with Laws. Except as Previously Disclosed, each
of Purchaser and its Subsidiaries:
(i) is in material compliance with all applicable
federal, state, local and foreign statutes, laws, regulations, ordinances,
rules, judgments, orders or decrees applicable thereto or to the employees
conducting such businesses, including, without limitation, the Equal Credit
Opportunity Act, the Fair Housing Act, the CRA (which includes a CRA Rating of
"satisfactory" or better), the Home Mortgage Disclosure Act and all other
applicable fair lending laws and other laws relating to discriminatory business
practices;
(ii) has all permits, licenses, authorizations, orders
and approvals of, and has made all filings, applications and registrations with,
all Governmental Authorities that are required in order to permit them to own or
lease their properties and to conduct their businesses as presently conducted
except where the failure to make any such filing would not constitute a Material
Adverse Effect; all such permits, licenses, certificates of authority, orders
and approvals are in full force and effect and, to Purchaser's knowledge, no
suspension or cancellation of any of them is threatened; and
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(iii) has not received, since December 31, 2006,
any notification or communication from any Governmental Authority (A) asserting
that Purchaser or any of its Subsidiaries is not in material compliance with any
of the statutes, regulations, or ordinances which such Governmental Authority
enforces or (B) threatening to revoke any license, franchise, permit, or
governmental authorization (nor, to Purchaser's knowledge, do any grounds for
any of the foregoing exist).
(j) Environmental Matters. Except as Previously Disclosed,
to Purchaser's knowledge, neither the conduct nor operation of Purchaser or its
Subsidiaries nor any condition of any property presently or previously owned,
leased or operated by any of them (including, without limitation, in a fiduciary
or agency capacity), or on which any of them holds a Lien, violates or violated
Environmental Laws and to Purchaser's knowledge, no condition has existed or
event has occurred with respect to any of them or any such property that, with
notice or the passage of time, or both, is reasonably likely to result in
liability under Environmental Laws. To Purchaser's knowledge, neither Purchaser
nor any of its Subsidiaries has used or stored any Hazardous Material in, on, or
at any property presently or previously owned, leased or operated by any of them
in violation of any Environmental Law. To Purchaser's knowledge, neither
Purchaser nor any of its Subsidiaries has received any notice from any Person
that Purchaser or its Subsidiaries or the operation or condition of any property
ever owned, leased, operated, or held as collateral or in a fiduciary capacity
by any of them are or were in violation of or otherwise are alleged to have
liability under any Environmental Law, including, but not limited to,
responsibility (or potential responsibility) for the cleanup or other
remediation of any pollutants, contaminants, or hazardous or toxic wastes,
substances or materials at, on, beneath, or originating from any such property.
Neither Purchaser nor any of its Subsidiaries is the subject of any action,
claim, litigation, dispute, investigation or other proceeding with respect to
violations of, or liability under, any Environmental Law. To Purchaser's
knowledge, Purchaser and each of its Subsidiaries has timely filed all reports
and notifications required to be filed with respect to all of its operations and
properties presently or previously owned, leased or operated by any of them and
has generated and maintained all required records and data under all applicable
Environmental Laws.
(k) Risk Management Instruments. All material interest rate
swaps, caps, floors, option agreements, futures and forward contracts and other
similar risk management arrangements, whether entered into for Purchaser's own
account, or for the account of one or more of Purchaser's Subsidiaries or their
customers (all of which are listed on Purchaser's Disclosure Schedule), were
entered into (i) in accordance with prudent business practices and all
applicable laws, rules, regulations and regulatory policies and (ii) with
counterparties believed to be financially responsible at the time; and each of
them constitutes the valid and legally binding obligation of Purchaser or one of
its Subsidiaries, enforceable in accordance with its terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general equity
principles), and is in full force and effect. Neither Purchaser nor its
Subsidiaries, nor to Purchaser's knowledge any other party thereto, is in breach
of any of its obligations under any such agreement or arrangement.
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(l) Books and Records; Minute Books. The books and records of
Purchaser and its Subsidiaries have been fully, properly and accurately
maintained in all material respects, have been maintained in accordance with
ordinary business practices in the banking industry, and there are no material
inaccuracies or discrepancies of any kind contained or reflected therein and
they fairly reflect the substance of events and transactions included therein.
The minute books of Purchaser and its Subsidiaries contain records, which are
accurate in all material respects, of all corporate actions of its
shareholder(s) and Board of Directors (including committees of its Board of
Directors).
(m) Purchaser Off Balance Sheet Transactions. Section 5.03(m)
of Purchaser's Disclosure Schedule sets forth a true and complete list of all
affiliated Purchaser entities, including without limitation all special purpose
entities, limited purpose entities and qualified special purpose entities, in
which Purchaser or any of its Subsidiaries has an economic or management
interest. Section 5.03(m) of Purchaser's Disclosure Schedule also sets forth a
true and complete list of all transactions, arrangements, and other
relationships between or among any such Purchaser affiliated entity, Purchaser,
any of its Subsidiaries, and any officer or director of Purchaser or any of its
Subsidiaries that are not reflected in the consolidated financial statements of
Purchaser (each, a "Purchaser Off Balance Sheet Transaction"), along with the
following information with respect to each such Purchaser Off Balance Sheet
Transaction: (i) the business purpose, activities, and economic substance; (ii)
the key terms and conditions; (iii) the potential risk to Purchaser or any of
its Subsidiaries; (iv) the amount of any guarantee, line of credit, standby
letter of credit or commitment, or any other type of arrangement, that could
require Purchaser or any of its Subsidiaries to fund any obligations under any
such transaction; and (v) any other information that could have a Material
Adverse Effect on Purchaser or any of its Subsidiaries.
(n) Disclosure. The representations and warranties contained
in this Section 5.03 do not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements and
information contained in this Section 5.03 not misleading.
(o) Material Adverse Change. Except as Previously Disclosed,
Purchaser has not, on a consolidated basis, suffered a change in its business,
financial condition or results of operations since December 31, 2006 that has
had a Material Adverse Effect on Purchaser.
(p) Bank Secrecy Act, Anti-Money Laundering and OFAC and
Customer Information. Purchaser is not aware of, has not been advised of, and
has no reason to believe that any facts or circumstances exist, which would
cause it or any of its Subsidiaries to be deemed (i) to be operating in
violation in any material respect of the Bank Secrecy Act, the Patriot Act, any
order issued with respect to anti-money laundering by the U.S. Department of the
Treasury's Office of Foreign Assets Control, or any other applicable anti-money
laundering statute, rule or regulation; or (ii) not to be in satisfactory
compliance in any material respect with the applicable privacy and customer
information requirements contained in any federal and state privacy laws and
regulations, including, without limitation, in Title V of the Xxxxx-Xxxxx-Xxxxxx
Act of 1999 and the regulations promulgated thereunder, as well as the
provisions of the information security program adopted by Purchaser pursuant to
12 C.F.R. Part 364. It is not aware of any facts or circumstances that would
cause it to believe that any non-public customer
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information has been disclosed to or accessed by an unauthorized third party in
a manner that would cause it or any of its Subsidiaries to undertake any
material remedial action. The Purchaser Board (or, where appropriate, the board
of directors of any of Purchaser's Subsidiaries) has adopted and implemented an
anti-money laundering program that contains adequate and appropriate customer
identification verification procedures that comply with Section 326 of the
Patriot Act and such anti-money laundering program meets the requirements in all
material respects of Section 352 of the Patriot Act and the regulations
thereunder, and it (or such other of its Subsidiaries) has complied in all
material respects with any requirements to file reports and other necessary
documents as required by the Patriot Act and the regulations thereunder.
(q) Financial Capacity. As of the Closing Date, Purchaser
shall have sufficient cash and a sufficient number of authorized but unissued
shares to fulfill its obligations with respect to the Merger Consideration.
ARTICLE VI
COVENANTS
Section 6.01 Reasonable Best Efforts. Subject to the terms and
conditions of this Agreement, each of Seller and Purchaser agrees to use its
reasonable best efforts in good faith to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper or
desirable, or advisable under applicable laws, so as to permit consummation of
the Merger as promptly as practicable and otherwise to enable consummation of
the transactions contemplated hereby, including the satisfaction of the
conditions set forth in Article VII hereof, and shall cooperate fully with the
other party hereto to that end.
Section 6.02 Shareholder Approval. Seller agrees to use its reasonable
best efforts to take, in accordance with applicable law and the Seller Articles
and Seller Bylaws, all action necessary to convene a meeting of its shareholders
(including any adjournment or postponement, the "Seller Meeting"), as promptly
as practicable, to consider and vote upon the adoption and approval of this
Agreement, as well as any other matters required to be approved by Seller's
shareholders for consummation of the Merger. Subject to its fiduciary duties, as
determined in good faith after consultation with independent legal counsel, the
Seller Board shall recommend that the shareholders of Seller vote in favor of
such adoption and approval.
Section 6.03 Registration Statement.
(a) Purchaser agrees to prepare, pursuant to all applicable
laws, rules and regulations, a registration statement on Form S-4 (the
"Registration Statement") to be filed by Purchaser with the SEC in connection
with the issuance of Purchaser Common Stock in the Merger (including the proxy
statement and prospectus and other proxy solicitation materials of Seller
constituting a part thereof (the "Proxy/Prospectus") and all related documents).
Seller agrees to cooperate, and to cause its Subsidiaries to cooperate, with
Purchaser, its counsel and its accountants, in preparation of the Registration
Statement and the Proxy/Prospectus; and provided that Seller and its
Subsidiaries have cooperated as required above, Purchaser agrees to file the
Registration Statement, which will include the form of Proxy/Prospectus with the
SEC as
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promptly as reasonably practicable but in no event later than 60 days after the
date hereof. Each of Seller and Purchaser agrees to use all reasonable efforts
to cause the Registration Statement to be declared effective under the
Securities Act as promptly as reasonably practicable after filing thereof.
Purchaser also agrees to use all reasonable efforts to obtain, prior to the
effective date of the Registration Statement, all necessary state securities law
or "Blue Sky" permits and approvals required to carry out the transactions
contemplated by this Agreement. Seller agrees to furnish to Purchaser all
information concerning Seller, its Subsidiaries, officers, directors and
shareholders as may be reasonably requested in connection with the foregoing.
(b) Each of Seller and Purchaser agrees, as to itself and its
Subsidiaries, that none of the information supplied or to be supplied by it for
inclusion or incorporation by reference in (i) the Registration Statement will,
at the time the Registration Statement and each amendment or supplement thereto,
if any, becomes effective under the Securities Act, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and (ii) the
Proxy/Prospectus and any amendment or supplement thereto will, at the date of
mailing to the Seller shareholders and at the time of the Seller Meeting, as the
case may be, not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein in light of the circumstances under which such statement is
made, not false or misleading. Each of Seller and Purchaser further agrees that
if it shall become aware prior to the Effective Date of any information
furnished by it that would cause any of the statements in the Proxy/Prospectus
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 party thereof and to take the necessary
steps to correct the Proxy/Prospectus.
(c) Purchaser agrees to advise Seller, promptly after Purchaser
receives notice thereof, of the time when the Registration Statement has become
effective or any supplement or amendment has been filed, of the issuance of any
stop order or the suspension of the qualification of Purchaser Common Stock for
offering or sale in any jurisdiction, of the initiation or threat of any
proceeding for any such purpose, or of any request by the SEC for the amendment
or supplement of the Registration Statement or for additional information.
Section 6.04 Press Releases. Each of Seller and Purchaser agrees that
it will not, without the prior approval of the other party, which shall not be
unreasonably withheld, issue any press release or written statement for general
circulation relating to the transactions contemplated hereby, except as
otherwise required by applicable law or regulation or AMEX or Nasdaq rules.
Section 6.05 Access; Information.
(a) Seller agrees that upon reasonable notice and subject to
applicable laws relating to the exchange of information, it shall afford
Purchaser and Purchaser's officers, employees, counsel, accountants and other
authorized representatives, such reasonable access during normal business hours
throughout the period prior to the Effective Time to the books, records
(including, without limitation, tax returns and work papers of independent
auditors), properties, personnel and to such other information as Purchaser may
reasonably request and, during such period, it shall furnish promptly to
Purchaser (i) a copy of each material report,
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schedule and other document filed by Seller pursuant to federal or state
securities or banking laws, and (ii) all other information concerning the
business, properties and personnel of Seller as Purchaser may reasonably
request. In no event, however, is Seller obligated to (i) provide access or
disclose any information to Purchaser where such access or disclosure would
violate any agreement not to disclose confidential information; or (ii) provide
access to board minutes that discuss of the transactions contemplated by this
Agreement, any Acquisition Proposal or any other subject matter Seller
reasonably determines should be treated as confidential.
(b) Each of Purchaser and Seller agrees that it will not, and
will cause its representatives not to, use any information obtained pursuant to
this Section 6.05 (as well as any other information obtained prior to the date
hereof in connection with the entering into of this Agreement) for any purpose
unrelated to the consummation of the transactions contemplated by this
Agreement. Subject to the requirements of law, each party will keep
confidential, and will cause its representatives to keep confidential, all
information and documents obtained pursuant to this Section 6.05 (as well as any
other information obtained prior to the date hereof in connection with the
entering into of this Agreement) unless such information (i) was already known
to such party, (ii) becomes available to such party from other sources not known
by such party to be bound by a confidentiality obligation, (iii) is disclosed
with the prior written approval of the party to which such information pertains
or (iv) is or becomes readily ascertainable from published information or trade
sources. No investigation by either party of the business and affairs of the
other shall affect or be deemed to modify or waive any representation, warranty,
covenant or agreement in this Agreement, or the conditions to either party's
obligation to consummate the transactions contemplated by this Agreement.
(c) During the period from the date of this Agreement to the
Effective Time, Seller shall promptly furnish Purchaser with copies of all
monthly and other interim financial statements produced in the ordinary course
of business as the same shall become available.
Section 6.06 Acquisition Proposals.
(a) Seller agrees that after the date hereof neither it
nor any of its subsidiaries nor any of its respective officers and directors or
the officers and directors of any of its subsidiaries shall, and it shall direct
and use its reasonable best efforts to cause its employees and agents, including
any investment banker, attorney or accountant retained by it or by any of its
subsidiaries (collectively, its "Representatives") not to, initiate, solicit or
encourage, directly or indirectly, any inquiries or the making or implementation
of any Acquisition Proposal, or, except to the extent that the Seller Board
determines, in good faith, after consultation with its outside financial and
legal advisors, that such action is required in order for the Seller Board to
comply with its fiduciary duties, 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 implement or make an Acquisition Proposal (and in any
event, Seller shall not provide any confidential information or data to any
Person in connection with an Acquisition Proposal unless such Person shall have
executed a confidentiality agreement on terms at least as favorable as those
contained in the Confidentiality Agreement). "Acquisition Proposal" means any
proposal or offer with respect to the following involving Seller or any of its
Significant Subsidiaries: (1) any merger, consolidation, share exchange,
business combination or other similar transaction; (2) any sale, lease,
exchange,
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pledge, transfer or other disposition of 25% or more of its consolidated assets
or liabilities in a single transaction or series of transactions; (3) any tender
offer or exchange offer for, or other acquisition of, 25% or more of the
outstanding shares of its capital stock; or (4) any public announcement of a
proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing, other than the Merger provided for in this
Agreement. Notwithstanding anything in this Agreement to the contrary, Seller
shall (i) promptly (but in no event later than 2 business days) advise
Purchaser, orally and in writing, of (x) the receipt by it (or any of the other
persons referred to above) of any Acquisition Proposal, or any inquiry which
could reasonably be expected to lead to an Acquisition Proposal, or any material
modification of or material amendment to any Acquisition Proposal, or any
request for nonpublic information relating to Seller or any of its Subsidiaries
or for access to the properties, books or records Seller or any of it
Subsidiaries by any Person or entity that informs the Seller Board or the board
of directors of any of its Subsidiaries that it is considering making, or has
made, an Acquisition Proposal and (y) the material terms and conditions of such
proposal or inquiry (whether written or oral) or modification or amendment to an
Acquisition Proposal, and (ii) keep Purchaser fully informed of the status and
details of any such proposal or inquiry and any developments with respect
thereto. Seller shall use its reasonable best efforts to enforce any existing
confidentiality or standstill agreements in accordance with the terms thereof,
and shall immediately take all steps necessary to terminate any approval that
may have been heretofore given under any such provisions authorizing any Person
to make an Acquisition Proposal. "Significant Subsidiary" has the meaning
ascribed to that term in Rule 1-02 of Regulation S-X under the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
(b) Seller and its Subsidiaries shall immediately cease and
cause to be terminated any existing discussions or negotiations with any Persons
(other than Purchaser) conducted heretofore with respect to any of the
foregoing, and shall use reasonable best efforts to cause all Persons other than
Purchaser who have been furnished confidential information regarding Seller or
its Subsidiaries in connection with the solicitation of or discussions regarding
an Acquisition Proposal within the 12 months prior to the date hereof promptly
to return or destroy such information. Neither Seller nor the Seller Board shall
approve or take any action to render inapplicable to any Acquisition Proposal
any applicable Takeover Laws or Takeover Provisions.
Section 6.07 Takeover Laws. No party hereto shall take any action that
would cause the transactions contemplated by this Agreement to be subject to
requirements imposed by any Takeover Law and each of them shall take all
necessary steps within its control to exempt (or ensure the continued exemption
of) the transactions contemplated by this Agreement from, or, if necessary,
challenge the validity or applicability of, any applicable Takeover Law, as now
or hereafter in effect. Neither party will take any action that would cause the
transactions contemplated hereby not to comply with any Takeover Provisions and
each of them will take all necessary steps within its control to make those
transactions comply with (or continue to comply with) the Takeover Provisions.
Section 6.08 Reports. Each of Seller and Purchaser shall file (and
shall cause Seller's Subsidiaries and Purchaser's Subsidiaries, respectively, to
file), between the date of this Agreement and the Effective Time, all reports
required to be filed by it with the SEC and any
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other Regulatory Authorities having jurisdiction over such party, and Seller
shall deliver to Purchaser copies of all such reports promptly after the same
are filed. Any financial statements contained in any reports to a Regulatory
Authority shall be prepared in accordance with requirements applicable to such
reports.
Section 6.09 Nasdaq Listing. Purchaser will use all reasonable best
efforts to cause the shares of Purchaser Common Stock to be issued in the Merger
to be approved for listing on the Nasdaq, subject to official notice of
issuance, as promptly as practicable, and in any event before the Effective
Time.
Section 6.10 Regulatory Applications.
(a) Purchaser and Seller and their respective Subsidiaries
shall cooperate and use their respective reasonable best efforts to prepare all
documentation, to timely effect all filings and to obtain all permits, consents,
approvals and authorizations of all third parties and Governmental Authorities
necessary to consummate the transactions contemplated by this Agreement. Each
party hereto agrees that it will consult with the other party hereto with
respect to the obtaining of all material permits, consents, approvals and
authorizations of all third parties and Governmental Authorities necessary or
advisable to consummate the transactions contemplated by this Agreement and each
party will keep the other party apprised of the status of material matters
relating to completion of the transactions contemplated hereby. Any initial
filings with Governmental Authorities shall be made by Purchaser as soon as
reasonably practicable after the execution hereof but, provided that Seller has
cooperated as described above, in no event later than 60 days after the date
hereof. Subject to applicable laws relating to the exchange of information, each
of Purchaser and Seller shall, to the extent practicable, consult with the other
on all material written information submitted to any third party and/or any
Governmental Authority in connection with the Merger and the other transactions
contemplated by this Agreement. In exercising the foregoing right, each of such
parties agrees to act reasonably and as promptly as practicable.
(b) Each party agrees, upon request, to furnish the other
party with all information concerning itself, its Subsidiaries, directors,
officers and shareholders and such other matters as may be reasonably necessary
or advisable in connection with any filing, notice or application made by or on
behalf of such other party or any of its Subsidiaries to any third party or
Governmental Authority.
Section 6.11 Seller Employees; Director and Management;
Indemnification.
(a) All employees of Seller and its Subsidiaries as of
immediately prior to the Effective Time shall be employed by Purchaser or its
Subsidiaries as of the Effective Time (the "Continuing Employees"). Such
employment of the Continuing Employees shall be subject to Purchaser's usual
terms, conditions and policies of employment. Continuing Employees shall be
entitled to participate in all benefit plans and programs on the same basis as
other similarly-situated employees of Purchaser, including, but not limited to,
vacation, health, life insurance, disability insurance, defined benefit pension
plans and salary deferral plans. For the calendar year including the Effective
Date, the Continuing Employees shall not be required to satisfy any deductible,
co-payment, out-of-pocket maximum or similar requirements under the benefit
plans
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maintained by Purchaser (or its Subsidiaries) that provide medical, dental and
other welfare benefits (the "Purchaser Welfare Plans") to the extent of amounts
previously credited for such purposes under the Seller Plans that provide
medical, dental and other welfare benefits (the "Seller Welfare Plans"). Any
waiting periods, pre-existing condition exclusions and requirements to show
evidence of good health contained in such Purchaser Welfare Plans shall be
waived with respect to the Continuing Employees (except to the extent any such
waiting period, pre-existing condition exclusion, or requirement to show
evidence of good health applied under the applicable Seller Welfare Plan in
which the participant then participates or is otherwise eligible to participate
as of immediately prior to the Effective Time). Continuing Employees will be
given credit for their service with Seller for purposes of eligibility and
vesting under all of Purchaser's Welfare Plans and other employee benefit plans.
This Section 6.11(a) shall not be construed to limit the ability of Purchaser
and its Subsidiaries to terminate the employment of any employee at any time for
any reason or to review employee benefits programs from time to time and to make
such changes as they deem appropriate.
(b) Purchaser agrees to honor, or to cause the appropriate
Purchaser Subsidiary to honor, in accordance with their terms, all change in
control agreements listed on Section 6.11(b) of the Disclosure Schedule,
provided, however, that the foregoing shall not prevent Purchaser or any
Purchaser Subsidiary from amending or terminating any such agreement in
accordance with its terms and applicable law.
(c) Effective immediately following the Effective Date, the
Continuing Employees will be eligible for severance benefits and defined benefit
pension plan coverage as set forth in Section 6.11(c) of the Disclosure
Schedule.
(d) No provision of this Section 6.11 shall create any third
party beneficiary rights in any Continuing Employee, or any other employee or
former employee of Seller or any of its Subsidiaries (including any beneficiary
or dependent of any Continuing Employee, other employee or former employee) in
respect of continued employment (or resumed employment) or any other matter.
(e) Prior to the Effective Date, Seller shall take all actions
that may be requested by Purchaser in writing with respect to (i) causing one or
more Plans to terminate as of the Effective Date, or as of the date immediately
preceding the Effective Date, (ii) causing benefit accrual and entitlements
under any Plan to cease as of the Effective Date, (iii) causing the continuation
on and after the Effective Date of any contract, arrangement or insurance policy
relating to any Plan for such period as may be requested by Purchaser, or (iv)
facilitating the merger of any Plan into any employee benefit plan maintained by
Purchaser.
(f) In the event of any threatened or actual claim, action,
suit, proceeding or investigation, whether civil, criminal or administrative,
including, without limitation, any such claim, action, suit, proceeding or
investigation in which any person who is now, or has been at any time prior to
the date of this Agreement, or who becomes prior to the Effective Date, a
director or officer of Seller (the "Indemnified Parties") is, or is threatened
to be, made a party based in whole or in part on, or arising in whole or in part
out of, or pertaining to (i) the fact that he is or was a director, officer or
employee of Seller, or any of its Subsidiaries or any of their respective
predecessors or (ii) this Agreement or any of the transactions contemplated
hereby,
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whether in any case asserted or arising before or after the Effective Date, the
parties hereto agree to cooperate and use their best efforts to defend against
and respond thereto. On and after the Effective Date, Purchaser shall indemnify
and hold harmless, as and to the fullest extent permitted by law, each such
Indemnified Party against any losses, claims, damages, liabilities, costs,
expenses (including reasonable attorney's fees and expenses in advance of the
final disposition of any claim, suit, proceeding or investigation to each
Indemnified Party to the fullest extent permitted by law upon receipt of any
undertaking required by applicable law), judgments, fines and amounts paid in
settlement in connection with any such threatened or actual claim, action, suit,
proceeding or investigation, and in the event of any such threatened or actual
claim, action, suit, proceeding or investigation (whether asserted or arising
before or after the Effective Date), the Indemnified Parties may retain counsel
reasonably satisfactory to them after consultation with Purchaser; provided,
however, that (1) Purchaser shall have the right to assume the defense thereof
and upon such assumption Purchaser shall not be liable to any Indemnified Party
for any legal expenses of other counsel or any other expenses subsequently
incurred by any Indemnified Party in connection with the defense thereof, except
that if Purchaser elects not to assume such defense or counsel for the
Indemnified Parties reasonably advises the Indemnified Parties that there are
issues which raise conflicts of interest between Purchaser and the Indemnified
Parties, the Indemnified Parties may retain counsel reasonably satisfactory to
them after notification, and Purchaser shall pay the reasonable fees and
expenses of such counsel for the Indemnified Parties, (2) Purchaser shall be
obligated pursuant to this paragraph to pay for only one firm of counsel for all
Indemnified Parties, (3) Purchaser shall not be liable for any settlement
effected without its prior written consent (which consent shall not be
unreasonably withheld), and (4) Purchaser shall have no obligation hereunder to
any Indemnified Party when and if a court of competent jurisdiction shall
ultimately determine, and such determination shall have become final and
nonappealable, that indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable law. Any Indemnified Party
wishing to claim Indemnification under this Section 6.11(f), upon learning of
any such claim, action, suit, proceeding or investigation, shall promptly notify
Purchaser thereof, provided that the failure of any Indemnified Party to so
notify Purchaser shall not relieve it of its obligations hereunder except (and
only) to the extent that such failure materially prejudices Purchaser.
Purchaser's obligations under this Section 6.11(f) continue in full force and
effect for a period of six years from the Effective Date; provided, however,
that all rights to indemnification in respect of any claim (a "Claim") asserted
or made within such period shall continue until the final disposition of such
Claim.
(g) Purchaser agrees that all rights to indemnification and all
limitations on liability existing in favor of the directors, officers and
employees of Seller and any of its Subsidiaries (the "Covered Parties") as
provided in their respective articles of incorporation, bylaws or similar
governing documents as in effect as of the date of this Agreement with respect
to matters occurring prior to the Effective Date shall survive the Merger and
shall continue in full force and effect, and shall be honored by such entities
or their respective successors as if they were the indemnifying party
thereunder, without any amendment thereto, for a period of six years from the
Effective Date; provided, however, that all rights to indemnification in respect
of any Claim asserted or made within such period shall continue until the final
disposition of such Claim; provided, further, however, that nothing contained in
this Section 6.11(g) shall be deemed to preclude the liquidation, consolidation
or merger of Seller or any of its Subsidiaries, in which
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case all of such rights to indemnification and limitations on liability shall be
deemed to so survive and continue as an obligation of Purchaser or the successor
to Seller or its Subsidiary notwithstanding any such liquidation, consolidation
or merger.
(h) Purchaser, from and after the Effective Date will use its
reasonable best efforts directly or indirectly to cause the persons who served
as directors or officers of Seller on or before the Effective Date to be covered
by Seller's existing directors' and officers' liability insurance policy
(provided that Purchaser may substitute therefor policies of at least the same
coverage and amounts containing terms and conditions which are not less
advantageous than such policy) but in no event shall any insured person be
entitled under this Section 6.11(h) to insurance coverage more favorable than
that provided to him or her in such capacities as of the date hereof with
respect to acts or omissions resulting from their service as such on or prior to
the Effective Date. Such insurance coverage, if reasonably available at a
reasonable cost relative to the coverage obtained, shall commence on the
Effective Date and will be provided for a period of no less than three years
after the Effective Date; provided, however, that in no event shall Purchaser be
required to expend more than 150% of the current amount expended by Seller (the
"Insurance Amount") to maintain or procure insurance coverage pursuant hereto
and, provided, further, that the Insurance Amount shall be deemed reasonable for
purposes of this Section 6.11(h). Seller agrees to renew any such existing
insurance or to purchase any "discovery period" insurance provided for
thereunder at Purchaser's request.
(i) In the event Purchaser or any of its successors or assigns
(i) consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) transfers or conveys all or substantially all of its properties and
assets to any person, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of Purchaser
assume the obligations set forth in this section.
(j) The provisions of Section 6.11(f), (g), (h) and (i) are
intended to be for the benefit of, and shall be enforceable by, each Indemnified
Party and their respective heirs and representatives.
(k) The parties agree to take the further actions Previously
Disclosed by Purchaser. [See terms to be disclosed in Disclosure Schedule.]
Section 6.12 Notification of Certain Matters. Each of Seller and
Purchaser shall give prompt notice to the other of any fact, event or
circumstance known to it that (i) is reasonably likely, individually or taken
together with all other facts, events and circumstances known to it, to result
in any Material Adverse Effect with respect to it or (ii) would cause or
constitute a material breach of any of its representations, warranties,
covenants or agreements contained herein.
Section 6.13 Dividend Coordination. It is agreed by the parties hereto
that they will cooperate to assure that as a result of the Merger, during any
applicable period, there shall not be a payment of both a Purchaser and a Seller
dividend. The parties further agree that if the Effective Date is at the end of
a fiscal quarter, then they will cooperate to assure that the Seller
shareholders receive the dividend declared by Purchaser, if any, rather than the
dividend for that
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period, if any, declared by Seller. In no event, however, shall Seller
shareholders fail to receive a dividend from either of Seller or Purchaser for
any quarterly period (or portion thereof) between the date hereof and the
Effective Date.
Section 6.14 Board of Directors; Advisory Board.
(a) Effective as of the Effective Date, three members of
the Seller Board designated prior to the Effective Date by Purchaser's
Nominating and Corporate Governance Committee in accordance with its policies
and procedures, as in effect as of the date of this Agreement, shall be
appointed to the Purchaser Board and to the Board of Directors of Purchaser
Bank.
(b) Each of the members of the Seller Board not appointed to the
Purchaser Board and the Board of Directors of Purchaser Bank will be asked to
serve on Purchaser Bank's Xxxxxxxxxxxx County Advisory Board.
(c) Individuals serving as Directors or Advisory Directors
pursuant to Subsections (a) and (b) of this Section 6.14 shall receive the
compensation provided to Directors or Advisory Directors of Purchaser or
Purchaser Bank, as the case may be which shall be at least $800 per year of
Advisory Board service.
Section 6.15 Tax Treatment. (i) Each of Purchaser and Seller agrees not
to take any actions subsequent to the date of this Agreement that would
adversely affect the qualification of the Parent Merger as a reorganization
under Section 368(a) of the Code, and (ii) each of Purchaser and Seller agrees
to take any action as may be reasonably required, if such action may be
reasonably taken to reverse the impact of any past actions that would adversely
impact the qualification of the Parent Merger as a reorganization under Section
368(a) of the Code.
Section 6.16 No Breaches of Representations and Warranties. Between the
date of this Agreement and the Effective Time, without the written consent of
the other party, each of Purchaser and Seller will not do any act or suffer any
omission of any nature whatsoever that would cause any of the representations or
warranties made in Article V of this Agreement to become untrue or incorrect in
any material respect.
Section 6.17 Consents. Each of Purchaser and Seller shall use its best
efforts to obtain any required consents to the transactions contemplated by this
Agreement.
Section 6.18 Insurance Coverage. Seller shall cause each of the
policies of insurance listed in its Disclosure Schedule to remain in effect
between the date of this Agreement and the Effective Date.
Section 6.19 Correction of Information. Each of Purchaser and Seller
shall promptly correct and supplement any information furnished under this
Agreement so that such information shall be correct and complete in all material
respects at all times, and shall include all facts necessary to make such
information correct and complete in all material respects at all times, provided
that any such correction that may result in a change to a party's Disclosure
Schedule shall not be made without the prior written consent of the other party.
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Section 6.20 Confidentiality. Except for the use of information in
connection with the Registration Statement described in Section 6.03 hereof and
any other governmental filings required in order to complete the transactions
contemplated by this Agreement, all information (collectively, the
"Information") received by each of Seller and Purchaser, pursuant to the terms
of this Agreement shall be kept in strictest confidence; provided that,
subsequent to the filing of the Registration Statement with the SEC, this
Section 6.20 shall not apply to information included in the Registration
Statement or to be included in the official Proxy/Prospectus to be sent to the
shareholders of Seller under Section 6.03. Seller and Purchaser agree that the
Information will be used only for the purpose of completing the transactions
contemplated by this Agreement. Seller and Purchaser agree to hold the
Information in strictest confidence and shall not use, and shall not disclose
directly or indirectly any of such Information except when, after and to the
extent such Information (i) is or becomes generally available to the public
other than through the failure of Seller or Purchaser to fulfill its obligations
hereunder, (ii) was already known to the party receiving the Information on a
nonconfidential basis prior to the disclosure or (iii) is subsequently disclosed
to the party receiving the Information on a nonconfidential basis by a third
party having no obligation of confidentiality to the party disclosing the
Information. It is agreed and understood that the obligations of Seller and
Purchaser contained in this Section 6.20 shall survive the Closing or
termination of this Agreement.
Section 6.21 Voting Agreement. Each director of Seller shall, within 30
days of the date hereof, enter into a voting agreement with Purchaser pursuant
to which such director agrees to vote all shares of Seller Common Stock with
respect to which such director shall have voting rights on the record date for
the special meeting of Seller in favor of the Parent Merger and further agrees
not to dispose of any shares of Seller Common Stock he or she holds as of the
date of such voting agreement prior to the earlier to occur of the Effective
Date or the date this Agreement is terminated in accordance with its terms.
Section 6.22 Certain Policies. Prior to the Effective Date, to the
extent permitted by law, Seller shall, consistent with generally accepted
accounting principles and on a basis mutually satisfactory to it and Purchaser,
modify and change its loan, 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 Purchaser; provided, however,
that Seller shall not be obligated to take any such action pursuant to this
Section 6.22 unless and until (i) Purchaser irrevocably acknowledges to Seller
in writing that all conditions to its obligation to consummate the Parent Merger
have been satisfied; and (ii) Purchaser irrevocably waives in writing any and
all rights that it may have to terminate this Agreement and Seller has obtained
the approval of this Agreement from its shareholders.
Section 6.23 Brokerage and Finder's Fees. Purchaser shall be fully
responsible for any brokerage fee, finder's fee, commission or other similar
form of compensation payable to any broker, finder or agent in connection with
this Agreement or the transactions contemplated hereby.
Section 6.24 Section 16(b) Exemption. Purchaser and Seller agree that,
in order to most effectively compensate and retain Seller Insiders (as defined
below) in connection with the Merger, both prior to and after the Effective
Date, it is desirable that Seller Insiders not be subject to a risk of liability
under Section 16(b) of the Exchange Act to the fullest extent
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permitted by applicable law in connection with the conversion of shares of
Seller Common Stock into shares of Purchaser Common Stock in the Merger, and for
that compensatory and retentive purpose agree to the provisions of this Section
6.24. Assuming that Seller delivers to Purchaser the Seller Section 16
Information (as defined below) in a timely fashion prior to the Effective Date,
the Board of Directors of Purchaser, or a committee of non-employee directors
thereof (as such term is defined for purposes of Rule 16b-3(d) under the
Exchange Act) shall reasonably promptly thereafter and in any event prior to the
Effective Date adopt a resolution providing in substance that the receipt by the
Seller Insiders of Purchaser Common Stock in exchange for shares of Seller
Common Stock pursuant to the transactions contemplated hereby and to the extent
such securities are listed in the Seller Section 16 Information, are intended to
be exempt from liability pursuant to Section 16(b) under the Exchange Act to the
fullest extent permitted by applicable law. "Seller Section 16 Information"
means information accurate in all material respects regarding the Seller
Insiders and the number of shares of Seller Common Stock held by each such
Seller Insider and expected to be exchanged for Purchaser Common Stock in the
Merger. "Seller Insiders" means those officers and directors of Seller who are
subject to the reporting requirements under Section 16(a) of the Exchange Act
and who are expected to be subject to Section 16(a) of the Exchange Act with
respect to Purchaser Common Stock subsequent to the Effective Date.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 7.01 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each of Purchaser and Seller to consummate
the Merger is subject to the fulfillment or written waiver by Purchaser and
Seller prior to the Effective Time of each of the following conditions:
(a) Shareholder Approval. This Agreement shall have been
duly adopted by the requisite vote of Seller's shareholders.
(b) Regulatory Approvals. All regulatory approvals required
to consummate the transactions contemplated hereby shall have been obtained and
shall remain in full force and effect and all statutory waiting periods in
respect thereof shall have expired and no such approvals shall contain (i) any
conditions, restrictions or requirements that the Purchaser Board reasonably
determines would either before or after the Effective Time have a Material
Adverse Effect on Purchaser after giving effect to the consummation of the
Merger, or (ii) any conditions, restrictions or requirements that the Purchaser
Board reasonably determines would either before or after the Effective Date be
unduly burdensome.
(c) No Injunction. No Governmental Authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, judgment, decree, injunction or other order (whether
temporary, preliminary or permanent) that is in effect and prohibits
consummation of the transactions contemplated by this Agreement.
(d) Registration Statement. The Registration Statement shall
have become effective under the Securities Act and no stop order suspending the
effectiveness of the
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Registration Statement shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the SEC and, if the offer and
sale of Purchaser Common Stock in the Merger is subject to the blue sky laws of
any state, shall not be subject to a stop order of any state securities
commissioner.
(e) Nasdaq Listing. The shares of Purchaser Common Stock to
be issued in the Merger shall have been approved for listing on Nasdaq, subject
to official notice of issuance.
(f) Tax Opinion. Purchaser and Seller shall have received
an opinion from counsel to Purchaser, dated the Closing Date, substantially to
the effect that on the basis of the facts, representations and assumptions set
forth or referred to in such opinion, (1) the Parent Merger will qualify as a
reorganization within the meaning of Section 368(a) of the Code; (2) holders of
Seller Common Stock who receive Purchaser Common Stock in the Parent Merger in
exchange for all of their shares of Seller Common Stock will not recognize any
gain or loss with respect to shares of Purchaser Common Stock received (except
with respect to cash received instead of a fractional share interest in
Purchaser Common Stock); (3) each holder of Seller Common Stock who receives
Purchaser Common Stock and cash (other than cash in lieu of fractional shares in
Purchaser Common Stock) in the Parent Merger in exchange for the holder's shares
of Seller Common Stock will recognize the gain, if any, realized by the holder,
in an amount not in excess of the amount of cash received (other than cash
received instead of a fractional share interest in Purchaser Common Stock), but
will not recognize any loss on the exchange; and (4) a holder of Seller Common
stock who receives cash instead of a fractional share interest in Purchaser
Common stock will recognize gain or loss equal to the difference between the
cash received and the portion of the basis of the holder's shares of Seller
Common Stock allocable to that fractional share interest.
Section 7.02 Conditions to Obligation of Seller. The obligation of
Seller to consummate the Merger is also subject to the fulfillment or written
waiver by Seller prior to the Effective Time of each of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of Purchaser set forth in this Agreement shall be true and correct in
all material respects, as of the date of this Agreement and as of the Effective
Date as though made on and as of the Effective Date (except that representations
and warranties that by their terms speak as of the date of this Agreement or
some other date shall be true and correct in all material respects as of such
date), and Seller shall have received a certificate, dated the Effective Date,
signed on behalf of Purchaser by a Senior Executive Vice President or an
Executive Vice President of Purchaser to such effect.
(b) Performance of Obligations of Purchaser. Purchaser shall
have performed in all material respects all obligations required to be performed
by Purchaser under this Agreement at or prior to the Effective Time, and Seller
shall have received a certificate, dated the Effective Date, signed on behalf of
Purchaser by a Senior Executive Vice President or an Executive Vice President of
Purchaser to such effect.
(c) Exchange Agent Certificate. Seller shall have received
a certificate from the Exchange Agent certifying the deposit by Purchaser in the
escrow account described in
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Section 3.04 of this Agreement of sufficient funds to pay the cash portion of
the Merger Consideration, together with irrevocable authorization to issue
sufficient shares of Purchaser Common Stock to be issued in exchange for the
shares of Seller Common Stock to be converted into Purchaser Common Stock
pursuant to the terms of this Agreement.
Section 7.03 Conditions to Obligation of Purchaser. The obligation of
Purchaser to consummate the Merger is also subject to the fulfillment or written
waiver by Purchaser prior to the Effective Time of each of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of Seller set forth in this Agreement shall be true and correct in
all material respects as of the date of this Agreement and as of the Effective
Date as though made on and as of the Effective Date (except that representations
and warranties that by their terms speak as of the date of this Agreement or
some other date shall be true and correct in all material respects as of such
date), and Purchaser shall have received a certificate, dated the Effective
Date, signed on behalf of Seller by the Chief Executive Officer and the Chief
Financial Officer of Seller to such effect.
(b) Rights Agreement. The Rights issued pursuant to the Rights
Agreement shall not have become nonredeemable, exercisable, distributed or
triggered pursuant to the terms of such agreement.
(c) Performance of Obligations of Seller. Seller shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Effective Time, and Purchaser shall
have received a certificate, dated the Effective Date, signed on behalf of
Seller by the Chief Executive Officer and the Chief Financial Officer of Seller
to such effect.
ARTICLE VIII
TERMINATION
Section 8.01 Termination. This Agreement may be terminated, and the
Merger may be abandoned:
(a) Mutual Consent. At any time prior to the Effective Time,
by the mutual written consent of Purchaser and Seller.
(b) Breach. At any time prior to the Effective Time, by
Purchaser or Seller in the event of either: (i) a breach by the other party of
any representation or warranty contained herein (subject to the standard set
forth in Section 5.02), which breach cannot be or has not been cured within 30
days after the giving of written notice to the breaching party of such breach;
or (ii) a breach by the other party of any of the covenants or agreements
contained herein, which breach cannot be or has not been cured within 30 days
after the giving of written notice to the breaching party of such breach,
provided that (A) such breach (under either clause (i) or (ii)) would entitle
the non-breaching party not to consummate the Merger under Article VII, and (B)
the terminating party is not itself in material breach of any provision of this
Agreement.
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(c) Delay. At any time prior to the Effective Time, by Purchaser
or Seller, if its Board of Directors so determines by vote of a majority of the
members of its entire Board, in the event that the Merger is not consummated by
September 30, 2008, except to the extent that the failure of the Merger then to
be consummated arises out of or results from the knowing action or inaction of
the party seeking to terminate pursuant to this Section 8.01(c).
(d) No Approval. By Seller or Purchaser in the event (i) the
approval of any Governmental Authority required for consummation of the Merger
and the other transactions contemplated by this Agreement shall have been denied
by final nonappealable action of such Governmental Authority or an application
therefore shall have been permanently withdrawn at the invitation, request or
suggestion of a Governmental Authority; (ii) the Seller shareholders fail to
adopt this Agreement at the Seller Meeting and approve the Merger; or (iii) any
of the closing conditions have not been met as required by Article VII hereof.
(e) Adverse Action. By Purchaser, if (i) the Seller Board
submits this Agreement (or the plan of merger contained herein) to its
shareholders without a recommendation for approval or with any adverse
conditions on, or qualifications of, such recommendation for approval; or (ii)
the Seller Board otherwise withdraws or materially and adversely modifies (or
discloses its intention to withdraw or materially and adversely modify) its
recommendation referred to in Section 6.02; or (iii) the Seller Board recommends
to its shareholders an Acquisition Proposal other than the Merger.
(f) Superior Proposal. By Seller in order to enter into an
agreement with another party with respect to an Acquisition Proposal not
obtained in violation of Section 6.06 of this Agreement that constitutes a
"Superior Proposal"; provided that, Seller may not terminate this Agreement
pursuant to this Section 8.01(f) and enter into a definitive agreement with
respect to the Superior Proposal until the expiration of five business days
following Purchaser's receipt of written notice advising Purchaser that Seller
has received a Superior Proposal and the material terms of such Superior
Proposal and stating whether Seller intends to enter into a definitive agreement
with respect to such Superior Proposal. After providing such notice, Seller
shall provide a reasonable opportunity to Purchaser during the five business day
period to make such adjustments in the terms and conditions of this Agreement as
would enable Seller to proceed with the Merger on such adjusted terms. For
purposes of this provision, the term "Superior Proposal" is defined as an
Acquisition Proposal that the Board of Directors of Sellers determines, after
consultation with its financial advisor, is superior to the Merger from a
financial point of view to Seller's shareholders.
(g) By Seller, if its Board of Directors so determines by a
majority vote of the members of its entire Board, at any time during the three
(3) business day period commencing on the Determination Date, such termination
to be effective on the fifteenth business day following the Determination Date
("Effective Termination Date"), if both of the following conditions are
satisfied:
(i) The Purchaser Market Value on the Determination
Date is less than the Initial Purchaser Market Value multiplied by 0.85; and
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(ii) The number obtained by dividing the Purchaser
Market Value on the Determination Date by the Initial Purchaser Market Value
("Purchaser Ratio") shall be less than the quotient obtained by dividing the
Final Index Price by the Initial Index Price minus 0.15; subject, however, to
the following three sentences. If Seller elects to exercise its termination
right pursuant to this Section 8.01(g), it shall give prompt written notice
thereof to Purchaser. During the three business day period commencing with its
receipt of such notice, Purchaser shall have the option of paying additional
Merger Consideration in the form of Purchaser Common Stock, cash, or a
combination of Purchaser Common Stock and cash so that the Merger Consideration
shall be valued at the lesser of (i) the product of 0.15 and the Initial
Purchaser Market Value multiplied by the Stock Exchange Ratio or (ii) the
product obtained by multiplying the Index Ratio by the Initial Purchaser Market
Value multiplied by the Stock Exchange Ratio. If within such three business day
period, Purchaser delivers written notice to Seller that it intends to proceed
with the Merger by paying such additional consideration, as contemplated by the
preceding sentence, then no termination shall have occurred pursuant to this
Section 8.01(g) and this Agreement shall remain in full force and effect in
accordance with its terms (except that the Merger Consideration shall have been
so modified).
For purposes of this Section 8.01(g), the following terms shall have
the meanings indicated below:
"Acquisition Transaction" means (i) a merger or consolidation, or any
similar transaction, involving the relevant companies, (ii) a purchase, lease or
other acquisition of all or substantially all of the assets of the relevant
companies, (iii) a purchase or other acquisition (including by way of merger,
consolidation, share exchange or otherwise) of securities representing 25% or
more of the voting power of the relevant companies, or (iv) agree or commit to
take any action referenced above.
"Determination Date" means the first date on which all Regulatory
Approvals (and waivers, if applicable) necessary for consummation of the Merger
and the transactions contemplated in this Agreement have been received.
"Final Index Price" means the closing price of the Nasdaq Bank Index as
of the Determination Date.
"Purchaser Market Value on the Determination Date" shall be the average
of the daily closing sales prices of a share of Purchaser Common Stock as
reported on Nasdaq for the 20 consecutive trading days immediately preceding the
Determination Date.
"Index Group" means the Nasdaq Bank Index.
"Initial Purchaser Market Value" equals the closing price of Purchaser
Common Stock on the last trading date before the date of this Agreement,
adjusted as indicated in the last sentence of this Section 8.01(g).
"Initial Index Price" means the closing price of the Nasdaq Bank Index
as of the last trading date before the date of this Agreement.
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"Index Ratio" shall be the Final Index Price divided by the Initial
Index Price.
If Purchaser declares or effects a stock dividend, reclassification,
recapitalization, split-up, combination, exchange of shares or similar
transaction between the date of this Agreement and the Determination Date, the
price for the Purchaser Common Stock shall be appropriately adjusted for the
purposes of applying this Section 8.01(g).
Section 8.02 Effect of Termination and Abandonment; Enforcement of
Agreement. In the event of termination of this Agreement and the abandonment of
the Merger pursuant to this Article VIII, no party to this Agreement shall have
any liability or further obligation to any other party hereunder except (i) as
set forth in Sections 8.03 and 9.01; and (ii) that termination will not relieve
a breaching party from liability or damages for any willful breach of this
Agreement giving rise to such termination. Notwithstanding anything contained
herein to the contrary, the parties hereto agree that irreparable damage will
occur in the event that a party breaches any of its obligations, duties,
covenants and agreements contained herein. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches or
threatened breaches of this Agreement and to enforce specifically the terms and
provisions of this Agreement in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which they
are entitled by law or in equity.
Section 8.03 Termination Fee.
(a) Seller shall pay to Purchaser by wire transfer in same day
funds within one business day of the date that Seller enters into an agreement
as contemplated by Subsections (a) or (b) of this Section 8.03, a termination
fee in the amount of Six Million Five Hundred Thousand Dollars ($6,500,000) (the
"Termination Fee") if:
(i) this Agreement is terminated by Purchaser pursuant
to Section 8.01(b) or 8.01(e) or by Purchaser or Seller pursuant to Section
8.01(d)(ii) or by Seller pursuant to Section 8.01(f); and prior to such
termination, an Acquisition Proposal with respect to Seller was commenced,
publicly proposed or publicly disclosed; and within 18 months after such
termination, Seller shall have entered into an agreement relating to an
Acquisition Proposal or any Acquisition Proposal shall have been consummated; or
(ii) after receiving an Acquisition Proposal, the
Seller Board does not take action to convene the Seller Meeting and/or recommend
that Seller shareholders adopt this Agreement; and within 18 months after such
receipt, Seller shall have entered into an agreement relating to an Acquisition
Proposal or any Acquisition Proposal shall have been consummated.
Upon payment of the Termination fee described in this Section 8.03,
Seller shall have no further liability to Purchaser at law or in equity with
respect to such termination. Seller acknowledges that the agreements contained
in this Section 8.03 are an integral part of the transactions contemplated by
this Agreement, and that, without these agreements, Purchaser would not enter
into this Agreement. Accordingly, if Seller fails to pay timely any amount due
pursuant to this Section 8.03 and, in order to obtain such payment, Purchaser
commences a suit that results in a judgment against Seller for the amount
payable to Purchaser pursuant to this Section 8.03, Seller shall pay to
Purchaser its costs and expenses (including attorneys' fees and
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expenses) in connection with such suit, together with interest on the amount so
payable at the applicable Federal Funds rate.
ARTICLE IX
MISCELLANEOUS
Section 9.01 Survival. No representations, warranties, agreements and
covenants contained in this Agreement shall survive the Effective Time (other
than Sections 6.11, 6.14, 6.15 and 6.20 and this Article IX which shall survive
the Effective Time) or the termination of this Agreement if this Agreement is
terminated prior to the Effective Time (other than Sections 6.03(b), 6.04,
6.05(b), 6.20, 8.02, and this Article IX which shall survive such termination).
Section 9.02 Waiver; Amendment. Prior to the Effective Time, any
provision of this Agreement may be (i) waived by the party benefited by the
provision, or (ii) amended or modified at any time, by an agreement in writing
between the parties hereto executed in the same manner as this Agreement, except
to the extent that any such amendment would violate applicable law or require
resubmission of this Agreement or the plan of merger contained herein to the
shareholders of Seller.
Section 9.03 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to constitute an original.
Section 9.04 Governing Law. This Agreement shall be governed by, and
interpreted in accordance with, the laws of Commonwealth of Pennsylvania
applicable to contracts made and to be performed entirely within such
Commonwealth (except to the extent that mandatory provisions of federal law are
applicable).
Section 9.05 Expenses. Except as set forth in Section 8.03(b) of this
Agreement, each party hereto will bear all expenses incurred by it in connection
with this Agreement and the transactions contemplated hereby, except that
Purchaser and Seller will each bear and pay one-half of the following expenses:
(a) the costs (excluding the fees and disbursements of counsel, financial
advisors and accountants) incurred in connection with the preparation (including
copying and printing and distributing) of the Registration Statement, the Proxy
Statement and applications to Governmental Authorities for the approval of the
Merger and (b) all listing, filing or registration fees, including, without
limitation, fees paid for filing the Registration Statement with the SEC and any
other fees paid for filings with Governmental Authorities.
Section 9.06 Notices. All notices, requests and other communications
hereunder to a party shall be in writing and shall be deemed given if personally
delivered, telecopied (with confirmation) or mailed by registered or certified
mail (return receipt requested) to such party at its address set forth below or
such other address as such party may specify by notice to the parties hereto.
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If to Seller, to:
IBT Bancorp, Inc.
000 Xxxx Xxxxxx
Xxxxx Xxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, President and Chief Executive Officer
Facsimile No: 000-000-0000
With a copy to:
Xxxxxxx Spidi & Xxxxx, PC
000 Xxx Xxxx Xxxxxx, XX
Xxxxx 000 Xxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Xxxxxxx Xxxxx, Esq.
Facsimile No: (000) 000-0000
If to Purchaser, to:
S&T Bancorp, Inc.
000 Xxxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxx
Facsimile No: (000) 000-0000
Wiith a copy to:
Xxxxxx & Xxxxxx
0000 Xxxxxx Xxxxxxxxx
Xxxxx 000
XxXxxx, XX 00000
Attention: Xxxxxx X. Xxx
Facsimile No: (000) 000-0000
Section 9.07 Entire Understanding; No Third Party Beneficiaries. This
Agreement and any separate agreement entered into by the parties of even date
herewith represent the entire understanding of the parties hereto with reference
to the transactions contemplated hereby and thereby and this Agreement
supersedes any and all other oral or written agreements heretofore made (other
than any such separate agreement). Nothing in this Agreement, whether express or
implied, is intended to confer upon any Person, other than the parties hereto or
their respective successors, any rights, remedies, obligations or liabilities
under or by reason of this Agreement; provided that the Indemnified Parties
shall be third party beneficiaries of and entitled to enforce Section 6.11.
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Section 9.08 Interpretation; Effect. When a reference is made in this
Agreement to Sections, Exhibits or Schedules, such reference shall be to a
Section of, or Exhibit or Schedule to, this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement are
for reference purposes only and are not part of this Agreement. Whenever the
words "include", "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation."
Section 9.09 Waiver of Jury Trial. Each of the parties hereto hereby
irrevocably waives any and all right to trial by jury in any legal proceeding
arising out of or related to this Agreement or the transactions contemplated
hereby.
Section 9.10 Severability. If any provision of this Agreement or the
application thereof to any Person or circumstance is determined by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions, or the application of such provision to Persons or circumstances
other than those as to which it has been held invalid or unenforceable, will
remain in full force and effect and will in no way be affected, impaired or
invalidated thereby, so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination, the parties will negotiate in
good faith in an effort to agree upon a suitable and equitable substitute
provision to effect the original intent of the parties.
Section 9.11 Assignment. Except to the extent provided in this
Agreement, Purchaser and Seller may not assign any of their rights or
obligations under this Agreement to any other Person, except upon the prior
written consent of the other party. Any purported agreement in violation hereof
shall be void.
Section 9.12 Time of Essence. With regard to all dates and time periods
set forth or referred to in this Agreement, time is of the essence.
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
IBT BANCORP, INC.
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------------
Xxxxxxx X. Xxxxx
President and Chief Executive Officer
S&T BANCORP, INC.
By: /s/ Xxxxx X. Xxxxxx
-------------------------------------
Xxxxx X. Xxxxxx
Chairman and Chief Executive Officer
EXHIBIT A
FORM OF VOTING AGREEMENT
This Voting Agreement (this "Agreement") is made and entered into as of
December 16, 2007, by and among S&T Bancorp, Inc., a Pennsylvania corporation,
("Purchaser"), and each of the individual, natural persons identified on
Schedule A hereto (individually a "Shareholder" and collectively the
"Shareholders").
WHEREAS, concurrently with the execution of this Agreement, IBT
Bancorp, Inc., a Pennsylvania corporation ("Seller" or the "Company") and
Purchaser have entered into an Agreement and Plan of Merger (the "Merger
Agreement") that provides for the merger (the "Merger") of Seller with and into
Purchaser pursuant to the terms thereof;
WHEREAS, as an essential condition and inducement to Purchaser to enter
into the Merger Agreement and in consideration therefor, the Shareholders and
Purchaser have agreed to enter into this Agreement;
WHEREAS, as of the date hereof, the Shareholders are the record holders
and beneficial owners of the shares of common stock, par value $1.25 per share,
of the Company (the "Shares") set forth on Schedule A hereto (which do not
include shares held in a fiduciary capacity or options) and desire to enter into
this Agreement with respect to such Shares (for purposes of this Agreement,
"beneficial ownership" shall have the meaning given to such term in Rule 13d-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")); and
WHEREAS, Purchaser desires the Shareholders to agree, and the
Shareholders are willing to agree, (i) not to transfer or otherwise dispose of
any of the Shares prior to the Expiration Date (as defined in Section 1.1 below)
and (ii) to vote the Shares so as to facilitate consummation of the Merger.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein and in the Merger Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
1. Agreement to Retain and Vote Shares.
1.1 Transfer and Encumbrance. The Shareholders agree not to
transfer (except as may be specifically required by court order), sell,
exchange, pledge or otherwise dispose of or encumber any of the Shares or to
make any offer or agreement relating thereto other than in accordance with the
Merger, at any time prior to the Expiration Date. As used herein, the term
"Expiration Date" shall mean the earlier to occur of: (a) such date and time as
the Merger shall become effective in accordance with the terms and provisions of
the Merger Agreement and (b) such date as the Merger Agreement is terminated
pursuant to the terms and provisions thereof, including, without limitation, in
accordance with Section 8.01 thereof.
1.2 Agreement to Vote Shares. From the date hereof until the
Expiration Date, at every meeting of the shareholders of the Company, and at
every adjournment or postponement thereof, and on every action or approval by
written consent of the shareholders of the Company, the Shareholders shall,
including by written consent if requested by Purchaser, vote (or cause to be
voted) the Shares (i) in favor of adoption and approval of the Merger Agreement,
the Merger and any matter that could reasonably be expected to facilitate the
Merger and (ii) against any amendment of the Company's articles of incorporation
or bylaws or other proposal, transaction, agreement or acquisition proposal
involving the Company or any of its subsidiaries which amendment or other
proposal or transaction would in any manner impede, frustrate, prevent or
nullify, or result in a breach of any covenant, representation or warranty or
any other obligation or agreement of the Company under or with respect to, the
Merger, the Merger Agreement or any of the other transactions contemplated by
the Merger Agreement. The Shareholders agree not to take any actions contrary to
the Shareholders' obligations under this Agreement.
1.3 Revocation of Other Proxies. To the extent inconsistent
with the other provisions of this Agreement or the Merger Agreement, the
Shareholders hereby revoke any and all previous proxies with respect to the
Shareholders' Shares.
1.4 Representations, Warranties and Covenants of the
Shareholders. Each Shareholder hereby represents, warrants and covenants to
Purchaser as follows:
(a) Ownership of Shares; Authority. The Shareholder
(i) is the record and beneficial owner of the Shares, which at the date hereof
and at all times up until the Expiration Date will be free and clear of any
liens, claims, options, charges or other encumbrances; (ii) has full power and
authority to make, enter into and carry out the terms of this Agreement; and
(iii) is not a party to any voting trusts, proxies or any other agreements or
understandings with respect to the voting of the Shares.
(b) No Conflicts or Consents. The execution and delivery
of this Agreement by the Shareholder does not, and the performance by the
Shareholder of the Shareholder's obligations under this Agreement will not: (i)
conflict with or violate any law, rule, regulation, order, decree or judgment
applicable to the Shareholder or by which its properties are bound or affected;
(ii) result in a violation of, or a default under, or loss of any rights with
respect to the Shares under, or conflict with, any contract, trust, commitment,
agreement, understanding, arrangement or restriction of any kind to which the
Shareholder is a party or by which the Shareholder may be bound or to which the
Shares are subject which would materially impair the ability of the Shareholder
to perform hereunder; or (iii) result in or constitute a breach or default
under, or give any person or entity rights of termination, amendment or
acceleration in, the creation of an encumbrance or restriction applicable to any
of the Shares.
(c) Transfer of Voting Rights. The Shareholder agrees
that, until the Expiration Date, the Shareholder shall ensure that: (i) none of
the Shares is deposited into a voting trust and (ii) no proxy is granted except
in connection with the Seller Meeting in favor of the Merger, and no voting
agreement or similar agreement is entered into, with respect to the Shares.
(d) No Proxy Solicitations, etc. From the date of this
Agreement until the Expiration Date, the Shareholder, solely in his or her
capacity as a shareholder of the Company, will
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not, and will not permit any individual or entity under the Shareholder's
control to: (i) solicit proxies with respect to (A) an approval of any proposal
made in opposition to or competition with consummation of the Merger, (B) the
adoption of any merger agreement or approval of any merger, consolidation, sale
of assets, reorganization or recapitalization with any party other than with
Purchaser or Purchaser's affiliates (as defined in Rule 405 of the Securities
Act of 1933, as amended) or (C) any liquidation or winding up of the Company
(each of the foregoing is hereinafter referred to as an "Opposing Proposal");
(ii) encourage or assist any party in taking or planning any action that would
compete with, restrain or otherwise serve to interfere with or inhibit the
timely consummation of the Merger in accordance with the terms of the Merger
Agreement, including, without limitation, encouraging, facilitating or
participating in any tender offer or exchange with respect to the Shares; or
(iii) initiate a shareholders' vote or action by consent of the Company
shareholders with respect to an Opposing Proposal.
(e) Shareholder Capacity. The Shareholder signs solely in
his, her or its capacity as the record and beneficial owner of, or the trustee
of a trust whose beneficiaries are the beneficial owners of, the Shareholder's
Shares, and not in his, her or its capacity as a director or officer of Seller.
No provision of this Agreement is intended to or shall be interpreted as
restricting the Shareholder's actions in his or her capacity as a director or
officer of Seller.
(f) Additional Covenants and Documents. The Shareholder hereby
covenants and agrees (i) not to take any action prohibited by Section 4.01 of
the Merger Agreement, and (ii) to execute and deliver any additional documents
necessary or desirable, in the reasonable opinion of Purchaser, to carry out the
intent of this Section 1.
2. Miscellaneous.
2.1 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, then the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
2.2 Binding Effect and Assignment. This Agreement and all
of the provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns, but,
except as otherwise specifically provided herein, neither this Agreement nor any
of the rights, interests or obligations of the Shareholder may be assigned by
the Shareholder without prior written consent of Purchaser.
2.3 Expenses. All costs and expenses incurred in connection
with this Agreement shall be paid by the party incurring such cost or expense.
2.4 Specific Performance; Injunctive Relief. The parties hereto
acknowledge that Purchaser will be irreparably harmed and that there will be no
adequate remedy at law for a violation of any of the covenants or agreements of
the Shareholder. Therefore, it is agreed that, in addition to any other remedies
that may be available to Purchaser upon any such violation, Purchaser shall have
the right to enforce such covenants and agreements by specific performance,
injunctive relief or by any other means available to Purchaser at law or in
equity. Each Shareholder agrees not to seek, and
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agrees to waive any requirement for, the securing or posting of a bond in
connection with Purchaser seeking or obtaining such equitable relief.
2.5 Notices. All notices, requests, claims, demands and
other communications hereunder shall be deemed duly delivered: (a) four business
days after being sent by registered or certified mail, return receipt requested,
postage prepaid or (b) one business day after being sent for next business day
delivery, fees prepaid, via a reputable nationwide overnight courier service to
the intended recipient as set forth below.
If to Purchaser: S&T Bancorp
000 Xxxxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxx
Fax: 000-000-0000
With a copy to: Xxxxxx & Xxxxxx llp
000 Xxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxx Xxxx
Fax: 000-000-0000
Xxxxxx & Xxxxxx LLP
0000 Xxxxxx Xxxxxxxxx
Xxxxx 000
XxXxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxx
Fax: 000-000-0000
If to the Shareholder: To the address for notice set forth on the
signature pages hereto.
With a copy to:
Attention:
Telecopy:
Any party to this Agreement may give any notice or other communication
hereunder using any other means (including personal delivery, messenger service,
telecopy, or ordinary mail), but no such notice or other communication shall be
deemed to have been duly given unless and until it actually is received by the
party for whom it is intended. Any party to this Agreement may change the
address to which notices and other communications hereunder are to be delivered
by giving the other party to this Agreement notice in the manner herein set
forth.
-4-
2.6 Amendments; Termination; Expiration. This Agreement may
not be modified, amended, altered or supplemented, except upon the execution and
delivery of a written agreement executed by the parties hereto. This Agreement
may be terminated by Purchaser upon written notice to the Shareholders. This
Agreement and the Shareholders' obligations hereunder shall terminate on the
Expiration Date; provided, however, that each party shall remain liable for any
breach of this Agreement by such party occurring prior to such termination.
2.7 Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the internal laws of the Commonwealth
of Pennsylvania without giving effect to any choice or conflict of law provision
or rule (whether of the Commonwealth of Pennsylvania or any other jurisdiction)
that would cause the application of laws of any jurisdiction other than those of
the Commonwealth of Pennsylvania.
2.8 Entire Agreement. This Agreement contains the entire
understanding of the parties in respect of the subject matter hereof, and
supersedes all prior negotiations and understandings between the parties with
respect to such subject matter.
2.9 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
2.10 Effect of Headings. The section headings herein are
for convenience only and shall not affect the construction or interpretation of
this Agreement.
[REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on the date and year first above written.
S&T BANCORP, INC.
By:
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Name:
----------------------------
Title:
----------------------------
[SHAREHOLDER]
By:
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Name:
----------------------------
Title:
----------------------------
Shareholder's Address for Notice:
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SCHEDULE A
SHARES OWNED
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