Exhibit 2
AGREEMENT AND PLAN OF MERGER
by and between
ALLIED IRISH BANKS, plc
("Acquiror")
FIRST MARYLAND BANCORP
("Acquiror Sub")
and
DAUPHIN DEPOSIT CORPORATION
("the "Company")
January 21, 1997
TABLE OF CONTENTS
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Page
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ARTICLE I - THE MERGER 1
1.1. Structure of the Merger 1
1.2. Conversion of Stock 1
1.3. Exchange Procedures 6
1.4. Options 9
1.5. Other Rights 10
1.6. Convertible Debentures 10
1.7. Closing 11
ARTICLE II - REPRESENTATIONS AND WARRANTIES 11
2.1. Organization and Capitalization of Acquiror
and Acquiror Sub 12
2.2. Organization and Capitalization of the Company 12
2.3. Rights, etc 12
2.4. Capital Stock 13
2.5. Authority 13
2.6. Subsidiaries 13
2.7. Authorization and Validity of Agreement 13
2.8. No Violations 14
2.9. Securities Exchange Act Reports 14
2.10. Absence of Certain Changes or Events 15
2.11. Taxes 15
2.12. Absence of Claims 16
2.13. Absence of Regulatory Actions 16
2.14. Labor Matters 16
2.15. Employee Benefit Plans 16
2.16. Material Contracts 18
2.17. Title to Assets 18
2.18. Knowledge as to Conditions 19
2.19. Compliance With Laws 19
2.20. Acquiror Common Stock 19
2.21. Fees 19
2.22. Registration Statement; Proxy Statement 19
2.23. Environmental Matters 20
2.24. Takeover Laws; Rights Plans 21
2.25. Vote Required 22
ARTICLE III - CONDUCT PRIOR TO CLOSING 22
3.1. Access to Information; Notice of Changes;
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Confidentiality 22
3.2. Conduct of the Business of the Company Pending
the Closing Date 23
3.3. Conduct of the Business of Acquiror Pending
the Closing Date 25
3.4. Dividends 26
3.5. No Solicitation of Other offers 26
3.6. Certain Filings, Consents and Arrangements 27
3.7. Best Efforts 27
3.8. Publicity 27
3.9. Shareholder Approvals 27
3.10. Registration Statement 28
3.11. The Company Rights Agreement 29
3.12. Securities Act 29
3.13. Additional Agreements 30
3.14. Listing 30
ARTICLE IV - CONDITIONS PRECEDENT TO MERGER 30
4.1. Conditions Precedent to Obligations of
All Parties 30
4.2. Conditions Precedent to Obligations of
Acquiror 32
4.3. Conditions Precedent to Obligation of
the Company 33
ARTICLE V - COVENANTS 34
5.1. Tax-Free Reorganization Treatment 34
5.2. Certain Contracts 34
5.3. Employee Benefits 34
5.4. Indemnification; Directors' and Officers'
Insurance 35
5.5. Certain Director and Officer Positions 37
ARTICLE VI - TERMINATION 38
6.1. Termination 38
6.2. Effect of Termination 39
ARTICLE VII - MISCELLANEOUS 39
7.1. Certain Definitions; Interpretation 40
7.2. Fees and Expenses 41
7.3. Survival 41
7.4. Public Announcements 41
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7.5. Notices 41
7.6. Entire Agreement 42
7.7. Binding Effect; Benefit; Assignment 42
7.8. Waiver 43
7.9. Further Actions 43
7.10. Counterparts 43
7.11. Applicable Law 43
7.12. Severability 43
EXHIBITS
Exhibit A: Stock Option Agreement [see Exhibit(99)(c)]
Exhibit B: Employment Agreement
and Change in Control Retention
Payments
Exhibit C: Additional Benefits Provisions
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INDEX TO DEFINITIONS
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Term Location of Definition
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Acquiror Preamble
Acquiror ADS 1.2(a)
Acquiror Meeting 2.22
Acquiror Ordinary Shares 1.2(a)
Acquiror Sub Preamble
Acquiror Sub Common Stock 2.1
Acquiror Sub Meeting 2.22
Acquiror Sub Preferred Stock 2.1
Acquisition Proposal 3.5
ADR 1.3
Affiliate 3.12(a)
Agreement Preamble
Bank Regulators 2.13
Benefit Plans 2.15
Blue Sky 2.8
Business Day 7.1
Cash Election Shares 1.2(b)
Cash Out 1.4(a)
Closing Date 1.7
Closing Market Price 1.2(a)
Company Preamble
Company Common Stock 1.2(a)
Company Meeting 2.22
Company Right 1.2(a)
Company Rights Agreement 1.2(a)
Contractual Consents 2.16
Control 7.1
Converted Cash Election Shares 1.2(c)
Costs 5.4(a)
Debentures 1.6
Deposit Agreement 1.2(a)
Depositary 1.2(a)
Dissenters' Shares 1.2(a)
Dollar 7.1
Effective Date 1.7
Effective Time 1.7
Election 1.2(b)
Election Deadline 1.2(d)
Election Form 1.2(b)
Environmental Law 2.23
ERISA 2.15
Exchange Agent 1.2(b)
Exchange Fund 1.3(a)
Exchange Option 1.4(a)
Exchange Ratio 1.2(a)
Federal Reserve Board 4.1(b)
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Indemnified Parties 5.4(a)
IRS 2.15
Mailing Date 1.2(d)
Market Price 7.1
Material 7.1
Material Adverse Effect 7.1
Maximum Amount 5.4(c)
Merger 1.1
MGCL 1.1
No-Election Shares 1.2(b)
Old Certificates 1.2(d)
Option Plans 1.4(a)
Outstanding Option 1.4(a)
Outstanding Rights 1.5
Outstanding Shares 1.2(a)
PBCL 1.1
Pension Plan 2.15
Per Share Cash Consideration 1.2(a)
Per Share Stock Consideration 1.2(a)
Person 7.1
Previously Disclosed Art. 2
Proxy Statement 2.22
Proxy Statement/Prospectus 2.22
Registration Statement 2.22
Reports 2.9
Rights 2.3
SEC 2.9
SEC Documents Art. 2
Securities Exchange Act Art. 2
Securities Act Art. 2
Shareholder Meeting 3.9
Stock Election Shares 1.2(b)
Stock Number 1.2(a)
Stock Option Agreement Preamble
Stock-Selected No-Election Shares 1.2(c)
Subsidiary 7.1
Surviving Institution 1.1
Takeover Laws 2.24
Termination Right Determination Date 6.1(f)
$ 7.1
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AGREEMENT AND PLAN OF MERGER
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THIS AGREEMENT AND PLAN OF MERGER ("Agreement") is made this 21st day
of January, 1997, by and among ALLIED IRISH BANKS, plc, an Irish company
("Acquiror"), FIRST MARYLAND BANCORP, a Maryland corporation and a subsidiary of
Acquiror ("Acquiror Sub"), and DAUPHIN DEPOSIT CORPORATION, a Pennsylvania
corporation (the "Company").
WHEREAS, the respective Boards of Directors of Acquiror, Acquiror Sub
and the Company have approved the acquisition of the Company by Acquiror and
Acquiror Sub, subject to the terms and conditions of this Agreement;
WHEREAS, as a condition and inducement to Acquiror's willingness to
enter into this Agreement, concurrently with the execution and delivery of this
Agreement, the Company has executed and delivered a Stock Option Agreement with
Acquiror (the "Stock Option Agreement") in substantially the form attached
hereto as Exhibit A, pursuant to which the Company is granting to Acquiror an
option to purchase, under certain circumstances, shares of Company Common Stock.
NOW THEREFORE, in consideration of the foregoing premises and of the
mutual covenants, representations, warranties and agreements herein contained,
the parties, intending to be legally bound hereby, agree as follows:
ARTICLE I
THE MERGER
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1.1. Structure of the Merger. Subject to the terms and conditions
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of this Agreement, at the Effective Time (as defined in Section 1.7 hereof), the
Company will merge with and into Acquiror Sub (the "Merger"), with Acquiror Sub
being the surviving institution (the "Surviving Institution") pursuant to the
provisions of, and with the effects provided in, the Pennsylvania Business
Corporation Law ("PBCL") and the Maryland General Corporation Law (the "MGCL").
At the Effective Time, the separate corporate existence of the Company shall
cease, and Acquiror Sub shall continue as the Surviving Institution. The
Articles of Incorporation of Acquiror Sub, as in effect immediately prior to the
Effective Time, shall be the Articles of Incorporation of the Surviving
Institution until thereafter amended as provided by law.
1.2. Conversion of Stock.
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(a) (i) At the Effective Time, each share of common stock of
the Company, par value $5.00 per share (the "Company Common Stock"), including
each attached right (a
"Company Right") issued pursuant to the Rights Agreement dated as of January 22,
1990 between the Company and Dauphin Deposit Bank and Trust Company as Rights
Agent (the "Company Rights Agreement"), then issued and outstanding (other than
(i) shares which have not been voted in favor of the approval of the Merger and
with respect to which dissenter's rights shall have been perfected in accordance
with applicable provisions of the PBCL (the "Dissenters' Shares") and (ii)
shares held directly or indirectly by Acquiror, excluding shares held in a
fiduciary or custodial capacity or in satisfaction of a debt previously
contracted) (the "Outstanding Shares") shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into and
represent the right to receive, at the election of each record holder thereof as
provided herein, but subject to the election and allocation procedures set forth
herein:
(A) cash in the amount of Forty-Three Dollars ($43)
(the "Per Share Cash Consideration"); or
(B) that number (the "Exchange Ratio") of Acquiror
ADSs (as defined below) having a Closing Market Price (as defined below) as of
the Election Deadline (as defined below) equal to Forty-Three Dollars ($43);
provided, however, that (A) if the Closing Market Price of an Acquiror ADS is
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less than Thirty-Seven Dollars ($37) per Acquiror ADS then the Exchange Ratio
shall be 1.1620, and (B) if the Closing Market Price of an Acquiror ADS is
greater than Forty-Three Dollars ($43) per Acquiror ADS then the Exchange Ratio
shall be 1.0000 (the "Per Share Stock Consideration");
provided, that not less than fifty-one percent (51%) of the shares of the
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Company Common Stock issued as of the Effective Time (such number, the "Stock
Number") shall be converted into the right to receive the Per Share Stock
Consideration.
(ii) References herein to "Acquiror ADSs" shall mean
American Depository Shares each representing six (6) ordinary shares of
Acquiror, IR 25p each ("Acquiror Ordinary Shares") deposited with The Bank of
New York, as Depositary (the "Depositary"), pursuant to the Deposit Agreement
dated as of November 8, 1990 (the "Deposit Agreement"). The "Closing Market
Price" shall mean the Market Price (as defined in Section 7.1 hereof) of an
Acquiror ADS as of the second Business Day immediately preceding the Election
Deadline. Acquiror will promptly calculate and make public disclosure of the
Closing Market Price.
(iii) If the Acquiror effects a stock dividend (which
shall not include the issuance of shares pursuant
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to a dividend reinvestment plan), reclassification, recapitalization, split-up,
combination, exchange of shares or similar transaction, after the date hereof
and prior to the Effective Time, the references in clause (B) of Section
1.2(a)(i) to the figures $37 and $43, and the references in Section 6.1(f) to
the figure $32, shall be appropriately adjusted.
(iv) No fractional Acquiror ADSs will be issued pursuant
hereto, and Acquiror shall pay cash in lieu of any fractional Acquiror ADS which
otherwise would be issuable. Any such cash payments shall be made on the basis
of the Market Price of Acquiror ADSs as of the Effective Time.
(v) As of the Effective Time, each share of the Company
Common Stock held directly or indirectly by Acquiror, excluding shares held in a
fiduciary or custodial capacity or in satisfaction of a debt previously
contracted, and each share held as treasury stock of the Company, shall be
canceled, retired and cease to exist, and no exchange or payment shall be made
with respect thereto. Each issued and outstanding share of common stock of
Acquiror Sub shall continue to be an issued and outstanding share of common
stock of the Surviving Institution.
(vi) Dissenters' Shares shall be paid for in accordance
with applicable provisions of the PBCL and thereupon shall be canceled, retired
and cease to exist.
(vii) The exchange of Company Common Stock and attached
Company Rights for the merger consideration as provided herein shall constitute
a redemption of such Company Rights pursuant to Section 23 of the Rights
Agreement. To the extent that any shares of Company Common Stock are
Dissenters' Shares or are otherwise not so exchanged, then the Company shall
redeem or otherwise extinguish the Company Rights attached to such unexchanged
shares of Company Common Stock as of the Effective Time.
(b) Subject to the allocation procedures set forth in Section
1.2(c), each record holder of outstanding Shares will be entitled (i) to elect
to receive Acquiror ADSs for all or some of the shares of Company Common Stock
("Stock Election Shares") held by such record holder, (ii) to elect to receive
cash for all or some of the shares of Company Common Stock ("Cash Election
Shares") held by such record holder or (iii) to indicate that such holder makes
no such election for all or some of the shares of Company Common Stock ("No-
Election Shares") held by such record holder. All such elections (each, an
"Election") shall be made on a form designed for that purpose by Acquiror and
reasonably
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acceptable to the Company (an "Election Form"). Any Outstanding Shares with
respect to which the record holder thereof shall not, as of the Election
Deadline (as defined in Section 1.2(d)), have properly submitted to the Exchange
Agent (as hereinafter defined) a properly completed Election Form shall be
deemed to be No-Election Shares. A record holder acting in different capacities
shall be entitled to submit an Election Form for each capacity in which such
record holder so acts with respect to each Person for which it so acts. The
Exchange agent (the "Exchange Agent") shall be a United States financial
institution selected by Acquiror and reasonably acceptable to the Company.
(c) Not later than the Effective Date, Acquiror shall cause the
Exchange Agent to effect the allocation among the holders of Company Common
Stock of rights to receive the Per Share Stock Consideration or the Per Share
Cash Consideration in the Merger as follows:
(i) Number of Stock Elections Less Than Stock Number.
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If the number of Stock Election Shares is less than the Stock Number, then
(A) all Stock Election Shares shall be converted
into the right to receive the Per Share Stock Consideration,
(B) the Exchange Agent shall select (by random
selection) from among the No-Election Shares a sufficient number of No-Election
Shares such that the sum of such number and the number of Stock Election Shares
shall equal as closely as practicable but be not less than the Stock Number, and
all such selected shares ("Stock-Selected No-Election Shares") shall be
converted into the right to receive the Per Share Stock Consideration, provided
that if the sum of all No-Election Shares and Stock Election Shares is less than
the Stock Number, all No-Election Shares shall be converted into the right to
receive the Per Share Stock Consideration, and thereby become Stock-Selected No-
Election Shares,
(C) if the sum of Stock Election Shares and No-
Election Shares is less than the Stock Number, the Exchange Agent shall convert
(by random selection) a sufficient number of Cash Election Shares into Stock
Election Shares ("Converted Cash Election Shares") such that the sum of Stock
Election Shares, No-Election Shares and Converted Cash Election Shares equals as
closely as practicable but be not less than the Stock Number, and all Converted
Cash Election Shares shall be converted into the right to receive the Per Share
Stock Consideration,
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(D) any Cash Election Shares that are not Converted
Cash Election Shares shall be converted into the right to receive the Per Share
Cash Consideration, and
(E) if there are No-Election Shares that are not
Stock-Selected No-Election Shares, Acquiror shall instruct the Exchange Agent
what number of such shares shall be converted into the right to receive the Per
Share Cash Consideration and what number of such shares shall be converted into
the right to receive the Per Share Stock Consideration, and if Acquiror shall
instruct the Exchange Agent that certain of such shares shall be converted into
the right to receive the Per Share Cash Consideration and that the remainder of
such shares shall be converted into the right to receive the Per Share Stock
Consideration, the Exchange Agent shall select among such shares by random
selection; or
(ii) Number of Stock Elections Greater Than or Equal to
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Stock Number. If the number of Stock Election Shares is greater than or equal
------------
to the Stock Number, then
(A) all Stock Election Shares shall be converted
into the right to receive the Per Share Stock Consideration,
(B) all Cash Election Shares shall be converted
into the right to receive the Per Share Cash Consideration, and
(C) Acquiror shall instruct the Exchange Agent what
number of No-Election Shares shall be converted into the right to receive the
Per Share Cash Consideration and what number of No-Election Shares shall be
converted into the right to receive the Per Share Stock Consideration, and if
Acquiror shall instruct the Exchange Agent that certain of such shares shall be
converted into the right to receive the Per Share Cash Consideration and that
the remainder of such shares shall be converted into the right to receive the
Per Share Stock Consideration, the Exchange Agent shall select among such shares
by random selection.
(iii) Notwithstanding the foregoing, a Person who
immediately prior to the Effective Time owned (for purposes of the Internal
Revenue Code) 5% or more of the outstanding shares of Company Common Stock and
who does not elect to receive Per Share Cash Consideration for all his shares,
shall deliver a written agreement, in a form reasonably acceptable to Acquiror,
containing customary
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representations to the effect that such holder has no present intention to sell,
exchange or otherwise dispose of such shares of Acquiror Common Stock to be
received in exchange for such shares of Company Common Stock, and if such holder
shall not deliver such a written agreement, in a form reasonably acceptable to
Acquiror, at the election of Acquiror such Person shall instead receive the Per
Share Cash Consideration with respect to such shares, regardless of the election
(or lack thereof) made by such Person in its Election Form.
(d) Not later than the 25th Business Day prior to the
anticipated Effective Date or such other date as the parties may agree in
writing (the "Mailing Date"), Acquiror shall mail an Election Form and a letter
of transmittal to each Person that was a holder of record of Company Common
Stock immediately prior to the Mailing Date. To be effective, an Election Form
must be properly completed, signed and actually received by the Exchange Agent
not later than 5:00 p.m., Eastern Time, on the second Business Day preceding the
Effective Date (which will be not earlier than the 20th day after the Mailing
Date) (the "Election Deadline") and accompanied by the certificates formerly
representing all of the Outstanding Shares ("Old Certificates") as to which the
Election is being made (or an appropriate guarantee of delivery by an eligible
organization). Acquiror shall have reasonable discretion, which it may delegate
in whole or in part to the Exchange Agent, to determine whether Election Forms
have been properly completed, signed and timely submitted or to disregard
defects in Election Forms; such decisions of Acquiror (or of the Exchange Agent)
shall be conclusive and binding. Neither Acquiror nor the Exchange Agent shall
be under any obligation to notify any Person of any defect in an Election Form
submitted to the Exchange Agent. The Exchange Agent and Acquiror shall also make
all computations contemplated by Section 1.2 hereof. For purposes hereof, all
calculations of the Acquiror Market Price and the Exchange Ratio shall be
rounded to the nearest one thousandth.
1.3. Exchange Procedures. Old Certificates previously representing
-------------------
shares of Company Common Stock shall be exchanged for cash and/or receipts
("ADRs") representing whole Acquiror ADSs (and cash in lieu of fractional
Acquiror ADSs) issued in consideration therefor in accordance with this Section
1.3.
(a) As of the Effective Time, Acquiror or Acquiror Sub shall
deposit, or shall cause to be deposited, with the Exchange Agent for the benefit
of the holders of shares of Company Common Stock for exchange in accordance with
this Section 1.3, ADRs representing the Acquiror ADSs (and the cash
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in lieu of fractional Acquiror ADSs) in the amount of the merger consideration
(such cash, and ADRs, together with any dividends or distributions with respect
thereto, being hereinafter referred to as the "Exchange Fund") to be issued and
paid pursuant to Section 1.2 in exchange for Outstanding Shares.
(b) Promptly after the Effective Time, Acquiror shall cause the
Exchange Agent to mail to each holder of record of Company Common Stock who has
not previously delivered such holders Old Certificates pursuant to the election
procedures set forth in Section 1.2: (i) a letter of transmittal specifying
that delivery shall be effected, and risk of loss and title to the Old
Certificates shall pass, only upon delivery of the Old Certificates to the
Exchange Agent, which shall be in a form and contain any other provisions as
Acquiror and Company may reasonably agree; and (ii) instructions for use in
effecting the surrender of the Old Certificates in exchange for the merger
consideration. Upon the proper surrender of an Old Certificate to the Exchange
Agent, together with a properly completed and duly executed letter of
transmittal, the holder of such Old Certificate shall be entitled to receive in
exchange therefor (x) a check in the amount of that amount of cash, (y) an ADR
representing that number of whole Acquiror ADSs, and (z) a check representing
the amount of cash in lieu of any fractional Acquiror ADSs and unpaid dividends
and distributions, if any, which such holder has the right to receive in respect
of the old Certificate surrendered pursuant to the provisions of Section 1.2,
and the Old Certificate so surrendered shall forthwith be canceled. No interest
will be paid or accrued on the cash payable pursuant to Section 1.2, or the cash
in lieu of fractional Acquiror ADSs and unpaid dividends and distributions, if
any, payable to holders of Old Certificates. If, after the Effective Time, Old
Certificates are presented to Acquiror or Acquiror Sub, they shall be canceled
and exchanged for the cash Acquiror ADSs and cash in lieu of fractional shares,
if any, deliverable in respect thereof pursuant to this Agreement in accordance
with the procedures set forth in this Section 1.3.
(c) Whenever a dividend or other distribution is declared by
Acquiror on the Acquiror Ordinary Shares, the record date for which is at or
after the Effective Time, the declaration shall include dividends or other
distributions on all Acquiror ADSs issuable pursuant to this Agreement; provided
that after the 90th day following the Effective Date no dividend or other
distribution declared or made on the Acquiror Ordinary Shares shall be paid to
the holder of any unsurrendered Old Certificate with respect to the Acquiror
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ADSs represented thereby until the holder of such Old Certificate shall have
duly surrendered such Old Certificate in accordance with Section 1.2 or this
Section 1.3.
(d) From and after the Effective Time, there shall be no
transfers on the stock transfer records of the Company of any shares of Company
Common Stock that were outstanding immediately prior to the Effective Time. In
the event of a transfer of ownership of any Company Common Stock not registered
in the transfer records of Company, a certificate representing the proper number
of Acquiror ADSs, together with a check for the cash to be paid in lieu of
fractional Acquiror ADSs and the proper amount of Per Share Cash Consideration,
may be issued to the transferee if the Old Certificate representing such Company
Common Stock is presented to the Exchange Agent, accompanied by documents
sufficient (1) to evidence and effect such transfer and (2) to evidence that all
applicable stock transfer taxes have been paid.
(e) Any portion of the Exchange Fund (including the proceeds of
any investments thereof and any Acquiror ADSs) that remains unclaimed by the
shareholders of the Company six months after the Effective Time shall, at the
Acquiror's request, be repaid to Acquiror or to the Depositary, as applicable.
Any shareholders of the Company who have not theretofore surrendered their old
Certificates in accordance with Section 1.2 or this Section 1.3 shall thereafter
look only to Acquiror for payment of the cash, Acquiror ADSs, and cash in lieu
of fractional Acquiror ADSs deliverable in respect thereof, and any unpaid
dividends and distributions on the Acquiror ADSs deliverable in respect of each
share of Company Common Stock such stockholder holds as determined pursuant to
this Agreement, in each case, without any interest thereon. None of Acquiror,
the Exchange Agent or any other Person shall be liable to any former holder of
Company Common Stock for any amount delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(f) In the event any Old Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Old Certificate to be lost, stolen or destroyed and, if required
by Acquiror, the posting by such Person of a bond in such amount as Acquiror may
direct as indemnity against any claim that may be made against it with respect
to such Old Certificate, the Exchange Agent will issue in exchange for such
lost, stolen or destroyed Old Certificate the cash, Acquiror ADSs and cash in
lieu of fractional shares
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deliverable (and unpaid dividends and distributions) in respect thereof pursuant
to this Agreement.
(g) Former shareholders of the Company shall be entitled to
direct the voting at any meeting of Acquiror shareholders the number of Acquiror
Ordinary Shares represented by the number of Acquiror ADSs into which their
shares of Company Common Stock are converted in accordance with Section 1.2 (to
the extent provided in and subject to the conditions of the Deposit Agreement),
regardless of whether such holders have exchanged their Old Certificate
representing Company Common Stock for ADRs representing Acquiror ADSs in
accordance with the provisions of this Agreement.
1.4. Options.
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(a) Each option to purchase shares of Company Common Stock
pursuant to the Company's 1986 Option Plan, 1995 Stock Incentive Plan, 1996 Non-
Officer Directors' Stock Plan and [AB&C] Option Plan (collectively, the "Option
Plans"), which is outstanding and unexercised immediately prior thereto (each,
an "Outstanding Option"), shall be converted as to each whole share subject to
such Outstanding Option at the holder's election (made at least 5 days prior to
the Closing Date) into:
(i) at the Effective Time, an option (each, an "Exchange
Option") to purchase such number of Acquiror ADSs at such exercise price as is
determined as provided below (and otherwise having the same duration and other
terms as the original option):
(A) the number of Acquiror ADSs to be subject to
the Exchange Option shall be equal to the product of (A) the number of shares of
the Company Common Stock subject to the original option as to which the holder
thereof has elected to receive an Exchange Option, multiplied by (B) the
Exchange Ratio (as may be adjusted pursuant to Section 1.2(b) above), the
product being rounded, if necessary, up or down, to the nearest whole share;
(B) the exercise price per Acquiror ADS under the
new option shall be equal to (I) the aggregate exercise price for the shares of
Company Common Stock subject to the Outstanding Option as to which the holder
has elected to receive an Exchange Option, divided by (II) the number of
Acquiror ADSs for which the Exchange Option is exercisable as determined
pursuant to clause (A) above, the result being rounded, if necessary, up or
down, to the nearest cent.
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OR:
(ii) immediately prior to the Effective Time, cash (the
"Cash Out") in an amount equal to the Per Share Cash Consideration multiplied by
the number of shares subject to such Outstanding Options as to which the holder
thereof has elected to receive the Cash Out, less the amount which would have
been required to exercise such Outstanding Options as to such shares.
(b) Holders of Outstanding Options shall have no rights to
receive the "Cash Out", and no other modification of such Outstanding Options
hereunder shall be effective, unless and until the Closing Date occurs. The
adjustments provided herein with respect to any options which are "incentive
stock options" (as defined in Section 422 of the Code) shall be effected in a
manner consistent with Section 424(a) of the Code.
(c) The Exchange Options with respect to Outstanding Options
shall be delivered by Acquiror at the Effective Time, and checks in the amounts
of the respective Cash Outs shall be delivered by the Company immediately prior
to the Effective Time with all amount paid to be reimbursed by Acquiror or
Acquiror Sub. As of the Effective Time, Acquiror shall have reserved for
issuance a sufficient number of Acquiror Ordinary Shares to cover the issuance
of the Acquiror ADSs subject to such Exchange Options.
1.5. Other Rights. Rights to receive shares of the Company's Common
------------
Stock pursuant to (i) Performance Share Agreements under the Company's 1995
Stock Incentive Plan, (ii) a deferral account pursuant to the Company's 1996
Non-Officer Directors' Stock Plan, and (iii) accrued rights under the Company's
Employee Stock Purchase Plan, which are outstanding as of the Effective Time
(collectively, the "Outstanding Rights") shall be converted into rights to
receive or purchase, as applicable, that number of Acquiror ADSs equal to the
number of shares to which such Outstanding Rights relate multiplied by the
Exchange Ratio.
1.6. Convertible Debentures. The Company's 9% Convertible
----------------------
Subordinated Debentures Due June 1999 (the "Debentures") outstanding at the
Effective Time shall be assumed by Acquiror or Acquiror Sub and remain
outstanding thereafter as an obligation of the Acquiror or Acquiror Sub, as the
case may be, and, from and after the Effective Time, the holders of the
Debentures shall have the right to convert such Debentures into the Per Share
Stock Consideration receivable upon the Merger by a holder of the number of
shares of Company Common
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Stock into which such Debentures could have been converted immediately prior to
the Merger. Acquiror or Acquiror Sub, as the case may be, shall enter into a
supplemental indenture with respect to such obligations in accordance with the
terms of the indenture pursuant to which the Debentures were issued.
1.7. Closing. On the first Business Day to occur which is at least
-------
three (3) Business Days after the expiration of all applicable waiting periods
in connection with approvals of governmental authorities occurs and all
conditions to the consummation of this Agreement are satisfied or waived and
which is the last Business Day of a month, or on such earlier or later date as
may be agreed by the parties (the "Closing Date"), articles of merger shall be
executed in accordance with all appropriate legal requirements and shall be
filed as required by law, and the Merger provided for herein shall become
effective upon such filing or on such date and at such time as may be specified
in such articles of merger by agreement of the parties hereto. The date and
time of such filing or such later effective date and time are herein called the
"Effective Time." The date on which the Effective Time occurs is herein referred
to as the "Effective Date."
ARTICLE II
REPRESENTATIONS AND WARRANTIES
------------------------------
Acquiror represents and warrants to the Company, and the Company
represents and warrants to Acquiror, to the extent applicable as indicated
below, that except as Previously Disclosed, the following representations and
warranties are true and correct in all Material respects. For purposes of this
Agreement, "Previously Disclosed" means disclosed prior to the execution hereof
in (i) an SEC Document filed with the SEC prior to the date hereof, (ii) this
Agreement, (iii) written materials provided to the other party prior to or as of
the date hereof as specified in a letter dated of even date herewith from the
party making such disclosure and delivered to the other party prior to the
execution hereof (its "Disclosure Letter"). Any information disclosed by one
party to the other for any purpose hereunder shall be deemed to be disclosed for
all purposes hereunder, except for purposes of Section 2.10 hereof. The
inclusion of any matter in information Previously Disclosed shall not be deemed
an admission or otherwise to imply that any such matter is Material for purposes
of this Agreement. "SEC Documents" means all publicly available documents filed
by the Company or its predecessors with the SEC, including all such documents
filed under the Securities Act of 1933, as amended (the "Securities Act") or the
-11-
Securities Exchange Act of 1934, as amended (the "Securities Exchange Act").
2.1. Organization and Capitalization of Acquiror and Acquiror Sub.
------------------------------------------------------------
In the case of Acquiror, it is a corporation duly organized, validly existing
and in good standing under the laws of Ireland and it is a bank holding company
registered under the Bank Holding Company Act of 1956, as amended; and its
authorized capital stock as of the date hereof consists of (a)
IR(Pounds)450,000,000 of authorized capital divided into 1,000,000,000 Acquiror
Ordinary Shares (of which 680,172,595 shares were issued and outstanding as of
December 31, 1996) and 250,000,000 noncumulative preference shares of
IR(Pounds)1 each (of which no shares are issued and outstanding as of the date
hereof), (b) US$400,000,000 of authorized capital divided into 16,000,000 non-
cumulative preference shares of US$25 each (of which 7,200,000 shares were
issued and outstanding as of December 31, 1996), and (c) Stg(Pounds)125,000,000
of authorized capital divided into 125,000,000 non-cumulative preference shares
of Stg(Pounds)1 each (of which no shares are issued and outstanding as of the
date hereof). Approximately 10,800,000 of the issued and outstanding Acquiror
Ordinary Shares are represented by outstanding Acquiror ADSs as of the date
hereof. Acquiror Sub is a corporation duly organized, validly existing and in
good standing under the laws of the State of Maryland; and its authorized
capital consists of 600,000,000 shares of common stock, par value $1/7 per
share, (the "Acquiror Sub Common Stock") of which 594,480,215 shares are issued
and outstanding as of the date hereof (all of which are held by Acquiror), and
9,000,000 shares of preferred stock par value $5.00 per share, (the "Acquiror
Sub Preferred Stock") of which 6,090,000 shares are issued and outstanding as of
the date hereof.
2.2. Organization and Capitalization of the Company. In the case of
----------------------------------------------
the Company it is a corporation duly organized, validly existing and in good
standing under the laws of the Commonwealth of Pennsylvania; and its authorized
capital stock as of the date hereof consists of 200,000,000 authorized shares of
the Company Common Stock, of which 30,666,729 shares were issued and outstanding
as of December 31, 1996, and 10,000,000 authorized shares of preferred stock,
par value $25.00 per share, of which no shares are issued and outstanding.
2.3. Rights, etc. In the case of Acquiror, as of the date hereof,
------------
and in the case of the Company in each case, except as Previously Disclosed,
there are not any shares of its capital stock reserved for issuance, or any
outstanding or authorized options, warrants, rights, subscriptions, claims of
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any character, agreements, obligations, convertible or exchangeable securities,
or other commitments, contingent or otherwise, relating to its capital stock,
pursuant to which it is or may become obligated to issue shares of capital stock
or any securities convertible into, exchangeable for, or evidencing the issued
and outstanding right to subscribe for, any shares of its capital stock
(collectively, "Rights").
2.4. Capital Stock. In the case of Acquiror, all outstanding shares
-------------
of capital stock of it and its Significant Subsidiaries (as defined in Rule 1-02
of Regulation S-X) and in the case of the Company, all outstanding shares of
capital stock of it and its Subsidiaries, are duly authorized, validly issued
and outstanding, fully paid and nonassessable, and subject to no preemptive
rights; and the shares of capital stock of such Subsidiaries are owned by it
(except for director's qualifying shares) free and clear of all liens, claims,
encumbrances and restrictions on transfer and there are no Rights with respect
to such capital stock.
2.5. Authority. In the case of Acquiror, each of it and its
---------
Significant Subsidiaries and in the case of the Company each of it and its
Subsidiaries, has the power and authority, and is duly qualified in all
jurisdictions where such qualification is required, to carry on its business as
it is now being conducted and to own all its Material properties and assets
(except for such qualifications the absence of which, individually or in the
aggregate, would not have a Material Adverse Effect (as defined in Section
7.1)), and it has all federal, state, local, and foreign governmental
authorizations necessary for it to own or lease its properties and assets and to
carry on its business as it is now being conducted, except for such powers and
authorizations the absence of which, either individually or in the aggregate,
would not have a Material Adverse Effect.
2.6. Subsidiaries. In the case of Acquiror, a list of its
------------
Significant Subsidiaries has been Previously Disclosed and in the case of the
Company a list of its Subsidiaries has been Previously Disclosed.
2.7. Authorization and Validity of Agreement. In the case of
---------------------------------------
Acquiror, it and Acquiror Sub each has, and in the case of the Company, it has,
full power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby. In
the case of Acquiror and Acquiror Sub and in the case of the Company,
respectively, subject in each case to the receipt of the required shareholder
approvals referred to in Section 4.1(a), this Agreement has been authorized by
all
-13-
necessary corporate action of it. In the case of Acquiror and Acquiror Sub and
in the case of the Company, respectively, this Agreement is a valid and binding
agreement of it enforceable against it in accordance with its terms, subject as
to enforcement to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
2.8. No Violations. In the case of Acquiror and Acquiror Sub and in
-------------
the case of the Company, respectively, the execution, delivery and performance
of this Agreement by it does not, and the consummation of the transactions
contemplated hereby by it will not, constitute (i) a breach or violation of, or
a default under, any law, rule or regulation or any judgment, decree, order,
governmental permit or license, or agreement, indenture or instrument of it or
its Subsidiaries or to which it or its Subsidiaries (or any of their respective
properties) is subject, which breach, violation or default would have a Material
Adverse Effect, or enable any Person to enjoin the Merger or (ii) a breach or
violation of, or a default under, the articles of incorporation or by-laws (or
similar corporate documents) of it or any of its Subsidiaries; and the
consummation of the transactions contemplated hereby will not require any
approval, consent or waiver under any such law, rule, regulation, judgment,
decree, order, governmental permit or license or the approval, consent or waiver
of any other party to any such agreement, indenture or instrument, other than
(w) the required approvals, consents and waivers of governmental authorities
referred to in Section 4.1(b), (x) the approval of the shareholders of the
Company referred to in Section 4.1(a), (y) such approvals, consents or waivers
as are required under the federal and state securities or "Blue Sky" laws in
connection with the transactions contemplated by this Agreement, and (z) any
other approvals, consents or waivers the absence of which, individually or in
the aggregate, would not result in a Material Adverse Effect or enable any
Person to enjoin the Merger.
2.9. Securities Exchange Act Reports. In the case of Acquiror and
-------------------------------
the Company, respectively, it has filed with the Securities and Exchange
Commission ("SEC") all required forms, reports and documents required under the
Securities Exchange Act. In the case of Acquiror and the Company, respectively,
as of their respective dates, neither its Annual Report on Form 20-F and 10-K,
respectively, for the fiscal year ended December 31, 1995, nor any other
document filed subsequent to December 31, 1995 under Section 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act, each in the form
-14-
(including exhibits) filed with the SEC (collectively, its "Reports"),
contained, as of the date thereof, any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances under which they
were made, not misleading. In the case of Acquiror and the Company,
respectively, each of the balance sheets contained or incorporated by reference
in its Reports (including any related notes and schedules) fairly present the
financial position of the entity or entities to which it relates as of its date
and each of the statements of income, cash flows or equivalent statements
contained or incorporated by reference in its Reports (including any related
notes and schedules) fairly present the cash flows of the entity or entities to
which it relates for the periods set forth therein (subject, in the case of
unaudited interim statements, to normal year-end audit adjustments that are not
Material in amount or effect), in each case in accordance with generally
accepted accounting principles applicable to bank holding companies consistently
applied during the periods involved, except as may be noted in the Reports.
2.10. Absence of Certain Changes or Events. Except as Previously
------------------------------------
Disclosed in Section 2.10 of its Disclosure Letter, in the case of Acquiror and
its Subsidiaries and the Company and its Subsidiaries, respectively, since
December 31, 1995, it has not incurred any Material liability except in the
ordinary course of its business consistent with past practice, and there has not
been any change in the financial condition, business or results of operations of
it or any of its Subsidiaries which, individually or in the aggregate, has had a
Material Adverse Effect (other than as a result of changes in banking laws or
regulations of general applicability or interpretations thereof).
2.11. Taxes. In the case of the Company, except as Previously
-----
Disclosed, or as otherwise would not have a Material Adverse Effect, all
federal, state, local and foreign tax returns required to be filed by or on
behalf of it or any of its Subsidiaries have been timely filed or requests for
extensions have been timely filed and any such extensions have been granted and
not expired. In the case of the Company, all taxes shown on returns filed by or
on behalf of it or any of its Subsidiaries have been paid in full or adequate
provision has been made for any such taxes on its balance sheet (in accordance
with generally accepted accounting principles). In the case of the Company, as
of the date of this Agreement, there are no assessments or notices of deficiency
or proposed assessments with respect to any taxes of it or any of its
Subsidiaries that, if resolved in a manner adverse to it,
-15-
would have a Material Adverse Effect. In the case of the Company, except as
otherwise would not have a Material Adverse Effect, it has not executed an
extension or waiver of any statute of limitations on the assessment or
collection of any tax due that is currently in effect.
2.12. Absence of Claims. In the case of Acquiror and the Company,
-----------------
respectively, except as Previously Disclosed no Material litigation, proceeding
or controversy before any court or governmental agency is pending, and there is
no pending claim, action or proceeding against it or any of its Subsidiaries,
which is reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect or to materially hinder or delay consummation of the transactions
contemplated hereby.
2.13. Absence of Regulatory Actions. In the case of Acquiror and the
-----------------------------
Company, respectively, except for matters arising in the ordinary course of
business, neither it nor any of its Subsidiaries is a party to any cease and
desist order, written agreement or memorandum of understanding with, or a party
to any commitment letter or similar undertaking to, or is subject to any order
or directive by, or is a recipient of any extraordinary supervisory letter from,
or has adopted any board resolutions at the request of, federal or state
governmental authorities charged with the supervision or regulation of banks,
savings associations, or bank or savings association holding companies, or
engaged in the insurance of bank or savings association deposits ("Bank
Regulators"), nor has it been advised by any Bank Regulator that it is
contemplating issuing or requesting (or is considering the appropriateness of
issuing or requesting) any such order, directive, written agreement, memorandum
of understanding, extraordinary supervisory letter, commitment letter, board
resolutions or similar undertaking.
2.14. Labor Matters. In the case of the Company, except as Previously
-------------
Disclosed neither it 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 it or any of its
Subsidiaries the subject of any proceeding asserting that it or any such
Subsidiary has committed an unfair labor practice or seeking to compel it or
such Subsidiary to bargain with any labor organization as to wages and
conditions of employment, nor is there any strike or other labor dispute
involving it or any of its Subsidiaries pending or threatened.
2.15. Employee Benefit Plans. Except as Previously
----------------------
-16-
Disclosed, in the case of Acquiror and the Company, respectively, all "employee
benefit plans", as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), that cover any of its or its
Subsidiaries' employees, comply in all Material respects with all applicable
requirements of ERISA, the Code and other applicable laws; neither it nor any of
its Subsidiaries has engaged in a "prohibited transaction" (as defined in
Section 406 of ERISA or Section 4975 of the Code) with respect to any such plan
which is likely to result in any Material penalties or taxes under Section
502(i) of ERISA or Section 4975 of the Code; no Material liability to the
Pension Benefit Guaranty Corporation has been or is expected by it or them to be
incurred with respect to any such plan which is subject to Title IV of ERISA
("Pension Plan"), or with respect to any "single-employer plan" (as defined in
Section 4001(a)(15) of ERISA) currently or formerly maintained by it, them or
any entity which is considered one employer with it under Section 4001 of ERISA
or Section 414 of the Code; no Pension Plan had an "accumulated funding
deficiency" (as defined in Section 302 of ERISA (whether or not waived) as of
the last day of the end of the most recent plan year ending prior to the date
hereof; the fair market value of the assets of each Pension Plan exceeds the
present value of the "benefit liabilities" (as defined in Section 4001(a)(16) of
ERISA) under such Pension Plan as of the end of the most recent plan year with
respect to the respective Pension Plan ending prior to the date hereof,
calculated on the basis of the actuarial assumptions used in the most recent
actuarial valuation for such Pension Plan as of the date hereof; no notice of a
"reportable event" (as defined in Section 4043 of ERISA) for which the 30-day
reporting requirement has not been waived has been required to be filed for any
Pension Plan within the 12-month period ending on the date hereof; neither it
nor any of its Subsidiaries has provided, or is required to provide, security to
any Pension Plan pursuant to Section 401(a)(29) of the Code; it and its
Subsidiaries have not contributed to any "multiemployer plan", as defined in
Section 3(37) of ERISA, on or after September 26, 1980. In the case of the
Company, with respect to each benefit plan for employees that is maintained or
contributed to by the Company or any of its Subsidiaries, including, but not
limited to, "employee benefit plans" within the meaning of Section 3(3) of ERISA
(the "Benefit Plans"), it has made available to Acquiror a true and correct copy
of (i) the most recent annual report on Form 5500 filed with the Internal
Revenue Service (the IRS), (ii) such Benefit Plan, (iii) each trust agreement
and insurance contract relating to such Benefit Plan, (iv) the most recent
summary plan description for such Benefit Plan, (v) the most recent actuarial
report or valuation if such Benefit Plan is subject
-17-
to Title IV of ERISA, (vi) the most recent determination letter issued by the
IRS if such Benefit Plan is intended to be qualified under Section 401(a) of the
Code, and (vii) all outstanding employment contracts or agreements. With respect
to Acquiror and the Company, a list of its Benefit Plans, and, in the case of
the Company, all outstanding employment contracts or agreements, has been
Previously Disclosed.
2.16. Material Contracts. In the case of the Company, all Material
------------------
contracts have been Previously Disclosed, including: (i) all Material written
employment or consulting agreements, contracts or commitments with, between or
among the Company or any of its Subsidiaries and any Person; (ii) all Material
agreements of guaranty or indemnification, other than by-laws provisions and
bank items presented for collection in the ordinary course of business, running
from the Company or any Subsidiary to any Person; (iii) all Material agreements,
contracts or commitments relating to the acquisition of assets or capital stock
of any Person other than assets acquired in the ordinary course of business by
the Company; (iv) all Material agreements, except for employment agreements and
other agreements listed pursuant to clause (i) above, for loans or the
provision, purchase or sale of goods, services or property between the Company
or any of its Subsidiaries and any director, officer, employee, agent or
representative of the Company or any Subsidiary, or any relative or affiliate of
any of the foregoing; (v) all Material agreements, contracts or commitments to
which the Company is a party or by which the Company is bound and which require
consent ("Contractual Consents") by any other Person in connection with the
consummation of the transactions contemplated hereby, either to prevent a breach
or to continue the effectiveness thereof; and (vi) all other Material agreements
(other than this Agreement, agreements to be executed with respect to this
Agreement and agreements with respect to deposits received and loans granted) of
the Company or any of its Subsidiaries. The Company is not in default in any
respect Material to the Company under any of the contracts, agreements or other
instruments described above. No event has occurred which, with notice or lapse
of time or both, would constitute a default by the Company under any of such
contracts, agreements or instruments, and all such contracts, agreements and
instruments are in full force and effect, except for such defaults or failures
to be in full force and effect as would not have a Material Adverse Effect.
2.17. Title to Assets. In the case of the Company, a list of all
---------------
Material real estate owned or leased by the Company or any of its Subsidiaries
(other than OREO) has been Previously Disclosed. In the case of the Company,
each of it
-18-
and its Subsidiaries has good and marketable title to its properties and assets
(other than (i) property as to which it is lessee and (ii) real estate owned as
a result of foreclosure, transfer in lieu of foreclosure or other transfer in
satisfaction of a debtor's obligation previously contracted), except for such
defects in title which would not, individually or in the aggregate, have a
Material Adverse Effect.
2.18. Knowledge as to Conditions. In the case of Acquiror and the
--------------------------
Company, respectively, it knows of no reason why the approvals, consents and
waivers of governmental authorities referred to in Section 4.1(b) should not be
obtained without the imposition of any condition of the type referred to in the
provisos to such Section.
2.19. Compliance With Laws. Except as Previously Disclosed, in the
--------------------
case of Acquiror and the Company, respectively, it and each of its Significant
Subsidiaries has all permits, licenses, certificates of authority, orders and
approvals of, and has made all filings, applications and registrations with,
federal, state, local and foreign governmental or regulatory bodies that are
required in order to permit it to carry on its business as it is presently
conducted and the absence of which could, individually or in the aggregate, have
a Material Adverse Effect.
2.20. Acquiror Common Stock. In the case of Acquiror, the Acquiror
---------------------
ADSs and underlying Acquiror Ordinary Shares to be issued pursuant to this
Agreement, when issued in accordance with the terms of this Agreement, will be
duly authorized, validly issued, fully paid and non-assessable and subject to no
preemptive rights.
2.21. Fees. In the case of Acquiror and the Company, respectively,
----
other than financial advisory services performed for Acquiror by Xxxxxxx Xxxxx &
Co. and for the Company by Xxxxxx Xxxxxxx & Co. and FMCG Capital Strategies (on
terms disclosed to Acquiror), neither it nor any of its Subsidiaries, nor any of
their respective officers, directors, employees or agents has employed any
broker or finder or incurred any liability for any financial advisory fees,
brokerage fees, commissions or finder's fees, and no broker or finder has acted
directly or indirectly for it or any of its Subsidiaries, in connection with
this Agreement or the transactions contemplated hereby.
2.22. Registration Statement; Proxy Statement. In the case of
---------------------------------------
Acquiror and the Company, respectively, the information to be supplied by it for
inclusion in (i) the Registra-
-19-
tion Statement on Form F-4 and/or such other form(s) as may be appropriate to be
filed under the Securities Act with the SEC by Acquiror for the purpose of,
among other things, registering the Acquiror ADSs and underlying Acquiror
Ordinary Shares to be issued to the shareholders of the Company in the Merger
(the "Registration Statement") will not, at the time such Registration Statement
becomes effective, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein not misleading, or (ii) the proxy statement or proxy
statements and other materials (as amended or supplemented from time to time,
collectively the "Proxy Statement", and together with the prospectus included in
the Registration Statement, as amended or supplemented from time to time, the
"Proxy Statement/Prospectus") to be filed with the SEC by the Company under the
Securities Exchange Act and distributed in connection with the Company's meeting
of its shareholders to vote upon this Agreement (the "Company Meeting") and to
be distributed by Acquiror Sub in connection with Acquiror Sub's meeting of its
Shareholders to vote upon this Agreement (the "Acquiror Sub Meeting"), and the
offering circular required under the rules and regulation of the London and
Irish stock exchanges (the "Offering Circular") to be distributed by Acquiror in
connection with Acquiror's meeting of the Shareholders to vote upon this
Agreement (the "Acquiror Meeting") will not, at the time the Proxy
Statement/Prospectus and the Offering Circular, respectively, are mailed and at
the time of the Company Meeting, the Acquiror Sub Meeting, or the Acquiror
Meeting, respectively, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
are made, not misleading.
2.23. Environmental Matters. Except as Previously Disclosed, in the
---------------------
case of Acquiror and the Company, respectively, except for such matters that,
alone or in the aggregate, are not reasonably likely to have a Material Adverse
Effect, to the best of its knowledge, (i) it and its Subsidiaries have complied
with all applicable Environmental Laws (as hereinafter defined) and (ii) neither
it nor any of its Subsidiaries has received any notices, demand letters or
requests for information from any governmental entity or any third party
indicating that it or any of its Subsidiaries may be in violation of, or liable
under, any Environmental Law and none of it, its Subsidiaries or the properties
owned or leased by any of them are subject to any court order, administrative
order or decree arising under any Environmental Law.
-20-
"Environmental Law" means any Federal, state, foreign or local law,
statute, ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, common law, legal doctrine, order, judgment, decree,
injunction, requirement or agreement with any governmental entity, relating to
(x) the protection, preservation or restoration of the environment (including,
without limitation, air, water vapor, surface water, groundwater, drinking water
supply, surface land, subsurface land, plant and animal life or any other
natural resource), or to human health or safety, or (y) the exposure to, or the
use, storage, recycling, treatment, generation, transformation, processing,
handling, labeling, production, release or disposal of any substance presently
listed, defined, designated or classified as hazardous, toxic, radioactive or
dangerous, including any substance containing any such substance as a component,
in each case as amended and as now in effect.
2.24. Takeover Laws; Rights Plans.
---------------------------
(a) In the case of the Company, it has taken all action
required to be taken by it in order to opt out or exempt this Agreement and the
Stock Option Agreement, and the transactions contemplated hereby and thereby,
from, and this Agreement and the Stock Option Agreement and the transactions
contemplated hereby and thereby are exempt from, the requirements of any
"business combination," "moratorium," "disgorgement," "control share," or other
applicable antitakeover laws and regulations (collectively, "Takeover Laws") of
the Commonwealth of Pennsylvania, including Chapter 25 of the PBCL.
(b) In the case of the Company, it has duly entered into an
amendment to the Company Rights Agreement in form and substance satisfactory to
Acquiror and the Company, and taken all other action necessary or appropriate,
so that the entering into of this Agreement and the Stock Option Agreement and
the completion of the transactions contemplated hereby and thereby (including
without limitation the Merger and the exercise of the option (as defined in the
Stock Option Agreement) do not and will not result in the ability of any Person
to exercise any rights under the Company Rights Agreement, or enable or require
the Company Rights to separate from the shares of common stock to which they are
attached or to be triggered or become exercisable.
(c) In the case of the Company, no "Distribution Date," "Stock
Acquisition Date" "Section 11(a)(ii) Trigger Date" or "Triggering Event" (as
such terms are defined in the Company Rights Agreement) has occurred.
-21-
(d) In the case of the Acquiror, Acquiror has not entered
into any agreement of similar effect as the Company Rights Agreement.
2.25. Vote Required. In the case of the Company, the affirmative
-------------
vote of the holders of a majority of the shares of its Common Stock present and
voting at the Company Meeting is the only vote of the holders of any class or
series of its capital stock necessary to approve this Agreement and the
transactions contemplated hereby; in the case of Acquiror, the affirmative vote
of holders of a majority of the outstanding Acquiror Ordinary Shares present and
voting at the Acquiror Meeting is the only vote of the holders of any class or
series of its capital stock necessary to approve this Agreement and the
transactions contemplated hereby; and in the case of Acquiror Sub, the
affirmative vote of holders of a majority of the outstanding voting power of the
Acquiror Sub Common Stock and Acquiror Sub Preferred Stock, voting as a single
class, is the only vote of the holders of any class or series of its capital
stock necessary to approve this Agreement and the transactions contemplated
hereby. The Acquiror Sub Common Stock and Acquiror Sub Preferred Stock each are
entitled to one vote per share with respect to approval of this Agreement and
the transactions contemplated hereby.
ARTICLE III
CONDUCT PRIOR TO CLOSING
------------------------
3.1. Access to Information; Notice of Changes; Confidentiality.
---------------------------------------------------------
(a) During the period commencing on the date hereof and
ending on the Closing Date, each of the parties shall (and shall cause each of
its Subsidiaries to) upon reasonable notice, afford the other parties, and their
respective counsel, accountants and other authorized representatives, reasonable
access during normal business hours to the properties, books and records of such
party and its Subsidiaries in order that they may have the opportunity to make
such investigations as they shall desire of the affairs of such party and its
Subsidiaries; such investigation shall not, however, affect or be deemed to
modify the representations and warranties made by such party in this Agreement.
(b) During the period commencing on the date hereof and
ending on the Closing Date, each party shall
-22-
promptly notify the other parties hereto in writing of any and all occurrences
which, if they had occurred prior to execution of this Agreement, would have
caused the representations and warranties of such party contained in Article 2
and the disclosures delivered in conjunction therewith to be incorrect in any
Material respect.
(c) Each party will not, and will cause its representatives
not to, use any information obtained pursuant to this Section 3.1 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 3.1 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. In the event that
this Agreement is terminated or the transactions contemplated by this Agreement
shall otherwise fail to be consummated each party shall promptly cause all
copies of documents or extracts thereof containing information and data as to
another party hereto to be returned to the party which furnished the same.
3.2. Conduct of the Business of the Company Pending the Closing
----------------------------------------------------------
Date. The Company agrees that, except as express permitted by this Agreement or
----
otherwise consented to or approved in writing by Acquiror, during the period
from the date hereof to the Effective Time:
(a) The Company will and will cause each of its Subsidiaries
to conduct their respective operations only in the ordinary course of business
consistent with past practice (subject, in any event, to the provisions of
paragraph (c) below) and will use its best efforts to preserve intact their
respective business organizations, keep available the services of their officers
and employees and maintain satisfactory relationships with licensors, suppliers,
distributors, customers, clients and others having business relationships with
them.
(b) The Company shall not, and shall not permit any of its
Subsidiaries to, take any action, engage in any transactions or enter into any
agreement which would adversely affect or delay in any Material respect the
ability of Acquiror or the Company to obtain any necessary approvals, consents
or waivers of any governmental authority required for
-23-
the transactions contemplated hereby or to perform its covenants and agreements
on a timely basis under this Agreement.
(c) The Company will not and will not permit any of its
Subsidiaries to:
(i) other than in the ordinary course of business
consistent with past practice, incur any indebtedness for borrowed money,
assume, guarantee, endorse or otherwise as an accommodation become responsible
for the obligations of any other Person, or make any loan or advance;
(ii) (A) adjust, split, combine or reclassify any capital
stock; (B) subject to Section 3.4 hereof, make, declare or pay any dividend
(other than (x) regular quarterly cash dividends not exceeding $0.30 per share
on the Company Common Stock and (y) dividends paid by any of the wholly-owned
Subsidiaries of the Company to the Company or any of its wholly-owned
Subsidiaries), or make any other distribution on, or directly or indirectly
redeem, purchase or otherwise acquire, any shares of its capital stock or any
securities or obligations convertible into or exchangeable for any shares of its
capital stock, (C) grant any stock appreciation rights or grant any Person any
right to acquire any shares of its capital stock, except for options issued to
employees and directors (not to exceed 315,000 shares) and rights arising under
the Company's Employee Stock Purchase Plan in the ordinary course of business
consistent with past practice; or (D) issue any additional shares of capital
stock except pursuant to (x) Rights outstanding as of the date hereof, (y)
Rights issued or arising after the date hereof as permitted by clause (C) above
(z) the Company's Dividend Reinvestment Plan;
(iii) other than in the ordinary course of business
consistent with past practice, sell, transfer, mortgage, encumber or otherwise
dispose of any of its Material properties or assets to any Person other than a
direct or indirect wholly-owned Subsidiary of the Company, or cancel, release or
assign any indebtedness of any such Person or any claims held by any such
Person, except in the ordinary course of business consistent with past practice
or pursuant to contracts or agreements in force at the date of this Agreement as
Previously Disclosed;
(iv) other than in the ordinary course of business
consistent with past practice, make any Material investment either by purchase
of stock or securities, contributions to capital, property transfers, or
purchase of any prop-
-24-
erty or assets of any other individual, corporation or other entity other than a
wholly-owned Subsidiary of the Company;
(v) other than in the ordinary course of business
consistent with past practice, enter into or terminate any Material contract or
agreement, or make any change in any of its Material leases or contracts, other
than renewals of contracts and leases without Material adverse changes of terms;
(vi) increase in any manner the compensation or fringe
benefits of any of its employees or pay any pension or retirement allowance not
required by any existing plan or agreement to any such employees, or except as
Previously Disclosed become a party to, amend or commit itself to any pension,
retirement, profit-sharing or welfare benefit plan or agreement or employment
agreement with or for the benefit of any employee, in each case other than in
the ordinary course of business consistent with past practice, or voluntarily
accelerate the vesting of any stock options or other stock-based compensation,
provided that extensions of employment contracts in existence on the date hereof
pursuant to the terms thereof shall be deemed to be made in the ordinary course
of business consistent with past practice; provided, however, that nothing
-------- -------
herein shall prevent the Company from establishing a bonus pool in the aggregate
amount of Three Million Dollars ($3,000,000) to be paid to certain officers and
employees upon Closing. The Chief Executive Officer of the Company will consult
with the senior executives of Acquiror and Acquiror Sub in connection with the
bonus pool.
(vii) other than in the ordinary course of business
consistent with past practice, settle any claim, action or proceeding involving
any liability of the Company or any of its Subsidiaries for Material money
damages or restrictions upon the operations of the Company or any of its
Subsidiaries;
(viii) modify in any Material respect the manner in which
it and its Subsidiaries have heretofore conducted or accounted for their
business;
(ix) except as contemplated by this Agreement, amend its
articles of incorporation or its by-laws; or
(x) agree to, or make any commitment to, take any of the
actions prohibited by this Section 3.2.
3.3. Conduct of the Business of Acquiror Pending
-------------------------------------------
-25-
the Closing Date. Acquiror agrees that, except as expressly permitted by this
----------------
Agreement or otherwise consented to or approved in writing by the Company,
during the period from the date of this Agreement to the Effective Time,
Acquiror will not (a) subject to Section 3.4 hereof, declare or pay any
extraordinary or special dividend on the Acquiror Ordinary Shares, or (b) take
any action that would adversely affect or delay in any material respect the
ability of the Company or Acquiror to obtain any necessary approvals, consents
or waivers of any governmental authority required for the transactions
contemplated hereby or to perform its covenants and agreements on a timely basis
under this Agreement.
3.4. Dividends. Notwithstanding Sections 3.2 and 3.3 hereof, in all
---------
events Acquiror and the Company agree to coordinate (on a mutually agreeable
basis) the declaration of dividends (and the record and payment dates therefor)
payable during the period preceding and including the quarter in which the
Effective Time occurs so that stockholders of the Company and Acquiror will
receive fair dividends and in no event shall stockholders of the Company and
Acquiror fail to receive a fair dividend during any quarter or semi-annual
period up to and including the quarter or semi-annual period, as the case may
be, immediately following the Effective Time.
3.5. No Solicitation of Other Offers. The Company agrees that
-------------------------------
neither it nor any of its Subsidiaries nor any of their respective officers and
directors shall, and the Company shall direct and use its best efforts to cause
its employees, agents and representatives (including, without limitation, any
investment banker, attorney or accountant retained by it or any of its
Subsidiaries) not to, directly or indirectly, take any action to solicit or
initiate any inquiries or the making of any offer or proposal with respect to a
merger, consolidation, business combination, liquidation, reorganization, sale
or other disposition of any significant portion of assets, sale of shares of
capital stock, or similar transactions involving the Company or any Subsidiary
of the Company (any such inquiry, offer or proposal, an "Acquisition Proposal"),
or, except as may be legally required for the discharge by the board of
directors of 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. The Company will immediately
cease and cause to be terminated any existing activities, discussions or
negotiations with any other parties conducted heretofore with respect to any of
the foregoing. The Company will promptly notify Acquiror of its receipt of any
Acquisition Proposal.
-26-
3.6. Certain Filings, Consents and Arrangements. Acquiror and the
------------------------------------------
Company shall (a) as soon as practicable make any filings and applications
required to be filed in order to obtain all approvals, consents and waivers of
governmental authorities necessary or appropriate for the consummation of the
transactions contemplated hereby (including without limitation all applications
for required approvals as set forth in Section 4.1(b) hereof), (b) cooperate
with one another (i) in promptly determining what filings are required to be
made and what approvals, consents or waivers are required to be obtained under
any relevant federal, state or foreign law or regulation and (ii) in promptly
making any such filings, furnishing information required in connection therewith
and seeking timely to obtain any such approvals, consents or waivers, and (c)
deliver to the other copies of the publicly available portions of all such
filings and applications promptly after they are filed.
3.7. Best Efforts. Acquiror and the Company each will (i) use its
------------
best efforts to take all action necessary to render accurate as of the Closing
Date the representations and warranties of it contained herein, and (ii) use its
best efforts to perform or cause to be satisfied each covenant or condition to
be performed or satisfied by it as contemplated by this Agreement.
3.8. Publicity. The initial press release announcing this Agreement
---------
shall be a joint press release and thereafter the Company and Acquiror shall
consult with each other in issuing any press releases or otherwise making public
statements with respect to the transactions contemplated hereby and in making
any filings with any governmental entity or with any national securities
exchange with respect thereto.
3.9. Shareholder Approvals. Each of Acquiror, Acquiror Sub and the
---------------------
Company shall take, in accordance with applicable law, the rules of any
applicable securities exchange or quotation system, and its respective articles
of incorporation and by-laws (or similar corporate documents), all action
necessary to convene an appropriate meeting of its shareholders to consider and
vote upon the approval of this Agreement (the Company Meeting, Acquiror Meeting
and Acquiror Sub Meeting each referenced to herein as a "Shareholder Meeting"),
as promptly as practicable after the Registration Statement is declared
effective. The Board of Directors of each such party will recommend approval of
such matters, and each such party will take all reasonable lawful action to
solicit such approval by its shareholders, except, in the case of the Company,
as may be legally required for the discharge by the board of directors of its
fiduciary duties. Acquiror
-27-
will vote all of the shares of the capital stock of Acquiror Sub held by it in
favor of such matters.
3.10. Registration Statement.
----------------------
(a) Each of Acquiror and the Company agrees to cooperate in
the preparation of the Registration Statement to be filed by Acquiror with the
SEC in connection with the issuance of Acquiror ADSs and the underlying Acquiror
Ordinary Shares in the Merger, including the Proxy Statement/Prospectus and the
Offering Circular. Each of Acquiror and the Company 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.
Acquiror also agrees to use all reasonable efforts to obtain all necessary state
securities law or "Blue Sky" permits and approvals required to carry out the
transactions contemplated by this Agreement. The Company and Acquiror each agree
to furnish all information concerning themselves and their Subsidiaries,
officers, directors and shareholders as may be reasonably requested in
connection with the foregoing.
(b) Each of Acquiror and the Company 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 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, (ii) the Proxy
Statement/Prospectus and any amendment or supplement thereto, and (iii) the
Offering Circular, will, at the date of mailing to shareholders and at the times
of each of the Shareholder Meetings, contain any statement which, in the light
of the circumstances under which such statement is made, is false or misleading
with respect to any material fact, or which will omit to state any material fact
necessary in order to make the statements therein not false or misleading or
necessary to correct any statement in any earlier communication with respect to
the solicitation of any proxy for the same meeting. Each of the Company and
Acquiror agrees that the Proxy Statement (except, in the case of the Company,
with respect to portions thereof prepared by Acquiror, and except, in the case
of Acquiror, with respect to portions thereof prepared by the Company) will
comply as to form in all material respects with the requirements of the Exchange
Act and the rules and regulations of the SEC thereunder, and the Registration
Statement (except, in the case of the Company, with respect to portions thereof
prepared
-28-
by Acquiror, and except, in the case of Acquiror, with respect to portions
thereof prepared by the Company) will comply as to form in all material respects
with the requirements of the Securities Act and the rules and regulations of the
SEC thereunder.
(c) In the case of Acquiror, Acquiror will advise the
Company, promptly after Acquiror 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 the Acquiror ADSs and the underlying Acquiror Ordinary Shares
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.
3.11. The Company Rights Agreement. The Board of Directors of the
----------------------------
Company shall take all further action (in addition to that referred to in
Section 2.24) reasonably requested in writing by Acquiror (including redeeming
the Company Rights immediately prior to the Effective Time or amending the
Company Rights Agreement) in order to render the Company Rights inapplicable to
the Merger and the other transactions contemplated by this Agreement and the
Stock Option Agreement. Except as provided above with respect to the Merger and
the other transactions contemplated by this Agreement and the Stock Option
Agreement and except as may be legally required for the discharge by the Board
of Directors of the Company of its fiduciary duties, the Board of Directors of
the Company shall not (a) amend the Company Rights Agreement or (b) take any
action with respect to, or make any determination under, the Company Rights
Agreement, including a redemption of the Company Rights or any action to
facilitate an Acquisition Proposal in respect of the Company.
3.12. Securities Act.
--------------
(a) Not later than the 15th day prior to mailing of the Proxy
Statement/Prospectus, Acquiror shall deliver to the Company, and the Company
shall deliver to Acquiror, a schedule of each Person that, to the best of its
knowledge, is or is reasonably likely to be, as of the date of the Company
Meeting, deemed to be an "affiliate" of it (each, an "Affiliate") as that term
is used in Rule 145 under the Securities Act.
(b) The Company shall use its reasonable best efforts to
cause each Person who may be deemed to be an
-29-
Affiliate of the Company to execute and deliver to the Acquiror prior to the
Effective Time an agreement relating to the above-referenced Rule 145 in form
and substance satisfactory to Acquiror.
3.13. Additional Agreements. Subject to the terms and conditions
---------------------
herein provided, each of the parties hereto agrees to use all reasonable efforts
to take promptly, or cause to be taken promptly, all actions and to do promptly,
or cause to be done promptly, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement as promptly as practicable,
including using efforts to obtain all necessary actions or non-actions,
extensions, waivers, consents and approvals from all applicable governmental
entities, effecting all necessary registrations, applications and filings
(including, without limitation, filings under any applicable state securities
laws) and obtaining any required contractual consents and regulatory approvals.
3.14. Listing. Acquiror shall use its best efforts to list on the
-------
New York Stock Exchange upon official notice of issuance the Acquiror ADSs to be
issued in the Merger.
ARTICLE IV
CONDITIONS PRECEDENT TO MERGER
------------------------------
4.1. Conditions Precedent to Obligations of All Parties. The
--------------------------------------------------
respective obligations of Acquiror and the Company to effect the Merger are
subject to the satisfaction or waiver (subject to applicable law) at or prior to
the Effective Time of each of the following conditions:
(a) Shareholder Approvals. This Agreement and the
---------------------
transactions contemplated hereby shall have been approved by the requisite vote
of the shareholders of the Company, Acquiror and Acquiror Sub in accordance with
applicable law.
(b) Regulatory Approval. Acquiror shall have procured the
-------------------
required approval, consent, waiver or other administrative action with respect
to this Agreement and the transactions contemplated hereby (i) by the
Pennsylvania Department of Banking pursuant to Pennsylvania law, and (ii) by the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board")
under the Bank Holding Company Act of 1956, (iii) by the Minister for Employment
and Enterprise for Ireland, and (iv) by the Central Bank of Ireland, and all
-30-
applicable statutory waiting periods shall have expired; and the parties shall
have procured all other regulatory approvals, consents, waivers or
administrative actions of governmental authorities or other Person that are
necessary or appropriate to the consummation of the transactions contemplated by
this Agreement; provided, however, that no approval, consent, waiver or
administrative action referred to in this Section 4.1(b) shall be deemed to have
been received if it shall include any condition or requirement (other than a
condition or requirement requiring divestitures or other actions in order to
comply with or avoid challenge under the antitrust laws) that would so
materially and adversely affect the economic or business benefits of the Merger
that the Acquiror would not have entered into this Agreement had such conditions
or requirements been known at the date hereof;
(c) Other Legal Requirements. All other requirements
------------------------
prescribed by law which are necessary to the consummation of the transactions
contemplated by this Agreement shall have been satisfied.
(d) Injunction. No preliminary or permanent injunction or
----------
other order shall have been issued by any court or by any governmental or
regulatory agency, body or authority which prohibits the consummation of the
Merger and the transactions contemplated by this Agreement and which is in
effect at the Effective Time.
(e) Statutes. No statute, rule, regulation, executive
--------
order, decree or order of any kind shall have been enacted, entered, promulgated
or enforced by any court or governmental authority which prohibits the
consummation of the Merger.
(f) Registration Statement. The Registration Statement
----------------------
shall have become effective and no stop order suspending the effectiveness of
the Registration Statement shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the SEC.
(g) Tax Opinion. Acquiror and the Company each shall have
-----------
received the opinion of counsel to Acquiror acceptable to the Company,
substantially to the effect that, on the basis of facts, representations and
assumptions set forth in such opinion which are consistent with the state of
facts existing at the Effective Time, the Merger will be treated for federal
income tax purposes as a reorganization within the meaning of Section 368(a) of
the Code and that, accordingly: (i) no gain or loss will be recognized by
Acquiror or the Company as a result of the Merger; (ii) no
-31-
gain or loss will be recognized by the shareholders of the Company who exchange
their shares of Company Common Stock solely for Acquiror ADSs pursuant to the
Merger (except with respect to cash received in lieu of fractional Acquiror
ADSs); (iii) the tax basis of the shares of Acquiror ADSs received by
shareholders who exchange all of their shares of the Company Common Stock solely
for shares of Acquiror ADSs in the merger will be the same as the tax basis of
the shares of the Company Common Stock surrendered in exchange therefor (reduced
by any amount allocable to a fractional interest for which cash is received);
and (iv) the holding period of the Acquiror ADSs received in the Merger will
include the period during which the shares of the Company Common Stock
surrendered in exchange therefor were held, provided such shares of the Company
Common Stock were held as capital assets at the Effective Time. In rendering
their opinion, such counsel may require and rely upon representations contained
in certificates of officers of Acquiror, the Company and others.
(h) Rights Agreements. There shall exist no "Acquiring
-----------------
Person" and no "Stock Acquisition Date" or "Triggering Event" (as each of such
terms are defined in the Company Rights Agreement) shall have occurred.
4.2. Conditions Precedent to Obligations of Acquiror. The
-----------------------------------------------
obligations of Acquiror to effect the Merger are also subject to the
satisfaction or waiver, at or prior to the Effective Time, of each of the
following conditions unless waived by Acquiror:
(a) Accuracy of Representations and Warranties. All
------------------------------------------
representations and warranties of the Company contained herein shall be true and
correct in all Material respects as of the date hereof and at and as of the
Closing Date, with the same force and effect as though made on and as of the
Closing Date.
(b) The Company's Performance. The Company shall have
-------------------------
performed in all material respects all obligations and agreements, and complied
in all material respects with all covenants and conditions, contained in this
Agreement to be performed or complied with by it prior to the Closing Date.
(c) Officer's Certificate. Acquiror shall have received a
---------------------
certificate signed by the Chief Executive Officer and the Chief Financial
Officer of the Company, dated the Closing Date, certifying as to the matters set
forth in subparagraphs 4.2(a) and (b).
(d) Opinion of Counsel. Acquiror shall have
------------------
-32-
received an opinion, dated the Closing Date, of counsel for the Company, in form
and substance satisfactory to Acquiror and its counsel.
(e) Blue Sky. Acquiror shall have received all state
--------
securities laws and "Blue Sky" permits and other authorizations necessary to
consummate the transactions contemplated hereby.
(f) Accountants' Comfort Letters. Acquiror and its
----------------------------
directors and officers who sign the Registration Statement shall have received
letters from the Company's independent certified public accountants, dated (i)
the date of the mailing of the Proxy Statement/Prospectus to the Company's
shareholders and (ii) shortly prior to the Closing Date, with respect to certain
financial information regarding the Company in the form customarily issued by
such accountants at such time in transactions of this type.
4.3. Conditions Precedent to Obligation of the Company. The
-------------------------------------------------
obligation of the Company to effect the Merger is also subject to the
satisfaction or waiver, at or prior to the Effective Time, of each of the
following conditions unless waived by the Company:
(a) Accuracy of Representations and Warranties. All
------------------------------------------
representations and warranties of Acquiror contained herein shall be true and
correct in all Material respects as of the date hereof and at and as of the
Closing, with the same force and effect as though made on and as of the Closing
Date.
(b) Acquiror's Performance. Acquiror shall have performed
----------------------
in all material respects all obligations and agreements, and complied in all
material respects with all covenants and conditions, contained in this Agreement
to be performed or complied with by it prior to the Closing Date.
(c) Officer's Certificate. The Company shall have received
---------------------
a certificate signed by the Chief Executive Officer and the Chief Financial
Officer of Acquiror and Acquiror Sub, dated the Closing Date, certifying as to
the matters set forth in subparagraphs 4.3(a) and (b).
(d) Opinion of Counsel. The Company shall have received an
------------------
opinion, dated the Closing Date, of counsel for Acquiror and Acquiror Sub, in
form and substance satisfactory to the Company and its counsel.
(e) Stock Listing. The Acquiror ADSs to be
-------------
-33-
issued in the Merger have been approved for listing on the New York Stock
Exchange, subject to official notice of issuance.
(f) Accountants' Comfort Letters. The Company and its
----------------------------
directors shall have received letters from Acquiror's independent certified
public accountants, dated (i) the date of the mailing of the Proxy
Statement/Prospectus to the Company's shareholders and (ii) shortly prior to the
Closing Date, with respect to certain financial information regarding Acquiror
in the form customarily issued by such accountants at such time in transactions
of this type.
(g) Employment Agreements. Acquiror Sub shall have entered
---------------------
into an agreement with Xxxxxxxxxxx X. Xxxxxxxx in the form attached hereto as
part of Exhibit B attached hereto, effective as of the Effective Time, and shall
have made the Change of Control Retention Payments specified on Exhibit B.
ARTICLE V
COVENANTS
---------
5.1. Tax-Free Reorganization Treatment. Neither Acquiror nor the
---------------------------------
Company shall take or cause to be taken any action, whether before or after the
Effective Time, which would disqualify the Merger as a "reorganization" within
the meaning of Section 368 of the Code.
5.2. Certain Contracts. Acquiror Sub hereby unconditionally
-----------------
agrees to, and agrees to cause its Subsidiaries to, honor, without modification,
offset or counterclaim, all Previously Disclosed contracts, agreements and
commitments of the Company or any of its Subsidiaries authorized by the Company
or any of its Subsidiaries prior to the date of this Agreement which apply to
any current or former employee or current or former director of the Company or
any of its Subsidiaries, including without limitation the Change in Control
Agreements and Indemnification Agreements with certain directors, officers and
employees as Previously Disclosed in accordance with Section 2.16 hereof. In
accordance with the terms of such contracts, agreements and commitments,
Acquiror Sub hereby assumes, subject to the consummation of the Merger, all of
the Company's and its Subsidiaries' obligations under such contracts, agreements
and commitments.
5.3. Employee Benefits. Acquiror Sub hereby unconditionally
-----------------
agrees to, and to cause its Subsidiaries to, provide to officers and employees
of the Company and its Subsidiaries who become or remain regular (full time)
-34-
employees of Acquiror Sub or any of its Subsidiaries employee benefits,
including, without limitations pension benefits, health and welfare benefits,
life insurance and vacation, which are no less favorable in the aggregate than
those provided from time to time by the Acquiror Sub and its Subsidiaries to
their similarly situated officers and employees. Any employee of the Company or
any of its Subsidiaries who becomes a participant in any employee benefit plan,
program, policy, or arrangement of the Acquiror Sub or any of its Subsidiaries
shall be given credit under such plan, program, policy, or arrangement for all
service with the Company or any of its Subsidiaries prior to becoming such a
participant for purposes of eligibility and vesting. Employees of the Company or
any of its Subsidiaries who are terminated within two years after the Effective
Time shall be entitled to severance benefits equal to the greater of those
provided by the Company on the date hereof or those provided by the Acquiror Sub
as of the Effective Time, and shall be provided outplacement assistance and
counselling by Acquiror Sub. In addition, (i) employees of the Company or its
Subsidiaries who continue as employees of Acquiror Sub or its Subsidiaries after
the Effective Time ("Affected Employees") shall be provided with the greater of
the weeks of annual vacation to which they were entitled on the day before the
Effective Date or the weeks of annual vacation to which similarly situated
employees of Acquiror Sub and its Subsidiaries are then entitled, (ii) Affected
Employees shall be entitled to preserve days of vacation that have been carried
over from 1996 to 1997, and Affected Employees who are not able to take all the
vacation days to which they are entitled for calendar year 1997 shall be
permitted to carry over unused days into calendar 1998; (ii) Affected Employees
shall be entitled to preserve occasional days that have been carried over from
1996 into 1997 in addition to any occasional days to which they may otherwise be
entitled, and Affected Employees who are not able to take all the occasional
days to which they are entitled for calendar year 1997 shall be permitted to
carry over unused days into calendar 1998; and (iii) Acquiror Sub shall
coordinate any transition of Affected Employees to benefit plans of Acquiror Sub
such that credit is given as to deductibles, co-payments and other similar
items, and the flexible spending accounts maintained for employees of the
Company and its Subsidiaries shall be maintained through the end of calendar
year 1997. Additional provisions regarding benefits of Affected Employees are
set forth on Exhibit C attached hereto.
5.4. Indemnification; Directors' and Officers' Insurance.
---------------------------------------------------
-35-
(a) From and after the Effective Time, Acquiror Sub agrees to
indemnify and hold harmless each present and former director and officer of the
Company or its Subsidiaries and each officer or employee of the Company or its
Subsidiaries that is serving or has served as a director or trustee of another
entity expressly at the Company's request or direction (the "Indemnified
Parties"), against any and all costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
(collectively, "Costs") incurred in connection with any and all claims, actions,
suits, proceedings or investigations, whether civil, criminal, administrative or
investigative, arising out of or pertaining to matters arising out of or in
connection with such party's position as, or actions taken as, a director or
officer of the Company or a Subsidiary or director or trustee of another entity
at the request or direction of the Company, at or prior to the Effective Time,
whether asserted or claimed prior to, at or after the Effective Time, to the
fullest extent permitted by applicable law (and also advance expenses incurred
to the fullest extent permitted by applicable law); provided, however, that
Acquiror Sub shall not have any 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 the
indemnification of such Indemnified Party in the manner contemplated hereby is
prohibited by applicable law. If such indemnity is determined not to be
available as a matter of law with respect to any Indemnified Party, then the
Acquiror Sub and the Indemnified Party shall contribute to the amount payable in
such proportion as is appropriate to reflect relative faults and benefits and
other relevant equitable considerations.
(b) Any Indemnified Party wishing to claim indemnification
under Section 5.4(a), upon learning of any such claim, action, suit, proceeding
or investigation, shall promptly notify Acquiror Sub thereof, but the failure to
so notify shall not relieve Acquiror Sub of any liability it may have to such
Indemnified Party if such failure does not materially prejudice Acquiror. In the
event of any such claim, action, suit, proceeding or investigation (whether
arising before or after the Effective Time): (i) Acquiror Sub shall have the
right to assume the defense thereof and Acquiror Sub shall not be liable to such
Indemnified Parties for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Parties in connection with
the defense thereof, except that if Acquiror elects not to assume such defense,
or counsel for the Indemnified Parties advises that there are issues which raise
-36-
conflicts of interest between Acquiror Sub and the Indemnified Parties, the
Indemnified Parties may retain counsel satisfactory to them, and Acquiror Sub
shall pay the reasonable fees and expenses of such counsel for the Indemnified
Parties promptly as statements therefor are received; (ii) the Indemnified
Parties will cooperate in the defense of any such matter; and (iii) Acquiror Sub
shall not be liable for any settlement effected without its prior written
consent which shall not be unreasonably withheld.
(c) For a period of six years after the Effective Time,
Acquiror Sub shall use all reasonable efforts to cause to be maintained in
effect the current policies of directors' and officers' liability insurance
maintained by the Company (provided that Acquiror Sub may substitute therefor
policies of at least the same coverage and amounts containing terms and
conditions which are substantially no less advantageous to such directors and
officers) with respect to claims arising from facts or events which occurred
before the Effective Time; provided, however, that in no event shall Acquiror
-------- -------
Sub be obligated to expend, in order to maintain or provide insurance coverage
pursuant to this Subsection 5.4(c), any amount per annum in excess of 200% of
the amount of the annual premiums paid as of the date hereof by the Company for
such insurance (the "Maximum Amount"). If the amount of the annual premiums
necessary to maintain or procure such insurance coverage exceeds the Maximum
Amount, Acquiror shall use all reasonable efforts to maintain the most
advantageous policies of directors' and officers' insurance obtainable for an
annual premium equal to the Maximum Amount.
5.5. Certain Director and Officer Positions.
--------------------------------------
(a) As of the Effective Date, Acquiror and Acquiror Sub shall
fix the size of the Board of Directors of Acquiror Sub at 21 members and shall
cause five members of the Company's Board of Directors (consisting of
Xxxxxxxxxxx X. Xxxxxxxx and four other current directors selected by the Company
and willing to so serve) to be appointed or elected to the Board of Directors of
Acquiror Sub. As of the Effective Time Acquiror and Acquiror Sub agree to cause
Xxxxxxxxxxx X. Xxxxxxxx to be named as Vice Chairman of the Board of Directors
of Acquiror Sub, and Vice Chairman of the Steering Committee of Acquiror Sub.
(b) As of the Effective Time, Acquiror Sub shall enter into
the employment agreements referred to in Section 4.3(g) hereof.
-37-
ARTICLE VI
TERMINATION
-----------
6.1. Termination. This Agreement may be terminated, and the Merger
-----------
abandoned, prior to the Effective Time, either before or after its approval by
the shareholders of the Company:
(a) by the mutual consent of the Acquiror and the Company, if
the board of directors of each so determines by vote of a majority of the
members of its entire board;
(b) by Acquiror or the Company, if its board of directors so
determines by vote of a majority of the members of its entire board, in the
event of the failure of the shareholders of the Company or Acquiror to approve
this Agreement at its meeting called to consider such approval;
(c) by Acquiror or the Company, if its board of directors so
determines by vote of a majority of the members of its entire board, in the
event of a Material breach by the other party hereto of any representation,
warranty, covenant or agreement contained herein which is not cured or not
curable within 60 days after written notice of such breach is given to the party
committing such breach by the other party;
(d) by Acquiror or the Company by written notice to the other
party if either (i) any approval, consent or waiver of a governmental authority
required to permit consummation of the transactions contemplated hereby shall
have been denied or (ii) any governmental authority of competent jurisdiction
shall have issued a final, unappealable order enjoining or otherwise prohibiting
consummation of the transactions contemplated by this Agreement;
(e) by Acquiror or the Company, 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 December 31, 1997, unless the
failure to so consummate by such time is due to the breach of any
representation, warranty or covenant contained in this Agreement by the party
seeking to terminate; or
(f) by the Company, if its board of directors so determines
by a majority vote of the members of its entire board, at any time during the
ten-day period commencing with the Termination Right Determination Date (as
defined below) if the Market Price on the Termination Right Determination Date
-38-
of an Acquiror ADS is less than Thirty-Two Dollars ($32); subject, however, to
------- -------
the following three sentences. If the Company elects to exercise its termination
right pursuant to the immediately preceding sentence, it shall give prompt
written notice to Acquiror, provided that such notice of election to terminate
--------
may be withdrawn at any time within the aforementioned ten-day period. During
the five-day period commencing with its receipt of such notice, Acquiror shall
have the option of adjusting the Per Share Stock Consideration to the value
thereof that would have resulted if the Market Price of an Acquiror ADS as of
the Termination Right Determination Date were equal to Thirty-Two Dollars ($32).
If Acquiror makes an election contemplated by the preceding sentence, within
such five-day period, it shall give prompt written notice to the Company of such
election and the revised Exchange Ratio and Per Share Stock Consideration,
whereupon no termination shall have occurred pursuant to this Section 6.1(f) and
this Agreement shall remain in effect in accordance with its terms (except as to
the Exchange Ratio and Per Share Stock Consideration), and any references in
this Agreement to the "Exchange Ratio" and "Per Share Stock Consideration" shall
thereinafter be deemed to refer to such numbers as adjusted pursuant to this
Section 6.1(f). The figure $32 appearing in the foregoing paragraph shall be
adjusted as provided in Section 1.2(a)(iii) hereof, in the circumstances
indicated therein.
For purposes of this Section 6.1(f), the "Termination Right
Determination Date" shall mean the sixteenth (16th) day preceding the Closing
Date (determined, upon receipt of approval of the Merger from the Federal
Reserve Board, as provided in Section 1.7 hereof assuming all other conditions
to closing are satisfied or waived and without regard to any possible agreement
of the parties to change such Closing Date).
6.2. Effect of Termination. In the event of the termination of this
---------------------
Agreement by either Acquiror or the Company, as provided above, except as
otherwise provided in Section 8.3 hereof, this Agreement shall thereafter become
void and there shall be no liability on the part of any party hereto or their
respective officers or directors, except that any such termination shall be
without prejudice to the rights of any party hereto arising out of the willful
breach of any covenant or willful misrepresentation by any other party under
this Agreement.
ARTICLE VII
-39-
MISCELLANEOUS
-------------
7.1. Certain Definitions; Interpretation. As used in this
-----------------------------------
Agreement, the following terms shall have the meanings indicated:
"Business Day" shall mean any day on which depository institutions
are generally open for business in the Commonwealth of Pennsylvania and the New
York Stock Exchange is generally open for trading.
"Control" shall have the meaning ascribed thereto in the Bank Holding
Company Act of 1956, as amended.
"Dollar" and "$" shall mean United States Dollars.
"Market Price" as of any date of determination means the average
closing price of one Acquiror ADS on the New York Stock Exchange (as reported by
The Wall Street Journal, or, if not reported thereby, another authoritative
-----------------------
source), for the ten (10) New York Stock Exchange trading days ending on the
Business Day immediately preceding the date of determination.
"Material" means material to Acquiror or the Company (as the case may
be) and its respective Subsidiaries, taken as a whole.
"Material Adverse Effect," with respect to a Person, means any
condition, event, change or occurrence that is reasonably likely to have a
material adverse effect upon (A) the financial condition, business or results of
operations of such Person and its Subsidiaries, taken as a whole, or (B) the
ability of such Person to perform its obligations under, and to consummate the
transactions contemplated by, this Agreement.
"Person" includes an individual, corporation, partnership,
association, trust, limited liability company, unincorporated organization or
other legal entity.
"Subsidiary," with respect to a Person, means any other Person
controlled by such Person.
When a reference is made in this Agreement to Articles, Sections, or Schedules,
such reference shall be to a Section or Article of, or Schedule to, this
Agreement unless otherwise indicated. The table of contents, tie sheet and
headings contained in this Agreement are for ease of reference only and shall
not affect the meaning or interpretation of this Agreement. Whenever the words
"include," "includes," or
-40-
"including" are used in this Agreement, they shall be deemed followed by the
words "without limitation." Any singular term in this Agreement shall be deemed
to include the plural, and any plural term the singular.
7.2. Fees and Expenses. All costs and expenses incurred in
-----------------
connection with this Agreement and the consummation of the transactions
contemplated hereby shall, if incurred by Acquiror, be paid by Acquiror and
shall, if incurred by the Company, be paid by the Company.
7.3. Survival. Only those agreements and covenants of the parties
--------
that are applicable in whole or in part after the Effective Time shall survive
the Effective Time. All other representations, warranties, agreements and
covenants shall be deemed to be conditions of this Agreement and shall not
survive the Effective Time. If this Agreement shall be terminated, the
agreements of the parties in Sections 3.1(c) and 7.2 shall survive such
termination.
7.4. Public Announcements. Unless required by applicable law, the
--------------------
Company and Acquiror will not issue any press release or otherwise make any
public statement with respect to the transactions contemplated hereby without
the prior written consent of the other party.
7.5. Notices. All notices, requests, demands, waivers and other
-------
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered in Person or
mailed, certified or registered mail with postage prepaid, or sent by telex,
telegram or telecopier, as follows:
(a) if to the Company, to it at:
Dauphin Deposit Corporation
000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxx, Esq.
Telecopier: (000) 000-0000
with a copy to:
Pepper, Xxxxxxxx & Xxxxxxx
0000 Xxx Xxxxx Xxxxxx
Xxxxxxxxxx & Xxxx Xxxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attention: L. Xxxxxxx Xxxxxx, Esq.
Telecopier: (000) 000-0000
-41-
(b) if to Acquiror, to it at:
Allied Irish Banks, plc
Bankcentre, Xxxxxxxxxxx
Xxxxxx 0, Xxxxxxx
Attention:
Telecopier:
and if to Acquiror Sub, to it at:
First Maryland Bancorp
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention:
Telecopier:
in each case, with a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
Telecopier: (000) 000-0000
or to such other Person or address as any party shall specify by notice in
writing to each of the other parties. All such notices, requests, demands,
waivers and communications shall be deemed to have been received on the date of
delivery unless if mailed in which case on the third business day after the
mailing thereof except for a notice of a change of address, which shall be
effective only upon receipt thereof.
7.6. Entire Agreement. This Agreement and the Schedules, Exhibits
----------------
and other documents referred to herein or delivered pursuant hereto collectively
contain the entire understanding of the parties hereto with respect to the
subject matter contained herein and supersede all prior and contemporaneous
agreements and understandings, oral and written, with respect thereto.
7.7. Binding Effect; Benefit; Assignment. This Agreement shall
-----------------------------------
inure to the benefit of and be binding upon the parties hereto and their
respective successors, heirs and permitted assigns, but neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned by
any of the parties hereto without the prior written consent of the other
parties. Nothing in this Agreement, expressed or implied, is intended to confer
on any Person, other than the parties hereto or their respective successors and
permitted assigns, any rights, remedies, obligations or liabilities
-42-
under or by reason of this Agreement.
7.8. Waiver. Prior to the Effective Time, any provision of this
------
Agreement may be (i) waived by the party benefitted by the provision or by both
parties, by a writing executed by an executive officer or officers, or (ii)
amended or modified at any time (including the structure of the transaction) by
an agreement in writing between the parties hereto approved by their respective
boards of directors, except that, after the vote by the shareholders of the
Company no such amendment or modification may be made which reduces or changes
the form and amount of consideration payable pursuant to this Agreement without
further shareholder approval.
7.9. Further Actions. Each of the parties hereto agrees that,
---------------
subject to its legal obligations, it will use its best efforts to fulfill all
conditions precedent specified herein, to the extent that such conditions are
within its control, and to do all things reasonably necessary to consummate the
transactions contemplated hereby.
7.10. Counterparts. This Agreement may be executed in several
------------
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument.
7.11. Applicable Law. This Agreement and the legal relations between
--------------
the parties hereto shall be governed by and construed in accordance with the
laws of the Commonwealth of Pennsylvania, without regard to the conflict of laws
rules thereof.
7.12. Severability. If any term, provision, covenant or restriction
------------
contained in this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions
contained in this Agreement shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.
-43-
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
ALLIED IRISH BANKS, p.l.c.
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Group Chief Executive
FIRST MARYLAND BANCORP
By: /s/ X. X. Xxxxx
----------------------------------
Name:
Title:
DAUPHIN DEPOSIT CORPORATION
By: /s/ X. X. Xxxxxxxx
----------------------------------
Name:
Title:
-44-
Exhibit B
Employment Agreement and
Change in Control Retention Payments
------------------------------------
Employment Agreement:
The Executive Employment and Benefit Agreement to be entered into
with Xxxxxxxxxxx X. Xxxxxxxx is attached hereto.
Change in Control Retention Payments:
As provided in the Executive Employment and Benefit Agreement
attached hereto, Xxxxxxxxxxx X. Xxxxxxxx will receive at closing the retention
payment provided for therein.
Xxxxxx X. Xxxxx will receive at closing the change in control payment
provided for in his Change in Control Agreement, which has been Previously
Disclosed.
EXECUTIVE EMPLOYMENT AND BENEFIT AGREEMENT
THIS AGREEMENT, made this ___________ day of ____________________, 1997
(the "Effective Date"), by and between FIRST MARYLAND BANCORP, a Maryland
corporation (the "Employer"), and XXXXXXXXXXX X. XXXXXXXX (the "Executive").
WHEREAS, the Executive has served Dauphin Deposit Corporation (the
"Corporation") as its Chief Executive Officer for several years and has rendered
valuable services to the Corporation; and
WHEREAS, the Corporation has entered into an agreement dated January 21,
1997 to merge itself with and into the Employer; and
WHEREAS, the Employer desires to employ the Executive and thereby retain
the benefit of Executive's knowledge and experience, and believes that such
employment and the continuity thereof is a vital element in protecting and
enhancing the interests of the Employer and its stockholders, and that the
Executive desires to accept such employment pursuant to the terms of this
Agreement; and
NOW THEREFORE, in consideration of these premises and the mutual promises
contained herein, and intending to be legally bound hereby, the parties agree as
follows:
SECTION I: Employment.
----------
A. Position and Duties. The Executive shall be employed as the Vice
-------------------
Chairman of the Employer. In addition, until such time as the operations of the
Corporation are consolidated with and into the operations of the Employer's
other principal subsidiary bank (the "Bank Consolidation"), the Executive shall
continue to serve as the Chairman and Chief Executive Officer of the
Corporation. After the Bank Consolidation, the Executive shall serve as the
Employer's Director of Strategic Planning and Mergers, Acquisitions &
Consolidations. In addition, both before and after the Bank Consolidation, the
Executive shall serve as member of the Employer's Board of Directors, as a
member of the Employer's Management Committee, and as the sole Vice Chairman of
the Steering Committee responsible for the Bank Consolidation. Executive shall
have such authority and duties as are commensurate with the positions described
in this Section I(A).
B. Duration. The Executive's term of employment under the terms of this
--------
Agreement shall begin on the Effective Date and end on the second anniversary of
the Effective Date, unless renewed, extended or sooner terminated as hereinafter
provided. The Executive's term of employment under the terms of this Agreement
shall be automatically extended for one (1) additional year unless written
notice is provided by either party at least six (6) months prior to
the end of the term of employment, and shall be extended on each anniversary of
the initial term unless such written notice is provided at least six (6) months
prior to such anniversary.
C. Termination
-----------
(1) Early Termination by the Executive. Notwithstanding the
----------------------------------
foregoing, the Executive may terminate his employment under this Agreement prior
to the expiration of the term specified herein upon 30-days prior written
notice. However, in the event of such early termination by the Executive during
the initial two year term of his employment, the Executive shall not accept
employment or perform services for another bank, bank holding company or other
financial institution located within 200 miles of the main offices of the
Corporation and which competes with Employer during the one (1) year period
immediately following the termination of his employment under this Agreement.
(2) Early Termination by the Employer. Notwithstanding the
---------------------------------
foregoing, the Executive's employment under this Agreement may be terminated by
the Employer prior to the expiration of the term specified herein and with at
least 90-days prior written notice if and only if such termination is for Cause.
As it is used in this Paragraph, "Cause" means that (i) the Executive has been
convicted of a felony, or has committed and been convicted or otherwise found
guilty in a court of law of committing a fraudulent act that, in either case, in
the reasonable judgment of a majority of the Employer's Board of Directors,
adversely affects the Employer's interests in a material respect, or (ii) in the
reasonable judgment of a majority of the Employer's Board of Directors, the
Executive, in carrying out his duties and responsibilities, has been willfully
and grossly negligent or has committed willful and gross misconduct resulting,
in either case, in material harm to the Employer.
(3) Severance Payment Upon Early Termination. If the Executive's
----------------------------------------
employment by the Employer terminates for any reason other than Cause, the
Executive shall receive on the date of such termination the greater of the
amount of base compensation the Executive would have received under Section I(E)
during the remainder of the term specified in this Section I(B), or eighteen
months' pay at the rate of base compensation in effect on the date of
termination.
(4) Any Termination. If the Executive's employment by the Employer
---------------
terminates for any reason, the following provisions shall apply to the extent
that the amounts to be paid and the rights and privileges provided thereunder
exceed those that would be provided under the similar arrangements of the
Employer, its subsidiaries or affiliates that would otherwise cover the
Executive:
(i) Insurance. The Employer shall provide the Executive until
---------
the date of his death with life and accident and health insurance coverages
comparable to the employer-sponsored coverages in effect for the Executive
immediately preceding the Executive's termination of employment with the
Employer. Comparable life and accident and health insurance coverages may be
provided to the Executive: (1) under existing plans or programs in
-2-
which the Executive participates; (2) through conversion of group coverage
pursuant to any group policy in effect; (3) through other available commercial
insurance arrangements; or (4) through an arrangement funded by the general
assets of the Employer. The Employer shall also provide the Executive's spouse
with health insurance coverage until the date of her death comparable to the
employer-sponsored coverages in effect for the Executive immediately preceding
the Executive's termination of employment with the Employer. Neither the
Executive nor his spouse shall be obligated to contribute toward the cost of
such coverages.
(ii) Supplemental Retirement Income. The Executive shall
------------------------------
be entitled to the supplemental retirement income benefit described in Section
II of this Agreement.
(iii) Consulting. The Executive shall provide consulting
----------
and advisory services to the Employer for a period of one year following the
date of termination of his employment. The Executive shall be available for
advice and counsel to the officers and directors of the Employer and said
advisory and consulting services shall be performed in Harrisburg, Pennsylvania
and its environs and in such other locations as are agreeable to the Executive.
As full compensation for such consulting and advisory services, the Employer
shall pay the Executive an amount equal to his highest annual compensation, plus
reimbursement for all expenses reasonably incurred by him in the performance of
his consulting services. The Executive's compensation for consulting and
advisory services set forth above shall be paid in approximately equal monthly
installments over the one year term. For purposes of this Paragraph, "highest
annual compensation" for shall mean the highest base salary ever earned by the
Executive from either the Employer or the Corporation (or, for the first
calendar year this Agreement is in effect, from both the Corporation and the
Employer) in any year, plus the largest amount of bonuses or incentive cash
compensation ever received by the Executive from either the Employer or the
Corporation (or, for the first calendar year this Agreement is in effect, from
both the Corporation and the Employer) in any year. Payments made under this
Section I(C)(4)(iii) shall be in addition to any other amounts payable under
this Agreement, including, but not limited to, any severance payment made under
Section I(C)(3).
D. Retention Payment. Under the terms of the Second Amended and
-----------------
Restated Supplemental Executive Benefit and Change in Control Agreement, dated
June 17, 1996, by and between the Executive and the Corporation (the "Prior
Agreement"), the Executive is entitled to certain payments upon any Change in
Control of the Corporation (as defined in the Prior Agreement). In consideration
of the Executive's execution of this Agreement and in lieu any such payment, the
Employer shall pay to the Executive on the Effective Date an amount equal to
2.99 multiplied by the average annual compensation which was paid by the
Corporation to the Executive and includible in the gross income of the Executive
for the years 1992 - 1996, inclusive.
E. Base Compensation. As compensation for the services contemplated
-----------------
herein, the Employer shall pay the Executive an annual salary of $400,000 (four
hundred thousand dollars), to be paid in installments not less frequently than
monthly. The Executive 's annual base salary shall be reviewed and increased in
accordance with the procedures of the
-3-
Employer generally in effect with respect to the adjustment of base salaries of
senior management employees.
F. Executive Benefits. The Executive shall be entitled to
------------------
participate in such executive incentive compensation plans of the Employer as
may from time to time be in effect, on such terms and conditions as may be in
effect generally with respect to such participation from time to time during the
term of his employment. The Executive shall be entitled to participate, and
shall be entitled to all benefits and service credits under, all employee
benefit, fringe benefit and perquisite plans, programs and arrangements of the
Employer which are made generally available from time to time by the Employer to
their executive management employees, including any stock option and stock
appreciation rights and stock purchase plans, bonus, incentive and deferred
compensation plans, and disability, medical and insurance plans. Such
participation shall be on terms comparable to those applicable to senior
executive management employees of the Employer.
G. Additional Benefits.
-------------------
(1) Professional Dues. The Employer shall pay any dues or fees
-----------------
that are related to the Executive's employment and are associated with the
Executive's membership in any business or professional organization and the cost
of any continuing professional education and licensing fees required for the
Executive to maintain his qualification and licensing as a Certified Public
Accountant during the term of his employment by the Employer.
(2) Club Dues. The Employer shall pay any fees or dues
---------
associated with the membership of the Executive and his spouse in the Hershey
Country Club during the term of his employment under this Agreement.
(3) Support Staff. Unless the Executive requests otherwise,
-------------
Xxxxxx Xxxxxxx shall be employed by the Employer as the Executive's secretary
and personal assistant during the term of the Executive's employment by the
Employer. The terms of Xx. Xxxxxxx'x employment shall be such fair and
reasonable terms as are consistent with those applicable to other senior
executive secretaries employed by the Employer. Other support staff shall be
provided to the Executive as the Executive reasonably deems to be necessary for
him to best perform his duties.
(4) Transportation. The Executive shall be provided with a car
--------------
for his exclusive use. Such car shall be comparable to cars provided to other
senior executive management employees of the Employer. Unless the Executive
requests otherwise, Xxxxxx X. Xxxxxxx shall be employed by the Employer as the
Executive's driver for at least the first six months of the term of this
Agreement, and as further required by the Executive.
H. Assumption of Existing Obligations. The Employer shall fully
----------------------------------
assume and fulfill the obligations of the Corporation, its subsidiaries and
affiliates with respect to (1) the transfer or redemption of any shares under
any stock option plan, stock purchase or stock bonus
-4-
plan, and the satisfaction of any rights held by the Executive under any such
arrangement, (2) the redemption of units under any long term incentive plan, (3)
the payment of any bonuses, (4) the payment of premiums on any insurance policy
covering the life of the Executive and owned by the Corporation, its
subsidiaries or affiliates, and (5) the payment of any other amount owing and
the satisfaction of any rights held by the Executive under any other plan or
arrangement of incentive or deferred compensation.
I. Preservation of Existing Benefits Arrangements. Sections I and
----------------------------------------------
IV shall apply to the extent that the amounts to be paid and the rights and
privileges provided thereunder exceed those provided under the similar
arrangements of the Employer, its subsidiaries or affiliates that would, in the
event of the inapplicability of those sections, otherwise cover the Executive.
SECTION II: Supplemental Retirement Income.
------------------------------
A. Amount of Benefit.
-----------------
(1) Retirement Prior to Age 65. The Executive may retire as of
--------------------------
any date. If the Executive retires prior to age 65, then commencing upon the
date of such retirement or such other later date selected by the Executive, the
Employer shall pay to the Executive a supplemental benefit for his services
prior to retirement. The annual amount of such supplemental retirement income
shall be equal to the greater of the following two alternatives, reduced,
however, by the early retirement factors in effect at that time under the
Corporation's Pension Plan, or by the early retirement factors in effect at that
time under the Employer's Pension Plan if such factors would produce a larger
benefit under this Section II(A) than the application of the factors from the
Corporation's Pension Plan, or if there are no such plans, by reasonable early
retirement factors that would be permissible under a qualified, defined benefit
pension plan:
(i) (a) 55% of the Executive's average annual compensation
for the five (5) calendar years included in the Executive's period of
service with the Employer and the Corporation which yield the highest
average. The calendar years used for purposes of computing benefits
under this Paragraph shall include, if applicable, the calendar years
in which the Executive was first employed by the Employer or the
Corporation and the calendar year in which the Executive retires. For
purposes of this Paragraph, compensation shall mean the Executive's
base salary in effect as of January 1 of a calendar year plus any
bonuses or annual incentive cash compensation earned by the Executive
for the immediately preceding calendar year, less
(b) the sum of the benefits that would be payable
annually under the Employer's Pension Plan and the
-5-
Corporation's Pension Plan, assuming that benefits from both plans are
paid at the same time in the form of a single life annuity (whether or
not the executive actually elects such form of payment) and assuming
that the Executive remained employed by the Employer until age 65 at
the rate of compensation in effect on the date he ceases to be an
employee, and less
(c) the Primary Social Security Benefit which the
Executive would be entitled to receive upon retirement at age 65 under
Title II of the Social Security Act in effect on the date an Executive
ceases to be an employee assuming he remained employed at a rate of
compensation in effect on the date he ceases to be an employee.
(ii) (a) the Pension Benefit, but assuming that the number
of years of benefit service used to calculate the Pension Benefit is
increased by ten. For purposes of this Paragraph, the benefit
calculation shall be calculated by: (1) utilizing the definition of
compensation as contained in Section II(A)(1)(i)(a); and (2)
disregarding the compensation limitation of Section 401(a)(17) of the
Internal Revenue Code of 1986, as amended, or any other subsequent
amendment to the Internal Revenue Code of 1986, as amended, which
serves to limit compensation under qualified retirement plans, less
(b) the sum of the benefits actually payable annually
under the Employer's Pension Plan and the Corporation's Pension Plan,
assuming that benefits from both plans are paid at the same time in
the form of a single life annuity (whether or not the executive
actually elects such form of payment).
No benefit shall be payable hereunder while the Executive is receiving
disability benefits under Section IV of this Agreement.
(2) Retirement At or After Age 65. If the Executive retires
-----------------------------
from Continuous Employment after the date on which the Executive attains age
sixty-five (65), then commencing upon the date of such retirement or such other
later date selected by the Executive, the Employer shall pay the Executive a
supplemental benefit for his services prior to retirement. The amount of such
supplemental retirement income shall be equal to the greater of the following
two alternatives:
(i) (a) 55% of the Executive's average annual compensation
for the five (5) calendar years included in the
-6-
Executive's period of service with the Employer and the Corporation
which yield the highest average. The calendar years used for purposes
of computing benefits under this Paragraph shall include, if
applicable, the calendar years in which the Executive was first
employed by the Employer or the Corporation and the calendar year in
which the Executive retires. For purposes of this Paragraph,
compensation shall mean the Executive's base salary in effect as of
January 1 of a calendar year plus any bonuses or annual incentive cash
compensation earned by the Executive for the immediately preceding
calendar year, less
(b) the sum of the benefits actually payable annually
under the Employer's Pension Plan and the Corporation's Pension Plan,
assuming that benefits from both plans are paid at the same time in
the form of a single life annuity (whether or not the executive
actually elects such form of payment), and less
(c) Primary Social Security Benefit.
(ii) (a) the Pension Benefit, but assuming that the number
of years of benefit service used to calculate the Pension Benefit is
increased by ten. For purposes of this Paragraph, the benefit
calculation shall be calculated by: (1) utilizing the definition of
compensation as contained in Section II(A)(2)(i)(a); and (2)
disregarding the compensation limitation of Section 401(a)(17) of the
Internal Revenue Code of 1986, as amended, or any other subsequent
amendment to the Internal Revenue Code of 1986, as amended, which
serves to limit compensation under qualified retirement plans, less
(b) the sum of the benefits actually payable annually
under the Employer's Pension Plan and the Corporation's Pension Plan,
assuming that benefits from both plans are paid at the same time in
the form of a single life annuity (whether or not the executive
actually elects such form of payment).
For purposes of this Section II(A), the maximum annual supplemental
benefit, calculated as a single life annuity, shall not exceed 70% of the
Executive's compensation for the last full calendar year before retirement, less
the Pension Benefit and less the Primary Social Security Benefit. For purposes
of this paragraph, "compensation" shall mean compensation from the Corporation
and the Employer includible in the gross income of the Executive for the last
full calendar year before retirement.
-7-
(3) Definitions.
-----------
(i) For the purposes of this Section, "Primary Social
Security Benefit" shall mean the monthly Primary Insurance Amount payable at age
65 under Social Security multiplied by twelve. The Primary Insurance Amount will
be calculated as of the date of retirement or termination or as of age 65, if
earlier, based upon provisions of the Social Security Act in effect at that
date. In determining this amount, all earnings subject to Social Security taxes
prior to the date of termination will be used.
(ii) For purposes of this Agreement, the phrase "Continuous
Employment" shall include periods when the Executive qualifies for disability
payments under Section IV of this Agreement and Leaves of Absences of up to two
years. A "Leave of Absence" shall mean any temporary absence from active
employment authorized by the Employer for disability, education, family
sickness, military purposes or other similar reasons.
(iii) For purposes of this Section, "Pension Benefit" shall
mean the greater of the benefit that would be payable annually under (i) the
Corporation's Pension Plan, or (ii) the Employer's Pension Plan, if (in either
case) all of the Executive's service to the Employer and to the Corporation were
credited as benefit service under each plan, and assuming that all benefits are
paid in the form of a single life annuity (whether or not the Executive actually
elects such form of payment).
B. Form of Payment. Any benefit under this Section II shall be
---------------
payable in equal monthly installments for the lifetime of the Executive, unless
he chooses one of the following alternative payment options:
(1) 50% Joint and Survivor Annuity Option. The Executive will
-------------------------------------
receive an actuarially reduced benefit for his lifetime. At his death, his
spouse will receive one-half of that amount until her subsequent death.
(2) 75% Joint and Survivor Annuity Option. The Executive will
-------------------------------------
receive an actuarially reduced benefit for his lifetime. At his death, his
spouse will receive three-fourths of that amount until her subsequent death.
(3) 100% Joint and Survivor Annuity Option. The Executive will
--------------------------------------
receive an actuarially reduced benefit for his lifetime and his spouse will
receive the same benefit amount until her subsequent death.
Alternate payment options may be determined utilizing actuarial and
present value assumptions set forth in the Corporation's Pension Plan, or by the
early retirement factors in effect at that time under the Employer's Pension
Plan if such factors would produce a larger benefit under this Section II than
the application of the factors from the Corporation's Pension
-8-
Plan, or if there are no such plans, by reasonable early retirement factors that
would be permissible under a qualified, defined benefit pension plan.
SECTION III: Pre-Retirement Death Benefit.
----------------------------
A. Amount of Death Benefits.
------------------------
(1) Death Prior to Age 55.
---------------------
If the Executive's death occurs before the Executive attains the age
of fifty-five (55), the Employer shall pay the Executive's Beneficiary (as
defined herein) a sum equal to sixty percent (60%) of the Executive's
compensation payable in twelve (12) monthly installments commencing on the first
day of the first month following the date of the Executive's death, and one-half
of said 60% monthly amount per month commencing with the thirteenth month
following the date of the Executive's death and continuing through the one
hundred twentieth month following the date of the Executive's death. For
purposes of this Paragraph, "compensation" shall mean the Executive's base
salary in effect on the Executive's date of death, or date of disability, if
applicable, plus any bonuses or annual incentive cash compensation earned by the
Executive for the calendar year immediately preceding the Executive's date of
death, or date of disability, if applicable.
(2) Death At or After Age 55.
------------------------
If the Executive's death occurs after the Executive attains the age of
fifty-five (55), the Employer shall pay the Executive's Beneficiary a sum equal
to the greater of the following two alternatives:
(i) A sum equal to sixty percent (60%) of the Executive's
compensation payable in twelve (12) monthly installments commencing on
the first day of the first month following the date of the Executive's
death, plus, if the Executive dies before attaining the age of sixty-
five (65), one-half of said monthly amount per month commencing with
the thirteenth month following the date of the Executive's death and
continuing through the month in which the Executive would have
attained the age of sixty-five (65). For purposes of this Paragraph,
"compensation" shall mean the Executive's base salary in effect on the
Executive's date of death, or date of disability, if applicable, plus
any bonuses or annual incentive cash compensation earned by the
Executive for the calendar year immediately preceding the Executive's
date of death, or date of disability, if applicable.
(ii) The benefit that would have been payable to his
surviving spouse under Section II(A)(l) had the Executive
-9-
retired early on the day prior to the date of his death and elected to
have the actual equivalent of such supplemental benefit paid over the
joint lives of himself and his spouse under a 100% joint and survivor
option. This alternative is only available if the Executive is
survived by his spouse. Such benefit shall be payable monthly for the
life of the surviving spouse.
The greater of the benefits under this Section III(A)(2) shall be
determined by applying the actuarial factors in effect at that time under the
Corporation's Pension Plan, or those in effect at that time under the Employer's
Pension Plan if such factors would produce a larger benefit than the application
of the factors contained in the Corporation's Pension Plan, or if there are no
such plans, by reasonable actuarial factors that would be permissible under a
qualified, defined benefit pension plan.
(3) As used in Paragraph A of this Section, the term "Beneficiary"
shall mean the person or persons designated in writing by the Executive to
receive benefits or, if no such written designation is made, the Executive's
spouse (if living at the date of the payment required hereunder), or otherwise
to the Executive's issue per stirpes. In the event that there is any doubt as
to the proper person or persons entitled to receive payments due hereunder,
payments under this Section III(A) may be withheld until the matter is decided
by a court of competent jurisdiction.
B. Termination. All rights under this Section III shall terminate
-----------
on the date that the Executive begins receipt of supplemental retirement income
benefits under Section II of this Agreement.
C. Notice. In the event that any benefit becomes payable under this
------
Section III, the Employer shall be obligated to immediately notify the
Executive's spouse and Beneficiary(ies) of their entitlement under this Section
III.
SECTION IV: Disability Income.
-----------------
A. Payment of Disability Benefits. If the Executive suffers a
------------------------------
Disability (as defined herein) before the Executive attains the age of 65 and
while the Executive is an active employee of the Employer, the Employer shall
pay the Executive a supplemental disability income, commencing on the first day
after the Executive has suffered such Disability for a period of thirty (30)
consecutive days and continuing to the earlier of that month in which the
Executive attains the age of sixty-five (65) years, the date of the Executive's
death or that date on which the Executive no longer meets the criteria for
Disability as described herein. The amount of such disability benefit shall be
equal to (a) 60% of the Executive's compensation, less (b) the total benefits
payable to the Executive under any group disability plan or plans which the
Employer may have in effect at the time of the payment of the benefit and, less
(c) social security disability payments received. For purposes of this
Paragraph, "compensation" shall mean the Executive's base salary in effect on
the date the Executive's disability payments are to commence plus any
-10-
bonuses or annual incentive cash compensation earned by the Executive for the
calendar year immediately preceding the date the Executive's disability payments
are to commence.
B. Disability Defined. For the purposes of this Agreement, an
------------------
Executive shall be considered disabled if as a result of bodily injury sustained
or sickness, he is unable to engage in an occupation for compensation or profit,
totally and continuously for a period in excess of thirty (30) days. During the
first thirty-six (36) months of Disability, "occupation" shall mean the
Executive's current occupation. After that period, "occupation" means any
occupation for which the Executive is or becomes reasonably fitted by education,
training or experience.
C. Disability to Age 65. If the Executive attains age sixty-five
--------------------
(65) while disabled, disability benefits under this Section IV shall cease and
he shall instead be entitled to receive the retirement benefit specified in
Section II(A)(2).
D. Notice. In the event that any benefit becomes payable under this
------
Section IV and the Executive is sufficiently incapacitated such that he is
unable to manage his own affairs, the Employer shall be obligated to immediately
notify the Executive's spouse (if then living) or legal representative of the
Executive's entitlement under this Section IV.
SECTION V: Section 280G Gross-Up Payment. If the total of all payments
-----------------------------
made to the Executive pursuant to this Agreement, together with any other
payments which the Executive has a right to receive from the Employer, the
Corporation, or any Employers, affiliates or subsidiaries of the foregoing
result in the imposition of an excise tax under Internal Revenue Code Section
4999 (or any successor thereto), the Employer shall pay the Executive an
additional excise tax adjustment payment in an amount such that, after the
payment of all federal and state income and excise taxes, the Executive will be
in the same after-tax position as if no excise tax had been imposed. Any
payment or benefit which is required to be included under Internal Revenue Code
Sections 280G or 4999 (or any successor provisions thereto) for purposes of
determining whether an excise tax is payable shall be deemed a payment "made to
the Executive" or a payment "which the Executive has a right to receive" for
purposes of this provision. The Employer shall be responsible for the costs of
calculation of the excise tax by its independent certified accountant and tax
counsel and shall notify the Executive of the amount of excise tax due prior to
the time such excise tax is due. If at any time it is determined that the
additional excise tax adjustment payment previously made to the Executive was
insufficient to cover the effect of the excise tax, the excise tax gross-up
payment pursuant to this provision shall be increased to make the Executive
whole, including an amount to cover the payment of any penalties resulting from
incorrect or late payment of the excise tax resulting from the prior
calculation.
SECTION VI: Performance by Successor. The parties have entered into this
------------------------
Agreement in recognition of Executive's past service to the Corporation and in
anticipation of his continued service to the Employer. The Employer agrees that
it will not enter into any agreement under which the Employer will be merged or
otherwise combined with, or sold to any other entity
-11-
unless that other entity expressly agrees in advance to assume and perform the
obligations of the Employer under this Agreement.
SECTION VII: Miscellaneous.
-------------
A. Arbitration. All claims, demands, disputes, controversies,
-----------
differences or misunderstandings arising out of or relating to this Agreement,
or the failure or refusal to perform the whole or any part hereof, shall be
settled by arbitration conducted in Pennsylvania by commercial law arbitrators
of the American Arbitration Association in accordance with the commercial rules
thereof then pertaining. The parties hereto, and each of them, hereby submit
themselves to the exclusive jurisdiction of the courts of the Commonwealth of
Pennsylvania in any proceeding for the enforcement of the award rendered by the
arbitrators, and agree that judgment upon such award may be entered in any
court, in or out of the Commonwealth of Pennsylvania, having jurisdiction
thereof.
B. Corporation's Pension Plan Defined. As used herein,
----------------------------------
"Corporation's Pension Plan" shall mean the Dauphin Deposit Corporation Pension
Plan and Trust Agreement, as amended, and any successor thereto.
C. Employer's Pension Plan Defined. As used herein, "Employer's
-------------------------------
Pension Plan" shall mean the tax-qualified defined benefit pension plan of the
Employer (or its subsidiary or affiliate) that covers the Executive, if any, and
any successor thereto.
D. Attachment. Neither this Agreement nor any benefit payable
----------
hereunder shall be subject to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or change or to execution, attachment, levy or
similar process or assignment by operation of law, and any attempt, voluntarily
or involuntarily, to effect such action shall be void and of no effect.
E. Notice. Any notice which shall be or may be given hereunder
------
shall be in writing and shall be mailed by certified mail, postage prepaid,
addressed as follows:
If to the Executive:
Xxxxxxxxxxx X. Xxxxxxxx
0000 Xxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
If to the Employer:
Director of Human Resources
First Maryland Bancorp
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
-12-
Any party hereto may from time to time change the address to which notices to it
shall be mailed by giving notice thereof in the manner provided for herein.
F. Binding Effect. This Agreement shall be binding upon and inure
--------------
to the benefit of each of the Executive, the Corporation and the Employer, their
respective heirs, executors, administrators, successors and, to the extent
permitted hereunder, assigns.
G. Indulgences. Neither the failure nor any delay on the part of
-----------
either party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, power or privilege preclude any other or further
exercise of the same or of any other right, remedy, power or privilege, nor
shall any waiver of any right, remedy, power or privilege with respect to any
occurrence be construed as a waiver of such right, remedy, power or privilege
with respect to any other occurrence. No waiver shall be effective unless it is
in writing and is signed by the party asserted to have granted such waiver.
H. Entire Agreement. This Agreement represents the entire
----------------
understanding with respect to the matters addressed herein and may be amended
only by an instrument in writing signed by the parties hereby bound. On the
Effective Date, this Agreement will supersede the Prior Agreement which will
hereby be terminated as of that date. Prior to the Effective Date, the Prior
Agreement will remain in full force and effect and will not be affected by this
Agreement.
I. Jurisdiction. The parties hereto consent to the exclusive
------------
jurisdiction of the courts of the Commonwealth of Pennsylvania in any and all
actions arising hereunder.
J. Governing Law. This Agreement shall be governed and construed
-------------
under the laws of the Commonwealth of Pennsylvania.
K. Headings. All headings preceding the text of the several
--------
paragraphs hereof are inserted solely for reference and shall not constitute a
part of this Agreement, nor affect its meaning, construction or effect.
L. Type of Arrangement and Status. It is the intention of the
------------------------------
parties that this Agreement constitutes an unfunded arrangement for Federal
Income Tax purposes and for purposes of Title I of ERISA and is an unfunded plan
maintained for the purpose of providing deferred compensation for a select group
of management or highly compensated employees. The Executive's interest under
this Agreement is that of a general unsecured creditor of the Employer.
M. Enforcement. If the Executive determines in good faith that the
-----------
Employer has failed to comply with its obligations under this Agreement, or if
the Employer or any other person takes any action to declare this Agreement void
or unenforceable in whole or in part, or institutes any legal action or
arbitration proceeding with respect to this Agreement, the Employer hereby
irrevocably authorizes the Executive from time to time to retain counsel of the
Executive's
-13-
choice, at the expense of the Employer, to represent the Executive in connection
with any and all actions and proceedings, whether by or against the Corporation,
the Employer, any acquiror or successor, or any director, officer, stockholder
or other person affiliated with any of the foregoing, which may adversely affect
the Executive's rights hereunder. In such event, the Employer shall be liable
to reimburse the Executive for all of the Executive's reasonable costs and
expenses (including reasonable attorney's fees) incurred and expended in
connection with enforcement.
N. Other Benefits Not Affected. Notwithstanding any other provision
---------------------------
of this Agreement, the payments provided by or as a result of this Agreement
shall not affect the Executive's rights to receive any payments or benefits to
which the Executive may be or become entitled under any other existing or future
agreement or arrangement of the Corporation or the Employer, or their
subsidiaries, affiliates or successors with the Executive, or under any existing
or future benefit plan or arrangement of the Corporation or the Employer, or
their subsidiaries, affiliates or successors in which the Executive is or
becomes a participant, or under which the Executive has or obtains rights,
including, without limitation, any qualified or nonqualified deferred
compensation or retirement plan or program. Any such rights of the Executive
shall be determined in accordance with the terms and conditions of the
applicable agreement, arrangement or plan.
O. Withholding for Taxes. All payments required to be made under
---------------------
this Agreement will be subject to withholding of such amounts relating to tax
and/or other payroll deductions as may be required by law.
P. Supplemental Benefit Trust. The Dauphin Deposit Corporation
--------------------------
Supplemental Benefit Trust (the "Trust") was established to assist the
Corporation in meeting its supplemental retirement income benefit, preretirement
death benefit or disability benefit obligations under the Prior Agreement and
other agreements. The Trust is a grantor trust which conforms in substantive
respect to the model trust set forth in Revenue Procedure 92-64.
(1) Obligations Under the Trust. The Employer shall agree to be
---------------------------
jointly and severally liable for any of the Corporation's obligations under the
Trust and shall agree to fulfill all the duties of the Corporation under the
Trust. Amounts held in the Trust or any other such trust or account may be
applied to satisfy obligations of the Employer under this Agreement. The
Employer shall remain obligated to pay benefits under this Agreement to the
extent the Trust does not pay benefits when due under this Agreement.
(2) Funding of the Trust. The Employer shall annually perform
--------------------
an actuarial analysis of the benefits payable from the Trust (as of December 31
of each year) and shall ensure that the Trust is fully funded based on such
anticipated payments, interest rates, mortality factors and other factors
customarily used in performing such an analysis by no later than March 31 of the
following calendar year.
-14-
IN WITNESS WHEREOF, the Employer has caused this Agreement to be
executed and attested to on its behalf by its duly authorized officers, and the
Executive hereunder has set his hand and seal as of the day and year first above
written.
ATTEST: FIRST MARYLAND BANCORP
By:
------------------------- -----------------------------
Secretary [Title]
(SEAL)
WITNESS: XXXXXXXXXXX X. XXXXXXXX
------------------------- -----------------------------
-15-
EXHIBIT C
Additional Benefits Provisions
------------------------------
Acquiror Sub shall use reasonable efforts after the Effective Time to
coordinate the pension benefits of its employees and the Affected Employees,
including the use of excess assets in the Company's tax-qualified defined
benefit pension plan (the "Company's Pension Plan") for the benefit of Affected
Employees, and shall use reasonable efforts to coordinate accrued benefits under
the Company's Pension Plan and the tax-qualified defined benefit pension plan
covering employees of Acquiror Sub (the "Acquiror Sub's Pension Plan") so that
each Affected Employee's total accrued pension benefit under the two plans is
not less than the benefit he or she would have accrued with respect to his or
her total period of service with the Company and the Acquiror Sub, had he or she
remained covered by the Company's Pension Plan as in effect immediately prior to
the Effective Time. Acquiror and Acquiror Sub shall cause both the Acquiror
Sub's Pension Plan and the Company's Pension Plan to provide that each Affected
Employee shall accrue a benefit under such plan for the portion of the plan year
before the Closing Date (with respect to the Company's Pension Plan) or after
the Closing Date (with respect to the Acquiror Sub's Pension Plan) without
regard to whether such benefit would otherwise not have been accrued under the
terms of such plan to the extent that such Affected Employee was not an active
participants on the last day of the plan year or failed to be credited with a
minimum period of service under either or both plans as a result of the Merger.
Acquiror Sub shall cause to be contributed to the tax-qualified defined
contribution plan covering the employees of Acquiror Sub and to the Company's
tax-qualified defined contribution plan on behalf of all Affected Employees all
contributions due for the portion of the plan year during which those Affected
Employees were active participants in those plans without regard to whether
those Affected Employees would have otherwise been ineligible for such
contributions to the extent that they were not active participants on the last
day of the plan year or failed to be credited with a minimum period of service
under either or both plans as a result of the Merger.
