Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
NORTHWEST BANCORP, MHC
NORTHWEST BANCORP, INC.
NORTHWEST MERGER SUBSIDIARY, INC.
NORTHWEST SAVINGS BANK
AND
PRESTIGE BANCORP, INC.
AND
PRESTIGE BANK, A FEDERAL SAVINGS BANK
DATED AS OF FEBRUARY 7, 2002
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
Page
ARTICLE I
CERTAIN DEFINITIONS
Section 1.01 Definitions....................................................................2
ARTICLE II
THE MERGER AND RELATED MATTERS
Section 2.01 Effects of Merger; Surviving Corporation.......................................8
Section 2.02 Conversion of Shares...........................................................9
Section 2.03 Exchange Procedures............................................................9
Section 2.04 Stock Options.................................................................10
Section 2.05 Restricted Stock..............................................................11
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PRESTIGE BANCORP AND PRESTIGE BANK
Section 3.01 Organization..................................................................11
Section 3.02 Capitalization................................................................12
Section 3.03 Authority; No Violation.......................................................13
Section 3.04 Consents......................................................................14
Section 3.05 Financial Statements..........................................................14
Section 3.06 Taxes.........................................................................15
Section 3.07 No Material Adverse Effect....................................................15
Section 3.08 Material Contracts; Leases; Defaults..........................................15
Section 3.09 Ownership of Property; Insurance Coverage.....................................17
Section 3.10 Legal Proceedings.............................................................17
Section 3.11 Compliance With Applicable Law................................................18
Section 3.12 Employee Benefit Plans........................................................19
Section 3.13 Brokers, Finders and Financial Advisors.......................................21
Section 3.14 Environmental Matters.........................................................21
Section 3.15 Loan Portfolio................................................................23
Section 3.16 Securities Documents..........................................................25
Section 3.17 Related Party Transactions....................................................25
Section 3.18 Schedule of Termination Benefits..............................................25
Section 3.19 Deposits.......................................................................25
i
Section 3.20 Antitakeover Provisions Inapplicable...........................................25
Section 3.21 Registration Obligations.......................................................26
Section 3.22 Risk Management Instruments....................................................26
Section 3.23 Fairness Opinion...............................................................26
Section 3.24 Dissenters' Rights.............................................................26
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF NORTHWEST SAVINGS BANK
AND NORTHWEST BANCORP
Section 4.01 Organization..................................................................27
Section 4.02 Authority; No Violation.......................................................27
Section 4.03 Consents......................................................................28
Section 4.04 Financial Statements..........................................................29
Section 4.05 Compliance With Applicable Law................................................29
Section 4.06 Financing.....................................................................30
Section 4.07 Regulatory Approvals..........................................................30
Section 4.08 Tax Opinion...................................................................30
Section 4.09 Legal Proceedings.............................................................30
ARTICLE V
COVENANTS OF THE PARTIES
Section 5.01 Conduct of Prestige Bancorp's Business........................................30
Section 5.02 Access; Confidentiality.......................................................34
Section 5.03 Regulatory Matters and Consents...............................................35
Section 5.04 Taking of Necessary Action....................................................36
Section 5.05 Certain Agreements............................................................37
Section 5.06 No Other Bids and Related Matters.............................................38
Section 5.07 Duty to Advise; Duty to Update Prestige Bancorp's Disclosure Schedules........39
Section 5.08 Conduct of Northwest Bancorp's Business.......................................39
Section 5.09 Board and Committee Minutes...................................................40
Section 5.10 Undertakings by Prestige Bancorp and Northwest Bancorp........................40
Section 5.11 Employee and Termination Benefits; Directors and Management...................43
Section 5.12 Duty to Advise; Duty to Update Northwest Bancorp's Disclosure Schedules.......46
Section 5.13 Bank and Related Merger Transactions..........................................47
ARTICLE VI
CONDITIONS
Section 6.01 Conditions to Prestige Bancorp's Obligations under this Agreement.............47
Section 6.02 Conditions to Northwest Bancorp's Obligations under this Agreement............48
ii
ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT
Section 7.01 Termination...................................................................49
Section 7.02 Effect of Termination.........................................................51
ARTICLE VIII
MISCELLANEOUS
Section 8.01 Expenses......................................................................51
Section 8.02 Non-Survival of Representations and Warranties................................52
Section 8.03 Amendment, Extension and Waiver...............................................52
Section 8.04 Entire Agreement..............................................................53
Section 8.05 No Assignment.................................................................53
Section 8.06 Notices.......................................................................53
Section 8.07 Captions......................................................................54
Section 8.08 Counterparts..................................................................54
Section 8.09 Severability..................................................................54
Section 8.10 Governing Law.................................................................54
Section 8.11 Specific Performance..........................................................54
EXHIBITS:
Exhibit A Form of Plan of Merger
Exhibit B Form of Prestige Bancorp Voting Agreement
Exhibit C Form of Opinion of Counsel
iii
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
February 7, 2002, is by and among Northwest Bancorp, MHC, a Federal mutual
holding company ("Northwest MHC"), Northwest Bancorp, Inc., a Federal
corporation ("Northwest Bancorp"), Northwest Merger Subsidiary, Inc., a wholly
owned subsidiary of Northwest Bancorp incorporated under the laws of the
Commonwealth of Pennsylvania ("Northwest Merger Subsidiary"), Northwest Savings
Bank, a Pennsylvania savings bank, and Prestige Bancorp, Inc., a Pennsylvania
corporation ("Prestige Bancorp") and Prestige Bank, a Federal Savings Bank
("Prestige Bank"). Each of Northwest Bancorp, Northwest Merger Subsidiary,
Northwest Savings Bank, Prestige Bancorp and Prestige Bank is sometimes
individually referred to herein as a "party," and all of them are sometimes
collectively referred to herein as the "parties."
RECITALS
WHEREAS, Northwest MHC, a registered savings and loan holding company,
with principal offices in Warren, Pennsylvania, owns a majority of the issued
and outstanding capital stock of Northwest Bancorp, with principal offices in
Warren, Pennsylvania;
WHEREAS, Northwest Bancorp, a registered savings and loan holding
company, with principal offices in Warren, Pennsylvania, owns all of the issued
and outstanding capital stock of Northwest Savings Bank and Northwest Merger
Subsidiary, both with principal offices in Warren, Pennsylvania;
WHEREAS, Prestige Bancorp, a registered savings and loan holding
company, with principal offices in Pleasant Hills, Pennsylvania, owns all of the
issued and outstanding capital stock of Prestige Bank, with principal offices in
Pleasant Hills, Pennsylvania;
WHEREAS, the Board of Directors of Prestige Bancorp deems it advisable
and in the best interests of Prestige Bancorp shareholders and the Board of
Directors of Northwest Bancorp deems it advisable and in the best interests of
Northwest Bancorp shareholders to consummate the business combination
transaction contemplated herein whereby: (i) Northwest Merger Subsidiary,
subject to the terms and conditions set forth herein, shall merge with and into
Prestige Bancorp, with Prestige Bancorp as the surviving entity (the "Merger"),
(ii) Prestige Bancorp shall merge with or liquidate into Northwest Bancorp, with
Northwest Bancorp as the surviving entity (the "Company Merger"), with the
result that Prestige Bank shall be a wholly-owned subsidiary of Northwest
Bancorp, and (iii) Prestige Bank shall merge with and into Northwest Savings
Bank, with Northwest Savings Bank as the surviving entity (the "Bank Merger")
(the Merger, Company Merger and the Bank Merger are sometimes collectively
referred to as the "Mergers"); and
WHEREAS, the parties hereto desire to provide for certain undertakings,
conditions, representations, warranties and covenants in connection with the
Merger, and the other transactions contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and covenants herein contained and intending to be
legally bound hereby, the parties hereto do hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.01 Definitions. Except as otherwise provided herein, as used
in this Agreement, the following terms shall have the indicated meanings (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):
"Affiliate" means, with respect to any Person, any Person who
directly, or indirectly, through one or more intermediaries, controls,
or is controlled by, or is under common control with, such Person and,
without limiting the generality of the foregoing, includes any
executive officer or director of such Person and any Affiliate of such
executive officer or director.
"Agreement" means this agreement, and any amendment or
supplement hereto, which constitutes a "plan of merger" between
Northwest Bancorp, Northwest Merger Subsidiary and Prestige Bancorp.
"Applications" means the applications for all Regulatory
Approvals that are required by the transactions contemplated hereby.
"Bank Merger" means the merger of Prestige Bank with and into
Northwest Savings Bank, with Northwest Savings Bank as the surviving
institution.
"Business Day" means any day other than a Saturday, Sunday or
Federal holiday.
"Closing Date" means the Business Day determined by Northwest
Bancorp, in its sole discretion, upon five (5) days prior written
notice to Prestige Bancorp, but in no event later than fifteen (15)
Business Days after the last condition precedent (other than the
delivery of certificates or other instruments and documents to be
delivered at closing) pursuant to this Agreement has been fulfilled or
waived (including the expiration of any applicable waiting period), or
such other date as to which Northwest Bancorp and Prestige Bancorp
shall mutually agree.
"Closing Expense Statement" has the meaning given to that term
in Section 5.10(c) of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Merger" means the merger or liquidation of Prestige
Bancorp, as a wholly owned subsidiary of Northwest Bancorp, with and
into Northwest Bancorp, with Northwest Bancorp being the surviving
corporation.
2
"Compensation and Benefit Plans" means any bonus, incentive,
deferred compensation, pension, retirement, profit-sharing, thrift,
savings, employee stock ownership, stock bonus, stock purchase,
restricted stock, stock option, stock appreciation, phantom stock,
severance, welfare and fringe benefit plans, employment, severance and
change in control agreements and all other benefit practices, policies
and arrangements maintained by Prestige Bancorp or Prestige Bank in
which any employee or former employee, consultant or former consultant
or director or former director of Prestige Bancorp or Prestige Bank
participates or to which any such employee, consultant or director is
a party or is otherwise entitled to receive benefits other than plans
and programs involving immaterial obligations.
"Department" means the Pennsylvania Department of Banking.
"Disclosure Schedule" means any of the Northwest Bancorp
Disclosure Schedules or the Prestige Bancorp Disclosure Schedules.
"DOL" means the U.S. Department of Labor.
"Environmental Law" means any Federal or state law, statute,
rule, regulation, code, order, judgment, decree, injunction, common law
or agreement with any Federal or state Regulatory Authority relating to
(i) the protection, preservation or restoration of the environment
(including air, water vapor, surface water, groundwater, drinking water
supply, surface land, subsurface land, plant and animal life or any
other natural resource), (ii) human health or safety relating to the
presence of Hazardous Material, or (iii) exposure to, or the use,
storage, recycling, treatment, generation, transportation, processing,
handling, labeling, production, release or disposal of, Hazardous
Material, in each case as amended and now in effect.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated from time to time
thereunder.
"Exchange Agent" means American Stock Transfer & Trust
Company, the transfer agent for Northwest Bancorp, or such other entity
selected by Northwest Bancorp and agreed to by Prestige Bancorp.
"FDIA" means the Federal Deposit Insurance Act, as amended.
"FDIC" means the Federal Deposit Insurance Corporation.
"FHLB" means a Federal Home Loan Bank.
"FRB" means the Board of Governors of the Federal Reserve
System.
3
"GAAP" means generally accepted accounting principles as in
effect at the relevant date and consistently applied.
"Hazardous Material" means any substance (whether solid,
liquid or gas) which is listed, defined, designated or classified as
hazardous, toxic, radioactive or dangerous, or otherwise regulated,
under any Environmental Law, whether by type or by quantity, including
any substance containing any such substance as a component. Hazardous
Material includes, without limitation, any toxic waste, pollutant,
contaminant, hazardous substance, toxic substance, hazardous waste,
special waste, industrial substance, oil or petroleum, or any
derivative or by-product thereof, radon, radioactive material,
asbestos, asbestos-containing material, urea formaldehyde foam
insulation, lead and polychlorinated biphenyl.
"HOLA" means the Home Owners' Loan Act, as amended.
"IRS" means the Internal Revenue Service.
"Knowledge" as used with respect to a Person (including
references to such Person being aware of a particular matter) means
those facts that are known, or reasonably should have been known, by
the senior officers and directors of such Person, and includes any
facts, matters or circumstances set forth in any written notice from
any Regulatory Authority or any other material written notice received
by that Person.
"Loan Property" shall have the meaning given to such term in
Section 3.14(b) of this Agreement.
"Material Adverse Effect" shall mean, with respect to a
Person, any adverse effect on its assets, financial condition or
results of operations which is material to its assets, financial
condition or results of operations on a consolidated basis, except for
any such effect caused by (i) any change in the value of such Person's
assets resulting from a change in interest rates generally, (ii) any
change or combination of changes occurring after the date hereof in any
federal or state law, rule or regulation or in GAAP, which change(s) or
affect(s) financial institutions generally, (iii) compliance with this
Agreement, (iv) any facts or circumstances existing on the date hereof
and identified in a Disclosure Schedule attached to this Agreement on
the date hereof or (v) expenses incurred in connection with this
Agreement and the transactions contemplated thereby.
"Merger" means the merger of Northwest Merger Subsidiary with
and into Prestige Bancorp, with Prestige Bancorp as the surviving
corporation.
"Merger Effective Date" means that date upon which the
articles of merger as to the Merger are accepted for filing by the
Office of the Pennsylvania Secretary of State, or such other date as
otherwise stated in such filed articles of merger, in accordance with
Pennsylvania law. The Merger Effective Date shall be the same date as
the Closing Date.
4
"Merger Consideration" has the meaning given to that term in
Section 2.02(i) of this Agreement.
"Northwest Bancorp Disclosure Schedules" means the Disclosure
Schedules delivered by Northwest Bancorp to Prestige Bancorp pursuant
to Article IV of this Agreement.
"Northwest Bancorp Financials" means (i) the audited
consolidated financial statements of Northwest Bancorp as of June 30,
2001 and 2000 and for the three years ended June 30, 2001, including
the notes thereto and (ii) the unaudited interim consolidated financial
statements of Northwest Bancorp as of each calendar quarter thereafter.
"Northwest Bancorp Regulatory Reports" means the Thrift
Financial Reports of Northwest Savings Bank and accompanying schedules,
as filed with the OTS, for each calendar quarter beginning with the
quarter ended June 30, 2001, through the Closing Date, and all Annual,
Quarterly and Current Reports filed on Form H-(b)11 with the OTS by
Northwest Bancorp from June 30, 2001 through the Closing Date.
"Northwest Bancorp Subsidiary" means any corporation, limited
liability company, limited liability partnership or partnership
(whether general or limited), 50% or more of the capital stock or other
equity ownership interest of which is owned, either directly or
indirectly, by Northwest Bancorp or Northwest Savings Bank, except any
corporation limited liability company, limited liability partnership or
partnership (whether general or limited), the stock or other equity
ownership interest of which is held as security by Northwest Savings
Bank in the ordinary course of its lending activities.
"OTS" means the Office of Thrift Supervision.
"PBCA" means the Pennsylvania Business Corporations Act, as
from time to time amended, and any successor thereto.
"Participation Facility" shall have the meaning given to such
term in Section 3.14(b) of this Agreement.
"Pension Plan" has the meaning given to that term in Section
3.12 of this Agreement.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, association, trust or "group"
(as that term is defined in Section 13(d)(3) of the Exchange Act).
"Prestige Bancorp Common Stock" shall have the meaning given
to such term in Section 3.02(a).
5
"Prestige Bancorp Disclosure Schedules" means the Disclosure
Schedules delivered by Prestige Bancorp to Northwest Bancorp pursuant
to Article III of this Agreement.
"Prestige Bancorp ESOP" means the Prestige Bancorp Employee
Stock Ownership Plan and Trust.
"Prestige Bancorp Financials" means (i) the audited
consolidated financial statements of Prestige Bancorp as of December
31, 2000 and 1999 and for the three years ended December 31, 2000,
including the notes thereto included in Securities Documents filed by
Prestige Bancorp, and (ii) the unaudited interim consolidated financial
statements of Prestige Bancorp as of each calendar quarter thereafter
included in Securities Documents filed by Prestige Bancorp.
"Prestige Bancorp Option" means issued and outstanding options
granted by Prestige Bancorp to purchase shares of Prestige Bancorp
Common Stock pursuant to the Prestige Bancorp Stock Option Plan.
"Prestige Bancorp Regulatory Reports" means the Thrift
Financial Reports of Prestige Bank and accompanying schedules, as filed
with the OTS, for each appropriate calendar quarter beginning with the
quarter ended December 31, 2000, through the Closing Date, and all
Annual, Quarterly and Current Reports filed with the OTS by Prestige
Bancorp from December 31, 2000 through the Closing Date.
"Prestige Bancorp Subsidiary" means any corporation, limited
liability company, limited liability partnership or partnership
(whether general or limited), 50% or more of the capital stock or other
equity ownership interest of which is owned, either directly or
indirectly, by Prestige Bancorp or Prestige Bank, except any
corporation limited liability company, limited liability partnership or
partnership (whether general or limited), the stock or other equity
ownership interest of which is held as security by Prestige Bank in the
ordinary course of its lending activities.
"Prestige Bancorp Restricted Stock Plan" means the Prestige
Bancorp Recognition and Retention Plan and Trust dated as of March 20,
1997, as amended from time to time.
"Prestige Bancorp Stock Option Plan" means the Prestige
Bancorp 1997 Stock Option Plan dated as of March 20, 1997, as amended
from time to time.
"Proxy Statement" means the proxy statement, together with any
supplements thereto, to be transmitted to holders of Prestige Bancorp
Common Stock in connection with the transactions contemplated by this
Agreement.
"Regulatory Agreement" has the meaning given to that term in
Section 3.11(c) of this Agreement.
6
"Regulatory Approvals" means all consents, waivers, approvals,
nonobjections and clearances required to be obtained from or issued by
the OTS, the FRB, the FDIC, the Department, the SEC or the respective
staffs thereof in order to complete the transactions contemplated
hereby, including any required approval of the OTS under the
Supervisory Agreement.
"Regulatory Authority" means any agency or department of any
federal, state or local government, including without limitation the
OTS, the FRB, the FDIC, the Department, the SEC or the respective
staffs thereof.
"Rights" means warrants, options, rights, convertible
securities and other capital stock equivalents that obligate an entity
to issue its securities or to make payments of cash in lieu of issuing
such securities or in respect to such securities.
"SAIF" means the Savings Association Insurance Fund of the
FDIC.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated from time to time thereunder.
"Securities Documents" means all registration statements,
schedules, statements, forms, reports, proxy material, and other
documents required to be filed under the Securities Laws.
"Securities Laws" means the Securities Act and the Exchange
Act.
"Subsidiary" means any corporation, limited liability company,
limited liability partnership or partnership, whether general or
limited), 50% or more of the capital stock or other equity ownership
interest of which is owned, either directly or indirectly, by another
entity, except any corporation the stock or other equity ownership
interest of which is held as security by either Northwest Savings Bank
or Prestige Bank, as the case may be, in the ordinary course of its
lending activities.
"Supervisory Agreement" means that certain Supervisory
Agreement dated as of September 20, 2000, by and among the OTS,
Prestige Bank and the directors of Prestige Bank.
"Surviving Corporation" has the meaning given to that term in
Section 2.01(a)(i) of this Agreement.
7
ARTICLE II
THE MERGER AND RELATED MATTERS
Section 2.01. Effects of Merger; Surviving Corporation.
(a) As of the Merger Effective Date, the following shall occur:
(i) Northwest Merger Subsidiary shall merge with and into
Prestige Bancorp; the separate existence of Northwest Merger Subsidiary shall
cease; Prestige Bancorp shall be the surviving corporation in the Merger (the
"Surviving Corporation") and a wholly owned subsidiary of Northwest Bancorp; and
all of the property (real, personal and mixed), rights, powers and duties and
obligations of Northwest Merger Subsidiary shall be taken and deemed to be
transferred to and vested in Prestige Bancorp, as the Surviving Corporation in
the Merger, without further act or deed; all in accordance with the PBCA.
(ii) the Articles of Incorporation of the Surviving
Corporation shall be amended and restated to read in their entirety as the
Articles of Incorporation of Northwest Merger Subsidiary, in effect immediately
prior to the Merger Effective Date; and the Bylaws of the Surviving Corporation
shall be amended and restated to read in their entirety as the Bylaws of
Northwest Merger Subsidiary, in effect immediately prior to the Merger Effective
Date, until thereafter altered, amended or repealed in accordance with
applicable law.
(iii) the directors of Northwest Merger Subsidiary duly
elected and holding office immediately prior to the Merger Effective Date shall
be the directors of the Surviving Corporation, each to hold office until his or
her successor is elected and qualified or otherwise in accordance with the
Articles of Incorporation and Bylaws of the Surviving Corporation.
(iv) the officers of Northwest Merger Subsidiary duly elected
and holding office immediately prior to the Merger Effective Date shall be the
officers of the Surviving Corporation, each to hold office until his or her
successor is elected and qualified or otherwise in accordance with the Articles
of Incorporation and the Bylaws of the Surviving Corporation.
(b) Notwithstanding any provision of this Agreement to the contrary,
Northwest Bancorp may elect, subject to the filing of all Applications and the
receipt of all Regulatory Approvals, to modify the structure of the transactions
contemplated hereby, and the parties shall enter into such alternative
transactions, so long as (i) there are no adverse tax consequences to any of the
shareholders of Prestige Bancorp as a result of such modification, (ii) the
Merger Consideration is not thereby changed in kind or reduced in amount or
delayed in payment following the Merger Effective Date because of such
modification, (iii) such modification will not materially increase the
obligations, liabilities or duties of Prestige Bancorp or Prestige Bank prior to
the Merger Effective Date, and (iv) such modification will not be likely to
delay or jeopardize receipt of any Regulatory Approvals or of the tax opinion
required under Sections 6.02(h).
8
Section 2.02. Conversion of Shares. At the Merger Effective Date, by
virtue of the Merger and without any action on the part of Prestige Bancorp or
the holders of shares of Prestige Bancorp Common Stock:
(i) Each outstanding share of Prestige Bancorp Common Stock issued and
outstanding at the Merger Effective Date, except as provided in clauses (ii) and
(iii) of this Section, shall cease to be outstanding, and shall be converted
into the right to receive $13.75 in cash (the "Merger Consideration").
(ii) Any shares of Prestige Bancorp Common Stock which are owned or
held by any party hereto or any of their respective Subsidiaries (other than in
a fiduciary capacity or in connection with debts previously contracted) at the
Merger Effective Date shall be deemed cancelled and the certificates for such
shares shall be deemed retired, such shares shall not be converted into the
Merger Consideration, and no cash or shares of capital stock of Northwest
Bancorp shall be issued or exchanged therefor.
(iii) Each share of Northwest Merger Subsidiary common stock issued and
outstanding immediately before the Merger Effective Date shall be converted into
and become an outstanding share of common stock of the Surviving Corporation.
(iv) The holders of certificates (immediately prior to the Merger)
representing shares of Prestige Bancorp Common Stock (any such certificate being
hereinafter referred to as a "Certificate") shall cease to have any rights as
shareholders of Prestige Bancorp, except such rights, if any, as they may have
pursuant to applicable law and this Agreement.
Section 2.03. Exchange Procedures.
(a) As promptly as practicable after the Merger Effective Date, and in
any event within five (5) Business Days thereafter, the Exchange Agent shall
mail to each holder of record of outstanding shares of Prestige Bancorp Common
Stock a letter of transmittal in form and substance reasonably acceptable to
Prestige Bancorp ("Letter of Transmittal") containing instructions for the
surrender of the Certificate(s) held by such holder for payment therefore. Upon
a holder's surrender of the Certificate(s) to the Exchange Agent in accordance
with the instructions set forth in the Letter of Transmittal, such holder shall
promptly receive in exchange therefor the Merger Consideration, without interest
thereon. Approval of this Agreement by the shareholders of Prestige Bancorp
shall constitute authorization for Northwest Bancorp to designate and appoint
the Exchange Agent. Neither Northwest Bancorp nor the Exchange Agent shall be
obligated to deliver the Merger Consideration to a former shareholder of
Prestige Bancorp until such former shareholder surrenders his Certificate(s).
(b) If payment of the Merger Consideration is to be made to a Person
other than the Person in whose name a Certificate surrendered in exchange
therefore is registered, it shall be a condition of payment that the Certificate
so surrendered shall be properly endorsed (or accompanied by an appropriate
instrument of transfer) and otherwise in proper form for transfer, and that the
Person requesting such payment shall pay any transfer or other taxes required by
reason of the payment to a Person other than the registered holder of the
Certificate surrendered,
9
or required for any other reason, or shall establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not payable.
(c) Contemporaneously with or prior to the Merger, Northwest Bancorp
and/or Northwest Savings Bank shall deposit or cause to be deposited, in trust
with the Exchange Agent, an amount of cash equal to the aggregate Merger
Consideration that the Prestige Bancorp shareholders shall be entitled to
receive on the Merger Effective Date pursuant to Section 2.02 hereof.
(d) The payment of the Merger Consideration upon the exchange of
Prestige Bancorp Common Stock in accordance with the terms and conditions hereof
shall constitute full satisfaction of all rights pertaining to such Prestige
Bancorp Common Stock.
(e) Promptly following the date which is twelve (12) months after the
Merger Effective Date, the Exchange Agent shall deliver to Northwest Bancorp all
cash, Certificates and other documents in its possession relating to the
transactions described in this Agreement, and the Exchange Agent's duties shall
terminate. Thereafter, each holder of a Certificate formerly representing shares
of Prestige Bancorp Common Stock may surrender such Certificate to Northwest
Bancorp and (subject to applicable abandoned property, escheat and similar laws)
receive in consideration therefore the Merger Consideration multiplied by the
number of shares of Prestige Bancorp Common Stock formerly represented by such
Certificate, without any interest or dividends thereon.
(f) As of the close of business on the Merger Effective Date, there
shall be no transfers on the stock transfer books of Prestige Bancorp of the
shares of Prestige Bancorp Common Stock which are outstanding immediately prior
to the Merger Effective Date, and the stock transfer books of Prestige Bancorp
shall be closed with respect to such shares. If, after the Merger Effective
Date, Certificates representing such shares are presented for transfer to the
Exchange Agent, they shall be canceled and exchanged for the Merger
Consideration as provided in this Article II.
(g) In the event any Certificate for Prestige Bancorp Common Stock
shall have been lost, stolen or destroyed, the Exchange Agent (or Northwest
Bancorp, if the Exchange Agent's duties hereunder have been discharged) shall
deliver (except as otherwise provided in Section 2.02(iii)) in exchange for such
lost, stolen or destroyed certificate, upon the making of an affidavit of the
fact by the holder thereof, the cash to be paid in the Merger as provided for
herein; provided, however, that Northwest Bancorp may, in its sole discretion
and as a condition precedent to the delivery thereof, require the owner of such
lost, stolen or destroyed Certificate to deliver a bond in such reasonable sum
as Northwest Bancorp may determine as indemnity against any claim that may be
made against Prestige Bancorp, Northwest Bancorp or any other party with respect
to the Certificate alleged to have been lost, stolen or destroyed.
Section 2.04. Stock Options. Prestige Bancorp Disclosure Schedule 2.04
attached hereto sets forth all of the outstanding Prestige Bancorp Options
(whether vested or unvested) and the exercise price for each such Prestige
Bancorp Option. At the Merger Effective Date, each Prestige Bancorp Option,
whether or not such option is exercisable as of the Merger Effective
10
Date, shall, by reason of the Merger, cease to be outstanding and be converted
into the right to receive in cash an amount equal to (i) the difference (if a
positive number) between (A) the Merger Consideration and (B) the exercise price
of each such Prestige Bancorp Option multiplied by (ii) the number of shares of
Prestige Bancorp Common Stock subject to the Prestige Bancorp Option.
Section 2.05. Restricted Stock. Prestige Bancorp Disclosure Schedule
2.05 attached hereto sets forth all of the outstanding unvested awards under the
Prestige Bancorp Restricted Stock Plan. At the Merger Effective Date, each
unvested share of restricted stock awarded pursuant to the Prestige Bancorp
Restricted Stock Plan shall automatically vest and the holder thereof shall be
entitled to receive the Merger Consideration.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PRESTIGE BANCORP AND PRESTIGE BANK
Prestige Bancorp and Prestige Bank represent and warrant to Northwest
Bancorp and Northwest Savings Bank that the statements contained in this Article
III are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
Article III), except as set forth in the Prestige Bancorp Disclosure Schedules
delivered by Prestige Bancorp to Northwest Bancorp on the date hereof, and
except as to any representation or warranty which specifically relates to an
earlier date. Prestige Bancorp and Prestige Bank have made a good faith effort
to ensure that the disclosure on each schedule of the Prestige Bancorp
Disclosure Schedules corresponds to the section reference herein. However, for
purposes of the Prestige Bancorp Disclosure Schedules, any item disclosed on any
schedule therein is deemed to be fully disclosed with respect to all schedules
under which such item may be relevant.
Section 3.01 Organization.
(a) Prestige Bancorp is a corporation duly organized, validly existing
and in good standing under the PBCA, and is duly registered as a savings and
loan holding company under the HOLA. Prestige Bancorp has full corporate power
and authority to carry on its business as now conducted and is duly licensed or
qualified to do business in the states of the United States and foreign
jurisdictions where its ownership or leasing of property or the conduct of its
business requires such qualification, except where the failure to be so licensed
or qualified would not have a Material Adverse Effect on Prestige Bancorp.
(b) Prestige Bank is a Federal savings bank organized, validly existing
and in good standing under the laws of the United States. Prestige Bank and
Prestige Insurance Services, LLP ("Prestige Insurance Services") are the only
Subsidiaries of Prestige Bancorp. The deposits of Prestige Bank are insured by
the FDIC through the SAIF to the fullest extent permitted by law, and all
premiums and assessments required to be paid in connection therewith have been
paid by Prestige Bank when due. Prestige Bank has no Subsidiary.
11
(c) Prestige Bank is a member in good standing of the FHLB of
Pittsburgh and owns the requisite amount of stock therein.
(d) The respective minute books of Prestige Bancorp and Prestige Bank
accurately records, in all material respects, all material corporate actions of
their respective shareholders and boards of directors (including committees)
through the date of this Agreement.
(e) Prior to the date of this Agreement, Prestige Bancorp and each
Prestige Bancorp Subsidiary has made available to Northwest Bancorp true and
correct copies of their respective articles of incorporation or charter, and
bylaws, each of which is attached hereto as Prestige Bancorp Disclosure Schedule
3.01(e).
Section 3.02 Capitalization.
(a) The authorized capital stock of Prestige Bancorp consists of
10,000,000 shares of common stock, par value $1.00 per share ("Prestige Bancorp
Common Stock"), of which 1,059,371 shares are outstanding, validly issued, fully
paid and nonassessable and free of preemptive rights, and 5,000,000 shares of
preferred stock, par value $1.00 per share ("Prestige Bancorp Preferred Stock"),
none of which are outstanding. There are 242,140 shares of Prestige Bancorp
Common Stock held by Prestige Bancorp as treasury stock. Neither Prestige
Bancorp nor Prestige Bank has or is bound by any Rights or other agreements of
any character relating to the purchase, sale or issuance or voting of, or right
to receive dividends or other distributions on any shares of Prestige Bancorp
Common Stock, or any other security of Prestige Bancorp or any securities
representing the right to vote, purchase or otherwise receive any shares of
Prestige Bancorp Common Stock or any other security of Prestige Bancorp, other
than shares issuable under the Prestige Bancorp Stock Option Plan (the number of
which is set forth in Prestige Bancorp Disclosure Schedule 2.04, and which are
not considered outstanding), shares issuable under or held pursuant to the
Prestige Bancorp Restricted Stock Plan (the number of which is identified in
Prestige Bancorp Disclosure Schedule 2.05 and which are considered outstanding),
and shares held pursuant to the ESOP (which are considered outstanding).
Prestige Bancorp Disclosure Schedule 3.02(a) sets forth (i) the name of each
holder of unvested awards under the Prestige Bancorp Restricted Stock Plan and
each holder of awards (whether vested or unvested) of Stock Options under the
Prestige Bancorp Stock Option Plan, the number of shares each such individual
may acquire pursuant to the exercise of Prestige Bancorp Stock Options, the
number of shares of restricted stock held by each such individual under the
Prestige Bancorp Restricted Stock Plan, the vesting dates, and the exercise
price relating to the Prestige Bancorp Stock Options, and (ii) the name of each
participant under the Prestige Bancorp ESOP, the number of shares of Prestige
Bancorp Common Stock allocated to each such participant and the unallocated
shares of Prestige Bancorp Common Stock held by the Prestige Bancorp ESOP.
Except as set forth in Prestige Bancorp Disclosure Schedule 3.02(a), there are
no shares of restricted stock of Prestige Bancorp outstanding, or authorized to
be issued pursuant to any Compensation and Benefit Plan of Prestige Bancorp.
(b) Prestige Bancorp owns all of the capital stock of Prestige Bank,
free and clear of any lien or encumbrance. Except for Prestige Bank and Prestige
Insurance Services, Prestige Bancorp does not possess, directly or indirectly,
any material equity interest in any corporate
12
entity, except for equity interests held in the investment portfolios of
Prestige Bancorp, equity interests held by Prestige Bank in a fiduciary
capacity, and equity interests held in connection with the lending activities of
Prestige Bank, including stock in the FHLB of Pittsburgh.
(c) To Prestige Bancorp's Knowledge (based solely upon filings made by
Persons pursuant to Section 13(d) of the Exchange Act), other than as set forth
in Prestige Bancorp Disclosure Schedule 3.02(c), no Person is the beneficial
owner (as defined in Section 13(d) of the Exchange Act) of 5% or more of the
outstanding shares of Prestige Bancorp Common Stock.
Section 3.03 Authority; No Violation.
(a) Prestige Bancorp and Prestige Bank each has full corporate power
and authority to execute and deliver this Agreement and, subject to a favorable
vote of the Prestige Bancorp shareholders and receipt of all Regulatory
Approvals, to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by Prestige Bancorp and Prestige Bank and the
completion by Prestige Bancorp and Prestige Bank of the transactions
contemplated hereby, up to and including the Merger, have been duly and validly
approved by the Boards of Directors of Prestige Bancorp and Prestige Bank, and,
except for approval of the shareholders of Prestige Bancorp, no other corporate
proceedings on the part of Prestige Bancorp or Prestige Bank are necessary to
complete the transactions contemplated hereby, up to and including the Merger.
Subject to any required OTS nonobjection pursuant to the Supervisory Agreement,
this Agreement has been duly and validly executed and delivered by Prestige
Bancorp and Prestige Bank, and the Bank Merger has been duly and validly
approved by the Board of Directors of Prestige Bank, and by Prestige Bancorp in
its capacity as sole shareholder of Prestige Bank, and subject to approval by
the shareholders of Prestige Bancorp and receipt of the Regulatory Approvals,
constitutes the valid and binding obligations of Prestige Bancorp and Prestige
Bank, enforceable against Prestige Bancorp and Prestige Bank in accordance with
its terms, subject to applicable bankruptcy, insolvency and similar laws
affecting creditors' rights generally, and as to Prestige Bank, the
conservatorship or receivership provisions of the FDIA, and subject, as to
enforceability, to general principles of equity.
(b) (A) Subject to any required OTS nonobjection pursuant to the
Supervisory Agreement, the execution and delivery of this Agreement by Prestige
Bancorp and Prestige Bank, (B) subject to receipt of all Regulatory Approvals
and the compliance by Prestige Bancorp and Northwest Bancorp with any conditions
contained therein, and subject to the receipt of the approval of shareholders of
Prestige Bancorp, the effectiveness of this Agreement and the consummation of
the transactions contemplated hereby, and (C) compliance by Prestige Bancorp and
Prestige Bank with all of the terms, conditions or provisions hereof will not
(i) conflict with or result in a breach of any provision of the articles of
incorporation or bylaws of Prestige Bancorp or the charter and bylaws of
Prestige Bank; (ii) violate any statute, code, ordinance, rule, regulation,
judgment, order, writ, decree or injunction applicable to Prestige Bancorp or
Prestige Bank or any of their respective properties or assets; or (iii) violate,
conflict with, result in a breach of any provisions of, constitute a default (or
an event which, with notice or lapse of time, or both, would constitute a
default) under, result in the termination of, accelerate the performance
required by, or result in a right of termination or acceleration or the creation
of any lien, security interest, charge or other encumbrance upon any of the
properties or assets of
13
Prestige Bancorp or Prestige Bank under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other investment or obligation to which Prestige Bancorp or
Prestige Bank is a party, or by which they or any of their respective properties
or assets may be bound or affected, except for such violations, conflicts,
breaches or defaults described in clause (ii) or (iii) hereof which, either
individually or in the aggregate, will not have a Material Adverse Effect on
Prestige Bancorp and Prestige Bank taken as a whole.
Section 3.04 Consents. Except for the receipt of the Regulatory
Approvals and compliance with any conditions contained therein, the approval of
this Agreement by the shareholders of Prestige Bancorp and Prestige Bank, the
filing of articles of merger with the Office of the Pennsylvania Secretary of
State pursuant to the PBCA, and the filing of articles of combination with the
OTS, no consents or approvals of, or filings or registrations with, any public
body or authority are necessary, and no consents or approvals of any Persons are
necessary, or will be, in connection with (a) the execution and delivery of this
Agreement by Prestige Bancorp and Prestige Bank, and (b) the completion by
Prestige Bancorp and Prestige Bank of the transactions contemplated hereby.
Prestige Bancorp and Prestige Bank have no reason to believe that (i) any
Regulatory Approvals will not be received or that (ii) any public body or
authority, the consent or approval of which is not required or to which a filing
is not required, will object to the completion of the transactions contemplated
by this Agreement.
Section 3.05 Financial Statements.
(a) Prestige Bancorp has previously made available to Northwest Bancorp
the Prestige Bancorp Regulatory Reports. The Prestige Bancorp Regulatory Reports
have been prepared in all material respects in accordance with applicable
regulatory accounting principles and practices throughout the periods covered by
such statements, and fairly present in all material respects, the consolidated
financial position, results of operations and changes in shareholders' equity of
Prestige Bancorp as of and for the periods ended on the dates thereof, in
accordance with applicable regulatory accounting principles applied on a
consistent basis.
(b) Prestige Bancorp has previously made available to Northwest Bancorp
the Prestige Bancorp Financials. The Prestige Bancorp Financials have been
prepared in accordance with GAAP, and (including the related notes where
applicable) fairly present in each case in all material respects (subject in the
case of the unaudited interim statements to normal year-end adjustments), the
consolidated financial position, results of operations and cash flows of
Prestige Bancorp and Prestige Bank on a consolidated basis as of and for the
respective periods ending on the dates thereof, in accordance with GAAP applied
on a consistent basis during the periods involved, except as indicated in the
notes thereto, or in the case of unaudited statements, as permitted by Form
10-Q.
(c) At the date of each balance sheet included in the Prestige Bancorp
Financials or the Prestige Bancorp Regulatory Reports, Prestige Bancorp did not
have any liabilities, obligations or loss contingencies of any nature (whether
absolute, accrued, contingent or otherwise) of a type required to be reflected
in such Prestige Bancorp Financials or Prestige Bancorp Regulatory Reports or in
the footnotes thereto which are not fully reflected or reserved
14
against therein or fully disclosed in a footnote thereto, except for
liabilities, obligations and loss contingencies which are not material
individually or in the aggregate or which are incurred in the ordinary course of
business, consistent with past practice, and except for liabilities, obligations
and loss contingencies which are within the subject matter of a specific
representation and warranty herein and subject, in the case of any unaudited
statements, to normal, recurring audit adjustments and the absence of footnotes.
Section 3.06 Taxes. Prestige Bancorp and Prestige Bank are members of
the same affiliated group within the meaning of Code Section 1504(a). Prestige
Bancorp has duly filed all federal, state and material local tax returns
required to be filed by or with respect to Prestige Bancorp and Prestige Bank on
or prior to the Merger Effective Date (all such returns being accurate and
correct in all material respects) and has duly paid or made provisions for the
payment of all material federal, state and local taxes which have been incurred
by or are due or claimed to be due from Prestige Bancorp and Prestige Bank by
any taxing authority or pursuant to any written tax sharing agreement on or
prior to the Merger Effective Date other than taxes or other charges which (i)
are not delinquent, (ii) are being contested in good faith, or (iii) have not
yet been fully determined. As of the date of this Agreement, there is no audit
examination, deficiency assessment, tax investigation or refund litigation with
respect to any taxes of Prestige Bancorp or any of its Subsidiaries, and no
claim has been made by any authority in a jurisdiction where Prestige Bancorp or
any of its Subsidiaries do not file tax returns that Prestige Bancorp or any
such Subsidiary is subject to taxation in that jurisdiction. Prestige Bancorp
and its Subsidiaries have not executed an extension or waiver of any statute of
limitations on the assessment or collection of any material tax due that is
currently in effect. Prestige Bancorp and each of its Subsidiaries has withheld
and paid all taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
shareholder or other third party, and Prestige Bancorp and each of its
Subsidiaries has timely complied with all applicable information reporting
requirements under Part III, Subchapter A of Chapter 61 of the Code and similar
applicable state and local information reporting requirements.
Section 3.07. No Material Adverse Effect. Except as disclosed in the
Securities Documents and other documents or releases set forth on Prestige
Bancorp Disclosure Schedule 3.07, Prestige Bancorp has not suffered any Material
Adverse Effect since December 31, 2000.
Section 3.08. Material Contracts; Leases; Defaults.
(a) Except as set forth in Prestige Bancorp Disclosure Schedule
3.08(a), and except for this Agreement, and those agreements and other documents
filed as exhibits to Prestige Bancorp's Securities Documents, neither Prestige
Bancorp nor Prestige Bank is a party to, bound by or subject to (i) agreement,
contract, arrangement, commitment or understanding (whether written or oral)
that is a "material contract" within the meaning of Item 601(b)(10) of the SEC's
Regulation S-K (ii) any collective bargaining agreement with any labor union
relating to employees of Prestige Bancorp or Prestige Bank; (iii) any agreement
which by its terms limits the payment of dividends by Prestige Bancorp or
Prestige Bank; (iv) any instrument evidencing or related to material
indebtedness for borrowed money whether directly or indirectly, by way of
purchase money obligation, conditional sale, lease purchase, guaranty or
otherwise, in respect of which Prestige Bancorp or Prestige Bank is an obligor
to any Person, which instrument
15
evidences or relates to indebtedness other than deposits, repurchase agreements,
FHLB of Pittsburgh advances, bankers' acceptances, "treasury tax and loan"
accounts established in the ordinary course of business and transactions in
"federal funds" or which contains financial covenants or other restrictions
(other than those relating to the payment of principal and interest when due)
which would be applicable on or after the Merger Effective Date to Northwest
Bancorp or any Northwest Bancorp Subsidiary; (v) any contract (other than this
Agreement) limiting the freedom, in any material respect, of Prestige Bancorp or
Prestige Bank to engage in any type of banking or bank-related business which
Prestige Bancorp or Prestige Bank is permitted to engage in under applicable law
as of the date of this Agreement or (vi) any agreement, contract, arrangement,
commitment or understanding (whether written or oral) that restricts or limits
in any material way the conduct of business by Prestige Bancorp or Prestige Bank
(it being understood that any non-compete or similar provision shall be deemed
material).
(b) Each real estate lease that may require the consent of the lessor
or its agent resulting from the Company Merger or the Bank Merger by virtue of a
prohibition or restriction relating to assignment, by operation of law or
otherwise, or change in control, is listed in Prestige Bancorp Disclosure
Schedule 3.08(b)(1) identifying the section of the lease that contains such
prohibition or restriction. Except as set forth in Prestige Bancorp Disclosure
Schedule 3.08(b)(2), neither Prestige Bancorp nor Prestige Bank is in default in
any material respect under any material contract, agreement, commitment,
arrangement, lease, insurance policy or other instrument to which it is a party,
by which its assets, business, or operations may be bound or affected, or under
which it or its assets, business, or operations receive benefits, and there has
not occurred any event that, with the lapse of time or the giving of notice or
both, would constitute such a default.
(c) True and correct copies of "material contracts," agreements,
instruments, contracts, arrangements, commitments, leases or understandings
identified in Prestige Bancorp Disclosure Schedule 3.08(a) and 3.08(b)(1) have
been made available to Northwest Bancorp on or before the date hereof, and are
in full force and effect on the date hereof and neither Prestige Bancorp nor
Prestige Bank (nor, to the Knowledge of Prestige Bancorp or any Prestige Bancorp
Subsidiary), any other party to any such "material contract," agreement,
instrument, contract, arrangement, commitment, lease or understanding) has
materially breached any provision of, or is in default in any respect under any
term of, any such "material contract," agreement, instrument, contract,
arrangement, commitment, lease or understanding. No party to any such "material
contract," agreement, instrument, contract, arrangement, commitment, lease or
understanding will have the right to terminate any or all of the provisions of
any such "material contract," agreement, instrument, contract, arrangement,
commitment, lease or understanding as a result of the execution of, and the
transactions contemplated by, this Agreement, or require the payment of an early
termination fee or penalty. No such "material contract," agreement, instrument,
contract, arrangement, commitment, lease or understanding to which Prestige
Bancorp or Prestige Bank is a party or under which Prestige Bancorp or Prestige
Bank may be liable contains provisions which permit an independent contractor to
terminate it without cause and after such termination without cause continue to
accrue future benefits thereunder.
16
Section 3.09. Ownership of Property; Insurance Coverage.
(a) Except as set forth in Prestige Bancorp Disclosure Schedule
3.09(a), Prestige Bancorp and the Prestige Bank each has good and, as to real
property, marketable title to all material assets and properties owned by
Prestige Bancorp or Prestige Bank in the conduct of their business, whether such
assets and properties are real or personal, tangible or intangible, including
assets and property reflected in the balance sheets contained in the Prestige
Bancorp Regulatory Reports and in the Prestige Bancorp Financials or acquired
subsequent thereto (except to the extent that such assets and properties have
been disposed of in the ordinary course of business, since the date of such
balance sheets), subject to no material liens, mortgages, security interests or
pledges, or to the Knowledge of Prestige Bancorp, material and adverse
encumbrances, except (i) those items which secure liabilities for public or
statutory obligations or any discount with, borrowing from or other obligations
to FHLB of Pittsburgh, inter-bank credit facilities, or any transaction by
Prestige Bank acting in a fiduciary capacity, and (ii) statutory liens for
amounts not yet delinquent or which are being contested in good faith. Prestige
Bancorp and Prestige Bank, as lessee, have the right under valid and subsisting
leases of real and personal properties used by Prestige Bancorp and Prestige
Bank in the conduct of their business to occupy or use all such properties as
presently occupied and used by each of them. Such existing leases and
commitments to lease constitute or will constitute operating leases for both tax
and financial accounting purposes and the lease expense and minimum rental
commitments with respect to such leases and lease commitments are as disclosed
in the notes to the Prestige Bancorp Financials.
(b) With respect to all material agreements pursuant to which Prestige
Bancorp or Prestige Bank has purchased securities subject to an agreement to
resell, if any, Prestige Bancorp or Prestige Bank has a lien or security
interest (which to Prestige Bancorp's Knowledge is a valid, perfected first
lien) in the securities or other collateral securing the repurchase agreement,
and the value of such collateral equals or exceeds the amount of the debt
secured thereby.
(c) Prestige Bancorp and Prestige Bank each currently maintains
insurance considered by Prestige Bancorp to be reasonable for their respective
operations. Prestige Bancorp has not received notice from any insurance carrier
that (i) such insurance will be canceled or that coverage thereunder will be
reduced or eliminated, or (ii) premium costs with respect to such policies of
insurance will be substantially increased. Except as set forth in Prestige
Bancorp Disclosure Schedule 3.09(c), there are presently no material claims
pending under such policies of insurance and no notices have been given by
Prestige Bancorp under such policies. All such insurance is valid and
enforceable and in full force and effect, and within the last three (3) years
Prestige Bancorp has received each type of insurance coverage for which it has
applied and during such periods has not been denied indemnification for any
material claims submitted under any of its insurance policies. Prestige Bancorp
Disclosure Schedule 3.09(c) identifies all policies of insurance maintained by
Prestige Bancorp and Prestige Bank.
Section 3.10. Legal Proceedings. Except as set forth in Prestige
Bancorp Disclosure Schedule 3.10, neither Prestige Bancorp nor Prestige Bank is
a party to any, and there are no pending or, to the Knowledge of either Prestige
Bancorp or Prestige Bank, threatened legal, administrative, arbitration or other
proceedings, claims (whether asserted or unasserted), actions
17
or governmental investigations or inquiries of any nature (i) against Prestige
Bancorp or Prestige Bank (other than routine bank regulatory examinations), (ii)
to which Prestige Bancorp's or Prestige Bank's assets are or may be subject,
(iii) challenging the validity or propriety of any of the transactions
contemplated by this Agreement, or (iv) which could adversely affect the ability
of Prestige Bancorp or Prestige Bank to perform under this Agreement, except for
any proceedings, claims, actions, investigations or inquiries referred to in
clauses (i) or (ii) which, if adversely determined, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect on
Prestige Bancorp and Prestige Bank, taken as a whole.
Section 3.11 Compliance With Applicable Law.
(a) Except as set forth in Prestige Bancorp Disclosure Schedule
3.11(a), since January 1, 1997, Prestige Bancorp and Prestige Bank each was, and
is, in substantial compliance with all applicable federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders or
decrees applicable to it, its properties, assets and deposits, its business, and
its conduct of business and its relationship with its employees, including,
without limitation, the Equal Credit Opportunity Act, the Fair Housing Act, the
Community Reinvestment Act of 1977, the Home Mortgage Disclosure Act and all
other applicable fair lending laws and other laws relating to discriminatory
business practices.
(b) Except as set forth in Prestige Bancorp Disclosure Schedule
3.11(b), Prestige Bancorp and Prestige Bank each has all material permits,
licenses, authorizations, orders and approvals of, and has made all filings,
applications and registrations with, all Regulatory Authorities that are
required in order to permit it to own or lease its properties and to conduct its
business as presently conducted; all such permits, licenses, certificates of
authority, orders and approvals are in full force and effect and, to the
Knowledge of Prestige Bancorp and Prestige Bank, no suspension or cancellation
of any such permit, license, certificate, order or approval is threatened or
will result from the consummation of the transactions contemplated by this
Agreement.
(c) Other than as set forth in Prestige Bancorp Disclosure Schedule
3.11(c), neither Prestige Bancorp nor Prestige Bank has received any
notification or communication from any Regulatory Authority (i) asserting that
Prestige Bancorp or Prestige Bank is not in material compliance with any of the
statutes, regulations or ordinances that such Regulatory Authority enforces;
(ii) threatening to revoke any license, franchise, permit or governmental
authorization that is material to Prestige Bancorp or Prestige Bank; (iii)
requiring or threatening to require Prestige Bancorp or Prestige Bank, or
indicating that Prestige Bancorp or Prestige Bank may be required, to enter into
a cease and desist order, agreement or memorandum of understanding or any other
agreement with any federal or state governmental agency or authority that is
charged with the supervision or regulation of banks or engages in the insurance
of bank deposits restricting or limiting, or purporting to restrict or limit, in
any material respect the operations of Prestige Bancorp or Prestige Bank,
including without limitation any restriction on the payment of dividends; or
(iv) directing, restricting or limiting, or purporting to direct, restrict or
limit, in any manner the operations of Prestige Bancorp or Prestige Bank,
including without limitation any restriction on the payment of dividends (any
such notice, communication, memorandum, agreement or order described in this
sentence is hereinafter referred to as a "Regulatory
18
Agreement"). Other than as set forth in Prestige Bancorp Disclosure Schedule
3.11(c), neither Prestige Bancorp nor Prestige Bank has consented to or entered
into any currently effective Regulatory Agreement. The most recent regulatory
rating given to Prestige Bank as to compliance with the Community Reinvestment
Act ("CRA") is satisfactory or better.
Section 3.12 Employee Benefit Plans.
(a) Prestige Bancorp Disclosure Schedule 3.12 includes a list of all
existing Compensation and Benefit Plans. Each Compensation and Benefit Plan that
is an "employee pension benefit plan" (as defined in Section 3(2) of ERISA) (a
"Pension Plan") and which is intended to be qualified under Section 401(a) of
the IRC (an "Prestige Bancorp or Prestige Bank Qualified Plan") has received a
favorable determination letter from the IRS or was a prototype document that has
received a favorable letter from the IRS, and Prestige Bancorp and Prestige Bank
have no Knowledge of any circumstances likely to result in revocation of any
such favorable determination letter. There has been no announcement or
commitment by Prestige Bancorp, Prestige Bank or any of its Subsidiaries to
create an additional Compensation and Benefit Plan, or to amend any Compensation
and Benefit Plan, except for amendments required by applicable law to maintain
its qualified status or otherwise, which do not materially increase the cost of
such Compensation and Benefit Plan.
(b) Each Compensation and Benefit Plan has been operated and
administered in all material respects in accordance with its terms and with
applicable law, including, but not limited to, ERISA, the Code, the Securities
Act, the Exchange Act, the Age Discrimination in Employment Act, and any
regulations or rules promulgated thereunder, and all material filings,
disclosures and notices required by ERISA, the Code, the Securities Act, the
Exchange Act, the Age Discrimination in Employment Act and any other applicable
law have been timely made. Except as set forth in Prestige Bancorp Disclosure
Schedule3.10(a), there is no material pending, or to the Knowledge of Prestige
Bancorp threatened, litigation, administrative action, suit or claim relating to
any of the Compensation and Benefit Plans (other than routine claims for
benefits). Neither Prestige Bancorp nor Prestige Bank has engaged in a
transaction, or omitted to take any action, with respect to any Compensation and
Benefit Plan that would reasonably be expected to subject Prestige Bancorp or
Prestige Bank to a tax or penalty imposed by either Section 4975 of the Code or
Section 502 of ERISA, assuming for purposes of Section 4975 of the Code that the
taxable period of any such transaction expired as of the date hereof and
subsequently expires as of the day next preceding the Merger Effective Date.
(c) No liability under Title IV of ERISA has been incurred by Prestige
Bancorp or Prestige Bank or any of its Subsidiaries with respect to any
Compensation and Benefit Plan which is subject to Title IV of ERISA, or with
respect to any "single-employer plan" (as defined in Section 4001(a) of ERISA)
("Prestige Bancorp or Prestige Bank Pension Plan") currently or formerly
maintained by Prestige Bancorp or Prestige Bank or any entity which is
considered one employer with Prestige Bancorp or Prestige Bank under Section
4001(b)(1) of ERISA or Section 414 of the IRC (an "ERISA Affiliate") since the
effective date of ERISA that has not been satisfied in full, and no condition
exists that presents a material risk to Prestige Bancorp or Prestige Bank or any
ERISA Affiliate of incurring a liability under such Title. No Prestige Bancorp
or Prestige Bank Pension Plan had an "accumulated funding deficiency" (as
defined in
19
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 Prestige Bancorp or Prestige Bank Pension Plan exceeds the
present value of the "benefit liabilities" (as defined in Section 4001(a)(16) of
ERISA) under such Prestige Bancorp or Prestige Bank Pension Plan as of the end
of the most recent plan year with respect to the respective Prestige Bancorp or
Prestige Bank 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 Prestige Bancorp or Prestige Bank Pension Plan as of the date hereof;
there is not currently pending with the PBGC any filing with respect to any
reportable event under Section 4043 of ERISA nor has any reportable event
occurred as to which a filing is required and has not been made (other than as
might be required with respect to this Agreement and the transactions
contemplated thereby). Neither Prestige Bancorp or Prestige Bank nor any ERISA
Affiliate has contributed to any "multiemployer plan," as defined in Section
3(37) of ERISA, on or after September 26, 1980. Except as set forth in Prestige
Bancorp's Disclosure Schedule 3.12, neither Prestige Bancorp or Prestige Bank,
nor any ERISA Affiliate, nor any Compensation and Benefit Plan, including any
Prestige Bancorp or Prestige Bank Pension Plan, nor any trust created
thereunder, nor any trustee or administrator thereof has engaged in a
transaction in connection with which Prestige Bancorp or Prestige Bank, any
ERISA Affiliate, and any Compensation and Benefit Plan, including any Prestige
Bancorp or Prestige Bank Pension Plan any such trust or any trustee or
administrator thereof, could reasonably be expected to be subject to either a
civil liability or penalty pursuant to Section 409, 502(i) or 502(l) of ERISA or
a tax imposed pursuant to Chapter 43 of the IRC.
(d) All material contributions required to be made under the terms of
any Compensation and Benefit Plan or ERISA Affiliate Plan or any employee
benefit arrangements to which Prestige Bancorp or Prestige Bank is a party or a
sponsor have been timely made, and all anticipated contributions and funding
obligations are accrued monthly on Prestige Bancorp's consolidated financial
statements to the extent required and in accordance with GAAP. Prestige Bancorp
and its Subsidiaries have expensed and accrued as a liability the present value
of future benefits under each applicable Compensation and Benefit Plan in
accordance with applicable laws and GAAP consistently applied. None of Prestige
Bancorp, Prestige Bank nor any ERISA Affiliate (x) has provided, or would
reasonably be expected to be required to provide, security to any Pension Plan
or to any ERISA Affiliate Plan pursuant to Section 401(a)(29) of the Code, or
(y) has taken any action, or omitted to take any action, that has resulted, or
would reasonably be expected to result, in the imposition of a Lien under
Section 412(n) of the Code or pursuant to ERISA.
(e) Neither Prestige Bancorp nor Prestige Bank has any obligations to
provide retiree health, life insurance, disability insurance, or other retiree
death benefits under any Compensation and Benefit Plan, other than benefits
mandated by Section 4980B of the Code. There has been no communication to
employees by Prestige Bancorp or Prestige Bank that would reasonably be expected
to promise or guarantee such employees retiree health, life insurance,
disability insurance, or other retiree death benefits.
(f) Prestige Bancorp and Prestige Bank do not maintain any Compensation
and Benefit Plans covering employees who are not United States residents.
20
(g) With respect to each Compensation and Benefit Plan, if applicable,
Prestige Bancorp has provided or made available to Northwest Bancorp copies of
the: (A) trust instruments and insurance contracts; (B) most recent Form 5500
filed with the IRS; (C) most recent actuarial report and financial statement;
(D) the most recent summary plan description; (E) most recent determination
letter issued by the IRS; (F) any Form 5310 or Form 5330 filed with the IRS; and
(G) most recent nondiscrimination tests performed under ERISA and the Code
(including 401(k) and 401(m) tests).
(h) Except as set forth in Prestige Bancorp Disclosure Schedules
3.02(a), 3.12, 3.18, and 5.11(e), the consummation of the Merger will not,
directly or indirectly (including, without limitation, as a result of any
termination of employment or service at any time prior to or following the
Merger Effective Date) (A) entitle any employee, consultant or director to any
payment or benefit (including severance pay, change in control benefit, or
similar compensation) or any increase in compensation, (B) result in the vesting
or acceleration of any benefits under any Compensation and Benefit Plan or (C)
result in any material increase in benefits payable under any Compensation and
Benefit Plan.
(i) Neither Prestige Bancorp nor Prestige Bank maintains any
compensation plans, programs or arrangements under which any payment is
reasonably likely to become non-deductible, in whole or in part, for tax
reporting purposes as a result of the limitations under Section 162(m) of the
Code and the regulations issued thereunder.
(j) Except as set forth in Prestige Bancorp Disclosure Schedule 3.12,
the consummation of the Merger will not, directly or indirectly (including
without limitation, as a result of any termination of employment or service at
any time prior to or following the Merger Effective Date), entitle any current
or former employee, director or independent contractor of Prestige Bancorp or
Prestige Bank to any actual or deemed payment (or benefit) which would
constitute a "parachute payment" (as such term is defined in Section 280G of the
Code).
(k) Except as set forth in Prestige Bancorp Disclosure Schedule 3.02(a)
or 3.12, there are no stock appreciation or similar rights, earned dividends or
dividend equivalents, or shares of restricted stock, outstanding under any of
the Compensation and Benefit Plan or otherwise as of the date hereof and none
will be granted, awarded, or credited after the date hereof, other than as set
forth in Section 5.11(g) hereof.
Section 3.13. Brokers, Finders and Financial Advisors. Except for the
engagement of FinPro, Inc. ("FinPro") in connection with the transactions
contemplated by this agreement, neither Prestige Bancorp nor Prestige Bank, nor
any of their respective officers, directors, employees or agents, has employed
any broker, finder or financial advisor in connection with the transactions
contemplated by this Agreement, or incurred any liability or commitment for any
fees or commissions to any such Person in connection with the transactions
contemplated by this Agreement, which has not been reflected in the Prestige
Bancorp Financials.
Section 3.14. Environmental Matters.
(a) With respect to Prestige Bancorp and Prestige Bank:
21
(i) Except as set forth in Prestige Bancorp Disclosure
Schedule 3.14, each of Prestige Bancorp and Prestige Bank, the Participation
Facilities, and, to Prestige Bancorp's Knowledge, the Loan Properties are, and
have been, in material compliance with, and are not liable under, any
Environmental Laws;
(ii) There is no suit, claim, action, demand, executive or
administrative order, directive, investigation or proceeding pending or, to
Prestige Bancorp's Knowledge, threatened, before any court, governmental agency
or board or other forum against it or Prestige Bank or any Participation
Facility (x) for alleged noncompliance (including by any predecessor) with, or
liability under, any Environmental Law or (y) relating to the presence of or
release (as defined herein) into the environment of any Hazardous Material (as
defined herein), whether or not occurring at or on a site owned, leased or
operated by it or Prestige Bank or any Participation Facility;
(iii) There is no suit, claim, action, demand, executive or
administrative order, directive, investigation or proceeding pending or, to
Prestige Bancorp's Knowledge threatened, before any court, governmental agency
or board or other forum relating to or against any Loan Property (or Prestige
Bancorp or Prestige Bank in respect of such Loan Property) (x) relating to
alleged noncompliance (including by any predecessor) with, or liability under,
any Environmental Law or (y) relating to the presence of or release into the
environment of any Hazardous Material, whether or not occurring at or on a site
owned, leased or operated by a Loan Property;
(iv) Except as set forth in Prestige Bancorp Disclosure
Schedule 3.14, to Prestige Bancorp's Knowledge, the properties currently owned
or operated by Prestige Bancorp or Prestige Bank (including, without limitation,
soil, groundwater or surface water on, under or adjacent to the properties, and
buildings thereon) are not contaminated with and do not otherwise contain any
Hazardous Material other than as permitted under applicable Environmental Law;
(v) Neither Prestige Bancorp nor Prestige Bank has received
any notice, demand letter, executive or administrative order, directive or
request for information from any federal, state, local or foreign governmental
entity or any other Person indicating that it may be in violation of, or liable
under, any Environmental Law;
(vi) To Prestige Bancorp's Knowledge, there are no underground
storage tanks on, in or under any properties owned or operated by Prestige
Bancorp or Prestige Bank or any Participation Facility, and no underground
storage tanks have been closed or removed from any properties owned or operated
by Prestige Bancorp or Prestige Bank or any Participation Facility; and
(vii) Except as set forth in Prestige Bancorp Disclosure
Schedule 3.14, to Prestige Bancorp's Knowledge, during the period of (s)
Prestige Bancorp's or Prestige Bank's ownership or operation of any of their
respective current properties or (t) Prestige Bancorp's or Prestige Bank's
participation in the management of any Participation Facility, there has been no
contamination by or release of Hazardous Materials in, on, under or affecting
such properties.
22
To Prestige Bancorp's Knowledge, prior to the period of (x) Prestige Bancorp's
or Prestige Bank's ownership or operation of any of their respective current
properties or (y) Prestige Bancorp's or Prestige Bank's participation in the
management of any Participation Facility, there was no contamination by or
release of Hazardous Material in, on, under or affecting such properties.
(b) "Loan Property" means any property in which the applicable party
(or a Subsidiary of it) holds a security interest, and, where required by the
context, includes the owner or operator of such property, but only with respect
to such property. "Participation Facility" means any facility in which the
applicable party (or a Subsidiary of it) participates in the management
(including all property held as trustee or in any other fiduciary capacity) and,
where required by the context, includes the owner or operator of such property,
but only with respect to such property.
Section 3.15. Loan Portfolio.
(a) The allowances for possible losses reflected in the consolidated
balance sheets contained in the Prestige Bancorp Financials as of and for the
period ending September 30, 2001 were adequate under GAAP, and the allowances
for possible losses shown on the consolidated balance sheets contained in the
Prestige Bancorp Financials as of and for periods ending after September 30,
2001 will be adequate as of the dates thereof under GAAP.
(b) Prestige Bancorp Disclosure Schedule 3.15(b) sets forth a listing,
as of the last Business Day prior to the date of this Agreement, by account, of:
(A) all loans (including loan participations) of Prestige Bancorp or Prestige
Bank that have been accelerated during the past twelve (12) months; (B) all loan
commitments or lines of credit of Prestige Bancorp or Prestige Bank that have
been terminated by Prestige Bancorp or Prestige Bank during the past twelve (12)
months by reason of a default or adverse developments in the condition of the
borrower or other events or circumstances affecting the credit of the borrower;
(C) all loans, lines of credit and loan commitments as to which Prestige Bancorp
or Prestige Bank has given written notice of its intent to terminate during the
past twelve (12) months; (D) with respect to all commercial loans (including
commercial real estate loans), all notification letters and other written
communications from Prestige Bancorp or Prestige Bank to any of their respective
borrowers, customers or other parties during the past twelve (12) months wherein
Prestige Bancorp or Prestige Bank has requested or demanded that actions be
taken to correct existing defaults or facts or circumstances which may become
defaults; (E) each borrower, customer or other party which has notified Prestige
Bancorp or Prestige Bank during the past twelve (12) months of, or has asserted
against Prestige Bancorp or Prestige Bank, in each case in writing, any "lender
liability" or similar claim, and, to the Knowledge of Prestige Bancorp, each
borrower, customer or other party which has given Prestige Bancorp or Prestige
Bank any oral notification of, or orally asserted to or against Prestige Bancorp
or Prestige Bank, any such claim; (F) all loans, (1) that are contractually past
due 90 days or more in the payment of principal and/or interest, (2) that are on
non-accrual status, (3) that as of the date of this Agreement are classified as
"Other Loans Specially Mentioned", "Special Mention", "Substandard", "Doubtful",
"Loss", "Classified", "Criticized", "Watch list" or words of similar import,
together with the principal amount of and accrued and unpaid interest on each
such Loan and the identity of the obligor
23
thereunder, (4) where a reasonable doubt exists as to the timely future
collectibility of principal and/or interest, whether or not interest is still
accruing or the loans are less than 90 days past due, (5) where the interest
rate terms have been reduced and/or the maturity dates have been extended
subsequent to the agreement under which the loan was originally created due to
concerns regarding the borrower's ability to pay in accordance with such initial
terms, or (6) where a specific reserve allocation exists in connection
therewith, and (G) all assets classified by Prestige Bancorp or Prestige Bank as
real estate acquired through foreclosure or in lieu of foreclosure, including
in-substance foreclosures, and all other assets currently held that were
acquired through foreclosure or in lieu of foreclosure.
(c) To the Knowledge of Prestige Bancorp and Prestige Bank, all loans
receivable (including discounts) and accrued interest entered on the books of
Prestige Bancorp and Prestige Bank arose out of bona fide arm's-length
transactions, were made for good and valuable consideration in the ordinary
course of Prestige Bancorp's or Prestige Bank's respective business, and the
notes or other evidences of indebtedness with respect to such loans (including
discounts) are to the Knowledge of Prestige Bancorp true and genuine and are
what they purport to be. Except as set forth in Prestige Bancorp Disclosure
Schedule 3.15, to the Knowledge of Prestige Bancorp, the loans, discounts and
the accrued interest reflected on the books of Prestige Bancorp and Prestige
Bank are subject to no defenses, set-offs or counterclaims (including, without
limitation, those afforded by usury or truth-in-lending laws), except as may be
provided by bankruptcy, insolvency or similar laws affecting creditors' rights
generally or by general principles of equity. All such loans are owned by
Prestige Bancorp or Prestige Bank free and clear of any Liens, except for Liens
for taxes, assessments, or similar charges, incurred in the ordinary course of
business and which are not yet due and payable, and Liens in favor of the FHLB
of Pittsburgh to secure advances of the FHLB of Pittsburgh to Prestige Bank. To
the Knowledge of Prestige Bancorp and Prestige Bank, after discussions with
representatives of the United States Department of Agriculture (the "USDA") in
the ordinary course of business concerning the administration of the loans and
loan participations hereinafter described, (i) all guarantees of the USDA of the
loans (including loan participations) of Prestige Bank are currently in full
force and effect, (ii) Prestige Bank has received no notice of dishonor,
compromise or discount from the USDA concerning such loans and loan
participations, and (iii) Prestige Bank has fulfilled all of its material
obligations and has undertaken all necessary and material steps to preserve its
rights under such guarantees. It is expressly understood that any breach of the
representations and warranties contained in the last sentence of this Section
3.15(c), shall not authorize Northwest Bancorp to pursue a remedy for a willful
breach under Section 8.01(b)(i) hereof.
(d) To the Knowledge of Prestige Bancorp and Prestige Bank, the notes
and other evidences of indebtedness evidencing the loans described in Section
3.15(c) above, and all pledges, mortgages, deeds of trust and other collateral
documents or security instruments relating thereto are, in all material
respects, valid, true and genuine, and what they purport to be.
(e) No representation or warranty set in this Section 3.15 shall be
deemed to be breached unless such breach, individually or in the aggregate, has
had or is reasonably likely to have a Material Adverse Effect on Prestige
Bancorp and Prestige Bank taken as a whole.
24
Section 3.16. Securities Documents. Prestige Bancorp has made available
to Northwest Bancorp copies of its (i) annual reports on Form 10-K for the years
ended December 31, 2000, 1999 and 1998, (ii) quarterly reports on Form 10-Q for
the quarters ended March 31, 2001, June 30, 2001 and September 30, 2001 and
(iii) proxy materials used or for use in connection with its meetings of
shareholders held in 2001, 2000 and 1999. Such reports and such proxy materials
complied, at the time filed with the SEC, in all material respects, with the
Securities Laws.
Section 3.17. Related Party Transactions. Except as described in
Prestige Bancorp's Proxy Statement distributed in connection with the 2001
annual meeting of shareholders or as otherwise set forth in Prestige Bancorp
Disclosure Schedule 3.17, neither Prestige Bancorp nor Prestige Bank is a party
to any transaction (including any loan or other credit accommodation) with any
Affiliate of Prestige Bancorp. All such transactions (a) were made in the
ordinary course of business, (b) were made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other Persons, and (c) did not involve more than
the normal risk of collectability or present other unfavorable features. No loan
or credit accommodation to any Affiliate of Prestige Bancorp or Prestige Bank is
presently in default or, during the three (3) year period prior to the date of
this Agreement, has been in default or has been restructured, modified or
extended. Neither Prestige Bancorp nor Prestige Bank has been notified that
principal and interest with respect to any such loan or other credit
accommodation will not be paid when due or that the loan grade classification
accorded such loan or credit accommodation by Prestige Bancorp is inappropriate.
Section 3.18. Schedule of Termination Benefits. Prestige Bancorp
Disclosure Schedules 3.02(a), 3.18 and 5.11(e) include schedules and/or
descriptions of all termination benefits and related payments that would or will
be payable to the individuals identified thereon, excluding any Prestige Bancorp
Options granted to such individuals, under any and all employment agreements,
special termination agreements, change in control agreements, supplemental
executive retirement plans, deferred bonus plans, deferred compensation plans,
salary continuation plans, or any compensation arrangement, or other pension
benefit or welfare benefit plan maintained by Prestige Bancorp or Prestige Bank
for the benefit of officers or directors of Prestige Bancorp or Prestige Bank
(the "Benefits Schedule"), assuming their employment or service is terminated as
of July 1, 2002 and the Closing Date occurs prior to such termination. No other
individuals are entitled to benefits under any such plans.
Section 3.19. Deposits. None of the deposits of Prestige Bancorp or
Prestige Bank is a "brokered deposit" as defined in 12 CFR Section 337.6(a)(2).
Section 3.20. Antitakeover Provisions Inapplicable. Except as set forth
in Prestige Bancorp Disclosure Schedule 3.20, the transactions contemplated by
this Agreement are not subject to the requirements of any "moratorium," "control
share," "fair price," "affiliate transactions," "business combination" or other
antitakeover laws and regulations of any state, including the provisions
Xxxxxxxxxxx X, X, X, X, X and J of Chapter 25 of the PBCA and the Takeover
Disclosure Law of the Commonwealth of Pennsylvania. The shareholder voting
restrictions contained in Article 6 of Prestige Bancorp's articles of
incorporation do not apply to the Merger. The affirmative vote of a majority of
the issued and outstanding shares of Prestige
25
Bancorp Common Stock is required to approve this Agreement under Prestige
Bancorp's articles of incorporation and the PBCA.
Section 3.21. Registration Obligations. Neither Prestige Bancorp nor
Prestige Bank is under any obligation, contingent or otherwise, that will
survive the Merger Effective Date by reason of any agreement to register any
transaction involving any of its securities under the Securities Act.
Section 3.22. Risk Management Instruments. All material interest rate
swaps, caps, floors, option agreements, futures and forward contracts and other
similar risk management arrangements, whether entered into for the account of
Prestige Bancorp or Prestige Bank or their customers (all of which are set forth
in Prestige Disclosure Schedule 3.22) were entered into in accordance with
prudent business practices and in all material respects in compliance with all
applicable laws, rules, regulations and regulatory policies and with
counterparties believed to be financially responsible at the time; and each of
them constitutes the valid and legally binding obligation of Prestige Bancorp or
Prestige Bank, enforceable in accordance with its terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general equity
principles), and is in full force and effect. Neither Prestige Bancorp, Prestige
Bank, nor to the Knowledge of Prestige Bancorp any other party thereto, is in
breach of any of its obligations under any such agreement or arrangement in any
material respect.
Section 3.23. Fairness Opinion. Prestige Bancorp has received a written
opinion from FinPro dated as of the date of this Agreement, to the effect that,
subject to the terms, conditions and qualifications set forth therein, as of the
date thereof, the Merger Consideration to be received by the shareholders of
Prestige Bancorp pursuant to this Agreement is fair to such shareholders from a
financial point of view.
Section 3.24. Dissenters' Rights. The transactions contemplated by this
Agreement shall not give rise to dissenters' rights under the PBCA or
Pennsylvania law or regulations, and the holders of shares of Prestige Bancorp
Common Stock shall not have the right to dissent and obtain payment of the fair
value of his shares under the PBCA.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF NORTHWEST SAVINGS BANK AND
NORTHWEST BANCORP
Northwest Bancorp and Northwest Savings Bank represent and warrant to
Prestige Bancorp and Prestige Bank that the statements contained in this Article
IV are correct and complete as of the date of this Agreement and will be correct
and complete as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement throughout this
Article IV), except as set forth in the Northwest Bancorp Disclosure Schedules
delivered by Northwest Bancorp to Prestige Bancorp on the date hereof and except
as to any representation or warranty which specifically relates to an earlier
date. Northwest
26
Bancorp and Northwest Savings Bank have made a good faith effort to ensure that
the disclosure on each schedule of the Northwest Bancorp Disclosure Schedules
corresponds to the Section referenced herein. However, for purposes of the
Northwest Bancorp Disclosure Schedules, any item disclosed on any schedule
therein is deemed to be fully disclosed with respect to all schedules under
which such item may be relevant.
Section 4.01. Organization.
(a) Northwest Bancorp and Northwest MHC are corporations duly
organized, validly existing and in good standing under the laws of the United
States, and are duly registered as savings association holding companies under
the HOLA. Northwest Bancorp has full corporate power and authority to carry on
its business as now conducted and is duly licensed or qualified to do business
in the states of the United States and foreign jurisdictions where its ownership
or leasing of property or the conduct of its business requires such
qualification, except where the failure to be so licensed or qualified would not
have a Material Adverse Effect on Northwest Bancorp.
(b) Northwest Savings Bank is a stock savings bank duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Pennsylvania. The deposits of Northwest Savings Bank are insured by the FDIC to
the fullest extent permitted by law, and all premiums and assessments required
to be paid in connection therewith have been paid when due by Northwest Savings
Bank. Each other Northwest Bancorp Subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization.
(c) Northwest Savings Bank is a member in good standing of the FHLB of
Pittsburgh and owns the requisite amount of stock therein.
(d) Prior to the date of this Agreement, Northwest Bancorp has
delivered to Prestige Bancorp true and correct copies of the charter and bylaws
of Northwest Bancorp and Northwest MHC, and Northwest Savings Bank has delivered
to Prestige Bancorp true and correct copies of its articles of incorporation and
bylaws.
(e) Northwest Merger Subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Pennsylvania, with its principal executive offices in Warren, Pennsylvania.
Northwest Merger Subsidiary is a wholly owned subsidiary of Northwest Bancorp.
Section 4.02. Authority; No Violation.
(a) Northwest MHC, Northwest Bancorp, Northwest Savings Bank and
Northwest Merger Subsidiary have full corporate power and authority to execute
and deliver this Agreement and Northwest Bancorp, Northwest Savings Bank and
Northwest Merger Subsidiary have full corporate power and authority to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Northwest Bancorp, Northwest Savings Bank and Northwest Merger
Subsidiary and the completion by Northwest Bancorp, Northwest Savings
27
Bank and Northwest Merger Subsidiary of the transactions contemplated hereby
have been duly and validly approved by the Boards of Directors of Northwest MHC,
Northwest Bancorp, Northwest Savings Bank and Northwest Merger Subsidiary and no
other corporate proceedings on the part of Northwest Bancorp, Northwest Savings
Bank or Northwest Merger Subsidiary are necessary to complete the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Northwest Bancorp, Northwest Savings Bank and Northwest Merger
Subsidiary and, subject to receipt of the Regulatory Approvals, constitutes the
valid and binding obligation of Northwest Bancorp, Northwest Savings Bank and
Northwest Merger Subsidiary, enforceable against Northwest Bancorp, Northwest
Savings Bank and Northwest Merger Subsidiary in accordance with its terms,
subject to applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally, and as to Northwest Savings Bank, the
conservatorship or receivership provisions of the FDIA, and subject, as to
enforceability, to general principles of equity.
(b) (A) The execution and delivery of this Agreement by Northwest
Bancorp, Northwest Savings Bank and Northwest Merger Subsidiary, (B) subject to
receipt of approvals from the Regulatory Authorities referred to in Section 4.03
hereof and Prestige Bancorp's and Northwest Bancorp's and Northwest Merger
Subsidiary's compliance with any conditions contained therein, the consummation
of the transactions contemplated hereby, and (C) compliance by Northwest
Bancorp, Northwest Savings Bank and Northwest Merger Subsidiary with any of the
terms or provisions hereof, will not (i) conflict with or result in a breach of
any provision of the charter or bylaws of Northwest Bancorp, or the articles of
incorporation or bylaws of any Northwest Bancorp Subsidiary; (ii) violate any
statute, code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to Northwest Bancorp or any Northwest Bancorp Subsidiary
or any of their respective properties or assets; or (iii) violate, conflict
with, result in a breach of any provisions of, constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a default),
under, result in the termination of, accelerate the performance required by, or
result in a right of termination or acceleration or the creation of any lien,
security interest, charge or other encumbrance upon any of the properties or
assets of Northwest Bancorp, Northwest Merger Subsidiary or Northwest Savings
Bank under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
investment or obligation to which Northwest Bancorp, Northwest Merger Subsidiary
or Northwest Savings Bank is a party, or by which they or any of their
respective properties or assets may be bound or affected, except for such
violations, conflicts, breaches or defaults described in clause (ii) or (iii)
hereof which, either individually or in the aggregate, will not have a Material
Adverse Effect on Northwest Bancorp.
Section 4.03. Consents. Except for the receipt of the Regulatory
Approvals and compliance with any conditions contained therein, the approval of
this Agreement by the shareholders of Prestige Bancorp, the filing of articles
of merger with the Office of the Pennsylvania Secretary of State pursuant to the
PBCA, and the filing of articles of combination with the OTS, no consents or
approvals of, or filings or registrations with, any public body or authority are
necessary, and no consents or approvals of any Persons are necessary, or will
be, in connection with (a) the execution and delivery of this Agreement by
Northwest Bancorp, Northwest Savings Bank and Northwest Merger Subsidiary, and
(b) the completion by Northwest Bancorp, Northwest Savings Bank and Northwest
Merger Subsidiary of the
28
transactions contemplated hereby. Northwest Bancorp has no reason to believe
that (i) any Regulatory Approvals will not be received or will be received with
conditions, limitations or restrictions unacceptable to it or that would
adversely impact the ability of Northwest Savings Bank and Northwest Bancorp to
complete the transactions contemplated by this Agreement or that (ii) any public
body or authority, the consent or approval of which is not required or to which
a filing is not required, will object to the completion of the transactions
contemplated by this Agreement.
Section 4.04. Financial Statements. Northwest Bancorp has made
available to Prestige Bancorp the Northwest Bancorp Financials. Except as set
forth in Northwest Bancorp Disclosure Schedule 4.04, the Northwest Bancorp
Financials have been prepared in accordance with GAAP and practices applied on a
consistent basis throughout the periods covered by such statements, and
(including the related notes where applicable) fairly present the consolidated
financial position, results of operations and cash flows of Northwest Bancorp
and the Northwest Bancorp Subsidiaries as of and for the respective periods
ending on the dates thereof, in accordance with GAAP applied on a consistent
basis during the periods involved, except as indicated in the notes thereto.
Section 4.05. Compliance With Applicable Law.
(a) Each of Northwest Bancorp and each Northwest Bancorp Subsidiary is
in substantial compliance with all applicable federal, state, local and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders or decrees
applicable to it, its properties, assets and deposits, its business, its conduct
of business and its relationship with its employees, including, without
limitation, the Equal Credit Opportunity Act, the Fair Housing Act, the
Community Reinvestment Act of 1977, the Home Mortgage Disclosure Act and all
other applicable fair lending laws and other laws relating to discriminatory
business practices.
(b) Each of Northwest Bancorp and each Northwest Bancorp Subsidiary has
all material permits, licenses, authorizations, orders and approvals of, and has
made all filings, applications and registrations with, all Regulatory
Authorities that are required in order to permit it to own or lease its
properties and to conduct its business as presently conducted; all such permits,
licenses, certificates of authority, orders and approvals are in full force and
effect and, to the best Knowledge of Northwest Bancorp, no suspension or
cancellation of any such permit, license, certificate, order or approval is
threatened or will result from the consummation of the transactions contemplated
by this Agreement.
(c) Neither Northwest Bancorp nor any Northwest Bancorp Subsidiary has
received any notification or communication from any Regulatory Authority (i)
asserting that Northwest Bancorp or any Northwest Bancorp Subsidiary is not in
material compliance with any of the statutes, regulations or ordinances which
such Regulatory Authority enforces; (ii) threatening to revoke any license,
franchise, permit or governmental authorization which is material to Northwest
Bancorp or any Northwest Bancorp Subsidiary; (iii) requiring or threatening to
require Northwest Bancorp or any Northwest Bancorp Subsidiary, or indicating
that Northwest Bancorp or any Northwest Bancorp Subsidiary may be required, to
enter into a cease and desist order, agreement or memorandum of understanding or
any other agreement with any federal or
29
state governmental agency or authority which is charged with the supervision or
regulation of banks or engages in the insurance of bank deposits restricting or
limiting, or purporting to restrict or limit, in any material respect the
operations of Northwest Bancorp or any Northwest Bancorp Subsidiary, including
without limitation any restriction on the payment of dividends; or (iv)
directing, restricting or limiting, or purporting to direct, restrict or limit,
in any manner the operations of Northwest Bancorp or any Northwest Bancorp
Subsidiary, including without limitation any restriction on the payment of
dividends (any such notice, communication, memorandum, agreement or order
described in this sentence is hereinafter referred to as a "Regulatory
Agreement"). Neither Northwest Bancorp nor any Northwest Bancorp Subsidiary has
consented to or entered into any currently effective Regulatory Agreement. The
most recent regulatory rating given to Northwest Savings Bank as to compliance
with the CRA is satisfactory or better.
Section 4.06. Financing. As of the Merger Effective Date and giving
effect to the Mergers, Northwest Bancorp and Northwest Savings Bank together
will have funds that are sufficient and available to meet their obligations
under this Agreement.
Section 4.07. Regulatory Approvals. Northwest Bancorp and Northwest
Savings Bank are not aware of any reason that they cannot obtain the Regulatory
Approvals, and neither Northwest Bancorp nor Northwest Savings Bank has received
any advice or information from any Regulatory Authority indicating that any such
approval will be denied or are doubtful.
Section 4.08. Tax Opinion. Northwest Bancorp and Northwest Savings Bank
are not aware of any reason that they cannot obtain the tax opinion referenced
in Section 6.02(h).
Section 4.09. Legal Proceedings. Neither Northwest Bancorp nor
Northwest Savings Bank is a party to any, and there are no pending or threatened
legal, administrative, arbitration or other proceedings, claims (whether
asserted or unasserted), actions or governmental investigations or inquiries of
any nature that could materially adversely affect the ability of Northwest
Bancorp or Northwest Savings Bank to perform under this Agreement.
ARTICLE V
COVENANTS OF THE PARTIES
Section 5.01. Conduct of Prestige Bancorp's Business.
(a) From the date of this Agreement to the Closing Date, Prestige
Bancorp and Prestige Bank each will conduct its business and engage in
transactions, including extensions of credit, only in the ordinary course and
consistent with past practice and policies, except as otherwise required or
contemplated by this Agreement or with the written consent of Northwest Bancorp.
Prestige Bancorp and Prestige Bank will use their reasonable good faith efforts,
to (i) preserve their business organizations intact, (ii) maintain good
relationships with employees, and (iii) preserve for themselves the goodwill of
their customers and others with whom business relationships exist. From the date
hereof to the Closing Date, except as otherwise consented to or approved by
Northwest Bancorp in writing (which approval will not be unreasonably delayed or
30
withheld) or as contemplated or required by this Agreement, Prestige Bancorp
will not, and Prestige Bancorp will not permit Prestige Bank to:
(i) amend any provision of its articles of incorporation,
charter or other chartering documents or bylaws, impose, or suffer the
imposition, on any share of stock held by Prestige Bancorp in Prestige Bank of
any material lien, charge or encumbrance or permit any such lien to exist, or
waive or release any material right or cancel or compromise any material debt or
claim;
(ii) change the number of shares of its authorized capital
stock or issue or grant any Right, option, warrant, call, commitment,
subscription, right to purchase or agreement of any character relating to its
authorized or issued capital stock, or any securities convertible into shares of
such capital stock, or split, combine or reclassify any shares of its capital
stock, redeem or otherwise acquire any shares of such capital stock, or sell or
issue any shares of capital stock (except pursuant to the exercise of Prestige
Bancorp Options);
(iii) declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of its capital stock, except that Prestige Bank may pay cash dividends
to Prestige Bancorp;
(iv) grant or agree to pay any bonus, severance or termination
to, or enter into, extend or amend any employment agreement, severance agreement
and/or supplemental executive agreement with, or increase in any manner the
compensation or fringe benefits of, any employee, officer or director, except
(i) as set forth in Prestige Bancorp Disclosure Schedules 3.12 or 3.18, (ii) for
normal increases in the ordinary course of business consistent with past
practice (it being understood that any salary increase of 4% or less shall be
deemed an increase in the ordinary course of business consistent with past
practice), and (iii) as otherwise provided in Section 5.11 hereof, or hire any
new employee without consulting with Northwest Bancorp prior to such hiring;
(v) enter into or, except as may be required by law to
maintain the qualified status thereof or otherwise required by law, modify any
pension, retirement, stock option, stock purchase, stock appreciation right,
stock grant, savings, profit sharing, deferred compensation, supplemental
retirement, consulting, bonus, group insurance or other employee benefit,
incentive or welfare contract, plan or arrangement, or any trust agreement
related thereto, in respect of any of its directors, officers or employees, or
former directors, officers or employees, except as set forth in Prestige Bancorp
Disclosure Schedule 5.01(a)(v); or make any contributions to any defined
contribution or defined benefit plan not in the ordinary course of business
consistent with past practice;
(vi) merge or consolidate with any other corporation; sell or
lease all or any substantial portion of its assets or business; make any
acquisition of all or any substantial portion of the business or assets of any
other Person, firm, association, corporation or business organization other than
in connection with foreclosures, settlements in lieu of foreclosure, troubled
loan or debt restructuring, or the collection of any loan or credit arrangement
between Prestige Bancorp, or Prestige Bank, and any other Person; enter into a
purchase and assumption
31
transaction with respect to deposits and liabilities; permit the revocation or
surrender of its certificate of authority to maintain, or file an application
for the relocation of, any existing branch office, or file an application for a
certificate of authority to establish a new branch office except as set forth in
Prestige Bancorp Disclosure Schedule 5.01(a)(vi);
(vii) sell or otherwise dispose of the capital stock of
Prestige Bank, or sell or otherwise dispose of any asset other than in the
ordinary course of business consistent with past practice; subject any asset to
a lien, pledge, security interest or other encumbrance (other than in connection
with deposits, the collections and/or processing of checks, drafts, notes,
instruments or letters of credit, Liens granted to the FHLB of Pittsburgh to
secure advance to Prestige Bank from the FHLB of Pittsburgh, repurchase
agreements, bankers acceptances, "treasury tax and loan" accounts established in
the ordinary course of business and transactions in "federal funds" and the
satisfaction of legal requirements in the exercise of trust powers) other than
in the ordinary course of business consistent with past practice; incur any
liability or indebtedness for borrowed money (or guarantee any indebtedness for
borrowed money), except in the ordinary course of business consistent with past
practice;
(viii) make any change in policies with regard to: the
extension of credit, or the establishment of reserves with respect to the
possible loss thereon or the charge off of losses incurred thereon; investments;
asset/liability management; or other material banking policies in any material
respect except as may be required by changes in applicable law or regulations,
or GAAP;
(ix) acquire any new loan participation or loan servicing
rights;
(x) except for any commitments disclosed on the Prestige
Bancorp Disclosure Schedule 5.01(a)(x): make any new loan or other credit
facility commitment (including without limitation, lines of credit and letters
of credit) in excess of $300,000; or increase, compromise, extend, renew or
modify any existing loan or commitment outstanding in excess of $300,000; or
make any new loan or other credit facility commitment (including without
limitation, lines of credit and letters of credit) in any amount if thereafter
the exposure to any one borrower or group of affiliated borrowers (including
obligors under loan participations) in the aggregate would exceed $750,000;
(xi) except for automatically renewing leases or as set forth
in Prestige Bancorp Disclosure Schedule 5.01(a)(xi), renew or extend any lease,
or by any act, or omission to act, allow any lease to renew or be extended;
(xii) make any capital expenditures in excess of $10,000
individually or $50,000 in the aggregate, other than pursuant to binding
commitments existing on the date hereof;
(xiii) except for the execution of, and as otherwise provided
for, contemplated in, or permitted by, this Agreement, the Schedules, and the
Exhibits hereto, take any action that would give rise to a right of payment to
any individual under any employment agreement, or take
32
any action that would give rise to a right of payment to any individual under
any Compensation and Benefit Plan;
(xiv) Except as set forth in Prestige Bancorp Disclosure
Schedule 5.01(a)(xiv), purchase any security for its investment portfolio not
rated "A" or higher by either Standard & Poor's Corporation or Xxxxx'x Investor
Services, Inc, or with a remaining term to maturity of more than five (5) years;
(xv) engage in any new loan transaction with an officer or
director;
(xvi) materially change the pricing strategies of Prestige
Bank with respect to its deposit or loan accounts;
(xvii) enter into any agreement, arrangement or commitment not
made in the ordinary course of business;
(xviii) change its method of accounting in effect prior to the
Merger Effective Date, except as required by changes in laws or regulations, by
Regulatory Authorities having jurisdiction over Prestige Bancorp or Prestige
Bank, or by GAAP concurred in by Prestige Bancorp's independent certified public
accountants;
(xix) enter into any futures contract, option, interest rate
caps, interest rate floors, interest rate exchange agreement or other agreement
or take any other action for purposes of hedging the exposure of its
interest-earning assets and interest-bearing liabilities to changes in market
rates of interest;
(xx) invest in "high risk" mortgage derivative investments as
defined by the Federal Financial Institutions Examination Council;
(xxi) discharge or satisfy any lien or encumbrance or pay any
material obligation or liability (absolute or contingent) other than at
scheduled maturity or in the ordinary course of business;
(xxii) enter or agree to enter into any agreement or
arrangement granting any preferential right to purchase any of its assets or
rights or requiring the consent of any party to the transfer and assignment of
any such assets or rights;
(xxiii) take any action that would result in any of the
representations or warranties of Prestige Bancorp or Prestige Bank contained in
this Agreement not to be true and correct in any material respect as of the
Merger Effective Date or that could reasonably result in a material delay in
consummation of the transactions contemplated hereby;
(xxiv) foreclose upon or otherwise take title to or possession
or control of any real property without first obtaining a phase one
environmental report thereon indicating that there is no apparent violation of
or liability under the Environmental Laws, provided, however, that it shall not
be required to obtain such a report with respect to one- to four-family,
33
non-agricultural residential property of five (5) acres or less to be foreclosed
upon unless it has reason to believe that such property might be in violation of
or require remediation under Environmental Laws;
(xxv) except in the ordinary course of business consistent
with past practice and involving an amount not in excess of $50,000, settle any
claim, action or proceeding; provided that no settlement shall be made if it
involves a precedent for other similar claims, which in the aggregate, could be
material to Prestige Bancorp and Prestige Bank, taken as a whole; or
(xxvi) agree to do any of the foregoing.
Except as otherwise set forth above in this Section 5.01, for purposes
of this Section 5.01, unless provided for in a business plan, budget or similar
document delivered to Northwest Bancorp prior to the date of this Agreement, it
shall not be considered in the ordinary course of business for Prestige Bancorp
or Prestige Bank to do any of the following: (i) make any sale, assignment,
transfer, pledge, hypothecation or other disposition of any assets having a book
or market value, whichever is greater, in the aggregate in excess of $100,000,
other than (w) pledges of, or Liens on, assets to secure government deposits,
advances made to Prestige Bank by FHLB of Pittsburgh, the payment of taxes,
assessments, or similar charges which are not yet due and payable, the payment
of deposits, repurchase agreements, bankers acceptances, "treasury tax and loan"
accounts consistent with past practices, or the collection and/or processing of
checks, drafts or letters of credit consistent with customary banking practices,
or to exercise trust powers, (x) sales of assets received in satisfaction of
debts previously contracted in the ordinary course of banking business, or (y)
issuance of loans, sales of previously purchased government guaranteed loans, or
transactions in the investment securities portfolio by Prestige Bancorp or a
Prestige Bank or repurchase agreements made, in each case, in the ordinary
course of banking business; or (ii) undertake or enter any lease, contract or
other commitment for its account, other than in the ordinary course of providing
credit to customers as part of its banking business, involving a payment by
Prestige Bancorp or Prestige Bank of more than $10,000 annually, or containing a
material financial commitment and extending beyond twelve (12) months from the
date hereof.
Section 5.02. Access; Confidentiality.
(a) Each of Prestige Bancorp and Prestige Bank shall permit Northwest
Bancorp and its representatives reasonable access to its properties, and shall
disclose and make available to them all books, papers and records relating to
the assets, properties, operations, obligations and liabilities of Prestige
Bancorp and Prestige Bank, including, but not limited to, all books of account
(including the general ledger), tax records, minute books of meetings of boards
of directors (and any committees thereof) (other than minutes of any
confidential discussion of this Agreement and the transactions contemplated
hereby), and shareholders, organizational documents, bylaws, material contracts
and agreements, filings with any regulatory authority, accountants' work papers,
litigation files, plans affecting employees, and any other business activities
or prospects in which Northwest Bancorp may have a reasonable interest (provided
that Prestige Bancorp shall not be required to provide access to any information
that would violate its, or Prestige Bank's, attorney-client privilege or would
violate applicable law, regulation, or
34
confidentiality agreement identified in Prestige Bancorp Disclosure Schedule
5.02(a)). Prestige Bancorp and Prestige Bank shall make their respective
officers, employees and agents and authorized representatives (including counsel
and independent public accountants) available to confer with Northwest Bancorp
and its representatives. In addition, from the date of this Agreement through
the Closing Date, Prestige Bancorp and Prestige Bank shall permit employees of
Northwest Bancorp reasonable access to information relating to problem loans,
loan restructurings and loan workouts of Prestige Bancorp and Prestige Bank. The
parties will hold all such information delivered in confidence to the extent
required by, and in accordance with, the provisions of confidentiality set forth
in a letter agreement, dated October 9, 2001, between Prestige Bancorp and
Northwest Bancorp (the "Confidentiality Agreement").
(b) Northwest Bancorp agrees to conduct such investigations and
discussions hereunder in a manner so as not to interfere unreasonably with
normal operations and customer and employee relationships of Prestige Bancorp
and Prestige Bank.
(c) If the transactions contemplated by this Agreement shall not be
consummated, Prestige Bancorp and Northwest Bancorp will each destroy or return
all documents and records obtained from the other party or its representatives,
during the course of its investigation and will cause all information with
respect to the other party obtained pursuant to this Agreement or preliminarily
thereto to be kept confidential, except to the extent such information becomes
public through no fault of the party to whom the information was provided or any
of its representatives or agents and except to the extent disclosure of any such
information is legally required. Prestige Bancorp and Northwest Bancorp shall
each give prompt written notice to the other party of any contemplated
disclosure where such disclosure is so legally required.
Section 5.03. Regulatory Matters and Consents.
(a) Northwest Bancorp and Northwest Savings Bank will prepare all
Applications, make all filings, and pay all filing fees for all Regulatory
Approvals necessary or advisable to consummate the transactions contemplated by
this Agreement; and Northwest Bancorp and Northwest Savings Bank will and use
their best efforts to obtain as promptly as practicable after the date hereof,
all Regulatory Approvals necessary or advisable to consummate the transactions
contemplated by this Agreement. The information supplied, or to be supplied, by
Northwest Bancorp or Northwest Savings Bank for inclusion in the Applications
will, at the time such documents are filed with any Regulatory Authority, be
accurate in all material aspects.
(b) Prestige Bancorp will furnish Northwest Bancorp with all
information concerning Prestige Bancorp and Prestige Bank as may be necessary or
advisable in connection with any Application or filing made by or on behalf of
Northwest Bancorp to any Regulatory Authority in connection with the
transactions contemplated by this Agreement. The information supplied, or to be
supplied, by Prestige Bancorp for inclusion in the Applications will, at the
time such documents are filed with any Regulatory Authority, be accurate in all
material respects.
(c) Northwest Bancorp and Prestige Bancorp will promptly furnish each
other with copies of all material written communications to, or received by them
from any Regulatory Authority, and notice of material oral communications with
the Regulatory Authorities, in
35
respect of the transactions contemplated hereby, except information that is
filed by either party that is designated as confidential.
(d) The parties hereto agree that they will consult with each other
with respect to the obtaining of all Regulatory Approvals and other necessary
permits, consents, approvals and authorizations of Regulatory Authorities.
Northwest Bancorp will furnish Prestige Bancorp with (i) copies of all
Applications prior to filing with any Regulatory Authority and provide Prestige
Bancorp a reasonable opportunity to provide changes to such Applications, (ii)
copies of all Applications filed by Northwest Bancorp and (iii) copies of all
Regulatory Reports filed by Northwest Bancorp after the date hereof.
(e) Prestige Bancorp and Prestige Bank, and Northwest Bancorp, will
cooperate with each other in the foregoing matters and will furnish the
responsible party with all information concerning it as may be necessary or
advisable in connection with any Application or filing (including the Proxy
Statement and any report filed with the SEC) made by or on behalf of Northwest
Bancorp or Prestige Bancorp to any Regulatory Authority in connection with the
transactions contemplated by this Agreement, and such information will be
accurate and complete in all material respects. In connection therewith, each
party will provide certificates and other documents reasonably requested by the
other.
Section 5.04. Taking of Necessary Action.
(a) Northwest Bancorp and Prestige Bancorp shall each use its best
efforts in good faith, and each of them shall cause its Subsidiaries to use
their best efforts in good faith, to (i) obtain any necessary shareholder
approval of their respective shareholders to complete the Merger, (ii) furnish
such information as may be required in connection with the preparation of the
documents referred to in Section 5.03 of this Agreement, and (iii) take or cause
to be taken all action necessary or desirable on its part using its best efforts
so as to permit completion of the Mergers and the other transactions
contemplated by this Agreement, including, without limitation, (A) obtaining the
consent or approval of each Person whose consent or approval is required or
desirable for consummation of the transactions contemplated hereby (including
assignment of leases without any change in terms), provided that neither
Prestige Bancorp nor Prestige Bank shall agree to make any payments or
modifications to agreements in connection therewith without the prior written
consent of Northwest Bancorp, and (B) requesting the delivery of appropriate
opinions, consents and letters from its counsel and independent auditors. No
party hereto shall take, or cause, or to the best of its ability permit to be
taken, any action that would substantially impair the prospects of completing
the Merger pursuant to this Agreement; provided that nothing herein contained
shall preclude Northwest Bancorp or Prestige Bancorp from exercising its rights
under this Agreement.
(b) Prestige Bancorp shall prepare, subject to the review and consent
of Northwest Bancorp with respect to matters relating to Northwest Bancorp and
the transactions contemplated by this Agreement, a Proxy Statement to be filed
by Prestige Bancorp with the SEC and to be mailed to the shareholders of
Prestige Bancorp in connection with the meeting of its shareholders and
transactions contemplated hereby, which Proxy Statement shall conform to all
applicable legal requirements. The parties shall cooperate with each other with
respect to the preparation of
36
the Proxy Statement. Prestige Bancorp shall, as promptly as practicable
following the preparation thereof, file the Proxy Statement with the SEC and
Prestige Bancorp shall use all reasonable efforts to have the Proxy Statement
mailed to shareholders as promptly as practicable after such filing. Prestige
Bancorp will promptly advise Northwest Bancorp of the time when the Proxy
Statement has been filed and mailed, or of any comments from the SEC or any
request by the SEC for additional information. The information to be supplied by
Northwest Bancorp for inclusion in the Proxy Statement will not, at the time the
Proxy Statement is mailed to Prestige Bancorp shareholders, contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein not misleading.
Section 5.05. Certain Agreements.
(a) From and after the Merger Effective Date, Northwest Bancorp and
Northwest Savings Bank, jointly and severally shall to the fullest extent
permitted under applicable law, agree to indemnify, defend and hold harmless
each present and former director and/or officer of Prestige Bancorp and Prestige
Bank as of the Merger Effective Date (the "Indemnified Parties") against all
losses, claims, damages, costs, expenses (including reasonable attorneys' fees
and expenses), liabilities, judgments or amounts paid in settlement (with the
approval of Northwest Bancorp, which approval shall not be unreasonably
withheld) or in connection with any claim, action, suit, proceeding or
investigation arising out of matters existing or occurring at or prior to the
Merger Effective Date (a "Claim") in which an Indemnified Party is, or is
threatened to be made, a party or a witness based in whole or in part on, or
arising in whole or in part out of, the fact that such Indemnified Party is or
was a director or officer of Prestige Bancorp or Prestige Bank, regardless of
whether such Claim is asserted or claimed prior to, at or after the Merger
Effective Date, to the fullest extent to which directors and officers of
Prestige Bancorp are entitled under the PBCA, Prestige Bancorp's articles of
incorporation and bylaws, or other applicable law as in effect on the date
hereof (and Northwest Bancorp shall pay expenses in advance of the final
disposition of any such action or proceeding to each Indemnified Party to the
extent permissible to a Pennsylvania corporation under the PBCA and Prestige
Bancorp's articles of incorporation and bylaws as in effect on the date hereof;
provided, that the Indemnified Party to whom expenses are advanced provides an
undertaking to repay such expenses if it is ultimately determined that such
Indemnified Party is not entitled to indemnification). All rights to
indemnification in respect of a Claim shall continue until the final disposition
of such Claim. No indemnification shall be required under this Section 5.05(a)
if prohibited by applicable law.
(b) Any Indemnified Party wishing to claim indemnification under
Section 5.05(a), upon learning of any Claim, shall promptly notify Northwest
Bancorp, but the failure to so notify shall not relieve Northwest Bancorp of any
liability it may have to such Indemnified Party except to the extent that such
failure materially prejudices Northwest Bancorp. In the event of any Claim, (1)
Northwest Bancorp shall have the right to assume the defense thereof (with
counsel reasonably satisfactory to the Indemnified Party) and shall not be
liable to such Indemnified Party for any legal expenses of other legal counsel
or any other expenses subsequently incurred by such Indemnified Party in
connection with the defense thereof, except that, if Northwest Bancorp elects
not to assume such defense or counsel for the Indemnified Party advises that
there are issues which raise conflicts of interest between Northwest Bancorp and
the Indemnified Party, the Indemnified Party may retain counsel satisfactory to
him, and Northwest Bancorp shall pay
37
all reasonable fees and expenses of such counsel for the Indemnified Party
promptly as statements therefore are received, provided further that Northwest
Bancorp shall in all Claims be obligated pursuant to this Section 5.05(b) to pay
for only one firm of counsel for all Indemnified Parties in connection with any
one action or separate but similar or related actions in the same jurisdiction
arising out of the same allegations or circumstances, (2) the Indemnified Party
will cooperate in the defense of any such Claim and (3) Northwest Bancorp shall
not be liable for any settlement effected without its prior written consent
(which consent shall not unreasonably be withheld).
(c) In the event Northwest Bancorp or any of is successors or assigns
(1) consolidates with or merges into any other Person and shall not continue or
survive such consolidation or merger, or (2) transfers or conveys all or
substantially all of its properties and assets to any Person, then, and in each
such case, to the extent necessary, proper provision shall be made so that the
successors and assigns of Northwest Bancorp assume the obligations set forth in
this Section 5.05.
(d) Northwest Bancorp shall maintain in effect for three (3) years from
the Merger Effective Date, the current directors' and officers' liability
insurance policy maintained by Prestige Bancorp (provided that Northwest Bancorp
may substitute therefor policies of at least the same coverage containing terms
and conditions which are not materially less favorable) with respect to matters
occurring at or prior to the Merger Effective Date. In connection with the
foregoing, Prestige Bancorp agrees to provide such insurer or substitute insurer
with such representations as such insurer may reasonably request with respect to
the reporting of any prior claims.
(e) The provisions of this Section 5.05 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and his or her
heirs and representatives.
Section 5.06. No Other Bids and Related Matters. From and after the
date hereof until the termination of this Agreement, neither Prestige Bancorp,
nor Prestige Bank, nor any of their respective officers, directors, employees,
representatives, agents or affiliates (including, without limitation, any
investment banker, attorney or accountant retained by Prestige Bancorp or
Prestige Bank), will, directly or indirectly, initiate, solicit or knowingly
encourage (including by way of furnishing non-public information or assistance),
or facilitate knowingly, any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Acquisition Proposal
(as defined below), or enter into or maintain or continue discussions or
negotiate with any Person in furtherance of such inquiries or to obtain an
Acquisition Proposal or agree to or endorse any Acquisition Proposal, or
authorize or permit any of its officers, directors, employees, investment
bankers, financial advisors, attorneys, accountants or other representatives to
take any such action, and Prestige Bancorp shall notify Northwest Bancorp orally
(within one Business Day) and in writing (as promptly as practicable) of all of
the relevant details relating to all inquiries and proposals that it or Prestige
Bank or any such officer, director employee, investment banker, financial
advisor, attorney, accountant or other representative may receive relating to
any of such matters. Provided, however, that nothing contained in this Section
5.06 shall prohibit the Board of Directors of Prestige Bancorp from (i)
furnishing information to, or entering into discussions or negotiations with any
Person that makes an unsolicited written,
38
bona fide proposal, to acquire Prestige Bancorp or Prestige Bank pursuant to a
merger, consolidation, share exchange, business combination, tender or exchange
offer or other similar transaction, if, and only to the extent that, (A) the
Board of Directors of Prestige Bancorp receives a written opinion from its
independent financial advisor that such proposal may be superior to the Merger
from a financial point-of-view to Prestige Bancorp's shareholders, (B) the Board
of Directors of Prestige Bancorp, after consultation with and based upon the
advice of independent legal counsel, determines in good faith that such action
is necessary for the Board of Directors of Prestige Bancorp to comply with its
fiduciary duties to shareholders under applicable law (such proposal that
satisfies (A) and (B) being referred to herein as a "Superior Proposal"), (C)
prior to furnishing such information to, or entering into discussions or
negotiations with, such person or entity, Prestige Bancorp (x) provides
reasonable notice to Northwest Bancorp to the effect that it is furnishing
information to, or entering into discussions or negotiations with, such person
or entity (identifying such person or entity) and (y) receives from such person
or entity an executed confidentiality agreement substantially identical in all
material respects to the Confidentiality Agreement, and (D) the Prestige Bancorp
meeting of shareholders convened to approve this Agreement has not occurred,
(ii) complying with Rule 14e-2 promulgated under the Exchange Act with regard to
a tender or exchange offer, or (iii) prior to the Prestige Bancorp Special
Meeting of Shareholders convened to approve this Agreement, failing to make or
withdrawing or modifying its recommendation to shareholders, because there
exists a Superior Proposal and based upon the advice of independent legal
counsel, determined in good faith that such action is necessary for such Board
of Directors to comply with its fiduciary duties under applicable law. For
purposes of this Agreement, "Acquisition Proposal" shall mean any of the
following (other than the transactions contemplated hereunder) involving
Prestige Bancorp or any of its subsidiaries: (i) any merger, consolidation,
share exchange, business combination, or other similar transactions; (ii) any
sale, lease, exchange, mortgage, pledge, transfer or other disposition of 20% or
more of the assets of Prestige Bancorp, taken as a whole, in a single
transaction or series of transactions; (iii) any tender offer or exchange offer
for 20% or more of the outstanding shares of capital stock of Prestige Bancorp
or the filing of a registration statement under the Securities Act in connection
therewith; or (iv) any public announcement of a proposal, plan or intention to
do any of the foregoing or any agreement to engage in any of the foregoing.
Section 5.07. Duty to Advise; Duty to Update Prestige Bancorp's
Disclosure Schedules. Prestige Bancorp shall promptly advise Northwest Bancorp
in writing of any change or event having a Material Adverse Effect on it or on
Prestige Bank or that it believes would or would be reasonably likely to cause
or constitute a material breach of any of its representations, warranties or
covenants set forth herein. Prestige Bancorp shall update Prestige Bancorp's
Disclosure Schedules as promptly as practicable after the occurrence of an event
or fact that, if such event or fact had occurred prior to the date of this
Agreement, would have been disclosed in the Prestige Bancorp Disclosure
Schedules. The delivery of such updated Schedule shall not relieve Prestige
Bancorp from any breach or violation of this Agreement and shall not have any
effect for the purposes of determining the satisfaction of the condition set
forth in Section 6.02(c) hereof.
Section 5.08. Conduct of Northwest Bancorp's and Northwest Savings
Bank's Business. From the date of this Agreement to the Closing Date, Northwest
Bancorp and Northwest Savings Bank each will use its best efforts to (x)
preserve its business organizations intact, (y) maintain
39
good relationships with its employees, and (z) preserve for itself the goodwill
of its customers. From the date of this Agreement to the Merger Effective Date,
neither Northwest Bancorp nor Northwest Savings Bank will (i) amend its charter
or bylaws in any manner inconsistent with the prompt and timely consummation of
the transactions contemplated by this Agreement; (ii) take any action that would
result in any of the representations and warranties of Northwest Bancorp or
Northwest Savings Bank set forth in this Agreement becoming untrue as of any
date after the date hereof or in any of the conditions set forth in Article VI
hereof not being satisfied, except in each case as may be required by applicable
law; (iii) take any action which would or is reasonably likely to adversely
effect or materially delay the receipt of the Regulatory Approvals or other
necessary approvals; (iv) take action which would or is reasonably likely to
materially and adversely affect Northwest Bancorp's or Northwest Savings Bank's
ability to perform its covenants and agreements under this Agreement; (v) take
any action that would result in any of the conditions to the Merger not being
satisfied; or (vi) agree to do any of the foregoing.
Section 5.09. Board and Committee Minutes. Prestige Bancorp and
Prestige Bank shall each provide to Northwest Bancorp, within thirty (30) days
after any meeting of their respective Board of Directors, or any committee
thereof, or any senior management committee, a copy of the minutes of such
meeting, except for information relating to the transactions contemplated by
this agreement and deemed confidential by the Board of Directors or subject to
the attorney-client privilege, except that with respect to any meeting held
within thirty (30) days of the Closing Date, such minutes shall be provided to
each party prior to the Closing Date.
Section 5.10. Undertakings by Prestige Bancorp and Northwest Bancorp.
(a) From and after the date of this Agreement:
(i) Voting by Directors. Simultaneous with the execution of
this Agreement, Prestige Bancorp's directors shall each enter into the agreement
set forth as Exhibit B to this Agreement;
(ii) Proxy Solicitor. Prestige Bancorp may retain a proxy
solicitor in connection with the solicitation of shareholder approval of this
Agreement;
(iii) Outside Service Bureau Contracts. If requested to do so
by Northwest Bancorp, Prestige Bancorp shall use its best efforts to obtain an
extension of any contract with an outside service bureau or other vendor of
services to Prestige Bancorp, on terms and conditions mutually acceptable to
Prestige Bancorp and Northwest Bancorp;
(iv) Board Meetings. Prestige Bancorp and Prestige Bank shall
permit a representative of Northwest Bancorp to attend any meeting of Prestige
Bancorp and/or Prestige Bank's Board of Directors or the Executive Committees
thereof (provided that neither Prestige Bancorp nor Prestige Bank shall be
required to permit the Northwest Bancorp representative to remain present during
any confidential discussion);
(v) List of Nonperforming Assets. Prestige Bancorp shall
provide Northwest Bancorp, within ten (10) days of the end of each calendar
month, a written list of nonperforming
40
assets (the term "nonperforming assets," for purposes of this Section
5.10(a)(v), means (i) loans that are "Troubled debt restructurings" as defined
in Statement of Financial Accounting Standards No. 15, "Accounting by Debtors
and Creditors for Troubled Debt Restructuring," (ii) loans on nonaccrual, (iii)
real estate owned, (iv) all loans ninety (90) days or more past due as of the
end of such month and (iv) impaired loans;
(vi) Reserves and Merger Related Costs. On or before the
Merger Effective Date, and at the request of Northwest Bancorp, Prestige Bancorp
shall establish such additional accruals and reserves as may be necessary to
conform the accounting reserve practices and methods (including credit loss
practices and methods) of Prestige Bancorp to those of Northwest Bancorp (as
such practices and methods are to be applied to Prestige Bancorp from and after
the Merger Effective Date) and Northwest Bancorp's plans with respect to the
conduct of the business of Prestige Bancorp following the Merger Effective Date
and otherwise to reflect Merger related expenses and costs incurred by Prestige
Bancorp; provided, however, that Prestige Bancorp shall not be required to take
any such action unless Northwest Bancorp agrees in writing that all conditions
to closing set forth in Section 6.02 have been satisfied or waived (except for
the expiration of any applicable waiting periods); prior to the delivery by
Northwest Bancorp of the writing referred to in the preceding clause, Prestige
Bancorp shall provide Northwest Bancorp a written statement, certified without
personal liability by the chief executive officer of Prestige Bancorp and dated
the date of such writing, that the representation made in Section 3.15 hereof is
true as of such date or, alternatively, setting forth in detail the
circumstances that prevent such representation from being true as of such date;
and no accrual or reserve made by Prestige Bancorp or Prestige Bank pursuant to
this Section 5.10(a)(vi), or any litigation or regulatory proceeding arising out
of any such accrual or reserve, shall constitute or be deemed to be a breach or
the occurrence of a Material Adverse Effect with respect to Prestige Bancorp or
Prestige Bank or violation of any representation, warranty, covenant, condition
or other provision of this Agreement or to constitute a termination event within
the meaning of Section 7.01(b) hereof. No action shall be required to be taken
by Prestige Bancorp pursuant to this Section 5.10(vi) if, in the opinion of
Prestige Bancorp's independent auditors, such action would contravene GAAP;
(vii) Shareholders' Meeting. Prestige Bancorp shall submit
this Agreement to its shareholders for approval at a special meeting to be held
as soon as practicable, and, subject to the next sentence, its Boards of
Director shall recommend approval of this Agreement to the Prestige Bancorp
shareholders. The Board of Directors of Prestige Bancorp may fail to make such a
recommendation, or withdraw, modify or change any such recommendation only in
connection with a Superior Proposal, as set forth in Section 5.06 of this
Agreement, and only if such Board of Directors, after having consulted with and
considered the advice of outside counsel to such Board, has determined that the
making of such recommendation, or the failure so to withdraw, modify or change
its recommendation, would constitute a breach of the fiduciary duties of such
directors under Pennsylvania law. Prestige Bancorp shall take all steps
necessary in order to hold a special meeting of shareholders for the purpose of
approving this Agreement within three (3) months of the date of this Agreement,
or as soon thereafter as is practicable. The Proxy Statement will not, at the
time it is mailed to Prestige Bancorp shareholders, contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make
the statements therein not misleading; except that Prestige Bancorp assumes no
responsibility for
41
any statement of a material fact, or failure to state a material fact necessary
in order to make the statements therein not misleading, concerning Northwest
Bancorp or Northwest Savings Bank that is included in the Proxy Statement and
that is provided in writing by Northwest Bancorp or Northwest Savings Bank; and
(b) From and after the date of this Agreement, Northwest Bancorp and
Prestige Bancorp shall each:
(i) Filings and Approvals. Cooperate with the other in the
preparation and filing, as soon as practicable, of (A) the Applications, (B) the
Proxy Statement, (C) all other documents necessary to obtain any other
approvals, consents, waivers and authorizations required to effect the
completion of the Merger and the other transactions contemplated by this
Agreement, and (D) all other documents contemplated by this Agreement;
(ii) Public Announcements. Cooperate and cause their
respective officers, directors, employees and agents to cooperate in good faith,
consistent with their respective legal obligations, in the preparation and
distribution of, and agree upon the form and substance of, any press release
related to this Agreement and the transactions contemplated hereby, and any
other public disclosures related thereto, including without limitation
communications to shareholders, internal announcements and customer disclosures,
but nothing contained herein shall prohibit any party from making any disclosure
that its counsel deems necessary, provided that the disclosing party notifies
the other party reasonably in advance of the timing and contents of such
disclosure;
(iii) Systems Conversions. Prestige Bancorp and Northwest
Bancorp shall meet on a regular basis to discuss and plan for the conversion of
Prestige Bank and Prestige Bancorp's data processing and related electronic
informational systems to those used by Northwest Savings Bank and Northwest
Bancorp, which planning shall include, but not be limited to, discussion of the
possible termination by Prestige Bancorp of third-party service provider
arrangements effective at the Merger Effective Date or at a date thereafter,
non-renewal of personal property leases and software licenses used by Prestige
Bancorp in connection with its systems operations, retention of outside
consultants and additional employees to assist with the conversion, and
outsourcing, as appropriate, of proprietary or self-provided system services, it
being understood that Prestige Bancorp shall not be obligated to take any such
action prior to the Merger Effective Date and, unless Prestige Bancorp otherwise
agrees, no conversion shall take place prior to the Merger Effective Date. In
the event that Prestige Bancorp takes, at the request of Northwest Bancorp, any
action relative to third parties to facilitate the conversion that results in
the imposition of any termination fees or charges, Northwest Bancorp shall
indemnify Prestige Bancorp for any such fee and charges, and the costs of
reversing the conversion process, if the Merger is not consummated for any
reason other than a breach of this Agreement by Prestige Bancorp, or a
termination of this Agreement under Section 7.01(c)(iv) or (d)(iv).
(iv) Maintenance of Insurance. Maintain, and cause their
respective Subsidiaries to maintain, insurance in such amounts as are reasonable
to cover such risks as are customary in relation to the character and location
of its properties and the nature of its business;
42
(v) Maintenance of Books and Records. Maintain, and cause
their respective Subsidiaries to maintain, books of account and records in
accordance with GAAP applied on a basis consistent with those principles used in
preparing the financial statements heretofore delivered;
(vi) Delivery of Securities Documents. Deliver to the other,
copies of all Securities Documents and Regulatory Reports simultaneously with
the filing thereof; and
(vii) Taxes. File all federal, state, and local tax returns
required to be filed by them or their respective Subsidiaries on or before the
date such returns are due (including any extensions) and pay all taxes shown to
be due on such returns on or before the date such payment is due, except those
being contested in good faith.
(c) Prestige Bancorp Disclosure Schedule 5.10(c) sets forth a good
faith estimate of Prestige Bancorp's budget of Merger-related expenses (the
"Budget") to be incurred and payable by Prestige Bancorp in connection with this
Agreement and the transactions contemplated hereby, including the fee and
expenses of counsel, accountants, investment bankers and other professionals.
Prestige Bancorp shall promptly notify Northwest Bancorp if or when it
determines that it expects to exceed its Budget. Promptly, but in any event
within 30 days, after the execution of this Agreement, Prestige Bancorp shall
ask all of its attorneys and other professionals to render current and correct
invoices for all unbilled time and disbursements. Prestige Bancorp shall accrue
and/or pay all of such amounts as soon as possible. Prestige Bancorp shall
request that its professionals render monthly invoices within 30 days after the
end of each month. Prestige Bancorp shall notify Northwest Bancorp monthly of
all out-of-pocket expenses, which Prestige Bancorp has incurred in connection
with this Agreement. No later than three (3) business days prior to the Closing
Date, Prestige Bancorp shall provide Northwest Bancorp with a statement of all
Merger-related expenses incurred and payable, and to be incurred and payable,
including the fees and expenses of counsel, accountants, investment bankers and
other professionals, and all costs and expenses associated with any legal
proceedings relating to this Agreement and the transactions contemplated
hereunder, through the merger Effective Date (the "Closing Expense Statement").
Section 5.11. Employee and Termination Benefits; Directors and
Management.
(a) Employee Benefits. Except as set forth in Prestige Bancorp
Disclosure Schedule 3.08 and as otherwise provided in this Section 5.11 of this
Agreement, as of or after the Merger Effective Date, and at Northwest Bancorp's
election and subject to the requirements of the Code, the Compensation and
Benefit Plans may continue to be maintained separately, consolidated, or
terminated. If requested by Northwest Bancorp in writing not later than ten (10)
days before the Merger Effective Date and provided that Northwest Bancorp has
indicated in writing that the conditions to its obligations set forth in Section
6.02 hereof have been satisfied or waived, Prestige Bancorp shall take such
steps within its power to effectuate a termination of any Compensation and
Benefit Plan as of the Merger Effective Date, provided that the Compensation and
Benefit Plan can be terminated within such period. In the event of a
consolidation of any or all of such plans or in the event of termination of any
Prestige Bancorp Compensation and Benefit Plan, except as otherwise set forth in
this Section 5.11, employees of Prestige Bancorp or
43
Prestige Bank who continue as employees of Northwest Bancorp or Northwest
Savings Bank after the Merger Effective Date ("Continuing Employees") shall be
eligible to participate in any Northwest Savings Bank employee plan of similar
character immediately upon such consolidation or as of the first entry date
coincident with or immediately following such termination. Continuing Employees
shall receive credit for service with Prestige Bancorp or Prestige Bank for
purposes of determining eligibility and vesting but not for purposes of accruing
or computing benefits under (i) any similar existing Northwest Bancorp benefit
plan except that Continuing Employees shall be treated as new employees under
the Northwest Savings Bank Employee Stock Ownership Plan and Northwest Savings
Bank's annual holiday bonus program, or (ii) any new Northwest Bancorp benefit
plan in which Continuing Employees or their dependents would be eligible to
enroll, subject to any pre-existing conditions or other exclusions to which such
person were subject under the Compensation and Benefit Plans. Such service shall
also apply for purposes of satisfying any waiting periods, actively-at-work
requirements and evidence of insurability requirements. Continuing Employees
shall have no rights in Northwest Savings Bank's terminated post-retirement
health benefit plan.
(b) In the event of the termination of any Prestige Bancorp or Prestige
Bank health, disability or life insurance plan, or the consolidation of any
Prestige Bancorp or Prestige Bank health, disability or life insurance plan with
any Northwest Bancorp or Northwest Savings Bank health, disability or life
insurance plan, Northwest Bancorp shall as soon as practicable make available to
Continuing Employees and their dependents employer-provided health, disability
or life insurance coverage on the same basis as it provides such coverage to
employees of Northwest Bancorp or Northwest Savings Bank. Unless a Continuing
Employee affirmatively terminates coverage under a Prestige Bancorp or Prestige
Bank health, disability or life insurance plan prior to the time that such
Continuing Employee becomes eligible to participate in the Northwest Bancorp or
Northwest Savings Bank health, disability or life insurance plan, no coverage of
any of the Continuing Employees or their dependents shall terminate under any of
the Prestige Bancorp or Prestige Bank health, disability or life insurance plans
prior to the time such Continuing Employees and their dependents become eligible
to participate in such plans, programs and benefits common to all employees of
Northwest Bancorp or Northwest Savings Bank and their dependents. Terminated
Prestige Bancorp and Prestige Bank employees and qualified beneficiaries will
have the right to continue coverage under group health plans of Northwest
Bancorp and/or Northwest Bancorp Subsidiaries in accordance with Code Section
4980B(f). Continuing Employees who become covered under a Northwest Bancorp or
Northwest Savings Bank health plan shall be required to satisfy the deductible
limitations of the Northwest Bancorp or Northwest Savings Bank health plan for
the plan year in which the coverage commences, without offset for deductibles
satisfied under the Prestige Bancorp or Prestige Bank health plan. In the event
of any termination of any Prestige Bancorp or Prestige Bank health plan, or
consolidation of any Prestige Bancorp or Prestige Bank health plan with any
health plan of Northwest Bancorp and/or Northwest Bancorp subsidiaries, any
pre-existing condition, limitation or exclusion in the health plan of Northwest
Bancorp and/or Northwest Bancorp subsidiaries shall not apply to Continuing
Employees or their covered dependents who have satisfied such pre-existing
condition exclusion waiting period under a Prestige Bancorp or Prestige Bank
health plan with respect to such pre-existing condition on the Merger Effective
Date and who then change that coverage to the health plan of Northwest Bancorp
and/or
44
Northwest Bancorp subsidiaries at the time such Continuing Employee is first
given the option to enroll in such health plan.
(c) If, after the Merger Effective Date, Northwest Savings Bank
continues in effect the 401(k) plan previously maintained by Prestige Bank,
Northwest Savings Bank shall not be required to cause employees who are covered
by such plan to participate in any other 401(k) plan with respect to any period
for which Northwest Savings Bank makes contributions to such Prestige Bank
401(k) plan provided that Northwest Bancorp and/or Northwest Savings Bank shall
maintain a contribution equal to the same level of contribution as provided in
the Northwest Savings Bank 401(k) plan. Nothing in this Section 5.11 shall be
construed to require any duplication of benefits.
(d) The Prestige Bank Employee Stock Ownership Plan (the "Prestige Bank
ESOP") shall be terminated as of the Merger Effective Date (all shares held by
the Prestige Bank ESOP shall be converted into the right to receive the Merger
Consideration), all outstanding Prestige Bank ESOP indebtedness shall be repaid
from the proceeds of the Merger Consideration for the unallocated shares of
Prestige Bancorp Common Stock, and the remaining balance shall be allocated to
Prestige Bank employees, as provided for in the Prestige Bank ESOP, subject to
the Code, ERISA, and rules and regulations promulgated thereunder. In connection
with the termination of the Prestige Bank ESOP, Prestige Bank shall promptly
apply to the IRS for a favorable determination letter on the tax-qualified
status of the Prestige Bank ESOP on termination and any amendments made to the
Prestige Bank ESOP in connection with its termination or otherwise, if such
amendments have not previously received a favorable determination letter from
the IRS with respect to their qualification under Code Section 401(a). Any and
all distributions from the Prestige Bank ESOP after its termination shall be
made consistent with the aforementioned determination letter.
(e) Northwest Bancorp shall honor the employment, change of control and
severance contracts or plans as set forth in Prestige Bancorp Disclosure
Schedule 5.11(e), and each of the persons identified in Prestige Bancorp
Disclosure Schedule 5.11(e) shall execute a termination and release agreement,
substantially in the form set forth in Prestige Bancorp Disclosure Schedule
5.11(e), releasing rights under such existing employment, change of control and
severance contracts or plans in consideration of the cash payment and benefits
identified in Prestige Bancorp Disclosure Schedule 5.11(e); provided that
notwithstanding anything contained therein or in this Agreement, no payment
shall be made under any employment, change of control and severance contract or
plan that would constitute a "parachute payment" (as such term is defined in
Section 280G of the Code). After the Merger Effective Date, any former employee
of Prestige Bancorp or Prestige Bank whose employment is actually terminated by
Northwest Bancorp within six (6) months of the Merger Effective Date, other than
the five (5) employees identified in Prestige Bancorp Disclosure Schedule
5.11(e), shall receive two (2) weeks salary for each year of service with a
minimum of eight (8) weeks of salary, and shall receive health benefit coverage
substantially similar to the coverage received by such person immediately prior
to termination of employment for a period of six months following termination of
employment or until enrolled in another health plan, whichever is first,
provided that any coverage period required under Code Section 4980B(f) shall run
concurrently with the period that health benefit coverage is provided to such
person(s) under this Section 5.11(e).
45
(f) Each person who serves on the Board of Directors of Prestige
Bancorp or Prestige Bank both on the date of this agreement and immediately
prior to the Merger Effective Date shall be offered a position as an advisory
director on Northwest Savings Bank's South Hills Advisory Board immediately
following the Merger Effective Date. For service on such advisory board for the
first year following the Merger Effective Date, the former chairman of the
Prestige Bancorp Board of Directors shall receive $1000 per month, all former
outside directors of Prestige Bancorp or Prestige Bank shall each receive $800
per month and all other former directors of Prestige Bancorp or Prestige Bank
shall each receive $500 per month, provided that no former director shall
receive fees for service during the first year following the Merger Effective
Date that exceed the rate at which director fees are paid on the date hereof.
After one year, fees paid to former directors of Prestige Bancorp or Prestige
Bank shall be modified to conform to Northwest Savings Bank's advisory board fee
schedule.
(g) After the effective date of this Agreement and prior to the Merger
Effective Date, Prestige Bancorp shall be permitted to grant awards of
forty-three (43) shares of restricted stock under the Prestige Bancorp
Restricted Stock Plan. Prior to the Merger Effective Date, Prestige Bancorp
shall take all actions necessary to terminate the Prestige Bancorp Stock Option
Plan and Prestige Bancorp Restricted Stock Plan, effective as of the Merger
Effective Date. Each person who becomes entitled to a cash payment in
cancellation of an option award shall be required to enter into an agreement and
release in complete and full satisfaction of all liabilities and obligations of
Prestige Bancorp or Prestige Bank under such award and consideration of such
cash payment. Each recipient of a restricted stock award for which vesting is
accelerated in connection with the Merger shall be required to enter into an
agreement and release acknowledging that, upon payment of the Merger
Consideration attributable to such shares, such person's rights under such award
shall be satisfied in full and the award terminate.
(h) Prestige Bancorp Disclosure Schedule 3.12 sets forth the accrued
vacation pay for employees as of the date of this Agreement that has been
accrued and expensed during 2001 based on hours worked during 2001, and the rate
of accrual of vacation pay during 2002. Upon Northwest Savings Bank's actual
termination prior to December 31, 2002 of any Prestige Bank employee identified
in Schedule 3.12 for whom vacation pay was accrued and expensed based on 2001
employment with Prestige Bank or for whom vacation pay was accrued during 2002
prior to the Merger Effective Date, such employee shall be entitled to payment
of any such accrued and expensed vacation pay. Any retained employee will be
entitled to any such unused vacation during 2002.
Section 5.12. Duty to Advise; Duty to Update Northwest Bancorp's
Disclosure Schedules. Northwest Bancorp shall promptly advise Prestige Bancorp
of any change or event having a Material Adverse Effect on it or on any
Northwest Bancorp Subsidiary or that it believes would or would be reasonably
likely to cause or constitute a material breach of any of its representations,
warranties or covenants set forth herein. Northwest Bancorp shall update the
Northwest Bancorp Disclosure Schedules as promptly as practicable after the
occurrence of an event or fact that, if such event or fact had occurred prior to
the date of this Agreement, would have been disclosed in the Northwest Bancorp
Disclosure Schedule. The delivery of such updated Schedules shall not relieve
Northwest Bancorp from any breach or violation of this
46
Agreement and shall not have any effect for the purposes of determining the
satisfaction of the condition set forth in Section 6.01(c) hereof.
Section 5.13. Bank and Related Merger Transactions.
(a) As soon as practicable following the Merger Effective Date,
Northwest Bancorp shall, and it shall cause Prestige Bancorp (as the Surviving
Corporation in the Merger) to, effect the Company Merger by executing a merger
agreement and filing articles of merger or a certificate of complete liquidation
with the Office of the Pennsylvania Secretary of State pursuant to the PBCA, and
articles of combination with the OTS. The Company Merger shall become effective
at the time (the "Subsequent Effective Time") specified in the articles of
merger or certificate of complete liquidation and/or articles of combination. As
a result of the Company Merger, the separate corporate existence of Prestige
Bancorp shall cease and Northwest Bancorp shall be the surviving corporation and
continue its corporate existence under the laws of the United States.
(b) As soon as practicable after consummation of the Company Merger,
Northwest Savings Bank and Prestige Bank shall take all actions necessary and
appropriate, including entering into an appropriate merger agreement in the form
attached to this Agreement as Exhibit A (the "Bank Merger Agreement"), to cause
Prestige Bank to effect the Bank Merger in accordance with applicable laws and
regulations and the terms of the Bank Merger Agreement. As a result of the Bank
Merger, the separate corporate existence of Prestige Bank shall cease and
Northwest Savings Bank shall be the surviving corporation and continue its
corporate existence under the laws of the Commonwealth of Pennsylvania.
ARTICLE VI
CONDITIONS
Section 6.01. Conditions to Prestige Bancorp's Obligations under this
Agreement. The obligations of Prestige Bancorp and Prestige Bank hereunder shall
be subject to satisfaction as of or prior to the Merger Effective Date of each
of the following conditions, unless waived by Prestige Bancorp pursuant to
Section 8.03 hereof:
(a) Corporate Proceedings. All action required to be taken by, or on
the part of, Northwest Bancorp, Northwest Savings Bank and Northwest Merger
Subsidiary to authorize the execution, delivery and performance of this
Agreement, and the consummation of the Merger, shall have been duly and validly
taken by Northwest Bancorp, Northwest Savings Bank and Northwest Merger
Subsidiary, and Prestige Bancorp shall have received certified copies of the
resolutions evidencing such authorizations;
(b) Covenants. The obligations and covenants of Northwest Bancorp,
Northwest Savings Bank and Northwest Merger Subsidiary required by this
Agreement to be performed by Northwest Bancorp, Northwest Savings Bank and
Northwest Merger Subsidiary as of or prior to the Merger Effective Date shall
have been duly performed and complied with in all material respects;
47
(c) Representations and Warranties. Each of the representations and
warranties of Northwest Bancorp and Northwest Savings Bank in this Agreement
that is qualified as to materiality shall be true and correct, and each such
representation or warranty that is not so qualified shall be true and correct in
all material respects, in each case as of the date of this Agreement, and
(except to the extent such representations and warranties speak as of an earlier
date) as of the Merger Effective Date;
(d) Approvals of Regulatory Authorities. Northwest Bancorp shall have
received all Regulatory Approvals and other approvals necessary to effect the
Merger; and all notice and waiting periods required thereunder shall have
expired or been terminated;
(e) No Injunction. There shall not be in effect any order, decree or
injunction of a court or agency of competent jurisdiction that enjoins or
prohibits consummation of the transactions contemplated hereby;
(f) Officer's Certificate. Northwest Bancorp shall have delivered to
Prestige Bancorp a certificate, dated the Closing Date and signed, without
personal liability, by its president, to the effect that the conditions set
forth in subsections (a) through (e) of this Section 6.01 have been satisfied,
to the Knowledge of the officer executing the same; and
(g) Approval of Prestige Bancorp's Shareholders. This Agreement shall
have been approved by the shareholders of Prestige Bancorp by such vote as is
required under the PBCA, Prestige Bancorp's certificate of incorporation and
bylaws, and under Nasdaq requirements applicable to it.
Section 6.02. Conditions to Northwest Bancorp's Obligations under this
Agreement. The obligations of Northwest Bancorp and Northwest Savings Bank
hereunder shall be subject to satisfaction as of or prior to the Merger
Effective Date of each of the following conditions, unless waived by Northwest
Bancorp pursuant to Section 8.03 hereof:
(a) Corporate Proceedings. All action required to be taken by, or on
the part of, Prestige Bancorp and Prestige Bank to authorize the execution,
delivery and performance of this Agreement, and the consummation of the Merger,
shall have been duly and validly taken by Prestige Bancorp and Prestige Bank,
and Northwest Bancorp shall have received certified copies of the resolutions
evidencing such authorizations;
(b) Covenants. The obligations and covenants of Prestige Bancorp and
Prestige Bank required by this Agreement to be performed as of or prior to the
Merger Effective Date shall have been duly performed and complied with in all
material respects;
(c) Representations and Warranties. Each of the representations and
warranties of Prestige Bancorp and Prestige Bank in this Agreement which is
qualified as to materiality shall be true and correct, and each such
representation or warranty that is not so qualified shall be true and correct in
all material respects, in each case as of the date of this Agreement, and
(except to the extent such representations and warranties speak as of an earlier
date) as of the Merger Effective Date;
48
(d) Approvals of Regulatory Authorities. Northwest Bancorp and
Northwest Savings Bank shall have received all Regulatory Approvals and other
approvals necessary to effect the Merger (without the imposition of any
condition that is in Northwest Bancorp's reasonable judgment unduly burdensome,
excluding standard conditions that are normally imposed by the Regulatory
Authorities in bank merger transactions); and all notice and waiting periods
required thereunder shall have expired or been terminated;
(e) No Injunction. There shall not be in effect any order, decree or
injunction of a court or agency of competent jurisdiction that enjoins or
prohibits consummation of the transactions contemplated hereby;
(f) No Material Adverse Effect. Except as set forth in Prestige Bancorp
Disclosure Schedule 3.07, since December 31, 2000, there shall not have occurred
any Material Adverse Effect with respect to Prestige Bancorp; and
(g) Officer's Certificate. Prestige Bancorp shall have delivered to
Northwest Bancorp a certificate, dated the Closing Date and signed, without
personal liability, by its chairman of the board or president, to the effect
that the conditions set forth in subsections (a) through (f) (but excluding (d))
of this Section 6.02 have been satisfied, to the Knowledge of the officer
executing the same.
(h) Tax Opinion. Northwest Bancorp shall have received an opinion or
opinions of Xxxx Xxxxxx Xxxxxx Xxxxxxxx & Xxxxxx, P.C., counsel to Northwest
Bancorp, substantially to the effect set forth on Exhibit C.
ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT
Section 7.01 Termination. This Agreement may be terminated at any time
prior to the Merger Effective Date, whether before or after approval of the
shareholders of Prestige Bancorp referred to in Section 5.10(a)(vii) hereof:
(a) by mutual written consent of the parties authorized by their
respective boards of directors;
(b) by Northwest Bancorp or Prestige Bancorp (i) if the Merger
Effective Date shall not have occurred on or prior to October 1, 2002, (ii) if a
vote of the shareholders of Prestige Bancorp is taken and such shareholders fail
to approve this Agreement at the special meeting of shareholders (or any
adjournment thereof) of Prestige Bancorp contemplated by Section 5.10(a)(vii)
hereof, or (iii) any Regulatory Authority formally disapproves the issuance of
any Regulatory Approval or other necessary approval, unless in the case of
clause (ii) of this Section 7.01(b) such failure is due to the failure of the
party seeking to terminate this Agreement to perform or observe its agreements
set forth herein to be performed or observed by such party on or before such
special meeting of shareholders, and in the case of clause (i) of this Section
49
7.01(b), the right to terminate shall not be available to any party whose
failure to perform an obligation under this Agreement has been the cause of, or
resulted in, the failure of the Merger and the other transactions contemplated
hereby to be consummated by October 1, 2002.
(c) by Northwest Bancorp if (i) at the time of such termination any of
the representations and warranties of Prestige Bancorp or Prestige Bank
contained in this Agreement shall not be true and correct to the extent that the
condition set forth in Section 6.02(b) or (c) hereof cannot be satisfied, (ii)
there shall have been any material breach of any covenant, agreement or
obligation of Prestige Bancorp or Prestige Bank hereunder and such breach shall
have not been remedied by Prestige Bancorp, Prestige Bank or any other Person
within thirty (30) days after receipt by Prestige Bancorp of notice in writing
from Northwest Bancorp specifying the nature of such breach and requesting that
it be remedied, (iii) any Regulatory Authority approves the transactions
contemplated but with conditions attached such that the requirements of Section
6.02(d) are not satisfied, (iv) Prestige Bancorp has received a Superior
Proposal, and in accordance with Section 5.06 of this Agreement, the Board of
Directors of Prestige Bancorp has entered into an acquisition agreement with
respect to the Superior Proposal or withdraws its recommendation of this
Agreement, fails to make such recommendation or modifies or qualifies its
recommendation in a manner adverse to Northwest Bancorp, or (v) any event occurs
such that a condition set forth in Sections 6.02 hereof which must be fulfilled
before Northwest Bancorp is obligated to consummate the Merger cannot be
fulfilled and non-fulfillment is not waived by Northwest Bancorp.
(d) by Prestige Bancorp if (i) at the time of such termination any of
the representations and warranties of Northwest Bancorp and Northwest Savings
Bank contained in this Agreement shall not be true and correct to the extent
that the condition set forth in Section 6.01(b) and/or (c) hereof cannot be
satisfied, (ii) there shall have been any material breach of any covenant,
agreement or obligation of Northwest Bancorp or Northwest Savings Bank hereunder
and such breach shall not have been remedied by Northwest Bancorp, Northwest
Savings Bank or any other Person within thirty (30) days after receipt by
Northwest Bancorp of notice in writing from Prestige Bancorp specifying the
nature of such breach and requesting that it be remedied, (iii) any event occurs
such that a condition set forth in Sections 6.01 hereof which must be fulfilled
before Prestige Bancorp is obligated to consummate the Merger cannot be
fulfilled and non-fulfillment is not waived by Prestige Bancorp, or (iv)
Prestige Bancorp has received a Superior Proposal, and in accordance with
Section 5.06 of this Agreement, the Board of Directors of Prestige Bancorp has
made a determination to accept such Superior Proposal subject to approval
thereof by the Prestige Bancorp's shareholders, and simultaneously with the
termination of this Agreement pursuant to this Section 7.01(d)(iv) Prestige
Bancorp enters into an acquisition agreement with respect to the Superior
Proposal, provided that Prestige Bancorp shall not terminate this Agreement
pursuant to this Section 7.01(d)(iv) and enter in a definitive agreement with
respect to the Superior Proposal until the expiration of five (5) business days
following Northwest Bancorp's receipt of written notice advising Northwest
Bancorp that Prestige Bancorp has received a Superior Proposal, specifying the
material terms and conditions of such Superior Proposal (and including a copy
thereof with all accompanying documentation, if in writing) identifying the
person making the Superior Proposal and stating whether Prestige Bancorp intends
to enter into a definitive agreement with respect to the Superior Proposal.
After providing such notice, Prestige Bancorp shall provide a reasonable
opportunity to Northwest
50
Bancorp during the five-day period to make such adjustments in the terms and
conditions of this Agreement as would enable Prestige Bancorp to proceed with
the Merger on such adjusted terms.
Section 7.02. Effect of Termination. Except as otherwise provided in
Section 8.01 of this Agreement, if this Agreement is terminated pursuant to
Section 7.01 hereof, this Agreement shall forthwith become void (other than
Section 5.02 and Section 8.01 hereof, which shall remain in full force and
effect), and there shall be no further liability on the part of Northwest
Bancorp or Prestige Bancorp to the other.
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Expenses.
(a) Except as otherwise provided in paragraphs (b) and (c) below, each
party hereto shall bear and pay all costs and expenses incurred by it in
connection with the transactions contemplated by this Agreement, including fees
and expenses of its own financial advisors, consultants, accountants and
counsel, and other costs and expenses ("Costs and Expenses").
(b) As an inducement to Northwest Bancorp to enter into this Agreement,
to incur the costs and expenses related hereto and to consummate the
transactions contemplated hereby, Prestige Bancorp hereby agrees to pay
Northwest Bancorp, and Northwest Bancorp shall be entitled to payment of, a fee
of $1.0 million (the "Northwest Fee"), within five (5) Business Days after
written demand for payment is made by Northwest Bancorp, following the
occurrence of any of the events set forth below:
(i) Northwest Bancorp terminates this Agreement pursuant to
Section 7.01(c)(i) or (c)(ii) as a result of either a willful breach of any
representation or warranty by Prestige Bancorp or the willful failure of
Prestige Bancorp to perform or observe its covenants, agreements or obligations
set forth herein to be performed on or prior to the Merger Effective Date;
(ii) Prestige Bancorp terminates this Agreement pursuant to
Section 7.01(d)(iv) or Northwest Bancorp terminates this Agreement pursuant to
Section 7.01(c)(iv); or
(iii) the entering into a definitive agreement by Prestige
Bancorp or Prestige Bank relating to a Superior Proposal or the consummation of
a Superior Proposal involving Prestige Bancorp or Prestige Bank within twelve
(12) months after the occurrence of any of the following: (i) the termination of
the Agreement by Northwest Bancorp pursuant to Section 7.01(c)(ii) following a
material willful breach of the Agreement by Prestige Bancorp; (ii) the failure
of the shareholders of Prestige Bancorp to approve this Agreement after the
occurrence of an Acquisition Proposal, or (iii) October 1, 2002 if prior thereto
the Prestige Bancorp shareholders have not adopted this Agreement.
51
If demand for payment of the Northwest Fee is made pursuant to this
Section 8.01(b) and payment is timely made, then none of Northwest MHC,
Northwest Bancorp or Northwest Savings Bank will have any other rights or claims
against Prestige Bancorp, Prestige Bank, and their respective officers,
directors, attorneys and financial advisors under this Agreement, it being
agreed that the acceptance of the Northwest Fee under this Section 8.01(b) will
constitute the sole and exclusive remedy of Northwest MHC, Northwest Bancorp and
Northwest Savings Bank against Prestige Bancorp, Prestige Bank, and their
respective officers, directors, attorneys and financial advisors.
(c) As a condition of and inducement to Prestige Bancorp to enter into
this Agreement and to incur the costs and expenses related to this Agreement and
to consummate the transactions contemplated hereby, Northwest Bancorp hereby
agrees to pay Prestige Bancorp, and Prestige Bancorp shall be entitled to
payment of a fee of $1.0 million (the "Prestige Fee"), within five (5) Business
Days after written demand for payment is made by Prestige Bancorp, if Prestige
Bancorp terminates this Agreement pursuant to Section 7.01(d)(i) or (d)(ii) as a
result of either a willful breach of any representation or warranty by Northwest
Bancorp or the willful failure of Northwest Bancorp to perform its covenants,
agreements or obligations herein to be performed on or prior to the Merger
Effective Date.
If demand for payment of the Prestige Fee is made pursuant to this
Section 8.01(c) and payment is timely made, then neither Prestige Bancorp nor
Prestige Bank will have any other rights or claims against Northwest MHC,
Northwest Bancorp, or Northwest Savings Bank, and their respective officers,
directors, attorneys and financial advisors under this Agreement, it being
agreed that the acceptance of the Prestige Fee under this Section 8.01(c) will
constitute the sole and exclusive remedy of Prestige Bancorp and Prestige Bank
against Northwest MHC, Northwest Bancorp and Northwest Savings Bank, and their
respective officers, directors, attorneys and financial advisors.
Section 8.02. Non-Survival of Representations and Warranties. All
representations, warranties and, except to the extent specifically provided
otherwise herein, agreements and covenants, other than those agreements in
Article II and covenants set forth in Sections 5.02(a), 5.05 and 5.11, which
will survive the Merger, shall terminate on the Merger Effective Date.
Section 8.03. Amendment, Extension and Waiver. Subject to applicable
law, at any time prior to the consummation of the transactions contemplated by
this Agreement, the parties may (a) amend this Agreement, (b) extend the time
for the performance of any of the obligations or other acts of either party
hereto, (c) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto, or (d) waive
compliance with any of the agreements or conditions contained in Articles V and
VI hereof or otherwise; provided, however, that after any approval of the
transactions contemplated by this Agreement by Prestige Bancorp's shareholders,
there may not be, without further approval of such shareholders, any amendment
of this Agreement which reduces the amount or changes the form of the
consideration to be delivered to Prestige Bancorp shareholders hereunder other
than as contemplated by this Agreement. This Agreement may not be amended except
by an instrument in writing authorized by the respective Boards of Directors and
signed, by duly authorized officers, on behalf of the parties hereto. Any
agreement on the part of a party hereto to any
52
extension or waiver shall be valid only if set forth in an instrument in writing
signed by a duly authorized officer on behalf of such party, but such waiver or
failure to insist on strict compliance with such obligation, covenant, agreement
or condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
Section 8.04. Entire Agreement. This Agreement, including the documents
and other writings referred to herein or delivered pursuant hereto, contains the
entire agreement and understanding of the parties with respect to its subject
matter. This Agreement supersedes all prior arrangements and understandings
between the parties, both written and oral with respect to its subject matter.
This Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors; provided, however, that nothing in this
Agreement, expressed or implied, is intended to confer upon any Person, other
than the parties hereto and their respective successors, any rights, remedies,
obligations or liabilities other than pursuant to Article II and Sections
5.02(a), 5.05 and 5.11(e).
Section 8.05. No Assignment. Neither party hereto may assign any of its
rights or obligations hereunder to any other person, without the prior written
consent of the other party hereto.
Section 8.06. Notices. All notices or other communications hereunder
shall be in writing and shall be deemed given if delivered personally, or mailed
by prepaid registered or certified mail (return receipt requested), addressed as
follows:
(a) If to Northwest Bancorp, Inc. to:
Northwest Bancorp, Inc.
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
President and Chief Executive Officer
with a copy to:
Xxxx Xxxxxx Xxxxxx Xxxxxxxx & Xxxxxx, PC
0000 Xxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx, XX 00000
Attention: Xxxx Xxxx, Esq.
Xxxxxxx X. Xxxxxx, Esq.
(b) If to Prestige Bancorp, to:
Prestige Bancorp, Inc.
000 Xxx Xxxxxxxx Xxxx
Xxxxxxxx Xxxxx, XX 00000
Attn: Xxxx X. Xxxxxx
President and Chief Executive Officer
53
with a copy to:
Xxxxxx Xxxxxxxxx, P.C.
Suite 0000
Xxx XXX Xxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx, Esq.
Section 8.07. Captions. The captions contained in this Agreement are
for reference purposes only and are not part of this Agreement.
Section 8.08. Counterparts. This Agreement may be executed in any
number of counterparts, and each such counterpart shall be deemed to be an
original instrument, but all such counterparts together shall constitute but one
agreement.
Section 8.09. Severability. If any provision of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provisions to other persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law.
Section 8.10. Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic internal law (including the law of
conflicts of law) of the Commonwealth of Pennsylvania, except to the extent
federal law and regulations applicable to financial institutions shall be
controlling.
Section 8.11. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that the provisions contained in
this Agreement were not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions thereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
[Remainder of Page Left Intentionally Blank]
54
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
NORTHWEST BANCORP, INC.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------------------
Xxxxxxx X. Xxxxxx
President and Chief Executive Officer
NORTHWEST MERGER SUBSIDIARY, INC.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------------------
Xxxxxxx X. Xxxxxx
President and Chief Executive Officer
NORTHWEST SAVINGS BANK
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------------------
Xxxxxxx X. Xxxxxx
President and Chief Executive Officer
NORTHWEST BANCORP, MHC
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------------------
Xxxxxxx X. Xxxxxx
President and Chief Executive Officer
PRESTIGE BANCORP, INC.
By: /s/ Xxxx X. Xxxxxx
----------------------------------------------
Xxxx X. Xxxxxx
President and Chief Executive Officer
PRESTIGE BANK, A FEDERAL SAVINGS BANK
By: /s/ Xxxx X. Xxxxxx
----------------------------------------------
Xxxx X. Xxxxxx
Chief Executive Officer
55
EXHIBIT A
PLAN OF MERGER
THIS PLAN OF MERGER (the "Plan") is dated as of ________, 2002, by and
between Northwest Savings Bank ("Northwest Savings Bank"), a Pennsylvania
savings bank, and Prestige Bank, a Federal Savings Bank ("Prestige Bank").
WHEREAS, pursuant to an Agreement and Plan of Merger (the "Merger
Agreement") dated as of February 7, 2002, by and among Northwest Bancorp, MHC,
Northwest Bancorp, Inc. ("Northwest Bancorp"), each a Federal corporation,
Northwest Merger Subsidiary, Inc. ("Northwest Merger Subsidiary"), a
Pennsylvania corporation and wholly-owned subsidiary of Northwest Bancorp,
Northwest Savings Bank, and Prestige Bancorp, Inc. ("Prestige Bancorp"), a
Pennsylvania corporation, and Prestige Bank, Northwest Merger Subsidiary will be
merged with and into Prestige Bancorp, and Prestige Bancorp as the surviving
entity will be merged with and into Northwest Bancorp, with Northwest Bancorp
surviving this merger, with the result that Prestige Bank will become a wholly
owned subsidiary of Northwest Bancorp (the "Company Merger"); and
WHEREAS, the Merger Agreement provides that immediately after the
Company Merger, Prestige Bank shall be merged with and into Northwest Savings
Bank with Northwest Savings Bank as the Surviving Bank (the "Merger");
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and in the Merger Agreement and for
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Prestige Bank and Northwest Savings Bank hereby agree that,
subject to the terms and conditions hereinafter set forth, and in accordance
with all applicable laws and regulations, Prestige Bank shall be merged with and
into Northwest Savings Bank on even date herewith (the "Merger"). The parties
hereto do hereby agree and covenant as follows:
ARTICLE I
DEFINITIONS
Except as otherwise provided herein, the capitalized terms set forth
below shall have the following meanings:
1.1 "DEPARTMENT" shall mean the Pennsylvania Department of Banking.
1.2 "EFFECTIVE TIME" shall mean the date and time at which the merger
contemplated by this Plan of Merger becomes effective as provided in Section 2.2
of this Plan of Merger.
1.3 "MERGER" shall refer to the merger of Prestige Bank with and into
Northwest Savings Bank as provided in Section 2.1 of this Plan of Merger.
A-1
1.4 "MERGING BANKS" shall collectively refer to Prestige Bank and
Northwest Savings Bank.
1.5 "SURVIVING BANK" shall refer to Northwest Savings Bank as the
surviving bank of the Merger.
ARTICLE II
TERMS OF THE MERGER
2.1 THE MERGER.
(a) Subject to the terms and conditions set forth in the Merger
Agreement, at the Effective Time, Prestige Bank shall be merged with and into
Northwest Savings Bank pursuant to Chapter 16 of the Banking Code of 1965.
Northwest Savings Bank shall be the Surviving Bank of the Merger and shall
continue to be governed by the Pennsylvania Banking Act of 1965.
(b) As a result of the Merger, (i) each share of common stock, par
value $_______ per share, of Prestige Bank issued and outstanding immediately
prior to the Effective Time shall be canceled and (ii) each share of common
stock, par value $.10 per share, of Northwest Savings Bank issued and
outstanding immediately prior to the Effective Time shall remain issued and
outstanding and shall constitute the only shares of capital stock of the
Surviving Bank issued and outstanding immediately after the Effective Time.
(c) At the Effective Time, the Surviving Bank shall be considered the
same business and corporate entity as each of the Merging Banks and thereupon
and thereafter all the property, rights, powers and franchises of each of the
Merging Banks shall vest in the Surviving Bank and the Surviving Bank shall be
subject to and be deemed to have assumed all of the debts, liabilities,
obligations and duties of each of the Merging Banks and shall have succeeded to
all of each of their relationships, fiduciary or otherwise, as fully and to the
same extent as if such property, rights, privileges, powers, franchises, debts,
obligations, duties and relationship had been originally acquired, incurred or
entered into by the Surviving Bank. The deposit taking offices of Prestige Bank
shall be operated by the Surviving Bank. In addition, any reference to either of
the Merging Banks in any contract, will or document, whether executed or taking
effect before or after the Effective Time, shall be considered a reference to
the Surviving Bank if not inconsistent with the other provisions of the
contract, will or document; and any pending, action or other judicial proceeding
to which either of the Merging Banks is a party shall not be deemed to have
abated or to have been discontinued by reason of the Merger, but may be
prosecuted to final judgment, order or decree in the same manner as if the
Merger had not been made or the Surviving Bank may be substituted as a party to
such action or proceeding, and any judgment, order or decree may be rendered for
or against it that might have been rendered for or against either of the Merging
Banks if the Merger had not occurred.
A-2
2.2 EFFECTIVE TIME. The Merger shall become effective as of the date
the Articles of Merger are filed with the Pennsylvania Department of State.
2.3 NAME OF SURVIVING BANK. The name of the Surviving Bank shall be
"Northwest Savings Bank."
2.4 CHARTER. On and after the Effective Time, the Articles of
Incorporation of Northwest Savings Bank shall be the Articles of Incorporation
of the Surviving Bank until amended in accordance with applicable law.
2.5 BYLAWS. On and after the Effective Time, the Bylaws of Northwest
Savings Bank shall be the Bylaws of the Surviving Bank until amended in
accordance with applicable law.
2.5 DIRECTORS AND OFFICERS. Except as otherwise provided in the Merger
Agreement, on and after the Effective Time, until changed in accordance with the
Articles of Incorporation and Bylaws of the Surviving Bank, (i) the directors of
the Surviving Bank shall be the directors of Northwest Savings Bank immediately
prior to the Effective Time and (ii) the officers of the Surviving Bank shall be
the officers of Northwest Savings Bank immediately prior to the Effective Time.
The directors and officers of the Surviving Bank shall hold office in accordance
with the Articles of incorporation and Bylaws of the Surviving Bank.
2.6 LIQUIDATION ACCOUNT. The liquidation account of Prestige Bank
established pursuant to regulations of the Office of Thrift Supervision in
connection with the conversion of Prestige Bank from mutual to stock form shall
be assumed by the Surviving Bank as of the Effective Time.
ARTICLE III
MISCELLANEOUS
3.1 CONDITIONS PRECEDENT. The respective obligations of each party
under this Plan of Merger shall be subject to (i) the satisfaction, or waiver by
the party permitted to do so, of the conditions set forth in Article VI of the
Merger Agreement and (ii) the approval of this Plan of Merger by Northwest
Bancorp as sole stockholder of Prestige Bank.
3.2 TERMINATION. This Plan of Merger shall be terminated automatically
without further act or deed of either of the parties hereto in the event of the
termination of the Merger Agreement in accordance with Section 7.01 thereof.
3.3 AMENDMENTS. To the extent permitted by the Banking Code of 1965,
this Plan of Merger may be amended by a subsequent writing signed by the parties
hereto upon the approval of the board of directors of each of the parties
hereto.
3.4 SUCCESSORS. This Plan of Merger shall be binding on the successors
of Prestige Bank and Northwest Savings Bank.
A-3
IN WITNESS WHEREOF, Prestige Bank and Northwest Savings Bank have
caused this Plan of Merger to be executed by their duly authorized officers as
of the day and year first above written.
NORTHWEST SAVINGS BANK
ATTEST:
By:
----------------------------- --------------------------------------
Xxxxxxx X. XxXxxxx Xxxxxxx X. Xxxxxx
Secretary President and Chief Executive Officer
PRESTIGE BANK, A FEDERAL SAVINGS BANK
ATTEST:
By:
----------------------------- --------------------------------------
Xxxxxxxx X. Xxxxx Xxxx X. Xxxxxx
Secretary President and Chief Executive Officer
A-4
EXHIBIT B
February ___, 2002
Northwest Bancorp, Inc.
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxx 00000-0000
Ladies and Gentlemen:
Northwest Bancorp, MHC, Northwest Bancorp, Inc. ("Northwest Bancorp"),
Northwest Savings Bank ("Northwest Savings Bank"), Northwest Merger Subsidiary
("Northwest Merger Subsidiary"), and Prestige Bancorp, Inc. ("Prestige Bancorp")
and Prestige Bank, a Federal Savings Bank ("Prestige Bank") have entered into an
Agreement and Plan of Merger dated as of February 7, 2001 (the "Merger
Agreement"), pursuant to which, and subject to the terms and conditions set
forth therein: (a) Northwest Merger Subsidiary will merge with and into Prestige
Bancorp, with Prestige Bancorp surviving the merger, to be followed by the
merger of Prestige Bancorp with and into Northwest Bancorp, with Northwest
Bancorp surviving the merger; (b) shareholders of Prestige Bancorp will receive
$13.75 in cash in exchange for each share of Prestige Bancorp Common Stock; and
(c) thereafter Prestige Bank will be merged with and into Northwest Savings
Bank, with Northwest Savings Bank being the surviving institution.
Northwest Bancorp has requested, as a condition to its execution and
delivery to Prestige Bancorp of the Merger Agreement, that the undersigned,
being directors and executive officers of Prestige Bancorp, execute and deliver
to Northwest Bancorp this Letter Agreement.
Each of the undersigned, in order to induce Northwest Bancorp to
execute and deliver to Prestige Bancorp the Merger Agreement, hereby
irrevocably:
(a) Agrees to be present (in person or by proxy) at all meetings of
shareholders of Prestige Bancorp called to vote for approval of the Merger
Agreement so that all shares of common stock of Prestige Bancorp then
beneficially owned by the undersigned, and as to which the undersigned has
voting power, will be counted for the purpose of determining the presence of a
quorum at such meetings and to vote all such shares (i) in favor of approval and
adoption of the Merger Agreement and the transactions contemplated thereby
(including any amendments or modifications of the terms thereof approved by the
Board of Directors of Prestige Bancorp), and (ii) against approval or adoption
of any other merger, business combination, recapitalization, partial liquidation
or similar transaction involving Prestige Bancorp;
(b) Agrees not to vote or execute any written consent to rescind or
amend in any manner any prior vote or written consent, as a shareholder of
Prestige Bancorp, to approve or adopt the Merger Agreement;
B-1
(c) Agrees not to sell, transfer or otherwise dispose of any common
stock of Prestige Bancorp on or prior to the date of the meeting of Prestige
Bancorp shareholders to vote on the Merger Agreement, except for transfers
effected in the undersigned's capacity as a fiduciary, and except for transfers
to a lineal descendant or a spouse of the undersigned, or to a trust for the
benefit of one or more of the foregoing persons, providing that in each such
case the transferee agrees in writing to be bound by the terms of this Letter
Agreement; and
(d) Represents that the undersigned has the capacity to enter into this
Letter Agreement and that it is a valid and binding obligation enforceable
against the undersigned in accordance with its terms, subject to bankruptcy,
insolvency and other laws affecting creditors' rights and general equitable
principles.
The obligations set forth herein shall terminate concurrently with any
termination of the Merger Agreement.
----------------------------
This Letter Agreement may be executed in two or more counterparts, each
of which shall be deemed to constitute an original, but all of which together
shall constitute one and the same Letter Agreement.
----------------------------
The undersigned intends to be legally bound hereby.
Sincerely,
-------------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
B-2
EXHIBIT C
[MATTERS TO BE COVERED IN OPINION OF COUNSEL TO BE DELIVERED TO NORTHWEST
BANCORP PURSUANT TO SECTION 6.02(H) OF THE AGREEMENT]
1. The formation of Northwest Merger Subsidiary and its merger with and into
Prestige Bancorp will be disregarded for federal income tax purposes, and the
transaction will be treated as a purchase by Northwest Bancorp of the
outstanding shares of Prestige Bancorp Common Stock. See 90-95, 1990-2 C.B. 67;
Rev. Rul. 73~27, 1973-2 C.B. 301. The purchase will be treated as a qualified
stock purchase within the meaning of Section 338(d)(3) of the Code.
2. For federal income tax purposes, no gain or loss will be recognized by
Northwest Bancorp, Northwest Merger Subsidiary or Prestige Bancorp as a result
of the Merger.
3. For federal income tax purposes, the statutory merger of Prestige Bancorp
into Northwest Bancorp pursuant to applicable law (the "Company Merger") will be
treated as a distribution by Prestige Bancorp in complete liquidation within the
meaning of Section 332 of the Code. See Section 1.332-2(d) of the Treasury
Regulations.
4. For federal income tax purposes, no gain or loss will be recognized by
Northwest Bancorp on its receipt of the assets of Prestige Bancorp distributed
in the Company Merger. See Section 332(a) of the Code.
5. For federal income tax purposes, no gain or loss will be recognized by
Prestige Bancorp on the distribution of its assets to Northwest Bancorp in the
Company Merger. See Section 337(a) of the Code.
6. For federal income tax purposes, the basis of the assets of Prestige Bancorp
in the hands of Northwest Bancorp will be the same as the basis of those assets
in the hands of Prestige Bancorp immediately preceding the Company Merger. See
Section 334(b)(1) of the Code.
7. The holding period of the assets received by Northwest Bancorp in the Company
Merger will include the period during which such property was held by Prestige
Bancorp. See Section 1223(2) of the Code.
8. As provided in Section 381(c)(2) of the Code and Section 1.381(c)(2)-1 of the
Treasury Regulations, Northwest Bancorp will succeed to and take into account
the earnings and profits, or deficit in earnings and profits, of Prestige
Bancorp as of the date of the Company Merger, subject to the limitations of
Sections 382 and 383 of the Code.
9. For federal income tax purposes, the statutory merger of Prestige Bank into
Northwest Savings Bank pursuant to applicable law (the "Bank Merger") will be
treated as tax-free reorganization within the meaning of Section 368(a) of the
Code.
10. For federal income tax purposes, no gain or loss will be recognized by
Northwest Savings Bank on its receipt of the assets of Prestige Bank in
constructive exchange for Northwest Savings Bank common stock in the Bank
Merger. See Code. Section 1032(a).
C-1
11. For federal income tax purposes, no gain or loss will be recognized by
Prestige Bank on the distribution of its assets to Northwest Savings Bank in
constructive exchange for Northwest Savings Bank common stock and the assumption
by Northwest Savings Bank of the liabilities of Prestige Bank in the Bank
Merger. Code Sections 361(a) and 357(a).
12. For federal income tax purposes, the basis of the assets of Prestige Bank in
the hands of Northwest Savings Bank will be the same as the basis of those
assets in the hands of Prestige Bank immediately preceding the Bank Merger. See
Section 362(b) of the Code.
13. The holding period of the assets received by Northwest Savings Bank in the
Bank Merger will include the period during which such property was held by
Prestige Bank. See Section 1223(2) of the Code.
14. As provided in Section 381(c)(2) of the Code and Section 1.381(c)(2)-1 of
the Treasury Regulations, Northwest Savings Bank will succeed to and take into
account the earnings and profits, or deficit in earnings and profits, of
Prestige Bank as of the date of the Bank Merger, subject to the limitations of
Sections 382 and 383 of the Code.
C-2
