EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
F&M BANCORP
AND
PATAPSCO VALLEY BANCSHARES, INC.
DATED AS OF SEPTEMBER 7, 1999
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of September 7, 1999 by
and between F&M Bancorp, a Maryland corporation ("Buyer"), and Patapsco
Valley Bancshares, Inc., a Maryland corporation (the "Company"). (Buyer and
the Company are sometimes collectively referred to herein as the
"Constituent Corporations".)
WHEREAS, the Boards of Directors of Buyer and the Company have
determined that it is in the best interests of their respective companies
and their stockholders to consummate the business combination transaction
provided for herein in which the Company will, subject to the terms and
conditions set forth herein, merge (the "Merger") with and into Buyer; and
WHEREAS, as soon as practicable after the execution and
delivery of this Agreement, Farmers & Mechanics National Bank, a banking
association organized under the laws of the United States and a wholly
owned subsidiary of Buyer ("Buyer Bank," and sometimes referred to herein
as the "Surviving Bank"), and Commercial and Farmers Bank, a
Maryland-chartered commercial bank and a wholly owned subsidiary of the
Company (the "Company Bank"), will enter into a Subsidiary Agreement and
Plan of Merger in substantially the form set forth on Exhibit A hereto (the
"Bank Merger Agreement") providing for the merger (the "Subsidiary Merger")
of the Company Bank with and into Buyer Bank, and it is intended that the
Subsidiary Merger be consummated immediately following the consummation of
the Merger; and
WHEREAS, the parties desire to make certain representations,
warranties and agreements in connection with the Merger and also to
prescribe certain conditions to the Merger; and
WHEREAS, for federal income tax purposes, it is intended that
the Merger will qualify as a reorganization under the provisions of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, for financial accounting purposes, it is intended that
the Merger will be accounted for as a pooling of interests transaction.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and intending
to be legally bound hereby, the parties agree as follows:
ARTICLE I
THE MERGER
1.1. The Merger. Subject to the terms and conditions of this
Agreement, in accordance with the Maryland General Corporation Law (the
"MGCL"), at the Effective Time (as defined in Section 1.2 hereof), the
Company shall merge with and into Buyer. Buyer shall be the surviving
corporation (hereinafter sometimes called the "Surviving Corporation") in
the Merger, and shall continue its corporate existence under the laws of
the State of Maryland. The name of the Surviving Corporation shall continue
to be F&M Bancorp. Upon consummation of the Merger, the separate corporate
existence of the Company shall terminate.
1.2. Effective Time. The Merger shall become effective as set
forth in the articles of merger (the "Articles of Merger") which shall be
filed with the State Department of Assessments and Taxation (the
"Department") on the Closing Date (as defined in Section 10.1 hereof). The
term "Effective Time" shall be the date and time when the Merger becomes
effective, as set forth in the Articles of Merger.
1.3. Effects of the Merger. At and after the Effective Time,
the Merger shall have the effects set forth in Section 3-114 of the MGCL.
1.4. Conversion of Company Common Stock. (a) At the Effective
Time, subject to Section 2.2(e) hereof, each share of the common stock, par
value $0.01 per share, of the Company (the "Company Common Stock") issued
and outstanding immediately prior to the Effective Time (other than shares
of Company Common Stock held directly or indirectly by Buyer or the Company
or any of their respective Subsidiaries (as defined below) (except for
Trust Account Shares and DPC Shares, as such terms are defined in Section
1.4(b) hereof)) shall, by virtue of this Agreement and without any action
on the part of the holder thereof, be converted into and exchangeable for
1.18 shares (the "Exchange Ratio") of the common stock, par value $5.00 per
share, of Buyer ("Buyer Common Stock"). All of the shares of Company Common
Stock converted into Buyer Common Stock pursuant to this Article I shall no
longer be outstanding and shall automatically be cancelled and shall cease
to exist, and each certificate (each a "Certificate") previously
representing any such shares of Company Common Stock shall thereafter only
represent the right to receive (i) the number of whole shares of Buyer
Common Stock and (ii) the cash in lieu of fractional shares into which the
shares of Company Common Stock represented by such Certificate have been
converted pursuant to this Section 1.4(a) and Section 2.2(e) hereof.
Certificates previously representing shares of Company Common Stock shall
be exchanged for certificates representing whole shares of Buyer Common
Stock and cash in lieu of fractional shares issued in consideration
therefor upon the surrender of such Certificates in accordance with Section
2.2 hereof, without any interest thereon. If, between the date of this
Agreement and the Effective Time, the outstanding shares of Buyer Common
Stock shall be changed into a different number or class of shares by reason
of any reclassification, recapitalization, split-up, combination, exchange
of shares or readjustment, or a stock dividend thereon shall be declared
with a record date within said period, the Exchange Ratio shall be adjusted
accordingly.
(b) At the Effective Time, all shares of Company Common
Stock that are owned directly or indirectly by Buyer or the Company or any
of their respective Subsidiaries (other than shares of Company Common Stock
(x) held directly or indirectly in trust accounts, managed accounts and the
like or otherwise held in a fiduciary capacity for the benefit of third
parties (any such shares, and shares of Buyer Common Stock which are
similarly held, whether held directly or indirectly by Buyer or the
Company, as the case may be, being referred to herein as "Trust Account
Shares") and (y) held by Buyer or the Company or any of their respective
Subsidiaries in respect of a debt previously contracted (any such shares of
Company Common Stock, and shares of Buyer Common Stock which are similarly
held, whether held directly or indirectly by Buyer or the Company, being
referred to herein as "DPC Shares")) shall be cancelled and shall cease to
exist and no stock of Buyer or other consideration shall be delivered in
exchange therefor. All shares of Buyer Common Stock that are owned by the
Company or any of its Subsidiaries (other than Trust Account Shares and DPC
Shares) shall become authorized but unissued shares of Buyer Common Stock.
As used in this Agreement, the word "Subsidiary" when used with respect to
any party means any corporation, partnership or other organization, whether
incorporated or unincorporated, which is consolidated with such party for
financial reporting purposes.
1.5. Stock Options. (a) At the Effective Time, each option
granted by the Company (a "Company Option") to purchase shares of Company
Common Stock which is outstanding and unexercised (whether vested or
unvested) immediately prior thereto shall be assumed by Buyer and converted
automatically into an option (a "Buyer Option") to purchase shares of Buyer
Common Stock in an amount and at an exercise price determined as provided
below (and otherwise subject to the terms of the Company's Incentive Stock
Option Plan, the Company's Employee Stock Purchase Plan or the Company's
Directors' Stock Option Plan, as the case may be (collectively, the
"Company Option Plans") or the Agreement for Non-Qualified Stock Option,
dated February 1, 1999, by and between the Company and W. Xxxxxxx Xxxxxxx
(the "Xxxxxxx Option"), as applicable):
(1) the number of shares of Buyer Common Stock to be
subject to the new option shall be equal to the product of the number
of shares of Company Common Stock subject to the original option and
the Exchange Ratio, provided that any fractional shares of Buyer
Common Stock resulting from such multiplication shall be rounded down
to the nearest whole share; and
(2) the exercise price per share of Buyer Common Stock
under the new option shall be equal to the exercise price per share
of Company Common Stock under the original option divided by the
Exchange Ratio, provided that such exercise price shall be rounded up
to the nearest whole cent.
The adjustment provided herein with respect to any options which are
"incentive stock options" (as defined in Section 422 of the Code) shall be
and is intended to be effected in a manner which is consistent with Section
424(a) of the Code and, to the extent it is not so consistent, such Section
424(a) shall override anything to the contrary contained herein. The
duration and other terms of the new option shall be the same as the
original option, except that all references to the Company shall be deemed
to be references to Buyer.
(b) Buyer shall take all corporate action necessary to
reserve for issuance a sufficient number of shares of Buyer Common Stock
for delivery upon exercise of Buyer Options, and, at or prior to the
Effective Time, Buyer shall file a registration statement on Form S-8 with
respect to the shares of Buyer Common Stock subject to Buyer Options, and
shall use its reasonable best efforts to maintain the effectiveness of such
registration statement for so long as any such Buyer Options remain
outstanding.
(c) Buyer and the Company shall take all such steps as
may be required to cause the transactions contemplated by this Section 1.5
and any other dispositions of Company equity securities (including
derivative securities) or acquisitions of Buyer equity securities
(including derivative securities) in connection with this Agreement by each
individual who (i) is a director or officer of the Company or (ii) at the
Effective Time, will become a director or officer of Buyer, to be exempt
under Rule 16b- 3 promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), such steps to be taken in accordance with the
No-Action Letter dated January 12, 1999, issued by the SEC to Skadden,
Arps, Slate, Xxxxxxx & Xxxx LLP.
1.6. Buyer Common Stock. Except for shares of Buyer Common
Stock owned by the Company or any of its Subsidiaries (other than Trust
Account Shares and DPC Shares), which shall constitute authorized but
unissued shares of Buyer Common Stock as contemplated by Section 1.4
hereof, the shares of Buyer Common Stock issued and outstanding immediately
prior to the Effective Time shall be unaffected by the Merger and such
shares shall remain issued and outstanding.
1.7. Articles of Incorporation. At the Effective Time, the
Articles of Incorporation of Buyer, as in effect at the Effective Time,
shall be the Articles of Incorporation of the Surviving Corporation.
1.8. By-Laws. At the Effective Time, the By-Laws of Buyer, as
in effect immediately prior to the Effective Time, shall be the By-Laws of
the Surviving Corporation until thereafter amended in accordance with
applicable law.
1.9. Directors and Officers. Except as contemplated by Section
7.14 hereof, the directors and officers of Buyer immediately prior to the
Effective Time shall be the directors and officers of the Surviving
Corporation, each to hold office in accordance with the Articles of
Incorporation and By-Laws of the Surviving Corporation until their
respective successors are duly elected or appointed and qualified.
1.10. Tax Consequences; Accounting Treatment. It is intended
that the Merger shall (i) constitute a reorganization within the meaning of
Section 368(a) of the Code, and that this Agreement shall constitute a
"plan of reorganization" for purposes of Section 368 of the Code, and (ii)
be accounted for as a "pooling-of-interests" under generally accepted
accounting principles ("GAAP").
ARTICLE II
EXCHANGE OF SHARES
2.1. Buyer to Make Shares Available. At or prior to the
Effective Time, Buyer shall deposit, or shall cause to be deposited, with a
bank or trust company (which may be a Subsidiary of Buyer) (the "Exchange
Agent"), selected by Buyer, for the benefit of the holders of Certificates,
for exchange in accordance with this Article II, certificates representing
the shares of Buyer Common Stock and the cash in lieu of fractional shares
(such cash and certificates for shares of Buyer Common Stock, together with
any dividends or distributions with respect thereto, being hereinafter
referred to as the "Exchange Fund") to be issued pursuant to Section 1.4
and paid pursuant to Section 2.2(a) in exchange for outstanding shares of
Company Common Stock.
2.2. Exchange of Shares. (a) As soon as practicable after the
Effective Time, and in no event more than five business days thereafter,
the Exchange Agent shall mail to each holder of record of a Certificate or
Certificates a form letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates to the Exchange Agent)
advising such holder of the effectiveness of the Merger and instructions
for use in effecting the surrender of the Certificates in exchange for
certificates representing the shares of Buyer Common Stock and the cash in
lieu of fractional shares into which the shares of Company Common Stock
represented by such Certificate or Certificates shall have been converted
pursuant to this Agreement. Upon surrender of a Certificate for exchange
and cancellation to the Exchange Agent, together with such letter of
transmittal, duly executed, the holder of such Certificate shall be
entitled to receive in exchange therefor (x) a certificate representing
that number of whole shares of Buyer Common Stock to which such holder of
Company Common Stock shall have become entitled pursuant to the provisions
of Article I hereof and (y) a check representing the amount of cash in lieu
of fractional shares, if any, which such holder has the right to receive in
respect of the Certificate surrendered pursuant to the provisions of this
Article II, and the Certificate so surrendered shall forthwith be
cancelled. No interest will be paid or accrued on the cash in lieu of
fractional shares and unpaid dividends and distributions, if any, payable
to holders of Certificates.
(b) No dividends or other distributions declared at or
after the Effective Time with respect to Buyer Common Stock and payable to
the holders of record thereof shall be paid to the holder of any
unsurrendered Certificate until the holder thereof shall surrender such
Certificate in accordance with this Article II. After the surrender of a
Certificate in accordance with this Article II, the record holder thereof
shall be entitled to receive any such dividends or other distributions,
without any interest thereon, which theretofore had become payable with
respect to shares of Buyer Common Stock represented by such Certificate. No
holder of an unsurrendered Certificate shall be entitled, until the
surrender of such Certificate, to vote the shares of Buyer Common Stock
into which his Company Common Stock shall have been converted.
(c) If any certificate representing shares of Buyer
Common Stock is to be issued in a name other than that in which the
Certificate surrendered in exchange therefor is registered, it shall be a
condition of the issuance thereof that the Certificate so surrendered shall
be properly endorsed (or accompanied by an appropriate instrument of
transfer) and otherwise in proper form for transfer, and that the person
requesting such exchange shall pay to the Exchange Agent in advance any
transfer or other taxes required by reason of the issuance of a certificate
representing shares of Buyer Common Stock in any name other than that of
the registered holder of the Certificate surrendered, 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.
(d) After the Effective Time, there shall be no transfers
on the stock transfer books of the Company of the shares of Company Common
Stock which were issued and outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates representing such shares
are presented for transfer to the Exchange Agent, they shall be cancelled
and exchanged for certificates representing shares of Buyer Common Stock as
provided in this Article II.
(e) Notwithstanding anything to the contrary contained
herein, no certificates or scrip representing fractional shares of Buyer
Common Stock shall be issued upon the surrender for exchange of
Certificates, no dividend or distribution with respect to Buyer Common
Stock shall be payable on or with respect to any fractional share, and such
fractional share interests shall not entitle the owner thereof to vote or
to any other rights of a stockholder of Buyer. In lieu of the issuance of
any such fractional share, Buyer shall pay to each former stockholder of
the Company who otherwise would be entitled to receive a fractional share
of Buyer Common Stock an amount in cash determined by multiplying (i) the
fraction of a share of Buyer Common Stock to which such holder would
otherwise be entitled to receive pursuant to Section 1.4 hereof by (ii) the
average of the last reported sale prices per share of Buyer Common Stock as
reported on The Nasdaq Market's National Market ("Nasdaq/NMS") (as reported
in The Wall Street Journal or, if not reported therein, in another mutually
agreed upon authoritative source) for the 5 (five) consecutive trading days
ending immediately preceding the date on which the Effective Time shall
occur.
(f) Any portion of the Exchange Fund that remains
unclaimed by the stockholders of the Company for six months after the
Effective Time shall be delivered by the Exchange Agent to Buyer. Any
stockholders of the Company who have not theretofore complied with this
Article II shall thereafter be entitled to look to Buyer for payment of
their shares of Buyer Common Stock, cash in lieu of fractional shares and
unpaid dividends and distributions on Buyer Common Stock deliverable in
respect of each share of Company Common Stock such stockholder holds as
determined pursuant to this Agreement, in each case, without any interest
thereon. Notwithstanding the foregoing, none of Buyer, the Company, the
Exchange Agent or any other person shall be liable to any former holder of
shares of Company Common Stock for any amount properly delivered to a
public official pursuant to applicable abandoned property, escheat or
similar laws.
(g) In the event any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by Buyer, the posting by such person of a bond in such amount as
Buyer reasonably may direct as indemnity against any claim that may be made
against it with respect to such Certificate, the Exchange Agent will issue
in exchange for such lost, stolen or destroyed Certificate the shares of
Buyer Common Stock, cash in lieu of fractional shares and unpaid dividends
and distributions deliverable in respect thereof pursuant to this
Agreement.
ARTICLE III
DISCLOSURE SCHEDULES; STANDARDS
FOR REPRESENTATIONS AND WARRANTIES
3.1. Disclosure Schedules. Prior to the execution and delivery
of this Agreement, the Company has delivered to Buyer, and Buyer has
delivered to the Company, a schedule (in the case of the Company, the
"Company Disclosure Schedule," and in the case of Buyer, the "Buyer
Disclosure Schedule") setting forth, among other things, items the
disclosure of which is necessary or appropriate either in response to an
express disclosure requirement contained in a provision hereof or as an
exception to one or more of such party's representations or warranties
contained in Article IV, in the case of the Company, or Article V, in the
case of Buyer, or to one or more of such party's covenants contained in
Article VI; provided, however, that notwithstanding anything in this
Agreement to the contrary (a) no such item is required to be set forth in
the Disclosure Schedule as an exception to a representation or warranty
(other than the representations and warranties contained in Sections 4.2,
4.3(a), 4.3(b), 4.6(a), 4.11(d), 4.12, 4.13, 5.2, 5.3(a), 5.3(b), 5.6(a),
5.10 and 5.12) if its absence would not result in the related
representation or warranty being deemed untrue or incorrect under the
standard established by Section 3.2, and (b) the mere inclusion of an item
in a Disclosure Schedule as an exception to a representation or warranty
shall not be deemed an admission by a party that such item represents a
material exception or material fact, event or circumstance or that such
item has had or is reasonably likely to have a Material Adverse Effect (as
defined herein) with respect to either the Company or Buyer, respectively.
3.2. Standards. (a) No representation or warranty of the
Company contained in Article IV (other than the representations and
warranties contained in Sections 4.2, 4.3(a), 4.3(b), 4.6(a), 4.11(d), 4.12
and 4.13) or of Buyer in Article V (other than the representations and
warranties contained in Sections 5.2, 5.3(a), 5.3(b), 5.6(a), 5.10 and
5.12) shall be deemed untrue or incorrect for any purpose under this
Agreement, including for purposes of Section 8.2(a) and Section 8.3(a), and
no party hereto shall be deemed to have breached any such representation or
warranty for any purpose under this Agreement, in any case as a consequence
of the existence or absence of any fact, circumstance or event unless such
fact, circumstance or event, individually or when taken together with all
other facts, circumstances or events inconsistent with any such
representations or warranties contained in Article IV, in the case of the
Company, or Article V, in the case of Buyer, has had or is reasonably
likely to have a Material Adverse Effect with respect to the Company or
Buyer, respectively.
(b) As used in this Agreement, the term "Material Adverse
Effect" means, with respect to Buyer or the Company, as the case may be, a
material adverse effect on (i) the business, results of operations or
financial condition of such party and its Subsidiaries taken as a whole,
other than any such effect attributable to or resulting from (A) any change
in banking or similar laws, rules or regulations of general applicability
or interpretations thereof by courts or governmental authorities, (B) any
change in GAAP or regulatory accounting principles applicable to banks or
their holding companies generally, (C) any change in general economic or
business conditions affecting banks, thrifts or holding companies
generally, provided that such change does not affect the referenced party
to a materially greater extent than banks, thrifts or holding companies
generally, and provided further that such change does not have a materially
adverse effect on the results of operations or financial condition of the
referenced party, or (D) any action or omission of the Company or Buyer or
any Subsidiary of either of them taken in contemplation of the Merger with
the prior written consent of the other party hereto, or (ii) the ability of
such party and its Subsidiaries to consummate the transactions contemplated
by the Company Documents (as defined herein) and the Bank Merger Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as specifically set forth in the Company Disclosure
Schedule (provided, however, that no exception shall be taken with respect
to any representation or warranty set forth in any Section of this Article
IV unless such exception is specifically set forth in the correspondingly
enumerated section of the Company Disclosure Schedule), the Company hereby
represents and warrants to Buyer as follows:
4.1. Corporate Organization. (a) The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Maryland. The Company has the corporate power and authority to own
or lease all of its properties and assets and to carry on its business as
it is now being conducted, and is duly qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it
makes such qualification necessary. The Company is duly registered as a
bank holding company under the Bank Holding Company Act of 1956, as amended
(the "BHC Act"). The Articles of Incorporation and By-Laws of the Company,
copies of which have previously been made available to Buyer, are true,
complete and correct copies of such documents as in effect as of the date
of this Agreement.
(b) The Company Bank is a commercial bank duly organized,
validly existing and in good standing under the laws of the State of
Maryland. The deposit accounts of the Company Bank are insured by the
Federal Deposit Insurance Corporation (the "FDIC") through the Bank
Insurance Fund ("BIF") and/or the Savings Association Insurance Fund
("SAIF") 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 the Company Bank. Each of the Company's other Subsidiaries is a
corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation or organization. Each of the
Company's Subsidiaries has the corporate power and authority to own or
lease all of its properties and assets and to carry on its business as it
is now being conducted and is duly qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or the location of the properties and assets owned or leased by
it makes such qualification necessary. The articles of incorporation,
by-laws and similar governing documents of each Subsidiary of the Company,
copies of which have previously been made available to Buyer, are true,
complete and correct copies of such documents as in effect as of the date
of this Agreement.
(c) The minute books of the Company and each of its
Subsidiaries contain true, complete and accurate records of all meetings
and other corporate actions held or taken since December 31, 1996 of their
respective stockholders and Boards of Directors (including committees of
their respective Boards of Directors).
4.2. Capitalization. (a) The authorized capital stock of the
Company consists of 50,000,000 shares of Company Common Stock. As of the
date of this Agreement, there are (x) 1,367,968.9364 shares of Company
Common Stock outstanding, (y) 5,200 shares of Company Common Stock reserved
for issuance pursuant to a restricted stock award that was granted by the
Board of Directors of the Company on April 20, 1999 (the "Restricted Stock
Award") and described in Section 4.2(a) of the Company Disclosure Schedule
and (z) no shares of Company Common Stock reserved for issuance upon
exercise of outstanding stock options or otherwise except for (i) 120,000
shares of Company Common Stock reserved for issuance pursuant to the
Company Option Plans and described in Section 4.2(a) of the Company
Disclosure Schedule, (ii) 4,000 shares of Company Common Stock reserved for
issuance pursuant to the Xxxxxxx Option Plan and described in Section
4.2(a) of the Company Disclosure Schedule and (iii) 272,225 shares of
Company Common Stock reserved for issuance upon exercise of the option
issued to Buyer pursuant to the Stock Option Agreement, dated as of the
date hereof, between Buyer and the Company (the "Company Option
Agreement"). All of the issued and outstanding shares of Company Common
Stock have been duly authorized and validly issued and are fully paid and
nonassessable, with no personal liability attaching to the ownership
thereof. Except as referred to above or reflected in Section 4.2(a) of the
Company Disclosure Schedule, and except for the Company Option Agreement,
the Company does not have and is not bound by any outstanding
subscriptions, options, warrants, calls, commitments or agreements of any
character calling for the purchase or issuance of any shares of Company
Common Stock or any other equity security of the Company or any securities
representing the right to purchase or otherwise receive any shares of
Company Common Stock or any other equity security of the Company. The
number of shares subject to each option to purchase Company Common Stock
granted and the price at which each such option may be exercised are set
forth in Section 4.2(a) of the Company Disclosure Schedule. The names of
the optionees, the date of each option to purchase Company Common Stock
granted, and the expiration date of each such option under the Company
Option Plans are set forth in Section 4.2(a) of the Company Disclosure
Schedule.
(b) Section 4.2(b) of the Company Disclosure Schedule
sets forth a true, complete and correct list of all of the Subsidiaries of
the Company. The Company owns, directly or indirectly, all of the issued
and outstanding shares of the capital stock of each of such Subsidiaries,
free and clear of all liens, charges, encumbrances and security interests
whatsoever, and all of such shares are duly authorized and validly issued
and are fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof. No Subsidiary of the
Company has or is bound by any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character calling for the
purchase or issuance of any shares of capital stock or any other equity
security of such Subsidiary or any securities representing the right to
purchase or otherwise receive any shares of capital stock or any other
equity security of such Subsidiary. Assuming compliance by Buyer with
Section 1.5 hereof, at the Effective Time, there will not be any
outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character by which the Company or any of its Subsidiaries
will be bound calling for the purchase or issuance of any shares of the
capital stock of the Company or any of its Subsidiaries.
(c) Upon the suspension by the Company of the Company
Dividend Reinvestment Plan (the "Company DRIP") pursuant to Section 7.18,
from the date of such suspension, if any, no issuances or purchases of the
Company Common Stock under the Company DRIP shall be permitted, nor shall
any other obligations thereunder accrue.
4.3. Authority; No Violation. (a) The Company has full
corporate power and authority to execute and deliver this Agreement and the
Company Option Agreement (this Agreement and the Company Option Agreement,
collectively, the "Company Documents") and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of each of the
Company Documents and the consummation of the transactions contemplated
hereby and thereby have been duly and validly approved by the Board of
Directors of the Company. The Board of Directors of the Company has
directed that this Agreement and the transactions contemplated hereby be
submitted to the Company's stockholders for approval at a meeting of such
stockholders and, except for the approval of the Merger and this Agreement
by the requisite vote of the Company's stockholders, no other corporate
proceedings on the part of the Company are necessary to approve the Company
Documents and to consummate the transactions contemplated hereby and
thereby. Without limiting the foregoing, the Board of Directors of the
Company has adopted a resolution declaring that this Agreement, the Merger
and the transactions contemplated hereby and thereby are advisable on
substantially the terms set forth herein and that such proposed
transactions be submitted for consideration at a special meeting of the
stockholders of the Company. Each of the Company Documents has been duly
and validly executed and delivered by the Company and (assuming due
authorization, execution and delivery by Buyer) this Agreement constitutes
a valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except as enforcement may be limited
by general principles of equity whether applied in a court of law or a
court of equity and by bankruptcy, insolvency and similar laws affecting
creditors' rights and remedies generally.
(b) The Company Bank has full corporate power and
authority to execute and deliver the Bank Merger Agreement and to
consummate the transactions contemplated thereby. The execution and
delivery of the Bank Merger Agreement and the consummation of the
transactions contemplated thereby will be duly and validly approved by the
Board of Directors of the Company Bank. Upon the due and valid approval of
the Bank Merger Agreement by the Board of Directors of the Company Bank and
by the Company as the sole stockholder of the Company Bank, no other
corporate proceedings on the part of the Company Bank will be necessary to
consummate the transactions contemplated thereby. The Bank Merger
Agreement, upon execution and delivery by the Company Bank, will be duly
and validly executed and delivered by the Company Bank and will (assuming
due authorization, execution and delivery by Buyer Bank) constitute a valid
and binding obligation of the Company Bank, enforceable against the Company
Bank in accordance with its terms, except as enforcement may be limited by
general principles of equity whether applied in a court of law or a court
of equity and by bankruptcy, insolvency and similar laws affecting
creditors' rights and remedies generally.
(c) Neither the execution and delivery of the Company
Documents by the Company or the Bank Merger Agreement by the Company Bank,
nor the consummation by the Company or the Company Bank, as the case may
be, of the transactions contemplated hereby or thereby, nor compliance by
the Company or the Company Bank, as the case may be, with any of the terms
or provisions hereof or thereof, will (i) violate any provision of the
Articles of Incorporation or By-Laws of the Company or the articles of
incorporation, by-laws or similar governing documents of any of its
Subsidiaries, or (ii) assuming that the consents and approvals referred to
in Section 4.4 hereof are duly obtained prior to the Effective Time, (x)
violate any statute, code, ordinance, rule, regulation, judgment, order,
writ, decree or injunction applicable to the Company or any of its
Subsidiaries, or any of their respective properties or assets, or (y)
violate, conflict with, result in a breach of any provision of or the loss
of any benefit under, 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 or a right of termination or cancellation under, accelerate
the performance required by, or result in the creation of any lien, pledge,
security interest, charge or other encumbrance upon any of the respective
properties or assets of the Company or any of its Subsidiaries under, any
of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or
obligation to which the Company or any of its Subsidiaries is a party, or
by which they or any of their respective properties or assets may be bound
or affected.
4.4. Consents and Approvals. Except for (a) the filing of
applications and notices, as applicable, with the Board of Governors of the
Federal Reserve System (the "Federal Reserve Board") under the BHC Act and
the Office of the Comptroller of the Currency (the "OCC") under the Bank
Merger Act and approval of such applications and notices, (b) the filing
with the Securities and Exchange Commission (the "SEC") of a proxy
statement in definitive form relating to the meeting of the Company's
stockholders to be held in connection with this Agreement and the
transactions contemplated hereby (the "Proxy Statement") and the filing and
declaration of effectiveness of the registration statement on Form S-4 (the
"S-4") in which the Proxy Statement will be included as a prospectus, (c)
the approval of the Merger and this Agreement by the requisite vote of the
stockholders of the Company, (d) the filing of the Articles of Merger with
the Department pursuant to the MGCL, (e) the approval of the Bank Merger
Agreement by the Company as the sole stockholder of the Company Bank, (f)
authorization for quotation of Buyer Common Stock to be issued in the
Merger on the Nasdaq/NMS, (g) approval of the transactions contemplated by
this Agreement and the Bank Merger Agreement by the Maryland Commissioner
of Financial Regulation and/or filings in connection therewith pursuant to
the Financial Institutions Article of the Annotated Code of Maryland, (h)
filings under state securities and blue sky laws, (i) filings with or
approvals of the State Insurance Commissioner and (j) such filings,
authorizations or approvals as may be set forth in Section 4.4 of the
Company Disclosure Schedule, no consents or approvals of or filings or
registrations with any court, administrative agency or commission or other
governmental authority or instrumentality (each a "Governmental Entity") or
with any third party are necessary in connection with (1) the execution and
delivery by the Company of the Company Documents, (2) the consummation by
the Company of the Merger and the other transactions contemplated hereby
and thereby, (3) the execution and delivery by the Company Bank of the Bank
Merger Agreement, and (4) the consummation by the Company Bank of the
Subsidiary Merger and the transactions contemplated thereby.
4.5. Reports. The Company and each of its Subsidiaries have
timely filed all reports, registrations and statements, together with any
amendments required to be made with respect thereto, that they were
required to file since December 31, 1995 with (i) the Federal Reserve
Board, (ii) the FDIC, (iii) any state banking commissions or any other
state regulatory authority (each a "State Regulator") and (iv) and any
self-regulatory organization ("SRO") (collectively, the "Regulatory
Agencies"), and have paid all fees and assessments due and payable in
connection therewith. Except for normal examinations conducted by a
Regulatory Agency in the regular course of the business of the Company and
its Subsidiaries, and no Regulatory Agency has initiated any proceeding or
investigation into the business or operations of the Company or any of its
Subsidiaries since December 31, 1995. There is no unresolved material
violation, criticism, or exception by any Regulatory Agency with respect to
any report or statement relating to any examinations of the Company or any
of its Subsidiaries.
4.6. Financial Statements. (a) The Company has previously made
available to Buyer copies of (i) the consolidated balance sheets of Company
and its Subsidiaries as of December 31 for the fiscal years 1997 and 1998,
and the related consolidated statements of income, changes in stockholders'
equity and cash flows for the fiscal years 1996 through 1998, inclusive, as
reported in the Company's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1998 filed with the SEC under the Exchange Act, in each
case accompanied by the audit report of Xxxxxx & Company, LLP, independent
public accountants with respect to the Company, and (ii) the unaudited
consolidated statements of financial condition of the Company and its
Subsidiaries as of June 30, 1999 and June 30, 1998 and the related
unaudited consolidated statements of operations and cash flows for the
six-month periods then ended as reported in the Company's Quarterly Report
on Form 10-QSB for the period ended June 30, 1999 filed with the SEC under
the Exchange Act. The December 31, 1998 consolidated balance sheet of the
Company (including the related notes, where applicable) fairly presents the
consolidated financial position of the Company and its Subsidiaries as of
the date thereof, and the other financial statements referred to in this
Section 4.6 (including the related notes, where applicable) fairly present
(subject, in the case of the unaudited statements, to recurring audit
adjustments normal in nature and amount), and the financial statements to
be filed with the SEC after the date hereof will fairly present (subject,
in the case of the unaudited statements, to recurring audit adjustments
normal in nature and amount), the results of the consolidated operations
and consolidated financial position of the Company and its Subsidiaries for
the respective fiscal periods or as of the respective dates therein set
forth; each of such statements (including the related notes, where
applicable) comply, and the financial statements to be filed with the SEC
after the date hereof will comply, with applicable accounting requirements
and with the published rules and regulations of the SEC with respect
thereto; and each of such statements (including the related notes, where
applicable) has been, and the financial statements to be filed with the SEC
after the date hereof will be, prepared in accordance with GAAP
consistently applied during the periods involved, except as indicated in
the notes thereto or, in the case of unaudited statements, as permitted by
Form 10-Q.
(b) The books and records of the Company and its
Subsidiaries have been, and are being, maintained in accordance with
applicable legal and accounting requirements.
4.7. Broker's Fees. Neither the Company nor any Subsidiary of
the Company nor any of their respective officers or directors has employed
any broker or finder or incurred any liability for any broker's fees,
commissions or finder's fees in connection with any of the transactions
contemplated by the Company Documents or the Bank Merger Agreement, except
that the Company has engaged, and will pay a fee or commission to, Xxxxxx,
Xxxxx Xxxxx Incorporated in accordance with the terms of a letter agreement
between Xxxxxx, Xxxxx Xxxxx Incorporated and the Company, a true, complete
and correct copy of which has been previously made available by the Company
to Buyer.
4.8. Absence of Certain Changes or Events. (a) Since December
31, 1998, there has been no change or development or combination of changes
or developments which, individually or in the aggregate, has had or is
reasonably likely to have a Material Adverse Effect on the Company.
(b) Except for the execution and delivery of the Company
Documents and the Bank Merger Agreement, since December 31, 1998, the
Company and its Subsidiaries have carried on their respective businesses in
the ordinary course consistent with their past practices.
(c) Since June 30, 1999, neither the Company nor any of
its Subsidiaries has (i) increased the wages, salaries, compensation,
pension or other fringe benefits or perquisites payable to any executive
officer, employee or director from the amount thereof in effect as of June
30, 1999 (which amounts have been previously disclosed to Buyer), granted
any severance or termination pay, entered into any contract to make or
grant any severance or termination pay, or paid any bonus other than
year-end bonuses for fiscal 1999 as listed in Section 4.8 of the Company
Disclosure Schedule, (ii) suffered any strike, work stoppage, slow-down, or
other labor disturbance, (iii) been a party to a collective bargaining
agreement, contract or other agreement or understanding with a labor union
or organization or (iv) had any union organizing activities.
4.9. Legal Proceedings. (a) Neither the Company nor any of its
Subsidiaries is a party to any, and there are no pending or, to the
Company's knowledge, threatened, legal, administrative, arbitral or other
proceedings, claims, actions or governmental or regulatory investigations
of any nature against the Company or any of its Subsidiaries or challenging
the validity or propriety of the transactions contemplated by any of the
Company Documents or the Bank Merger Agreement.
(b) There is no injunction, order, judgment, decree or
regulatory restriction imposed upon the Company, any of its Subsidiaries or
the assets of the Company or any of its Subsidiaries.
4.10. Taxes. (a) Each of the Company and its Subsidiaries (i)
has duly and timely filed (including applicable extensions granted without
penalty) all Tax Returns (as hereinafter defined) required to be filed on
or prior to the date hereof and will duly and timely file all Tax Returns
after the date hereof and prior to the Effective Time, and such Tax Returns
are or will be true, correct and complete, and (ii) has paid or will pay in
full or to the extent necessary made or will make adequate provision in the
financial statements of the Company (in accordance with GAAP) for all Taxes
(as hereinafter defined). No deficiencies for any Taxes have been proposed,
asserted, assessed or, to the knowledge of the Company, threatened against
or with respect to the Company or any of its Subsidiaries. (i) There are no
liens for Taxes upon the assets of either the Company or its Subsidiaries
except for statutory liens for current Taxes not yet due, (ii) neither the
Company nor any of its Subsidiaries has requested any extension of time
within which to file any Tax Returns in respect of any fiscal year which
have not since been filed and no request for waivers of the time to assess
any Taxes are pending or outstanding, (iii) with respect to each taxable
period of the Company and its Subsidiaries, the federal and state income
Tax Returns of the Company and its Subsidiaries have been audited by the
Internal Revenue Service (the "IRS") or appropriate state tax authorities
or the time for assessing and collecting income Tax with respect to such
taxable period has closed and such taxable period is not subject to review,
(iv) neither the Company nor any of its Subsidiaries has filed or been
included in a combined, consolidated or unitary income Tax Return other
than one in which the Company was the parent of the group filing such Tax
Return, (v) neither the Company nor any of its Subsidiaries is a party to
any agreement providing for the allocation or sharing of Taxes (other than
the allocation of federal income taxes as provided by Regulation
1.1552-1(a)(1) under the Code), (vi) neither the Company nor any of its
Subsidiaries is required to include in income any adjustment pursuant to
Section 481(a) of the Code (or any similar or corresponding provision or
requirement of state, local or foreign income Tax law), by reason of the
voluntary change in accounting method (nor has any taxing authority
proposed in writing any such adjustment or change of accounting method),
(vii) neither the Company nor any of its Subsidiaries has filed a consent
pursuant to Section 341(f) of the Code, (viii) neither the Company nor any
of its Subsidiaries has made any payment or will be obligated to make any
payment (by contract or otherwise) which will not be deductible by reason
of Section 280G of the Code and (ix) none of the Company, any of its
Subsidiaries or any entity acquired by the Company or its Subsidiaries is
or was (a) a domestic building and loan association, (b) a mutual savings
bank or (c) a cooperative bank without capital stock organized and operated
for mutual purposes and without profit, which has taken a deduction for
additions to a reserve for bad debts under Section 593 of the Code.
(b) For the purposes of this Agreement, "Taxes" shall
mean all taxes, charges, fees, levies, penalties or other assessments
imposed by any United States federal, state, local or foreign taxing
authority, including, but not limited to income, excise, property, sales,
transfer, franchise, payroll, withholding, social security or other taxes,
including any interest, penalties or additions attributable thereto. For
purposes of this Agreement, "Tax Return" shall mean any return, report,
information return or other document (including any related or supporting
information) with respect to Taxes.
4.11. Employees. (a) Section 4.11(a) of the Company Disclosure
Schedule sets forth a true, complete and correct list of each deferred
compensation plan, incentive compensation plan, equity compensation plan,
"welfare" plan, fund or program (within the meaning of section 3(1) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"));
each "pension" plan, fund or program (within the meaning of section 3(2) of
ERISA); each employment, termination or severance agreement; and each other
employee benefit plan, fund, program, agreement or arrangement, in each
case, that is sponsored, maintained or contributed to or required to be
contributed to (the "Company Plans") by the Company, any of its
Subsidiaries or by any trade or business, whether or not incorporated (a
"Company ERISA Affiliate"), all of which together with the Company would be
deemed a "single employer" within the meaning of Section 4001 of ERISA, for
the benefit of any employee or former employee of the Company, any
Subsidiary or any Company ERISA Affiliate.
(b) The Company has heretofore made available to Buyer
true, complete and correct copies of each of the Company Plans and all
related documents, including but not limited to (i) the actuarial report
for such Company Plan (if applicable) for each of the last two years and
(ii) the most recent determination letter from the IRS (if applicable) for
such Company Plan.
(c) (i) Each of the Company Plans has been operated and
administered in all material respects in accordance with its terms and
applicable law, including but not limited to ERISA and the Code, (ii) each
of the Company Plans intended to be "qualified" within the meaning of
Section 401(a) of the Code either (1) has received a favorable
determination letter from the IRS, or (2) is or will be the subject of an
application for a favorable determination letter, and the Company is not
aware of any circumstances likely to result in the revocation or denial of
any such favorable determination letter, (iii) with respect to each Company
Plan which is subject to Title IV of ERISA, the present value of accrued
benefits under such Company Plan, based upon the actuarial assumptions used
for funding purposes in the most recent actuarial report prepared by such
Company Plan's actuary with respect to such Company Plan, did not, as of
its latest valuation date, exceed the then current value of the assets of
such Company Plan allocable to such accrued benefits, (iv) no Company Plan
provides benefits, including without limitation death or medical benefits
(whether or not insured), with respect to current or former employees of
the Company, its Subsidiaries or any Company ERISA Affiliate beyond their
retirement or other termination of service, other than (w) coverage
mandated by applicable law, (x) death benefits or retirement benefits under
any "employee pension plan," as that term is defined in Section 3(2) of
ERISA, (y) deferred compensation benefits accrued as liabilities on the
books of the Company, its Subsidiaries or the Company ERISA Affiliates or
(z) benefits the full cost of which is borne by the current or former
employee (or his beneficiary), (v) no liability under Title IV of ERISA has
been incurred by the Company, its Subsidiaries or any Company ERISA
Affiliate that has not been satisfied in full, and no condition exists that
presents a material risk to the Company, its Subsidiaries or a Company
ERISA Affiliate of incurring a liability thereunder, (vi) no Company Plan
is a "multiemployer pension plan," as such term is defined in Section 3(37)
of ERISA, (vii) all contributions or other amounts payable by the Company,
its Subsidiaries or any Company ERISA Affiliates as of the Effective Time
with respect to each Company Plan in respect of current or prior plan years
have been paid or accrued in accordance with GAAP and Section 412 of the
Code, (viii) neither the Company, its Subsidiaries nor any Company ERISA
Affiliate has engaged in a transaction in connection with which the
Company, its Subsidiaries or any Company ERISA Affiliate could be subject
to either a civil penalty assessed pursuant to Section 409 or 502(i) of
ERISA or a tax imposed pursuant to Section 4975 or 4976 of the Code, (ix)
there are no pending or, to the best knowledge of the Company, threatened
or anticipated claims (other than routine claims for benefits) by, on
behalf of or against any of the Company Plans or any trusts related thereto
and (x) the consummation of the transactions contemplated by this Agreement
or the Bank Merger Agreement will not (y) entitle any current or former
employee or officer of the Company or any Company ERISA Affiliate to
severance pay, termination pay or any other payment or benefit, except as
expressly provided in this Agreement or (z) accelerate the time of payment
or vesting or increase the amount or value of compensation or benefits due
any such employee or officer.
(d) Section 4.11(d) of the Company Disclosure Schedule
sets forth a true, complete and correct list of each contract, arrangement,
commitment or understanding (whether written or oral,) with respect to the
employment or retention of any director, officer, employee or consultant
(each, an "Employment Agreement") to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries
is bound, and the Company has heretofore made available to Buyer true,
complete and correct copies of each such Employment Agreement and all
related documents.
4.12. SEC Reports. The Company has previously made available to
Buyer a true, complete and correct copy of each (a) final registration
statement, prospectus, report, schedule and definitive proxy statement
filed since January 1, 1997 by the Company with the SEC pursuant to the
Securities Act of 1933, as amended (the "Securities Act"), or the Exchange
Act (the "Company Reports") and (b) communication mailed by the Company to
its stockholders since January 1, 1997, and no such registration statement,
prospectus, report, schedule, proxy statement or communication contained
any untrue statement of a material fact or omitted to state any material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances in which they were made,
not misleading, except that information as of a later date shall be deemed
to modify information as of an earlier date. The Company has timely filed
all Company Reports and other documents required to be filed by it under
the Securities Act and the Exchange Act, and, as of their respective dates,
all Company Reports complied with the published rules and regulations of
the SEC with respect thereto.
4.13. Company Information. The information relating to the
Company and its Subsidiaries which is provided to Buyer by the Company
specifically for inclusion in the Proxy Statement and the S-4, or in any
other document filed with any other regulatory agency in connection
herewith, will not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in light
of the circumstances in which they are made, not misleading.
4.14. Compliance with Applicable Law. The Company and each of
its Subsidiaries hold, and have at all times held, all licenses,
franchises, permits and authorizations necessary for the lawful conduct of
their respective businesses under and pursuant to all, and have complied
with and are not in default in any respect under any, applicable law,
statute, order, rule, regulation, policy and/or guideline of any
Governmental Entity relating to the Company or any of its Subsidiaries, and
neither the Company nor any of its Subsidiaries has received notice of, any
violations of any of the above.
4.15. Certain Contracts. (a) Neither the Company nor any of its
Subsidiaries is a party to or bound by any contract, arrangement,
commitment or understanding (whether written or oral) (i) which is an
Employment Agreement, (ii) which, upon the consummation of the transactions
contemplated by this Agreement or the Bank Merger Agreement, will (either
alone or upon the occurrence of any additional acts or events) result in
any payment or benefits (whether of severance pay or otherwise) becoming
due, or the acceleration or vesting of any rights to any payment or
benefits, from Buyer, the Company, the Surviving Corporation, the Surviving
Bank or any of their respective Subsidiaries to any officer, director,
consultant or employee thereof, (iii) which is a material contract (as
defined in Item 601(b)(10) of Regulation S-K of the SEC) to be
performed after the date of this Agreement that has not been filed or
incorporated by reference in the Company Reports, (iv) which is a
consulting agreement (including data processing, software programming and
licensing contracts) not terminable on 60 days or less notice involving the
payment of more than $50,000 per annum, in the case of any such agreement
with an individual, or $100,000 per annum, in the case of any other such
agreement, (v) which materially restricts the conduct of any line of
business by the Company or any of its Subsidiaries or (vi) (including any
stock option plan, stock appreciation rights plan, restricted stock plan or
stock purchase plan) any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the occurrence of
any of the transactions contemplated by this Agreement or the Bank Merger
Agreement, or the value of any of the benefits of which will be calculated
on the basis of any of the transactions contemplated by this Agreement or
the Bank Merger Agreement. Each contract, arrangement, commitment or
understanding of the type described in this Section 4.15(a), whether or not
set forth in Section 4.15(a) of the Company Disclosure Schedule, is
referred to herein as a "Company Contract". The Company has previously made
available to Buyer true, complete and correct copies of each Company
Contract.
(b) (i) Each Company Contract is valid and binding and in
full force and effect, (ii) the Company and each of its Subsidiaries has
performed all obligations required to be performed by it to date under each
Company Contract, (iii) no event or condition exists which constitutes or,
after notice or lapse of time or both, would constitute, a default on the
part of the Company or any of its Subsidiaries under any such Company
Contract and (iv) no other party to such Company Contract is, to the
knowledge of the Company, in default in any respect thereunder.
4.16. Agreements with Regulatory Agencies. Neither the Company
nor any of its Subsidiaries is subject to any cease-and-desist or other
order issued by, or is a party to any written agreement, consent agreement
or memorandum of understanding with, or is a party to any commitment letter
or similar undertaking to, or is subject to any order or directive by, or
is a recipient of any extraordinary supervisory letter from, or has adopted
any board resolutions at the request of (each, whether or not set forth on
Section 4.16 of the Company Disclosure Schedule, a "Company Regulatory
Agreement"), any Regulatory Agency or other Governmental Entity that
restricts the conduct of its business or that in any manner relates to its
capital adequacy, its credit policies, its management or its business, nor
has the Company or any of its Subsidiaries been advised in writing by any
Regulatory Agency or other Governmental Entity that it is considering
issuing or requesting any Company Regulatory Agreement.
4.17. Investment Securities. Section 4.17 of the Company
Disclosure Schedule sets forth the book and market value as of July 31,
1999 of the investment securities and securities available for sale of the
Company and its Subsidiaries.
4.18. Intellectual Property. The Company and each of its
Subsidiaries owns or possesses valid and binding licenses and other rights
to use without payment all patents, copyrights, trade secrets, trade names,
servicemarks and trademarks used in its businesses; and neither the Company
nor any of its Subsidiaries has received any notice of conflict with
respect thereto that asserts the right of others.
4.19. State Takeover Laws. The Board of Directors of the
Company has approved this Agreement, the Company Option Agreement and the
transaction contemplated hereby prior to the date of this Agreement such
that the provisions of Section 3-602 of the MGCL will not, assuming the
accuracy of the representations contained in Section 5.13 hereof, apply to
this Agreement, the Bank Merger Agreement or the Company Option Agreement
or any of the transactions contemplated hereby or thereby.
4.20. Administration of Fiduciary Accounts. The Company and
each of its Subsidiaries has properly administered all accounts for which
it acts as a fiduciary, including but not limited to accounts for which it
serves as a trustee, agent, custodian, personal representative, guardian,
conservator or investment advisor, in accordance with the terms of the
governing documents and applicable state and federal law and regulation and
common law. Neither the Company nor any of its Subsidiaries nor any of
their respective directors, officers or employees has committed any breach
of trust with respect to any such fiduciary account, and the accountings
for each such fiduciary account are true, complete and correct and
accurately reflect the assets of such fiduciary account.
4.21. Environmental Matters. (a) Each of the Company and its
Subsidiaries and to the best knowledge of the Company, the Participation
Facilities and the Loan Properties (each as hereinafter defined) are, and
have been, in compliance with all applicable federal, state and local laws
including common law, regulations and ordinances and with all applicable
decrees, orders and contractual obligations relating to pollution or the
discharge of, or exposure to Hazardous Materials (as hereinafter defined)
in the environment or workplace ("Environmental Laws");
(b) There is no suit, claim, action or proceeding,
pending or, to the best knowledge of the Company, threatened, before any
Governmental Entity or other forum in which the Company, any of its
Subsidiaries or to the best knowledge of the Company, any Participation
Facility or any Loan Property, has been or, with respect to threatened
proceedings, may be, named as a defendant (x) for alleged noncompliance
(including by any predecessor), with any Environmental Laws or (y) relating
to the release, threatened release or exposure to any Hazardous Material,
whether or not occurring at or on a site owned, leased or operated by the
Company or any of its Subsidiaries, any Participation Facility or any Loan
Property;
(c) During the period of (x) the Company's or any of its
Subsidiaries' ownership or operation of any of their respective current or
former properties, (y) the Company's or any of its Subsidiaries'
participation in the management of any Participation Facility or (z) the
Company's or any of its Subsidiaries' holding of a security interest in a
Loan Property, to the best knowledge of the Company, there has been no
release of Hazardous Materials in, on, under or affecting any such
property. Prior to the period of (x) the Company's or any of its
Subsidiaries' ownership or operation of any of their respective current or
former properties, (y) the Company's or any of its Subsidiaries'
participation in the management of any Participation Facility or (z) the
Company's or any of its Subsidiaries' holding of a security interest in a
Loan Property, to the best knowledge of the Company, there was no release
or threatened release of Hazardous Materials in, on, under or affecting any
such property, Participation Facility or Loan Property; and
(d) The following definitions apply for purposes of this
Section 4.21: (x) "Hazardous Materials" means any chemicals, pollutants,
contaminants, wastes, toxic substances, petroleum or other regulated
substances or materials; (y) "Loan Property" means any property in which
the Company or any of its Subsidiaries holds a security interest, and,
where required by the context, said term means the owner or operator of
such property; and (z) "Participation Facility" means any facility in which
the Company or any of its Subsidiaries participates in the management and,
where required by the context, said term means the owner or operator of
such property.
4.22. Derivative Transactions. Since December 31, 1998, neither
Company nor any of its Subsidiaries has engaged in transactions in or
involving forwards, futures, options on futures, swaps or other derivative
instruments except (i) as agent on the order and for the account of others
or (ii) as principal for purposes of hedging interest rate risk on U.S.
dollar-denominated securities and other financial instruments. None of the
counterparties to any contract or agreement with respect to any such
instrument is in default with respect to such contract or agreement and no
such contract or agreement, were it to be a Loan (as defined below) held by
the Company or any of its Subsidiaries, would be classified as "Other Loans
Specially Mentioned", "Special Mention", "Substandard", "Doubtful", "Loss",
"Classified", "Criticized", "Credit Risk Assets", "Concerned Loans" or
words of similar import. The financial position of the Company and its
Subsidiaries on a consolidated basis under or with respect to each such
instrument has been reflected in the books and records of the Company and
such Subsidiaries in accordance with GAAP consistently applied, and no open
exposure of the Company or any of its Subsidiaries with respect to any such
instrument (or with respect to multiple instruments with respect to any
single counterparty) exceeds $50,000.
4.23. Opinion. Prior to the execution of this Agreement, the
Company has received an opinion from Xxxxxx, Xxxxx Xxxxx Incorporated to
the effect that, as of the date hereof and based upon and subject to the
matters set forth therein, the consideration to be received by the
stockholders of the Company pursuant to this Agreement is fair to the
Company's stockholders from a financial point of view. Such opinion has not
been amended or rescinded as of the date of this Agreement.
4.24. Approvals. As of the date of this Agreement, the Company
knows of no reason why all Requisite Regulatory Approvals (as such term is
defined in subsection 8.1(c) hereof) should not be obtained.
4.25. Loan Portfolio. (a) Neither the Company nor any of its
Subsidiaries is a party to any written or oral (i) loan agreement, note or
borrowing arrangement (including, without limitation, leases, credit
enhancements, commitments, guarantees and interest-bearing assets)
(collectively, "Loans"), other than any Loan the unpaid principal balance
of which does not exceed $50,000, under the terms of which the obligor is,
as of the date of this Agreement, over 90 days delinquent in payment of
principal or interest or in default of any other provision, or (ii) Loan
with any director, executive officer or five percent or greater stockholder
of the Company or any of its Subsidiaries, or to the knowledge of the
Company, any person, corporation or enterprise controlling, controlled by
or under common control with any of the foregoing. Section 4.25 of the
Company Disclosure Schedule sets forth (i) all of the Loans in original
principal amount in excess of $50,000 of the Company or any of its
Subsidiaries that as of the date of this Agreement are classified by any
bank examiner (whether regulatory or internal) as "Other Loans Specially
Mentioned", "Special Mention", "Substandard", "Doubtful", "Loss",
"Classified", "Criticized", "Credit Risk Assets", "Concerned Loans", "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
borrower thereunder, (ii) by category of Loan (i.e., commercial, consumer,
etc.), all of the other Loans of the Company and its Subsidiaries that as
of the date of this Agreement are classified as such, together with the
aggregate principal amount of and accrued and unpaid interest on such Loans
by category and (iii) each asset of the Company that as of the date of this
Agreement is classified as "Other Real Estate Owned" and the book value
thereof. The Company shall promptly inform Buyer in writing of any Loan
that becomes classified in the manner described in the previous sentence,
or any Loan the classification of which is changed, at any time after the
date of this Agreement.
(b) Each Loan in original principal amount in excess of
$50,000 (i) is evidenced by notes, agreements or other evidences of
indebtedness which are true, genuine and what they purport to be, (ii) to
the extent secured, has been secured by valid liens and security interests
which have been and remain perfected and (iii) is the legal, valid and
binding obligation of the obligor named therein, enforceable in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent conveyance
and other laws of general applicability relating to or affecting creditors'
rights and to general equity principles.
4.26. Accounting for the Merger; Reorganization. As of the date
of this Agreement, the Company has no reason to believe that the Merger
will fail to qualify (i) for pooling-of-interests treatment under GAAP or
(ii) as a reorganization under Section 368(a) of the Code.
4.27. Ownership of Company Common Stock. Immediately prior to
the Effective Time, none of the Company or its Subsidiaries will
beneficially own, directly or indirectly, any Company Common Stock that
will be cancelled, pursuant to Section 1.4(b) hereof, at the Effective
Time.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF BUYER
Except as specifically set forth in the Buyer Disclosure
Schedule (provided, however, that no exception shall be taken with respect
to any representation or warranty set forth in any Section of this Article
V unless such exception is specifically set forth in the correspondingly
enumerated section of the Buyer Disclosure Schedule), Buyer hereby
represents and warrants to the Company as follows:
5.1. Corporate Organization. (a) Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Maryland. Buyer has the corporate power and authority to own or
lease all of its properties and assets and to carry on its business as it
is now being conducted, and is duly licensed or qualified to do business in
each jurisdiction in which the nature of the business conducted by it or
the character or location of the properties and assets owned or leased by
it makes such licensing or qualification necessary. Buyer is duly
registered as a bank holding company under the BHC Act. The Articles of
Incorporation and By-Laws of Buyer, copies of which have previously been
made available to the Company, are true, complete and correct copies of
such documents as in effect as of the date of this Agreement.
(b) Buyer Bank is a banking association duly organized,
validly existing and in good standing under the laws of the United States.
The deposit accounts of Buyer Bank are insured by the FDIC through the BIF
and the SAIF to the fullest extent permitted by law, and all premiums and
assessments required in connection therewith have been paid by Buyer Bank.
Each of Buyer's other Subsidiaries is duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation.
Each Subsidiary of Buyer has the corporate power and authority to own or
lease all of its properties and assets and to carry on its business as it
is now being conducted, and is duly licensed or qualified to do business in
each jurisdiction in which the nature of the business conducted by it or
the character or location of the properties and assets owned or leased by
it makes such licensing or qualification necessary.
(c) The minute books of Buyer and each of its
Subsidiaries contain true, complete and accurate records of all meetings
and other corporate actions held or taken since December 31, 1996 of their
respective stockholders and Boards of Directors (including committees of
their respective Boards of Directors).
5.2. Capitalization. (a) As of the date of this Agreement, the
authorized capital stock of Buyer consists of 50,000,000 shares of Buyer
Common Stock. As of August 31, 1999, there were 9,360,558 shares of Buyer
Common Stock issued and outstanding. As of the date of this Agreement, no
shares of Buyer Common Stock were reserved for issuance, except that (i)
63,814 shares of Buyer Common Stock were reserved for issuance pursuant to
Buyer's dividend reinvestment and stock purchase plans and (ii) 487,408
shares of Buyer Common Stock were reserved for issuance upon the exercise
of stock options pursuant to the Buyer 1983 Incentive Stock Option Plan, as
amended, the Buyer 1995 Stock Option Plan, the Buyer Employee Stock
Purchase Plan, the Buyer 1999 Employee Stock Option Plan, the Buyer 1999
Stock Option Plan for Non-Employee Directors, the Home Federal Corporation
1989 Stock Option and Stock Appreciation Rights Plan, the Monocacy
Bancshares, Inc. 1994 Stock Incentive Plan, the Monocacy Bancshares, Inc.
1997 Independent Director Stock Option Plan, and the Xxxxxx Xxxxxxxxxxx
Stock Option Plan (collectively, the "Buyer Stock Plans"). All of the
issued and outstanding shares of Buyer Common Stock have been duly
authorized and validly issued and are fully paid, nonassessable and free of
preemptive rights, with no personal liability attaching to the ownership
thereof. As of the date of this Agreement, except as referred to above or
reflected in Section 5.2(a) of the Buyer Disclosure Schedule, Buyer does
not have and is not bound by any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character calling for the
purchase or issuance of any shares of Buyer Common Stock or any other
equity securities of Buyer or any securities representing the right to
purchase or otherwise receive any shares of Buyer Common Stock. The shares
of Buyer Common Stock to be issued pursuant to the Merger will be duly
authorized and validly issued and, at the Effective Time, all such shares
will be fully paid, nonassessable and free of preemptive rights, with no
personal liability attaching to the ownership thereof.
(b) Section 5.2(b) of the Buyer Disclosure Schedule sets
forth a true and correct list of all of Buyer Subsidiaries as of the date
of this Agreement. As of the date of this Agreement, Buyer owns, directly
or indirectly, all of the issued and outstanding shares of capital stock of
each of the Subsidiaries of Buyer, free and clear of all liens, charges,
encumbrances and security interests whatsoever, and all of such shares are
duly authorized and validly issued and are fully paid, nonassessable and
free of preemptive rights, with no personal liability attaching to the
ownership thereof. As of the date of this Agreement, no Subsidiary of Buyer
has or is bound by any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character with any party that is not a
direct or indirect Subsidiary of Buyer calling for the purchase or issuance
of any shares of capital stock or any other equity security of such
Subsidiary or any securities representing the right to purchase or
otherwise receive any shares of capital stock or any other equity security
of such Subsidiary.
5.3. Authority; No Violation. (a) Buyer has full corporate
power and authority to execute and deliver this Agreement and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have
been duly and validly approved by the Board of Directors of Buyer and no
other corporate proceedings on the part of Buyer are necessary to approve
this Agreement and to consummate the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Buyer and
(assuming due authorization, execution and delivery by the Company) this
Agreement constitutes a valid and binding obligation of Buyer, enforceable
against Buyer in accordance with its terms, except as enforcement may be
limited by general principles of equity whether applied in a court of law
or a court of equity and by bankruptcy, insolvency and similar laws
affecting creditors' rights and remedies generally.
(b) Buyer Bank has full corporate power and authority to
execute and deliver the Bank Merger Agreement and to consummate the
transactions contemplated thereby. The execution and delivery of the Bank
Merger Agreement and the consummation of the transactions contemplated
thereby will be duly and validly approved by the Board of Directors of
Buyer Bank. Upon the due and valid approval of the Bank Merger Agreement by
Buyer as the sole stockholder of Buyer Bank, and by the Board of Directors
of Buyer Bank, no other corporate proceedings on the part of Buyer Bank
will be necessary to consummate the transactions contemplated thereby. The
Bank Merger Agreement, upon execution and delivery by Buyer Bank, will be
duly and validly executed and delivered by Buyer Bank and will (assuming
due authorization, execution and delivery by the Company Bank) constitute a
valid and binding obligation of Buyer Bank, enforceable against Buyer Bank
in accordance with its terms, except as enforcement may be limited by
general principles of equity whether applied in a court of law or a court
of equity and by bankruptcy, insolvency and similar laws affecting
creditors' rights and remedies generally.
(c) Neither the execution and delivery of this Agreement
by Buyer or the Bank Merger Agreement by Buyer Bank, nor the consummation
by Buyer or Buyer Bank, as the case may be, of the transactions
contemplated hereby or thereby, nor compliance by Buyer or Buyer Bank, as
the case may be, with any of the terms or provisions hereof or thereof,
will (i) violate any provision of the Articles of Incorporation or By-Laws
of Buyer, or the articles of incorporation or by-laws or similar governing
documents of any of its Subsidiaries or (ii) assuming that the consents and
approvals referred to in Section 5.4 are duly obtained, (x) violate any
statute, code, ordinance, rule, regulation, judgment, order, writ, decree
or injunction applicable to Buyer or any of its Subsidiaries or any of
their respective properties or assets, or (y) violate, conflict with,
result in a breach of any provision of or the loss of any benefit under,
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 or a
right of termination or cancellation under, accelerate the performance
required by, or result in the creation of any lien, pledge, security
interest, charge or other encumbrance upon any of the respective properties
or assets of Buyer or any of its Subsidiaries under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument or obligation to which
Buyer or any of its Subsidiaries is a party, or by which they or any of
their respective properties or assets may be bound or affected.
5.4. Consents and Approvals. Except for (a) the filing of
applications and notices, as applicable, with the Federal Reserve Board
under the BHC Act and the Office of the Comptroller of the Currency under
the Bank Merger Act, and approval of such applications and notices, (b) the
filing and declaration of effectiveness of the S-4, (c) the filing of the
Articles of Merger with the Department pursuant to the MGCL, (d) such
filings and approvals as are required to be made or obtained under the
securities or "Blue Sky" laws of various states in connection with the
issuance of the shares of Buyer Common Stock pursuant to this Agreement,
(e) the approval of the Bank Merger Agreement by the stockholder of Buyer
Bank, (f) authorization for quotation of Buyer Common Stock to be issued in
the Merger on the Nasdaq/NMS, (g) approval of the transactions contemplated
by this Agreement and the Bank Merger Agreement by the Maryland
Commissioner of Financial Regulation and/or filings in connection therewith
pursuant to the Financial Institutions Article of the Annotated Code of
Maryland, (h) filings with the State Insurance Commissioner and (i) such
filings, authorizations or approvals as may be set forth in Section 5.4 of
the Buyer Disclosure Schedule, no consents or approvals of or filings or
registrations with any Governmental Entity or with any third party are
necessary in connection with (1) the execution and delivery by Buyer of
this Agreement, (2) the consummation by Buyer of the Merger and the other
transactions contemplated hereby, (3) the execution and delivery by Buyer
Bank of the Bank Merger Agreement, and (4) the consummation of Buyer Bank
of the transactions contemplated by the Bank Merger Agreement.
5.5. Reports. Buyer and each of its Subsidiaries have timely
filed all reports, registrations and statements, together with any
amendments required to be made with respect thereto, that they were
required to file since December 31, 1995 with the OCC or any other
Regulatory Agency (collectively, the "Buyer Regulatory Agencies"), and have
paid all fees and assessments due and payable in connection therewith.
Except for normal examinations conducted by a Buyer Regulatory Agency in
the regular course of the business of Buyer and its Subsidiaries, and no
Buyer Regulatory Agency has initiated any proceeding or investigation into
the business or operations of Buyer or any of its Subsidiaries since
December 31, 1995. There is no unresolved violation, criticism, or
exception by any Buyer Regulatory Agency with respect to any report or
statement relating to any examinations of Buyer or any of its Subsidiaries.
5.6. Financial Statements. (a) Buyer has previously made
available to the Company copies of (i) the consolidated balance sheets of
Buyer and its Subsidiaries as of December 31 for the fiscal years 1997 and
1998 and the related consolidated statements of income and comprehensive
income, changes in shareholders' equity and cash flows for the fiscal years
1996 through 1998, inclusive, as reported in Buyer's Annual Report on Form
10-K for the fiscal year ended December 31, 1998 filed with the SEC under
the Exchange Act, in each case accompanied by the audit report of Xxxxxx
Xxxxxxxx, LLP, independent public accountants with respect to Buyer, and
(ii) the unaudited consolidated balance sheets of Buyer and its
Subsidiaries as of June 30, 1999 and June 30, 1998 and the related
unaudited consolidated statements of income and comprehensive income,
changes in shareholders' equity and cash flows for the six-month periods
then ended as reported in Buyer's Quarterly Report on Form 10-Q for the
period ended June 30, 1999 filed with the SEC under the Exchange Act. The
December 31, 1998 consolidated balance sheet of Buyer (including the
related notes, where applicable) fairly presents the consolidated financial
position of Buyer and its Subsidiaries as of the date thereof, and the
other financial statements referred to in this Section 5.6 (a) (including
the related notes, where applicable) fairly present and the financial
statements to be filed with the SEC after the date hereof will fairly
present (subject, in the case of the unaudited statements, to recurring
audit adjustments normal in nature and amount), the results of the
consolidated operations and changes in shareholders' equity and
consolidated financial position of Buyer and its Subsidiaries for the
respective fiscal periods or as of the respective dates therein set forth;
each of such statements (including the related notes, where applicable)
comply, and the financial statements to be filed with the SEC after the
date hereof will comply, with applicable accounting requirements and with
the published rules and regulations of the SEC with respect thereto; and
each of such statements (including the related notes, where applicable) has
been, and the financial statements to be filed with the SEC after the date
hereof will be, prepared in accordance with GAAP consistently applied
during the periods involved, except as indicated in the notes thereto or,
in the case of unaudited statements, as permitted by Form 10-Q.
(b) The books and records of Buyer and its Subsidiaries
have been, and are being, maintained in accordance with GAAP and any other
applicable legal and accounting requirements.
5.7. Broker's Fees. Neither Buyer nor any Subsidiary of Buyer,
nor any of their respective officers or directors, has employed any broker
or finder or incurred any liability for any broker's fees, commissions or
finder's fees in connection with any of the transactions contemplated by
this Agreement, the Company Option Agreement or the Bank Merger Agreement,
except that Buyer has engaged, and will pay a fee or commission to, Wheat
First Securities, Inc.
5.8. Absence of Certain Changes or Events. Since December 31,
1998, there has been no change or development or combination of changes or
developments which, individually or in the aggregate, has had or is
reasonably likely to have a Material Adverse Effect on Buyer.
5.9. Legal Proceedings. (a) Neither Buyer nor any of its
Subsidiaries is a party to any, and there are no pending or, to the Buyer's
knowledge, threatened, legal, administrative, arbitral or other
proceedings, claims, actions or governmental or regulatory investigations
of any nature against Buyer or any of its Subsidiaries or challenging the
validity or propriety of the transactions contemplated by this Agreement or
the Bank Merger Agreement.
(b) There is no injunction, order, judgment, decree, or
regulatory restriction imposed upon Buyer, any of its Subsidiaries or the
assets of Buyer or any of its Subsidiaries.
5.10. SEC Reports. Buyer has previously made available to the
Company a true, complete and correct copy of each (a) final registration
statement, prospectus, report, schedule and definitive proxy statement
filed since January 1, 1997 by Buyer with the SEC pursuant to the
Securities Act or the Exchange Act (the "Buyer Reports") and (b)
communication mailed by Buyer to its stockholders since January 1, 1997,
and no such registration statement, prospectus, report, schedule, proxy
statement or communication contained any untrue statement of a material
fact or omitted to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances in which they were made, not misleading, except that
information as of a later date shall be deemed to modify information as of
an earlier date. Buyer has timely filed all Buyer Reports and other
documents required to be filed by it under the Securities Act and the
Exchange Act, and, as of their respective dates, all Buyer Reports complied
with the published rules and regulations of the SEC with respect thereto.
5.11. Agreements with Regulatory Agencies. Neither Buyer nor
any of its Subsidiaries is subject to any cease-and-desist or other order
issued by, or is a party to any written agreement, consent agreement or
memorandum of understanding with, or is a party to any commitment letter or
similar undertaking to, or is subject to any order or directive by, or is a
recipient of any extraordinary supervisory letter from, or has adopted any
board resolutions at the request of (each, whether or not set forth in
Section 5.11 of the Buyer Disclosure Schedule, a "Buyer Regulatory
Agreement"), any Buyer Regulatory Agency or other Governmental Entity that
restricts the conduct of its business or that in any manner relates to its
capital adequacy, its credit policies, its management or its business, nor
has Buyer or any of its Subsidiaries been advised by any Buyer Regulatory
Agency or other Governmental Entity that it is considering issuing or
requesting any Regulatory Agreement.
5.12. Buyer Information. The information relating to Buyer and
its Subsidiaries which is provided to the Company by Buyer for inclusion in
the Proxy Statement and the S-4, or in any other document filed with any
other regulatory agency in connection herewith, will not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein, in light of the circumstances in which they
are made, not misleading.
5.13. Ownership of Company Common Stock; Affiliates and
Associates. (a) Except for the Company Option Agreement, neither Buyer nor
any of its affiliates or associates (as such terms are defined under the
Exchange Act), (i) beneficially owns, directly or indirectly, or (ii) is a
party to any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of, in each case, any shares of
capital stock of the Company (other than Trust Account Shares and DPC
Shares); and
(b) Neither Buyer nor any of its Subsidiaries is an
"affiliate" (as such term is defined in MGCL ss. 3-601) or an "associate"
(as such term is defined in MGCL ss. 3-601) of the Company or an
"Interested Stockholder" (as such term is defined in MGCL ss. 3-601) of the
Company.
5.14. Approvals. As of the date of this Agreement, Buyer knows
of no reason why all regulatory approvals required for the consummation of
the transactions contemplated hereby (including, without limitation, the
Merger and the Subsidiary Merger) should not be obtained.
5.15. Accounting for the Merger; Reorganization. As of the date
of this Agreement, Buyer has no reason to believe that the Merger will fail
to qualify (i) for pooling-of-interests treatment under GAAP or (ii) as a
reorganization under Section 368(a) of the Code.
5.16. Taxes. Each of Buyer and its Subsidiaries (i) has duly
and timely filed (including applicable extensions granted without penalty)
all Tax Returns required to be filed on or prior to the date hereof and
will duly and timely file all Tax Returns after the date hereof and prior
to the Effective Time, and such Tax Returns are or will be true, correct
and complete, and (ii) has paid or will pay in full or to the extent
necessary made or will make adequate provision in the financial statements
of Buyer (in accordance with GAAP) for all Taxes. No deficiencies for any
Taxes have been proposed, asserted, assessed or, to the knowledge of Buyer,
threatened against or with respect to Buyer or any of its Subsidiaries. (i)
There are no liens for Taxes upon the assets of either Buyer or its
Subsidiaries except for statutory liens for current Taxes not yet due, (ii)
neither Buyer nor any of its Subsidiaries has requested any extension of
time within which to file any Tax Returns in respect of any fiscal year
which have not since been filed and no request for waivers of the time to
assess any Taxes are pending or outstanding, (iii) with respect to each
taxable period of Buyer and its Subsidiaries, the federal and state income
Tax Returns of Buyer and its Subsidiaries have been audited by the IRS or
appropriate state tax authorities or the time for assessing and collecting
income Tax with respect to such taxable period has closed and such taxable
period is not subject to review, (iv) neither Buyer nor any of its
Subsidiaries has filed or been included in a combined, consolidated or
unitary income Tax Return other than one in which Buyer was the parent of
the group filing such Tax Return, (v) neither Buyer nor any of its
Subsidiaries is a party to any agreement providing for the allocation or
sharing of Taxes (other than the allocation of federal income taxes as
provided by Regulation 1.1552-1(a)(1) under the Code), (vi) neither Buyer
nor any of its Subsidiaries is required to include in income any adjustment
pursuant to Section 481(a) of the Code (or any similar or corresponding
provision or requirement of state, local or foreign income Tax law), by
reason of the voluntary change in accounting method (nor has any taxing
authority proposed in writing any such adjustment or change of accounting
method), (vii) neither Buyer nor any of its Subsidiaries has filed a
consent pursuant to Section 341(f) of the Code, and (viii) neither Buyer
nor any of its Subsidiaries has made any payment or will be obligated to
make any payment (by contract or otherwise) which will not be deductible by
reason of Section 280G of the Code.
5.17. Employees. (a) Section 5.17(a) of the Buyer Disclosure
Schedule sets forth a true, complete and correct list of each deferred
compensation plan, incentive compensation plan, equity compensation plan,
"welfare" plan, fund or program (within the meaning of section 3(1) of
ERISA; each "pension" plan, fund or program (within the meaning of section
3(2) of ERISA); each employment, termination or severance agreement; and
each other employee benefit plan, fund, program, agreement or arrangement,
in each case, that is sponsored, maintained or contributed to or required
to be contributed to (the "Buyer Plans") by Buyer, any of its Subsidiaries
or by any trade or business, whether or not incorporated (a "Buyer ERISA
Affiliate"), all of which together with Buyer would be deemed a "single
employer" within the meaning of Section 4001 of ERISA, for the benefit of
any employee or former employee of Buyer, any Subsidiary or any Buyer ERISA
Affiliate.
(b) (i) Each of the Buyer Plans has been operated and
administered in all material respects in accordance with its terms and
applicable law, including but not limited to ERISA and the Code, (ii) each
of the Buyer Plans intended to be "qualified" within the meaning of Section
401(a) of the Code either (1) has received a favorable determination letter
from the IRS, or (2) is or will be the subject of an application for a
favorable determination letter, and Buyer is not aware of any circumstances
likely to result in the revocation or denial of any such favorable
determination letter, (iii) with respect to each Buyer Plan which is
subject to Title IV of ERISA, the present value of accrued benefits under
such Buyer Plan, based upon the actuarial assumptions used for funding
purposes in the most recent actuarial report prepared by such Buyer Plan's
actuary with respect to such Buyer Plan, did not, as of its latest
valuation date, exceed the then current value of the assets of such Buyer
Plan allocable to such accrued benefits, (iv) no Buyer Plan provides
benefits, including without limitation death or medical benefits (whether
or not insured), with respect to current or former employees of Buyer, its
Subsidiaries or any Buyer ERISA Affiliate beyond their retirement or other
termination of service, other than (w) coverage mandated by applicable law,
(x) death benefits or retirement benefits under any "employee pension
plan," as that term is defined in Section 3(2) of ERISA, (y) deferred
compensation benefits accrued as liabilities on the books of Buyer, its
Subsidiaries or a Buyer ERISA Affiliates or (z) benefits the full cost of
which is borne by the current or former employee (or his beneficiary), (v)
no liability under Title IV of ERISA has been incurred by Buyer, its
Subsidiaries or any Buyer ERISA Affiliate that has not been satisfied in
full, and no condition exists that presents a material risk to Buyer, its
Subsidiaries or a Buyer ERISA Affiliate of incurring a liability
thereunder, (vi) no Buyer Plan is a "multiemployer pension plan," as such
term is defined in Section 3(37) of ERISA, (vii) all contributions or other
amounts payable by Buyer, its Subsidiaries or any Buyer ERISA Affiliates as
of the Effective Time with respect to each Buyer Plan in respect of current
or prior plan years have been paid or accrued in accordance with GAAP and
Section 412 of the Code, (viii) neither Buyer, its Subsidiaries nor any
Buyer ERISA Affiliate has engaged in a transaction in connection with which
Buyer, its Subsidiaries or any Buyer ERISA Affiliate could be subject to
either a civil penalty assessed pursuant to Section 409 or 502(i) of ERISA
or a tax imposed pursuant to Section 4975 or 4976 of the Code, (ix) there
are no pending or, to the best knowledge of Buyer, threatened or
anticipated claims (other than routine claims for benefits) by, on behalf
of or against any of the Buyer Plans or any trusts related thereto and (x)
the consummation of the transactions contemplated by this Agreement or the
Bank Merger Agreement will not (y) entitle any current or former employee
or officer of Buyer or any Buyer ERISA Affiliate to severance pay,
termination pay or any other payment or benefit, except as expressly
provided in this Agreement or (z) accelerate the time of payment or vesting
or increase the amount or value of compensation or benefits due any such
employee or officer.
5.18. Compliance with Applicable Law. Buyer and each of its
Subsidiaries holds, and have at all times held, all licenses, franchises,
permits and authorizations necessary for the lawful conduct of their
respective businesses under and pursuant to all, and have complied with and
are not in default in any respect under any, applicable law, statute,
order, rule, regulation, policy and/or guideline of any Governmental Entity
relating to Buyer or any of its Subsidiaries, and neither Buyer nor any of
its Subsidiaries has received notice of, any violations of any of the
above.
5.19. Investment Securities. Section 5.19 of the Buyer
Disclosure Schedule sets forth the book and market value as of July 31,
1999 of the investment securities and securities available for sale of
Buyer and its Subsidiaries.
5.20. Intellectual Property. Buyer and each of its Subsidiaries
owns or possesses valid and binding licenses and other rights to use
without payment all patents, copyrights, trade secrets, trade names,
servicemarks and trademarks used in its businesses; and neither Buyer nor
any of its Subsidiaries has received any notice of conflict with respect
thereto that asserts the right of others.
5.21. Environmental Matters. (a) Each of Buyer and its
Subsidiaries and to the best knowledge of Buyer, the Participation
Facilities and the Loan Properties (each as hereinafter defined) are, and
have been, in compliance with all applicable federal, state and local laws
including common law, regulations and ordinances and with all applicable
Environmental Laws;
(b) There is no suit, claim, action or proceeding,
pending or, to the best knowledge of Buyer, threatened, before any
Governmental Entity or other forum in which Buyer, any of its Subsidiaries
or to the best knowledge of Buyer, any Participation Facility or any Loan
Property, has been or, with respect to threatened proceedings, may be,
named as a defendant (x) for alleged noncompliance (including by any
predecessor), with any Environmental Laws or (y) relating to the release,
threatened release or exposure to any Hazardous Material whether or not
occurring at or on a site owned, leased or operated by Buyer or any of its
Subsidiaries, any Participation Facility or any Loan Property;
(c) During the period of (x) Buyer's or any of its
Subsidiaries' ownership or operation of any of their respective current or
former properties, (y) Buyer's or any of its Subsidiaries' participation in
the management of any Participation Facility or (z) Buyer's or any of its
Subsidiaries' holding of a security interest in a Loan Property, to the
best knowledge of Buyer, there has been no release of Hazardous Materials
in, on, under or affecting any such property. Prior to the period of (x)
Buyer's or any of its Subsidiaries' ownership or operation of any of their
respective current or former properties, (y) Buyer's or any of its
Subsidiaries' participation in the management of any Participation Facility
or (z) Buyer's or any of its Subsidiaries' holding of a security interest
in a Loan Property, to the best knowledge of Buyer, there was no release or
threatened release of Hazardous Materials in, on, under or affecting any
such property, Participation Facility or Loan Property; and
(d) The following definitions apply for purposes of this
Section 5.21: (x) "Hazardous Materials" means any chemicals, pollutants,
contaminants, wastes, toxic substances, petroleum or other regulated
substances or materials; (y) "Loan Property" means any property in which
Buyer or any of its Subsidiaries holds a security interest, and, where
required by the context, said term means the owner or operator of such
property; and (z) "Participation Facility" means any facility in which
Buyer or any of its Subsidiaries participates in the management and, where
required by the context, said term means the owner or operator of such
property.
5.22. Derivative Transactions. Since December 31, 1998, neither
Buyer nor any of its Subsidiaries has engaged in transactions in or
involving forwards, futures, options on futures, swaps or other derivative
instruments except (i) as agent on the order and for the account of others
or (ii) as principal for purposes of hedging interest rate risk on U.S.
dollar-denominated securities and other financial instruments. None of the
counterparties to any contract or agreement with respect to any such
instrument is in default with respect to such contract or agreement and no
such contract or agreement, were it to be a Loan held by Buyer or any of
its Subsidiaries, would be classified as "Other Loans Specially Mentioned",
"Special Mention", "Substandard", "Doubtful", "Loss", "Classified",
"Criticized", "Credit Risk Assets", "Concerned Loans" or words of similar
import. The financial position of Buyer and its Subsidiaries on a
consolidated basis under or with respect to each such instrument has been
reflected in the books and records of Buyer and such Subsidiaries in
accordance with GAAP consistently applied, and no open exposure of Buyer or
any of its Subsidiaries with respect to any such instrument (or with
respect to multiple instruments with respect to any single counterparty)
exceeds $10,000,000.
5.23. Loan Portfolio. (a) Neither Buyer nor any of its
Subsidiaries is a party to any written or oral (i) Loan, other than any
Loan the unpaid principal balance of which does not exceed $1,000,000,
under the terms of which the obligor is, as of the date of this Agreement,
over 90 days delinquent in payment of principal or interest or in default
of any other provision, or (ii) Loan with any director, executive officer
or five percent or greater stockholder of Buyer or any of its Subsidiaries,
or to the knowledge of Buyer, any person, corporation or enterprise
controlling, controlled by or under common control with any of the
foregoing. Section 5.23 of the Buyer Disclosure Schedule sets forth (i) all
of the Loans in original principal amount in excess of $1,000,000 of Buyer
or any of its Subsidiaries that as of the date of this Agreement are
classified by any bank examiner (whether regulatory or internal) as "Other
Loans Specially Mentioned", "Special Mention", "Substandard", "Doubtful",
"Loss", "Classified", "Criticized", "Credit Risk Assets", "Concerned
Loans", "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 borrower thereunder, (ii) by category of Loan (i.e.,
commercial, consumer, etc.), all of the other Loans of Buyer and its
Subsidiaries that as of the date of this Agreement are classified as such,
together with the aggregate principal amount of and accrued and unpaid
interest on such Loans by category and (iii) each asset of Buyer that as of
the date of this Agreement is classified as "Other Real Estate Owned" and
the book value thereof.
(b) Each Loan in original principal amount in excess of
$10,000,000 (i) is evidenced by notes, agreements or other evidences of
indebtedness which are true, genuine and what they purport to be, (ii) to
the extent secured, has been secured by valid liens and security interests
which have been and remain perfected and (iii) is the legal, valid and
binding obligation of the obligor named therein, enforceable in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent conveyance
and other laws of general applicability relating to or affecting creditors'
rights and to general equity principles.
5.24. Administration of Fiduciary Accounts. Buyer and each of
its Subsidiaries has properly administered all accounts for which it acts
as a fiduciary, including but not limited to accounts for which it serves
as a trustee, agent, custodian, personal representative, guardian,
conservator or investment advisor, in accordance with the terms of the
governing documents and applicable state and federal law and regulation and
common law. Neither Buyer nor any of its Subsidiaries nor any of their
respective directors, officers or employees has committed any breach of
trust with respect to any such fiduciary account, and the accountings for
each such fiduciary account are true, complete and correct and accurately
reflect the assets of such fiduciary account.
ARTICLE VI
COVENANTS RELATING TO CONDUCT OF BUSINESS
6.1. Covenants of the Company. During the period from the date
of this Agreement and continuing until the Effective Time, except as
expressly contemplated or permitted by this Agreement, the Bank Merger
Agreement or the Company Option Agreement or with the prior written consent
of Buyer, the Company and its Subsidiaries shall carry on their respective
businesses in the ordinary course consistent with past practice and
consistent with prudent banking practice. The Company will use its
reasonable best efforts to (x) preserve its business organization and that
of its Subsidiaries intact, (y) keep available to itself and Buyer the
present services of the employees of the Company and its Subsidiaries and
(z) preserve for itself and Buyer the goodwill of the customers of the
Company and its Subsidiaries and others with whom business relationships
exist. Without limiting the generality of the foregoing, and except as set
forth on Section 6.1 of the Company Disclosure Schedule or as otherwise
contemplated by this Agreement or consented to in writing by Buyer, the
Company shall not, and shall not permit any of its Subsidiaries to:
(a) solely in the case of the Company, declare or pay any
dividends on, or make other distributions in respect of, any of its capital
stock, other than normal quarterly dividends not in excess of $0.13 per
share of Company Common Stock;
(b) (i) split, combine or reclassify any shares of its
capital stock or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock except upon the exercise or fulfillment of rights or options
issued or existing pursuant to employee benefit plans, programs or
arrangements, all to the extent outstanding and in existence on the date of
this Agreement and in accordance with their present terms and except
pursuant to the Company Option Agreement or (ii) repurchase, redeem or
otherwise acquire (except for the acquisition of Trust Account Shares and
DPC Shares) any shares of the capital stock of the Company or any
Subsidiary of the Company, or any securities convertible into or
exercisable for any shares of the capital stock of the Company or any
Subsidiary of the Company;
(c) issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock or any
securities convertible into or exercisable for, or any rights, warrants or
options to acquire, any such shares, or enter into any agreement with
respect to any of the foregoing, other than (i) the issuance of Company
Common Stock pursuant to stock options or similar rights to acquire Company
Common Stock granted pursuant to the Company Option Plans and outstanding
prior to the date of this Agreement, in each case in accordance with their
present terms, (ii) the issuance of 4,000 shares of Company Common Stock
pursuant to and in accordance with the terms of the Xxxxxxx Option Plan,
(iii) the issuance of 5,200 shares of Company Common Stock pursuant to and
in accordance with the Restricted Stock Award, (iv) if the Company DRIP has
not been suspended pursuant to Section 7.18, the issuance of Company Common
Stock pursuant to and in accordance with the terms of the Company DRIP in
respect of regular quarterly dividend payments and (v) pursuant to the
Company Option Agreement;
(d) amend its Articles of Incorporation, By-Laws or other
similar governing documents;
(e) make any capital expenditures other than those which
(i) are made in the ordinary course of business or are necessary to
maintain existing assets in good repair and (ii) in any event are in an
amount of no more than $100,000 in the aggregate;
(f) enter into any new line of business;
(g) acquire or agree to acquire, by merging or
consolidating with, or by purchasing a substantial equity interest in or a
substantial portion of the assets of, or by any other manner, any business
or any corporation, partnership, association or other business organization
or division thereof or otherwise acquire any assets, which would be
material, individually or in the aggregate, to the Company, other than in
connection with foreclosures, settlements in lieu of foreclosure or
troubled loan or debt restructurings in the ordinary course of business
consistent with prudent banking practices;
(h) take any action that is intended or may reasonably be
expected to result in any of the conditions to the Merger set forth in
Article VIII not being satisfied;
(i) change its methods of accounting in effect at June
30, 1999, except as required by changes in GAAP or regulatory accounting
principles as concurred to by the Company's independent auditors;
(j) (i) except as required by applicable law or to
maintain qualification pursuant to the Code, adopt, amend, renew or
terminate any employee benefit plan (including, without limitation, any
Plan) or any agreement, arrangement, plan or policy between the Company or
any Subsidiary of the Company and one or more of its current or former
directors, officers or employees or (ii) except for normal increases in the
ordinary course of business consistent with past practice or except as
required by applicable law, increase in any manner the compensation or
fringe benefits of any director, officer or employee or pay any benefit not
required by any Plan or agreement as in effect as of the date hereof
(including, without limitation, the granting of stock options, stock
appreciation rights, restricted stock, restricted stock units or
performance units or shares);
(k) take or cause to be taken any action which would
disqualify the Merger as a "pooling of interests" for accounting purposes
or a tax free reorganization under Section 368(a) of the Code, provided,
however, that nothing contained herein shall limit the ability of Buyer to
exercise its rights under the Company Option Agreement;
(l) other than activities in the ordinary course of
business consistent with past practice, sell, lease, encumber, assign or
otherwise dispose of, or agree to sell, lease, encumber, assign or
otherwise dispose of, any of its material assets, properties or other
rights or agreements;
(m) other than in the ordinary course of business
consistent with past practice, incur any indebtedness for borrowed money or
assume, guarantee, endorse or otherwise as an accommodation become
responsible for the obligations of any other individual, corporation or
other entity;
(n) file any application to relocate or terminate the
operations of any banking office of it or any of its Subsidiaries;
(o) make any equity investment or commitment to make such
an investment in real estate or in any real estate development project,
other than in connection with foreclosures, settlements in lieu of
foreclosure or troubled loan or debt restructurings in the ordinary course
of business consistent with prudent banking practices;
(p) create, renew, amend or terminate or give notice of a
proposed renewal, amendment or termination of, any material contract,
agreement or lease for goods, services or office space to which the Company
or any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries or their respective properties is bound;
(q) other than in prior consultation with Buyer,
restructure or materially change its investment securities portfolio or its
gap position, through purchases, sales or otherwise, or the manner in which
the portfolio is classified or reported;
(r) without the prior consent of Buyer, make or purchase,
or commit to make or purchase, any loan or loans, or extend any line of
credit, to any borrower and its affiliates in an aggregate principal amount
greater than $1,000,000 or in an amount which, when aggregated with any
existing indebtedness to the Company and its Subsidiaries and lines of
credit from the Company and its Subsidiaries of such borrower and its
affiliates, would exceed $1,000,000; provided, however, that if at any time
from the date of this Agreement to the Effective Time, the Company or any
of its Subsidiaries desires to make or purchase, or commit to make or
purchase, any such loan, or extend any such line of credit, the Company
shall furnish to Buyer, promptly upon its substantial completion, the
information package prepared by the Company's (or such Subsidiary's) loan
committee with respect to such proposed loan requests and any other
information that Buyer may reasonably request (collectively, the "Loan
Request Documents"), and unless, within 24 hours of receiving the Loan
Request Documents, Buyer notifies the Company (whether telephonically or in
writing) that Buyer objects to the making of such loan or the extension of
such credit, Buyer shall be deemed to have consented to such loan or
extension of credit; or
(s) agree to do any of the foregoing.
6.2. Covenants of Buyer. During the period from the date of
this Agreement and continuing until the Effective Time, except as expressly
contemplated or permitted by this Agreement, the Bank Merger Agreement or
the Company Option Agreement or with the prior written consent of the
Company, Buyer and its Subsidiaries shall carry on their respective
businesses in the ordinary course consistent with prudent banking practice.
Without limiting the generality of the foregoing, and except as set forth
on Section 6.2 of the Buyer Disclosure Schedule or as otherwise
contemplated by this Agreement or consented to in writing by the Company,
Buyer shall not, and shall not permit any of its Subsidiaries to:
(a) solely in the case of Buyer, declare or pay any
extraordinary or special dividends on or make any other extraordinary or
special distributions in respect of any of its capital stock; provided,
however, that nothing contained herein shall prohibit Buyer from increasing
the quarterly cash dividend on Buyer Common Stock;
(b) take any action that is intended or may reasonably be
expected to result in any of the conditions to the Merger set forth in
Article VIII not being satisfied;
(c) change its methods of accounting in effect at June
30, 1999, except in accordance with changes in GAAP or regulatory
accounting principles as concurred to by Buyer's independent auditors;
(d) knowingly take any action that would result in a
failure to maintain the authorization for quotation of Buyer Comon Stock on
the Nasdaq/NMS;
(e) take or cause to be taken any action which would
disqualify the Merger as a "pooling of interests" for accounting purposes
or a tax free reorganization under Section 368(a) of the Code, provided,
however, that nothing contained herein shall limit the ability of Buyer to
exercise its rights under the Company Option Agreement; or
(f) agree to do any of the foregoing.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1. Regulatory Matters. (a) The Company shall promptly prepare
and file with the SEC the Proxy Statement and Buyer shall promptly prepare
and file with the SEC the S-4, in which the Proxy Statement will be
included as a prospectus. Each of the Company and Buyer shall use all
reasonable efforts to have the S-4 declared effective under the Securities
Act as promptly as practicable after such filing, and the Company shall
thereafter mail the Proxy Statement to its stockholders. Buyer shall also
use all reasonable efforts to obtain all necessary state securities law or
"Blue Sky" permits and approvals required to carry out the transactions
contemplated by this Agreement and the Company shall furnish all
information concerning the Company and the holders of Company Common Stock
as may be reasonably requested in connection with any such action.
(b) The parties hereto shall cooperate with each other
and use their commercially reasonable efforts to promptly prepare and file
all necessary documentation, to effect all applications, notices, petitions
and filings, and to obtain as promptly as practicable all permits,
consents, approvals and authorizations of all third parties and
Governmental Entities which are necessary or advisable to consummate the
transactions contemplated by this Agreement (including without limitation
the Merger and the Subsidiary Merger) (it being understood that any
amendments to the S-4 or a resolicitation of proxies as consequence of a
subsequent proposed merger, stock purchase or similar acquisition by Buyer
or any of its Subsidiaries shall not violate this covenant). The Company
and Buyer shall have the right to review in advance, and to the extent
practicable each will consult the other on, in each case subject to
applicable laws relating to the exchange of information, all the
information relating to the Company or Buyer, as the case may be, and any
of their respective Subsidiaries, which appears in any filing made with, or
written materials submitted to, any third party or any Governmental Entity
in connection with the transactions contemplated by this Agreement. In
exercising the foregoing right, each of the parties hereto shall act
reasonably and as promptly as practicable. The parties hereto agree that
they will consult with each other with respect to the obtaining of all
permits, consents, approvals and authorizations of all third parties and
Governmental Entities necessary or advisable to consummate the transactions
contemplated by this Agreement and each party will keep the other apprised
of the status of matters relating to completion of the transactions
contemplated herein.
(c) Buyer and the Company shall, upon request, furnish
each other with all information concerning themselves, their Subsidiaries,
directors, officers and stockholders and such other matters as may be
reasonably necessary or advisable in connection with the Proxy Statement,
the S-4 or any other statement, filing, notice or application made by or on
behalf of Buyer, the Company or any of their respective Subsidiaries to any
Governmental Entity in connection with the Merger and the other
transactions contemplated by this Agreement.
(d) Buyer and the Company shall promptly furnish each
other with copies of written communications received by Buyer or the
Company, as the case may be, or any of their respective Subsidiaries,
Affiliates or Associates (as such terms are defined in Rule 12b-2 under the
Exchange Act as in effect on the date of this Agreement) from, or delivered
by any of the foregoing to, any Governmental Entity in respect of the
transactions contemplated hereby.
(e) The information supplied by the Company for inclusion
in the S-4 shall not, at the time the S-4 is declared effective, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading. The information supplied by the Company for
inclusion in the Proxy Statement shall not, at the date the Proxy Statement
(or any supplement thereto) is first mailed to stockholders, at the time of
the Company's stockholders meeting or at the Effective Time contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made not
misleading. If at any time prior to the Effective Time, any event or
circumstance relating to the Company or any of its affiliates, or its or
their respective officers or directors, should be discovered by the Company
that should be set forth in an amendment to the S-4 or a supplement to the
Proxy Statement, the Company shall promptly inform Buyer thereof in
writing. All documents that the Company is responsible for filing with the
SEC in connection with the transactions contemplated herein will comply as
to form in all material respects with applicable requirements of the
Securities Act and the rules and regulations thereunder and the Exchange
Act and the rules and regulations thereunder.
(f) The information supplied by Buyer for inclusion in
the S-4 shall not, at the time the S-4 is declared effective, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading. The information supplied by Buyer for inclusion in
the Proxy Statement shall not, at the date the Proxy Statement (or any
supplement thereto) is first mailed to stockholders, at the time of the
Company's stockholders meeting or at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. If at any
time prior to the Effective Time, any event or circumstance relating to
Buyer or any of its affiliates, or to their respective officers or
directors, should be discovered by Buyer that should be set forth in an
amendment to the S-4 or a supplement to the Proxy Statement, Buyer shall
promptly inform the Company thereof in writing. All documents that Buyer is
responsible for filing with the SEC in connection with the transactions
contemplated hereby will comply as to form in all material respects with
the applicable requirements of the Securities Act and the rules and
regulations thereunder and the Exchange Act and the rules and regulations
thereunder.
7.2. Access to Information. (a) Upon reasonable notice and
subject to applicable laws relating to the exchange of information, the
Company shall, and shall cause each of its Subsidiaries to, afford to the
officers, employees, accountants, counsel and other representatives of
Buyer, access, during normal business hours during the period prior to the
Effective Time, to all its properties, books, contracts, commitments,
records, officers, employees, accountants, counsel and other
representatives and, during such period, the Company shall, and shall cause
its Subsidiaries to, make available to Buyer (i) a copy of each report,
schedule, registration statement and other document filed or received by it
during such period pursuant to the requirements of Federal securities laws
or Federal or state banking laws (other than reports or documents which the
Company is not permitted to disclose under applicable law) and (ii) all
other information concerning its business, properties and personnel as
Buyer may reasonably request. Neither the Company nor any of its
Subsidiaries shall be required to provide access to or to disclose
information where such access or disclosure would violate or prejudice the
rights of the Company's customers, jeopardize any attorney-client privilege
or contravene any law, rule, regulation, order, judgment, decree, fiduciary
duty or binding agreement entered into prior to the date of this Agreement.
The parties hereto will make appropriate substitute disclosure arrangements
under circumstances in which the restrictions of the preceding sentence
apply. Buyer will hold, and will cause its officers, directors, employees,
accountants, counsel and other representatives to hold, all such
information in confidence to the extent required by, and in accordance
with, the provisions of the confidentiality agreement, dated August 25,
1999, by and between the Company and Buyer, with respect to all of the
information furnished by the Company to Buyer or its representatives (the
"Company Confidentiality Agreement").
(b) Upon reasonable notice and subject to applicable laws
relating to the exchange of information, Buyer shall, and shall cause its
Subsidiaries to, afford to the officers, employees, accountants, counsel
and other representatives of the Company, access, during normal business
hours during the period prior to the Effective Time, to all its properties,
books, contracts, commitments, records, officers, employees, accountants,
counsel and other representatives and, during such period, Buyer shall, and
shall cause its Subsidiaries to, make available to the Company (i) a copy
of each report, schedule, registration statement and other document filed
or received by it during such period pursuant to the requirements of
Federal securities laws or Federal or state banking laws (other than
reports or documents which Buyer is not permitted to disclose under
applicable law) and (ii) all other information concerning its business,
properties and personnel as the Company may reasonably request. Neither
Buyer nor any of its Subsidiaries shall be required to provide access to or
to disclose information where such access or disclosure would violate or
prejudice the rights of Buyer's customers, jeopardize any attorney-client
privilege or contravene any law, rule, regulation, order, judgment, decree,
fiduciary duty or binding agreement entered into prior to the date of this
Agreement. The parties hereto will make appropriate substitute disclosure
arrangements under circumstances in which the restrictions of the preceding
sentence apply. The Company will hold, and will cause its officers,
directors, employees, accountants, counsel and other representatives to
hold, all such information in confidence to the extent required by, and in
accordance with, the provisions of the confidentiality agreement, dated
August 25, 1999, by and between Buyer and the Company, with respect to all
of the information furnished by Buyer to the Company or its representatives
(the "Buyer Confidentiality Agreement," and together with the Company
Confidential Agreement, the "Confidentiality Agreements").
(c) No investigation by either of the parties or their
respective representatives shall affect the representations, warranties,
covenants or agreements of the other set forth herein.
7.3. No Solicitation. The Company agrees that neither it nor
any of its Subsidiaries shall, or shall authorize or permit any of its
respective officers, directors, employees or any investment banker,
financial advisor, attorney, accountant or other representative retained by
it to, directly or indirectly through another person, (i) solicit,
initiate, encourage or facilitate any inquiries relating to, or the making
of any proposal which constitutes, a "takeover proposal" (as defined
below), (ii) recommend or endorse any takeover proposal, or (iii) enter
into, encourage or facilitate any discussions or negotiations regarding,
furnish to any person any information with respect to, or facilitate any
attempt to make or implement any proposal that constitutes or may
reasonably be expected to lead to, any proposal relating to or involving a
takeover proposal; provided, however, that the Company may communicate
information about any such takeover proposal to its stockholders if, in the
good faith judgment of the Company's Board of Directors, based upon the
advice of outside counsel, such communication is required under applicable
law; provided, further, however, that nothing contained in this Section 7.3
shall prohibit the Board of Directors of the Company from (x) to the extent
applicable, complying with Rule 14e-2 and/or Rule 14d-9 promulgated under
the Exchange Act or (y) furnishing information to, or entering into
discussions or negotiations with, any person or entity that makes an
unsolicited, written bona fide proposal regarding a takeover proposal if,
and only to the extent that (A) the meeting of the Company's stockholders
contemplated by Section 7.4 hereof shall not have occurred, (B) the Board
of Directors of the Company concludes in good faith, after consultation
with and based upon the advice of outside counsel, that it is legally
required to furnish such information or enter into such discussions or
negotiations in order to comply with its fiduciary duties to stockholders
under applicable law, (C) prior to taking such action, the Company receives
from such person or entity an executed confidentiality agreement and an
executed standstill agreement, each in reasonably customary form (provided
that each such agreement is at least as limiting as any such agreement
between Buyer and the Company), and (D) the Board of Directors of the
Company, after consultation with and based upon the advice of its financial
advisor, concludes in good faith that the proposal regarding the takeover
proposal contains an offer of consideration that is greater than the
consideration set forth herein (a "Superior Takeover Proposal"). The
Company will immediately cease and cause to be terminated any existing
activities, discussions or negotiations previously conducted with any
parties other than Buyer with respect to any of the foregoing. The Company
will take all actions necessary or advisable to inform the appropriate
individuals or entities referred to in the first sentence hereof of the
obligations undertaken in this Section 7.3. The Company will notify Buyer
immediately if any such inquiries or takeover proposals are received by,
any such information is requested from, or any such negotiations or
discussions are sought to be initiated or continued with, the Company, and
the Company will promptly inform Buyer in writing of all of the relevant
details with respect to the foregoing. Without limiting the foregoing, it
is understood that any violation of the restrictions set forth in the first
sentence of this Section 7.3 by any officer or director of the Company or
any Subsidiary thereof or any investment banker, attorney or other advisor,
representative or agent of the Company or any Subsidiary thereof, acting on
behalf of or at the request of the Board of Directors of the Company, shall
be deemed to be a breach of this Section 7.3 by the Company. As used in
this Agreement, "takeover proposal" shall mean any tender or exchange
offer, proposal for a merger, consolidation or other business combination
involving the Company or any Subsidiary of the Company or any proposal or
offer to acquire in any manner a substantial equity interest in, or a
substantial portion of the assets of, the Company or any Subsidiary of the
Company other than the transactions contemplated or permitted by this
Agreement, the Bank Merger Agreement and the Company Option Agreement.
7.4. Stockholder Meeting. (a) The Company shall take all steps
necessary to duly call, give notice of, convene and hold a meeting of its
stockholders to be held as soon as is reasonably practicable after the date
on which the S-4 becomes effective for the purpose of voting upon the
approval of this Agreement and the consummation of the transactions
contemplated hereby. The Company will, through its Board of Directors,
except as provided in Section 7.4(b) hereof, recommend to its stockholders
approval of this Agreement and the transactions contemplated hereby and
such other matters as may be submitted to its stockholders in connection
with this Agreement.
(b) Notwithstanding the provisions of Section 7.4(a)
above, the Board of Directors of the Company may withdraw or modify, or
propose publicly to withdraw or modify, in a manner adverse to Buyer, the
approval or recommendation by such Board of Directors or such committee of
the Merger or this Agreement if the Company receives an unsolicited,
written bona fide proposal regarding a takeover proposal, and (i) the Board
of Directors of the Company concludes in good faith that it is required to
take such action, but only after consultation with and based upon the
advice of outside counsel that the failure to take such action would result
in a violation of any fiduciary duties of the Board of Directors to its
stockholders under applicable law, and (ii) the Board of Directors of the
Company, after consultation with and based upon the advice of its financial
advisor, concludes in good faith that such takeover proposal is a Superior
Takeover Proposal.
7.5. Legal Conditions to Merger. Each of Buyer and the Company
shall, and shall cause its Subsidiaries to, use their commercially
reasonable efforts (a) to take, or cause to be taken, all actions
necessary, proper or advisable to comply promptly with all legal
requirements which may be imposed on such party or its Subsidiaries with
respect to the Merger or the Subsidiary Merger and, subject to the
conditions set forth in Article VIII hereof, to consummate the transactions
contemplated by this Agreement and (b) to obtain (and to cooperate with the
other party to obtain) any consent, authorization, order or approval of, or
any exemption by, any Governmental Entity and any other third party which
is required to be obtained by the Company or Buyer or any of their
respective Subsidiaries in connection with the Merger and the Subsidiary
Merger and the other transactions contemplated by this Agreement, and to
comply with the terms and conditions of such consent, authorization, order
or approval.
7.6. Affiliates. (a) Each of Buyer and the Company shall use
its commercially reasonable efforts to cause each director, executive
officer and other person who is an "affiliate" (for purposes of Rule 145
under the Securities Act and for purposes of qualifying the Merger for
"pooling-of-interests" accounting treatment) of such party to deliver to
the other party hereto, as soon as practicable after the date of this
Agreement, a written agreement, in the form of Exhibit 7.6(a) hereto (in
the case of affiliates of Buyer) or 7.6(b) hereto (in the case of
affiliates of the Company).
(b) Buyer shall use its commercially reasonable efforts
to publish, not later than 21 days after the end of the first full calendar
month (in which there are at least 30 days) following the month in which
the Effective Time occurs, financial results covering at least 30 days of
post-Merger combined operations as contemplated by SEC Accounting Series
Release No. 135; provided, however, if the foregoing would otherwise
require publication of such financial results in April, Buyer shall not be
required to publish such financial results prior to the time it has
released summary quarterly earnings information with respect to the first
quarter in the ordinary course.
7.7. Stock Exchange Listing. Buyer shall use all commercially
reasonable efforts to cause the shares of Buyer Common Stock to be issued
in the Merger to be authorized for quotation on the Nasdaq/NMS, subject to
official notice of issuance, as of the Effective Time.
7.8. Employee Benefit Plans; Existing Agreements. (a) Buyer
agrees that those individuals who are employed by the Company or any of its
Subsidiaries immediately prior to the Effective Time shall continue to be
employees of the Surviving Corporation as of the Effective Time (the
"Company Employees"); provided, however, that this Section 7.8 shall not be
construed to limit the ability of the applicable employer to terminate the
employment of any Company Employee at any time.
(b) As soon as practicable following the Effective Time,
the Company Employees shall be entitled to participate in Buyer's employee
benefit plans in which similarly situated employees of Buyer or its
Subsidiaries participate, to the same extent as comparable employees of
Buyer or its Subsidiaries (it being understood that inclusion of Company
Employees in Buyer's employee benefit plans may occur at different times
with respect to different plans).
(c) Buyer shall, or shall cause the Surviving Bank to,
give Company Employees full credit for the Company Employees' service with
the Company or any Subsidiary of the Company to the same extent recognized
by the Company or such Subsidiary immediately prior to the Effective Time,
for purposes of eligibility, vesting and benefit accrual (except to the
extent giving such credit would result in the duplication of benefits and
except for benefit accruals under any defined benefit pension plan) under
any employee benefit plan or arrangement maintained by the Buyer or the
Surviving Bank in which the Company Employees participate.
(d) Buyer shall, or shall cause the Surviving Bank to,
(i) waive all limitations as to preexisting conditions exclusions and
waiting periods with respect to participation and coverage requirements
applicable to the Company Employees under any welfare benefit plans in
which such Company Employees may be eligible to participate after the
Effective Time, other than limitations or waiting periods that are already
in effect with respect to such Company Employees and that have not been
satisfied as of the Effective Time under any welfare plan maintained for
the Company Employees immediately prior to the Effective Time, and (ii)
provide each Company Employee with credit for any co-payments and
deductibles paid prior to the Effective Time in satisfying any applicable
deductible or out-of-pocket requirements under any welfare plans that such
Company Employees are eligible to participate in after the Effective Time.
(e) Following the Effective Time, Buyer shall honor and
shall cause the Surviving Bank to honor in accordance with their terms all
employment, severance and other compensation agreements and arrangements
existing prior to the execution of this Agreement which are between the
Company and any director, officer or employee thereof and which have been
disclosed in the Company Disclosure Schedule and have previously been made
available to Buyer.
7.9. Indemnification. (a) In the event of any threatened or
actual claim, action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative, including, without limitation,
any such claim, action, suit, proceeding or investigation in which any
person who is now, or has been at any time prior to the date of this
Agreement, or who becomes prior to the Effective Time, a director or
officer of the Company or any of its Subsidiaries (the "Indemnified
Parties") is, or is threatened to be, made a party based in whole or in
part on, or arising in whole or in part out of, or pertaining to (i) the
fact that he is or was a director or officer of the Company, any of the
Subsidiaries of the Company or any of their respective predecessors or (ii)
this Agreement or any of the transactions contemplated hereby, whether in
any case asserted or arising before or after the Effective Time, the
parties hereto agree to cooperate and use their best efforts to defend
against and respond thereto. It is understood and agreed that after the
Effective Time, Buyer shall indemnify and hold harmless, as and to the
extent permitted by Maryland law, each such Indemnified Party against any
losses, claims, damages, liabilities, costs, expenses (including reasonable
attorney's fees and expenses in advance of the final disposition of any
claim, suit, proceeding or investigation to each Indemnified Party to the
fullest extent permitted by law upon receipt of any undertaking required by
applicable law), judgments, fines and amounts paid in settlement in
connection with any such threatened or actual claim, action, suit,
proceeding or investigation, and in the event of any such threatened or
actual claim, action, suit, proceeding or investigation (whether asserted
or arising before or after the Effective Time), the Indemnified Parties may
retain counsel reasonably satisfactory to them after consultation with
Buyer; provided, however, that (1) Buyer shall have the right to assume the
defense thereof and upon such assumption Buyer shall not be liable to any
Indemnified Party for any legal expenses of other counsel or any other
expenses subsequently incurred by any Indemnified Party in connection with
the defense thereof, except that if Buyer elects not to assume such defense
or counsel for the Indemnified Parties reasonably advises that there are
issues which raise conflicts of interest between Buyer and the Indemnified
Parties, the Indemnified Parties may retain counsel reasonably satisfactory
to them after consultation with Buyer, and Buyer shall pay the reasonable
fees and expenses of such counsel for the Indemnified Parties, (2) Buyer
shall in all cases be obligated pursuant to this paragraph to pay for only
one firm of counsel for all Indemnified Parties, (3) Buyer shall not be
liable for any settlement effected without its prior written consent (which
consent shall not be unreasonably withheld) and (4) Buyer shall have no
obligation hereunder to any Indemnified Party when and if a court of
competent jurisdiction shall ultimately determine, and such determination
shall have become final and nonappealable, that indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by
applicable law. Any Indemnified Party wishing to claim Indemnification
under this Section 7.9, upon learning of any such claim, action, suit,
proceeding or investigation, shall promptly notify Buyer thereof, provided
that the failure to so notify shall not affect the obligations of Buyer
under this Section 7.9 except to the extent such failure to notify
prejudices Buyer. Buyer's obligations under this Section 7.9 shall continue
in full force and effect for a period of six (6) years from the Effective
Time; provided, however, that all rights to indemnification in respect of
any claim (a "Claim") asserted or made within such period shall continue
until the final disposition of such Claim.
(b) Prior to the Effective Time the Company shall
purchase, and for a period of six years after the Effective Time, Buyer
shall use its commercially reasonable efforts to maintain, directors and
officers liability insurance "tail" or "runoff" coverage with respect to
wrongful acts and/or omissions committed or allegedly committed prior to
the Effective Time. Subject to the foregoing, such coverage shall have an
aggregate coverage limit over the term of such policy in an amount no less
than the annual aggregate coverage limit under the Company's existing
directors and officers liability policy, and in all other respects shall be
at least comparable to such existing policy.
(c) In the event Buyer or any of its successors or
assigns (i) consolidates with or merges into any other person and shall not
be the continuing or surviving corporation or entity of such consolidation
or merger, or (ii) transfers or conveys all or substantially all of its
properties and assets to any person, then, and in each such case, to the
extent necessary, proper provision shall be made so that the successors and
assigns of Buyer assume the obligations set forth in this section.
(d) The provisions of this Section 7.9 are intended to be
for the benefit of, and shall be enforceable by, each Indemnified Party and
his or her heirs and representatives.
7.10. Additional Agreements. In case at any time after the
Effective Time any further action is necessary or desirable to carry out
the purposes of this Agreement or the Bank Merger Agreement or to vest the
Surviving Corporation or the Surviving Bank with full title to all
properties, assets, rights, approvals, immunities and franchises of any of
the parties to the Merger or the Subsidiary Merger, the proper officers and
directors of each party to this Agreement and their respective Subsidiaries
shall take all such necessary action as may be reasonably requested by
Buyer.
7.11. Advice of Changes. Buyer and the Company shall promptly
advise the other party of any change or event having a Material Adverse
Effect on it or which it believes would or would be reasonably likely to
cause or constitute a material breach of any of its representations,
warranties or covenants contained herein. From time to time prior to the
Effective Time (and on the date prior to the Closing Date), each party will
promptly supplement or amend the Disclosure Schedules delivered in
connection with the execution of this Agreement to reflect any matter
which, if existing, occurring or known at the date of this Agreement, would
have been required to be set forth or described in such Disclosure
Schedules or which is necessary to correct any information in such
Disclosure Schedules which has been rendered inaccurate thereby. No
supplement or amendment to such Disclosure Schedules shall have any effect
for the purpose of determining satisfaction of the conditions set forth in
Sections 8.2(a) or 8.3(a) hereof, as the case may be, or the compliance by
the Company or Buyer, as the case may be, with the respective covenants and
agreements of such parties contained herein.
7.12. Current Information. During the period from the date of
this Agreement to the Effective Time, the Company will cause one or more of
its designated representatives to confer on a regular and frequent basis
(not less than monthly) with representatives of Buyer and to report the
general status of the ongoing operations of the Company and its
Subsidiaries. The Company will promptly notify Buyer of any material change
in the normal course of business or in the operation of the properties of
the Company or any of its Subsidiaries and of any governmental complaints,
investigations or hearings (or communications indicating that the same may
be contemplated), or the institution or the threat of significant
litigation involving the Company or any of its Subsidiaries, and will keep
Buyer fully informed of such events.
7.13. Execution and Authorization of Bank Merger Agreement. As
soon as reasonably practicable after the date of this Agreement, (a) Buyer
shall (i) cause the Board of Directors of Buyer Bank to approve the Bank
Merger Agreement, (ii) cause Buyer Bank to execute and deliver the Bank
Merger Agreement, and (iii) approve the Bank Merger Agreement as the sole
stockholder of Buyer Bank, and (b) the Company shall (i) cause the Board of
Directors of the Company Bank to approve the Bank Merger Agreement, (ii)
cause the Company Bank to execute and deliver the Bank Merger Agreement,
and (iii) approve the Bank Merger Agreement as the sole stockholder of the
Company Bank.
7.14. Directorship. Prior to Closing, Buyer shall take all
action as may be necessary or appropriate to cause one member of the
Company's Board of Directors designated by the Board of Directors of the
Company and acceptable to the Buyer (the "Company Designee") to be a
director of Buyer as of the Effective Time, who is to hold office in
accordance with the charter and bylaws of Buyer until his successor is duly
elected or appointed and qualified. Subject to the next sentence, the
Company Designee shall be appointed to the class of directors with the
fewest members as of the Closing Date and at the first annual meeting of
the stockholders of Buyer after the Effective Time shall be nominated by
the Board of Directors of Buyer for election to such position for the
remainder of the term of such class. If at the Effective Time each class of
directors has an equal number of members, the Company Designee shall be
appointed to the class of directors whose term of office expires at the
first annual meeting of the stockholders of Buyer following the Effective
Time and at such annual meeting of the stockholders of Buyer shall be
included on the list of nominees for director presented by the Board of
Directors of Buyer.
7.15. Advisory Council. Promptly following the Effective Time,
Buyer shall cause, for a period of not less than twelve months after the
Effective Time, those persons who are members of the Board of Directors of
the Company (other than any such person who shall be appointed to the Board
of Directors of Buyer pursuant to Section 7.14) to be appointed to Buyer
Bank's community advisory council.
7.16. Coordination of Dividends. After the date of this
Agreement each of Buyer and the Company shall coordinate with the other the
declaration of any dividends in respect of Buyer Common Stock and the
Company Common Stock and the record dates and payments dates relating
thereto, it being the intention of the parties that the holders of Buyer
Common Stock or Company Common Stock shall not receive more than one
dividend, or fail to receive one dividend, for any single calendar quarter
with respect to their shares of Buyer Common Stock and/or Company Common
Stock and any shares of Buyer Common Stock any holder of Company Common
Stock receives in exchange therefor in the Merger.
7.17. Year 2000 Survey. The Company shall, and shall cause its
Subsidiaries to, send to each of its customers identified by Buyer a Year
2000 survey in a form designated by Buyer and the Company shall, and shall
cause its Subsidiaries to, use reasonable best efforts to cause its
customers to complete and return such survey. Furthermore, the Company
shall, and shall cause its Subsidiaries to, (a) seek such additional
information as Buyer shall reasonably request from any customer designated
by Buyer, and (b) take such action as is reasonably necessary to obtain
such information, including, without limitation, scheduling face-to-face
meetings with such customers;
7.18. Company DRIP. The Company shall suspend the Company DRIP
upon the request of Buyer if Buyer has been previously advised by its
accountants (a copy of which advice shall be provided to the Company) that
such suspension will not adversely effect pooling-of-interests treatment
under GAAP for the Merger.
ARTICLE VIII
CONDITIONS PRECEDENT
8.1. Conditions to Each Party's Obligation To Effect the
Merger. The respective obligation of each party to effect the Merger shall
be subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) Stockholder Approval. This Agreement shall have been
approved and adopted by the requisite vote of the holders of Company Common
Stock under applicable law.
(b) Nasdaq/NMS Listing. The shares of Buyer Common Stock
which shall be issued to the stockholders of the Company upon consummation
of the Merger shall have been authorized for quotation on the Nasdaq/NMS,
subject to official notice of issuance.
(c) Other Approvals. All regulatory approvals required to
consummate the transactions contemplated hereby (including the Merger and
the Subsidiary Merger) shall have been obtained and shall remain in full
force and effect and all statutory waiting periods in respect thereof shall
have expired (all such approvals and the expiration of all such waiting
periods being referred to herein as the "Requisite Regulatory Approvals").
(d) S-4. The S-4 shall have become effective under the
Securities Act and no stop order suspending the effectiveness of the S-4
shall have been issued and no proceedings for that purpose shall have been
initiated or threatened by the SEC.
(e) No Injunctions or Restraints; Illegality. No order,
injunction or decree issued by any court or agency of competent
jurisdiction or other legal restraint or prohibition (an "Injunction")
preventing the consummation of the Merger or the Subsidiary Merger shall be
in effect. No statute, rule, regulation, order, injunction or decree shall
have been enacted, entered, promulgated or enforced by any Governmental
Entity which prohibits, restricts or makes illegal consummation of the
Merger or the Subsidiary Merger.
(f) Pooling of Interests. Buyer shall have received a
letter from Xxxxxx Xxxxxxxx, LLP addressed to Buyer, to the effect that the
Merger will qualify for "pooling of interests" accounting treatment, and
the Company shall have received a copy of such letter.
8.2. Conditions to Obligations of Buyer. The obligation of
Buyer to effect the Merger is also subject to the satisfaction or waiver by
Buyer at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. (i) Subject to
Section 3.2, the representations and warranties of the Company set forth in
this Agreement (other than the representations and warranties set forth in
Sections 4.2, 4.3(a), 4.3(b), 4.6(a), 4.11(d), 4.12 and 4.13) shall be true
and correct 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
Closing Date as though made on and as of the Closing Date and (ii) the
representations and warranties of the Company set forth in Sections 4.2,
4.3(a), 4.3(b), 4.6(a), 4.11(d), 4.12 and 4.13 of this Agreement shall be
true and correct in all material respects (without giving effect to Section
3.2 of this Agreement) 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 Closing Date as though made on and as of the Closing Date. Buyer
shall have received a certificate signed on behalf of the Company by the
Chief Executive Officer and the Chief Financial Officer of the Company to
the foregoing effect.
(b) Performance of Obligations of the Company. The
Company shall have performed in all material respects all obligations
required to be performed by it under this Agreement at or prior to the
Closing Date, and Buyer shall have received a certificate signed on behalf
of the Company by the Chief Executive Officer and the Chief Financial
Officer of the Company to such effect.
(c) No Pending Governmental Actions. No proceeding
initiated by any federal agency or state banking authority seeking an
Injunction shall be pending.
(d) Federal Tax Opinion. Buyer shall have received an
opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, counsel to Buyer
("Buyer's Counsel"), in form and substance reasonably satisfactory to
Buyer, substantially to the effect that, on the basis of facts,
representations and assumptions set forth in such opinion which are
consistent with the state of facts existing at the Effective Time, the
Merger will be treated as a reorganization within the meaning of Section
368(a) of the Code. In rendering such opinion, Buyer's Counsel may require
and rely upon representations and covenants, including those contained in
certificates of officers of Buyer, Buyer Bank, the Company, the Company
Bank and others reasonably satisfactory in form and substance to such
counsel.
8.3. Conditions to Obligations of the Company. The obligation
of the Company to effect the Merger is also subject to the satisfaction or
waiver by the Company at or prior to the Effective Time of the following
conditions:
(a) Representations and Warranties. (i) Subject to
Section 3.2, the representations and warranties of Buyer set forth in this
Agreement (other than the representations and warranties set forth in
Sections 5.2, 5.3(a), 5.3(b), 5.6(a), 5.10 and 5.12) shall be true and
correct 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
Closing Date as though made on and as of the Closing Date and (ii) the
representations and warranties of Buyer set forth in Sections 5.2, 5.3(a),
5.3(b), 5.6(a), 5.10 and 5.12 of this Agreement shall be true and correct
in all material respects (without giving effect to Section 3.2 of this
Agreement) 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
Closing Date as though made on and as of the Closing Date. The Company
shall have received a certificate signed on behalf of Buyer by the Chief
Executive Officer and the Chief Financial Officer of Buyer to the foregoing
effect.
(b) Performance of Obligations of Buyer. Buyer shall have
performed in all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date, and the Company
shall have received a certificate signed on behalf of Buyer by the Chief
Executive Officer and the Chief Financial Officer of Buyer to such effect.
(c) No Pending Governmental Actions. No proceeding
initiated by any federal agency or state banking authority seeking an
Injunction shall be pending.
(d) Federal Tax Opinion. The Company shall have received
an opinion of Xxxxxx, Feinblatt, Rothman, Hoffberger & Xxxxxxxxx, LLC (the
"Company's Counsel"), in form and substance reasonably satisfactory to the
Company, dated as of the Effective Time, substantially to the effect that,
on the basis of facts, representations and assumptions set forth in such
opinion which are consistent with the state of facts existing at the
Effective Time, the Merger and the Subsidiary Merger will be treated as
reorganizations within the meaning of Section 368(a) of the Code and that
accordingly for federal income tax purposes:
(i) No gain or loss will be recognized by the Company as a
result of the Merger;
(ii) No gain or loss will be recognized by the Company
Bank as a result of the Subsidiary Merger (except to the extent the
Company Bank or Buyer Bank may be required to recognize income due to
the recapture of bad debt reserves as a result of the Subsidiary
Merger);
(iii) No gain or loss will be recognized by the
stockholders of the Company who exchange all of their Company Common
Stock solely for Buyer Common Stock pursuant to the Merger (except
with respect to cash received in lieu of a fractional share interest
in Buyer Common Stock); and
(iv) The aggregate tax basis of Buyer Common Stock
received by stockholders who exchange all of their Company Common
Stock solely for Common Stock pursuant to the Merger will be the same
as the aggregate tax basis of the Company Common Stock surrendered in
exchange therefor (reduced by any amount allocable to a fractional
share interest for which cash is received).
In rendering such opinion, the Company's Counsel may require and rely upon
representations and covenants, including those contained in certificates of
officers of Buyer, Buyer Bank, the Company, the Company Bank and others
reasonably satisfactory in form and substance to such counsel. ARTICLE IX
ARTICLE IX
TERMINATION AND AMENDMENT
9.1. Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval of the
matters presented in connection with the Merger by the stockholders of the
Company:
(a) by mutual consent of the Company and Buyer in a
written instrument, if the Board of Directors of each so determines by a
vote of a majority of the members of its entire Board;
(b) by either Buyer or the Company upon written notice to
the other party (i) 60 days after the date on which any request or
application for a Requisite Regulatory Approval shall have been denied by
any Governmental Entity which must grant such Requisite Regulatory
Approval, unless within the 60-day period following such denial or
withdrawal a petition for rehearing or an amended application has been
filed with the applicable Governmental Entity, provided, however, that no
party shall have the right to terminate this Agreement pursuant to this
Section 9.1(b)(i) if such denial shall be due to the failure of the party
seeking to terminate this Agreement to perform or observe the covenants and
agreements of such party set forth herein or (ii) if any Governmental
Entity of competent jurisdiction shall have issued a final nonappealable
order enjoining or otherwise prohibiting the Merger or the Subsidiary
Merger;
(c) by either Buyer or the Company if the Merger shall
not have been consummated on or before March 31, 2000, unless the failure
of the Closing to occur by such date shall be due to the failure of the
party seeking to terminate this Agreement to perform or observe the
covenants and agreements of such party set forth herein;
(d) by either Buyer or the Company (provided that if the
Company is the terminating party, it shall not be in material breach of any
of its obligations under Section 7.4) if the approval of the stockholders
of the Company required for the consummation of the Merger shall not have
been obtained by reason of the failure to obtain the required vote at a
duly held meeting of such stockholders or at any adjournment or
postponement thereof;
(e) by either Buyer or the Company (provided that the
terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein) if there shall have
been a material breach of any of the representations or warranties set
forth in this Agreement on the part of the other party, which breach is not
cured within thirty days following written notice to the party committing
such breach, or which breach, by its nature, cannot be cured prior to the
Closing; provided, however, that neither party shall have the right to
terminate this Agreement pursuant to this Section 9.1(e) unless the breach
of representation or warranty, together with all other such breaches, would
entitle the party receiving such representation not to consummate the
transactions contemplated hereby under Section 8.2(a) (in the case of a
breach of representation or warranty by the Company) or Section 8.3(a) (in
the case of a breach of representation or warranty by Buyer);
(f) by either Buyer or the Company (provided that the
terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein) if there shall have
been a material breach of any of the covenants or agreements set forth in
this Agreement on the part of the other party, which breach shall not have
been cured within thirty days following receipt by the breaching party of
written notice of such breach from the other party hereto, or which breach,
by its nature, cannot be cured prior to the Closing;
(g) by Buyer, if the Board of Directors of the Company
does not publicly recommend in the Proxy Statement that the Company's
stockholders approve this Agreement or if, after recommending in the Proxy
Statement that stockholders approve this Agreement, the Board of Directors
of the Company shall have withdrawn, modified or amended such
recommendation in any respect materially adverse to Buyer; or
(h) by the Company at any time during the ten-day period
commencing two days after the Determination Date (as defined below), if
both of the following conditions are satisfied:
(1) the Average Closing Price (as defined below) shall be less
than the product of 0.75 and the Starting Price; and
(2) (i) the number obtained by dividing the Average Closing
Price by the Starting Price (such number being referred to herein as
the "Buyer Ratio") shall be less than (ii) the number obtained by
dividing the Index Price on the Determination Date by the Index Price
on the Starting Date and subtracting 0.15 from such quotient (such
number being referred to herein as the "Index Ratio");
subject to the following four sentences. If the Company elects to exercise
its termination right pursuant to the immediately preceding sentence, it
shall give prompt written notice of such election to Parent; provided that
such notice of election to terminate may be withdrawn at any time within
the aforementioned ten-day period. During the five-day period commencing
with its receipt of such notice, Buyer shall have the option of adjusting
the Exchange Ratio to equal the lesser of (i) a number equal to a quotient
(rounded to the nearest one-ten-thousandth), the numerator of which is the
product of 0.75, the Starting Price and the Exchange Ratio (as then in
effect) and the denominator of which is the Average Closing Price, and (ii)
a number equal to a quotient (rounded to the nearest one-ten-thousandth),
the numerator of which is the Index Ratio multiplied by the Exchange Ratio
(as then in effect) and the denominator of which is the Buyer Ratio. If
Buyer makes an election contemplated by the preceding sentence, within such
five-day period, it shall give prompt written notice to the Company of such
election and the revised Exchange Ratio, whereupon no termination shall
have occurred pursuant to this Section 9.1(h) and this Agreement shall
remain in effect in accordance with its terms (except as the Exchange Ratio
shall have been so modified), and any references in this Agreement to
"Exchange Ratio" shall thereafter be deemed to refer to the Exchange Ratio
as adjusted pursuant to this Section 9.1(h). For purposes of this Section
9.1(h), the following terms shall have the meanings indicated:
"Average Closing Price" means the average of the last reported sale
prices per share of Buyer Common Stock as reported on Nasdaq/NMS (as
reported in The Wall Street Journal or, if not reported therein, in another
mutually agreed upon authoritative source) for the 20 consecutive trading
days on Nasdaq/NMS ending at the close of trading on the Determination
Date.
"Determination Date" means the fifth business day prior to the date
on which the approval of the OCC required for consummation of the Merger
shall be received, without regard to any requisite waiting periods in
respect thereof.
"Index Group" means the group of each of the 17 bank holding
companies listed below, the common stock of all of which shall be publicly
traded and as to which there shall not have been, since the Starting Date
and before the Determination Date, an announcement of a proposal for such
company to be acquired or for such company to acquire another company or
companies in transactions with a value exceeding 25% of the acquiror's
market capitalization as of the Starting Date. In the event that the common
stock of any such company ceases to be publicly traded or any such
announcement is made with respect to any such company, such company will be
removed from the Index Group, and the weights (which have been determined
based on the number of outstanding shares of common stock) redistributed
proportionately for purposes of determining the Index Price. The 17 bank
holding companies and the weights attributed to them are as follows:
BANK HOLDING COMPANY WEIGHTING
BT Financial Corporation
5.2%
F&M National Corporation 7.4
F.N.B. Corporation 6.7
FCNB Corp 3.8
First Commonwealth Financial Corp.
10.2
Harleysville National Corporation 2.5
National Penn Bancshares, Inc. 5.6
Omega Financial Corporation
2.9
Provident Bankshares Corporation 8.4
S&T Bancorp, Inc. 8.9
Xxxxx Spring Bancorp, Inc. 3.2
Sun Bancorp, Inc. 2.5
Susquehanna Bancshares, Inc.
12.2
Trust Company of New Jersey (The) 6.3
Union Bankshares Corporation 2.5
United National Bancorp 5.0
WesBanco, Inc. 6.7
100.0%
"Index Price" on a given date means the weighted average (weighted in
accordance with the factors listed above) of the closing prices of the
companies comprising the Index Group.
"Starting Date" means September 7, 1999.
"Starting Price" shall mean the last reported sale price per share of
Buyer Common Stock on the Starting Date, as reported by Nasdaq/NMS (as
reported in The Wall Street Journal or, if not reported therein, in another
mutually agreed upon authoritative source).
If any company belonging to the Index Group or Buyer declares or
effects a stock dividend, reclassification, recapitalization, split-up,
combination, exchange of shares or similar transaction between the Starting
Date and the Determination Date, the prices for the common stock of such
company or Buyer shall be appropriately adjusted for the purposes of
applying this Section 9.1(h).
9.2. Effect of Termination; Expenses. In the event of
termination of this Agreement by either Buyer or the Company as provided in
Section 9.1, this Agreement shall forthwith become void and have no effect
except (i) the last sentence of Section 7.2(a), the last sentence of
Section 7.2(b), and Sections 9.2 and 10.4, shall survive any termination of
this Agreement, and (ii) that notwithstanding anything to the contrary
contained in this Agreement, no party shall be relieved or released from
any liabilities or damages arising out of its willful breach of any
provision of this Agreement.
9.3. Amendment. Subject to compliance with applicable law, this
Agreement may be amended by the parties hereto, by action taken or
authorized by their respective Boards of Directors, at any time before or
after approval of the matters presented in connection with the Merger by
the stockholders of either the Company or Buyer; provided, however, that
after any approval of the transactions contemplated by this Agreement by
the Company's stockholders, there may not be, without further approval of
such stockholders, any amendment of this Agreement which reduces the amount
or changes the form of the consideration to be delivered to the Company
stockholders hereunder other than as contemplated by this Agreement. This
Agreement may not be amended except by an instrument in writing signed on
behalf of each of the parties hereto.
9.4. Extension; Waiver. At any time prior to the Effective
Time, the parties hereto, by action taken or authorized by their respective
Board of Directors, may, to the extent legally allowed, (a) extend the time
for the performance of any of the obligations or other acts of the other
parties hereto, (b) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto
and (c) waive compliance with any of the agreements or conditions contained
herein. Any agreement on the part of a party hereto to any such extension
or waiver shall be valid only if set forth in a written instrument signed
on behalf of such party, but such extension or waiver or failure to insist
on strict compliance with an obligation, covenant, agreement or condition
shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
ARTICLE X
GENERAL PROVISIONS
10.1. Closing. Subject to the terms and conditions of this
Agreement and the Bank Merger Agreement, the closing of the Merger (the
"Closing") will take place at 10:00 a.m. on the first day which is (a) the
last business day of a month and (b) at least two business days after the
satisfaction or waiver (subject to applicable law) of the latest to occur
of the conditions set forth in Article VIII hereof (other than those
conditions which relate to actions to be taken at the Closing)(the "Closing
Date"), at the offices of Buyer unless another time, date or place is
agreed to in writing by the parties hereto; provided, however, that the
Closing shall not occur prior to December 19, 1999.
10.2. Alternative Structure. Notwithstanding anything to the
contrary contained in this Agreement, prior to the Effective Time, Buyer
shall be entitled to revise the structure of the Merger and/or the
Subsidiary Merger and related transactions in order to (x) substitute a
subsidiary of Buyer as a Constituent Corporation in the Merger or (y)
provide that a different entity shall be the surviving corporation in a
merger provided that each of the transactions comprising such revised
structure shall (i) qualify as, or be treated as part of, one or more
tax-free reorganizations within the meaning of Section 368(a) of the Code,
and not reduce the amount of consideration to be received by such
stockholders, (ii) be properly treated for financial reporting purposes as
a pooling of interests and (iii) be capable of consummation in as timely a
manner as the structure contemplated herein. This Agreement and any related
documents shall be appropriately amended in order to reflect any such
revised structure.
10.3. Nonsurvival of Representations, Warranties and
Agreements. None of the representations, warranties, covenants and
agreements in this Agreement or in any instrument delivered pursuant to
this Agreement (other than pursuant to the Company Option Agreement which
shall terminate in accordance with its terms) shall survive the Effective
Time, except for those covenants and agreements contained herein and
therein which by their terms apply in whole or in part after the Effective
Time.
10.4. Expenses. All costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid
by the party incurring such expense, provided, however, that the costs and
expenses of printing and mailing the Proxy Statement to the stockholders of
the Company and Buyer, and all filing and other fees paid to the SEC or any
other Governmental Entity in connection with the Merger, the Subsidiary
Merger and the other transactions contemplated hereby, shall be borne
equally by Buyer and the Company, provided, further, however, that nothing
contained herein shall limit either party's rights to recover any
liabilities or damages arising out of the other party's willful breach of
any provision of this Agreement.
10.5. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (with confirmation), mailed by registered or certified mail
(return receipt requested) or delivered by an express courier (with
confirmation) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Buyer, to:
F&M Bancorp
000 Xxxxxx Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Chief Executive Officer
with a copy to:
F&M Bancorp
000 Xxxxxx Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: General Counsel
and to:
Skadden, Arps Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxxxxxx, Esq.
and
(b) if to the Company, to:
Patapsco Valley Bancshares, Inc.
0000 Xxxxxxxxx Xxxxxxxx Xxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attn: President and Chief Executive Officer
with a copy to:
Xxxxxx, Feinblatt, Rothman, Hoffberger & Xxxxxxxxx, LLC
The Xxxxxxx Building
000 X. Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx Xxxxx Xxxxxx
10.6. Interpretation. When a reference is made in this
Agreement to Sections, Exhibits or Schedules, such reference shall be to a
Section of or Exhibit or Schedule to this Agreement unless otherwise
indicated. The table of contents and headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning
or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed
to be followed by the words "without limitation". The phrases "the date of
this Agreement", "the date hereof" and terms of similar import, unless the
context otherwise requires, shall be deemed to refer to September 7, 1999.
10.7. Counterparts. This Agreement may be executed by facsimile
or otherwise in counterparts, all of which shall be considered one and the
same agreement and shall become effective when counterparts have been
signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
10.8. Entire Agreement. This Agreement (including the documents
and the instruments referred to herein), together with the Confidentiality
Agreements, the Company Option Agreement and the Bank Merger Agreement,
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to
the subject matter hereof.
10.9. Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Maryland, without
regard to any applicable conflicts of law.
10.10. Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that the provisions contained
in the last sentence of Section 7.2(a) and of Section 7.2(b) of 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 the last
sentence of Section 7.2(a) and of Section 7.2(b) 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.
10.11. Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining
terms and provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Agreement in any
other jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
10.12. Publicity. Except as otherwise required by law or the
rules of the Nasdaq/NMS, so long as this Agreement is in effect, neither
Buyer nor the Company shall, or shall permit any of its Subsidiaries to,
issue or cause the publication of any press release or other public
announcement with respect to, or otherwise make any public statement
concerning, the transactions contemplated by this Agreement without the
consent of the other party, which consent shall not be unreasonably
withheld.
10.13. Assignment; No Third Party Beneficiaries. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other parties. Subject
to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their respective
successors and assigns. Except as otherwise expressly provided herein, this
Agreement (including the documents and instruments referred to herein) is
not intended to confer upon any person other than the parties hereto any
rights or remedies hereunder.
IN WITNESS WHEREOF, Buyer and the Company have caused this
Agreement to be executed by their respective officers thereunto duly
authorized as of the date first above written.
F&M BANCORP
By ____________________________________________
Name: Xxxx X. Xxxxxx
Title: President & Chief Executive Officer
Attest:
______________________________
Name: Xxxxxx X. Xxxxxx
Title: Secretary
PATAPSCO VALLEY BANCSHARES, INC
By ____________________________________________
Name: Xxxx X. Xxxxxxxxx
Title: President & Chief Executive Officer
Attest:
______________________________
Name: Xxxxx X. XxXxx
Title: Secretary
EXHIBIT A
SUBSIDIARY AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
Page
ARTICLE I THE MERGER..............................................2
1.1. The Merger..............................................2
1.2. Effective Time..........................................2
1.3. Effects of the Merger...................................2
1.4. Conversion of Company Common Stock......................2
1.5. Stock Options...........................................3
1.6. Buyer Common Stock......................................4
1.7. Articles of Incorporation...............................5
1.8. By-Laws.................................................5
1.9. Directors and Officers..................................5
1.10. Tax Consequences; Accounting Treatment.................5
ARTICLE II EXCHANGE OF SHARES......................................5
2.1. Buyer to Make Shares Available..........................5
2.2. Exchange of Shares......................................6
ARTICLE III DISCLOSURE SCHEDULES; STANDARDS
FOR REPRESENTATIONS AND WARRANTIES...................8
3.1. Disclosure Schedules....................................8
3.2. Standards...............................................8
ARTICLE IV REPRESENTATIONS AND WARRANTIES
OF THE COMPANY.......................................9
4.1. Corporate Organization..................................9
4.2. Capitalization.........................................10
4.3. Authority; No Violation................................12
4.4. Consents and Approvals.................................13
4.5. Reports................................................14
4.6. Financial Statements...................................14
4.7. Broker's Fees..........................................15
4.8. Absence of Certain Changes or Events...................15
4.9. Legal Proceedings......................................16
4.10. Taxes.................................................16
4.11. Employees.............................................17
4.12. SEC Reports...........................................19
4.13. Company Information...................................19
4.14. Compliance with Applicable Law........................20
4.15. Certain Contracts.....................................20
4.16. Agreements with Regulatory Agencies...................21
4.17. Investment Securities.................................21
4.18. Intellectual Property.................................21
4.19. State Takeover Laws...................................21
4.20. Administration of Fiduciary Accounts..................21
4.21. Environmental Matters.................................22
4.22. Derivative Transactions...............................23
4.23. Opinion...............................................23
4.24. Approvals.............................................23
4.25. Loan Portfolio........................................23
4.26. Accounting for the Merger; Reorganization.............24
4.27. Ownership of Company Common Stock.....................24
ARTICLE V REPRESENTATIONS AND WARRANTIES
OF BUYER............................................25
5.1. Corporate Organization.................................25
5.2. Capitalization.........................................26
5.3. Authority; No Violation................................27
5.4. Consents and Approvals.................................28
5.5. Reports................................................28
5.6. Financial Statements...................................29
5.7. Broker's Fees..........................................30
5.8. Absence of Certain Changes or Events...................30
5.9. Legal Proceedings......................................30
5.10. SEC Reports...........................................30
5.11. Agreements with Regulatory Agencies...................30
5.12. Buyer Information.....................................31
5.13. Ownership of Company Common Stock; Affiliates and
Associates.............................................31
5.14. Approvals.............................................31
5.15. Accounting for the Merger; Reorganization.............31
5.16. Taxes.................................................32
5.17. Employees.............................................32
5.18. Compliance with Applicable Law........................34
5.19. Investment Securities.................................34
5.20. Intellectual Property.................................34
5.21. Environmental Matters.................................34
5.22. Derivative Transactions...............................35
5.23. Loan Portfolio........................................35
5.24. Administration of Fiduciary Accounts..................36
ARTICLE VI COVENANTS RELATING TO CONDUCT OF BUSINESS..............37
6.1. Covenants of the Company...............................37
6.2. Covenants of Buyer.....................................40
ARTICLE VII ADDITIONAL AGREEMENTS................................41
7.1. Regulatory Matters.....................................41
7.2. Access to Information..................................43
7.3. No Solicitation........................................45
7.4. Stockholder Meeting....................................46
7.5. Legal Conditions to Merger.............................46
7.6. Affiliates.............................................47
7.7. Stock Exchange Listing.................................47
7.8. Employee Benefit Plans; Existing Agreements............47
7.9. Indemnification........................................48
7.10. Additional Agreements.................................50
7.11. Advice of Changes.....................................50
7.12. Current Information...................................51
7.13. Execution and Authorization of Bank Merger Agreement..51
7.14. Directorship..........................................51
7.15. Advisory Council......................................51
7.16. Coordination of Dividends.............................52
7.17. Year 2000 Survey......................................52
7.18. Company DRIP..........................................52
ARTICLE VIII CONDITIONS PRECEDENT................................52
8.1. Conditions to Each Party's Obligation To Effect
the Merger.............................................52
8.2. Conditions to Obligations of Buyer.....................53
8.3. Conditions to Obligations of the Company...............54
ARTICLE IX TERMINATION AND AMENDMENT..............................56
9.1. Termination............................................56
9.2. Effect of Termination; Expenses........................60
9.3. Amendment..............................................60
9.4. Extension; Waiver......................................60
ARTICLE X GENERAL PROVISIONS.....................................61
10.1. Closing...............................................61
10.2. Alternative Structure.................................61
10.3. Nonsurvival of Representations, Warranties and
Agreements............................................61
10.4. Expenses..............................................61
10.5. Notices...............................................62
10.6. Interpretation........................................63
10.7. Counterparts..........................................63
10.8. Entire Agreement......................................63
10.9. Governing Law.........................................63
10.10. Enforcement of Agreement.............................64
10.11. Severability.........................................64
10.12. Publicity............................................64
10.13. Assignment; No Third Party Beneficiaries.............64
