EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
By and Among
NORTHWEST SAVINGS BANK,
NORTHWEST BANCORP, INC.,
NORTHWEST BANCORP, MHC
And
FIRST CARNEGIE DEPOSIT,
XXXXX FINANCIAL CORP.,
XXXXX BANCSHARES, M.H.C.
Dated as of September 11, 2003
TABLE OF CONTENTS
ARTICLE I
CERTAIN DEFINITIONS
Section 1.01 Definitions..................................................................................2
ARTICLE II
THE MERGER AND RELATED MATTERS
Section 2.01 Effects of Merger; Surviving Institutions....................................................7
Section 2.02 Conversion and Cancellation of Shares........................................................8
Section 2.03 Exchange Procedures..........................................................................9
Section 2.04. Stock Options...............................................................................10
Section 2.05. Restricted Stock............................................................................10
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF XXXXX
Section 3.01 Organization................................................................................11
Section 3.02 Capitalization..............................................................................12
Section 3.03 Authority; No Violation.....................................................................13
Section 3.04 Consents....................................................................................14
Section 3.05 Xxxxx Financial Statements..................................................................14
Section 3.06 Taxes.......................................................................................15
Section 3.07 No Material Adverse Effect..................................................................15
Section 3.08 Contracts...................................................................................15
Section 3.09 Ownership of Property; Insurance Coverage...................................................17
Section 3.10 Legal Proceedings...........................................................................18
Section 3.11 Compliance With Applicable Law..............................................................18
Section 3.12 Employee Benefit Plans......................................................................19
Section 3.13 Brokers, Finders and Financial Advisors.....................................................21
Section 3.14 Environmental Matters.......................................................................22
Section 3.15 Loan Portfolio..............................................................................23
Section 3.16 Securities Documents........................................................................24
Section 3.17 Related Party Transactions..................................................................24
Section 3.18 Schedule of Termination Benefits............................................................24
Section 3.19 Deposits....................................................................................25
Section 3.20 Fairness Opinion............................................................................25
Section 3.21 Required Vote of Stockholders...............................................................25
Section 3.22 Derivative Transactions.....................................................................25
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF NORTHWEST
Section 4.01 Organization................................................................................26
Section 4.02 Authority; No Violation.....................................................................26
Section 4.03 Consents....................................................................................27
Section 4.04 Northwest Financial Statements..............................................................28
Section 4.05 Material Adverse Effect.....................................................................28
Section 4.06 Legal Proceedings...........................................................................28
Section 4.07 Compliance With Applicable Law..............................................................28
Section 4.08 Northwest Benefit Plans.....................................................................29
Section 4.09 Regulatory Approvals........................................................................29
Section 4.10 Securities Documents........................................................................30
ARTICLE V
COVENANTS OF THE PARTIES
Section 5.01 Conduct of the Business of Xxxxx............................................................30
Section 5.02 Access; Confidentiality.....................................................................33
Section 5.03 Regulatory Matters and Consents.............................................................34
Section 5.04 Taking of Necessary Action..................................................................35
Section 5.05 Certain Agreements..........................................................................36
Section 5.06 No Other Bids and Related Matters...........................................................38
Section 5.07 Duty to Advise; Duty to Update the Xxxxx Financial Schedules................................39
Section 5.08 Conduct of Northwest's Business.............................................................39
Section 5.09 Board and Committee Minutes.................................................................40
Section 5.10 Undertakings by the Parties.................................................................40
Section 5.11 Employee and Termination Benefits; Directors and Management.................................43
Section 5.12 Duty to Advise; Duty to Update the Northwest Disclosure Schedules...........................47
ARTICLE VI
CONDITIONS
Section 6.01 Conditions to Obligations of Xxxxx Under this Agreement.....................................48
Section 6.02 Conditions to the Obligations of Northwest Under this Agreement.............................49
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ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT
Section 7.01 Termination.................................................................................50
Section 7.02 Effect of Termination.......................................................................51
ARTICLE VIII
MISCELLANEOUS
Section 8.01 Expenses....................................................................................52
Section 8.02 Non-Survival of Representations and Warranties..............................................52
Section 8.03 Amendment, Extension and Waiver.............................................................52
Section 8.04 Entire Agreement............................................................................53
Section 8.05 No Assignment...............................................................................53
Section 8.06 Notices.....................................................................................53
Section 8.07 Captions....................................................................................54
Section 8.08 Counterparts................................................................................54
Section 8.09 Severability................................................................................54
Section 8.10 Governing Law...............................................................................54
Section 8.11 Specific Performance........................................................................55
Exhibit A Form of Merger Agreement Relating to the MHC Merger
Exhibit B Form of Merger Agreement Relating to the Mid-Tier Merger
Exhibit C Form of Xxxxx Voting Agreement
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this Agreement"), dated as of
September 11, 2003, is by and among (i) Northwest Savings Bank, a Pennsylvania
savings bank ("Northwest Bank"), Northwest Bancorp, Inc., a Federal corporation
("Northwest Bancorp"), Northwest Bancorp, MHC, a Federal mutual holding company
("Northwest MHC"), and First Carnegie Deposit, a Federal savings association
("First Carnegie"), Xxxxx Financial Corp., a Federal corporation ("Xxxxx
Financial"), and Xxxxx Bancshares, M.H.C., a Federal mutual holding company
("Xxxxx MHC"). Each of Northwest Bank, Northwest Bancorp, Northwest MHC, First
Carnegie, Xxxxx Financial and Xxxxx MHC is sometimes individually referred to
herein as a "party," and collectively as the "parties."
RECITALS
1. Northwest MHC owns a majority of the outstanding capital stock of
Northwest Bancorp, which owns all of the outstanding capital stock of Northwest
Bank. Each of Northwest Bank, Northwest Bancorp and Northwest MHC has its
principal offices in Warren, Pennsylvania.
2. Xxxxx MHC owns a majority of the outstanding capital stock of Xxxxx
Financial, which owns all of the outstanding capital stock of First Carnegie.
Each of First Carnegie, Xxxxx Financial and Xxxxx MHC has its principal offices
in Carnegie, Pennsylvania.
3. The Boards of Directors of the respective parties deem it advisable
and in the best interests of the parties, including the depositors of Northwest
Bank and First Carnegie, and the stockholders of Northwest Bancorp and Xxxxx
Financial, for Xxxxx MHC to merge with and into Northwest MHC with Northwest MHC
as the surviving entity, and for Xxxxx Financial to convert to an interim
savings bank and then merge with and into First Carnegie, with First Carnegie as
the surviving entity, all pursuant to the terms, conditions and procedures set
forth in this Agreement.
4. The parties desire to provide for certain undertakings, conditions,
representations, warranties and covenants in connection with the transactions
contemplated by this Agreement;
5. Simultaneously with the execution of this Agreement, each director
of Xxxxx Financial is entering into the letter agreement included as Exhibit C
to this Agreement; and
6. In consideration of the premises and of the mutual representations,
warranties and covenants herein contained and intending to be legally bound
hereby, the parties hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.01 Definitions
Except as otherwise provided herein, as used in this Agreement, the
following terms shall have the indicated meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Affiliate" means, with respect to any Person, any Person who directly,
or indirectly, through one or more intermediaries, controls, or is controlled
by, or is under common control with such Person and, without limiting the
generality of the foregoing, includes any executive officer or director of such
Person and any Affiliate of such executive officer or director.
"Agreement" means this agreement, and any amendment or supplement
hereto, which constitutes a "plan of merger" between the Northwest Parties and
the Xxxxx Parties.
"Applications" means the applications to be filed with the appropriate
Regulatory Authorities requesting approval or nonobjection of the transactions
described in this Agreement.
"Board of Directors" means the Board of Directors of Xxxxx MHC, Xxxxx
Financial, First Carnegie, Northwest Bancorp or Northwest Bank, or the Board of
Trustees of Northwest MHC, as applicable.
"Closing Date" means the date determined by Northwest, in consultation
with and upon no less than five (5) days prior written notice to Xxxxx
Financial, but in no event later than fifteen (15) days after the last condition
precedent pursuant to this Agreement has been fulfilled or waived (including the
expiration of any applicable waiting period), or such other date as to which the
parties shall mutually agree. Notwithstanding anything to the contrary herein,
in the event that the transactions contemplated by this Agreement are not
consummated prior to December 31, 2003, the Closing Date will not be prior to
February 2, 2004.
"Compensation and Benefit Plans" means any bonus, incentive, deferred
compensation, pension, retirement, profit-sharing, thrift, savings, employee
stock ownership, stock bonus, stock purchase, restricted stock, stock option,
stock appreciation, phantom stock, severance, welfare and fringe benefit plans,
employment, severance and change in control agreements and all other benefit
practices, policies and arrangements maintained by Xxxxx Financial or First
Carnegie in which any employee or former employee, consultant or former
consultant or director or former director of Xxxxx Financial or First Carnegie
participates or to which any such employee, consultant or director is a party or
is otherwise entitled to receive benefits.
"Defined Benefit Plan" means the First Carnegie benefit pension plan.
"Environmental Law" means any Federal or state law, statute, rule,
regulation, code, judgment, common law or agreement with any Federal or state
governmental authority, and any
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decree, injunction or order entered with or by any governmental authority that
is binding upon Xxxxx relating to (i) the protection, preservation or
restoration of the environment (including air, surface water, groundwater,
drinking water supply, surface land, subsurface land, plant and animal life or
any other natural resource), (ii) human health or safety, or (iii) exposure to,
or the use, storage, recycling, treatment, generation, transportation,
processing, handling, labeling, production, release or disposal of, hazardous
substances, in each case as amended and now in effect.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated from time to time thereunder.
"Exchange Agent" means the third party entity selected by Northwest and
reasonably acceptable to Xxxxx, as provided in Section 2.03(a) of this
Agreement.
"FDIC" means the Federal Deposit Insurance Corporation.
"First Carnegie" means First Carnegie Deposit, a federal stock savings
association.
"FHLB" means the Federal Home Loan Bank.
"FinPro" means FinPro, Inc., the financial advisor to Xxxxx in
connection with the transactions provided for in this Agreement.
"GAAP" means generally accepted accounting principles as in effect at
the relevant date and consistently applied.
"Hazardous Material" means any substance (whether solid, liquid or gas)
that is detrimental to human health or safety or to the environment and
currently listed, defined, designated or classified as hazardous, toxic,
radioactive or dangerous, or otherwise regulated, under any Environmental Law,
whether by type or by quantity, including any material containing any such
substance as a component. Hazardous Material includes, without limitation, any
toxic waste, pollutant, contaminant, hazardous substance, toxic substance,
hazardous waste, special waste, industrial substance, oil or petroleum, or any
derivative or by-product thereof, radon, radioactive material, friable
asbestos-containing material, urea formaldehyde foam insulation, lead and
polychlorinated biphenyl.
"HOLA" means the Home Owners' Loan Act of 1956.
"Interim" means the federal interim stock savings association resulting
from the exchange by Xxxxx Financial of its federal mutual holding company
subsidiary charter for an interim stock savings association charter.
"IRC" means the Internal Revenue Code of 1986, as amended.
"IRS" means the Internal Revenue Service.
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"Loan Property" shall have the meaning given to such term in Section
3.14(b) of this Agreement.
"Material Adverse Effect" shall mean, with respect to Northwest Bancorp
or Xxxxx Financial, any adverse effect on its assets, financial condition or
results of operations which is material to its assets, financial condition or
results of operations on a consolidated basis, except for any material adverse
effect caused by (i) any change in the value of the assets of Northwest Bancorp
or Xxxxx Financial resulting from a change in interest rates generally, (ii) any
individual or combination of changes occurring after the date hereof in any
Federal or state law, rule or regulation or in GAAP, which change(s) affect(s)
financial institutions generally, (iii) expenses incurred in connection with
this Agreement and the transactions contemplated hereby; or (iv) the effects of
any action or omission taken pursuant to this Agreement or with the written
consent of the other parties hereto.
"Member Proxy Statement" means any proxy statement, if any, together
with any supplements thereto, to be transmitted by Xxxxx MHC to its members in
connection with the transactions contemplated by this Agreement if a vote of
such members is required by any Regulatory Authority.
"Merger" shall mean collectively the MHC Merger and the Mid-Tier
Merger, and any other mergers by interim corporate entities necessary to
effectuate the transactions contemplated by this Agreement.
"Merger Consideration" has the meaning given to that term in Section
2.02(a) of this Agreement.
"Merger Effective Date" means the date as of which the articles of
combination as to the Merger are endorsed by the OTS, or such other date
specified in the endorsement of the articles of combination by the OTS.
"MHC Merger" means the merger of Xxxxx MHC with and into Northwest MHC
with Northwest MHC as the surviving entity.
"Mid-Tier Merger" means the merger of Interim with and into First
Carnegie with First Carnegie as the surviving association.
"Northwest" means Northwest Bank, Northwest Bancorp, Northwest MHC
and/or any direct or indirect Subsidiary of such entities.
"Northwest Bancorp" means Northwest Bancorp, Inc., a federal
corporation.
"Northwest Bank" means Northwest Savings Bank, a Pennsylvania stock
savings bank.
"Northwest Disclosure Schedules" means the Disclosure Schedules
delivered by Northwest to Xxxxx pursuant to Article III of this Agreement.
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"Northwest Financials" means (i) the audited consolidated financial
statements of Northwest Bancorp as of June 30, 2002 and 2001 and for the three
years ended June 30, 2002, including the notes thereto, included in Securities
Documents filed by Northwest Bancorp, and (ii) the unaudited interim
consolidated financial statements of Northwest Bancorp as of each calendar
quarter following June 30, 2002 included in Securities Documents filed by
Northwest Bancorp.
"Northwest MHC" means Northwest Bancorp, MHC, a federal mutual holding
company.
"Northwest Parties" means Northwest Bank, Northwest Bancorp and
Northwest MHC.
"Northwest Subsidiary" means any corporation, 50% or more of the
capital stock of which is owned, either directly or indirectly, by Northwest
Bancorp, and includes Northwest Bank, except that it does not include any
corporation the stock of which is held in the ordinary course of the lending
activities of Northwest Bank.
"OTS" means the Office of Thrift Supervision.
"Participation Facility" shall have the meaning given to such term in
Section 3.14(b) of this Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means any individual, corporation, partnership, joint venture,
association, trust or "group" (as that term is defined under the Exchange Act).
"Regulatory Agreement" has the meaning given to that term in Section
3.11(b) of this Agreement.
"Regulatory Authority" or "Regulatory Authorities" means any agency or
department of any Federal or state government, including without limitation the
OTS, the FDIC, the SEC and the respective staffs thereof.
"Right" means any warrant, option, right, convertible security and
other capital stock equivalent that obligate an entity to issue its securities.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated from time to time thereunder.
"Securities Documents" means all registration statements, schedules,
statements, forms, reports, proxy material, and other documents required to be
filed under the Securities Laws.
"Securities Laws" means the Securities Act and the Exchange Act and the
rules and regulations promulgated from time to time thereunder.
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"SERP" means the First Carnegie Deposit Supplemental Executive
Retirement Plan.
"Xxxxx" means First Carnegie, Xxxxx Financial, Xxxxx, MHC and/or any
direct or indirect Subsidiary of such entities.
"Xxxxx Financial" means Xxxxx Financial Corp., a Federal corporation or
any successor in interest thereto, as the context requires.
"Xxxxx Financials" means (i) the audited consolidated financial
statements of Xxxxx Financial as of March 31, 2003 and 2002 and for the two
years ended March 31, 2003, including the notes thereto, included in Securities
Documents filed by Xxxxx Financial, and (ii) the unaudited interim consolidated
financial statements of Xxxxx Financial as of each calendar quarter following
March 31, 2003 included in Securities Documents filed by Xxxxx Financial.
"Xxxxx Financial Common Stock" means the common stock of Xxxxx
Financial described in Section 3.02(a) or the common stock of a successor in
interest of Xxxxx Financial, as the context requires.
"Xxxxx Financial Option" means issued and outstanding options granted
by Xxxxx Financial to purchase shares of Xxxxx Financial Common Stock pursuant
to the Xxxxx Financial Stock Option Plan.
"Xxxxx Financial Restricted Stock Plan" means the First Carnegie
Deposit 1998 Restricted Stock Plan.
"Xxxxx Financial Schedules" means the Disclosure Schedules delivered by
Xxxxx to Northwest pursuant to Article III of this Agreement.
"Xxxxx Compensation and Benefit Plan" has the meaning given to that
term in Section 3.12 of this Agreement.
"Xxxxx MHC" means Xxxxx Bancshares, M.H.C., a federal mutual holding
company.
"Xxxxx Parties" means First Carnegie, Xxxxx Financial and Xxxxx MHC.
"Xxxxx Regulatory Reports" means the Thrift Financial Reports of First
Carnegie and accompanying schedules, as filed with the OTS, for each calendar
quarter beginning with the quarter ended March 31, 2003, through the Closing
Date, and all Annual, Quarterly and Current Reports filed on Form H-(b)11 with
the OTS by Xxxxx Financial and Xxxxx MHC from March 31, 2003 through the Closing
Date.
"Xxxxx Financial Stock Option Plan" means the Xxxxx Financial Corp.
1998 Stock Option Plan.
"Xxxxx Subsidiary" means any corporation, 50% or more of the capital
stock of which is owned, either directly or indirectly, by Xxxxx Financial, and
includes First Carnegie, except that
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it does not include any corporation the stock of which is held in the ordinary
course of the lending activities of First Carnegie.
"Stockholder Proxy Statement" means the proxy statement together with
any supplements thereto to be transmitted to holders of Xxxxx Financial Common
Stock in connection with the transactions contemplated by this Agreement.
"Subsidiary" means any corporation, 50% or more of the capital stock of
which is owned, either directly or indirectly, by another entity, except any
corporation the stock of which is held as security by either Northwest Bank or
First Carnegie, as the case may be, in the ordinary course of their lending
activities.
ARTICLE II
THE MERGER AND RELATED MATTERS
Section 2.01 Effects of Merger; Surviving Institutions.
On the Merger Effective Date the Merger will be effected as follows:
(a) The Mid-Tier Merger. Xxxxx Financial will exchange its federal
stock holding company charter for an interim stock savings association charter
to become Interim, and Interim will merge with and into First Carnegie with
First Carnegie as the surviving association pursuant to the merger agreement
substantially in the Form of Exhibit A hereto. Thereafter, First Carnegie shall
be a wholly-owned subsidiary of Xxxxx MHC. As a result of the Mid-Tier Merger,
the separate existence of Xxxxx Financial and Interim shall cease, and all of
the property (real, personal and mixed), rights, powers, duties and obligations
of Xxxxx Financial and Interim shall be transferred to and assumed by First
Carnegie as the surviving entity in the Mid-Tier Merger, without further act or
deed, all in accordance with the HOLA and regulations of the OTS.
(b) The MHC Merger. Immediately after the Mid-Tier Merger, Xxxxx MHC
will merge with and into Northwest MHC with Northwest MHC as the surviving
entity pursuant to the merger agreement substantially in the form of Exhibit B
hereto. The separate existence of Xxxxx MHC shall cease, and all of the property
(real, personal and mixed), rights, powers and duties and obligations of Xxxxx
MHC shall be transferred to and assumed by Northwest MHC as the surviving entity
in the MHC Merger, without further act or deed, all in accordance with the HOLA,
and regulations of the OTS. As a result of the MHC Merger, each borrower member
of Xxxxx MHC and holder of a deposit account in First Carnegie as of the Merger
Effective Date shall have the same rights and privileges in Northwest MHC as if
such borrowing and/or deposit account, respectively, had been established at
Northwest Bank, and all deposit accounts established at First Carnegie prior to
the Merger Effective Date shall confer on a depositor the same rights and
privileges in Northwest MHC as if such deposit account had been established at
Northwest Bank on the date established at First Carnegie and the borrower
members of Xxxxx MHC identified by Xxxxx prior to the Merger Effective Date will
be given subscription rights to
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the extent permitted by regulatory authorities in any conversion of Northwest
MHC to stock form that occurs prior to any merger of First Carnegie with and
into Northwest Bank if such borrowing remains outstanding at the time of such
mutual-to-stock conversion (collectively, the "Membership Conversion").
(c) Modification of Structure. Notwithstanding any provision of this
Agreement to the contrary, Northwest Bancorp may elect, subject to the filing of
all necessary applications and the receipt of all required regulatory approvals,
to modify the structure of the transactions described in this Section 2.01, and
the parties shall enter into such alternative transactions, so long as (i) there
are no adverse tax consequences to any of the stockholders of Xxxxx Financial as
a result of such modification, (ii) the Merger Consideration is not thereby
changed in kind or reduced in amount because of such modification and (iii) such
modification will not materially delay or jeopardize receipt of any required
regulatory approvals required under Sections 6.02(d).
Section 2.02 Conversion and Cancellation of Shares
(a) On the Merger Effective Date and in accordance with the MHC Merger
and the Mid-Tier Merger:
(i) Each issued and outstanding share of Xxxxx Financial
Common Stock held by Xxxxx MHC shall be exchanged for one share of
First Carnegie Common Stock.
(ii) Each issued and outstanding share of Xxxxx Financial
Common Stock (except shares held by Xxxxx MHC and except as otherwise
provided in this subsection (a) of Section 2.02) shall cease to be
outstanding, shall cease to exist and shall be converted automatically
into the right to receive $17.00 in cash (the "Merger Consideration").
(b) Any shares of Xxxxx Financial Common Stock (other than those held
by Xxxxx MHC) which are owned or held by either party hereto or any of their
respective Subsidiaries (other than in a fiduciary capacity or in connection
with debts previously contracted) at the Merger Effective Date shall cease to
exist, the certificates for such shares shall be canceled as promptly as
practicable, such shares shall not be converted into the Merger Consideration
and no cash shall be issued or exchanged therefor.
(c) The holders of certificates representing shares of Xxxxx Financial
Common Stock (other than Xxxxx MHC) (any such certificate being hereinafter
referred to as a "Certificate") shall cease to have any rights as stockholders
of Xxxxx Financial.
(d) Each option to purchase shares of Xxxxx Financial Common Stock
issued and outstanding pursuant to the Xxxxx Stock Option Plan, whether or not
such option is exercisable as of the Merger Effective Date, shall, by reason of
the Merger, cease to be outstanding and shall automatically be converted into
the right to receive in cash an amount equal to (i) the difference (if a
positive number) between (A) the Merger Consideration and (B) the exercise price
of each such option multiplied by (ii) the number of shares of Xxxxx Financial
Common Stock subject to such option.
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Section 2.03 Exchange Procedures
(a) As promptly as practicable after the Merger Effective Date, and in
any event within five business days of the Merger Effective Date, the Exchange
Agent shall mail to each holder of record of an outstanding Certificate(s) a
Letter of Transmittal containing instructions for the surrender of the
Certificate(s) held by such holder for payment if applicable. Upon surrender of
the Certificate(s) to the Exchange Agent in accordance with the instructions set
forth in the Letter of Transmittal, such holder shall promptly receive in
exchange therefor the Merger Consideration if applicable, without interest
thereon. Approval of this Agreement by the stockholders of Xxxxx Financial shall
constitute authorization for Northwest Bancorp to designate and appoint the
Exchange Agent, which appointment shall be reasonably acceptable to Xxxxx
Financial. Neither Northwest Bancorp nor the Exchange Agent shall be obligated
to deliver the Merger Consideration to a former stockholder of Xxxxx Financial
until such former stockholder surrenders his Certificate(s) or, in lieu thereof,
any such appropriate affidavit of loss and indemnity agreement and bond as may
be reasonably required by Northwest Bancorp.
(b) If payment of the Merger Consideration is to be made to a person
other than the person in whose name a Certificate surrendered in exchange
therefor is registered, it shall be a condition of payment that the Certificate
so surrendered shall be properly endorsed (or accompanied by an appropriate
instrument of transfer) and otherwise in proper form for transfer, and that the
person requesting such payment shall pay any transfer or other taxes required by
reason of the payment to a person other than the registered holder of the
Certificate surrendered, or required for any other reason, or shall establish to
the satisfaction of the Exchange Agent that such tax has been paid or is not
payable.
(c) On or prior to the Merger Effective Date, Xxxxx Financial shall
deposit or cause to be deposited in trust with the Exchange Agent, an amount of
cash equal to the aggregate Merger Consideration that Xxxxx Financial
stockholders shall be entitled to receive on the Merger Effective Date pursuant
to Section 2.02 hereof (determined by multiplying the Merger Consideration by
the number of shares of Xxxxx Financial Common Stock which are issued and
outstanding immediately prior to the Merger Effective Date, other than shares
referenced in Section 2.02(b) hereof).
(d) The payment of the Merger Consideration in exchange for each share
of Xxxxx Financial Common Stock in accordance with the above terms and
conditions shall be in full satisfaction of all rights pertaining to such Xxxxx
Financial Common Stock.
(e) Promptly following the date which is 12 months after the Merger
Effective Date, the Exchange Agent shall deliver to Northwest Bancorp all cash,
certificates and other documents in its possession relating to the transactions
described in this Agreement, and the Exchange Agent's duties shall terminate.
Thereafter, each holder of a Certificate formerly representing shares of Xxxxx
Financial Common Stock may surrender such Certificate to Northwest Bancorp and
(subject to applicable abandoned property, escheat and similar laws) receive in
consideration therefor the Merger Consideration multiplied by the number of
shares of
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Xxxxx Financial Common Stock formerly represented by such Certificate, without
any interest or dividends thereon.
(f) After the close of business on the Merger Effective Date, there
shall be no transfers on the stock transfer books of Xxxxx Financial of Xxxxx
Financial Common Stock which are outstanding immediately prior to the Merger
Effective Date, and the stock transfer books of Xxxxx Financial shall be closed
with respect to such shares. If, after the Merger Effective Date, Certificates
representing such shares are presented for transfer to the Exchange Agent, they
shall be canceled and exchanged for the Merger Consideration as provided in this
Article II.
(g) In the event any certificate for Xxxxx Financial Common Stock shall
have been lost, stolen or destroyed, the Exchange Agent shall deliver (except as
otherwise provided in Section 2.02) in exchange for such lost, stolen or
destroyed certificate, upon receipt of an affidavit of such fact by the holder
thereof, the cash to be paid in the Merger as provided for herein; provided,
however, that Northwest Bancorp may, in its sole discretion and as a condition
precedent to the delivery thereof, require the owner of such lost, stolen or
destroyed certificate to deliver a bond in such reasonable sum as Northwest
Bancorp may specify as indemnity against any claim that may be made against
Xxxxx Financial, Northwest Bancorp or any other party with respect to the
certificate alleged to have been lost, stolen or destroyed.
(h) Northwest Bancorp is hereby authorized, with the written consent of
Xxxxx Financial, to adopt additional reasonable rules and regulations with
respect to the matters referred to in this Section 2.03 not inconsistent with
the provisions of this Agreement and which do not adversely affect the rights of
stockholders of Xxxxx Financial.
Section 2.04. Stock Options.
Xxxxx Disclosure Schedule 2.04 sets forth all of the outstanding Xxxxx
Financial Options as of the date hereof, including vesting dates. At the Merger
Effective Date, each Xxxxx Financial Option which is unexercised and
outstanding, whether or not vested, immediately prior thereto shall, by reason
of the Merger, be terminated and converted into the right to receive in cash an
amount equal to (i) the difference between (A) the Merger Consideration and (B)
the exercise price of each such Xxxxx Financial Option multiplied by (ii) the
number of shares of Xxxxx Financial Common Stock subject to the Xxxxx Financial
Option. Xxxxx Financial agrees to take or to cause to be taken all actions
necessary to provide for such payment at or prior to the Merger Effective Date,
and shall use its reasonable best efforts to obtain the written acknowledgement
of each holder of a then outstanding Xxxxx Financial Option with regard to the
termination of such Option and the full payment therefor in accordance with the
terms of this Agreement.
Section 2.05. Restricted Stock.
Xxxxx Disclosure Schedule 2.05 sets forth all outstanding unvested
awards under the Xxxxx Financial Restricted Stock Plan. At the Merger Effective
Date, each unvested restricted share of Xxxxx Financial Common Stock granted
under the Xxxxx Financial Restricted Stock Plan
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which is outstanding at such time shall vest and become free of all
restrictions. Each holder of such a share of restricted Xxxxx Financial Common
Stock shall have the same right to receive the Merger Consideration as is
provided to each holder of Xxxxx Common Stock. Xxxxx Financial agrees to take or
to cause to be taken all actions necessary to provide for such payment at or
prior to the Merger Effective Date, and shall use its reasonable best efforts to
obtain the written acknowledgement of each holder of a share of restricted Xxxxx
Financial Common Stock with regard to the payment for such shares and the full
payment therefor in accordance with the terms of this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF XXXXX
Xxxxx represents and warrants to Northwest that the statements
contained in this Article III are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement throughout this Article III), except as set forth in the Xxxxx
Financial Schedules delivered to Northwest on the date hereof, and except as to
any representation or warranty which relates to a specific date.
Section 3.01 Organization
(a) Xxxxx MHC is a Federal mutual holding company organized, validly
existing and in good standing under the laws of the United States, and is duly
registered as a savings and loan holding company under the HOLA. Xxxxx MHC has
full power and authority to carry on its business as now conducted and is duly
licensed or qualified to do business in the states of the United States and
foreign jurisdictions where its ownership or leasing of property or the conduct
of its business requires such qualification, except where the failure to be so
licensed or qualified would not have a Material Adverse Effect on Xxxxx. Except
as set forth in Xxxxx Disclosure Schedule 3.01(a), Xxxxx MHC has no subsidiary
other than Xxxxx Financial and First Carnegie.
(b) Xxxxx Financial is a Federal corporation organized, validly
existing and in good standing under the laws of the United States, and is duly
registered as a savings and loan holding company under the HOLA. Xxxxx Financial
has the full corporate power and authority to own or lease all of its properties
and assets and to carry on its business as it is now being conducted, and is
duly licensed or qualified to do business and is in good standing in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such licensing or qualification necessary, except where the failure to be so
licensed, qualified or in good standing would not have a Material Adverse Effect
on Xxxxx. Other than shares of capital stock in First Carnegie and its
subsidiaries, as identified below (collectively, the "Xxxxx Subsidiaries"),
Xxxxx Financial does not own or control, directly or indirectly, or have the
right to acquire directly or indirectly, an equity interest in any corporation,
company, association, partnership, joint venture or other entity.
(c) First Carnegie is a Federal savings bank organized, validly
existing and in good standing under the laws of the United States. Except as set
forth in Xxxxx Disclosure Schedule
11
3.01(c), First Carnegie is the only Xxxxx Subsidiary. The deposits of First
Carnegie are insured by the FDIC to the fullest extent permitted by law, and all
premiums and assessments required to be paid in connection therewith have been
paid when due by First Carnegie. Each Xxxxx Subsidiary is identified in Xxxxx
Disclosure Schedule 3.01(c), and is a corporation organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation or
organization.
(d) First Carnegie is a member in good standing of the FHLB of
Pittsburgh and owns the requisite amount of stock therein.
(e) Except as disclosed in Xxxxx Disclosure Schedule 3.01(e), the
respective minute books of Xxxxx MHC, Xxxxx Financial, First Carnegie and each
Xxxxx Subsidiary accurately records, in all material respects, all material
corporate actions of their respective stockholders and boards of directors
(including committees) through the date of this Agreement.
(f) Prior to the date of this Agreement, Xxxxx has made available to
Northwest true and correct copies of the charters and bylaws of First Carnegie,
Xxxxx Financial and Xxxxx MHC, and the certificates of incorporation and bylaws
of each Xxxxx Subsidiary.
Section 3.02 Capitalization
(a) The authorized capital stock of Xxxxx Financial consists of
10,000,000 shares of common stock, $0.10 par value ("Xxxxx Financial Common
Stock"), and 5,000,000 shares of Preferred Stock, without par value (the "Xxxxx
Preferred Stock"), of which 3,153,344 shares of Xxxxx Financial Common Stock are
outstanding, validly issued, fully paid and nonassessable and free of preemptive
rights. There are no shares of Xxxxx Financial Preferred Stock issued and
outstanding. There are 296,630 shares of Xxxxx Financial Common Stock held by
Xxxxx Financial as treasury stock. Neither Xxxxx Financial nor any Xxxxx
Subsidiary has or is bound by any Right of any character relating to the
purchase, sale, issuance or voting of, or right to receive dividends or other
distributions on, any shares of Xxxxx Financial Common Stock, or any other
security of Xxxxx Financial or any Xxxxx Subsidiary, or any securities
representing the right to vote, purchase or otherwise receive any shares of
Xxxxx Financial Common Stock or any other security of Xxxxx Financial, other
than 142,535 shares issuable upon the exercise of Xxxxx Financial Options (as
set forth in the Xxxxx Disclosure Schedule 2.04 which are not considered
outstanding shares), and shares held pursuant to the First Carnegie ESOP (which
are outstanding). Xxxxx Disclosure Schedule 3.02(a) sets forth (i) each holder
of awards of Stock Options under the Xxxxx Financial Stock Option Plan, the
number of shares each such individual may acquire pursuant to the exercise of
Xxxxx Financial Stock Options and the exercise price relating to the Xxxxx
Financial Stock Options, and (ii) the name of each participant under the First
Carnegie ESOP, the number of shares of Xxxxx Financial Common Stock allocated to
each such participant and the number of allocated and unallocated shares of
Xxxxx Financial Common Stock held by the First Carnegie ESOP. Except as set
forth in Xxxxx Disclosure Schedule 3.02(a), there are no shares of restricted
stock of Xxxxx Financial outstanding, or authorized to be issued pursuant to any
Compensation and Benefit Plan of Xxxxx Financial.
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(b) Xxxxx MHC owns 1,897,500 shares of Xxxxx Financial Common Stock,
free and clear of any lien or encumbrance except as set forth in Xxxxx
Disclosure Schedule 3.02(b). Except as disclosed in Xxxxx Disclosure Schedule
3.02(b) and except for shares of Xxxxx Financial Common Stock (and any equity
interests that may be attributed to Xxxxx MHC due to its ownership of Xxxxx
Financial Common Stock), Xxxxx MHC does not possess, directly or indirectly, any
equity interest in any corporation.
(c) To the best knowledge of Xxxxx Financial, no Person or "group" (as
that term is used in Section 13(d)(3) of the Exchange Act) other than Xxxxx MHC,
is the beneficial owner (as defined in Section 13(d) of the Exchange Act) of 5%
or more of the outstanding shares of Xxxxx Financial Common Stock, except as
disclosed in the Xxxxx Disclosure Schedule 3.02(c).
(d) The authorized capital stock of First Carnegie consists of
10,000,000 shares of common stock, $1.00 par value, and 5,000,000 shares of
Preferred Stock, no par value. There are 2,300,000 shares of First Carnegie
common stock issued and outstanding, all of which are validly issued, fully paid
and nonassessable and free of preemptive rights, and all of which are owned by
Xxxxx Financial free and clear of any liens, encumbrances, charges, restrictions
or rights of third parties of any kind whatsoever.
Section 3.03 Authority; No Violation
(a) Xxxxx has full power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by Xxxxx and the completion by Xxxxx of the
transactions contemplated hereby have been duly and validly approved by the
requisite vote of the Boards of Directors of the Xxxxx Parties and, except for
approval of the stockholders of Xxxxx Financial and, if required, the members of
Xxxxx MHC, no other proceedings on the part of the Xxxxx Parties are necessary
to complete the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by Xxxxx and, subject to approval by the
stockholders of Xxxxx Financial and, if required, the members of Xxxxx MHC and
receipt of the required approvals of the Regulatory Authorities, constitutes the
valid and binding obligations of Xxxxx, enforceable against Xxxxx in accordance
with its terms, subject to applicable bankruptcy, insolvency and similar laws
affecting creditors' rights generally, and as to First Carnegie, the
conservatorship or receivership provisions of the FDIA, and subject, as to
enforceability, to general principles of equity.
(b) Subject to the receipt of approvals from the Regulatory Authorities
referred to in Section 5.03 hereof and the compliance by Xxxxx and Northwest
with any conditions contained therein,
(A) the execution and delivery of this Agreement by Xxxxx,
(B) the consummation of the transactions contemplated hereby, and
(C) compliance by Xxxxx with any of the terms or provisions hereof,
13
will not (i) conflict with or result in a material breach of any provision of
the charters or bylaws of any of the Xxxxx Parties or the certificate of
incorporation of any Xxxxx Subsidiary; (ii) violate any statute, code,
ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to the Xxxxx Parties or any of the properties or assets of the Xxxxx
Parties; or (iii) violate, conflict with, result in a breach of any provisions
of, constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, result in the termination of,
accelerate the performance required by, or result in a right of termination or
acceleration or the creation of any lien, security interest, charge or other
encumbrance upon any of the properties or assets of Xxxxx under any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other investment or obligation to which
Xxxxx is a party, or by which they or any of their respective properties or
assets may be bound or affected, except in the case of clauses (ii) and (iii)
above for violations which, individually or in the aggregate, would not have a
Material Adverse Effect on Xxxxx.
Section 3.04 Consents
Except as set forth in Xxxxx Disclosure Schedule 3.04, and except for
the consents, waivers, approvals, filings and registrations from or with the
Regulatory Authorities referred to in Section 5.03 hereof and compliance with
any conditions contained therein, and the approval of this Agreement by the
requisite vote of the stockholders of Xxxxx Financial and, if required, the
members of Xxxxx MHC, no consents, waivers or approvals of, or filings or
registrations with, any public body or governmental authority are necessary,
and, to the best knowledge of Xxxxx, no consents, waivers or approvals of, or
filings or registrations with, any other third parties are necessary, in
connection with (a) the execution and delivery of this Agreement by Xxxxx, and
(b) the completion by Xxxxx of the transactions described in this Agreement. The
Xxxxx Parties have no reason to believe that (i) any Regulatory Approvals will
not be received or (ii) any public body or authority, the consent or approval of
which is not required or to which a filing is not required, will object to the
completion of the transactions contemplated by this Agreement.
Section 3.05 Xxxxx Financial Statements
(a) Xxxxx Financial has previously made available to Northwest the
Xxxxx Regulatory Reports. The Xxxxx Regulatory Reports have been, or will be,
prepared in all material respects in accordance with applicable regulatory
accounting principles and practices throughout the periods covered by such
statements, and fairly present, or will fairly present in all material respects,
the consolidated financial position, results of operations and changes in
stockholders' equity of each of the Xxxxx Parties as of and for the periods
ended on the dates thereof, in accordance with applicable regulatory accounting
principles applied on a consistent basis.
(b) Xxxxx Financial has previously made available to Northwest the
Xxxxx Financials (the availability of the Xxxxx Financials will be assumed if
they are included in SEC Documents filed on XXXXX). The Xxxxx Financials
(including the related notes where applicable) fairly present in each case in
all material respects (subject in the case of the unaudited interim statements
to normal year-end adjustments), the consolidated financial condition, results
of operations and cash flows of Xxxxx Financial as of and for the respective
periods ending on the
14
dates thereof and have been prepared in accordance with GAAP applied on a
consistent basis during the periods involved, except as indicated therein, or in
the case of unaudited statements, as permitted by Form 10-QSB.
(c) At the date of each balance sheet included in the Xxxxx Financials
or the Xxxxx Regulatory Reports, Xxxxx did not have, and will not have, any
liabilities, obligations or loss contingencies of any nature (whether absolute,
accrued, contingent or otherwise) of a type required to be reflected in such
Xxxxx Financials or Xxxxx Regulatory Reports or in the footnotes thereto which
are not fully reflected or reserved against therein or fully disclosed in a
footnote thereto, except for liabilities, obligations and loss contingencies
that are not material individually or in the aggregate or which are incurred in
the ordinary course of business, consistent with past practice, and except for
liabilities, obligations and loss contingencies that are within the subject
matter of a specific representation and warranty herein and subject, in the case
of any unaudited statements, to normal, recurring audit adjustments and the
absence of footnotes.
Section 3.06 Taxes
Xxxxx Financial and the Xxxxx Subsidiaries are members of the same
affiliated group within the meaning of IRC Section 1504(a). Xxxxx has duly filed
all Federal, state and material local tax returns required to be filed by or
with respect to it on or prior to the date hereof (all such returns being
accurate and correct in all material respects) and has duly paid or has made
provisions for the payment of, all material Federal, state and local taxes which
have been incurred by or are due or claimed to be due from Xxxxx by any taxing
authority or pursuant to any written tax sharing agreement on or prior to the
date hereof other than taxes or other charges which (i) are not delinquent, (ii)
are being contested in good faith, or (iii) have not yet been fully determined.
As of the date of this Agreement, there is no audit examination, deficiency
assessment, tax investigation or refund litigation with respect to any taxes of
Xxxxx, and no claim has been made by any authority in a jurisdiction where Xxxxx
does not file tax returns that Xxxxx is subject to taxation in that
jurisdiction. Xxxxx has not executed an extension or waiver of any statute of
limitations on the assessment or collection of any material tax due that is
currently in effect. Xxxxx has withheld and paid all taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor or stockholder, and Xxxxx has timely complied
with all applicable information reporting requirements under Part III,
Subchapter A of Chapter 61 of the IRC and similar applicable state and local
information reporting requirements.
Section 3.07 No Material Adverse Effect
Xxxxx has not suffered any Material Adverse Effect since March 31,
2002.
Section 3.08 Contracts
(a) Except as set forth in Xxxxx Disclosure Schedule 3.08(a), and
except for this Agreement, the Merger Agreement for the MHC Merger, the Merger
Agreement for the Mid-Tier Merger, and those agreements and other documents
filed as exhibits to Xxxxx Financial's Securities Documents, Xxxxx is not a
party to or subject to:
15
(i) any employment, consulting or severance contract or
material arrangement with any past or present officer, director or
employee of Xxxxx except for "at will" arrangements;
(ii) any plan, material arrangement or contract providing for
bonuses, pensions, options, deferred compensation, retirement payments,
profit sharing or similar material arrangements for or with any past or
present officers, directors or employees of Xxxxx;
(iii) any collective bargaining agreement with any labor union
relating to employees of Xxxxx;
(iv) any agreement which by its terms limits the payment of
dividends by First Carnegie or Xxxxx Financial;
(v) any instrument evidencing or related to material
indebtedness for borrowed money whether directly or indirectly, by way
of purchase money obligation, conditional sale, lease purchase,
guaranty or otherwise, in respect of which Xxxxx is an obligor to any
person, which instrument evidences or relates to indebtedness other
than deposits, repurchase agreements, bankers' acceptances, advances
from the FHLB of Pittsburgh, and "treasury tax and loan" accounts
established in the ordinary course of business and transactions in
"Federal funds" or which contains financial covenants or other
restrictions (other than those relating to the payment of principal and
interest when due) which would be applicable on or after the Closing
Date to Northwest; or
(vi) any contract (other than this Agreement) limiting the
freedom, in any material respect, of Xxxxx to engage in any type of
banking or bank-related business in which Xxxxx is permitted to engage
under applicable law as of the date of this Agreement.
(b) True and correct copies of agreements, plans, contracts,
arrangements and instruments referred to in Section 3.08(a), have been made
available to Northwest on or before the date hereof, are listed in and attached
to Xxxxx Disclosure Schedule 3.08(a) and are in full force and effect on the
date hereof, and Xxxxx (nor, to the knowledge of Xxxxx, any other party to any
such contract, plan, arrangement or instrument) has not materially breached any
provision of, or is in default in any respect under any term of, any such
contract, plan, arrangement or instrument. Except as set forth in the Xxxxx
Disclosure Schedule 3.08(b)(i), no party to any material contract, plan,
arrangement or instrument will have the right to terminate any or all of the
provisions of any such contract, plan, arrangement or instrument as a result of
the execution of, and the transactions contemplated by, this Agreement. Except
as set forth in Xxxxx Disclosure Schedule 3.08(b)(i), none of the employees
(including officers) of Xxxxx possesses the right to terminate his/her
employment and receive or be paid (or cause Xxxxx to accrue on his/her behalf)
benefits solely as a result of the execution of this Agreement or the
consummation of the transactions contemplated thereby. Except as set forth in
Xxxxx Disclosure Schedule 3.08(b)(i), no plan, contract, employment agreement,
termination agreement, or similar agreement or arrangement to which Xxxxx is a
party or under which Xxxxx may be liable contains provisions
16
which permit any employee or independent contractor to terminate it without
cause and continue to accrue future benefits thereunder. Except as set forth in
Xxxxx Disclosure Schedule 3.08(b)(i), no such agreement, plan, contract, or
arrangement: (x) provides for acceleration in the vesting of benefits or
payments due thereunder upon the occurrence of a change in ownership or control
of Xxxxx or upon the occurrence of a subsequent event; or (y) requires Xxxxx to
provide a benefit in the form of Xxxxx Financial Common Stock or determined by
reference to the value of Xxxxx Financial Common Stock. Except as disclosed in
Xxxxx Disclosure Schedule 3.08(b)(ii), no such agreement, plan or arrangement
with respect to officers or directors of Xxxxx or to any of their respective
employees, provides for benefits which may cause an "excess parachute payment"
or the disallowance of a Federal income tax deduction under IRC Section 280G.
Section 3.09 Ownership of Property; Insurance Coverage.
(a) Except as disclosed in Xxxxx Disclosure Schedule 3.09(a), Xxxxx has
good and, as to real property, marketable title to all material assets and
properties owned by Xxxxx in the conduct of its business, whether such assets
and properties are real or personal, tangible or intangible, including assets
and property reflected in the balance sheets contained in the Xxxxx Regulatory
Reports and in the Xxxxx Financials or acquired subsequent thereto (except to
the extent that such assets and properties have been disposed of in the ordinary
course of business, since the date of such balance sheets), subject to no
material encumbrances, liens, mortgages, security interests or pledges, except
(i) those items which secure liabilities for public or statutory obligations or
any discount with, borrowing from or other obligations to the FHLB of
Pittsburgh, inter-bank credit facilities, or any transaction by Xxxxx acting in
a fiduciary capacity, and (ii) statutory liens for amounts not yet delinquent or
which are being contested in good faith. Xxxxx, as lessee, has the right under
valid and subsisting leases of real and personal properties used by Xxxxx in the
conduct of its businesses to occupy or use all such properties as presently
occupied and used by each of them. Except as disclosed in Xxxxx Disclosure
Schedule 3.09(a), such existing leases and commitments to lease constitute
operating leases for both tax and financial accounting purposes and the lease
expense and minimum rental commitments with respect to such leases and lease
commitments are as disclosed in the notes to the Xxxxx Financials.
(b) With respect to all material agreements pursuant to which Xxxxx has
purchased securities subject to an agreement to resell, if any, Xxxxx has a lien
or security interest (which to the knowledge of Xxxxx is a valid, perfected
first lien) in the securities or other collateral securing the repurchase
agreement, and the value of such collateral equals or exceeds the amount of the
debt secured thereby.
(c) Xxxxx currently maintains insurance considered by Xxxxx to be
reasonable for its operations, in accordance with good business practice. Xxxxx
has not received notice from any insurance carrier that (i) such insurance will
be canceled or that coverage thereunder will be reduced or eliminated, or (ii)
premium costs with respect to such policies of insurance will be substantially
increased. There are presently no material claims pending under such policies of
insurance and no notices have been given by Xxxxx under such policies. All such
insurance is valid and enforceable and in full force and effect, and within the
last three years Xxxxx has received each type of insurance coverage for which it
has applied and during such periods has
17
not been denied indemnification for any material claims submitted under any of
its insurance policies. Xxxxx Disclosure Schedule 3.09(c) identifies all
policies of insurance maintained by Xxxxx.
Section 3.10 Legal Proceedings.
Except as disclosed in Xxxxx Disclosure Schedule 3.10, Xxxxx is not a
party to any, and there are no pending or, to the best of the knowledge of
Xxxxx, threatened legal, administrative, arbitration or other proceedings,
actions or governmental investigations of any nature (i) against Xxxxx, (ii) to
which the assets of Xxxxx are or may be subject, (iii) challenging the validity
or propriety of any of the transactions contemplated by this Agreement, or (iv)
which could adversely affect the ability of Xxxxx to perform under this
Agreement, except for any proceedings, claims, actions, investigations or
inquiries referred to in clauses (i) or (ii) which, if adversely determined,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on Xxxxx.
Section 3.11 Compliance With Applicable Law
(a) Xxxxx holds all licenses, franchises, permits and authorizations
necessary for the lawful conduct of its businesses under, and has complied in
all material respects with, applicable laws, statutes, orders, rules or
regulations of any Federal, state or local governmental authority relating to
it, other than where such failure to hold or such noncompliance will neither
result in a limitation in any material respect on the conduct of its business
nor otherwise have a Material Adverse Effect on Xxxxx. Xxxxx, directly or
indirectly, owns, or is licensed or otherwise possesses legally enforceable
rights to use, all patents, trademarks, trade names, service marks, copyrights
and any applications therefor, technology, know-how and tangible or intangible
proprietary information or material that are material to the business of Xxxxx.
(b) Except as disclosed in Xxxxx Disclosure Schedule 3.11(b), Xxxxx has
not received any notification or communication from any Regulatory Authority (i)
asserting that Xxxxx is not in material compliance with any of the statutes,
regulations or ordinances which such Regulatory Authority enforces; (ii)
threatening to revoke any license, franchise, permit or governmental
authorization which is material to Xxxxx; (iii) requiring or threatening to
require Xxxxx, or indicating that Xxxxx may be required, to enter into a cease
and desist order, agreement or memorandum of understanding or any other
agreement with any Federal or state governmental agency or authority which is
charged with the supervision or regulation of banks or engages in the insurance
of bank deposits restricting or limiting, or purporting to restrict or limit, in
any material respect the operations of Xxxxx, including without limitation any
restriction on the payment of dividends; or (iv) directing, restricting or
limiting, or purporting to direct, restrict or limit, in any material manner the
operations of Xxxxx, including without limitation any restriction on the payment
of dividends (any such notice, communication, memorandum, agreement or order
described in this sentence is hereinafter referred to as a "Regulatory
Agreement"). Xxxxx has not consented to or entered into any currently effective
Regulatory Agreement, except as set forth in Xxxxx Disclosure Schedule 3.11(b).
The most recent regulatory rating given to First
18
Carnegie as to compliance with the Community Reinvestment Act ("CRA") is
satisfactory or better.
Section 3.12 Employee Benefit Plans.
(a) Xxxxx Disclosure Schedule 3.12 includes a list of all existing
Compensation and Benefit Plans. Each Compensation and Benefit Plan that is an
"employee pension benefit plan" (as defined in Section 3(2) of ERISA) and which
is intended to be qualified under Section 401(a) of the IRC (a "Xxxxx Qualified
Plan") has received a favorable determination letter from the IRS or was a
prototype document that has received a favorable opinion letter from the IRS,
and Xxxxx Financial and First Carnegie have no knowledge of any circumstances
likely to result in revocation of any such favorable determination or opinion
letter. There has been no announcement or commitment by Xxxxx Financial, First
Carnegie or any Xxxxx Subsidiary to create an additional Compensation and
Benefit Plan, or to amend any Compensation and Benefit Plan, except for
amendments required by applicable law to maintain its qualified status or
otherwise, which do not increase the cost of such Compensation and Benefit Plan.
(b) Each Compensation and Benefit Plan has been operated and
administered in all material respects in accordance with its terms and with
applicable law, including, but not limited to, ERISA, the IRC, the Securities
Act, the Exchange Act, the Age Discrimination in Employment Act, and any
regulations or rules promulgated thereunder, and all filings, disclosures and
notices required by ERISA, the IRC, the Securities Act, the Exchange Act, the
Age Discrimination in Employment Act and any other applicable law have been
timely made. Except as set forth in Xxxxx Disclosure Schedule 3.12(b), there is
no pending, or to the Knowledge of Xxxxx Financial threatened, litigation,
administrative action, suit or claim relating to any of the Compensation and
Benefit Plans (other than routine claims for benefits). Neither Xxxxx Financial
nor First Carnegie has engaged in a transaction, or omitted to take any action,
with respect to any Compensation and Benefit Plan that would reasonably be
expected to subject Xxxxx Financial or First Carnegie to a tax or penalty
imposed by either Section 4975 of the IRC or Section 502 of ERISA, assuming for
purposes of Section 4975 of the IRC that the taxable period of any such
transaction expired as of the date hereof and subsequently expires as of the day
next preceding the Merger Effective Date. Except as set forth in Xxxxx
Disclosure Schedule 3.12(b), each of the Compensation and Benefit Plans can be
terminated in accordance with its terms upon sixty (60) days written notice.
(c) No liability under Title IV of ERISA has been incurred by Xxxxx
Financial or First Carnegie or any Xxxxx Subsidiary with respect to any
Compensation and Benefit Plan which is subject to Title IV of ERISA, or with
respect to any "single-employer plan" (as defined in Section 4001(a) of ERISA)
("Xxxxx Pension Plan") currently or formerly maintained by Xxxxx Financial or
First Carnegie or any entity which is considered one employer with Xxxxx
Financial or First Carnegie under Section 4001(b)(1) of ERISA or Section 414 of
the IRC (an "ERISA Affiliate") since the effective date of ERISA that has not
been satisfied in full, and no condition exists that presents a risk to Xxxxx
Financial or First Carnegie or any ERISA Affiliate of incurring a liability
under such Title. Except as disclosed in Xxxxx Disclosure Schedule 3.12(c), no
Xxxxx Pension Plan had an "accumulated funding deficiency" (as defined in
Section 302 of
19
ERISA), whether or not waived, as of the last day of the end of the most recent
plan year ending prior to the date hereof; the fair market value of the assets
of each Xxxxx Pension Plan exceeds the present value of the "benefit
liabilities" (as defined in Section 4001(a)(16) of ERISA) under such Xxxxx
Pension Plan as of the end of the most recent plan year with respect to the
respective Xxxxx Pension Plan ending prior to the date hereof, calculated on the
basis of the actuarial assumptions used in the most recent actuarial valuation
for such Xxxxx Pension Plan as of the date hereof; there is not currently
pending with the PBGC any filing with respect to any reportable event under
Section 4043 of ERISA nor has any reportable event occurred as to which a filing
is required and has not been made (other than as might be required with respect
to this Agreement and the transactions contemplated thereby). Neither Xxxxx
Financial or First Carnegie nor any ERISA Affiliate has contributed to any
"multiemployer plan," as defined in Section 3(37) of ERISA, on or after
September 26, 1980. Except as set forth in Xxxxx Financial's Disclosure Schedule
3.12(c), neither Xxxxx Financial or First Carnegie, nor any ERISA Affiliate, nor
any Compensation and Benefit Plan, including any Xxxxx Pension Plan, nor any
trust created thereunder, nor any trustee or administrator thereof has engaged
in a transaction in connection with which Xxxxx Financial or First Carnegie, any
ERISA Affiliate, and any Compensation and Benefit Plan, including any Xxxxx
Pension Plan any such trust or any trustee or administrator thereof, could
reasonably be expected to be subject to either a civil liability or penalty
pursuant to Section 409, 502(i) or 502(l) of ERISA or a tax imposed pursuant to
Chapter 43 of the IRC.
(d) All contributions required to be made under the terms of any
Compensation and Benefit Plan or ERISA Affiliate plan or any employee benefit
arrangements to which Xxxxx Financial or First Carnegie is a party or a sponsor
have been timely made, and all anticipated contributions and funding obligations
are accrued monthly on Xxxxx Financial's consolidated financial statements to
the extent required and in accordance with GAAP. Except as disclosed on Xxxxx
Disclosure Schedule 3.12(d), Xxxxx Financial and any Xxxxx Subsidiary has
expensed and accrued as a liability the present value of future benefits under
each applicable Compensation and Benefit Plan in accordance with applicable laws
and GAAP consistently applied. None of Xxxxx Financial, First Carnegie nor any
ERISA Affiliate (x) has provided, or would reasonably be expected to be required
to provide, security to any Xxxxx Pension Plan or to any ERISA Affiliate plan
pursuant to Section 401(a)(29) of the IRC, or (y) has taken any action, or
omitted to take any action, that has resulted, or would reasonably be expected
to result, in the imposition of a lien under Section 412(n) of the IRC or
pursuant to ERISA.
(e) Except as set forth in Xxxxx Disclosure Schedule 3.12(e), neither
Xxxxx Financial nor First Carnegie has any obligations to provide retiree
health, life insurance, disability insurance, or other retiree death benefits
under any Compensation and Benefit Plan, other than benefits mandated by Section
4980B of the IRC. There has been no communication to employees by Xxxxx
Financial or First Carnegie that would reasonably be expected to promise or
guarantee such employees retiree health, life insurance, disability insurance,
or other retiree death benefits.
(f) With respect to each Compensation and Benefit Plan, if applicable,
Xxxxx Financial has provided or made available to Northwest Bancorp copies of
the: (A) trust
20
instruments and insurance contracts; (B) most recent Form 5500 filed with the
Department of Labor; (C) most recent actuarial report and financial statement;
(D) the most recent summary plan description; (E) most recent determination
letter issued by the IRS; (F) any Form 5310 or Form 5330 filed with the IRS; and
(G) most recent nondiscrimination tests performed under ERISA and the IRC
(including 401(k) and 401(m) tests). Xxxxx Disclosure Schedule 3.12(f) sets
forth the name of each participant under the First Carnegie ESOP and the number
of shares of Xxxxx Financial Common Stock allocated to such participant.
(g) Except as set forth in Xxxxx Disclosure Schedules 3.12(a) and 3.18,
the consummation of the Merger will not, directly or indirectly (including,
without limitation, as a result of any termination of employment or service at
any time prior to or following the Merger Effective Date) (A) entitle any
employee, consultant or director to any payment or benefit (including severance
pay, change in control benefit, or similar compensation) or any increase in
compensation, (B) result in the vesting or acceleration of any benefits under
any Compensation and Benefit Plan or (C) result in any increase in benefits
payable under any Compensation and Benefit Plan.
(h) Neither Xxxxx Financial nor First Carnegie maintains any
compensation plans, programs or arrangements under which any payment is
reasonably likely to become non-deductible, in whole or in part, for tax
reporting purposes as a result of the limitations under Section 162(m) of the
IRC and the regulations issued thereunder.
(i) Except as set forth in Xxxxx Disclosure Schedule 3.12(i), the
consummation of the Merger will not, directly or indirectly (including without
limitation, as a result of any termination of employment or service at any time
prior to or following the Merger Effective Date), entitle any current or former
employee, director or independent contractor of Xxxxx Financial or First
Carnegie to any actual or deemed payment (or benefit) which would constitute a
"parachute payment" (as such term is defined in Section 280G of the IRC).
(j) Except as set forth in Xxxxx Disclosure Schedule 3.12(a), there are
no stock appreciation or similar rights, earned dividends or dividend
equivalents, or shares of restricted stock, outstanding under any Compensation
and Benefit Plan or otherwise as of the date hereof and none will be granted,
awarded, or credited after the date hereof.
Section 3.13 Brokers, Finders and Financial Advisors
Except the engagement of FinPro in connection with transactions
contemplated by this Agreement, neither Xxxxx, nor any of its officers,
directors, employees or agents, has engaged or retained any broker, finder or
financial advisor in connection with the transactions contemplated by this
Agreement, or, except for the commitments disclosed in Xxxxx Disclosure Schedule
3.13, incurred any liability or commitment for any fees or commissions to any
such person in connection with the transactions contemplated by this Agreement,
which has not been reflected in the Xxxxx Financials.
21
Section 3.14 Environmental Matters
(a) Except as set forth in Xxxxx Disclosure Schedule 3.14(a):
(i) To the knowledge of Xxxxx, the Participation Facilities
(as defined below) and the Loan Properties are, and have been, in
substantial compliance with all Environmental Laws;
(ii) There is no suit, claim, action, notice, demand,
executive or administrative order, directive, investigation or
proceeding pending or, to the knowledge of Xxxxx, threatened before any
court, governmental agency or board or other forum against Xxxxx (x)
for alleged noncompliance (including by any predecessor) with, or
liability under, any Environmental Law or (y) relating to the presence
of or release (as defined herein) into the environment of any Hazardous
Material (as defined herein), whether or not occurring at or on a site
owned, leased or operated by Xxxxx or any Participation Facility;
(iii) To the knowledge of Xxxxx, there is no suit, claim,
action, demand, executive or administrative order, directive,
investigation or proceeding pending or threatened before any court,
governmental agency or board or other forum relating to or against any
Loan Property (or Xxxxx in respect of such Loan Property) (x) relating
to alleged noncompliance (including by any predecessor) with, or
liability under, any Environmental Law or (y) relating to the presence
of or release into the environment of any Hazardous Material;
(iv) The properties currently owned or operated by Xxxxx
(including, without limitation, soil, groundwater or surface water on
or under the properties, and buildings thereon) are not contaminated
with and do not otherwise contain any Hazardous Material other than as
permitted under any applicable Environmental Law;
(v) Xxxxx has not received any notice, demand letter,
executive or administrative order, directive or request for information
from any Federal, state, local or foreign governmental entity or any
third party indicating that it may be in violation of, or liable under,
any Environmental Law;
(vi) To the knowledge of Xxxxx, there are no underground
storage tanks on, in or under any properties owned or operated by Xxxxx
and no underground storage tanks have been closed or removed from any
properties owned or operated by Xxxxx; and
(vii) During the period of ownership or operation by Xxxxx of
any of its respective current properties, or during the period of
participation in the management of any Participation Facility by Xxxxx,
to the knowledge of Xxxxx there has been no contamination by or release
of Hazardous Materials in, on, under or affecting such properties.
Prior to the period of ownership or operation by Xxxxx of any of its
current properties, or prior to the period of participation in the
management of any Participation Facility by Xxxxx, there was no
contamination by or release of Hazardous Material in, on, under or
affecting such properties to the knowledge of Xxxxx.
22
(b) As used in this section the term "Loan Property" means any property
in which the applicable party (or a Subsidiary of it) holds a security interest.
The term "Participation Facility" means any facility in which the applicable
party (or a Subsidiary of it) participates in the management (including all
property held as trustee or in any other fiduciary capacity) and, where required
by the context, includes the owner or operator of such property.
Section 3.15 Loan Portfolio.
(a) With respect to each loan owned by Xxxxx in whole or in part (each,
a "Loan"):
(i) the note and the related security documents are each
legal, valid and binding obligations of the maker or obligor thereof,
enforceable against such maker or obligor in accordance with their
terms;
(ii) neither Xxxxx nor any prior holder of a Loan, has
modified the note or any of the related security documents in any
material respect or satisfied, canceled or subordinated the note or any
of the related security documents except as otherwise disclosed by
documents in the applicable Loan file;
(iii) Xxxxx is the sole holder of legal and beneficial title
to each Loan (or any applicable participation interest, as
appropriate), except as otherwise referenced on the books and records
of Xxxxx;
(iv) the note and the related security documents, copies of
which are included in the Loan files, are true and correct copies of
the documents they purport to be and have not been suspended, amended,
modified, canceled or otherwise changed except as otherwise disclosed
by documents in the applicable Loan file;
(v) there is no pending or threatened condemnation proceeding
or similar proceeding affecting the property that serves as security
for a Loan, except as otherwise referenced on the books and records of
Xxxxx;
(vi) there is no litigation or proceeding pending or
threatened relating to the property that serves as security for a Loan
that would have a Material Adverse Effect upon the related Loan, except
as otherwise disclosed by documents in the applicable Loan file;
(vii) with respect to a Loan held in the form of a
participation, the participation documentation is legal, valid, binding
and enforceable, except as otherwise disclosed by documents in the
applicable Loan file; and
(viii) no representation or warranty set forth in this Section
3.15(a) shall be deemed to be breached unless such breach, individually
or in the aggregate, has had or is reasonably likely to have a Material
Adverse Effect on Xxxxx.
23
(b) The allowance for possible losses reflected in the audited
statement of condition of Xxxxx Financial at March 31, 2003 was, and the
allowance for possible losses shown on the balance sheets in the Securities
Documents of Xxxxx Financial for periods ending after March 31, 2003 have been
and will be adequate, as of the dates thereof, under GAAP.
(c) Xxxxx Disclosure Schedule 3.15(c) sets forth by category all loans,
leases, advances, credit enhancements, other extensions of credit, commitments
and interest-bearing assets of Xxxxx, including the amounts thereof and the name
of the obligor, that have been classified (whether regulatory or internal) as
"Special Mention," "Substandard," "Doubtful," "Loss" or words of similar import
as of March 31, 2003. The real estate owned ("REO") included in any
non-performing assets of Xxxxx is carried net of reserves at the lower of cost
or fair value, less estimated selling costs, based on current independent
appraisals or evaluations or current management appraisals or evaluations;
provided, however, that "current" shall mean within the past 12 months.
Section 3.16 Securities Documents
Xxxxx Financial has made available to Northwest copies of its (i)
annual reports on Form 10-KSB for the years ended March 31, 2003 and 2002, (ii)
quarterly reports on Form 10-QSB for the quarters ended December 31, 2002 and
June 30, 2003, and (iii) proxy materials used in connection with its most recent
meeting of stockholders (the availability of the preceding documents will be
assumed if such documents are filed on XXXXX). Such reports and such proxy
materials, at the time filed, did not contain any untrue statements of material
fact or omit to state any material fact necessary in order to make the
statements therein not misleading.
Section 3.17 Related Party Transactions
Except as disclosed in Xxxxx Disclosure Schedule 3.17, or as described
in the proxy statement of Xxxxx Financial distributed in connection with the
2002 annual meeting of stockholders (which previously has been provided to
Northwest), Xxxxx is not a party to any transaction (including any loan or other
credit accommodation) with an Affiliate. Except as disclosed in Xxxxx Disclosure
Schedule 3.17, all such transactions (a) were made in the ordinary course of
business, (b) were made on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for comparable
transactions with other Persons, and (c) did not involve more than the normal
risk of collectability or present other unfavorable features. Except as set
forth in Xxxxx Disclosure Schedule 3.17, no loan or credit accommodation to an
Affiliate is presently in default or, during the three-year period prior to the
date of this Agreement, has been in default or has been restructured, modified
or extended. Xxxxx has not been notified that principal and interest with
respect to any such loan or other credit accommodation will not be paid when due
or that the loan grade classification accorded such loan or credit accommodation
is inappropriate.
Section 3.18 Schedule of Termination Benefits
Xxxxx Disclosure Schedule 3.18 includes a description of all
termination benefits and related payments (including dollar amounts) that would
or will be payable to the individuals
24
identified thereon, excluding any Xxxxx Financial Options granted to such
individuals, under any and all employment agreements, special termination
agreements, change in control agreements, supplemental executive retirement
plans, deferred bonus plans, deferred compensation plans, salary continuation
plans, or any compensation arrangement, or other pension benefit or welfare
benefit plan maintained by Xxxxx Financial or First Carnegie for the benefit of
officers or directors of Xxxxx Financial or First Carnegie (the "Benefits
Schedule"), assuming their employment or service is terminated as of September
30, 2003, and the Closing Date occurs prior to such termination, and provided,
however, that the dollar amounts of such benefits and payments need not be
provided for any tax-qualified pension plan, any insured welfare benefit plan,
the Xxxxx Financial Stock Option Plan, the Xxxxx Financial Restricted Stock
Plan, the severance provisions of Section 5.11(c) of this Agreement or the
miscellaneous benefits set forth in Xxxxx Disclosure Schedule 3.12(a). No other
individuals are entitled to benefits under any such plans.
Section 3.19 Deposits
Except as set forth in Xxxxx Disclosure Schedule 3.19, none of the
deposits of Xxxxx is a "brokered" deposit as defined in 12 U.S.C. Section
1831f(g).
Section 3.20 Fairness Opinion
Xxxxx Financial and Xxxxx MHC have received a written opinion from
FinPro to the effect that, subject to the terms, conditions and qualifications
set forth therein, as of the date hereof, the Merger Consideration to be
received by the stockholders of Xxxxx Financial pursuant to this Agreement is
fair to such stockholders from a financial point of view, and the Membership
Conversion is equitable to the members of Xxxxx MHC (the "Fairness Opinion").
Section 3.21 Required Vote of Stockholders
The affirmative vote of (i) two-thirds of all votes entitled to be cast
by all the stockholders of Xxxxx Financial, including Xxxxx MHC and (ii) a
majority of votes cast by the stockholders of Xxxxx Financial other than Xxxxx
MHC is necessary to approve this Agreement and the transactions contemplated
hereby, in each case at a meeting of the stockholders of Xxxxx Financial.
Section 3.22 Derivative Transactions
Except as set forth in Xxxxx Disclosure Schedule 3.22, Xxxxx has not
entered into any future or option contracts, exchange rate swaps, caps or
floors, or other interest rate or exchange rate risk management instruments or
arrangements.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF NORTHWEST
Northwest represents and warrants to Xxxxx that the statements
contained in this Article IV are correct and complete as of the date of this
Agreement and will be correct and complete as
25
of the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Article IV), except
as set forth in the Northwest Disclosure Schedules delivered by Northwest on the
date hereof, and except as to any representation or warranty that relates to a
specific date.
Section 4.01 Organization
(a) Northwest MHC is a Federal mutual holding company organized,
validly existing and in good standing under the laws of the United States, and
is duly registered as a savings and loan holding company under the HOLA.
Northwest MHC has full power and authority to carry on its business as now
conducted and is duly licensed or qualified to do business in the states of the
United States and foreign jurisdictions where its ownership or leasing of
property or the conduct of its business requires such qualification, except
where the failure to be so licensed or qualified would not have a Material
Adverse Effect on Northwest MHC.
(b) Northwest Bancorp is a Federal corporation organized, validly
existing and in good standing under the laws of the United States, and is duly
registered as a savings and loan holding company under the HOLA. Northwest
Bancorp has the full corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being conducted,
and is duly licensed or qualified to do business and is in good standing in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such licensing or qualification necessary, except where the failure to be so
licensed, qualified or in good standing would not have a Material Adverse Effect
on Northwest Bancorp.
(c) Northwest Bank is a savings bank organized, validly existing and in
good standing under the laws of the Commonwealth of Pennsylvania. The deposits
of Northwest Bank are insured by the FDIC to the fullest extent permitted by
law, and all premiums and assessments required to be paid in connection
therewith have been paid when due by Northwest Bank. Each Northwest Subsidiary
is identified in exhibits to Northwest Bancorp's Form 10-K for the fiscal year
ended June 30, 2002, filed with the SEC, and is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization.
(d) Northwest Bank is a member in good standing of the FHLB of
Pittsburgh and owns the requisite amount of stock therein.
(e) Prior to the date of this Agreement, Northwest has made available
to Xxxxx true and correct copies of the charters and bylaws of Northwest MHC and
Northwest Bancorp, and the articles of incorporation and bylaws of Northwest
Bank.
Section 4.02 Authority; No Violation
(a) Northwest has full power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by Northwest and the completion by Northwest of
the transactions contemplated hereby have been duly and validly approved by the
requisite vote of the Boards of Directors of
26
the Northwest Parties, and no other corporate proceedings on the part of
Northwest are necessary to complete the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Northwest and,
subject to receipt of the required approvals of Regulatory Authorities described
in Section 4.03 hereof, constitutes the valid and binding obligation of
Northwest, enforceable against Northwest in accordance with its terms, subject
to applicable bankruptcy, insolvency and similar laws affecting creditors'
rights generally.
(b) Subject to the receipt of approvals from the Regulatory Authorities
referred to in Section 5.03 hereof and the compliance by Xxxxx and Northwest
with any conditions contained therein,
(A) the execution and delivery of this Agreement by Northwest,
(B) the consummation of the transactions contemplated hereby, and
(C) compliance by Northwest with any of the terms or provisions hereof,
will not (i) conflict with or result in a breach of any provision of the charter
or bylaws of Northwest MHC or Northwest Bancorp, or the articles of
incorporation or bylaws of Northwest Bank or any Northwest Subsidiary; (ii)
violate any statute, code, ordinance, rule, regulation, judgment, order, writ,
decree or injunction applicable to Northwest or any Northwest Subsidiary or any
of their respective properties or assets; or (iii) violate, conflict with,
result in a breach of any provisions of, constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a default),
under, result in the termination of, accelerate the performance required by, or
result in a right of termination or acceleration or the creation of any lien,
security interest, charge or other encumbrance upon any of the properties or
assets of Northwest under any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, deed of trust, license, lease, agreement or
other investment or obligation to which Northwest is a party, or by which it or
any of its properties or assets may be bound or affected, except in the case of
clauses (i) and (iii) above, for violations which individually or in the
aggregate would not have a Material Adverse Effect on Northwest.
Section 4.03 Consents
Except for consents, waivers, approvals, filings and registrations from
or with the OTS and the SEC, and compliance with any conditions contained
therein, and the approval of this Agreement by the stockholders of Xxxxx
Financial and, if necessary, the members of Xxxxx MHC, no consents, waivers or
approvals of, or filings or registrations with, any public body or governmental
authority are necessary, and no consents, waivers or approvals of, or filings or
registrations with, any third parties are necessary in connection with (a) the
execution and delivery of this Agreement by Northwest, and (b) the completion by
Northwest of the transactions contemplated hereby. Northwest has no reason to
believe that (i) any required consents or approvals will not be received or will
be received with conditions, limitations or restrictions unacceptable to it or
which would adversely impact Northwest' ability to complete the transactions
described in this Agreement or that (ii) any public body or authority, the
consent
27
or approval of which is not required or any filing which is not required, will
object to the completion of the transactions described in this Agreement.
Section 4.04 Northwest Financial Statements
Northwest Bancorp has previously made available to Xxxxx the Northwest
Financials. The Northwest Financials (including the related notes where
applicable) fairly present in each case in all material respects (subject in the
case of the unaudited interim statements to normal year-end adjustments), the
consolidated financial condition, results of operations and cash flows of
Northwest Bancorp as of and for the respective periods ending on the dates
thereof and have been prepared in accordance with GAAP applied on a consistent
basis during the periods involved, except as indicated therein, or in the case
of unaudited statements, as permitted by Form 10-Q.
Section 4.05 Material Adverse Effect
Northwest has not suffered any Material Adverse Effect since June 30,
2002.
Section 4.06 Legal Proceedings
Northwest is not a party to any, and there are no pending or, to the
best of Northwest's knowledge, threatened legal, administrative, arbitration or
other proceedings, actions or governmental investigations of any nature (i)
against Northwest, (ii) to which Northwest's assets are or may be subject, (iii)
challenging the validity or propriety of any of the transactions contemplated by
this Agreement, or (iv) which could adversely affect the ability of Northwest to
perform under this Agreement, except for any proceedings, claims, actions,
investigations or inquiries referred to in clauses (i) or (ii) which, if
adversely determined, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on Northwest.
Section 4.07 Compliance With Applicable Law
(a) Northwest holds all licenses, franchises, permits and
authorizations necessary for the lawful conduct of its businesses under, and has
complied in all material respects with, applicable laws, statutes, orders, rules
or regulations of any Federal, state or local governmental authority relating to
it, other than where such failure to hold or such noncompliance will neither
result in a limitation in any material respect on the conduct of its businesses
nor otherwise have a Material Adverse Effect on Northwest.
(b) Northwest has not received any notification or communication from
any Regulatory Authority (i) asserting that Northwest is not in compliance with
any of the statutes, regulations or ordinances which such Regulatory Authority
enforces; (ii) threatening to revoke any license, franchise, permit or
governmental authorization which is material to Northwest; (iii) requiring or
threatening to require Northwest, or indicating that Northwest may be required,
to enter into a cease and desist order, agreement or memorandum of understanding
or any other agreement restricting or limiting, or purporting to restrict or
limit, in any manner the operations of Northwest; or (iv) directing, restricting
or limiting, or purporting to direct, restrict or limit, in
28
any manner the operations of Northwest, including without limitation any
restriction on the payment of dividends (any such notice, communication,
memorandum, agreement or order described in this sentence is hereinafter
referred to as a "Regulatory Agreement"). Northwest has not consented to or
entered into any currently effective Regulatory Agreement. The most recent
regulatory rating given to Northwest Bank as to compliance with the CRA is
satisfactory or better.
Section 4.08 Northwest Benefit Plans
(a) Northwest has provided Xxxxx with a complete and accurate list of
all pension, retirement, group insurance, and other employee benefit plans and
arrangements, including, but not limited to, "employee benefit plans," as
defined in Section 3(3) of ERISA, incentive and welfare policies, contracts,
plans and arrangements with respect to any present employees of Northwest
(hereinafter collectively referred to as the "Northwest Employee Plans" and
individually as a "Northwest Employee Plan"). Each of the Northwest Employee
Plans complies in all material respects with all applicable requirements of
ERISA, the IRC and other applicable laws.
(b) No Northwest Employee Plan which is subject to Title IV of ERISA
(each such plan shall be referred to herein as a "Northwest Pension Plan") had
an "accumulated funding deficiency" (as defined in Section 302 of ERISA),
whether or not waived, as of the last day of the end of the most recent plan
year ending prior to the date hereof; the fair market value of the assets of
each Northwest Pension Plan exceeds the present value of the "benefit
liabilities" (as defined in Section 4001(a)(16) of ERISA) under such Northwest
Pension Plan as of the end of the most recent plan year with respect to the
respective Northwest Pension Plan ending prior to the date hereof, calculated on
the basis of the actuarial assumptions used in the most recent actuarial
valuation for such Northwest Pension Plan as of the date hereof; and no notice
of a "reportable event" (as defined in Section 4043 of ERISA) for which the
30-day reporting requirement has not been waived has been required to be filed
for any Northwest Pension Plan within the 12-month period ending on the date
hereof.
(c) Each Northwest Employee Plan that is an "employee pension benefit
plan" (as defined in Section 3(2) of ERISA) and which is intended to be
qualified under Section 401(a) of the IRC has received a favorable determination
letter from the IRS, and Northwest is not aware of any circumstances likely to
result in revocation of any such favorable determination letter. There is no
pending or, to Northwest's knowledge, threatened litigation, administrative
action or proceeding relating to any Northwest Employee Plan.
Section 4.09 Regulatory Approvals
Northwest is not aware of any reason that it cannot obtain any of the
approvals of Regulatory Authorities necessary to consummate the transactions
contemplated by this Agreement, and Northwest has not received any advice or
information from any regulatory authority indicating that such approvals will be
denied or are doubtful or will be unduly delayed.
29
Section 4.10 Securities Documents
Northwest Bancorp has made available to Xxxxx copies of its (i) annual
reports on Form 10-K for the years ended June 30, 2002 and 2001, (ii) quarterly
reports on Form 10-Q for the quarters ended December 31, 2002 and March 31,
2003, and (iii) proxy materials used in connection with its most recent meeting
of stockholders (the availability of the preceding documents will be assumed if
such documents are filed on XXXXX). Such reports and such proxy materials, at
the time filed, did not contain any untrue statements of a material fact or omit
to state any material fact necessary in order to make the statements therein not
misleading.
ARTICLE V
COVENANTS OF THE PARTIES
Section 5.01 Conduct of the Business of Xxxxx
(a) From the date of this Agreement to the Closing Date, Xxxxx will
conduct its business and engage in transactions, including extensions of credit,
only in the ordinary course and consistent with past practice and policies in
existence on the date hereof, except as otherwise required or contemplated by
this Agreement or with the written consent of Northwest Bank. Xxxxx will use its
reasonable good faith efforts to (i) preserve its business organizations intact,
(ii) maintain good relationships with its employees, and (iii) preserve the
goodwill of its customers and others with whom business relationships exist.
From the date hereof to the Closing Date, except as otherwise consented to or
approved by Northwest in writing (which approval will not be unreasonably
delayed or withheld) or as contemplated or required by this Agreement, Xxxxx
will not:
(i) amend or change any provision of its certificate of
incorporation, charter, or bylaws;
(ii) change the number of authorized or issued shares of its
capital stock or issue or grant any Right or agreement of any character
relating to its authorized or issued capital stock or any securities
convertible into shares of such stock, or split, combine or reclassify
any shares of capital stock, or declare, set aside or pay any dividend
or other distribution in respect of capital stock or redeem or
otherwise acquire any shares of capital stock, except that (I) Xxxxx
Financial may pay quarterly cash dividends to stockholders (other than
Xxxxx MHC) only to the extent that such dividend payments do not exceed
Xxxxx Financial's net income as recorded in its financial statements
(with net income defined as including all nonrecurring or extraordinary
items such as extraordinary expenses related to this Agreement and the
transactions contemplated hereby) for that quarter, and (II) Xxxxx
Financial may issue Xxxxx Financial Common Stock upon the valid
exercise of presently outstanding options to acquire Xxxxx Financial
Common Stock in accordance with the information set forth in Xxxxx
Disclosure Schedule 3.02(a) and the Xxxxx Compensation and Benefit
Plans;
30
(iii) except as required by this Agreement, grant or agree to
pay any bonus, severance or termination payment to, enter into or
amend, or take any action (other than executing this Agreement) that
would trigger obligations under any employment agreement, severance
agreement, supplemental executive agreement, or similar agreement or
arrangement with any of its directors, officers or employees, or
increase in any manner the compensation or fringe benefits of any
employee, officer or director, except for salary increases in the
ordinary course of business consistent with past practice or as may be
required pursuant to legally binding commitments existing on the date
hereof set forth in Xxxxx Financial Schedules 3.08 and 3.12; and
provided further, that bonuses may be paid to employees with respect to
the year ending December 31, 2003 as set forth in Xxxxx Disclosure
Schedule 5.01(a)(iii) to the extent that the related expense has been
accrued and the bonuses are generally consistent (with respect to
amounts and persons covered) with past practices;
(iv) enter into or, except as may be required by law or by the
terms of this Agreement, modify any pension, retirement, stock option,
stock purchase, stock appreciation right, stock grant, savings, profit
sharing, deferred compensation, supplemental retirement, consulting,
bonus, group insurance or other employee benefit, incentive or welfare
contract, plan or arrangement, or any trust agreement related thereto,
in respect of any of its directors, officers or employees; or make any
contributions to any defined contribution or defined benefit plan not
in the ordinary course of business consistent with past practice other
than contributions necessary to terminate and pay out benefits of the
First Carnegie Defined Benefit Pension Plan (the "Defined Benefit
Plan") and the First Carnegie Deposit Supplemental Executive Retirement
Plan (the "SERP"); or materially amend any Xxxxx Compensation and
Benefit Plan other than amendments that are required by law to be made
prior to the Merger Effective Date, or amendments required by the terms
of this Agreement;
(v) except as otherwise provided in Section 5.06 of this
Agreement, merge or consolidate Xxxxx with any other corporation; sell
or lease all or any substantial portion of the assets or business of
Xxxxx; make any acquisition of all or any substantial portion of the
business or assets of any other person, firm, association, corporation
or business organization other than in connection with foreclosures,
settlements in lieu of foreclosure, troubled loan or debt
restructuring, or the collection of any loan or credit arrangement
between Xxxxx and any other person; enter into a purchase and
assumption transaction with respect to deposits and liabilities; permit
the revocation or surrender by Xxxxx of its certificate of authority to
maintain, or file an application for the relocation of, any existing
branch office, or file an application for a certificate of authority to
establish a new branch office;
(vi) sell or otherwise dispose of the capital stock of Xxxxx
or sell or otherwise dispose of any asset of Xxxxx other than in the
ordinary course of business consistent with past practice; subject any
asset of Xxxxx to any lien, pledge, security interest or other
encumbrance (other than in connection with deposits, repurchase
agreements, bankers acceptances, FHLB of Pittsburgh advances, "treasury
tax and loan" accounts established
31
in the ordinary course of business and transactions in "Federal funds"
and the satisfaction of legal requirements in the exercise of trust
powers) other than in the ordinary course of business consistent with
past practice; incur any indebtedness for borrowed money (or guarantee
any indebtedness for borrowed money), except in the ordinary course of
business consistent with past practice;
(vii) take any action which would result in any of the
representations and warranties of Xxxxx set forth in Article III of
this Agreement becoming untrue as of any date after the date hereof
(except as to any representation or warranty which specifically relates
to an earlier date) or in any of the conditions set forth in Article VI
hereof not being satisfied, except in each case as may be required by
applicable law;
(viii) change any method, practice or principle of accounting,
except as may be required from time to time by GAAP (without regard to
any optional early adoption date) or any Regulatory Authority
responsible for regulating Xxxxx;
(ix) waive, release, grant or transfer any material rights of
value or modify or change in any material respect any existing material
agreement or indebtedness to which Xxxxx is a party, other than in the
ordinary course of business, consistent with past practice;
(x) purchase any security for its investment portfolio not
rated "A" or higher by either Standard & Poor's Corporation or Xxxxx'x
Investor Services, Inc, or with a remaining term to maturity of more
than five (5) years;
(xi) make any new loan or other credit facility commitment
(including without limitation, lines of credit and letters of credit)
to any borrower or group of affiliated borrowers in excess of $100,000
in the aggregate, or increase, compromise, extend, renew or modify any
existing loan or commitment outstanding in excess of $100,000, except
for loans secured by one- to four- family, residential real property in
an amount not exceeding $300,000 (on the basis of and consistent with
existing lending policies);
(xii) enter into, renew, extend or modify any other
transaction with any Affiliate;
(xiii) enter into any futures contract, option, interest rate
caps, interest rate floors, interest rate exchange agreement or other
agreement or, except in the ordinary course of business and consistent
with past practice, take any other action for purposes of hedging the
exposure of its interest-earning assets and interest-bearing
liabilities to changes in market rates of interest;
(xiv) except for the execution of, and as otherwise provided
in or contemplated by, this Agreement, take any action that would give
rise to a right of payment to any individual under any employment
agreement, or take any action that would give rise to a right of
payment to any individual under any Xxxxx Compensation and Benefit
Plan;
32
(xv) make any change in policies with regard to the extension
of credit, the establishment of reserves with respect to the possible
loss thereon or the charge off of losses incurred thereon, investment,
asset/liability management or other material banking policies in any
material respect except as may be required by changes in applicable law
or regulations or in GAAP or by applicable regulatory authorities;
(xvi) make any capital expenditures in excess of $25,000
individually or $100,000 in the aggregate, other than pursuant to
binding commitments existing on the date hereof and other than
expenditures necessary to maintain existing assets in good repair;
(xvii) purchase or otherwise acquire, or sell or otherwise
dispose of, any assets or incur any liabilities other than in the
ordinary course of business consistent with past practices and
policies;
(xviii) incur any non-deposit liability in excess of $250,000
other than in the ordinary course of business consistent with past
practice; or
(xix) agree to do any of the foregoing.
(b) For purposes of this Section 5.01, unless provided for in a
business plan, budget or similar document delivered to Northwest prior to the
date of this Agreement, it shall not be considered in the ordinary course of
business for Xxxxx to do any of the following: (i) make any sale, assignment,
transfer, pledge, hypothecation or other disposition of any assets having a book
or market value, whichever is greater, in the aggregate in excess of $100,000,
other than pledges of assets to secure government deposits, to exercise trust
powers, sales of assets received in satisfaction of debts previously contracted
in the normal course of business, issuance of loans, sales of previously
purchased government guaranteed loans, or transactions in the investment
securities portfolio by Xxxxx or repurchase agreements made, in each case, in
the ordinary course of business; or (ii) undertake or enter any lease, contract
or other commitment for its account, other than in the normal course of
providing credit to customers as part of its banking business, involving a
payment by Xxxxx of more than $50,000 annually, or containing a material
financial commitment and extending beyond 12 months from the date hereof.
Section 5.02 Access; Confidentiality
(a) Xxxxx shall permit Northwest and its representatives reasonable
access to its properties and make available to them all books, papers and
records relating to the assets, properties, operations, obligations and
liabilities of Xxxxx, including, but not limited to, all books of account
(including the general ledger), tax records, minute books of meetings of boards
of directors (and any committees thereof) (other than minutes of any
confidential discussion of this Agreement and the transactions contemplated
hereby), and stockholders, organizational documents, bylaws, material contracts
and agreements, filings with any regulatory authority, accountants' work papers,
litigation files, plans affecting employees, and any other business activities
or prospects in which Northwest may have a reasonable interest (provided that
Xxxxx shall not be required to provide access to any information that would
violate its attorney-client
33
privilege or any employee or customer privacy policies, laws or regulations).
Xxxxx shall make its respective officers, employees and agents and authorized
representatives (including counsel and independent public accountants) available
to confer with Northwest and its representatives. First Carnegie shall provide
in a timely manner to Northwest Bank's officer in charge of retail banking
copies of current rate sheets for all deposit and loan products. Xxxxx shall
permit Northwest, at its expense, to cause a "phase I environmental audit" and a
"phase II environmental audit" to be performed at any physical location owned or
occupied by Xxxxx, provided that such audit is contracted for within forty-five
(45) days of the date of this Agreement and commenced as soon as practicable
thereafter. The Northwest Parties agree to abide and be bound by the
confidentiality letter between FinPro (in FinPro's capacity as an agent for
Xxxxx) and Northwest Bancorp dated and acknowledged on January 17, 2003, (the
"Confidentiality Letter") as if each such party had executed such
Confidentiality Letter originally and the Northwest Parties will hold all
information delivered pursuant to this Section 5.02 in confidence to the extent
required by, and in accordance with, the provisions of the Confidentiality
Letter.
(b) Northwest agrees to conduct such investigations and discussions
hereunder in a manner so as not to interfere unreasonably with normal operations
and customer and employee relationships of the other party.
(c) In addition to the access permitted by subparagraph (a) above, from
the date of this Agreement through the Closing Date, Xxxxx shall permit
employees of Northwest Bank reasonable access to information relating to problem
loans, loan restructurings and loan work-outs of First Carnegie.
Section 5.03 Regulatory Matters and Consents
(a) Northwest will, in consultation with Xxxxx, prepare all
Applications (other than the Stockholder Proxy Statement and, if necessary, the
Member Proxy Statement) and make all filings for, and use its best efforts to
obtain as promptly as practicable after the date hereof, all necessary permits,
consents, approvals, waivers and authorizations of all Regulatory Authorities or
other Persons necessary or advisable to consummate the transactions contemplated
by this Agreement. Northwest shall file the Applications within forty-five (45)
days of the date of this Agreement, or as soon as practicable thereafter.
(b) Xxxxx will furnish Northwest with all information concerning Xxxxx
as may be necessary or advisable in connection with any Application or filing
made by or on behalf of Northwest to any Regulatory Authority in connection with
the transactions contemplated by this Agreement.
(c) Northwest and Xxxxx will promptly furnish the other with copies of
all material written communications to, or received by them from any Regulatory
Authority regarding the transactions contemplated hereby, except for information
filed by either party that is designated confidential.
34
(d) Northwest will use its best efforts to obtain all necessary
regulatory approvals to effectuate the transactions contemplated by this
Agreement and related exhibits and appendices.
(e) Xxxxx will use its best efforts to cooperate with Northwest to
obtain all necessary regulatory approvals to effectuate the transactions
contemplated by this Agreement and related exhibits and appendices.
(f) The parties 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 Regulatory Authorities. Northwest will furnish Xxxxx
Financial and its counsel with copies of all Applications prior to filing with
any Regulatory Authority and provide Xxxxx Financial a reasonable opportunity to
provide changes to such Applications, and copies of all Applications filed by
Northwest.
(g) Xxxxx and Northwest will cooperate with each other in the foregoing
matters and will furnish the responsible party with all information concerning
it and its subsidiaries as may be necessary or advisable in connection with any
Application or filing made by or on behalf of Northwest or Xxxxx to any
Regulatory Authority in connection with the transactions contemplated by this
Agreement, and such information will be accurate and complete in all material
respects. In connection therewith, each party will provide certificates and
other documents reasonably requested by the other.
(h) If any (i) Regulatory Authority objects to a term or condition set
forth in this Agreement, and (ii) that term or condition is modified to the
satisfaction of the Regulatory Authority or is eliminated in order to satisfy
the Regulatory Authority, and (iii) such modification or elimination would cause
a reduction in benefits to the party for whom the term or condition was meant to
benefit, then the parties shall use their best efforts to enter into an
alternative arrangement so that such benefits are not reduced, provided such
alternative arrangement is permissible under applicable law and is not
disapproved by any Regulatory Authority and provided further that such
alternative arrangement shall not be more costly than the original benefit that
has been or would be reduced as a result of an objection by a Regulatory
Authority.
Section 5.04 Taking of Necessary Action
(a) Subject to the terms and conditions of this Agreement, Northwest
and Xxxxx shall each use its reasonable best efforts in good faith, and each of
them shall cause its Subsidiaries to use their reasonable best efforts in good
faith, to take, or cause to be taken, all actions, and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws so as to
permit consummation of the Merger and the other transactions contemplated hereby
as soon as practicable after the date hereof, and otherwise to enable
consummation of such transactions, including the satisfaction of the conditions
set forth in Article VI hereof, and shall cooperate fully with the other parties
hereto to that end. No party hereto shall take, or cause, or to the best of its
ability permit to be taken, any action that would substantially impair the
prospects of completing the Merger and the other transactions contemplated
hereby pursuant to this
35
Agreement; provided that nothing herein contained shall preclude a party to this
Agreement from exercising its rights under this Agreement.
(b) Xxxxx Financial shall prepare, subject to the review of Northwest
with respect to matters relating to Northwest and the transactions contemplated
by this Agreement, the Stockholder Proxy Statement, which shall be filed by
Xxxxx Financial with the SEC and mailed to the stockholders of Xxxxx Financial
in connection with the meeting of its stockholders and transactions contemplated
hereby, and which shall conform to all applicable legal requirements. Should it
be required by Regulatory Authorities, Xxxxx MHC shall prepare, subject to the
review and consent of Northwest with respect to matters relating to Northwest
and the transactions contemplated by this Agreement, the Member Proxy Statement,
which shall be filed by Xxxxx MHC with the Regulatory Authorities and mailed to
members of Xxxxx MHC in connection with any meeting of depositors and the
transactions contemplated hereby. The parties shall cooperate with each other
with respect to the preparation of the Stockholder Proxy Statement and any
Member Proxy Statement. Xxxxx Financial and Xxxxx MHC shall, as promptly as
practicable following the preparation thereof, file any proxy statement with the
Regulatory Authorities, and use all reasonable efforts to have the Stockholder
Proxy Statement mailed to stockholders, and if necessary the Member Proxy
Statement mailed to members, as promptly as practicable after such filing,
provided that Xxxxx Financial and Xxxxx MHC shall have received an updated
Fairness Opinion as of a date no more than three days prior to the date of the
Stockholder Proxy Statement (the "Updated Fairness Opinion"). Xxxxx Financial
and First Carnegie will promptly advise Northwest of the time when the
Stockholder Proxy Statement and any Member Proxy Statement has been filed and
mailed, and of any comments from any Regulatory Authority and any request by any
Regulatory Authority for additional information.
(c) Northwest agrees that the information to be supplied by Northwest
for inclusion in the Stockholder Proxy Statement and any Member Proxy Statement
will not, at the time they are mailed, contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein not misleading. The information supplied, or to be supplied,
by Northwest for inclusion in the Applications will be, at the time such
documents are filed with any Regulatory Authority, accurate in all material
respects.
(d) Xxxxx agrees that, except for any information provided by Northwest
concerning Northwest for inclusion therein, the Stockholder Proxy Statement and
any Member Proxy Statement will not, at the time it or they are mailed, contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein not misleading. The
information supplied, or to be supplied, by Xxxxx for inclusion in the
Applications will be, at the time such documents are filed with any Regulatory
Authority, accurate in all material aspects.
Section 5.05 Certain Agreements
(a) Northwest shall maintain in effect for three years from the Merger
Effective Date, if available, the current directors' and officers' liability
insurance policy maintained by Xxxxx Financial (provided that Northwest may
substitute therefor policies of substantially the same
36
coverage containing terms and conditions which are not materially less
favorable) with respect to matters occurring at or prior to the Closing Date;
provided however that in no event shall Northwest be required to expend annually
pursuant to this section more than the amount equal to 125% of the current
annual amount expended by Xxxxx to maintain or procure insurance coverage
pursuant hereto. In connection with the foregoing, Xxxxx Financial agrees to
provide such insurer or substitute insurer with such representations as such
insurer may request with respect to the reporting of any prior claims.
(b) For a period of six years from the Merger Effective Date, Northwest
agrees to indemnify, defend and hold harmless each present and former director
and officer of Xxxxx determined as of the Closing Date (the "Indemnified
Parties") against all losses, claims, damages, costs, expenses (including
reasonable attorneys' fees and expenses), liabilities, judgments or amounts paid
in settlement (with the approval of Northwest, which approval shall not be
unreasonably withheld) or in connection with any claim, action, suit, proceeding
or investigation arising out of matters existing or occurring at or prior to the
Merger Effective Date (a "Claim") in which an Indemnified Party is, or is
threatened to be made, a party or a witness based in whole or in part on, or
arising in whole or in part out of, the fact that such person is or was a
director or officer of Xxxxx, regardless of whether such Claim is asserted or
claimed prior to, at or after the Closing Date, to the fullest extent to which
directors and officers of Xxxxx are entitled under Federal law, or Xxxxx'
charters and bylaws, or other applicable law as in effect on the date hereof
(and Northwest shall pay expenses in advance of the final disposition of any
such action or proceeding to each Indemnified Party to the extent permissible to
a Federal corporation or savings bank, or Xxxxx' charters and bylaws; provided,
that the person to whom expenses are advanced provides an undertaking to repay
such expenses if it is ultimately determined that such person is not entitled to
indemnification). All rights to indemnification in respect of a Claim asserted
or made within the period described in the preceding sentence shall continue
until the final disposition of such Claim.
(c) Any Indemnified Party wishing to claim indemnification under
Section 5.05(b), upon learning of any Claim, shall promptly notify Northwest,
but the failure to so notify shall not relieve Northwest of any liability it may
have to such Indemnified Party except to the extent that such failure materially
prejudices Northwest. In the event of any Claim, (i) Northwest shall have the
right to assume the defense thereof (with counsel reasonably satisfactory to the
Indemnified Party) and shall not be liable to the Indemnified Party for any
legal expenses of other counsel or any other expenses subsequently incurred by
the Indemnified Party in connection with the defense thereof, except that, if
Northwest elects not to assume such defense or counsel for the Indemnified Party
advises that there are issues which raise conflicts of interest between
Northwest and the Indemnified Party, the Indemnified Party may retain counsel
satisfactory to them, and Northwest shall pay all reasonable fees and expenses
of such counsel for the Indemnified Party promptly as statements therefor are
received, provided further that Northwest shall in all cases be obligated
pursuant to this paragraph to pay for only one firm of counsel for all
Indemnified Parties, (ii) the Indemnified Parties will cooperate in the defense
of any such Claim and (iii) Northwest shall not be liable for any settlement
effected without its prior written consent (which consent shall not unreasonably
be withheld).
37
(d) In the event Northwest or any of its successors or assigns (i)
consolidates with or merges into any other Person and shall not continue or
survive 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 Northwest assume the obligations set forth in this
Section 5.05.
(e) The provisions of this Section 5.05 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and his or her
heirs and representatives.
Section 5.06 No Other Bids and Related Matters
(a) From and after the date hereof until the termination of this
Agreement, neither Xxxxx nor any of its officers, directors, employees,
representatives, agents or affiliates (including, without limitation, any
investment banker, attorney or accountant retained by Xxxxx), will, directly or
indirectly, initiate, solicit or knowingly encourage (including by way of
furnishing non-public information or assistance), or facilitate knowingly, any
inquiries or the making of any proposal that constitutes, or may reasonably be
expected to lead to, any Acquisition Proposal (as defined below), or enter into
or maintain or continue discussions or negotiate with any person or entity in
furtherance of such inquiries or to obtain an Acquisition Proposal or agree to
or endorse any Acquisition Proposal, or authorize or permit any of its officers,
directors, or employees or any of its subsidiaries or any investment banker,
financial advisor, attorney, accountant or other representative retained by any
of its subsidiaries to take any such action, and Xxxxx shall notify Northwest
orally (within two business days) and in writing (as promptly as practicable) of
all of the relevant details relating to all inquiries and proposals which it or
any such officer, director, employee, investment banker, financial advisor,
attorney, accountant or other representative may receive relating to any of such
matters; provided, however, that nothing contained in this Section 5.06 shall
prohibit the Board of Directors from:
(i) furnishing information to, or entering into discussions or
negotiations with any person or entity that makes an unsolicited
written, bona fide proposal, to acquire Xxxxx Financial and/or First
Carnegie pursuant to a merger, consolidation, share exchange, business
combination, tender or exchange offer or other similar transaction, if,
and only to the extent that,
(A) the Board of Directors of Xxxxx Financial
receives a written opinion from its independent financial
advisor that such proposal is superior to the Merger from a
financial point of view to Xxxxx Financial stockholders;
(B) the Board of Directors of Xxxxx Financial, after
consultation with and receipt of the advice of independent
legal counsel (including whether the proposed acquiror may
legally acquire Xxxxx and the prospects of regulatory approval
under regulations and policies of the OTS), determines in good
faith that such action is necessary for the Board of Directors
of Xxxxx Financial to comply with its fiduciary duties to
stockholders under applicable law (such proposal that
satisfies (A) and (B) being referred to herein as a "Superior
Proposal");
38
(C) prior to furnishing such information to, or
entering into discussions or negotiations with, such person or
entity, Xxxxx Financial provides reasonable notice to
Northwest to the effect that it is furnishing information to,
or entering into discussions or negotiations with, such person
or entity and Xxxxx Financial receives from such person or
entity an executed confidentiality agreement; and
(D) the Xxxxx Financial special meeting of
stockholders convened to approve this Agreement has not
occurred;
(ii) complying with Rule 14e-2 promulgated under the Exchange
Act with regard to a tender or exchange offer; or
(iii) prior to the Xxxxx Financial meeting of stockholders
convened to approve this Agreement, failing to make or withdrawing or
modifying its recommendation to stockholders, if the Board of Directors
of Xxxxx Financial, after consultation with and based upon the advice
of independent legal counsel, determined in good faith that such action
is necessary for such Board of Directors to comply with its fiduciary
duties to stockholders under applicable law.
(b) For purposes of this Agreement, "Acquisition Proposal" shall mean
any of the following (other than the transactions contemplated hereunder)
involving Xxxxx: (i) any merger, consolidation, share exchange, business
combination, or other similar transaction; (ii) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition of 20% or more of the assets of
Xxxxx Financial or First Carnegie, taken as a whole, in a single transaction or
series of transactions; (iii) any tender offer or exchange offer for 20% or more
of the outstanding shares of capital stock of Xxxxx Financial or the filing of a
registration statement under the Securities Laws in connection therewith; or
(iv) any bona fide public announcement of a proposal, plan or intention to do
any of the foregoing or any agreement to engage in any of the foregoing.
Section 5.07 Duty to Advise; Duty to Update the Xxxxx Financial
Schedules
Xxxxx shall promptly advise Northwest of any change or event having a
Material Adverse Effect on Xxxxx or which Xxxxx believes would or would be
reasonably likely to cause or constitute a material breach of any of its
representations, warranties or covenants set forth herein. Xxxxx shall update
the Xxxxx Financial Schedules as promptly as practicable after the occurrence of
an event or fact that, if such event or fact had occurred prior to the date of
this Agreement, would have been disclosed in the Xxxxx Financial Schedules. The
delivery of such updated Xxxxx Disclosure Schedule shall not relieve Xxxxx from
any breach or violation of this Agreement and shall not have any effect for the
purposes of determining the satisfaction of the condition set forth in Sections
6.02(c) hereof.
Section 5.08 Conduct of Northwest's Business
(a) From the date of this Agreement to the Closing Date, Northwest will
use its best efforts to preserve its business organizations intact, maintain
good relationships with employees,
39
and preserve for itself the goodwill of customers of Northwest. From the date of
this Agreement to the Closing Date, Northwest will not
(i) amend its charter or bylaws in any manner inconsistent
with the prompt and timely consummation of the transactions
contemplated by this Agreement;
(ii) take any action that would result in any of the
representations and warranties of Northwest set forth in Article IV of
this Agreement becoming untrue as of any date after the date hereof or
in any of the conditions set forth in Article VI hereof not being
satisfied, except in each case as may be required by applicable law;
(iii) take any action that would or is reasonably likely to
adversely effect or materially delay the receipt of the necessary
approvals from the Regulatory Authorities;
(iv) take action that would or is reasonably likely to
materially and adversely affect Northwest's ability to perform its
covenants and agreements under this Agreement;
(v) take any action that would result in any of the conditions
to the transactions contemplated by this Agreement not being satisfied;
or
(vi) agree to do any of the foregoing.
Section 5.09 Board and Committee Minutes
Each of the Xxxxx Parties shall provide to Northwest, within
twenty-five (25) days after any meeting of their respective Board of Directors,
or any committee thereof, or any senior management committee, a copy of the
minutes of such meeting, except that with respect to any meeting held within
twenty-five (25) days of the Closing Date, such minutes shall be provided to
each party prior to the Closing Date. Xxxxx may exclude from the minutes matters
(i) relating to merger negotiations, (ii) associated with Section 5.06, or (iii)
relating to discussions of possible breaches of this Agreement by Northwest.
Section 5.10 Undertakings by the Parties
(a) From and after the date of this Agreement:
(i) Voting by Directors and Executive Officers. Concurrently
with the execution of this Agreement, or within five (5) business days
thereof, all Directors and the Executive Officers of Xxxxx set forth in
Xxxxx Disclosure Schedule 5.10(a)(i), shall have entered into the
agreement set forth as Exhibit C to this Agreement;
(ii) Proxy Solicitor. If requested to do so by Northwest,
Xxxxx Financial and/or Xxxxx MHC shall retain a proxy solicitor in
connection with the solicitation of stockholders and if necessary Xxxxx
MHC member approval of this Agreement and the transaction contemplated
hereby;
40
(iii) Outside Service Bureau Contracts. If requested to do so
by Northwest, First Carnegie shall use its best efforts to obtain an
extension of any contract with an outside service bureau or other
vendor of services to First Carnegie, on terms and conditions mutually
acceptable to First Carnegie and Northwest Bank;
(iv) Board Meetings. Each of the Xxxxx Parties shall permit a
representative of Northwest to attend meetings of their Boards of
Directors or the Executive Committees thereof (provided that they shall
not be required to permit the Northwest representative to remain
present during any confidential discussion of the Agreement and the
transactions contemplated thereby or any matter associated with Section
5.06);
(v) List of Nonperforming Assets. First Carnegie shall provide
Northwest Bank, within ten (10) days of the end of each calendar month,
a written list of nonperforming assets (the term "nonperforming
assets," for purposes of this subsection, means (i) loans that are
"troubled debt restructuring" as defined in Statement of Financial
Accounting Standards No. 15, "Accounting by Debtors and Creditors for
Troubled Debt Restructuring," (ii) loans on nonaccrual, (iii) real
estate owned, (iv) all loans ninety (90) days or more past due as of
the end of such month and (v) and impaired loans); and
(vi) Reserves and Merger-Related Costs. On or before the
Merger Effective Date, and at the request of Northwest, Xxxxx Financial
shall establish such additional accruals and reserves as may be
necessary to conform the accounting reserve practices and methods
(including credit loss practices and methods) of Xxxxx Financial to
those of Northwest Bancorp (as such practices and methods are to be
applied to Northwest Bancorp from and after the Closing Date) and
Northwest Bancorp plans with respect to the conduct of the business of
Xxxxx Financial following the Merger and otherwise to reflect
Merger-related expenses and costs incurred by Xxxxx Financial,
provided, however, that Xxxxx Financial shall not be required to take
such action unless Northwest Bancorp agrees in writing that all
conditions to closing set forth in Section 6.02 have been satisfied or
waived (except for the expiration of any applicable waiting periods);
prior to the delivery by Northwest Bancorp of the writing referred to
in the preceding clause, Xxxxx Financial shall provide Northwest
Bancorp a written statement, certified without personal liability by
the chief executive officer of Xxxxx Financial and dated the date of
such writing, that the representations made in Section 3.15 hereof are
true as of such date or, alternatively, setting forth in detail the
circumstances that prevent such representation from being true as of
such date; and no accrual or reserve made by Xxxxx Financial or any
Xxxxx Subsidiary pursuant to this subsection, or any litigation or
regulatory proceeding arising out of any such accrual or reserve, shall
constitute or be deemed to be a breach or violation of any
representation, warranty, covenant, condition or other provision of
this Agreement or constitute a termination event within the meaning of
Section 7.01(b) hereof. No action shall be required to be taken by
Xxxxx Financial pursuant to this Section 5.10(vi) if, in the opinion of
the independent auditor of Xxxxx Financial, such action would
contravene GAAP.
41
(vii) Stockholders and Depositors Meetings.
(A) Xxxxx Financial shall use its best efforts to
file with the SEC, within sixty (60) days of the date of this
Agreement, preliminary proxy materials relating to this
Agreement, and shall mail the Stockholder Proxy Statement
within thirty (30) days thereafter, or such longer period as
may be necessitated by SEC review and comment with respect to
the Stockholder Proxy Statement, and shall submit this
Agreement to its stockholders for approval at a meeting to be
held within thirty-five (35) days after the date of the
mailing of the Stockholder Proxy Statement. Subject to the
receipt of the Updated Fairness Opinion, the Board of
Directors shall recommend approval of this Agreement to the
Xxxxx Financial stockholders. The Board of Directors of Xxxxx
Financial may fail to make such a recommendation, or withdraw,
modify or change any such recommendation only in connection
with a Superior Proposal, as set forth in Section 5.06 of this
Agreement, and only if such Board of Directors, after having
consulted with and considered the advice of outside counsel to
such Board, has determined that the making of such
recommendation, or the failure so to withdraw, modify or
change its recommendation, would constitute a breach of the
fiduciary duties of such Board.
(B) If required by Regulatory Authorities, as soon as
practicable Xxxxx MHC shall submit this Agreement to Xxxxx MHC
members for approval, and the Board of Directors of Xxxxx MHC
shall, subject to its fiduciary duties, recommend approval of
this Agreement to the members of Xxxxx MHC. Xxxxx MHC shall
take all steps necessary in order to hold a special meeting of
members for the purpose of approving this Agreement as soon as
practicable. At the meeting of stockholders of Xxxxx Financial
held to approve this Agreement, the Board of Directors of
Xxxxx MHC shall vote the shares of Xxxxx Financial held by
Xxxxx MHC as determined by the vote of the Xxxxx MHC members,
and if no such members' vote is taken, the Board of Directors
of Xxxxx MHC shall vote the shares of Xxxxx Financial held by
Xxxxx MHC in favor of this Agreement, subject to its fiduciary
duties.
(b) From and after the date of this Agreement, Northwest and Xxxxx
shall each:
(i) Filings and Approvals. Cooperate with the other in the
preparation and filing, as soon as practicable, of (A) the
Applications, (B) the Stockholder Proxy Statement and any Member Proxy
Statement, (C) all other documents necessary to obtain any other
approvals and consents required to effect the completion of the Merger,
and the transactions contemplated by this Agreement, and (D) all other
documents contemplated by this Agreement;
(ii) Public Announcements. Cooperate and cause their
respective officers, directors, employees and agents to cooperate in
good faith, consistent with their respective legal obligations, in the
preparation and distribution of, and agree upon the
42
form and substance of, any press release related to this Agreement and
the transactions contemplated hereby, and any other public disclosures
related thereto, including without limitation communications to
stockholders, internal announcements and customer disclosures, but
nothing contained herein shall prohibit either party from making any
disclosure which its counsel deems necessary, provided that the
disclosing party notifies the other party reasonably in advance of the
timing and contents of such disclosure;
(iii) Maintenance of Insurance. Maintain insurance in such
amounts as are reasonable to cover such risks as are customary in
relation to the character and location of its properties and the nature
of its business;
(iv) Maintenance of Books and Records. Maintain books of
account and records in accordance with GAAP applied on a basis
consistent with those principles used in preparing the financial
statements heretofore delivered;
(v) Delivery of Securities Documents. Deliver to the other
copies of all Securities Documents simultaneously with the filing
thereof; and
(vi) Taxes. File all Federal, state, and local tax returns
required to be filed by them on or before the date such returns are due
(including any extensions) and pay all taxes shown to be due on such
returns on or before the date such payment is due.
Section 5.11 Employee and Termination Benefits; Directors and
Management
(a) Employee Benefits. Except as otherwise provided in this Section
5.11, as of or after the Merger Effective Date, and at Northwest's election and
subject to the requirements of the IRC and ERISA, the Xxxxx Compensation and
Benefit Plans may continue to be maintained separately, consolidated, terminated
or frozen, provided, however, that the Defined Benefit Plan and the SERP will
terminate at the Merger Effective Date and benefits shall be paid to
participants in the SERP on the Merger Effective Date and under the Defined
Benefit Plan in accordance with the plan documents and the requirements of the
IRC and the PBGC. In connection with the termination of the defined benefit
plan, Xxxxx prior to the Merger Effective Date, and Northwest on and after the
Merger Effective Date, shall file a determination letter request for a ruling on
the tax-qualified status of the defined benefit plan under IRC Section 401(a) on
termination and will make all applicable filings with the PBGC. In the event of
a consolidation of any or all of such plans or in the event of termination (or
freeze) of any Xxxxx Compensation and Benefit Plan, Xxxxx employees who are
participants in the Xxxxx Compensation and Benefit Plans and who continue
employment with Northwest ("Continuing Employees") shall receive credit for
service with First Carnegie (for purposes of eligibility and vesting
determination but not for benefit accrual purposes) under any existing Northwest
benefit plan other than the Northwest ESOP, the post-retirement provisions of
the Northwest health care plan (which post-retirement provisions have been
frozen) and the Holiday Bonus Plan, and any future Northwest benefit plan in
which such employees or their dependents would be eligible to enroll to the
extent that prior service is also not recognized for other Northwest employees,
subject to any pre-existing conditions or other exclusions to which such persons
were subject
43
under the Xxxxx Compensation and Benefit Plans. Notwithstanding anything to the
contrary herein, Continuing Employees shall be eligible to participate in the
Northwest ESOP and the Holiday Bonus Plan at the same time and in the same
manner as new employees of Northwest.
(b) In the event of any termination or consolidation of any Xxxxx
health, disability or life insurance plan with any Northwest health, disability
or life insurance plan, Northwest shall make available to Continuing Employees
and their dependents employer-provided health, disability or life insurance
coverage on the same basis as it provides such coverage to Northwest employees.
Unless a Continuing Employee affirmatively terminates coverage under a Xxxxx
health, disability or life insurance plan prior to the time that such Continuing
Employee becomes eligible to participate in the Northwest health, disability or
life insurance plan, no coverage of any of the Continuing Employees or their
dependents shall terminate under any of the Xxxxx health, disability or life
insurance plans prior to the time such Continuing Employees and their dependents
become eligible to participate in the health, disability or life insurance
plans, programs and benefits common to all employees of Northwest and their
dependents. A Continuing Employee's prior service with Xxxxx or a Xxxxx
Subsidiary shall also apply for purposes of satisfying any waiting periods,
actively-at-work requirements, and evidence of insurability requirements.
Continuing Employees who become covered under a Northwest health plan shall be
required to satisfy the deductible limitations of the Northwest health plan for
the plan year in which coverage commences, without offset for deductibles
satisfied under the Xxxxx health plan, except to the extent, Xxxxx and/or the
Continuing Employee shall provide substantiation in a form satisfactory to
Northwest, of the dollar amount of such deductibles that have been satisfied for
such Continuing Employees. In the event of any termination of any Xxxxx health
plan, or consolidation of any Xxxxx health plan with any health plan of
Northwest Bancorp and/or Northwest Bancorp Subsidiaries, the Health Insurance
Portability Accountability Act of 1996 ("HIPAA") will govern any coverage
limitations due to pre-existing conditions. In the event of a termination of or
consolidation of any Xxxxx health plan with any Northwest health plan,
Continuing Employees will be required to seek reimbursement of claims arising
prior to the Merger Effective Date from the Xxxxx health plan and shall not be
entitled to seek reimbursement of claims arising prior to the Merger Effective
Date from the Northwest health plan.
(c) Nothing contained in this Agreement shall be construed to grant a
contract of employment to any employee of Xxxxx who becomes an employee of
Northwest. Any Xxxxx employee whose employment is terminated involuntarily
(other than for cause) within twelve months of the Merger Effective Date shall
receive a lump sum severance payment from First Carnegie or Northwest equal to
two weeks pay at the rate then in effect, for each full year of employment with
First Carnegie, with a minimum of four weeks and a maximum of twenty-six weeks.
Such Xxxxx employees will have the right to continued health coverage under
group health plans of Northwest in accordance with IRC Section 4980B(f) and
ERISA Sections 601-609.
(d) All Directors of First Carnegie as of the Merger Effective Date
shall continue as directors of First Carnegie following the Merger Effective
Date ("Continuing Directors") until June 30, 2005 at the current rate of
compensation. As of July 1, 2005, Northwest shall establish
44
a First Carnegie Advisory Board of Directors of the ("Xxxxx Advisory Board"), to
be appointed annually, comprising the Continuing Directors and any other person
designated by Northwest Bancorp. Subject to the exercise of fiduciary duties of
the Northwest Board of Directors, such Xxxxx Advisory Board will be maintained
until December 31, 2006. The Advisory Board shall meet no less than quarterly
and each Advisory Board member who was a Continuing Director ("Xxxxx Advisory
Directors") shall receive a fee as an advisory director of $1,800 per month for
such service. Continuing Directors who are also employees of First Carnegie
shall be compensated as employees and shall not receive separate compensation
for service as a director of First Carnegie or a member of the Advisory Board
during such time as they continue to be compensated as an employee of First
Carnegie or Northwest.
(e) At or prior to the Merger Effective Date, the First Carnegie
Deposit Employee Stock Ownership Plan (the "ESOP") shall be terminated on such
terms and conditions as contained in the ESOP (as of the date of this
Agreement). All ESOP Participants shall fully vest and have a nonforfeitable
interest in their accounts under the ESOP determined in accordance with the
terms of the plan as of the Merger Effective Date. As soon as practicable after
the receipt of a favorable determination letter from the Internal Revenue
Service ("IRS") as to the tax qualified status of the ESOP upon its termination
under Section 401(a) of the IRC (the "Final Determination Letter"),
distributions of the benefits under the ESOP shall be made to the ESOP
Participants. From and after the date of this Agreement, in anticipation of such
termination and distribution, Xxxxx and its representatives before the Merger
Effective Date, and Northwest and its representatives after the Merger Effective
Date, shall use their best efforts to apply for and to obtain such favorable
Final Determination Letter from the IRS. If Xxxxx and its representatives,
before the Merger Effective Date, and Northwest and its representatives after
the Merger Effective Date, reasonably determine that the ESOP cannot obtain a
favorable Final Determination Letter, or that the amounts held therein cannot be
so applied, allocated or distributed without causing the ESOP to lose its
tax-qualified status, Xxxxx before the Merger Effective Date, and Northwest
after the Merger Effective Date, shall take such action as they may reasonably
determine with respect to the distribution of benefits to the ESOP Participants,
provided that the assets of the ESOP shall be held or paid only for the benefit
of the ESOP Participants, as determined on the Merger Effective Date, and
provided further that in no event shall any portion of the amounts held in the
ESOP revert, directly or indirectly, to Xxxxx or to Northwest or any affiliate
thereof. At the time distribution of benefits is made under the ESOP on or after
the Merger Effective Date, at the election of the ESOP Participant, the amount
thereof that constitutes an "eligible rollover distribution" (as defined in
Section 402(f)(2)(A) of the IRC) may be rolled over by such ESOP Participant to
any qualified Northwest benefit plan that permits rollover distributions or to
any eligible individual retirement account.
(f) Northwest and First Carnegie shall honor all obligations under the
Directors Retirement Plan to Director Craig's beneficiary. Such beneficiary
shall receive an annual benefit equal to the amount, and at the time, set forth
in Xxxxx Disclosure Schedule 5.11(f). Such annual benefit shall be paid pursuant
to the applicable provisions of the Directors Retirement Plan in effect on the
Merger Effective Date. No other directors shall receive any benefit under the
Directors Retirement Plan.
45
(g) Except as otherwise provided in this Agreement, Northwest and Xxxxx
shall honor all obligations under the SERP to the executive participants therein
as set forth in Xxxxx Disclosure Schedule 3.08(a). The SERP shall be terminated
and the payments required thereunder, as set forth in Xxxxx Disclosure Schedule
5.11(g), shall be made as of the Merger Effective Date; provided, however, that
neither Northwest nor Xxxxx shall be obligated to make any payment to any
recipient that will exceed the amount that is tax deductible to Northwest or
Xxxxx under section 280G or section 162(m) of the IRC; and provided, further,
that not later than the tenth day prior to Xxxxx'x making any payment under the
SERP that is or may be characterized as contingent on a change in ownership or
control of the corporation (under section 280G of the IRC), Xxxxx shall furnish
Northwest with a calculation by Xxxxx or Xxxxx'x accountant, together with
related work papers, demonstrating that such payment will not result in a
payment to the recipient, when aggregated with other payments that are or may be
characterized as contingent on a change in ownership or control, of any amount
that is not tax deductible to Xxxxx or Northwest, if applicable, under section
280G or section 162(m) of the IRC. In the event it is determined that a payment
will or may fail to be tax deductible under Section 162(m) of the Code or cause
an excess parachute payment under Section 280G of the Code, and delaying such
payment until termination of employment will avoid the loss of tax deduction or
characterization as an excess parachute payment, then such payment shall be
delayed until termination of employment of the executive and will be paid within
thirty (30) days thereafter. In connection with the termination and distribution
of the SERP and contemporaneously therewith, First Carnegie and each of Xxxxxx
X. Xxxxx and Xxxxx X. Xxxxxxx shall terminate the endorsement split dollar
arrangements on each of the four life insurance policies disclosed in Xxxxx
Disclosure Schedule 3.08 that cover Xx. Xxxxx and Xx. Xxxxxxx.
(h) Until the Merger Effective Date, Xxxxx shall be liable for all
obligations for continued health coverage pursuant to Section 4980B of the IRC
and Sections 601 through 609 of ERISA ("COBRA") with respect to each Xxxxx
qualifying beneficiary (as defined in COBRA) who incurs a qualifying event (as
defined in COBRA) before the Merger Effective Date. Northwest shall be liable
for (i) all obligations for continued health coverage under COBRA with respect
to each Xxxxx qualified beneficiary (as defined in COBRA) who incurs a
qualifying event (as defined in COBRA) from and after the Merger Effective Date,
and (ii) for continued health coverage under COBRA from and after the Merger
Effective Date for each First Carnegie qualified beneficiary who incurs a
qualifying event before the Merger Effective Date. In the event of a termination
or consolidation of any Xxxxx health plan, terminated Xxxxx employees and
qualified beneficiaries will have the right to continued coverage under group
health plans of Northwest in accordance with IRC Section 4980B(f) and ERISA
Sections 601-609, consistent with the provisions of sub-section (b) above.
(i) Notwithstanding anything contained in any existing employment or
severance agreement, as of the Merger Effective Date, Xxxxxx X. Xxxxx and Xxxxx
X. Xxxxxxx shall each execute a termination and release to his or her employment
agreement, respectively, substantially in the form set forth in Xxxxx Disclosure
Schedule 6.02(i), which shall provide that such employment agreement shall
terminate as of the Merger Effective Date and, in lieu of any rights and
payments under such employment agreement, Xx. Xxxxx and Xx. Xxxxxxx shall be
entitled to the rights and payments identified in such termination and release
agreement. In addition, Mr.
46
Xxxxx and Xx. Xxxxxxx shall be retained as employees of First Carnegie from the
Merger Effective Date through June 30, 2005, at their current rates of base pay.
After June 30, 2005, Xx. Xxxxx will be retained as a consultant to Northwest and
First Carnegie for a period of fifteen months at his current rate of pay.
Similarly, after June 30, 2005, Xx. Xxxxxxx will be retained as a consultant for
twelve months at her current rate of pay. Northwest and/or First Carnegie shall
continue to provide each of Xx. Xxxxx and Xx. Xxxxxxx with health benefits
including dependent coverage to the extent such individual is enrolled in such
coverage immediately prior to becoming a consultant for the fifteen and twelve
months periods respectively, that they perform services as consultants,
provided, however, that the COBRA coverage period shall run concurrently with
the period that Northwest provides the consultants continued health coverage.
For so long as Xx. Xxxxx performs services as an employee or consultant, he
shall continue to have the use of an automobile provided by First Carnegie and
at the expiration of such term he shall be permitted to purchase such automobile
at its then fair market value.
(j) Prior to the Merger Effective Date, Xxxxx shall take all actions
necessary to terminate the Xxxxx Financial Stock Option Plan and Xxxxx Financial
Restricted Stock Plan, effective as of the Merger Effective Date.
(k) Xxxxx Disclosure Schedule 3.18 sets forth the accrued but unpaid
vacation pay for employees of Xxxxx and First Carnegie as of December 31, 2003.
Upon a Xxxxx non-executive employee's actual termination prior to December 31,
2004 for whom vacation pay was accrued based on employment before or during 2003
with Xxxxx Financial or First Carnegie or for whom vacation pay was accrued
during 2004 prior to the Merger Effective Date, such non-executive employee
shall be paid any such accrued vacation pay. Any Continuing Employee will be
entitled to any such unused vacation during 2004, provided, however if such
Continuing Employee does not use such accrued vacation on or prior to December
31, 2004, such accrued but unused vacation pay shall be paid to such Continuing
Employee as of December 31, 2004.
Section 5.12 Duty to Advise; Duty to Update the Northwest Disclosure
Schedules
Northwest shall promptly advise Xxxxx of any change or event having a
Material Adverse Effect on Northwest or which Northwest believes would or would
be reasonably likely to cause or constitute a material breach of any of its
representations, warranties or covenants set forth herein. Northwest shall
update Northwest' Disclosure Schedules as promptly as practicable after the
occurrence of an event or fact which, if such event or fact had occurred prior
to the date of this Agreement, would have been disclosed in the Northwest
Disclosure Schedule. The delivery of such updated Schedules shall not relieve
Northwest from any breach or violation of this Agreement and shall not have any
effect for the purposes of determining the satisfaction of the condition set
forth in Section 6.01(c) hereof.
47
ARTICLE VI
CONDITIONS
Section 6.01 Conditions to Obligations of Xxxxx Under this Agreement
The obligations of Xxxxx under this Agreement shall be subject to
satisfaction at or prior to the Closing Date of each of the following
conditions, unless waived by Xxxxx pursuant to Section 8.03 hereof:
(a) Corporate Proceedings. All action required to be taken by, or on
the part of, Northwest to authorize the execution, delivery and performance of
this Agreement, and the consummation of the transactions contemplated by this
Agreement, shall have been duly and validly taken by Northwest, and Xxxxx
Financial shall have received certified copies of the resolutions evidencing
such authorizations;
(b) Covenants. The obligations and covenants of Northwest required by
this Agreement to be performed by Northwest at or prior to the Closing Date
shall have been duly performed and complied with in all material respects;
(c) Representations and Warranties. Each of the representations and
warranties of Northwest in this Agreement which is qualified as to materiality
shall be true and correct, and each such representation or warranty that is not
so qualified shall be true and correct in all material respects, in each case as
of the date of this Agreement, and (except to the extent such representations
and warranties speak as of an earlier date) as of the Closing Date.
(d) Approvals of Regulatory Authorities. The MHC Merger and the
Mid-Tier Merger shall have received all required approvals of Regulatory
Authorities and all notice and waiting periods required thereunder shall have
expired or been terminated.
(e) No Injunction. There shall not be in effect any order, decree or
injunction of a court or agency of competent jurisdiction which enjoins or
prohibits consummation of the transactions contemplated hereby;
(f) Officer's Certificate. Northwest shall have delivered to Xxxxx
Financial a certificate, dated the Closing Date and signed, without personal
liability, by its chairman of the board or president, to the effect that the
conditions set forth in subsections (a) through (e), and (j) of this Section
6.01 have been satisfied, to the best knowledge of the officer executing the
same;
(g) Approval of the Stockholders of Xxxxx Financial and the Members of
Xxxxx MHC. This Agreement and the transactions contemplated hereby shall have
been approved by:
(i) the stockholders of Xxxxx Financial by such vote as is
required under the HOLA and regulations and policy of the Regulatory
Authorities, the charter and bylaws of Xxxxx Financial, and under
Nasdaq requirements applicable to it; and
48
(ii) to the extent required by the Regulatory Authorities, by
the members of Xxxxx MHC by such vote as is required.
(h) Updated Fairness Opinion. Prior to the mailing of the Stockholder
Proxy Statement, Xxxxx shall have received the Updated Fairness Opinion.
(i) Employment Agreements. Northwest Bancorp shall have executed the
Termination and Release Agreements and Consulting Agreements with Xxxxxx X.
Xxxxx and Xxxxx X. Xxxxxxx substantially in the forms set forth as part of Xxxxx
Disclosure Schedule 6.01(i).
(j) Tax opinion. Northwest shall have received the favorable opinion of
KPMG LLP or Xxxx Xxxxxx Xxxxxxxx & Xxxxxx, P.C., dated as of the Merger
Effective Date, to the effect that the Merger Consideration paid by Northwest or
Seller Bank to Xxxxx Financial stockholders shall not be taxed to the Xxxxx
Financial stockholders as a dividend under IRC Section 301 but instead will be
taxed as an exchange under IRC Section 302(b)(3) whereby the Xxxxx Financial
stockholders completely terminate their interests in Xxxxx Financial.
Section 6.02 Conditions to the Obligations of Northwest Under this
Agreement
The obligations of Northwest hereunder shall be subject to satisfaction
at or prior to the Closing Date of each of the following conditions, unless
waived by Northwest pursuant to Section 8.03 hereof:
(a) Corporate Proceedings. All action required to be taken by, or on
the part of, Xxxxx to authorize the execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated by this
Agreement, shall have been duly and validly taken by Xxxxx and Northwest shall
have received certified copies of the resolutions evidencing such
authorizations;
(b) Covenants. The obligations and covenants of Xxxxx required by this
Agreement to be performed at or prior to the Closing Date shall have been duly
performed and complied with in all material respects;
(c) Representations and Warranties. Each of the representations and
warranties of Xxxxx in this Agreement which is qualified as to materiality shall
be true and correct, and each such representation or warranty that is not so
qualified shall be true and correct in all material respects, in each case as of
the date of this Agreement, and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing Date.
(d) Approvals of Regulatory Authorities. The Merger shall have received
all required approvals of Regulatory Authorities (without the imposition of any
conditions adversely affecting in a material respect the economic benefit
Northwest reasonably expects to accrue in the transaction, excluding standard
conditions that are normally imposed by the Regulatory Authorities in merger
transactions); and all notice and waiting periods required thereunder shall have
expired or been terminated.
49
(e) No Injunction. There shall not be in effect any order, decree or
injunction of a court or agency of competent jurisdiction which enjoins or
prohibits consummation of the transactions contemplated hereby;
(f) No Material Adverse Effect. Since March 31, 2002, there shall not
have occurred any Material Adverse Effect with respect to Xxxxx Financial and
First Carnegie; and
(g) Officer's Certificate. Xxxxx MHC, Xxxxx Financial and First
Carnegie shall have delivered to Northwest a certificate, dated the Closing Date
and signed, without personal liability, by the chairman of the board or
president of each, to the effect that the conditions set forth in subsections
(a) through (f) of this Section 6.02 have been satisfied, to the best knowledge
of the officer executing the same.
(h) Employment Agreements. Xxxxxx X. Xxxxx and Xxxxx X. Xxxxxxx shall have
executed the Termination and Release Agreements and Consulting Agreements with
Northwest, substantially in the forms set forth as part of Xxxxx Disclosure
Schedule 6.01(i).
(i) Funds Deposited with the Exchange Agent. On or prior to the Closing
Date, Xxxxx Financial shall have deposited or caused to be deposited, in trust
with the Exchange Agent, an amount of cash equal to the aggregate Merger
Consideration that the Xxxxx Financial stockholders shall be entitled to receive
on the Merger Effective Date pursuant to Section 2.02 of this Agreement
(determined by multiplying the Merger Consideration by the number of shares of
Xxxxx Financial Common Stock which are issued and outstanding immediately prior
to the Merger Effective Date, other than shares referenced in Section 2.02(b)
hereof). Northwest will provide a line of credit for the benefit of Xxxxx for
the sole purpose of ensuring Xxxxx'x compliance with Section 2.02 and this
Section, at the request of Xxxxx. Such request should be made by Xxxxx no later
than ten (10) business days prior to the Closing Date and will be made at the
rates and terms substantially similar to those then offered to unaffiliated
customers of Northwest.
ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT
Section 7.01 Termination
This Agreement may be terminated on or at any time prior to the Closing
Date:
(a) By the mutual written consent of the parties hereto;
(b) By either Northwest, Xxxxx Financial or Xxxxx MHC acting
individually:
(i) if there shall have been a material breach of any
representation, warranty, covenant or other obligation of the other
party and the breach cannot be, or shall not have been, remedied within
thirty (30) days after receipt by such other party of notice in writing
specifying the nature of such breach and requesting that it be
remedied;
50
(ii) if the Closing Date shall not have occurred on or before
August 1, 2004, unless the failure of such occurrence shall be due to
the failure of the party seeking to terminate this Agreement to perform
or observe its obligations set forth in this Agreement required to be
performed or observed by such party on or before the Closing Date;
provided, however, the parties shall in good faith agree to extend such
deadline for a period of an additional one hundred and twenty (120)
days thereafter in the event that such parties determine that it is
reasonably likely that such Closing Date will in fact occur during such
extension period.
(iii) if either party has been informed in writing by a
Regulatory Authority whose approval or consent has been requested that
such approval or consent is denied, or is granted subject to any
condition that adversely affects in a material respect the economic
benefit that either Party reasonably expects to accrue in the
transactions unless the failure of such occurrence shall be due to the
failure of the party seeking to terminate this Agreement to perform or
observe its agreements set forth herein required to be performed or
observed by such party on or before the Closing Date;
(iv) if the approval of the stockholders of Xxxxx Financial
and any approval of the members of Xxxxx MHC 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
stockholders or members, as the case may be, or at any adjournment or
postponement thereof; or
(c) By Northwest if (i) as provided in Section 5.06(a)(iii), the Board
of Directors of Xxxxx MHC or Xxxxx Financial withdraws its recommendation of
this Agreement, fails to make such recommendation or modifies or qualifies its
recommendation in a manner adverse to Northwest, or (ii) Xxxxx MHC or Xxxxx
Financial enters into an agreement to be acquired by, or merge or combine with,
a third party in connection with a Superior Proposal.
(d) By Xxxxx Financial or Xxxxx MHC, upon two days' prior notice to
Northwest, if, as a result of a Superior Proposal, the Board of Directors of
Xxxxx Financial or Xxxxx MHC determines, in good faith and in consultation with
counsel, that its fiduciary duties require that such Superior Proposal be
accepted.
Section 7.02 Effect of Termination
(a) Except as otherwise provided in this Agreement, if this Agreement
is terminated pursuant to Section 7.01 hereof, this Agreement shall forthwith
become void (other than the confidentiality provisions of Section 5.02(a) and
Section 8.01 hereof, which shall remain in full force and effect), and there
shall be no further liability on the part of Northwest or Xxxxx to the other,
except that no party shall be relieved or released from any liabilities or
damages arising out of its willful breach of any provision of this Agreement.
(b) As a condition of Northwest's willingness, and in order to induce
Northwest to enter into this Agreement and to reimburse Northwest for incurring
the costs and expenses related to entering into this Agreement and consummating
the transactions contemplated by this
51
Agreement, Xxxxx Financial will make an aggregate cash payment to Northwest of
$1.2 million (the "Expense Fee") if Northwest has terminated this Agreement
pursuant to Section 7.01(c) or Xxxxx Financial or Xxxxx MHC has terminated this
Agreement pursuant to Section 7.01(d), and in such event Xxxxx Financial and
Xxxxx MHC shall have no further liability to Northwest. Any payment required
under this Section 7.02(b) shall be paid by Xxxxx Financial to Northwest (by
wire transfer of immediately available funds to an account designated by
Northwest) within five (5) business days after written demand by Northwest.
ARTICLE VIII
MISCELLANEOUS
Section 8.01 Expenses
(a) Except as provided herein, each party hereto shall bear and pay all
costs and expenses incurred by it in connection with the transactions
contemplated hereby, including fees and expenses of its own financial
consultants, accountants and counsel.
(b) In the event of any termination of this Agreement pursuant to
Section 7.01(b)(i) hereof because of a breach of this Agreement by one of the
parties, in addition to any other damages and remedies that may be available to
the non-breaching party, the non-breaching party shall be entitled to payment
of, and the breaching party shall pay to the non-breaching party, all reasonable
out-of-pocket costs and expenses, including, without limitation, reasonable
legal, accounting and investment banking fees and expenses, incurred by the
non-breaching party in connection with entering into this Agreement and carrying
out of any and all acts contemplated hereunder; provided, however, that this
clause shall not be construed to relieve or release a breaching party from any
additional liabilities or damages arising out of its willful breach of any
provision of this Agreement.
Section 8.02 Non-Survival of Representations and Warranties
All representations, warranties and, except to the extent specifically
provided otherwise herein, agreements and covenants shall terminate on the
Closing Date, other than those covenants set forth in Sections 2.01(a), 5.05 and
5.11, which will survive the Merger.
Section 8.03 Amendment, Extension and Waiver
Subject to applicable law, at any time prior to the consummation of the
transactions contemplated by this Agreement, the parties may (a) amend this
Agreement, (b) extend the time for the performance of any of the obligations or
other acts of either party hereto, (c) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto, or (d) waive compliance with any of the agreements or
conditions contained in Articles V and VI hereof or otherwise. This Agreement
may not be amended except by an instrument in writing authorized by the
respective Boards of Directors and signed by duly authorized officers on behalf
of the parties hereto. Any agreement on the part of a party hereto to any
extension or waiver shall be valid only if set forth in an instrument in writing
signed by a duly authorized officer on behalf of such party, but such waiver or
failure to insist on strict
52
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure.
Section 8.04 Entire Agreement
Except as set forth in this Agreement, this Agreement, including the
documents and other writings referred to herein or delivered pursuant hereto,
contains the entire agreement and understanding of the parties with respect to
its subject matter. Except as set forth in this Agreement, this Agreement
supersedes all prior arrangements and understandings between the parties, both
written and oral, with respect to its subject matter. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
successors; provided, however, that nothing in this Agreement, expressed or
implied, is intended to confer upon any party, other than the parties hereto and
their respective successors, any rights, remedies, obligations or liabilities
other than pursuant to Sections 2.02(a)(ii), 2.02(d), 2.03, 5.05 and 5.11.
Section 8.05 No Assignment
Neither party hereto may assign any of its rights or obligations
hereunder to any other person, without the prior written consent of the other
party hereto.
Section 8.06 Notices
All notices or other communications hereunder shall be in writing and
shall be deemed given if delivered personally, mailed by prepaid registered or
certified mail (return receipt requested), or sent by telecopy, addressed as
follows:
(a) If to Northwest to:
Northwest Bancorp, Inc.
Liberty and Xxxxxx Xxxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx
President and CEO
Fax: (000) 000-0000
with a copy to:
Xxxx Xxxxxx Xxxxxxxx & Xxxxxx
0000 Xxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx, XX 00000
Attn: Xxxx Xxxx, Esq.
Xxxx Xxxx, Esq.
Fax: (000) 000-0000
53
(b) If to Xxxxx to:
Xxxxx Financial Corp.
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxx
President, and Chief Executive Officer
Fax: (000) 000-0000
with a copy to:
Xxxxxxx Spidi & Xxxxx, PC
0000 Xxx Xxxx Xxxxxx, X.X.
Xxxxx 000 Xxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxx, Esq.
Fax: (000) 000-0000
Section 8.07 Captions
The captions contained in this Agreement are for reference purposes
only and are not part of this Agreement.
Section 8.08 Counterparts
This Agreement may be executed in any number of counterparts, and each
such counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.
Section 8.09 Severability
If any provision of this Agreement or the application thereof to any
person or circumstance shall be invalid or unenforceable to any extent, the
remainder of this Agreement and the application of such provisions to other
persons or circumstances shall not be affected thereby and shall be enforced to
the greatest extent permitted by law. If however, any provision of this
Agreement is held invalid by a court of competent jurisdiction, then the parties
hereto shall in good faith amend this Agreement to include an alternative
provision that accomplishes a result that is as substantially similar to the
result originally intended as possible.
Section 8.10 Governing Law
This Agreement shall be governed by and construed in accordance with
the domestic internal law (including the law of conflicts of law) of the State
of Pennsylvania, except to the extent that Federal law shall be deemed to
preempt such State law.
54
Section 8.11 Specific Performance
The parties hereto agree that irreparable damage would occur in the
event that the provisions contained in this Agreement were not performed in
accordance with its specific terms or was otherwise breached. It is accordingly
agreed that the parties shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the terms and
provisions thereof in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.
55
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
NORTHWEST SAVINGS BANK
/s/Xxxxxxx X. Xxxxxx
------------------------------------
By: Xxxxxxx X. Xxxxxx, President
NORTHWEST BANCORP, INC.
/s/Xxxxxxx X. Xxxxxx
------------------------------------
By: Xxxxxxx X. Xxxxxx, President
NORTHWEST BANCORP, MHC
/s/Xxxxxxx X. Xxxxxx
------------------------------------
By: Xxxxxxx X. Xxxxxx, President
FIRST CARNEGIE DEPOSIT
/s/Xxxxxx X. Xxxxx
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By: Xxxxxx X. Xxxxx, President
XXXXX FINANCIAL CORP.
/s/Xxxxxx X. Xxxxx
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By: Xxxxxx X. Xxxxx, President
XXXXX BANCSHARES, M.H.C.
/s/Xxxxxx X. Xxxxx
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By: Xxxxxx X. Xxxxx, President
