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EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of May 16, 2001
("Agreement"), between ESB Financial Corporation ("ESB"), a Pennsylvania
corporation headquartered in Ellwood City, Pennsylvania, and WSB Holding Company
("WSB"), a Pennsylvania corporation headquartered in Pittsburgh, Pennsylvania.
WITNESSETH:
WHEREAS, the Boards of Directors of ESB and WSB have determined that it
is in the best interests of their respective companies and their shareholders to
consummate the business combination transactions provided for herein, including
the merger of WSB with and into ESB subject to the terms and conditions set
forth herein; and
WHEREAS, the parties desire to provide for certain undertakings,
conditions, representations, warranties and covenants in connection with the
transactions contemplated hereby; and
WHEREAS, as a condition and inducement to ESB's willingness to enter
into this Agreement, (i) WSB is concurrently entering into a Stock Option
Agreement with ESB (the "Stock Option Agreement"), in substantially the form
attached hereto as Exhibit A, pursuant to which WSB is granting to ESB the
option to purchase shares of WSB Common Stock (as defined herein) under certain
circumstances and (ii) certain stockholders of WSB are concurrently entering
into a Stockholder Agreement with ESB (the "Stockholder Agreement"), in
substantially the form attached hereto as Exhibit B, pursuant to which, among
other things, such stockholders agree to vote their shares of WSB Common Stock
in favor of this Agreement and the transactions contemplated hereby.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, representations, warranties and agreements herein contained, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
1.01. THE MERGER. Subject to the terms and conditions of this
Agreement and the Agreement of Merger, dated as of the date hereof, between ESB
and WSB, a copy of which is attached hereto as Exhibit C, at the Effective Time
(as defined in Section 1.02 hereof), WSB shall be merged with and into ESB in
accordance with Chapter 19, Subchapter C of the Pennsylvania
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Business Corporation Law ("PBCL") (the "Merger"), with ESB as the surviving
corporation (hereinafter sometimes called the "Surviving Corporation"). Each
share of common stock, par value $.10 per share, of WSB ("WSB Common Stock")
outstanding immediately prior to the Effective Time (other than shares as to
which dissenters' rights have been asserted and duly perfected in accordance
with Pennsylvania law (the "WSB Dissenting Shares") and shares held other than
in a fiduciary capacity by WSB (including treasury shares) or ESB or any of
their respective wholly-owned subsidiaries) shall, by virtue of the Merger and
without any further action by the holder thereof, be converted into and
represent the right to receive shares of common stock, par value $.01 per share,
of ESB ("ESB Common Stock") or $17.10 in cash ("Merger Consideration"), as
provided in Section 1.03 hereof and subject to the terms, conditions,
limitations and procedures set forth in this Agreement and the Agreement of
Merger.
1.02. EFFECTIVE TIME. The Merger shall become effective on the date
and at the time that Articles of Merger are filed with the Secretary of State of
the Commonwealth of Pennsylvania pursuant to Section 1927 of the PBCL, unless a
later date and time is specified as the effective time in such Articles of
Merger ("Effective Time"). A closing (the "Closing") shall take place
immediately prior to the Effective Time at 10:00 a.m., on the fifth business day
following the receipt of all necessary regulatory or governmental approvals and
consents and the expiration of all statutory waiting periods in respect thereof
and the satisfaction or waiver, to the extent permitted hereunder, of the
conditions to the consummation of the Merger specified in Article V of this
Agreement (other than the delivery of certificates, opinions and other
instruments and documents to be delivered at the Closing), at the offices of
ESB, 000 Xxxxxxxx Xxxxxx, Xxxxxxx Xxxx, Xxxxxxxxxxxx, or at such other place, at
such other time, or on such other date as the parties may mutually agree upon.
At the Closing, there shall be delivered to ESB and WSB the opinions,
certificates and other documents required to be delivered under Article V
hereof.
1.03 CONVERSION OF SHARES. At the Effective Time, by virtue of the
Merger and without any action on the part of a holder of shares of WSB Common
Stock:
(a) Each share of ESB Common Stock that is issued and outstanding
immediately prior to the Effective Time shall remain issued and outstanding and
shall be unchanged by the Merger.
(b) All shares of WSB Common Stock owned by WSB (including treasury
shares) or ESB or any of their respective wholly-owned subsidiaries, in each
case other than in a fiduciary capacity, shall be canceled and retired and shall
not represent capital stock of the Surviving Corporation and shall not be
exchanged for shares of ESB Common Stock, cash or other consideration.
(c) (1) Subject to Sections 1.04, 1.05 and 1.08, each share of WSB
Common Stock issued and outstanding at the Effective Time (other than shares to
be canceled in accordance with Section 1.03(b)) shall be converted into, and
shall be canceled in exchange for, the right to receive, at the election of the
holder thereof:
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(i) the number of shares of ESB Common Stock which is equal
to the quotient (the "Exchange Ratio") determined by dividing (x) $17.10
by (y) the Average Share Price of the ESB Common Stock (the "Per Share
Stock Consideration"), or
(ii) a cash amount equal to $17.10 per share of WSB Common
Stock (the "Per Share Cash Consideration").
(2) For purposes of this Agreement:
(i) the "Aggregate Cash Consideration" shall amount to the
product of the number of shares of WSB Common Stock (other than WSB
Common Stock owned by WSB (including treasury shares) or ESB other than
in a fiduciary capacity) outstanding at the Effective Time times .49
times $17.10; and
(ii) the "Average Share Price" of the ESB Common Stock shall
mean the average of the closing sales price of a share of ESB Common
Stock, as reported on the Nasdaq Stock Market's National Market (as
reported by an authoritative source), for the 20 trading-day period
ending with the close of business on the business day which is five days
preceding the Effective Time. The closing sales prices during the 20-day
trading period shall be subject to appropriate adjustments in the event
that, during such 20-day trading period, the outstanding shares of ESB
Common Stock shall have been increased, decreased, changed into or
exchanged for a different number or kind of shares or securities through
reorganization, recapitalization, reclassification, stock dividend,
stock split, reverse stock split or other like changes in ESB's
capitalization.
1.04 ELECTION AND EXCHANGE PROCEDURES
(a) The parties shall designate an exchange agent to act as agent
(the "Exchange Agent") for purposes of conducting the election procedure and the
exchange procedure as described in Sections 1.04 and 1.05. No later than seven
business days following the Effective Time, ESB shall cause the Exchange Agent
to mail or make available to each holder of record of a certificate or
certificates which immediately prior to the Effective Time represented issued
and outstanding shares of WSB Common Stock (i) a notice and letter of
transmittal (which shall specify that delivery shall be effected and risk of
loss and title to the certificates theretofore representing shares of WSB Common
Stock shall pass only upon proper delivery of such certificates to the Exchange
Agent) advising such holder of the effectiveness of the Merger and the procedure
for surrendering to the Exchange Agent such certificate or certificates which
immediately prior to the Effective Time represented issued and outstanding
shares of WSB Common Stock in exchange for the consideration set forth in
Section 1.03(c) hereof deliverable in respect thereof pursuant to this Agreement
and (ii) an election form in such form as ESB and WSB shall mutually agree
("Election Form"). Each Election Form shall permit the holder (or in the case of
nominee record holders, the beneficial owner through proper instructions and
documentation) (i) to elect to receive ESB Common Stock with respect to all of
such holder's WSB Common Stock as hereinabove provided (the "Stock Election
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Shares"), (ii) to elect to receive cash with respect to all of such holder's WSB
Common Stock as hereinabove provided (the "Cash Election Shares"), or (iii) to
indicate that such holder makes no such election with respect to such holder's
shares of WSB Common Stock (the "No-Election Shares"). Nominee record holders
who hold WSB Common Stock on behalf of multiple beneficial owners shall indicate
how many of the shares held by them are Stock Election Shares, Cash Election
Shares and No-Election Shares. Any shares of WSB Common Stock with respect to
which the holder thereof shall not, as of the Election Deadline, have made such
an election by submission to the Exchange Agent of an effective, properly
completed Election Form shall be deemed to be No-Election Shares. Any WSB
Dissenting Shares shall be deemed to be Cash Election Shares, and with respect
to such shares the holders thereof shall in no event be classified as
Reallocated Stock Shares (as hereinafter defined).
(b) The term "Election Deadline" shall mean 5:00 p.m., Eastern Time,
on the 20th business day following but not including the date of mailing of the
Election Form or such other date as ESB and WSB shall mutually agree upon.
(c) Any election to receive ESB Common Stock or cash shall have been
properly made only if the Exchange Agent shall have actually received a properly
completed Election Form by the Election Deadline. An Election Form will be
properly completed only if accompanied by certificates representing all shares
of WSB Common Stock covered thereby, subject to the provisions of subsection (h)
below of this Section 1.04. Any Election Form may be revoked or changed by the
person submitting such Election Form to the Exchange Agent by written notice to
the Exchange Agent only if such notice is actually received by the Exchange
Agent at or prior to the Election Deadline. The certificate or certificates
representing WSB Common Stock relating to any revoked Election Form shall be
promptly returned without charge to the person submitting the Election Form to
the Exchange Agent. The Exchange Agent shall have reasonable discretion to
determine when any election, modification or revocation is received and whether
any such election, modification or revocation has been properly made.
(d) Within ten business days after the Election Deadline, the
Exchange Agent shall effect the allocation among holders of WSB Common Stock of
rights to receive ESB Common Stock or cash in the Merger in accordance with the
Election Forms as follows:
(i) If the number of Cash Election Shares times the Per
Share Cash Consideration is less than the Aggregate Cash Consideration,
then:
(1) all Cash Election Shares (subject to Section
1.08 with respect to WSB Dissenting Shares) shall be converted
into the right to receive cash,
(2) No-Election Shares shall then be deemed to be
Cash Election Shares to the extent necessary to have the total
number of Cash Election Shares times the Per Share Cash
Consideration equal the Aggregate Cash Consideration. If less
than all of the No-Election Shares need to be treated as Cash
Election Shares, then the
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Exchange Agent shall select which No-Election Shares shall be
treated as Cash Election Shares in such manner as the Exchange
Agent shall determine, and all remaining No-Election Shares
shall thereafter be treated as Stock Election Shares,
(3) If all of the No-Election Shares are treated as
Cash Election Shares under the preceding subsection and the
total number of Cash Election Shares times the Per Share Cash
Consideration is less than the Aggregate Cash Consideration,
then the Exchange Agent shall convert on a pro rata basis as
described below a sufficient number of Stock Election Shares
into Cash Election Shares ("Reallocated Cash Shares") such that
the sum of the number of Cash Election Shares plus the number of
Reallocated Cash Shares times the Per Share Cash Consideration
equals the Aggregate Cash Consideration, and all Reallocated
Cash Shares will be converted into the right to receive cash,
and
(4) the Stock Election Shares which are not
Reallocated Cash Shares shall be converted into the right to
receive ESB Common Stock.
(ii) If the number of Cash Election Shares times the Per
Share Cash Consideration is greater than the Aggregate Cash
Consideration, then:
(1) all Stock Election Shares and all No-Election
Shares shall be converted into the right to receive ESB Common
Stock,
(2) the Exchange Agent shall convert on a pro rata
basis as described below a sufficient number of Cash Election
Shares (excluding any WSB Dissenting Shares) ("Reallocated Stock
Shares") such that the number of remaining Cash Election Shares
(including WSB Dissenting Shares) times the Per Share Cash
Consideration equals the Aggregate Cash Consideration, and all
Reallocated Stock Shares shall be converted into the right to
receive ESB Common Stock, and
(3) the Cash Election Shares (subject to Section
1.08 with respect to WSB Dissenting Shares) which are not
Reallocated Stock Shares shall be converted into the right to
receive cash.
(iii) If the number of Cash Election Shares times the Per
Share Cash Consideration is equal to the Aggregate Cash Consideration,
then subparagraphs (d)(i) and (ii) above shall not apply and all
No-Election Shares and all Stock Election Shares will be converted into
the right to receive ESB Common Stock.
(e) In the event that the Exchange Agent is required pursuant to
Section 1.04(d)(i)(3) to convert some Stock Election Shares into Reallocated
Cash Shares, each holder of Stock Election Shares shall be allocated a pro rata
portion of the total Reallocated Cash Shares. In the event the Exchange Agent is
required pursuant to Section 1.04(d)(ii)(2) to convert some Cash Election Shares
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into Reallocated Stock Shares, each holder of Cash Election Shares shall be
allocated a pro rata portion of the total Reallocated Stock Shares.
(f) At the Effective Time, ESB shall deliver to the Exchange Agent
the number of shares of ESB Common Stock issuable and the amount of cash payable
in the Merger (which shall be held by the Exchange Agent in trust for the
holders of WSB Common Stock and invested only in deposit accounts of an
FDIC-insured institution, direct obligations of the U.S. Government or
obligations issued or guaranteed by an agency thereof which carry the full faith
and credit of the United States). No later than ten (10) business days after the
Election Deadline, the Exchange Agent shall distribute ESB Common Stock and cash
as provided herein. The Exchange Agent shall not be entitled to vote or exercise
any rights of ownership with respect to the shares of ESB Common Stock held by
it from time to time hereunder, except that it shall receive and hold all
dividends or other distributions paid or distributed with respect to such shares
for the account of the persons entitled thereto.
(g) After the completion of the foregoing allocation, each holder of
an outstanding certificate or certificates which prior thereto represented
shares of WSB Common Stock who surrenders such certificate or certificates to
the Exchange Agent will, upon acceptance thereof by the Exchange Agent, be
entitled to a certificate or certificates representing the number of full shares
of ESB Common Stock and/or the amount of cash into which the aggregate number of
shares of WSB Common Stock previously represented by such certificate or
certificates surrendered shall have been converted pursuant to this Agreement
and, if such holder's shares of WSB Common Stock have been converted into ESB
Common Stock, any other distribution theretofore paid with respect to ESB Common
Stock issuable in the Merger, in each case without interest. The Exchange Agent
shall accept such certificates upon compliance with such reasonable terms and
conditions as the Exchange Agent may impose to effect an orderly exchange
thereof in accordance with normal exchange practices. Each outstanding
certificate which prior to the Effective Time represented WSB Common Stock and
which is not surrendered to the Exchange Agent in accordance with the procedures
provided for herein shall, except as otherwise herein provided, until duly
surrendered to the Exchange Agent be deemed to evidence ownership of the number
of shares of ESB Common Stock or the right to receive the amount of cash into
which such WSB Common Stock shall have been converted. After the Effective Time,
there shall be no further transfer on the records of WSB of certificates
representing shares of WSB Common Stock and if such certificates are presented
to WSB for transfer, they shall be cancelled against delivery of certificates
for ESB Common Stock or cash as hereinabove provided. No dividends which have
been declared will be remitted to any person entitled to receive shares of ESB
Common Stock under this Section 1.04 until such person surrenders the
certificate or certificates representing WSB Common Stock, at which time such
dividends shall be remitted to such person, without interest.
(h) ESB shall not be obligated to deliver cash and/or a certificate
or certificates representing shares of ESB Common Stock to which a holder of WSB
Common Stock would otherwise be entitled as a result of the Merger until such
holder surrenders the certificate or certificates representing the shares of WSB
Common Stock for exchange as provided in this Section 1.04, or, in default
thereof, an appropriate affidavit of loss and indemnity agreement and/or a bond
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as may be required by ESB. If any certificates evidencing shares of ESB Common
Stock are to be issued in a name other than that in which the certificate
evidencing WSB Common Stock surrendered in exchange therefor is registered, it
shall be a condition of the issuance thereof that the certificate so surrendered
shall be properly endorsed or accompanied by an executed form of assignment
separate from the certificate and otherwise in proper form for transfer and that
the person requesting such exchange pay to the Exchange Agent any transfer or
other tax required by reason of the issuance of a certificate for shares of ESB
Common Stock in any name other than that of the registered holder of the
certificate surrendered or otherwise establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not payable.
(i) Any portion of the shares of ESB Common Stock and cash delivered
to the Exchange Agent by ESB pursuant to Section 1.04(f) that remains unclaimed
by the shareholders of WSB for six months after the Effective Time (as well as
any proceeds from any investment thereof) shall be delivered by the Exchange
Agent to ESB. Any shareholders of WSB who have not theretofore complied with
Section 1.04(g) shall thereafter look only to ESB for the consideration
deliverable in respect of each share of WSB Common Stock such shareholder holds
as determined pursuant to this Agreement without any interest thereon. If
outstanding certificates for shares of WSB Common Stock are not surrendered or
the payment for them is not claimed prior to the date on which such shares of
ESB Common Stock or cash would otherwise escheat to or become the property of
any governmental unit or agency, the unclaimed items shall, to the extent
permitted by abandoned property and any other applicable law, become the
property of ESB (and to the extent not in its possession shall be delivered to
it), free and clear of all claims or interest of any person previously entitled
to such property. Neither the Exchange Agent nor any party to this Agreement
shall be liable to any holder of stock represented by any certificate for any
consideration paid to a public official pursuant to applicable abandoned
property, escheat or similar laws. ESB and the Exchange Agent shall be entitled
to rely upon the stock transfer books of WSB to establish the identity of those
persons entitled to receive consideration specified in this Agreement, which
books shall be conclusive with respect thereto. In the event of a dispute with
respect to ownership of stock represented by any certificate, ESB and the
Exchange Agent shall be entitled to deposit any consideration represented
thereby in escrow with an independent third party and thereafter be relieved
with respect to any claims thereto.
1.05 NO FRACTIONAL SHARES. Notwithstanding any other provision of
this Agreement, neither certificates nor scrip for fractional shares of ESB
Common Stock shall be issued in the Merger. Each holder who otherwise would have
been entitled to a fraction of a share of ESB Common Stock shall receive in lieu
thereof cash (without interest) in an amount determined by multiplying the
fractional share interest to which such holder would otherwise be entitled by
the Average Share Price. No such holder shall be entitled to dividends, voting
rights or any other rights in respect of any fractional share.
1.06 STOCK OPTIONS AND RESTRICTED STOCK AWARDS. Each option with
respect to WSB Common Stock (a "WSB Stock Option") that has been issued pursuant
to WSB's 1998 Stock Option Plan and is outstanding and exercisable at the
Effective Time shall be canceled and converted into
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the right to receive from ESB, subject to required withholding taxes, if any,
cash in an amount equal to the difference between the Per Share Cash
Consideration and the per share exercise price of such WSB Stock Option for each
share of WSB Common Stock subject to such WSB Stock Option. Plan Shares which
have been awarded under the Workingmens Bank Restricted Stock Plan as of the
date of this Agreement and which remain outstanding immediately prior to the
Effective Time shall become fully earned as of the Effective Time, and the
holders of such Plan Shares shall be entitled to receive the merger
consideration specified in Section 1.03(c), subject to the election and exchange
procedures specified in Sections 1.04 and 1.05 and subject to any applicable tax
withholding.
1.07 WITHHOLDING RIGHTS. ESB (through the Exchange Agent, if
applicable) shall be entitled to deduct and withhold from any amounts otherwise
payable pursuant to this Agreement to any holder of shares of WSB Common Stock
such amounts as ESB is required under the Internal Revenue Code of 1986, as
amended ("Code") or any provision of state, local or foreign tax law to deduct
and withhold with respect to the making of such payment. Any amounts so withheld
shall be treated for all purposes of this Agreement as having been paid to the
holder of WSB Common Stock in respect of which such deduction and withholding
was made by ESB.
1.08 DISSENTING SHARES. Each outstanding share of WSB Common Stock
the holder of which has perfected his right to dissent under the PBCL and has
not effectively withdrawn or lost such right as of the Effective Time shall not
be converted into or represent a right to receive shares of ESB Common Stock or
cash hereunder, and the holder thereof shall be entitled only to such rights as
are granted by the PBCL. WSB shall give ESB prompt notice upon receipt by WSB of
any such written demands for payment of the fair value of such shares of WSB
Common Stock and of withdrawals of such demands and any other instruments
provided pursuant to the PBCL (any shareholder duly making such demand being
hereinafter called a "Dissenting Shareholder"). Any payments made in respect of
WSB Dissenting Shares shall be made by ESB. If any Dissenting Shareholder shall
effectively withdraw or lose (through failure to perfect or otherwise) his right
to such payment at or prior to the Effective Time, such holder's shares of WSB
Common Stock shall be converted into a right to receive cash or ESB Common Stock
in accordance with the applicable provisions of this Agreement. If such holder
shall effectively withdraw or lose (through failure to perfect or otherwise) his
right to such payment after the Effective Time, each share of WSB Common Stock
of such holder shall be converted on a share by share basis into either the
right to receive cash or ESB Common Stock as ESB or the Exchange Agent shall
determine.
1.09 ADDITIONAL ACTIONS. If at any time after the Effective Time the
Surviving Corporation shall consider that any further assignments or assurances
in law or any other acts are necessary or desirable to (i) vest, perfect or
confirm, of record or otherwise, in the Surviving Corporation its rights, title
or interest in, to or under any of the rights, properties or assets of WSB
acquired or to be acquired by the Surviving Corporation as a result of, or in
connection with, the Merger, or (ii) otherwise carry out the purposes of this
Agreement, WSB and its proper officers and directors shall be deemed to have
granted to the Surviving Corporation an irrevocable power of attorney to execute
and deliver all such proper deeds, assignments and assurances in law and to do
all acts necessary or proper to vest, perfect or confirm title to and possession
of such rights, properties or assets in the Surviving Corporation and otherwise
to carry out the purposes of this
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Agreement; and the proper officers and directors of the Surviving Corporation
are fully authorized in the name of WSB or otherwise to take any and all such
action.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF WSB
References to "WSB Disclosure Schedules" shall mean all of the
disclosure schedules required by this Article II, dated as of the date hereof
and referenced to the specific sections and subsections of Article II of this
Agreement, which have been delivered by WSB to ESB. WSB hereby represents and
warrants to ESB as follows as of the date hereof:
2.01. CORPORATE ORGANIZATION.
(a) WSB is a corporation duly organized, validly existing and in
good standing under the laws of the Commonwealth of Pennsylvania. WSB has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted and is duly licensed
or qualified to do business 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 the business,
operations, assets or financial condition of WSB and the WSB Subsidiaries (as
defined below) taken as a whole. WSB is registered as a thrift holding company
under the Home Owners' Loan Act, as amended ("HOLA"). WSB Disclosure Schedule
2.01(a) sets forth true and complete copies of the Articles of Incorporation or
other governing instrument and Bylaws of WSB and the WSB Subsidiaries as in
effect on the date hereof.
(b) The only direct or indirect subsidiaries of WSB are Workingmens
Bank and Workingmens Service Corporation (together the "WSB Subsidiaries"). Each
of the WSB Subsidiaries (i) is duly organized and validly existing or in good
standing under the laws of its respective jurisdiction of incorporation, (ii)
has the corporate power and authority to own or lease all of its properties and
assets and to conduct its business as it is now being conducted, and (iii) 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 the business, operations, assets or financial condition of WSB and the WSB
Subsidiaries taken as a whole. Each of WSB and Workingmens Bank has satisfied in
all material respects all commitments, financial or otherwise, as may have been
agreed upon with their appropriate thrift regulatory agencies. Other than the
WSB Subsidiaries, WSB does not own or control, directly or indirectly, greater
than a 5% equity interest in any corporation, company, association, partnership,
joint venture or other entity.
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2.02. CAPITALIZATION. The authorized capital stock of WSB consists of
4,000,000 shares of WSB Common Stock, of which 302,684 are issued and
outstanding (including Plan Shares under the Workingmens Bank Restricted Stock
Plan, including 4,367 unallocated Plan Shares) and 27,916 shares are held in
treasury as of the date hereof, and 1,000,000 shares of preferred stock, of
which no shares are issued and outstanding as of the date hereof. All issued and
outstanding shares of capital stock of WSB, and all issued and outstanding
shares of capital stock of each of the WSB Subsidiaries, have been duly
authorized and validly issued and are fully paid, nonassessable and free of
preemptive rights. All of the outstanding shares of capital stock of each of the
WSB Subsidiaries are owned by WSB free and clear of any liens, encumbrances,
charges, restrictions or rights of third parties of any kind whatsoever, and,
except for options granted to ESB pursuant to the Option Agreement and for
options to purchase 21,820 shares of WSB Common Stock which have been granted
pursuant to WSB's 1998 Stock Option Plan, and which are outstanding, none of WSB
or any of the WSB Subsidiaries has or is bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any character calling for
the transfer, purchase or issuance of any shares of capital stock of WSB or any
of the WSB Subsidiaries or any securities representing the right to purchase or
otherwise receive any shares of such capital stock or any securities convertible
into or representing the right to purchase or subscribe for any such stock.
2.03. AUTHORITY; NO VIOLATION.
(a) Subject to the approval of this Agreement and the Agreement of
Merger and the transactions contemplated hereby and thereby by the stockholders
of WSB, WSB has full corporate power and authority to execute and deliver this
Agreement and the Agreement of Merger and to consummate the transactions
contemplated hereby and thereby in accordance with the terms hereof and thereof.
The execution and delivery of this Agreement and the Agreement of Merger and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly approved by the Board of Directors of WSB. Except for the approval
of WSB's stockholders of this Agreement and the Agreement of Merger, no other
corporate proceedings on the part of WSB are necessary to consummate the
transactions so contemplated. This Agreement and the Agreement of Merger have
been duly and validly executed and delivered by WSB and constitute valid and
binding obligations of WSB, enforceable against it in accordance with and
subject to their terms, except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally, and except that the availability of equitable remedies (including,
without limitation, specific performance) is within the discretion of the
appropriate court.
(b) None of the execution and delivery of this Agreement and the
Agreement of Merger by WSB, nor the consummation by WSB of the transactions
contemplated hereby and thereby in accordance with the terms hereof and thereof,
or compliance by WSB with any of the terms or provisions hereof or thereof, will
(i) violate any provision of the Articles of Incorporation or other governing
instrument or Bylaws of WSB or any of the WSB Subsidiaries, (ii) assuming that
the consents and approvals set forth below are duly obtained, violate any
statute, code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to WSB or any of the WSB Subsidiaries or any of their
respective properties or assets, or (iii) except as disclosed in WSB
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Disclosure Schedule 2.03(b), 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 the creation of any lien,
security interest, charge or other encumbrance upon any of the respective
properties or assets of WSB or any of the WSB Subsidiaries under any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument or obligation to which WSB
or any of the WSB Subsidiaries is a party, or by which any of their respective
properties or assets may be bound or affected, except, with respect to (ii) and
(iii) above, such as individually or in the aggregate will not have a material
adverse effect on the business, operations, assets or financial condition of WSB
and the WSB Subsidiaries taken as a whole and which will not prevent or delay
the consummation of the transactions contemplated hereby. Except as set forth in
WSB Disclosure Schedule 2.03(b) and for consents and approvals of or filings or
registrations with or notices to the Securities and Exchange Commission
("Commission"), the Secretary of State of the Commonwealth of Pennsylvania, the
Office of Thrift Supervision ("OTS") and the stockholders of WSB, no consents or
approvals of or filings or registrations with or notices to any federal, state,
municipal or other governmental or regulatory commission, board, agency, or
non-governmental third party are required on behalf of WSB in connection with
(a) the execution and delivery of this Agreement and the Agreement of Merger by
WSB and (b) the consummation by WSB of the Merger and the other transactions
contemplated hereby and by the Agreement of Merger.
2.04. FINANCIAL STATEMENTS.
(a) WSB has previously delivered to ESB copies of the consolidated
balance sheets of WSB as of June 30, 2000, 1999 and 1998 and the related
consolidated statements of income, changes in stockholders' equity and cash
flows for the years ended June 30, 2000, 1999 and 1998, in each case accompanied
by the audit reports of S.R. Xxxxxxxxx, X.X. or Xxxxxx Xxxxx & Xxxxx LLC,
independent public accountants, as applicable, as well as the unaudited
consolidated balance sheet of WSB as of March 31, 2001 and the related unaudited
consolidated statements of income, changes in stockholders' equity and cash
flows for the three and nine months ended March 31, 2001 and 2000. The
consolidated balance sheets of WSB referred to herein (including the related
notes, where applicable), as well as the consolidated financial statements
contained in the reports of WSB to be delivered by WSB pursuant to Section 4.05
hereof, fairly present or will fairly present, as the case may be, the
consolidated financial condition of WSB as of the respective dates set forth
therein, and the related consolidated statements of income, changes in
stockholders' equity and cash flows (including the related notes, where
applicable) fairly present or will fairly present, as the case may be, the
results of the consolidated operations, changes in stockholders' equity and cash
flows of WSB for the respective periods or as of the respective dates set forth
therein (it being understood that WSB's interim financial statements are not
audited and are not prepared with related notes but reflect all adjustments
which are, in the opinion of WSB, necessary for a fair presentation of such
financial statements).
(b) Each of the financial statements referred to in this Section
2.04 (including the related notes, where applicable) has been or will be, as the
case may be, prepared in accordance with
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generally accepted accounting principles consistently applied during the periods
involved. The books and records of WSB and the WSB Subsidiaries are being
maintained in material compliance with applicable legal and accounting
requirements and reflect only actual transactions.
(c) Except to the extent reflected, disclosed or reserved against in
the consolidated financial statements referred to in the first sentence of
Section 2.04(a) or the notes thereto or liabilities incurred since March 31,
2001 in the ordinary course of business and consistent with past practice, none
of WSB or any of the WSB Subsidiaries has any obligation or liability, whether
absolute, accrued, contingent or otherwise, material to the business,
operations, assets or financial condition of WSB and the WSB Subsidiaries taken
as a whole.
2.05. ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) Except as set forth in WSB Disclosure Schedule 2.05(a),
there has not been any material adverse change in the business, operations,
assets or financial condition of WSB and the WSB Subsidiaries taken as a whole
since March 31, 2001, other than: (i) any such effect attributable to or
resulting from any change in banking or similar laws, rules or regulations of
general applicability to banks, thrift institutions or their holding companies
or interpretations thereof by courts or governmental authorities; (ii) changes
in generally accepted accounting principles that are generally applicable to the
banking or savings industries; (iii) expenses incurred in connection with the
transactions contemplated hereby; (iv) actions or omissions of a party (or any
of its subsidiaries) taken with the prior informed written consent of the other
party; or (v) changes attributable to or resulting from changes in general
economic conditions, including changes in the prevailing level of interest
rates. To the best knowledge of WSB, no fact or condition exists which WSB
believes will cause such a material adverse change in the future.
(b) Neither WSB nor any of the WSB Subsidiaries has taken or
permitted any of the actions set forth in Section 4.02 hereof between March 31,
2001 and the date hereof.
2.06. LEGAL PROCEEDINGS. Neither WSB nor any of the WSB Subsidiaries
is a party to any, and there are no pending or, to the best knowledge of WSB,
threatened legal, administrative, arbitration or other proceedings, claims,
actions or governmental investigations of any nature against WSB or any of the
WSB Subsidiaries, except such proceedings, claims, actions or governmental
investigations which in the good faith judgment of WSB will not have a material
adverse effect on the business, operations, assets or financial condition of WSB
and the WSB Subsidiaries taken as a whole. Neither WSB nor any of the WSB
Subsidiaries is a party to any order, judgment or decree which materially
adversely affects the business, operations, assets or financial condition of WSB
and the WSB Subsidiaries taken as a whole.
2.07. TAXES AND TAX RETURNS.
(a) Each of WSB and the WSB Subsidiaries, or the affiliated,
combined or unitary group (within the meaning of applicable federal income tax
law) of which any such corporation is or was
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a member, as the case may be (individually an "Affiliate" and collectively,
"Affiliates"), has duly filed (and until the Effective Time will so file) all
returns, declarations, reports, information returns and statements ("Returns")
required to be filed or sent by or with respect to them in respect of any Taxes
(as hereinafter defined), and has duly paid (and until the Effective Time will
so pay) all Taxes due and payable other than Taxes or other charges which (i)
are being contested in good faith (and disclosed in writing to ESB) and (ii)
have not finally been determined. WSB and its Affiliates have established (and
until the Effective Time will establish) on their books and records reserves
that are adequate for the payment of all Taxes not yet due and payable, whether
or not disputed, accrued or applicable. Except as set forth in WSB Disclosure
Schedule 2.07(a), (i) the federal income tax returns of WSB and its Affiliates
have been examined by the Internal Revenue Service ("IRS") (or are closed to
examination due to the expiration of the applicable statute of limitations), and
(ii) the Pennsylvania income tax returns of WSB and its Affiliates have been
examined by applicable authorities (or are closed to examination due to the
expiration of the statute of limitations), and in the case of both (i) and (ii)
no deficiencies were asserted as a result of such examinations which have not
been resolved and paid in full. There are no audits or other administrative or
court proceedings presently pending nor any other disputes pending, or claims
asserted for, Taxes or assessments upon WSB or any of its Affiliates, nor has
WSB or any of its Affiliates given any currently outstanding waivers or
comparable consents regarding the application of the statute of limitations with
respect to any Taxes or Returns.
(b) Except as set forth in WSB Disclosure Schedule 2.07(b), none of
WSB or any of its Affiliates (i) has requested any extension of time within
which to file any Return which Return has not since been filed, (ii) is a party
to any agreement providing for the allocation or sharing of Taxes, (iii) is
required to include in income any adjustment pursuant to Section 481(a) of the
Code, by reason of a voluntary change in accounting method initiated by WSB or
any Affiliate (nor does WSB have any knowledge that the IRS has proposed any
such adjustment or change of accounting method), or (iv) has filed a consent
pursuant to Section 341(f) of the Code or agreed to have Section 341(f)(2) of
the Code apply.
(c) For purposes of this Agreement, "Taxes" shall mean all taxes,
charges, fees, levies or other assessments, including, without limitation, all
net income, gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, withholding, payroll, employment (including
withholding, payroll and employment taxes required to be withheld with respect
to income paid to employees), excise, estimated, severance, stamp, occupation,
property or other taxes, customs duties, fees, assessments or charges of any
kind whatsoever, together with any interest and any penalties, additions to tax
or additional amounts imposed by any taxing authority (domestic or foreign) upon
WSB or any of its Affiliates.
2.08. EMPLOYEE BENEFIT PLANS.
(a) Each employee benefit plan or arrangement of WSB or any of the
WSB Subsidiaries which is an "employee benefit plan" within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), is listed in WSB Disclosure Schedule 2.08(a)
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("WSB Plans"). WSB has previously furnished to ESB true and complete copies of
each of the WSB Plans together with (i) the most recent actuarial and financial
reports prepared with respect to any qualified WSB Plans, (ii) the most recent
annual reports filed with any government agency, and (iii) all rulings and
determination letters and any open requests for rulings or letters that pertain
to any qualified WSB Plans.
(b) Each WSB Plan has been operated in compliance in all material
respects with the applicable provisions of ERISA, the Code, all regulations,
rulings and announcements promulgated or issued thereunder, and all other
applicable governmental laws and regulations.
(c) Neither WSB nor any of the WSB Subsidiaries participates in or
has incurred any liability under Section 4201 of ERISA for a complete or partial
withdrawal from a multi-employer plan (as such term is defined in ERISA).
(d) The present value of all accrued benefits under each of the WSB
Plans subject to Title IV of ERISA did not, as of the latest valuation date of
each such Plan, exceed the then current value of the assets of such plans
allocable to such accrued benefits, based upon the actuarial and accounting
assumptions currently utilized for such WSB Plans.
(e) Neither WSB nor any of the WSB Subsidiaries, nor, to the best
knowledge of WSB, any trustee, fiduciary or administrator of a WSB Plan or any
trust created thereunder, has engaged in a "prohibited transaction," as such
term is defined in Section 4975 of the Code, which could subject WSB or any of
the WSB Subsidiaries, or, to the best knowledge of WSB, any trustee, fiduciary
or administrator thereof, to the tax or penalty on prohibited transactions
imposed by said Section 4975.
(f) No WSB Plan or any trust created thereunder has been terminated,
nor have there been any "reportable events" with respect to any WSB Plan, as
that term is defined in Section 4043(b) of ERISA.
(g) No WSB Plan or any trust created thereunder has incurred any
"accumulated funding deficiency," as such term is defined in Section 302 of
ERISA.
(h) Each of the WSB Plans which is intended to be a qualified plan
within the meaning of Section 401(a) of the Code has been determined by the IRS
to be so qualified, and WSB is not aware of any fact or circumstance which would
adversely affect the qualified status of any such Plan.
2.09. SECURITIES DOCUMENTS AND REGULATORY REPORTS.
(a) WSB has previously delivered or made available to ESB a complete
copy of each final registration statement, prospectus, annual, quarterly or
current report and definitive proxy statement or other communication (other than
general advertising materials) filed pursuant to the Securities Act of 1933, as
amended ("1933 Act"), or the Securities Exchange Act of 1934, as
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amended ("1934 Act"), or mailed by WSB to its stockholders as a class since
January 1, 1998, and each such final registration statement, prospectus, annual,
quarterly or current report and definitive proxy statement or other
communication, as of its date, complied in all material respects with all
applicable statutes, rules and regulations and did not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading; provided
that information as of a later date shall be deemed to modify information as of
an earlier date.
(b) WSB and each of the WSB Subsidiaries has duly filed with the OTS
and the FDIC in correct form the monthly, quarterly and annual reports required
to be filed under applicable laws and regulations, and WSB has delivered or made
available to ESB accurate and complete copies of such reports. WSB Disclosure
Schedule 2.09(b) lists all examinations of WSB or of the WSB Subsidiaries
conducted by the applicable thrift regulatory authorities since January 1, 1999
and the dates of any responses thereto submitted by WSB. In connection with the
most recent examinations of WSB or the WSB Subsidiaries by the applicable thrift
regulatory authorities, neither WSB nor any of the WSB Subsidiaries was required
to correct or change any action, procedure or proceeding which WSB or such WSB
Subsidiaries believes has not been now corrected or changed as required.
2.10. WSB INFORMATION. None of the information relating to WSB and the
WSB Subsidiaries to be provided by WSB or the WSB Subsidiaries for use in (i)
the Registration Statement on Form S-4 to be filed by ESB in connection with the
issuance of shares of ESB Common Stock pursuant to the Merger, as amended or
supplemented (or on any successor or other appropriate form) ("Form S-4"), will,
at the time the Form S-4 becomes effective, contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and (ii) the proxy statement/prospectus contained in the Form S-4,
as amended or supplemented, and to be delivered to stockholders of WSB in
connection with the solicitation of their approval of this Agreement, the
Agreement of Merger and the transactions contemplated hereby and thereby ("Proxy
Statement/Prospectus"), as of the date(s) such Proxy Statement/Prospectus is
mailed to stockholders of WSB and up to and including the date(s) of the meeting
of stockholders to which such Proxy Statement/Prospectus relates, will contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, provided that information as of a later
date shall be deemed to modify information as of an earlier date.
2.11. COMPLIANCE WITH APPLICABLE LAW.
(a) WSB and each of the WSB Subsidiaries has all permits, licenses,
certificates of authority, orders and approvals of, and has made all filings,
applications and registrations with, federal, state, local and foreign
governmental or regulatory bodies that are required in order to permit it to
carry on its business as it is presently being conducted and the absence of
which could have a material adverse effect on the business, operations, assets
or financial condition of WSB and the
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WSB Subsidiaries taken as a whole; all such permits, licenses, certificates of
authority, orders and approvals are in full force and effect; and to the best
knowledge of WSB and the WSB Subsidiaries, no suspension or cancellation of any
of the same is threatened.
(b) Neither WSB nor any of the WSB Subsidiaries is in violation of
its respective Articles of Incorporation or other governing instrument or
Bylaws, or of any applicable federal, state or local law or ordinance or any
order, rule or regulation of any federal, state, local or other governmental
agency or body (including, without limitation, all banking, securities,
municipal securities, safety, health, zoning, anti-discrimination, antitrust,
and wage and hour laws, ordinances, orders, rules and regulations), or in
default with respect to any order, writ, injunction or decree of any court, or
in default under any order, license, regulation or demand of any governmental
agency, any of which violations or defaults could have a material adverse effect
on the business, operations, assets or financial condition of WSB and the WSB
Subsidiaries taken as a whole; and neither WSB nor any of the WSB Subsidiaries
has received any notice or communication from any federal, state or local
governmental authority asserting that WSB or any WSB Subsidiary is in violation
of any of the foregoing which could have a material adverse effect on the
business, operations, assets or financial condition of WSB and the WSB
Subsidiaries taken as a whole. Neither WSB nor any WSB Subsidiary is subject to
any regulatory or supervisory cease and desist order, agreement, written
directive, memorandum of understanding or written commitment (other than those
of general applicability to all savings associations issued by governmental
authorities), and none of them has received any written communication requesting
that they enter into any of the foregoing.
2.12. DEPOSIT INSURANCE AND OTHER REGULATORY MATTERS.
(a) The deposit accounts of Workingmens Bank are insured by the
Savings Association Insurance Fund administered by the FDIC to the maximum
extent permitted by the Federal Deposit Insurance Act, as amended ("FDIA"), and
Workingmens Bank has paid all premiums and assessments required by the FDIA and
the regulations thereunder.
(b) Workingmens Bank is a member in good standing of the Federal
Home Loan Bank ("FHLB") of Pittsburgh and owns the requisite amount of stock in
the FHLB of Pittsburgh.
(c) Workingmens Bank is a "qualified thrift lender," as such term is
defined in the HOLA and the regulations thereunder.
(d) Workingmens Bank has at all times qualified as a "domestic
building and loan association," as such term is defined in Section 7701(a)(19)
of the Code, for purposes of Section 593 of the Code.
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2.13. CERTAIN CONTRACTS.
(a) Except as disclosed in WSB Disclosure Schedule 2.13(a), neither
WSB nor any of the WSB Subsidiaries is a party to, is bound or affected by,
receives, or is obligated to pay benefits under, (i) any agreement, arrangement
or commitment, including without limitation, any agreement, indenture or other
instrument relating to the borrowing of money by WSB or any of the WSB
Subsidiaries or the guarantee by WSB or any of the WSB Subsidiaries of any
obligation, (ii) any agreement, arrangement or commitment relating to the
employment of a consultant or the employment, election or retention in office of
any present or former director or officer of WSB or any of the WSB Subsidiaries,
(iii) any contract, agreement or understanding with a labor union, (iv) any
agreement, arrangement or understanding pursuant to which any payment (whether
of severance pay or otherwise) became or may become due to any director, officer
or employee of WSB or any of the WSB Subsidiaries upon execution of this
Agreement or upon or following consummation of the transactions contemplated by
this Agreement (either alone or in connection with the occurrence of any
additional acts or events), (v) any agreement, arrangement or understanding to
which WSB or any of the WSB Subsidiaries is a party or by which any of the same
is bound which limits the freedom of WSB or any of the WSB Subsidiaries to
compete in any line of business or with any person, (vi) any assistance
agreement, supervisory agreement, memorandum of understanding, consent order,
cease and desist order or condition of any regulatory order or decree with or by
the OTS, the FDIC or any other regulatory agency, (vii) any other agreement,
arrangement or understanding which would be required to be filed as an exhibit
to WSB's annual, quarterly or current reports under the 1934 Act and which has
not been so filed, or (viii) any other agreement, arrangement or understanding
to which WSB or any of the WSB Subsidiaries is a party and which is material to
the business, operations, assets or financial condition of WSB and the WSB
Subsidiaries taken as a whole (excluding loan agreements or agreements relating
to deposit accounts), in each of the foregoing cases whether written or oral.
(b) Neither WSB nor any of the WSB Subsidiaries is in default or in
non-compliance, which default or non-compliance would have a material adverse
effect on the business, operations, assets or financial condition of WSB and the
WSB Subsidiaries taken as a whole or the transactions contemplated hereby, under
any contract, agreement, commitment, arrangement, lease, insurance policy or
other instrument to which it is a party or by which its assets, business or
operations may be bound or affected, whether entered into in the ordinary course
of business or otherwise and whether written or oral, and there has not occurred
any event that with the lapse of time or the giving of notice, or both, would
constitute such a default or non-compliance.
2.14. PROPERTIES AND INSURANCE.
(a) All real and personal property owned by WSB or any of the WSB
Subsidiaries or presently used by any of them in their respective business is in
an adequate condition (ordinary wear and tear excepted) and is sufficient to
carry on the business of WSB and the WSB Subsidiaries in the ordinary course of
business consistent with their past practices. WSB and the WSB Subsidiaries have
good and, as to owned real property, marketable title to all material assets and
properties,
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whether real or personal, tangible or intangible, reflected in WSB's
consolidated balance sheet as of March 31, 2001, or owned and acquired
subsequent thereto (except to the extent that such assets and properties have
been disposed of for fair value in the ordinary course of business since March
31, 2001), subject to no encumbrances, liens, mortgages, security interests or
pledges, except (i) those items that secure liabilities that are reflected in
said consolidated balance sheet or the notes thereto or have been incurred in
the ordinary course of business after the date of such consolidated balance
sheet, (ii) statutory liens for amounts not yet delinquent or which are being
contested in good faith, (iii) such encumbrances, liens, mortgages, security
interests, pledges and title imperfections that are not in the aggregate
material to the business, operations, assets or financial condition of WSB and
the WSB Subsidiaries taken as a whole, and (iv) with respect to owned real
property, title imperfections noted in title reports prior to the date hereof.
WSB and the WSB Subsidiaries as lessees have the right under valid and
subsisting leases to occupy, use, possess and control all property leased by
them in all material respects as presently occupied, used, possessed and
controlled by WSB and the WSB Subsidiaries and the consummation of the
transactions contemplated hereby and by the Agreement of Merger will not affect
any such right. WSB Disclosure Schedule 2.14(a) sets forth an accurate listing
of each lease pursuant to which WSB or any of the WSB Subsidiaries acts as
lessor or lessee, including the expiration date and the terms of any renewal
options which relate to the same.
(b) The business operations and all insurable properties and assets
of WSB and the WSB Subsidiaries are insured for their benefit against all risks
which, in the reasonable judgment of the management of WSB, should be insured
against, in each case under valid, binding and enforceable policies or bonds
issued by insurers of recognized responsibility, in such amounts with such
deductibles and against such risks and losses as are in the opinion of the
management of WSB adequate for the business engaged in by WSB and the WSB
Subsidiaries. As of the date hereof, neither WSB nor any of the WSB Subsidiaries
has received any notice of cancellation or notice of a material amendment of any
such insurance policy or bond or is in default under such policy or bond, no
coverage thereunder is being disputed and all material claims thereunder have
been filed in a timely fashion.
2.15. ENVIRONMENTAL MATTERS. For purposes of this Agreement, the
following terms shall have the indicated meaning:
"Environmental Law" means any federal, state or local law, statute,
ordinance, rule, regulation, code, license, permit, authorization, approval,
consent, order, judgment, decree, injunction or agreement with any governmental
entity relating to (1) the protection, preservation or restoration of the
environment (including, without limitation, air, water vapor, surface water,
groundwater, drinking water supply, surface soil, subsurface soil, plant and
animal life or any other natural resource), and/or (2) the use, storage,
recycling, treatment, generation, transportation, processing, handling,
labeling, production, release or disposal of Hazardous Substances. The term
Environmental Law includes without limitation (1) the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C.
Section 9601, et seq; the Resource Conservation and Recovery Act, as amended, 42
U.S.C. Section 6901, et seq; the Clean Air Act, as amended, 42 U.S.C.
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Section 7401, et seq; the Federal Water Pollution Control Act, as amended, 33
U.S.C. Section 1251, et seq; the Toxic Substances Control Act, as amended, 15
U.S.C. Section 9601, et seq; the Emergency Planning and Community Right to Know
Act, 42 U.S.C. Section 11001, et seq; the Safe Drinking Water Act, 42 U.S.C.
Section 300f, et seq; and all comparable state and local laws, and (2) any
common law (including without limitation common law that may impose strict
liability) that may impose liability or obligations for injuries or damages due
to, or threatened as a result of, the presence of or exposure to any Hazardous
Substance.
"Hazardous Substance" means any substance presently 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 regulated material containing any such substance as a
component. Hazardous Substances include without limitation petroleum (including
crude oil or any fraction thereof), asbestos, radioactive material, and
polychlorinated biphenyls.
"Loan Portfolio Properties and Other Properties Owned" means those
properties owned, leased or operated by WSB or any of the WSB Subsidiaries or
those properties which serve as collateral for loans owned by WSB or any of the
WSB Subsidiaries.
(a) To the best knowledge of WSB and the WSB Subsidiaries, neither
WSB nor any of the WSB Subsidiaries has been or is in violation of or liable
under any Environmental Law, except any such violations or liabilities which
would not singly or in the aggregate have a material adverse effect on the
business, operations, assets or financial condition of WSB and the WSB
Subsidiaries taken as a whole.
(b) To the best knowledge of WSB and the WSB Subsidiaries, none of
the Loan Portfolio Properties and Other Properties Owned by WSB or any of the
WSB Subsidiaries has been or is in violation of or liable under any
Environmental Law, except any such violations or liabilities which singly or in
the aggregate would not have a material adverse effect on the business,
operations, assets or financial condition of WSB and the WSB Subsidiaries taken
as a whole.
(c) To the best knowledge of WSB and the WSB Subsidiaries, there are
no actions, suits, demands, notices, claims, investigations or proceedings
pending or threatened relating to the liability of the Loan Portfolio Properties
and Other Properties Owned by WSB or any of the WSB Subsidiaries under any
Environmental Law, including without limitation any notices, demand letters or
requests for information from any federal or state environmental agency relating
to any such liabilities under or violations of Environmental Law, except such
which would not have or result in a material adverse effect on the business,
operations, assets or financial condition of WSB and the WSB Subsidiaries taken
as a whole.
2.16. ALLOWANCE FOR LOAN LOSSES AND REAL ESTATE OWNED. The allowance
for loan losses reflected on WSB's consolidated balance sheets included in the
consolidated financial statements referred to in Section 2.04 hereof is, or will
be in the case of subsequently delivered financial
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statements, as the case may be, in the opinion of WSB's management adequate in
all material respects as of their respective dates under the requirements of
generally accepted accounting principles to provide for reasonably anticipated
losses on outstanding loans net of recoveries. The real estate owned reflected
on the consolidated balance sheets included in the consolidated financial
statements referred to in Section 2.04 hereof is, or will be in the case of
subsequently delivered financial statements, as the case may be, carried at the
lower of cost or fair value, or the lower of cost or net realizable value, as
required by generally accepted accounting principles.
2.17. MINUTE BOOKS. Since January 1, 1999, the minute books, including
any attachments thereto, of WSB and the WSB Subsidiaries contain complete and
accurate records of all meetings and other corporate action held or taken by
their respective Boards of Directors (including committees of their respective
Boards of Directors) and stockholders.
2.18. AFFILIATE TRANSACTIONS.
(a) Except as disclosed in WSB Disclosure Schedule 2.18(a) or in
WSB's proxy statements, and except as specifically contemplated by this
Agreement, since January 1, 1999, neither WSB nor any of the WSB Subsidiaries
has engaged in or agreed to engage in (whether in writing or orally) any
transaction with any "affiliated person" or "affiliate" of Workingmens Bank, as
such terms are defined in 12 C.F.R. Section 561.5 and 12 C.F.R. Section 563.41,
respectively.
(b) WSB Disclosure Schedule 2.18(b) sets forth the name and number
of shares of WSB Common Stock owned as of the date hereof beneficially or of
record by any persons WSB considers to be affiliates of WSB ("WSB Affiliates")
as that term is defined for purposes of Rule 145 under the 1933 Act.
2.19. BROKER FEES. Except as set forth in WSB Disclosure Schedule
2.19, none of WSB, the WSB Subsidiaries or any of the respective directors or
officers of such companies has employed any consultant, broker or finder or
incurred any liability for any consultant's, broker's or finder's fees or
commissions in connection with any of the transactions contemplated by this
Agreement.
2.20. DISCLOSURES. No representation or warranty contained in Article
II of this Agreement, and no statement contained in the WSB Disclosure
Schedules, contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements herein or therein not
misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ESB
References to "ESB Disclosure Schedules" shall mean all of the
disclosure schedules required by this Article III, dated as of the date hereof
and referenced to the specific sections and
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subsections of Article III of this Agreement, which have been delivered by ESB
to WSB. ESB hereby represents and warrants to WSB as follows as of the date
hereof:
3.01. CORPORATE ORGANIZATION.
(a) ESB is a corporation duly organized, validly existing and in
good standing under the laws of the Commonwealth of Pennsylvania. ESB has the
corporate power and authority to own or lease all of its properties and assets
and to carry on its business as it is now being conducted and is duly licensed
or qualified to do business 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 the business,
operations, assets or financial condition of ESB and the ESB Subsidiaries (as
defined below) taken as a whole. ESB is registered as a thrift holding company
under the HOLA. ESB Disclosure Schedule 3.01(a) sets forth true and complete
copies of the Articles of Incorporation or other governing instrument and Bylaws
of ESB and the ESB Subsidiaries as in effect on the date hereof.
(b) The only direct or indirect subsidiaries of ESB are ESB Bank,
FSB ("ESB Bank"), Amsco, Inc., ESB Financial Services, Inc., PennFirst Financial
Services, Inc., PennFirst Capital Trust I, THF, Inc., ESB Bank Building
Associates (a limited partnership), XxXxxxxxx Place (a limited partnership), the
Links at Deer Run Associates (a limited liability corporation) and Shady Park II
Townhouse Associates (a limited partnership) (together the "ESB Subsidiaries").
Each of the ESB Subsidiaries (i) is duly organized and validly existing or in
good standing under the laws of its respective jurisdiction of incorporation,
(ii) has the corporate power and authority to own or lease all of its properties
and assets and to conduct its business as it is now being conducted, and (iii)
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 the business, operations, assets or financial condition of ESB and the ESB
Subsidiaries taken as a whole. Each of ESB and ESB Bank has satisfied in all
material respects all commitments, financial or otherwise, as may have been
agreed upon with their appropriate thrift regulatory agencies. Other than the
ESB Subsidiaries, ESB does not own or control, directly or indirectly, greater
than a 5% equity interest in any corporation, company, association, partnership,
joint venture or other entity.
3.02. CAPITALIZATION. The authorized capital stock of ESB consists of
10,000,000 shares of ESB Common Stock, of which 5,938,873 are issued and
outstanding and 1,551,930 shares which are held in treasury as of the date
hereof, and 5,000,000 shares of preferred stock, par value $.01 per share, of
which no shares are issued and outstanding as of the date hereof (ESB has
declared a six-for-five split of the ESB Common Stock payable May 30, 2001 to
stockholders of record on May 18, 2001). All issued and outstanding shares of
capital stock of ESB, and all issued and outstanding shares of capital stock of
each of the ESB Subsidiaries, have been duly authorized and validly issued and
are fully paid, nonassessable and free of preemptive rights. All of the
outstanding shares of
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capital stock of each of the ESB Subsidiaries are owned by ESB free and clear of
any liens, encumbrances, charges, restrictions or rights of third parties of any
kind whatsoever, and, except for options to purchase 626,538 shares of ESB
Common Stock which have been granted pursuant to ESB's 2001 Stock Option Plan,
1997 Stock Option Plan, 1992 Stock Incentive Plan or Ellwood Federal Savings
Bank's 1990 Stock Option Plan (or options granted by ESB pursuant thereto after
the date hereof) or options to purchase ESB Common Stock assumed under the Xxxx
Xxxx Bancorp, Inc. 1994 Stock Option Plan or the SHS Bancorp, Inc. 1998 Stock
Option Plan, none of ESB or any of the ESB Subsidiaries has or is bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the transfer, purchase or issuance of any shares of
capital stock of ESB or any of the ESB Subsidiaries or any securities
representing the right to purchase or otherwise receive any shares of such
capital stock or any securities convertible into or representing the right to
purchase or subscribe for any such stock.
3.03. AUTHORITY; NO VIOLATION.
(a) ESB has full corporate power and authority to execute and
deliver this Agreement and the Agreement of Merger and to consummate the
transactions contemplated hereby and thereby in accordance with the terms hereof
and thereof. The execution and delivery of this Agreement and the Agreement of
Merger and the consummation of the transactions contemplated hereby and thereby
have been duly and validly approved by the Board of Directors of ESB and no
other corporate proceedings on the part of ESB are necessary to consummate the
transactions so contemplated. This Agreement and the Agreement of Merger have
been duly and validly executed and delivered by ESB and constitute valid and
binding obligations of ESB, enforceable against it in accordance with and
subject to their terms, except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally, and except that the availability of equitable remedies (including,
without limitation, specific performance) is within the discretion of the
appropriate court.
(b) None of the execution and delivery of this Agreement and the
Agreement of Merger by ESB, nor the consummation by ESB of the transactions
contemplated hereby and thereby in accordance with the terms hereof and thereof,
or compliance by ESB with any of the terms or provisions hereof or thereof, will
(i) violate any provision of the Articles of Incorporation or other governing
instrument or Bylaws of ESB or any of the ESB Subsidiaries, (ii) assuming that
the consents and approvals set forth below are duly obtained, violate any
statute, code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to ESB or any of the ESB Subsidiaries 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 the
creation of any lien, security interest, charge or other encumbrance upon any of
the respective properties or assets of ESB or any of the ESB Subsidiaries under
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or
obligation to which ESB or any of the ESB Subsidiaries is a party, or by which
any of their respective properties or assets may be bound or affected, except,
with
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respect to (ii) and (iii) above, such as individually or in the aggregate will
not have a material adverse effect on the business, operations, assets or
financial condition of ESB and the ESB Subsidiaries taken as a whole and which
will not prevent or delay the consummation of the transactions contemplated
hereby. Except for consents and approvals of or filings or registrations with or
notices to the Commission, the Secretary of State of the Commonwealth of
Pennsylvania and the OTS, no consents or approvals of or filings or
registrations with or notices to any federal, state, municipal or other
governmental or regulatory commission, board, agency or non-governmental third
party are required on behalf of ESB in connection with (a) the execution and
delivery of this Agreement and the Agreement of Merger by ESB and (b) the
consummation by ESB of the transactions contemplated hereby and by the Agreement
of Merger.
3.04. FINANCIAL STATEMENTS.
(a) ESB has previously delivered to WSB copies of the consolidated
statements of financial condition of ESB as of December 31, 2000, 1999 and 1998,
and the related consolidated statements of income, changes in stockholders'
equity and cash flows for the years ended December 31, 2000, 1999 and 1998 in
each case accompanied by the audit reports of Ernst & Young LLP or KPMG LLP,
independent public accountants, as applicable, as well as the unaudited
consolidated statement of financial condition of ESB as of March 31, 2001 and
the related unaudited consolidated statements of income, changes in
stockholders' equity and cash flows for the three months ended March 31, 2001
and 2000. The consolidated statements of financial condition of ESB referred to
herein (including the related notes, where applicable), as well as the
consolidated financial statements contained in the reports of ESB to be
delivered by ESB pursuant to Section 4.04 hereof, fairly present or will fairly
present, as the case may be, the consolidated financial condition of ESB as of
the respective dates set forth therein, and the related consolidated statements
of operations, changes in stockholders' equity and cash flows (including the
related notes, where applicable) fairly present or will fairly present, as the
case may be, the results of the consolidated operations, changes in
stockholders' equity and cash flows of ESB for the respective periods or as of
the respective dates set forth therein (it being understood that ESB's interim
financial statements are not audited and are not prepared with related notes but
reflect all adjustments which are, in the opinion of ESB, necessary for a fair
presentation of such financial statements).
(b) Each of the financial statements referred to in this Section
3.04 (including the related notes, where applicable) has been or will be, as the
case may be, prepared in accordance with generally accepted accounting
principles consistently applied during the periods involved. The books and
records of ESB and the ESB Subsidiaries are being maintained in material
compliance with applicable legal and accounting requirements and reflect only
actual transactions.
(c) Except to the extent reflected, disclosed or reserved against in
the consolidated financial statements referred to in the first sentence of
Section 3.04(a) or the notes thereto or liabilities incurred since March 31,
2001 in the ordinary course of business and consistent with past practice, none
of ESB or any of the ESB Subsidiaries has any obligation or liability, whether
absolute, accrued, contingent or otherwise, material to the business,
operations, assets or financial condition of ESB and the ESB Subsidiaries taken
as a whole.
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3.05. ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) There has not been any material adverse change in the business,
operations, assets or financial condition of ESB and the ESB Subsidiaries taken
as a whole since March 31, 2001, other than: (i) any such effect attributable to
or resulting from any change in banking or similar laws, rules or regulations of
general applicability to banks, thrift institutions or their holding companies
or interpretations thereof by courts or governmental authorities; (ii) changes
in generally accepted accounting principles that are generally applicable to the
banking or savings industries; (iii) expenses incurred in connection with the
transactions contemplated hereby; (iv) actions or omissions of a party (or any
of its subsidiaries) taken with the prior informed written consent of the other
party or parties in contemplation of the transactions contemplated hereby; or
(v) changes attributable to or resulting from changes in general economic
conditions, including changes in the prevailing level of interest rates. To the
best knowledge of ESB, no fact or condition exists which ESB believes will cause
such a material adverse change in the future.
(b) ESB has not taken or permitted any of the actions set forth in
Section 4.04 hereof between March 31, 2001 and the date hereof.
3.06. LEGAL PROCEEDINGS. None of ESB or any of the ESB Subsidiaries is
a party to any, and there are no pending or, to the best knowledge of ESB,
threatened legal, administrative, arbitration or other proceedings, claims,
actions or governmental investigations of any nature against ESB or any of the
ESB Subsidiaries, except such proceedings, claims, actions or governmental
investigations which in the good faith judgment of ESB will not have a material
adverse effect on the business, operations, assets or financial condition of ESB
and the ESB Subsidiaries taken as a whole. None of ESB or any of the ESB
Subsidiaries is a party to any order, judgment or decree which materially
adversely affects the business, operations, assets or financial condition of ESB
and the ESB Subsidiaries taken as a whole.
3.07. TAXES AND TAX RETURNS.
(a) Each of ESB and the ESB Subsidiaries, or the affiliated,
combined or unitary group (within the meaning of applicable federal income tax
law) of which any such corporation is or was a member, as the case may be
(individually an "Affiliate" and collectively, "Affiliates"), has duly filed
(and until the Effective Time will so file) all returns, declarations, reports,
information returns and statements ("Returns") required to be filed or sent by
or with respect to them in respect of any Taxes, and has duly paid (and until
the Effective Time will so pay) all Taxes due and payable other than Taxes or
other charges which (i) are being contested in good faith (and disclosed in
writing to WSB and (ii) have not finally been determined. ESB and its Affiliates
have established (and until the Effective Time will establish) on their books
and records reserves that are adequate for the payment of all Taxes not yet due
and payable, whether or not disputed, accrued or applicable. Except as set forth
in ESB Disclosure Schedule 3.07(a), (i) the federal income tax returns of ESB
and its Affiliates have been examined by the IRS (or are closed to examination
due to the expiration
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of the applicable statute of limitations), and (ii) the Pennsylvania income tax
returns of ESB and its Affiliates have been examined by applicable authorities
(or are closed to examination due to the expiration of the statute of
limitations), and in the case of both (i) and (ii) no deficiencies were asserted
as a result of such examinations which have not been resolved and paid in full.
There are no audits or other administrative or court proceedings presently
pending nor any other disputes pending, or claims asserted for, Taxes or
assessments upon ESB or any of its Affiliates, nor has ESB or any of its
Affiliates given any currently outstanding waivers or comparable consents
regarding the application of the statute of limitations with respect to any
Taxes or Returns.
(b) Except as set forth in ESB Disclosure Schedule 3.07(b), none of
ESB or any of its Affiliates (i) has requested any extension of time within
which to file any Return which Return has not since been filed, (ii) is a party
to any agreement providing for the allocation or sharing of Taxes, (iii) is
required to include in income any adjustment pursuant to Section 481(a) of the
Code, by reason of a voluntary change in accounting method initiated by ESB or
any Affiliate (nor does ESB have any knowledge that the IRS has proposed any
such adjustment or change of accounting method), or (iv) has filed a consent
pursuant to Section 341(f) of the Code or agreed to have Section 341(f)(2) of
the Code apply.
3.08. EMPLOYEE BENEFIT PLANS.
(a) Each employee benefit plan or arrangement of ESB or any of the
ESB Subsidiaries which is an "employee benefit plan" within the meaning of
Section 3(3) of the ERISA, is listed in ESB Disclosure Schedule 3.08(a) ("ESB
Plans"). ESB has previously furnished or made available to WSB true and complete
copies of each of the ESB Plans together with (i) the most recent actuarial and
financial reports prepared with respect to any qualified ESB Plans, (ii) the
most recent annual reports filed with any government agency, and (iii) all
rulings and determination letters and any open requests for rulings or letters
that pertain to any qualified ESB Plans.
(b) Each ESB Plan has been operated in compliance in all material
respects with the applicable provisions of ERISA, the Code, all regulations,
rulings and announcements promulgated or issued thereunder, and all other
applicable governmental laws and regulations.
(c) Neither ESB nor any of the ESB Subsidiaries participates in or
has incurred any liability under Section 4201 of ERISA for a complete or partial
withdrawal from a multi-employer plan (as such term is defined in ERISA).
(d) The present value of all accrued benefits under each of the ESB
Plans subject to Title IV of ERISA did not, as of the latest valuation date of
each such Plan, exceed the then current value of the assets of such plans
allocable to such accrued benefits, based upon the actuarial and accounting
assumptions currently utilized for such ESB Plans.
(e) Neither ESB nor any of the ESB Subsidiaries, nor, to the best
knowledge of ESB, any trustee, fiduciary or administrator of an ESB Plan or any
trust created thereunder, has engaged in a
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"prohibited transaction," as such term is defined in Section 4975 of the Code,
which could subject ESB or any of the ESB Subsidiaries, or, to the best
knowledge of ESB, any trustee, fiduciary or administrator thereof, to the tax or
penalty on prohibited transactions imposed by said Section 4975.
(f) No ESB Plan or any trust created thereunder has been terminated,
nor have there been any "reportable events" with respect to any ESB Plan, as
that term is defined in Section 4043(b) of ERISA.
(g) No ESB Plan or any trust created thereunder has incurred any
"accumulated funding deficiency," as such term is defined in Section 302 of
ERISA.
(h) Each of the ESB Plans which is intended to be a qualified plan
within the meaning of Section 401(a) of the Code has been determined by the IRS
to be so qualified, and ESB is not aware of any fact or circumstance which would
adversely affect the qualified status of any such Plan.
3.09. SECURITIES DOCUMENTS AND REGULATORY REPORTS.
(a) ESB has previously delivered or made available to WSB a complete
copy of each final registration statement, prospectus, annual, quarterly or
current report and definitive proxy statement or other communication (other than
general advertising materials) filed pursuant to the 1933 Act or the 1934 Act or
mailed by ESB to its stockholders as a class since January 1, 1998, and each
such final registration statement, prospectus, annual, quarterly or current
report and definitive proxy statement or other communication, as of its date,
complied in all material respects with all applicable statutes, rules and
regulations and did not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements made therein, in light of the circumstances under which
they were made, not misleading; provided that information as of a later date
shall be deemed to modify information as of an earlier date.
(b) ESB and each of the ESB Subsidiaries has duly filed with the OTS
and the FDIC in correct form the monthly, quarterly and annual reports required
to be filed under applicable laws and regulations, and ESB has delivered or made
available to WSB accurate and complete copies of such reports. ESB Disclosure
Schedule 3.09(b) lists all examinations of ESB or of the ESB Subsidiaries
conducted by the applicable thrift regulatory authorities since January 1, 1999
and the dates of any responses thereto submitted by ESB. In connection with the
most recent examinations of ESB or the ESB Subsidiaries by the applicable thrift
regulatory authorities, neither ESB nor any ESB Subsidiary was required to
correct or change any action, procedure or proceeding which ESB or such ESB
Subsidiary believes has not been now corrected or changed as required.
3.10. ESB INFORMATION. None of the information relating to ESB and the
ESB Subsidiaries to be contained in (i) the Form S-4 will, at the time the Form
S-4 becomes effective, contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, and
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(ii) the Proxy Statement/Prospectus, as of the date(s) such Proxy
Statement/Prospectus is mailed to stockholders of WSB and up to and including
the date(s) of the meeting of stockholders to which such Proxy
Statement/Prospectus relates, will contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading,
provided that information as of a later date shall be deemed to modify
information as of an earlier date.
3.11. COMPLIANCE WITH APPLICABLE LAW.
(a) ESB and each of the ESB Subsidiaries has all permits, licenses,
certificates of authority, orders and approvals of, and has made all filings,
applications and registrations with, federal, state, local and foreign
governmental or regulatory bodies that are required in order to permit it to
carry on its business as it is presently being conducted and the absence of
which could have a material adverse effect on the business, operations, assets
or financial condition of ESB and the ESB Subsidiaries taken as a whole; all
such permits, licenses, certificates of authority, orders and approvals are in
full force and effect; and to the best knowledge of ESB and the ESB
Subsidiaries, no suspension or cancellation of any of the same is threatened.
(b) Neither ESB nor any of the ESB Subsidiaries is in violation of
its respective Articles of Incorporation or other governing instrument or
Bylaws, or of any applicable federal, state or local law or ordinance or any
order, rule or regulation of any federal, state, local or other governmental
agency or body (including, without limitation, all banking, securities,
municipal securities, safety, health, zoning, anti-discrimination, antitrust,
and wage and hour laws, ordinances, orders, rules and regulations), or in
default with respect to any order, writ, injunction or decree of any court, or
in default under any order, license, regulation or demand of any governmental
agency, any of which violations or defaults could have a material adverse effect
on the business, operations, assets or financial condition of ESB and the ESB
Subsidiaries taken as a whole; and neither ESB nor any of the ESB Subsidiaries
has received any notice or communication from any federal, state or local
governmental authority asserting that ESB or any ESB Subsidiary is in violation
of any of the foregoing which could have a material adverse effect on the
business, operations, assets or financial condition of ESB and the ESB
Subsidiaries taken as a whole. Neither ESB nor any ESB Subsidiary is subject to
any regulatory or supervisory cease and desist order, agreement, written
directive, memorandum of understanding or written commitment (other than those
of general applicability to all savings associations issued by governmental
authorities), and none of them has received any written communication requesting
that they enter into any of the foregoing.
3.12. DEPOSIT INSURANCE AND OTHER REGULATORY MATTERS.
(a) The deposit accounts of ESB Bank are insured by the Savings
Association Insurance Fund administered by the FDIC to the maximum extent
permitted by the FDIA, and ESB Bank has paid all premiums and assessments
required by the FDIA and the regulations thereunder.
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(b) ESB Bank is a member in good standing of the FHLB of Pittsburgh
and owns the requisite amount of stock in the FHLB of Pittsburgh.
(c) ESB Bank is a "qualified thrift lender," as such term is defined
in the HOLA and the regulations thereunder.
(d) ESB Bank has at all times qualified as a "domestic building and
loan association," as such term is defined in Section 7701(a)(19) of the Code,
for purposes of Section 593 of the Code.
3.13. PROPERTIES AND INSURANCE.
(a) All real and personal property owned by ESB or any of the ESB
Subsidiaries or presently used by any of them in their respective business is in
an adequate condition (ordinary wear and tear excepted) and is sufficient to
carry on the business of ESB and the ESB Subsidiaries in the ordinary course of
business consistent with their past practices. ESB and the ESB Subsidiaries have
good and, as to owned real property, marketable title to all material assets and
properties, whether real or personal, tangible or intangible, reflected in ESB's
consolidated statement of financial condition as of March 31, 2001, or owned and
acquired subsequent thereto (except to the extent that such assets and
properties have been disposed of for fair value in the ordinary course of
business since March 31, 2001), subject to no encumbrances, liens, mortgages,
security interests or pledges, except (i) those items that secure liabilities
that are reflected in said consolidated statement of financial condition or the
notes thereto or have been incurred in the ordinary course of business after the
date of such consolidated statement of financial condition, (ii) statutory liens
for amounts not yet delinquent or which are being contested in good faith, (iii)
such encumbrances, liens, mortgages, security interests, pledges and title
imperfections that are not in the aggregate material to the business,
operations, assets or financial condition of ESB and the ESB Subsidiaries taken
as a whole, and (iv) with respect to owned real property, title imperfections
noted in title reports prior to the date hereof. ESB and the ESB Subsidiaries as
lessees have the right under valid and subsisting leases to occupy, use, possess
and control all property leased by them in all material respects as presently
occupied, used, possessed and controlled by ESB and the ESB Subsidiaries and the
consummation of the transactions contemplated hereby and by the Agreement of
Merger will not affect any such right.
(b) The business operations and all insurable properties and assets
of ESB and the ESB Subsidiaries are insured for their benefit against all risks
which, in the reasonable judgment of the management of ESB, should be insured
against, in each case under valid, binding and enforceable policies or bonds
issued by insurers of recognized responsibility, in such amounts with such
deductibles and against such risks and losses as are in the opinion of the
management of ESB adequate for the business engaged in by ESB and the ESB
Subsidiaries. As of the date hereof, neither ESB nor either of the ESB
Subsidiaries has received any notice of cancellation or notice of a material
amendment of any such insurance policy or bond or is in default under such
policy or bond, no coverage thereunder is being disputed and all material claims
thereunder have been filed in a timely fashion.
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3.14. ENVIRONMENTAL MATTERS.
(a) To the best knowledge of ESB and the ESB Subsidiaries, neither
ESB nor any of the ESB Subsidiaries has been or is in violation of or liable
under any Environmental Law, except any such violations or liabilities which
would not singly or in the aggregate have a material adverse effect on the
business, operations, assets or financial condition of ESB and ESB Subsidiaries
taken as a whole.
(b) To the best knowledge of ESB and the ESB Subsidiaries, none of
the Loan Portfolio Properties and Other Properties Owned by ESB or any of the
ESB Subsidiaries has been or is in violation of or liable under any
Environmental Law, except any such violations or liabilities which singly or in
the aggregate would not have a material adverse effect on the business,
operations, assets or financial condition of ESB and the ESB Subsidiaries taken
as a whole.
(c) To the best knowledge of ESB and the ESB Subsidiaries, there are
no actions, suits, demands, notices, claims, investigations or proceedings
pending or threatened relating to the liability of the Loan Portfolio Properties
and Other Properties Owned by ESB or any of the ESB Subsidiaries under any
Environmental Law, including without limitation any notices, demand letters or
requests for information from any federal or state environmental agency relating
to any such liabilities under or violations of Environmental Law, except such
which would not have or result in a material adverse effect on the business,
operations, assets or financial condition of ESB and the ESB Subsidiaries taken
as a whole.
3.15. ALLOWANCE FOR LOAN LOSSES AND REAL ESTATE OWNED. The allowance
for loan losses reflected on ESB's consolidated statements of financial
condition included in the consolidated financial statements referred to in
Section 3.04 hereof is, or will be in the case of subsequently delivered
financial statements, as the case may be, in the opinion of ESB's management
adequate in all material respects as of their respective dates under the
requirements of generally accepted accounting principles to provide for
reasonably anticipated losses on outstanding loans net of recoveries. The real
estate owned reflected on the consolidated statements of financial condition
included in the consolidated financial statements referred to in Section 3.04
hereof is, or will be in the case of subsequently delivered financial
statements, as the case may be, carried at the lower of cost or fair value, or
the lower of cost or net realizable value, as required by generally accepted
accounting principles.
3.16. MINUTE BOOKS. Since January 1, 1999, the minute books, including
any attachments thereto, of ESB and the ESB Subsidiaries contain complete and
accurate records of all meetings and other corporate action held or taken by
their respective Boards of Directors (including committees of their respective
Boards of Directors) and stockholders.
3.17. BROKER FEES. Except as set forth in ESB Disclosure Schedule
3.17, neither ESB nor any of its directors or officers has employed any
consultant, broker or finder or incurred any liability
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for any consultant's, broker's or finder's fees or commissions in connection
with any of the transactions contemplated by this Agreement.
3.18. DISCLOSURES. No representation or warranty contained in Article
III of this Agreement, and no statement contained in the ESB Disclosure
Schedules, contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements herein or therein not
misleading.
ARTICLE IV
COVENANTS OF THE PARTIES
4.01. CONDUCT OF THE BUSINESS OF WSB. During the period from the date
hereof to the Effective Time, WSB shall, and shall cause Workingmens Bank to,
conduct its businesses and engage in transactions permitted hereunder or only in
the ordinary course and consistent with past practice, except with the prior
written consent of ESB, which consent shall not be unreasonably withheld. WSB
shall use its best efforts to (i) preserve its business organization and that of
Workingmens Bank intact, (ii) keep available to itself and ESB the present
services of the employees of WSB and Workingmens Bank, and (iii) preserve for
itself and ESB the goodwill of the customers of itself and Workingmens Bank and
others with whom business relationships exist.
4.02. NEGATIVE COVENANTS OF WSB. WSB agrees that from the date hereof
to the Effective Time, except as otherwise approved by ESB in writing or as
permitted or required by this Agreement, WSB will not, nor will WSB permit
Workingmens Bank to:
(i) change any provision of the Articles of Incorporation or other
governing instrument or Bylaws of WSB or Workingmens Bank;
(ii) except for the issuance of WSB Common Stock pursuant to the
present terms of stock options which are outstanding as of the date hereof (and
identified on WSB Disclosure Schedule 4.02) and compliance with the terms of the
Option Agreement of even date herewith, change the number of shares of its
authorized or issued capital stock or issue or grant any option, warrant, call,
commitment, subscription, award, right to purchase or agreement of any character
relating to the authorized or issued capital stock of WSB or Workingmens Bank,
or any securities convertible into shares of such capital stock, or split,
combine or reclassify any shares of its capital stock, or redeem or otherwise
acquire any shares of such capital stock;
(iii) declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
the capital stock of WSB or Workingmens Bank;
(iv) grant any severance or termination pay (other than pursuant to
binding contracts of WSB in effect on the date hereof and disclosed to ESB on
WSB Disclosure Schedule 2.13(a)), to, or enter into or amend any employment,
consulting or compensation agreement with, any of its
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directors, officers or employees; or award any increase in compensation or
benefits to its directors, officers or employees, except, in the case of
employees, such as may be granted in the ordinary course of business and
consistent with past practices and policies not to exceed 4% of the current
salary of each respective employee;
(v) enter into or modify any pension, retirement, stock option,
stock purchase, stock grant, stock appreciation right, savings, profit sharing,
deferred compensation, 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 the employee stock ownership plan of WSB
("WSB ESOP") or any other defined contribution plan or any defined benefit
pension or retirement plan other than in the ordinary course of business
consistent with past practice, except that nothing herein shall prohibit
payments under the WSB bonus pool to employees of WSB and Workingmens Bank for
amounts currently accrued up to $12,500;
(vi) sell or dispose of any significant assets or incur any
significant liabilities other than in the ordinary course of business consistent
with past practices and policies, or acquire in any manner whatsoever (other
than to realize upon collateral for a defaulted loan) any business or entity;
(vii) make any capital expenditures in excess of $25,000 in the
aggregate, other than pursuant to binding commitments existing on the date
hereof, other than expenditures necessary to maintain existing assets in good
repair and other than as set forth in WSB Disclosure Schedule 4.02(vii);
(viii) file any applications or make any contract with respect to
branching or site location or relocation;
(ix) make any material change in its accounting methods or practices,
other than changes required by generally accepted accounting principles, or
change any of its methods of reporting income and deductions for federal income
tax purposes, except as required by changes in laws or regulations;
(x) change its lending, investment, deposit or asset and liability
management or other banking policies in any material respect except as may be
required by applicable law;
(xi) engage in any transaction with an "affiliated person" or
"affiliate," in each case as defined in Section 2.18(a) hereof;
(xii) enter into any futures contract, option or other agreement or
take any other action for purposes of hedging the exposure of its
interest-earning assets and interest-bearing liabilities to changes in market
rates of interest;
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(xiii) take any action that would result in any of its representations
and warranties contained in Article II of this Agreement not being true and
correct in any material respect at the Effective Time; or
(xiv) agree to do any of the foregoing.
4.03. NO SOLICITATION. Neither WSB nor Workingmens Bank shall, nor
shall WSB or Workingmens Bank authorize or permit any of its directors, officers
or employees or any investment banker, financial advisor, attorney, accountant
or other representative of WSB or Workingmens Bank to, directly or indirectly,
encourage or solicit or hold discussions or negotiations with, or provide any
information to, any person, entity or group (other than ESB) concerning any
merger, sale of substantial assets or liabilities not in the ordinary course of
business, sale of shares of capital stock or similar transactions involving WSB
or Workingmens Bank (an "Acquisition Transaction"); provided, however, that WSB
may provide information in connection with an unsolicited possible Acquisition
Transaction if the Board of Directors of WSB, after receiving written advice of
counsel, determines that the failure to do so would constitute a breach of its
fiduciary duties under applicable law. WSB will promptly communicate to ESB the
terms of any proposal which it may receive in respect of any such Acquisition
Transaction and shall provide ESB with copies of (i) the written legal advice
provided to the Board of Directors of WSB, (ii) all such written inquiries or
proposals and (iii) an accurate and complete written synopsis of all such oral
inquiries or proposals.
4.04. NEGATIVE COVENANTS OF ESB. ESB agrees that from the date hereof
to the Effective Time, except as otherwise approved by WSB in writing or as
permitted or required by this Agreement, ESB will not:
(i) take any action which can reasonably be expected to adversely
affect or delay the ability of ESB or WSB to perform its covenants and
agreements on a reasonably timely basis under this Agreement or to consummate
the transactions contemplated under this Agreement;
(ii) declare or pay any special cash distributions in respect of any
of its capital stock in excess of $1.00 per share, provided, however, that ESB
shall be permitted to continue to declare and pay its regular quarterly
dividends; or
(iii) agree to do any of the foregoing.
4.05. CURRENT INFORMATION. During the period from the date hereof to
the Effective Time, each party will cause one or more of its designated
representatives to confer on a monthly or more frequent basis with
representatives of the other party regarding its business, operations,
prospects, assets and financial condition and matters relating to the completion
of the transactions contemplated hereby. As soon as reasonably available, but in
no event more than 45 days after the end of each calendar quarter (other than
the last quarter of the party's fiscal year) ending after the date of this
Agreement, each party will deliver to the other party its quarterly report on
Form 10-Q (or Form 10-QSB) under the 1934 Act, and, as soon as reasonably
available, but in no event more than 90 days
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after the end of each fiscal year, each party will deliver to the other party
its Annual Report on Form 10-K (or Form 10-KSB). Within 25 days after the end of
each month, each party shall provide the other party with a copy of the Thrift
Financial Report filed with the OTS.
4.06. ACCESS TO PROPERTIES AND RECORDS; CONFIDENTIALITY.
(a) WSB shall permit ESB and its representatives reasonable access
to its properties and those of Workingmens Bank, and shall disclose and make
available to ESB all books, papers and records relating to the assets,
properties, operations, obligations and liabilities of WSB and Workingmens Bank,
including, but not limited to, all books of account (including the general
ledger), tax records, minute books of directors' and stockholders' meetings,
organizational documents, bylaws, material contracts and agreements, filings
with any regulatory authority, accountants' work papers, litigation files
(except as necessary to preserve attorney-client privilege), plans affecting
employees, and any other business activities or prospects in which ESB may have
a reasonable interest. Neither WSB nor Workingmens Bank shall be required to
provide access to or to disclose information where such access or disclosure
would violate or prejudice the rights of any customer or would contravene any
law, rule, regulation, order or judgment. WSB will use its best efforts to
obtain waivers of any such restriction and in any event make appropriate
substitute disclosure arrangements under circumstances in which the restrictions
of the preceding sentence apply. WSB and Workingmens Bank shall make their
respective directors, officers, employees and agents and authorized
representatives (including counsel and independent public accountants) available
to confer with ESB and its representatives, provided that such access shall be
reasonably related to the transactions contemplated hereby and not unduly
interfere with normal operations. Similar access shall be provided by ESB to WSB
and its representatives to the extent necessary to enable WSB to satisfy its due
diligence obligations with respect to ESB.
(b) All information furnished previously in connection with the
transactions contemplated by this Agreement or pursuant hereto shall be treated
as the sole property of the party furnishing the information until consummation
of the Merger and, if such Merger shall not occur, the party receiving the
information shall, at the request of the party which furnished such information,
either return to the party which furnished such information or destroy all
documents or other materials containing, reflecting or referring to such
information; shall use its best efforts to keep confidential all such
information; shall use such information only for the purpose of consummating the
transactions contemplated by this Agreement; and shall not directly or
indirectly use such information for any competitive or commercial purposes. The
obligation to keep such information confidential shall continue for three years
from the date the proposed Merger is abandoned but shall not apply to (i) any
information which (A) the party receiving the information can establish by
convincing evidence was already in its possession prior to the disclosure
thereof to it by the party furnishing the information; (B) was then generally
known to the public; (C) became known to the public through no fault of the
party receiving the information; or (D) was disclosed to the party receiving the
information by a third party not bound by an obligation of confidentiality; or
(ii) disclosures pursuant to a legal requirement or in accordance with an order
of a court of competent jurisdiction.
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(c) From the date hereof until the earlier of the Effective Time or
the termination of this Agreement in accordance with the terms hereof, WSB shall
invite two persons (to be designated by ESB) to attend all meetings of the Board
of Directors of WSB and Workingmens Bank.
4.07. REGULATORY MATTERS.
(a) The parties hereto will cooperate with each other and use their
best efforts to prepare all necessary documentation (including without
limitation the Form S-4 and the Proxy Statement/Prospectus), to effect all
necessary filings and to obtain all necessary permits, consents, approvals and
authorizations of all third parties and governmental bodies necessary to
consummate the transactions contemplated by this Agreement as soon as
practicable. The parties shall each have the right to review and approve in
advance all information relating to the other, as the case may be, and any of
their respective subsidiaries, which appears in any filing made with, or written
material submitted to, any third party or governmental body in connection with
the transactions contemplated by this Agreement.
(b) Each of the parties will furnish each other with all information
concerning themselves, their subsidiaries, directors, officers and stockholders
and such other matters as may be necessary or advisable in connection with any
statement or application made by or on behalf of them, or any of their
respective subsidiaries to any governmental body in connection with the Merger
and the other transactions, applications or filings contemplated by this
Agreement.
(c) Each of the parties will promptly furnish each other with copies
of written communications received by them or any of their respective
subsidiaries from, or delivered by any of the foregoing to, any governmental
body in connection with the Merger and the other transactions, applications or
filings contemplated by this Agreement.
4.08. APPROVAL OF STOCKHOLDERS. WSB will (a) take all steps
(including, without limitation, assisting ESB in the preparation of the Form S-4
and Proxy Statement/Prospectus in accordance with all applicable requirements)
necessary to duly call, give notice of, convene and hold a meeting of its
stockholders as soon as reasonably practicable, but in no event later than
September 28, 2001, for the purposes of securing the approval of such
stockholders of this Agreement and the Agreement of Merger, (b) recommend to its
stockholders the approval of this Agreement and the Agreement of Merger and the
transactions contemplated hereby and thereby, and use its best efforts to
obtain, as promptly as practicable, such approval, provided however, that the
Board of Directors of WSB may fail to make such recommendation, or withdraw,
modify or change any such recommendation, if such Board of Directors, after
having consulted with and considered the written advice of outside counsel
experienced in such matters, has determined that the making of such
recommendation or the failure to withdraw, modify or change such recommendation,
would constitute a breach of the fiduciary duties of such directors under
applicable law, and (c) cooperate and consult with ESB with respect to the
foregoing matters.
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4.09. FURTHER ASSURANCES. (a) Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use its best efforts to
take, or cause to be taken, all reasonable action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to satisfy the conditions to closing contained herein and to
consummate and make effective the transactions contemplated by this Agreement
and the Agreement of Merger. In case at any time after the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of each party to this Agreement
shall take all such necessary action. Nothing in this section shall be construed
to require any party to participate in any threatened or actual legal,
administrative or other proceedings (other than proceedings, actions or
investigations to which it is a party or subject or threatened to be made a
party or subject) in connection with consummation of the transactions
contemplated by this Agreement unless such party shall consent in advance and in
writing to such participation and the other party agrees to reimburse and
indemnify such party for and against any and all costs and damages related
thereto.
(b) If requested by ESB in writing, WSB shall cause Workingmens Bank
to terminate its supplemental executive benefit agreements with its directors
and executive officers within 30 days following receipt of such request. Upon
such termination, the aggregate amount of the balances in the participant's
Pre-Retirement Contribution Accounts shall be distributed among the participants
as determined by such participants. The termination of the supplemental
executive benefit agreements shall be done at no additional expense to WSB, the
WSB Subsidiaries, ESB or the ESB Subsidiaries beyond the amounts already accrued
by Workingmens Bank as of the date of this Agreement.
(c) Upon the request of ESB, ESB and WSB shall use their reasonable
best efforts to cause, including the entering into of a merger agreement, their
respective banking subsidiaries, ESB Bank and Workingmens Bank, to merge (the
"Bank Merger") immediately after consummation of the Merger, with ESB Bank being
the surviving bank (the "Surviving Bank") thereof pursuant to the provisions of
applicable law. At the effective time of the Bank Merger, the Charter and Bylaws
of the Surviving Bank shall be the Charter and Bylaws of ESB Bank in effect
immediately prior to the effective time of the Bank Merger. At the effective
time of the Bank Merger, the directors and officers of the Surviving Bank shall
be the directors and officers of ESB Bank immediately prior to the effective
time of the Bank Merger.
4.10. DISCLOSURE SUPPLEMENTS. From time to time prior to the Effective
Time, each party will promptly supplement or amend its respective Disclosure
Schedules delivered pursuant hereto with respect to any matter hereafter arising
which, if existing, occurring or known as of the date hereof, would have been
required to be set forth or described in such Schedules or which is necessary to
correct any information in such Schedules which has been rendered inaccurate
thereby. No supplement or amendment to such Schedules shall have any effect for
the purpose of determining satisfaction of the conditions set forth in Article V
or the compliance by WSB with the covenants set forth in Section 4.01 hereof.
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4.11. PUBLIC ANNOUNCEMENTS. The parties hereto shall approve in
advance the substance of and cooperate with each other in the development and
distribution of all news releases and other public disclosures with respect to
this Agreement or any of the transactions contemplated hereby, except as may be
otherwise required by law or regulation and as to which the parties releasing
such information have used their best efforts to discuss with the other parties
in advance.
4.12. FAILURE TO FULFILL CONDITIONS. In the event that either of the
parties hereto determines that a condition to its respective obligations to
consummate the transactions contemplated hereby cannot be fulfilled on or prior
to January 31, 2002 and that it will not waive that condition, it will promptly
notify the other party. ESB and WSB will promptly inform the other of any facts
applicable to them, or their respective directors or officers, that would be
likely to prevent or materially delay approval of the Merger by any governmental
authority or which would otherwise prevent or materially delay completion of the
Merger.
4.13. CERTAIN POST-MERGER AGREEMENTS.
The parties hereto agree to the following arrangements following the
Effective Time:
(a) Operations of Workingmens Bank. Following the Merger, ESB may,
in its sole discretion, determine to merge or consolidate Workingmens Bank with
ESB Bank.
(b) Advisory Board of Directors. At the Effective Time, the four
non-employee directors of WSB will be appointed to a newly created Workingmens
Bank Advisory Board for ESB Bank and/or ESB for a period of not less than three
years. Each advisory board member shall be compensated for their services in an
amount of not less than an annual retainer of $12,000 to be paid quarterly in
consideration for attendance at quarterly meetings. Xx. Xxxxxxx Xxxxxx (or such
other person selected by ESB Bank and/or ESB) will chair the Advisory Board. The
provisions of this Section 4.13(b) are intended to be for the benefit of, and
shall be enforceable by, members of the Board of Directors of WSB.
(c) Employment Agreements. ESB shall honor all existing employment
agreements of Workingmens Bank, in effect as of the date of this Agreement, each
of which is disclosed on WSB Disclosure Schedule 4.13(c), which schedule
describes and quantifies in reasonable detail the maximum amount of payments and
benefits which could become due and payable to each such person (assuming the
Merger is consummated on or before December 31, 2001) under the agreements or
plans as a result of a termination of employment and/or a change in control of
WSB or Workingmens Bank. The total cash severance and other parachute amounts
(including any parachute amounts associated with the accelerated vesting of
stock options and restricted stock awards) to be paid to the three officers with
employment agreements at the Effective Time shall equal the respective officer's
Section 280G limit under the Code.
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(d) Employee Benefit Plans.
(1) Subject to the provisions of this Section 4.13, all employees of
WSB or Workingmens Bank immediately prior to the Effective Time who are employed
by ESB, ESB Bank or Workingmens Bank (the "Employers") immediately following the
Effective Time ("Transferred Employees") will be covered by the respective
Employer's employee benefit plans on substantially the same basis as any
employee of the Employers in a comparable position. Notwithstanding the
foregoing, ESB may determine to continue any of the WSB benefit plans for
Transferred Employees in lieu of offering participation in the Employers'
benefit plans providing similar benefits (e.g., medical and hospitalization
benefits), to terminate any of WSB's benefit plans, or to merge any such benefit
plans with the Employers' benefit plans, provided the result is the provision of
benefits to Transferred Employees that are substantially similar to the benefits
provided to the Employers' employees generally. Except as specifically provided
in this Section 4.13 and as otherwise prohibited by law, Transferred Employees'
service with WSB or Workingmens Bank shall be recognized as service with the
Employers for purposes of eligibility to participate and vesting, if applicable
(but not for purposes of benefit accrual) under the Employers' benefit plans,
subject to applicable break-in-service rules. ESB agrees that any pre-existing
condition, limitation or exclusion in its medical, long-term disability and life
insurance plans shall not apply to Transferred Employees or their covered
dependents who are covered under a medical or hospitalization indemnity plan
maintained by WSB or Workingmens Bank on the Effective Time and who then change
coverage to the Employers' medical or hospitalization indemnity health plan at
the time such Transferred Employees are first given the option to enroll.
Notwithstanding anything herein to the contrary, after the Effective Time, (x)
any amendment to, or grant of additional benefits under, any WSB or Workingmens
Bank benefit plan, including stock based plans, which continues to exist
subsequent to the Effective Time, shall require the prior consent of ESB, and
(y) ESB may cause any of the WSB or Workingmens Bank benefit plans which
continue to exist, including stock based plans, to be amended in order to
provide that employees of ESB or ESB Bank may be participants in such plans.
(2) WSB shall take all necessary action to cause the WSB ESOP to be
terminated as of the Effective Time. The Merger Consideration received by the
WSB ESOP trustee in connection with the Merger with respect to the unallocated
shares of WSB Common Stock shall be first applied by the WSB ESOP trustee to the
full repayment of the WSB ESOP loan. The balance of the Merger Consideration (if
any) received by the WSB ESOP trustee with respect to the unallocated shares of
WSB Common Stock shall be allocated as earnings to the accounts of all
participants in the WSB ESOP who have accounts remaining under the WSB ESOP
(whether or not such participants are then actively employed) and beneficiaries
in proportion to the account balances of such participants and beneficiaries as
of the first day of the WSB ESOP plan year in which the Effective Time occurs,
to the maximum extent permitted under the Code and applicable law. The accounts
of all participants and beneficiaries in the WSB ESOP immediately prior to the
Effective Time shall become fully vested as of the Effective Time. As soon as
practicable after the date hereof, with the assistance of WSB, ESB shall file or
cause to be filed all necessary documents with the IRS for a determination
letter for termination of the WSB ESOP as of the Effective Time. As soon as
practicable after the later of the Effective Time or the receipt of a favorable
determination letter for termination from the
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IRS, the account balances in the WSB ESOP shall be distributed to participants
and beneficiaries or transferred to an eligible individual retirement account as
a participant or beneficiary may direct. Prior to the Effective Time, no
prepayments shall be made on the WSB ESOP loan and contributions to the WSB ESOP
and payments on the WSB ESOP loan shall be made consistent with past practices
on the regularly scheduled payment dates.
(e) Employee Severance. Any person who is currently serving as an
employee of either WSB or Workingmens Bank and continues as such immediately
prior to the Effective Time (other than those employees covered by a written
employment agreement set forth in WSB Disclosure Schedule 4.13(c)) whose
employment is discontinued by ESB or any of the ESB Subsidiaries within six
months after the Effective Time (unless termination of such employment is for
Cause (as defined below)) shall be entitled to a severance payment from ESB Bank
in an amount equal to their current salary of one month for every year of
service at WSB or Workingmens Bank, up to a maximum severance of nine months for
current officers and six months for current non-officer employees, together with
any accrued but unused vacation leave with respect to the 2001 calendar year.
For purposes of this Section 4.13(e), "Cause" shall mean termination because of
the employee's personal dishonesty, incompetence, willful misconduct, breach of
fiduciary duty involving personal profit, intentional failure to perform stated
duties or willful violation of any law, rule or regulation (other than traffic
violations or similar offenses).
(f) Consulting Agreements. Effective as of the Effective Time, ESB
agrees that either it and/or ESB Bank will enter into three-year consulting
agreements with each of Xxxxxx X. Xxxxxxxxx, Xxxxxx X. Xxxxxxxx and Xxxxxxxx X.
Xxxxxxxxx providing for (i) annual consulting fees of $28,000 for Xx. Xxxxxxxxx,
$14,000 for Xx. Xxxxxxxx and $12,000 for Xxx. Xxxxxxxxx, payable in equal
monthly installments, and (ii) medical and dental benefits at no cost to the
aforementioned individuals and their eligible dependents for the term of their
consulting agreements, provided that such person is still employed by WSB or
Workingmens Bank immediately prior to the Effective Time.
(g) Indemnification. ESB shall indemnify and hold harmless each
present and former director, officer and employee of WSB and Workingmens Bank
determined as of the Effective Time (the "Indemnified Parties") against any
costs or expenses (including reasonable attorneys' fees), judgments, fines,
losses, claims, damages or liabilities (collectively, "Costs") incurred in
connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, arising out of matters
existing or occurring at or prior to the Effective Time, whether asserted or
claimed prior to, at or after the Effective Time (collectively, "Claims"), to
the fullest extent to which such Indemnified Parties were entitled under
Pennsylvania law, the Articles of Incorporation and Bylaws of WSB or Workingmens
Bank as in effect on the date hereof.
Any Indemnified Party wishing to claim indemnification under this
Section 4.13(g), upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify ESB, but the failure to so notify shall not
relieve ESB of any liability it may have to such Indemnified Party if such
failure does not materially prejudice ESB. In the event of any such claim,
action, suit, proceeding or investigation (whether arising before or after the
Effective Time), (i) ESB shall have
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the right to assume the defense thereof and ESB shall not be liable to such
Indemnified Parties for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Parties in connection with
the defense thereof, except that if ESB elects not to assume such defense or if
counsel for the Indemnified Parties advises that there are issues which raise
conflicts of interest between ESB and the Indemnified Parties, the Indemnified
Parties may retain counsel which is reasonably satisfactory to ESB, and ESB
shall pay, promptly as statements therefor are received, the reasonable fees and
expenses of such counsel for the Indemnified Parties (which may not exceed one
firm in any jurisdiction unless the use of one counsel for such Indemnified
Parties would present such counsel with a conflict of interest), (ii) the
Indemnified Parties will cooperate in the defense of any such matter, and (iii)
ESB shall not be liable for any settlement effected without its prior written
consent, which consent shall not be withheld unreasonably.
In the event that ESB or any of its respective successors or assigns (i)
consolidates with or merges into any other entity and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers all or substantially all of its properties and assets to any
entity, then, and in each such case, the successors and assigns of such entity
shall assume the obligations set forth in this Section 4.13(g), which
obligations are expressly intended to be for the irrevocable benefit of, and
shall be enforceable by, each of the Indemnified Parties.
(h) Insurance. ESB and ESB Bank shall maintain a directors' and
officers' liability insurance policy covering the Indemnified Parties Costs in
connection with any Claims for a period of six (6) years after the Effective
Time.
ARTICLE V
CLOSING CONDITIONS
5.01. CONDITIONS TO THE PARTIES' OBLIGATIONS UNDER THIS AGREEMENT. The
respective obligations of the parties under this Agreement shall be subject to
the fulfillment at or prior to the Effective Time of the following conditions:
(a) All necessary regulatory or governmental approvals and consents
(including without limitation any required approval of the OTS required to
consummate the transactions contemplated hereby) shall have been obtained
without any non-standard term or condition which would materially impair the
value of WSB and Workingmens Bank to ESB; all conditions required to be
satisfied prior to the Effective Time by the terms of such approvals and
consents shall have been satisfied; and all waiting periods in respect thereof
shall have expired.
(b) All corporate action necessary to authorize the execution and
delivery of this Agreement and consummation of the transactions contemplated
hereby and by the Agreement of Merger shall have been duly and validly taken by
ESB and WSB, including approval by the requisite vote of the stockholders of WSB
of this Agreement and the Agreement of Merger.
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(c) No order, judgment or decree shall be outstanding against a
party hereto or a third party that would have the effect of preventing
completion of the Merger; no suit, action or other proceeding shall be pending
or threatened by any governmental body in which it is sought to restrain or
prohibit the Merger; and no suit, action or other proceeding shall be pending
before any court or governmental agency in which it is sought to restrain or
prohibit the Merger or obtain other substantial monetary or other relief against
one or more of the parties hereto in connection with this Agreement and which
ESB or WSB determines in good faith, based upon the advice of their respective
counsel, makes it inadvisable to proceed with the Merger because any such suit,
action or proceeding has a significant potential to be resolved in such a way as
to deprive the party electing not to proceed of any of the material benefits to
it of the Merger.
(d) The Form S-4 shall have become effective under the 1933 Act, and
ESB shall have received all state securities laws or "blue sky" permits and
other authorizations or there shall be exemptions from registration requirements
necessary to issue the ESB Common Stock in connection with the Merger, and
neither the Form S-4 nor any such permit, authorization or exemption shall be
subject to a stop order or threatened stop order by the Commission or any state
securities authority.
(e) The parties shall have received, in form and substance
reasonably satisfactory to them, an opinion of Elias, Matz, Xxxxxxx & Xxxxxxx
L.L.P. to the effect that, for federal income tax purposes, (i) the Merger will
qualify as a "reorganization" under Section 368(a) of the Code; (ii) no taxable
gain will be recognized by ESB or WSB (y) upon the transfer of WSB's assets to
ESB in exchange for ESB Common Stock, cash and the assumption of WSB's
liabilities or (z) upon the distribution of such ESB Common Stock and cash to
WSB stockholders; (iii) no gain or loss will be recognized by the shareholders
of WSB who receive ESB Common Stock in exchange for their WSB Common Stock in
the Merger; (iv) the tax basis of a holder of ESB Common Stock received in the
Merger in exchange for his or her WSB Common Stock will be the same as the tax
basis of the WSB Common Stock surrendered in exchange therefor; and (v) the
holding period of the shares of ESB Common Stock received in the Merger will
include the holding period of the shares of WSB Common Stock surrendered
therefor, provided that such WSB Common Stock was held as a capital asset by
such shareholder, provided, however, that in the event such counsel believes
that the Merger will not qualify as a reorganization under Section 368(a) of the
Code, ESB shall have the right but not the obligation to increase the aggregate
stock consideration as necessary to cause the transaction to qualify for such
tax treatment.
5.02. CONDITIONS TO THE OBLIGATIONS OF ESB UNDER THIS AGREEMENT. The
obligations of ESB under this Agreement shall be further subject to the
satisfaction, at or prior to the Effective Time, of the following conditions,
any one or more of which may be waived by ESB to the extent permitted by law:
(a) Each of the obligations of WSB required to be performed by it at
or prior to the Closing pursuant to the terms of this Agreement shall have been
duly performed and complied with in all material respects and the
representations and warranties of WSB contained in this Agreement shall have
been true and correct as of the date hereof and as of the Effective Time as
though made at and as of the Effective Time, except (i) as to any representation
or warranty which specifically
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relates to an earlier date or (ii) where the facts which caused the failure of
any representation or warranty to be so true and correct would not, either
individually or in the aggregate, constitute a material adverse change in the
business, operations, assets or financial condition of WSB and the WSB
Subsidiaries taken as a whole, other than: (i) any such effect attributable to
or resulting from any change in banking or similar laws, rules or regulations of
general applicability to banks, savings institutions or their holding companies
or interpretations thereof by courts or governmental authorities; (ii) changes
in generally accepted accounting principles that are generally applicable to the
banking or savings industries; (iii) expenses incurred in connection with the
transactions contemplated hereby; (iv) actions or omissions of a party (or any
of its subsidiaries) taken with the prior informed written consent of the other
party after the date hereof; or (v) changes attributable to or resulting from
changes in general economic conditions, including changes in the prevailing
level of interest rates, and ESB shall have received a certificate to that
effect signed by the President and Chief Executive Officer of WSB.
(b) All permits, consents, waivers, clearances, approvals and
authorizations of all regulatory or governmental authorities or third parties
which are necessary in connection with the consummation of the Merger shall have
been obtained, and none of such permits, consents, waivers, clearances,
approvals and authorizations shall contain any non-standard term or condition
which would materially impair the value of WSB and Workingmens Bank to ESB.
(c) Holders of WSB Common Stock who dissent from the Merger pursuant
to Chapter 15, Subchapter D of the PBCL by meeting the requirements set forth in
the PBCL shall not hold more than 15% of the WSB Common Stock immediately prior
to the Effective Time.
(d) Each stockholder of WSB who is a WSB Affiliate shall have
executed and delivered a commitment and undertaking to the effect that (i) such
stockholder will dispose of the shares of ESB Common Stock received by him in
connection with the Merger only in accordance with the provisions of paragraph
(d) of Rule 145 under the 1933 Act; (ii) such stockholder will not dispose of
any of such shares until ESB has received an opinion of counsel acceptable to it
that such proposed disposition is in compliance with the provisions of paragraph
(d) of Rule 145 under the 1933 Act, which opinion shall be rendered promptly
following counsel's receipt of such stockholder's written notice of its
intention to sell shares of ESB Common Stock; and (iii) the certificates
representing said shares may bear a legend referring to the foregoing
restrictions.
(e) WSB shall have furnished ESB with such certificates of its
officers or others and such other documents to evidence fulfillment of the
conditions set forth in this Section 5.02 as ESB may reasonably request.
5.03. CONDITIONS TO THE OBLIGATIONS OF WSB UNDER THIS AGREEMENT. The
obligations of WSB under this Agreement shall be further subject to the
satisfaction, at or prior to the Effective Time, of the following conditions,
any one or more of which may be waived by WSB to the extent permitted by law:
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(a) Each of the obligations of ESB required to be performed by it at
or prior to the Closing pursuant to the terms of this Agreement shall have been
duly performed and complied with in all material respects and the
representations and warranties of ESB contained in this Agreement shall have
been true and correct as of the date hereof and as of the Effective Time as
though made at and as of the Effective Time, except (i) as to any representation
or warranty which specifically relates to an earlier date or (ii) where the
facts which caused the failure of any representation or warranty to be so true
and correct would not, either individually or in the aggregate, constitute a
material adverse change in the business, operations, assets or financial
condition of ESB and the ESB Subsidiaries taken as a whole, other than: (i) any
such effect attributable to or resulting from any change in banking or similar
laws, rules or regulations of general applicability to banks, savings
institutions or their holding companies or interpretations thereof by courts or
governmental authorities; (ii) changes in generally accepted accounting
principles that are generally applicable to the banking or savings industries;
(iii) expenses incurred in connection with the transactions contemplated hereby;
(iv) actions or omissions of a party (or any of its subsidiaries) taken with the
prior informed written consent of the other party after the date hereof; or (v)
changes attributable to or resulting from changes in general economic
conditions, including changes in the prevailing level of interest rates, and WSB
shall have received a certificate to that effect signed by the President and
Chief Executive Officer of ESB.
(b) ESB shall have furnished WSB with such certificates of its
officers or others and such other documents to evidence fulfillment of the
conditions set forth in this Section 5.03 as WSB may reasonably request.
ARTICLE VI
TERMINATION, AMENDMENT AND WAIVER, ETC.
6.01. TERMINATION. This Agreement may be terminated at any time prior
to the Effective Time, whether before or after approval of this Agreement and
the Agreement of Merger by the stockholders of WSB:
(a) by mutual written consent of the parties hereto;
(b) by ESB or WSB (i) if the Effective Time shall not have occurred
on or prior to January 31, 2002 or (ii) if a vote of the stockholders of WSB is
taken and such stockholders fail to approve this Agreement and the Agreement of
Merger at the meeting of stockholders (or any adjournment thereof) of WSB
contemplated by Section 4.08 hereof; 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 to be performed or observed
by such party at or before the Effective Time;
(c) by ESB or WSB upon written notice to the other 30 or more days
after the date upon which any application for a regulatory or governmental
approval necessary to consummate the
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Merger and the other transactions contemplated hereby shall have been denied or
withdrawn at the request or recommendation of the applicable regulatory agency
or governmental authority, unless within such 30-day period a petition for
rehearing or an amended application is filed or noticed, or 30 or more days
after any petition for rehearing or amended application is denied;
(d) by ESB in writing if WSB has, or by WSB in writing if ESB has,
breached (i) any covenant or undertaking contained herein or in the Agreement of
Merger, or (ii) any representation or warranty contained herein, which breach
would have a material adverse effect on the business, operations, assets or
financial condition of WSB and Workingmens Bank or ESB and the ESB Subsidiaries,
as applicable, taken as a whole, or upon the consummation of the transactions
contemplated hereby, in any case if such breach has not been cured by the
earlier of 30 days after the date on which written notice of such breach is
given to the party committing such breach or the Effective Time; provided that
it is understood and agreed that either party may terminate this Agreement on
the basis of any such material breach of any representation or warranty
contained herein, notwithstanding any qualification therein relating to the
knowledge of the other party; or
(e) by ESB or WSB in writing if any of the applications for prior
approval referred to in Section 4.07 hereof are denied or by ESB in writing if
any of such applications are approved contingent upon the satisfaction of any
non-standard condition or requirement which, in the reasonable opinion of the
Board of Directors of ESB, would materially impair the value of WSB and the WSB
Subsidiaries to ESB, and in each case the time period for appeals and requests
for reconsideration has run.
6.02. EFFECT OF TERMINATION. In the event of termination of this
Agreement by either ESB or WSB as provided above, this Agreement shall forthwith
become void (other than Sections 4.06(b) and 7.01 hereof, which shall remain in
full force and effect) and there shall be no further liability on the part of
the parties or their respective officers or directors except for the liability
of the parties under Sections 4.06(b) and 7.01 hereof and except for liability
for any breach of this Agreement.
6.03. AMENDMENT, EXTENSION AND WAIVER. Subject to applicable law, at
any time prior to the consummation of the Merger, whether before or after
approval thereof by the stockholders of WSB, the parties may (a) amend this
Agreement and the Agreement of Merger, (b) extend the time for the performance
of any of the obligations or other acts of the other parties 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 herein; provided, however, that after any
approval of the Merger by the stockholders of WSB, there may not be, without
further approval of such stockholders, any amendment or waiver of this Agreement
or the Agreement of Merger which modifies either the amount or the form of the
Merger Consideration to be delivered to stockholders of WSB. This Agreement and
the Agreement of Merger may not be amended except by an instrument in writing
signed on behalf of each 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 on behalf of such party, but such waiver or failure
to insist on strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
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ARTICLE VII
MISCELLANEOUS
7.01. EXPENSES.
(a) All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby (including without limitation
legal, accounting, investment banking and printing expenses) shall be borne by
the party incurring such costs and expenses, provided that ESB shall bear all
costs of printing, mailing and filing the Form S-4 and Proxy
Statement/Prospectus and all other registration and filing fees relating to the
Merger.
(b) Notwithstanding any provision in this Agreement to the contrary,
in the event of a willful breach of any representation, warranty, covenant or
agreement contained in this Agreement, the non-breaching party may pursue any
remedy available at law or in equity to enforce its rights and shall be paid by
the breaching party for all damages, costs and expenses, including without
limitation legal, accounting, investment banking and printing expenses, incurred
or suffered by the non-breaching party in connection herewith or in the
enforcement of its rights hereunder.
7.02. SURVIVAL. The respective representations, warranties and
covenants of the parties to this Agreement shall not survive the Effective Time
but shall terminate as of the Effective Time, except for the provisions of
Section 4.13 hereof.
7.03. NOTICES. All notices or other communications hereunder shall be
in writing and shall be deemed given if delivered personally, sent by overnight
express or mailed by prepaid registered or certified mail (return receipt
requested) or by cable, telegram or telex addressed as follows:
(a) If to ESB, to:
ESB Financial Corporation
000 Xxxxxxxx Xxxxxx
Xxxxxxx Xxxx, Xxxxxxxxxxxx 00000
Attn: Xxxxxxxxx X. Xxxxxxxx
Copy to:
Elias, Matz, Xxxxxxx and Xxxxxxx L.L.P.
000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Xxxxxx X. Xxxxxx, Xx., Esq.
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(b) If to WSB, to:
WSB Holding Company
000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxxx
Copy to:
Xxxxxxxxx & Xxxxx
0000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxx Xxx Two
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx
or such other address as shall be furnished in writing by any party, and any
such notice or communication shall be deemed to have been given as of the date
so mailed.
7.04. PARTIES IN INTEREST. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns; provided, however, that neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any party hereto
without the prior written consent of the other party and, except as otherwise
expressly provided herein, that nothing in this Agreement is intended to confer,
expressly or by implication, upon any other person any rights or remedies under
or by reason of this Agreement.
7.05. COMPLETE AGREEMENT. This Agreement and the Agreement of Merger,
including the documents and other writings referred to herein or therein or
delivered pursuant hereto or thereto, contain the entire agreement and
understanding of the parties with respect to their subject matter and shall
supersede all prior agreements and understandings between the parties, both
written and oral, with respect to such subject matter. There are no
restrictions, agreements, promises, representations, warranties, covenants or
undertakings between the parties other than those expressly set forth herein or
therein.
7.06. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
each of which shall be deemed an original.
7.07. GOVERNING LAW. This Agreement shall be governed by the laws of
the Commonwealth of Pennsylvania, without giving effect to the principles of
conflicts of laws thereof.
7.08. HEADINGS. The Article and Section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
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IN WITNESS WHEREOF, ESB and WSB have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
ESB FINANCIAL CORPORATION
Attest:
/s/ Xxxxx X. Xxxxx By: /s/ Xxxxxxxxx Xxxxxxxx
------------------------------ -------------------------------------
Xxxxx X. Xxxxx Xxxxxxxxx X. Xxxxxxxx
Group Senior Vice President President and Chief Executive Officer
of Operations and Secretary
WSB HOLDING COMPANY
Attest:
/s/ Xxxxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------ -------------------------------------
Xxxxxxx X. Xxxxx Xxxxxx X. Xxxxxxxxx
Secretary President and Chief Executive Officer
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EXHIBIT C
AGREEMENT OF MERGER
This Agreement of Merger is dated as of May 16, 2001, by and between ESB
Financial Corporation ("ESB"), a Pennsylvania corporation, and WSB Holding
Company ("WSB"), a Pennsylvania corporation.
W I T N E S S E T H:
WHEREAS, ESB and WSB have entered into an Agreement and Plan of
Reorganization, dated as of the date hereof (the "Reorganization Agreement");
and
WHEREAS, pursuant to the Reorganization Agreement and this Agreement of
Merger, and subject to the terms and conditions set forth therein and herein,
WSB shall be merged with and into ESB, with ESB the surviving corporation of
such merger;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and in the Reorganization Agreement,
the parties hereto do mutually agree as follows:
ARTICLE I
DEFINITIONS
Except as otherwise provided herein, the capitalized terms set forth
below shall have the following meanings:
1.1 "EFFECTIVE TIME" shall mean the date and time at which the
Merger contemplated by this Agreement of Merger becomes effective as provided in
Section 2.2 of this Agreement of Merger.
1.2 "WSB COMMON STOCK" shall mean the common stock, par value $.10
per share, of WSB.
1.3 "MERGER" shall refer to the merger of WSB with and into ESB as
provided in Section 2.1 of this Agreement of Merger.
1.4 "MERGING CORPORATIONS" shall collectively refer to ESB and WSB.
1.5 "ESB COMMON STOCK" shall mean the common stock, par value $.01
per share, of ESB.
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1.6 "STOCKHOLDER MEETING" shall mean the meeting of the stockholders
of WSB held pursuant to Section 4.07 of the Reorganization Agreement.
1.7 "SURVIVING CORPORATION" shall mean ESB as the surviving
corporation of the Merger.
ARTICLE II
TERMS OF THE MERGER
2.1 THE MERGER. Subject to the terms and conditions set forth in the
Reorganization Agreement, at the Effective Time, WSB shall be merged with and
into ESB pursuant to Chapter 19, Subchapter C of the Pennsylvania Business
Corporation Law ("PBCL"). ESB shall be the Surviving Corporation of the Merger
and shall continue to be governed by the laws of the Commonwealth of
Pennsylvania. At the Effective Time, the separate existence and corporate
organization of WSB shall cease, and ESB shall thereupon and thereafter possess
all the rights, privileges, powers and franchises of a public as well as of a
private nature of each of WSB and ESB; and be subject to all the restrictions,
disabilities and duties of each of WSB and ESB; and all and singular, the
rights, privileges, powers and franchises of each of WSB and ESB, and all
property, real, personal and mixed, and all debts due to either WSB or ESB on
whatever account, as well for stock subscriptions and all other things in action
or belonging to each of WSB and ESB shall be vested in the Surviving
Corporation; and all property, rights, privileges, powers and franchises, and
all and every other interest shall be thereafter as effectually the property of
the Surviving Corporation as they were of, respectively, WSB and ESB, and the
title to any real estate vested by deed or otherwise, under the laws of the
Commonwealth of Pennsylvania or elsewhere in either WSB or ESB shall not revert
or be in any way impaired by reason of the Merger, but all rights of creditors
and all liens upon any property of either of WSB or ESB shall be preserved
unimpaired, and all debts, liabilities and duties of WSB and ESB shall
thenceforth attach to the Surviving Corporation and may be enforced against it
to the same extent as if said debts, liabilities and duties had been incurred or
contracted by it.
2.2 EFFECTIVE TIME. The Merger shall become effective on the date
and at the time that Articles of Merger are executed and filed with the
Secretary of State of the Commonwealth of Pennsylvania pursuant to Section 1927
of the PBCL, unless a later date and time is specified as the Effective Time in
such Articles of Merger.
2.3 NAME OF THE SURVIVING CORPORATION. The name of the Surviving
Corporation shall be "ESB Financial Corporation."
2.4 ARTICLES OF INCORPORATION. On and after the Effective Time, the
Articles of Incorporation of ESB shall be the Articles of Incorporation of the
Surviving Corporation until amended in accordance with applicable law.
2.5 BYLAWS. On and after the Effective Time, the Bylaws of ESB shall
be the Bylaws of the Surviving Corporation until amended in accordance with
applicable law.
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ARTICLE III
CONVERSION OF SHARES
3.1 CONVERSION OF WSB COMMON STOCK AND OPTIONS TO PURCHASE WSB
COMMON STOCK.
(a) Subject to Section 3.2 hereof, each share of WSB Common Stock
outstanding immediately prior to the Effective Time, other than (i) shares held
by WSB (including treasury shares) or ESB or any of their respective wholly
owned subsidiaries in other than a fiduciary capacity and (ii) WSB Dissenting
Shares (as hereinafter defined), shall be converted into the number of shares of
ESB Common Stock equal to the Exchange Ratio (as defined in the Reorganization
Agreement) or $17.10 in cash in accordance with the terms of Section 1.03 of the
Reorganization Agreement.
(b) Notwithstanding any other provision hereof, no fractional shares
of ESB Common Stock shall be issued to holders of WSB Common Stock. In lieu
thereof, each holder of shares of WSB Common Stock entitled to a fraction of a
share of ESB Common Stock shall, at the time of surrender of the certificate or
certificates representing such holder's shares, receive an amount of cash in
accordance with the terms of Section 1.05 of the Reorganization Agreement. No
such holder shall be entitled to dividends, voting rights or any other rights in
respect of any fractional share.
(c) At the Effective Time, each option to purchase WSB Common Stock
issued pursuant to WSB's 1998 Stock Option Plan shall be cancelled, and each
holder of any such option, whether or not then vested or exercisable, shall be
entitled to receive from ESB a cash amount determined in accordance with Section
1.06 of the Reorganization Agreement. The payment of the consideration referred
to in this Section 3.1(c) to holders of options to purchase WSB Common Stock
shall be subject to the execution by any such holder of such instruments of
cancellation as ESB may reasonably deem appropriate.
3.2 EXCHANGE OF CERTIFICATES FOR STOCK AND/OR CASH.
After the Effective Time, each holder of a certificate for theretofore
outstanding shares of WSB Common Stock, shall be surrendered and exchanged for
cash or stock consideration in the manner provided in Section 1.04 of the
Reorganization Agreement.
3.3 DISSENTING SHARES. Notwithstanding anything in this Agreement of
Merger to the contrary, shares of WSB Common Stock which are outstanding
immediately prior to the Effective Time and which are held by stockholders
(other than ESB or any wholly-owned subsidiary thereof) who shall not have voted
such shares in favor of the Agreement and this Agreement of Merger and who shall
have satisfied all of the applicable requirements of Chapter 15, Subchapter D of
the PBCL ("WSB Dissenting Shares"), shall not be converted into the right to
receive, or be exchangeable for, shares of ESB Common Stock or cash as set forth
in Section 3.1 hereof, but the holders thereof shall be entitled to payment of
the fair value of such shares in accordance with said section of the PBCL,
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subject to the procedures and the conditions specified in such provision of the
PBCL, unless and until such holders shall have failed to perfect or shall have
effectively withdrawn or lost their right to appraisal and payment under such
law. If any such holder shall have failed to perfect or shall have effectively
withdrawn or lost such right of appraisal, the shares of WSB Common Stock held
by such holder shall thereupon be deemed to have been converted into the right
to receive, or be exchangeable at the Effective Time for, cash as provided in
1.08 of the Reorganization Agreement. ESB hereby agrees to make, or cause to be
made, payment in cash for any Dissenting Shares.
3.4 ESB COMMON STOCK. Each share of ESB Common Stock issued and
outstanding immediately prior to the Effective Time shall, on and after the
Effective Time, continue to be issued and outstanding as an identical share of
ESB Common Stock.
ARTICLE IV
MISCELLANEOUS
4.1 CONDITIONS PRECEDENT. The respective obligations of each party
under this Agreement of Merger shall be subject to the satisfaction, or waiver
by the party permitted to do so, of the conditions set forth in Article V of the
Reorganization Agreement.
4.2 TERMINATION. This Agreement of Merger shall be terminated
automatically without further act or deed of either of the parties hereto in the
event of the termination of the Reorganization Agreement in accordance with
Section 6.01 thereof.
4.3 AMENDMENTS. To the extent permitted by the PBCL, this Agreement
of Merger may be amended by a subsequent writing signed by each of the parties
hereto upon the approval of the Board of Directors of each of the parties
hereto; provided, however, that the provisions of Article III of this Agreement
of Merger relating to the consideration to be paid for the shares of WSB Common
Stock shall not be amended after the meeting of stockholders of WSB so as to
modify either the amount or the form of such consideration or to otherwise
materially adversely affect the shareholders of WSB without the approval of the
stockholders of WSB.
4.4 SUCCESSORS. This Agreement of Merger shall be binding on the
successors of ESB and WSB.
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IN WITNESS WHEREOF, ESB and WSB have caused this Agreement of Merger to
be executed by their duly authorized officers as of the day and year first above
written.
ESB FINANCIAL CORPORATION
Attest:
/s/ Xxxxx X. Xxxxx By: /s/ Xxxxxxxxx X. Xxxxxxxx
-------------------------------- -------------------------------------
Xxxxx X. Xxxxx Xxxxxxxxx X. Xxxxxxxx
Group Senior Vice President President and Chief Executive Officer
of Operations and Secretary
WSB HOLDING COMPANY
Attest:
/s/ Xxxxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxxxxxx
-------------------------------- -------------------------------------
Xxxxxxx X. Xxxxx Xxxxxx X. Xxxxxxxxx
Secretary President and Chief Executive Officer
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