AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of September 1, 2004
("Agreement"), among Parkvale Financial Corporation ("Parkvale"), a Pennsylvania
corporation, Parkvale Savings Bank (the "Bank"), a Pennsylvania chartered
savings bank and a wholly-owned subsidiary of Parkvale, Advance Financial
Bancorp ("Advance"), a Delaware corporation, and Advance Financial Savings Bank
("Advance Savings"), a federally-chartered savings bank and wholly-owned
subsidiary of Advance.
WITNESSETH:
WHEREAS, the Boards of Directors of Parkvale, the Bank, Advance and
Advance Savings have determined that it is in the best interests of their
respective companies and their stockholders to consummate the business
combination transactions provided for 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 the willingness of Parkvale
to enter into this Agreement, the directors and executive officers of Advance
(the "Advance Stockholders") are concurrently entering into a Stockholder
Agreement with Parkvale (the "Stockholder Agreement"), in substantially the form
attached hereto as Exhibit A, pursuant to which, among other things, such
directors agree to vote their shares of Advance Common Stock (as defined below)
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 subject to and in accordance with an Agreement of Merger, a copy of which is
attached hereto as Exhibit B (the "Agreement of Merger"), between Advance and
Advance Acquisition Corp. ("Interim"), a Delaware corporation to be formed as a
wholly-owned subsidiary of Parkvale in connection with the transactions
contemplated hereby, at the Effective Time (as defined in Section 1.05 hereof),
Interim shall be merged with and into Advance in accordance with Section 251 of
the Delaware General Corporation Law ("DGCL") (the "Merger"), with Advance as
the surviving corporation (hereinafter sometimes called the "Surviving
Corporation"). Simultaneously with or immediately following consummation of the
Merger, the parties hereto will cause Advance Savings to be merged with and into
the Bank, with the Bank as the resulting institution (the "Bank Merger").
Simultaneously with
or as soon as practicable after the Bank Merger, the Surviving Corporation shall
be merged with and liquidated into Parkvale (the "Liquidation") in accordance
with an Agreement and Plan of Liquidation, the form of which is attached hereto
as Exhibit C.
1.02 Effect of the Merger. As of the Effective Time (as defined in
Section 1.05 hereof), the Surviving Corporation shall be considered the same
business and corporate entity as each of Advance and Interim and thereupon and
thereafter, all the property, rights, powers and franchises of each of Advance
and Interim shall vest in the Surviving Corporation and the Surviving
Corporation shall be subject to and be deemed to have assumed all of the debts,
liabilities, obligations and duties of each of Advance and Interim and shall
have succeeded to all of each of their relationships, fiduciary or otherwise, as
fully and to the same extent as if such property rights, privileges, powers,
franchises, debts, obligations, duties and relationships had been originally
acquired, incurred or entered into by the Surviving Corporation. In addition,
any reference to either of Advance or Interim in any contract or document,
whether executed or taking effect before or after the Effective Time, shall be
considered a reference to the Surviving Corporation if not inconsistent with the
other provisions of the contract or document; and any pending action or other
judicial proceeding to which either of Advance or Interim is a party, shall not
be deemed to have abated or to have discontinued by reason of the Merger, but
may be prosecuted to final judgment, order or decree in the same manner as if
the Merger had not been made; or the Surviving Corporation may be substituted as
a party to such action or proceeding, and any judgment, order or decree may be
rendered for or against it that might have been rendered for or against either
of Advance or Interim if the Merger had not occurred. At the Effective Time, the
directors and officers of the Surviving Corporation shall be the persons
designated in Section 1.04.
1.03 Certificate of Incorporation and Bylaws. As of the Effective Time,
the Certificate of Incorporation and Bylaws of Advance shall be the Certificate
of Incorporation and Bylaws of the Surviving Corporation until otherwise amended
as provided by law.
1.04 Directors and Officers. As of the Effective Time, the directors
and officers of Interim shall become the directors and officers of the Surviving
Corporation. The directors of Advance and/or Advance Savings shall resign as of
the Effective Time.
1.05 Effective Time. The Merger shall become effective upon the
occurrence of the filing of a Certificate of Merger with the Secretary of State
of the State of Delaware pursuant to Section 251 of the DGCL, unless a later
date and time is specified as the effective time in such Certificate 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 and other instruments and documents to be
delivered at the Closing), at the offices of Parkvale or at such other place, at
such other time, or on such other date as the parties may mutually
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agree upon. At the Closing, there shall be delivered to Parkvale, the Bank,
Advance and Advance Savings the certificates and other documents required to be
delivered under Article V hereof.
1.06 Modification of Structure. Notwithstanding any provision of this
Agreement to the contrary, Parkvale, with the prior written consent of Advance,
which consent shall not be unreasonably withheld, may elect, subject to the
filing of all necessary applications and the receipt of all required regulatory
approvals, to modify the structure of the transactions contemplated hereby so
long as (i) there are no adverse federal income tax consequences to the
stockholders of Advance as a result of such modification, (ii) the Merger
Consideration (as defined below) to be paid to holders of Advance Common Stock
(as defined below) under this Agreement is not thereby changed in kind or
reduced in amount solely because of such modification and (iii) such
modification will not be likely to materially delay or jeopardize receipt of any
required regulatory approvals or impair or prevent the satisfaction of any
conditions to the Closing.
1.07 Conversion of Advance Common Stock and Options. As of the
Effective Time, each share of common stock, par value $0.0667 per share, of
Advance (the "Advance Common Stock," which shall include the rights issued by
Advance pursuant to the Rights Agreement dated July 17, 1997, as amended,
between Advance and American Securities Transfer & Trust, Incorporated, as
Rights Agent, relating to Advance's Junior Participating Preferred Stock, Series
A, par value $.10 per share (the "Advance Rights Agreement")), issued and
outstanding immediately prior to the Effective Time (other than shares (i) as to
which dissenters' rights have been asserted and duly perfected in accordance
with the DGCL ("Dissenting Shares"), (ii) under the Advance Restricted Stock
Plan ("RSP") which have not been allocated, and (iii) held by Advance (including
treasury shares) or Parkvale or the Bank other than in a fiduciary capacity,
which shares shall be cancelled) shall, by virtue of the Merger and without any
action on the part of the holder thereof, be cancelled and by operation of law
be converted into and represent the right to receive from Parkvale, $26.00 in
cash (the "Merger Consideration") in accordance with Section 1.08 hereof. At or
immediately prior to the Effective Time, each outstanding option to purchase
Advance Common Stock issued by Advance and as described on Advance Disclosure
Schedule 2.02 ("Advance Option"), shall be cancelled, and each holder of any
such Advance Option, whether or not then vested or exercisable, shall be
entitled to receive from Advance immediately prior to the Effective Time for
each Advance Option an amount determined by multiplying (i) the excess of the
Merger Consideration over the applicable exercise price per share of such
Advance Option by (ii) the number of shares of Advance Common Stock subject to
such Advance Option ("Option Consideration"). The payment of the Option
Consideration referred to in the immediately preceding sentence to holders of
Advance Options shall be subject to the execution by any such holder of such
instruments of cancellation as Advance and Parkvale may reasonably deem
appropriate. Advance may make necessary tax withholdings from the Option
Consideration as it deems appropriate. The aggregate consideration to be paid
for the conversion of all outstanding shares of Advance Common Stock is
hereinafter referred to as the "Aggregate Merger Consideration."
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1.08 Exchange Procedures
(a) Immediately prior to the Effective Time, Parkvale shall deposit in
trust with an exchange agent designated by Parkvale and reasonably acceptable to
Advance (the "Exchange Agent") cash in an amount equal to the Aggregate Merger
Consideration. No later than five business days following the Effective Time,
Parkvale shall cause the Exchange Agent to mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented issued and outstanding shares of Advance Common Stock 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
Advance 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 Advance Common Stock in exchange for the consideration
set forth in Section 1.07 hereof deliverable in respect thereof pursuant to this
Agreement. Within five business days following receipt of surrendered
certificates and a properly completed letter of transmittal, the Exchange Agent
shall deliver the Merger Consideration to which such former holder is entitled
to each former Advance stockholder. The Exchange Agent shall accept such
certificates upon compliance with such reasonable terms and conditions as the
Exchange Agent reasonably may impose to effect an orderly exchange thereof in
accordance with normal exchange practices.
(b) Each outstanding certificate which prior to the Effective Time
represented Advance Common Stock (other than Dissenting Shares) 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 the right to receive the Merger
Consideration. After the Effective Time, there shall be no further transfer on
the records of Advance of certificates representing shares of Advance Common
Stock and if such certificates are presented to Advance for transfer, they shall
be cancelled against delivery of the Merger Consideration as hereinabove
provided.
(c) Parkvale shall not be obligated to deliver the Merger Consideration
to which a holder of Advance Common Stock would otherwise be entitled as a
result of the Merger until such holder surrenders the certificate or
certificates representing the shares of Advance Common Stock for exchange as
provided in this Section 1.08, or, in lieu thereof, an appropriate affidavit of
loss and indemnity agreement and/or a bond as may be required in each case by
Parkvale. If payment of the Merger Consideration is to be made in a name other
than that in which the certificate evidencing Advance 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
payment pay to the Exchange Agent in advance, any transfer or other tax required
by reason of the payment 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.
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(d) Any portion of the Aggregate Merger Consideration delivered to the
Exchange Agent by Parkvale pursuant to Section 1.07 that remains unclaimed by
the stockholders of Advance for six months after the Effective Time (as well as
any proceeds from any investment thereof) shall be delivered by the Exchange
Agent to Parkvale. Any stockholders of Advance who have not exchanged their
shares of Advance Common Stock for the Merger Consideration in accordance with
this Agreement shall thereafter look only to Parkvale for the consideration
deliverable in respect of each share of Advance Common Stock such stockholder
holds as determined pursuant to this Agreement without any interest thereon. If
outstanding certificates for shares of Advance Common Stock are not surrendered
or the payment for them is not claimed prior to the date on which payment of the
Merger Consideration 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
Parkvale (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. Parkvale and the Exchange Agent shall be
entitled to rely upon the stock transfer books of Advance to establish the
identity of those persons entitled to receive the Merger 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, Parkvale 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.
1.09 Withholding Rights. Parkvale (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 Advance Common
Stock such amounts as Parkvale 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 withheld in accordance with the Code and other applicable
laws and regulations and shall be treated for all purposes of this Agreement as
having been paid to the holder of Advance Common Stock in respect of which such
deduction and withholding was made by Parkvale.
1.10 Dissenting Shares. Each outstanding share of Advance Common Stock
the holder of which has perfected his right to dissent under the DGCL and has
not effectively withdrawn or lost such rights as of the Effective Time shall not
be converted into or represent a right to receive the Merger Consideration, and
the holder thereof shall be entitled only to such rights as are granted by the
DGCL. Advance shall give Parkvale prompt notice upon receipt by Advance of any
such written demands for payment of their fair value of such shares of Advance
Common Stock and of withdrawals of such demands and any other instruments
provided pursuant to the DGCL (any stockholder duly making such demand being
hereinafter called a "Dissenting Stockholder"). Any payments made in respect of
Dissenting Shares shall be made by Parkvale. If any Dissenting Stockholder shall
effectively withdraw or lose (through failure to perfect or otherwise) his right
to such payment at or prior to the Effective Time, each such holder's shares of
Advance Common
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Stock shall be converted into a right to receive the Merger Consideration in
accordance with the applicable provisions of this Agreement.
1.11 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 Advance
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, Advance 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 Agreement; and the proper officers and
directors of the Surviving Corporation are fully authorized in the name of
Advance or otherwise to take any and all such action.
1.12 Interim Shares. Each outstanding share of common stock of Interim,
$.01 par value per share ("Interim Common Stock"), on the Effective Time shall
be converted automatically and without any action on the part of the holder
thereof into an equal number of shares of the Surviving Corporation, which shall
constitute all of the outstanding common stock of the Surviving Corporation.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF ADVANCE
AND ADVANCE SAVINGS
References to "Advance Disclosure Schedules" shall mean all of the
disclosure schedules required by this Article II and Article IV hereof, dated as
of the date hereof and referenced to the specific sections and subsections of
this Agreement, which have been delivered by Advance to Parkvale. Advance and
Advance Savings hereby represent and warrant to Parkvale and the Bank as follows
as of the date hereof:
2.01 Corporate Organization.
(a) Advance is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. Advance 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 (as defined below).
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Advance is registered as a savings and loan holding company under the Home
Owners' Loan Act ("HOLA"). Advance Disclosure Schedule 2.01(a) sets forth true
and complete copies of the Certificate of Incorporation and Bylaws of Advance as
in effect on the date hereof.
For purposes of this Agreement, the term "Material Adverse Effect",
when applied to a party, shall mean any event, change or occurrence which,
together with any other event, change or occurrence, has a material adverse
impact on (i) the financial position, business, results of operation or
financial performance of such party and their respective subsidiaries, taken as
a whole, or (ii) the ability of such party to perform its obligations under this
Agreement or to consummate the Merger and the other transactions contemplated by
this Agreement in a timely fashion; provided, however, that a "Material Adverse
Effect" shall not be deemed to include the impact of (a) actions or omissions of
a party taken with the prior written consent of the other in contemplation of
the transactions contemplated by this Agreement, (b) changes in banking and
similar laws or regulations of general applicability or interpretations thereof
by courts or governmental authorities, (c) changes in generally accepted
accounting principles or regulatory accounting requirements applicable to banks,
savings associations and bank or thrift holding companies generally, (d) changes
attributable to or resulting from changes in general economic conditions,
including changes in the prevailing level of interest rates, or (e) the Merger
and related expenses associated with the transactions contemplated by this
Agreement.
(b) The only direct or indirect subsidiaries of Advance are Advance
Savings, Advance Financial Service Corporation of West Virginia and Advance
Statutory Trust I (together, the "Advance Subsidiaries"). Advance Disclosure
Schedule 2.01(b)(i) sets forth true and complete copies of the Charter,
Certificate of Incorporation, Bylaws or other governing documents of each of the
Advance Subsidiaries as in effect on the date hereof. Each of the Advance
Subsidiaries (i) is duly organized, validly existing and in good standing under
the laws of its respective jurisdiction of incorporation or formation, (ii) has
the corporate or trust power and authority to own or lease all of its properties
and assets, 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. Advance and Advance Savings have satisfied in all material
respects all commitments, financial or otherwise, as may have been agreed upon
with their state and/or federal regulatory agencies. Other than the Advance
Subsidiaries and except as set forth in Advance Disclosure Schedule 2.01(b)(ii),
Advance 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. In addition, Advance Disclosure Schedule 2.01(b)(ii)
lists the primary activities engaged in by Advance Financial Service
Corporation.
2.02 Capitalization. The authorized capital stock of Advance consists
of 2,000,000 shares of Advance Common Stock, of which 1,398,373 are issued and
outstanding as of the date hereof, and 500,000 shares of preferred stock, of
which no shares are issued and outstanding. The 1,398,373 shares of Advance
Common Stock issued and outstanding as of the date hereof include 2,931
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unallocated shares of Advance Common Stock held in the RSP, and 12,050 shares of
Advance Common Stock held in the RSP which were surrendered in connection with
the satisfaction of tax withholding obligations by plan participants, which
shares shall be cancelled as of the Effective Time. All issued and outstanding
shares of capital stock of Advance, and all issued and outstanding shares of
capital stock of each of the Advance 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 Advance
Subsidiaries are owned directly or indirectly by Advance free and clear of any
liens, encumbrances, charges, restrictions or rights of third parties of any
kind whatsoever, and, except for (i) an aggregate of 155,859 shares of Advance
Common Stock issuable upon exercise of stock options ("Advance Options") granted
pursuant to Advance's 1998 Stock Option Plan (the "Stock Option Plan") and (ii)
shares of Advance's Junior Participating Preferred Stock, Series A, par value
$.10 per share ("Advance Series A Preferred"), none of Advance or any of the
Advance 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 Advance or any
of the Advance 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. Advance Disclosure Schedule 2.02 lists each Advance Option outstanding as
of the date hereof under the Stock Option Plan, as well as the name of the
grantee, the date of grant, the vesting schedule and the respective exercise
price with respect thereto. No shares of Advance Series A Preferred are issued
and outstanding.
2.03 Authority; No Violation; Rights Agreement.
(a) Subject to the approval of this Agreement, the Agreement of Merger
and the transactions contemplated hereby and thereby by the stockholders of
Advance, and the receipt of all required regulatory approvals and expiration of
any related waiting periods, Advance and Advance Savings have full corporate
power and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby in accordance with the terms hereof. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly approved by the
boards of directors of Advance and Advance Savings. Except for the adoption by
Advance's stockholders of this Agreement and the Agreement of Merger, no other
corporate proceedings on the part of Advance or Advance Savings are necessary to
consummate the Merger. This Agreement has been duly and validly executed and
delivered by Advance and Advance Savings and constitutes the valid and binding
obligation of Advance and Advance Savings, enforceable against them in
accordance with and subject to its 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) Subject to the approval this Agreement, the Agreement of Merger and
the transactions contemplated hereby and thereby by the stockholders of Advance,
and the receipt of all required regulatory approvals and expiration of any
related waiting periods, Advance has full corporate power
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and authority to execute and deliver the Agreement of Merger and to consummate
the transactions contemplated thereby in accordance with the terms thereof. The
execution and delivery of the Agreement of Merger by Advance and the
consummation of the transactions contemplated thereby have been duly and validly
approved by the Board of Directors of Advance. The Agreement of Merger, upon its
execution and delivery by Advance, will constitute a valid and binding
obligation of Advance, enforceable against it in accordance with and subject to
its 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.
(c) None of the execution and delivery of this Agreement by Advance and
Advance Savings, the execution and delivery of the Agreement of Merger by
Advance, the consummation by Advance and Advance Savings of the transactions
contemplated hereby in accordance with the terms hereof, the consummation by
Advance of the transactions contemplated by the Agreement of Merger in
accordance with the terms thereof, compliance by Advance and Advance Savings
with any of the terms or provisions hereof or compliance by Advance with any
terms or provisions of the Agreement of Merger, will (i) violate any provision
of the Certificate of Incorporation, Charter, Bylaws or other governing
documents of Advance or any of the Advance Subsidiaries, (ii) assuming that the
consents and approvals set forth below are duly obtained and all required
waiting periods have expired, violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to Advance or
any of the Advance Subsidiaries or any of their respective properties or assets,
or (iii) except as disclosed in Advance Disclosure Schedule 2.03(c), 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 properties or assets of Advance or any of the
Advance 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 Advance or any of the Advance
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. Except as set forth in Advance Disclosure Schedule 2.03(c) and for any
consents and approvals of or filings or registrations with or notices to the
Securities and Exchange Commission (the "SEC"), the Secretary of State of the
Commonwealth of Pennsylvania, the Pennsylvania Department of Banking (the
"Department"), the Office of Thrift Supervision ("OTS"), the Federal Deposit
Insurance Corporation (the "FDIC"), the Commissioner of Banking of West Virginia
and the stockholders of Advance, 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 Advance or Advance Savings in connection with
(a) the execution and delivery of this Agreement by Advance and Advance Savings
or the execution and delivery of the Agreement of Merger by Advance, and (b) the
completion by Advance and Advance Savings of the transactions contemplated
hereby or the completion by Advance of the transactions contemplated by the
Agreement of Merger.
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(d) Effective prior to execution of this Agreement, Advance has taken
all action necessary to amend the Advance Rights Agreement so that execution of
this Agreement and the Agreement of Merger and consummation of the transactions
contemplated herein and therein, including without limitation consummation of
the Merger pursuant to this Agreement, shall not result in the grant of any
rights to any person under the Advance Rights Agreement or enable or require any
of the preferred share purchase rights thereunder to be exercised, distributed
or triggered. Advance Disclosure Schedule 2.03(d) contains a copy of the
amendment to the Advance Rights Agreement.
2.04 Financial Statements.
(a) Advance has previously delivered to Parkvale copies of the
consolidated balance sheet of Advance as of June 30, 2004 and 2003 and the
related consolidated statements of income, changes in stockholders' equity, and
cash flows for the years ended June 30, 2004, 2003 and 2002, in each case
accompanied by the audit report of S.R. Xxxxxxxxx, X.X., independent public
accountants. The consolidated balance sheets of Advance referred to herein, as
well as the financial statements to be delivered pursuant to Section 4.04 hereof
(including the related notes, where applicable), fairly present or will fairly
present, in all material respects, as the case may be, the consolidated
financial condition of Advance 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
income, changes in stockholders' equity and cash flows of Advance for the
respective periods or as of the respective dates set forth therein (it being
understood that Advance's interim financial statements are not audited and are
not prepared with all related notes and are subject to normal year end
adjustments but have been, or will be, prepared in compliance with all
applicable legal and regulatory accounting requirements and reflect all
adjustments which are, in the opinion of Advance, 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 prepared in accordance
with generally accepted accounting principles consistently applied during the
periods involved. The books and records of Advance and each of the Advance
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, and except for liabilities incurred since
June 30, 2004 in the ordinary course of business and consistent with past
practice, neither Advance nor any Advance Subsidiary has any obligation or
liability, whether absolute, accrued, contingent or otherwise, material to the
business, results of operations, assets or financial condition of Advance and
the Advance Subsidiaries taken as a whole.
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2.05 Absence of Certain Changes or Events. (a) Except as set forth in
Advance Disclosure Schedule 2.05, since June 30, 2004, (i) Advance and the
Advance Subsidiaries have conducted their businesses in the ordinary and usual
course and (ii) no event has occurred or circumstances arisen that, individually
or in the aggregate, has had or is reasonably likely to have a Material Adverse
Effect.
(b) Except as set forth in Advance Disclosure Schedule 2.05(b), neither
Advance nor any Advance Subsidiary has taken or permitted any of the actions set
forth in Section 4.02 hereof between June 30, 2004 and the date hereof.
2.06 Legal Proceedings. Except as disclosed in Advance Disclosure
Schedule 2.06, neither Advance nor any Advance Subsidiary is a party to any, and
there are no pending or, to the best knowledge of Advance and Advance Savings,
threatened legal, administrative, arbitration or other proceedings, claims,
actions or governmental investigations of any nature against Advance or any
Advance Subsidiary, except such proceedings, claims, actions or governmental
investigations which in the good faith judgment of Advance and Advance Savings
will not have a Material Adverse Effect. Neither Advance nor any Advance
Subsidiary is a party to any order, judgment or decree which has or could
reasonably be expected to have a Material Adverse Effect.
2.07 Taxes and Tax Returns.
(a) Advance and each of the Advance Subsidiaries has (taking into
account any extension of time within which to file which has not expired) timely
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 Parkvale) and (ii) have not finally
been determined. Advance and each of the Advance Subsidiaries has 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
for periods ending on or prior to the Effective Time, whether or not disputed or
accrued. Except as set forth in Advance Disclosure Schedule 2.07(a), (i) the
federal income tax returns of Advance and each of the Advance Subsidiaries 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) each of the state income tax returns of Advance and each of the Advance
Subsidiaries 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 Advance or
any of the Advance Subsidiaries, nor has Advance or any of the Advance
Subsidiaries given any currently outstanding waivers or comparable consents
regarding the application of the statute of limitations with respect to any
Taxes or Returns.
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(b) Except as set forth in Advance Disclosure Schedule 2.07(b), neither
Advance nor any Advance Subsidiary (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
Advance or any Advance Subsidiary (nor does Advance 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) Advance and each of the Advance Subsidiaries has withheld and paid
all taxes (as hereinafter defined) required to be paid in connection with
amounts paid to any employee, independent contractor, creditor, stockholder or
other third party.
(d) 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
Advance or any Advance Subsidiary.
2.08 Employee Benefit Plans.
(a) Each employee benefit plan or arrangement of Advance or any of the
Advance 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 Advance Disclosure Schedule 2.08(a) ("Advance Plans").
Advance has previously furnished to Parkvale true and complete copies of each of
the Advance Plans together with (i) Schedule B forms and the most recent
actuarial and financial reports prepared with respect to any qualified Advance
Plans, (ii) the most recent annual reports filed with any government agency for
any qualified or non-qualified plan, and (iii) all rulings and determination
letters and any open requests for rulings or letters that pertain to any
qualified Advance Plans.
(b) Each of the Advance Plans 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 Advance nor any of the Advance 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).
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(d) Except as set forth in Advance Disclosure Schedule 2.08(d), the
present value of all accrued liabilities under each of the Advance Plans subject
to Title IV of ERISA did not, as of the latest valuation date of each such
Advance Plan, exceed the fair market value of the assets of such Advance Plan
allocable to such accrued liabilities, based upon the actuarial and accounting
assumptions currently utilized for such Advance Plans (as of the latest
valuation date).
(e) Neither Advance nor any of the Advance Subsidiaries, nor, to the
best knowledge of Advance and Advance Savings, any trustee, fiduciary or
administrator of an Advance 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 Advance or any of the Advance Subsidiaries, or, to the best
knowledge of Advance and Advance Savings, any trustee, fiduciary or
administrator thereof, to the tax or penalty on prohibited transactions imposed
by Section 4975.
(f) No Advance Plan or any trust created thereunder has been
terminated, nor have there been any "reportable events" with respect to any
Advance Plan subject to Title IV of ERISA, as that term is defined in Section
4043(b) of ERISA.
(g) No Advance 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 Advance Plans which is intended to be a qualified plan
under Section 401(a) of the Code received a favorable determination letter
issued by the IRS to the effect that such plan is qualified under Section 401(a)
of the Code and the trust associated with such plan is tax exempt under Section
501 of the Code, and Advance is not aware of any fact or circumstance which
would adversely affect the qualified status of any such plan.
(i) Neither Advance nor any of the Advance Subsidiaries has any
obligations for retiree health and life benefits under any Advance Plans other
than as may be required under Section 4980B of the Code or Part 6 of Title I of
ERISA, or under the continuation of coverage provisions of the laws of any state
or locality. Advance or Advance Savings may amend or terminate any such Advance
Plan at any time without incurring any liability thereunder.
(j) Except as set forth on Advance Disclosure Schedule 2.08(j), none of
the execution of this Agreement, stockholder approval of this Agreement or
consummation of the transactions contemplated hereby will (A) entitle any
employees of Advance or any Advance Subsidiary to severance pay or any increase
in severance pay upon any termination of employment after the date hereof, (B)
accelerate the time of payment or vesting or trigger any payment or funding
(through a grantor trust or otherwise) of compensation or benefits under,
increase the amount payable or trigger any other material obligation pursuant
to, any of the Advance Plans, (C) result in any breach or violation of, or a
default under, any of the Advance Plans or (D) result in any payment that would
be a "parachute payment" to a "disqualified individual" as those terms are
defined in Section 280G of the Code, without regard to whether such payment is
reasonable compensation for personal services performed or to be performed in
the future.
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2.09 Securities Documents and Regulatory Reports.
(a) Advance has previously delivered or made available to Parkvale a
complete copy of, and Advance Disclosure Schedule 2.09(a) lists, 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 amended ("1934 Act"),
or mailed by Advance to its stockholders as a class since January 1, 2001. 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) Since January 1, 2001, Advance and each of the Advance Subsidiaries
has duly filed with the OTS, in materially correct form the monthly, quarterly
and annual reports required to be filed under applicable laws and regulations,
and Advance has delivered or made available to Parkvale accurate and complete
copies of such reports. Advance Disclosure Schedule 2.09 lists all examinations
of Advance or of the Advance Subsidiaries conducted by the applicable regulatory
authorities since January 1, 2001 and the dates of any responses thereto
submitted by Advance or Advance Savings. In connection with the most recent
examinations of Advance or the Advance Subsidiaries by the applicable regulatory
authorities, neither Advance nor any of the Advance Subsidiaries were required
to correct or change any action, procedure or proceeding which Advance or such
Advance Subsidiaries believe has not been now corrected or changed as required.
2.10 Compliance with Applicable Law.
(a) Advance and each of the Advance Subsidiaries has all permits,
licenses, certificates of authority, orders and approvals of, and have made all
filings, applications and registrations with, federal, state, local and foreign
governmental or regulatory bodies that are required in order to permit them to
carry on their respective businesses as they are presently being conducted and
the absence of which could reasonably be expected to have a Material Adverse
Effect; all such permits, licenses, certificates of authority, orders and
approvals are in full force and effect; and to the best knowledge of Advance and
the Advance Subsidiaries, no suspension or cancellation of any of the same is
threatened.
(b) Neither Advance nor any of the Advance Subsidiaries is in violation
of its Certificate of Incorporation, Charter, Bylaws or other governing
documents, 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
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any court, or in default under any order, license, regulation or demand of any
governmental agency, any of which violations or defaults could reasonably be
expected to have a Material Adverse Effect, and neither Advance nor any Advance
Subsidiary has received any notice or communication from any federal, state or
local governmental authority asserting that Advance or any Advance Subsidiary is
in violation of any of the foregoing which violation could reasonably be
expected to have a Material Adverse Effect. Neither Advance nor any Advance
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 commercial banks or savings
associations issued by governmental authorities), and neither of them have
received any written communication requesting that it enter into any of the
foregoing.
2.11 Deposit Insurance and Other Regulatory Matters.
(a) The deposit accounts of Advance Savings are insured by the Savings
Association Insurance Fund administered by the Federal Deposit Insurance
Corporation ("FDIC") to the maximum extent permitted by the Federal Deposit
Insurance Act, as amended ("FDIA"), and Advance Savings has paid all premiums
and assessments required by the FDIA and the regulations thereunder.
(b) Advance Savings 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) As of the date hereof, neither Advance nor Advance Savings is aware
of any reasons relating to Advance or Advance Savings why all consents and
approvals shall not be received from all regulatory agencies having jurisdiction
over the transactions contemplated by this Agreement as shall be necessary for
consummation of the transactions contemplated hereby. Furthermore, Advance
Savings' most recent Community Reinvestment Act rating is not less than
satisfactory.
2.12 Certain Contracts.
(a) Except as disclosed in Advance Disclosure Schedule 2.12(a), neither
Advance nor any Advance Subsidiary is a party to, is bound 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 Advance or any Advance Subsidiary (other
than in the case of deposits, federal funds purchased and securities sold under
agreements to repurchase in the ordinary course of business) or the guarantee by
Advance or any Advance Subsidiary 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 Advance or any of the Advance 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
Advance or any of the Advance Subsidiaries upon execution of this Agreement and
the Agreement of Merger or upon or following consummation of the
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transactions contemplated by this Agreement or the Agreement of Merger (either
alone or in connection with the occurrence of any additional acts or events),
(v) any agreement, arrangement or understanding to which Advance or any of the
Advance Subsidiaries is a party or by which any of the same is bound which
limits the freedom of Advance or any of the Advance Subsidiaries to compete in
any line of business or with any person, other than any such limitations set
forth in laws or regulations of general applicability to thrift holding
companies and their subsidiaries, (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 Advance'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 Advance or any of the
Advance Subsidiaries is a party and which is material to the business, results
of operations, assets or financial condition of Advance and the Advance
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 Advance nor any Advance Subsidiary is in default or in
non-compliance 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, which
default or non-compliance would have a Material Adverse Effect, 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 by Advance or any
Advance Subsidiary.
(c) Neither Advance nor any Advance Subsidiary is a party or has agreed
to enter into an exchange traded or over-the-counter equity, interest rate,
foreign exchange or other swap, forward, future, option, cap, floor or collar or
any other contract that is not included in Advance's audited financial
statements at and for the year ended June 30, 2004 and is a derivatives contract
(including various combinations thereof) (each, a "Derivatives Contract") or
owns securities that are referred to generically as "structured notes," "high
risk mortgage derivatives," "capped floating rate notes" or "capped floating
rate mortgage derivatives."
2.13 Properties and Insurance.
(a) All real and personal property owned by Advance or any of the
Advance Subsidiaries or presently used by them in their respective businesses is
in adequate condition (ordinary wear and tear excepted) and is sufficient to
carry on the business of Advance and the Advance Subsidiaries in the ordinary
course of business consistent with their past practices. Advance and each of the
Advance Subsidiaries has good and, as to owned real property, marketable title
to all material assets and properties, whether real or personal, tangible or
intangible, reflected in Advance's consolidated balance sheet as of June 30,
2004, 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 June 30, 2004), subject to no encumbrances, liens,
mortgages, securities interests or pledges,
16
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, securities interests,
pledges and title imperfections that are not in the aggregate material to the
business, results of operations, assets or financial condition of Advance and
the Advance Subsidiaries taken as a whole, and (iv) with respect to owned real
property, title imperfections noted in title reports prior to the date hereof.
Advance and the Advance 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 Advance and the Advance Subsidiaries and the consummation of the
transactions contemplated hereby and by the Agreement of Merger will not affect
any such right in a way that would have a Material Adverse Effect. Advance
Disclosure Schedule 2.13(a) sets forth an accurate listing of each lease
pursuant to which Advance or any Advance Subsidiary 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
Advance and the Advance Subsidiaries are insured for its benefit against all
risks which, in the reasonable judgment of the management of Advance and Advance
Savings, 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 Advance and Advance Savings adequate for the
business engaged in by Advance and the Advance Subsidiaries. As of the date
hereof, neither Advance nor any Advance Subsidiary 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.
2.14 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.
ss.9601, et seq; the Resource Conservation and Recovery Act, as amended, 42
U.S.C. ss.6901, et seq; the Clean Air Act, as amended, 42 U.S.C. ss.7401, et
seq; the Federal Water Pollution Control Act, as amended, 33 U.S.C. ss.1251, et
seq; the Toxic Substances Control Act, as amended, 15 U.S.C. ss.9601, et seq;
the Emergency Planning and Community Right to Know Act, 42 U.S.C. ss.11001, et
seq; the Safe Drinking Water Act, 42 U.S.C.
17
ss.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" means those properties which serve as
collateral for loans owned by Advance or any of the Advance Subsidiaries.
"Other Properties Owned" means those properties owned, leased or
operated by Advance or any of the Advance Subsidiaries which are not Loan
Portfolio Properties.
(a) To the best knowledge of Advance and the Advance Subsidiaries,
neither Advance nor any Advance Subsidiary 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.
(b) To the best knowledge of Advance and the Advance Subsidiaries, none
of the Loan Portfolio Properties has been or is in violation of, or is the
subject of liability under, any Environmental Law except any such violations or
liabilities which would not, individually or in the aggregate, have a Material
Adverse Effect.
(c) To the best knowledge of Advance and the Advance Subsidiaries, none
of the Other Properties Owned is the subject of liability under or has been or
is in violation of, any Environmental Law.
(d) To the best knowledge of Advance and the Advance 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 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.
(e) Advance Disclosure Schedule 2.14(e) lists (i) any environmental
studies which have been undertaken by, or on behalf of, Advance or any Advance
Subsidiary with respect to the Other Properties Owned and (ii) and
correspondence known to Advance or any Advance Subsidiary with respect to the
Other Properties Owned and issues related to Environmental Laws.
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2.15 Allowance for Loan Losses and Real Estate Owned. The allowance for
loan losses reflected on Advance's consolidated balance sheets included in the
consolidated financial statements referred to in Section 2.04 hereof is, in the
opinion of Advance'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 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.
2.16 Minute Books. Since January 1, 2001, the minute books of Advance
and each Advance Subsidiary 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 Board of Directors) and
stockholders in all material respects.
2.17 Broker Fees. Except for Xxxxx, Xxxxxxxx & Xxxxx, Inc., neither
Advance nor any Advance Subsidiary 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.
2.18 Proxy Statement Information. None of the information relating to
it which is included in the proxy statement distributed by Advance to its
stockholders in order to solicit their approval of this Agreement and the
transactions contemplated hereby ("Proxy Statement"), as of the date such Proxy
Statement is mailed to its stockholders and up to and including the date of the
meeting of its stockholders to which such Proxy Statement 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.
2.19 Transactions with Affiliates. Except as set forth in Advance
Disclosure Schedule 2.19, there are no existing or pending transactions, nor are
there any agreements or understandings, with any directors, officers or
employees of Advance or Advance Savings (collectively, "Affiliates"), relating
to, arising from or affecting Advance and Advance Savings, including, without
limitation, any transactions, arrangements or understandings relating to the
purchase or sale of goods or services, the lending of monies or the sale, lease
or use of any assets of Advance or Advance Savings.
2.20 Required Vote; Fairness Opinion.
(a) This Agreement and the transactions contemplated hereby are
required to be approved on behalf of Advance by the affirmative vote of the
holders of at least a majority of the outstanding shares of Advance Common Stock
at a meeting called for such purpose. No other vote of the stockholders of
Advance is required by law, Advance's Certificate of Incorporation,
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Advance's Bylaws or otherwise to approve this Agreement and the transactions
contemplated hereby.
(b) Advance has received a written opinion of Xxxxx, Xxxxxxxx & Xxxxx,
Inc., dated the date hereof, to the effect that, as of such date, the Merger
Consideration to be paid to the stockholders of Advance pursuant to this
Agreement is fair from a financial point of view to such holders of Advance
Common Stock.
2.21 Disclosures. No representation or warranty contained in Article II
of this Agreement, and no statement contained in the Advance 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 PARKVALE AND THE BANK
References to "Parkvale 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 subsections of Article III of this
Agreement, which have been delivered by Parkvale to Advance. Parkvale and the
Bank hereby represent and warrant to Advance and Advance Savings as follows as
of the date hereof:
3.01 Corporate Organization.
(a) Parkvale is a corporation duly organized, validly existing and in
good standing under the laws of the Commonwealth of Pennsylvania. Parkvale 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
(as defined in Section 2.01). Parkvale is registered as a savings and loan
holding company under the HOLA.
(b) The Bank is duly organized, validly existing and in good standing
under the laws of the Commonwealth of Pennsylvania and is a wholly-owned
subsidiary of Parkvale. The Bank 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 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.
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(c) At the Effective Time, Interim will be duly organized, validly
existing and in good standing as a corporation under the laws of the State of
Delaware. Interim will not engage in any business other than in connection with
the transactions contemplated by this Agreement and the Agreement of Merger and
Interim will have no material obligations or liabilities other than its
obligations hereunder.
3.02 Authority; No Violation.
(a) Parkvale and the Bank have full corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby in accordance with the terms hereof. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly approved by the Board of Directors of Parkvale
and the Bank, and no other corporate proceedings on the part of Parkvale or the
Bank are necessary to consummate the transactions so contemplated. This
Agreement has been duly and validly executed and delivered by Parkvale and the
Bank and constitutes a valid and binding obligation of Parkvale and the Bank,
enforceable against them in accordance with and subject to its 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) Prior to the Effective Time, Interim will have full corporate power
and authority to execute and deliver the Agreement of Merger and to consummate
the transactions contemplated thereby in accordance with the terms thereof.
Prior to the Effective Time, the execution and delivery of the Agreement of
Merger by Interim and the consummation of the transactions contemplated thereby
will have been duly and validly approved by the Board of Directors of Interim
and by Parkvale as the sole stockholder of Interim, and no other corporate
proceedings on the part of Interim are necessary to consummate the transactions
so contemplated. The Agreement of Merger, upon its execution and delivery by
Interim, will constitute a valid and binding obligation of Interim, enforceable
against it in accordance with and subject to its 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.
(c) None of the execution and delivery of this Agreement by Parkvale
and the Bank, the execution and delivery of the Agreement of Merger by Interim,
the consummation by Parkvale and the Bank of the transactions contemplated
hereby in accordance with the terms hereof, the consummation by Interim of the
transactions contemplated by the Agreement of Merger, compliance by Parkvale or
the Bank with any of the terms or provisions hereof or compliance by Interim
with any terms or provisions of the Agreement of Merger, will (i) violate any
provision of the Articles of Incorporation, Charter or Bylaws of Parkvale, the
Bank or Interim, (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 Parkvale, the Bank or
Interim or any of their
21
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 Parkvale, the Bank or Interim 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 Parkvale, the Bank or Interim 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. Except for consents and approvals of or filings or
registrations with or notices to the SEC, the Secretary of State of the State of
Delaware, the OTS, the Department, the FDIC and the Commissioner of Banking of
West Virginia, 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 Parkvale, the Bank and Interim in connection with (a) the execution and
delivery of this Agreement by Parkvale and the Bank or the execution and
delivery of the Agreement of Merger by Interim and (b) the completion by
Parkvale and the Bank of the transactions contemplated hereby or the completion
by Interim of the transactions contemplated by the Agreement of Merger.
(d) As of the date hereof, neither Parkvale nor the Bank is aware of
any reasons relating to Parkvale or the Bank why all consents and approvals
shall not be procured from all regulatory agencies having jurisdiction over the
transactions contemplated by this Agreement as shall be necessary for
consummation of the transactions contemplated hereby. The Bank's most recent
Community Reinvestment Act rating is not less than satisfactory.
3.03 Financial Statements.
(a) Parkvale has previously delivered to Advance copies of the
consolidated statements of financial condition of Parkvale as of June 30, 2004
and 2003, and the related consolidated statements of earnings, comprehensive
income, stockholders' equity and cash flows for the years ended June 30, 2004,
2003 and 2002, accompanied by the audit report of Parente Xxxxxxxx, LLC,
independent certified public accountants, for fiscal 2004 and by the audit
reports of Ernst & Young, independent certified public accountants, for fiscal
2003 and 2002. The consolidated statements of financial condition of Parkvale
referred to herein, as well as the financial statements to be delivered pursuant
to Section 4.04 hereof (including the related notes, where applicable) fairly
present or will fairly present, as the case may be, the consolidated financial
condition of Parkvale as of the respective dates set forth therein, and the
related consolidated statements of earnings, 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 earnings,
stockholders' equity and cash flows of Parkvale for the respective periods or as
of the respective dates set forth therein (it being understood that Parkvale's
interim financial statements are not audited and are not prepared with all
related notes and are subject to normal year end adjustments but reflect all
adjustments which are, in the opinion of Parkvale, necessary for a fair
presentation of such financial statements).
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(b) Each of the financial statements referred to in this Section 3.03
(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
Parkvale and the Bank 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 this
Section 3.03 or the notes thereto or liabilities incurred since June 30, 2004 in
the ordinary course of business and consistent with past practice, neither
Parkvale nor the Bank has any obligation or liability, whether absolute,
accrued, contingent or otherwise, which would have a Material Adverse Effect.
3.04 Absence of Certain Changes or Events. Since June 30, 2004, (i)
Parkvale and the Bank have conducted their businesses in the ordinary and usual
course and (ii) no event has occurred or circumstances arisen that, individually
or in the aggregate, has had or is reasonably likely to have a Material Adverse
Effect on Parkvale.
3.05 Ability to Pay Merger Consideration. Parkvale will have available
to it, immediately prior to the Effective Time, sufficient cash to pay the
Aggregate Merger Consideration to stockholders of Advance as set forth in
Section 1.07.
3.06 Legal Proceedings. Neither Parkvale nor the Bank is a party to
any, and there are no pending or, to the best knowledge of Parkvale and the
Bank, threatened legal, administrative, arbitration or other proceedings,
claims, actions or governmental investigations of any nature against Parkvale or
the Bank, except such proceedings, claims actions or governmental investigations
which in the good faith judgment of Parkvale and the Bank are not reasonably
expected to have a Material Adverse Effect. Neither Parkvale nor the Bank is a
party to any order, judgment or decree which has had or is reasonably expected
to have a Material Adverse Effect.
3.07 Broker Fees. Other than fees payable to Boenning & Scattergood,
Inc., neither Parkvale nor the Bank, nor any of their respective directors or
officers, 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.
3.08 Certain Information. None of the information relating to Parkvale
or the Bank supplied or to be supplied by Parkvale to Advance expressly for
inclusion in the Proxy Statement, as of the date such Proxy Statement is mailed
to shareholders of Advance and up to and including the date of the meeting of
shareholders to which such Proxy Statement 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.
3.09 Deposit Insurance. The deposit accounts of the Bank are insured by
the Savings Association Insurance Fund administered by the FDIC to the maximum
extent permitted by the
23
FDIA, and the Bank has paid all premiums and assessments required by the FDIA
and the regulations thereunder.
3.10 Disclosures. No representation or warranty contained in Article
III of this Agreement, and no statement contained in the Parkvale 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.
3.11 Compliance with Laws.
(a) Parkvale and the Bank have all permits, licenses, certificates of
authority, orders and approvals of, and have made all filings, applications and
registrations with, federal, state, local and foreign governmental or regulatory
bodies that are required in order to permit them to carry on their respective
businesses as they are presently being conducted and the absence of which could
reasonably be expected to have a Material Adverse Effect; all such permits,
licenses, certificates of authority, orders and approvals are in full force and
effect; and to the best knowledge of Parkvale and the Bank, no suspension or
cancellation of any of the same is threatened.
(b) Neither Parkvale nor the Bank is in violation of its Articles of
Incorporation, Charter, Bylaws or other governing documents, 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 reasonably be expected to have a Material Adverse
Effect, and neither Parkvale nor the Bank has received any notice or
communication from any federal, state or local governmental authority asserting
that Parkvale or the Bank is in violation of any of the foregoing which
violation could reasonably be expected to have a Material Adverse Effect.
Neither Parkvale nor the Bank 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 commercial
banks issued by governmental authorities), and neither of them have received any
written communication requesting that it enter into any of the foregoing.
ARTICLE IV
COVENANTS OF THE PARTIES
4.01 Conduct of the Business of Advance and Advance Savings. During the
period from the date hereof to the Effective Time, Advance and each of the
Advance Subsidiaries shall conduct their respective businesses and engage in
transactions permitted hereunder or only in the ordinary course and consistent
with past practice. Advance and each of the Advance Subsidiaries shall use all
reasonable efforts to (i) preserve their business organization intact, (ii) keep
available
24
for themselves, Parkvale and the Bank the present services of the employees of
Advance and the Advance Subsidiaries, and (iii) preserve for themselves,
Parkvale and the Bank the goodwill of their customers and others with whom
business relationships exist.
4.02 Negative Covenants. Advance and Advance Savings agree that from
the date hereof to the Effective Time, except as otherwise approved by Parkvale
in writing (which approval shall not be unreasonably withheld) or as permitted
or required by this Agreement, neither Advance nor any Advance Subsidiary will:
(i) amend or change any provision of its Certificate of Incorporation,
Charter, Bylaws or other governing documents unless such amendment shall be
necessary to complete the Merger, Bank Merger or Liquidation;
(ii) change the number of shares of its authorized or issued capital
stock (except upon the exercise of Advance Options as set forth in Advance
Disclosure Schedule 2.02) 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 Advance, 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 Advance or Advance Savings; provided however, that Advance
shall be permitted to continue to declare and pay its regular quarterly cash
dividends of $0.10 per share for each full calendar quarter prior to the
Effective Time but no dividends shall be declared or paid for any partial
quarterly period;
(iv) grant any severance or termination pay (other than pursuant to
binding contracts, plans, or policies of Advance or Advance Savings in effect on
the date hereof and disclosed to Parkvale on Advance Disclosure Schedule
2.12(a)) to, or enter into or amend any employment, consulting or compensation
agreement with, any of its directors, officers or employees; or award any
increase in compensation or benefits to its directors, officers or employees
except for the payment and accrual of bonus compensation for calendar year 2004
as set forth in Advance Disclosure Schedule 4.02(iv) and 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 4.5% of the current
salary of each respective employee;
(v) enter into or modify (except as may be required by applicable law
or as may be required by Section 4.12 hereof), 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
Advance ("Advance ESOP") or any other
25
defined contribution plan or any defined benefit pension or retirement plan
other than in the ordinary course of business consistent with past practice and
policies;
(vi) purchase or otherwise acquire, or sell or otherwise dispose of,
any assets or incur any liabilities other than in the ordinary course of
business consistent with past practice and policies;
(vii) enter into any new capital commitments or make any capital
expenditures in excess of $25,000 each, and $100,000 in the aggregate, other
than pursuant to binding commitments existing on the date hereof and
expenditures necessary to maintain existing assets in good repair;
(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 changes in applicable laws or regulations or
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 applicable 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 or regulations;
(xi) 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;
(xii) incur any liability for borrowed funds (other than in the case of
deposits, federal funds purchased, securities sold under agreements to
repurchase and FHLB advances in the ordinary course of business) or place upon
or permit any lien or encumbrance upon any of its properties or assets, except
liens of the type permitted in the exceptions to Section 2.13(a).
(xiii) acquire in any manner whatsoever (other than to realize upon
collateral for a defaulted loan) any business or entity;
(xiv) engage in any transaction with an Affiliate;
(xv) discharge or satisfy any material lien or encumbrance or pay any
material obligation or liability (absolute or contingent) other than at
scheduled maturity or in the ordinary course of business;
(xvi) enter or agree to enter into any agreement or arrangement
granting any preferential right to purchase any of its assets or rights or
requiring the consent of any party to the transfer and assignment of any such
assets or rights;
26
(xvii) invest in any investment securities other than United States
government agencies, mortgage-backed securities and insured certificates of
deposit with a maturity of two (2) years or less (7 years or less for
mortgage-backed securities) or federal funds;
(xviii) make or commit to make any commercial real estate loan to any
one person or entity (together with "affiliates of such person or entity) in
excess of $300,000 in the aggregate;
(xix) 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
(xx) agree to do any of the foregoing.
4.03 No Solicitation. Advance and Advance Savings agree that neither
they nor any of their respective officers or directors shall, and that they
shall direct and use their reasonable best efforts to cause each of their
employees, investment bankers, financial advisors, attorneys, accountants and
other agents and representatives not to, directly or indirectly, initiate,
solicit, encourage, facilitate any inquiries or hold discussions or negotiations
with, or provide any information to, any person, entity or group (other than
Parkvale and the Bank) 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 Advance or any Advance Subsidiary (an
"Acquisition Transaction"); provided, however, that Advance may provide
information in connection with an unsolicited possible Acquisition Transaction
if the Board of Directors of Advance, after receiving advice of counsel,
determines in good faith that the failure to do so would or could reasonably be
expected to constitute a breach of its fiduciary duties under applicable law.
Advance and Advance Savings agree that they will immediately cease and cause to
be terminated any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any Acquisition Transaction.
Advance will promptly communicate to Parkvale the terms of any proposal which it
may receive in respect of any such Acquisition Transaction.
4.04 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, as either party
may reasonably request, 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. Within 25
days after the end of each month, each party shall provide the other party with
a statement of financial condition and a statement of earnings, without related
notes, for such month prepared in accordance with past practices as presented to
its Board of Directors. On a monthly basis, Advance and Advance Savings shall
furnish Parkvale with a report, in such detail as reasonably requested by
Parkvale, indicating all loans which have been originated, purchased or sold
during such period as well as all applications for loans which have been
received for processing ("pipeline report") subject to Advance and Advance
Savings maintaining the confidentiality of the parties associated with such
applications.
27
4.05 Access to Properties and Records; Confidentiality.
(a) Advance and each of the Advance Subsidiaries shall permit Parkvale
and its representatives reasonable access, upon advance notice, to their
properties, and shall disclose and make available to Parkvale all books, papers
and records relating to the assets, stock ownership, properties, operations,
obligations and liabilities of Advance and the Advance Subsidiaries, including,
but not limited to, all books of account (including the general ledger), tax
records, minute books of directors' and stockholders' meetings (excluding
minutes related to the transactions contemplated by this Agreement or other
Acquisition Transactions), organizational documents, bylaws, material contracts
and agreements, filings with any regulatory authority, accountants' work papers,
litigation files (except to the extent necessary to preserve attorney-client
privilege), plans affecting employees, and any other business activities or
prospects in which Parkvale may have a reasonable interest. Advance and the
Advance Subsidiaries shall not 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. Advance and each of the Advance Subsidiaries will use their 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. Advance and each of the Advance
Subsidiaries shall make its directors, officers, employees and agents and
authorized representatives (including counsel and independent public
accountants) available to confer with Parkvale and its representatives, provided
that such access shall be reasonably related to the transactions contemplated
hereby and not unduly interfere with normal operations.
(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 effort 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.
(c) No investigation by either of the parties hereto or their
respective representatives shall affect the representations, warranties,
covenants or agreements of the other party set forth herein.
28
4.06 Regulatory Matters.
(a) Each of Advance, Advance Savings, Parkvale and the Bank shall
cooperate with each other and use their best efforts to prepare all necessary
documentation to effect all necessary filings within 30 days from the date of
this Agreement 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 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 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 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.
(d) Each of Advance and Parkvale agrees that if such party shall become
aware prior to the mailing date of the Proxy Statement of any information
furnished by such party that would cause any of the statements in the Proxy
Statement to be false or misleading with respect to any material fact, or to
omit to state any material fact necessary to make the statements therein not
false or misleading, to promptly inform the other parties thereof and to take
the necessary steps to correct the Proxy Statement.
4.07 Approval of Stockholders. Advance will (a) take all steps
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
December 22, 2004, for the purposes of securing the adoption of such
stockholders of this Agreement and the Agreement of Merger, provided that
Advance shall not be required to hold the meeting by such date if the SEC
selects the Proxy Statement for review and delays in obtaining SEC clearance of
the Proxy Statement preclude the Proxy Statement from being mailed in a timely
manner prior to such date, (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 approvals, provided, however, that the Board of Directors of
Advance 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 advice of outside counsel, has determined in good faith that the
making of such recommendation or the failure to withdraw, modify or change such
recommendation, would or could
29
reasonably be expected to constitute a breach of the fiduciary duties of such
directors under applicable law, and (c) cooperate and consult with Parkvale and
the Bank with respect to the foregoing matters. Notwithstanding anything to the
contrary herein, this Agreement and the Agreement of Merger shall be submitted
to the Advance stockholders at a duly called meeting of stockholders for the
purpose of adopting this Agreement and the Agreement of Merger and nothing
herein shall be deemed to relieve Advance of such obligation.
4.08 Further Assurances. 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.
4.09 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 Advance and the Advance Subsidiaries with the covenants set
forth in Section 4.01 hereof.
4.10 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.
4.11 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 December 31, 2004 and that it will not waive that condition, it will promptly
notify the other party. Parkvale and Advance will promptly inform the other of
any facts applicable to them, or their respective directors or officers, that
would be likely to prevent or
30
materially delay approval of the Merger by any governmental authority or which
would otherwise prevent or materially delay completion of the Merger.
4.12 Certain Post-Merger Agreements.
The parties hereto agree to the following arrangements following the
Effective Time:
(a) Transferred Employees. Subject to the provisions of this Section
4.12, all employees immediately prior to the Effective Time who are employed by
Parkvale or the Bank immediately following the Effective Time ("Transferred
Employees") will be covered by the employee benefit plans of Parkvale and/or the
Bank on substantially the same basis as any employee of Parkvale and/or the Bank
in a comparable position. Notwithstanding the foregoing, Parkvale may determine
to continue any of the Advance Plans for Transferred Employees in lieu of
offering participation in the benefit plans of Parkvale and/or the Bank
providing similar benefits (e.g., medical and hospitalization benefits), to
terminate or suspend any of the Advance Plans, or to merge any such Benefits
Plans with the benefit plans of Parkvale and/or the Bank, provided the result is
the provision of benefits to Transferred Employees that are substantially
similar to the benefits provided to the employees of Parkvale and/or the Bank
generally. Except as specifically provided in this Section 4.12 and as otherwise
prohibited by law, Transferred Employees service with Advance or Advance Savings
shall be recognized as service with Parkvale or the Bank for purposes of
eligibility to participate and vesting, if applicable (but not for purposes of
benefit accrual) under the benefit plans of Parkvale and/or the Bank, subject to
applicable break-in-service rules. However, notwithstanding anything to the
contrary herein, Transferred Employees shall not be eligible to participate in
the Parkvale Financial Corporation Employee Stock Ownership Plan until the plan
year commencing in 2005. Notwithstanding anything herein to the contrary, after
the Effective Time, (x) any amendment to, or grant of additional benefits under,
any Advance Plan, including stock based plans (but not including the Advance
ESOP or Advance 401(k) plan), which continues to exist subsequent to the
Effective Time, shall require the prior consent of Parkvale, and (y) Parkvale
may cause any of the Advance Plans which continue to exist, including stock
based plans, to be amended in order to provide that employees of Parkvale or the
Bank may be participants in such plans.
(b) Health Plans. Parkvale will use (i) its best efforts to cause any
pre-existing condition, limitation or exclusion in its medical, long-term
disability and life insurance plans to not apply to Transferred Employees or
their covered dependents who are covered under a medical or hospitalization
indemnity plan maintained by Advance or Advance Savings on the Effective Time
and who then change coverage to Parkvale's or the Bank's medical or
hospitalization indemnity health plan at the time such Transferred Employees are
first given the option to enroll and (ii) honor under such plans any deductibles
and annual out-of-pocket contributions incurred by the Transferred Employees
during the calendar year prior to the Effective Time.
(c) Advance ESOP. Advance shall take all necessary action to cause the
Advance ESOP to be terminated as of the Effective Time. The aggregate Merger
Consideration received by the Advance ESOP trustee in connection with the Merger
with respect to the unallocated shares of
31
Advance Common Stock shall be first applied by the Advance ESOP trustee to the
full repayment of the Advance ESOP loan. The balance of the Merger Consideration
(if any) received by the Advance ESOP trustee with respect to the unallocated
shares of Advance Common Stock shall be allocated as earnings to the accounts of
all participants in the Advance ESOP who have accounts remaining under the
Advance ESOP (whether or not such participants are then actively employed) and
beneficiaries in proportion to the account balances of such participants and
beneficiaries, in accordance with the Advance ESOP's terms and conditions in
effect as of the date of this Agreement, to the maximum extent permitted under
the Code and applicable law, except as set forth in Advance Disclosure Schedule
4.12(c). The accounts of all participants and beneficiaries in the Advance ESOP
immediately prior to the Effective Time shall become fully vested as of the
Effective Time. As soon as practicable after the date hereof, but in no event
later than 60 days after the date of this Agreement, Advance shall file or cause
to be filed all necessary documents with the IRS for a determination letter for
termination of the Advance ESOP as of the Effective Time, with a copy to be
provided to Parkvale and its counsel no later than five days prior to its
filing. As soon as practicable after the later of the Effective Time or the
receipt of a favorable determination letter for termination from the IRS, the
account balances in the Advance 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 Advance ESOP loan and contributions to the
Advance ESOP and payments on the Advance ESOP loan shall be made consistent with
past practices on the regularly scheduled payment dates.
(d) Advance 401(k) Plan. Advance shall take all necessary action to
cause the Advance Financial Savings Bank Employee's Profit Sharing Plan & Trust
("Advance 401(k) Plan") to be terminated prior to the Effective Time
("Termination Date"). The accounts of all participants and beneficiaries in the
Advance 401(k) Plan shall become fully vested as of the Termination Date. As
soon as practicable after the date hereof, but in no event later than 60 days
after the date of this Agreement, Advance shall file or cause to be filed all
necessary documents with the IRS for a determination letter for termination of
the Advance 401(k) Plan as of the Termination Date, with a copy to be provided
to Parkvale and its counsel no later than five days prior to its filling. As
soon as practicable after the later of the Termination Date or the receipt of a
favorable determination letter for termination from the IRS, the account
balances in the Advance 401(k) Plan shall be distributed as a participant or
beneficiary may direct, consistent with applicable laws and regulations.
(e) Existing Employment Agreements. In satisfaction of the obligations
of Advance Savings under its employment agreement with Xx. Xxxxxxxxx,
concurrently with the execution of this Agreement Parkvale, Advance and Advance
Savings shall enter into a Termination and Release Agreement with Xxxxxxx X.
Xxxxxxxxx as set forth in Exhibit D hereto. Parkvale shall honor the other
employment agreements of Advance Savings, in effect as of the date of this
Agreement, each of which is disclosed on Advance Disclosure Schedule 4.12(d),
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, 2004) under each
of the employment agreements as a result of a termination of employment and/or a
32
change in control of Advance or Advance Savings. As of the date hereof, the Bank
shall enter into an Addendum to each such agreement in the form and substance as
set forth at Exhibit F hereto.
(f) Consulting and Noncompetition Agreement. Concurrently with the
execution of this Agreement, Parkvale shall enter into a Consulting and
Noncompetition Agreement with Xxxxxxx X. Xxxxxxxxx as set forth in Exhibit E
hereto.
(g) Employee Severance. Any person who is currently serving as an
employee of either Advance or Advance Savings and continues as such immediately
prior to the Effective Time (other than those employees covered by a written
employment or change in control agreement set forth in Advance Disclosure
Schedule 2.08(j)) whose employment is discontinued by Parkvale or the Bank
(including those employees who are asked to transfer to other positions and/or
locations of Parkvale or the Bank and choose not to do so) within one year after
the Effective Time (unless termination of such employment is for Cause (as
defined below)) shall be entitled to a severance payment from the Bank in an
amount equal to one week's salary for each year of service at Advance or Advance
Savings, with a minimum benefit of one week of salary and a maximum benefit of
ten (10) weeks of salary and the continuation of participation in the group
health insurance plans sponsored by Parkvale or Advance without the payment of
premiums by the former employee or dependents for a period of two months. For
purposes of this Section 4.12(f), "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). Advance and Advance Savings agree to terminate
their Change in Control Severance Pay Plan prior to the Effective Time. With
respect to accrued but unused sick leave and vacation pay as of December 31,
2004, the employees of Advance and Advance Savings will receive the benefit of
such leave in accordance with current Advance policies. In periods subsequent to
December 31, 2004, the employees of Advance and Advance Savings will receive
accruals for unused sick leave and accruals and payouts for vacation pay based
upon the policies of the Bank.
(h) Indemnification. Parkvale shall indemnify and hold harmless each
present and former director, officer and employee of Advance and Advance Savings
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
Delaware law or under the Certificate of Incorporation and Bylaws of Advance or
Advance Savings as in effect on the date hereof, for a period of six years
following the Effective Time; provided, however, that all rights to
indemnification in respect to any claim asserted or made within such period
shall continue until the final disposition of such claim. Indemnified Parties
shall be third-party beneficiaries to this Section 4.12(g).
33
Any Indemnified Party wishing to claim indemnification under this
Section 4.12(g), upon learning of any such claim, action, suit, proceeding or
investigation, shall promptly notify Parkvale, but the failure to so notify
shall not relieve Parkvale of any liability it may have to such Indemnified
Party if such failure does not materially prejudice Parkvale. In the event of
any such claim, action, suit, proceeding or investigation (whether arising
before or after the Effective Time), (i) Parkvale shall have the right to assume
the defense thereof and Parkvale 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 Parkvale elects not to assume such defense or if counsel for the
Indemnified Parties advises that there are issues which raise conflicts of
interest between Parkvale and the Indemnified Parties, the Indemnified Parties
may retain counsel which is reasonably satisfactory to Parkvale, and Parkvale
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)
Parkvale shall not be liable for any settlement effected without its prior
written consent, which consent shall not be withheld unreasonably.
In the event that Parkvale 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 4.12(g), which
obligations are expressly intended to be for the irrevocable benefit of, and
shall be enforceable by, each of the Indemnified Parties.
(i) Insurance. Parkvale and the Bank shall maintain a directors' and
officers' liability insurance policy covering the Indemnified Parties in
connection with any Claims for a period of three (3) years after the Effective
Time, provided that the total premium cost of such coverage shall not exceed
175% of the current premium paid by Advance (the "Insurance Amount"). If the
cost of the coverage exceeds the Insurance Amount, then Parkvale and the Bank
shall use their reasonable best efforts to obtain as much comparable insurance
as is available for the Insurance Amount.
(j) Payout of Options. In accordance with Section 1.07 of the
Agreement, Advance or Advance Savings will pay out, as of the Effective Time,
the amounts necessary to settle the awards under the Advance Stock Option Plan
with the holders of such awards to execute releases in a form satisfactory to
Parkvale.
(k) Advisory Board. Subject to the fiduciary duties of the Board of
Directors of Parkvale, each director of Advance as of the date hereof shall be
requested by Parkvale to serve as members of an Advisory Board for three
consecutive one-year terms following the Effective Time. The members of the
Advisory Board shall meet quarterly and be paid a fee of $275 per meeting
attended. Within 12 months following the Effective Time, the Advisory Board
shall nominate one of its members to become a director of Parkvale. The
Nominating Committee of the Board of Directors
34
of Parkvale shall consider such nomination as well as the qualifications of the
other members of the Advisory Board and shall recommend that one of the members
of the Advisory Board be appointed to the Parkvale Board of Directors on or
shortly after the one-year anniversary of the Effective Time. After considering
the foregoing nomination and recommendation, the Parkvale Board of Directors
shall select and appoint a member of the Advisory Board as a director of
Parkvale. Following such appointment, the newly appointed director shall no
longer serve as a member of the Advisory Board.
(l) Parkvale shall honor the obligations to retired directors of
Advance Savings as set forth in Advance Disclosure Schedule 2.12(a). No other
directors shall become entitled to benefits under the Retirement Policy.
4.13. Certain Policies. Prior to the Effective Time, each of Advance
and Advance Savings shall, consistent with generally accepted accounting
principles, the rules and regulations of the SEC and applicable banking laws and
regulations, modify or change its loan, real estate owned, accrual, reserve,
tax, litigation and real estate valuation policies and practices (including loan
classifications and levels of reserves) so as to be applied on a basis that is
consistent with that of Parkvale and the Bank; provided, however, that no such
modifications or changes need be made prior to the satisfaction of the
conditions set forth in Section 5.02; and further provided that in any event, no
accrual or reserve made by Advance or Advance Savings pursuant to this Section
4.13 shall constitute or be deemed to be a Material Adverse Effect or breach,
violation of or failure to satisfy any representation, warranty, covenant,
agreement, condition or other provision of this Agreement or otherwise be
considered in determining whether any such Material Adverse Effect or breach,
violation or failure to satisfy shall have occurred; and provided, further, that
any such changes shall not result in Advance's filing of materially inconsistent
documents or reports with the Securities and Exchange Commission or any other
governmental authority. The recording of any such adjustments shall not be
deemed to imply any misstatement of previously furnished financial statements or
information and shall not be construed as concurrence of Advance or its
management with any such adjustments.
4.14 Advance Rights Plan. If requested by Parkvale, Advance shall cause
the preferred share purchase rights issued pursuant to the Advance Rights Plan
to be redeemed or terminated and shall cause the Advance Rights Plan to be
terminated, in each case effective at or prior to the Effective Time and without
material cost to Parkvale.
4.15 Amendment to Advance's Bylaws. Prior to the Effective time, the
Board of Directors of Advance shall amend the Bylaws of Advance to delete
Sections 15, 16 and 17 of Article III of the Bylaws.
4.16 Supplemental Indenture. Prior to the Effective Time, Advance shall
take all actions necessary to enter into a supplemental indenture with the
Trustee of the Indenture dated December 19, 2002 for Advance's outstanding
floating rate junior subordinated deferrable interest debentures to evidence the
succession of Parkvale as of the Effective Time. The form of the supplemental
35
indenture shall be reasonably acceptable to Parkvale, and Parkvale agrees to
assume the covenants, agreements and obligations of Advance under such
Indenture.
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, governmental or third party approvals,
waivers, clearances, authorizations and consents (including without limitation
the requisite approval and/or non- objection, if any, of the Department and the
OTS required to consummate the transactions contemplated hereby) shall have been
obtained without any non-standard term or condition which, in the reasonable
opinion of Parkvale, would materially impair the value of Advance and the
Advance Subsidiaries taken as a whole to Parkvale and the Bank; 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 the Agreement of Merger and consummation of the
transactions contemplated hereby and thereby shall have been duly and validly
taken by Parkvale, the Bank, Interim, Advance and Advance Savings, including
approval by the requisite vote of the stockholders of Advance of this Agreement
and the Agreement of Merger.
(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 Parkvale, the
Bank, Advance or Advance Savings 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.
5.02. Conditions to the Obligations of Parkvale and the Bank Under This
Agreement. The obligations of Parkvale and the Bank 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 Parkvale and
the Bank to the extent permitted by law:
36
(a) Each of the obligations of Advance and Advance Savings required to
be performed by them 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 Advance and Advance Savings
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 Effect, and
Parkvale and the Bank shall have received a certificate to that effect signed by
the President of Advance and Advance Savings.
(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 Advance and the Advance Subsidiaries
to Parkvale and the Bank.
(c) Advance and Advance Savings shall have furnished Parkvale and the
Bank 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
Parkvale and the Bank may reasonably request.
5.03 Conditions to the Obligations of Advance and Advance Savings Under
this Agreement. The obligations of Advance and Advance Savings 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 Advance and Advance Savings to the extent permitted by law:
(a) Each of the obligations of Parkvale and the Bank required to be
performed by them 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 Parkvale and the Bank
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 Effect, and
Advance and Advance Savings shall have received a certificate to that effect
signed by the President and Chief Executive Officer of Parkvale and the Bank.
(b) Parkvale and the Bank shall have furnished Advance and Advance
Savings 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 Advance and Advance Savings may reasonably request.
37
(c) Parkvale shall provide confirmation to Advance that an amount equal
to the Aggregate Merger Consideration in immediately available funds has been
deposited by Parkvale with the Exchange Agent.
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 Advance:
(a) by mutual written consent of the parties hereto;
(b) by Parkvale, the Bank, Advance or Advance Savings (i) if the
Effective Time shall not have occurred on or prior to June 30, 2005, or (ii) if
a vote of the stockholders of Advance 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 Advance contemplated by Section
4.07 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 in all material respects set forth herein to be performed or observed
by such party at or before the Effective Time;
(c) by Parkvale or Advance 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 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 Parkvale or the Bank in writing if Advance or Advance Savings
has, or by Advance or Advance Savings in writing if Parkvale or the Bank 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, 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;
(e) by Parkvale or Advance in writing, if any of the applications for
prior approval referred to in Section 4.06 hereof are denied or are approved
contingent upon the satisfaction of any non-standard condition or requirement
which, in the reasonable opinion of the Board of Directors of Parkvale, would
materially impair the value of Advance and Advance Savings taken as a whole to
Parkvale, and the time period for appeals and requests for reconsideration has
run; or
38
(f) by Parkvale in the event of a Termination Event (as defined in
Section 7.01(c) hereof).
6.02 Effect of Termination. In the event of termination of this
Agreement by Parkvale, the Bank, Advance or Advance Savings as provided above,
this Agreement shall forthwith become void (other than Sections 4.05(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 4.05(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 Advance, 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 Advance, 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 Advance. 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.
ARTICLE VII
MISCELLANEOUS
7.01 Expenses; Termination Fee.
(a) Subject to the provisions of Section 7.01(b) hereof, each party
hereto shall bear and pay all costs and expenses incurred by it in connection
with the transactions contemplated by this Agreement, including fees and
expenses of its own financial consultants, accountants and counsel, provided,
however, that 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.
39
(b) Notwithstanding any provision in this Agreement to the contrary, in
order to induce Parkvale to enter into this Agreement and as a means of
compensating Parkvale for the substantial direct and indirect monetary
and other damages and costs incurred and to be incurred in connection
with this Agreement in the event the transactions contemplated hereby
do not occur as a result of a Termination Event (as defined herein),
Advance agrees to pay Parkvale, and Parkvale shall be entitled to
payment of, a fee (the "Fee") of $1.5 million upon the occurrence of a
Termination Event so long as the Termination Event occurs prior to a
Fee Termination Event (as defined herein). The parties hereto
acknowledge that the actual amount of such damages and costs would be
impracticable or extremely difficult to determine, and that the sum of
$1.5 million constitutes a reasonable estimate by the parties under the
circumstance existing as of the date of this Agreement of such damages
and costs. Such payment shall be made to Parkvale in immediately
available funds within five business days after the occurrence of a
Termination Event. A Fee Termination Event shall be the first to occur
of the following: (i) the Effective Time, (ii) 12 months after
termination of this Agreement in accordance with its terms following
the first occurrence of a Preliminary Termination Event (as defined
herein), (iii) termination of this Agreement in accordance with the
terms hereof prior to the occurrence of a Termination Event or a
Preliminary Termination Event (other than a termination of this
Agreement by Parkvale pursuant to Section 6.01(d) hereof as a result of
a willful breach of any representation, warranty, covenant or agreement
of Advance or Advance Savings) or (iv) 12 months after the termination
of this Agreement by Parkvale pursuant to Section 6.01(d) hereof as a
result of a willful breach of any representation, warranty, covenant or
agreement of Advance or Advance Savings.
(c) For purposes of this Agreement, a "Termination Event" shall mean
any of the following events:
(i) Advance or Advance Savings, without having received Parkvale's
prior written consent, shall have entered into an agreement to engage
in an Acquisition Transaction with any person (the term "person" for
purposes of this Agreement having the meaning assigned thereto in
Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934,
as amended ("Exchange Act"), and the rules and regulations thereunder),
other than Parkvale or any subsidiary of Parkvale or the Board of
Directors of Advance shall have recommended that the stockholders of
Advance approve or accept any Acquisition Transaction with any person
other than Parkvale or any subsidiary of Parkvale; or
(ii) any person, other than Parkvale, shall have acquired beneficial
ownership (as such term is defined in Rule 13d-3 promulgated under the
Exchange Act) of or the right to acquire beneficial ownership, or any
"group" (as such term is defined in Section 13(d)(3) of the Exchange
Act) shall have been formed which beneficially owns or has the right to
acquire beneficial ownership of, 25% or more of the aggregate voting
power represented by the outstanding Advance Common Stock.
(d) For purposes of this Agreement, a "Preliminary Termination Event"
shall mean any of the following events:
40
(i) any person (other than Parkvale) shall have commenced (as such term
is defined in Rule 14d-2 under the Exchange Act), or shall have filed a
registration statement under the Securities Act of 1933, as amended
("Securities Act") with respect to, a tender offer or exchange offer to
purchase any shares of Advance Common Stock such that, upon
consummation of such offer, such person would own or control 10% or
more of Advance Common Stock outstanding (such an offer being referred
to herein as a "Tender Offer" and an "Exchange Offer," respectively,
regardless of whether the provisions of Regulations 14D or 14E under
the Exchange Act apply to such Tender Offer or Exchange Offer);
(ii) (A) the holders of Advance Common Stock shall not have approved
this Agreement at the meeting of such stockholders held for the purpose
of voting on this Agreement, (B) such meeting shall not have been held
or shall have been canceled prior to termination of the Agreement or
(C) Advance's Board of Directors shall have withdrawn or modified in a
manner adverse to Parkvale the recommendation of Advance's Board of
Directors with respect to the Agreement, in each case after any person
(other than Parkvale) shall have (x) made, or disclosed an intention to
make, a bona fide proposal to Advance or its stockholders to engage in
an Acquisition Transaction (and, in the case of clause (A) hereof,
which bona fide proposal has been made public by announcement or
written communication that is or becomes the subject of public
disclosure), (y) commenced a Tender Offer or filed a registration
statement under the Securities Act with respect to an Exchange Offer or
(z) filed an application or given notice, whether in draft or final
form, with the appropriate regulatory authorities for approval to
engage in an Acquisition Transaction; or
(iii) Advance or Advance Savings shall have breached any
representation, warranty, covenant or obligation contained in this
Agreement and such breach would entitle Parkvale to terminate this
Agreement under Section 6.01(d) hereof (without regard to the cure
period provided for therein unless such cure is promptly effected
without jeopardizing consummation of the Merger pursuant to the terms
of this Agreement) after any person (other than Parkvale) shall have
(x) made, or disclosed an intention to make, a bona fide proposal to
Advance or its stockholders to engage in an Acquisition Transaction,
(y) commenced a Tender Offer or filed a registration statement under
the Securities Act with respect to an Exchange Offer or (z) filed an
application or given notice, whether in draft or final form, with the
appropriate regulatory authorities for approval to engage in an
Acquisition Transaction.
(e) Advance shall promptly notify Parkvale in writing of the occurrence
of any Preliminary Termination Event or Termination Event.
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 Sections 1.07,
1.08, 4.12 and 7.01 hereof.
41
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 Parkvale or the Bank, to:
Parkvale Financial Corporation
Parkvale Savings Bank
0000 Xxxxxxx Xxxx Xxxxxxx
Xxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attn: Xxxxxx X. XxXxxxxx, Xx.
President and Chief Executive Officer
Copy to:
Elias, Matz, Xxxxxxx and Xxxxxxx L.L.P.
000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxx X. Xxxxxx, Xx., Esq.
(b) If to Advance or Advance Savings, to:
Advance Financial Bancorp
Advance Financial Savings Bank
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxxx
President and Chief Executive Officer
Copy to:
Xxxxxxx Spidi & Xxxxx, PC
0000 Xxx Xxxx Xxxxxx, XX
Xxxxx 000 Xxxx
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxxx Xxxxx, Esq.
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 provided in
42
Section 4.12 hereof or 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.
43
IN WITNESS WHEREOF, Parkvale, the Bank, Advance and Advance Savings
have caused this Agreement to be executed by their duly authorized officers as
of the day and year first above written.
PARKVALE FINANCIAL CORPORATION
Attest:
/s/Xxxx X. Xxxxxx By: /s/Xxxxxx X. XxXxxxxx, Xx.
--------------------------- ---------------------------------------------
Xxxx X. Xxxxxx Xxxxxx X. XxXxxxxx, Xx.
Corporate Secretary President and Chief Executive Officer
PARKVALE SAVINGS BANK
Attest:
/s/Xxxx X. Xxxxxx By: /s/Xxxxxx X. XxXxxxxx, Xx.
--------------------------- ---------------------------------------------
Xxxx X. Xxxxxx Xxxxxx X. XxXxxxxx, Xx.
Corporate Secretary President and Chief Executive Officer
ADVANCE FINANCIAL BANCORP
Attest:
/s/Xxxxxxxx X. XxXxxxxx By: /s/Xxxxxxx X. Xxxxxxxxx
--------------------------- ---------------------------------------------
Xxxxxxxx X. XxXxxxxx Xxxxxxx X. Xxxxxxxxx
Corporate Secretary President and Chief Executive Officer
ADVANCE FINANCIAL SAVINGS BANK
Attest:
/s/Xxxxxxxx X. XxXxxxxx By: /s/Xxxxxxx X. Xxxxxxxxx
--------------------------- ---------------------------------------------
Xxxxxxxx X. XxXxxxxx Xxxxxxx X. Xxxxxxxxx
Corporate Secretary President and Chief Executive Officer
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