AGREEMENT AND PLAN OF REORGANIZATION
among
BERKSHIRE FINANCIAL HOLDINGS, INC.,
BFHI ACQUISITION CORPORATION,
XXXXXXXXXXXXX.XXX, INC.
and
vBANK, A SAVINGS BANK
dated as of March 9, 2002
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of March 9, 2002
("Agreement"), among Berkshire Financial Holdings, Inc. ("BFHI"), a Pennsylvania
corporation, BFHI Acquisition Corporation ("Acquisition"), a Pennsylvania
corporation and wholly-owned subsidiary of BFHI, XXXXxxxXxxxxx.xxx, Inc.
("USAB"), a Pennsylvania corporation, and vBank, a Savings Bank (the "Bank"), a
Pennsylvania-chartered savings bank and wholly-owned subsidiary of USAB.
W I T N E S S E T H:
WHEREAS, the Boards of Directors of BFHI, Acquisition, USAB and the
Bank have determined that it is advisable and in the best interests of their
respective companies and their shareholders, employees, customers and
communities to consummate the business 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 BFHI's willingness to enter
into this Agreement, the directors and executive officers of USAB and the Bank
named therein are concurrently entering into a Stockholder Agreement with BFHI
(the "Stockholder Agreement"), in substantially the form attached hereto as
Exhibit A, pursuant to which, among other things, such persons agree to vote
their shares of USAB Common Stock (as defined herein) in favor of this Agreement
and the transactions contemplated hereby;
WHEREAS, as a further condition and inducement to BFHI's willingness to
enter into this Agreement, USAB is concurrently entering into a Stock Option
Agreement with BFHI (the "USAB Option Agreement"), in substantially the form
attached hereto as Exhibit B, pursuant to which USAB is granting to BFHI the
option to purchase shares of USAB Common Stock under certain circumstances; and
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements herein contained, the
parties hereto, intending to be legally bound, do hereby agree as follows:
ARTICLE I
DEFINITIONS
"Acquisition" shall mean BFHI Acquisition Corporation.
"Acquisition Transaction" shall have the meaning set forth in Section
5.6(c) hereof.
"Affiliate" shall mean, with respect to any Person, any Person that,
directly or indirectly, controls, is controlled by or is under common control
with such Person. For the purposes of this definition, "control" (including,
with correlative meanings, the terms "controlled by" and "under common control
with") shall mean the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise.
"Affiliated Group" shall mean any affiliated group within the meaning
of Section 1504(a) of the Code or any similar group defined under a similar
provision of state, local or foreign law.
"Agreement of Merger" shall mean the Agreement of Merger dated as of
the date hereof by and between Acquisition and USAB, a copy of which is attached
hereto as Exhibit H.
"Bank" shall mean vBank, a Savings Bank.
"Bank Common Stock" shall mean the common stock, par value $2.50 per
share, of the Bank.
"BFHI" shall mean Berkshire Financial Holdings, Inc.
"BFHI Common Stock" shall mean the common stock, par value $.01 per
share, of BFHI.
"BFHI Preferred Stock" shall mean the shares of preferred stock, par
value $.01 per share, of BFHI .
"BFHI Promissory Note" shall have the meaning set forth in Section
5.13(a) hereto.
"BHCA" shall mean the Bank Holding Company Act of 1956, as amended.
"BIF" shall mean the Bank Insurance Fund administered by the FDIC.
"Closing" shall have the meaning set forth in Section 2.5 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commission" shall mean the Securities and Exchange Commission.
"Confidentiality Agreement" shall have the meaning set forth in Section
5.4(b) hereof.
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"CRA" shall mean the Community Reinvestment Act of 1977, as amended.
"Department" shall mean the Commonwealth of Pennsylvania Department of
Banking.
"Dissenting Shares" shall have the meaning set forth in Section 2.8
hereof.
"Effective Time" shall mean the time specified pursuant to Section 2.5
hereof as the effective time of the Merger.
"Environmental Claim" shall mean any written notice from any
governmental authority or third party alleging potential liability (including,
without limitation, potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damages, property damages,
personal injuries or penalties) arising out of, based on, or resulting from the
presence, or release into the environment, of any Materials of Environmental
Concern.
"Environmental Laws" shall mean 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 or 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 Materials of Environmental Concern.
The term Environmental Laws includes without limitation (1) the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C.
Section 9601, et seq; the Resource Conservation and Recovery Act, as amended, 42
U.S.C. Section 2901, et seq; the Clean Air Act, as amended, 42 U.S.C. Section
7401, et seq; the Federal Water Pollution Control Act, as amended, 33 U.S.C.
Section 1251, et seq; the Toxic Substances Control Act, as amended, 15 U.S.C.
Section 9601, et seq; the Emergency Planning and Community Right to Know Act, 42
U.S.C. Section 11001, et seq; the Safe Drinking Water Act, 42 U.S.C. Section
300f, et seq; (2) all comparable state and local laws and any amendment, rule,
regulation, order, or directive issued thereunder; and (3) 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 Materials of
Environmental Concern.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exchange Agent" shall have the meaning set forth in Section 2.7(b)
hereof.
"FDIA" shall mean the Federal Deposit Insurance Act, as amended.
"FDIC" shall mean the Federal Deposit Insurance Corporation, or any
successor thereto.
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"FRB" shall mean the Board of Governors of the Federal Reserve System.
"Governmental Entity" shall mean any federal or state court,
administrative agency or commission or other governmental authority or
instrumentality.
"Liquidation" shall have the meaning set forth in Section 2.1 hereof.
"Material Adverse Effect" shall mean, with respect to USAB or any
Subsidiary, any event, change or occurrence that has or would reasonably be
expected to have a material adverse change on the business, operations, results
of operations or financial condition of USAB and its Subsidiaries considered as
one enterprise but shall not include any adverse change with respect to, or
effect on such entity resulting from (1) changes in general economic conditions
(including, without limitation, increases or decreases in market rates of
interest), (2) any change in a law, rule or regulation generally applicable to
financial institutions, (3) any change in generally accepted accounting
principles or regulatory accounting principles, as such would apply to the
financial statements of such entity, (4) actions taken or to be taken by USAB or
the Bank in accordance with the specific terms of this Agreement or based upon
the written request of BFHI or Acquisition pursuant to this Agreement, or (5) an
"Event of Default" as such term is defined in the Loan Agreement dated March 31,
2000 by and between USAB and Crusader Bank (now Royal Bank of Pennsylvania), as
amended, or an "Event of Default" under Section 6(d) of the Collateral Pledge
and Security Agreement dated March 31, 2000 between the same parties, in each
case, resulting from a failure to pay interest or principal on the "Loan" (as
defined in each agreement) (in either case, a "Loan Agreement Event of
Default")(Royal Bank of Pennsylvania and its assigns are hereinafter referred to
as the "Lender").
"Materials of Environmental Concern" shall mean pollutants,
contaminants, wastes, toxic substances, petroleum and petroleum products and any
other materials regulated under the Environmental Laws.
"Merger" shall have the meaning set forth in Section 2.1 hereof.
"Merger Consideration" shall mean cash consideration equal to $0.60 per
share of USAB Common Stock, into which shares of USAB Common Stock shall be
converted in the Merger pursuant to Section 2.6(c) hereof.
"Offering" shall mean the offer and sale of BFHI Common Stock conducted
in accordance with Section 5.14 hereof.
"PBCL" shall mean the Pennsylvania Business Corporation Law of 1988, as
amended.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor thereto.
"Person" shall mean an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or a political subdivision or an agency or instrumentality thereof.
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"Previously Disclosed" shall mean disclosed in (i) a schedule dated the
date hereof delivered from the disclosing party to the other party specifically
referring to the appropriate section of this Agreement and describing in
reasonable detail the matters contained therein or (ii) a letter dated after the
date hereof from the disclosing party specifically referring to this Agreement
and describing in reasonable detail the matters contained therein and delivered
by the other party pursuant to Section 5.11 hereof.
"Private Placement Memorandum" means the private placement memorandum
utilized by BFHI in connection with the Offering.
"Proxy Statement" shall mean the proxy statement, as amended or
supplemented, to be delivered by USAB to its shareholders in connection with the
solicitation of their approval of this Agreement and the transactions
contemplated hereby.
"Rights" shall mean warrants, options, rights, convertible securities
and other arrangements or commitments which obligate an entity to issue or
dispose of any of its capital stock or other ownership interests.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securities Documents" shall mean all reports, offering circulars,
proxy statements, registration statements and all similar documents filed
pursuant to the Securities Laws, as amended and restated.
"Securities Laws" shall mean the Securities Act, the Exchange Act and
the rules and regulations of the Commission promulgated thereunder.
"Stockholder Agreement" shall mean the agreement dated the date hereof
between BFHI and certain of the stockholders of USAB, the form of which is
attached hereto as Exhibit A.
"Subsidiary" of any Person shall mean any entity of which securities or
other ownership interests having ordinary voting power to elect a majority of
the Board of Directors or other persons performing similar functions are owned
directly or indirectly by such Person.
"Surviving Corporation" shall have the meaning set forth in Section 2.1
hereof.
"Tax" or "Taxes" shall mean any U.S. federal, state, local or foreign
income, gross receipts, profits, windfall profits, severance, occupation,
premium, environmental, personal property, real property, intangibles, ad
valorem, mortgage, production, sales, use, license, excise, customs duties,
franchise, registration, value-added, estimated, documentary, stamp, transfer,
capital stock, employment, payroll, withholding, social security (or similar),
unemployment, disability, transfer, withholding or other taxes or charges of any
kind whatsoever levied or imposed on any person or such person's income,
properties, assets or operations by any governmental authority or under any law,
together with any interest, additions to tax or penalties with respect thereto
and any interest in respect of such additions to tax or penalties, whether or
not disputed.
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"Tax Returns" shall mean any return, declaration, report, claim for
refund or information return or statement relating to Taxes, including any
schedule or attachment thereto and any amendment thereof.
"USAB" shall mean XXXXxxxXxxxxx.xxx, Inc.
"USAB Capital Securities" shall mean the USAB Common Securities and the
USAB Preferred Securities, each issued by the USAB Trust.
"USAB Common Securities" shall mean the shares of common securities
issued to USAB by the USAB Trust.
"USAB Common Stock" shall mean the common stock, par value $1.00 per
share, of USAB.
"USAB Debentures" shall mean the junior subordinated debentures issued
by USAB to the USAB Trust.
"USAB Employee Plans" shall have the meaning set forth in Section
3.13(a) hereof.
"USAB Financial Statements" shall mean (i) the consolidated financial
statements referred to in Section 3.7(a) hereof (each as amended and restated),
and (ii) the consolidated balance sheets of USAB (including related notes and
schedules, if any), and the consolidated statements of income, changes in
stockholders' equity and cash flows (including related notes and schedules, if
any) of USAB with respect to the quarterly and annual periods ended subsequent
to September 30, 2001 and delivered to BFHI pursuant to Section 5.7 hereof.
"USAB Option" shall mean each option outstanding under the USAB Stock
Option Plan.
"USAB Option Agreement" shall mean the agreement dated the date hereof,
between USAB and BFHI, the form of which is set forth as Exhibit B hereto.
"USAB Preferred Securities" shall mean the preferred securities issued
by the USAB Trust to investors.
"USAB Preferred Stock" shall mean the preferred stock par value $1.00
per share, of USAB.
"USAB Stock Option Plan" shall mean the XXXXxxxXxxxxx.xxx, Inc. Stock
Option Plan.
"USAB Trust" shall mean the USA Capital Trust I established by USAB.
Other terms used herein are defined in the preamble and elsewhere in
this Agreement.
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ARTICLE II
THE MERGER
2.1 The Merger
Subject to the terms and conditions of this Agreement, at the Effective
Time (as defined in Section 2.5 hereof), Acquisition shall be merged with and
into USAB in accordance with Section 1921 of the PBCL (the "Merger"), with USAB
as the surviving corporation (hereinafter sometimes called the "Surviving
Corporation"). Simultaneously with or as soon as practicable after the Merger,
the Surviving Corporation shall be merged with and into BFHI (the "Liquidation")
in accordance with an Agreement and Plan of Merger, the form of which is
attached hereto as Exhibit C.
2.2 Effect of the Merger
As of the Effective Time (as defined in Section 2.5 hereof), the
Surviving Corporation shall be considered the same business and corporate entity
as each of USAB and Acquisition and thereupon and thereafter, all the property,
rights, powers and franchises of each of USAB and Acquisition 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 USAB and Acquisition 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 USAB and
Acquisition 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 USAB and Acquisition 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 USAB and Acquisition
if the Merger had not occurred.
2.3 Articles of Incorporation and Bylaws
As of the Effective Time, the Articles of Incorporation and Bylaws of
USAB shall be the Articles of Incorporation and Bylaws of the Surviving
Corporation until otherwise amended as provided by law.
2.4 Directors and Officers
As of the Effective Time, the directors and officers of Acquisition
shall become the directors and officers of the Surviving Corporation and BFHI
shall have taken steps to elect Xxxxx X. Xxxxx to the Board of Directors of the
Surviving Corporation in accordance with Section 5.8(d) hereof.
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2.5 Effective Time
The Merger shall become effective upon the occurrence of the filing of
Articles of Merger ("Articles of Merger") with the Department of State of the
Commonwealth of Pennsylvania, unless a later date and time is specified as the
effective time in such Articles of Merger ("Effective Time"). A closing (the
"Closing") shall take place immediately prior to the Effective Time at 10:00
a.m., Eastern Time, on the third 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 VI of this Agreement (other than the delivery
of certificates and other instruments and documents to be delivered at the
Closing), at the principal offices of counsel to BFHI in Vienna, Virginia or at
such other place, at such other time, or on such other date as the parties may
mutually agree upon. At the Closing, the Agreement of Merger shall be filed with
the Corporation Bureau in Harrisburg, Pennsylvania, and there shall be delivered
to the parties hereto the certificates and other documents required to be
delivered under Article VI hereof.
2.6 Effect on Outstanding Shares
Subject to the provisions of this Agreement, at the Effective Time,
automatically by virtue of the Merger and without any action on the part of any
party hereto:
(a) Each share of BFHI Common Stock issued and outstanding immediately
prior to the Effective Time shall be unchanged and shall remain issued and
outstanding.
(b) Each share of common stock of Acquisition issued and outstanding
immediately prior to the Effective Time shall become the issued and outstanding
common stock of the Surviving Corporation.
(c) Each share of USAB Common Stock issued and outstanding immediately
prior to the Effective Time (other than (i) shares held by USAB or the Bank,
which shall be canceled and retired without consideration, and (ii) Dissenting
Shares) shall become and be converted into the right to receive, without any
action on the part of the holders thereof, the Merger Consideration.
2.7 Shareholder Rights; Stock Transfers and Exchange Procedures
(a) Subject to the provisions of Section 2.8 hereof, at the Effective
Time, each holder of a certificate or certificates representing outstanding
shares of USAB Common Stock (the "Certificates") shall cease to have any rights
with respect thereto, except the right to receive, upon the surrender of any
such Certificates in accordance with this Section 2.7, the amount of the Merger
Consideration into which each share of USAB Common Stock shall have been
converted pursuant to Section 2.6 hereof, without interest. After the Effective
Time, there shall be no further registration of transfers on the stock transfer
books of USAB of shares of USAB Common Stock which were outstanding immediately
prior to the Effective Time. If, after the Effective Time, Certificates are
presented to BFHI or the Exchange Agent for any reason, they shall be canceled
and exchanged as provided hereunder, except as otherwise provided by law.
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(b) At least one business day prior to the Effective Time, BFHI shall
deposit in trust with an agent duly appointed by BFHI (the "Exchange Agent")
cash in an amount equal to the aggregate Merger Consideration. At or after the
Effective Time, each holder of a Certificate or Certificates, upon surrender of
the same to the Exchange Agent, shall be entitled to receive in exchange
therefor the Merger Consideration for each share of USAB Common Stock
theretofore represented by the Certificate or Certificates so surrendered, which
shall have been converted as provided in Section 2.6(c) hereof. Within five (5)
days following the Effective Time, the Exchange Agent shall mail to each holder
of record of an outstanding Certificate a form of letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to
such Certificate shall pass, only upon delivery of such Certificate to the
Exchange Agent) advising such holder of the terms of the exchange effected by
the Merger and of the procedure for surrendering to the Exchange Agent such
Certificate in exchange for their interest in the Merger Consideration.
(c) BFHI shall not be obligated to deliver the interest in the Merger
Consideration to which a holder of USAB Common Stock would otherwise be entitled
as a result of the Merger until such holder surrenders a Certificate or
Certificates for exchange as provided in this Section 2.7, or, in default
thereof, an appropriate affidavit of loss and indemnity agreement and/or a bond
in an amount as may be reasonably required in each case by BFHI. If payment of
the Merger Consideration is to be made to a person other than the registered
holder of the USAB Certificate(s) surrendered, it shall be a condition of such
payment that the USAB Certificate(s) so surrendered shall be properly endorsed
or otherwise in proper form for transfer and that the person requesting such
payment shall pay any transfer or other taxes required by reason of the payment
to a person other than the registered holder of the USAB Certificate(s)
surrendered or establish to the satisfaction of BFHI or Acquisition that such
tax has been paid or is not applicable.
(d) Any portion of the aggregate Merger Consideration delivered to the
Exchange Agent by BFHI pursuant to Section 2.7(b) hereof that remains unclaimed
by the stockholders of USAB for six months after the Effective Time (as well as
any proceeds from any investment thereof) shall be delivered by the Exchange
Agent to BFHI. Any stockholders of USAB who have not exchanged their shares of
USAB Common Stock for the Merger Consideration in accordance with this Agreement
shall thereafter look only to BFHI for the consideration deliverable in respect
of each share of USAB Common Stock such stockholder holds as determined pursuant
to this Agreement without any interest thereon. If outstanding Certificates for
shares of USAB 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 BFHI (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. BFHI and the
Exchange Agent shall be entitled to rely upon the stock transfer books of USAB
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, BFHI 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.
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2.8 Dissenting Shares
Each outstanding share of USAB Common Stock, the holder of which has
perfected his right to dissent under the PBCL and has not effectively withdrawn
or lost such right as of the Effective Time (the "Dissenting Shares") shall not
be converted into or represent a right to receive the Merger Consideration
hereunder and the holder thereof shall be entitled only to such rights as are
granted by the PBCL. If any holder of Dissenting Shares shall fail to perfect or
shall have effectively withdrawn or lost the right to dissent, the Dissenting
Shares held by such holder shall thereupon be treated as though such Dissenting
Shares had been converted into the right to receive the Merger Consideration in
accordance with the applicable provisions of this Agreement. USAB shall give
BFHI prompt notice upon receipt by USAB of any such written demands for payment
of the fair value of shares of USAB Common Stock and of withdrawals of such
demands and any other instruments provided pursuant to the PBCL. Any payments
made in respect of Dissenting Shares shall be made by the Surviving Corporation.
2.9 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 USAB 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, each of USAB 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 USAB or otherwise to
take any and all such action.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF USAB AND THE BANK
Except as Previously Disclosed, USAB and the Bank represent and warrant
to BFHI and Acquisition as follows:
3.1 Capital Structure of USAB
The authorized capital stock of USAB consists of 25,000,000 shares of
USAB Common Stock and 5,000,000 shares of USAB Preferred Stock. As of the date
hereof, there are 5,729,167 shares of USAB Common Stock issued and outstanding,
169,889 shares of USAB Common Stock held as treasury shares and no shares of
USAB Preferred Stock outstanding. All outstanding shares of USAB Common Stock
have been duly authorized and validly issued and are fully paid and
nonassessable and none of the outstanding shares of USAB Common Stock have been
issued in violation of the preemptive rights of any Person. USAB has Previously
Disclosed each USAB Option outstanding as of the date hereof, including the
number of shares covered by each such USAB Option and the exercise price
thereof. Except for USAB Options to purchase 176,554 shares of USAB Common Stock
as of the date hereof and the option granted by USAB to BFHI hereof pursuant to
the USAB Option Agreement, there are no Rights authorized, issued or outstanding
with respect to the capital stock of USAB. The USAB Debentures have been duly
authorized and issued in accordance with their terms.
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3.2 Organization, Standing and Authority of USAB
USAB is a corporation duly organized, validly existing and in good
standing under the laws of the Commonwealth of Pennsylvania. USAB 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 on USAB and its
Subsidiaries considered as one enterprise. USAB is registered as a bank holding
company under the BHCA. USAB has heretofore delivered or made available to BFHI
true and complete copies of the Articles of Incorporation and Bylaws of USAB as
in effect as of the date hereof.
3.3 Ownership of USAB's Subsidiaries
The only direct or indirect Subsidiaries of USAB are the Bank, USAB
Trust, USARealEstate, Inc. and USACredit, Inc. Except for (i) its ownership of
the Bank Common Stock and common stock of USARealEstate, Inc. and USACredit,
Inc., (ii) its ownership of the USAB Common Securities, and (iii) securities and
other interests held in a fiduciary capacity by the Bank and beneficially owned
by third parties or taken in consideration of debts previously contracted, USAB
does not own or have the right to acquire, directly or indirectly, any
outstanding capital stock or other voting securities or ownership interests of
any Person. The authorized capital stock of the Bank consists of 100,000 shares
of Bank Common Stock. As of the date hereof, there were 78,800 shares of the
Bank Common Stock issued and outstanding and no shares of the Bank Common Stock
are held as treasury shares. The authorized Capital Stock of USARealEstate, Inc.
consists of 1,000 shares of common stock. USAB owns all of the outstanding
shares of common stock of USARealEstate, Inc. and no shares of such common stock
are held as treasury shares. USAB owns all of the outstanding capital stock of
USACredit, Inc. and no shares of such capital stock are held as treasury shares.
As of the date hereof, there were 310 USAB Common Securities issued and
outstanding, all of which are directly owned by USAB and none are held as
treasury shares, and 10,000 USAB Preferred Securities issued and outstanding.
The outstanding Bank Common Stock, USARealEstate, Inc. common stock and USAB
Capital Securities have been duly authorized and validly issued, are fully paid
and nonassessable and, except in the case of the USAB Preferred Securities, are
directly owned by USAB free and clear of all liens, claims, encumbrances,
charges, pledges, restrictions or rights of third parties of any kind
whatsoever. No Rights are authorized, issued or outstanding with respect to the
Bank Common Stock, USARealEstate, Inc. common stock or USAB Capital Securities
and, except for agreements entered into in connection with the USAB Capital
Securities, there are no agreements, understandings or commitments relating to
the right of USAB to vote or to dispose of such capital stock or other ownership
interests.
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3.4 Organization, Standing and Authority of USAB's Subsidiaries
(a) The Bank, USARealEstate, Inc. and USACredit, Inc. (i) are duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania, (ii) have the corporate power and authority to own
or lease all of their respective properties and assets and to conduct their
respective businesses as they are now being conducted, and (iii) are duly
licensed or qualified to do business and are in good standing in each
jurisdiction in which the nature of the business conducted by them or the
character or location of the properties and assets owned or leased by them makes
such licensing or qualification necessary, except where the failure to be so
licensed, qualified or in good standing would not have a Material Adverse Effect
on USAB and its Subsidiaries considered as one enterprise. The deposit accounts
of the Bank are insured by the BIF to the maximum extent permitted by the FDIA,
and the Bank has paid all deposit insurance premiums and assessments required by
the FDIA and the regulations thereunder. USAB has heretofore delivered or made
available to BFHI true and complete copies of the Articles of Incorporation and
Bylaws of the Bank as in effect as of the date hereof.
(b) The USAB Trust (i) is duly organized, validly existing and in good
standing as a business trust under the laws of the State of Delaware, (ii) has
the power and authority to own or lease all of its properties and assets and to
conduct its business as it is now being conducted, and (iii) is duly licensed or
qualified to do business and is in good standing in each jurisdiction in which
the nature of the business conducted by it or by character or location of the
properties or assets owned or leased by it makes such licensing or qualification
necessary, except where the failure to be so licensed, qualified or in good
standing would not have a Material Adverse Effect on USAB and its Subsidiaries
considered as one enterprise.
3.5 Authorized and Effective Agreement; Consents and Approvals
(a) USAB and the Bank have all requisite corporate power and authority
to enter into this Agreement and the Agreement of Merger, as applicable, and
(subject to receipt of all necessary governmental approvals and the approval of
USAB's shareholders of this Agreement and the transactions contemplated hereby)
to perform all of their obligations under this Agreement and the Agreement of
Merger. The execution and delivery of this Agreement and the Agreement of Merger
and the consummation of the transactions contemplated hereby and thereby have
been duly and validly authorized by all necessary corporate action in respect
thereof on the part of USAB and the Bank, as applicable, except for the approval
of this Agreement and the transactions contemplated hereby by USAB's
shareholders. This Agreement and the Agreement of Merger have been duly and
validly executed and delivered by USAB and the Bank, as applicable, and, except
for the approval of this Agreement and the transactions contemplated hereby by
USAB's shareholders, constitute legal, valid and binding obligations of USAB and
the Bank which are enforceable against USAB and the Bank in accordance with
their terms, except as limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, 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, regardless of whether
enforcement is considered in a proceeding in equity or at law.
12
(b) None of the execution and delivery of this Agreement and the
Agreement of Merger by USAB and the Bank, as applicable, the consummation by
USAB and the Bank of the transactions contemplated hereby and thereby in
accordance with the terms hereof or thereof, or the compliance by USAB and the
Bank with any of the terms or provisions hereof or thereof, will (i) violate any
provision of the Articles of Incorporation and Bylaws or equivalent documents of
USAB or its Subsidiaries, (ii) assuming that the consents and approvals set
forth herein are duly obtained, violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to USAB or
its Subsidiaries or any of their respective properties or assets, or (iii)
violate, conflict with, result in a breach of any provisions of, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of, accelerate the
performance required by, or result in the creation of any lien, security
interest, charge or other encumbrance upon any of the respective properties or
assets of USAB or its Subsidiaries under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which USAB or its
Subsidiaries are a party, or by which any of their respective properties or
assets may be bound or affected, except, with respect to (ii) and (iii) above,
such as individually or in the aggregate will not have a Material Adverse Effect
on USAB and its Subsidiaries considered as one enterprise and which will not
prevent or delay the consummation of the transactions contemplated hereby.
Except for consents and approvals of or filings or registrations with or notices
to the FRB, the FDIC, the Commission, the Department and the stockholders of
USAB, no consents or approvals of or filings or registrations with or notices to
any Governmental Entity or non-governmental third party are required on behalf
of USAB or the Bank in connection with (a) the execution and delivery of this
Agreement and the Agreement of Merger by USAB and the Bank, as applicable, and
(b) the completion by USAB and the Bank of the transactions contemplated hereby
and thereby, except for any such non-governmental third party consents or
approvals, the failure of which to obtain would not result in a Material Adverse
Effect on USAB and its Subsidiaries considered as one enterprise or prevent or
delay the consummation of the transactions contemplated hereby.
(c) As of the date hereof, neither USAB nor the Bank is aware of any
reasons relating to USAB 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 by this Agreement.
3.6 Securities Documents and Regulatory Reports
(a) USAB has previously delivered or made available to BFHI a complete
copy of all Securities Documents filed by USAB pursuant to the Securities Laws
or mailed by the Company to its shareholders as a class since January 1, 1997.
USAB has filed with the Commission all Securities Documents required by the
Securities Laws and such Securities Documents complied in all material respects
with the Securities Laws 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 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.
13
(b) Since January 1, 1997, USAB and the Bank have duly filed with the
appropriate regulatory authorities (excluding the Commission), the monthly,
quarterly and annual reports required to be filed under applicable laws and
regulations and such reports, as the same may have been amended from time to
time, were in all material respects complete and accurate and in compliance with
the requirements of applicable laws and regulations (except with respect to the
timeliness of any such filings), and USAB and the Bank have previously delivered
or made available to BFHI accurate and complete copies of all such reports. In
connection with the most recent examinations of USAB and the Bank by the
appropriate regulatory authorities, neither USAB nor the Bank were required to
correct or change any action, procedure or proceeding which USAB or the Bank
believes in good faith has not been now corrected or changed, other than
corrections or changes which, if not made, either individually or in the
aggregate, would not have a Material Adverse Effect on USAB and its Subsidiaries
considered as one enterprise. The most recent regulatory rating given to the
Bank as to compliance with the CRA is at least "satisfactory." To the knowledge
of USAB and the Bank, since its last regulatory examination of CRA compliance,
the Bank has not received any complaints as to CRA compliance.
3.7 Financial Statements
(a) USAB has previously delivered or made available to BFHI accurate
and complete copies of the consolidated balance sheet of USAB as of December 31,
2000 and 1999 and the consolidated statements of income, changes in
shareholders' equity and cash flows for each of the three years ended December
31, 2000, 1999 and 1998, which are accompanied by the audit report of Xxxxx
Xxxxxxxx LLP, and (ii) the unaudited consolidated balance sheets as of March 31,
2001, June 30, 2001 and September 30, 2001 and the related unaudited
consolidated statements of income, changes in shareholders' equity and cash
flows for each of the three month periods ended March 31, 2001, June 30, 2001
and September 30, 2001, and in each case, as amended. The USAB Financial
Statements referred to herein (as amended and restated), as well as the USAB
Financial Statements to be delivered pursuant to Section 5.7 hereof (including
the related notes, where applicable), fairly present or will fairly present, as
the case may be, the consolidated financial condition of USAB as of the
respective dates set forth therein, and the consolidated results of operations,
changes in shareholders' equity and cash flows of USAB for the respective
periods or as of the respective dates set forth therein (it being understood
that any USAB Financial Statements with respect to interim periods are not
audited and are not prepared with all related notes 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 USAB,
necessary for a fair presentation of such financial statements, subject to
normal year-end adjustments).
(b) The USAB Financial Statements have been or will be, as the case may
be, prepared in accordance with generally accepted accounting principles
consistently applied during the periods involved, except as stated therein, and
except that unaudited USAB Financial Statements may not include all footnote
disclosures required by generally accepted accounting principles. The audits of
USAB and its Subsidiaries have been conducted in accordance with generally
accepted auditing standards. The books and records of USAB and its Subsidiaries
are being maintained in material compliance with applicable legal and accounting
requirements, and such books and records accurately reflect in all material
respects all dealings and transactions in respect of the business, assets,
liabilities and affairs of USAB and its Subsidiaries.
14
(c) Except to the extent (i) reflected, disclosed or provided for in
the consolidated statement of financial condition of USAB as of September 30,
2001, as amended and restated (including related notes), and (ii) of liabilities
incurred since such date in the ordinary course of business, none of USAB nor
its Subsidiaries has any liabilities, whether absolute, accrued, contingent or
otherwise, which would have a Material Adverse Effect on USAB and its
Subsidiaries considered as one enterprise.
3.8 Material Adverse Change
Since September 30, 2001, (i) USAB and its Subsidiaries have conducted
their respective 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 USAB and its
Subsidiaries considered as one enterprise.
3.9 Environmental Matters
(a) USAB and the Bank have Previously Disclosed all violations of any
Environmental Laws by USAB or its Subsidiaries whether or not such violations
would have, individually or in the aggregate, a Material Adverse Effect on USAB
and its Subsidiaries considered as one enterprise. To the knowledge of USAB and
the Bank, USAB and its Subsidiaries are in compliance with all Environmental
Laws, except for any violations of any Environmental Law which would not,
individually or in the aggregate, have a Material Adverse Effect on USAB and its
Subsidiaries considered as one enterprise. Neither USAB nor its Subsidiaries has
received any communication alleging that the USAB or its Subsidiaries is not in
such compliance and, to the knowledge of USAB and the Bank, there are no present
circumstances that would prevent or interfere with the continuation of such
compliance.
(b) USAB and the Bank have Previously Disclosed all properties owned,
leased or operated by USAB or its Subsidiaries or which serve as collateral for
loans owned by USAB or its Subsidiaries which have been or are in violation of
or liable under any Environmental Law, whether or not any such violations or
liabilities would have, individually or in the aggregate, a Material Adverse
Effect on USAB and its Subsidiaries considered as one enterprise. To the
knowledge of USAB and the Bank, none of the properties owned, leased or operated
by the USAB or its Subsidiaries nor any of the properties which serve as
collateral for loans owned by USAB or its Subsidiaries has been or is in
violation of or liable under any Environmental Law, except any such violations
or liabilities which would not, individually or in the aggregate, have a
Material Adverse Effect on USAB and its Subsidiaries considered as one
enterprise.
15
(c) USAB and the Bank have Previously Disclosed all past or present
actions, activities, circumstances, conditions, events or incidents that could
reasonably form the basis of any Environmental Claim or other claim or action or
governmental investigation that could result in the imposition of any liability
arising under any Environmental Law against USAB or its Subsidiaries or against
any person or entity whose liability for any Environmental Claim USAB or its
Subsidiaries has or may have retained or assumed either contractually or by
operation of law, including but not limited to loans made by USAB or the Bank,
whether or not such would have individually or in the aggregate, a Material
Adverse Effect on USAB and its Subsidiaries considered as one enterprise. To the
knowledge of USAB and the Bank, there are no past or present actions,
activities, circumstances, conditions, events or incidents that could reasonably
form the basis of any Environmental Claim or other claim or action or
governmental investigation that could result in the imposition of any liability
arising under any Environmental Law against USAB or its Subsidiaries or against
any person or entity whose liability for any Environmental Claim USAB or its
Subsidiaries has or may have retained or assumed either contractually or by
operation of law, including but not limited to loans made by USAB or the Bank,
except such which would not, individually or in the aggregate, have a Material
Adverse Effect on USAB and its Subsidiaries considered as one enterprise.
(d) USAB and the Bank have Previously Disclosed any environmental
studies in USAB's or the Bank's possession or control conducted with respect to
any properties directly or indirectly owned or leased by USAB or its
Subsidiaries as of the date hereof.
3.10 Tax Matters
(a) All Tax Returns required to be filed by or on behalf of USAB and
its Subsidiaries or any Affiliated Group of which USAB or any of its
Subsidiaries is or was a member have been (or, prior to the date that includes
the Effective Time, will be) timely filed with the appropriate taxing
authorities in all jurisdictions in which such Tax Returns were required to be
filed, after giving effect to any valid extensions of time in which to make such
filings, and all such Tax Returns were true, complete and correct in all
respects.
(b) All Taxes due and payable by or on behalf of USAB and any of its
Subsidiaries or any Affiliated Group of which USAB or any of its Subsidiaries is
or was a member or in respect of their income, assets or operations, have been
(or, prior to the date that includes the Effective Time, will be) fully and
timely paid, and adequate reserves or accruals for Taxes of USAB and its
Subsidiaries have been provided in the books and records of USAB and its
Subsidiaries in accordance with generally accepted accounting principles with
respect to any period for which Tax Returns have not yet been filed or for which
Taxes are not yet due and owing. USAB and its Subsidiaries have made all
required estimated Tax payments.
(c) Neither USAB nor any of its Subsidiaries has executed or filed with
the Internal Revenue Service (the "IRS") or any other taxing authority any
currently applicable agreement, waiver or other document or arrangement
extending or having the effect of extending the period for assessment or
collection of Taxes (including, but not limited to any applicable statute of
limitations), and no power of attorney of USAB or any of its Subsidiaries with
respect to any Tax matter is currently in force.
(d) USAB and its Subsidiaries have complied in all respects with all
applicable laws, rules and regulations relating to the payment and withholding
of Taxes and have duly and timely withheld from employee salaries, wages and
other compensation and have paid over to the appropriate taxing authorities all
amounts required to be so withheld and paid over for all periods under all
applicable laws.
16
(e) USAB has made available to BFHI copies of (i) all U.S. federal,
state, local and foreign income or franchise Tax Returns of USAB and its
Subsidiaries (or any Affiliated Group of which USAB or any of its Subsidiaries
are members) relating to the Tax periods ended December 31, 1998, 1999 and 2000
and (ii) any audit report issued by the IRS or other taxing authority within the
last three years relating to Taxes due from or with respect to USAB and any of
its Subsidiaries (or any Affiliated Group of which USAB or any of its
Subsidiaries are members) or its income, assets or operations. USAB and its
Subsidiaries have Previously Disclosed all income and franchise Tax Returns
filed by or on behalf of USAB and any of its Subsidiaries (or any Affiliated
Group of which USAB or any of its Subsidiaries are members), which have been
examined by the relevant taxing authority or with respect to which the statute
of limitations has expired.
(f) No claim has been made by a taxing authority in a jurisdiction
where USAB or its Subsidiaries does not file Tax Returns that USAB or its
Subsidiaries is or may be subject to taxation in that jurisdiction.
(g) All deficiencies asserted or assessments made as a result of any
examination by any taxing authority of the Tax Returns of USAB or its
Subsidiaries or any Affiliated Group of which USAB or any of its Subsidiaries is
or was a member have been fully paid, and there are no audits or investigations
of USAB or any of its Subsidiaries or any Affiliated Group of which USAB or any
of its Subsidiaries is or was a member by any taxing authority in progress, nor
has USAB or the Bank or any Affiliated Group of which USAB or any of its
Subsidiaries is or was a member received any notice from any taxing authority
that it intends to conduct such an audit or investigation. No issue has been
raised by a U.S. federal, state, local or foreign taxing authority in any
current or prior examination of USAB or any of its Subsidiaries which, by
application of the same or similar principles, would reasonably be expected to
result in a proposed deficiency with for any subsequent Tax period.
(h) Neither USAB nor any of its Subsidiaries has (i) filed a consent
pursuant to Section 341(f) of the Code, (ii) agreed to or is required to make
any adjustments pursuant to Section 481(a) of the Code or any similar provision
of state, local or foreign law by reason of a change in accounting method
initiated by USAB or any of its Subsidiaries or has knowledge that the Internal
Revenue Service has proposed any such adjustment or change in accounting method,
or has any application pending with any taxing authority requesting permission
for any changes in accounting methods that relate to the business or operations
of USAB and its Subsidiaries, or has otherwise taken any action that would have
the effect of deferring any liability for Taxes from any Tax period ending on or
before the date that includes the Effective Time to any Tax period ending
thereafter, (iii) executed or entered into a closing agreement pursuant to
Section 7121 of the Code or any similar provision of state, local or foreign Tax
law with respect to USAB or its Subsidiaries, or (iv) requested any extension of
time within which to file any Tax Return of USAB or any of its Subsidiaries,
which Tax Return has since not been filed prior to the end of the extension
period. USAB has not been a "United States real property holding corporation"
within the meaning of Section 897(c)(2) of the Code at any time during the past
60 months.
17
(i) No property owned by USAB or any of its Subsidiaries (i) is
property required to be treated as being owned by another person pursuant to the
provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as amended
and in effect immediately prior to the enactment of the Tax Reform Act of 1986,
(ii) constitutes "tax-exempt use property" within the meaning of Section
168(h)(1) of the Code or (iii) is "tax-exempt bond financed property" within the
meaning of Section 168(g) of the Code.
(j) Neither USAB nor any of its Subsidiaries is a party to any Tax
sharing or similar agreement or arrangement with any person.
(k) There is no contract, agreement, plan or arrangement, including
this Agreement, covering any person that, individually or collectively, would
give rise to the payment of any amount that would be not be deductible by USAB
or any of its Subsidiaries by reason of Section 280G or 162(m) of the Code.
(l) Neither USAB nor any of its Subsidiaries is subject to any private
letter ruling of the Internal Revenue Service or comparable rulings of other tax
authorities.
(m) USAB is not, nor has it ever been, a member of an Affiliated Group
other than the Affiliated Group of which it is the parent, and none of its
Subsidiaries has ever been a member of any Affiliated Group for any Tax purposes
other than the Affiliated Group of which USAB is the parent. Neither USAB nor
any of its Subsidiaries has any liability for the Taxes of any Person under
Section 1.1502-6 of U.S. Treasury Regulations (or any similar provision of
state, local or foreign law) as a transferee or successor, by contract or
otherwise.
(n) Neither USAB nor any of its Subsidiaries owns any interest in any
entity that is treated as a partnership or disregarded entity for U.S. federal
income Tax purposes.
(o) There are no material liens on any assets of USAB or any of its
Subsidiaries that arose as a result of any unpaid Taxes (except for Taxes not
yet due) of USAB or any of its Subsidiaries.
(p) USAB and the Bank have Previously Disclosed all material Tax
elections of USAB and its Subsidiaries that are required to be made on any Tax
Return and which are currently in effect aside from Tax elections made on Tax
Returns made available to BFHI in accordance with Section 3.10 (e) above.
3.11 Legal Proceedings
There are no actions, suits, claims, governmental investigations or
proceedings instituted, pending or, to the knowledge of USAB and the Bank,
threatened against USAB or any of its Subsidiaries or against any asset,
interest or right of USAB or any of its Subsidiaries, or against any officer,
director or employee of USAB or any of its Subsidiaries that in any such case,
if decided adversely, could reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on USAB and its Subsidiaries considered
as one enterprise. Neither USAB nor any of its Subsidiaries is a party to any
order, judgment or decree which has or could reasonably be expected to have a
Material Adverse Effect on USAB and its Subsidiaries considered as one
enterprise.
18
3.12 Compliance with Laws
(a) USAB and its Subsidiaries 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 necessary in order to permit them to conduct their
businesses as they are presently being conducted and the absence of which could
reasonably be expected to have a Material Adverse Effect on USAB and its
Subsidiaries considered as one enterprise; all such permits, licenses,
certificates of authority, orders and approvals are in full force and effect;
and to the knowledge of USAB and the Bank, no suspension or cancellation of any
of the same is threatened.
(b) Neither USAB nor any of its Subsidiaries is in violation of its
Articles of Incorporation and Bylaws, or of any applicable federal, state or
local law or ordinance or any order, rule or regulation of any federal, state,
local or other Governmental Entity (including, without limitation, all the
banking, securities, municipal securities, safety, health, environmental,
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 Entity, any of which violations or
defaults could reasonably be expected to have a Material Adverse Effect on USAB
and its Subsidiaries considered as one enterprise; and USAB and its Subsidiaries
have not received any notice or communication from any Governmental Entity
asserting that USAB or any of its Subsidiaries are in violation of any of the
foregoing which could reasonably be expected to have a Material Adverse Effect
on USAB and its Subsidiaries considered as one enterprise. Neither USAB nor any
of its Subsidiaries is subject to any regulatory or supervisory cease and desist
order, agreement, written directive, memorandum of understanding or written
commitment.
3.13 Employee Benefit Plans
(a) USAB and the Bank have Previously Disclosed all stock option,
employee stock purchase and stock bonus plans, qualified pension or
profit-sharing plans, any deferred compensation, bonus or USAB insurance
contract or any other incentive, welfare or employee benefit plan, as defined in
Section 3(3) of ERISA, or agreement, understanding, practice or commitment,
formal or informal, sponsored, maintained or contributed to by USAB or any of
its Subsidiaries for the benefit of the current or former directors, officers,
employees or independent contractors of USAB and its Subsidiaries (the "USAB
Employee Plans"). USAB and the Bank have Previously Disclosed accurate and
complete copies of the USAB Employee Plans together with (i) the most recent
actuarial and financial reports prepared with respect to any such plans that are
qualified plans, (ii) the most recent annual reports filed with any Governmental
Entity with respect to each such plan and (iii) all rulings and determination
letters and any open requests for rulings or letters that pertain to any such
plan that is a qualified plan.
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(b) None of USAB, its Subsidiaries, any pension plan maintained by any
of them and qualified under Section 401 of the Code or, to the knowledge of USAB
and the Bank, any fiduciary of such plan, has incurred any liability to the
PBGC, the Department of Labor or the Internal Revenue Service with respect to
the coverage of any employees of USAB or its Subsidiaries under any USAB
Employee Plan that has not been satisfied in full and that would have a Material
Adverse Effect on USAB and its Subsidiaries considered as one enterprise. To the
knowledge of USAB and the Bank, no reportable event under Section 4043(b) of
ERISA has occurred with respect to any USAB Employee Plan that is a pension
plan.
(c) Neither USAB nor any of its 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), and
neither USAB nor any of its Subsidiaries (or their respective successors) will
incur any liability in the event of a complete withdrawal from any
multi-employer plan of which USAB or any of its Subsidiaries is a participant as
of the date hereof in connection with the transactions contemplated hereby.
(d) A favorable determination letter has been issued by the Internal
Revenue Service with respect to each USAB Employee Plan that is an "employee
pension benefit plan" (as defined in Section 3(2) of ERISA) (a "USAB Pension
Plan") which is intended to qualify under Section 401 of the Code to the effect
that (i) such plan is qualified under Section 401 of the Code and (ii) the trust
associated with such employee pension plan is tax exempt under Section 501 of
the Code. No such letter has been revoked or, to the knowledge of USAB and the
Bank, is threatened to be revoked and neither USAB nor the Bank knows of any
ground on which such revocation may be based. Neither USAB nor any of its
Subsidiaries has any material liability under any such plan that is not
reflected on the consolidated balance sheet of USAB at September 30, 2001
included in the USAB Financial Statements, other than liabilities incurred in
the ordinary course of business in connection therewith subsequent to the date
thereof.
(e) No prohibited transaction (which shall mean any transaction
prohibited by Section 406 of ERISA and not exempt under Section 408 of ERISA or
Section 4975 of the Code) has occurred with respect to any USAB Employee Plan
which would result in the imposition, directly or indirectly, of a material
excise tax on USAB or any of its Subsidiaries under Section 4975 of the Code or
otherwise have a Material Adverse Effect on USAB and its Subsidiaries considered
as one enterprise.
(f) Full payment has been made (or proper accruals have been
established to the extent required by generally accepted accounting principles)
of all contributions which are required for periods prior to the date hereof,
and full payment will be so made (or proper accruals will be so established to
the extent required by generally accepted accounting principles) of all
contributions which are due and payable after the date hereof and prior to the
Effective Time, under the terms of each USAB Employee Plan or ERISA; no
accumulated funding deficiency (as defined in Section 302 of ERISA or Section
412 of the Code), whether or not waived, exists with respect to any USAB Pension
Plan, and there is no "unfunded current liability" (as defined in Section 412 of
the Code) with respect to any USAB Pension Plan.
(g) The USAB Employee Plans have 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.
20
(h) There are no pending or, to the knowledge of USAB and the Bank,
threatened claims (other than routine claims for benefits) by, on behalf of or
against any of the USAB Employee Plans or any trust related thereto or any
fiduciary thereof.
(i) The consummation of the transactions contemplated by this Agreement
would not, directly or indirectly (including, without limitation, as a result of
any termination of employment prior to or following the Effective Time)
reasonably be expected to (i) entitle any director, officer, employee or
consultant of or to USAB or any of its Subsidiaries to any payment (including
severance pay or similar compensation) or any increase in compensation, (ii)
result in the vesting or acceleration of any benefits under any USAB Employee
Plan or (iii) result in any material increase in benefits payable under any USAB
Employee Plan, except to the extent provided in the employment agreement between
the Bank and Xxxxx X. Xxxxx, which has been Previously Disclosed (as amended
pursuant to Section 5.8(f) hereof).
(j) Neither USAB nor any of its Subsidiaries maintains any compensation
plans, programs or arrangements the payments under which would not reasonably be
expected to be deductible as a result of the limitations under Section 162(m) of
the Code and the regulations issued thereunder.
(k) None of the execution of this Agreement, stockholder approval of
this Agreement or consummation of the transactions contemplated hereby will (A)
except for the employment agreement referred to in Section 3.13(i) hereof (as
amended pursuant to Section 5.8(f) hereof), entitle any employees of USAB or any
of its Subsidiaries 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 USAB Benefit
Plans, (C) result in any breach or violation of, or a default under, any of the
USAB Benefit 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.
3.14 Certain Contracts
(a) Neither USAB nor any of its Subsidiaries is a party to, is bound or
affected by, receives or is or may become obligated to make payments under (i)
any agreement, arrangement or commitment, including without limitation any
agreement, indenture or other instrument, relating to the borrowing of money by
USAB or any of its Subsidiaries (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 USAB or any of its Subsidiaries
of any obligation; (ii) any agreement, arrangement or commitment relating to the
employment of a consultant or the employment, election or retention in office of
any present or former director, officer or employee of USAB or any of its
Subsidiaries; (iii) any agreement, arrangement or commitment pursuant to which
USAB or any of its Subsidiaries is obligated to indemnify any existing or former
director, officer, employee or agent of USAB or its Subsidiaries; (iv) any
agreement, arrangement or commitment which limits the freedom of USAB or any of
its Subsidiaries to compete in any line of business or with any person or
entity; (v) any lease of real or personal property requiring payments of annual
rental in excess of $15,000, whether as lessor or lessee; (vi) any other
agreement, arrangement or understanding which involves an annual payment of more
than $15,000 or (vii) any sales agreement, arrangement or commitment pursuant to
which USAB or any of its Subsidiaries has transferred any loans and which
provides for recourse against USAB or any of its Subsidiaries in the event that
any borrower fails to pay the principal or interest when due. USAB and the Bank
have Previously Disclosed all contracts which provide for the servicing of loans
by or for USAB or any of its Subsidiaries.
21
(b) Neither USAB nor any of its Subsidiaries is in default or in
non-compliance, which default or non-compliance could reasonably be expected to
have a Material Adverse Effect on USAB and its Subsidiaries considered as one
enterprise, under any contract, agreement, commitment, arrangement, lease,
insurance policy or other instrument to which it is a party or by which its
assets, business or operations may be bound or affected, whether entered into in
the ordinary course of business or otherwise and whether written or oral, and
there has not occurred any event that with the lapse of time or the giving of
notice, or both, would constitute such a default or non-compliance.
3.15 Brokers and Finders
Neither USAB nor any of its Subsidiaries nor any of their directors,
officers, employees or agents, has employed any broker or finder or incurred any
liability for any financial advisory fees, brokerage fees, commissions or
finder's fees, and no broker or finder has acted directly or indirectly for USAB
or any of its Subsidiaries in connection with this Agreement or the transactions
contemplated hereby.
3.16 Insurance
USAB and the Bank believe that USAB and its Subsidiaries are insured,
and during each of the past three calendar years have been insured, for
reasonable amounts with financially sound and reputable insurance companies
against such risks as companies engaged in a similar business would, in
accordance with good business practice, customarily be insured, and have
maintained all insurance required by applicable laws and regulations. USAB and
the Bank have Previously Disclosed to BFHI a list identifying all insurance
policies maintained by USAB and its Subsidiaries as of the date hereof and any
claims pending thereunder. All of the policies and bonds maintained by USAB and
its Subsidiaries are in full force and effect and all claims thereunder have
been filed in a due and timely manner and no such claim has been denied.
3.17 Properties
All real and personal property owned by USAB and its Subsidiaries or
presently used by them in their respective businesses is in an adequate
condition (ordinary wear and tear excepted) sufficient to conduct their
respective businesses as currently conducted by USAB and its Subsidiaries in the
ordinary course of business consistent with past practices. USAB and its
Subsidiaries have good and marketable title free and clear of all liens,
encumbrances, charges, defaults or equities (other than equities of redemption
under applicable foreclosure laws or of lessors respecting any leased property)
to all of the material properties and assets, real and personal, reflected on
the consolidated balance sheet of USAB as of September 30, 2001 included in the
USAB Financial Statements or acquired after such date, other than properties
sold by USAB or its Subsidiaries in the ordinary course of business, except for
(i) liens for current taxes not yet due or payable, (ii) pledges to secure
deposits and other liens incurred in the ordinary course of its banking business
and (iii) such imperfections of title, easements and encumbrances, if any, as
are not material in character, amount or extent. All real and personal property
which are material to USAB and its Subsidiaries respective businesses and leased
or licensed by USAB or any of its Subsidiaries are held pursuant to leases or
licenses which are valid and enforceable in accordance with their respective
terms and such leases will not terminate or lapse prior to the Effective Time.
USAB and the Bank have Previously Disclosed a description of each real property
owned or leased by USAB and its Subsidiaries and used in the conduct of their
respective businesses.
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3.18 Labor
No work stoppage involving USAB or any of its Subsidiaries is pending
or, to the knowledge of USAB and the Bank, threatened. Neither USAB nor any of
its Subsidiaries is involved in, nor to the knowledge of USAB and the Bank,
threatened with or affected by, any labor dispute, arbitration, lawsuit or
administrative proceeding involving the employees of USAB or any of its
Subsidiaries which could reasonably be expected to have a Material Adverse
Effect on USAB and its Subsidiaries considered as one enterprise. Employees of
USAB or any of its Subsidiaries are not represented by any labor union nor are
any collective bargaining agreements otherwise in effect with respect to such
employees, and to the knowledge of USAB and the Bank, there have been no efforts
to unionize or organize any employees of USAB or any of its Subsidiaries.
3.19 Transactions with Affiliates
There are no existing or pending transactions, nor are there any
agreements or understandings, with any directors, officers or employees of USAB
or any of its Subsidiaries or any Affiliate of USAB or any of its Subsidiaries,
relating to, arising from or affecting USAB or any of its Subsidiaries,
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 USAB or any of its Subsidiaries.
3.20 Loans; Nonperforming Loans and Classified Assets
(a) Each loan agreement, note or borrowing arrangement, including
unfunded portions of outstanding lines of credit and loan commitments, on the
books and records of USAB or its Subsidiaries was made and has been serviced in
all material respects in accordance with customary lending standards in the
ordinary course of business, is evidenced in all material respects by
appropriate, sufficient and customary documentation given the nature of the loan
and, to the knowledge of USAB and the Bank, constitutes the legal, valid and
binding obligation of the obligor named therein, subject to the bankruptcy,
insolvency, fraudulent conveyance and other laws of general applicability
relating to or affecting creditor's rights and to general equity principles.
23
(b) USAB and the Bank have Previously Disclosed: (i) a list at
September 30, 2001 of any written or, to USAB's and the Bank's knowledge, oral
loan or similar agreement under the terms of which an obligor of USAB or the
Bank is 90 or more days delinquent in payment of principal or interest, or to
the knowledge of USAB and the Bank, in default of any other provision thereof;
(ii) a list of each loan or similar agreement which has been classified as
"substandard," "doubtful" or "loss" or designated "special mention" by USAB or
the Bank or an applicable regulatory authority at September 30, 2001; and (iii)
a listing of the real estate owned or acquired by USAB or the Bank by
foreclosure or by deed-in-lieu thereof at September 30, 2001.
3.21 Administration of Fiduciary Duties
USAB and its Subsidiaries have properly administered all accounts for
which they act as a fiduciary, including but not limited to accounts for which
they serve as a trustee, agent, custodian, personal representative, guardian,
conservator or investment advisor, in accordance with the terms of the governing
documents and applicable laws and regulations, except for failures to so
administer which would not have a Material Adverse Effect on USAB and its
Subsidiaries considered as one enterprise. Neither USAB nor any of its
Subsidiaries, nor any of their directors, officers or employees, has committed
any breach of trust with respect to any such fiduciary account and the records
for each such fiduciary account are true and correct and accurately reflect the
assets of such fiduciary account, except for breaches of trust and failures to
maintain records which would not, individually or in the aggregate, have a
Material Adverse Effect on USAB and its Subsidiaries considered as one
enterprise.
3.22 Required Vote
This Agreement and the transactions contemplated hereby are required to
be approved on behalf of USAB by the affirmative vote of the holders of at least
a majority of the outstanding shares of the USAB Common Stock.
3.23 Proxy Statement and Private Placement Memorandum Information
None of the information relating to USAB and its Subsidiaries (i) which
is included in the 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, and (ii) which is
supplied or to be supplied by USAB and its Subsidiaries in writing to BFHI
expressly for inclusion in the Private Placement Memorandum, as of the date of
such Private Placement Memorandum and up to and including the Effective Time,
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.
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3.24 Disclosures
None of the representations and warranties of USAB or the Bank or any
of the written information or documents furnished by USAB or the Bank to BFHI
and Acquisition pursuant to this Agreement or in connection with the
transactions contemplated hereby, when considered as a whole, contains or will
contain any untrue statement of a material fact, or omits or will omit to state
any material fact required to be stated or necessary to make any such
information or document, at the time and in light of the circumstances
(including without limitation the nature and scope of the information described
in the representation, warranty, information or document), not misleading.
Copies of all documents Previously Disclosed or made available to BFHI and
Acquisition pursuant to this Article III are true, correct and complete copies
thereof and include all amendments, supplements and modifications thereto and
all waivers thereunder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BFHI AND ACQUISITION
BFHI and Acquisition represent and warrant to USAB and the Bank as
follows:
4.1 Capital Structure of BFHI
The authorized capital stock of BFHI consists of 10,000,000 shares of
BFHI Common Stock and 5,000,000 shares of BFHI Preferred Stock. As of the date
hereof, there are 1,000 shares of BFHI Common Stock issued and outstanding, no
shares of BFHI Preferred Stock issued and outstanding and no shares of BFHI
Common Stock held as treasury shares. All outstanding shares of BFHI Common
Stock and all shares of BFHI Common Stock which shall be issued in connection
with the Offering have been or will be, as the case may be, duly authorized and
validly issued and are or will be, as the case may be, fully paid and
nonassessable, and none of the outstanding shares of BFHI Common Stock and none
of the shares of BFHI Common Stock which shall be issued in connection with the
Offering have been or will be, as the case may be, issued in violation of the
preemptive rights of any person, firm or entity. As of the date hereof, there
are no Rights authorized, issued or outstanding with respect to the capital
stock of BFHI.
4.2 Organization, Standing and Authority of BFHI
BFHI is a corporation duly organized, validly existing and in good
standing under the laws of the Commonwealth of Pennsylvania. BFHI 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 owned or leased by it makes such licensing or qualification
necessary, except where the failure to be so licensed, qualified or in good
standing would not have a material adverse effect on the ability of BFHI to
consummate the transactions contemplated by this Agreement.
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4.3 Ownership of Subsidiaries
Acquisition, a Pennsylvania corporation, is the only Subsidiary of
BFHI. The outstanding shares of capital stock of Acquisition has been duly
authorized and validly issued, are fully paid and nonassessable and are directly
owned by BFHI free and clear of all liens, claims, encumbrances, charges,
pledges, restrictions or rights of third parties of any kind whatsoever. As of
the date hereof, no Rights are authorized, issued or outstanding with respect to
the capital stock or other ownership interests of Acquisition and there are no
agreements, understandings or commitments relating to the right of BFHI to vote
or to dispose of such capital stock or other ownership interests.
4.4 Organization, Standing and Authority of Acquisition
Acquisition is duly organized, validly existing and in good standing
under the laws of the Commonwealth of Pennsylvania, 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 by character or location of the properties or assets
owned or leased by it makes such licensing or qualification necessary, except
where the failure to be so licensed, qualified or in good standing would not
have a material adverse effect on the ability of BFHI and Acquisition to
consummate the transactions contemplated by this Agreement.
4.5 Authorized and Effective Agreement; Consents and Approvals
(a) BFHI and Acquisition have all requisite corporate power and
authority to enter into this Agreement and the Agreement of Merger, as
applicable, and (subject to receipt of all necessary governmental approvals) to
perform all of their obligations under this Agreement and the Agreement of
Merger. The execution and delivery of this Agreement and the Agreement of Merger
and the consummation of the transactions contemplated hereby and thereby have
been duly and validly authorized by all necessary corporate action (including
shareholder approval, if necessary) in respect thereof on the part of BFHI and
Acquisition, as applicable. This Agreement and the Agreement of Merger have been
duly and validly executed and delivered by BFHI and Acquisition, as applicable,
and constitute legal, valid and binding obligations of BFHI and Acquisition
which are enforceable against BFHI and Acquisition in accordance with their
terms, except as limited by applicable bankruptcy, insolvency, reorganization,
fraudulent conveyance, 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, regardless of whether enforcement is considered in a
proceeding in equity or at law.
26
(b) None of the execution and delivery of this Agreement and the
Agreement of Merger by BFHI and Acquisition, as applicable, the consummation by
BFHI and Acquisition of the transactions contemplated hereby and thereby in
accordance with the terms hereof or thereof or the compliance by BFHI and
Acquisition with any terms or provisions hereof or thereof will (i) violate any
provision of the Articles of Incorporation and Bylaws of BFHI or Acquisition,
(ii) assuming that the consents and approvals set forth herein are duly
obtained, violate any statute, code, ordinance, rule, regulation, judgment,
order, writ, decree or injunction applicable to BFHI or Acquisition or any of
their respective properties or assets, or (iii) violate, conflict with, result
in a breach of any provisions of, constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, result in
the termination of, accelerate the performance required by, or result in the
creation of any lien, security interest, charge or other encumbrance upon any of
the respective properties or assets of BFHI or Acquisition 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
BFHI, Acquisition or any Affiliate thereof is a party, or by which any of their
respective properties or assets may be bound or affected, except with respect to
(ii) and (iii) above, such as individually or in the aggregate will not have a
material adverse effect on the ability of BFHI and Acquisition to consummate the
transactions contemplated by this Agreement and will not prevent or delay the
consummation of the transactions contemplated hereby. Except for consents and
approvals of or filings or registrations with or notices to the FRB, the FDIC
and the Department, no consents or approvals of or filings or registrations with
or notices to any Governmental Entity or non-governmental third party are
required on behalf of BFHI and Acquisition in connection with (a) the execution
and delivery of this Agreement and the Agreement of Merger by BFHI and
Acquisition, as applicable, and (b) the completion by BFHI and Acquisition of
the transactions contemplated hereby and thereby.
(c) As of the date hereof, neither BFHI nor Acquisition is aware of any
reasons relating to BFHI or Acquisition 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 by this Agreement.
4.6 Legal Proceedings
There are no actions, suits, claims, governmental investigations or
proceedings instituted, pending or, to the knowledge of BFHI, threatened against
BFHI, Acquisition or any Affiliate thereof or against any asset, interest or
right of BFHI, Acquisition or any Affiliate thereof, or against any officer,
director or employee of BFHI or Acquisition that in any such case, if decided
adversely, could reasonably be expected to have, individually or in the
aggregate, a material adverse effect on the ability of BFHI and Acquisition to
consummate the transactions contemplated by this Agreement. None of BFHI,
Acquisition nor any Affiliate thereof is a party to any order, judgment or
decree which has or could reasonably be expected to have a material adverse
effect on the ability of BFHI and Acquisition to consummate the transactions
contemplated by this Agreement.
4.7 Brokers and Finders
Neither BFHI nor Acquisition, nor any of their respective directors,
officers, employees or agents has employed any broker or finder or incurred any
liability for any financial advisory fees, brokerage fees, commissions or
finders' fees, and no broker or finder has acted directly or indirectly for BFHI
or Acquisition in connection with this Agreement or the transactions
contemplated hereby.
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4.8 Proxy Statement and Private Placement Memorandum Information
None of the information relating to BFHI and Acquisition (i) supplied
or to be supplied by BFHI to USAB expressly for inclusion in the Proxy
Statement, as of the date such Proxy Statement is mailed to shareholders of USAB
and up to and including the date of the meeting of shareholders to which such
Proxy Statement relates, and (ii) included in the Private Placement Memorandum,
as of the date of the Private Placement Memorandum and up to and including the
Effective Time, 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.
4.9 Disclosures
None of the representations and warranties of BFHI nor Acquisition or
any of the documents furnished by BFHI or Acquisition to USAB pursuant to this
Agreement or in connection with the transactions contemplated hereby, when
considered as a whole, contains or will contain any untrue statement of a
material fact, or omits or will omit to state any material fact required to be
stated or necessary to make any such information or document, at the time and in
light of the circumstances (including without limitation the nature and scope of
the information described in the representation, warranty, information or
document), not misleading. Copies of all documents made available to USAB
pursuant to this Article IV are true, correct and complete copies thereof and
include all amendments, supplements and modifications thereto and all waivers
thereunder.
ARTICLE V
COVENANTS
5.1 Reasonable Best Efforts
Subject to the terms and conditions of this Agreement, each party to
this Agreement shall use its reasonable best efforts in good faith to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
necessary or advisable under applicable laws and regulations so as to permit
consummation of the Merger (including, without limitation, satisfaction of the
conditions to consummation of the Merger specified in Article VI of this
Agreement) as promptly as practicable thereafter and to otherwise enable
consummation of the transactions contemplated hereby, and shall cooperate fully
with the other party or parties hereto to that end.
5.2 Solicitation of Shareholder Approval
USAB shall as soon as is reasonably practicable prepare a Proxy
Statement which shall be used to solicit the shareholder approval required
hereby. USAB shall provide BFHI with a reasonable opportunity to review such
materials prior to their filing with the Commission. USAB shall take all action
necessary to properly call, give notice of, convene and hold a special meeting
of its shareholders as soon as practicable after the date hereof to consider and
vote upon this Agreement and the transactions contemplated hereby, provided,
however, that USAB shall use its reasonable best efforts to file the preliminary
Proxy Statement with the Commission no later than forty-five (45) days after the
date hereof or as soon thereafter as is practicable. USAB shall retain a proxy
solicitation firm to assist USAB with respect to the solicitation of proxies
from shareholders. The Board of Directors of USAB will recommend that the
shareholders of USAB approve this Agreement and the transactions contemplated
hereby, provided that the Board of Directors of USAB may fail to make such
recommendation, or withdraw, modify or change any such recommendation, if such
Board of Directors, after having consulted with and considered the written
advice of outside counsel, has determined that the making of such
recommendation, or the failure to withdraw, modify or change such
recommendation, would constitute a breach of the fiduciary duties of such
directors under applicable law.
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5.3 Regulatory and Other Matters
(a) The parties hereto shall cooperate with each other and use their
reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings, and
to obtain as promptly as practicable all permits, consents, approvals and
authorizations of all Governmental Entities and third parties which are
necessary or advisable to consummate the transactions contemplated by this
Agreement. BFHI and USAB shall have the right to review in advance, and to the
extent practicable each will consult with the other on, in each case subject to
applicable laws relating to the exchange of information, all the information
which appears in any filing made with or written materials submitted to, any
third party or any Governmental Entity in connection with the transactions
contemplated by this Agreement. In exercising the foregoing right, each of the
parties hereto shall act reasonably and as promptly as practicable. The parties
hereto agree that they will consult with each other with respect to the
obtaining of all permits, consents, approvals and authorizations of all third
parties and Governmental Entities necessary or advisable to consummate the
transactions contemplated by this Agreement and each party will keep the other
apprised of the status of matters relating to completion of the transactions
contemplated herein. Subject to the requirements of this Section 5.3(a), BFHI
shall use its reasonable best efforts to file all regulatory applications and
other required documentation with Governmental Entities no later than forty-five
(45) days after the date hereof or as soon thereafter as is practicable.
(b) BFHI and USAB shall, upon request, furnish each other with all
information concerning themselves, their respective Subsidiaries, directors,
officers and shareholders and such other matters as may be reasonably necessary
or advisable in connection with any statement, filing, notice or application
made by or on behalf of BFHI, USAB or any of their respective Subsidiaries to
any Governmental Entity in connection with the transactions contemplated by this
Agreement.
(c) BFHI and USAB shall promptly furnish each other with copies of
written communications received by BFHI or USAB, as the case may be, from or
delivered by any of the foregoing to, any Governmental Entity in respect of the
transactions contemplated by this Agreement.
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5.4 Investigation and Confidentiality
(a) USAB shall permit BFHI and its representatives reasonable access
during normal business hours to its properties and personnel, and shall disclose
and make available to BFHI all books, papers and records relating to the assets,
stock ownership, properties, operations, obligations and liabilities of USAB and
its Subsidiaries including, but not limited to, all books of account (including
the general ledger), Tax records (including Tax Returns), minute books of
meetings of boards of directors (and any committees thereof) and shareholders,
organizational documents, bylaws, material contracts and agreements, filings
with any regulatory authority, accountants' work papers (to the extent permitted
by such accountants), litigation files, loan files, plans affecting employees,
and any other business activities or prospects in which BFHI may have a
reasonable interest, provided that such access shall be reasonably related to
the transactions contemplated hereby and not unduly interfere with normal
operations; provided that such disclosure shall not be required to the extent it
would violate any law or agreement or constitute the waiver of any privilege. In
the event that BFHI is prohibited by law or agreement from providing any of the
access referred to in the preceding sentence, it shall use its reasonable best
efforts to obtain promptly waivers thereof so as to permit such access. USAB and
its Subsidiaries shall make their respective directors, officers, employees and
agents and authorized representatives (including counsel and independent public
accountants) available to confer with BFHI and its representatives, provided
that such access shall be reasonably related to the transactions contemplated by
this Agreement and not unduly interfere with normal operations.
(b) BFHI shall hold all information furnished by or on behalf of USAB
or any of USAB's Subsidiaries or representatives pursuant hereto in confidence
to the extent required by, and in accordance with, the confidentiality
agreement, dated January 29, 2002, between USAB and BFHI (the "Confidentiality
Agreement"), which Confidentiality Agreement is hereby ratified and confirmed in
all respects.
5.5 Press Releases
BFHI and USAB shall agree with each other as to the form and substance
of any press release related to this Agreement or the transactions contemplated
hereby, and consult with each other as to the form and substance of other public
disclosures which may relate to the transactions contemplated by this Agreement,
provided, however, that nothing contained herein shall prohibit either party,
following notification to the other party, from making any disclosure which it
determines in good faith is required by law or regulation.
5.6 Business of USAB and the Bank
(a) During the period from the date of this Agreement and continuing
until the Effective Time, except as expressly contemplated or permitted by this
Agreement or with the prior written consent of BFHI, each of USAB and its
Subsidiaries shall conduct its business in the ordinary course consistent with
past practice. Each of USAB and its Subsidiaries shall use all reasonable
efforts to (i) preserve its business organizations intact, (ii) keep available
to itself and BFHI the present services of the employees of USAB and its
Subsidiaries and (iii) preserve for itself and BFHI the goodwill of the
customers of USAB and its Subsidiaries and others with whom business
relationships exist.
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(b) Without limiting the generality of the foregoing, except with the
prior written consent of BFHI or as expressly contemplated hereby, between the
date hereof and the Effective Time, USAB and its Subsidiaries shall not (to the
extent applicable):
(i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of its capital stock, except that USAB shall permit and cause to be paid
dividends on the USAB Capital Securities of the USAB Trust from the interest
reserve account maintained with Wilmington Trust Company or other available
funds;
(ii) except for any USAB Common Stock issued to BFHI upon exercise
of the option granted pursuant to the USAB Option Agreement or to any holder of
presently outstanding USAB Options upon the exercise thereof, issue any shares
of its capital stock, issue, grant, modify or authorize any Rights, or effect
any recapitalization, reclassification, stock dividend, stock split or like
change in capitalization;
(iii) amend its Articles of Incorporation, Bylaws or equivalent
documents; impose, or suffer the imposition, on any share of USAB Common Stock
or Bank Common Stock owned by USAB of any material lien, charge or encumbrance
or permit any such lien to exist; or waive or release any material right or
cancel or compromise any material debt or claim;
(iv) increase the rate of compensation of any of its directors,
executive officers or employees, or pay or agree to pay any bonus or severance
to, or accelerate the payment of any employee benefit or incentive to, or
provide any other new employee benefit or incentive to, any of its directors,
officers or employees, except (A) as may be required pursuant to binding
commitments existing on the date hereof and Previously Disclosed, and (B) in the
case of employees who are not officers above the level of Vice President, such
as may be granted in the ordinary course of business consistent with past
practice;
(v) enter into or, except as may be required by law, modify any
pension, retirement, stock option, stock purchase, stock appreciation right,
savings, profit sharing, deferred compensation, supplemental retirement,
consulting, bonus, 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 USAB Employee Plans other than contributions which are
contractually required to be made to a USAB Pension Plan as of the date hereof;
(vi) enter into (A) any agreement, arrangement or commitment not
made in the ordinary course of business, (B) any agreement, indenture or other
instrument relating to the borrowing of money (other than in the case of
deposits and federal funds purchased or securities sold under agreements to
repurchase in the ordinary course of business) or guarantee of any such
obligation, (C) any agreement, arrangement or commitment relating to the
employment of, or severance of, an officer, employee or consultant or amend any
such existing agreement, except that an individual may be employed in the
ordinary course of business if the employment of such employee is terminable at
will without liability, other than as required by law, or (D) any contract,
agreement or understanding with a labor union;
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(vii) change its method of accounting in effect for the year ended
December 31, 2000, except as required by changes in laws or regulations or by
regulatory authorities or generally accepted accounting principles concurred in
by its and BFHI's independent public accountants, or change any of its methods
of reporting income and deductions for federal income Tax purposes from those
employed in the preparation of its federal income Tax Return for the year ended
December 31, 2000, except as required by changes in laws or regulations;
(viii) purchase or otherwise acquire any assets or incur any
liabilities other than in the ordinary course of business consistent with past
practice and policies;
(ix) engage in any transaction of any type in excess of $250,000,
including but not limited to the making of any loan, or investment in excess of
such amount, provided that USAB and the Bank may (i) sell investment securities
irrespective of whether the amount of each such investment security sold exceeds
$250,000 if such sales are conducted pursuant to the terms of, or in order to
comply with, the Cease and Desist Order which has been Previously Disclosed by
USAB and the Bank, (ii) purchase investment securities which comply with Section
5.6(b)(xix) hereof to the extent such purchase does not exceed $1.0 million per
investment security and (iii) renew or extend (for up to one year) existing
loans irrespective of whether the principal balance of such loans exceeds
$250,000;
(x) make any capital expenditures in excess of $5,000 individually
or $25,000 in the aggregate, other than pursuant to binding commitments existing
on the date hereof which are Previously Disclosed and other than expenditures
necessary to maintain existing assets in good repair;
(xi) file any applications or make any contract with respect to
branching, site location or relocation or closing of a branch;
(xii) acquire in any manner whatsoever (other than to realize upon
collateral for a defaulted loan) any business or entity or enter into any new
line of business;
(xiii) engage in any transaction with an Affiliate, other than
transactions in the ordinary course of business consistent with past practice
and which are in compliance with the requirements of applicable laws and
regulations;
(xiv) enter into any futures contract, option contract, interest
rate cap, interest rate floor, interest rate exchange agreement or other
agreement for purposes of hedging the exposure of its interest-earning assets
and interest-bearing liabilities to changes in market rates of interest;
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(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 consistent with past
practice;
(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;
(xvii) 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 or regulatory agreement;
(xviii) incur any liability for borrowed funds (other than in the
case of deposits, federal funds purchased and securities sold under agreements
to repurchase 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 3.17;
(xix) invest in any investment securities other than United States
government agencies with a term of one (1) year or less or federal funds;
(xx) sell or otherwise dispose of any assets with recourse, or
otherwise other than in the ordinary course of business consistent with past
practices;
(xxi) file any Tax Returns with respect to Taxes before providing
BFHI with a reasonable period of time to review such Tax Return;
(xxii) take any action that would or could reasonably be expected
to result in any of the representations and warranties of USAB and the Bank
contained in this Agreement not to be true and correct in any material respect
at or prior to the Effective Time, or in any of the conditions to the Merger set
forth in Article VI hereof not being satisfied or in violation of any provision
of this Agreement, except in each case as may be required by applicable law; or
(xxiii) agree to do any of the foregoing.
(c) USAB and the Bank shall not authorize or permit any of their
respective directors, officers, employees or agents to directly or indirectly
solicit, initiate or encourage any inquiries relating to, or the making of any
proposal which constitutes, an Acquisition Transaction (as defined below), or,
except to the extent legally required for the discharge of the fiduciary duties
of the Board of Directors of USAB, as advised by counsel in writing, (i)
recommend or endorse an Acquisition Transaction, (ii) participate in any
discussions or negotiations regarding an Acquisition Transaction or (iii)
provide any third party (other than BFHI) with any nonpublic information in
connection with any inquiry or proposal relating to an Acquisition Transaction.
USAB and the Bank will immediately cease and cause to be terminated any existing
activities, discussions or negotiations previously conducted with any parties
other than BFHI with respect to any of the foregoing, and will take all actions
necessary or advisable to inform the appropriate individuals or entities
referred to in the first sentence hereof of the obligations undertaken in this
Section 5.6(c). USAB and the Bank will notify BFHI immediately if any inquiries
or proposals relating to an Acquisition Transaction are received by, any such
information is requested from, or any such negotiations or discussions are
sought to be initiated or continued with, USAB or the Bank, and USAB and the
Bank will promptly inform BFHI in writing of all of the relevant details with
respect to the foregoing. As used in this Agreement, "Acquisition Transaction"
shall mean (i) a merger or consolidation, or any similar transaction, involving
USAB or the Bank, (ii) a purchase, lease or other acquisition of all or a
substantial portion of the assets or liabilities of USAB or the Bank or (iii) a
purchase or other acquisition (including by way of share exchange, tender offer,
exchange offer or otherwise) of an interest in any class or series of equity
securities of USAB or the Bank; provided that "Acquisition Transaction" shall
not include any transaction involving BFHI or any of its Affiliates.
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5.7 Current Information
During the period from the date of this Agreement to the Effective
Time, each party shall, upon the request of the other party, cause one or more
of its designated representatives to confer on a monthly or more frequent basis
with representatives of the other party regarding its financial condition,
operations, business and prospects and matters relating to the completion of the
transactions contemplated by this Agreement. As soon as reasonably available,
but in no event more than 45 days after the end of each calendar quarter ending
after the date of this Agreement (other than the last quarter of each calendar
year ending December 31), unless extended in accordance with applicable laws,
rules and regulations, USAB will deliver to BFHI its quarterly report on Form
10-QSB under the Exchange Act. As soon as reasonably available, but in no event
more than 90 days after the end of each fiscal year, unless extended in
accordance with applicable laws, rules and regulations, (i) USAB will deliver to
BFHI its Annual Report on Form 10-KSB. Within 15 days after the end of each
month, USAB and the Bank will each deliver to BFHI a balance sheet and a
statement of income, without related notes, for such month prepared in
accordance with generally accepted accounting principles. The statements
delivered by USAB pursuant to the preceding sentence shall be on a consolidated
basis.
5.8 Benefit Plans, Directors and Employment Matters
(a) BFHI and Acquisition anticipate that most employees of USAB and the
Bank as of the Effective Time shall continue as employees of the Bank following
the Effective Time, provided that BFHI and Acquisition shall have no obligation
to continue the employment of any such person and nothing contained in this
Agreement shall give any employee of USAB or the Bank a right to continuing
employment with the Bank following the Effective Time.
(b) Subject to the provisions of this Section 5.8, all employees of
USAB and the Bank immediately prior to the Effective Time who continue to be
employed by BFHI or the Bank immediately following the Effective Time
("Transferred Employees") will either (i) continue to be covered by USAB's or
the Bank's employee benefit plans or (ii) be covered by the employee benefit
plans of BFHI in a manner which is comparable with the employee benefits
previously provided to the Transferred Employees by USAB and the Bank.
Notwithstanding the foregoing, BFHI may determine to terminate any of USAB's or
the Bank's employee benefit plans, or to merge any such employee benefit plan
with the benefit plans of BFHI, provided the result is the provision of benefits
to Transferred Employees that are substantially similar to the benefits
previously provided by USAB and the Bank. Except as specifically provided in
this Section 5.8 and as otherwise prohibited by law, Transferred Employees'
service with USAB or the Bank shall be recognized as service with BFHI for
purposes of eligibility to participate and vesting, if applicable (but not for
purposes of benefit accrual), under the benefit plans of BFHI subject to
applicable break-in-service rules.
(c) Except as set forth in Section 5.8(d) below, USAB and Bank shall
use its reasonable best efforts to procure and deliver to BFHI and Acquisition
not more than thirty (30) days following the date of this Agreement the
resignations, together with a release of claims, each effective as of the
Effective Time, of each director and executive officer of USAB and each director
of the Bank.
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(d) Effective as of the Effective Time, BFHI agrees to take all
necessary action to elect Xxxxx X. Xxxxx to the Board of Directors of BFHI and
to have Xx. Xxxxx remain a director of the Bank.
(e) Effective as of the Effective Time, BFHI shall honor and assume the
Bank's Employee Retention Plan; provided, however, that clause (iii) in the
definition of "Change of Control" with respect to USAB included in Section 3 of
such plan shall have been amended to provide that the "payment date" shall be
the date of consummation of a merger or consolidation transaction rather than
the date of shareholder approval of a definitive agreement with respect to such
a transaction.
(f) Effective as of the Effective Time, Xxxxx X. Xxxxx shall enter into
an employment Agreement with the Bank, the form of which is set forth as Exhibit
D hereto.
(g) Effective as of the Effective Time, BFHI shall assume the
automobile lease payments which are currently being paid by the Bank with
respect to the automobile currently being operated by Xxxxxx X. Xxxxxxxx,
provided that the remaining term of such lease does not exceed two years from
the date of such assumption.
(h) Effective as of the Effective Time, BFHI shall pay Xxxxxxxx X.
Xxxxx as of the first day of each month in an amount equal to $5,000 per month
for a period of 18 months to terminate all pension obligations which he has been
receiving for the past five years.
5.9 Indemnification; Insurance
(a) From and after the Effective Time through the sixth anniversary of
the Effective Time, BFHI (the "Indemnifying Party"), agrees to indemnify and
hold harmless each person who served as director, officer or employee of USAB or
the Bank (the "Indemnified Parties"), against any costs or expenses (including
reasonable attorneys' fees), judgments, fines, losses, claims, damages or
liabilities 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, only and to the
fullest extent to which USAB and the Bank is or was required by law or their
Bylaws to indemnify such Indemnified Parties and in the manner to which it could
indemnify such parties under the Bylaws of USAB or the Bank, as in effect on the
date hereof.
(b) On or prior to the Effective Time, BFHI shall purchase insurance
coverage on substantially the same terms and conditions as the liability
insurance provided by USAB for its directors and officers as of the date hereof
for a period of six years, following the Effective Time, provided, however, that
in no event shall BFHI expend, in order to obtain such insurance, an aggregate
amount in excess of $117,000 (the "Maximum Amount"), which amount shall be paid
prior to the Effective Time. If the amount of the aggregate premiums necessary
to maintain or procure such insurance coverage exceeds the Maximum Amount, BFHI
shall use all reasonably efforts to maintain the most advantageous policies of
directors' and officers' insurance obtainable for an aggregate premium equal to
the Maximum Amount.
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5.10 Real Estate
(a) USAB and Bank shall use their reasonable best efforts to obtain and
deliver to BFHI and Acquisition at the Closing with respect to all real estate
(i) owned by USAB or the Bank, an estoppel letter dated as of the Closing in the
form of Exhibit E from all tenants and (ii) leased by USAB or the Bank, an
estoppel letter dated as of the Closing in the form of Exhibit F from all
lessors.
(b) Between the date of this Agreement and the Effective Time, the Bank
shall use its reasonable best efforts to sell its office facility located in
Chestnut Hill, Pennsylvania, at a sales price which shall not be less than the
carrying value of such property on the date of this Agreement, less no more than
normal and customary depreciation on such property thereafter.
5.11 Disclosure Supplements
From time to time prior to the Effective Time, each party shall
promptly supplement or amend any materials Previously Disclosed and delivered to
the other party pursuant hereto with respect to any matter hereafter arising
which, if existing, occurring or known at the date of this Agreement, would have
been required to be set forth or described in materials Previously Disclosed to
the other party or which is necessary to correct any information in such
materials which has been rendered inaccurate thereby; no such supplement or
amendment to such materials shall be deemed to have modified the
representations, warranties and covenants of a party for the purposes of
determining whether the conditions set forth in Article VI hereof have been
satisfied.
5.12 Failure to Fulfill Conditions
In the event that any 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 the termination of this Agreement pursuant to
Section 7.1 hereof, it will promptly notify the other parties. Each party will
promptly inform the other parties of any facts applicable to it that would be
likely to prevent or materially delay approval of the Merger and the
transactions contemplated hereby by any Governmental Entity or third party or
which would otherwise prevent or materially delay completion of the Merger and
the transactions contemplated hereby.
5.13 Bridge Loan
BFHI shall, upon receipt of permission or approval from the FRB, loan
USAB Two Million and Nine Hundred and Seventy Six Thousand Dollars ($2,976,000)
pursuant to the terms of a Promissory Note, the form of which is set forth as
Exhibit G hereto (the "BFHI Promissory Note"). Upon receipt of such FRB
approval, BFHI shall have sufficient funds to fund the loan to USAB. The terms
of the BFHI Promissory Note are considered an integral part of this Agreement
and the terms thereof are incorporated herein by reference. BFHI shall cooperate
with USAB in making an application within seven (7) days from the date hereof
for approval from the FRB for the loan to be evidenced by the BFHI Promissory
Note. BFHI and USAB shall have the right to review in advance and each will
consult with the other on the information which appears in the application which
is referenced above as well as with respect to communications with the FRB
regarding such application.
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5.14 Offering
(a) BFHI shall prepare a Private Placement Memorandum which shall be
utilized in connection with the Offering. USAB shall, upon request, furnish BFHI
with all information concerning USAB and its Subsidiaries, directors, officers
and shareholders and such other matters as may be reasonably necessary or
advisable to be included in the Private Placement Memorandum. USAB shall have
the right to review in advance the Private Placement Memorandum before it is
distributed to potential investors. Pursuant to the Private Placement
Memorandum, BFHI shall offer and sell shares of BFHI Common Stock in a private
placement that is exempt from the registration provisions of the Securities Act.
(b) Prior to the Effective Time, BFHI shall have completed the Offering
contemplated by Section 5.14(a) hereof and shall have raised at least $10.0
million of gross proceeds (which includes the proceeds raised to fund the BFHI
Promissory Note which shall be converted into equity at the Effective Time) from
the sale of BFHI Common Stock in the Offering.
5.15 Certain Policies
If requested by BFHI, on the business day immediately prior to the
Effective Time, USAB shall, consistent with generally accepted accounting
principles, establish such additional accruals and reserves as may be necessary
to conform USAB's accounting and credit loss reserve practices and methods to
those of BFHI (as such practices and methods are to be applied to USAB or its
Subsidiaries from and after the Effective Time) and reflect BFHI's plans with
respect to the conduct of USAB's business following the Merger and to provide
for the costs and expenses relating to the consummation by USAB of the
transactions contemplated by this Agreement; provided, however, that USAB shall
not be required to take such action (i) if such action is prohibited by
applicable law, rule or regulation or by generally accepted accounting
principles or any regulatory agreement, (ii) if such action would have a
Material Adverse Effect on USAB and its Subsidiaries considered as one
enterprise or (iii) unless BFHI informs USAB that all conditions to BFHI's
obligations to consummate the transactions contemplated by this Agreement set
forth in Article VI hereof have been satisfied or waived. The establishment of
such accruals and reserves shall not, in and of itself, constitute a breach of
any representation or warranty of USAB contained in this Agreement.
5.16 USAB Options and Warrants
(a) USAB shall terminate the USAB Stock Option Plan effective prior to
the Effective Time. In the event that the shareholders of USAB approve this
Agreement and the transactions contemplated hereby, promptly following such
approval USAB shall give notice of acceleration and termination of all employee
options outstanding under the USAB Stock Option Plan in accordance with the
terms thereof, which termination will take place 30 days following the date of
such notice. In addition, USAB shall use its reasonable best efforts to obtain
prior to the Effective Time a cancellation agreement from each option holder in
form and substance satisfactory to BFHI, acknowledging such cancellation and
termination of options.
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(b) USAB shall use its reasonable best efforts to have that certain
Warrant Agreement dated February 13, 1998 between USAB and Sandler X'Xxxxx &
Partners, L.P. ("Sandler"), pursuant to which Sandler has the right to purchase
186,044 shares of USAB Common Stock at an exercise price of $2.89 per share (the
"Sandler Warrant"), either exercised or terminated by Sandler prior to the
Effective Time.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions Precedent - All Parties
The respective obligations of all of the parties hereto to effect the
transactions contemplated by this Agreement shall be subject to satisfaction of
the following conditions at or prior to the Effective Time.
(a) All corporate action necessary to authorize the execution and
delivery of this Agreement and consummation of the transactions contemplated
hereby shall have been duly and validly taken by all of the parties hereto,
including approval by the requisite vote of the shareholders of USAB of this
Agreement and the transactions contemplated hereby.
(b) All approvals, consents and waivers from any Governmental Entity
the approval, consent or waiver of which is required for the consummation of the
transactions contemplated by this Agreement shall have been received and all
statutory waiting periods in respect thereof shall have expired, provided,
however, that no approval, consent or waiver referred to in this Section 6.1(b)
shall be deemed to have been received if it shall include any condition or
requirement that, individually or in the aggregate, would so materially reduce
the economic or business benefits of the transactions contemplated by this
Agreement to BFHI and Acquisition that had such condition or requirement, other
than customary conditions that are normally imposed in banking transactions of a
similar nature, been known, BFHI and Acquisition, in its reasonable judgment,
would not have entered into this Agreement.
(c) None of the parties hereto shall be subject to any statute, rule,
regulation, order, injunction or decree which shall have been enacted, entered,
promulgated or enforced by any Governmental Entity which prohibits, restricts or
makes illegal consummation of the transactions contemplated by this Agreement.
6.2 Conditions Precedent - USAB and the Bank
The obligations of USAB and the Bank to effect the transactions
contemplated by this Agreement shall be subject to satisfaction of the following
conditions at or prior to the Effective Time unless waived by USAB and the Bank
pursuant to Section 7.4 hereof.
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(a) The representations and warranties of BFHI and Acquisition set
forth in Article IV hereof shall be true and correct as of the date of this
Agreement and as of the Effective Time as though made on and as of the Effective
Time (or on the date when made in the case of any representation and warranty
which specifically relates to an earlier date), provided, however, that
notwithstanding anything herein to the contrary, this Section 6.2(a) shall be
deemed to have been satisfied even if such representations and warranties are
not true and correct (exclusive of any exceptions in such representations and
warranties relating to materiality) unless the failure of any of the
representations and warranties to be so true and correct would have, or could
reasonably be expected to have, individually or in the aggregate, a material
adverse effect on the ability of BFHI and Acquisition to consummate the
transactions contemplated by this Agreement.
(b) BFHI and Acquisition shall have performed all material obligations
and covenants required to be performed by it on or prior to the Effective Time.
(c) BFHI and Acquisition shall have delivered to USAB and the Bank a
certificate, dated the date of the Closing and signed by its Chief Executive
Officer and Chief Financial Officer, to the effect that the conditions set forth
in Sections 6.2(a) and 6.2(b) have been satisfied.
(d) BFHI and Acquisition shall have furnished USAB and the Bank with
such certificates of its respective officers or others and such other documents
to evidence fulfillment of the conditions set forth in Sections 6.1 and 6.2 as
such conditions relate to BFHI and Acquisition as USAB may reasonably request.
6.3 Conditions Precedent - BFHI and Acquisition
The obligations of BFHI and Acquisition to effect the transactions
contemplated by this Agreement shall be subject to satisfaction of the following
conditions at or prior to the Effective Time unless waived by BFHI and
Acquisition and pursuant to Section 7.4 hereof.
(a) The representations and warranties of USAB and the Bank set forth
in Article III hereof shall be true and correct as of the date of this Agreement
and as of the Effective Time as though made on and as of the Effective Time (or
on the date when made in the case of any representation and warranty which
specifically relates to an earlier date), provided, however, that
notwithstanding anything herein to the contrary, this Section 6.3(a) shall be
deemed to have been satisfied even if such representations and warranties are
not true and correct (exclusive of any exceptions in such representations and
warranties relating to materiality or Material Adverse Effect) unless the
failure of any of the representations and warranties to be so true and correct
would have, or could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on USAB and the Bank considered as one
enterprise.
(b) USAB and the Bank shall have performed all material obligations and
covenants required to be performed by it on or prior to the Effective Time.
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(c) USAB and the Bank shall have delivered to BFHI and Acquisition a
certificate, dated the date of the Closing and signed by its Chief Financial
Officer, in the case of USAB, and the President and Chief Executive Officer, in
the case of the Bank, to the effect that the conditions set forth in Sections
6.3(a) and 6.3(b) have been satisfied.
(d) The consent, approval or waiver of each person (other than the
Governmental Entities referred to in Section 6.1(b) hereof) whose consent,
approval or waiver shall be required in connection with the transactions
contemplated by this Agreement under any loan or credit agreement, note,
mortgage, indenture, lease, license or other agreement or instrument to which
USAB or the Bank is a party or is otherwise bound shall have been obtained,
except those consents or approvals for which failure to obtain would not,
individually or in the aggregate, have a Material Adverse Effect on USAB and the
Bank considered as one enterprise.
(e) Holders of a number of shares of outstanding USAB Common Stock
which represents 15.0% or more of the USAB Common Stock shall not have elected
to exercise dissenters' or appraisal rights pursuant to the PBCL.
(f) USAB and the Bank shall have furnished BFHI and Acquisition with
such certificates of its officers or others and such other documents to evidence
fulfillment of the conditions set forth in Sections 6.1 and 6.3 as such
conditions relate to USAB and the Bank as BFHI and Acquisition may reasonably
request.
ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT
7.1 Termination
This Agreement may be terminated at any time prior to the Effective
Time:
(a) by the mutual consent in writing of the parties hereto;
(b) by BFHI and Acquisition in writing if USAB and the Bank have, or by
USAB and the Bank in writing if BFHI and Acquisition have (provided that the
terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained therein), breached (i) any
covenant or undertaking contained herein, or (ii) any representation or warranty
contained herein, which in the case of USAB and the Bank would have, or could
reasonably be expected to have, a Material Adverse Effect on USAB and the Bank
considered as one enterprise, and in the case of BFHI and Acquisition would
have, or could reasonably be expected to have, a material adverse effect on the
ability of BFHI and Acquisition to consummate the transactions contemplated by
this Agreement, in any case if such breach has not been cured following written
notice of such breach by the earlier of 30 days after the date on which such
written notice of such breach is given to the party committing such breach or
the Effective Time, provided that any failure of BFHI to perform the covenants
set forth in Sections 5.8(f), (g) or (h) or 5.13 hereof because of an objection
thereto by an applicable Governmental Agency shall not be deemed to give USAB or
the Bank the right to terminate this Agreement.
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(c) by any party hereto in writing, if any of the applications for
prior approval referred to in Section 5.3 hereof are denied or withdrawn at the
request or recommendation of the applicable Governmental Entity or are approved
in a manner which does not satisfy the requirements of Section 6.1(b) hereof,
and the time period for appeals and requests for reconsideration has run, unless
the failure of such occurrence shall be due to the failure of the party seeking
to terminate to perform or observe in any material respect its agreements set
forth herein to be performed or observed by such party at or before the
Effective Time;
(d) by any party hereto in writing, if the Effective Time has not
occurred by the close of business on December 31, 2002, provided that this right
to terminate shall not be available to any party whose failure to perform an
obligation under this Agreement has been the cause of, or resulted in, the
failure of the transactions contemplated by this Agreement to be consummated by
such date; or
(e) by BFHI and Acquisition, (i) if the Board of Directors of USAB
shall have withdrawn, modified or changed in a manner adverse to BFHI and
Acquisition its recommendation of this Agreement and the transactions
contemplated hereby pursuant to Section 5.2 hereof or (ii) if any party to the
Stockholder Agreement shall have breached his or her obligations pursuant to the
Stockholder Agreement in a manner which materially adversely affects the ability
of USAB to obtain the approval of the holders of USAB Common Stock of this
Agreement or otherwise materially adversely affects the ability of the parties
hereto to consummate the transactions contemplated hereby.
7.2 Effect of Termination
In the event that this Agreement is terminated pursuant to Section 7.1
hereof, this Agreement shall become void and have no effect, except that (i)
Sections 5.4(b) and 8.1 hereof shall survive any such termination and (ii) a
termination pursuant to Section 7.1(b), (c), (d) or (e) hereof shall not relieve
the breaching party from liability for willful breach of any covenant,
undertaking, representation or warranty giving rise to such termination.
7.3 Survival of Representations, Warranties and Covenants
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, other than covenants that by their terms are to be performed
after the Effective Time (including, without limitation, the covenants set forth
in Sections 5.8 and 5.9 hereof).
7.4 Waiver
Each party hereto, by written instrument signed by an executive officer
of such party, may at any time (whether before or after approval of this
Agreement by the shareholders of USAB) extend the time for the performance of
any of the obligations or other acts of the other party hereto and may waive (i)
any inaccuracies of the other party in the representations or warranties
contained in this Agreement or any document delivered pursuant hereto, (ii)
compliance with any of the covenants, undertakings or agreements of the other
party or, to the extent permitted by law, satisfaction of any of the conditions
precedent to its obligations contained herein or (iii) the performance by the
other party of any of its obligations set forth herein, provided that any such
waiver granted, or any amendment or supplement pursuant to Section 7.5 hereof
executed, after shareholders of USAB have approved this Agreement, shall not
modify either the amount or form of the consideration to be provided hereby to
the holders of USAB Common Stock upon consummation of the Merger or otherwise
materially adversely affect any of such shareholders without the approval of the
shareholders who would be so affected.
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7.5 Amendment or Supplement
This Agreement may be amended or supplemented at any time by mutual
agreement of the parties hereto, subject to the proviso to Section 7.4 hereof.
Any such amendment or supplement must be in writing and approved by all of the
parties' respective Boards of Directors.
ARTICLE VIII
MISCELLANEOUS
8.1 Expenses; Termination Fee
(a) 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 (which,
in the case of Xxxx, Xxxx & Co., LLC, shall be paid by the Bank), accountants
and counsel, provided that in the event of a termination of this Agreement
resulting from a breach of a representation, warranty, covenant or undertaking
pursuant to the provisions of Section 7.1(b) hereof, the party committing such
breach shall be liable for $300,000 to the other party, without prejudice to any
other rights or remedies as may be available to the non-breaching party,
including without limitation any rights under Section 8.1(b) hereof.
(b) Notwithstanding any provision in this Agreement to the contrary, in
order to induce BFHI and Acquisition to enter into this Agreement and as a means
of compensating BFHI and Acquisition 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), USAB and the Bank
jointly and severally agree to pay BFHI, and BFHI shall be entitled to payment
of, a fee (the "Fee") of $275,000 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 $275,000 constitutes a reasonable estimate by the parties
under the circumstances existing as of the date of this Agreement of such
damages and costs. Such payment shall be made to BFHI 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) 15 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 BFHI pursuant
to Section 7.1(b) hereof as a result of a willful breach of any representation,
warranty, covenant or agreement of USAB or the Bank) or (iv) 15 months after the
termination of this Agreement by BFHI pursuant to Section 7.1(b) hereof as a
result of a willful breach of any representation, warranty, covenant or
agreement of USAB or the Bank.
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(c) For purposes of this Agreement, a "Termination Event" shall mean
any of the following events:
(i) USAB or the Bank, without having received BFHI's prior
written consent, shall have entered into an agreement to engage in an
Acquisition Transaction with any Person other than BFHI or Acquisition,
or the Board of Directors of USAB shall have recommended that the
stockholders of USAB approve or accept any Acquisition Transaction with
any Person other than BFHI or Acquisition;
(ii) any Person, other than BFHI or Acquisition, 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 USAB Common Stock or Bank Common Stock; or
(iii) one or more signatories to the Stockholder Agreement
shall have breached his or her obligations pursuant to the Stockholder
Agreement in a manner which materially adversely affects the ability of
USAB to obtain the approval of the holders of USAB Common Stock of this
Agreement or otherwise materially adversely affects the ability of the
parties hereto to consummate the transactions contemplated hereby.
(d) For purposes of this Agreement, a "Preliminary Termination Event"
shall mean any of the following events:
(i) any person (other than BFHI or Acquisition) 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, with respect to, a tender offer or exchange offer to purchase any
shares of USAB Common Stock such that, upon consummation of such offer,
such person would own or control 10% or more of USAB 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 USAB Common Stock shall not have
approved this Agreement through the solicitation of proxies conducted
for the purpose of voting on this Agreement, (B) such proxy
solicitation shall not have been conducted prior to termination of the
Agreement or (C) USAB's Board of Directors shall have withdrawn or
modified in a manner adverse to BFHI and Acquisition the recommendation
of USAB's Board of Directors with respect to the Agreement, in each
case after any person (other than BFHI or Acquisition) shall have (x)
made, or disclosed an intention to make, a bona fide proposal to USAB
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;
43
(iii) USAB or the Bank shall have breached any representation,
warranty, covenant or obligation contained in this Agreement, and such
breach would entitle BFHI and Acquisition to terminate this Agreement
under Section 7.1(b) 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 BFHI or Acquisition) shall have (x) made,
or disclosed an intention to make, a bona fide proposal to USAB 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; or
(iv) A Loan Agreement Event of Default has occurred and the
Lender has filed a regulatory application pursuant to the Change in
Bank Control Act and/or has filed a court proceeding to execute on the
Bank Common Stock.
(e) USAB shall promptly notify BFHI and Acquisition in writing of the
occurrence of any Preliminary Termination Event or Termination Event.
8.2 Entire Agreement
This Agreement (including the Stockholder Agreement, the USAB Option
Agreement and the BFHI Promissory Note) and the Confidentiality Agreement
contain the entire agreement among the parties with respect to the transactions
contemplated hereby and supersede all prior arrangements or understandings with
respect thereto, written or oral.
8.3 Assignment; Successors
None of the parties hereto may assign any of its rights or obligations
under this Agreement to any other person without the prior written consent of
the other party or parties. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors. Except as provided in Sections 5.8 and 5.9 hereof,
nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors, any
rights, remedies, obligations or liabilities. In the event that BFHI or any of
its successors, (i) consolidates with or merges into any other person and shall
not be the continuing or surviving corporation or entity of such consolidation
or merger or (ii) transfers all or substantially all of its properties and
assets to any person, then, and in each such case, proper provision shall be
made so that the successors shall assume the obligations set forth in Sections
5.8 and 5.9 hereof, which obligations are expressly intended to be for the
irrevocable benefit of, and shall be enforceable by, each person covered
thereby.
44
8.4 Notices
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered personally or sent by
overnight express or by registered or certified mail, postage prepaid, addressed
as follows:
If to BFHI and Acquisition:
Berkshire Financial Holdings, Inc.
00 Xxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx, Chief Executive Officer
With a required copy to:
Xxxxxx Xxxx & Xxxxxx LLP
0000 Xxxxxx Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx, Esq.
Xxxxxxx X. Xxxx, Esq.
If to USAB or the Bank:
XXXXxxxXxxxxx.xxx, Inc.
c/o vBank, a Savings Bank
Xxx Xxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxx, President and Chief Executive Officer
With a required copy to:
Drinker Xxxxxx & Xxxxx LLP
One Xxxxx Square
00xx xxx Xxxxxx Xxxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Any notice, request, demand or other communication delivered or sent in the
manner aforesaid shall be deemed given or made (as the case may be) upon the
earliest of (i) the date it is actually received, (ii) the business day after
the day on which it is delivered by hand, (iii) the business day after the day
on which it is properly delivered to Federal Express (or a comparable overnight
delivery service), or (iv) the third business day after the day on which it is
deposited in the United States mail. USAB, the Bank, BFHI or Acquisition may
change its address by notifying the other party of its new address in the manner
set forth above.
45
8.5 Alternative Structure
Notwithstanding any provision of this Agreement to the contrary, BFHI
and Acquisition may elect, subject to the filing of all necessary applications
and the receipt of all required regulatory approvals, to modify the structure of
the Merger set forth herein, provided that (i) the Merger Consideration is not
thereby changed in kind or reduced in amount as a result of such modification or
alters the taxation of any amounts to be received by USAB's stockholders, (ii)
such modification will not materially delay or jeopardize receipt of any
required regulatory approvals or any other condition to BFHI's obligations set
forth in Sections 6.1 and 6.3 hereof, and such modification would not require
USAB to supplement, amend or prepare new proxy materials without USAB's prior
written consent.
8.6 Interpretation
The table of contents and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. The phrases "the date of this Agreement," "the
date hereof" and terms of similar import herein, unless the context otherwise
requires, shall be deemed to be the date first above written on page one (1)
hereof.
8.7 Counterparts
This Agreement may be executed in any number of counterparts, and each
such counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.
8.8 Governing Law
This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Pennsylvania applicable to agreements made and
entirely to be performed within such jurisdiction except to the extent federal
law may be applicable.
46
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
BERKSHIRE FINANCIAL HOLDINGS, INC.
Attest:
/s/ Xxxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxxxxx
--------------------- --------------------------------
Xxxxxx X. Xxxxx Name: Xxxxx X. Xxxxxxxx
Title: Chief Executive Officer
BFHI ACQUISITION CORPORATION
Attest:
/s/ Xxxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxxxxx
----------------------- --------------------------------
Xxxxxx X. Xxxxx Name: Xxxxx X. Xxxxxxxx
Title: Chief Executive Officer
XXXXXXXXXXXXX.XXX, INC.
Attest:
/s/ Xxxxx X. Xxxxx By: /s/ Xxxxxx X. Xxxxxx, Xx.
------------------------ -----------------------------------
Xxxxx X. Xxxxx Name: Xxxxxx X. Xxxxxx, Xx.
Title: Chief Financial Officer
vBANK, A SAVINGS BANK
Attest:
/s/ Xxxxxx X. Xxxxxx, Xx. By: /s/ Xxxxx X. Xxxxx
------------------------- ------------------------------------
Xxxxxx X. Xxxxxx, Xx. Name: Xxxxx X. Xxxxx
Title: President and Chief Executive Officer
47
EXHIBIT A
FORM OF STOCKHOLDER AGREEMENT
Xxxxx 0, 0000
Xxxxxxxxx Financial Holdings, Inc.
00 Xxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
Gentlemen:
The undersigned, a director or executive officer of XXXXxxxXxxxxx.xxx,
Inc. ("USAB") or vBank, a Savings Bank ("Bank") understands that Berkshire
Financial Holdings, Inc. ("BFHI") and BFHI Acquisition Corporation
("Acquisition") are about to enter into an Agreement and Plan of Reorganization
(the "Agreement") with USAB and the Bank. The Agreement provides for the merger
of Acquisition with and into USAB and the related conversion of all of the
outstanding common stock of USAB into the Merger Consideration set forth in the
Agreement.
In order to induce BFHI and Acquisition to enter into the Agreement,
and intending to be legally bound hereby, the undersigned agrees that in
connection with the proxy solicitation of USAB shareholder approval contemplated
by Section 5.2 of the Agreement, the undersigned will vote his shares FOR
approval of the Agreement and the transactions contemplated thereby with respect
to the shares of USAB Common Stock beneficially owned by the undersigned
individually or, to the extent of the undersigned's proportionate voting
interest, jointly with other persons, as well as (to the extent of the
undersigned's proportionate voting interest) any other shares of USAB Common
Stock over which the undersigned may hereafter acquire beneficial ownership
(collectively, the "Shares"). Subject to the penultimate paragraph of this
agreement, the undersigned further agrees that he will use his best efforts to
cause a vote FOR approval of the Agreement and the transactions referenced
therein to be provided with respect to any other shares of USAB Common Stock
over which he has or shares voting power.
The undersigned represents and warrants that he has or shares the
beneficial ownership of the number of shares of USAB Common Stock set forth on
Schedule I hereto.
The undersigned further agrees that until the earlier of (i) the
consummation of the transactions contemplated by the Agreement or (ii) the
termination of the Agreement in accordance with its terms, the undersigned will
not, directly or indirectly:
(a) vote any of the Shares or provide a consent with respect to such
Shares, or cause or permit any of the Shares to be voted or consented to, in
favor of any other merger, consolidation, plan of liquidation, sale of assets,
reclassification or other transaction involving USAB or the Bank which would
have the effect of any person, other than BFHI or an affiliate of BFHI,
acquiring control over USAB or the Bank or any substantial portion of the assets
of USAB or the Bank. As used herein, the term "control" means (i) the ability to
direct the voting of 10% or more of the outstanding voting securities of a
person having ordinary voting power in the election of directors or in the
election of any other body having similar functions or (ii) the ability to
direct the management and policies of a person, whether through ownership of
securities, through any contract, arrangement or understanding or otherwise.
A-1
(b) sell or otherwise transfer any of the Shares, or cause or permit
any of the Shares to be sold or otherwise transferred, (i) pursuant to any
tender offer, exchange offer or similar proposal made by any person, other than
BFHI or an affiliate of BFHI, (ii) to any person known by the undersigned to be
seeking to obtain control of USAB or the Bank or any substantial portion of the
assets of USAB or the Bank or to any other person, other than BFHI or an
affiliate of BFHI, under circumstances where such sale or transfer may
reasonably be expected to assist a person seeking to obtain such control or
(iii) for the principal purpose of avoiding the obligations of the undersigned
under this agreement.
It is understood and agreed that this agreement relates solely to the
capacity of the undersigned as a shareholder or other beneficial owner of the
Shares and, to the extent applicable, is not in any way intended to affect the
exercise by the undersigned of the undersigned's responsibilities as a director
or officer of USAB or the Bank. It is further understood and agreed that this
agreement is not in any way intended to affect the exercise by the undersigned
of any fiduciary responsibility which the undersigned may have in respect of any
Shares as of the date hereof.
Use of the masculine gender herein shall be considered to represent the
masculine, feminine or neuter gender whenever appropriate.
Very truly yours
----------------------------
Name
Accepted and Agreed to:
BERKSHIRE FINANCIAL HOLDINGS, INC.
By: ____________________________________
Name: Xxxxx X. Xxxxxxxx
Title: Chief Executive Officer
A-2
Schedule I
Number of Shares Beneficially
Name of Shareholder Owned of USAB Common Stock(1)
--------------------------------------------- ------------------------------------------
Xxxxxx X. Xxxxxxxx 133,562
Xxxxxxxx X. Xxxxx 17,688
Xxxxx X. Xxxxx 6,200
Xxxxxx Beach --
Xxxxxx X. Xxxxxx, Xx. 4,000
Xxxxx X. Xxxxx 82,810
-----------------
(1) Does not include options to purchase shares of USAB Common Stock.
A-3
EXHIBIT B
FORM OF
STOCK OPTION AGREEMENT
Stock Option Agreement ("Agreement"), dated as of March 9, 2002,
between Berkshire Financial Holdings, Inc., a Pennsylvania corporation
("Grantee"), and XXXXxxxXxxxxx.xxx, Inc., a Pennsylvania corporation ("Issuer").
W I T N E S S E T H:
WHEREAS, Grantee, Issuer, Berkshire Acquisition Corporation and vBank,
a Savings Bank (the "Bank") have entered into an Agreement and Plan of
Reorganization of even date herewith (the "Merger Agreement"), providing for,
among other things, the merger of a wholly owned subsidiary of Grantee with and
into Issuer (the "Merger");
WHEREAS, as a condition and an inducement to Grantee to enter into the
Merger Agreement, Grantee has requested that Issuer agree, and Issuer has
agreed, to grant Grantee the Option (as hereinafter defined); and
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Merger Agreement, the
parties hereto agree as follows:
1(a) Issuer hereby grants to Grantee an irrevocable option (the
"Option") to purchase, subject to the terms and conditions hereof, up to an
aggregate of 1,140,104 fully paid and nonassessable shares (the "Option Shares")
of common stock, par value $1.00 per share, of Issuer (the "Common Stock"), at a
price per share equal to $0.40 (the "Option Price"); provided, however, that in
no event shall the number of Option Shares for which this Option is exercisable
exceed 19.9% of the aggregate issued and outstanding shares of Common Stock
(including, for purposes hereof, securities convertible into Common Stock, the
"Capital Stock") without giving effect to any shares subject to or issued
pursuant to the Option. The number of shares of Common Stock that may be
received upon the exercise of the Option and the Option Price are subject to
adjustment as herein set forth.
(b) In the event that any additional shares of Capital Stock are issued
or otherwise become outstanding after the date of this Agreement (other than
pursuant to this Agreement and other than pursuant to an event described in
Section 5(a) hereof), including, without limitation, pursuant to stock option or
other employee plans or as a result of the exercise of conversion rights, the
number of Option Shares shall be increased so that, after such event, such
number equals 19.9% of the number of shares of Capital Stock then issued and
outstanding without giving effect to any shares subject to or issued pursuant to
the Option. Nothing contained in this Section l(b) or elsewhere in this
Agreement shall be deemed to authorize Issuer to issue shares in breach of any
provision of the Merger Agreement.
B-1
2(a) The Holder (as hereinafter defined) may exercise the Option, in
whole or part, and from time to time, if, but only if, both an Initial
Triggering Event (as hereinafter defined) and a Subsequent Triggering Event (as
hereinafter defined) shall have occurred prior to the occurrence of an Exercise
Termination Event (as hereinafter defined), provided that the Holder shall have
sent the written notice of the first exercise (as provided in paragraph (e) of
this Section 2) within 90 days following the first Subsequent Triggering Event
to occur (or such later period as provided in Section 7). Each of the following
shall be an Exercise Termination Event: (i) the Effective Time (as defined in
the Merger Agreement); (ii) termination of the Merger Agreement in accordance
with the provisions thereof if such termination occurs prior to the occurrence
of an Initial Triggering Event, except a termination by Grantee pursuant to
Section 7.1(b) of the Merger Agreement as a result of a willful breach of any
representation, warranty, covenant or agreement of Issuer; or (iii) the passage
of 15 months after termination of the Merger Agreement if such termination
follows the occurrence of an Initial Triggering Event or is a termination by
Grantee pursuant to Section 7.1(b) of the Merger Agreement as a result of a
willful breach of any representation, warranty, covenant or agreement of Issuer.
The term "Holder" shall mean the holder or holders of the Option pursuant to
this Agreement. Notwithstanding anything to the contrary contained herein, the
Option may not be exercised at any time when Grantee shall be in willful
material breach of any of its covenants or agreements contained in the Merger
Agreement such that Issuer shall be entitled to terminate the Merger Agreement
pursuant to Section 7.1(b) thereof as a result of such a willful material
breach.
(b) The term "Initial Triggering Event" shall mean any of the following
events or transactions occurring on or after the date hereof:
(i) any person (other than Grantee or any Subsidiary of
Grantee (a "Grantee Subsidiary") shall have commenced (as such term is defined
in Rule 14d-2 under the Securities Exchange Act of 1934, as amended (the "1934
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 Issuer Common Stock such that, upon consummation
of such offer, such person would own or control 10% or more of Issuer 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 Issuer Common Stock shall not have
approved the Merger Agreement through the solicitation of proxies conducted for
the purpose of voting on the Merger Agreement, (B) such proxy solicitation shall
not have been conducted prior to termination of the Merger Agreement or (C)
Issuer's Board of Directors shall have withdrawn or modified in a manner adverse
to Grantee the recommendation of Issuer's Board of Directors with respect to the
Merger Agreement, in each case after any person (other than Grantee or a Grantee
Subsidiary) shall have (x) made, or disclosed an intention to make, a bona fide
proposal to Issuer or its stockholders to engage in an Acquisition Transaction
(as hereinafter defined), (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;
B-2
(iii) Issuer or any Subsidiary of Issuer (an "Issuer
Subsidiary") shall have breached any representation, warranty, covenant or
obligation contained in the Merger Agreement, and such breach would entitle
Grantee to terminate the Merger Agreement under Section 7.1(b) thereof (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 the Merger Agreement), after any person (other than Grantee or a Grantee
Subsidiary) shall have (x) made, or disclosed an intention to make, a bona fide
proposal to Issuer 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. For purposes
of this Agreement, (a) "Acquisition Transaction" shall mean (x) a merger or
consolidation, or any similar transaction, involving Issuer or any Issuer
Subsidiary, (y) a purchase, lease or other acquisition of all or a substantial
portion of the assets or liabilities of Issuer or any Issuer Subsidiary or (z) a
purchase or other acquisition (including by way of share exchange, tender offer,
exchange offer or otherwise) of an interest in any class or series of equity
securities of Issuer or any Issuer Subsidiary; provided that "Acquisition
Transaction" shall not include any transaction involving Grantee or any Grantee
Subsidiary; and (b) "Subsidiary" shall have the meaning set forth in Rule 12b-2
under the 1934 Act; or
(iv) a Loan Agreement Event of Default (as defined in the
Merger Agreement) has occurred and the Lender (as defined in the Merger
Agreement) has filed a regulatory application pursuant to the Change in Bank
Control Act and/or has filed a court proceeding to execute on the Bank's Common
Stock (as defined in the Merger Agreement).
(c) The term "Subsequent Triggering Event" shall mean any of the
following events or transactions occurring after the date hereof:
(i) Issuer or any Issuer Subsidiary, without having received
Grantee's prior written consent, shall have entered into an agreement to engage
in an Acquisition Transaction with any person other than Grantee or any Grantee
Subsidiary, or the Board of Directors of Issuer shall have recommended that the
stockholders of Issuer approve or accept any Acquisition Transaction with an
Person other than Grantee or any Grantee Subsidiary;
(ii) any person, other than Grantee or any Grantee Subsidiary,
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 Issuer Common Stock or the Bank's Common Stock
(as defined in the Merger Agreement); or
(iii) one or more signatories to the Stockholder Agreement (as
defined in the Merger Agreement) shall have breached his or her obligations
pursuant to the Stockholder Agreement in a manner which materially adversely
affects the ability of Issuer to obtain the approval of the holders of Issuer
Common Stock of the Merger Agreement or otherwise materially adversely affects
the ability of the parties hereto to consummate the transactions contemplated
thereby.
B-3
(d) Issuer shall notify Grantee promptly in writing of the occurrence
of any Initial Triggering Event or Subsequent Triggering Event (together, a
"Triggering Event") of which it has notice, it being understood that the giving
of such notice by Issuer shall not be a condition to the right of the Holder to
exercise the Option.
(e) In the event the Holder is entitled to and wishes to exercise the
Option (or any portion thereof), it shall send to Issuer a written notice (the
date of which being herein referred to as the "Notice Date") specifying (i) the
total number of shares of Common Stock it will purchase pursuant to such
exercise and (ii) a place and date not earlier than three business days nor
later than 30 business days from the Notice Date for the closing of such
purchase (the "Closing"); provided that if prior notification to or approval of
any regulatory or antitrust agency is required in connection with such purchase,
the Holder shall promptly file the required notice or application for approval,
shall promptly notify Issuer of such filing and shall expeditiously process the
same and the period of time that otherwise would run pursuant to this sentence
shall run instead from the date on which any required notification periods have
expired or been terminated or such approvals have been obtained and any
requisite waiting period or periods shall have passed. Any exercise of the
Option shall be deemed to occur on the Notice Date relating thereto. The term
"business day" for purposes of this Agreement means any day, excluding
Saturdays, Sundays and any other day that is a legal holiday in the Commonwealth
of Pennsylvania or a day on which banking institutions in the Commonwealth of
Pennsylvania are authorized by law or executive order to close.
(f) At each Closing, the Holder shall (i) pay to Issuer an amount equal
to the Option Price multiplied by the number of Option Shares to be purchased at
such Closing in immediately available funds by wire transfer to a bank account
designated by Issuer, and (ii) present and surrender this Agreement to Issuer at
its principal executive offices, provided that the failure or refusal of the
Issuer to designate such a bank account or accept surrender of this Agreement
shall not preclude the Holder from exercising the Option.
(g) At each Closing, simultaneously with the delivery of immediately
available funds and surrender of this Agreement as provided in subsection (f) of
this Section 2, (i) Issuer shall deliver to the Holder (A) a certificate or
certificates representing the Option Shares purchased by the Holder at such
Closing and (B) if the Option should be exercised in part only, a new Option
evidencing the right of the Holder thereof to purchase the balance of the Option
Shares purchasable hereunder, and (ii) the Holder shall deliver to Issuer a
letter agreeing that the Holder will not offer to sell or otherwise dispose of
the Option Shares in violation of applicable law or the provisions of this
Agreement.
(h) Certificates for Option Shares delivered at each Closing hereunder
may be endorsed (in the sole discretion of Issuer) with a restrictive legend
that shall read substantially as follows:
B-4
"The transfer of the shares represented by this certificate is
subject to certain provisions of an agreement between the
registered holder hereof and Issuer and to resale restrictions
arising under the Securities Act of 1933, as amended. A copy
of such agreement is on file at the principal office of Issuer
and will be provided to the holder hereof without charge upon
receipt by Issuer of a written request therefor."
It is understood and agreed that: (i) the reference to the resale
restrictions of the Securities Act of 1933, as amended (the "1933 Act"), in the
above legend shall be removed by delivery of substitute certificate(s) without
such reference if the Holder shall have delivered to Issuer a copy of a letter
from the staff of the SEC, or an opinion of counsel, in form and substance
reasonably satisfactory to Issuer, to the effect that such legend is not
required for purposes of the 1933 Act; (ii) the reference to the provisions of
this Agreement in the above legend shall be removed by delivery of substitute
certificate(s) without such reference if the shares have been sold or
transferred in compliance with the provisions of this Agreement and under
circumstances that do not require the retention of such reference in the
reasonable opinion of counsel to the Holder; and (iii) the legend shall be
removed in its entirety if the conditions in the preceding clauses (i) and (ii)
are both satisfied. In addition, such certificates shall bear any other legend
as may be required by law.
(i) Upon the giving by the Holder to Issuer of the written
notice of exercise of the Option provided for under paragraph (e) of this
Section 2, the tender of the applicable Option Price in immediately available
funds and the tender of this Agreement to Issuer, the Holder shall be deemed,
subject to the receipt of any necessary regulatory approvals, to be the holder
of record of the shares of Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of Issuer shall then be closed or
that certificates representing such shares of Common Stock shall not then be
actually delivered to the Holder. Issuer shall pay all expenses, and any and all
United States federal, state and local taxes and other charges (other than any
applicable transfer taxes) that may be payable in connection with the
preparation, issue and delivery of stock certificates under this Section 2 in
the name of the Holder or its assignee, transferee or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock; (ii)
that it will not, by charter amendment or through reorganization, consolidation,
merger, dissolution or sale of assets, or by any other voluntary act, avoid or
seek to avoid the observance or performance of any of the covenants,
stipulations or conditions to be observed or performed hereunder by Issuer;
(iii) promptly to take all action as may from time to time be required
(including without limitation (x) complying with all applicable premerger
notification, reporting and waiting period requirements specified in 15 U.S.C.
Section 18a and regulations promulgated thereunder and (y) in the event, under
the Change in Bank Control Act of 1978, as amended, or any state or other
federal banking law, prior approval of or notice to any state or federal
regulatory authority is necessary before the Option may be exercised, cooperate
fully with the Holder in connection with the preparation of such applications or
notices and providing such information to such state or federal regulatory
authority as they may require) in order to permit the Holder to exercise the
Option and Issuer duly and effectively to issue shares of Common Stock pursuant
hereto; and (iv) promptly to take all action provided herein to protect the
rights of the Holder against dilution.
B-5
4. This Agreement and the Option granted hereby are exchangeable,
without expense, at the option of the Holder, upon presentation and surrender of
this Agreement at the principal office of Issuer, for other Agreements providing
for Options of different denominations entitling the holder thereof to purchase
on the same terms and subject to the same conditions as are set forth herein in
the aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any Stock Option
Agreements and related Options for which this Agreement (and the Option granted
hereby) may be exchanged. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, subject to the
aforementioned indemnification, if applicable, whether or not the Agreement so
lost, stolen, destroyed or mutilated shall at any time be enforceable by anyone.
5. In addition to the adjustment in the number of shares of Common
Stock that are purchasable upon exercise of the Option pursuant to Section 1 of
this Agreement, the number of Option Shares purchasable upon the exercise of the
Option and the Option Price shall be subject to adjustment from time to time as
provided in this Section 5.
(a) In the event of any change in, or distributions in respect of, the
Capital Stock by reason of stock dividend, split-up, merger, recapitalization,
combination, subdivision, conversion, exchange of shares, or similar
transaction, the type and number of Option Shares shall be adjusted
appropriately, and proper provision shall be made in the agreements governing
such transaction, so that Grantee shall receive upon exercise of the Option the
number and class of Option Shares that Grantee would have held immediately after
such event if the Option had been exercised immediately prior to such event, or
the record date therefor, as applicable.
(b) Whenever the number of Option Shares is adjusted as provided in
this Section 5, the Option Price shall be adjusted by multiplying the Option
Price in effect immediately before such change in the number of Option Shares by
a fraction, the numerator of which shall be equal to the number of Option Shares
purchasable prior to the adjustment and the denominator of which shall be equal
to the number of Option Shares purchasable after the adjustment.
6. Upon the occurrence of a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event, Issuer shall, at the request of Grantee
delivered within six months (or such later period as provided in Section 7)
following such Subsequent Triggering Event (whether on its own behalf or on
behalf of any subsequent holder of this Option (or part thereof) or any of the
Option Shares issued pursuant hereto), promptly prepare, file and keep current,
with respect to the Option Shares, a registration statement under the 1933 Act
and qualify such Option Shares for resale or other disposition under applicable
state securities laws, in each case in accordance with any plan of disposition
requested by Grantee. Issuer will use all reasonable efforts to cause such
registration statement promptly to become effective and then to remain effective
for such period not in excess of 180 days from the day such registration
statement first becomes effective or such shorter time as may be reasonably
necessary to effect such sales or other dispositions. Grantee shall have the
right to demand two such registrations. The Issuer shall bear the costs of such
registrations (including, but not limited to, Issuer's attorneys' fees, printing
costs and filing fees, except for underwriting discounts or commissions,
brokers' fees and the fees and disbursements of Grantee's counsel related
thereto). The foregoing notwithstanding, if, at the time of any request by
Grantee for registration of the Option Shares as provided above, Issuer is in
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registration with respect to an underwritten public offering by Issuer of shares
of Capital Stock, and if in the good faith judgment of the managing underwriter
or managing underwriters, or, if none, the sole underwriter or underwriters, of
such offering, the inclusion of the Option Shares would interfere with the
successful marketing of the shares of Capital Stock offered by Issuer, the
number of Option Shares otherwise to be covered in the registration statement
contemplated hereby may be reduced; provided, however, that after any such
required reduction the number of Option Shares to be included in such offering
for the account of the Holder shall constitute at least 25% of the total number
of shares to be sold by the Holder and Issuer in the aggregate; and provided
further, however, that if such reduction occurs, then Issuer shall file a
registration statement for the balance as promptly as practicable thereafter as
to which no reduction pursuant to this Section 6 shall be permitted or occur.
Each such Holder shall provide all information reasonably requested by Issuer
for inclusion in any such registration statement to be filed hereunder. If
requested by any such Holder in connection with such registration, Issuer shall
become a party to any underwriting agreement relating to the sale of such
shares, but only to the extent of obligating itself in respect of
representations, warranties, indemnities and other agreements customarily
included in secondary offering underwriting agreements. Upon receiving any
request under this Section 6 from any Holder, Issuer agrees to send a copy
thereof to any other person known to Issuer to be entitled to registration
rights under this Section 6, in each case by promptly mailing the same, postage
prepaid, to the address of record of the persons entitled to receive such
copies. Notwithstanding anything to the contrary contained herein, in no event
shall the number of registrations that Issuer is obligated to effect be
increased by reason of the fact that there shall be more than one Holder as a
result of any assignment or division of this Agreement.
7. The 90-day or 6-month periods for exercise of certain rights under
Sections 2, 6, and 9 shall be extended: (i) to the extent necessary to obtain
all regulatory approvals for the exercise of such rights (for so long as the
Holder is using its reasonable best efforts to obtain such regulatory
approvals), and for the expiration of all statutory waiting periods; (ii) during
the pendency of any temporary restraining order, injunction or other legal bar
to exercise of such rights; and (iii) to the extent necessary to avoid liability
under Section 16(b) of the 1934 Act by reason of such exercise.
B-7
8(a) Issuer hereby represents and warrants to Grantee as follows:
(i) Issuer has full corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of Issuer and no other corporate proceedings on the part of
Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by Issuer and is a valid and legally binding obligation of Issuer,
enforceable against Issuer in accordance with its terms, except that enforcement
thereof may be limited by the receivership, conservatorship and supervisory
powers of bank regulatory agencies generally as well as bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting enforcement of
creditors rights generally and except that enforcement thereof may be subject to
general principles of equity (regardless of whether enforcement is considered in
a proceeding in equity or at law) and the availability of equitable remedies.
(ii) Issuer has taken all necessary corporate action to
authorize and reserve and to permit it to issue, and at all times from the date
hereof through the termination of this Agreement in accordance with its terms
will have reserved for issuance upon the exercise of the Option, that number of
shares of Common Stock equal to the maximum number of shares of Common Stock at
any time and from time to time issuable hereunder, and all such shares, upon
issuance pursuant thereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrances and security interests and not subject to any preemptive rights.
(b) Grantee hereby represents and warrants to Issuer that:
(i) Grantee has full corporate power and authority to execute
and deliver this Agreement and, subject to any approvals or consents referred to
herein, to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Grantee and no other corporate proceedings on the part of Grantee are
necessary to authorize this Agreement or to consummate the transactions so
contemplated. This Agreement has been duly executed and delivered by Grantee and
is a valid and legally binding obligation of Grantee, enforceable against
Grantee in accordance with its terms, except that enforcement thereof may be
limited by the receivership, conservatorship and supervisory powers of bank
regulatory agencies generally as well as bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting enforcement of creditors rights
generally and except that enforcement thereof may be subject to general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law) and the availability of equitable remedies.
(ii) The Option is not being, and any shares of Common Stock
or other securities acquired by Grantee upon exercise of the Option will not be,
acquired with a view to the public distribution thereof and will not be
transferred or otherwise disposed of except in a transaction registered or
exempt from registration under the Securities Act.
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9. Neither of the parties hereto may assign any of its rights or
obligations under this Agreement or the Option created hereunder to any other
person, without the express written consent of the other party, except that in
the event a Subsequent Triggering Event shall have occurred prior to an Exercise
Termination Event, Grantee, subject to the express provisions hereof and
applicable law, may assign in whole or in part its rights and obligations
hereunder within six months following such Subsequent Triggering Event;
provided, however, that until the date 15 days following the date on which the
applicable federal or state bank regulatory authority approves an application by
Grantee to acquire the shares of Common Stock subject to the Option, Grantee may
not assign its rights under the Option except in a private placement in which no
one party acquires the right to purchase in excess of 9.9% of the voting shares
of Issuer or any other manner approved by the applicable federal or state bank
regulatory authority.
10. Each of Grantee and Issuer will use all reasonable efforts to make
all filings with, and to obtain consents of, all third parties and governmental
authorities necessary to the consummation of the transactions contemplated by
this Agreement, including, without limitation, applying to the applicable
federal or state bank regulatory authority for approval to acquire the shares
issuable hereunder and applying for listing or quotation of such shares on any
exchange or quotation system on which the Common Stock is then listed or quoted.
11. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief.
12. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that the Holder is not permitted to acquire the full number of shares of Common
Stock provided in Section l(a) hereof (as adjusted pursuant to Section l(b) or
Section 5 hereof), it is the express intention of Issuer to allow the Holder to
acquire such lesser number of shares as may be permissible, without any
amendment or modification hereof.
13. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
fax, telecopy or by registered or certified mail (postage prepaid, return
receipt requested) at the respective addresses of the parties set forth in the
Merger Agreement.
14. This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Pennsylvania, without regard to the
conflict of law principles thereof.
15. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement.
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16. Except as otherwise expressly provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers, accountants and
counsel.
17. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assigns.
Nothing in this Agreement, express or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors and
permitted assigns any rights, remedies, obligations or liabilities under or by
reason of this Agreement, except as expressly provided herein.
18. Capitalized terms used in this Agreement and not defined herein
shall have the meanings assigned thereto in the Merger Agreement.
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IN WITNESS WHEREOF, Grantee and Issuer have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
BERKSHIRE FINANCIAL HOLDINGS, INC.
Attest:
___________________________ By: __________________________
Xxxxxx X. Xxxxx Name: Xxxxx X. Xxxxxxxx
Title: Chief Executive Officer
XXXXXXXXXXXXX.XXX, INC.
Attest:
___________________________ By: __________________________
Xxxxx X. Xxxxx Name: Xxxxxx X. Xxxxxx, Xx.
Title: Chief Financial Officer
B-11
EXHIBIT C
FORM OF
AGREEMENT AND PLAN OF MERGER of
XXXXXXXXXXXXX.XXX, INC.
with BERKSHIRE FINANCIAL HOLDINGS, INC.
AGREEMENT AND PLAN OF MERGER agreed to this __ day of ___________ 2002,
between Berkshire Financial Holdings, Inc., a Pennsylvania corporation
("Company"), and XXXXxxxxxxxxx.xxx, Inc., a Pennsylvania corporation ("USAB").
WHEREAS, the Company owns all of the issued and outstanding capital
stock of USAB; and
WHEREAS, the Company wishes to approve, authorize, and consent to (i)
the merger of USAB with and into the Company pursuant to the Business
Corporation Law of 1988 of the Commonwealth of Pennsylvania ("BCL") and (ii) the
voluntary liquidation of USAB in accordance with Section 332 of the Internal
Revenue Code of 1986, as amended ("Code"), and pursuant to an Agreement and Plan
of Reorganization, dated as of March 8, 2002; and
WHEREAS, BFHI Acquisition Corporation, a Pennsylvania corporation and
former subsidiary of the Company, previously has merged with and into USAB.
NOW, THEREFORE, the parties hereto agree as follows:
1. The Company approves, authorizes, and consents to the merger and
liquidation of USAB.
2. Following the consummation of this Agreement and Plan of Merger and
Liquidation, USAB shall be liquidated in accordance with the provisions of
Section 332 of the Internal Revenue Code of 1986, as amended.
3. The officers of USAB are authorized and directed to distribute
USAB's assets (subject to its liabilities) within one year in cancellation of
its stock to the Company, as owner of all of its issued and outstanding stock.
4. The officers of USAB are further authorized and directed to take all
appropriate and necessary actions to liquidate USAB in accordance with the Code.
C-1
IN WITNESS WHEREOF, the parties hereto have caused this Agreement and
Plan of Merger and Liquidation to be executed by their respective duly
authorized officers as of the day and year first above written.
BERKSHIRE FINANCIAL HOLDINGS, INC.
Attest:
______________________________ By: __________________________
Name: Xxxxxx X. Xxxxx Name: Xxxxx X. Xxxxxxxx
Title: Corporate Secretary Title: Chief Executive Officer
XXXXXXXXXXXXX.XXX, INC.
Attest:
______________________________ By: __________________________
Name: Name:
Title: Title:
C-2
EXHIBIT D
AGREEMENT
AGREEMENT, dated this __ day of __________ 2002, between vBank, a
Savings Bank (the "Bank"), a wholly-owned subsidiary of Berkshire Financial
Holdings, Inc. (the "Corporation"), and Xxxxx X. Xxxxx (the "Executive").
WITNESSETH
WHEREAS, the Executive has served previously as an officer of the Bank
pursuant to an employment agreement dated as of October 29, 1999 (the "Prior
Agreement"), which is being terminated in connection with the closing of the
transactions contemplated by the Agreement and Plan of Reorganization among the
Corporation, BFHI Acquisition Corporation, XXXXxxxXxxxxx.xxx, Inc. and the Bank
dated March 9, 2002 (the "Merger Agreement");
WHEREAS, the Bank desires to be ensured of the Executive's continued
active participation in the business of the Bank;
WHEREAS, the Bank desires to enter into an employment agreement with
the Executive with respect to his employment by the Bank and to provide for the
severance payments to be made to Xx. Xxxxx with respect to the Prior Agreement;
NOW THEREFORE, in consideration of the mutual agreements herein
contained, and upon the other terms and conditions hereinafter provided, the
parties hereby agree as follows:
1. Definitions. The following words and terms shall have the meanings
set forth below for the purposes of this Agreement:
(a) Base Salary. "Base Salary" shall have the meaning set
forth in Section 4(a) hereof.
(b) Cause. Termination of the Executive's employment for
"Cause" shall mean termination because of personal dishonesty, incompetence,
willful misconduct, breach of fiduciary duty involving personal profit,
intentional failure to perform stated duties, willful violation of any law, rule
or regulation (other than traffic violations or similar offenses) or final
cease-and-desist order or material breach of any provision of this Agreement.
(c) Change in Control. "Change in Control" shall mean the
occurrence of any of the following events subsequent to the date of this
Agreement: (i) the acquisition of control of the Corporation as defined in the
Change in Bank Control Act of 1978, as amended, 12 U.S.C. ss. 1842(3), or any
successor to such sections; (ii) an event that would be required to be reported
in response to Item 1(a) of Form 8-K or Item 6(e) of Schedule 14A of Regulation
14A pursuant to the Securities Exchange Act of 1934, as amended ("Exchange
Act"), or any successor thereto, whether or not any class of securities of the
Corporation is registered under the Exchange Act; (iii) any "person" (as such
D-1
term is used in Sections 13(d) and 14(d) of the Exchange Act), other than a
trustee or other fiduciary holding securities under an employee benefit plan of
the Corporation, is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the
Corporation representing 25% or more of the combined voting power of the
Corporation's then outstanding securities; (iv) the sale or other disposition of
all or substantially all of the assets of the Bank or the transfer by the
Corporation of greater than 35% of the voting securities of the Bank; or (v)
during any period of three consecutive years, individuals who at the beginning
of such period constitute the Board of Directors of the Corporation or the Bank
cease for any reason to constitute at least a majority thereof unless the
election, or the nomination for election by stockholders, of each new director
was approved by a vote of at least two-thirds of the directors then still in
office who were directors at the beginning of the period.
(d) Code. "Code" shall mean the Internal Revenue Code of
1986, as amended.
(e) Date of Termination. "Date of Termination" shall mean (i)
if the Executive's employment is terminated for Cause or for Disability, the
date specified in the Notice of Termination, and (ii) if the Executive's
employment is terminated for any other reason, the date on which a Notice of
Termination is given or as specified in such Notice.
(f) Disability. Termination by the Bank of the Executive's
employment based on "Disability" shall mean termination because of any physical
or mental impairment which qualifies the Executive for disability benefits under
the applicable long-term disability plan maintained by the Bank or, if no such
plan applies, which would qualify the Executive for disability benefits under
the Federal Social Security System.
(g) Good Reason. Termination by the Executive of the
Executive's employment for "Good Reason" shall mean termination by the
Executive within twenty-four (24) months following a Change in Control based on:
(i) Without the Executive's express written consent, the
failure to elect or to re-elect or to appoint or to
re-appoint the Executive to the office of President
of the Philadelphia Region of the Bank or a material
adverse change made by the Bank which would reduce
the Executive's functions, duties or responsibilities
as President of the Philadelphia Region of the Bank;
(ii) Without the Executive's express written consent,
a reduction by the Bank in the Executive's Base
Salary as the same may be increased from time to
time;
D-2
(iii) Without the Executive's express written consent, the
Bank requires the Executive to be based anywhere
other than the Philadelphia metropolitan area in
which the Bank's principal executive office is
located, except for required travel on business of
the Bank to an extent substantially consistent with
the Executive's present business travel obligations;
(iv) Any purported termination of the Executive's
employment for Disability which is not effected
pursuant to a Notice of Termination satisfying the
requirements of paragraph (i) below; or
(v) The failure by the Bank to obtain the assumption of
and agreement to perform this Agreement by any
successor as contemplated in Section 10 hereof in
connection with a Change in Control.
(h) IRS. IRS shall mean the Internal Revenue Service.
(i) Notice of Termination. Any purported termination of the
Executive's employment by the Bank for any reason, including without limitation
for Cause or Disability, or by the Executive for any reason, including without
limitation for Good Reason, shall be communicated by written "Notice of
Termination" to the other party hereto. For purposes of this Agreement, a
"Notice of Termination" shall mean a dated notice which (i) indicates the
specific termination provision in this Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of Executive's employment under the provision so indicated, (iii)
specifies a Date of Termination, which shall be not less than thirty (30) nor
more than ninety (90) days after such Notice of Termination is given, except in
the case of the Bank's termination of Executive's employment for Cause, which
shall be effective immediately; and (iv) is given in the manner specified in
Section 11 hereof.
2. Payments Resulting from Prior Agreement. Pursuant to obligations of
the Bank incurred under the Prior Agreement, the Bank shall pay to the Executive
an aggregate amount equal to $350,000, payable as follows: (a) a lump sum
payment of $175,000 at the Effective Time (as such term is defined in the Merger
Agreement), and (b) an additional lump sum payment of $175,000, upon the earlier
to occur of (i) the one year anniversary of the date of this Agreement, or (ii)
the termination of this Agreement for any reason.
3. Term of Employment.
(a) The Bank hereby employs the Executive as President of the
Philadelphia Region of the Bank, and the Executive hereby accepts said
employment and agrees to render such services to the Bank, on the terms and
conditions set forth in this Agreement. The term of employment under this
Agreement shall be for a term of three years, commencing on the date of this
Agreement, unless such term is extended as provided in this Section 3. Prior to
the first annual anniversary of the date first above written and each annual
anniversary thereafter, the Board of Directors of the Bank shall consider,
review (with appropriate corporate documentation thereof, and after taking into
account all relevant factors, including the Executive's performance) and, if
appropriate, explicitly approve a one-year extension of the remaining term of
this Agreement. The term of this Agreement shall continue to extend each year if
the Board of Directors so approves such extension unless the Executive gives
written notice to the Bank of the Executive's election not to extend the term,
with such notice to be given not less than sixty (60) days prior to any such
anniversary date. If the Board of Directors elects not to extend the term, it
shall give written notice of such decision to the Executive not less than sixty
(60) days prior to any such anniversary date. If any party gives timely notice
that the term will not be extended as of any annual anniversary date, then this
Agreement shall terminate at the conclusion of its remaining term. References
herein to the term of this Agreement shall refer both to the initial term and
successive terms.
D-3
(b) During the term of this Agreement, the Executive shall
perform such executive services for the Bank as may be consistent with his
titles and from time to time assigned to him by the Bank's Board of Directors.
4. Compensation and Benefits.
(a) The Bank shall compensate and pay the Executive for his
services during the term of this Agreement at a minimum base salary of $175,000
per year ("Base Salary"), which may be increased from time to time in such
amounts as may be determined by the Board of Directors of the Bank and may not
be decreased without the Executive's express written consent. In addition to his
Base Salary, the Executive shall be entitled to receive during the term of this
Agreement such bonus payments as may be determined by the Board of Directors of
the Bank.
(b) During the term of this Agreement, the Executive shall be
entitled to participate in and receive the benefits of any pension or other
retirement benefit plan, profit sharing, stock option, employee stock ownership,
or other plans, benefits and privileges given to employees and executives of the
Bank, to the extent commensurate with his then duties and responsibilities as
fixed by the Board of Directors of the Bank.
(c) During the term of this Agreement, the Executive shall be
entitled to four (4) weeks of paid annual vacation. The Executive shall not be
entitled to receive any additional compensation from the Bank for failure to
take a vacation, nor shall the Executive be able to accumulate unused vacation
time from one year to the next, except to the extent authorized by the Board of
Directors of the Bank.
(d) In the event the Executive's employment is terminated due
to Disability, the Bank shall provide continued life, medical, dental and
disability coverage substantially identical to the coverage maintained by the
Bank for the Executive immediately prior to his termination at no expense to the
Executive. Upon the expiration of the term of this Agreement, Executive shall be
entitled to continue such coverage (at Executive's own expense) in accordance
with applicable state and Federal continuation coverage law.
(e) The Bank shall, during the term of this Agreement, provide
the Executive with a company-owned automobile and provide for its maintenance
and upkeep.
D-4
5. Expenses. The Bank shall reimburse the Executive or otherwise
provide for or pay for all reasonable expenses incurred by the Executive in
furtherance of or in connection with the business of the Bank, including, but
not by way of limitation, traveling expenses, subject to such reasonable
documentation and other limitations as may be established by the Board of
Directors of the Bank. If such expenses are paid in the first instance by the
Executive, the Bank shall reimburse the Executive therefor.
6. Termination.
(a) The Bank shall have the right, at any time upon prior
Notice of Termination, to terminate the Executive's employment hereunder for any
reason, including without limitation termination for Cause or Disability and the
Executive shall have the right, upon prior Notice of Termination, to terminate
his employment hereunder for any reason.
(b) In the event that (i) the Executive's employment is
terminated by the Bank for Cause or (ii) the Executive terminates his employment
hereunder other than for Disability, death or Good Reason, the Executive shall
have no right pursuant to this Agreement to compensation or other benefits for
any period after the applicable Date of Termination other than for Base Salary
accrued through the Date of Termination.
(c) In the event that the Executive's employment is terminated
as a result of Disability during the term of this Agreement, the Executive shall
receive his salary for the duration of the term of this Agreement. In the event
of the Executive's death during the term of the Agreement, the Executive's
estate shall receive his salary to the end of the term of this Agreement.
(d) In the event that (i) the Executive's employment is
terminated by the Bank for other than Cause, Disability, or the Executive's
death or (ii) such employment is terminated by the Executive (a) due to a
material breach of this Agreement by the Bank, which breach has not been cured
within fifteen (15) days after a written notice of non-compliance has been given
by the Executive to the Bank, or (b) for Good Reason, then the Bank shall,
subject to Section 7 hereof, if applicable:
(A) pay to the Executive, a cash severance amount equal to the
Executive's Base Salary as in effect immediately prior to the Date of
Termination, multiplied by two years ("Severance Pay"). Such Severance
Pay shall be paid in monthly installments beginning with the first
business day of the month following the Date of Termination and
continuing for two (2) years. The Board of Directors, at its sole
discretion, may elect to pay the Severance Pay to Executive on a more
accelerated schedule than that set forth in the immediately preceding
sentence.
D-5
(B) maintain and provide for a period ending at the earlier of
(i) the second anniversary of the Date of Termination or (ii) the date
of the Executive's full-time employment by another employer, at no cost
to the Executive, the Executive's continued participation in all group
insurance, life insurance, health and accident, disability and other
employee benefit plans, programs and arrangements in which the
Executive was entitled to participate immediately prior to the Date of
Termination (other than any stock option or other stock compensation
plans or bonus plans of the Bank or the Corporation), provided that in
the event that Executive's participation in any such plan, program or
arrangement is barred, the Bank shall arrange to provide Executive with
benefits substantially similar to those Executive was entitled to
receive under such plans, programs and arrangements prior to the Date
of Termination. Upon the expiration of the time period described in
this subsection, Executive may elect (at his own expense) to continue
such coverage in accordance with applicable state and Federal
continuation coverage laws.
7. Limitation of Benefits under Certain Circumstances. If the
payments and benefits pursuant to Section 6 hereof, either alone or together
with other payments and benefits which the Executive has the right to receive
from the Bank, would constitute a "parachute payment" under Section 280G of the
Code, the payments and benefits payable by the Bank pursuant to Section 6 hereof
shall be reduced, in the manner determined by the Executive, by the amount, if
any, which is the minimum necessary to result in no portion of the payments and
benefits payable by the Bank under Section 6 being non-deductible to the Bank
pursuant to Section 280G of the Code and subject to the excise tax imposed under
Section 4999 of the Code. The determination of any reduction in the payments and
benefits to be made pursuant to Section 6 shall be based upon the opinion of
independent counsel selected by the Bank's independent public accountants and
paid by the Bank. Such counsel shall be reasonably acceptable to the Bank and
the Executive; shall promptly prepare the foregoing opinion, but in no event
later than thirty (30) days from the Date of Termination; and may use such
actuaries as such counsel deems necessary or advisable for the purpose. Nothing
contained herein shall result in a reduction of any payments or benefits to
which the Executive may be entitled upon termination of employment under any
circumstances other than as specified in this Section 7, or a reduction in the
payments and benefits specified in Section 6 below zero.
8. Non-Competition. The Executive agrees that:
(a) During the term of his employment as well as the period of
time the Executive is receiving Severance Pay pursuant to the terms of this
Agreement, the Executive will not, directly or indirectly, participate in or act
as a principal, partner, officer, employee, agent, or consultant to any business
entity which is competitive with the business now or hereafter engaged in or
conducted by the Bank, nor shall the Executive hold greater than 5% of the
equity securities of any such business.
(b) For a period amounting to the later of: (i) one year
following the termination of this Agreement for any reason or (ii) the period of
time the Executive is receiving Severance Pay pursuant to the terms of this
Agreement, the Executive will not, directly or indirectly, solicit for
employment, or hire any person who during the term of this Agreement was engaged
as an employee or officer of the Bank or any of its subsidiary or affiliated
companies.
D-6
9. Withholding. All payments required to be made by the Bank hereunder
to the Executive shall be subject to the withholding of such amounts, if any,
relating to tax and other payroll deductions as the Bank may reasonably
determine should be withheld pursuant to any applicable law or regulation.
10. Assignability. The Bank may assign this Agreement and its rights
and obligations hereunder in whole, but not in part, to any corporation, bank or
other entity with or into which the Bank may hereafter merge or consolidate or
to which the Bank may transfer all or substantially all of its assets, if in any
such case said corporation, bank or other entity shall by operation of law or
expressly in writing assume all obligations of the Bank hereunder as fully as if
it had been originally made a party hereto, but may not otherwise assign this
Agreement or its rights and obligations hereunder. The Executive may not assign
or transfer this Agreement or any rights or obligations hereunder.
11. Notice. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below:
The Bank: Secretary
vBank, a Savings Bank
One Lincoln Plaza
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
With a copy to:
Secretary
Berkshire Financial Holdings, Inc.
00 Xxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
The Executive: Xxxxx X. Xxxxx
00 Xxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Any notice, request, demand or other communication delivered or sent in the
manner aforesaid shall be deemed given or made (as the case may be) upon the
earliest of (a) the date it is actually received, (b) the business day after the
day on which it is delivered by hand, (c) the business day after the day on
which it is properly delivered to Federal Express (or a comparable overnight
delivery service), or (d) the third business day after the day on which it is
deposited in the United States mail. The Bank or the Executive may change its
address by notifying the other party of the new address in any manner permitted
by this Section 11.
12. Amendment; Waiver. No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and such officer or officers as may be
specifically designated by the Board of Directors of the Bank to sign on its
behalf. No waiver by any party hereto at any time of any breach by any other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
D-7
13. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the United States
where applicable and otherwise by the substantive laws of the Commonwealth of
Pennsylvania.
14. Nature of Obligations. Nothing contained herein shall create or
require the Bank to create a trust of any kind to fund any benefits which may be
payable hereunder, and to the extent that the Executive acquires a right to
receive benefits from the Bank hereunder, such right shall be no greater than
the right of any unsecured general creditor of the Bank.
15. Headings. The 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.
16. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
17. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
18. Regulatory Prohibition. Notwithstanding any other provision of this
Agreement to the contrary, any payments made to the Executive pursuant to this
Agreement, or otherwise, are subject to and conditioned upon their compliance
with Section 18(k) of the FDIA (12 U.S.C.ss.1828(k)) and the regulations
promulgated thereunder, including 12 C.F.R. Part 359. Furthermore, following
such termination for Cause, the Executive will not, directly or indirectly,
participate in the affairs or the operations of the Bank.
19. Entire Agreement. This Agreement embodies the entire agreement
between the Bank and the Executive with respect to the matters agreed to herein.
All prior agreements between the Bank and the Executive with respect to the
matters agreed to herein are hereby superseded and shall have no force or
effect.
D-8
IN WITNESS WHEREOF, this Agreement has been executed as of the date
first above written.
vBANK, A Savings Bank
By: __________________________
Xxxxx X. Xxxxxxxx
Chief Executive Officer
EXECUTIVE
By: __________________________
Xxxxx X. Xxxxx
D-9
EXHIBIT E
FORM OF
TENANT ESTOPPEL LETTER
__________, 2002
Berkshire Financial Holdings, Inc.
00 Xxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
Re: ___________________, as amended __________________ ("Lease")
by and between vBank, A Savings Bank ("Landlord") and
__________________ ("Tenant") for the premises commonly known
as ____________________ ("Premises")
Dear __________:
In connection with the acquisition of vBank, A Savings Bank, by
Berkshire Financial Holdings, Inc. ("Assignee"), and the corresponding
assignment of the above referenced Lease, the undersigned Tenant hereby
certifies to Assignee that the following statements are true, correct and
complete as of the date hereof:
1. Tenant is the tenant under the Lease for the Premises. The term of
the Lease commenced on _____________, and will expire on _____________. There
have been no amendments, modifications or revisions to the Lease (except as set
forth on Schedule A hereto), and there are no agreements of any kind between
Landlord and Tenant regarding the Premises, except as provided in the attached
Lease.
2. Attached hereto as Schedule A is a true, correct and complete copy
of the Lease which has been duly authorized and executed by Tenant and which is
in full force and effect.
3. Tenant has accepted and is in sole possession of the Premises and is
presently occupying the Premises. The Lease has not been assigned, by operation
of law or otherwise, by Tenant, and no sublease, concession agreement or
license, covering the Premises, or any portion of the Premises, has been entered
into by Tenant.
4. Tenant is obligated to pay rent under the Lease in the total amount
of ______________________________ Dollars ($_________), payable in ______
installments of ___________________________ Dollars ($_________) (subject to
increases as provided in the Lease). No rent under the Lease has been paid more
than one (1) month in advance, and no other sums or security deposits have been
deposited with Landlord, except in the amount of $__________. (If none, state
"NONE"). Tenant is not entitled to rent concessions or free rent.
E-1
5. All conditions and obligations of Landlord relating to completion of
tenant improvements and making the Premises ready for occupancy by Tenant have
been satisfied or performed and all other conditions and obligations under the
Lease to be satisfied or performed by Landlord as of the date hereof have been
fully satisfied or performed.
6. To Tenant's knowledge, there exists no defense to, or right of
offset against, enforcement of the Lease by Landlord. Neither Tenant nor to
Tenant's knowledge, Landlord is in default under the Lease and no event has
occurred which, with the giving of notice or passage of time, or both, could
result in such a default.
7. Tenant has not received any notice of any present violation of any
federal, state, county or municipal laws, regulations, ordinances, orders or
directives relating to the use or condition of the Premises.
8. Except as specifically stated in the Lease, Tenant has not been
granted (a) any option to extend the term of the Lease; (b) any option to expand
the Premises or to lease additional space with in the Premises; (c) any right to
terminate the Lease prior to its stated expiration; or (d) any option or right
of first refusal to purchase the Premises or any part thereof.
9. Tenant acknowledges having been notified that Landlord's interest in
and to the Lease has been, or will be, assigned to Assignee. Until further
notice from Landlord, however, Tenant will continue to make all payments under
the Lease to Landlord and otherwise look solely to Landlord for the performance
of the Landlord's obligations under the Lease.
The agreements and certifications set forth herein are made with the
knowledge and intent that Assignee will rely on them in purchasing the Premises,
and Assignee's successors and assigns may rely upon them for that purpose.
Very truly yours,
[TENANT]
--------------------------------
By: ___________________________
Name: _________________________
Title: ________________________
E-2
SCHEDULE A
LEASE
E-3
EXHIBIT F
FORM OF
LANDLORD ESTOPPEL LETTER
__________, 2002
Berkshire Financial Holdings, Inc.
00 Xxxxxxx Xxxxx
Xxxxxxxxxxxx, XX 00000
Re: ___________________, as amended __________________ ("Lease")
by and between ______________ ("Landlord") and vBank,
A Savings Bank ("Tenant") for the premises commonly known as
____________________ ("Premises")
Dear __________:
In connection with the acquisition of vBank, A Savings Bank by
Berkshire Financial Holdings, Inc. ("Assignee"), and the corresponding
assignment of the above referenced Lease, the undersigned Landlord hereby
certifies to Assignee that the following statements are true, correct and
complete as of the date hereof:
1. Tenant is the tenant under the Lease for the Premises. The term of
the Lease commenced on _____________, and will expire on _____________. There
have been no amendments, modifications or revisions to the Lease (except as set
forth on Schedule A hereto), and there are no agreements of any kind between
Landlord and Tenant regarding the Premises, except as provided in the attached
Lease.
2. Attached hereto as Schedule A is a true, correct and complete copy
of the Lease which has been duly authorized and executed by Landlord and which
is in full force and effect.
3. Tenant has accepted and, to the Landlord's knowledge, is in sole
possession of the Premises and is presently occupying the Premises. To the
Landlord's knowledge, the Lease has not been assigned, by operation of law or
otherwise, by Tenant, and no sublease, concession agreement or license, covering
the Premises, or any portion of the Premises, has been entered into by Tenant.
4. Tenant began paying rent on _____________. Tenant is obligated to
pay rent under the Lease in the total amount of ________________________________
Dollars ($_____________), payable in ______ installments of
______________________________ Dollars ($__________) (subject to increases as
provided in the Lease). No rent under the Lease has been paid to Landlord more
than one (1) month in advance, and no other sums or security deposits have been
deposited with Landlord, except in the amount $__________. (If none, state
"NONE"). Tenant is not entitled to rent concessions or free rent.
F-1
5. To the Landlord's knowledge, all conditions and obligations of
Landlord relating to completion of tenant improvements and making the Premises
ready for occupancy by Tenant have been satisfied or performed and all other
conditions and obligations under the Lease to be satisfied or performed by
Landlord and Tenant as of the date hereof have been fully satisfied or
performed.
6. To Landlord's knowledge, there exists no defense to, or right of
offset against, enforcement of the Lease by Tenant. Neither Landlord nor, to
Landlord's knowledge, Tenant is in default under the Lease and no event has
occurred which, with the giving of notice or passage of time, or both, could
result in such a default.
7. Landlord has not received any notice of any present violation of any
federal, state, county or municipal laws, regulations, ordinances, orders or
directives relating to the use or condition of the Premises.
8. Except as specifically stated in the Lease, Tenant has not been
granted (a) any option to extend the term of the Lease, except as follows:
______________ (if none, state "NONE"); (b) any option to expand the Premises or
to lease additional space with in the Premises, except as follows:
_______________ (if none, state "NONE"); (c) any right to terminate the Lease
prior to its stated expiration, except as follows: _______________ (if none,
state "NONE"); or (d) any option or right of first refusal to purchase the
Premises or any part thereof, except as follows: ________________ (if none,
state "NONE").
The agreements and certifications set forth herein are made with the
knowledge and intent that Assignee will rely on them in purchasing the Premises,
and Assignee's successors and assigns may rely upon them for that purpose.
Very truly yours,
[LANDLORD]
-------------------------------
By: __________________________
Name: ________________________
Title: _______________________
F-2
SCHEDULE A
LEASE
F-3
EXHIBIT G
FORM OF BFHI PROMISSORY NOTE
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. THIS SECURITY
HAS BEEN ISSUED PURSUANT TO AN EXEMPTION FROM THE REGISTRATION STATEMENT
REQUIREMENTS OF THE SECURITIES ACT AND HAS NOT BEEN OFFERED PURSUANT TO A
REGISTRATION STATEMENT FILED WITH, AND DECLARED EFFECTIVE BY, THE SECURITIES AND
EXCHANGE COMMISSION ("SEC"). THIS SECURITY MAY NOT BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO THE
TERMS SET FORTH IN SECTION 9 OF THIS INSTRUMENT.
XXXXXXXXXXXXX.XXX, INC.
PROMISSORY NOTE
$2,976,000.00 _________ __, 0000
Xxxxxxxxxxxx, Xxxxxxxxxxxx
FOR VALUE RECEIVED, XXXXxxxXxxxxx.xxx, Inc., a Pennsylvania corporation
(the "Company"), promises to pay to the order of Berkshire Financial Holdings,
Inc. ("BFHI" or the "Holder"), at such place as the Holder hereof may from time
to time designate in writing, in lawful money of the United States of America,
without offset, the principal sum of Two Million and Nine Hundred and Seventy
Six Thousand Dollars and No Cents ($2,976,000.00), together with interest as
described below and in accordance with the following terms and provisions:
1. Interest Rate. The unpaid principal balance of this Promissory Note
(as the same may be amended, modified, supplemented, renewed or replaced from
time to time, the "Note") outstanding from time to time shall bear interest at
the rate of eight percent (8.0%) per annum. Interest shall accrue daily as set
forth herein, shall be calculated using a 360 day year and shall be payable upon
the Maturity Date to holders of record on the books of the Company as of the
close of business on the fifteenth day of the month in which such payment is due
to be made. The Note will bear interest from the original date of issuance of
the Note to the Maturity Date (as defined below). Payment of interest shall be
made by check mailed to the address of Holder or any assignee thereof as such
address shall appear in the books of the Company or, in accordance with
arrangements satisfactory to the Company, at the option of the Holder, by wire
transfer to an account designated in writing by the Holder. If any payment under
this Note shall become due on a Saturday, Sunday or public holiday under the
laws of the Commonwealth of Pennsylvania, such payment shall be made on the next
succeeding business day, but without the payment of any additional interest.
G-1
2. Maturity Date. The entire unpaid principal balance of this Note,
together with all accrued and unpaid interest, shall be due and payable upon the
earliest to occur of (i) September 9, 2002, (ii) the consummation of the
transactions contemplated by the Agreement and Plan of Reorganization among the
Company, vBank, a Savings Bank, BFHI and BFHI Acquisition Corporation dated
March 9, 2002 (the "Agreement") or (iii) the occurrence of a Termination Event,
as defined in the Agreement (as the case may be, the "Maturity Date").
3. Use of Loan Proceeds. The entire proceeds of the loan advanced by
BFHI to the Company, as evidenced by this Note, shall only be used by the
Company to repay outstanding indebtedness to Royal Bank of Pennsylvania in the
principal amount of $2,626,000 and a loan from vBank, a Savings Bank to the
Company in the principal amount of $350,000.
4. Prepayment. The Company shall have the right to prepay the Note in
whole, but not in part, without penalty or premium, at any time upon five (5)
days prior written notice to the Holder at the Holder's address appearing on the
records of the Company.
5. No Collateral. This Note is not secured by any assets of Maker.
6. Acceleration of Payment. If an Event of Default (as defined below)
occurs and is continuing, then the Holder may declare the principal amount of
and all accrued but unpaid interest on the Note to be due and payable
immediately, by a notice in writing to the Company, and upon any such
declaration, such principal amount and interest shall become immediately due and
payable. Upon payment of such amounts, all obligations of the Company in respect
of the payment of principal of and interest on the Note shall terminate.
For purpose of this Note, an "Event of Default" means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law, pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(a) a decree or order by a court having jurisdiction in the
premises shall have been entered adjudging the Company a bankrupt or
insolvent, or approving as properly filed a petition seeking
reorganization, readjustment, arrangement, composition or similar
relief for the Company under the Federal bankruptcy laws, or any other
similar applicable law of any governmental unit, domestic or foreign,
and such decree or order shall have continued undischarged or unstayed
for a period of 90 days; or a decree or order or other decision of a
court or agency or supervisory authority having jurisdiction in the
premises for the appointment of any person to act as a receiver or
conservator or liquidator or trustee or assignee in bankruptcy or
insolvency of the Company or of a substantial part of its property, or
for the involuntary winding up or liquidation of its affairs, shall
have been entered and such decree or order shall have remained in force
undischarged and unstayed for a period of 90 days; or, under the
provisions of any insolvency, bankruptcy, or other law for the relief
or aid of creditors or depositors, any court, or agency or supervisory
authority having jurisdiction in the premises shall assume custody or
control of the Company or of a substantial part of its property, and
such custody and control shall not be terminated or stayed within 90
days from the date of assumption of such custody or control; or any
substantial part of the property of the Company shall be sequestered or
attached and shall not be returned to the possession of the Company or
released from such attachment within 90 days thereafter; or
G-2
(b) the Company shall institute proceedings to be adjudicated
a voluntary bankrupt, or shall consent to the filing of a bankruptcy
proceeding against it, or shall file a petition or answer or consent
seeking reorganization, readjustment, arrangement, composition or
similar relief under the Federal bankruptcy laws, or any other similar
applicable law of any governmental unit, domestic or foreign, or shall
consent to the filing of any such petition or shall consent to the
appointment of a receiver or conservator or liquidator or trustee or
assignee in bankruptcy or insolvency of it or of a substantial part of
its property, or shall make an assignment for the benefit of creditors,
or shall admit in writing its inability to pay its debts generally as
they become due, or if corporate action shall be taken by the Company
in furtherance of any of the aforesaid purposes; or
(c) the Company fails to pay the principal or accrued interest
on the Note at the Maturity Date and such failure is continued for ten
days;
(d) the use by the Company of the Note proceeds for any reason
other than as required by Section 3 hereof.
7. No Impairment. The Company covenants that it shall not by amendment
of its Articles of Incorporation or through reorganization, consolidation,
merger, dissolution, issuance or sale of securities, sale of assets, or by any
other voluntary act or deed, avoid or seek to avoid the observance or
performance of any of its agreements, covenants, stipulations or conditions to
be observed or performed by it hereunder.
8. Transfer of Note.
(a) This Note may only be transferred in the manner set forth
below and only subsequent to the Maturity Date.
(b) This Note has not been registered under the Securities Act
of 1933 or any state securities laws. This Note has been issued
pursuant to an exemption from the registration statement requirements
of the Securities Act and has not been offered pursuant to any
registration statement filed with, and declared effective by, the SEC.
This Note may not be reoffered, sold, assigned, transferred, pledged,
encumbered or otherwise disposed of except pursuant to an effective
registration statement under such registration statement requirements
or pursuant to an exemption from such requirements. The Holder of this
Note by its acceptance hereof agrees to offer, sell or otherwise
transfer such Security only (a) to the Company, (b) pursuant to Rule
144a, to a person it reasonably believes is a "Qualified Institutional
Buyer" as defined in Rule 144a that purchases for its own account or
for the account of a Qualified Institutional Buyer to whom notice is
given that the transfer is being made in reliance on Rule 144a, (c) to
an "Accredited Investor" within the meaning of subparagraph (a) (1),
(2), (3) or (7) of Rule 501 under the Securities Act that is acquiring
this Note for its own account, or for the account of an "Accredited
Investor," for investment purposes and not with a view to, or for offer
or sale in connection with, any distribution in violation of the
Securities Act, or (d) pursuant to another available exemption from the
registration statement requirements of the Securities Act, subject to
the Company's right prior to any such offer, sale or transfer pursuant
to clause (c) or (d) to require the delivery of an opinion of counsel,
certification or other information satisfactory to it. The Holder of
this Note agrees that it will comply with the foregoing restrictions.
G-3
(c) This Note shall be registered on the books of the Company
kept at its principal office for that purpose, and shall be
transferable only on such books by the registered owner hereof in
person or by a duly authorized attorney upon surrender of this Note
properly endorsed, and only in compliance with this Section 9.
9. Notices. All notices, request, demands and other communications with
respect hereto shall be in writing and shall be delivered by had, sent prepaid
by Federal Express (or a comparable overnight delivery service) or sent by the
United States mail, certified, postage prepaid, return receipt requested, to the
following addresses:
(a) If to the Holder:
Berkshire Financial Services, Inc.
00 Xxxxxxxx XxxxxXxxxxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxxx
Chief Executive Officer
(b) If to the Company:
XXXXxxxXxxxxx.xxx, Inc.
c/o vBank, a Savings Bank
One Lincoln Plaza
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxx
President and Chief Executive Officer
Any notice, request, demand or other communication delivered or sent in
the manner aforesaid shall be deemed given or made (as the case may be) upon the
earliest of (i) the date it is actually received, (ii) the business day after
the day on which it is delivered by hand, (iii) the business day after the day
on which it is properly delivered to Federal Express (or a comparable overnight
delivery service), or (iv) the third business day after the day on which it is
deposited in the United States mail. The Company or the Holder may change its
address by notifying the other party of the new address in any manner permitted
by this Section 9.
10. Severability. If any provision of this Note, or the application
thereof to any person or circumstance, shall to any extent be invalid or
unenforceable, the remainder of the provisions of this Note, or the application
of such provision to other persons or circumstances, shall not be affected
thereby, and each provision of this Note shall be valid and enforceable to the
fullest extent permitted by law.
G-4
11. Successors and Assigns. This Note shall be binding upon and inure
to the benefit of the Company and the Holder, and their respective successors
and assigns; provided, however, that the Company may not assign or delegate its
rights or obligations hereunder without the prior written consent of the Holder.
12. Payments. All payments due hereunder, if any, shall be made in
immediately available funds.
13. Governing Law. This Note shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania, without reference
to conflict of law principles.
14. Miscellaneous. No provision of this Note shall alter or impair the
obligation of the Maker, which is absolute and unconditional, to pay the
principal of, and interest on, this Note at the time, place and rate and in the
coin or currency or stock, herein prescribed. This Note is a direct obligation
of the Maker.
IN WITNESS WHEREOF, the Company has executed this Note as of the date
first written above.
XXXXxxxxxxxxx.xxx, inc.
By:___________________________
Name: Xxxxxx X. Xxxxxx, Xx.
Title: Chief Financial Officer
G-5
EXHIBIT H
AGREEMENT OF MERGER
This Agreement of Merger is dated as of March 9, 2002, by and between
BFHI Acquisition Corporation ("Acquisition"), a Pennsylvania corporation, and
XXXXxxxXxxxxx.xxx, Inc. ("USAB"), a Pennsylvania corporation.
WHEREAS, Acquisition and USAB have entered into an Agreement and Plan
of Reorganization, dated as of the date hereof (the "Reorganization Agreement");
and
WHEREAS, pursuant to the Reorganization Agreement and this Agreement of
Merger, and subject to the terms and conditions set forth therein and herein,
Acquisition shall be merged with and into USAB, with USAB the surviving
corporation of such merger;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and in the Reorganization Agreement,
the parties hereto do mutually agree as follows:
ARTICLE
DEFINITIONS
Except as otherwise provided herein, the capitalized terms set forth
below shall have the following meanings:
1.1 "EFFECTIVE TIME" shall mean the date and time which the Merger
contemplated by this Agreement of Merger becomes effective as provided in
Section 2.2 of this Agreement of Merger.
1.2 "USAB COMMON STOCK" shall mean the common stock, par value $1.00
per share, of USAB.
1.3 "MERGER" shall refer to the merger of Acquisition with and into
USAB as provided in Section 2.1 of this Agreement of Merger.
1.4 "MERGING CORPORATION" shall collectively refer to Acquisition and
USAB.
1.5 "ACQUISITION COMMON STOCK" shall mean the common stock, par value
$.01 per share, of Acquisition.
1.6 "STOCKHOLDER MEETING" shall mean the meeting of the stockholders of
USAB held pursuant to Section 5.2 of the Reorganization Agreement.
1.7 "SURVIVING CORPORATION" shall mean USAB as the surviving
corporation of the Merger.
H-1
ARTICLE II
TERMS OF THE MERGER
2.1 THE MERGER. Subject to the terms and conditions set forth in the
Reorganization Agreement, at the Effective Time, Acquisition shall be merged
with and into USAB pursuant to Chapter 19, Subchapter C of the Pennsylvania
Business Corporation Law ("PBCL"). USAB shall be the Surviving Corporation of
the Merger and shall continue to be governed by the laws of the Commonwealth of
Pennsylvania. At the Effective Time, the separate existence and corporate
organization of Acquisition shall cease, and USAB shall thereupon and thereafter
possess all the rights, privileges, powers and franchises of a public as well as
of a private nature of each of Acquisition and USAB; and be subject to all the
restrictions, disabilities and duties of each of Acquisition and USAB; and all
and singular, the rights, privileges, powers and franchises of each of
Acquisition and USAB, and all property, real, personal and mixed, and all debts
due to either Acquisition or USAB on whatever account, as well for stock
subscriptions and all other things in action or belonging to each of Acquisition
and USAB shall be vested in the Surviving Corporation; and all property, rights,
privileges, powers and franchises, and all and every other interest shall be
thereafter as effectually the property of the Surviving Corporation as they were
of, respectively, Acquisition and USAB, and the title to any real estate vested
by deed or otherwise, under the laws of the Commonwealth of Pennsylvania or
elsewhere in either Acquisition or USAB shall not revert or be in any way
impaired by reason of the Merger, but all rights of creditors and all liens upon
any property of either of Acquisition or USAB shall be preserved unimpaired, and
all debts, liabilities and duties of Acquisition and USAB shall thenceforth
attach to the Surviving Corporation and may be enforced against it to the same
extent as if said debts, liabilities and duties had been incurred or contracted
by it.
2.2 EFFECTIVE TIME. The Merger shall become effective on the date and
at the time that Articles of Merger are executed and filed with the Secretary of
State of the Commonwealth of Pennsylvania pursuant to Section 1927 of the PBCL,
unless a later date and time is specified as the Effective Time in such Articles
of Merger.
2.3 NAME OF THE SURVIVING CORPORATION. The name of the Surviving
Corporation shall be "XXXXxxxXxxxxx.xxx, Inc."
2.4 ARTICLES OF INCORPORATION. On and after the Effective Time, the
Articles of Incorporation of USAB shall be the Articles of Incorporation of the
Surviving Corporation until amended in accordance with applicable law.
2.5 BYLAWS. On and after the Effective Time, the Bylaws of USAB shall
be the Bylaws of the Surviving Corporation until amended in accordance with
applicable law.
H-2
ARTICLE III
TERMS OF THE MERGER
3.1 CONVERSION OF USAB COMMON STOCK. Subject to Section 3.2 hereof,
each share of USAB Common Stock outstanding immediately prior to the Effective
Time, other than (i) shares held by USAB or the Bank and (ii) USAB Dissenting
Shares (as hereinafter defined), shall be converted into the right to receive
$0.60 per share in cash in accordance with the terms of Section 2.6(c) of the
Reorganization Agreement.
3.2 EXCHANGE OF CERTIFICATE FOR STOCK AND/OR CASH. After the Effective
Time, each holder of a certificate for theretofore outstanding shares of USAB
Common Stock, shall be surrendered and exchanged for cash in the manner provided
in Section 2.7 of the Reorganization Agreement.
3.3 DISSENTING SHARES. Notwithstanding anything in this Agreement of
Merger to the contrary, shares of USAB Common Stock which are outstanding
immediately prior to the Effective Time and which are held by stockholders who
shall not have voted such shares in favor of the Reorganization Agreement and
this Agreement of Merger and who shall have satisfied all of the applicable
requirements of Chapter 15, Subchapter D of the PBCL ("USAB Dissenting Shares"),
shall not be converted into the right to receive, or be exchangeable for, cash
as set forth in Section 3.1 hereof, but the holders thereof shall be entitled to
payment of the fair value of such shares in accordance with said section of the
PBCL, subject to the procedures and the conditions specified in such provision
of the PBCL, unless and until such holders shall have failed to perfect or shall
have effectively withdrawn or lost their right to appraisal and payment under
such law. If any such holder shall have failed to perfect or shall have
effectively withdrawn or lost such right of appraisal, the shares of USAB Common
Stock held by such holder shall thereupon be deemed to have been converted into
the right to receive, or be exchangeable at the Effective Time for, cash as
provided in 2.6(c) of the Reorganization Agreement.
3.4 ACQUISITION COMMON STOCK. The shares of Acquisition Common Stock
issued and outstanding immediately prior to the Effective Time shall, on and
after the Effective Time, become the issued and outstanding common stock of the
Surviving Corporation.
ARTICLE IV
MISCELLANEOUS
4.1 CONDITIONS PRECEDENT. The respective obligations of each party
under this Agreement of Merger shall be subject to the satisfaction, or waiver
by the party permitted to do so, of the conditions set forth in Article VI of
the Reorganization Agreement.
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4.2 TERMINATION. This Agreement of Merger shall be terminated
automatically without further act or deed of either of the parties hereto in the
event of the termination of the Reorganization Agreement in accordance with
Section 7.1 thereof.
4.3 AMENDMENTS. To the extent permitted by the PBCL, this Agreement of
Merger may be amended by a subsequent writing signed by each of the parties
hereto upon the approval of the Board of Directors of each of the parties
hereto; provided, however, that the provisions of Article III of this Agreement
of Merger relating to the consideration to be paid for the shares of USAB Common
Stock shall not be amended after the meeting of stockholders of USAB so as to
modify either the amount or the form of such consideration or to otherwise
materially adversely affect the shareholder of USAB without the approval of the
stockholders of USAB.
4.5 SUCCESSORS. This Agreement of Merger shall be binding on the
successors of Acquisition and USAB.
IN WITNESS WHEREOF, Acquisition and USAB have caused this Agreement of
Merger to be executed by their duly authorized officers as of the day and year
first above written.
BFHI ACQUISITION CORPORATION
Attest:
______________________ By: ______________________________
Xxxxxx X. Xxxxx Xxxxx X. Xxxxxxxx
Chief Executive Officer
XXXXXXXXXXXXX.XXX, INC.
Attest:
______________________ By: ______________________________
Xxxxx X. Xxxxx Xxxxxx X. Xxxxxx, Xx.
Chief Financial Officer
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TABLE OF CONTENTS
Page
Article I DEFINITIONS................................................................................2
Article II THE MERGER.................................................................................7
2.1 The Merger.....................................................................................7
2.2 Effect of the Merger...........................................................................7
2.3 Articles of Incorporation and Bylaws...........................................................7
2.4 Directors and Officers.........................................................................7
2.5 Effective Time.................................................................................8
2.6 Effect on Outstanding Shares...................................................................8
2.7 Shareholder Rights; Stock Transfers and Exchange Procedures....................................8
2.8 Dissenting Shares.............................................................................10
2.9 Additional Actions............................................................................10
Article III REPRESENTATIONS AND WARRANTIES OF USAB AND THE BANK.......................................10
3.1 Capital Structure of USAB.....................................................................10
3.2 Organization, Standing and Authority of USAB..................................................11
3.3 Ownership of USAB's Subsidiaries..............................................................11
3.4 Organization, Standing and Authority of USAB's Subsidiaries...................................12
3.5 Authorized and Effective Agreement; Consents and Approvals....................................12
3.6 Securities Documents and Regulatory Reports...................................................13
3.7 Financial Statements..........................................................................14
3.8 Material Adverse Change.......................................................................15
3.9 Environmental Matters.........................................................................15
3.10 Tax Matters...................................................................................16
3.11 Legal Proceedings.............................................................................18
3.12 Compliance with Laws..........................................................................19
3.13 Employee Benefit Plans........................................................................19
3.14 Certain Contracts.............................................................................21
3.15 Brokers and Finders...........................................................................22
3.16 Insurance.....................................................................................22
3.17 Properties....................................................................................22
3.18 Labor.........................................................................................23
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TABLE OF CONTENTS
(continued)
3.19 Transactions with Affiliates..................................................................23
3.20 Loans; Nonperforming Loans and Classified Assets..............................................23
3.21 Administration of Fiduciary Duties............................................................24
3.22 Required Vote.................................................................................24
3.23 Proxy Statement and Private Placement Memorandum Information..................................24
3.24 Disclosures...................................................................................25
Article IV REPRESENTATIONS AND WARRANTIES OF BFHI AND ACQUISITION....................................25
4.1 Capital Structure of BFHI.....................................................................25
4.2 Organization, Standing and Authority of BFHI..................................................25
4.3 Ownership of Subsidiaries.....................................................................26
4.4 Organization, Standing and Authority of Acquisition...........................................26
4.5 Authorized and Effective Agreement; Consents and Approvals....................................26
4.6 Legal Proceedings.............................................................................27
4.7 Brokers and Finders...........................................................................27
4.8 Proxy Statement and Private Placement Memorandum Information..................................28
4.9 Disclosures...................................................................................28
Article V COVENANTS.................................................................................28
5.1 Reasonable Best Efforts.......................................................................28
5.2 Solicitation of Shareholder Approval..........................................................28
5.3 Regulatory and Other Matters..................................................................29
5.4 Investigation and Confidentiality.............................................................30
5.5 Press Releases................................................................................30
5.6 Business of USAB and the Bank.................................................................30
5.7 Current Information...........................................................................34
5.8 Benefit Plans, Directors and Employment Matters...............................................34
5.9 Indemnification; Insurance....................................................................35
5.10 Real Estate...................................................................................36
5.11 Disclosure Supplements........................................................................36
5.12 Failure to Fulfill Conditions.................................................................36
5.13 Bridge Loan...................................................................................37
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Page
5.14 Offering......................................................................................37
5.15 Certain Policies..............................................................................37
5.16 USAB Options and Warrants.....................................................................38
Article VI CONDITIONS PRECEDENT......................................................................38
6.1 Conditions Precedent - All Parties...........................................................38
6.2 Conditions Precedent - USAB and the Bank......................................................39
6.3 Conditions Precedent - BFHI and Acquisition...................................................39
Article VII TERMINATION, WAIVER AND AMENDMENT.........................................................40
7.1 Termination...................................................................................40
7.2 Effect of Termination.........................................................................41
7.3 Survival of Representations, Warranties and Covenants.........................................42
7.4 Waiver........................................................................................42
7.5 Amendment or Supplement.......................................................................42
Article VIII MISCELLANEOUS.............................................................................42
8.1 Expenses; Termination Fee.....................................................................42
8.2 Entire Agreement..............................................................................45
8.3 Assignment; Successors........................................................................45
8.4 Notices.......................................................................................45
8.5 Alternative Structure.........................................................................46
8.6 Interpretation................................................................................46
8.7 Counterparts..................................................................................47
8.8 Governing Law.................................................................................47
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EXHIBIT A Form Of Stockholder Agreement..................................A-1
EXHIBIT B Form Of Stock Option Agreement.................................B-1
EXHIBIT C Form Of Agreement And Plan Of Merger Of
XxxxxxxXxxxxx.xxx, Inc. With Berkshire Financial Holdings,
Inc. ..........................................................C-1
EXHIBIT D Agreement......................................................D-1
EXHIBIT E Form Of Tenant Estoppel Letter.................................E-1
EXHIBIT F Form Of Landlord Estoppel Letter...............................F-1
EXHIBIT G Form Of Bfhi Promissory Note...................................G-1
EXHIBIT H Agreement Of Merger............................................H-1
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