EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
DATED AS OF
MAY 7, 2002
BY AND BETWEEN
THREE RIVERS BANCORP, INC.
AND
SKY FINANCIAL GROUP, INC.
TABLE OF CONTENTS
PAGE
ARTICLE I CERTAIN DEFINITIONS.................................................1
1.01 CERTAIN DEFINITIONS..............................................1
ARTICLE II THE MERGER.........................................................6
2.01 THE PARENT MERGER................................................6
2.02 THE SUBSIDIARY MERGER............................................7
2.03 EFFECTIVENESS OF THE PARENT MERGER...............................7
2.04 EFFECTIVE DATE AND EFFECTIVE TIME................................7
ARTICLE III CONSIDERATION; EXCHANGE PROCEDURES................................7
3.01 MERGER CONSIDERATION.............................................7
3.02 RIGHTS AS STOCKHOLDERS; STOCK TRANSFERS.........................12
3.03 FRACTIONAL SHARES...............................................12
3.04 EXCHANGE PROCEDURES.............................................13
3.05 ANTI-DILUTION PROVISIONS........................................14
3.06 OPTIONS.........................................................14
ARTICLE IV ACTIONS PENDING ACQUISITION.......................................14
4.01 FORBEARANCES OF THREE RIVERS....................................14
4.02 FORBEARANCES OF SKY.............................................16
ARTICLE V REPRESENTATIONS AND WARRANTIES.....................................17
5.01 DISCLOSURE SCHEDULES............................................17
5.02 STANDARD........................................................18
5.03 REPRESENTATIONS AND WARRANTIES OF THREE RIVERS..................18
5.04 REPRESENTATIONS AND WARRANTIES OF SKY...........................29
ARTICLE VI COVENANTS.........................................................35
6.01 REASONABLE BEST EFFORTS.........................................35
6.02 STOCKHOLDER APPROVAL............................................35
6.03 REGISTRATION STATEMENT..........................................35
6.04 PRESS RELEASES..................................................36
6.05 ACCESS; INFORMATION.............................................36
6.06 ACQUISITION PROPOSALS...........................................37
6.07 AFFILIATE AGREEMENTS............................................38
6.08 TAKEOVER LAWS...................................................38
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6.09 CERTAIN POLICIES................................................38
6.10. NASDAQ LISTING..................................................38
6.11 REGULATORY APPLICATIONS.........................................38
6.12 INDEMNIFICATION.................................................39
6.13 OPPORTUNITY OF EMPLOYMENT; EMPLOYEE BENEFITS; EXECUTIVE
ANNUAL INCENTIVE PLAN...........................................40
6.14 NOTIFICATION OF CERTAIN MATTERS.................................41
6.15 DIVIDEND COORDINATION...........................................41
6.16 SKY BOARD REPRESENTATION; ADVISORY BOARDS; SEVERANCE
FOR THREE RIVERS DIRECTORS......................................41
6.17 TAX TREATMENT...................................................41
6.18 NO BREACHES OF REPRESENTATIONS AND WARRANTIES...................41
6.19 CONSENTS........................................................41
6.20 INSURANCE COVERAGE..............................................42
6.21 CORRECTION OF INFORMATION.......................................42
6.22 CONFIDENTIALITY.................................................42
6.23 SUPPLEMENTAL ASSURANCES.........................................42
6.24 CONSULTING AGREEMENTS...........................................42
6.25 SUPPLEMENTAL IRS RULING.........................................43
ARTICLE VII CONDITIONS TO CONSUMMATION OF THE MERGER.........................43
7.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT
THE MERGER......................................................43
7.02 CONDITIONS TO OBLIGATION OF THREE RIVERS........................44
7.03 CONDITIONS TO OBLIGATION OF SKY.................................45
ARTICLE VIII TERMINATION.....................................................46
8.01 TERMINATION.....................................................46
8.02 EFFECT OF TERMINATION AND ABANDONMENT; ENFORCEMENT
OF AGREEMENT....................................................48
8.03 TERMINATION FEE.................................................48
ARTICLE IX MISCELLANEOUS.....................................................49
9.01 SURVIVAL........................................................49
9.02 WAIVER; AMENDMENT...............................................49
9.03 COUNTERPARTS....................................................49
9.04 GOVERNING LAW...................................................49
9.05 EXPENSES........................................................49
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9.06 NOTICES.........................................................49
9.07 ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES..............50
9.08 INTERPRETATION; EFFECT..........................................51
9.09 WAIVER OF JURY TRIAL............................................51
Exhibit A Form of Three Rivers Affiliate Agreement
Exhibit B Peer Group Commercial Financial Institutions for Index
pursuant to Section 8.01(e)
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This AGREEMENT AND PLAN OF MERGER, dated as of May 7, 2002 (this
"Agreement"), is by and between Three Rivers Bancorp, Inc. ("Three Rivers") and
Sky Financial Group, Inc. ("Sky").
RECITALS
A. Three Rivers. Three Rivers is a Pennsylvania corporation, having its
principal place of business in Monroeville, Pennsylvania.
B. Sky. Sky is a Ohio corporation, having its principal place of business
in Bowling Green, Ohio.
C. Intentions of the Parties. It is the intention of the parties to this
Agreement that the business combinations contemplated hereby be treated as a
"reorganization" under Section 368(a) of the Internal Revenue Code of 1986, as
amended.
D. Board Action. The respective Boards of Directors of each of Sky and
Three Rivers have determined that it is in the best interests of their
respective companies and their stockholders to consummate the strategic business
combinations provided for herein.
NOW, THEREFORE, in consideration of the foregoing premises and of the
mutual covenants, representations, warranties and agreements contained herein,
intending to be legally bound hereby, the parties agree as follows:
ARTICLE I
Certain Definitions
1.01 Certain Definitions. The following terms are used in this Agreement
with the meanings set forth below:
"Acquisition Proposal" means any tender or exchange offer, proposal for a
merger, consolidation or other business combination involving Three Rivers or
any of its Subsidiaries, or any proposal or offer to acquire in any manner a
substantial equity interest in, or a substantial portion of the assets or
deposits of, Three Rivers or any of its Subsidiaries, other than the
transactions contemplated by this Agreement.
"Agreement" means this Agreement, as amended or modified from time to time
in accordance with Section 9.02.
"All Cash Election" has the meaning set forth in Section 3.01(a)(ii).
"All Stock Election" has the meaning set forth in Section 3.01(a)(i).
"Agreement to Merge" has the meaning set forth in Section 2.02.
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"Bank" means Three Rivers Bank and Trust Company, a wholly-owned subsidiary
of Three Rivers.
"Cash Exchange Ratio" has the meaning set forth in Section 3.01.
"Code" means the Internal Revenue Code of 1986, as amended.
"Compensation and Benefit Plans" has the meaning set forth in Section
5.03(m)(i).
"Consultants" has the meaning set forth in Section 5.03(m)(i).
"Directors" has the meaning set forth in Section 5.03(m)(i).
"Disclosure Schedule" has the meaning set forth in Section 5.01.
"DSCP" means the Department of State of the Commonwealth of Pennsylvania.
"Effective Date" means the date on which the Effective Time occurs, as
provided for in Section 2.04.
"Effective Time" means the effective time of the Merger, as provided for in
Section 2.04.
"Election" has the meaning set forth in Section 3.01(d).
"Election Deadline" has the meaning set forth in Section 3.01(d).
"Election Form" has the meaning set forth in Section 3.01(d).
"Election Period" has the meaning set forth in Section 3.01(d).
"Employees" has the meaning set forth in Section 5.03(m)(i). All references
herein to "employees of Three Rivers" or "Three Rivers employees" shall be
deemed to mean employees of Bank.
"Environmental Laws" means all applicable local, state and federal
environmental, health and safety laws and regulations, including, without
limitation, the Resource Conservation and Recovery Act, the Comprehensive
Environmental Response, Compensation and Liability Act, the Clean Water Act, the
Federal Clean Air Act, and the Occupational Safety and Health Act, each as
amended, regulations promulgated thereunder, and state counterparts.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" has the meaning set forth in Section 5.03(m)(iii).
"ERISA Affiliate Plan" has the meaning set forth in Section 5.03(m)(iii).
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder.
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"Exchange Agent" has the meaning set forth in Section 3.04.
"Exchange Fund" has the meaning set forth in Section 3.04.
"FDIA" has the meaning set forth in Section 5.03(dd).
"FDIC" means the Federal Deposit Insurance Corporation.
"Governmental Authority" means any court, administrative agency or
commission or other federal, state or local governmental authority or
instrumentality.
"Indemnified Party" has the meaning set forth in Section 6.12(a).
"Information" has the meaning set forth in Section 6.22.
"IRS" has the meaning set forth in Section 5.03(m)(ii).
The term "knowledge" means, with respect to a party hereto, actual
knowledge of any officer of that party with the title of not less than a senior
vice president or that party's in-house counsel, if any.
"Lien" means any charge, mortgage, pledge, security interest, restriction,
claim, lien, or encumbrance.
"Material Adverse Effect" means, with respect to Sky or Three Rivers, any
effect that (i) is material and adverse to the financial position, results of
operations or business of Sky and its Subsidiaries taken as a whole, or Three
Rivers and its Subsidiaries taken as a whole, respectively, or (ii) would
materially impair the ability of either Sky or Three Rivers to perform its
obligations under this Agreement or otherwise materially threaten or materially
impede the consummation of the Merger and the other transactions contemplated by
this Agreement; provided, however, that Material Adverse Effect shall not be
deemed to include the impact of (a) changes in banking and similar laws of
general applicability or interpretations thereof by courts or governmental
authorities or other changes affecting depository institutions generally,
including changes in general economic conditions and changes in prevailing
interest and deposit rates, (b) any modifications or changes to valuation
policies and practices in connection with the Merger or restructuring charges
taken in connection with the Merger, in each case in accordance with generally
accepted accounting principles, (c) changes resulting from expenses (such as
legal, accounting and investment bankers' fees) incurred in connection with this
Agreement or the transactions contemplated herein, and (d) actions or omissions
of a party which have been waived in accordance with Section 9.02 hereof.
"Merger" collectively refers to the Parent Merger and the Subsidiary
Merger, as set forth in Section 2.01 and Section 2.02, respectively.
"Merger Consideration" has the meaning set forth in Section 3.01.
"Mixed Election" has the meaning set forth in Section 3.01(a)(iii).
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"NASD" means The National Association of Securities Dealers.
"NASDAQ" means The NASDAQ Stock Market, Inc.'s National Market System.
"New Certificates" has the meaning set forth in Section 3.04.
"OGCL" means the Ohio General Corporation Law.
"Old Certificates" has the meaning set forth in Section 3.04.
"OSS" means the Office of the Secretary of State of the State of Ohio.
"Parent Merger" has the meaning set forth in Section 2.01.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PBCL" means the Pennsylvania Business Corporation Law of 1988, as amended.
"PDB" means the Pennsylvania Department of Banking.
"Pension Plan" has the meaning set forth in Section 5.03(m)(ii).
"Person" means any individual, bank, corporation, partnership, association,
joint-stock company, business trust or unincorporated organization.
"Previously Disclosed" by a party shall mean information set forth in its
Disclosure Schedule. Disclosure of any information, agreement, or other item in
a party's Disclosure Schedule referenced by a particular Section in this
Agreement shall, should the existence of such information, agreement, or other
item or its contents be relevant to any other Section, be deemed to be disclosed
with respect to that Section whether or not an explicit cross-reference appears
in the Disclosure Schedule.
"Proxy/Prospectus" has the meaning set forth in Section 6.03(a).
"Proxy Statement" has the meaning set forth in Section 6.03(a).
"Registration Statement" has the meaning set forth in Section 6.03(a).
"Regulatory Authority" has the meaning set forth in Section 5.03(i)(i).
"Rights" means, with respect to any Person, securities or obligations
convertible into or exercisable or exchangeable for, or giving any person any
right to subscribe for or acquire, or any options, calls or commitments relating
to, or any stock appreciation right or other instrument the value of which is
determined in whole or in part by reference to the market price or value of,
shares of capital stock of such person.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.
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"Sky Articles" means the Articles of Incorporation of Sky, as amended.
"Sky Bank" means the Sky Bank, an Ohio banking corporation which is a
wholly-owned subsidiary of Sky.
"Sky Board" means the Board of Directors of Sky.
"Sky Code" means the Amended and Restated Code of Regulations of Sky.
"Sky Common Stock" means the common stock, without par value, of Sky.
"Sky's Financial Statements" has the meaning set forth in Section
5.04(l)(i).
"Sky Off Balance Sheet Transaction" has the meaning set forth in Section
5.04(o).
"Sky Preferred Stock" means the serial preferred stock, par value $10.00
per share, of Sky.
"Sky SEC Documents" has the meaning set forth in Section 5.04(g)(i).
"Sky Stock" means the Sky Common Stock and Sky Preferred Stock.
"Stock Exchange Ratio" has the meaning set forth in Section 3.01.
"Subsidiary" and "Significant Subsidiary" have the meanings ascribed to
them in Rule 1-02 of Regulation S-X of the SEC.
"Subsidiary Merger" has the meaning set forth in Section 2.02.
"Surviving Corporation" has the meaning set forth in Section 2.01.
"Takeover Laws" has the meaning set forth in Section 5.03(o).
"Tax" and "Taxes" means all federal, state, local or foreign taxes,
charges, fees, levies or other assessments, however denominated, including,
without limitation, all net income, gross income, gains, gross receipts, sales,
use, ad valorem, goods and services, capital, production, transfer, franchise,
windfall profits, license, withholding, payroll, employment, disability,
employer health, excise, estimated, severance, stamp, occupation, property,
environmental, unemployment or other taxes, custom duties, fees, assessments or
charges of any kind whatsoever, together with any interest and any penalties,
additions to tax or additional amounts imposed by any taxing authority whether
arising before, on or after the Effective Date.
"Tax Returns" means any return, amended return or other report (including
elections, declarations, disclosures, schedules, estimates and information
returns) required to be filed with respect to any Tax.
"Three Rivers" has the meaning set forth in the preamble to this Agreement.
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"Three Rivers Affiliate" has the meaning set forth in Section 6.07.
"Three Rivers Articles" means the Articles of Incorporation of Three
Rivers.
"Three Rivers Board" means the Board of Directors of Three Rivers.
"Three Rivers By-Laws" means the By-Laws of Three Rivers.
"Three Rivers Common Stock" means the common stock, par value $0.01 per
share, of Three Rivers.
"Three Rivers Financial Statements" has the meaning set forth in Section
5.03(q)(i).
"Three Rivers Meeting" has the meaning set forth in Section 6.02.
"Three Rivers Off Balance Sheet Transaction" has the meaning set forth in
Section 5.03(u).
"Three Rivers Preferred Stock" means the preferred stock, without par
value, of Three Rivers.
"Three Rivers SEC Documents" has the meaning set forth in Section 5.03(g).
"Three Rivers Stock" means Three Rivers Common Stock and Three Rivers
Preferred Stock.
"Three Rivers Stock Option" has the meaning set forth in Section 3.06.
"Three Rivers Stock Plans" means the option plans and agreements of Three
Rivers and its Subsidiaries pursuant to which rights to purchase Three Rivers
Common Stock are outstanding immediately prior to the Effective Time pursuant to
the Three Rivers Stock Option Plan, the Three Rivers Long-Term Incentive Plan,
and the Three Rivers Executive Annual Incentive Plan.
"Treasury Stock" shall mean shares of Three Rivers Stock held by Three
Rivers or any of its Subsidiaries or by Sky or any of its Subsidiaries, in each
case other than in a fiduciary capacity or as a result of debts previously
contracted in good faith.
ARTICLE II
The Merger
2.01 The Parent Merger. At the Effective Time, (i) Three Rivers shall be
merged with and into Sky (the "Parent Merger"), and (ii) the separate corporate
existence of Three Rivers shall cease and Sky shall survive and continue to
exist as an Ohio corporation (Sky, as the surviving corporation in the Parent
Merger, sometimes being referred to herein as the "Surviving Corporation"). The
Sky Articles, as in effect immediately prior to the Effective Time, shall be the
Articles of Incorporation of the Surviving Corporation, and the Amended and
Restated Code of
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Regulations of Sky, as in effect immediately prior to the Effective Time, shall
be the Code of Regulations of the Surviving Corporation. Sky may at any time
prior to the Effective Time change the method of effecting the Merger
(including, without limitation, the provisions of this Article II) if and to the
extent it deems such change to be necessary, appropriate or desirable; provided,
however, that no such change shall (i) alter or change the amount or kind of
consideration to be issued to holders of Three Rivers Stock as provided for in
Article III of this Agreement (subject to adjustment as provided in Sections
3.05 and 8.01(e)), (ii) adversely affect the tax treatment of Three Rivers'
stockholders as a result of receiving the Merger Consideration, or (iii)
materially impede or delay consummation of the transactions contemplated by this
Agreement.
2.02 The Subsidiary Merger. At the time specified by Sky Bank in its
Certificate of Merger filed with the OSS (which shall not be earlier than the
Effective Time), Bank shall merge with and into Sky Bank (the "Subsidiary
Merger") pursuant to an agreement to merge (the "Agreement to Merge") to be
executed by Bank and Sky Bank and filed with the OSS and the PDB, as required.
Upon consummation of the Subsidiary Merger, the separate corporate existence of
Bank shall cease and Sky Bank shall survive and continue to exist as a state
banking corporation. (The Parent Merger and the Subsidiary Merger shall
sometimes collectively be referred to as the "Merger".)
2.03 Effectiveness of the Parent Merger. Subject to the satisfaction or
waiver of the conditions set forth in Article VII, the Parent Merger shall
become effective upon the occurrence of the filings in the office of the OSS of
a certificate of merger in accordance with Section 1701.81 of the OGCL and in
the office of the DSCP of Articles of Merger in accordance with Section 1928 of
the PBCL, or such later date and time as may be set forth in such filings.
2.04 Effective Date and Effective Time. Subject to the satisfaction or
waiver of the conditions set forth in Article VII, the parties shall cause the
effective date of the Merger (the "Effective Date") to occur on (i) the third
business day to occur after the last of the conditions set forth in Article VII
shall have been satisfied or waived in accordance with the terms of this
Agreement (or, at the election of Sky, on the last business day of the month in
which such third business day occurs or, if such third business day occurs
within the last three business days of such month, on the last business day of
the succeeding month; provided, however, that no such election shall cause the
Effective Date to fall after the date specified in Section 8.01(c) hereof or
after the date or dates on which any Regulatory Authority approval or any
extension thereof expires, or (ii) such other date to which the parties may
agree in writing. The time on the Effective Date when the Merger shall become
effective is referred to as the "Effective Time."
ARTICLE III
Consideration; Exchange Procedures
3.01 Merger Consideration. Subject to the provisions of this Agreement, at
the Effective Time, automatically by virtue of the Parent Merger and without any
action on the part of any Person, each share (excluding Treasury Stock and
shares of Three Rivers Common Stock held by Sky) of Three Rivers Common Stock
issued and outstanding immediately prior to the Effective Time shall, by virtue
of the Merger and on the Effective Date, be converted at the
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election of the holder thereof (in accordance with the election and allocation
procedures set forth in Section 3.01(a), (d), (g), and (h)) into either (i)
shares of Sky Common Stock based upon a fixed exchange ratio of 0.80 shares of
Sky Common Stock for each share of Three Rivers Common Stock (subject to
adjustment as set forth in Sections 3.05 and 8.01(e), the "Stock Exchange
Ratio"); (ii) cash, at the rate of $18.27 for each share of Three Rivers Common
Stock (subject to adjustment as set forth in Section 3.05, the "Cash Exchange
Ratio"); or (iii) a combination of such shares of Sky Common Stock and cash, as
more fully set forth in Section 3.01(a)(iii). Subject to adjustment for the
shares of Three Rivers common stock held by Sky, shares of Three Rivers common
stock issued upon exercise of options between the date hereof and the Effective
Date, and for cash paid in lieu of fractional shares in accordance with Section
3.03, it is agreed and understood that the total consideration payable by Sky to
Three Rivers stockholders in connection with the Merger shall consist of
5,121,464 shares of Sky Common Stock and cash in the amount of $38,987,143
(collectively, the "Merger Consideration").
(a) Election as to Outstanding Three Rivers Common Stock. The Three
Rivers stockholders will have the following options in connection with the
exchange of their Three Rivers Common Stock in connection with the Merger:
(i) AT THE OPTION OF THE HOLDER, all of such holder's Three
Rivers Common Stock shall be converted into and become Sky Common
Stock at the Stock Exchange Ratio (such election, the "All Stock
Election"), provided that:
(A) Fractional shares will not be issued and cash (payable
by check) will be paid in lieu thereof as provided in Section
3.03; and
(B) Giving effect to Section 3.01(a)(i), (ii), and (iii), in
no event shall, in the aggregate, more than seventy-five percent
(75%) of Three Rivers Common Stock issued and outstanding on the
Effective Date be converted into and become shares of Sky Common
Stock; or
(ii) AT THE OPTION OF THE HOLDER, all of such holder's Three
Rivers Common Stock deposited with the Exchange Agent shall be
converted into and become cash (payable by check) at the Cash Exchange
Ratio (such election, the "All Cash Election"), provided that:
(A) Giving effect to Section 3.01(a)(i), (ii), and (iii), in
no event shall, in the aggregate, more than twenty-five percent
(25%) of such Three Rivers Common Stock issued and outstanding on
the Effective Date be converted into and become cash; or
(iii) AT THE OPTION OF THE HOLDER, seventy-five percent (75%) of
such holder's aggregate number of shares of Three Rivers Common Stock
shall be converted into and become shares of Sky Common Stock at the
rate of the Stock Exchange Ratio and twenty-five percent (25%) of such
holder's aggregate number of shares of Three Rivers Common Stock
deposited with the Exchange Agent shall be converted into and become
cash (payable by check) at
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the rate of the Cash Exchange Ratio (such election, the "Mixed
Election"), provided that:
(A) Fractional shares will not be issued and cash (payable
by check) will be paid in lieu thereof as provided in Section
3.03; and
(B) Giving effect to Section 3.01(a)(i), (ii), and (iii), in
no event shall, in the aggregate, more than seventy-five percent
(75%) of such Three Rivers Common Stock issued and outstanding on
the Effective Date be converted into and become shares of Sky
Common Stock; and
(C) Giving effect to Section 3.01(a)(i), (ii), and (iii), in
no event shall, in the aggregate, more than twenty-five percent
(25%) of such Three Rivers Common Stock issued and outstanding on
the Effective Date be converted into and become cash; or
(iv) IF NO ELECTION (AS DEFINED IN SECTION 3.01(d)) IS MADE BY
THE HOLDER BY THE ELECTION DEADLINE (AS DEFINED IN SECTION 3.01(d)),
all of such holder's shares of Three Rivers Common Stock shall be
converted into the right to receive Sky Common Stock as set forth in
Section 3.01(a)(i), cash as set forth in Section 3.01(a)(ii), or any
combination of Sky Common Stock and cash as determined by Sky, at the
Stock Exchange Ratio and the Cash Exchange Ratio, as applicable;
provided, however, that fractional shares shall not be issued and cash
will be paid in lieu thereof as provided in Section 3.03. Such shares
of Three Rivers Common Stock shall be allocated by Sky pro rata among
non-electing holders based upon the number of shares of Three Rivers
Common Stock for which an election has not been received by the
Election Deadline in order to achieve the overall ratio of
seventy-five percent (75%) of Three Rivers Common Stock to be
converted into Sky Common Stock and twenty-five percent (25%) of Three
Rivers Common Stock to be converted into cash. Notice of such
allocation shall be provided promptly to each stockholder whose shares
of Three Rivers Common Stock are allocated pursuant to this Section
3.01(a)(iv).
(b) Treasury Shares and Shares Held by Sky. Each share of Three Rivers
Common Stock held as Treasury Stock or held by Sky immediately prior to the
Effective Time shall be canceled and retired at the Effective Time and no
consideration shall be issued in exchange therefor.
(c) Outstanding Sky Common Stock. Each share of Sky Common Stock
issued and outstanding immediately prior to the Effective Time shall remain
issued and outstanding and unaffected by the Merger.
(d) Procedures for Election. An election form and other appropriate
transmittal materials in such form as Three Rivers and Sky shall mutually
agree (the "Election Form") shall be mailed to stockholders of Three Rivers
prior to the Election Period (defined below). The "Election Period" shall
be such period of time as Three
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Rivers and Sky shall mutually agree, within which Three Rivers
stockholders may validly elect the form of Merger Consideration set
forth in Section 3.01(a) (the "Election") that they will receive,
occurring between (i) the date of the mailing by Three Rivers of the
Proxy Statement for the special meeting of stockholders of Three
Rivers at which this Agreement is presented for approval and (ii) the
Effective Date. The "Election Deadline" shall be the time, specified
by Sky after consultation with Three Rivers, on the last day of the
Election Period.
(e) Perfection of the Election. An Election shall be considered to
have been validly made by a Three Rivers stockholder only if (i) the
Exchange Agent (as defined in Section 3.04) shall have received an Election
Form properly completed and executed by such stockholder, accompanied by a
certificate or certificates representing the shares of Three Rivers Common
Stock as to which such Election is being made, duly endorsed in blank or
otherwise in form acceptable for transfer on the books of Three Rivers, or
containing an appropriate guaranty of delivery in the form customarily used
in transactions of this nature from a member of a national securities
exchange or a member of the NASD or a commercial bank or trust company in
the United States and (ii) such Election Form and such certificate(s) or
such guaranty of delivery shall have been received by the Exchange Agent
prior to the Election Deadline.
(f) Withdrawal of Shares. Any Three Rivers stockholder may at any time
prior to the Election Deadline revoke its election and either (i) submit a
new Election Form in accordance with the procedures in Section 3.01(e), or
(ii) withdraw the certificate(s) for Three Rivers Common Stock deposited
therewith by providing written notice that is received by the Exchange
Agent by 5:00 p.m., local time for the Exchange Agent, on the business day
prior to the Election Deadline. Elections may be similarly revoked if the
Effective Date does not occur by January 31, 2003. In the event of the
termination of this Agreement, the Exchange Agent shall return any
certificates deposited by the holder of Three Rivers Common Stock to such
holder at the address and to the person set forth in the Election Form.
(g) Reduction of Shares Deposited for Cash. If more than twenty-five
percent (25%) of the total number of shares of Three Rivers Common Stock
issued and outstanding have, at the Election Deadline, been deposited for
cash pursuant to the All Cash Election or the Mixed Election and not
withdrawn pursuant to Section 3.01(f), Sky will promptly eliminate, or
cause to be eliminated by the Exchange Agent, from the shares deposited
pursuant to the All Cash Election (subject to the limitations described in
Section 3.01(g)(iv)), a sufficient number of such shares so that the total
number of shares remaining on deposit for cash pursuant to the All Cash
Election and the Mixed Election does not exceed twenty-five percent (25%)
of the shares of Three Rivers Common Stock issued and outstanding on the
Effective Date. The holders of Three Rivers Common Stock who have elected
to have their shares converted pursuant to the Mixed Election shall not be
required to have more than seventy-five percent (75%) of their shares of
Three Rivers Common Stock converted into Sky Common Stock. After giving
effect to Section 3.01(a)(iv), such elimination will be effected as
follows:
(i) Subject to the limitations described in Section 3.01(g)(iv),
Sky
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will eliminate or cause to be eliminated from the shares deposited
pursuant to the All Cash Election, and will add or cause to be added
to the shares deposited for Sky Common Stock pursuant to the All Stock
Election, on a pro rata basis in relation to the total number of
shares deposited pursuant to the All Cash Election minus the number of
shares so deposited by the holders described in Section 3.01(g)(iv)(A)
and the number of shares so deposited by the administrators of Three
Rivers' defined benefit pension plan and 401(k) plan, such number of
whole shares of Three Rivers Common Stock on deposit for cash pursuant
to the All Cash Election as may be necessary so that the total number
of shares remaining on deposit for cash pursuant to All Cash Election
or the Mixed Election is equal, as nearly as practicable, to
twenty-five percent (25%) of the shares of Three Rivers Common Stock
issued and outstanding on the Effective Date;
(ii) All shares of Three Rivers Common Stock that are eliminated
pursuant to Section 3.01(g)(i) from the shares deposited for cash
shall be converted into Sky Common Stock as provided by Section
3.01(a)(i);
(iii) Notice of such allocation shall be provided promptly to
each stockholder whose shares of Three Rivers Common Stock are
eliminated from the shares on deposit for cash pursuant to Section
3.01(g)(i); and
(iv) Notwithstanding the foregoing:
(A) the holders of one hundred (100) or fewer shares of
Three Rivers Common Stock of record on the date of this Agreement
who have elected the All Cash Election shall not be required to
have any of their shares of Three Rivers Common Stock converted
into Sky Common Stock;
(B) the administrators of the Three Rivers' defined benefit
pension plan and 401(k) plan shall not be required to have any of
the shares of Three Rivers Common Stock held in such plans
converted into Sky Common Stock if the appropriate administrator
has elected the All Cash Election, and shall not be required to
have more than seventy-five percent (75%) of the shares of Three
Rivers Common Stock held in such plans converted into Sky Common
Stock if the appropriate administrator has elected the Mixed
Election.
(h) Increase of Shares Deposited for Cash. If fewer than twenty-five
percent (25%) of the total number of shares of Three Rivers Common Stock
issued and outstanding have, at the Election Deadline, been deposited for
cash pursuant to the All Cash Election or the Mixed Election and not
withdrawn pursuant to Section 3.01(f), Sky will promptly add, or cause to
be added by the Exchange Agent, to such deposited shares, a sufficient
number of shares of Three Rivers Common Stock deposited for shares of Sky
Common Stock pursuant to the All Stock Election (subject to the limitation
described in Section 3.01(h)(iv)) so that the total number of shares of
Three Rivers Common Stock on deposit for cash pursuant to the All Cash
Election or the Mixed Election on the Effective Date is not less than
twenty-five percent (25%) of the shares of Three Rivers Common
11
Stock issued and outstanding on the Effective Date. The holders of Three
Rivers Common Stock who have elected to have their shares converted
pursuant to the Mixed Election shall not be required to have more than
twenty-five percent (25%) of their shares of Three Rivers Common Stock
converted into cash. After giving effect to Section 3.01(a)(iv), such
addition will be effected as follows:
(i) Subject to the limitation described in Section 3.01(h)(iv),
Sky will add or cause to be added to the shares deposited for cash
pursuant to the All Cash Election or the Mixed Election, and will
eliminate or cause to be eliminated from the shares deposited for Sky
Common Stock pursuant to the All Stock Election, on a pro rata basis
in relation to the total number of shares of Three Rivers Common Stock
deposited for shares of Sky Common Stock pursuant to the All Stock
Election minus the number of shares so deposited by the administrators
of Three Rivers' defined benefit pension plan and 401(k) plan, such
number of whole shares of Three Rivers Common Stock not then on
deposit for cash as may be necessary so that the number of shares
remaining on deposit for cash is equal, as nearly as practicable, to
twenty-five percent (25%) of the shares of Three Rivers Common Stock
issued and outstanding on the Effective Date;
(ii) All shares of Three Rivers Common Stock that are added
pursuant to Section 3.01(h)(i) to the shares deposited for cash shall
be converted into cash as provided by Section 3.01(a)(ii);
(iii) Notice of such allocation shall be provided promptly to
each stockholder whose shares of Three Rivers Common Stock are added
to the shares on deposit for cash pursuant to Section 3.01(h)(i); and
(iv) Notwithstanding the foregoing, the administrators of the
Three Rivers' defined benefit pension plan and 401(k) plan shall not
be required to have any of the shares of Three Rivers Common Stock
held in such plans converted into cash if the appropriate
administrator has elected the All Stock Election, and shall not be
required to have more than twenty-five percent (25%) of the shares of
Three Rivers Common Stock held in such plans converted into cash if
the administrator has elected the Mixed Election.
3.02 Rights as Stockholders; Stock Transfers. At the Effective Time,
holders of Three Rivers Common Stock shall cease to be, and shall have no rights
as, stockholders of Three Rivers, other than to receive any dividend or other
distribution with respect to such Three Rivers Common Stock with a record date
occurring prior to the Effective Time and the consideration provided under this
Article III. After the Effective Time, there shall be no transfers on the stock
transfer books of Three Rivers or the Surviving Corporation of any shares of
Three Rivers Stock.
3.03 Fractional Shares. Notwithstanding any other provision hereof, no
fractional shares of Sky Common Stock and no certificates or scrip therefor, or
other evidence of ownership thereof, will be issued in the Merger; instead, Sky
shall pay to each holder of Three Rivers Common Stock who would otherwise be
entitled to a fractional share of Sky Common Stock (after taking into account
all Old Certificates delivered by such holder) an amount in cash
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(without interest) determined by multiplying such fractional share of Sky Common
Stock to which the holder would be entitled by the last sale price of Sky Common
Stock (as reported by the NASDAQ, as reported in The Wall Street Journal or, if
not reported therein, in another authoritative source) for the average of 20
NASDAQ trading days immediately preceding the Effective Date.
3.04 Exchange Procedures. (a) At or prior to the Effective Time, Sky shall
deposit, or shall cause to be deposited, with The Bank of New York (in such
capacity, the "Exchange Agent"), for the benefit of the holders of certificates
formerly representing shares of Three Rivers Common Stock ("Old Certificates"),
for exchange in accordance with this Article III, certificates representing the
shares of Sky Common Stock ("New Certificates") and an estimated amount of cash
(such cash and New Certificates, together with any dividends or distributions
with a record date occurring on or after the Effective Date with respect thereto
(without any interest on any such cash, dividends or distributions), being
hereinafter referred to as the "Exchange Fund") to be paid pursuant to this
Article III in exchange for outstanding shares of Three Rivers Common Stock.
(b) As promptly as practicable after the Effective Date, Sky shall cause
the New Certificates into which shares of a stockholder's Three Rivers Common
Stock are converted on the Effective Date and/or any check in respect of cash to
be paid as part of the Merger Consideration and in respect of any fractional
share interests or dividends or distributions which such person shall be
entitled to receive to be delivered to such stockholder upon delivery to the
Exchange Agent of Old Certificates representing such shares of Three Rivers
Common Stock (or an indemnity affidavit reasonably satisfactory to Sky and the
Exchange Agent, if any of such certificates are lost, stolen or destroyed) owned
by such stockholder. No interest will be paid on any such cash to be paid in
lieu of fractional share interests or in respect of dividends or distributions
which any such person shall be entitled to receive pursuant to this Article III
upon such delivery.
(c) Notwithstanding the foregoing, neither the Exchange Agent, if any, nor
any party hereto shall be liable to any former holder of Three Rivers Common
Stock for any amount properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(d) No dividends or other distributions with respect to Sky Common Stock
with a record date occurring on or after the Effective Date shall be paid to the
holder of any unsurrendered Old Certificate representing shares of Three Rivers
Common Stock converted in the Merger into the right to receive shares of such
Sky Common Stock until the holder thereof shall be entitled to receive New
Certificates in exchange therefor in accordance with the procedures set forth in
this Section 3.04. After becoming so entitled in accordance with this Section
3.04, the record holder thereof also shall be entitled to receive any such
dividends or other distributions, without any interest thereon, which theretofor
had become payable with respect to shares of Sky Common Stock such holder had
the right to receive upon surrender of the Old Certificates.
(e) Any portion of the Exchange Fund that remains unclaimed by the
stockholders of
13
Three Rivers for nine months after the Effective Time shall be paid to Sky. Any
stockholders of Three Rivers who have not theretofor complied with this Article
III shall thereafter look only to Sky for payment of the shares of Sky Common
Stock, cash in lieu of any fractional shares and unpaid dividends and
distributions on Sky Common Stock deliverable in respect of each share of Three
Rivers Common Stock such stockholder holds as determined pursuant to this
Agreement, in each case, without any interest thereon.
3.05 Anti-Dilution Provisions. In the event Sky changes (or establishes a
record date for changing) the number of shares of Sky Common Stock issued and
outstanding between the date hereof and the Effective Date as a result of a
stock split, stock dividend, recapitalization, reclassification, split up,
combination, exchange of shares, readjustment or similar transaction with
respect to the outstanding Sky Common Stock and the record date therefor shall
be prior to the Effective Date, the Stock Exchange Ratio and the Cash Exchange
Ratio shall be proportionately adjusted.
3.06 Options. On the Effective Date, each outstanding option to purchase
shares of Three Rivers Common Stock under the Three Rivers Stock Plans (each, a
"Three Rivers Stock Option"), shall be terminated in exchange for a cash payment
by Sky to each holder of a Three Rivers Stock Option in an amount equal to the
Cash Exchange Ratio minus the applicable exercise price per share for Three
Rivers Common Stock covered by any such Three Rivers Stock Option, multiplied by
the number of shares of Three Rivers Common Stock covered by such Three Rivers
Stock Option. At or prior to the Effective Time, Three Rivers shall use its best
efforts, including using its best efforts to obtain any necessary consents from
optionees, with respect to the Three Rivers Stock Plans to permit the
termination of the outstanding Three Rivers Stock Options by Sky pursuant to
this Section 3.06.
ARTICLE IV
Actions Pending Acquisition
4.01 Forbearances of Three Rivers. From the date hereof until the Effective
Time, except as expressly contemplated by this Agreement and/or disclosed on the
Disclosure Schedule, without the prior written consent of Sky, Three Rivers will
not, and will cause each of its Subsidiaries not to:
(a) Ordinary Course. Conduct the business of Three Rivers and its
Subsidiaries other than in the ordinary and usual course or fail to use
reasonable efforts to preserve intact their business organizations and
assets and maintain their rights, franchises and existing relations with
customers, suppliers, employees and business associates, or voluntarily
take any action which, at the time taken, is reasonably likely to have an
adverse affect upon Three Rivers' ability to perform any of its material
obligations under this Agreement.
(b) Capital Stock. Other than pursuant to Rights Previously Disclosed
and outstanding on the date hereof, (i) issue, sell or otherwise permit to
become outstanding, or authorize the creation of, any additional shares of
Three Rivers Stock or any Rights, (ii) enter into any agreement with
respect to the foregoing, or (iii) permit any additional shares of Three
Rivers Stock to become subject to new grants of employee or director
14
stock options, other Rights or similar stock-based employee rights.
(c) Dividends, Etc. (i) Make, declare, pay or set aside for payment
any dividend, other than (A) quarterly cash dividends on Three Rivers Stock
in an amount not to exceed the per share amount declared and paid in its
most recent quarterly cash dividend, with record and payment dates as
indicated in Section 6.15 hereof, and (B) dividends from wholly-owned
Subsidiaries to Three Rivers, or (ii) directly or indirectly adjust, split,
combine, redeem, reclassify, purchase or otherwise acquire, any shares of
its capital stock.
(d) Compensation; Employment Agreements; Etc. Enter into or amend or
renew any employment, consulting, severance or similar agreements or
arrangements with any director, officer or employee of Three Rivers or its
Subsidiaries (other than the normal extension of the four existing change
of control agreements with senior management), or grant any salary or wage
increase or increase any employee benefit (including incentive or bonus
payments), except (i) for normal individual increases in compensation to
employees in the ordinary course of business consistent with past practice,
(ii) for other changes that are required by applicable law, and (iii) to
satisfy Previously Disclosed contractual obligations existing as of the
date hereof. Three Rivers shall have available, to facilitate retention of
Three Rivers employees, a bonus pool for key employees of Three Rivers for
use or commitment prior to the Effective Date, it being understood and
agreed that the designation of such employees and the amount of the bonus
payable to each of them shall be subject to the prior reasonable approval
of Sky.
(e) Benefit Plans. Enter into, establish, adopt or amend (except (i)
as may be required by applicable law, (ii) to satisfy Previously Disclosed
contractual obligations existing as of the date hereof or (iii) the regular
annual renewal of insurance contracts) any pension, retirement, stock
option, stock purchase, savings, profit sharing, deferred compensation,
consulting, bonus, group insurance or other employee benefit, incentive or
welfare contract, plan or arrangement, or any trust agreement (or similar
arrangement) related thereto, in respect of any director, officer or
employee of Three Rivers or its Subsidiaries, or take any action to
accelerate the vesting or exercisability of stock options, restricted stock
or other compensation or benefits payable thereunder.
(f) Dispositions. Sell, transfer, mortgage, encumber or otherwise
dispose of or discontinue any of its assets, deposits, business or
properties except in the ordinary course of business.
(g) Acquisitions. Acquire (other than by way of foreclosures or
acquisitions of control in a bona fide fiduciary capacity or in
satisfaction of debts previously contracted in good faith, in each case in
the ordinary and usual course of business consistent with past practice)
all or any portion of, the assets, business, deposits or properties of any
other entity.
(h) Governing Documents. Amend the Three Rivers Articles, Three Rivers
By-Laws or the Articles of Incorporation or By-laws (or similar governing
documents) of
15
any of Three Rivers' Subsidiaries, except for immaterial By-law amendments
Previously Disclosed to Sky.
(i) Accounting Methods. Implement or adopt any change in its
accounting principles, practices or methods, other than as may be required
by generally accepted accounting principles.
(j) Contracts. Except in the ordinary course of business consistent
with past practice, enter into or terminate any material contract (as
defined in Section 5.03(k)) or amend or modify in any material respect any
of its existing material contracts.
(k) Claims. Except in the ordinary course of business consistent with
past practice, settle any claim, action or proceeding, except for any
claim, action or proceeding which does not involve precedent for other
material claims, actions or proceedings and which involve solely money
damages in an amount, individually or in the aggregate for all such
settlements, that is not material to Three Rivers and its Subsidiaries,
taken as a whole.
(l) Adverse Actions. (a) Take any action while knowing that such
action would, or is reasonably likely to, prevent or impede the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the
Code; or (b) knowingly take any action that is intended or is reasonably
likely to result in (i) any of its representations and warranties set forth
in this Agreement being or becoming untrue in any material respect at any
time at or prior to the Effective Time, (ii) any of the conditions to the
Merger set forth in Article VII not being satisfied or (iii) a material
violation of any provision of this Agreement except, in each case, as may
be required by applicable law or regulation.
(m) Risk Management. Except pursuant to applicable law or regulation,
(i) implement or adopt any material change in its interest rate risk
management and other risk management policies, procedures or practices;
(ii) fail to follow its existing policies or practices with respect to
managing its exposure to interest rate and other risk; or (iii) fail to use
commercially reasonable means to avoid any material increase in its
aggregate exposure to interest rate risk.
(n) Indebtedness. Incur any indebtedness for borrowed money other than
in the ordinary course of business.
(o) Commitments. Agree or commit to do any of the foregoing.
4.02 Forbearances of Sky. From the date hereof until the Effective Time,
except as expressly contemplated by this Agreement, without the prior written
consent of Three Rivers, Sky will not, and will cause each of its Subsidiaries
not to:
(a) Ordinary Course. Conduct the business of Sky and its Subsidiaries
other than in the ordinary and usual course or fail to use reasonable
efforts to preserve intact their business organizations and assets (other
than as previously discussed with Three Rivers) and maintain their rights,
franchises and existing relations with customers,
16
suppliers, employees and business associates, or voluntarily take any
action which, at the time taken, is reasonably likely to have an adverse
affect upon Sky's ability to perform any of its material obligations under
this Agreement.
(b) Preservation. Fail to use reasonable efforts to preserve intact in
any material respect their business organizations and assets and maintain
their rights, franchises and existing relations with customers, suppliers,
employees and business associates.
(c) Accounting Methods. Implement or adopt any change in its
accounting principles, practices or methods, other than as may be required
by generally accepted accounting principles.
(d) Adverse Actions. (a) Take any action while knowing that such
action would, or is reasonably likely to, prevent or impede the Merger from
qualifying as a reorganization within the meaning of Section 368(a) of the
Code; or (b) knowingly take any action that is intended or is reasonably
likely to result in (i) any of its representations and warranties set forth
in this Agreement being or becoming untrue in any material respect at any
time at or prior to the Effective Time, (ii) any of the conditions to the
Merger set forth in Article VII not being satisfied or (iii) a material
violation of any provision of this Agreement except, in each case, as may
be required by applicable law or regulation.
(e) Risk Management. Except pursuant to applicable law or regulation,
(i) fail to follow its existing policies or practices with respect to
managing its exposure to interest rate and other risk, or (ii) fail to use
commercially reasonable means to avoid any material increase in its
aggregate exposure to interest rate risk.
(f) Commitments. Agree or commit to do any of the foregoing.
ARTICLE V
Representations and Warranties
5.01 Disclosure Schedules. On or prior to the date hereof, Sky has
delivered to Three Rivers a schedule and Three Rivers has delivered to Sky a
schedule (respectively, its "Disclosure Schedule") setting forth, among other
things, items, the disclosure of which are necessary or appropriate either in
response to an express disclosure requirement contained in a provision hereof or
as an exception to one or more representations or warranties contained in
Section 5.03 or 5.04 or to one or more of its respective covenants contained in
Article IV and Article VI; provided, however, that (a) no such item is required
to be set forth in a Disclosure Schedule as an exception to a representation or
warranty if its absence would not be reasonably likely to result in the related
representation or warranty being deemed untrue or incorrect under the standard
established by Section 5.02, and (b) the mere inclusion of an item in a
Disclosure Schedule as an exception to a representation or warranty shall not be
deemed an admission by a party that such item represents a material exception or
fact, event or circumstance or that such item is reasonably likely to have or
result in a Material Adverse Effect on the party making
17
the representation. Three Rivers' representations, warranties and covenants
contained in this Agreement shall not be deemed to be untrue, incorrect or to
have been breached as a result of effects on Three Rivers arising solely from
actions taken in compliance with a written request of Sky.
5.02 Standard. No representation or warranty of Three Rivers or Sky
contained in Section 5.03 or 5.04 shall be deemed untrue or incorrect, and no
party hereto shall be deemed to have breached a representation or warranty, as a
consequence of the existence of any fact, event or circumstance unless such
fact, circumstance or event, individually or taken together with all other
facts, events or circumstances inconsistent with any representation or warranty
contained in Section 5.03 or 5.04 has had, or is reasonably likely to have, a
Material Adverse Effect.
5.03 Representations and Warranties of Three Rivers. Subject to
Sections 5.01 and 5.02 and except as Previously Disclosed in a paragraph of its
Disclosure Schedule corresponding to the relevant paragraph below, Three Rivers
hereby represents and warrants to Sky:
(a) Organization, Standing and Authority. Three Rivers is a
corporation duly organized, validly existing and in good standing under the
laws of the Commonwealth of Pennsylvania and any foreign jurisdictions
where its ownership or leasing of property or assets or the conduct of its
business requires it to be so qualified. Three Rivers is registered as a
bank holding company under the Bank Holding Company Act of 1956, as
amended. Bank is a Pennsylvania state bank chartered under the Pennsylvania
Banking Code of 1965, as amended, and is duly organized, validly existing
and in good standing under the laws of the Commonwealth of Pennsylvania.
Three Rivers is duly qualified to do business and is in good standing in
the Commonwealth of Pennsylvania and any foreign jurisdictions where its
ownership or leasing of property or assets or the conduct of its business
requires it to be so qualified.
(b) Capital Structure of Three Rivers. The authorized capital stock of
Three Rivers consists solely of 25,000,000 shares, of which (A) 20,000,000
shares are Three Rivers Common Stock, par value $0.01 per share, of which
8,541,099 shares were outstanding as of May 3, 2002, and (B) 5,000,000
shares are Three Rivers Preferred Stock, without par value, of which no
shares were outstanding as of May 3, 2002. The outstanding shares of Three
Rivers Common Stock have been duly authorized, are validly issued and
outstanding, fully paid and nonassessable, and are not subject to any
preemptive rights (and were not issued in violation of any preemptive
rights). As of May 3, 2002, (i) there were no shares of Three Rivers Common
Stock authorized and reserved for issuance, (ii) Three Rivers did not have
any Rights issued or outstanding with respect to Three Rivers Common Stock,
and (iii) Three Rivers did not have any commitment to authorize, issue or
sell any Three Rivers Common Stock or Rights, except pursuant to this
Agreement. The number of shares of Three Rivers Common Stock which were
issuable and reserved for issuance upon exercise of Three Rivers Stock
Options as of April 30, 2002 was Previously Disclosed in Three Rivers'
Disclosure Schedule.
(c) Subsidiaries.
18
(i) (A) Three Rivers has Previously Disclosed a list of all of
its Subsidiaries together with the jurisdiction of organization of
each such Subsidiary, (B) it owns, directly or indirectly, all the
issued and outstanding equity securities of each of its Subsidiaries,
(C) no equity securities of any of its Subsidiaries are or may become
required to be issued (other than to it or its wholly-owned
Subsidiaries) by reason of any Right or otherwise, (D) there are no
contracts, commitments, understandings or arrangements by which any of
such Subsidiaries is or may be bound to sell or otherwise transfer any
equity securities of any such Subsidiaries (other than to it or its
wholly-owned Subsidiaries), (E) there are no contracts, commitments,
understandings, or arrangements relating to its rights to vote or to
dispose of such securities and (F) all the equity securities of each
Subsidiary held by Three Rivers or its Subsidiaries are fully paid and
nonassessable (except pursuant to 12 U.S.C. Section 55) and are owned
by Three Rivers or its Subsidiaries free and clear of any Liens.
(ii) Three Rivers does not own beneficially, directly or
indirectly, any equity securities or similar interests of any Person,
or any interest in a partnership or joint venture of any kind, other
than its Subsidiaries.
(iii) Each of Three Rivers' Subsidiaries has been duly organized
and is validly existing in good standing under the laws of the
jurisdiction of its organization, and is duly qualified to do business
and in good standing in the jurisdictions where its ownership or
leasing of property or the conduct of its business requires it to be
so qualified.
(d) Corporate Power; Authorized and Effective Agreement. Each of Three
Rivers and its Subsidiaries has full corporate power and authority to carry
on its business as it is now being conducted and to own all its properties
and assets. Three Rivers has the corporate power and authority to execute,
deliver and perform its obligations under this Agreement. Bank has the
corporate power and authority to consummate the Subsidiary Merger and the
Agreement to Merge in accordance with the terms of this Agreement.
(e) Corporate Authority. Subject to receipt of the requisite adoption
of this Agreement by the holders of a majority of the outstanding shares of
Three Rivers Common Stock entitled to vote thereon (which is the only
stockholder vote required thereon), this Agreement and the transactions
contemplated hereby have been authorized by all necessary corporate action
of Three Rivers and the Three Rivers Board prior to the date hereof. The
Agreement to Merge, when executed by Bank, shall have been approved by the
Board of Directors of Bank and by the Three Rivers Board, as the sole
stockholder of Bank. This Agreement is a valid and legally binding
obligation of Three Rivers, enforceable in accordance with its terms
(except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and similar
laws of general applicability relating to or affecting creditors' rights or
by general equity principles). The Three Rivers Board has received the
written opinion of Sandler ▇'▇▇▇▇▇ & Partners, L.P. to the effect that as
of the date hereof the consideration to be received by the holders of Three
Rivers Common Stock in the Merger is fair to the
19
holders of Three Rivers Common Stock from a financial point of view.
(f) Regulatory Filings; No Defaults.
(i) No consents or approvals of, or filings or registrations
with, any Governmental Authority or with any third party are required
to be made or obtained by Three Rivers or any of its Subsidiaries in
connection with the execution, delivery or performance by Three Rivers
of this Agreement or to consummate the Merger except for (A) filings
of applications, notices and the Agreement to Merge, as applicable,
with federal and state banking authorities, (B) filings with the SEC
and state securities authorities, and (C) the filings of the
certificate of merger with the OSS pursuant to the OGCL and the
Articles of Merger with the DSCP pursuant to the PBCL. As of the date
hereof, Three Rivers is not aware of any reason why the approvals set
forth in Section 7.01(b) will not be received without the imposition
of a condition, restriction or requirement of the type described in
Section 7.01(b).
(ii) Subject to receipt of the regulatory and stockholder
approvals referred to above and expiration of related regulatory
waiting periods, and required filings under federal and state
securities laws, the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby
do not and will not (A) constitute a breach or violation of, or a
default under, or give rise to any Lien, any acceleration of remedies
or any right of termination under, any law, rule or regulation or any
judgment, decree, order, governmental permit or license, or agreement,
indenture or instrument of Three Rivers or of any of its Subsidiaries
or to which Three Rivers or any of its Subsidiaries or properties is
subject or bound, (B) constitute a breach or violation of, or a
default under, the Three Rivers Articles or the Three Rivers By-Laws,
or (C) require any consent or approval under any such law; rule,
regulation, judgment, decree, order, governmental permit or license,
agreement, indenture or instrument.
(g) Financial Reports and SEC Documents; Material Adverse Effect. (i)
Three Rivers' Annual Reports on Form 10-K for the fiscal years ended
December 31, 2000 and 2001 and all other reports, registration statements,
definitive proxy statements or information statements filed or to be filed
by it or any of its Subsidiaries subsequent to December 31, 2000 under the
Securities Act, or under Section 13, 14 ,or 15(d) of the Exchange Act, in
the form filed or to be filed (collectively, "Three Rivers SEC Documents")
with the SEC, as of the date filed, (A) complied or will comply in all
material respects with the applicable requirements under the Securities Act
or the Exchange Act, as the case may be, and (B) did not and will not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; and each of the consolidated balance sheets contained in or
incorporated by reference into any such SEC Document (including the related
notes and schedules thereto) fairly presents, or will fairly present, the
consolidated financial position of Three Rivers and its Subsidiaries as of
its date, and each of the consolidated
20
statements of income, changes in stockholders' equity, and cash flows in
such Three Rivers SEC Documents (including any related notes and schedules
thereto) fairly presents, or will fairly present, the consolidated results
of operations, changes in stockholders' equity and cash flows, as the case
may be, of Three Rivers and its Subsidiaries for the periods to which they
relate, in each case in accordance with generally accepted accounting
principles consistently applied during the periods involved, except in each
case as may be noted therein, subject to normal year-end audit adjustments
and the absence of footnotes in the case of unaudited statements.
(ii) Since December 31, 2000, Three Rivers and its Subsidiaries
have not incurred any material liability not disclosed in Three
Rivers' SEC Documents.
(iii) Since December 31, 2000, except as disclosed in the Three
Rivers SEC Documents, (A) Three Rivers and its Subsidiaries have
conducted their respective businesses in the ordinary and usual course
consistent with past practice (excluding matters related to this
Agreement and the transactions contemplated hereby) and (B) no event
has occurred or circumstance arisen that, individually or taken
together with all other facts, circumstances and events (described in
any paragraph of Section 5.03 or otherwise), is reasonably likely to
have a Material Adverse Effect with respect to Three Rivers.
(h) Litigation. Except as Previously Disclosed, no material
litigation, claim or other proceeding before any court or governmental
agency is pending against Three Rivers or any of its Subsidiaries and, to
Three Rivers' knowledge, no such litigation, claim or other proceeding has
been threatened.
(i) Regulatory Matters.
(i) Neither Three Rivers nor any of its Subsidiaries or
properties is a party to or is subject to any order, decree,
agreement, memorandum of understanding or similar arrangement with, or
a commitment letter or similar submission to, or extraordinary
supervisory letter from, any federal or state governmental agency or
authority charged with the supervision or regulation of financial
institutions (or their holding companies) or issuers of securities or
engaged in the insurance of deposits (including, without limitation,
the PDB, the Federal Reserve System and the FDIC) or the supervision
or regulation of it or any of its Subsidiaries (collectively, the
"Regulatory Authorities").
(ii) Neither it nor any of its Subsidiaries has been advised by
any Regulatory Authority that such Regulatory Authority is
contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree,
agreement, memorandum of understanding, commitment letter, supervisory
letter or similar submission.
(j) Compliance with Laws. Except as Previously Disclosed, each of
Three Rivers and its Subsidiaries:
(i) is in compliance with all applicable federal, state, local
and
21
foreign statutes, laws, regulations, ordinances, rules, judgments,
orders or decrees applicable thereto or to the employees conducting
such businesses, including, without limitation, the Equal Credit
Opportunity Act, the Fair Housing Act, the Community Reinvestment Act,
the Home Mortgage Disclosure Act and all other applicable fair lending
laws and other laws relating to discriminatory business practices;
(ii) has all permits, licenses, authorizations, orders and
approvals of, and has made all filings, applications and registrations
with, all Governmental Authorities that are required in order to
permit them to own or lease their properties and to conduct their
businesses as presently conducted; all such permits, licenses,
certificates of authority, orders and approvals are in full force and
effect and, to Three Rivers' knowledge, no suspension or cancellation
of any of them is threatened; and
(iii) has received, since December 31, 2000, no notification or
communication from any Governmental Authority (A) asserting that Three
Rivers or any of its Subsidiaries is not in compliance with any of the
statutes, regulations, or ordinances which such Governmental Authority
enforces or (B) threatening to revoke any license, franchise, permit,
or governmental authorization (nor, to Three Rivers' knowledge, do any
grounds for any of the foregoing exist).
(k) Material Contracts; Defaults. Except for this Agreement and those
agreements and other documents filed as exhibits to the Three Rivers SEC
Documents or Previously Disclosed, neither it nor any of its Subsidiaries
is a party to, bound by or subject to any agreement, contract, arrangement,
commitment or understanding (whether written or oral) (i) that is a
"material contract" within the meaning of Item 601(b)(10) of the SEC's
Regulation S-K or (ii) that restricts or limits in any way the conduct of
business by it or any of its Subsidiaries (including without limitation a
non-compete or similar provision). Neither it nor any of its Subsidiaries
is in default under any contract, agreement, commitment, arrangement,
lease, insurance policy or other instrument to which it is a party, by
which its respective assets, business, or operations may be bound or
affected in any way, or under which it or its respective assets, business,
or operations receive benefits, 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.
(l) No Brokers. No action has been taken by Three Rivers that would
give rise to any valid claim against any party hereto for a brokerage
commission, finder's fee or other like payment with respect to the
transactions contemplated by this Agreement, except for a fee to be paid to
Sandler ▇'▇▇▇▇▇ & Partners, L.P.
(m) Employee Benefit Plans. (i) Section 5.03(m)(i) of Three Rivers'
Disclosure Schedule contains a complete and accurate list of all existing
bonus, incentive, deferred compensation, pension, retirement,
profit-sharing, thrift, savings, employee stock ownership, stock bonus,
stock purchase, restricted stock, stock option, severance, welfare and
fringe benefit plans, employment or severance agreements and all similar
practices, policies and arrangements maintained or contributed to by Three
Rivers or any
22
of its Subsidiaries and in which any employee or former employee (the
"Employees"), consultant or former consultant (the "Consultants") or
director or former director (the "Directors") of Three Rivers or any of its
Subsidiaries participates or to which any such Employees, Consultants or
Directors are a party (the "Compensation and Benefit Plans"). Neither Three
Rivers nor any of its Subsidiaries has any commitment to create any
additional Compensation and Benefit Plan or to modify or change any
existing Compensation and Benefit Plan, except as otherwise contemplated by
Section 4.01(e) of this Agreement.
(ii) Each Compensation and Benefit Plan has been operated and
administered in all material respects in accordance with its terms and
with applicable law, including, but not limited to, ERISA, the Code,
the Securities Act, the Exchange Act, the Age Discrimination in
Employment Act, or any regulations or rules promulgated thereunder,
and all filings, disclosures and notices required by ERISA, the Code,
the Securities Act, the Exchange Act, the Age Discrimination in
Employment Act and any other applicable law have been timely made.
Each Compensation and Benefit Plan which is an "employee pension
benefit plan" within the meaning of Section 3(2) of ERISA (a "Pension
Plan") and which is intended to be qualified under Section 401(a) of
the Code has received a favorable determination letter (including a
determination that the related trust under such Compensation and
Benefit Plan is exempt from tax under Section 501(a) of the Code) from
the Internal Revenue Service ("IRS"), and Three Rivers is not aware of
any circumstances likely to result in revocation of any such favorable
determination letter. There is no material pending or, to the
knowledge of Three Rivers, threatened legal action, suit or claim
relating to the Compensation and Benefit Plans other than routine
claims for benefits thereunder. Neither Three Rivers nor any of its
Subsidiaries has engaged in a transaction, or omitted to take any
action, with respect to any Compensation and Benefit Plan that would
reasonably be expected to subject Three Rivers or any of its
Subsidiaries to a tax or penalty imposed by either Section 4975 of the
Code or Section 502 of ERISA, assuming for purposes of Section 4975 of
the Code that the taxable period of any such transaction expired as of
the date hereof.
(iii) No liability (other than for payment of premiums to the
PBGC which have been made or will be made on a timely basis) under
Title IV of ERISA has been or is expected to be incurred by Three
Rivers or any of its Subsidiaries with respect to any ongoing, frozen
or terminated "single-employer plan," within the meaning of Section
4001(a)(15) of ERISA, currently or formerly maintained by any of them,
or any single-employer plan of any entity (an "ERISA Affiliate") which
is considered one employer with Three Rivers under Section 4001(a)(14)
of ERISA or Section 414(b) or (c) of the Code (an "ERISA Affiliate
Plan"). None of Three Rivers, any of its Subsidiaries or any ERISA
Affiliate has contributed, or has been obligated to contribute, to a
multiemployer plan under Subtitle E of Title IV of ERISA at any time
since September 26, 1980. No notice of a "reportable event", within
the meaning of Section 4043 of ERISA for which the 30-day reporting
requirement has not been waived, has been required to be filed for any
Compensation and Benefit Plan or by any ERISA
23
Affiliate Plan within the 12-month period ending on the date hereof,
and no such notice will be required to be filed as a result of the
transactions contemplated by this Agreement. The PBGC has not
instituted proceedings to terminate any Pension Plan or ERISA
Affiliate Plan and, to Three Rivers' knowledge, no condition exists
that presents a material risk that such proceedings will be
instituted. To the knowledge of Three Rivers, there is no pending
investigation or enforcement action by the PBGC, the Department of
Labor or IRS or any other governmental agency with respect to any
Compensation and Benefit Plan. Except as previously disclosed, under
each Pension Plan and ERISA Affiliate Plan, as of the date of the most
recent actuarial valuation performed prior to the date of this
Agreement, the actuarially determined present value of all "benefit
liabilities", within the meaning of Section 4001(a)(16) of ERISA (as
determined on the basis of the actuarial assumptions contained in such
actuarial valuation of such Pension Plan or ERISA Affiliate Plan), did
not exceed the then current value of the assets of such Pension Plan
or ERISA Affiliate Plan and since such date there has been neither an
adverse change in the financial condition of such Pension Plan or
ERISA Affiliate Plan nor any amendment or other change to such Pension
Plan or ERISA Affiliate Plan that would increase the amount of
benefits thereunder which reasonably could be expected to change such
result.
(iv) All contributions required to be made under the terms of any
Compensation and Benefit Plan or ERISA Affiliate Plan have been timely
made in cash or have been reflected on Three Rivers' Financial
Statements (as defined in Section 5.03(q)(i) below) as of December 31,
2001. Neither any Pension Plan nor any ERISA Affiliate Plan has an
"accumulated funding deficiency" (whether or not waived) within the
meaning of Section 412 of the Code or Section 302 of ERISA and all
required payments to the PBGC with respect to each Pension Plan or
ERISA Affiliate Plan have been made on or before their due dates. None
of Three Rivers, any of its Subsidiaries or any ERISA Affiliate (x)
has provided, or would reasonably be expected to be required to
provide, security to any Pension Plan or to any ERISA Affiliate Plan
pursuant to Section 401(a)(29) of the Code, and (y) has taken any
action, or omitted to take any action, that has resulted, or would
reasonably be expected to result, in the imposition of a lien under
Section 412(n) of the Code or pursuant to ERISA.
(v) Neither Three Rivers nor any of its Subsidiaries has any
obligations to provide retiree health and life insurance or other
retiree death benefits under any Compensation and Benefit Plan, other
than benefits mandated by Section 4980B of the Code. There has been no
communication to Employees by Three Rivers or any of its Subsidiaries
that would reasonably be expected to promise or guarantee such
Employees retiree health or life insurance or other retiree death
benefits on a permanent basis.
(vi) Three Rivers and its Subsidiaries do not maintain any
Compensation and Benefit Plans covering foreign Employees.
(vii) With respect to each Compensation and Benefit Plan, if
24
applicable, Three Rivers has provided or made available to Sky, true
and complete copies of existing: (A) Compensation and Benefit Plan
documents and amendments thereto; (B) trust instruments and insurance
contracts; (C) two most recent Forms 5500 filed with the IRS; (D) most
recent actuarial report and financial statement; (E) the most recent
summary plan description; (F) forms filed with the PBGC within the
past year (other than for premium payments); (G) most recent
determination letter issued by the IRS; (H) any Form 5310 or Form 5330
filed within the past year with the IRS; and (I) most recent
nondiscrimination tests performed under ERISA and the Code (including
401(k) and 401(m) tests).
(viii) Except as disclosed on Section 5.03(m)(viii) of Three
Rivers' Disclosure Schedule, 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 (A) entitle any Employee, Consultant or Director to any
payment (including severance pay or similar compensation) or any
increase in compensation, (B) result in the vesting or acceleration of
any benefits under any Compensation and Benefit Plan or (C) result in
any material increase in benefits payable under any Compensation and
Benefit Plan.
(ix) Neither Three Rivers 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.
(x) Except as disclosed on Section 5.03(m)(x) of Three Rivers'
Disclosure Schedule, as a result, directly or indirectly, of the
transactions contemplated by this Agreement (including, without
limitation, as a result of any termination of employment prior to or
following the Effective Time), none of Sky, Three Rivers or the
Surviving Corporation, or any of their respective Subsidiaries will be
obligated to make a payment that would be characterized as an "excess
parachute payment" to an individual who is a "disqualified individual"
(as such terms are defined in Section 280G of the Code) of Three
Rivers on a consolidated basis, without regard to whether such payment
is reasonable compensation for personal services performed or to be
performed in the future.
(n) Labor Matters. Neither Three Rivers nor any of its Subsidiaries is
a party to or is bound by any collective bargaining agreement, contract or
other agreement or understanding with a labor union or labor organization,
nor is Three Rivers or any of its Subsidiaries the subject of a proceeding
asserting that it or any such Subsidiary has committed an unfair labor
practice (within the meaning of the National Labor Relations Act) or
seeking to compel Three Rivers or any such Subsidiary to bargain with any
labor organization as to wages or conditions of employment, nor is there
any strike or other labor dispute involving it or any of its Subsidiaries
pending or, to Three Rivers' knowledge, threatened, nor is Three Rivers
aware of any activity involving its or any of its Subsidiaries' employees
seeking to certify a collective bargaining unit or engaging in other
organizational activity.
25
(o) Takeover Laws. Three Rivers has taken all action required to be
taken by it in order to exempt this Agreement and the transactions
contemplated hereby from, and this Agreement and the transactions
contemplated hereby are exempt from, the requirements of any "moratorium";
"control share", "fair price", "affiliate transaction", "business
combination" or other antitakeover laws and regulations of any state
(collectively, "Takeover Laws") applicable to it, including, without
limitation, the Commonwealth of Pennsylvania, and including, without
limitation, Subchapters D (Section 2538), E, F, G, H, I and J of Chapter 25
of the PBCL.
(p) Environmental Matters. Except as Previously Disclosed, no Three
Rivers' knowledge, neither the conduct nor operation of Three Rivers or its
Subsidiaries nor any condition of any property presently or previously
owned, leased or operated by any of them (including, without limitation, in
a fiduciary or agency capacity), or on which any of them holds a Lien,
violates or violated Environmental Laws and to Three Rivers' knowledge, no
condition has existed or event has occurred with respect to any of them or
any such property that, with notice or the passage of time, or both, is
reasonably likely to result in liability under Environmental Laws. To Three
Rivers' knowledge, neither Three Rivers nor any of its Subsidiaries has
received any notice from any person or entity that Three Rivers or its
Subsidiaries or the operation or condition of any property ever owned,
leased, operated, or held as collateral or in a fiduciary capacity by any
of them are or were in violation of or otherwise are alleged to have
liability under any Environmental Law, including, but not limited to,
responsibility (or potential responsibility) for the cleanup or other
remediation of any pollutants, contaminants, or hazardous or toxic wastes,
substances or materials at, on, beneath, or originating from any such
property.
(q) Tax Matters. (i) All Tax Returns that are required to be filed by
or with respect to Three Rivers and its Subsidiaries have been duly filed,
(ii) all Taxes shown to be due on the Tax Returns referred to in clause (i)
have been paid in full, (iii) except as Previously Disclosed, the Tax
Returns referred to in clause (i) have been examined by the IRS or the
appropriate state, local or foreign taxing authority or the period for
assessment of the Taxes in respect of which such Tax Returns were required
to be filed has expired, (iv) all deficiencies asserted or assessments made
as a result of such examinations have been paid in full, (v) no issues that
have been raised by the relevant taxing authority in connection with the
examination of any of the Tax Returns referred to in clause (i) are
currently pending, and (vi) no waivers of statutes of limitation have been
given by or requested with respect to any Taxes of Three Rivers or its
Subsidiaries. Three Rivers has made or will make available to Sky true and
correct copies of the United States federal income Tax Returns filed by
Three Rivers and its Subsidiaries for each of the three most recent fiscal
years ended on or before December 31, 2000. Neither Three Rivers nor any of
its Subsidiaries has any liability with respect to income, franchise or
similar Taxes that accrued on or before the end of the most recent period
covered by Three Rivers' SEC Documents filed prior to the date hereof in
excess of the amounts accrued with respect thereto that are reflected in
the financial statements included in Three Rivers' SEC Documents filed on
or prior to the date hereof ("Three Rivers' Financial Statements"). As of
the date hereof, neither Three Rivers nor any of its Subsidiaries has any
reason to believe that any conditions exist that might prevent or impede
the Merger from qualifying as a reorganization within the meaning of
Section 368(a) of the Code.
26
(ii) No Tax is required to be withheld pursuant to Section 1445
of the Code as a result of the transfer contemplated by this
Agreement.
(r) Risk Management Instruments. All material interest rate swaps,
caps, floors, option agreements, futures and forward contracts and other
similar risk management arrangements, whether entered into for Three
Rivers' own account, or for the account of one or more of Three Rivers'
Subsidiaries or their customers (all of which are listed on Three Rivers'
Disclosure Schedule), were entered into (i) in accordance with prudent
business practices and all applicable laws, rules, regulations and
regulatory policies and (ii) with counterparties believed to be financially
responsible at the time; and each of them constitutes the valid and legally
binding obligation of Three Rivers or one of its Subsidiaries, enforceable
in accordance with its terms (except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and similar laws of general applicability relating to or affecting
creditors' rights or by general equity principles), and is in full force
and effect. Neither Three Rivers nor its Subsidiaries, nor to Three Rivers'
knowledge any other party thereto, is in breach of any of its obligations
under any such agreement or arrangement.
(s) Books and Records. The books and records of Three Rivers and its
Subsidiaries have been fully, properly and accurately maintained in all
material respects, have been maintained in accordance with sound business
practices and the requirements of Section 13(b)(2) of the Exchange Act, and
there are no material inaccuracies or discrepancies of any kind contained
or reflected therein and they fairly reflect the substance of events and
transactions included therein.
(t) Insurance. Three Rivers' Disclosure Schedule sets forth all of the
insurance policies, binders, or bonds maintained by Three Rivers or its
Subsidiaries. Three Rivers and its Subsidiaries are insured with reputable
insurers against such risks and in such amounts as the management of Three
Rivers reasonably has determined to be prudent in accordance with industry
practices. All such insurance policies are in full force and effect; Three
Rivers and its Subsidiaries are not in material default thereunder; and all
claims thereunder have been filed in due and timely fashion.
(u) Three Rivers Off Balance Sheet Transactions. Section 5.03(u) of
Three Rivers' Disclosure Schedule sets forth a true and complete list of
all affiliated Three Rivers entities, including without limitation all
special purpose entities, limited purpose entities and qualified special
purpose entities, in which Three Rivers or any of its Subsidiaries or any
officer or director of Three Rivers or any of its Subsidiaries has an
economic or management interest. Section 5.03(u) of Three Rivers'
Disclosure Schedule also sets forth a true and complete list of all
transactions, arrangements, and other relationships between or among any
such Three Rivers affiliated entity, Three Rivers, any of its Subsidiaries,
and any officer or director of Three Rivers or any of its Subsidiaries
which are not reflected in the consolidated financial statements of Three
Rivers (each, a "Three Rivers Off Balance Sheet Transaction"), along with
the following information with respect to each such Three Rivers Off
Balance Sheet Transaction: (i) the business purpose, activities, and
economic substance; (ii) the key terms and conditions; (iii) the potential
risk to Three Rivers or any of its Subsidiaries; (iv) the amount of any
guarantee,
27
line of credit, standby letter of credit or commitment, or any other type
of arrangement, that could require Three Rivers or any of its Subsidiaries
to fund any obligations under any such transaction; and (v) any other
information that could have a Material Adverse Effect on Three Rivers or
any of its Subsidiaries.
(v) Disclosure. The representations and warranties contained in this
Section 5.03 do not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements and
information contained in this Section 5.03 not misleading.
(w) Material Adverse Change. Except as Previously Disclosed, Three
Rivers has not, on a consolidated basis, suffered a change in its business,
financial condition or results of operations since December 31, 2000,
except as disclosed in the Three Rivers SEC Documents, that has had a
Material Adverse Effect on Three Rivers.
(x) Absence of Undisclosed Liabilities. Except as Previously
Disclosed, neither Three Rivers nor any of its Subsidiaries has any
liability (contingent or otherwise) that is material to Three Rivers on a
consolidated basis, or that, when combined with all liabilities as to
similar matters would be material to Three Rivers on a consolidated basis,
except as disclosed in Three Rivers' Financial Statements.
(y) Properties. Three Rivers and its Subsidiaries have good and
marketable title, free and clear of all liens, encumbrances, charges,
defaults or equitable interests to all of the properties and assets, real
and personal, reflected on Three Rivers' Financial Statements as being
owned by Three Rivers as of December 31, 2000 or acquired after such date,
except (i) statutory liens for amounts not yet due and payable, (ii)
pledges to secure deposits and other liens incurred in the ordinary course
of banking business, (iii) such imperfections of title, easements,
encumbrances, liens, charges, defaults or equitable interests, if any, as
do not affect the use of properties or assets subject thereto or affected
thereby or otherwise materially impair business operations at such
properties, (iv) dispositions and encumbrances in the ordinary course of
business, and (v) liens on properties acquired in foreclosure or on account
of debts previously contracted. All leases pursuant to which Three Rivers
or any of its Subsidiaries, as lessee, leases real or personal property
(except for leases that have expired by their terms or that Three Rivers or
any such Subsidiary has agreed to terminate since the date hereof) are
valid without default thereunder by the lessee or, to Three Rivers'
knowledge, the lessor.
(aa) Loans. Each loan reflected as an asset in Three Rivers' Financial
Statements and each balance sheet date subsequent thereto, other than loans
the unpaid balance of which does not exceed $500,000 in the aggregate, (i)
is evidenced by notes, agreements or other evidences of indebtedness which
are true, genuine and what they purport to be, (ii) to the extent secured,
has been secured by valid liens and security interests which have been
perfected, and (iii) is the legal, valid and binding obligation of the
obligor named therein, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent conveyance and other laws of general
applicability relating to or affecting creditors' rights and to general
equity principles. Except as Previously Disclosed, as of December 31, 2001,
Bank is not a party to a loan, including
28
any loan guaranty, with any director, executive officer or 5% stockholder
of Three Rivers or any of its Subsidiaries or any person, corporation or
enterprise controlling, controlled by or under common control with any of
the foregoing. All loans and extensions of credit that have been made by
Bank and that are subject either to Section 22(b) of the Federal Reserve
Act, as amended, comply therewith.
(bb) Allowance for Loan Losses. The allowance for loan losses
reflected on Three Rivers' Financial Statements, as of their respective
dates, is adequate in all material respects under the requirements of
generally accepted accounting principles to provide for reasonably
anticipated losses on outstanding loans.
(cc) Repurchase Agreements. With respect to all agreements pursuant to
which Three Rivers or any of its Subsidiaries has purchased securities
subject to an agreement to resell, if any, Three Rivers or such Subsidiary,
as the case may be, has a valid, perfected first lien or security interest
in or evidence of ownership in book entry form of the government securities
or other collateral securing the repurchase agreement, and the value of
such collateral equals or exceeds the amount of the debt secured thereby.
(dd) Deposit Insurance. The deposits of Bank are insured by the FDIC
in accordance with The Federal Deposit Insurance Act ("FDIA"), and Bank has
paid all assessments and filed all reports required by the FDIA.
5.04 Representations and Warranties of Sky. Subject to Sections 5.01 and
5.02 and except as Previously Disclosed in a paragraph of its Disclosure
Schedule corresponding to the relevant paragraph below, Sky hereby represents
and warrants to Three Rivers as follows:
(a) Organization, Standing and Authority. Sky is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Ohio. Sky is duly qualified to do business and is in good standing
in the State of Ohio and any foreign jurisdictions where its ownership or
leasing of property or assets or the conduct of its business requires it to
be so qualified. Sky is registered as a bank holding company under the Bank
Holding Company Act of 1956, as amended. Sky Bank is a state banking
association duly organized, validly existing and in good standing under the
laws of the State of Ohio. Sky Bank is duly qualified to do business and is
in good standing in the State of Ohio and any foreign jurisdictions where
its ownership or leasing of property or assets or the conduct of its
business requires it to be so qualified.
(b) Sky Stock
(i) The authorized capital stock of Sky consists of 160,000,000
shares, of which (A) 150,000,000 shares are Sky Common Stock, without
par value, of which 82,673,918 shares were outstanding as of May 1,
2002, and (B) 10,000,000 shares are Sky Preferred Stock, par value
$10.00 per share, of which no shares were outstanding as of May 1,
2002. As of May 1, 2002, except as set forth in its Disclosure
Schedule, Sky does not have any Rights issued or outstanding with
respect to Sky Common Stock and Sky does not have any commitment to
authorize, issue or sell any Sky Common Stock or Rights, except
29
pursuant to this Agreement. The outstanding shares of Sky Common Stock
have been duly authorized and are validly issued and outstanding,
fully paid and nonassessable, and subject to no preemptive rights (and
were not issued in violation of any preemptive rights).
(ii) The shares of Sky Common Stock to be issued in exchange for
shares of Three Rivers Common Stock in the Merger, when issued in
accordance with the terms of this Agreement, will be duly authorized,
validly issued, fully paid and nonassessable and subject to no
preemptive rights.
(c) Subsidiaries. Sky has Previously Disclosed a list of all its
Subsidiaries together with the jurisdiction or organization of each
Subsidiary. Each of Sky's Subsidiaries has been duly organized and is
validly existing in good standing under the laws of the jurisdiction of its
organization, and is duly qualified to do business and is in good standing
in the jurisdictions where its ownership or leasing of property or the
conduct of its business requires it to be so qualified and, except as
Previously Disclosed, it owns, directly or indirectly, all the issued and
outstanding equity securities of each of its Significant Subsidiaries.
(d) Corporate Power. Each of Sky and its Subsidiaries has the
corporate power and authority to carry on its business as it is now being
conducted and to own all its properties and assets; and Sky has the
corporate power and authority to execute, deliver and perform its
obligations under this Agreement and to consummate the transactions
contemplated hereby.
(e) Corporate Authority; Authorized and Effective Agreement. Subject
in the case of this Agreement to receipt of the requisite adoption of this
Agreement by the holders of a majority of the outstanding shares of Sky
Common Stock entitled to vote thereon, this Agreement and the transactions
contemplated hereby have been authorized by all necessary corporate action
of Sky and the Sky Board prior to the date hereof and no stockholder
approval is required on the part of Sky. The Agreement to Merge, when
executed by Sky Bank, shall have been approved by the Board of Directors of
Sky Bank and by the Sky Board, as the sole stockholder of Sky Bank. This
Agreement is a valid and legally binding agreement of Sky, enforceable in
accordance with its terms (except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and similar laws of general applicability relating to or affecting
creditors rights or by general equity principles).
(f) Regulatory Approvals; No Defaults.
(i) No consents or approvals of, or filings or registrations
with, any Governmental Authority or with any third party are required
to be made or obtained by Sky or any of its Subsidiaries in connection
with the execution, delivery or performance by Sky of this Agreement
or to consummate the Merger except for (A) the filing of applications,
notices or the Agreement to Merge, as applicable, with the federal and
state banking authorities; (B) the filing and declaration of
effectiveness of the Registration Statement; (C) the filings of the
30
certificate of merger with the OSS pursuant to the OGCL and the
Articles of Merger with the DSCP pursuant to the PBCL; (D) such
filings as are required to be made or approvals as are required to be
obtained under the securities or "Blue Sky" laws of various states in
connection with the issuance of Sky Common Stock in the Merger; and
(E) receipt of the approvals set forth in Section 7.01(b). As of the
date hereof, Sky is not aware of any reason why the approvals set
forth in Section 7.01(b) will not be received without the imposition
of a condition, restriction or requirement of the type described in
Section 7.01(b).
(ii) Subject to the satisfaction of the requirements referred to
in the preceding paragraph and expiration of the related waiting
periods, and required filings under federal and state securities laws,
the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby do not and will
not (A) constitute a breach or violation of, or a default under, or
give rise to any Lien, any acceleration of remedies or any right of
termination under, any law, rule or regulation or any judgment,
decree, order, governmental permit or license, or agreement, indenture
or instrument of Sky or of any of its Subsidiaries or to which Sky or
any of its Subsidiaries or properties is subject or bound, (B)
constitute a breach or violation of, or a default under, the Articles
of Incorporation or Code of Regulations (or similar governing
documents) of Sky or any of its Subsidiaries, or (C) require any
consent or approval under any such law, rule, regulation, judgment,
decree, order, governmental permit or license, agreement, indenture or
instrument.
(g) Financial Reports and SEC Documents; Material Adverse Effect.
(i) Sky's Annual Report on Form 10-K for the fiscal year ended
December 31, 2001, and all other reports, registration statements,
definitive proxy statements or information statements filed or to be
filed by it or any of its Subsidiaries with the SEC subsequent to
December 31, 2001 under the Securities Act, or under Section 13, 14 or
15(d) of the Exchange Act, in the form filed or to be filed
(collectively, "Sky SEC Documents") as of the date filed, (A) complied
or will comply in all material respects with the applicable
requirements under the Securities Act or the Exchange Act, as the case
may be, and (B) did not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and each of
the balance sheets or statements of condition contained in or
incorporated by reference into any such Sky SEC Document (including
the related notes and schedules thereto) fairly presents, or will
fairly present, the financial position of Sky and its Subsidiaries as
of its date, and each of the statements of income or results of
operations and changes in stockholders' equity and cash flows or
equivalent statements in such Sky SEC Documents (including any related
notes and schedules thereto) fairly presents, or will fairly present,
the results of operations, changes in stockholders' equity and cash
flows, as the case may be, of Sky and its Subsidiaries for the periods
to which they relate, in each case in accordance with generally
accepted accounting principles consistently applied
31
during the periods involved, except in each case as may be noted
therein, subject to normal year-end audit adjustments and the absence
of footnotes in the case of unaudited statements.
(ii) Since December 31, 2001, no event has occurred or
circumstance arisen that, individually or taken together with all
other facts, circumstances and events (described in any paragraph of
Section 5.04 or otherwise), is reasonably likely to have a Material
Adverse Effect with respect to Sky, except as disclosed in the Sky SEC
Documents.
(h) Litigation; Regulatory Action.
(i) Except as Previously Disclosed, no material litigation, claim
or other proceeding before any court or governmental agency is pending
against Sky or any of its Subsidiaries and, to the best of Sky's
knowledge, no such litigation, claim or other proceeding has been
threatened.
(ii) Except as Previously Disclosed, neither Sky nor any of its
Subsidiaries or properties is a party to or is subject to any order,
decree, agreement, memorandum of understanding or similar arrangement
with, or a commitment letter or similar submission to, or
extraordinary supervisory letter from a Regulatory Authority, nor has
Sky or any of its Subsidiaries been advised by a Regulatory Authority
that such agency is contemplating issuing or requesting (or is
considering the appropriateness of issuing or requesting) any such
order, decree, agreement, memorandum of understanding, commitment
letter, supervisory letter or similar submission.
(i) Compliance with Laws. Each of Sky and its Subsidiaries:
(i) is in material compliance with all applicable federal, state,
local and foreign statutes, laws, regulations, ordinances, rules,
judgments, orders or decrees applicable thereto or to the employees
conducting such businesses, including, without limitation, the Equal
Credit Opportunity Act, the Fair Housing Act, the Community
Reinvestment Act, the Home Mortgage Disclosure Act and all other
applicable fair lending laws and other laws relating to discriminatory
business practices; and
(ii) has all material permits, licenses, authorizations, orders
and approvals of, and has made all material filings, applications and
registrations with, all Governmental Authorities that are required in
order to permit them to conduct their businesses substantially as
presently conducted; all such permits, licenses, certificates of
authority, orders and approvals are in full force and effect and, to
the best of its knowledge, no suspension or cancellation of any of
them is threatened; and
(iii) has received, since December 31, 2000, no notification or
communication from any Governmental Authority (A) asserting that Sky
or any of its Subsidiaries is not in material compliance with any of
the statutes,
32
regulations, or ordinances which such Governmental Authority enforces
or (B) threatening to revoke any license, franchise, permit, or
governmental authorization (nor, to Sky's knowledge, do any grounds
for any of the foregoing exist).
(j) Brokerage and Finder's Fees. Except for fees payable to its
financial advisor, ▇▇▇▇▇▇ Brothers, Sky has not employed any broker,
finder, or agent, or agreed to pay or incurred any brokerage fee, finder's
fee, commission or other similar form of compensation in connection with
this Agreement or the transactions contemplated hereby.
(k) Takeover Laws. Sky has taken all action required to be taken by it
in order to exempt this Agreement and the transactions contemplated hereby
from, and this Agreement and the transactions contemplated hereby are
exempt from, the requirements of any Takeover Laws applicable to Sky.
(l) Tax Matters. (i) All Tax Returns that are required to be filed by
or with respect to Sky and its Subsidiaries have been duly filed, (ii) all
Taxes shown to be due on the Tax Returns referred to in clause (i) have
been paid in full as required, (iii) except as Previously Disclosed, the
Tax Returns referred to in clause (i) have been examined by the IRS or the
appropriate state, local or foreign taxing authority or the period for
assessment of the Taxes in respect of which such Tax Returns were required
to be filed has expired (iv) except as Previously Disclosed, all
deficiencies asserted or assessments made as a result of such examinations
have been paid in full, (v) no issues that have been raised by the relevant
taxing authority in connection with the examination of any of the Tax
Returns referred to in clause (i) are currently pending, and (vi) except as
Previously Disclosed, no waivers of statutes of limitation have been given
by or requested with respect to any Taxes of Sky or its Subsidiaries.
Neither Sky nor any of its Subsidiaries has any liability with respect to
income, franchise or similar Taxes that accrued on or before the end of the
most recent period covered by Sky's SEC Documents filed prior to the date
hereof in excess of the amounts accrued with respect thereto that are
reflected in the financial statements included in Sky's SEC Documents filed
on or prior to the date hereof ("Sky's Financial Statements"). As of the
date hereof, Sky has no reason to believe that any conditions exist that
might prevent or impede the Merger from qualifying as a reorganization with
the meaning of Section 368(a) of the Code.
(m) Books and Records. The books and records of Sky and its
Subsidiaries have been fully, properly and accurately maintained in all
material respects, have been maintained in accordance with sound business
practices and the requirements of Section 13(b)(2) of the Exchange Act, and
there are no material inaccuracies or discrepancies of any kind contained
or reflected therein, and they fairly present the substance of events and
transactions included therein.
(n) Insurance. Sky's Disclosure Schedule sets forth all of the
insurance policies, binders, or bonds maintained by Sky or its
Subsidiaries. Sky and its Subsidiaries are insured with reputable insurers
against such risks and in such amounts as the management of Sky reasonably
has determined to be prudent in accordance with
33
industry practices. All such insurance policies are in full force and
effect; Sky and its Subsidiaries are not in material default thereunder;
and all claims thereunder have been filed in due and timely fashion.
(o) Sky Off Balance Sheet Transactions. Section 5.04(o) of Sky's
Disclosure Schedule sets forth a true and complete list of all affiliated
Sky entities, including without limitation all special purpose entities,
limited purpose entities and qualified special purpose entities, in which
Sky or any of its Subsidiaries or any officer or director of Sky or any of
its Subsidiaries has an economic or management interest. Section 5.04(o) of
Sky's Disclosure Schedule also sets forth a true and complete list of all
material transactions, arrangements, and other relationships between or
among any such Sky affiliated entity, Sky, any of its Subsidiaries, and any
officer or director of Sky or any of its Subsidiaries which are not
reflected in the consolidated financial statements of Sky (each, a "Sky Off
Balance Sheet Transaction"), along with the following information with
respect to each such Sky Off Balance Sheet Transaction: (i) the business
purpose, activities, and economic substance; (ii) the key terms and
conditions; (iii) the potential material risk to Sky or any of its
Subsidiaries; (iv) the amount of any guarantee, line of credit, standby
letter of credit or commitment, or any other type of arrangement, that
could require Sky or any of its Subsidiaries to fund any obligations under
any such transaction; and (v) any other information that could have a
Material Adverse Effect on Sky or any of its Subsidiaries.
(p) Contracts. Neither Sky nor any of its Subsidiaries is in default
under any contract, agreement, commitment, arrangement, lease, insurance
policy or other instrument to which it is a party, by which its respective
assets, business, or operations may be bound or affected in any way, or
under which it or its respective assets, business, or operations receive
benefits, 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.
(q) Disclosure. The representations and warranties contained in this
Section 5.04 do not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements and
information contained in this Section 5.04 not misleading.
(r) Risk Management Instruments. All material interest rate swaps,
caps, floors, option agreements, futures and forward contracts and other
similar risk management arrangements, whether entered into for Sky's own
account, or for the account of one or more of its Subsidiaries or their
customers, were entered into (i) in accordance with prudent business
practices and all applicable laws, rules, regulations and regulatory
policies and with counterparties believed to be financially responsible at
the time; and each of them constitutes the valid and legally binding
obligation of Sky or one of its Subsidiaries, enforceable in accordance
with its terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
similar laws of general applicability relating to or affecting creditors'
rights or by general equity principles), and is in full force and effect.
Neither Sky nor its Subsidiaries, nor to Sky's knowledge any other party
thereto, is in breach of any of its obligations under any such agreement or
arrangement in any material respect.
34
(s) Material Adverse Change. Sky has not, on a consolidated basis,
suffered a change in its business, financial condition or results of
operations since December 31, 2001 that has had a Material Adverse Effect
on Sky, except as described in the Sky SEC Documents.
(t) Allowance for Loan Losses. The allowance for loan losses reflected
on Sky's Financial Statements, as of their respective dates, is adequate in
all material respects under the requirements of generally accepted
accounting principles to provide for reasonably anticipated losses on
outstanding loans.
(u) Repurchase Agreements. With respect to all agreements pursuant to
which Sky or any of its Subsidiaries has purchased securities subject to an
agreement to resell, if any, Sky or such Subsidiary, as the case may be,
has a valid, perfected first lien or security interest in or evidence of
ownership in book entry form of the government securities or other
collateral securing the repurchase agreement, and the value of such
collateral equals or exceeds the amount of the debt secured thereby.
(v) Deposit Insurance. The deposits of Sky Bank are insured by the
FDIC in accordance with the FDIA, and Sky Bank has paid all assessments and
filed all reports required by the FDIA.
ARTICLE VI
Covenants
6.01 Reasonable Best Efforts. Subject to the terms and conditions of
this Agreement, each of Three Rivers and Sky agrees to 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, proper or desirable, or advisable under
applicable laws, so as to permit consummation of the Merger as promptly as
practicable and otherwise to enable consummation of the transactions
contemplated hereby and shall cooperate fully with the other party hereto to
that end.
6.02 Stockholder Approval. Three Rivers agrees to take, in accordance
with applicable law and the Three Rivers Articles and Three Rivers By-Laws, all
action necessary to convene an appropriate meeting of its stockholders to
consider and vote upon the adoption of this Agreement and any other matters
required to be approved or adopted by Three Rivers' stockholders for
consummation of the Merger (including any adjournment or postponement, the
"Three Rivers Meeting"), as promptly as practicable after the Registration
Statement is declared effective. The Three Rivers Board shall recommend that its
stockholders adopt this Agreement at the Three Rivers Meeting unless the Three
Rivers Board, after consultation with independent legal counsel, determines in
good faith that it is probable that such recommendation would be a breach of its
fiduciary duties under applicable Pennsylvania law and Three Rivers' Articles.
6.03 Registration Statement. (a) Sky agrees to prepare pursuant to all
applicable laws, rules and regulations a registration statement on Form S-4 (the
"Registration Statement") to be filed by Sky with the SEC in connection with the
issuance of Sky Common Stock in the Merger (including the proxy statement and
prospectus and other proxy solicitation materials of Three
35
Rivers constituting a part thereof (the "Proxy Statement") and all related
documents). Three Rivers agrees to cooperate, and to cause its Subsidiaries to
cooperate, with Sky, its counsel and its accountants, in preparation of the
Registration Statement and the Proxy Statement; and provided that Three Rivers
and its Subsidiaries have cooperated as required above, Sky agrees to file the
Proxy Statement and the Registration Statement (together, the
"Proxy/Prospectus") with the SEC as promptly as reasonably practicable. Each of
Three Rivers and Sky agrees to use all reasonable efforts to cause the
Proxy/Prospectus to be declared effective under the Securities Act as promptly
as reasonably practicable after filing thereof. Sky also agrees to use all
reasonable efforts to obtain, prior to the effective date of the Registration
Statement, all necessary state securities law or "Blue Sky" permits and
approvals required to carry out the transactions contemplated by this Agreement.
Three Rivers agrees to furnish to Sky all information concerning Three Rivers,
its Subsidiaries, officers, directors and stockholders as may be reasonably
requested in connection with the foregoing.
(b) Each of Three Rivers and Sky agrees, as to itself and its
Subsidiaries, that none of the information supplied or to be supplied by it for
inclusion or incorporation by reference in (i) the Registration Statement will,
at the time the Registration Statement and each amendment or supplement thereto,
if any, becomes effective under the Securities Act, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and (ii) the
Proxy Statement and any amendment or supplement thereto will, at the date of
mailing to the Three Rivers stockholders and at the time of the Three Rivers
Meeting, as the case may be, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading or any statement which, in the light
of the circumstances under which such statement is made, will be false or
misleading with respect to any material fact, or which will omit to state any
material fact necessary in order to make the statements therein not false or
misleading or necessary to correct any statement in any earlier statement in the
Proxy Statement or any amendment or supplement thereto. Each of Three Rivers and
Sky further agrees that if it shall become aware prior to the Effective Date of
any information furnished by it that would cause any of the statements in the
Proxy Statement to be false or misleading with respect to any material fact, or
to omit to state any material fact necessary to make the statements therein not
false or misleading, to promptly inform the other party thereof and to take the
necessary steps to correct the Proxy Statement.
(c) Sky agrees to advise Three Rivers, promptly after Sky receives
notice thereof, of the time when the Registration Statement has become effective
or any supplement or amendment has been filed, of the issuance of any stop order
or the suspension of the qualification of Sky Stock for offering or sale in any
jurisdiction, of the initiation or threat of any proceeding for any such
purpose, or of any request by the SEC for the amendment or supplement of the
Registration Statement or for additional information.
6.04 Press Releases. Each of Three Rivers and Sky agrees that it will
not, without the prior approval of the other party, issue any press release or
written statement for general circulation relating to the transactions
contemplated hereby, except as otherwise required by applicable law or
regulation or NASDAQ rules.
6.05 Access; Information. (a) Each of Three Rivers and Sky agrees that
upon
36
reasonable notice and subject to applicable laws relating to the exchange of
information, it shall afford the other party and the other party's officers,
employees, counsel, accountants and other authorized representatives, such
access during normal business hours throughout the period prior to the Effective
Time to the books, records (including, without limitation, tax returns and work
papers of independent auditors), properties, personnel and to such other
information as any party may reasonably request and, during such period, it
shall furnish promptly to such other party (i) a copy of each material report,
schedule and other document filed by it pursuant to federal or state securities
or banking laws, and (ii) all other information concerning the business,
properties and personnel of it as the other may reasonably request.
(b) Each agrees that it will not, and will cause its representatives
not to, use any information obtained pursuant to this Section 6.05 (as well as
any other information obtained prior to the date hereof in connection with the
entering into of this Agreement) for any purpose unrelated to the consummation
of the transactions contemplated by this Agreement. Subject to the requirements
of law, each party will keep confidential, and will cause its representatives to
keep confidential, all information and documents obtained pursuant to this
Section 6.05 (as well as any other information obtained prior to the date hereof
in connection with the entering into of this Agreement) unless such information
(i) was already known to such party, (ii) becomes available to such party from
other sources not known by such party to be bound by a confidentiality
obligation, (iii) is disclosed with the prior written approval of the party to
which such information pertains or (iv) is or becomes readily ascertainable from
published information or trade sources. In the event that this Agreement is
terminated or the transactions contemplated by this Agreement shall otherwise
fail to be consummated, each party shall promptly cause all copies of documents
or extracts thereof containing information and data as to another party hereto
to be returned to the party which furnished the same. No investigation by either
party of the business and affairs of the other shall affect or be deemed to
modify or waive any representation, warranty, covenant or agreement in this
Agreement, or the conditions to either party's obligation to consummate the
transactions contemplated by this Agreement.
(c) During the period from the date of this Agreement to the Effective
Time, each party shall promptly furnish the other with copies of all monthly and
other interim financial statements produced in the ordinary course of business
as the same shall become available.
6.06 Acquisition Proposals. Three Rivers agrees that it shall not, and
shall cause its Subsidiaries and its and its Subsidiaries' officers, directors,
agents, advisors and affiliates not to, solicit or encourage inquiries or
proposals with respect to, or engage in any negotiations concerning, or provide
any confidential information to, or have any discussions with, any person
relating to, any Acquisition Proposal, except to the extent that the Three
Rivers Board, after consultation with independent legal counsel, determines in
good faith that it is probable that the failure to take such action would be a
breach of its fiduciary duties under applicable Pennsylvania law and Three
Rivers' Articles. It shall immediately cease and cause to be terminated any
activities, discussions or negotiations conducted prior to the date of this
Agreement with any parties other than Sky with respect to any of the foregoing
and shall use its reasonable best efforts to enforce any confidentiality or
similar agreement relating to an Acquisition Proposal. Three Rivers shall
promptly advise Sky following the receipt by Three Rivers of any Acquisition
Proposal and the substance thereof (including the identity of the person making
such Acquisition Proposal), and advise Sky of any material developments with
respect to such Acquisition Proposal promptly upon the occurrence thereof.
37
6.07 Affiliate Agreements. Not later than the 15th day prior to the
mailing of the Proxy Statement, Three Rivers shall deliver to Sky a schedule of
each person that, to the best of its knowledge, is or is reasonably likely to
be, as of the date of the Three Rivers Meeting, deemed to be an "affiliate" of
Three Rivers (each, a "Three Rivers Affiliate") as that term is used in Rule 145
under the Securities Act or SEC Accounting Series Releases 130 and 135. Three
Rivers shall cause each person who may be deemed to be a Three Rivers Affiliate
to execute and deliver to Three Rivers on or before the date of mailing of the
Proxy Statement an agreement in the form attached hereto as Exhibit A.
6.08 Takeover Laws. No party hereto shall take any action that would
cause the transactions contemplated by this Agreement to be subject to
requirements imposed by any Takeover Law and each of them shall take all
necessary steps within its control to exempt (or ensure the continued exemption
of) the transactions contemplated by this Agreement from, or if necessary
challenge the validity or applicability of, any applicable Takeover Law, as now
or hereafter in effect.
6.09 Certain Policies. Prior to the Effective Date, Three Rivers shall,
consistent with generally accepted accounting principles and on a basis mutually
satisfactory to it and Sky, modify and change its loan, litigation and real
estate valuation policies and practices (including loan classifications and
levels of reserves) so as to be applied on a basis that is consistent with that
of Sky; provided, however, that Three Rivers shall not be obligated to take any
such action pursuant to this Section 6.09 unless and until Sky acknowledges that
all conditions to its obligation to consummate the Merger have been satisfied
and certifies to Three Rivers that Sky's representations and warranties, subject
to Section 5.02, are true and correct as of such date and that Sky is otherwise
material in compliance with this Agreement. Three Rivers' representations,
warranties and covenants contained in this Agreement shall not be deemed to be
untrue or breached in any respect for any purpose as a consequence of any
modifications or changes undertaken solely on account of this Section 6.09.
6.10. NASDAQ Listing. Sky shall file a listing application, or a NASDAQ
Notification Form for Change in the Number of Shares Outstanding, as required by
NASDAQ, with respect to the shares of Sky Common Stock to be issued to the
holders of Three Rivers Common Stock in the Merger.
6.11 Regulatory Applications. (a) Sky and Three Rivers and their
respective Subsidiaries shall cooperate and use their respective reasonable best
efforts to prepare all documentation, to timely effect all filings and to obtain
all permits, consents, approvals and authorizations of all third parties and
Governmental Authorities necessary to consummate the transactions contemplated
by this Agreement. Each of Sky and Three Rivers shall have the right to review
in advance, and to the extent practicable each will consult with the other, in
each case subject to applicable laws relating to the exchange of information,
with respect to, and shall be provided in advance so as to reasonably exercise
its right to review in advance, all material written information submitted to
any third party or any Governmental Authority in connection with the
transactions contemplated by this Agreement. In exercising the foregoing right,
each of the parties hereto agrees to act reasonably and as -promptly as
practicable. Each party hereto
38
agrees that it will consult with the other party hereto with respect to the
obtaining of all material permits, consents, approvals and authorizations of all
third parties and Governmental Authorities necessary or advisable to consummate
the transactions contemplated by this Agreement and each party will keep the
other party apprised of the status of material matters relating to completion of
the transactions contemplated hereby.
(b) Each party agrees, upon request, to furnish the other party with
all information concerning itself, its Subsidiaries, directors, officers and
stockholders and such other matters as may be reasonably necessary or advisable
in connection with any filing, notice or application made by or on behalf of
such other party or any of its Subsidiaries to any third party or Governmental
Authority.
6.12 Indemnification. (a) Following the Effective Date, Sky shall
indemnify, defend and hold harmless the present directors, officers and
employees of Three Rivers and its Subsidiaries (each, an "Indemnified Party")
against all 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 actions or omissions occurring
on or prior to the Effective Time (including, without limitation, the
transactions contemplated by this Agreement) to the fullest extent that Three
Rivers is permitted to indemnify (and advance expenses to) its directors,
officers, and employees under the laws of the Commonwealth of Pennsylvania, the
Three Rivers Articles and the Three Rivers By-Laws as in effect on the date
hereof; provided that any determination required to be made with respect to
whether an officer's, director's or employee's conduct complies with the
standards set forth under Pennsylvania law, the Three Rivers Articles and the
Three Rivers By-Laws shall be made by independent counsel (which shall not be
counsel that provides material services to Sky) selected by Sky and reasonably
acceptable to such officer, director or employee.
(b) For a period of three years from the Effective Time, Sky shall use
its reasonable best efforts to provide that portion of director's and officer's
liability insurance that serves to reimburse the present and former officers and
directors of Three Rivers or any of its Subsidiaries (determined as of the
Effective Time) (as opposed to Three Rivers) with respect to claims against such
directors and officers arising from facts or events which occurred before the
Effective Time, on terms no less favorable than those in effect on the date
hereof; provided, however, that Sky may substitute therefor policies providing
at least comparable coverage containing terms and conditions no less favorable
than those in effect on the date hereof; and provided, further, that officers
and directors of Three Rivers or any Subsidiary may be required to make
application and provide customary representations and warranties to Sky's
insurance carrier for the purpose of obtaining such insurance.
(c) Any Indemnified Party wishing to claim indemnification under
Section 6.12(a), upon learning of any claim, action, suit, proceeding or
investigation described above, shall promptly notify Sky thereof; provided that
the failure so to notify shall not affect the obligations of Sky under Section
6.12(a) unless and to the extent that Sky is actually prejudiced as a result of
such failure.
(d) If Sky or any of its successors or assigns shall consolidate with
or merge into any
39
other entity and shall not be the continuing or surviving entity of such
consolidation or merger or shall transfer all or substantially all of its assets
to any entity, then and in each case, proper provision shall be made so that the
successors and assigns of Sky shall assume the obligations set forth in this
Section 6.12.
6.13 Opportunity of Employment; Employee Benefits; Executive Annual
Incentive Plan. (a) The existing employees of Three Rivers shall have the
opportunity to continue as employees of Sky or one of its Subsidiaries, on the
Effective Date; subject, however, to the right of Sky and its Subsidiaries to
terminate any such employees either (i) for "cause" or (ii) pursuant to the
procedures set forth in the Sky Workforce Redesign Process previously disclosed
to Three Rivers. It is understood and agreed that nothing in this Section 6.13
or elsewhere in this Agreement shall be deemed to be a contract of employment or
be construed to give said employees any rights other than as employees at will
under applicable law and said employees shall not be deemed to be third-party
beneficiaries of this provision. Each existing Three Rivers employee (except
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, and ▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇) who
is not employed with Sky or one of its Subsidiaries for at least the first whole
year following the Effective Date shall be paid by Sky in accordance with Sky's
standard severance policy for employees, with credit for years of Three Rivers
service (including years of service with Three Rivers' predecessors, including
any entities merged into Three Rivers or Bank), reduced by the amount of any
severance payment previously received by such Three Rivers employee from
USBANCORP, Inc. Sky also shall pay each such employee for all unused vacation
time as of the Effective Date, up to a maximum of one year. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇.
▇▇▇▇▇▇▇▇ ▇▇▇▇, and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ shall be provided with the automobiles that
Three Rivers provided to them.
(b) From and after the Effective Time, Three Rivers employees shall
continue to participate in the Three Rivers employee benefit plans in effect at
the Effective Time unless and until Sky, in its sole discretion, shall determine
that Three Rivers employees shall, subject to applicable eligibility
requirements, participate in employee benefit plans of Sky and that all or some
of the Three Rivers plans shall be terminated or merged into certain employee
benefit plans of Sky. Notwithstanding the foregoing, (i) Three Rivers' defined
benefit pension plan and any supplemental executive retirement plan shall not be
terminated or merged into any plan of Sky; and (ii) each Three Rivers employee
shall be credited with years of Three Rivers service (including years of service
with Three Rivers' predecessors, to the same extent that Three Rivers credited
such service, including any entities merged into Three Rivers or Bank) for
purposes of eligibility and vesting in the employee benefit plans of Sky, and
shall not be subject to any exclusion or penalty for pre-existing conditions
that were covered under Three Rivers' welfare plans immediately prior to the
Effective Date, or to any waiting period relating to such coverage. If, after
the Effective Date, Sky adopts a new plan or program for its employees or
executives, then to the extent its employees or executives receive past service
credits for any reason, Sky shall credit similarly-situated employees and
executives of Three Rivers with equivalent credit for service with Three Rivers
or its predecessors (including any entities merged into Three Rivers or Bank),
to the same extent that Three Rivers credited service with its predecessors. The
foregoing covenants shall survive the Merger, and Sky shall, before the
Effective Time, adopt resolutions that amend its tax-qualified retirement plans
to provide for Three Rivers service credits referenced herein.
40
(c) The annual corporate performance measures which trigger payment
under Three Rivers' Executive Annual Incentive Plan shall be prorated based on
the Effective Date (exclusive of any special charges related to the transactions
contemplated hereby), and all quarterly and annual payments due under the
Executive Annual Incentive Plan for the remainder of the year in which the
Effective Date occurs shall be calculated and paid based on such prorated
measures.
6.14 Notification of Certain Matters. Each of Three Rivers and Sky
shall give prompt notice to the other of any fact, event or circumstance known
to it that (i) is reasonably likely, individually or taken together with all
other facts, events and circumstances known to it, to result in any Material
Adverse Effect with respect to it or (ii) would cause or constitute a material
breach of any of its representations, warranties, covenants or agreements
contained herein.
6.15 Dividend Coordination. It is agreed by the parties hereto that
they will cooperate to assure that as a result of the Merger, during any
applicable period, there shall not be a payment of both a Sky and a Three Rivers
dividend. The parties further agree that if the Effective Date is at the end of
a fiscal quarter, then they will cooperate to assure that the Three Rivers
stockholders receive the dividend declared by Sky, if any, rather than the
dividend for that period, if any, declared by Three Rivers. In no event will the
selection of the Effective Date cause the stockholders of Three Rivers to lose a
quarterly or a portion of a quarterly dividend.
6.16 Sky Board Representation; Advisory Boards; Severance for Three
Rivers Directors. Sky shall cause its Executive Committee to nominate for
election one director to the Sky Board, who shall also be nominated for Sky's
Executive Committee, which nominee shall be recommended by Three Rivers and
selected by Sky in its discretion. Sky shall establish a regional advisory board
for the region served by Three Rivers, which shall include five members who
shall be recommended by Three Rivers and selected by Sky in its discretion. Any
member of the Three Rivers Board as of the Effective Date who is not appointed
to the Sky Board or such regional advisory board shall be paid a severance
payment of $6,000 promptly after the Effective Date.
6.17 Tax Treatment. Each of Sky and Three Rivers agrees not to take any
actions subsequent to the date of this Agreement that would adversely affect the
ability of Three Rivers and its stockholders to characterize the Merger as a
tax-free reorganization under Section 368(a) of the Code, and each of Sky and
Three Rivers agrees to take such action as may be reasonably required, if such
action may be reasonably taken to reverse the impact of any past actions which
would adversely impact the ability for the Merger to be characterized as a
tax-free reorganization under Section 368(a) of the Code.
6.18 No Breaches of Representations and Warranties. Between the date of
this Agreement and the Effective Time, without the written consent of the other
party, each of Sky and Three Rivers will not do any act or suffer any omission
of any nature whatsoever which would cause any of the representations or
warranties made in Article V of this Agreement to become untrue or incorrect in
any material respect.
6.19 Consents. Each of Sky and Three Rivers shall use its best efforts
to obtain any required consents to the transactions contemplated by this
Agreement.
41
6.20 Insurance Coverage. Three Rivers shall cause the policies of
insurance listed in the Disclosure Schedule to remain in effect between the date
of this Agreement and the Effective Date.
6.21 Correction of Information. Each of Sky and Three Rivers shall
promptly correct and supplement any information furnished under this Agreement
so that such information shall be correct and complete in all material respects
at all times, and shall include all facts necessary to make such information
correct and complete in all material respects at all times.
6.22 Confidentiality. Except for the use of information in connection
with the Registration Statement described in Section 7.1 hereof and any other
governmental filings required in order to complete the transactions contemplated
by this Agreement, all information (collectively, the "Information") received by
each of Three Rivers and Sky, pursuant to the terms of this Agreement shall be
kept in strictest confidence; provided that, subsequent to the filing of the
Registration Statement with the SEC, this Section 6.22 shall not apply to
information included in the Registration Statement or to be included in the
official proxy/prospectus to be sent to the stockholders of Three Rivers and Sky
under Section 6.03. Three Rivers and Sky agree that the Information will be used
only for the purpose of completing the transactions contemplated by this
Agreement. Three Rivers and Sky agree to hold the Information in strictest
confidence and shall not use, and shall not disclose directly or indirectly any
of such Information except when, after and to the extent such Information (i) is
or becomes generally available to the public other than through the failure of
Three Rivers or Sky to fulfill its obligations hereunder, (ii) was already known
to the party receiving the Information on a nonconfidential basis prior to the
disclosure or (iii) is subsequently disclosed to the party receiving the
Information on a nonconfidential basis by a third party having no obligation of
confidentiality to the party disclosing the Information. It is agreed and
understood that the obligations of Three Rivers and Sky contained in this
Section 6.22 shall survive the Closing. In the event the transactions
contemplated by this Agreement are not consummated, Three Rivers and Sky agree
to return all copies of the Information provided to the other promptly.
6.23 Supplemental Assurances. (a) On the date the Registration
Statement becomes effective and on the Effective Date, Three Rivers shall
deliver to Sky a certificate signed by its principal executive officer and its
principal financial officer to the effect, to such officers' knowledge, that the
information contained in the Registration Statement relating to the business and
financial condition and affairs of Three Rivers, does not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading.
(b) On the date the Registration Statement becomes effective and on the
Effective Date, Sky shall deliver to Three Rivers a certificate signed by its
chief executive officer and its chief financial officer to the effect, to such
officers' knowledge, that the Registration Statement (other than the information
contained therein relating to the business and financial condition and affairs
of Three Rivers) does not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading.
6.24 Consulting Agreements. Immediately after the Merger, Sky shall
enter into
42
consulting agreements with ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇ to memorialize
the terms set forth in the letters from Sky to each of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇.
▇▇▇▇▇▇▇▇ ▇▇▇▇ dated May 7, 2002, all on terms and conditions mutually
satisfactory to the parties thereto.
6.25 Supplemental IRS Ruling. If Three Rivers and Sky determine after
further investigation that it is necessary, proper, or desirable, or advisable
under applicable laws, to obtain a supplemental ruling from the IRS to the
private letter ruling issued February 4, 2000, as previously supplemented, each
of Three Rivers and Sky agrees to 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, proper or desirable, or advisable under applicable laws, so as
to obtain such a ruling on or before September 30, 2002.
ARTICLE VII
Conditions to Consummation of the Merger
7.01 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each of Sky and Three Rivers to consummate the Merger
is subject to the fulfillment or written waiver by Sky and Three Rivers prior to
the Effective Time of each of the following conditions:
(a) Stockholder Approval. This Agreement shall have been
duly adopted by the requisite vote of Three Rivers' stockholders.
(b) Regulatory Approvals. All regulatory approvals required to
consummate the transactions contemplated hereby shall have been
obtained and shall remain in full force and effect and all statutory
waiting periods in respect thereof shall have expired and no such
approvals shall contain (i) any conditions, restrictions or
requirements which the Sky Board reasonably determines would either
before or after the Effective Time have a Material Adverse Effect on
Sky and its Subsidiaries taken as a whole after giving effect to the
consummation of the Merger, or (ii) any conditions, restrictions or
requirements that are not customary and usual for approvals of such
type and which the Sky Board reasonably determines would either before
or after the Effective Date be unduly burdensome.
(c) No Injunction. No Governmental Authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, judgment, decree, injunction or
other order (whether temporary, preliminary or permanent) which is in
effect and prohibits consummation of the transactions contemplated by
this Agreement.
(d) Registration Statement. The Registration Statement shall
have become effective under the Securities Act and no stop order
suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall have been
initiated or threatened by the SEC.
(e) Blue Sky Approvals. All permits and other authorizations
under state
43
securities laws necessary to consummate the transactions contemplated
hereby and to issue the shares of Sky Common Stock to be issued in the
Merger shall have been received and be in full force and effect.
7.02 Conditions to Obligation of Three Rivers. The obligation of Three
Rivers to consummate the Merger is also subject to the fulfillment or written
waiver by Three Rivers prior to the Effective Time of each of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of Sky set forth in this Agreement shall be true and
correct, subject to Section 5.02, as of the date of this Agreement and
as of the Effective Date as though made on and as of the Effective Date
(except that representations and warranties that by their terms speak
as of the date of this Agreement or some other date shall be true and
correct as of such date), and Three Rivers shall have received a
certificate, dated the Effective Date, signed on behalf of Sky by the
Chief Executive Officer and the Chief Financial Officer of Sky to such
effect.
(b) Performance of Obligations of Sky. Sky shall have
performed in all material respects all obligations required to be
performed by them under this Agreement at or prior to the Effective
Time, and Three Rivers shall have received a certificate, dated the
Effective Date, signed on behalf of Sky by the Chief Executive Officer
and the Chief Financial Officer of Sky to such effect.
(c) Tax Opinion. Three Rivers shall have received an opinion
of ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, dated the Effective Date, to the effect
that, on the basis of facts, representations and assumptions set forth
in such opinion, (i) the Merger constitutes a "reorganization" within
the meaning of Section 368(a) of the Code and (ii) no gain or loss will
be recognized by stockholders of Three Rivers who receive shares of Sky
Common Stock in exchange for shares of Three Rivers Common Stock, other
than the gain or loss to be recognized as to cash received in lieu of
fractional share interests and cash received in exchange for shares of
Three Rivers Common Stock. In rendering its opinion, such counsel may
require and rely upon representations contained in letters from Three
Rivers and Sky.
(d) Opinion of Sky's Counsel. Three Rivers shall have received
an opinion of Squire, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P., counsel to Sky, dated
the Effective Date, to the effect that, on the basis of the facts,
representations and assumptions set forth in the opinion, (i) Sky is a
corporation duly organized and in good standing under the laws of the
State of Ohio, (ii) this Agreement has been duly executed by Sky and
constitutes the binding obligation of Sky, enforceable in accordance
with its terms against Sky, except as the same may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium, and other similar laws relating to or affecting the
enforcement of creditors' rights generally, by general equitable
principles (regardless of whether enforceability is considered in a
proceeding in equity or at law) and by an implied covenant of good
faith and fair dealing, (iii) that the Sky Common Stock to be issued as
part of the Merger Consideration, when issued, shall be duly
authorized, fully paid and non-assessable, and (iv) that, assuming
approval of Three Rivers' stockholders, upon the filing of the Articles
of Merger with the DSCP, the Merger shall become effective.
44
(e) Fairness Opinion. Three Rivers shall have received a
fairness opinion from Sandler ▇'▇▇▇▇▇ & Partners, L.P., financial
advisor to Three Rivers, dated as of a date reasonably proximate to the
date of the Proxy Statement, stating that the Merger Consideration to
be paid to Three Rivers' stockholders is fair to the stockholders of
Three Rivers from a financial point of view.
7.03 Conditions to Obligation of Sky. The obligation of Sky to
consummate the Merger is also subject to the fulfillment or written waiver by
Sky prior to the Effective Time of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Three Rivers set forth in this Agreement shall be true
and correct, subject to Section 5.02, as of the date of this Agreement
and as of the Effective Date as though made on and as of the Effective
Date (except that representations and warranties that by their terms
speak as of the date of this Agreement or some other date shall be true
and correct as of such date) and Sky shall have received a certificate,
dated the Effective Date, signed on behalf of Three Rivers by the Chief
Executive Officer and the Chief Financial Officer of Three Rivers to
such effect.
(b) Performance of Obligations of Three Rivers. Three Rivers
shall have performed in all material respects all obligations required
to be performed by it under this Agreement at or prior to the Effective
Time, and Sky shall have received a certificate, dated the Effective
Date, signed on behalf of Three Rivers by the Chief Executive Officer
and the Chief Financial Officer of Three Rivers to such effect.
(c) Opinion of Three Rivers' Counsel. Sky shall have received
an opinion of ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel to Three Rivers,
dated the Effective Date, to the effect that, on the basis of the
facts, representations and assumptions set forth in the opinion, (i)
Three Rivers is a corporation duly organized and in good standing under
the laws of the Commonwealth of Pennsylvania, (ii) this Agreement has
been duly executed by Three Rivers and constitutes a binding obligation
on Three Rivers, enforceable in accordance with its terms against Three
Rivers, except as the same may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium, and other similar
laws relating to or affecting the enforcement of creditors' rights
generally, by general equitable principles (regardless of whether
enforceability is considered in a proceeding in equity or at law) and
by an implied covenant of good faith and fair dealing and (iii) that,
assuming approval of Three Rivers' stockholders, upon the filing of the
Articles of Merger with the DSCP, the Merger shall become effective.
(d) Affiliate Agreements. Sky shall have received the
agreements referred to in Section 6.07 from each affiliate of Three
Rivers.
(e) Tax Opinion. Sky shall have received an opinion of Squire,
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P., dated the Effective Date, in form and in
substance reasonably acceptable to it, to the effect that, on the basis
of the facts, representations and
45
assumptions set forth in such opinion, (i) the Merger constitutes a
"reorganization" within the meaning of Section 368(a) of the Code, and
(ii) the distribution by USBANCORP, Inc. of Three Rivers on or about
April 1, 2000 was not a distribution to which Section 355(e) of the
Code applies. In rendering its opinion, such counsel may require and
rely upon representations contained in letters from Three Rivers and
Sky.
(f) Compliance with Section 407 of ERISA. Sky shall have
received documentation reasonably acceptable to Sky that the Three
Rivers Common Stock held by the Three Rivers Bank and Trust Company
Pension Trust does not exceed the limitations of ERISA Section 407.
ARTICLE VIII
Termination
8.01 Termination. This Agreement may be terminated, and the Acquisition
may be abandoned:
(a) Mutual Consent. At any time prior to the Effective Time,
by the mutual consent of Sky and Three Rivers, if the Board of
Directors of each so determines by vote of a majority of the members
of its entire Board.
(b) Breach. At any time prior to the Effective Time, by Sky or
Three Rivers, if its Board of Directors so determines by vote of a
majority of the members of its entire Board, in the event of either:
(i) a breach by the other party of any representation or warranty
contained herein (subject to the standard set forth in Section 5.02),
which breach cannot be or has not been cured within 30 days after the
giving of written notice to the breaching party of such breach; or (ii)
a breach by the other party of any of the covenants or agreements
contained herein, which breach cannot be or has not been cured within
30 days after the giving of written notice to the breaching party of
such breach, provided that such breach (whether under (i) or (ii))
would be reasonably likely, individually or in the aggregate with other
breaches, to result in a Material Adverse Effect.
(c) Delay. At any time prior to the Effective Time, by Sky or
Three Rivers, if its Board of Directors so determines by vote of a
majority of the members of its entire Board, in the event that the
Merger is not consummated by January 31, 2003, except to the extent
that the failure of the Merger then to be consummated arises out of or
results from the knowing action or inaction of the party seeking to
terminate pursuant to this Section 8.01(c).
(d) No Approval. By Three Rivers or Sky, if its Board of
Directors so determines by a vote of a majority of the members of its
entire Board, in the event (i) the approval of any Governmental
Authority required for consummation of the Merger and the other
transactions contemplated by this Agreement shall have been denied by
final nonappealable action of such Governmental Authority; (ii) the
Three Rivers stockholders fail to adopt this Agreement at the Three
Rivers Meeting; or (iii) any of the closing conditions have not been
met as required by Article VII hereof.
46
(e) Sky Common Stock. By Three Rivers, in the event that:
(i) the Average NMS Closing Price (as defined
below) of Sky Common Stock is less than $20.56; and
(ii) (A) the number obtained by dividing the Average
NMS Closing Price of Sky Common Stock by $22.84 is less than (B) the
number obtained by dividing the Final Index Price (as defined below) by
the Initial Index Price (as defined below) and then multiplying the
quotient in this clause (ii)(B) by 0.85.
For purposes of this Section 8.01(e), the following terms have
the meanings indicated below:
"Average NMS Closing Price" shall mean the arithmetic
mean of the NMS Closing Prices for the ten trading days immediately
preceding the fifth trading day prior to the receipt of final federal
regulatory approval of the Merger.
"Final Index Price" means the sum of the Final Prices
for each company comprising the Index Group multiplied by the
appropriate weight.
"Final Price," with respect to any company belonging
to the Index Group, means the arithmetic mean of the daily closing
sales prices of a share of common stock of such company, as reported on
the consolidated transaction reporting system for the market or
exchange on which such common stock is principally traded, for the same
ten trading days used in calculating the Average NMS Closing Price of
Sky Common Stock (i.e., the valuation date).
"Index Group" means the 24 financial institutions
holding companies listed on Exhibit B attached hereto, the common stock
of all of which shall be publicly traded and as to which there shall
not have been a publicly announced proposal at any time during the
period beginning on the date of the Agreement and ending on the
valuation date for any such company to be acquired. In the event that
the common stock of any such company ceases to be publicly traded or a
proposal to acquire any such company is announced at any time during
the period beginning on the date of this Agreement and ending on the
valuation date, such company will be removed from the Index Group, and
the weights attributed to the remaining companies will be adjusted
proportionately for purposes of determining the Final Index Price and
the Initial Index Price. The 24 financial institution holding companies
and the weights attributed to them are listed on Exhibit B.
"Initial Index Price" means the sum of each per share
closing price of the common stock of each company comprising the Index
Group multiplied by the applicable weighting, as such prices are
reported on the consolidated transactions reporting system for the
market or exchange on which such common stock is principally traded, on
the trading day immediately preceding the public announcement of the
Agreement.
47
"NMS Closing Price" shall mean the price per share of
the last sale of Sky Common Stock reported on the NASDAQ National
Market System at the close of the trading day by the NASD.
Prior to Three Rivers exercising its right of termination
under this Section 8.01(e), in the event that both of the conditions
specified in Sections 8.01(e)(i) and (ii) are met, Sky may, at its
option (the "Fill Option"), for a period of ten business days
commencing on the date the parties determine the conditions have been
met, offer to distribute to Three Rivers' stockholders, in connection
with the Merger Consideration, the number of shares of Sky Common Stock
or cash necessary for the Stock Exchange Ratio to equal $16.45 divided
by the Average NMS Closing Price of Sky Common Stock (the "Fill
Offer"). Thereafter, for a period of ten business days, Three Rivers
shall have the opportunity to accept or reject the Fill Offer. If Three
Rivers elects to accept the Fill Offer, Three Rivers shall provide
written notice of its acceptance to Sky, whereupon no termination shall
have occurred pursuant to this Section 8.01(e) and this Agreement shall
remain in effect in accordance with its terms, except that the Merger
Consideration shall have been so increased and any references in this
Agreement to "Merger Consideration" and "Stock Exchange Ratio" shall
thereafter be deemed to refer to the Merger Consideration and Stock
Exchange Ratio after giving effect to any adjustment made pursuant to
this Section 8.01(e). If Three Rivers rejects the Fill Offer, Three
Rivers may terminate this Agreement in accordance with the provisions
hereof. In the event Sky determines not to exercise the Fill Option, it
will so advise Three Rivers in writing, and thereafter, for a period of
three business days Three Rivers may exercise its right to terminate
this Agreement pursuant to this Section 8.01(e).
If Sky or any company belonging to the Index Group declares or
effects a stock dividend, reclassification, recapitalization, split-up,
combination, exchange of shares or similar transaction between the date
of the Agreement and the valuation date, the prices for the common
stock of such company will be appropriately adjusted.
8.02 Effect of Termination and Abandonment; Enforcement of Agreement.
In the event of termination of this Agreement and the abandonment of the Merger
pursuant to this Article VIII, no party to this Agreement shall have any
liability or further obligation to any other party hereunder except (i) as set
forth in Sections 8.03 and 9.01; and (ii) that termination will not relieve a
breaching party from liability for any willful breach of this Agreement giving
rise to such termination. Notwithstanding anything contained herein to the
contrary, the parties hereto agree that irreparable damage will occur in the
event that a party breaches any of its obligations, duties, covenants and
agreements contained herein. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches or threatened
breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which they are
entitled by law or in equity.
8.03 Termination Fee. Three Rivers shall pay to Sky a termination
fee in the amount of $4,500,000 if:
(i) this Agreement is terminated by Sky pursuant to Section
8.01(b)(ii) or by Sky or Three Rivers pursuant to Section 8.01(d)(ii);
and prior to such termination, an
48
Acquisition Proposal with respect to Three Rivers was commenced,
publicly proposed or publicly disclosed; and within 18 months after
such termination, Three Rivers shall have entered into an agreement
relating to an Acquisition Proposal or any Acquisition Proposal shall
have been consummated; OR
(ii) after receiving an Acquisition Proposal, the Three Rivers
Board does not take action to convene the Three Rivers Meeting and
recommend that Three Rivers stockholders adopt this Agreement; and
within 18 months after such receipt, Three Rivers shall have entered
into an agreement relating to an Acquisition Proposal or any
Acquisition Proposal shall have been consummated.
Upon payment of the fee described in this Section 8.03, Three
Rivers shall have no further liability to Sky at law or in equity with
respect to such termination under Section 8.01(b)(ii) or 8.01(d)(ii),
or with respect to the Three Rivers Board's failure to take action to
convene the Three Rivers Meeting and recommend that Three Rivers
stockholders adopt this Agreement.
ARTICLE IX
Miscellaneous
9.01 Survival. No representations, warranties, agreements and covenants
contained in this Agreement shall survive the Effective Time (other than
Sections 6.12, 6.13, 6.16, and 6.17 and this Article IX which shall survive the
Effective Time) or the termination of this Agreement if this Agreement is
terminated prior to the Effective Time (other than Sections 6.03(b), 6.04,
6.05(b), 8.02, and this Article IX which shall survive such termination).
9.02 Waiver; Amendment. Prior to the Effective Time, any provision of
this Agreement may be (i) waived by the party benefited by the provision, or
(ii) amended or modified at any time, by an agreement in writing between the
parties hereto executed in the same manner as this Agreement, except that after
the Three Rivers Meeting, this Agreement may not be amended if it would violate
the PBCL or the federal securities laws.
9.03 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to
constitute an original.
9.04 Governing Law. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of Ohio applicable to
contracts made and to be performed entirely within such State (except to the
extent that mandatory provisions of Federal law are applicable).
9.05 Expenses. Each party hereto will bear all expenses incurred by it
in connection with this Agreement and the transactions contemplated hereby,
except that printing and mailing expenses shall be shared equally between Three
Rivers and Sky. All fees to be paid to Regulatory Authorities and the SEC in
connection with the transactions contemplated by this Agreement shall be borne
by Sky.
9.06 Notices. All notices, requests and other communications hereunder
to a party
49
shall be in writing and shall be deemed given if personally delivered,
telecopied (with confirmation) or mailed by registered or certified mail (return
receipt requested) to such party at its address set forth below or such other
address as such party may specify by notice to the parties hereto.
If to Three Rivers, to:
Three Rivers Bancorp, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Building
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: J. ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Sky, to:
Sky Financial Group, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Squire, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: M. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
9.07 Entire Understanding; No Third Party Beneficiaries. This Agreement
and any separate agreement entered into by the parties on even date herewith
represent the entire understanding of the parties hereto with reference to the
transactions contemplated hereby and thereby and this Agreement supersedes any
and all other oral or written agreements heretofore made (other than any such
separate agreement). Nothing in this Agreement, whether express or implied, is
intended to confer upon any person, other than the parties hereto or their
respective successors, any rights, remedies, obligations or liabilities under or
by reason of this Agreement.
50
9.08 Interpretation; Effect. When a reference is made in this Agreement
to Sections, Exhibits or Schedules, such reference shall be to a Section of, or
Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference purposes
only and are not part of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation."
9.09 Waiver of Jury Trial. Each of the parties hereto hereby
irrevocably waives any and all right to trial by jury in any legal proceeding
arising out of or related to this Agreement or the transactions contemplated
hereby.
51
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
THREE RIVERS BANCORP, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman and CEO
SKY FINANCIAL GROUP, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman, President and CEO
52
EXHIBIT A
FORM OF THREE RIVERS AFFILIATE AGREEMENT
_____________, 2002
Sky Financial Group, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
I have been advised that as of the date hereof I may be deemed to be an
"affiliate" of Three Rivers Bancorp, Inc. ("Three Rivers"), as that term is
defined for purposes of Paragraphs (c) and (d) of Rule 145 of the Rules and
Regulations (the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") promulgated under the Securities Act of 1933, as
amended (the "Act").
Pursuant to the terms of the Agreement and Plan of Merger by and
between Sky Financial Group, Inc. ("Sky Financial") and Three Rivers dated as of
May ___, 2002 (the "Merger Agreement"), providing for the merger of Three Rivers
with and into Sky Financial (the "Merger"), and as a result of the Merger, I may
receive shares of Sky Financial common stock ("Sky Financial Common Shares") in
exchange for Three Rivers common shares ("Three Rivers Stock") owned by me at
the Effective Time (as defined and determined pursuant to the Merger Agreement).
This letter is being delivered pursuant to Section 6.07 of the Merger Agreement.
I represent and warrant to Sky Financial that in such event:
A. I will not sell, assign or transfer the Sky Financial Common Shares
which I receive as aforesaid in violation of the Act or the Rules and
Regulations.
B. I have carefully read this letter and the Merger Agreement and have
discussed their requirements and other applicable limitations upon my ability to
sell, transfer or otherwise dispose of the Sky Financial Common Shares, to the
extent I feel necessary, with my counsel or counsel for Three Rivers. I
understand that Sky Financial is relying on the representations I am making in
this letter and I hereby agree to hold harmless and indemnify Sky Financial and
its officers and directors from and against any losses, claims, damages,
expenses (including reasonable attorneys' fees), or liabilities ("Losses") to
which Sky Financial or any officer or director of Sky Financial may become
subject under the Act or otherwise as a result of the untruth, breach, or
failure of such representations.
A-1
, 2002
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Page 2
C. I have been advised that the issuance of the Sky Financial Common
Shares issued to me pursuant to the Merger will have been registered with the
Commission under the Act on a Registration Statement on Form S-4. However, I
have also been advised that since I may be deemed to be an affiliate under the
Rules and Regulations at the time the Merger was submitted for a vote of the
shareholders of Three Rivers, that the Sky Financial Common Shares must be held
by me indefinitely unless (i) my subsequent distribution of Sky Financial Common
Shares has been registered under the Act; (ii) a sale of the Sky Financial
Common Shares is made in conformity with the volume and other applicable
limitations of a transaction permitted by Rule 145 promulgated by the Commission
under the Act and as to which Sky Financial has received satisfactory evidence
of the compliance and conformity with said Rule, or (iii) a transaction in
which, in the opinion of Squire, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P. (or other counsel
reasonably acceptable to Sky Financial) or in accordance with a no-action letter
from the Commission, some other exemption from registration is available with
respect to any such proposed sale, transfer or other disposition of the Sky
Financial Common Shares.
D. I also understand that stop transfer instructions will be given to
Sky Financial's transfer agent with respect to any Sky Financial Common Shares
which I receive in the Merger and that there will be placed on the certificates
for such Sky Financial Common Shares, a legend stating in substance:
"The shares represented by this certificate have been
issued or transferred to the registered holder as a result of
a transaction to which Rule 145 under the Securities Act of
1933, as amended (the "Act"), applies. The shares represented
by this certificate may not be sold, transferred or assigned,
and the issuer shall not be required to give effect to any
attempted sale, transfer or assignment, except pursuant to (i)
an effective registration statement under the Act, (ii) a
transaction permitted by Rule 145 and as to which the issuer
has received reasonable and satisfactory evidence of
compliance with the provisions of Rule 145, or (iii) a
transaction in which, in the opinion of Squire, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇ L.L.P. or other counsel satisfactory to the issuer or
in accordance with a "no action" letter from the staff of the
Securities and Exchange Commission, such shares are not
required to be registered under the Act."
A-2
, 2002
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Page 3
It is understood and agreed that the legend set forth in Paragraph D
above shall be removed and any stop order instructions with respect thereto
shall be canceled upon receipt of advice from Squire, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
or other counsel satisfactory to Sky Financial that such actions are appropriate
under the then-existing circumstances.
Very truly yours,
Date: , 2002
--------------------- --------------------------------
(Name of Affiliate)
PLEASE PRINT YOUR NAME HERE:
---------------------------------
Accepted this day of
-----
, 2002
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SKY FINANCIAL GROUP, INC.
By
-------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇, Chairman, President and CEO
A-3
EXHIBIT B
PEER GROUP COMMERCIAL FINANCIAL INSTITUTIONS FOR
INDEX PURSUANT TO SECTION 8.01(E)
HOLDING COMPANY WEIGHTING
--------------- ---------
AMCORE Financial, Inc. 1.4570%
Associated Bank-Corp. 4.4838%
Charter One Financial, Inc. 13.0065%
Citizens Banking Corporation 2.6619%
Commerce Bancshares, Inc. 3.8703%
Community First Bankshares, Inc. 2.3573%
First Commonwealth Financial Corporation 3.4661%
First Midwest Bancorp, Inc. 2.8691%
FirstMerit Corporation 5.0220%
▇▇▇▇▇▇ Financial Corporation 4.8779%
Huntington Bancshares Incorporated 14.7784%
M&T Bank Corporation 5.5019%
NBT Bancorp, Inc. 1.9627%
North Fork Bancorporation 9.6840%
Old National Bancorp 3.6156%
Park National Corporation 0.8236%
Provident Financial Group, Inc. 2.9119%
Republic Bancorp Inc. 3.1409%
S&T Bancorp, Inc. 1.5678%
Susquehanna Bancshares, Inc. 2.3274%
TCF Financial Corporation 4.5208%
UMB Financial Corporation 1.3043%
United Bankshares, Inc. 2.5309%
WesBanco, Inc. 1.2582%
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TOTAL 100.00%
B-1
