EXHIBIT 99.2
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION ("Reorganization Agreement" or
"Agreement") dated as of March 19, 2002, by and among PEOPLES FINANCIAL
CORPORATION, INC. ("Seller"), a Pennsylvania business corporation having its
principal executive office at 000 Xxxx Xxxxxx, Xxxx Xxxx, Xxxxxxxxxxxx 00000,
S&T BANCORP, INC. ("Purchaser"), a Pennsylvania business corporation having its
principal executive office at 000 Xxxxxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxxx
00000-0000, and S&T MERGER SUBSIDIARY, INC. ("Merger Sub"), a Delaware
corporation having its principal executive office at 000 Xxxxxxxxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxxxxxx 00000-0000.
WITNESSETH
WHEREAS, the parties hereto desire that Seller shall be acquired by
Purchaser through the merger ("Merger") of Merger Sub with and into Seller, with
Seller as the surviving corporation ("Surviving Corporation"), pursuant to an
Agreement and Plan of Merger substantially in the form attached hereto as Annex
A ("Plan of Merger"); and
WHEREAS, following the consummation of the Merger, the Surviving
Corporation, which shall be a wholly-owned subsidiary of Purchaser following the
Merger, shall merge with and into Purchaser ("Intermediary Merger"), pursuant to
an Agreement and Plan of Merger ("Intermediary Merger Agreement") in a form to
be specified by Purchaser; and
WHEREAS, following the consummation of the Intermediary Merger, PFC BANK
("Seller Bank"), a banking subsidiary of Seller, which shall be a wholly-owned
subsidiary of Purchaser following the Intermediary Merger, shall merge with and
into S&T Bank ("Purchaser Bank"), a bank subsidiary of Purchaser ("Bank
Merger"), pursuant to an Agreement and Plan of Merger ("Bank Merger Agreement")
in a form to be specified by Purchaser; and
WHEREAS, the parties hereto desire to provide for certain undertakings,
conditions, representations, warranties and covenants in connection with the
transactions contemplated hereby;
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and covenants herein contained and intending to be
legally bound hereby, the parties hereto do hereby agree as follows:
ARTICLE 1.
DEFINITIONS
1.1 "Agreement" is defined in the preamble hereto.
1.2 "Bank Holding Company Act" shall mean the Bank Holding Company Act of
1956, as amended.
1.3 "Banking Department" shall mean the Pennsylvania Department of Banking.
1.4 "Bank Merger" is defined in the recitals hereto.
1.5 "Bank Merger Agreement" is defined in the recitals hereto.
1.6 "Claim" is defined in Section 4.9(c) hereof.
1.7 "Closing Date" shall mean the date specified pursuant to Section 4.8
hereof as the date on which the parties hereto shall close the transactions
contemplated herein.
1.8 "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.9 "Commission" or "SEC" shall mean the Securities and Exchange
Commission.
1.10 "Confidentiality Agreement" is defined in Section 4.5 hereof.
1.11 "Covered Parties" is defined in Section 4.9(d) hereof.
1.12 "DAI" is defined in Section 2.17 hereof.
1.13 "PFC Shares" is defined in the Plan of Merger.
1.14 "Effective Date" shall mean the date specified pursuant to Section 4.8
hereof as the effective date of the Merger.
1.15 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
1.16 "ERISA Affiliate" is defined in Section 2.13(a) hereof.
1.17 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
1.18 "FDIA" shall mean the Federal Deposit Insurance Act.
1.19 "FDIC" shall mean the Federal Deposit Insurance Corporation.
1.20 "Federal Reserve Board" shall mean the Board of Governors of the
Federal Reserve System.
1.21 "Indemnified Parties" is defined in Section 4.9(c) hereof.
1.22 "Insurance Amount" is defined in Section 4.9(e) hereof.
1.23 "Intellectual Property" means domestic and foreign letters patent,
patents, patent applications, patent licenses, software licensed or owned,
know-how licenses, trade names, common law and other trademarks, service marks,
licenses of trademarks, trade names and/or service marks, trademark
registrations and applications, service xxxx registrations and applications and
copyright registrations and applications.
1.24 "Intermediary Merger" is defined in the recitals hereto.
1.25 "Intermediary Merger Agreement" is defined in the recitals hereto.
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1.26 "Material Adverse Effect" shall mean, with respect to Seller or
Purchaser, as the case may be, a material adverse effect on the business,
results of operations or financial condition of such party and any Subsidiary of
the party taken as a whole or a material adverse effect on such party's ability
to consummate the transactions contemplated hereby; provided, however, that in
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determining whether a Material Adverse Effect has occurred there shall be
excluded any effect on the referenced party the cause of which is (i) any change
in banking or similar laws, rules or regulations of general applicability or
interpretations thereof by courts or governmental authorities, (ii) any change
in generally accepted accounting principles or regulatory accounting
requirements applicable to banks or their holding companies generally, (iii)
general changes in conditions, including interest rates, in the banking industry
or in the global or United States economy or financial markets, with respect to
clause (i), (ii) or (iii), to the extent that a change does not materially
affect the referenced party to a materially different extent than other
similarly situated banking organizations, and (iv) any action or omission of
Seller or Purchaser or any Subsidiary of either of them taken with the prior
written consent of Purchaser or Seller, as applicable, in contemplation of the
Merger.
1.27 "Merger" is defined in the recitals hereto.
1.28 "Merger Consideration" is defined in the Plan of Merger.
1.29 "Merger Sub" is defined in the preamble to this Agreement.
1.30 "Nasdaq" shall mean the Nasdaq Stock Market.
1.31 "NYSE" shall mean the New York Stock Exchange.
1.32 "Plan of Merger" is defined in the recitals hereto.
1.33 "Previously Disclosed" shall mean disclosed prior to the execution
hereof in a letter dated of even date herewith from the party making such
disclosure and delivered to the other party prior to the execution hereof.
1.34 "Proxy Statement" shall mean the proxy statement (or similar
documents) together with any supplements thereto sent to the shareholders of
Seller to solicit their votes in connection with this Agreement and the Plan of
Merger.
1.35 "Purchaser" is defined in the preamble of this Agreement.
1.36 "Purchaser Bank" is defined in the recitals hereof.
1.37 "Rights" shall mean warrants, options, rights, convertible securities
and other arrangements or commitments which obligate an entity to issue or
dispose of any of its capital stock, and stock appreciation rights, performance
units and other similar stock-based rights whether they obligate the issuer
thereof to issue stock or other securities or to pay cash.
1.38 "Reorganization Agreement" is defined in the preamble of this
Agreement.
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1.39 "SEC Documents" shall mean all reports and registration statements
filed, or required to be filed, by a party hereto pursuant to the Securities
Laws.
1.40 "Securities Act" shall mean the Securities Act of 1933, as amended.
1.41 "Securities Laws" shall mean the Securities Act; the Exchange Act; the
Investment Company Act of 1940, as amended; the Investment Advisers Act of 1940,
as amended; the Trust Indenture Act of 1939, as amended; and the rules and
regulations of the Commission promulgated thereunder.
1.42 "Seller" is defined in the preamble of this Agreement.
1.43 "Seller Bank" is defined in the recitals hereto.
1.44 "Seller Common Stock" is defined in Section 2.1 hereof.
1.45 "Seller Employees" is defined in Section 4.9(a) hereof.
1.46 "Seller Financial Statements" shall mean the consolidated statements
of condition of Seller as of December 31, 2001 and 2000 and the related
consolidated statements of income, cash flows and changes in shareholders'
equity (including related notes, if any) for each of the three years ended,
December 31, 2001, 2000 and 1999 respectively, as filed by Seller in SEC
Documents.
1.47 "Seller Plan" is defined in Section 2.13(a) hereof.
1.48 "Subsidiary" or "Subsidiaries" shall mean with respect to any party,
any bank, corporation, partnership or other organization, whether incorporated
or unincorporated, which is consolidated with such party for financial reporting
purposes.
1.49 "Surviving Corporation" is defined in the recitals hereto.
1.50 "Takeover Laws" is defined in Section 2.24 hereof.
1.51 "Takeover Proposal" is defined in Section 4.7(b)(xiv) hereof.
1.52 "Tax," collectively, "Taxes" shall mean all taxes, however
denominated, including any interest, penalties, criminal sanctions or additions
to tax (including, without limitation, any underpayment penalties for
insufficient estimated tax payments) or other additional amounts that may become
payable in respect thereof (or in respect of a failure to file any Tax Return
when and as required), imposed by any federal, state, local or foreign
government or any agency or political subdivision of any such government, which
taxes shall include, without limiting the generality of the foregoing, all
income taxes, payroll and employment taxes, withholding taxes (including
withholding taxes in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder or other person or entity),
unemployment insurance taxes, social security (or similar) taxes, sales and use
taxes, excise taxes, franchise taxes, gross receipts taxes, occupation taxes,
real and personal property taxes, stamp taxes, value added taxes, transfer
taxes, profits or windfall profits taxes, licenses
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in the nature of taxes, estimated taxes, severance taxes, duties (custom and
others), workers' compensation taxes, premium taxes, environmental taxes
(including taxes under Section 59A of the Code), disability taxes, registration
taxes, alternative or add-on minimum taxes, estimated taxes, and other fees,
assessments, charges or obligations of the same or of a similar nature.
1.53 "Tax Return," collectively, "Tax Returns" shall mean all returns,
reports, estimates, information statements or other written submissions, and any
schedules or attachments thereto, required or permitted to be filed pursuant to
the statutes, rules and regulations of any federal, state, local or foreign
government Tax authority, including but not limited to, original returns and
filings, amended returns, claims for refunds, information returns and accounting
method change requests.
1.54 "Trust Account Shares" is defined in the Plan of Merger.
ARTICLE 2.
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as Previously Disclosed, Seller hereby represents and warrants to
Purchaser and Merger Sub as follows:
2.1. CAPITAL STRUCTURE OF SELLER
The authorized capital stock of Seller consists of 5,000,000 shares of
common stock, par value $.30 per share ("Seller Common Stock"), 1,665,412 shares
of which are issued and outstanding and 107,640 shares of which are held in
treasury. As of the date hereof, no shares of Seller Common Stock are reserved
for issuance, except as Previously Disclosed. All outstanding shares of Seller
Common Stock have been duly authorized and validly issued and are fully paid and
nonassessable. Seller does not have and is not bound by any Rights which are
authorized, issued or outstanding with respect to the capital stock of Seller
except (i) as Previously Disclosed, and (ii) as set forth above. None of the
shares of Seller's capital stock has been issued in violation of the preemptive
rights of any person.
2.2. ORGANIZATION, STANDING AND AUTHORITY OF SELLER
Seller is a duly organized corporation, validly existing and in good
standing under the laws of the Commonwealth of Pennsylvania with full corporate
power and authority to carry on its business as now conducted and is duly
licensed or qualified to do business in the states of the United States and
foreign jurisdictions where its ownership or leasing of property or the conduct
of its business requires such qualification, except where the failure to be so
licensed or qualified would not have a Material Adverse Effect on Seller. Seller
is registered as a bank holding company under the Bank Holding Company Act.
2.3. OWNERSHIP OF SELLER SUBSIDIARIES; CAPITAL STRUCTURE OF SELLER
SUBSIDIARIES
As of the date hereof, Seller does not own, directly or indirectly, 5% or
more of the outstanding capital stock or other voting securities of any
corporation, bank or other organization except the Seller Subsidiaries and as
Previously Disclosed. Seller has Previously Disclosed to Purchaser a list of all
of the Seller Subsidiaries, including a summary description of each
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Subsidiary's activities and the authority under which each Subsidiary is held by
Seller or Seller Bank, as the case may be. Except as Previously Disclosed, the
outstanding shares of capital stock or other equity interests of each Seller
Subsidiary have been duly authorized and validly issued and are fully paid and
(except as provided by applicable law) nonassessable and all such shares or
equity interests are directly or indirectly owned by Seller free and clear of
all liens, claims and encumbrances. No Seller Subsidiary has or is bound by any
Rights which are authorized, issued or outstanding with respect to the capital
stock or other equity interests of any Seller Subsidiary and, except as
Previously Disclosed, there are no agreements, understandings or commitments
relating to the right of Seller to vote or to dispose of said shares. None of
the shares of capital stock or other equity interests of any Seller Subsidiary
has been issued in violation of the preemptive rights of any person.
2.4. ORGANIZATION, STANDING AND AUTHORITY OF SELLER SUBSIDIARIES
Each Seller Subsidiary is a duly organized corporation, banking association
or other organization, validly existing and in good standing under applicable
laws. Each Seller Subsidiary (i) has full power and authority to carry on its
business as now conducted, and (ii) is duly licensed or qualified to do business
in the states of the United States and foreign jurisdictions where its ownership
or leasing of property or the conduct of its business requires such licensing or
qualification, except where failure to be so licensed or qualified would not
have a Material Adverse Effect on Seller. Each Seller Subsidiary has all
federal, state, local and foreign governmental authorizations necessary for it
to own or lease its properties and assets and to carry on its business as it is
now being conducted, except where the failure to be so authorized would not have
a Material Adverse Effect on Seller.
2.5. AUTHORIZED AND EFFECTIVE AGREEMENT
(a) Seller has all requisite corporate power and authority to enter
into and perform all of its obligations under this Reorganization Agreement
and the Plan of Merger. The execution and delivery of this Reorganization
Agreement and the Plan of Merger and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by
all necessary corporate action in respect thereof on the part of Seller,
except for the affirmative vote of 70% of the votes cast by the holders of
Seller Common Stock entitled to vote thereon, which is the only shareholder
vote required to approve the Plan of Merger pursuant to the Pennsylvania
Business Corporation Law and Seller's Articles of Incorporation, as
amended, and Seller's Bylaws. The Board of Directors of Seller has directed
that this Agreement and the Plan of Merger be submitted to Seller's
stockholders for approval at a special meeting to be held as soon as
practicable.
(b) Assuming the accuracy of the representation contained in Section
3.2(b) hereof, this Reorganization Agreement and the Plan of Merger
constitute legal, valid and binding obligations of Seller, enforceable
against it in accordance with their respective terms, subject as to
enforceability, to bankruptcy, insolvency and other laws of general
applicability relating to or affecting creditors' rights and to general
equity principles.
(c) Neither the execution and delivery of this Reorganization
Agreement or the Plan of Merger, nor consummation of the transactions
contemplated hereby or thereby, nor
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compliance by Seller with any of the provisions hereof or thereof shall (i)
conflict with or result in a breach of any provision of the articles or
certificate of incorporation or association, charter or bylaws of Seller or
any Seller Subsidiary, (ii) assuming the consents and approvals
contemplated by Section 4.3 hereof and the consents and approvals which are
Previously Disclosed are duly obtained, constitute or result in a breach of
any term, condition or provision of, or constitute a default under, or give
rise to any right of termination, cancellation or acceleration with respect
to, or result in the creation of any lien, charge or encumbrance upon any
property or asset of Seller or any Seller Subsidiary pursuant to, any note,
bond, mortgage, indenture, license, agreement or other instrument or
obligation, or (iii) assuming the consents and approvals contemplated by
Section 4.3 hereof and the consents and approvals which are Previously
Disclosed are duly obtained, violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Seller or any Seller Subsidiary,
except (in the case of clauses (ii) and (iii) above) for such violations,
rights, conflicts, breaches, creations or defaults which, either
individually or in the aggregate, would not have a Material Adverse Effect
on Seller.
(d) Other than as contemplated by Section 4.3 hereof, no consent,
approval or authorization of, or declaration, notice, filing or
registration with, any governmental or regulatory authority, or any other
person, is required to be made or obtained by Seller or any Seller
Subsidiary on or prior to the Closing Date in connection with the
execution, delivery and performance of this Agreement and the Plan of
Merger or the consummation of the transactions contemplated hereby or
thereby. As of the date hereof, Seller is not aware of any reason that the
condition set forth in Section 5.1(b) of this Agreement, including the
proviso thereto, would not be satisfied.
2.6. SEC DOCUMENTS; REGULATORY FILINGS
Seller has filed all SEC Documents required by the Securities Laws and such
SEC Documents complied, as of their respective dates, in all material respects
with the Securities Laws. Seller and each Seller Subsidiary has filed all
reports required by statute or regulation to be filed with any federal or state
bank regulatory agency, except where the failure to so file would not have a
Material Adverse Effect on Seller, and such reports were prepared in accordance
with the applicable statutes, regulations and instructions in existence as of
the date of filing of such reports in all material respects.
2.7. FINANCIAL STATEMENTS; BOOKS AND RECORDS; MINUTE BOOKS
The Seller Financial Statements filed by Seller in SEC Documents prior to
the date of this Agreement fairly present, and the Seller Financial Statements
filed by Seller after the date of this Agreement will fairly present, the
consolidated financial position of Seller and its consolidated Subsidiaries as
of the dates indicated and the consolidated income, changes in shareholders'
equity and cash flows of Seller and its consolidated Subsidiaries for the
periods then ended and each such financial statement has been or will be, as the
case may be, prepared in conformity with generally accepted accounting
principles applicable to financial institutions applied on a consistent basis
except as disclosed therein and except, in the case of unaudited statements, as
permitted by Form 10-Q. The books and records of Seller and each Seller
Subsidiary fairly reflect in all material respects the transactions to which it
is a party or by which its properties are subject or bound. Such books and
records have been properly kept and maintained and are in compliance with all
applicable legal and accounting requirements in all
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material respects. The minute books of Seller and each Seller Subsidiary contain
records, which are accurate in all material respects of all corporate actions of
its shareholders and Board of Directors (including committees of its Board of
Directors).
2.8. MATERIAL ADVERSE CHANGE
Seller has not, on a consolidated basis, suffered any change in its
financial condition, results of operations or business since December 31, 2001,
which individually or in the aggregate with any other such changes would
constitute a Material Adverse Effect with respect to Seller.
2.9. ABSENCE OF UNDISCLOSED LIABILITIES
Neither Seller nor any Seller Subsidiary has any liability (contingent or
otherwise), excluding contractually assumed contingencies, that is material to
Seller on a consolidated basis, or that, when combined with all similar
liabilities, would be material to Seller on a consolidated basis, except as
disclosed in the Seller Financial Statements filed with the SEC prior to the
date hereof and except for liabilities incurred in the ordinary course of
business subsequent to December 31, 2001.
2.10. PROPERTIES
Seller and the Seller 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, which, individually or in
the aggregate, are material to the business of Seller and its Subsidiaries taken
as a whole, and which are reflected on the Seller Financial Statements as of
December 31, 2001, or acquired after such date, except (i) liens for taxes 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 and encumbrances, if any, as are not material in character, amount or
extent and (iv) dispositions and encumbrances for adequate consideration in the
ordinary course of business. All leases pursuant to which Seller or any Seller
Subsidiary, as lessee, leases real and personal property which, individually or
in the aggregate, are material to the business of Seller and its Subsidiaries
taken as a whole are valid and enforceable in accordance with their respective
terms except where the failure of such lease or leases to be valid and
enforceable would not, individually or in the aggregate, have a Material Adverse
Effect on Seller. All tangible property used in the business of Seller and its
Subsidiaries is in good condition, reasonable wear and tear excepted, and is
usable in the ordinary course of business consistent with Seller's past
practices.
2.11. LOANS
(a) Each loan reflected as an asset in the Seller Financial Statements
(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, in each case other than loans as to which the
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failure to satisfy the foregoing standards, individually or in the
aggregate, would not have a Material Adverse Effect on Seller.
(b) The allowance for loan losses reflected on the Seller Financial
Statements, as of their respective dates, is in all material respects
consistent with the requirements of generally accepted accounting
principles to provide for reasonably anticipated losses with respect to
Seller's loan portfolio based upon information reasonably available at the
time.
2.12. TAX MATTERS
(a) Seller and each Seller Subsidiary have timely filed federal income
tax returns for each year through December 31, 2001 and have timely filed,
or caused to be filed, all other Tax Returns required to be filed with
respect to Seller or any Seller Subsidiary, except where the failure to
file timely such federal income and other Tax Returns would not, in the
aggregate, have a Material Adverse Effect on Seller. All Taxes due by or on
behalf of Seller or any Seller Subsidiary have been paid or adequate
reserves have been established on the Seller Financial Statements for the
payment of such Taxes, except where any such failure to pay or establish
adequate reserves would not, in the aggregate, have a Material Adverse
Effect on Seller. Neither Seller nor any Seller Subsidiary will have any
liability for any such Taxes in excess of the amounts so paid or reserves
or accruals so established except where such liability would not have a
Material Adverse Effect on Seller.
(b) All Tax Returns filed by Seller and each Seller Subsidiary are
complete and accurate in all material respects. Neither Seller nor any
Seller Subsidiary is delinquent in the payment of any material Tax, and,
except as Previously Disclosed, none of them has requested any extension of
time within which to file any Tax Returns which have not since been filed.
Except as Previously Disclosed or as fully settled and paid or accrued on
the Seller Financial Statements, Seller has not received written notice of
any material audit examination, deficiency, adjustment, refund claim or
litigation with respect to Tax Returns, paid Taxes, unpaid Taxes or Tax
attributes of Seller or any Seller Subsidiary. Except as Previously
Disclosed, there are currently no agreements in effect with respect to
Seller or any Seller Subsidiary to extend the period of limitations for the
assessment or collection of any Tax.
(c) Neither the transactions contemplated hereby nor the termination
of the employment of any employees of Seller or any Seller Subsidiary prior
to or following consummation of the transactions contemplated hereby will
result in Seller or any Seller Subsidiary (or any successor thereof) making
or being required to make any "excess parachute payment" as that term is
defined in Section 280G of the Code.
(d) Neither Seller nor any Seller Subsidiary is a party to any
agreement (other than an agreement exclusively among Seller and the Seller
Subsidiaries) providing for the allocation or sharing of, or
indemnification for, Taxes.
(e) Neither Seller nor any Seller Subsidiary is required to include in
income any adjustment in any taxable period ending after the date hereof
pursuant to Section 481(a) of the Code.
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(f) Neither Seller nor any Seller Subsidiary has executed or entered
into any written agreement with any Tax authority conceding or agreeing to
any treatment of Taxes or Tax attributes, including, without limitation, an
Internal Revenue Service Form 870 or Form 870-AD, closing agreement or
special closing agreement, affecting the Seller or any Seller Subsidiary
pursuant to Section 7121 of the Code or any predecessor provision thereof
or any similar provision of state, local or foreign law, which agreement
would have a material impact on the calculation of the Taxes of Purchaser
or any Purchaser Subsidiary after the Effective Date.
(g) For purposes of this Section 2.12, (i) references to Seller and
any Seller Subsidiary shall include predecessors thereof and (ii) "Seller
Subsidiary" shall include each Subsidiary (as defined in Article 1 hereof)
of Seller, and each corporation, partnership, limited liability company,
joint venture or other entity which Seller controls directly or indirectly
(through one or more intermediaries). For purposes of the previous
sentence, "control" means the possession, direct or indirect, of the power
either (1) to vote fifty percent (50%) or more of the voting interests of a
corporation, partnership, limited liability company, joint venture or other
entity, or (2) to direct or cause the direction of the management and
policies of a corporation, partnership, limited liability company, joint
venture or other entity, whether by contract or otherwise.
2.13. EMPLOYEE BENEFIT PLANS
(a) Seller has made available to Purchaser true and complete copies of
each Seller Plan. For purposes of this Section 2.13, the term "Seller Plan"
means each bonus, deferred compensation, incentive compensation, stock
purchase, stock option, severance pay, medical, life or other insurance,
profit-sharing, or pension plan, program, agreement or arrangement, and
each other employee benefit plan, program, agreement or arrangement,
sponsored, maintained or contributed to or required to be contributed to by
Seller or by any trade or business, whether or not incorporated, that
together with Seller would be deemed a "single employer" under Section 414
of the Code (an "ERISA Affiliate") for the benefit of any employee or
director or former employee or former director of Seller or any ERISA
Affiliate of Seller.
(b) With respect to each of the Seller Plans, Seller has made
available to Purchaser true and complete copies of each of the following
documents: (a) the Seller Plan and related documents (including all
amendments thereto); (b) the most recent annual reports, financial
statements, and actuarial reports, if any; (c) the most recent summary plan
description, together with each summary of material modifications, required
under ERISA with respect to such Seller Plan and all material
communications relating to each such Seller Plan; and (d) the most recent
determination letter received from the IRS with respect to each Seller Plan
that is intended to be qualified under the Code and all material
communications to or from the IRS or any other governmental or regulatory
agency or authority relating to each Seller Plan.
(c) No liability under Title IV of ERISA has been incurred by Seller
or any ERISA Affiliate of Seller that has not been satisfied in full, and
no condition exists that presents a material risk to Seller or any ERISA
Affiliate of Seller of incurring a liability under such Title, other than
liability for premium payments to the Pension Benefit Guaranty Corporation
("PBGC"), which premiums have been or will be paid when due.
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(d) Neither Seller nor, to the knowledge of Seller, any ERISA
Affiliate of Seller, nor any of the Seller Plans, nor, to the knowledge of
Seller, any trust created thereunder, nor any trustee or administrator
thereof has engaged in a prohibited transaction (within the meaning of
Section 406 of ERISA and Section 4975 of the Code) in connection with which
Seller or any ERISA Affiliate of Seller could reasonably be expected to,
either directly or indirectly, incur any material liability or material
cost.
(e) Full payment has been made, or will be made in accordance with
Section 404(a)(6) of the Code, of all amounts that Seller or any ERISA
Affiliate of Seller is required to pay under Section 412 of the Code or
under the terms of the Seller Plans.
(f) Except as Previously Disclosed, the fair market value of the
assets held under each Seller Plan that is subject to Title IV of ERISA
equals or exceeds the actuarial present value of all accrued benefits under
each such Seller Plan. No reportable event under Section 4043 of ERISA has
occurred with respect to any Seller Plan other than any reportable event
occurring by reason of the transactions contemplated by this Agreement or a
reportable event for which the requirement of notice to the PBGC has been
waived.
(g) None of the Seller Plans is a "multiemployer pension plan," as
such term is defined in Section 3(37) of ERISA, a "multiple employer
welfare arrangement," as such term is defined in Section 3(40) of ERISA, or
a single employer plan that has two or more contributing sponsors, at least
two of whom are not under common control, within the meaning of Section
4063(a) of ERISA.
(h) A favorable determination letter has been issued by the Internal
Revenue Service with respect to each of the Seller Plans that is intended
to be "qualified" within the meaning of Section 401(a) of the Code to the
effect that such plan is so qualified and, to the knowledge of Seller, no
condition exists that could adversely affect the qualified status of any
such Seller Plan. Each of the Seller Plans that is intended to satisfy the
requirements of Section 125 or 501(c)(9) of the Code satisfies such
requirements in all material respects. Each of the Seller Plans has been
operated and administered in all material respects in accordance with its
terms and applicable laws, including but not limited to ERISA and the Code.
(i) There are no actions, suits or claims pending, or, to the
knowledge of Seller, threatened or anticipated (other than routine claims
for benefits) against any Seller Plan, the assets of any Seller Plan or
against Seller or any ERISA Affiliate of Seller with respect to any Seller
Plan. There is no judgment, decree, injunction, rule or order of any court,
governmental body, commission, agency or arbitrator outstanding against or
in favor of any Seller Plan or any fiduciary thereof (other than rules of
general applicability). There are no pending or, to the knowledge of
Seller, threatened audits, examinations or investigations by any
governmental body, commission or agency involving any Seller Plan.
(j) The consummation of the transactions contemplated by this
Agreement will not result in, and is not a precondition to, (i) any current
or former employee or director of Seller or any ERISA Affiliate of Seller
becoming entitled to severance pay, unemployment compensation or any
similar payment, (ii) any acceleration in the time of payment or vesting,
or increase in the amount, of any compensation due to any such current or
former employee or
11
director, or (iii) any renewal or extension of the term of any agreement
regarding compensation for any such current or former employee or director.
2.14. CERTAIN CONTRACTS
(a) Neither Seller nor any Seller Subsidiary is a party to, or is
bound by, (i) any material contract as defined in Item 601(b)(10) of
Regulation S-K of the SEC or any other material contract or similar
arrangement whether or not made in the ordinary course of business (other
than loans or loan commitments and funding transactions in the ordinary
course of business of any Seller Subsidiary) or any agreement restricting
the nature or geographic scope of its business activities in any material
respect, (ii) any agreement, indenture or other instrument relating to the
borrowing of money by Seller or any Seller Subsidiary or the guarantee by
Seller or any Seller Subsidiary of any such obligation, other than
instruments relating to transactions entered into in the ordinary course of
business, or (iii) any contract, agreement or understanding with a labor
union, in each case whether written or oral.
(b) Neither Seller nor any Seller Subsidiary is in default under any
material agreement, commitment, arrangement, lease, insurance policy or
other instrument whether entered into in the ordinary course of business or
otherwise and whether written or oral, and there has not occurred any event
that, with the lapse of time or giving of notice or both, would constitute
such a default, except for such defaults which would not, individually or
in the aggregate, have a Material Adverse Effect on Seller.
(c) Except as Previously Disclosed, Neither Seller nor any Seller
Subsidiary is a party to any transaction (other than agreements Previously
Disclosed in connection with Section 2.14(a) hereof) with (i) any person
who has been an executive officer or a director of Seller, (ii) any spouse
of any such officer or director, (iii) any parent, child, borther, sister
or other family relation of any such officer or director who has the same
home as such officer or director, (iv) any corporation or other entity of
which such officer or director or any such family relation is an officer,
director, partner, or greater than 5% interest holder (based on percentage
of ownership of voting securities) or (v) any "affiliate" or "associate" of
any such persons (as such terms are defined in the rules and regulations
promulgated under the Securities Act), including without limitation, (x)
any transaction involving a contract, agreement, or other arrangement
providing for the employment of, furnishing of materials, products or
services by, rental of real or personal property from, or otherwise
requiring payments to, any such person or entity, and (y) loans (including
any loan guaranty) outstanding at the date hereof, but not (z) deposit
accounts maintained at Seller in the ordinary course of its banking
business.
2.15. LEGAL PROCEEDINGS
Except as Previously Disclosed, there are no actions, suits or proceedings
instituted, pending or, to the knowledge of Seller or any Seller Subsidiary,
threatened (or unasserted but considered probable of assertion and which if
asserted would have at least a reasonable probability of an unfavorable outcome)
against Seller or any Seller Subsidiary or against any asset, interest or right
of Seller or any Seller Subsidiary as to which there is a reasonable probability
of an unfavorable outcome and which, if such an unfavorable outcome was
rendered, would, individually or in the aggregate, have a Material Adverse
Effect on Seller. To the
12
knowledge of Seller or any Seller Subsidiary, there are no actual or threatened
actions, suits or proceedings which present a claim to restrain or prohibit the
transactions contemplated herein or to impose any material liability in
connection therewith as to which there is a reasonable probability of an
unfavorable outcome and which, if such an unfavorable outcome was rendered,
would, individually or in the aggregate, have a Material Adverse Effect on
Seller. There are no actions, suits or proceedings instituted, pending or, to
the knowledge of Seller or any Seller Subsidiary, threatened (or unasserted but
considered probable of assertion and which if asserted would be reasonably
expected to have an unfavorable outcome) against any present or, to Seller's
knowledge, former director or officer of Seller or any Seller Subsidiary, that
would reasonably be expected to give rise to a claim for indemnification and
that (i) has a reasonable probability of an unfavorable outcome and (ii) in the
event of an unfavorable outcome, would, individually or in the aggregate, have a
Material Adverse Effect on Seller.
2.16. COMPLIANCE WITH LAWS
Except as Previously Disclosed, Seller and each Seller Subsidiary is in
compliance in all material respects with all statutes and regulations applicable
to the conduct of its business, and neither Seller nor any Seller Subsidiary has
received notification from any agency or department of federal, state or local
government (i) asserting a material violation of any such statute or regulation,
(ii) threatening to revoke any license, franchise, permit or government
authorization or (iii) restricting or in any way limiting its operations, except
for such noncompliance, violations, revocations and restrictions which would
not, individually or in the aggregate, have a Material Adverse Effect on Seller.
Neither Seller nor any Seller Subsidiary is subject to any regulatory or
supervisory cease and desist order, agreement, directive, memorandum of
understanding or commitment which would be reasonably expected to have a
Material Adverse Effect on Seller, and none of them has received any
communication requesting that they enter into any of the foregoing.
2.17. BROKERS AND FINDERS
Neither Seller nor any Seller Subsidiary, nor any of their respective
officers, directors or employees, has employed any broker, finder or financial
advisor or incurred any liability for any fees or commissions in connection with
the transactions contemplated herein or the Plan of Merger, except that Seller
has engaged and will pay a fee or commission to Xxxxxxxxx Associates, Inc.
("DAI") to perform certain financial advisory services as Previously Disclosed.
2.18. INSURANCE
Seller and the Seller Subsidiaries each currently maintains insurance in
amounts considered by Seller and any Seller Subsidiary as applicable, to be
reasonably necessary for their operations. Neither Seller nor any Seller
Subsidiary has received any notice of a material premium increase over current
rates or cancellation with respect to any of its insurance policies or bonds,
and within the last three years, neither Seller nor any Seller Subsidiary has
been refused any insurance coverage sought or applied for, and Seller has no
reason to believe that existing insurance coverage cannot be renewed as and when
the same shall expire, upon terms and conditions as favorable as those presently
in effect, other than possible increases in premiums or unavailability in
coverage that have not resulted from any extraordinary loss
13
experience of Seller or any Seller Subsidiary. Seller has Previously Disclosed a
list of all outstanding claims as of the date hereof against Seller or any
Seller Subsidiary under any insurance policy. The deposits of Seller Bank are
insured by the FDIC in accordance with the FDIA, and Seller Bank and its
predecessors have paid all assessments and filed all reports required by the
FDIA.
2.19. ENVIRONMENTAL LIABILITY
Neither Seller nor any Seller Subsidiary has received any written notice of
any legal, administrative, arbitral or other proceeding, claim or action and, to
the knowledge of Seller and the Seller Subsidiaries, there is no governmental
investigation of any nature ongoing, in each case that would reasonably be
expected to result in the imposition, on Seller or any Seller Subsidiary of any
liability arising under any local, state or federal environmental statute,
regulation or ordinance including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended,
which liability would have a Material Adverse Effect on Seller; except as
Previously Disclosed, there are no facts or circumstances which would reasonably
be expected to form the basis for any such proceeding, claim, action or
governmental investigation that would impose any such liability; and neither
Seller nor any Seller Subsidiary is subject to any agreement, order, judgment,
decree or memorandum by or with any court, governmental authority, regulatory
agency or third party imposing any such liability.
2.20. INTELLECTUAL PROPERTY
Except as Previously Disclosed, Seller or a Seller Subsidiary owns the
entire right, title and interest in and to, or has valid licenses with respect
to, all of the Intellectual Property necessary in all material respects to
conduct the business and operations of Seller and the Seller Subsidiaries as
presently conducted, except where the failure to do so would not, individually
or in the aggregate, have a Material Adverse Effect on Seller. The ownership,
licensing or use of Intellectual Property by Seller or its Subsidiaries does
not, to the knowledge of Seller, conflict with, infringe, misappropriate or
otherwise violate the Intellectual Property rights of any other person or
entity. None of such Intellectual Property is subject to any outstanding order,
decree, judgment, stipulation, settlement, lien, charge, encumbrance or
attachment, which order, decree, judgment, stipulation, settlement, lien,
charge, encumbrance or attachment would have a Material Adverse Effect on
Seller. Except as Previously Disclosed, upon consummation of the transactions
contemplated by this Agreement Purchaser and the Purchaser Subsidiaries will be
entitled to continue to use all such Intellectual Property without the payment
of any fees, licenses or other payments (other than ongoing payments required
under license agreements for software used by Seller or the Seller Subsidiaries
in Previously Disclosed amounts consistent with past practice).
2.21. RISK MANAGEMENT INSTRUMENTS
All interest rate swaps, caps, floors, option agreements, futures and
forward contracts and other similar risk management arrangements to which Seller
or a Seller Subsidiary is a party, whether entered into for Seller's own
account, or for the account of one or more of the Seller Subsidiaries or their
customers, were entered into (i) in accordance with prudent business
14
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 Seller
or one of the Seller 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
equity principles), and neither Seller nor any Seller Subsidiary nor to Seller's
knowledge, any other party thereto, is in breach of any of its obligations under
any such agreement or arrangement. Seller has previously made available to
Purchaser all of such agreements and arrangements that are in effect as of the
date of this Agreement.
2.22. REPURCHASE AGREEMENTS
With respect to all agreements pursuant to which Seller or any Seller
Subsidiary has purchased securities subject to an agreement to resell, if any,
Seller or such Seller 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
agreements, and the value of such collateral equals or exceeds the amount of the
debt secured thereby.
2.23. CERTAIN INFORMATION
The information contained in the Proxy Statement, other than information
provided by Purchaser, at the time the Proxy Statement is mailed to shareholders
of Seller up to and including the time of the Seller's shareholders' meeting to
vote upon the Merger, (i) shall comply in all material respects with the
applicable provisions of the Securities Laws, and (ii) shall 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 contained therein not
misleading. All information concerning Seller and its directors, officers,
shareholders and any Subsidiaries included (or submitted for inclusion) in any
application and furnished by it pursuant to Section 4.3 of this Agreement shall
be true, correct and complete in all material respects.
2.24. TAKEOVER LAWS
Seller has taken all action required to by taken by it in order to exempt
this Reorganization Agreement and the Plan of Merger and the transactions
contemplated hereby and thereby from, and this Reorganization Agreement and the
Plan of Merger and the transactions contemplated hereby and thereby 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"), including, without
limitation, the Commonwealth of Pennsylvania.
2.25. FAIRNESS OPINION
DAI has rendered an opinion to the Board of Directors of Seller, dated the
same date as this Agreement, to the effect that, as of such date, the Merger
Consideration is fair, from a financial point of view, to the holders of Seller
Common Stock. A correct and complete copy of that opinion has been delivered to
Purchaser.
15
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND MERGER SUB
Except as Previously Disclosed, Purchaser and Merger Sub hereby jointly and
severally represent and warrant to Seller as follows:
3.1. ORGANIZATION, STANDING AND AUTHORITY OF PURCHASER AND MERGER SUB
Purchaser is a duly organized corporation, validly existing and in good
standing under the laws of the Commonwealth of Pennsylvania, with full corporate
power and authority to carry on its business as now conducted and is duly
licensed or qualified to do business in the states of the United States and
foreign jurisdictions where its ownership or leasing of property or the conduct
of its business requires such qualification, except where the failure to be so
licensed or qualified would not have a Material Adverse Effect on Purchaser.
Merger Sub is a duly organized corporation, validly existing and in good
standing under the laws of the State of Delaware, with full corporate power and
authority to carry on its business as now conducted and is duly licensed or
qualified to do business in the states of the United States and foreign
jurisdictions where its ownership or leasing of property or the conduct of its
business requires such qualification, except where the failure to be so licensed
or qualified would not have a Material Adverse Effect on Purchaser or Merger
Sub.
3.2. AUTHORIZED AND EFFECTIVE AGREEMENT
(a) Each of Purchaser and Merger Sub has all requisite corporate power
and authority to enter into and perform all of its obligations under this
Reorganization Agreement and the Plan of Merger. The execution and delivery
of this Reorganization Agreement and the Plan of Merger and the
consummation of the transactions contemplated hereby and thereby have been
duly and validly authorized by all necessary corporate action in respect
thereof on the part of Purchaser and Merger Sub.
(b) Assuming the accuracy of the representation contained in Section
2.5(b) hereof, this Reorganization Agreement and the Plan of Merger
constitute legal, valid and binding obligations of Purchaser and Merger
Sub, in each case, enforceable against it in accordance with their
respective terms subject, as to enforceability, to bankruptcy, insolvency
and other laws of general applicability relating to or affecting creditors'
rights and to general equity principles.
(c) No vote of the shareholders of Purchaser is required to approve
the transactions contemplated by this Agreement or the Plan of Merger
pursuant to the Pennsylvania Business Corporation Law and Purchaser's
Articles of Incorporation and Purchaser's Bylaws. The Board of Directors of
Purchaser (at a meeting duly called, convened and held) has, by the
requisite vote of its directors, declared that the Agreement and the Plan
of Merger are advisable and in the best interests of it and its
shareholders and approved this Agreement, the Plan of Merger and the
transactions contemplated hereby and thereby.
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3.3. CONSENTS AND APPROVALS; NO VIOLATION
(a) Neither the execution and delivery of this Reorganization
Agreement and the Plan of Merger, nor consummation of the transactions
contemplated hereby or thereby, nor compliance by Purchaser or Merger Sub
with any of the provisions hereof or thereof shall (i) conflict with or
result in a breach of any provision of the articles or certificate of
incorporation or association, charter or bylaws of Purchaser or any
Purchaser Subsidiary; (ii) constitute or result in a breach of any term,
condition or provision of, or constitute a default under, or give rise to
any right of termination, cancellation or acceleration with respect to, or
result in the creation of any lien, charge or encumbrance upon any property
or asset of Purchaser or any Purchaser Subsidiary pursuant to, any note,
bond, mortgage, indenture, license, agreement or other instrument or
obligation; or (iii) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to Purchaser or any Purchaser Subsidiary,
except (in the case of clauses (ii) and (iii) above) for such violations,
rights, conflicts, breaches, creations or defaults which, either
individually or in the aggregate, will not have a Material Adverse Effect
on Purchaser.
(b) Except for approvals specified in Section 4.3 hereof and except as
expressly referred to in this Reorganization Agreement, no consent,
approval or authorization of, or declaration, notice, filing or
registration with, any governmental or regulatory authority, or any other
person, is required to be made or obtained by Purchaser or Merger Sub on or
prior to the Closing Date in connection with the execution, delivery and
performance of this Agreement and the Plan of Merger or the consummation of
the transactions contemplated hereby or thereby. As of the date hereof,
Purchaser is not aware of any reason that the condition set forth in
Section 5.1(b) of this Agreement would not be satisfied.
3.4. LEGAL PROCEEDINGS
There are no actions, suits or proceedings instituted, pending or, to the
knowledge of Purchaser, threatened against Purchaser or any subsidiary of
Purchaser which present a claim to restrain or prohibit the transactions
contemplated hereby.
3.5. BROKERS AND FINDERS
Neither Purchaser nor any subsidiary of Purchaser, nor any of their
respective officers, directors or employees, has employed any broker, finder or
financial advisor or incurred any liability for any fees or commissions in
connection with the transactions contemplated herein or the Plan of Merger,
except for Purchaser's retention of Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated to perform certain financial advisory services.
3.6. FINANCIAL RESOURCES
Purchaser will have available on the Closing Date sufficient financial
resources to enable Purchaser to lawfully satisfy its obligations pursuant to
this Agreement and the Plan of Merger and to consummate the Merger. Purchaser
has and will have sufficient management and financial resources to obtain the
required regulatory and other approvals for the transactions contemplated by
this Agreement and the Plan of Merger.
17
ARTICLE 4.
COVENANTS
4.1. SHAREHOLDERS' MEETING
Seller shall submit this Reorganization Agreement and the Plan of Merger to
its shareholders for approval at special meetings to be held as soon as
practicable. Subject to the fiduciary duties of the respective Board of
Directors of Seller as determined after consultation with counsel, the Board of
Directors of Seller shall recommend that the shareholders of Seller vote in
favor of such approval.
4.2. PROXY STATEMENT; REGISTRATION STATEMENT
As promptly as practicable after the date hereof, Purchaser and Seller
shall cooperate in the preparation of the Proxy Statement to be mailed to the
shareholders of Seller in connection with this Reorganization Agreement and the
transactions contemplated hereby.
4.3. APPLICATIONS
As promptly as practicable after the date hereof, and after a reasonable
opportunity for review by counsel to Seller, Purchaser shall submit any
requisite applications for prior approval of, and notices with respect to, the
transactions contemplated herein, in the Plan of Merger, in the Intermediary
Merger Agreement and in the Bank Merger Agreement, to (i) the Federal Reserve
Board pursuant to Sections 3 and 4 of the Bank Holding Company Act and the Bank
Merger Act, (ii) the FDIC pursuant to the 12 U.S.C. Sections 1828(c)(2) and 12
CFR Part 362, and (iii) the Banking Department pursuanT to Sections 115 and 1603
of the Pennsylvania Banking Code and Sections 201 and 203 of the Pennsylvania
Banking Code, and the regulations promulgated thereunder, and each of the
parties hereto shall, and they shall cause their respective Subsidiaries to,
submit any applications, notices or other filings to any other state or federal
government agency, department or body the approval of which is required for
consummation of the Merger and the Bank Merger. Seller and Purchaser each
represents and warrants to the other that all information concerning it and its
directors, officers, shareholders and subsidiaries included (or submitted for
inclusion) in any such application and furnished by it shall be true, correct
and complete in all material respects.
4.4. BEST EFFORTS
(a) Subject to the terms and conditions of this Agreement, Purchaser
and Seller shall each use its reasonable best efforts in good faith, and
each of them shall cause its Subsidiaries to use their reasonable best
efforts in good faith, to (i) furnish such information as may be required
in connection with the preparation of the documents referred to in Sections
4.2 and 4.3 above, and (ii) take or cause to be taken all action necessary
or desirable on its part so as to permit consummation of the Merger at the
earliest possible date, including, without limitation, (1) obtaining the
consent or approval of each individual, partnership, corporation,
association or other business or professional entity whose consent or
approval is required for consummation of the transactions contemplated
hereby, provided that neither Seller nor any Seller Subsidiary shall agree
to make any payments or modifications to agreements in connection therewith
without the prior written consent of Purchaser, which consent shall not be
unreasonably withheld and
18
(2) requesting the delivery of appropriate opinions, consents and letters
from its counsel and independent auditors. Subject to the terms and
conditions of this Agreement, no party hereto shall take or fail to take,
or cause or permit its Subsidiaries to take or fail to take, or to the best
of its ability permit to be taken or omitted to be taken by any third
persons, any action that would substantially impair the prospects of
completing the Merger pursuant to this Reorganization Agreement and the
Plan of Merger, or that would materially delay such completion.
(b) Seller shall give prompt notice to Purchaser, and Purchaser shall
give prompt notice to Seller, of (i) the occurrence, or failure to occur,
of any event which occurrence or failure would be reasonably likely to
cause any representation or warranty contained in this Agreement to be
untrue or inaccurate at any time from the date hereof to the Closing Date
such that the condition set forth in Section 5.2(a) or 5.3(a), as
applicable, would not be met if such failure to be true or accurate were to
occur or be continuing on the Closing Date, and (ii) any material failure
of Seller or Purchaser, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder, and each party shall use all reasonable best efforts to remedy
such failure.
(c) From the date of this Agreement through the Effective Date, to the
extent permitted by law, Seller shall, and shall cause the Seller
Subsidiaries to, provide such assistance to Purchaser as shall be
reasonably necessary to assist Purchaser in converting and transferring as
soon as practicable after the Effective Date all information concerning the
loans, deposits and other assets and liabilities of Seller and the Seller
Subsidiaries into Purchaser's own data processing system, with a view to
facilitating the integration of Purchaser's and Seller's systems and
otherwise combining Purchaser's and Seller's operations upon consummation
of the Merger. After execution of this Agreement, to the extent permitted
by law, Seller shall provide Purchaser with computer file instructions with
respect to the information in its data processing system regarding the
assets and liabilities of Seller and the Seller Subsidiaries, together with
operational procedures designed to implement the transfer of such
information to Purchaser, with a view to facilitating the integration of
Purchaser's and Seller's systems and otherwise combining Purchaser's and
Seller's operations upon consummation of the Merger. After execution of
this Agreement, Seller and Purchaser shall each designate an individual to
serve as liaison concerning the transfer of data processing information and
other similar operational matters and to consult as to whether and when
Seller will proceed with its pending data processing conversion.
(d) Each party shall provide and shall request its auditors to provide
the other party with such historical financial information regarding it
(and related audit reports and consents) as the other party may reasonably
request for disclosure purposes under the Securities Laws.
4.5. INVESTIGATION AND CONFIDENTIALITY
Seller and Purchaser each will keep the other advised of all material
developments relevant to its business and to consummation of the transactions
contemplated herein and in the Plan of Merger. Purchaser and Seller each may
make or cause to be made such investigation of the financial and legal condition
of the other as such party reasonably deems necessary or advisable in connection
with the transactions contemplated herein and in the Plan of Merger, provided,
--------
however, that such investigation shall be reasonably related to such
-------
19
transactions and shall not interfere unnecessarily with normal operations.
Purchaser and Seller agree to furnish the other and the other's advisors with
such financial data and other information with respect to its business and
properties as such other party shall from time to time reasonably request. No
investigation pursuant to this Section 4.5 shall affect or be deemed to modify
any representation or warranty made by, or the conditions to the obligations to
consummate the Merger of, any party hereto. Each party hereto shall hold all
information furnished by the other party or any of such party's Subsidiaries or
representatives pursuant to this Agreement in confidence to the extent required
by, and in accordance with, the provisions of the confidentiality agreement,
dated March 1, 2002, between Seller and Purchaser (the "Confidentiality
Agreement").
4.6. PRESS RELEASES
Seller and Purchaser shall agree with each other as to the form and
substance of any press release related to this Reorganization Agreement and the
Plan of Merger or the transactions contemplated hereby or thereby, and shall
consult each other as to the form and substance of other public disclosures
related thereto, provided, however, that nothing contained herein shall prohibit
-------- -------
any party, following notification to the other parties, from making any
disclosure which is required by applicable law or Nasdaq rules.
4.7. ACTIONS PENDING THE MERGER
(a) Prior to the Closing Date, and except as otherwise provided for by
this Reorganization Agreement, the Plan of Merger, or consented to or
approved by Purchaser, Seller shall, and shall cause each of its
Subsidiaries to, use its reasonable best efforts to preserve its
properties, business and relationships with customers, employees and other
persons.
(b) Seller shall not, and shall not permit any of the Seller
Subsidiaries to, except with the prior written consent of Purchaser and
except as Previously Disclosed or expressly contemplated or permitted by
this Agreement or the Plan of Merger:
(i) carry on its business other than in the usual, regular and
ordinary course in substantially the same manner as heretofore
conducted;
(ii) declare, set aside, make or pay any dividend or other
distribution in respect of its capital stock other than regular
quarterly cash dividends on Seller Common Stock in amounts not in
excess of $.22 per share;
(iii) issue any shares of its capital stock or permit any
treasury shares to become outstanding;
(iv) incur any additional debt obligation or other obligation for
borrowed money other than in the ordinary course of business
consistent with past practice;
(v) issue, grant or authorize any Rights or effect any
recapitalization, reclassification, stock dividend, stock split or
like change in capitalization, or redeem, repurchase or otherwise
acquire any shares of its capital stock except for Trust Account
Shares and PFC Shares;
20
(vi) amend its articles or certificate of incorporation or
association or bylaws; impose, or suffer the imposition, on any share
of stock of any Seller Subsidiary held by Seller of any lien, charge
or encumbrance, or permit any such lien, charge or encumbrance to
exist except, in each case, for liens, charges and encumbrances which
have been Previously Disclosed;
(vii) merge with any other corporation, savings association or
bank or permit any other corporation, savings association or bank to
merge into it or consolidate with any other corporation, savings
association or bank; acquire control over any other firm, bank,
corporation, savings association or organization or create any
Subsidiary;
(viii) waive or release any material right or cancel or
compromise any material debt or claim;
(ix) fail to comply in any material respect with any material
laws, regulations, ordinances or governmental actions applicable to it
and to the conduct of its business;
(x) liquidate or sell or dispose of any material assets or
acquire any material assets; except as Previously Disclosed, make any
capital expenditure in excess of $20,000 in any instance or $150,000
in the aggregate; or, except as Previously Disclosed, establish new
branches or other similar facilities, close existing branches or
similar facilities or enter into or modify any leases or other
contracts relating thereto;
(xi) except as Previously Disclosed, increase the rate of
compensation of, pay or agree to pay any bonus to, or provide any
other employee benefit or incentive to, any of its directors, officers
or employees except in a manner consistent with past practice or as
required by law or contractual obligation in effect as of the date
hereof;
(xii) change its lending, investment, asset/liability management
or other material banking policies in any material respect except as
may be required by changes in applicable law;
(xiii) change its methods of accounting in effect at December 31,
2001, except as required by changes in generally accepted accounting
principles concurred in by its independent certified public
accountants, or change any of its methods of reporting income,
deductions or other items for federal income tax purposes from those
employed in the preparation of its federal income tax returns for the
year ended December 31, 2001, except as required by applicable law;
(xiv) authorize or permit any of its officers, directors,
employees or agents to directly or indirectly solicit, initiate or
encourage any inquiries relating to, or the making of any proposal
which constitutes, a Takeover Proposal (as defined below), or, except
to the extent legally required for the discharge of the fiduciary
duties of its Board of Directors, recommend or endorse any Takeover
Proposal, or participate in any discussions or negotiations, or
provide third parties with any nonpublic information, relating to any
such inquiry or proposal or otherwise facilitate any effort or attempt
to make or implement a Takeover Proposal; provided, however, that
-------- -------
Seller may communicate information about any such Takeover Proposal to
its stockholders if, in the judgment of Seller's Board of Directors,
after consultation with outside counsel, such communication is
necessary in order to comply with its fiduciary duties to Seller's
shareholders required under
21
applicable law. Seller will take all actions necessary or advisable to
inform the appropriate individuals or entities referred to in the
first sentence hereof of the obligations undertaken herein. Seller
will notify Purchaser immediately if any such inquiries or Takeover
Proposals are received by, any such information is requested from, or
any such negotiations or discussions are sought to be initiated or
continued with, Seller, and Seller will promptly inform Purchaser in
writing of all of the relevant details with respect to the foregoing.
As used in this Agreement, "Takeover Proposal" shall mean any tender
or exchange offer, proposal for a merger, consolidation or other
business combination involving Seller or any Seller Subsidiary or any
proposal or offer to acquire in any manner a substantial equity
interest in, or a substantial portion of the assets of, Seller or any
Seller Subsidiary other than the transactions contemplated or
permitted by this Agreement and the Plan of Merger; or
(xv) agree to do any of the foregoing.
4.8. CLOSING; ARTICLES OF MERGER
The transactions contemplated by this Reorganization Agreement and the Plan
of Merger shall be consummated at a closing to be held at such location as the
parties shall mutually agree, on the first business day following satisfaction
of the conditions to consummation of the Merger set forth in Article 5 hereof
(other than such conditions relating to the actions to be taken at the Closing).
In connection with such Closing, Merger Sub and Seller shall execute a
certificate of merger and shall cause such certificate to be delivered to (i)
the Pennsylvania Secretary of State in accordance with Section 1603 of the
Pennsylvania Business Corporation Law, and (ii) the Delaware Secretary of State
in accordance with Section 251(c) of the Delaware General Corporation Law. The
Merger shall be effective at the time and on the date specified in such
certificate of merger.
4.9. SELLER EMPLOYEES; DIRECTORS AND MANAGEMENT; INDEMNIFICATION
(a) On and after the Effective Date (or as soon thereafter as may be
practicable), all persons who are employed by Seller and/or any of the
Seller Subsidiaries on such date ("Seller Employees") shall be employed on
terms and conditions (including benefits) that in the aggregate are no less
favorable with respect to their employment by Purchaser and its
Subsidiaries after the Effective Date than those generally afforded to
other similarly situated employees of Purchaser or its Subsidiaries,
subject to the terms and conditions under which those employee benefits are
made available to such employees and provided that (i) for purposes of (A)
determining eligibility for and vesting of such employee benefits (and not
for pension benefit accrual purposes), (B) determining levels of short-term
disability benefits, and vacation benefits, and (C) if applicable,
satisfying any waiting periods concerning "preexisting conditions," service
with Seller or a Seller Subsidiary or any predecessor thereto prior to the
Effective Date shall be treated as service with an "employer" to the same
extent as if such persons had been employees of Purchaser, and (ii)
copayments and expenses paid by the Seller Employees prior to the Effective
Date under the Seller Plans that provide medical benefits shall be treated
as if paid under Purchaser's employee benefit plans that provide medical
benefits for purposes of determining satisfaction of copayment and
deductible requirements under such Purchaser plans, and provided, further,
-------- -------
that this Section 4.9(a) shall not be construed (A) to limit the ability of
Purchaser and its Subsidiaries to terminate the employment of any employee
at any time for any
22
reason or to review employee benefits programs from time to time and to
make such changes as they deem appropriate or (B) to require Purchaser or
its Subsidiaries to provide employees or former employees of Seller or any
of its Subsidiaries with post-retirement medical benefits more favorable
than those provided to new hires at Purchaser. Purchaser agrees to honor,
or to cause the appropriate Purchaser Subsidiary to honor, in accordance
with their terms all employment, severance and employee benefit plans,
contracts, agreements and arrangements, and understandings Previously
Disclosed, provided, however, that the foregoing shall not prevent
-------- -------
Purchaser from amending or terminating any such plan, contract, or
agreement in accordance with its terms and applicable law. The continued
coverage of the Seller Employees under the employee benefit plans
maintained by Seller and/or any Seller Subsidiary immediately prior to the
Effective Date (the "Seller Plans") during a transition period of no more
than 6 months shall be deemed to provide the Seller Employees with benefits
that are no less favorable than those offered to other employees of
Purchaser and any Purchaser Subsidiary; provided, that after the Effective
--------
Date there is no material reduction in the benefits provided under the
Seller Plans. If a Seller Employee's employment is terminated by Purchaser
or any Purchaser Subsidiary after the Closing Date, such Seller Employee
shall be entitled to severance benefits, with such Seller Employee being
given credit for service with Seller or any Seller Subsidiary, from
Purchaser or a Purchaser Subsidiary that are not less than the severance
benefits that would be paid under the severance benefit plan or program, as
in effect from time to time, of Purchaser that applies to similarly
situated employees of Purchaser and its Subsidiaries. No provision of this
Section 4.9(a) shall create any third party beneficiary rights in any
employee or former employee of Seller (including any beneficiary or
dependent thereof) in respect of continued employment (or resumed
employment) or any other matter.
(b) Prior to the Effective Date, Seller shall take all actions that
may be requested by Purchaser in writing with respect to (i) causing one or
more Seller Plans to terminate as of the Effective Date or for benefit
accrual and entitlements to cease as of the Effective Date, (ii) causing
the continuation on and after the Effective Date of any contract,
arrangement or insurance policy relating to any Seller Plan for such period
as may be requested by Purchaser, or (iii) facilitating the merger of any
Plan into any Purchaser Plan. Seller shall not authorize the commencement
of any purchase period under any Seller Stock Purchase Plan between the
date hereof and the termination of this Reorganization Agreement and shall
not extend any purchase period that is in effect on the date hereof beyond
its originally scheduled date of termination.
(c) In the event of any threatened or actual claim, action, suit,
proceeding or investigation, whether civil, criminal or administrative,
including, without limitation, any such claim, action, suit, proceeding or
investigation in which any person who is now, or has been at any time prior
to the date of this Agreement, or who becomes prior to the Effective Date,
a director or officer of Seller (the "Indemnified Parties") is, or is
threatened to be, made a party based in whole or in part on, or arising in
whole or in part out of, or pertaining to (i) the fact that he is or was a
director, officer or employee of Seller, or any Seller Subsidiary or any of
their respective predecessors or (ii) this Agreement or the Plan of Merger
or any of the transactions contemplated hereby or thereby, whether in any
case asserted or arising before or after the Effective Date, the parties
hereto agree to cooperate and use their best efforts to defend against and
respond thereto. On and after the Effective Date, Purchaser shall indemnify
and hold harmless, as and to the fullest extent permitted by law, each such
Indemnified Party against any losses, claims, damages, liabilities, costs,
expenses (including reasonable attorney's fees and
23
expenses in advance of the final disposition of any claim, suit, proceeding
or investigation to each Indemnified Party to the fullest extent permitted
by law upon receipt of any undertaking required by applicable law),
judgments, fines and amounts paid in settlement in connection with any such
threatened or actual claim, action, suit, proceeding or investigation, and
in the event of any such threatened or actual claim, action, suit,
proceeding or investigation (whether asserted or arising before or after
the Effective Date), the Indemnified Parties may retain counsel reasonably
satisfactory to them after consultation with Purchaser; provided, however,
-------- -------
that (1) Purchaser shall have the right to assume the defense thereof and
upon such assumption Purchaser shall not be liable to any Indemnified Party
for any legal expenses of other counsel or any other expenses subsequently
incurred by any Indemnified Party in connection with the defense thereof,
except that if Purchaser elects not to assume such defense or counsel for
the Indemnified Parties reasonably advises the Indemnified Parties that
there are issues which raise conflicts of interest between Purchaser and
the Indemnified Parties, the Indemnified Parties may retain counsel
reasonably satisfactory to them after notification, and Purchaser shall pay
the reasonable fees and expenses of such counsel for the Indemnified
Parties, (2) Purchaser shall be obligated pursuant to this paragraph to pay
for only one firm of counsel for all Indemnified Parties, (3) Purchaser
shall not be liable for any settlement effected without its prior written
consent (which consent shall not be unreasonably withheld), and (4)
Purchaser shall have no obligation hereunder to any Indemnified Party when
and if a court of competent jurisdiction shall ultimately determine, and
such determination shall have become final and nonappealable, that
indemnification of such Indemnified Party in the manner contemplated hereby
is prohibited by applicable law. Any Indemnified Party wishing to claim
Indemnification under this Section 4.9(c), upon learning of any such claim,
action, suit, proceeding or investigation, shall promptly notify Purchaser
thereof, provided that the failure of any Indemnified Party to so notify
Purchaser shall not relieve it of its obligations hereunder except (and
only) to the extent that such failure materially prejudices Purchaser.
Purchaser's obligations under this Section 4.9(c) continue in full force
and effect for a period of six years from the Effective Date; provided,
--------
however, that all rights to indemnification in respect of any claim (a
-------
"Claim") asserted or made within such period shall continue until the final
disposition of such Claim.
(d) Purchaser agrees that all rights to indemnification and all
limitations on liability existing in favor of the directors, officers and
employees of Seller and any Seller Subsidiary (the "Covered Parties") as
provided in their respective articles of incorporation, bylaws or similar
governing documents as in effect as of the date of this Agreement with
respect to matters occurring prior to the Effective Date shall survive the
Merger and shall continue in full force and effect, and shall be honored by
such entities or their respective successors as if they were the
indemnifying party thereunder, without any amendment thereto, for a period
of six years from the Effective Date; provided, however, that all rights to
-------- -------
indemnification in respect of any Claim asserted or made within such period
shall continue until the final disposition of such Claim; provided,
--------
further, however, that nothing contained in this Section 4.9(d) shall be
------- -------
deemed to preclude the liquidation, consolidation or merger of Seller or
any Seller Subsidiary, in which case all of such rights to indemnification
and limitations on liability shall be deemed to so survive and continue as
an obligation of Purchaser or the successor to Seller or the Seller
Subsidiary notwithstanding any such liquidation, consolidation or merger.
(e) Purchaser, from and after the Effective Date will use its
reasonable best efforts directly or indirectly to cause the persons who
served as directors or officers of Seller on
24
or before the Effective Date to be covered by Seller's existing directors'
and officers' liability insurance policy (provided that Purchaser may
substitute therefor policies of at least the same coverage and amounts
containing terms and conditions which are not less advantageous than such
policy) but in no event shall any insured person be entitled under this
Section 4.9(e) to insurance coverage more favorable than that provided to
him or her in such capacities as of the date hereof with respect to acts or
omissions resulting from their service as such on or prior to the Effective
Date. Such insurance coverage, if reasonably available at a reasonable cost
relative to the coverage obtained, shall commence on the Effective Date and
will be provided for a period of no less than six years after the Effective
Date; provided, however, that in no event shall Purchaser be required to
-------- -------
expend more than 150% of the current amount expended by Seller (the
"Insurance Amount") to maintain or procure insurance coverage pursuant
hereto and, provided, further, that the Insurance Amount shall be deemed
-------- -------
reasonable for purposes of this Section 4.9(e). Seller agrees to renew any
such existing insurance or to purchase any "discovery period" insurance
provided for thereunder at Purchaser's request.
(f) In the event Purchaser or any of its successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers or conveys all or substantially all of its
properties and assets to any person, then, and in each such case, to the
extent necessary, proper provision shall be made so that the successors and
assigns of Purchaser assume the obligations set forth in this section.
(g) The provisions of Section 4.9(c), (d), (e) and (f) are intended to
be for the benefit of, and shall be enforceable by, each Indemnified Party
and their respective heirs and representatives.
(h) The parties agree to take the further actions Previously Disclosed
by Purchaser.
4.10. SELLER SUBSIDIARIES
Seller undertakes and agrees that, if so requested by Purchaser, it shall
take all necessary action to facilitate the merger of Seller Subsidiaries with
Subsidiaries of Purchaser or the dissolution of such Seller Subsidiaries
effective at or after the Effective Date; provided however, that in no event
-------- -------
shall the Closing be delayed in order to facilitate any such merger or
dissolution.
4.11. TAKEOVER LAWS
No party hereto shall take any action that would cause the transactions
contemplated by this Reorganization Agreement or the Plan of Merger to be
subject to the 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 Reorganization Agreement and
the Plan of Merger from, or if necessary challenge the validity or applicability
of, any applicable Takeover Law, as now or hereafter in effect.
25
ARTICLE 5.
CONDITIONS PRECEDENT
5.1. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER, MERGER SUB AND
SELLER
The respective obligations of the parties to effect the Merger shall be
subject to satisfaction or waiver of the following conditions at or prior to the
Closing Date:
(a) All corporate action necessary to authorize the execution,
delivery and performance of this Reorganization Agreement and the Plan of
Merger and consummation of the transactions contemplated hereby and
thereby, including without limitation the stockholder approvals
contemplated by Section 2.5 hereof, shall have been duly and validly taken;
(b) The parties hereto shall have received all regulatory approvals
required or mutually deemed necessary in connection with the transactions
contemplated by this Reorganization Agreement, the Plan of Merger, the
Intermediary Merger Agreement and the Bank Merger Agreement, all notice
periods and waiting periods required after the granting of any such
approvals shall have passed and all conditions contained in any such
approval required to have been satisfied prior to consummation of such
transactions shall have been satisfied, provided, however, that no such
-------- -------
approval shall have imposed any condition or requirement that, in the
reasonable good faith opinion of the Board of Directors of Purchaser or
Seller so materially and adversely affects the anticipated economic and
business benefits to Purchaser or Seller, respectively, of the transactions
contemplated by this Agreement as to render consummation of such
transactions inadvisable;
(c) To the extent that any lease, license, loan, financing agreement
or other contract or agreement to which Seller or any Seller Subsidiary is
a party requires the consent of or waiver from the other party thereto as a
result of the transactions contemplated by this Agreement, such consent or
waiver shall have been obtained, unless the failure to obtain such consents
or waivers, individually or in the aggregate, would not have a Material
Adverse Effect on Seller; and
(d) None of the parties hereto shall be subject to any order, decree
or injunction of a court or agency of competent jurisdiction which enjoins
or prohibits the consummation of the transactions contemplated by this
Reorganization Agreement and the Plan of Merger.
5.2. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligations of Seller to effect the Merger shall be subject to
satisfaction of the following additional conditions at or prior to the Closing
Date unless waived by Seller pursuant to Section 6.4 hereof:
(a) The representations and warranties of Purchaser and Merger Sub set
forth in Article 3 hereof shall be true and correct in all material
respects as of the date of this Reorganization Agreement and as of the
Closing Date as though made on and as of the Closing Date (or on the date
when made in the case of any representation and warranty which specifically
relates to an earlier date), except as otherwise contemplated by this
Reorganization Agreement or consented to in writing by Seller; provided,
--------
however, that (i) in determining whether or not the
-------
26
condition contained in this paragraph (a) shall be satisfied, no effect
shall be given to any exceptions in such representations and warranties
relating to materiality or Material Adverse Effect and (ii) the condition
contained in this paragraph (a) shall be deemed to be satisfied unless the
failure of such representations and warranties to be so true and correct
constitute, individually or in the aggregate, a Material Adverse Effect on
Purchaser;
(b) Purchaser and Merger Sub shall have in all material respects
performed all obligations and complied with all covenants required by this
Reorganization Agreement and the Plan of Merger to be performed or complied
with at or prior to the Closing Date; and
(c) Each of Purchaser and Merger Sub shall have delivered to Seller a
certificate, dated the Closing Date and signed by its respective Chairman,
CEO, Executive Vice President or Senior Vice President to the effect that
the conditions set forth in paragraphs (a) and (b) of this section have
been satisfied.
5.3. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER AND MERGER SUB
The respective obligations of Purchaser and Merger Sub to effect the Merger
shall be subject to satisfaction of the following additional conditions at or
prior to the Closing Date unless waived by Purchaser pursuant to Section 6.4
hereof:
(a) The representations and warranties of Seller set forth in Article
2 hereof shall be true and correct in all material respects as of the date
of this Reorganization Agreement and as of the Closing Date as though made
on and as of the Closing Date (or on the date when made in the case of any
representation and warranty which specifically relates to an earlier date),
except as otherwise contemplated by this Reorganization Agreement or
consented to in writing by Purchaser; provided, however, that (i) in
-------- -------
determining whether or not the condition contained in this paragraph (a)
shall be satisfied, no effect shall be given to any exceptions in such
representations and warranties relating to materiality or Material Adverse
Effect and (ii) the condition contained in this paragraph (a) shall be
deemed to be satisfied unless the failure of such representations and
warranties to be so true and correct constitute, individually or in the
aggregate, a Material Adverse Effect on Seller;
(b) Seller shall have in all material respects performed all
obligations and complied with all covenants required by this Reorganization
Agreement and the Plan of Merger to be performed or complied with at or
prior to the Closing Date; and
(c) Seller shall have delivered to Purchaser and Merger Sub a
certificate, dated the Closing Date and signed by its Chairman, President
and Chief Executive Officer or any Executive Vice President to the effect
that the conditions set forth in paragraphs (a) and (b) of this section
have been satisfied.
27
ARTICLE 6.
TERMINATION, WAIVER AND AMENDMENT
6.1. TERMINATION
This Reorganization Agreement and the Plan of Merger may be terminated,
either before or after approval by the shareholders of Seller or Purchaser:
(a) At any time on or prior to the Effective Date, by the mutual
consent in writing of the parties hereto;
(b) At any time on or prior to the Closing Date, by Purchaser in
writing, if Seller has, or by Seller in writing, if Purchaser or Merger Sub
has, in any material respect, breached (i) any covenant or agreement
contained herein or in the Plan of Merger or (ii) any representation or
warranty contained herein, and in either case if (x) such breach has not
been cured by the earlier of 30 days after the date on which written notice
of such breach is given to the party committing such breach or the Closing
Date and (y) such breach would entitle the non-breaching party not to
consummate the transactions contemplated hereby under Article V hereof;
(c) On the Closing Date, by Purchaser in writing, if Seller has, or by
Seller in writing, if Purchaser has, not fulfilled or satisfied any of the
conditions set forth in Article 5 hereof with respect to such party;
(d) At any time, by any party hereto in writing, if the applications
for prior approval referred to in Section 4.3 hereof have been finally
denied, and the time period for appeals and requests for reconsideration
has run, or if any governmental entity of competent jurisdiction shall have
issued a final nonappealable order enjoining or otherwise prohibiting the
Merger;
(e) At any time, by any party hereto in writing, if the shareholders
of Seller do not approve the transactions contemplated herein at the
special meetings duly called for that purpose; or
(f) By Purchaser, if (i) Seller's Board of Directors fails to
recommend approval and adoption of this Agreement and the Merger by
Seller's shareholders or withdraws or modifies (or publicly announces an
intention to withdraw or modify) in any adverse manner its approval or
recommendation of this Agreement or the Merger; (ii) Seller's Board of
Directors makes any public recommendation with respect to any Takeover
Proposal other than a recommendation to reject such Takeover Proposal;
(iii) Seller takes any action prohibited by 4.7(b)(xiv); or (iv) Seller's
Board of Directors resolves to take any of the actions specified above.
(g) By any party hereto in writing, if the Closing Date has not
occurred by the close of business on September 30, 2002 unless the failure
of the Closing to occur by such date shall be due to the failure of the
party seeking to terminate this Agreement to perform or observe the
covenants and agreements set forth herein.
28
6.2. EFFECT OF TERMINATION
(a) In the event this Reorganization Agreement and the Plan of Merger
are terminated pursuant to Section 6.1 hereof, this Agreement and the Plan
of Merger shall become void and have no effect, except that (i) the
provisions relating to confidentiality, fees and expenses set forth in
Sections 4.5, 6.2(b) and 7.1 hereof, respectively, shall survive any such
termination and (ii) a termination pursuant to Section 6.1(b)(i) or (b)(ii)
hereof shall not relieve the breaching party from liability for an uncured
willful breach of such covenant or agreement or representation or warranty
giving rise to such termination.
(b) Seller and Purchaser each acknowledge that the other has spent,
and will be required to spend, substantial time and effort in examining the
business, properties, affairs, financial condition and prospects of the
other, has incurred, and will continue to incur, substantial fees and
expenses in connection with such examination, the preparation of this
Reorganization Agreement and the accomplishment of the transactions
contemplated hereby, and will be unable to evaluate and, possibly, make
investments in or acquire other entities due to the limited number of
personnel available for such purpose and the constraints of time.
Therefore, to induce each of the parties to enter into this Reorganization
Agreement, in the event this Reorganization Agreement and the Plan of
Merger are terminated:
(i) Any termination of this Agreement pursuant to Sections 6.1(a)
or 6.l(g) hereof shall be without cost, expense or liability on the
part of any party to the others. Any termination of this Agreement
pursuant to Section 6.1(b), 6.1(c) or 6.1(d) hereof shall also be
without cost, liability or expense on the part of any party to the
others, unless the material breach of a representation or warranty or
covenant or the failure to fulfill or satisfy the condition is due to
the knowing and intentional misrepresentation or knowing and
intentional breach of warranty or breach of any covenant or agreement
by a party, in which event: (x) so long as Purchaser shall not have
breached its obligations hereunder, if this Agreement is terminated by
Purchaser pursuant to Section 6.1(b) or 6.1 (c) hereof, Seller shall
promptly, but in no event later than four (4) business days after such
termination, pay Purchaser a fee of $250,000, which amount shall be
payable by wire transfer of same day funds; and (y) so long as Seller
shall not have breached its obligations hereunder, if this Agreement
is terminated by Seller pursuant to Section 6.1(b) or 6.1(c) hereof,
Purchaser shall promptly, but in no event later than four (4) business
days after such termination, pay Seller a fee of $250,000, which
amount shall be payable by wire transfer of same day funds.
(ii) So long as Purchaser shall not have breached its obligations
hereunder, if this Agreement is terminated by Purchaser pursuant to
Section 6.1(e) hereof because of the failure to obtain the required
approval of Seller's shareholders and, in the case of termination
pursuant to Section 6.1(e) and this clause (ii), if (A) at or prior to
the Seller's shareholders meeting a Takeover Proposal shall have been
publicly announced or disclosed (whether or not such offer, proposal
or announcement or agreement shall have been rejected or shall have
been withdrawn prior to the time of such termination or of Seller's
shareholders' meeting) and (B)(1) a third party or "group" (within the
meaning of Rule 13d-5 under the Exchange Act), directly or indirectly,
acquires Seller Common Stock which results in a such third party or
"group" having beneficial ownership of 25% or more of the then
outstanding Seller Common Stock or (2) a sale, transfer or license
(having similar effect as a sale or transfer) of
29
25% or more of the fair market value of the assets of Seller, other
than in the ordinary course of business, or (3) a definitive agreement
with respect to any transaction referred to in (1) or (2) is executed
by Seller or any of its Subsidiaries, in the case of (1), (2) or (3),
within six (6) months following termination of this Reorganization
Agreement and the Plan of Merger pursuant to Section 6.1(e) and this
clause (ii), Seller shall promptly, but in no event later than four
(4) business days after the satisfaction of all conditions to payment
set forth in this clause (ii), pay Purchaser a fee of $3,500,000,
which amount shall be payable by wire transfer of same day funds. In
the case of termination pursuant to Section 6.1(f), Seller shall
promptly, but in no event later than four (4) business days after the
date of such termination, pay Purchaser a fee of $3,500,000, which
amount shall be payable by wire transfer of same day funds.
In the event that either party fails to promptly pay the amount due
pursuant to this Section 6.2(b), Seller shall also pay Purchaser, or
Purchaser shall pay Seller, as applicable, interest at the rate of 10%
per annum on any amounts that are not paid when due, plus all costs
and expense in connection with or arising out of the enforcement of
the obligation of the party to pay such fee or such interest.
6.3. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
All representations, warranties and covenants in this Reorganization
Agreement and the Plan of Merger or in any instrument delivered pursuant hereto
or thereto shall expire on, and be terminated and extinguished at, the Effective
Date other than covenants that by their terms are to survive or be performed
after the Effective Date; provided, that no such representations, warranties or
--------
covenants shall be deemed to be terminated or extinguished so as to deprive
Purchaser, Merger Sub or Seller (or any director, officer or controlling person
thereof) of any defense in law or equity which otherwise would be available
against the claims of any person, including, without limitation, any shareholder
or former shareholder of either Purchaser or Seller, the aforesaid
representations, warranties and covenants being material inducements to the
consummation by Purchaser and Seller of the transactions contemplated herein.
6.4. WAIVER
Except where not permitted by law, Purchaser and Seller, respectively, by
written instrument signed by an executive officer of such party, may at any time
(whether before or after approval of this Reorganization Agreement and the Plan
of Merger by the shareholders of Purchaser and Seller) extend the time for the
performance of any of the obligations or other acts of Seller, on the one hand,
or Purchaser or Merger Sub, on the other hand, and may waive (i) any
inaccuracies of such parties in the representations or warranties contained in
this Agreement, the Plan of Merger or any document delivered pursuant hereto or
thereto, (ii) compliance with any of the covenants, undertakings or agreements
of such parties, or satisfaction of any of the conditions precedent to its
obligations, contained herein or in the Plan of Merger or (iii) the performance
by such parties of any of its obligations set out herein or therein; provided,
--------
however, that no such waiver, or amendment or supplement contemplated by Section
-------
6.5 hereof, executed after approval of this Reorganization Agreement and the
Plan of Merger by the shareholders of Seller shall, without the further approval
thereof, change the amount or kind of Merger Consideration.
30
6.5. AMENDMENT OR SUPPLEMENT
This Reorganization Agreement and the Plan of Merger may be amended or
supplemented at any time only by mutual agreement of the parties hereto or
thereto. Any such amendment or supplement must be in writing and approved by
their respective boards of directors and/or officers authorized thereby and
shall be subject to the proviso in Section 6.4 hereto.
ARTICLE 7.
MISCELLANEOUS
7.1. EXPENSES
Except as otherwise provided in Section 6.2(b) hereof, each party hereto
shall bear and pay all costs and expenses incurred by it in connection with the
transactions contemplated in this Reorganization Agreement, including fees and
expenses of its own financial consultants, accountants and counsel, except that
Purchaser and Seller each shall bear and pay 50% of all printing and mailing
costs and filing fees associated with the Proxy Statement.
7.2. ENTIRE AGREEMENT
This Reorganization Agreement and the Plan of Merger contain the entire
agreement between the parties with respect to the transactions contemplated
hereunder and thereunder and supersede all prior arrangements or understandings
with respect thereto, written or oral, other than documents referred to herein
or therein and the Confidentiality Agreement. The terms and conditions of this
Reorganization Agreement and the Plan of Merger shall inure to the benefit of
and be binding upon the parties hereto and thereto and their respective
successors. Except as specifically set forth herein, or in the Plan of Merger,
nothing in this Reorganization Agreement or the Plan of Merger, expressed or
implied, is intended to confer upon any party, other than the parties hereto and
thereto, and their respective successors, any rights, remedies, obligations or
liabilities.
7.3. NO ASSIGNMENT
No party hereto may assign any of its rights or obligations under this
Reorganization Agreement to any other person.
7.4. NOTICES
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered personally or sent by
facsimile transmission or overnight express or by registered or certified mail,
postage prepaid, addressed as follows:
If to Seller:
Peoples Financial Corporation, Inc.
000 Xxxxx Xxxxxx
X.X. Xxx 000
Xxx Xxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attn: Raleigh X. Xxxxxxxxx
Facsimile No: (000) 000-0000
31
With a required copy to:
Xxxxxxxx Xxxxxxxx P.C.
0000 Xxxxxxx Xxxxx Xxxx (Xxxx Hill)
X.X. Xxx 00
Xxxxxxxxxx, Xxxxxxxxxxxx 00000-000
Attn: Xxxx X. Xxxxx
Facsimile No: (000) 000-0000
If to Purchaser or Merger Sub:
S&T Bancorp, Inc.
000 Xxxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxx 00000-0000
Attn: Xxxxx X. Xxxxxx
Facsimile No: (000) 000-0000
With a required copy to:
Xxxxxx & Xxxxxx
0000 Xxxxxx Xxxxxxxxx
Xxxxx 000
XxXxxx, XX 00000
Attn: Xxxxxx X. Xxx
Facsimile No: (000) 000-0000
7.5. CAPTIONS
The captions contained in this Reorganization Agreement are for reference
purposes only and are not part of this Reorganization Agreement.
7.6. COUNTERPARTS
This Reorganization Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
7.7. GOVERNING LAW
This Reorganization Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania applicable to
agreements made and entirely to be performed within such jurisdiction, except to
the extent federal law may be applicable.
[Remainder of this page left intentionally blank.]
32
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have caused this Reorganization Agreement to be executed in counterparts
by their duly authorized officers and their corporate seal to be hereunto
affixed and attested by their officers thereunto duly authorized, all as of the
day and year first above written.
Attest S&T BANCORP, INC.
/s/ Xxxxxx X. Xxxx By: /s/ Xxxxx X. Xxxxxx
---------------------------- -----------------------------
Xxxxxx X. Xxxx Xxxxx X. Xxxxxx
Secretary President & Chief Executive Officer
(SEAL)
Attest S&T MERGER SUBSIDIARY, INC.
s/ Xxxxxx X. Xxxx By: /s/ Xxxxx X. Xxxxxx
---------------------------- -----------------------------
Xxxxxx X. Xxxx Xxxxx X. Xxxxxx
Secretary President
(SEAL)
Attest PEOPLES FINANCIAL CORPORATION, INC.
/s/ Xxxxxxx X. Xxxxxxxxx By: /s/ Raleigh X. Xxxxxxxxx
---------------------------- ----------------------------
Xxx Xxxxxxxxx Raleigh X. Xxxxxxxxx
Secretary President & Chief Executive Officer
(SEAL)
33
ANNEX A
-------
AGREEMENT AND PLAN OF MERGER OF
S&T MERGER SUBSIDIARY, INC.
WITH AND INTO
PEOPLES FINANCIAL CORPORATION, INC.
AGREEMENT AND PLAN OF MERGER ("Plan of Merger") dated as of ___, 2002, by
and between PEOPLES FINANCIAL CORPORATION, INC. ("Seller"), a Pennsylvania
business corporation having its principal executive office at 000 Xxxx Xxxxxx,
Xxxx Xxxx, Xxxxxxxxxxxx 00000, S&T MERGER SUBSIDIARY, INC. ("Merger Sub"), a
Delaware corporation having its principal executive office at 000 Xxxxxxxxxxxx
Xxxxxx, Xxxxxxx, Xxxxxxxxxxxx 00000-0000, and S&T BANCORP, INC. ("Purchaser"), a
Pennsylvania business corporation having its principal executive office at 000
Xxxxxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxxx 00000-0000.
WITNESSETH
----------
WHEREAS, the respective Boards of Directors of Seller, Merger Sub and
Purchaser deem the merger of Merger Sub with and into Seller, under and pursuant
to the terms and conditions herein set forth or referred to, desirable and in
the best interests of the respective corporations and their respective
shareholders, and the respective Boards of Directors of Seller, Merger Sub and
Purchaser have adopted resolutions approving this Plan of Merger and an
Agreement and Plan of Reorganization dated of even date herewith
("Reorganization Agreement"); and
WHEREAS, the parties hereto desire that Seller shall be acquired by
Purchaser through the merger of Merger Sub with and into Seller, with Seller as
the surviving corporation, subject to the terms and conditions of this Plan of
Merger and the Reorganization Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the parties hereto do hereby agree as follows:
ARTICLE 1.
MERGER
Subject to the terms and conditions of this Plan of Merger, at the
Effective Time (as hereinafter defined), Merger Sub shall be merged with and
into Seller, pursuant to the provisions of, and with the effect provided in, the
Pennsylvania Business Corporation Law and the Delaware General Corporation Law
(said transaction being hereinafter referred to as the "Merger"). At the
Effective Time, the separate existence of Merger Sub shall cease and Seller, as
the surviving entity, shall continue unaffected and unimpaired by the Merger.
(Seller as existing on and after the Effective Time being hereinafter sometimes
referred to as the "Surviving Corporation.")
ARTICLE 2.
ARTICLES OF INCORPORATION AND BY-LAWS
The Articles of Incorporation and the By-Laws of Merger Sub in effect
immediately prior to the Effective Time shall be the Articles of Incorporation
and the By-Laws of the Surviving Corporation, in each case until amended in
accordance with applicable law.
ARTICLE 3.
BOARD OF DIRECTORS AND OFFICERS
The directors of Merger Sub at the Effective Time shall be the directors of
the Surviving Corporation, until the earlier of their resignation or removal or
until their respective successors are duly elected and qualified, as the case
may be.
ARTICLE 4.
CAPITAL
Each share of common stock of Merger Sub issued and outstanding
immediately prior to the Effective Time shall, at the Effective Time, be
converted into one share of common stock of the Surviving Corporation.
ARTICLE 5.
CONVERSION AND EXCHANGE OF COMPANY
SHARES; FRACTIONAL SHARE INTERESTS
5.1 At the Effective Time, each share of the common stock of Seller, par
value $0.01 per share ("Seller Common Stock"), outstanding immediately prior to
the Effective Time (except as provided in Sections 5.2 and 5.3), shall by virtue
of the Merger be converted into the right to receive $52.50 in cash (the "Merger
Consideration").
5.2 At the Effective Time, all shares of Seller Common Stock held in the
treasury of Seller or owned beneficially by any subsidiary of Seller other than
in a fiduciary capacity (the "Trust Account Shares") or in connection with a
debt previously contracted ("PFC Shares"), and all shares of Seller Common Stock
owned by Purchaser or owned beneficially by any subsidiary of Purchaser other
than Trust Account Shares and PFC Shares shall be canceled and no cash, stock or
other property shall be delivered in exchange therefor.
5.3 Notwithstanding any other provisions contained in this Plan of Merger,
to the extent required by the Pennsylvania Business Corporation Law, no shares
of Seller Common Stock that are issued and outstanding as of the Effective Time
and that are held by a shareholder who has properly exercised his appraisal
rights (any such shares being referred to herein as "Dissenting Shares") under
applicable law shall be converted into the right to receive the Merger
Consideration unless and until the holder shall have failed to perfect, or shall
have effectively withdrawn or lost, his right to dissent from the Merger under
applicable law and to receive such consideration as may be determined to be due
2
with respect to such Dissenting Shares pursuant to and subject to the
requirements of applicable law. If any such holder shall have failed to perfect
or effectively withdrawn or lost such holder's right to dissent from the Merger,
each of such holder's shares of Seller Common Stock shall thereupon be deemed to
have been converted into and to have become, at the Effective Time, the right to
receive the Merger Consideration.
5.4 As of the Effective Time, Purchaser shall deposit, or shall cause to
be deposited, with such bank or trust company as Purchaser shall elect (the
"Payment Agent"), for the benefit of the holders of shares of Seller Common
Stock, for payment in accordance with this Section 5.4, the Merger Consideration
to be paid pursuant to Section 5.1 and deposited pursuant to this Section 5.4 in
exchange for outstanding shares of Seller Common Stock. Promptly after the
Effective Time, Purchaser shall cause the Payment Agent to mail to each holder
of record of a certificate previously representing shares of Seller common Stock
(a "Certificate") the following: (i) a letter of transmittal specifying that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Payment Agent, which shall
be in a form and contain such provisions as Purchaser and Seller may determine;
and (ii) instructions for use in effecting the surrender of the Certificates in
payment for the Merger Consideration. Upon the proper surrender of a Certificate
to the Payment Agent, together with a properly completed and duly executed
letter of transmittal, the holder of such Certificate shall be entitled to
receive in payment therefor a check representing the Merger Consideration which
such holder has the right to receive in respect of the Certificate surrendered
pursuant to the provisions hereof, and the Certificate so surrendered shall
forthwith be cancelled. No interest will be paid or accrued on the Merger
Consideration. In the event of a transfer of ownership of any shares of Seller
Common Stock not registered in the transfer records of Seller, a check for the
Merger Consideration may be issued to the transferee if the Certificate
representing such Seller Common Stock is presented to the Payment Agent,
accompanied by documents sufficient, in the discretion of Purchaser, (i) to
evidence and effect such transfer; and (ii) to evidence that all applicable
stock transfer taxes have been paid. Any portion of the aggregate Merger
Consideration or the proceeds of any investments thereof that remains unclaimed
by the shareholders of Seller for six months after the Effective Time shall be
repaid by the Payment Agent to Purchaser. Any shareholders of Seller who have
not theretofore complied with this Section 5.4 shall thereafter look only to
Purchaser for payment of the Merger Consideration deliverable in respect of each
share of Seller Common Stock such stockholder holds as determined pursuant to
this Plan of Merger without any interest thereon. If outstanding certificates
for shares of Seller Common Stock are not surrendered or the payment for them
not claimed prior to the date on which such payments would otherwise escheat to
or become the property of any governmental unit or agency, the unclaimed items
shall, to the extent permitted by abandoned property and any other applicable
law, become the property of Purchaser (and to the extent not in its possession
shall be paid over to it), free and clear of all claims or interest of any
person previously entitled to such claims. Any other provision of this Plan of
Merger notwithstanding, neither Purchaser or its agent nor any party to the
Merger shall be liable to a holder of Seller Common Stock for any amount paid or
property delivered in good faith to a public official pursuant to any applicable
abandoned property, escheat or similar law. After the Effective Time, the stock
transfer books of Seller shall be closed and no
3
transfer of Seller Common Stock shall thereafter be made or recognized. If after
the Effective Time Certificates are presented to Purchaser or the Surviving
Corporation, they shall be cancelled and exchanged for the Merger Consideration
deliverable in respect thereof pursuant to this Plan of Merger in accordance
with the procedures set forth in this Section 5.4.
5.5 In the event any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person claiming such
Certificate to be lost, stolen or destroyed and, if required by Purchaser, the
posting by such person of a bond in such amount as Purchaser may reasonably
direct as indemnity against any claim that may be made against it with respect
to such Certificate, Purchaser or its agent will issue in exchange for such
lost, stolen or destroyed Certificate the Merger Consideration to which the
holder of such Certificate is entitled pursuant to Section 5.1.
ARTICLE 6.
EFFECTIVE TIME OF THE MERGER
A certificate of merger evidencing the transactions contemplated herein
shall be delivered to the Pennsylvania Secretary of State and the Delaware
Secretary of State for filing as provided in the Reorganization Agreement. The
Merger shall be effective at the time and on the date specified in such
certificate of merger (such date and time being herein referred to as the
"Effective Time").
ARTICLE 7.
FURTHER ASSURANCES
If at any time the Surviving Corporation shall consider or be advised that
any further assignments, conveyances or assurances are necessary or desirable to
vest, perfect or confirm in the Surviving Corporation title to any property or
rights of Merger Sub, or otherwise carry out the provisions hereof, the proper
officers and directors of Merger Sub, as of the Effective Time, and thereafter
the officers of the Surviving Corporation acting on behalf of Merger Sub, shall
execute and deliver any and all proper assignments, conveyances and assurances,
and do all things necessary or desirable to vest, perfect or confirm title to
such property or rights in the Surviving Corporation and otherwise carry out the
provisions hereof.
ARTICLE 8.
CONDITIONS PRECEDENT
The obligations of Purchaser, Merger Sub and Seller to effect the Merger as
herein provided shall be subject to satisfaction, unless duly waived, of the
conditions set forth in the Reorganization Agreement.
4
ARTICLE 9.
TERMINATION
Anything contained in the Plan of Merger to the contrary notwithstanding,
and notwithstanding adoption hereof by the shareholders of Seller, this Plan of
Merger may be terminated and the Merger abandoned as provided in the
Reorganization Agreement.
ARTICLE 10.
MISCELLANEOUS
10.1 This Plan of Merger may be amended or supplemented at any time prior
to the Effective Time by mutual agreement of Purchaser, Merger Sub and Seller.
Any such amendment or supplement must be in writing and approved by their
respective Boards of Directors and/or by officers authorized thereby and shall
be subject to the proviso in Section 6.4 of the Reorganization Agreement.
10.2 Any notice or other communication required or permitted under this
Plan of Merger shall be given, and shall be effective, in accordance with the
provisions of the Reorganization Agreement.
10.3 The headings of the several Articles herein are inserted for
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Plan of Merger.
10.4 This Plan of Merger shall be governed by and construed in accordance
with the laws of the Commonwealth of Pennsylvania and the State of Delaware
applicable to the internal affairs of Seller and Merger Sub, respectively.
[Remainder of page left intentionally blank; signatures appear on the
following page.]
5
IN WITNESS WHEREOF, the parties hereto, intending to be legally
bound hereby, have caused this Agreement and Plan of Merger to be executed in
counterparts by their duly authorized officers as of the day and year first
above written.
S&T BANCORP, INC.
By --------------------------------
Xxxxx X. Xxxxxx
President & Chief Executive Officer
S&T MERGER SUBSIDIARY, INC.
By --------------------------------
Xxxxx X. Xxxxxx
President
PEOPLES FINANCIAL CORPORATION, INC.
By --------------------------------
Raleigh X. Xxxxxxxxx
President & Chief Executive Officer
6
