Exhibit 2.1
AGREEMENT AND PLAN OF CONSOLIDATION
by and between
PARKVALE FINANCIAL CORPORATION
and
THE SECOND NATIONAL BANK OF MASONTOWN
Dated July 30, 2001
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS AND RULES OF INTERPRETATION
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Rules of Interpretation . . . . . . . . . . . . . . . . . . 7
ARTICLE II
PLAN OF MERGER
2.1 The Consolidation . . . . . . . . . . . . . . . . . . . . . 8
2.2 Effective Date and Effective Time; Closing. . . . . . . . . 9
2.3 The Bank Merger . . . . . . . . . . . . . . . . . . . . . .10
2.4 Consolidation Consideration . . . . . . . . . . . . . . . .10
2.5 Rights as Shareholders; Stock Transfers . . . . . . . . . .10
2.6 Dissenting Shares . . . . . . . . . . . . . . . . . . . . .10
2.7 Exchange Procedures . . . . . . . . . . . . . . . . . . . .11
ARTICLE III
UNQUALIFIED REPRESENTATIONS AND WARRANTIES
OF MASONTOWN
3.1 Capital Structure . . . . . . . . . . . . . . . . . . . . .13
3.2 Registrations . . . . . . . . . . . . . . . . . . . . . . .13
3.3 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . .13
3.4 Deposit Insurance . . . . . . . . . . . . . . . . . . . . .13
3.5 This Agreement. . . . . . . . . . . . . . . . . . . . . . .13
3.6 Financial Statements; No Adverse Change . . . . . . . . . .14
3.7 Fairness Opinion. . . . . . . . . . . . . . . . . . . . . .14
3.8 Interim Events. . . . . . . . . . . . . . . . . . . . . . .14
3.9 Regulatory Reports. . . . . . . . . . . . . . . . . . . . .14
3.10 Governmental Approvals. . . . . . . . . . . . . . . . . . .15
3.11 No Broker's or Finder's Fees. . . . . . . . . . . . . . . .15
3.12 Equity Holdings . . . . . . . . . . . . . . . . . . . . . .15
3.13 Certain Agreements. . . . . . . . . . . . . . . . . . . . .15
3.14 No Impediments. . . . . . . . . . . . . . . . . . . . . . .16
3.15 Registration Obligations. . . . . . . . . . . . . . . . . .16
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ARTICLE IV
QUALIFIED REPRESENTATIONS AND WARRANTIES
OF MASONTOWN
4.1 Organization and Good Standing. . . . . . . . . . . . . . .17
4.2 Compliance with Law . . . . . . . . . . . . . . . . . . . .17
4.3 No Violations . . . . . . . . . . . . . . . . . . . . . . .17
4.4 Litigation and Other Proceedings. . . . . . . . . . . . . .18
4.5 Environmental Matters . . . . . . . . . . . . . . . . . . .18
4.6 Insurance . . . . . . . . . . . . . . . . . . . . . . . . .18
4.7 Labor . . . . . . . . . . . . . . . . . . . . . . . . . . .19
4.8 Indemnification . . . . . . . . . . . . . . . . . . . . . .19
4.9 Loan Portfolio. . . . . . . . . . . . . . . . . . . . . . .19
4.10 Investment Portfolio. . . . . . . . . . . . . . . . . . . .19
4.11 Defaults. . . . . . . . . . . . . . . . . . . . . . . . . .19
4.12 Real Estate Loans and Investments . . . . . . . . . . . . .20
4.13 Employee Benefit Plans. . . . . . . . . . . . . . . . . . .20
4.14 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . .22
4.15 Derivatives Contracts . . . . . . . . . . . . . . . . . . .23
4.16 Properties. . . . . . . . . . . . . . . . . . . . . . . . .23
4.17 Material Interests of Certain Persons . . . . . . . . . . .24
4.18 Intellectual Property . . . . . . . . . . . . . . . . . . .24
4.19 Fiduciary Accounts. . . . . . . . . . . . . . . . . . . . .24
4.20 Books and Records . . . . . . . . . . . . . . . . . . . . .25
4.21 Regulatory Matters. . . . . . . . . . . . . . . . . . . . .25
4.22 Proxy Statement Information . . . . . . . . . . . . . . . .25
4.23 Disclosures . . . . . . . . . . . . . . . . . . . . . . . .25
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF PARKVALE
5.1 Organization and Good Standing. . . . . . . . . . . . . . .26
5.2 Registrations . . . . . . . . . . . . . . . . . . . . . . .26
5.3 This Agreement. . . . . . . . . . . . . . . . . . . . . . .26
5.4 Financial Statements. . . . . . . . . . . . . . . . . . . .26
5.5 Fairness Opinion. . . . . . . . . . . . . . . . . . . . . .27
5.6 Regulatory Reports. . . . . . . . . . . . . . . . . . . . .27
5.7 Governmental Approvals. . . . . . . . . . . . . . . . . . .27
5.8 No Impediments. . . . . . . . . . . . . . . . . . . . . . .27
5.9 Proxy Statement Information . . . . . . . . . . . . . . . .27
5.10 Financial Ability . . . . . . . . . . . . . . . . . . . . .28
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ARTICLE VI
COVENANTS AND AGREEMENTS
6.1 Reasonable Best Efforts . . . . . . . . . . . . . . . . . .28
6.2 Shareholders Meeting. . . . . . . . . . . . . . . . . . . .28
6.3 Regulatory Matters. . . . . . . . . . . . . . . . . . . . .28
6.4 Investigation and Confidentiality . . . . . . . . . . . . .29
6.5 Press Releases. . . . . . . . . . . . . . . . . . . . . . .30
6.6 Business of the Parties . . . . . . . . . . . . . . . . . .30
6.7 Certain Actions . . . . . . . . . . . . . . . . . . . . . .33
6.8 Current Information . . . . . . . . . . . . . . . . . . . .35
6.9 Indemnification . . . . . . . . . . . . . . . . . . . . . .35
6.10 Environmental Reports . . . . . . . . . . . . . . . . . . .37
6.11 Employees and Employee Benefit Plans. . . . . . . . . . . .37
6.12 Litigation Matters. . . . . . . . . . . . . . . . . . . . .39
6.13 Conforming Entries. . . . . . . . . . . . . . . . . . . . .40
6.14 Systems Integration . . . . . . . . . . . . . . . . . . . .40
6.15 Disclosure Supplements. . . . . . . . . . . . . . . . . . .41
6.16 Failure to Fulfill Conditions . . . . . . . . . . . . . . .41
6.17 Organization of Interim Sub . . . . . . . . . . . . . . . .41
6.18 The Bank Merger . . . . . . . . . . . . . . . . . . . . . .41
6.19 Liquidated Damages. . . . . . . . . . . . . . . . . . . . .42
6.20 Transaction Expenses of Masontown . . . . . . . . . . . . .42
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions Precedent - the Parties. . . . . . . . . . . . .43
7.2 Conditions Precedent - Masontown. . . . . . . . . . . . . .43
7.3 Conditions Precedent - Parkvale . . . . . . . . . . . . . .44
ARTICLE VIII
TERMINATION, WAIVER, AMENDMENT
AND SPECIFIC PERFORMANCE
8.1 Termination . . . . . . . . . . . . . . . . . . . . . . . .45
8.2 Effect of Termination . . . . . . . . . . . . . . . . . . .46
8.3 Survival of Representations, Warranties and Covenants . . .46
8.4 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . .46
8.5 Amendment or Supplement . . . . . . . . . . . . . . . . . .47
8.6 Specific Performance. . . . . . . . . . . . . . . . . . . .47
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ARTICLE IX
MISCELLANEOUS
9.1 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . .47
9.2 Entire Agreement. . . . . . . . . . . . . . . . . . . . . .47
9.3 No Assignment . . . . . . . . . . . . . . . . . . . . . . .48
9.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . .48
9.5 Counterparts. . . . . . . . . . . . . . . . . . . . . . . .49
9.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . .49
9.7 Severability. . . . . . . . . . . . . . . . . . . . . . . .49
9.8 Standard of Breach. . . . . . . . . . . . . . . . . . . . .49
9.9 Alternative Structure . . . . . . . . . . . . . . . . . . .49
9.10 Calculation of Dates and Deadlines. . . . . . . . . . . . .50
EXHIBITS
Exhibit A - Voting Agreement
Exhibit B - Form of Employment Agreements
Exhibit C - Form of Consulting Agreement
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AGREEMENT AND PLAN OF CONSOLIDATION
THIS AGREEMENT AND PLAN OF MERGER is dated as of July 30, 2001, by and
between Parkvale and Masontown.
WHEREAS, the Boards of the Parties deem it advisable and in the best
interests of the respective companies and their shareholders to consummate the
Transactions consisting of: (a) the Consolidation, pursuant to which Interim
Sub and Masontown shall consolidate and in connection therewith each share of
Masontown Common Stock outstanding immediately prior to the Effective Time
(excluding Dissenting Shares and Masontown-Owned Shares) shall be canceled in
exchange for the right to receive the Consolidation Consideration, and (b) the
Bank Merger, pursuant to which Masontown shall merge with and into Parkvale
Bank, it being the intention of the Parties that the Consolidation and the
Bank Merger occur in that order substantially simultaneously;
WHEREAS, the Boards of the Parties have approved and adopted this
Agreement and the Consolidation;
WHEREAS, as a material inducement for Parkvale to enter into this
Agreement, the executive officers and directors of Masontown have entered into
the Voting Agreement pursuant to which they have agreed to vote all of the
shares of Masontown Common Stock owned or controlled by them or for which they
possess voting power in favor of the Consolidation and the adoption of this
Agreement; and
WHEREAS, the Parties desire to provide for certain undertakings,
conditions, representations, warranties and covenants in connection with the
Transactions.
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 do agree as follows:
ARTICLE I
DEFINITIONS AND RULES OF INTERPRETATION
The following meanings shall apply for purposes of this Agreement.
1.1 Definitions
"Agreement" means this Agreement and Plan of Consolidation, as amended
or modified from time to time in accordance with Section 8.5.
"Alternative Proposal" shall mean any bona fide written proposal by any
Person other than Parkvale and Parkvale Bank to engage in a merger,
consolidation, purchase or lease of substantially
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all assets, purchase of securities representing more than 20% of the voting
power, or any similar transaction, involving Masontown.
"Banking Code" means the Pennsylvania Banking Code of 1965, as amended.
"Banking Regulations" means the Banking Code, the FDIA, the HOLA, the
National Bank Act and the rules and regulations promulgated thereunder.
"Bank Insurance Fund" means the Bank Insurance Fund maintained by the
FDIC.
"Bank Merger" has the meaning set forth in Section 6.18.
"Bank Merger Effective Time" means the time specified in the articles of
merger to be filed by the Department with the Pennsylvania Department of State
with respect to the Bank Merger.
"Board" means the Board of Directors of an entity, or any committee duly
authorized to act on behalf of the Board of Directors of such entity with
respect to the relevant matter.
"Cause" means termination because of the employee's (a) conviction of,
or plea of guilty or nolo contendere to, a felony or a crime of falsehood or
moral turpitude, (b) willful misconduct resulting in demonstrable material
injury to the employer, (c) breach of fiduciary duty involving personal
profit, (d) intentional failure to perform stated duties if such failure is
not cured within ten (10) days following written notice to the employee, or
(e) willful violation of any law, rule or regulation (other than traffic
violations or similar offenses) or final cease and desist order.
"Certificate" means any certificate which immediately prior to the
Effective Time represented shares of Masontown Common Stock.
"Certificate of Consolidation" has the meaning set forth in Section
2.2(a).
"Claim" has the meaning attributed to it in Section 6.9(a).
"Closing" means the closing of the Transactions.
"Closing Date" means the date on which the Closing occurs.
"Code" means the Internal Revenue Code of 1986, as amended.
"Consolidation" has the meaning set forth in Section 2.1(a).
"Consolidation Consideration" means $92.00, without interest, for each
share of Masontown Common Stock that is outstanding immediately prior to the
Effective Time (but excluding Dissenting Shares and Masontown-Owned Shares).
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"Common Stock" means the common stock of any entity which has only one
authorized class of common stock.
"CRA" means the Community Reinvestment Act of 1977, as amended.
"Department" means the Pennsylvania Department of Banking.
"Delivered" means provided by a Party or any of its Subsidiaries to the
other Party or Parties.
"Dissenting Shares" has the meaning set forth in Section 2.6.
"DOL" means the U.S. Department of Labor.
"Effective Time" has the meaning set forth in Section 2.2(a).
"Employee Plans" means all employee stock purchase and stock bonus
plans, pension, profit-sharing and retirement plans, deferred compensation,
consultant, bonus and group insurance agreements and all other incentive,
health, welfare and benefit plans and arrangements maintained for the benefit
of any present or former directors or employees of Masontown, whether written
or oral.
"Encumbrance" means any lien, claim, charge, restriction, security
interest, rights of third parties, or encumbrance.
"Environmental Claim" means any written notice from any Governmental
Entity or third party alleging potential liability (including potential
liability for investigatory costs, cleanup costs, governmental response costs,
natural resources damages, property damages, personal injuries or penalties)
arising out of, based on, or resulting from the presence, or release into the
environment, of any Materials of Environmental Concern.
"Environmental Laws" means any federal, state or local law, statute,
ordinance, rule, regulation, code, license, permit, authorization, approval,
consent, order, judgment, decree, injunction or agreement with any
Governmental Entity relating to (i) the protection, preservation or
restoration of the environment (including air, water vapor, surface water,
groundwater, drinking water supply, surface soil, subsurface soil, plant and
animal life or any other natural resource), and/or (ii) the use, storage,
recycling, treatment, generation, transportation, processing, handling,
labeling, production, release or disposal of Materials of Environmental
Concern. The term Environmental Law includes (x) the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C.
Section 9601, et seq; the Resource Conservation and Recovery Act, as amended,
42 U.S.C. Section 6901, et seq; the Clean Air Act, as amended, 42 U.S.C.
Section 7401, et seq; the Federal Water Pollution Control Act, as amended, 33
U.S.C. Section 1251, et seq; the Toxic Substances Control Act, as amended, 15
U.S.C. Section 9601, et seq; the Emergency Planning and Community Right to
Know Act, 42 U.S.C. Section 1101, et seq; the Safe Drinking Water Act, 42
U.S.C. Section 300f, et seq; and all comparable state and local laws, and (y)
any common law (including common law that may impose strict liability) that
may impose
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liability or obligations for injuries or damages due to, or threatened as a
result of, the presence of or exposure to any Materials of Environmental
Concern.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" has the meaning set forth in Section 4.13(f).
"ERISA Affiliate Plan" has the meaning set forth in Section 4.13(f).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Agent" means an exchange agent designated by Parkvale or
Parkvale Bank and reasonably acceptable to Masontown.
"FDIA" means the Federal Deposit Insurance Act, as amended.
"FDIC" means the Federal Deposit Insurance Corporation or any successor
thereto.
"FHLB" means the Federal Home Loan Bank of Pittsburgh.
"Federal Reserve Act" means the Federal Reserve Act, as amended.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System.
"Financial Advisor" means Berwind Financial, L.P. with respect to
Masontown, and Xxxxxx Xxxxxxxxxx Xxxxx with respect to Parkvale.
"Financial Statements" means both the Annual Financial Statements and
Interim Financial Statements of Masontown or Parkvale, whichever is
applicable.
(a) "Financial Reports" means the balance sheets, statements of
income and statements of changes in shareholders' equity and cash flows,
including any related notes and schedules, which shall be on a
consolidated basis with respect to any Party that has one or more
Subsidiaries.
(b) "Annual Financial Statements" means the Financial Reports
filed by Parkvale in its most recent annual report under the Securities
Laws and the Financial Reports included by Masontown in its annual
report to shareholders for the year ended December 31, 2000.
(c) "Interim Financial Statements" means the Financial Reports
filed by Parkvale in all of its quarterly reports under the Securities
Laws since the filing of its most recent Annual Financial Statements and
the consolidated reports of condition and income filed by Masontown in
its Regulatory Reports for periods subsequent to December 31, 2000.
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"GAAP" means generally accepted accounting principles applied
consistently with prior practices.
"Governmental Entity" means any federal, state or local court,
administrative agency or commission or other governmental authority or
instrumentality.
"HOLA" means the Home Owners' Loan Act, as amended.
"Indemnified Liabilities" has the meaning attributed to it in Section
6.9(a).
"Indemnified Parties " has the meaning attributed to it in Section
6.9(a).
"Insider Loans" means loans from Masontown to any of its officers,
directors or employees or any associate or related interest of any such
person.
"Interim Sub" means an interim savings bank to be formed under the
Banking Code and wholly owned by Parkvale as a transitory Subsidiary to
effectuate the Consolidation.
"IRS" means the Internal Revenue Service or any successor thereto.
"Knowledge Qualification" means to the best knowledge, after reasonable
investigation, of the Party receiving the benefit of the qualification.
"Masontown" means The Second National Bank of Masontown, a national
bank.
"Masontown 401(k) Plan" means The Second National Bank of Masontown
401(k) Plan and Trust Agreement as in effect on the date hereof.
"Masontown-Owned Shares" means any shares of Masontown's Common Stock
which are owned beneficially or of record by any Party or any Subsidiary of a
Party immediately prior to the Effective Time, other than shares held in a
fiduciary capacity for the benefit of third parties or as a result of debts
previously contracted.
"Material Adverse Effect" means, (a) in the case of Masontown, any
effect that is material and adverse to the condition (financial or otherwise),
results of operations or business of Masontown, or that materially impairs the
ability of Masontown to consummate any of the Transactions, provided, however,
that a Material Adverse Effect shall not be deemed to include the impact of
(i) changes in laws and regulations or interpretations thereof that are
generally applicable to the banking industry, (ii) changes in GAAP that are
generally applicable to the banking industry, (iii) up to $500,000 of expenses
that Masontown has incurred or may incur in connection with this Agreement and
the Transactions, (iv) actions or omissions of Masontown taken with the prior
written consent of Parkvale in contemplation of the Transactions (including
without limitation any actions taken by Masontown pursuant to Section 6.13 of
this Agreement) or (v) changes attributable to or resulting from changes
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in general economic conditions generally affecting financial institutions,
including changes in the prevailing level of interest rates; and (b) in the
case of Parkvale, any effect that materially impairs the ability of Parkvale
or Parkvale Bank to make payment at the Effective Time of the aggregate
Consolidation Consideration or otherwise materially impairs the ability of
Parkvale or Parkvale Bank to consummate any of the Transactions.
"Materials of Environmental Concern" means pollutants, contaminants,
wastes, toxic substances, petroleum and petroleum products and any other
materials regulated under Environmental Laws.
"National Bank Act" means the National Bank Act, as amended.
"National Labor Relations Act" means the National Labor Relations Act,
as amended.
"OCC" means the Office of the Comptroller of the Currency.
"Organization" means the organization of Interim Sub by Parent.
"OTS" means the Office of Banking Supervision of the U.S. Department of
the Treasury or any successor thereto.
"Parkvale" means Parkvale Financial Corporation, a Pennsylvania
corporation.
"Parkvale Bank" means Parkvale Savings Bank, a Pennsylvania chartered
savings bank.
"Parkvale Proposal" has the meaning set forth in Section 6.7(b).
"Party" means Masontown, Parkvale or Interim Sub, after it becomes a
party to this Agreement, whichever is applicable.
"PBCL" means the Pennsylvania Business Corporation Law.
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereto.
"Pension Plan" has the meaning set forth in Section 4.13(c).
"Plan of Bank Merger" means the plan of merger to be entered into by
Masontown and Parkvale Bank to effectuate the Bank Merger.
"Person" means any individual, bank, corporation, partnership,
association, trust, limited liability company or partnership, or
unincorporated organization.
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"Previously Disclosed" means disclosed in a written disclosure schedule
delivered at least two business days prior to the date hereof by Masontown to
Parkvale and its counsel specifically referring to the appropriate section of
this Agreement and describing in reasonable detail the matters contained
therein.
"Proxy Statement" means the proxy statement, together with any
supplements thereto, to be delivered to the holders of Masontown Common Stock
in connection with the solicitation of their adoption of this Agreement.
"Regulatory Reports" means all reports, including Securities Documents,
which a Party or any of its Subsidiaries is required to file with any federal
or state banking agency or other Governmental Entity.
"Rights" means all warrants, options, rights, convertible securities and
other arrangements or commitments which obligate an entity to issue or dispose
of any of its capital stock or other ownership interests.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Documents" means all reports, offering circulars, proxy
statements, registration statements and all similar documents filed, or
required to be filed, pursuant to the Securities Laws.
"Securities Laws" means 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; the rules and
regulations of the SEC promulgated under the above laws; and 12 C.F.R. Part
11.
"Subsidiary" when used with respect to any Party means any entity,
whether incorporated or unincorporated, which is consolidated with such Party
for financial reporting purposes.
"Superior Offer" has the meaning set forth in Section 6.7(d).
"Transactions" means the Organization, the Consolidation and the Bank
Merger.
"Voting Agreement" means that certain agreement entered into between
Parkvale and the executive officers and directors of Masontown on the date
hereof in the form of Exhibit A hereto.
1.2 Rules of Interpretation
The captions contained in this Agreement are for reference purposes only
and are not part of this Agreement. All provisions of this Agreement are
subject to applicable law and to the other terms
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and conditions of this Agreement. No provision of this Agreement shall be
construed to require a party or its affiliate to take any action which would
violate applicable law.
The word "accurate" includes the concept "true and complete."
The word "agreement" includes every sort of contract, commitment, or
understanding, whether written or oral.
The word "authority" includes the concept "all requisite power and
authority."
The word "authorized" includes the concepts "duly approved and
authorized," "adopted," "advised," and any other similar term which may be
required by law.
All forms of the verb "include" includes the concept "without
limitation."
With respect to any securities, "outstanding" means "issued and
outstanding."
ARTICLE II
THE CONSOLIDATION AND THE BANK MERGER
2.1 The Consolidation
(a) The Consolidation. Subject to the terms and conditions of
this Agreement and the prior consummation of the Organization, at the
Effective Time, Interim Sub and Masontown shall consolidate in
accordance with the requirements of Section 215 of the National Bank Act
and the regulations of the OCC thereunder (the "Consolidation"), the
separate corporate existence of Interim Sub shall cease and Masontown
shall continue to exist as a national bank incorporated under the laws
of the United States (Masontown, as the surviving corporation in the
Consolidation, sometimes being referred to herein as the "Consolidated
Corporation").
(b) Name. The name of the Consolidated Corporation upon
consummation of the Consolidation shall be "The Second National Bank of
Masontown."
(c) Articles and Bylaws. The Articles of Association and Bylaws
of the Consolidated Corporation upon consummation of the Consolidation
shall be the Articles of Association and Bylaws of Masontown as in
effect immediately prior to consummation of the Consolidation.
(d) Directors and Officers of the Consolidated Corporation. The
directors of Masontown immediately after the Consolidation shall be the
directors of Interim Sub immediately prior to the Consolidation. The
executive officers of Masontown immediately
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after the Consolidation shall be the executive officers of Interim Sub
immediately prior to the Consolidation. Each of the directors and
executive officers of Masontown immediately after the Consolidation
shall hold office until his or her successor is elected and qualified
or otherwise in accordance with the Articles of Association and Bylaws
of Masontown.
(e) Authorized Capital Stock. The authorized capital stock of
the Consolidated Corporation upon consummation of the Consolidation
shall be as set forth in the Articles of Association of Masontown
immediately prior to the Consolidation.
(f) Effect of the Consolidation. At the Effective Time, the
effect of the Consolidation shall be as provided in Section 215 of the
National Bank Act and the regulations of the OCC thereunder. Without
limiting the generality of the foregoing, and subject thereto, at the
Effective Time, all the property, rights, privileges, powers and
franchises of Interim Sub and Masontown shall vest in the Consolidated
Corporation, and all debts, liabilities, obligations, restrictions,
disabilities and duties of Interim Sub and Masontown shall become the
debts, liabilities, obligations, restrictions, disabilities and duties
of the Consolidated Corporation.
2.2. Effective Date and Effective Time; Closing.
(a) Subject to the satisfaction or waiver of the conditions set
forth in Article VII (other than those conditions that by their nature
are to be satisfied at the consummation of the Consolidation, but
subject to the fulfillment or waiver of those conditions), the parties
shall request the OCC to issue a certificate of consolidation (the
"Certificate of Consolidation"), and in connection therewith make such
filing or filings as may be required to consummate the Consolidation by
applicable laws and regulations, on (i) a date selected by Parkvale
after such satisfaction or waiver which is not later than the later of
(A) seven Business Days after such satisfaction or waiver or (B) the
first month end following such satisfaction or waiver, or (ii) such
other date to which the parties may agree in writing. The Consolidation
provided for herein shall become effective upon the issuance of a
Certificate of Consolidation by the OCC or on such date as may be
specified therein. The date of such filing or such later effective date
is herein called the "Effective Date." The "Effective Time" of the
Consolidation shall be the time of such filing or as set forth in such
filing.
(b) A closing (the "Closing") shall take place immediately prior
to the Effective Time at 10:00 a.m., Eastern Time, at the principal
offices of Parkvale in Monroeville, Pennsylvania, or such other place,
at such other time, or on such other date as the parties may mutually
agree upon (such date, the "Closing Date"). At the Closing, there shall
be delivered to Parkvale and Masontown the certificates and other
documents required to be delivered under Article VII hereof.
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2.3. The Bank Merger.
After the Consolidation, the Consolidated Corporation shall merge with
and into Parkvale Bank pursuant to the Plan of Bank Merger, as provided in
Section 6.18.
2.4. Consolidation Consideration.
Subject to the provisions of this Agreement, at the Effective Time,
automatically by virtue of the Consolidation and without any action on the
part of any Person:
(a) Outstanding Masontown Common Stock. Each share of Masontown
Common Stock, excluding (i) Masontown-Owned Shares and (ii) Dissenting
Shares, issued and outstanding immediately prior to the Effective Time
shall become and be converted into the right to receive the
Consolidation Consideration.
(b) Outstanding Interim Sub Common Stock. Each share of Interim
Sub common stock issued and outstanding immediately prior to the
Effective Time shall be converted into and become one share of Masontown
Common Stock.
(c) Masontown-Owned Shares. Each Masontown-Owned Share
outstanding immediately prior to the Effective Time shall be canceled
and retired at the Effective Time and no consideration shall be issued
in exchange therefor.
2.5. Rights as Shareholders; Stock Transfers.
At the Effective Time, holders of Masontown Company Stock shall cease to
be, and shall have no rights as, shareholders of Masontown other than the
right to receive the consideration provided under this Article II. After the
Effective Time, there shall be no transfers on the stock transfer books of
Masontown or the Consolidated Corporation of shares of Masontown Common Stock,
and if Certificates are presented for transfer after the Effective Time, they
shall be delivered to the Exchange Agent or Parkvale Bank for cancellation
against delivery of the Consolidation Consideration. No interest shall be
paid on the Consolidation Consideration.
2.6. Dissenting Shares.
Each outstanding share of Masontown Common Stock the holder of which
has perfected his right to dissent under Section 215 of the National Bank Act
and has not effectively withdrawn or lost such right as of the Effective Time
(the "Dissenting Shares") shall not be converted into or represent a right to
receive the Consolidation Consideration specified in Section 2.4(a) hereof,
and the holder thereof shall be entitled only to such rights as are granted by
Section 215 of the National Bank Act. If any holder of Dissenting Shares
shall fail to perfect or shall have effectively withdrawn or lost the right to
dissent, the Dissenting Shares held by such holder shall thereupon be treated
as though such Dissenting Shares had been converted into the right to receive
the aggregate Consolidation
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Consideration to which such holder would be entitled pursuant to Section
2.4(a) hereof. Masontown shall give Parkvale prompt notice upon receipt by
Masontown of any such written demands for payment of the fair value of shares
of Masontown Common Stock and of withdrawals of such demands and any other
instruments provided pursuant to Section 215 of the National Bank Act. In
addition, the Board of Masontown shall select pursuant to Section 215(c)(2)
of the National Bank Act the President of Parkvale. Any payments made in
respect of Dissenting Shares shall be made by the Consolidated Corporation.
2.7 Exchange Procedures
(a) No later than the later of (i) seven business days following
the Effective Time or (ii) five business days after receipt by the
Exchange Agent of information concerning Masontown's shareholders in a
form reasonably acceptable to the Exchange Agent and sufficient to
permit the Exchange Agent to do so, Parkvale shall cause the Exchange
Agent to mail or make available to each holder of record of a
Certificate a notice and letter of transmittal disclosing the
effectiveness of the Consolidation and the procedure for exchanging
Certificates for the Consolidation Consideration. Such letter of
transmittal shall specify that delivery shall be effected and risk of
loss and title shall pass only upon proper delivery of Certificates to
the Exchange Agent.
(b) At or prior to the Effective Time, Parkvale shall deliver,
or cause Parkvale Bank to deliver, to the Exchange Agent for the
benefit of the holders of Certificates (other than the holders of
Dissenting Shares and Masontown-Owned Shares) an amount of cash equal to
the aggregate Consolidation Consideration for payment of the aggregate
Consolidation Consideration to such holders of Certificates.
(c) Each holder of any outstanding Certificate (other than
holders of Dissenting Shares and Masontown-Owned Shares) who surrenders
such Certificate and a completed letter of transmittal to the Exchange
Agent will, upon acceptance thereof by the Exchange Agent, be entitled
to the Consolidation Consideration. The Exchange Agent shall accept
Certificates upon compliance with such reasonable terms and conditions
as the Exchange Agent may impose to effect an orderly exchange in
accordance with normal exchange practices. Within two business days of
the Exchange Agent's acceptance from a holder of such holder's
Certificate and a completed letter of transmittal, the Exchange Agent
shall distribute the Consolidation Consideration owed to such holder.
Each outstanding Certificate which is not surrendered to the Exchange
Agent shall, except as provided in Sections 2.4(c) and 2.6, evidence
ownership of only the right to receive the Consolidation Consideration
without interest.
(d) The Exchange Agent shall not be obligated to deliver the
Consolidation Consideration until the holder surrenders a Certificate
and a completed letter of transmittal as provided in this Section 2.7,
or, in default thereof, an appropriate affidavit of loss and indemnity
agreement and/or a bond as may be required in each case by the Exchange
Agent
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or Parkvale. The Exchange Agent shall promptly notify a holder of any
deficiency in a completed letter of transmittal submitted by such holder.
If any check is to be issued in a name other than that in which the
Certificate is registered, it shall be a condition of the issuance
thereof that the Certificate so surrendered shall be properly endorsed or
accompanied by an executed form of assignment separate from the
Certificate and otherwise in proper form for transfer and that the person
requesting such exchange pay to the Exchange Agent any transfer or other
tax required by reason of the issuance of a check in any name other than
that of the registered holder of the Certificate surrendered or otherwise
establish to the satisfaction of the Exchange Agent that such tax has
been paid or is not payable.
(e) Any portion of the cash delivered to the Exchange Agent by
Parkvale or Parkvale Bank pursuant to Section 2.7(b) that remains
unclaimed by the former shareholders of Masontown for six months after
the Effective Time shall be delivered by the Exchange Agent to Parkvale
or Parkvale Bank, as applicable. Any shareholders of Masontown who have
not theretofore complied with Section 2.7(c) shall thereafter look only
to Parkvale for the Consolidation Consideration. If outstanding
Certificates are not surrendered or the payment for them is not claimed
prior to the date on which such payment would otherwise escheat to or
become the property of any Governmental Entity, the unclaimed items
shall, to the extent permitted by abandoned property and any other
applicable law, become the property of Parkvale or Parkvale Bank, as
applicable (and to the extent not in its possession shall be delivered
to it), free and clear of all claims or interest of any Person
previously entitled to such property. Neither the Exchange Agent nor
any of the Parties shall be liable to any holder of Masontown Common
Stock represented by any Certificate for any consideration paid to a
public official pursuant to applicable abandoned property, escheat or
similar laws. Parkvale, Parkvale Bank and the Exchange Agent shall be
entitled to rely upon the stock transfer books of Masontown to establish
the identity of those persons entitled to receive the Consolidation
Consideration, which books shall be conclusive with respect thereto.
(f) The Exchange Agent, Parkvale or Parkvale Bank shall be
entitled to deduct and withhold from the Consolidation Consideration
otherwise payable pursuant to this Agreement to any holder of
Certificates such amounts as it is required to deduct and withhold with
respect to the making of such payment under the Code, or any provision
of state, local or foreign tax law. To the extent that amounts are so
withheld by the Exchange Agent, Parkvale or Parkvale Bank, such withheld
amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of the Certificates in respect of which such
deduction and withholding was made.
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ARTICLE III
UNQUALIFIED REPRESENTATIONS AND WARRANTIES
OF MASONTOWN
As of the date hereof, Masontown represents and warrants to Parkvale as
follows:
3.1 Capital Structure
(a) Its authorized capital stock consists solely of 500,000
shares of Masontown Common Stock, par value $2.50 per share, of which
400,000 are issued and outstanding. After the date of this Agreement,
the number of issued and outstanding shares of Masontown Common Stock is
not subject to increase pursuant to any current plans, commitments or
agreements. No shares of Masontown Common Stock are held by it as
treasury shares. All outstanding shares of Masontown Common Stock have
been duly authorized and validly issued, are fully paid and
nonassessable, and have not been issued in violation of the preemptive
rights of any person.
(b) There are no outstanding Rights with respect to the
Masontown Common Stock.
3.2 Registrations
Its Common Stock is not required to be and has never been registered
under the Securities Laws, including but not limited to 12 C.F.R. Part 11.
3.3 Subsidiaries
It has no Subsidiaries.
3.4 Deposit Insurance
All eligible accounts of Masontown are insured by the FDIC through the
Bank Insurance Fund to the maximum extent permitted by law. Masontown has
fully paid to the FDIC as and when due all assessments with respect to its
deposits as are required to maintain such deposit insurance in full force and
effect.
3.5 This Agreement
(a) It has authority to enter into this Agreement, and any other
documents and instruments that are to be executed by it in connection
with the Transactions and, subject to any necessary approvals from
Governmental Entities and/or its shareholders, to consummate the
Transactions.
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(b) Its Board has authorized the execution, delivery and
performance of this Agreement and the consummation of the Transactions.
It has properly executed and delivered this Agreement. Its obligations
under this Agreement are valid and binding upon it, and this Agreement
does not violate its Articles of Association, Bylaws, or any law,
judgment, order, writ, memorandum of understanding, arbitral award,
decree or injunction applicable to it, assuming the timely receipt of
each of the approvals referred to in Section 3.10.
(c) No "business combination," "moratorium," "control share" or
other state anti-takeover statute or regulation prohibits, restricts or
subjects to any material condition its ability to perform its
obligations under this Agreement.
3.6 Financial Statements; No Adverse Change
Its Annual Financial Statements have been prepared in accordance with
GAAP and fairly present in all material respects its financial position,
results of operations and cash flows as of and for the periods indicated. Its
Annual Financial Statements contain reserves for losses which Masontown's
Board of Directors believes are adequate to provide for potential losses in
the Masontown loan portfolio. Since the period covered by its most recent
Annual Financial Statements prior to the date hereof, it conducted its
business only in the ordinary course and it has not suffered a Material
Adverse Effect. Except as disclosed in such Annual Financial Statements, no
circumstances exist that could reasonably be expected to result in a Material
Adverse Effect to it. It has no liabilities, known or unknown, asserted or
unasserted, absolute, contingent or otherwise, that are required under GAAP to
be reflected in audited financial statements or the notes thereto which are
not reflected in its Annual Financial Statements other than liabilities
incurred in the ordinary course of business since such date.
3.7 Fairness Opinion
It has received an opinion from its Financial Advisor to the effect that
the Consolidation Consideration is fair, from a financial point of view, to
its shareholders.
3.8 Interim Events
Except as Previously Disclosed, since its most recent Interim Financial
Statements it has not paid or declared any dividend (other than its regular
semi-annual cash dividend) or made any other distribution to shareholders or
taken any action (other than loan originations) which if taken after the date
hereof would require the prior written consent of Parkvale under Section 6.6
of this Agreement.
3.9 Regulatory Reports
Since January 1, 1998, it has timely filed all required Regulatory
Reports. The Regulatory Reports filed by it since January 1, 1998, as filed
or amended, complied with applicable requirements of law and, as of their
respective dates or the dates as amended, did not contain any untrue statement
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of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
3.10 Governmental Approvals
No approval of, or filing with, any Governmental Entity is required by
it for the consummation of the Transactions except for:
(a) any filings or approvals under the Banking Regulations;
(b) the filing of the Certificate of Consolidation;
(c) the filing of the articles of merger with respect to the Bank
Merger; and
(d) any anti-trust filings or approvals.
It is not aware of any reasons relating to it why such consents and
approvals should not be granted, free of any conditions or requirements which
would be unduly burdensome to Parkvale or Parkvale Bank or which would
materially reduce the value of the Transactions to Parkvale.
3.11 No Broker's or Finder's Fees
No agent, broker, investment banker, person or firm acting on behalf of
it will be entitled to any fee or commission in connection with the
Transactions, except for its Financial Advisor. It has Previously Disclosed
the engagement letter that it entered into with its Financial Advisor which
sets forth all of the fees and expenses to be paid to its Financial Advisor in
connection with the Transactions.
3.12 Equity Holdings
It does not own more than 2% of the capital stock or other equity
securities (including securities convertible or exchangeable into such
securities) of or more than 2% of the aggregate profit participations in any
entity.
3.13 Certain Agreements
Except as Previously Disclosed, it is not a party to, is not bound or
affected by, or does not receive or is not obligated to pay benefits (other
than those that relate to benefits which previously have been fully accrued as
a liability or expensed and for which there is no future financial reporting
obligation) under:
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(a) any agreement, arrangement or commitment, including any
agreement, indenture or other instrument, relating to the borrowing of
money (other than in the case of deposits, FHLB advances and federal
funds purchased) or the guarantee of any obligation;
(b) any agreement, arrangement or commitment relating to the
employment of a consultant or the employment, election or retention in
office of any present or former director, advisory director, officer or
employee;
(c) any agreement, arrangement or understanding pursuant to which
any payment (whether of severance pay or otherwise) is or may become due
to any present or former director, advisory director, officer or
employee;
(d) any agreement, arrangement or understanding pursuant to which
any present or former director, advisory director, officer, employee or
agent is entitled to indemnification;
(e) any agreement, arrangement or understanding which limits its
freedom to compete in any line of business or with any person;
(f) any agreement, arrangement or understanding which would be
required to be filed as an exhibit to its Regulatory Reports and which
has not been so filed;
(g) any agreement pursuant to which loans have been sold, which
impose any potential recourse obligations (by representation, warranty,
covenant or other contractual terms) upon it; or
(h) any subservicing agreement.
3.14 No Impediments
It has not taken or agreed to take any action, nor does it have
knowledge of any fact or circumstance, that would materially impede or delay
the consummation of the Transactions or the ability of the Parties to obtain
any approval of any Governmental Entity required for consummation of the
Transactions or to perform their covenants and agreements under this
Agreement.
3.15 Registration Obligations
It is not under any obligation, contingent or otherwise, which will
survive the Effective Time to register any of its securities under the
Securities Laws.
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ARTICLE IV
QUALIFIED REPRESENTATIONS AND WARRANTIES
OF MASONTOWN
As of the date hereof, except as Previously Disclosed and subject to the
standard set forth in Section 9.8, Masontown represents and warrants to
Parkvale as follows:
4.1 Organization and Good Standing
It is duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization and has authority to own, operate and
lease its assets and properties and to carry on its business. It is qualified
to do business and is in good standing in each jurisdiction where the
character of its assets or the nature of its business requires it to be
qualified. It has Delivered accurate copies of its organizational documents,
bylaws and other governing documents as currently in effect. Its minute books
contain complete and accurate records of all meetings and other actions taken
by its shareholders, owners, Board, or committees of its Board. Its stock
ledgers or other ownership ledgers reflect all transactions in its capital
stock or ownership interests, since its inception.
4.2 Compliance with Law
(a) It is in compliance with all laws, regulations, ordinances,
rules, judgments, orders or decrees applicable to its operations and
business.
(b) It has all permits, licenses, certificates of authority,
orders and approvals of, and has made all filings, applications and
registrations with, all Governmental Entities that are required in order
to permit it to carry on its business as it is presently being
conducted.
(c) It has not received since January 1, 1998 any notification or
communication from any Governmental Entity or the staff thereof
asserting that it was not in compliance with any statutes, regulations
or ordinances, threatening to revoke any license, franchise, permit or
authorization; or threatening or contemplating any enforcement action.
(d) It is not required to give prior notice to any regulatory
agency of the proposed addition of an individual to its board of
directors or the employment of an individual as a senior executive
officer.
4.3 No Violations
Neither the execution of this Agreement nor the consummation of the
Transactions will result in any violation, breach, termination, default or
loss of a material benefit under, or permit the acceleration of any obligation
under, or require the consent of a third party under, or give rise to any
rights of termination or cancellation under, or result in the creation of any
Encumbrance on any of the property or assets under, any of the terms,
conditions or provisions of any note, bond, mortgage,
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indenture, lease, franchise, license, permit, agreement or other instrument
or obligation to which Masontown is a party, or by which Masontown or any of
its properties or assets are bound.
4.4 Litigation and Other Proceedings
It is not a defendant in nor is any of its property subject to any
pending (or, subject to the Knowledge Qualification, threatened), claim,
action, suit, investigation or proceeding or subject to any judicial order,
judgment or decree.
4.5 Environmental Matters
(a) It is in compliance with all Environmental Laws. It has not
received any communication alleging that it is not in such compliance
and, subject to the Knowledge Qualification, there are no present
circumstances that would prevent or interfere with the continuation of
such compliance.
(b) Subject to the Knowledge Qualification, none of the
properties owned, leased or operated by it has been or is in violation of
or liable under any Environmental Law.
(c) Subject to the Knowledge Qualification, there are no past or
present actions, activities, circumstances, conditions, events or
incidents that could reasonably form the basis of any Environmental
Claim or other claim or action or governmental investigation that could
result in the imposition of any liability against or obligation on the
part of it or any person or entity whose liability or obligation for any
Environmental Claim it has or may have retained or assumed either
contractually or by operation of law.
(d) It has not conducted (i) any phase one environmental
investigations during the past three years (other than in connection
with loan originations or purchases) or (ii) any phase two environmental
investigations during the past five years, in each case, with respect to
any properties owned by it, leased by it or securing loans held by it.
4.6 Insurance
It is insured for reasonable amounts with financially sound and
reputable insurance companies against such risks as companies or institutions
engaged in a similar business would, in accordance with good business
practice, customarily be insured and has maintained all insurance required by
its agreements and applicable laws and regulations. It has not, during the
past five years, had an insurance policy canceled or non-renewed or been
denied any insurance coverage for which it has applied.
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4.7 Labor
No work stoppage involving it is pending or, subject to the Knowledge
Qualification, threatened. It is not involved in or, subject to the Knowledge
Qualification, threatened with or affected by, any labor dispute,
discrimination or sexual harassment claims, arbitration, lawsuit or
administrative proceeding involving any of its current or former employees.
It is not a party to any collective bargaining agreement.
4.8 Indemnification
Subject to the Knowledge Qualification, no action or failure to take
action by any present or former director, advisory director, officer, employee
or agent of it has occurred which would give rise to a claim or a potential
claim by any such person for indemnification from it; provided, however, that
this Section 4.8 shall in no event reduce or otherwise affect the obligations
of Parkvale to provide the indemnification and advancement of expenses
provided in Section 6.9.
4.9 Loan Portfolio
Each loan reflected as an asset on its Annual Financial Statements and
each loan originated or acquired thereafter is evidenced by appropriate and
sufficient documentation and constitutes a legal, valid and binding obligation
of the obligor named therein, enforceable in accordance with its terms, except
to the extent that the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws or equitable principles
or doctrines. All such loans are free and clear of any Encumbrance. It has no
loan or other asset that has been classified by examiners or others as "Other
Loans of Concern," "Special Mention," "Substandard," "Doubtful" or "Loss," or
words of similar import. It has Previously Disclosed a complete list of the
real estate acquired by it through foreclosure, repossession or deed in lieu
thereof which are currently held by it. The allowance for loan losses
reflected in Masontown's Regulatory Reports and shown in the balance sheets
contained in Masontown's Annual Financial Statements has been established in
accordance with GAAP and all applicable regulatory criteria.
4.10 Investment Portfolio
All investment securities held by it are carried on its financial books
and records in accordance with GAAP. Except for pledges to secure public and
trust deposits, none of its investment securities are subject to any
restriction, whether contractual or statutory, which materially impairs its
ability to freely dispose of such investment securities at any time, other
than those restrictions imposed on securities held to maturity under GAAP.
4.11 Defaults
There has not been any default in any obligation to be performed by it
under any agreement and it has not waived any material right under any
agreement. Subject to the Knowledge
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Qualification, no other party to any agreement is in default in any obligation
to be performed by such party.
4.12 Real Estate Loans and Investments
Except for properties acquired by it in settlement of loans, there are
no facts, circumstances or contingencies known to it which exist and would
require a reduction under GAAP in the present carrying value of any of its
real estate investments, joint ventures, construction loans, other investments
or other loans (either individually or in the aggregate with its other loans
and investments).
4.13 Employee Benefit Plans
(a) It has Previously Disclosed all Employee Plans (other than
those that relate to benefits which previously have been fully accrued
as a liability or expensed and for which there is no future financial
reporting obligation) and has heretofore delivered accurate copies of
each (including amendments and agreements relating thereto) together
with, in the case of qualified plans, (i) the most recent financial
reports and actuarial reports prepared with respect thereto, (ii) the
most recent annual reports filed with any Governmental Entity with
respect thereto, and (iii) all rulings and determination letters and any
open requests for rulings or letters that pertain thereto.
(b) Each Employee Plan has been operated and administered in
accordance with its terms and with applicable law, including, to the
extent applicable, ERISA, the Code, the Securities Act, the Exchange
Act, the Age Discrimination in Employment Act, and the regulations or
rules promulgated thereunder; and all filings, disclosures and notices
required by ERISA, the Code, the Securities Act, the Exchange Act, the
Age Discrimination in Employment Act and any other applicable law have
been timely made.
(c) Each Employee Plan which is an "employee pension benefit
plan" within the meaning of Section 3(2) of ERISA (a "Pension Plan") and
which is intended to be qualified under Section 401(a) of the Code has
received a favorable determination letter (including a determination
that the related trust under such Pension Plan is exempt from tax under
Section 501(a) of the Code) from the IRS, and it is not aware of any
circumstances likely to result in revocation of any such favorable
determination letter.
(d) There is no pending or, subject to the Knowledge
Qualification, threatened legal action, suit or claim relating to any
Employee Plan (other than routine claims for benefits) or against any
related trust thereto or fiduciary thereof.
(e) It has not engaged in a transaction, or omitted to take any
action, with respect to any Employee Plan that has or would reasonably
be expected to subject it to a tax or penalty imposed by either Section
4975 of the Code or Section 502 of ERISA, assuming for
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purposes of Section 4975 of the Code that the taxable period of any such
transaction expired as of the date hereof.
(f) No liability (other than for payment of premiums to the PBGC
which have been made or will be made on a timely basis) under Title IV
of ERISA has been or is expected to be incurred by it with respect to
any ongoing, frozen or terminated "single-employer plan", within the
meaning of Section 4001(a)(15) of ERISA, currently or formerly
maintained by it, or any single-employer plan of any entity (an "ERISA
Affiliate") which is considered one employer with it under Section
4001(a)(14) of ERISA or Section 414(b) or (c) of the Code (an "ERISA
Affiliate Plan").
(g) Neither it nor any ERISA Affiliate has contributed, or has
been obligated to contribute, to a multiemployer plan under Subtitle E
of Title IV of ERISA at any time since September 26, 1980.
(h) No notice of a "reportable event", within the meaning of
Section 4043 of ERISA for which the 30-day reporting requirement has not
been waived, has been required to be filed for any Employee Plan or by
any ERISA Affiliate Plan within the 12-month period ending on the date
hereof. The PBGC has not instituted proceedings to terminate any
Pension Plan or ERISA Affiliate Plan and, subject to the Knowledge
Qualification, no condition exists that presents a risk that such
proceedings will be instituted by the PBGC.
(i) There is no pending investigation or enforcement action by
the PBGC, DOL or IRS or any other Governmental Entity with respect to
any Employee Plan.
(j) All contributions required to be made under the terms of any
Employee Plan or ERISA Affiliate Plan have been timely made.
(k) Neither any Pension Plan nor any ERISA Affiliate Plan has an
"accumulated funding deficiency" (whether or not waived) within the
meaning of Section 412 of the Code or Section 302 of ERISA and all
required payments to the PBGC with respect to each Pension Plan or ERISA
Affiliate Plan have been made on or before their due dates.
(l) Neither it nor any ERISA Affiliate (i) has provided, or
would reasonably be expected to be required to provide, security to any
Pension Plan or to any ERISA Affiliate Plan pursuant to
Section 401(a)(29) of the Code, or (ii) has taken any action, or omitted
to take any action, that has resulted, or would reasonably be expected
to result, in the imposition of an Encumbrance under Section 412(n) of
the Code or pursuant to ERISA.
(m) It is not currently a sponsor of or a participating employer
in any Pension Plan that is a defined benefit plan.
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(n) It has no obligation to provide retiree health and life
insurance or other retiree death benefits under any Employee Plan, other
than benefits mandated by Section 4980B of the Code. There has been no
communication to its employees that would reasonably be expected to
promise or guarantee such employees retiree health or life insurance or
other retiree death benefits.
(o) It has neither made any payments, nor is obligated to make any
payments by virtue of the consummation of any of the Transactions or any
termination of employment in connection therewith, nor is a party to any
agreement or any Employee Plan, that under any circumstances could
obligate it or its successor to make payments or deemed payments that
(i) are not or will not be deductible because of Sections 162(m) or 280G
of the Code or (ii) would require Parkvale or any of its Subsidiaries to
record any charge or expense therefor (or any tax gross-up payments) for
financial reporting purposes on a post-acquisition basis.
4.14 Tax Matters
(a) It has timely filed all federal, state and local (and, if
applicable, foreign) income, franchise, bank, excise, real property,
personal property and other tax returns and reports required by
applicable law to be filed by it(including estimated tax returns, income
tax returns, information returns and withholding and employment tax
returns) and has paid, or where payment is not required to have been
made, has set up adequate reserves or accruals for the payment of, all
taxes in respect of the periods covered by such returns and reports and,
as of the Effective Time, will have paid, or where payment is not
required to have been made will have set up adequate reserves or
accruals for the payment of, all taxes for any subsequent periods ending
on or prior to the Effective Time. It will not have any liability for
any such taxes in excess of the amounts so paid or reserves or accruals
so established.
(b) All federal, state and local (and, if applicable, foreign)
income, franchise, bank, excise, real property, personal property and
other tax returns and reports filed by it are accurate and complete. It
is either not delinquent in the payment of any tax, assessment or
governmental charge or has requested an extension of time without
penalty within which to file any tax returns or reports in respect of
any fiscal year or portion thereof. Its federal, state and local tax
returns and reports that are open to audit have not been audited by the
applicable tax authorities and no deficiencies for any tax, assessment
or governmental charge have been proposed, asserted or assessed
(tentatively or otherwise) against it which have not been settled and
paid. There are currently no agreements in effect as to it to extend the
period of limitations for the assessment or collection of any tax. No
audit, examination or deficiency or refund litigation with respect to
any of its returns or reports is pending or, subject to the Knowledge
Qualification, threatened.
(c) It(i) is not a party to any agreement providing for the
allocation or sharing of taxes, (ii) is not required to include in
income any adjustment pursuant to Section 481(a) of the Code or by
reason of any change in accounting method (nor does it have any
knowledge that the
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IRS has proposed any such adjustment or change of accounting method) and
(iii) has not filed a consent pursuant to Section 341(f) of the Code or
agreed to have Section 341(f)(2) of the Code apply.
(d) It has withheld amounts from its employees, shareholders, and
holders of public deposit accounts in compliance with the tax
withholding provisions of applicable federal, state and local laws, has
filed all federal, state and local returns and reports for all periods
for which such returns or reports would be due with respect to income
tax withholding, social security, unemployment taxes, income and other
taxes and all payments or deposits with respect to such taxes have been
timely made.
4.15 Derivatives Contracts
It is not a party to and has not agreed to enter into any
exchange-traded or over-the-counter swap, forward, future, option, cap, floor
or collar financial contract or any other contract not included in Masontown's
Annual Financial Statements which is a derivatives contract (including various
combinations thereof) (each, a "Derivatives Contract"). It does not own
securities that (i) are referred to generically as "structured notes," "high
risk mortgage derivatives," "capped floating rate notes" or "capped floating
rate mortgage derivatives" or (ii) are likely to have changes in value as a
result of interest or exchange rate changes that significantly exceed normal
changes in value attributable to interest or exchange rate changes.
4.16 Properties
(a) All real and personal property owned by it or presently used
by it is in good condition (ordinary wear and tear excepted) and are
sufficient to carry on its business in the ordinary course consistent
with past practices. It has good and marketable title free and clear
of all Encumbrances (other than equitable rights of redemption laws
relating to property acquired in foreclosure) to all of its properties
and assets, real and personal, except
(i) liens for current taxes not yet due or payable,
(ii) pledges to secure deposits,
(iii) such imperfections of title, easements and
non-monetary Encumbrances affecting real property, if any, which
do not adversely affect the value or use of such real property,
and
(iv) any monetary Encumbrances, reflected in Masontown's
Annual Financial Statements.
(b) All real and personal property that is leased or licensed by
it is held pursuant to leases or licenses which are valid and
enforceable in accordance with their respective terms
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and no such lease or license will terminate or lapse prior to the
Effective Time or thereafter by reason of completion of the Transactions.
None of Masontown's leases contain a prohibition against assignment by
Masontown, by operation of law or otherwise, or any provision that would
materially interfere with the possession, use or rights with respect to
the property by Parkvale or its Subsidiaries for the same purposes and
upon the same rental and other terms following consummation of the
Transactions as are applicable to Masontown prior to the Effective Time.
All improved real property owned or leased by it is in compliance in all
material respects with all applicable laws including zoning laws.
4.17 Material Interests of Certain Persons
(a) None of its officers, directors or employees or any
"associate" (as such term is defined in Rule 14a-1 under the Exchange
Act) or related interest of any such persons has any material interest
in any material agreement or property (real or personal, tangible or
intangible), used in, or pertaining to, its business.
(b) Except as Previously Disclosed, there are no outstanding
Insider Loans. All outstanding Insider Loans were made in the ordinary
course of business and on substantially the same terms as those
prevailing at the time for comparable transactions with third parties
and were, with respect to executive officers and directors, approved by
its Board in accordance with applicable law and regulations.
4.18 Intellectual Property
Masontown owns or possesses valid and binding licenses and other rights
to use without payment of any material amount all material patents,
copyrights, trade secrets, trade names, service marks and trademarks used in
its businesses, all of which have been Previously Disclosed by Masontown, and
Masontown has not received any notice of conflict with respect thereto that
asserts the right of others. Masontown has performed in all material respects
all the obligations required to be performed by it and is not in default under
any contract, agreement, arrangement or commitment relating to any of the
foregoing.
4.19 Fiduciary Accounts
Masontown has properly administered all accounts for which it acts as a
fiduciary, including but not limited to accounts for which it serves as a
trustee, agent, custodian, personal representative, guardian, conservator or
investment advisor, in accordance with the terms of the governing documents
and applicable laws and regulations. Neither Masontown nor any of its
directors, officers or employees has committed any breach of trust with
respect to any fiduciary account and the records for each such fiduciary
account are true and correct and accurately reflect the assets of such
fiduciary account.
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4.20 Books and Records
The books and records of Masontown are being maintained in material
compliance with applicable legal and accounting requirements, and such books
and records accurately reflect in all material respects all dealings and
transactions in respect of the business, assets, liabilities and affairs of
Masontown.
4.21 Regulatory Matters
(a) Neither Masontown nor any of any of its properties is a
party to or is subject to any order, decree, agreement, memorandum of
understanding or similar arrangement with, or a commitment letter or
similar submission to, or extraordinary supervisory letter from, any
federal or state Governmental Entity charged with the supervision or
regulation of financial institutions or issuers of securities or engaged
in the insurance of deposits or the supervision or regulation of it.
Masontown has paid all assessments made or imposed by any Government
Entity.
(b) Masontown has not been advised by, and does not have any
knowledge of facts which could give rise to an advisory notice by, any
Governmental Entity that such Governmental Entity is contemplating
issuing or requesting (or is considering the appropriateness of issuing
or requesting) any such order, decree, agreement, memorandum of
understanding, commitment letter, supervisory letter or similar
submission.
(c) Masontown received a satisfactory rating in its most recent
CRA examination report and a composite rating under the Uniform
Financial Institutions Rating System as Previously Disclosed in its most
recent compliance examination report.
4.22 Proxy Statement Information
None of the information relating to it which is included in the Proxy
Statement, as of the date such Proxy Statement is mailed to its shareholders
and up to and including the date of the meeting of its shareholders to which
such Proxy Statement relates, will contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, provided that information as of a later date shall be deemed to
modify information as of an earlier date.
4.23 Disclosures
None of the representations and warranties pursuant to Articles III and
IV hereof or any of the information Previously Disclosed or Delivered by it or
on its behalf, contains any untrue statement of a material fact, or omits to
state any material fact required to be stated or necessary to make any such
information, in light of the circumstances, not misleading.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARKVALE
As of the date hereof, Parkvale represents and warrants to Masontown as
follows:
5.1 Organization and Good Standing
It is duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization and has authority to own, operate and
lease its assets and properties and to carry on its business. It is qualified
to do business and is in good standing in each jurisdiction where the
character of its assets or the nature of its business requires it to be
qualified. It has Delivered accurate copies of its organizational documents,
bylaws and other governing documents as currently in effect.
5.2 Registrations
Parkvale is duly registered as a savings and loan holding company under
the HOLA and its Common Stock is registered under the Exchange Act.
5.3 This Agreement
(a) It has authority to enter into this Agreement, and any other
documents and instruments that are to be executed by it in connection
with the Transactions and, subject to any necessary approvals from
Governmental Entities, to consummate the Transactions.
(b) Its Board has authorized the execution, delivery and
performance of this Agreement and the consummation of the Transactions.
It has properly executed and delivered this Agreement. Its obligations
under this Agreement are valid and binding upon it, and this Agreement
does not violate its Articles of Incorporation, Bylaws, or any law,
judgment, order, writ, memorandum of understanding, arbitral award,
decree or injunction applicable to it, assuming the timely receipt of
each of the approvals referred to in Section 5.7.
(c) No "business combination," "moratorium," "control share" or
other state anti-takeover statute or regulation prohibits, restricts or
subjects to any material condition its ability to perform its
obligations under this Agreement.
5.4 Financial Statements
The Financial Statements of Parkvale have been prepared in accordance
with GAAP, fairly present in all material respects its consolidated financial
position, and contain reserves for losses which Parkvale's Board of Directors
believes are adequate to provide for potential losses in the Parkvale loan
portfolio. It has not suffered a Material Adverse Effect. No circumstance
exists that could reasonably be expected to result in a Material Adverse
Effect to it.
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5.5 Fairness Opinion
It has received an opinion from its Financial Advisor to the effect that
the Consolidation Consideration is fair, from a financial point of view, to it
and its shareholders.
5.6 Regulatory Reports
The Regulatory Reports filed by it and its Subsidiaries during the past
three years, as filed or amended, complied with applicable requirements of law
and, as of their respective dates or the dates as amended, did not contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
5.7 Governmental Approvals
No approval of, or filing with, any Governmental Entity is required by
it for the consummation of the Transactions except for:
(a) any filings or approvals under the Banking Regulations;
(b) the filing of the Certificate of Consolidation;
(c) the filing of the articles of merger with respect to the Bank
Merger; and
(d) any anti-trust filings or approvals.
It is not aware of any reasons relating to it why such consents and
approvals should not be granted, free of any conditions or requirements which
would be unduly burdensome to it or which would materially reduce the value of
the Transactions to it.
5.8 No Impediments
It has not taken or agreed to take any action, nor does it have
knowledge of any fact or circumstance, that would materially impede or delay
the consummation of the Transactions or the ability of the Parties to obtain
any approval of any Governmental Entity required for consummation of the
Transactions or to perform their covenants and agreements under this
Agreement.
5.9 Proxy Statement Information
None of the information relating to it or any of its Subsidiaries which
is supplied by it in writing for inclusion in the Proxy Statement, as of the
date such Proxy Statement is mailed to the shareholders of Masontown and up to
and including the date of the meeting of the shareholders of Masontown to
which such Proxy Statement relates, will contain any untrue statement of a
material
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fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, provided that information as of a later date shall be deemed
to modify information as of an earlier date.
5.10 Financial Ability
At the Effective Time, Parkvale or Parkvale Bank will have sufficient
cash funds to pay the aggregate Consolidation Consideration and will use such
funds for the payment of the Consolidation Consideration subject to the
completion of the Transactions in accordance with the terms of this Agreement.
Parkvale Bank is, and will be immediately following completion of the
Transactions, in compliance with all capital requirements applicable to it
under the Banking Regulations.
ARTICLE VI
COVENANTS AND AGREEMENTS
6.1 Reasonable Best Efforts
Subject to the terms and conditions of this Agreement, each of the
Parties (i) shall use its reasonable best efforts in good faith to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
necessary or advisable under applicable laws and regulations so as to permit
and otherwise enable completion of the Transactions as promptly as reasonably
practicable, and (ii) shall cooperate fully with each other to that end.
6.2 Shareholders Meeting
Masontown shall take all action necessary to properly call and convene a
meeting of its shareholders as soon as practicable after the date hereof to
consider and vote upon the adoption of this Agreement. The Board of Masontown
has agreed as of the date hereof to recommend to its shareholders that they
vote in favor of the adoption of this Agreement. The Board of Masontown will
continue to make such favorable recommendation, provided that the Board of
Masontown may fail to continue to make such recommendation, or withdraw,
modify or change such recommendation, if it has determined in good faith,
after the receipt of written advice from its outside counsel, that the making
of such recommendation would result in a breach of its fiduciary duties to the
shareholders of Masontown under applicable law.
6.3 Regulatory Matters
(a) The Parties shall promptly cooperate with each other in the
preparation of the Proxy Statement. Masontown shall promptly mail the
Proxy Statement to its shareholders and shall publish and send the
notices required by Section 215(a) of the National Bank Act.
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(b) The Parties shall cooperate with each other and use their
reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all applications (including applications of
Interim Sub), notices, petitions and filings, and to obtain as promptly
as practicable all permits, consents, approvals and authorizations of
all Governmental Entities and third parties which are necessary or
advisable to consummate the Transactions. Each Party shall have the
right to review in advance, and to the extent practicable each will
consult with the other on, in each case subject to applicable laws
relating to the exchange of information, all the information which
appears in any filing made by another Party or written materials
submitted by another Party to any third party or any Governmental Entity
in connection with the Transactions. In exercising the foregoing right,
each Party shall act reasonably and as promptly as practicable. The
Parties agree that they will consult with each other with respect to the
obtaining of all permits, consents, approvals and authorizations of all
third parties and Governmental Entities necessary or advisable to
consummate the Transactions and each Party will keep the other Parties
apprised of the status of matters relating to completion of the
Transactions. The Parties agree that they will use their reasonable best
efforts to cause the Closing Date to occur by April 30, 2002.
(c) Each Party shall, upon the request of another Party, furnish
to such other Party all information concerning itself and its
Subsidiaries, their respective present and former directors and
officers, the shareholders of Masontown and such other matters as may be
reasonably necessary or advisable in connection with any statement,
filing, notice or application made by or on behalf of a Party or any of
its Subsidiaries to any Governmental Entity in connection with the
Transactions.
(d) Each Party shall promptly furnish the other Parties with
copies of written communications received from, or delivered to, any
Governmental Entity in respect of the Transactions.
6.4 Investigation and Confidentiality
(a) Masontown shall permit Parkvale and Parkvale's
representatives reasonable access to its properties and personnel, and
shall disclose and make available to them, upon reasonable request, all
books, papers and records relating to its assets, stock or other
ownership records, properties, operations, obligations and liabilities,
including all books of account (including the general ledger), tax
records, minute books of meetings of boards of directors (and any
committees thereof) and shareholders, organizational documents, bylaws,
material contracts and agreements, filings with any Governmental Entity,
accountants' work papers, litigation files, loan files, plans affecting
employees, and any other business activities or prospects in which
Parkvale may have a reasonable interest, provided that such access and
any such reasonable request shall not unduly interfere with the normal
operations of Masontown. Masontown shall make its directors, officers,
employees and agents and authorized representatives (including counsel
and independent public accountants) available
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to confer with Parkvale and its representatives, provided that such
access shall not unduly interfere with Masontown's normal operations.
(b) All information furnished previously in connection with the
Transactions or pursuant to this Agreement shall be treated as the sole
property of the Party furnishing the information until completion of the
Transactions and, if the Transactions shall not be completed, the Party
receiving the information shall either destroy or return to the Party
which furnished such information all documents or other materials
containing, reflecting or referring to such information, shall use its
best efforts to keep confidential all such information, and shall not
directly or indirectly use such information for any competitive or other
commercial purposes. The obligation to keep such information
confidential shall continue for two years from the date the Transactions
are abandoned but shall not apply to (i) any information which (A) the
Party receiving the information can establish was already in its
possession prior to the disclosure thereof by the Party furnishing the
information; (B) was then generally known to the public; or (C) became
known to the public through no fault of the Party receiving the
information; or (ii) disclosures pursuant to a legal requirement or in
accordance with an order of a court of competent jurisdiction, provided
that the Party which is the subject of any such legal requirement or
order shall use its best efforts to give the Party, at least ten
business days' prior notice thereof.
6.5 Press Releases
Parkvale and Masontown shall agree with each other as to the form and
substance of any press release related to this Agreement or the Transactions,
and consult with each other as to the form and substance of other public
disclosures which may relate to the Transactions provided, however, that
nothing contained herein shall prohibit either of them, following notification
to the other, from making any disclosure which it believes is required by law
or regulation.
6.6 Business of the Parties
(a) During the period from the date of this Agreement and
continuing until the Effective Time, except as expressly contemplated or
permitted by this Agreement or with the prior written consent of
Parkvale, Masontown shall carry on its business only in the ordinary
course consistent with past practice. During such period, Masontown will
use all reasonable efforts to (x) preserve its business organization
intact, (y) keep available the present services of its employees and (z)
preserve the goodwill of its customers and others with whom it has
business relationships. Without limiting the generality of the
foregoing, except with the prior written consent of Parkvale or as
expressly contemplated hereby, between the date hereof and the Effective
Time, Masontown shall not:
(i) declare, set aside, make or pay any dividend or
other distribution (whether in cash, stock or property or
any combination thereof) in respect of its capital stock;
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(ii) issue any shares of its capital stock; issue,
grant, modify or authorize any Rights; purchase any shares
of its capital stock or ownership interests; or effect any
recapitalization, reclassification, stock dividend, stock
split or like change in capitalization;
(iii) amend its Articles of Association, Bylaws or
similar organizational documents; or waive or release any
material right or cancel or compromise any material debt or
claim;
(iv) increase the rate of compensation of or benefits
to any of its directors, officers or employees, or pay or
agree to pay any bonus or severance to, or provide any other
new benefit or incentive to, any of its directors, officers
or employees, except (A) compensation increases as may be
required pursuant to Previously Disclosed commitments
existing on the date hereof, (B) normal year-end bonuses for
calendar 2001 not to exceed 10% of aggregate salaries, or
(C) as may be required by law;
(v) enter into or, except as may be required by law,
modify any Employee Plan;
(vi) except for Previously Disclosed loans as to
which a commitment is outstanding as of the date of this
Agreement, originate or purchase (A) any brokered loan not
pursuant to a commitment Previously Disclosed and existing
on the date hereof, (B) any unsecured loan in excess of
$50,000,(C) any loan secured by a first trust or mortgage on
a one- to four-family residential property in excess of
$250,000, (D) any loan secured by a first trust or mortgage
on commercial real property in excess of $400,000, or (E)
any other loan in excess of $100,000, provided that Parkvale
agrees it will not unreasonably withhold its consent upon
receiving a request from Masontown;
(vii) except as otherwise permitted hereunder, enter
into (A) any agreement for the purchase, sale, transfer,
Encumbrance or other disposition of any properties or assets
(other than real estate acquired in foreclosure (or by deed
in lieu thereof) or repossessed assets, in each case, with a
carrying value on Masontown's Financial Reports of less than
$250,000 individually), (B) any other transaction,
agreement, arrangement or commitment not made in the
ordinary course of business, (C) any agreement, indenture or
other instrument relating to the borrowing of money or
guarantee of any obligations, except for deposits, FHLB
advances not to exceed six months to maturity, federal funds
purchased and securities sold under agreements to repurchase
in the ordinary course of business consistent with past
practice, (D) any agreement, arrangement or commitment
relating to the employment of an
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employee or consultant, or amend any such existing agreement,
arrangement or commitment; or (E) any contract, agreement or
understanding with a labor union;
(viii) change any of its methods of accounting,
except as required by changes in laws or regulations or
GAAP, or change any of its methods of reporting income and
deductions for federal income tax purposes from those
employed in the preparation of its last federal income tax
return, except as required by changes in laws or
regulations;
(ix) enter into or renew any lease of real or
personal property or any service contract; or fail to give
any required notice to prevent a lease or service contract
from being renewed; or make any capital expenditures in
excess of $25,000 individually or $50,000 in the aggregate,
other than pursuant to binding commitments Previously
Disclosed and existing on the date hereof and expenditures
necessary to maintain existing assets in good repair;
(x) enter into or agree to enter into any agreement,
arrangement or commitment described in Section 3.13(b) -
(h);
(xi) file any applications or make any contract with
respect to branching or site location or relocation;
(xii) purchase any security or acquire in any manner
whatsoever (other than to realize upon collateral for a
defaulted loan) control over or any equity interest in any
business or entity, other than marketable securities (which
do not exceed 1% of the securities outstanding within such
class) purchased in the ordinary course of business
consistent with past practice;
(xiii) except with respect to real estate acquired in
foreclosure (or by deed in lieu thereof) or repossessed
assets, enter or agree to enter into any agreement or
arrangement granting any preferential right to purchase any
of its assets or rights or requiring the consent of any
party to the transfer and assignment of any such assets or
rights;
(xiv) except as necessitated in the reasonable opinion
of Masontown due to changes in interest rates, and in
accordance with safe and sound banking practices, change or
modify in any material respect any of its lending,
investment, or deposit gathering policies, except to the
extent required by law or an applicable regulatory
authority;
(xv) enter into any futures contract, option
contract, interest rate caps, interest rate floors, interest
rate exchange agreement or other agreement
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for purposes of hedging the exposure of its interest-earning assets
and interest-bearing liabilities to changes in market rates of
interest;
(xvi) take any action that would cause any of the
representations and warranties of Masontown contained in
this Agreement not to be true and correct in any material
respect at the Effective Time or that would cause any of the
conditions of Section 7.1 or 7.3 hereof not to be satisfied;
(xvii) voluntarily take any action that would
materially impede or delay the completion of the
Transactions or the ability of the Parties to perform their
covenants and agreements under this Agreement; or
(xviii) agree to do any of the foregoing.
(b) Except with the prior written consent of Masontown or as
expressly contemplated hereby, between the date hereof and the Effective
Time, Parkvale shall not:
(i) take any action that would cause any of its
representations and warranties contained in this Agreement
not to be true and correct in any material respect at the
Effective Time or that would cause any of the conditions of
Section 7.1 or 7.2 hereof not to be satisfied;
(ii) voluntarily take any action that would
materially impede its ability to perform its covenants and
agreements under this Agreement; or
(iii) agree to do any of the foregoing.
(c) Each Party shall promptly notify the other Parties in
writing of the occurrence of any matter or event known to and directly
involving it, that could have, either individually or in the aggregate,
a Material Adverse Effect upon it.
6.7 Certain Actions
(a) Neither Masontown nor any of its officers, directors,
employees, representatives or agents shall solicit or encourage
inquiries or proposals with respect to, furnish any information relating
to, or participate in any negotiations or discussions concerning, any
Alternative Proposal, provided, however, that the Board of Masontown may
furnish such information or participate in such negotiations or
discussions if it, after having consulted with and considered the
written advice of outside counsel and its Financial Advisor, has
determined in good faith that the failure to do the same would result in
a breach of the fiduciary duties of such Board to Masontown's
shareholders under applicable law. Masontown will promptly inform
Parkvale orally and in writing of any such request for information or of
any such negotiations or discussions, as well as instruct its directors,
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officers, representatives and agents to refrain from taking any action
prohibited by this Section 6.7. In no event may Masontown provide any
information to a third party that it has not provided to Parkvale.
Masontown agrees that it will immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any Alternative Proposal.
(b) In the event that the Board of Masontown determines in good
faith, upon the written advice of its Financial Advisor and outside
counsel, that it has received a Superior Offer (as defined below), it
shall notify Parkvale in writing of its intent to terminate this
Agreement and concurrently with or after such termination cause
Masontown to enter into an acquisition agreement with respect to, or in
the event of a tender offer recommend acceptance of, the Superior Offer.
Such notice shall specify all of the terms and conditions of such
Superior Offer, identify the person making such Superior Offer, and
provide the written advice received from its Financial Advisor and
outside counsel. Parkvale shall have five business days to evaluate and
respond to the Masontown notice. If Parkvale notifies Masontown in
writing prior to the expiration of the five business day period provided
above that it or Parkvale Bank shall increase the Consolidation
Consideration to an amount at least equal to that of such Superior Offer
(the "Parkvale Proposal"), then Masontown shall not be permitted to
enter into an acquisition agreement with respect to, or in the event of
a tender offer permit its Board to recommend acceptance to its
shareholders of, such Superior Offer. Such notice by Parkvale shall
specify the new Consolidation Consideration. Masontown shall have five
business days to evaluate the Parkvale Proposal.
(c) In the event the Superior Offer involves consideration to
Masontown's shareholders consisting of securities, in whole or in part,
a Parkvale Proposal shall be deemed to be at least equal to the Superior
Offer, if the Parkvale Proposal offers cash Consolidation Consideration
that equals or exceeds the consideration being offered to Masontown's
shareholders in the Superior Offer valuing any securities forming a part
of the Superior Offer at its cash equivalent based upon (a) the average
trading price of such securities for the 10 trading days immediately
preceding the date of the Parkvale Proposal or (b) the written valuation
of such securities by a nationally recognized investment banking firm
selected by Parkvale and reasonably acceptable to Masontown if such
securities are not traded on a nationally recognized exchange or will be
newly issued securities that are not of a class then trading on a
nationally recognized exchange. Any written valuation shall be attached
as an exhibit to the Parkvale Proposal.
(d) In the event that the Board of Masontown determines in good
faith, upon the written advice of its Financial Advisor and outside
counsel, that the Parkvale Proposal is not at least equal to the
Superior Offer, Masontown can terminate this Agreement in order to
execute an acquisition agreement with respect to, or in the event of a
tender offer to allow its Board to adopt a resolution recommending
acceptance to Masontown's shareholders of, the Superior Offer as
provided in Section 8.1(g). For purposes of this Agreement, a "Superior
Offer" means any bona fide proposal, including a tender offer, made by a
third party to
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acquire, directly or indirectly, for consideration consisting of cash
and/or securities, more than 50% of the voting power of the shares of
Masontown Common Stock then outstanding or all or substantially all
the assets of Masontown and provides consideration to Masontown's
shareholders which the Board of Masontown determines in its good faith
judgment (based on the advice of its Financial Advisor) to be materially
more favorable than the Consolidation Consideration and for which third-
party financing, to the extent required, is then firmly committed.
6.8 Current Information
During the period from the date hereof to the Effective Time, Masontown
shall, upon the request of Parkvale, cause one or more of its designated
representatives to confer on a monthly or more frequent basis with
representatives of Parkvale regarding Masontown's financial condition,
operations and business and matters relating to the completion of the
Transactions. As soon as reasonably available, but in no event more than two
business days after filing or receipt, Masontown will deliver to Parkvale all
reports and documents including Regulatory Reports filed by it with the OCC or
under the Banking Regulations subsequent to the date hereof, and all reports
issued by any Governmental Entity with respect to, and delivered to, Masontown
subsequent to the date hereof. Within 45 days after the end of each month,
Masontown will deliver to Parkvale an unaudited balance sheet and an unaudited
statement of income, without related notes, for such month prepared in
accordance with GAAP.
6.9 Indemnification
(a) Parkvale shall honor any and all rights to indemnification
and advancement of expenses now existing in favor of the directors and
officers of Masontown (the "Indemnified Parties") under Masontown's
Articles of Association or Bylaws as Previously Disclosed which, as
enforceable contractual rights, shall survive the Consolidation and
shall, as contractual rights, continue with respect to acts or omissions
occurring before the Effective Time with the same force and effect as
prior to the Effective Time. Parkvale shall pay expenses in advance of
the final disposition of any such action or proceeding to each
Indemnified Party to the fullest extent permitted by the applicable
Banking Regulations in effect on the date hereof or as amended
applicable to a time before the Effective Time upon receipt of any
undertaking required by the applicable Banking Regulations. Any
Indemnified Party wishing to claim indemnification under this Section
6.9(a), upon learning of any claim, action, suit, proceeding or
investigation, whether civil, criminal or administrative (each a
"Claim"), shall notify Parkvale (but the failure so to notify Parkvale
shall not relieve it from any liability which it may have under this
Section 6.9(a) except to the extent such failure materially prejudices
Parkvale) and shall deliver to Parkvale any undertaking required by the
applicable Banking Regulations. Parkvale shall ensure, to the extent
permitted under the applicable Banking Regulations, that all limitations
of liability existing in favor of the Indemnified Parties as provided in
the Articles of Association or Bylaws of Masontown (as the case may be),
as in effect on the date hereof, or allowed under the applicable Banking
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Regulations, as in effect on the date hereof or as such law or
regulation may be amended applicable to a time before the Effective
Time, shall survive the consummation of the Transactions.
(b) From and after the Effective Time, the directors and
officers of Masontown who become directors or officers of Parkvale or
its Subsidiaries shall have indemnification rights having prospective
application with respect to acts or omissions occurring after the
Effective Time. The prospective indemnification rights shall consist of
such rights to which directors and officers of Parkvale or its
Subsidiaries, whichever is applicable, are entitled to under the
provisions of the Articles of Incorporation, Charter or Bylaws of
Parkvale or its Subsidiaries, whichever is applicable, as in effect from
time to time after the Effective Time, and the provisions of applicable
state law and the Banking Regulations, whichever is applicable, as in
effect from time to time after the Effective Time.
(c) For a period of six years from and after the Effective Time,
Parkvale shall use all commercially reasonable efforts to cause to be
maintained in effect the current policies of directors' and officers'
liability insurance maintained by Masontown (provided that Parkvale may
substitute therefor policies from a financially capable insurer of at
least the same coverage and amount containing terms and conditions which
are substantially no less advantageous, or in the event such coverage is
provided through Parkvale's insurer it may be on terms and conditions
(other than coverage and amounts) consistent with Parkvale's current
coverage), or in lieu thereof single limit tail coverage for such period
(which shall be purchased by Masontown immediately prior to Closing upon
the request of Parkvale), with respect to claims arising from facts or
events which occurred before the Effective Time. In no event shall
Parkvale be required to spend, directly or indirectly through Masontown,
more than $50,000 in the aggregate to either maintain or procure
insurance coverage pursuant to this Agreement. If the cost to maintain
or procure such coverage exceeds $50,000, Parkvale shall use all
commercially reasonable efforts to obtain the most advantageous
insurance coverage that is readily available for a premium equal to
$50,000. Coverage under Parkvale's policy shall not be considered
"substantially less advantageous" than Masontown's policy because of a
higher deductible amount if Parkvale undertakes in writing to pay any
difference in deductible amounts. Following the Effective Time, the
directors and officers of Parkvale and its Subsidiaries shall be covered
by the directors' and officers' liability insurance maintained by
Parkvale and/or its Subsidiaries, whichever is applicable.
(d) The obligations of Parkvale provided under paragraphs (a),
(b) and (c) of this Section 6.9 are intended to be enforceable against
Parkvale directly by the Indemnified Parties and shall be binding on all
successors and permitted assigns of Parkvale.
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6.10 Environmental Reports
(a) If requested by Parkvale within 30 days of the date hereof
(or within 20 days after Parkvale is informed of the permitted
acquisition or lease of any real property by Masontown after the date
hereof), Masontown shall provide to Parkvale, as soon as reasonably
practicable, but not later than 30 days from the receipt by Masontown of
the request of Parkvale therefor, a report of a phase one environmental
investigation on real property owned or leased by Masontown (but
excluding space in office or retail and similar establishments leased by
Masontown for automatic teller machines or bank branch facilities or
other office uses where the space leased comprises less than 20% of the
total space leased to all tenants of such property). If required by the
phase one environmental investigation in Parkvale's reasonable opinion,
Masontown shall provide to Parkvale, within 45 days of the receipt by
Masontown of the request of Parkvale therefor, a report of a phase two
environmental investigation on properties requiring such additional
study. Parkvale shall have ten days from its receipt of the phase one
environmental investigation to request a phase two environmental
investigation. The costs of the phase one and phase two environmental
investigations, if any, shall be borne by Parkvale.
(b) Should the sum of the cost of taking all remedial or other
corrective actions and measures (i) required by applicable law,
including applicable cleanup standards, or reasonably likely to be
required by applicable law, and (ii) not required or likely required by
applicable law, but recommended or suggested by the above report or
reports or prudent in light of serious life, environmental, health or
safety concerns exceed the sum of $200,000 as reasonably estimated by an
environmental expert retained for such purpose by Parkvale and
reasonably acceptable to Masontown, or if the cost of such actions and
measures cannot be so reasonably estimated by such expert to be such
amount or less with any reasonable degree of certainty, then Parkvale
shall have the right pursuant to Section 8.1(h) hereof, for a period of
20 business days following receipt of such estimate or indication that
the cost of such actions and measures cannot be so reasonably estimated,
to terminate this Agreement.
6.11 Employees and Employee Benefit Plans
(a) Full time employees of Masontown who remain employed after the
Effective Time will be eligible to participate in benefit plans of
Parkvale and its Subsidiaries that are generally available to their
full-time employees on a uniform and non-discriminatory basis in
accordance with and subject to the terms and provisions of such benefit
plans, with credit for years of service with Masontown for the purpose
of determining eligibility for participation, vesting and entitlement to
vacation time and sick pay (but not for the purpose of accrual or
restoration of benefits under any existing or future benefit plan of
Parkvale or any of its Subsidiaries where benefits are calculated on an
actuarial basis, including any qualified or non-qualified defined
benefit plan or restoration plan). Contributions to (and accrual of
benefits, to the extent applicable, if any, under) benefit plans of
Parkvale on behalf of continuing full-time employees of Masontown shall
only relate to qualifying compensation
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earned by such employees after the Effective Time subject to the terms
and provisions of such benefit plans. Notwithstanding anything contained
above, continuing full time employees of Masontown shall not be eligible
to participate in any qualified plan of Parkvale or any of its
Subsidiaries, including the Parkvale employee stock ownership plan, until
the plan year commencing in 2002, except that former Masontown employees
who participate in the Masontown 401(k) Plan shall be eligible to
participate in the Parkvale 401(k) Plan at the time the 401(k) Plans are
merged in accordance with Section 6.11(d) hereof. Parkvale shall amend
its employee stock ownership plan to accomplish the foregoing, to the
extent such amendments are consistent with the Code and any other
applicable law. Parkvale shall use its best efforts to cause any and all
pre-existing condition limitations (to the extent such limitations did
not apply to a pre-existing condition under the corresponding Masontown
group health plan) and eligibility waiting periods under its group health
plans to be waived with respect to such participants and their eligible
dependents.
(b) If the employment of any full-time employee of Masontown is
involuntarily terminated other than for Cause within one year following
the Effective Time, Parkvale or its applicable Subsidiary shall provide
severance benefits to such employee in a cash amount equal to such
employee's regular salary for a one-week period (as in effect
immediately prior to the Effective Time) multiplied by the total number
of whole years of such employee's full-time employment at Masontown
(subject to a minimum severance of eight weeks for those employees who
have at least one year of service as of the Effective Time), plus the
continuation of any insurance benefits that the terminated employee was
receiving through the end of the calendar month in which the employee
receives his or her lump sum severance payment. Notwithstanding the
foregoing, however, in no event shall Parkvale or any of its
Subsidiaries have any obligation to provide severance benefits to any
full-time employee (i) whose termination of employment occurs due to
resignation or discharge for Cause or (ii) who is entitled to severance
benefits or the equivalent thereof under the terms of any other
compensation plan or individual contract or the provisions of Section
6.11(c).
(c) Parkvale agrees that it will offer as of the Effective Time
to enter into (i) employment agreements with each of the Masontown
executive officers set forth on the disclosure schedule, with the form
of such agreements to be substantially similar to Exhibit B hereto and
with the individual titles, salary amounts and other terms to be as
Previously Disclosed, and (ii) a consulting agreement with Xxxxx X.
Xxxxxx in a form substantially similar to Exhibit C hereto, provided
in each case that the executive officer has not died, become disabled or
incapacitated, or become subject to termination for Cause as of the
Effective Time. Those executive officers who accept Parkvale's offer
shall not be entitled to any severance payments pursuant to Section
6.11(b) hereof.
(d) At any time on or after the Effective Time as determined by
Parkvale, the Masontown 401(k) Plan shall be merged into the Parkvale
401(k) Plan, with the Parkvale 401(k) Plan being the surviving plan, all
in accordance with applicable law. Masontown shall take all actions
requested by Parkvale in order to accomplish the merger of the Masontown
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401(k) Plan into the Parkvale 401(k) Plan. Parkvale may at any time
after the Effective Time modify the Masontown 401(k) Plan or the merged
401(k) Plans, as Parkvale in its sole discretion determines necessary or
appropriate to accomplish the merger, and to facilitate the ongoing
operation of the merged 401(k) Plan, subject to compliance with
applicable law.
(e) Masontown shall cause its defined benefit pension plan to be
terminated as soon as practicable but in no event later than at or
immediately prior to the Effective Time in accordance with applicable
law and in a manner that will not result in the imposition of any
liability or responsibility upon Parkvale or any of its Subsidiaries.
Notwithstanding the preceding sentence, the parties understand that
actual liquidation of the pension plan will not occur until an IRS
determination letter is obtained and the affairs of the plan are wound
up. The reasonable costs of terminating the defined benefit pension
plan shall be paid by the plan in a manner consistent with DOL Advisory
Opinions 97-03A and 2001-01A, provided that such costs do not exceed the
amount by which the plan is overfunded. Masontown shall not make any
additional contributions to its defined benefit pension plan, except as
required by law. In connection with the plan termination, the parties
agree that any excess plan assets (after payment of appropriate fees and
expenses) will be allocated among the plan participants in proportion to
the present value of their accrued benefits, unless otherwise required
by the IRS. Plan benefits will be distributed in lump-sum payments or
funded through the purchase of annuities from an insurance carrier
reasonably to Parkvale, at the election of Masontown.
(f) Parkvale agrees to take all action necessary to appoint or
elect, within 12 months following the Effective Time, one current
director of Masontown who is designated by the Masontown Board and who
is otherwise reasonably acceptable to Parkvale as a director of
Parkvale. Such former Masontown director shall be appointed to the
Parkvale Board of Directors for a term expiring in 2002. Thereafter,
subject to its fiduciary duties, the Parkvale Board of Directors shall
nominate such former Masontown director for a three-year term expiring
in 2005.
(g) Subject to the fiduciary duties of the Parkvale Board,
Messrs. Xxxxxx and Xxxx and each non-employee director of Masontown as
of the date hereof who is not appointed or elected to the Parkvale Board
shall be requested by Parkvale to serve as members of an Advisory Board
for three consecutive one-year terms following the Effective Time. The
members of the Advisory Board shall meet quarterly and be paid a fee of
$250 per meeting attended.
(h) Parkvale agrees to honor the plans providing post-retirement
life insurance benefits Previously Disclosed by Masontown.
6.12 Litigation Matters
Masontown will consult with Parkvale about any proposed settlement, or
any disposition of, any litigation to which Masontown is a party.
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6.13 Conforming Entries
(a) Masontown recognizes that Parkvale and its Subsidiaries may
have adopted different loan, accrual and reserve policies (including
loan classifications and levels of reserves for possible loan losses).
Subject to applicable law, from and after the date hereof to the
Closing, Masontown and Parkvale shall consult and cooperate with each
other with respect to conforming the loan, accrual and reserve policies
of Masontown to those policies of Parkvale and its Subsidiaries, as
specified in each case in writing from Parkvale to Masontown, based upon
such consultation and subject to the conditions in Section 6.13(c)
below.
(b) Subject to applicable law, Masontown and Parkvale shall
consult and cooperate with each other with respect to determining, as
specified in a written notice from Parkvale to Masontown, based upon
such consultation and subject to the conditions in Section 6.13(c)
below, the amount and the timing for recognizing for financial
accounting purposes of Masontown's expenses of the Transactions and the
restructuring charges relating to or to be incurred in connection with
the Transactions.
(c) Subject to applicable law, Masontown shall (i) establish and
take such reserves and accruals at such time as Parkvale shall
reasonably request to conform the loan, accrual and reserve policies of
Masontown to the policies of Parkvale and its Subsidiaries, and (ii)
establish and take such accruals, reserves and charges in order to
implement such policies and to recognize for financial accounting
purposes such expenses of the Transactions and restructuring charges
related to or to be incurred in connection with the Transactions, in
each case at such times as are reasonably requested by Parkvale, but in
no event prior to five days before the Closing Date; provided, however,
that on the date such reserves, accruals and charges are to be taken,
Parkvale shall certify to Masontown that all conditions to Parkvale's
obligation to consummate the Transactions set forth in Sections 7.1 and
7.3 hereof (other than the delivery of certificates, opinions and other
instruments and documents to be delivered at the Closing by Masontown,
the delivery of which shall continue to be conditions to Parkvale's
obligation to consummate the Transactions) have been satisfied or
waived; and provided, further, that Masontown shall not be required to
take any such action that is not consistent with GAAP and regulatory
accounting principles.
(d) No reserves, accruals or charges taken in accordance with this
Section may be a basis to assert a violation or a breach of a
representation, warranty or covenant of Masontown herein.
6.14 Systems Integration
During the period from the date hereof to the Effective Time, Masontown
shall cause its directors, officers and employees to, and shall make all
reasonable efforts to cause its data processing service providers to,
cooperate and assist Parkvale in connection with an electronic and systematic
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conversion of all applicable data regarding Masontown to Parkvale Bank's
system of electronic data processing. In furtherance of the foregoing,
Masontown shall make reasonable arrangements during normal business hours to
permit representatives of Parkvale Bank to train Masontown's employees in
Parkvale Bank's system of electronic data processing.
6.15 Disclosure Supplements
From time to time prior to the Closing, each Party shall promptly
supplement or amend any materials Previously Disclosed or Delivered pursuant
hereto with respect to any matter hereafter arising which, if existing,
occurring or known at the date of this Agreement, would have been required to
be set forth or described in materials Previously Disclosed or Delivered or
which is necessary to correct any information in such materials which has been
rendered materially inaccurate thereby. No such supplement or amendment to
such materials shall be deemed to have modified the representations,
warranties and covenants of the disclosing Party for the purpose of
determining whether the conditions set forth in Article VII hereof have been
satisfied.
6.16 Failure to Fulfill Conditions
If a Party determines that a condition to its obligations to consummate
the Transactions may not be fulfilled, it will promptly notify the other
Parties. Each Party will promptly inform the other Parties of any facts
applicable to it that would be likely to prevent or materially delay approval
of any of the Transactions by any Governmental Entity or third party or which
would otherwise prevent or materially delay completion of any of the
Transactions.
6.17 Organization of Interim Sub
Parkvale shall cause Interim Sub to be organized as an interim savings
bank under the Banking Code. The Board of Interim Sub shall approve this
Agreement and the Merger, whereupon Interim Sub shall become a party to, and
be bound by, this Agreement, and Parkvale shall adopt and ratify this
Agreement in its capacity as the sole shareholder of Interim Sub.
6.18 The Bank Merger
Parkvale and Masontown agree to take all action necessary and
appropriate, including causing the entering into of an appropriate Plan of
Merger to cause the Consolidated Corporation to merge with and into Parkvale
Bank (the "Bank Merger") in accordance with applicable laws and regulations
and the terms of the Plan of Bank Merger immediately following consummation of
the Consolidation, with Parkvale Bank as the surviving entity. The Plan of
Bank Merger shall provide that (i) the directors of Parkvale Bank upon
consummation of the Bank Merger shall be the directors of Parkvale Bank
immediately prior to the Bank Merger, and (ii) the offices of Masontown shall
operate as a division of Parkvale Bank under the name "The Second Bank of
Masontown, a division of Parkvale Bank," or as close to that as legally
possible, for a period of three years following the Bank Merger Effective
Time.
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6.19 Liquidated Damages
Due to expenses, direct and indirect, incurred by Parkvale and Parkvale
Bank in negotiating and executing this Agreement and in taking steps to effect
the Transactions, and the loss by them of other opportunities, and as material
inducement for Parkvale agreeing to enter into this Agreement, Masontown shall
pay to Parkvale agreed upon cash liquidated damages of $1,600,000, within 30
days after written demand for payment is made by Parkvale, following the
occurrence of any of the events set forth below:
(a) Masontown terminates this Agreement pursuant to Section
8.1(g);
(b) the termination of this Agreement by Masontown for any
reason (other than a termination by Masontown pursuant to Section 8.1(b)
or (c)) prior to the date of the meeting of the shareholders of
Masontown to vote on this Agreement; or
(c) the entering into a definitive agreement by Masontown
relating to an Alternative Proposal or the consummation of an
Alternative Proposal involving Masontown within 18 months after the
occurrence of any of the following: (i) the termination of this
Agreement by Parkvale pursuant to Section 8.1(b) or 8.1(f); (ii) the
failure of the shareholders of Masontown to adopt this Agreement at the
Masontown shareholders meeting held to vote on this Agreement; or (iii)
March 31, 2002 if prior thereto the Masontown shareholders meeting has
not been held to vote on the adoption of this Agreement.
6.20 Transaction Expenses of Masontown
(a) Masontown has Previously Disclosed to Parkvale its estimated
budget of transaction-related expenses either paid or reasonably
anticipated to be payable by Masontown in connection with the
negotiation of this Agreement and the completion of the transactions
contemplated by this Agreement, based on facts and circumstances
currently known, including the fees and expenses of counsel,
accountants, investment bankers and other professionals. Masontown
shall use its best efforts to keep its transaction-related expenses
within the budget and shall promptly notify Parkvale if it determines
that it may not be able to do so.
(b) Promptly after the execution of this Agreement, Masontown
shall ask all of its attorneys and other professionals to render current
and correct invoices for all unbilled time and disbursements within 30
days. Masontown shall accrue and/or pay all of such amounts as soon as
possible.
(c) Masontown shall cause its professionals to render monthly
invoices within 20 days after the end of each month. Masontown shall
advise Parkvale monthly of all out-of-pocket expenses which Masontown
has incurred in connection with the Agreement.
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ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions Precedent - the Parties
The respective obligations of both Parties to effect the Consolidation
shall be subject to the satisfaction of the following conditions at or prior
to the Closing unless waived by the Parties to the extent permitted by Section
8.4.
(a) The shareholders of Masontown shall have adopted this
Agreement in accordance with all legal requirements.
(b) All approvals and consents from any Governmental Entity, the
approval or consent of which is required for the completion of the
Transactions, shall have been received and all statutory waiting periods
in respect thereof shall have expired; and the Parties shall have
procured all other approvals, consents and waivers of each person (other
than the Governmental Entities referred to above) whose approval,
consent or waiver is necessary to the completion of the Transactions;
provided, however, none of the approvals, consents or waivers referred
to in this Section 7.1(b) shall contain any conditions, restrictions or
requirements which the Parkvale Board reasonably determines in good
faith would, individually or in the aggregate, be unduly burdensome or
materially reduce the value of the Transactions to Parkvale.
(c) None of Parkvale, Parkvale Bank or Masontown shall be subject
to any statute, rule, regulation, injunction or other order or decree
which shall have been enacted, entered, promulgated or enforced by any
Governmental Entity which prohibits, restricts or makes illegal
completion of any of the Transactions.
(d) No proceeding initiated by any Government Entity seeking an
order, injunction or decree issued by any court or agency of competent
jurisdiction or other legal restraint or prohibition preventing the
completion of any of the Transactions shall be pending or threatened.
7.2 Conditions Precedent - Masontown
The obligations of Masontown to effect the Consolidation shall be
subject to satisfaction of the following conditions at or prior to the Closing
unless waived by Masontown to the extent permitted by Section 8.4.
(a) The representations and warranties of Parkvale made herein
shall be true and correct as of the date hereof and in all material
respects as of the Closing as though made anew at the Closing (as if the
Closing Date was the date hereof for such purpose).
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(b) Parkvale shall have performed in all material respects all
obligations and complied in all material respects with all covenants and
agreements required to be performed and complied with by it pursuant to
this Agreement on or prior to the Closing.
(c) Parkvale shall have delivered to Masontown a certificate,
dated the Closing Date and signed by its Chief Executive Officer, to the
effect that the conditions set forth in Sections 7.2(a) and 7.2(b) have
been satisfied.
(d) Parkvale shall have furnished Masontown with such certificates
of their officers or others and such other documents to evidence
fulfillment of the conditions set forth in Section 7.1 as such
conditions relate to Parkvale as Masontown may reasonably request.
7.3 Conditions Precedent - Parkvale
The obligations of Parkvale and Interim Sub to effect the Consolidation
shall be subject to satisfaction of the following conditions at or prior to
the Closing unless waived by Parkvale to the extent permitted by Section 8.4.
(a) Between the date hereof and the Closing, Masontown shall not
have been affected by any event or change which has had or caused, or is
reasonably likely to have or cause, a Material Adverse Effect.
(b) The representations and warranties of Masontown set forth
herein shall be true and correct as of the date hereof and in all
material respects as of the Closing as though made anew at the Closing
(as if the Closing Date was the date hereof for such purpose), except
that in each case the representations and warranties under Article IV
shall be subject to the standard set forth in Section 9.8.
(c) Masontown shall have performed in all material respects all
obligations and complied in all material respects with all covenants and
agreements required to be performed and complied with by it pursuant to
this Agreement on or prior to the Closing.
(d) Masontown shall have delivered to Parkvale a certificate,
dated the Closing Date and signed by its Chief Executive Officer, to the
effect that the conditions set forth in Sections 7.3(a) through 7.3(c)
have been satisfied.
(e) Masontown shall have furnished Parkvale with such certificates
of its officers or others and such other documents to evidence
fulfillment of the conditions set forth in Section 7.1 as such
conditions relate to Masontown as Parkvale Bank may reasonably request.
(f) Dissenting Shares shall not represent 15% or more of the
outstanding Masontown Common Stock.
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ARTICLE VIII
TERMINATION, WAIVER, AMENDMENT
AND SPECIFIC PERFORMANCE
8.1 Termination
This Agreement may be terminated by a written instrument prior to the
Effective Time:
(a) by the mutual consent of the Boards of Parkvale and Masontown;
(b) by the Board of the non-breaching Party if the other Party has
breached in any material respect any of its covenants, agreements or
representations and warranties (but in the case of representations and
warranties under Article IV subject to the standard set forth in Section
9.8) herein, and such breach has not been cured within 30 days after
written notice;
(c) by the Board of either Parkvale or Masontown, (i) if any
Governmental Entity of competent jurisdiction shall have issued a final
nonappealable order prohibiting the completion of the Transactions or
(ii) if application for any necessary prior approval of a Governmental
Entity is denied or withdrawn at the request or recommendation of the
Governmental Entity, provided that such denial or request or
recommendation for withdrawal is not due to the terminating Party's
breach of any provision of this Agreement;
(d) by the Board of either Parkvale or Masontown if the
shareholders of Masontown fail to adopt this Agreement at the Masontown
shareholders meeting held to vote on this Agreement;
(e) by the Board of either Parkvale or Masontown if the Effective
Time has not occurred by the close of business on April 30, 2002,
provided that the terminating Party is not then in breach of any of its
covenants, agreements or representations and warranties (but in the case
of representations and warranties under Article IV subject to the
standard set forth in Section 9.8) herein;
(f) by the Board of Parkvale if the Masontown Board either (i)
fails to recommend, or fails to continue its recommendation, that the
shareholders of Masontown vote in favor of the adoption of this
Agreement, or (ii) modifies, withdraws or changes in any manner adverse
to Parkvale its recommendation that the shareholders of Masontown vote
in favor of the adoption of this Agreement;
(g) by the Board of Masontown if Masontown has received a
Superior Offer which is not timely matched by Parkvale and Parkvale Bank
pursuant to Section 6.7, and the Board of Masontown has made a
determination to accept such Superior Offer subject to approval thereof
by Masontown's shareholders, and simultaneously with the termination of
this Agreement pursuant to this paragraph Masontown enters into an
acquisition agreement with
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respect to the Superior Offer if the Superior Offer is for a merger or
the Board of Masontown adopts a binding resolution to recommend to the
shareholders of Masontown that they accept the Superior Offer if the
Superior Offer is for a tender offer; or
(h) by the Board of Parkvale if Parkvale has determined that
there is an unacceptable environmental risk pursuant to Section 6.10.
8.2 Effect of Termination
In the event that this Agreement is terminated, it shall become void and
have no effect, except for:
(a) the provisions relating to confidentiality set forth in
Section 6.4,
(b) the provision relating to press releases set forth in Section
6.5,
(c) the provision relating to cash liquidated damages set forth in
Section 6.19; and
(d) a termination pursuant to Section 8.1(b) shall not relieve the
breaching Party from any liability or damages if such termination arises
out of its willful breach of any provision of this Agreement; in such
event the non-breaching Party shall be entitled to such monetary
remedies and relief against the breaching Party as are available at law.
8.3 Survival of Representations, Warranties and Covenants
All representations, warranties, agreements and covenants in this
Agreement or in any other document or instrument delivered pursuant hereto or
in connection herewith shall expire on, and be terminated and extinguished at,
the Effective Time other than agreements or covenants contained herein or
therein that by their terms are to be performed after the Effective Time. No
such representations, warranties, agreements or covenants shall be deemed to
be terminated or extinguished so as to deprive Parkvale or any of its
affiliates of any defense at law or in equity which otherwise would be
available against the claims of any person, including any shareholder or
former shareholder.
8.4 Waiver
Each Party hereto by written instrument approved by its Board and signed
by an executive officer of such Party, may at any time (whether before or
after approval of this Agreement by the shareholders of Masontown) extend the
time for the performance of any of the obligations or other acts of the other
Party hereto and may waive (i) any inaccuracies of the other Party in the
representations or warranties contained in this Agreement or any document
delivered pursuant hereto, (ii) compliance with any of the covenants,
undertakings or agreements of the other Party, (iii) to the extent permitted
by law, satisfaction of any of the conditions precedent to its obligations
contained herein or (iv) the performance by the other Party of any of its
obligations set forth herein.
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8.5 Amendment or Supplement
This Agreement may be amended at any time by mutual written agreement of
the Parties approved by their Boards and signed by an executive officer of
each Party, provided that any such amendment after the adoption of this
Agreement by shareholders of Masontown shall not either modify the form or
decrease the amount of the Consolidation Consideration or otherwise materially
adversely affect such shareholders without the approval of the shareholders to
the extent required by applicable law.
8.6 Specific Performance
The Parties acknowledge and agree that the Transactions contemplated
herein are unique and that any remedy at law for breach is inadequate to
compensate the aggrieved Party or Parties. Accordingly, each Party shall have
the right to seek specific performance of this Agreement and the other Party's
duties, obligations, covenants and agreements herein in order to cause the
Transactions to be consummated. To this end, each Party, to the extent
permitted by law, irrevocably waives any defense it might have based on the
adequacy of a remedy at law which might be asserted as a bar to specific
performance or any other equitable relief.
ARTICLE IX
MISCELLANEOUS
9.1 Expenses
Each Party hereto shall bear and pay all costs and expenses incurred by
it in connection with this Agreement and the Transactions, including fees and
expenses of its Financial Advisor, counsel and accountants.
9.2 Entire Agreement
This Agreement together with any other documents or instruments executed
by the Parties relating to the subject matter hereto concurrently with or on
the same day as the execution of this Agreement contains the entire agreement
among the Parties with respect to the Transactions and supersedes all prior
arrangements or understandings with respect thereto, written or oral, other
than documents referred to herein which are to be executed after the date
hereof. The terms and conditions of this Agreement shall inure to the benefit
of and be binding upon the Parties hereto and their respective successors.
Nothing in this Agreement, expressed or implied, is intended to confer upon
any person, other than the Parties, and their respective successors, any
rights, remedies, obligations or liabilities other than as set forth in
Article II and in Sections 6.9 and 6.11 hereof.
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9.3 No Assignment
None of the Parties hereto may assign any of its rights or obligations
under this Agreement to any other person.
9.4 Notices
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered personally,
telecopied (with confirmation) or sent by overnight mail service or by
registered or certified mail (return receipt requested), postage prepaid,
addressed as follows:
If to Masontown:
The Second National Bank of Masontown
000 Xxxxx Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Chairman and Chief Executive Officer
With a required copy to:
Xxxxxxx & Xxx, P.C.
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
If to Parkvale or Interim Sub:
Parkvale Financial Corporation
0000 Xxxxxxx Xxxx Xxxxxxx
Xxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: Xxxxxx X. XxXxxxxx, Xx.
President and Chief Executive Officer
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With a required copy to:
Elias, Matz, Xxxxxxx & Xxxxxxx, L.L.P.
000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxx X. Xxxxxx, Xx., Esq.
9.5 Counterparts
This Agreement may be executed in any number of counterparts, and each
such counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.
9.6 Governing Law
This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Pennsylvania applicable to agreements made and
entirely to be performed within such jurisdiction. The Parties hereby
designate Pittsburgh, Pennsylvania to be the proper jurisdiction and venue for
any suit or action arising out of this Agreement.
9.7 Severability
Any term, provision, covenant or restriction contained in this Agreement
held to be invalid, void or unenforceable, shall be ineffective to the extent
of such invalidity, voidness or unenforceability, but neither the remaining
terms, provisions, covenants or restrictions contained in this Agreement nor
the validity or enforceability thereof in any other jurisdiction shall be
affected or impaired thereby. Any term, provision, covenant or restriction
contained in this Agreement that is so found to be so broad as to be
unenforceable shall be interpreted to be as broad as is enforceable.
9.8 Standard of Breach
None of the representations or warranties contained in Article IV shall
be deemed untrue or incorrect, and Masontown shall not be deemed to have
breached its representations or warranties therein as a consequence of the
existence of any fact, circumstance or event, which would not, either
individually or taken together with all other facts, circumstances or events,
have a Material Adverse Effect on it.
9.9 Alternative Structure
Notwithstanding any provision of this Agreement to the contrary,
Parkvale may at any time modify the structure of the acquisition of Masontown
set forth herein, subject to the prior written consent of Masontown which
consent shall not be unreasonably withheld or delayed, provided that
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(i) the Consolidation Consideration to be paid to the holders of Masontown
Common Stock is not thereby changed in kind or reduced in amount as a result
of such modification and (ii) such modification will not materially delay or
jeopardize receipt of any required approvals of Governmental Entities.
9.10 Calculation of Dates and Deadlines
Unless otherwise specified, any period of time to be determined under
this Agreement shall be deemed to commence at 12:01 a.m. on the first full day
after the specified starting date, event or occurrence. Any deadline, due
date, expiration date or period-end to be calculated under this Agreement
shall be deemed to end at 5:00 p.m. on the last day of the specified period.
The time of day shall be determined with reference to the then current local
time in Monroeville, Pennsylvania.
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed by their duly authorized officers and attested by their officers
thereunto duly authorized, all as of the day and year first above written.
THE SECOND NATIONAL BANK OF
MASONTOWN
Attest:
/s/ Xxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxxx
---------------------- ----------------------------
Name: Xxxxx X. Xxxxx Name: Xxxxx X. Xxxxxx
Title: Secretary Title: Chairman and Chief Executive Officer
PARKVALE FINANCIAL CORPORATION
Attest:
/s/ Xxxx X. Xxxxxx By: /s/ Xxxxxx X. XxXxxxxx, Xx.
---------------------- ----------------------------
Name: Xxxx X. Xxxxxx Name: Xxxxxx X. XxXxxxxx, Xx.
Title: Secretary Title: President
Parkvale Acquisition Corp., Interim Sub, has joined as a Party to this
Agreement on this __ day of ___________, 2001.
PARKVALE ACQUISITION CORP.
Attest:
______________________ By:_________________________________
Name: Xxxx X. Xxxxxx Name: Xxxxxx X. XxXxxxxx, Xx.
Title: Secretary Title: President
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Exhibit A
Form of Voting Agreement
July __, 2001
Board of Directors
Parkvale Financial Corporation
0000 Xxxxxxx Xxxx Xxxxxxx
Xxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Dear Ladies and Gentlemen:
The undersigned understands that Parkvale Financial Corporation
("Parkvale") and The Second National Bank of Masontown ("Masontown") are
entering into an Agreement and Plan of Consolidation (the "Consolidation
Agreement") providing for, among other things, the consolidation of a
wholly-owned subsidiary of Parkvale into Masontown (the "Consolidation"), in
which the outstanding shares of common stock of Masontown will be exchanged
for cash.
The undersigned is a stockholder of Masontown and is entering into this
agreement to induce Parkvale to enter into the Consolidation Agreement and to
consummate the transactions contemplated thereby.
The undersigned confirms its agreement with Parkvale as follows:
1. The undersigned represents, warrants and agrees that Schedule I
annexed hereto sets forth the shares of the capital stock of Masontown of
which the undersigned is the record or beneficial owner, or over which he has
voting control other than shares of Masontown capital stock he or she holds in
a fiduciary capacity (the "Shares"), and that the undersigned is on the date
hereof the lawful owner of the Shares, free and clear of all liens, charges,
encumbrances, voting agreements and commitments of every kind, except as
disclosed in Schedule I. Except as Previously Disclosed (as such term is
defined in the Consolidation Agreement) or as set forth in Schedule I, the
undersigned does not own or hold any rights to acquire any additional shares
of the capital stock of Masontown (by exercise of stock options or otherwise)
or any interest therein or any voting rights with respect to any additional
shares.
2. Except as required by law, the undersigned agrees that the
undersigned will not, and will not permit any company, trust or other entity
controlled by the undersigned to, contract to sell, sell or otherwise transfer
or dispose of any of the Shares over which the undersigned controls the power
of disposition or any interest therein or securities convertible thereunto or
any voting rights with respect thereto, other than subsequent to the
stockholder meeting of Masontown held in connection with the vote on the
Consolidation Agreement, pursuant to a gift where the donee has agreed in
writing to abide by the terms of this agreement in a form reasonably
satisfactory to Parkvale, or pursuant to an order of a court of competent
jurisdiction.
July __, 2001
Page 2
3. The undersigned agrees that all of the Shares, together with any
additional shares of capital stock of Masontown over which the undersigned
obtains voting control as of the record date for any meeting of stockholders
of Masontown called to consider and vote to adopt the Consolidation Agreement
(other than shares of Masontown capital stock he or she holds in a fiduciary
capacity), will be voted by the undersigned in favor thereof.
4. The undersigned represents and warrants to Parkvale that (i) the
undersigned has all necessary power and authority to enter into this agreement
and (ii) this agreement is a legal, valid and binding agreement of the
undersigned, and is enforceable against the undersigned in accordance with its
terms.
5. This agreement shall automatically terminate (i) upon termination
of the Consolidation Agreement in accordance with its terms; (ii) at the
Effective Time (as defined in the Consolidation Agreement) or (iii) by mutual
consent of the parties hereto.
6. This agreement may be amended, modified or supplemented at any
time by the written approval of such amendment, modification or supplement by
the undersigned and Parkvale.
7. This agreement evidences the entire agreement between the parties
hereto with respect to the matters provided for herein and there are no
agreements, representations or warranties with respect to the matters provided
for herein other than those set forth herein.
8. The parties agree that if any provision of this agreement shall
under any circumstances be deemed invalid or inoperative, this agreement shall
be construed with the invalid or inoperative provisions deleted and the rights
and obligations of the parties shall be construed and enforced accordingly.
9 This agreement may be executed in two counterparts, each of which
shall be deemed an original, but all of which together shall constitute one
and the same agreement.
10. The validity, construction, enforcement and effect of this
agreement shall be governed by the laws of the Commonwealth of Pennsylvania.
11. This agreement shall inure to the benefit of Parkvale, and shall
be binding upon the undersigned and his or her executors, personal
representatives, administrators, heirs, legatees, guardians and other legal
representatives. This agreement shall survive the death or incapacity of the
undersigned.
July __, 2001
Page 3
12. Nothing in this agreement shall be construed to give Parkvale any
rights to exercise or direct the exercise of voting power as owner of the
Shares, either beneficially or otherwise, for any purpose.
13. The undersigned agrees that in the event of his or her breach
Parkvale shall be entitled to such remedies and relief against the undersigned
as are available at law or in equity. The undersigned acknowledges that there
is not an adequate remedy at law to compensate Parkvale for a violation of
this agreement, and irrevocably waives, to the extent permitted by law, any
defense that he or she might have based on the adequacy of a remedy at law
which might be asserted as a bar to specific performance, injunctive relief,
or other equitable relief. The undersigned agrees to the granting of
injunctive relief without the posting of any bond and further agrees that if
any bond shall be required, such bond shall be in a nominal amount.
Please confirm that the foregoing correctly states the understanding
between the undersigned and Parkvale by signing and returning to Parkvale a
counterpart hereof.
Very truly yours,
Name:___________________________
Accepted as of this __ day
of July 2001:
Parkvale Financial Corporation
By: ______________________________
Xxxxxx X. XxXxxxxx, Xx.
President
Schedule I
Number of shares of Masontown common
stock beneficially owned:
With sole voting power. . . . . . . . . . . . . . . . . . . .
With shared voting power. . . . . . . . . . . . . . . . . . .
Exhibit B
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated this ____ day of ______ 2001, between
Parkvale Savings Bank, a Pennsylvania chartered savings bank (the "Bank" or
the "Employer"), and _____________________ (the "Executive").
WITNESSETH
WHEREAS, the Executive is presently an officer of The Second National
Bank of Masontown ("Masontown");
WHEREAS, the Bank's parent company, Parkvale Financial Corporation
("Parkvale"), has acquired Masontown, and Masontown is currently a wholly
owned subsidiary of Parkvale, pursuant to an Agreement and Plan of
Consolidation dated July __, 2001 (the "Consolidation Agreement");
WHEREAS, concurrently with the execution of this Agreement, Masontown is
merging with and into the Bank, with the Bank as the surviving entity;
WHEREAS, the Bank desires to be ensured of the Executive's continued
active participation in the business of the Bank; and
WHEREAS, in order to induce the Executive to remain in the employ of the
Bank and in consideration of the Executive's agreeing to remain in the employ
of the Bank, the parties desire to specify the terms of such employment;
NOW THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereby agree as follows:
1. Definitions. The following words and terms shall have the
meanings set forth below for the purposes of this Agreement:
(a) Base Salary. "Base Salary" shall have the meaning set forth in
Section 3(a) hereof.
(b) Cause. "Cause" means termination because of the employee's (i)
conviction of, or plea of guilty or nolo contendere to, a felony or a crime of
falsehood or moral turpitude, (ii) willful misconduct resulting in
demonstrable material injury to the employer, (iii) breach of fiduciary duty
involving personal profit, (iv) intentional failure to perform stated duties
if such failure is not cured
within ten (10) days following written notice to the employee, or (v) willful
violations of any law, rule or regulation (other than traffic violations or
similar offenses) or final cease and desist order or material breach of any
provision of this Agreement.
(c) Code. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(d) Date of Termination. "Date of Termination" shall mean the date
specified in the Notice of Termination.
(e) Disability. Termination by the Employer of the Executive's
employment based on "Disability" shall mean termination because of any
physical or mental impairment which qualifies the Executive for disability
benefits under the applicable long-term disability plan maintained by the
Employer or any subsidiary or, if no such plan applies, which would qualify
the Executive for disability benefits under the Federal Social Security
System.
(f) Good Reason. Termination by the Executive of the Executive's
employment for "Good Reason" shall mean termination by the Executive based on:
(i) a material breach of this Agreement by the Employer, which
breach has not been cured within thirty (30) days after a
written notice of non-compliance has been given by the
Executive to the Employer, specifying the provision(s) of
this Agreement which have been breached;
(ii) Without the Executive's express written consent, a reduction
by the Employer in the Executive's Base Salary as the same
may be increased from time to time or, except to the extent
permitted by Section 3(b) hereof, a material reduction in
the package of fringe benefits provided to the Executive,
taken as a whole;
(iii) Without the Executive's express written consent, the
Employer requires the Executive to work on a regular basis
in an office which is more than 30 miles from the location
of Masontown's current principal executive office, except
for required travel on business of the Employer to an extent
substantially consistent with similarly situated employees
of the Employer;
(iv) Any purported termination of the Executive's employment for
Cause, Disability or Retirement which is not effected
pursuant to a Notice of Termination satisfying the
requirements of paragraph (g) below; or
(v) The failure by the Employer to obtain the assumption of and
agreement to perform this Agreement by any successor as
contemplated in Section 9 hereof.
(g) Notice of Termination. Any purported termination of the
Executive's employment by the Employer for any reason, including without
limitation for Cause, Disability or Retirement, or
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by the Executive for any reason, including without limitation for Good Reason,
shall be communicated by written "Notice of Termination" to the other party
hereto. For purposes of this Agreement, a "Notice of Termination" shall mean
a dated notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated, (iii) specifies a Date of
Termination, which shall be not less than thirty (30) nor more than ninety
(90) days after such Notice of Termination is given, except in the case of
the Employer's termination of the Executive's employment for Cause; and (iv)
is given in the manner specified in Section 10 hereof.
(h) Retirement. "Retirement" shall mean voluntary termination by the
Executive in accordance with the Employer's retirement policies, including
early retirement, generally applicable to the Employer's salaried employees.
2. Term of Employment.
(a) The Employer hereby employs the Executive as ______________________
and the Executive hereby accepts said employment and agrees to render such
services to the Employer on the terms and conditions set forth in this
Agreement. This Agreement shall terminate three (3) years after the date
first above written.
(b) During the term of this Agreement, the Executive shall perform
such executive services for the Employer as is consistent with his title of
_______________.
3. Compensation and Benefits.
(a) The Employer shall compensate and pay the Executive for his
services during the term of this Agreement at a minimum base salary of $______
per year ("Base Salary"), payable in the same manner as other officers of the
Employer, which may be increased from time to time in such amounts as may be
determined by the Board of Directors of the Employer. In addition to his Base
Salary, the Executive shall be entitled to receive during the term of this
Agreement such bonus payments as may be determined by the Board of Directors
of the Employer; provided, however, that the Executive shall be considered for
annual bonus payments in a manner consistent with other officers of the
Employer (prorated for the first calendar year ending after the date of this
Agreement) and provided that no bonus shall be paid for calendar 2001.
(b) During the term of the Agreement, the Executive shall be entitled
to participate in and receive the benefits of those plans generally made
available to employees and executives of the Employer, to the extent
commensurate with his then duties and responsibilities, as fixed by the Board
of Directors of the Employer, and subject to the provisions of the
Consolidation Agreement. Nothing paid to the Executive under any plan
presently in effect or made available in the future shall be deemed to be in
lieu of the salary payable to the Executive pursuant to Section 3(a) hereof.
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(c) During the term of this Agreement, the Executive shall be entitled
to paid annual vacation in accordance with the policies as established from
time to time by the Board of Directors of the Employer. The Executive shall
not be entitled to receive any additional compensation from the Employer for
failure to take a vacation, nor shall the Executive be able to accumulate
unused vacation time from one year to the next, except to the extent
authorized by the Board of Directors of the Employer.
4. Expenses. The Employer shall reimburse the Executive or otherwise
provide for or pay for all reasonable expenses incurred by the Executive in
furtherance of, or in connection with the business of the Employer, including,
but not by way of limitation, automobile and traveling expenses, and all
reasonable entertainment expenses, subject to such reasonable documentation
and other limitations as may be established by the Board of Directors of the
Employer. If such expenses are paid in the first instance by the Executive,
the Employer shall reimburse the Executive therefor.
5. Termination.
(a) The Employer shall have the right, at any time upon prior Notice
of Termination, to terminate the Executive's employment hereunder for any
reason, including without limitation termination for Cause, Disability or
Retirement, and the Executive shall have the right, upon prior Notice of
Termination, to terminate his employment hereunder for any reason.
(b) In the event that (i) the Executive's employment is terminated by
the Employer for Cause or Disability, by the Executive for Retirement or in
the event of the Executive's death, or (ii) the Executive terminates his
employment hereunder other than for Good Reason, the Executive shall have no
right pursuant to this Agreement to compensation or other benefits for any
period after the applicable Date of Termination.
(c) In the event that (i) the Executive's employment is terminated by
the Employer for other than Cause, Disability, Retirement or the Executive's
death or (ii) such employment is terminated by the Executive for Good Reason,
then the Employer shall, subject to the provisions of Section 6 hereof, if
applicable,
(A) Pay to the Executive his then currently monthly Base Salary for
the month in which the Date of Termination occurs,
(B) Pay to the Executive a cash severance amount equal to (i) his then
current monthly Base Salary, multiplied by (ii) the number of full months
remaining until this Agreement terminates pursuant to Section 2(a), with the
cash severance to be paid in equal monthly installments beginning with the
first business day of the month following the Date of Termination, and
(C) Maintain and provide for a period ending at the earlier of (i) the
expiration of the remaining term of employment pursuant hereto prior to the
Notice of Termination or (ii) the date of the Executive's full-time employment
by another employer (provided that the Executive is entitled
-4-
under the terms of such employment to benefits substantially similar to those
described in this subparagraph (C)), the Executive's continued participation
in all group insurance, life insurance, health and accident, and disability
benefit plans in which the Executive was entitled to participate immediately
prior to the Date of Termination, provided that in the event that the
Executive's participation in any plan as provided in this subparagraph (C) is
barred or during such period any such plan is discontinued or the benefits
thereunder are materially reduced, the Employer shall arrange to provide the
Executive with benefits substantially similar to those which the Executive was
entitled to receive under such plans immediately prior to the Date of
Termination.
6. Limitation of Benefits under Certain Circumstances. If the
payments and benefits pursuant to Section 5 hereof, either alone or together
with other payments and benefits which the Executive has the right to receive
from the Employer, would constitute a "parachute payment" under Section 280G
of the Code, the payments and benefits pursuant to Section 5 hereof shall be
reduced, in the manner determined by the Executive, by the amount, if any,
which is the minimum necessary to result in no portion of the payments and
benefits under Section 5 being non-deductible to the Employer pursuant to
Section 280G of the Code and subject to the excise tax imposed under
Section 4999 of the Code. The determination of any reduction in the
payments and benefits to be made pursuant to Section 5 shall be based upon the
opinion of independent tax counsel selected by the Employer and paid by the
Employer. Such counsel shall be reasonably acceptable to the Employer and the
Executive; shall promptly prepare the foregoing opinion, but in no event later
than thirty (30) days from the Date of Termination; and may use such actuaries
as such counsel deems necessary or advisable for the purpose. The Employer
shall pay to the Executive the maximum amount of payments and benefits
pursuant to Section 5, as selected by the Executive, which such opinion
indicates that there is a high probability do not result in any of such
payments and benefits being non-deductible to the Employer and subject to the
imposition of the excise tax imposed under Section 4999 of the Code. Nothing
contained herein shall result in a reduction of any payments or benefits to
which the Executive may be entitled upon termination of employment under any
circumstances other than as specified in this Section 6, or a reduction in the
payments and benefits specified in Section 5 below zero.
7. Mitigation; Exclusivity of Benefits.
(a) The Executive shall not be required to mitigate the amount of any
benefits hereunder by seeking other employment or otherwise, nor shall the
amount of any such benefits be reduced by any compensation earned by the
Executive as a result of employment by another employer after the Date of
Termination or otherwise.
(b) The specific arrangements referred to herein are not intended to
exclude any other benefits which may be available to the Executive upon a
termination of employment with the Employer pursuant to employee benefit plans
of the Employer or otherwise.
8. Withholding. All payments required to be made by the Employer
hereunder to the Executive shall be subject to the withholding of such
amounts, if any, relating to tax and other payroll
-5-
deductions as the Employer may reasonably determine should be withheld pursuant
to any applicable law or regulation.
9. Assignability. The Employer may assign this Agreement and its
rights and obligations hereunder in whole, but not in part, to any
corporation, bank or other entity with or into which the Employer may
hereafter merge or consolidate or to which the Employer may transfer all or
substantially all of its assets, if in any such case said corporation, bank or
other entity shall by operation of law or expressly in writing assume all
obligations of the Employer hereunder as fully as if it had been originally
made a party hereto, but may not otherwise assign this Agreement or its rights
and obligations hereunder. The Executive may not assign or transfer this
Agreement or any rights or obligations hereunder.
10. Notice. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below:
To the Employer: President
Parkvale Savings Bank
0000 Xxxxxxx Xxxx Xxxxxxx
Xxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
To the Executive: [to be completed]
11. Amendment; Waiver. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge
is agreed to in writing and signed by the Executive and such officer or
officers as may be specifically designated by the Board of Directors of the
Employer to sign on its behalf. No waiver by any party hereto at any time of
any breach by any other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the same
or at any prior or subsequent time.
12. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the
Commonwealth of Pennsylvania.
13. Nature of Obligations. Nothing contained herein shall create or
require the Employer to create a trust of any kind to fund any benefits which
may be payable hereunder, and to the extent that the Executive acquires a
right to receive benefits from the Employer hereunder, such right shall be no
greater than the right of any unsecured general creditor of the Employer.
14. Interpretation and Headings. This agreement shall be interpreted
in order to achieve the purposes for which it was entered into. The section
headings contained in this Agreement are for
-6-
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
15. Validity. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
17. Regulatory Provision. Notwithstanding any other provision of this
Agreement to the contrary, any payments made to the Executive pursuant to this
Agreement, or otherwise, are subject to and conditioned upon their compliance
with Section 18(k) of the FDIA (12 U.S.C. Section 1828(k)) and the regulations
promulgated thereunder.
18. Arbitration. (a) The Executive and the Employer agree to submit
to final and binding arbitration, pursuant to the rules of the American
Arbitration Association, any and all claims arising from the alleged breach of
any provision of this Agreement or from the termination, for any reason, of
the Executive's employment by the Employer, including but not limited to:
(1) any and all claims for wages and benefits (including without
limitation salary, health and welfare benefits, severance pay, vacation
pay, and bonuses);
(2) any and all claims for wrongful discharge and breach of
contract (whether express or implied), and implied covenants of good
faith and fair dealing;
(3) any and all claims for alleged employment discrimination on
the basis of age, race, color, religion, sex, national origin, veteran
status, disability and/or handicap, in violation of any federal, state
or local statute, ordinance, judicial precedent or executive order,
including but not limited to claims for discrimination under the
following statutes: Title VII of the Civil Rights Act of 1964, 42 U.S.C.
Section 2000 et. seq., the Civil Rights Act of 1866, 42 U.S.C. Section
1981, the Age Discrimination in Employment Act, as amended, 29 U.S.C.
Section 621 et. seq., the Older Workers Benefit Protection Act, the
Rehabilitation Act of 1972, as amended, 29 U.S.C. Section 701 et. seq.,
the Americans with Disabilities Act, 42 U.S.C. Section 12101 et. seq.,
and the Pennsylvania Human Relations Act, 43 P.S. Section 951 et. seq.;
(4) any and all claims under any federal or state statute
relating to employee benefits or pensions;
-7-
(5) any and all claims in tort (including but not limited to any
claims for misrepresentation, defamation, interference with contract or
prospective economic advantage, intentional infliction of emotional
distress and negligence); and
(6) any and all claims for attorney's fees and costs. A party
shall only be entitled to recover attorney's fees and costs from the
other party if it has prevailed on its claims (or defenses) in the
arbitration proceeding to a significantly greater extent than the other
party.
(b) No arbitration proceeding shall be commenced until the party
seeking arbitration has first provided to the other party to this Agreement
written notice which (i) indicates the specific provision in this Agreement
relied upon, (ii) sets forth in reasonable detail the facts and circumstances
giving rise to the claim, (iii) provides at least thirty (30) calendar days
following the other party's receipt of the notice to cure or resolve the basis
for the claim, and (iv) is given in the manner specified in Section 10 hereof.
19. Non-Competition.
(a) The Executive hereby agrees that during the term of this
Agreement, the Executive will not (i) engage directly or indirectly in the
banking or financial services business other than on behalf of the Employer or
its affiliates within the Market Area (as hereinafter defined), (ii) directly
or indirectly own, manage, operate, control, be employed by, or provide
management, consulting or advisory service in any capacity to any firm,
corporation or other entity (other than the Employer or its affiliates)
engaged directly or indirectly in the banking or financial services business
in the Market Area, or (iii) directly or indirectly solicit or otherwise
intentionally cause any employee, officer or member of the respective Board of
Directors of the Employer or any of its affiliates to engage in any action
prohibited under (i) or (ii) of this Section 19(a); provided that the
ownership by the Executive as an investor of not more than five percent of the
outstanding shares of stock of any corporation whose stock is listed for
trading on any securities exchange or is quoted on the automated quotation
system of the National Association of Securities Dealers, Inc., or the shares
of any investment company as defined in Section 3 of the Investment Company
Act of 1940, as amended, shall not in itself constitute a violation of the
Executive's obligations under this Section 19(a).
(b) The Executive acknowledges and agrees that irreparable injury will
result to the Employer in the event of a breach of any of the provisions of
this Section 19 (the "Designated Provisions") and that the Employer will have
no adequate remedy at law with respect thereto. Accordingly, in the event of
a breach of any Designated Provision, and in addition to any other legal or
equitable remedy the Employer may have, the Employer shall be entitled to the
entry of a preliminary and permanent injunction to restrain the violation or
breach thereof by the Executive or any affiliates, agents or any other persons
acting for or with the Executive in any capacity whatsoever.
(c) It is the desire and intent of the parties that the provisions of
this Section 19 shall be enforced to the fullest extent permissible under the
laws and public policies applied in each jurisdiction in which enforcement is
sought. Accordingly, if any particular provision of this Section
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19 shall be adjudicated to be invalid or unenforceable, such provision shall
be deemed amended to delete therefrom the portion thus adjudicated to be
invalid or unenforceable, such deletion to apply only with respect to the
operation of such provision in the particular jurisdiction in which such
adjudication is made. In addition, should any court determine that the
provisions of this Section 19 shall be unenforceable with respect to scope,
duration or geographic area, such court shall be empowered to substitute, to
the extent enforceable, provisions similar hereto or other provisions so as to
provide to the Employer, to the fullest extent permitted by applicable law,
the benefits intended by this Section 19.
(d) As used herein, "Market Area" shall consist of (i) each of the
counties in the Commonwealth of Pennsylvania in which the Employer or any of
its affiliates has a deposit-taking or lending office, and (ii) the counties
in the Commonwealth of Pennsylvania which are immediately adjacent to the
counties covered by clause (i).
IN WITNESS WHEREOF, this Agreement has been executed as of the date
first above written.
Attest: PARKVALE SAVINGS BANK
_________________________ By: _____________________________
Xxxx X. Xxxxxx, Secretary Xxxxxx X. XxXxxxxx, President
EXECUTIVE
By: ________________________
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Exhibit C
SEVERANCE, CONSULTING AND NON-COMPETITION AGREEMENT
This Severance, Consulting and Non-Competition Agreement (the
"Agreement") is dated as of the ____ day of _______ 2001 by and between
Parkvale Financial Corporation (the "Company") and Xxxxx X. Xxxxxx (the
"Consultant").
WITNESSETH:
WHEREAS, the Consultant has been an officer of The Second National Bank
of Masontown ("Masontown") for a number of years;
WHEREAS, the Company is acquiring Masontown pursuant to an Agreement and
Plan of Consolidation (the "Consolidation Agreement");
WHEREAS, the Company desires to have the Consultant provide, and the
Consultant is willing to provide the Company with, the consulting services on
the terms and conditions set forth herein;
WHEREAS, the Board of Directors of the Company is of the opinion that
the consulting services of the Consultant will be of substantial value to the
Company;
WHEREAS, since the consulting services will only be provided by the
Consultant on a part-time basis for a period of one year, the Company believes
that there is substantial value to it in precluding the Consultant from
providing services to the Company's competitors; and
WHEREAS, to retain such Consultant's services and to preclude the
Consultant from providing services to the Company's competitors, the Company
and the Consultant have agreed to enter into this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein and other good and valuable consideration, the parties hereto agree as
follows:
1. Severance Payment. As of the date of this Agreement, which shall
be dated as of the Effective Time of the Consolidation as such terms are
defined in the Consolidation Agreement, the Company (or Masontown at the
Company's election) shall pay to the Consultant a lump sum cash severance
amount equal to $104,400, minus applicable withholding taxes.
2. Consultancy.
(a) The parties hereto agree that, during the one-year period
immediately following the date hereof ("Consulting Period"), the Consultant
undertakes to provide his personal advice and
counsel to the Company and its subsidiaries in connection with the business
of the Company and its subsidiaries, including consulting with the Company
regarding the operations and customer relationships of the Company, providing
introductions to customers, serving as senior adviser to Parkvale Savings Bank
(the "Bank"), and providing assistance with respect to the transition period
following the Company's acquisition of The Second National Bank of Masontown
(collectively the "Consulting Services"), subject to the terms and conditions
which are set forth herein. The Consultant shall provide such Consulting
Services commensurate with the Consultant's prior experience as may be
reasonably requested by the Chief Executive Officer of the Company from time
to time and at mutually agreeable times. The Consultant shall not be required
to provide more than 100 hours of Consulting Services in any calendar month
during the Consulting Period. Such Consulting Services may be provided in
person, telephonically, electronically or by correspondence.
(b) In consideration of the Consultant's agreement to provide
Consulting Services hereunder, during the Consulting Period, the Company
shall, or shall cause one of its subsidiaries to, pay the Consultant
consulting fees at the rate of $52,200 per annum, payable in monthly
installments on the first business day of each month during such Consulting
Period, commencing with the first business day of the month immediately
following the Effective Time of the Consolidation, as such terms are defined
in the Consolidation Agreement.
(c) During the Consulting Period, the Company shall provide the
Consultant with health and accident and group life insurance coverage and
shall pay his club dues, provided that the club dues do not exceed $3,000.
(d) During the Consulting Period, the Company shall reimburse the
Consultant or otherwise provide for or pay for all reasonable expenses
incurred by the Consultant at the request of the Company, subject to such
reasonable documentation as may be established by the Board of Directors of
the Company. If such expenses are paid in the first instance by the
Consultant, the Company shall reimburse the Consultant therefor.
(e) During the Consulting Period, the Consultant shall be treated as
an independent contractor and shall not be deemed to be an employee of the
Company or any other affiliate of the Company.
3. Payment Obligation. Provided that the Consultant complies, in
all material respects, with his obligations pursuant to Sections 2(a) and 4(a)
hereof, the Company's obligation to pay the Consultant the payments provided
in Section 2(b) hereof during the term of this Agreement shall be absolute and
unconditional and shall not be affected by any circumstances other than the
Consultant's death, and each and every such payment made or benefit provided
shall be final and the Company shall not seek to recover all or any part of
any such payment or benefit from the Consultant. If the Consultant dies
during the Consulting Period, the Consulting Period shall terminate on the
date of the Consultant's death and no further consulting fees shall be payable
pursuant to this Agreement.
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4. Non-Competition.
(a) The Consultant hereby agrees that for a period of three years from
the date of this Agreement, the Consultant will not (i) engage directly or
indirectly in the banking or financial services business other than on behalf
of the Company or its affiliates within the Market Area (as hereinafter
defined), (ii) directly or indirectly own, manage, operate, control, be
employed by, or provide management, consulting or advisory service in any
capacity to any firm, corporation or other entity (other than the Company or
its affiliates) engaged directly or indirectly in the banking or financial
services business in the Market Area, or (iii) directly or indirectly solicit
or otherwise intentionally cause any employee, officer or member of the
respective Board of Directors of the Company or any of its affiliates to
engage in any action prohibited under (i) or (ii) of this Section 4(a);
provided that the ownership by the Consultant as an investor of not more than
five percent of the outstanding shares of stock of any corporation whose stock
is listed for trading on any securities exchange or is quoted on the automated
quotation system of the National Association of Securities Dealers, Inc., or
the shares of any investment company as defined in Section 3 of the Investment
Company Act of 1940, as amended, shall not in itself constitute a violation of
the Consultant's obligations under this Section 4(a).
(b) The Consultant acknowledges and agrees that irreparable injury
will result to the Company in the event of a breach of any of the provisions
of this Section 4 (the "Designated Provisions") and that the Company will have
no adequate remedy at law with respect thereto. Accordingly, in the event of
a breach of any Designated Provision, and in addition to any other legal or
equitable remedy the Company may have, the Company shall be entitled to the
entry of a preliminary and permanent injunction to restrain the violation or
breach thereof by the Consultant or any affiliates, agents or any other
persons acting for or with the Consultant in any capacity whatsoever.
(c) It is the desire and intent of the parties that the provisions of
this Section 4 shall be enforced to the fullest extent permissible under the
laws and public policies applied in each jurisdiction in which enforcement is
sought. Accordingly, if any particular provision of this Section 4 shall be
adjudicated to be invalid or unenforceable, such provision shall be deemed
amended to delete therefrom the portion thus adjudicated to be invalid or
unenforceable, such deletion to apply only with respect to the operation of
such provision in the particular jurisdiction in which such adjudication is
made. In addition, should any court determine that the provisions of this
Section 4 shall be unenforceable with respect to scope, duration or geographic
area, such court shall be empowered to substitute, to the extent enforceable,
provisions similar hereto or other provisions so as to provide to the Company,
to the fullest extent permitted by applicable law, the benefits intended by
this Section 4.
(d) As used herein, "Market Area" shall consist of each of (i) the
counties in the Commonwealth of Pennsylvania in which the Company or any of
its affiliates has a deposit-taking or lending office, and (ii) if the
Consultant would have any management or executive responsibilities
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or would have the title of Vice President or higher, the counties in the
Commonwealth of Pennsylvania which are immediately adjacent to the counties
covered by clause (i).
5. Limitation of Benefits under Certain Circumstances. If the
payments and benefits pursuant to Sections 1 and 2 hereof, either alone or
together with other payments and benefits which the Consultant has the right
to receive from the Company, would constitute a "parachute payment" under
Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"),
the payments and benefits pursuant to Sections 1 and 2 hereof shall be
reduced, in the manner determined by the Consultant, by the amount, if any,
which is the minimum necessary to result in no portion of the payments and
benefits under Sections 1 and 2 being non-deductible to the Company pursuant
to Section 280G of the Code and subject to the excise tax imposed under
Section 4999 of the Code. The determination of any reduction in the payments
and benefits to be made pursuant to Sections 1 and 2 shall be based upon the
opinion of independent tax counsel selected by the Company and paid by the
Company. The Company shall pay to the Consultant the maximum amount of
payments and benefits pursuant to Sections 1 and 2, as selected by the
Consultant, which such opinion indicates that there is a high probability do
not result in any of such payments and benefits being non-deductible to the
Company and subject to the imposition of the excise tax imposed under Section
4999 of the Code.
6. Successors and Assigns. This Agreement will inure to the benefit
of and be binding upon the Consultant and the Company, including any successor
to the Company by merger or consolidation or any other change in form or any
other person or firm or corporation to which all or substantially all of the
assets and business of the Company may be sold or otherwise transferred. This
Agreement may not be assigned by any party hereto without the consent of the
other party.
7. Notices. Any communication to a party required or permitted under
this Agreement, including any notice, direction, designation, consent,
instruction, objection or waiver, shall be in writing and shall be deemed to
have been given at such time as it is delivered personally, or five (5) days
after mailing if mailed, postage prepaid, by registered or certified mail,
return receipt requested, addressed to such party at the address listed below
or at such other address as one such party may by written notice specify to
the other party or parties, as applicable:
If to the Consultant:
Xxxxx X. Xxxxxx
[complete address]
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If to the Company:
Parkvale Financial Corporation
0000 Xxxxxxx Xxxx Xxxxxxx
Xxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: Xxxxxx X. XxXxxxxx, Xx.
President and Chief Executive Officer
8. Severability. A determination that any provision of this
Agreement is invalid or unenforceable shall not affect the validity or
enforceability of any other provision hereof.
9. Waiver. Failure to insist upon strict compliance with any of the
terms, covenants or conditions hereof shall not be deemed a waiver of such
term, covenant or condition. A waiver of any provision of this Agreement must
be made in writing, designated as a waiver, and signed by the party against
whom its enforcement is sought. Any waiver or relinquishment of any right or
power hereunder at any one or more times shall not be deemed a waiver or
relinquishment of such right or power at any other time or times.
10. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which
shall constitute one and the same Consulting Agreement.
11. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the Commonwealth of Pennsylvania.
12. Headings. The headings of sections in this Agreement are for
convenience of reference only and are not intended to qualify the meaning of
any section. Any reference to a section number shall refer to a section of
this Agreement, unless otherwise stated.
IN WITNESS WHEREOF, the Company and the Consultant have entered into
this Agreement as of the day and year first above written.
PARKVALE FINANCIAL CORPORATION
By: ___________________________
Xxxxxx X. XxXxxxxx, Xx.,
President and Chief Executive Officer
CONSULTANT
By: ___________________________
Xxxxx X. Xxxxxx
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