EXHIBIT 2.1
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
DATED AS OF JANUARY 20, 2005
BETWEEN
WILLOW GROVE BANCORP, INC.
AND
CHESTER VALLEY BANCORP, INC.
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TABLE OF CONTENTS
ARTICLE I
CERTAIN DEFINITIONS
Page No.
--------
1.01. Certain
Definitions............................................
1
ARTICLE II
THE MERGER
2.01. The
Merger.....................................................
12
2.02. Effective Date and
Effective Time; Closing..................... 14
ARTICLE III
CONSIDERATION; ELECTION; AND EXCHANGE PROCEDURES
3.01. Effect on Capital
Stock........................................ 14
3.02. Election
Procedures............................................ 15
3.03. Exchange
Procedures............................................ 17
3.04. No Fractional
Shares........................................... 20
3.05. Company
Options................................................
20
ARTICLE IV
ACTIONS PENDING ACQUISITION
4.01. Covenants of the
Company....................................... 22
4.02. Covenants of
Parent............................................ 25
4.03.
Transition.....................................................
26
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01. Representations and
Warranties of the Company.................. 26
5.02. Representations and
Warranties of Parent....................... 45
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ARTICLE VI
COVENANTS
Page No.
--------
6.01. Reasonable Best
Efforts........................................ 63
6.02. Shareholder
Approval........................................... 63
6.03. Registration
Statement......................................... 64
6.04. Regulatory
Filings............................................. 65
6.05. Public
Announcements...........................................
66
6.06. Access;
Information............................................
66
6.07. No
Solicitation................................................
66
6.08.
Indemnification................................................
69
6.09. Employees; Benefit
Plans....................................... 71
6.10. The Bank
Merger................................................ 73
6.11. Advice of
Changes.............................................. 73
6.12. Current
Information............................................
74
6.13.
Affiliates.....................................................
74
6.14. Stock
Listing..................................................
74
6.15. Certain
Policies...............................................
74
6.16. Section 16
Matters............................................. 75
6.17. Certain Other
Agreements....................................... 75
ARTICLE VII
CONDITIONS TO CONSUMMATION
OF THE MERGER
7.01. Conditions to Each
Party's Obligation to Effect the Merger..... 77
7.02. Conditions to
Obligation of the Company........................ 78
7.03. Conditions to
Obligation of Parent............................. 79
7.04. Frustration of Closing
Conditions.............................. 79
ARTICLE VIII
TERMINATION
8.01.
Termination....................................................
80
8.02. Effect of Termination
and Abandonment.......................... 83
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ARTICLE IX
MISCELLANEOUS
Page No.
9.01.
Survival.......................................................
85
9.02.
Standard.......................................................
85
9.03. Waiver;
Amendment..............................................
85
9.04.
Counterparts...................................................
85
9.05. Governing
Law.................................................. 86
9.06.
Expenses.......................................................
86
9.07.
Notices........................................................
86
9.08. Entire Understanding;
No Third Party Beneficiaries............. 87
9.09.
Severability...................................................
87
9.10. Enforcement of the
Agreement................................... 87
9.11.
Interpretation.................................................
88
9.12.
Assignment.....................................................
88
9.13. Alternative
Structure.......................................... 88
EXHIBIT A Form of Company Shareholder
Agreement......................... A-1
EXHIBIT B Form of Parent Shareholder
Agreement.......................... B-1
<PAGE>
AGREEMENT AND
PLAN OF MERGER, dated as of January 20, 2005 (the
"Agreement"), between Willow Grove Bancorp,
Inc. ("Parent"), a Pennsylvania
corporation, and Chester Valley Bancorp,
Inc. (the "Company"), a Pennsylvania
corporation.
RECITALS
WHEREAS, the Boards of Directors of Parent and the Company have
determined that it is in the best interests
of their respective companies and
shareholders to consummate the business
combination transaction provided for
herein, in which the Company will, subject
to the terms and conditions set forth
herein, merge with and into Parent (the
"Merger"); and
WHEREAS, as a material inducement to Parent to enter into this
Agreement, and simultaneously with the
execution of this Agreement, each
director of the Company is entering into an
agreement (the "Company Shareholder
Agreement"), in the form of Exhibit A
hereto, pursuant to which such persons
have agreed, among other things, to vote
their shares of Company Common Stock
(as defined herein) in favor of this
Agreement, and, as a material inducement to
the Company to enter into this Agreement,
and simultaneously with the execution
of this Agreement, each director of Parent
is entering into an Agreement (the
"Parent Shareholder Agreement"), in the
form of Exhibit B hereto, pursuant to
which such persons have agreed, among other
things, to vote their shares of
Parent Common Stock (as defined herein) in
favor of this Agreement (the Company
Shareholder Agreement and Parent
Shareholder Agreement are referred to
collectively as the "Shareholder
Agreements"); and
WHEREAS, the parties desire to make certain representations,
warranties and agreements in connection
with the transactions provided for
herein and also to prescribe certain
conditions to the consummation of such
transactions;
NOW, THEREFORE, in consideration of the premises and of the
mutual
covenants, representations, warranties and
agreements contained herein, and
intending to be legally bound hereby, the
parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.01. Certain
Definitions. The following terms are used in this Agreement
-------------------
with the meanings set forth below:
"Acquisition Proposal" means any proposal or offer by any Person
or
group of Persons
with respect to any of the following: (i) any merger,
consolidation,
share exchange, business combination, recapitalization,
liquidation or dissolution
or other similar transaction involving the
Company or any
Subsidiary of the Company whose assets, individually or in
the aggregate,
constitute more than 10% of the consolidated
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assets of the
Company; (ii) any sale, lease, exchange, mortgage, pledge
(except in the
ordinary course of business consistent with past practice),
transfer or
other disposition of assets (including for this purpose the
outstanding
capital stock of any Subsidiary of the Company and the capital
stock of any
entity surviving any merger or business combination involving
any Subsidiary
of the Company) and/or liabilities that constitute 10% or
more of the
assets of the Company and its Subsidiaries taken as a whole in
a single
transaction or series of transactions; (iii) any purchase or
other
acquisition of
or tender offer or exchange offer that if consummated would
result in such
Person(s) beneficially owning 25% or more of the outstanding
shares of the
common stock of the Company or any Subsidiary of the Company
whose assets,
individually or in the aggregate, constitute more than 10% of
the consolidated
assets of the Company; or (iv) any public announcement by
any Person
(which shall include any regulatory application or notice,
whether in draft
or final form) of a proposal, plan or intention to do any
of the foregoing
or any agreement to engage in any of the foregoing, in
each case other than
(x) the transactions contemplated by this Agreement
and (y) any
transaction referred to in clause (i) or (ii) involving only
the Company and
one or more of its Subsidiaries, or involving two or more
of its
Subsidiaries, provided that any such transaction is not entered
into
in violation of
the terms of this Agreement.
"Aggregate Cash Consideration" has the meaning set forth in
Section
3.03(a).
"Agreement" means this Agreement, as amended or modified from time
to
time in
accordance with Section 9.03.
"Articles of Merger" has the meaning set forth in Section
2.02(a).
"Average Share Price" means the average of the per share closing
sale
prices of the
Parent Common Stock on Nasdaq (as reported by an
authoritative
source) for the ten trading-day period ending on (and
including) the
Determination Date, rounded to the nearest whole cent.
"Bank Merger" means the merger of the Company Bank (as defined
herein)
with and into
Parent Bank (as defined herein) as set forth in Section 6.10.
"Bank Merger Agreement" has the meaning set forth in Section
6.10.
"Bank Secrecy Act" means the Bank Secrecy Act of 1970, as
amended.
"BHC
Act" means the Bank Holding Company Act of 1956, as amended.
"Business Day" means Monday through Friday of each week, except
a
legal holiday
recognized as such by the U.S. Government or any day on which
banking
institutions in the Commonwealth of Pennsylvania are authorized
or
obligated to
close.
"Cancelled Option Holder" has the meaning set forth in Section
3.05(a)(i).
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"Capital Change" has the meaning set forth in Section 3.01(b).
"Cash Consideration" has the meaning set forth in Section
3.01(a).
"Cash Election" and "Cash Election Shares" have the meaning set
forth
in Section
3.02(a).
"Certificate" means any certificate which immediately prior to
the
Effective Time
represented shares of Company Common Stock.
"Change in Recommendation" has the meaning set forth in Section
6.02.
"Closing" and "Closing Date" have the meanings set forth in
Section
2.02(b).
"Code" means the Internal Revenue Code of 1986, as amended.
"Community Reinvestment Act" means the Community Reinvestment Act
of
1977, as
amended.
"Company" has the meaning set forth in the preamble to this
Agreement.
"Company Affiliate" has the meaning set forth in Section 6.13.
"Company Articles" means the restated Articles of Incorporation of
the
Company.
"Company Bank" means First Financial Bank, a
Pennsylvania-chartered
bank and trust
company and wholly owned subsidiary of the Company.
"Company Benefit Plans" has the meaning set forth in Section
5.01(p)(i).
"Company Board" means the Board of Directors of the Company.
"Company Bylaws" means the Bylaws of the Company, as amended, as
of
the date
hereof.
"Company Common Stock" means the common stock, $1.00 par value
per
share, of the
Company.
"Company Designees" has the meaning set forth in Section
6.17(b).
"Company Disclosure Schedule" has the meaning set forth at the
beginning of
Section 5.01.
"Company ERISA Affiliate" has the meaning set forth in Section
5.01(p)(iv).
"Company ERISA Affiliate Plan" has the meaning set forth in
Section
5.01(p)(v).
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"Company ESOP" means the Employee Stock Ownership Plan maintained
by
the Company
Bank.
"Company Financial Advisor" means Boenning & Scattergood,
Inc.
"Company Insiders" has the meaning set forth in Section 6.16.
"Company Insurance Policies" has the meaning set forth in
Section
5.01(z)(i).
"Company Intellectual Property" has the meaning set forth in
Section
5.01(x).
"Company Investment Securities" has the meaning set forth in
Section
5.01(t).
"Company Leases" has the meaning set forth in Section
5.01(w)(ii).
"Company Loan Property" has the meaning set forth in Section
5.01(r).
"Company Loans" has the meaning set forth in Section
5.01(v)(i).
"Company Options" means the options to acquire Company Common
Stock
issued under the
Company Stock Plans.
"Company Pension Plan" has the meaning set forth in Section
5.01(p)(ii).
"Company Preferred Stock" means the preferred stock, $1.00 par
value
per share, of
the Company.
"Company SEC Reports" has the meaning set forth in Section
5.01(j).
"Company Stock" means the Company Common Stock and the Company
Preferred
Stock.
"Company Stock Plans" means the Company's 1993 Stock Option Plan,
as
amended, and the
Company's 1997 Stock Option Plan, as amended.
"Company Termination Fee" has the meaning set forth in Section
8.02(b).
"Confidentiality Agreement" has the meaning set forth in
Section
6.06(b).
"Continuing Option Holder" has the meaning set forth in Section
3.05(a)(ii).
"Contract" shall mean any written or oral agreement,
arrangement,
commitment,
contract, indenture, instrument, lease, understanding or
undertaking of
any kind or character to which a Person is a Party that is
binding on any
Person or its capital stock, assets or business.
4
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"Department" means the Pennsylvania Department of Banking.
"Derivative Transaction" means any swap transaction, option,
warrant,
forward purchase
or sale transaction, futures transaction, cap transaction,
floor
transaction or collar transaction relating to one or more
currencies,
commodities,
bonds, equity securities, loans, interest rates, catastrophic
events,
weather-related events, credit-related events or conditions or
any
indexes, or any
other similar transaction (including any option with
respect to any
of these transactions) or combination of any of these
transactions,
including collateralized mortgage obligations or other
similar
instruments or any debt or equity instruments evidencing or
embedding any
such types of transactions, and any related credit support,
collateral or
other similar arrangements related to such transactions.
"Determination Date" means the date on which the last required
approval of a
Governmental Authority is obtained with respect to the
Transactions,
all statutory waiting periods in respect thereof have expired
and all other
conditions to the consummation of the Merger specified in
Article VII
hereof (other than the delivery of certificates, opinions and
other
instruments and documents to be delivered at the Closing) have
been
satisfied or
waived.
"Effective Date" has the meaning set forth in Section 2.02(a).
"Effective Time" has the meaning set forth in Section 2.02(a).
"Election Deadline" has the meaning set forth in Section
3.02(b).
"Election Form" has the meaning set forth in Section 3.02(a).
"Election Form Record Date" has the meaning set forth in
Section
3.02(a).
"Environmental Laws" means any federal, state or local law,
regulation,
order, decree, permit, authorization, opinion or agency
requirement
relating to (i) the protection or restoration of the
environment,
health, safety, or natural resources, (ii) the handling, use,
presence,
disposal, release or threatened release of any Hazardous
Substance or
(iii) wetlands, indoor air, pollution, contamination or any
injury or threat
of injury to persons or property in connection with any
Hazardous
Substance.
"Equal Credit Opportunity Act" means the Equal Credit Opportunity
Act,
as amended.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended,
and the rules
and regulations thereunder.
5
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"Exchange Agent" has the meaning set forth in Section 3.02(a).
"Exchange Fund" has the meaning set forth in Section 3.03(a).
"Exchange Ratio" has the meaning set forth in Section 3.01(a).
"Fair Housing Act" means the Fair Housing Act, as amended.
"FDIC" means the Federal Deposit Insurance Corporation.
"Federal Reserve Act" means the Federal Reserve Act, as
amended.
"Federal Reserve Board" means the Board of Governors of the
Federal
Reserve
System.
"GAAP" means accounting principles generally accepted in the
United
States of
America.
"Governmental Authority" means any federal, state or local
court,
administrative
agency or commission or other governmental authority or
instrumentality
and any SRO.
"Hazardous Substance" means any substance that is (i) listed,
classified or
regulated pursuant to any Environmental Law, (ii) any
petroleum
product or by-product, asbestos-containing material,
lead-containing
paint or plumbing, polychlorinated biphenyls, radioactive
materials or
radon or (iii) any other substance which is the subject of
regulatory
action by any Governmental Authority in connection with any
Environmental
Law.
"HSR Act" means Section 7A of the Clayton Act, as added by Title II
of
the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
and
the rules and
regulations promulgated thereunder.
"Indemnified Party" and "Indemnifying Party" have the meanings
set
forth in Section
6.08(a).
"Index Ratio" has the meaning set forth in Section 8.01(i).
"Insurance Amount" has the meaning set forth in Section
6.08(c).
"Intellectual Property" means all patents, trademarks, trade
names,
service marks,
domain names, database rights, copyrights and any
applications
therefore, mask works, technology, know-how, trade secrets,
ideas,
algorithms, processes, computer software programs or
applications
(in both source
code and object code form), and tangible or intangible
proprietary
information or material and all other intellectual property or
proprietary
rights.
6
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"IRS" means the Internal Revenue Service.
"Knowledge" as used with respect to a Person (including references
to
such Person
being aware of a particular matter) means those facts that are
known, or
reasonably should have been known in the course of the
performance of
their duties to the Company or Parent, as applicable, by the
executive
officers and directors of the Company or Parent, as applicable,
and includes any
facts, matters or circumstances set forth in any written
notice from any
Governmental Authority received by that Person.
"Lien" means any lien, claim, charge, mortgage, pledge,
security
interest,
restriction or encumbrance.
"Loans" means any loan, loan agreement, note or borrowing
arrangement,
including,
without limitation, leases (other than operating leases),
credit
enhancements,
commitments, guarantees and similar interest-bearing assets.
"Mailing Date" has the meaning set forth in Section 3.02(a).
"Material Adverse Effect" means with respect to a Party (a) any
effect
that is material
and adverse to the financial position, results of
operations or
business of the Party and its Subsidiaries taken as a whole,
or which would
materially impair the ability of the Party to perform its
material
obligations under this Agreement or the ability of the Party or
its banking
subsidiary to consummate the transactions contemplated hereby
on a timely
basis; provided, however, that Material Adverse Effect shall
not be deemed to
include the impact of (i) changes in banking and similar
laws of general
applicability or interpretations thereof by Governmental
Authorities,
(ii) changes in GAAP or regulatory accounting requirements
applicable to
banks, savings banks, savings and loan holding companies or
bank holding
companies generally, (iii) changes in general economic
conditions
(including prevailing interest rates, currency exchange rates
or
other economic
or monetary conditions) affecting banks, savings banks,
savings and loan
holding companies or bank holding companies generally,
(iv) any
modifications or changes to valuation policies and practices in
connection with
the transactions contemplated hereby or restructuring
charges taken in
connection with such transactions, in each case in
accordance with
GAAP, (v) reasonable expenses incurred in connection with
the transactions
contemplated hereby, (vi) with respect to a Party, the
effects of any
action or omission taken with the prior consent of the other
Party or
required to be taken hereunder and (vii) public disclosure of
the
execution and
delivery of this Agreement by the Parties.
"Merger" has the meaning ascribed thereto in the recitals to
this
Agreement.
"Merger Consideration" has the meaning set forth in Section
3.01(a)(iii).
"Mixed Election" has the meaning set forth in Section 3.02(a).
"Nasdaq" means The Nasdaq National Stock Market.
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"Nasdaq Bank Average Index" means the average closing values of
the
Nasdaq Bank
Index for the ten trading-day period ending on (and including)
the Determination Date.
"Nasdaq Bank Starting Index" means $3,223.90, the closing value of
the
Nasdaq Bank
Index on December 3, 2004.
"National Labor Relations Act" means the National Labor Relations
Act,
as amended.
"Non-Election" and "Non-Election Shares" have the meanings set
forth
in Section
3.02(a).
"OREO" means property owned and considered other real estate owned
by
Parent or the
Company or any of their respective Subsidiaries.
"OTS" means the Office of Thrift Supervision.
"Parent" has the meaning set forth in the preamble to this
Agreement.
"Parent Acquisition Proposal" means any proposal or offer by
any
Person or group
of Persons with respect to any of the following: (i) any
merger,
consolidation, share exchange, business combination,
recapitalization, liquidation or dissolution or other similar
transaction
involving Parent
or any Subsidiary of Parent whose assets, individually or
in the aggregate,
constitute more than 10% of the consolidated assets of
Parent; (ii) any
sale, lease, exchange, mortgage, pledge (except in the
ordinary course
of business consistent with past practice), transfer or
other
disposition of assets (including for this purpose the
outstanding
capital stock of
any Subsidiary of Parent and the capital stock of any
entity surviving
any merger or business combination involving any
Subsidiary of
Parent) and/or liabilities that constitute 10% or more of the
assets of Parent
and its Subsidiaries taken as a whole in a single
transaction or
series of transactions; (iii) any purchase or other
acquisition of
or tender offer or exchange offer that if consummated would
result in such
Person(s) beneficially owning 25% or more of the outstanding
shares of the
common stock of Parent or any Subsidiary of Parent whose
assets,
individually or in the aggregate, constitute more than 10% of
the
consolidated
assets of Parent; or (iv) any public announcement by any
Person (which
shall include any regulatory application or notice, whether
in draft or
final form) of a proposal, plan or intention to do any of the
foregoing or any
agreement to engage in any of the foregoing, in each case
other than (x)
the transactions contemplated by this Agreement and (y) any
transaction
referred to in clause (i) or (ii) involving only Parent and one
or more of its
Subsidiaries, or involving two or more of its Subsidiaries,
provided that
any such transaction is not entered into in violation of the
terms of this
Agreement.
8
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"Parent Articles" means the Articles of Incorporation of
Parent.
"Parent Bank" means Willow Grove Bank, a Federally-chartered
savings
bank and wholly
owned subsidiary of Parent.
"Parent Benefit Plans" has the meaning set forth in Section
5.02(p)(i).
"Parent Board" means the Board of Directors of Parent.
"Parent Bylaws" means the Amended and Restated Bylaws of
Parent.
"Parent Common Stock" means the common stock, par value $0.01
per
share, of
Parent.
"Parent Designees" has the meaning set forth in Section
6.17(b).
"Parent Disclosure Schedule" has the meaning set forth at the
beginning of
Section 5.02.
"Parent ERISA Affiliate" has the meaning set forth in Section
5.02(p)(iv).
"Parent ERISA Affiliate Plan" has the meaning set forth in
Section
5.02(p)(v).
"Parent Financial Advisor" means The Blackstone Group L.P.
"Parent Insurance Policies" has the meaning set forth in
Section
5.02(y).
"Parent Intellectual Property" has the meaning set forth in
Section
5.02(w).
"Parent Investment Securities" has the meaning set forth in
Section
5.02(t).
"Parent Leases" has the meaning set forth in Section 5.02(v).
"Parent Loans" has the meaning set forth in Section 5.02(u).
"Parent Loan Property" has the meaning set forth in Section
5.02(r).
"Parent Pension Plan" has the meaning set forth in Section
5.02(p)(ii).
"Parent Preferred Stock" means the preferred stock, par value
$0.01
per share, of
Parent.
"Parent Ratio" has the meaning set forth in Section 8.01(i).
"Parent SEC Reports" has the meaning set forth in Section
5.02(j).
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"Parent
Stock Plans" means Parent's 1999 Stock Option Plan, 1999
Recognition and
Retention Plan and Trust Agreement, 2002 Stock Option Plan
and 2002
Recognition and Retention Plan and Trust Agreement.
"Party" means either the Company or Parent, and "Parties" shall
mean
both the Company
and Parent.
"PBCL" means the Pennsylvania Business Corporation Law, as
amended.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PCIS" means Philadelphia Corporation for Investment Services,
a
Pennsylvania
corporation, which is a registered securities broker/dealer
and a registered
investment adviser which is a wholly owned subsidiary of
the Company.
"Pennsylvania Act" means the Pennsylvania Banking Code of 1965,
as
amended.
"Person" means any individual, bank, corporation, partnership,
association,
joint-stock company, business trust, limited liability
company,
unincorporated organization or other organization or firm of
any
kind or
nature.
"Proxy Statement/Prospectus" has the meaning set forth in
Section
6.03(a).
"Registration Statement" has the meaning set forth in Section
6.03(a).
"Representative" has the meaning set forth in Section 3.02(a).
"Requisite Regulatory Approvals" has the meaning set forth in
Section
7.01(b).
"Rights" means, with respect to any Person, warrants, options,
rights,
convertible
securities and other arrangements or commitments which obligate
the Person to
issue or dispose of any of its capital stock or other
ownership
interests or which provide payments or benefits measured by the
value of its
capital stock.
"SEC" means the Securities and Exchange Commission.
"Section 16 Information" has the meaning set forth in Section
6.16.
"Securities Act" means the Securities Act of 1933, as amended, and
the
rules and
regulations thereunder.
"Shareholder Agreements" has the meaning ascribed to such term in
the
recitals to this
Agreement.
"Shortfall Number" has the meaning set forth in Section
3.02(d).
10
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"Significant Subsidiary" has the meaning ascribed to such term in
Rule
1-02 of
Regulation S-X of the SEC.
"SRO" means any self-regulatory organization as defined in
Section
3(a)(26) of the
Exchange Act.
"Starting Price" means $19.45, the closing price of a share of
Parent
Common Stock on
December 3, 2004.
"Stock Consideration" has the meaning set forth in Section
3.01(a).
"Stock Conversion Number" has the meaning set forth in Section
3.02(a).
"Stock Election" and "Stock Election Shares" have the meanings
set
forth in Section
3.02(a).
"Stock Election Number" has the meaning set forth in Section
3.02(a).
"Subsidiary" means, with respect to any Party, any corporation
or
other entity of
which a majority of the capital stock or other ownership
interest having
ordinary voting power to elect a majority of the board of
directors or
other persons performing similar functions are at the time
directly or
indirectly owned by such Party.
"Superior Proposal" means any bona fide written proposal made by
a
third party to
acquire, directly or indirectly, including pursuant to a
tender offer,
exchange offer, merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction,
for
consideration
consisting of cash and/or securities, more than 50% of the
combined voting
power of the shares of the Company Common Stock then
outstanding or
all or substantially all of the assets of the Company and
otherwise (i) on
terms which the Company Board determines in good faith,
after
consultation with its financial advisor(s), to be more favorable
from
a financial
point of view to the Company's shareholders than the Merger,
(ii) that
constitutes a transaction that, in the good faith judgment of
the
Company Board,
is reasonably likely to be consummated on the terms set
forth, taking
into account all legal, financial, regulatory and other
aspects of such
proposal, and (iii) for which financing, to the extent
required, is
then committed or which, in the good faith judgment of the
Company Board
based on written advice, with only customary qualifications,
from a reputable
and qualified investment banking firm serving as financial
advisor to the
Company, is highly likely to be obtained by such third
party.
"Surviving Bank" has the meaning set forth in Section 6.10.
"Surviving Corporation" has the meaning set forth in Section
2.01(a).
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"Tax" and "Taxes" mean all federal, state, local or foreign
income,
gross income,
gains, gross receipts, sales, use, ad valorem, goods and
services,
capital, production, transfer, franchise, windfall profits,
license,
withholding, payroll, employment, disability, employer health,
excise,
estimated, severance, stamp, occupation, property,
environmental,
custom duties,
unemployment or other taxes of any kind whatsoever, together
with any
interest, additions or penalties thereto and any interest in
respect of such
interest and penalties.
"Tax Returns" means any return, declaration or other report
(including
elections,
declarations, schedules, estimates and information returns)
including
amended versions of any of the foregoing relating to or
required
to be filed in
connection with any Taxes required to be filed with the IRS
or any other
taxing authority.
"Transferred Employees" has the meaning set forth in Section
6.09(a).
"Transactions" means the Merger, the Bank Merger and any other
transaction
contemplated by this Agreement.
"Treasury Stock" means shares of Company Stock held by the Company
or
by Parent, in
each case other than in a fiduciary (including custodial or
agency) capacity
or as a result of debts previously contracted in good
faith.
"Unfunded Pension Liability" has the meaning set forth in
Section
5.01(p)(viii).
ARTICLE II
THE MERGER
2.01. The
Merger.
----------
(a) The Merger. Subject to the
terms and conditions of this Agreement, at
----------
the Effective Time, the Company shall merge
with and into Parent in accordance
with Section 1921 of the PBCL, the separate
corporate existence of the Company
shall cease and Parent shall survive and
continue to exist as a corporation
incorporated under the PBCL (Parent, as the
surviving corporation in the Merger,
sometimes being referred to herein as the
"Surviving Corporation").
(b) Name. The name of the
Surviving Corporation shall be "Willow Grove
----
Bancorp, Inc." or such other name as the
Parties may mutually agree upon
pursuant to Section 6.17(e).
(c) Articles and Bylaws. Parent
Articles as in effect immediately prior
-------------------
to the Effective
Time, as may be amended pursuant to Section 6.17(e) solely
to change
Parent's name, will be the articles of incorporation of the
Surviving
Corporation until further amended in accordance with their
terms.
Parent Bylaws as
in effect immediately prior to the Effective Time, as
amended in
accordance with Section 6.17, shall be the Bylaws of the
Surviving
Corporation until further amended in accordance with their
terms.
12
<PAGE>
(d) Directors of the Surviving
Corporation. The directors of the
--------------------------------------
Surviving
Corporation immediately after the Merger shall be the directors
of Parent
immediately prior to the Merger together with the seven
directors
elected pursuant
to Section 6.17(b) hereof, each of whom shall serve until
such time as
their successors are duly elected and qualified.
(e) Effect of the Merger. At the
Effective Time, the effect of the Merger
--------------------
shall be as provided in Section 1929 of the
PBCL. Without limiting the
generality of the foregoing, and subject
thereto, at the Effective Time, all the
property, rights, privileges, powers and
franchises of the Company shall vest in
the Surviving Corporation, and all debts,
liabilities, obligations,
restrictions, disabilities and duties of
the Company shall become the debts,
liabilities, obligations, restrictions,
disabilities and duties of the Surviving
Corporation.
(f) Tax Consequences. It is
intended that each of the Bank Merger and the
----------------
Merger shall constitute a "reorganization"
within the meaning of Section 368(a)
of the Code and that each of this Agreement
and the agreement providing for the
Bank Merger shall constitute a "plan of
reorganization" for purposes of Sections
354 and 361 of the Code.
(g) Additional Actions. If, at
any time after the Effective Time, the
------------------
Surviving Corporation shall consider that
any further assignments or assurances
in law or any other acts (except any other
act which is inconsistent with any of
the provisions of this Agreement) are
necessary or desirable to (i) vest,
perfect or confirm, of record or otherwise,
in the Surviving Corporation its
right, title or interest in, to or under
any of the rights, properties or assets
of the Company acquired or to be acquired
by the Surviving Corporation as a
result of, or in connection with, the
Merger, or (ii) otherwise carry out the
purposes of this Agreement, the Company,
and its proper officers and directors,
shall be deemed to have granted to the
Surviving Corporation an irrevocable
power of attorney to execute and deliver
all such proper deeds, assignments and
assurances in law and to do all acts
necessary or proper to vest, perfect or
confirm title to and possession of such
rights, properties or assets in the
Surviving Corporation and otherwise to
carry out the purposes of this Agreement,
and the proper officers and directors of
the Surviving Corporation are fully
authorized in the name of the Surviving
Corporation or otherwise to take any and
all such action.
13
<PAGE>
2.02. 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
Merger, but subject to the fulfillment or
waiver of those conditions), the Parties
shall cause articles of merger relating
to the Merger (the "Articles of Merger") to
be filed with the Secretary of State
of the Commonwealth of Pennsylvania
pursuant to the PBCL on (i) a date selected
by Parent after such satisfaction or waiver
which is no later than the later of
(A) five Business Days following such
satisfaction or waiver and (B) the first
month end following such satisfaction or
waiver or (ii) such other date to which
the parties may mutually agree in writing.
The Merger provided for herein shall
become effective upon such filing 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 Merger 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 Parent
in Maple Glen, Pennsylvania, or at 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 Parent and the Company the
opinions, certificates and other documents
required to be delivered under
Article VII hereof.
ARTICLE III
CONSIDERATION; ELECTION AND EXCHANGE PROCEDURES
3.01. Effect on
Capital Stock.
-----------------------
(a) At the Effective Time,
automatically by virtue of the Merger and
without any action on the part of any
Person:
(i) each share of Parent Common Stock that is issued and
outstanding
immediately
prior to the Effective Time shall remain issued and outstanding
and shall be
unchanged by the Merger;
(ii) each share of Company Common Stock held as Treasury Stock
immediately
prior to the Effective Time shall be cancelled and retired at
the Effective
Time and no consideration shall be issued in exchange
therefor;
and
(iii) each outstanding share of Company Common Stock issued and
outstanding
immediately prior to the Effective Time (other than Treasury
Stock) shall
become and be converted into, as provided in and subject to
the limitations
set forth in this Agreement, the right to receive at the
election of the
holder thereof, as provided in Section 3.02, (i) 1.4823
shares (the
"Exchange Ratio") of Parent Common Stock (the "Stock
Consideration")
or (ii) $27.90 in cash, without interest (the "Cash
Consideration").
The Stock Consideration and the Cash Consideration are
sometimes
referred to herein collectively as the "Merger Consideration."
14
<PAGE>
(b) The Exchange Ratio shall be
subject to appropriate adjustments in the
event that, subsequent to the date of this
Agreement but prior to the Effective
Time, the outstanding Parent Common Stock
shall have been increased, decreased,
changed into or exchanged for a different
number of shares or securities through
stock dividend, stock split, reverse stock
split or other like changes in
Parent's capitalization (a "Capital
Change"). In addition, if Parent enters into
an agreement pursuant to which shares of
Parent Common Stock would be converted,
prior to the Effective Time, into shares or
other securities or obligations of
another corporation, proper provision shall
be made in such agreement, so that
each Company shareholder shall be entitled
to receive at the Effective Time such
number of shares or other securities or
amount of obligations of such other
corporation as such shareholder would be
entitled to receive if the Effective
Time had occurred immediately prior to the
consummation of such conversion.
3.02. Election
Procedures.
-------------------
(a) An election form and other
appropriate and customary transmittal
materials (which shall specify that
delivery shall be effected, and risk of loss
and title to Certificates shall pass, only
upon proper delivery of such
Certificates to an unaffiliated bank or
trust company designated by Parent and
reasonably satisfactory to the Company (the
"Exchange Agent")) in such form as
the Company and Parent shall mutually agree
(the "Election Form"), shall be
mailed no later than ten days prior to the
anticipated Effective Time or on such
earlier date as Parent and the Company may
mutually agree (the "Mailing Date")
to each holder of record of Company Common
Stock as of five Business Days prior
to the Mailing Date (the "Election Form
Record Date"). Each Election Form shall
permit each holder of record of Company
Common Stock as of the Election Form
Record Date (or in the case of nominee
record holders, the beneficial owner
through proper instructions and
documentation) to (i) elect to receive the Cash
Consideration for all of such holder's
shares (a "Cash Election"), (ii) elect to
receive the Stock Consideration for all of
such holder's shares (a "Stock
Election"), (iii) elect to receive the Cash
Consideration with respect to some
of such holder's shares and the Stock
Consideration with respect to such
holder's remaining shares (a "Mixed
Election") or (iv) make no election with
respect to the receipt of the Cash
Consideration or the Stock Consideration (a
"Non-Election"), provided that,
notwithstanding any other provision of this
Agreement, other than paragraph (e) of this
Section 3.02, 64.76% of the total
number of shares of Company Common Stock
issued and outstanding at the Effective
Time, excluding any Treasury Stock (the
"Stock Conversion Number"), shall be
converted into the Stock Consideration and
the remaining outstanding shares of
Company Common Stock shall be converted
into the Cash Consideration. Holders of
record of shares of Company Common Stock
who hold such shares as nominees,
trustees or in other representative
capacities (a "Representative") may submit
multiple Election Forms, provided that such
Representative certifies that each
such Election Form covers all the shares of
Company Common Stock held by that
Representative for a particular beneficial
owner. Shares of Company Common Stock
as to which a Cash Election has been made
(including pursuant to a Mixed
Election) are referred to herein as "Cash
Election Shares." Shares of Company
15
<PAGE>
Common Stock as to which a Stock Election
has been made (including pursuant to a
Mixed Election) are referred to herein as
"Stock Election Shares." Shares of
Company Common Stock as to which no
election has been made are referred to
herein as "Non-Election Shares." The
aggregate number of shares of Company
Common Stock with respect to which a Stock
Election has been made is referred to
herein as the "Stock Election Number."
(b) To be effective as an
election, a properly completed Election Form
shall be submitted to the Exchange Agent on
or before 5:00 p.m., New York City
time, on the 20th calendar day following
but not including the Mailing Date (or
such other time and date as Parent and the
Company may mutually agree) (the
"Election Deadline").
(c) An Election Form shall be
deemed properly completed only if
accompanied by one or more Certificates (or
customary affidavits and
indemnification regarding the loss or
destruction of such Certificates or the
guaranteed delivery of such Certificates)
representing all shares of Company
Common Stock covered by such Election Form,
together with duly executed
transmittal materials included with the
Election Form. If a holder of Company
Common Stock either (i) does not submit a
properly completed Election Form in a
timely fashion or (ii) revokes the holder's
Election Form prior to the Election
Deadline, the shares of Company Common
Stock held by such holder shall be
designated Non-Election Shares. Subject to
the terms of this Agreement and of
the Election Form, the Exchange Agent shall
have reasonable discretion to
determine whether any election, revocation
or change has been properly or timely
made and to disregard immaterial defects in
any Election Form, and any good
faith decisions of the Exchange Agent
regarding such matters shall be binding
and conclusive. Neither Parent nor the
Exchange Agent shall be under any
obligation to notify any Person of any
defect in an Election Form.
(d) Within five Business Days
after the later to occur of the Election
Deadline or the Effective Time, Parent
shall cause the Exchange Agent to effect
the allocation among holders of Company
Common Stock of rights to receive the
Cash Consideration and the Stock
Consideration as follows:
(i) If the
Stock Election Number exceeds the Stock Conversion Number,
then all Cash
Election Shares and all Non-Election Shares shall be
converted into
the right to receive the Cash Consideration, and each holder
of Stock
Election Shares will be entitled to receive the Stock
Consideration in
respect of that number of Stock Election Shares equal to
the product
obtained by multiplying (x) the number of Stock Election Shares
held by such
holder by (y) a fraction, the numerator of which is the Stock
Conversion
Number and the denominator of which is the Stock Election
Number, with the
remaining number of such holder's Stock Election Shares
being converted
into the right to receive the Cash Consideration;
16
<PAGE>
(ii) If the Stock Election Number is less than the Stock
Conversion
Number (the
amount by which the Stock Conversion Number exceeds the Stock
Election Number
being referred to herein as the "Shortfall Number"), then
all Stock
Election Shares shall be converted into the right to receive
the
Stock
Consideration and the Non-Election Shares and Cash Election
Shares
shall be treated
in the following manner:
(A) if the Shortfall Number is less than or equal to the number
of
Non-Election Shares, then all Cash Election Shares shall be
converted
into the right to receive the Cash Consideration and each holder
of
Non-Election Shares shall receive the Stock Consideration in
respect
of that number of Non- Election Shares equal to the product
obtained
by multiplying (x) the number of Non-Election Shares held by
such
holder by (y) a fraction, the numerator of which is the
Shortfall
Number and the denominator of which is the total number of
Non-Election Shares, with the remaining number of such holder's
Non-Election Shares being converted into the right to receive
the
Cash Consideration; or
(B) if the Shortfall Number exceeds the number of Non- Election
Shares, then all Non-Election Shares shall be converted into
the
right to receive the Stock Consideration, and each holder of
Cash
Election Shares shall receive the Stock Consideration in respect
of
that number of Cash Election Shares equal to the product obtained
by
multiplying (x) the number of Cash Election Shares held by such
holder by (y) a fraction, the numerator of which is the amount
by
which (1) the Shortfall Number exceeds (2) the total number of
Non-Election Shares and the denominator of which is the total
number
of Cash Election Shares, with the remaining number of such
holder's
Cash Election Shares being converted into the right to receive
the
Cash Consideration.
(e) If the tax opinions referred
to in Section 7.01(e) cannot be rendered
because the counsel charged with providing
such opinions reasonably determine
that the Merger may not satisfy the
continuity of interest requirements
applicable to reorganizations under Section
368(a) of the Code, then Parent
shall reduce the number of shares of
Company Common Stock converted into the
Cash Consideration and correspondingly
increase the number of shares of Company
Common Stock converted into the Stock
Consideration by the minimum amount
necessary to enable such tax opinion to be
rendered (the fair market value of
which, at the Effective Time, shall equal
the reduction in Cash Consideration).
3.03. Exchange
Procedures.
-------------------
(a) Immediately prior to the
Effective Time, for the benefit of the
holders of Certificates, (i) Parent shall
reserve for issuance a sufficient
number of shares of Parent Common Stock and
deliver to the Exchange Agent
certificates evidencing such number of
shares of Parent Common Stock issuable
and (ii) Parent shall deliver, or cause
Parent Bank to deliver, to the Exchange
Agent an amount of cash sufficient to pay
the aggregate amount of cash payable
17
<PAGE>
pursuant to this Article III in exchange
for Certificates (the "Aggregate Cash
Consideration") (such cash and certificates
for shares of Parent Common Stock,
together with any dividends or
distributions with respect thereto, are
hereinafter referred to as the "Exchange
Fund"). The Exchange Agent shall not be
entitled to vote or exercise any rights of
ownership with respect to the shares
of Parent Common Stock held by it from time
to time hereunder, except that it
shall receive and hold all dividends or
other distributions paid or distributed
with respect to such shares for the account
of the persons entitled thereto.
(b) As soon as practicable after
the Effective Time, and provided that
the Company has delivered, or caused to be
delivered, to the Exchange Agent all
information which is necessary for the
Exchange Agent to perform its obligations
as specified herein, the Exchange Agent
shall mail to each holder of record of a
Certificate or Certificates who has not
previously surrendered such Certificate
or Certificates with an Election Form, a
form of letter of transmittal (which
shall specify that delivery shall be
effected, and risk of loss and title to the
Certificates shall pass, only upon delivery
of the Certificates to the Exchange
Agent) and instructions for use in
effecting the surrender of the Certificates
in exchange for the Merger Consideration
into which the shares of Company Common
Stock represented by such Certificate or
Certificates shall have been converted
pursuant to Sections 3.01 and 3.02 of this
Agreement. Upon proper surrender of a
Certificate for exchange and cancellation
to the Exchange Agent, together with a
properly completed letter of transmittal,
duly executed, the holder of such
Certificate shall be entitled to receive in
exchange therefor, as applicable,
(i) a certificate representing that number
of shares of Parent Common Stock (if
any) to which such former holder of Company
Common Stock shall have become
entitled pursuant to this Agreement, (ii) a
check representing that amount of
cash (if any) to which such former holder
of Company Common Stock shall have
become entitled pursuant to this Agreement
and/or (iii) a check representing the
amount of cash (if any) payable in lieu of
a fractional share of Parent Common
Stock which such former holder has the
right to receive in respect of the
Certificate surrendered pursuant to this
Agreement, and the Certificate so
surrendered shall forthwith be cancelled.
Until surrendered as contemplated by
this Section 3.03(b), each Certificate
(other than Certificates representing
Treasury Stock) shall be deemed at any time
after the Effective Time to
represent only the right to receive upon
such surrender the Merger Consideration
provided in Sections 3.01 and 3.02 and any
unpaid dividends and distributions
thereon as provided in paragraph (c) of
this Section 3.03. No interest shall be
paid or accrued on any cash constituting
Merger Consideration (including any
cash in lieu of fractional shares) and any
unpaid dividends and distributions,
if any, payable to holders of
Certificates.
(c) No dividends or other
distributions with a record date after the
Effective Time with respect to Parent
Common Stock shall be paid to the holder
of any unsurrendered Certificate until the
holder thereof shall surrender such
Certificate in accordance with this Section
3.03. After the surrender of a
Certificate in accordance with this Section
3.03, the record holder thereof
shall be entitled to receive any such
dividends or other distributions, without
any interest thereon, which theretofore had
become payable with respect to
shares of Parent Common Stock represented
by such Certificate.
18
<PAGE>
(d) The Exchange Agent and
Parent, as the case may be, shall not be
obligated to deliver cash and/or a
certificate or certificates representing
shares of Parent Common Stock to which a
holder of Company Common Stock would
otherwise be entitled as a result of the
Merger until such holder surrenders the
Certificate or Certificates representing
the shares of Company Common Stock for
exchange as provided in this Section 3.03,
or, in default thereof, an
appropriate affidavit of loss and indemnity
agreement and/or a bond in an amount
as may be required in each case by Parent.
If any certificates evidencing shares
of Parent Common Stock are to be issued in
a name other than that in which the
Certificate evidencing Company Common Stock
surrendered in exchange therefor is
registered, it shall be a condition of the
issuance thereof that the Certificate
so surrendered shall be properly endorsed
or accompanied by an executed form of
assignment separate from the Certificate
and otherwise in proper form for
transfer and that the person requesting
such exchange pay to the Exchange Agent
any transfer or other tax required by
reason of the issuance of a certificate
for shares of Parent Common Stock 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) At and after the Effective
Time, the stock transfer books of the
Company shall be closed and there shall be
no transfers on the stock transfer
books of the Company of the shares of
Company Stock which were issued and
outstanding immediately prior to the
Effective Time. At the Effective Time,
holders of Company Stock shall cease to be,
and shall have no rights as,
shareholders of the Company other than to
receive the consideration provided
under this Article III. On or after the
Effective Time, any Certificates
presented to Parent or the Exchange Agent
shall be cancelled and exchanged for
certificates representing shares of Parent
Common Stock and/or the payment of
cash as provided herein.
(f) Any portion of the Exchange
Fund that remains unclaimed by the
shareholders of the Company for six months
after the Effective Time (as well as
any proceeds from any investment thereof)
shall be delivered by the Exchange
Agent to Parent. Any shareholders of
Company who have not theretofore complied
with Section 3.03(b) shall thereafter look
only to Parent for the Merger
Consideration deliverable in respect of
each share of Company Common Stock such
shareholder holds as determined pursuant to
this Agreement, in each case without
any interest thereon. If outstanding
Certificates for shares of Company Common
Stock are not surrendered or the payment
for them is not claimed prior to the
date on which such shares of Parent Common
Stock or cash would otherwise escheat
to or become the property of any
governmental unit or agency, the unclaimed
items shall, to the extent permitted by
abandoned property and any other
applicable law, become the property of
Parent (and to the extent not in its
possession shall be delivered to it), free
and clear of all claims or interest
of any Person previously entitled to such
property. Neither the Exchange Agent
nor any party to this Agreement shall be
liable to any holder of stock
represented by any Certificate for any
consideration paid to a public official
pursuant to applicable abandoned property,
escheat or similar laws. Parent and
the Exchange Agent shall be entitled to
rely upon the stock transfer books of
the Company to establish the identity of
those persons entitled to receive the
Merger Consideration specified in this
Agreement, which books shall be
conclusive with respect thereto. In the
event of a dispute with respect to
ownership of stock represented by any
Certificate, Parent and the Exchange Agent
shall be entitled to deposit any Merger
Consideration represented thereby in
escrow with an independent third party and
thereafter be relieved with respect
to any claims thereto.
19
<PAGE>
(g) Parent (through the Exchange
Agent, if applicable) shall be entitled
to deduct and withhold from any amounts
otherwise payable pursuant to this
Agreement to any holder of shares of
Company Common Stock such amounts as Parent
is required to deduct and withhold under
applicable law. Any amounts so withheld
shall be treated for all purposes of this
Agreement as having been paid to the
holder of Company Common Stock in respect
of which such deduction and
withholding was made by Parent.
(h) Notwithstanding any other
provision of this Agreement to the
contrary, Certificates surrendered for
exchange by any Company Affiliate shall
not be exchanged for certificates
representing shares of Parent Common Stock to
which such Company Affiliate may be
entitled pursuant to the terms of this
Agreement until Parent has received a
written agreement from such person as
specified in Section 6.13.
3.04. No
Fractional Shares. Notwithstanding any other provision of this
--------------------
Agreement to the contrary, neither
certificates nor scrip for fractional shares
of Parent Common Stock shall be issued in
the Merger. Each holder who otherwise
would have been entitled to a fraction of a
share of Parent Common Stock shall
receive in lieu thereof cash (without
interest) in an amount determined by
multiplying the fractional share interest
to which such holder would otherwise
be entitled (after taking into account all
shares of the Company Common Stock
owned by such holder at the Effective Time)
by the Average Share Price. No such
holder shall be entitled to dividends,
voting rights or any other rights in
respect of any fractional share.
3.05.
Company Options.
---------------
(a) At the Effective Time, each
Company Option which is outstanding
and unexercised immediately prior thereto,
whether or not then vested or
exercisable, will, at the election of the
individual holders of the Company
Options be either:
(i) cancelled and all rights thereunder be extinguished
("Cancelled
Option Holder"),
in consideration for which the Company shall make payment
immediately
prior to the Effective Time an amount determined by multiplying
(A) the number of shares of
Company Common Stock underlying such Company
Option by (B) an
amount equal to the excess (if any) of (1) the Cash
Consideration,
over (2) the exercise price per share of such Company
Option; or
20
<PAGE>
(ii) converted automatically into an option to purchase shares
of
Parent Common
Stock ("Continuing Option Holder") and Parent shall assume
each such
Company Option so converted, in accordance with the terms of
the
applicable
Company Stock Option Plan and stock option or other agreement
by
which it is
evidenced except that from and after the Effective Time:
(A) the number of shares to be subject to the new option shall
be
equal to the product of the number of shares of Company Common
Stock
subject to the Company Option immediately prior to the Effective
Time
and the Exchange Ratio, provided that any fractional shares of
Parent
Common Stock resulting from such multiplication shall be rounded
to
the nearest whole share;
(B) the exercise price per share of Parent Common Stock under
the
new option shall be equal to the exercise price per share of
Company
Common Stock under the Company Option divided by the Exchange
Ratio,
provided that such exercise price shall be rounded up to the
nearest
cent;
(C) The term or duration of the new option shall be the same as
that of the Company Option;
(D) Parent and the Compensation Committee of its Board of
Directors shall be substituted for the Company and the committee
of
the Company's Board of Directors (including, if applicable, the
entire Board of Directors of the Company) administering the
Company
Stock Option Plans; and
(E) each Company Option assumed by Parent may be exercised
solely
for shares of Parent Common Stock.
(b) In order for any Continuing
Option Holder to have his or her Company
Options converted into an option to
purchase Parent Common Stock as set forth in
Section 3.05(a) or for a Cancelled Option
Holder to have his or her Company
Option converted into the right to receive
cash, such Continuing Option Holder
or Cancelled Option Holder shall have
executed a written election with respect
to such conversion or cancellation no later
than the Effective Time, which
written election shall be in such form as
shall be prescribed by Parent and
reasonably satisfactory to the Company.
Parent shall send such election form to
optionees no later than the time it sends
Election Forms to Company
shareholders. No payment shall be made to a
Cancelled Option Holder unless and
until such holder has executed and
delivered the foregoing written election. In
the event any holder of a Company Option
fails to make an election within the
time frame set forth herein, the Company
Option held thereby shall automatically
be converted at the Effective Time into an
option to purchase Parent Common
Stock in the amount and at the exercise
price as calculated pursuant to Section
3.05(a)(ii) hereof.
21
<PAGE>
(c) Within five Business Days
after the Effective Time, Parent shall file
a registration statement on Form S-3 or
Form S-8, as the case may be (or any
successor or other appropriate forms), with
respect to the shares of Parent
Common Stock subject to the options
referred to in paragraph (a) (ii) of this
Section 3.05 and shall use its reasonable
best efforts to maintain the current
status of the prospectus or prospectuses
contained therein for so long as such
options remain outstanding in the case of a
Form S-8 or, in the case of a Form
S-3, until the shares subject to such
options may be sold without a further
holding period under Rule 144 under the
Securities Act.
ARTICLE IV
ACTIONS PENDING ACQUISITION
4.01. Covenants
of the Company. 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
Parent, the Company shall, and shall cause
its Subsidiaries to, carry on their
respective businesses in the ordinary
course consistent with past practice and
consistent with prudent banking practice
and in compliance in all material
respects with all applicable laws and
regulations. The Company will use its
reasonable best efforts to (x) preserve its
business organization and that of
its Subsidiaries, (y) keep available to
itself and Parent the present services
of the current officers and employees of
the Company and its Subsidiaries and
(z) preserve for itself and Parent the
goodwill of the customers of the Company
and its Subsidiaries and others with whom
business relationships exist. Without
limiting the generality of the foregoing,
and except as set forth in Section
4.01 of the Company Disclosure Schedule or
as otherwise expressly contemplated
or permitted by this Agreement or consented
to in writing by Parent, the Company
shall not, and shall not permit any of its
Subsidiaries to:
(a) Capital Stock. Other than
pursuant to the exercise of Company Options
-------------
set forth in Section 5.01(b) of the Company
Disclosure Schedule, (i) issue, sell
or otherwise permit to become outstanding,
or authorize the creation of, any
additional shares of capital stock or any
Rights or (ii) permit any additional
shares of capital stock to become subject
to grants of employee or director
stock options or other Rights.
(b) Dividends and Other
Distributions. Make, declare, pay or set aside
---------------------------------
for payment any dividend on or in respect
of, or declare or make any
distribution on any shares of its capital
stock, other than (i) regular
quarterly cash dividends by the Company on
the Company Common Stock at a rate
not in excess of the regular quarterly cash
dividend declared prior to the date
of this Agreement on the Company Common
Stock, provided that after the date of
this Agreement the Company shall coordinate
the declaration of any dividends in
respect of the Company Common Stock and the
record dates and payment dates
relating thereto with Parent's declaration
of regular quarterly dividends on
Parent Common Stock and the record dates
and payment dates relating thereto, it
being the intention of the Parties that
holders of Company Common Stock shall
not receive two dividends, or fail to
receive one dividend, for any quarter with
respect to their shares of Company Common
Stock and any shares of Parent Common
Stock any such holders receive in exchange
therefor in the Merger, (ii)
dividends paid by any Subsidiary of the
Company to the Company or to any
wholly-owned Subsidiary of the Company and
(iii) dividends paid to the holders
of trust preferred securities issued by
affiliated trusts, in each case in the
ordinary course of business consistent with
past practice.
22
<PAGE>
(c) Compensation; Employment
Agreements, Etc. Enter into or amend or
----------------------------------------
renew any employment, consulting, severance
or similar agreements or
arrangements with any director, officer or
employee of the Company or its
Subsidiaries or grant any salary or wage
increase or increase any employee
benefit or pay any incentive or bonus
payments, except for normal individual
increases in compensation to employees
(other than any employee who is party to
an employment agreement or a
change-in-control agreement) in the ordinary course
of business consistent with past
practice.
(d) Hiring. Hire any person as
an employee of the Company or any of its
------
Subsidiaries or promote any employee,
except (i) to satisfy contractual
obligations existing as of the date hereof
and set forth on Schedule 4.01(d) of
the Company Disclosure Schedule and (ii)
persons whose employment is terminable
at the will of the Company or a Subsidiary
of the Company, as applicable.
(e) Benefit Plans. Enter into,
establish, adopt, amend, modify or
-------------
terminate (except (i) as may be required by
or to make consistent with
applicable law, subject to the provision of
prior written notice to and
consultation with respect thereto with
Parent, or (ii) to satisfy contractual
obligations existing as of the date hereof
and set forth on Schedule 4.01(e) of
the Company Disclosure Schedule), any
pension, retirement, supplemental
executive retirement, stock option, stock
purchase, savings, profit sharing,
deferred compensation, consulting, bonus,
group insurance or other employee
benefit, incentive or welfare contract,
plan or arrangement, or any trust
agreement (or similar arrangement) related
thereto, in respect of any current or
former director, officer or employee of the
Company or its Subsidiaries or take
any action to accelerate the vesting or
exercisability of stock options,
restricted stock or other compensation or
benefits payable thereunder.
(f) Transactions with
Affiliates. Except pursuant to agreements or
----------------------------
arrangements in effect on the date hereof,
pay, loan or advance any amount to,
or sell, transfer or lease any properties
or assets (real, personal or mixed,
tangible or intangible) to, or enter into
any agreement or arrangement with, any
of its officers or directors or any of
their immediate family members or any
affiliates or associates (as such terms are
defined under the Exchange Act) of
any of its officers or directors other than
compensation in the ordinary course
of business consistent with past
practice.
(g) Acquisitions. Acquire (other
than by way of foreclosures or
------------
acquisitions of control in a bona fide
fiduciary capacity or in satisfaction of
debts previously contracted in good faith,
in each case in the ordinary and
usual course of business consistent with
past practice) all or a substantial
portion of the assets, business, deposits
or properties of any other entity.
(h) Governing Documents. Amend
the Company Articles or Company Bylaws or
-------------------
the articles of incorporation or bylaws (or
equivalent documents) of any
Subsidiary of the Company.
23
<PAGE>
(i) Contracts. Except in the
ordinary course of business consistent with
---------
past practice, and except for normal
renewals without materially adverse
changes, additions or deletions of terms,
enter into, amend, modify or terminate
any material Contract.
(j) Banking Operations. Enter
into any new material line of business;
------------------
change its material lending, investment,
underwriting, risk and asset liability
management and other material banking and
operating policies, except as required
by applicable law, regulation or policies
imposed by any Governmental Authority;
or file any application or make any
contract with respect to branching or site
location or branching or site
relocation.
(k) Derivatives Transactions.
Enter into any Derivatives Transactions,
------------------------
except in the ordinary course of business
consistent with past practice.
(l) Indebtedness. Incur any
indebtedness for borrowed money, other than
------------
in the ordinary course of business
consistent with past practice.
(m) Investment Securities.
Acquire (other than by way of foreclosures or
---------------------
acquisitions in a bona fide fiduciary
capacity or in satisfaction of debts
previously contracted in good faith, in
each case in the ordinary course of
business consistent with past practice) any
debt security or equity investment
that is not rated investment grade or
better or which would be considered "high
risk" securities under applicable
regulatory pronouncements, in each case
purchased in the ordinary course of
business consistent with past practice.
(n) Taxes. Except as may be
required by applicable laws or regulations,
-----
make or change any material Tax election,
file any material amended Tax Return,
enter into any material closing agreement,
settle or compromise any material
liability with respect to Taxes, or consent
to any extension or waiver of the
limitation period applicable to any
material Tax claim or assessment.
(o) Compliance with Agreements.
Knowingly commit any act or omission
--------------------------
which constitutes a material breach or
default by the Company or any of its
Subsidiaries under any agreement with any
Governmental Authority or under any
material Contract to which any of them is a
party or by which any of them or
their respective properties is bound.
(p) Reorganization. Knowingly
take any action that would, or would
--------------
be reasonably expected to, prevent either
the Merger or the Bank Merger from
qualifying as a "reorganization" within the
meaning of Section 368(a) of the
Code.
(q) Adverse Actions. Knowingly
take any action or fail to take any action
---------------
that is intended or is reasonably likely to
result in (i) any of its
representations and warranties set forth in
this Agreement being or becoming
untrue in any material respect at any time
at or prior to the Effective Time,
(ii) any of the conditions to the Merger
set forth in Article VII not being
satisfied or (iii) a material violation of
any provision of this Agreement,
except in each case as may be required by
applicable law or regulation.
24
<PAGE>
(r) Commitments. Enter into any
contract with respect to, or otherwise
-----------
agree or commit to do, any of the
foregoing.
4.02. Covenants
of Parent. 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
the Company, Parent shall, and shall cause
its Subsidiaries to, carry on their
respective businesses in the ordinary
course consistent with past practice and
consistent with prudent banking practice
and in compliance in all material
respects with all applicable laws and
regulations. Parent will use its
reasonable best efforts to (x) preserve its
business organization and that of
its Subsidiaries, and (y) preserve for
itself and the Company the goodwill of
the customers of Parent and its
Subsidiaries and others with whom business
relationships exist. From the date hereof
until the Effective Time, except as
expressly contemplated or permitted by this
Agreement, without the prior written
consent of the Company, Parent will not,
and will cause each of its Subsidiaries
not to:
(a) Reorganization. Knowingly
take any action that would, or would be
--------------
reasonably expected to, prevent either the
Merger or the Bank Merger from
qualifying as a "reorganization" within the
meaning of Section 368(a) of the
Code.
(b) Adverse Actions. Knowingly
take any action or fail to take any action
---------------
that is intended or is reasonably likely to
result in (i) any of its
representations and warranties set forth in
this Agreement being or becoming
untrue in any material respect at any time
at or prior to the Effective Time,
(ii) any of the conditions to the Merger
set forth in Article VII not being
satisfied or (iii) a material violation of
any provision of this Agreement,
except, in each case, as may be required by
applicable law or regulation.
(c) Governing Documents. Amend
Parent Articles or Parent Bylaws in a
-------------------
manner that would adversely affect the
economic benefits of the Merger to the
holders of Company Common Stock.
(d) Acquisitions. Acquire (other
than by way of foreclosures or
------------
acquisitions of control in a bona fide
fiduciary capacity or in satisfaction of
debts previously contracted in good faith,
in each case in the ordinary and
usual course of business consistent with
past practice) all or a substantial
portion of the assets, business, deposits
or properties of any other entity.
(e) Commitments. Enter into any
contract with respect to, or otherwise
-----------
agree or commit to do, any of the
foregoing.
25
<PAGE>
4.03.
Transition. Commencing following the date hereof, Parent and
the
----------
Company shall, and shall cause their
respective Subsidiaries to, cooperate with
respect to the integration of their
respective businesses, operations and
organizations following consummation of the
Merger and the Bank Merger in an
effort to realize at the earliest
practicable time following the Effective Time
the synergies, operating efficiencies and
other benefits expected to be realized
by Parent as a result of the consummation
of such transactions.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01
Representations and
Warranties of the Company. Except as set forth in
---------------------------------------------
a disclosure schedule delivered by the
Company to Parent (the "Company
Disclosure Schedule") prior to the date
hereof (which sets forth, among other
things, items the disclosure of which is
necessary or appropriate either in
response to an express provision of this
Agreement or as an exception to one or
more of its representations and warranties
set forth below or its covenants in
Article IV or VI, provided, that (i) no
such item is required to be set forth in
the Company Disclosure Schedule as an
exception to any representation or
warranty of the Company if its absence
would not be reasonably likely to result
in the related representation or warranty
being deemed untrue or incorrect under
the standard set forth in Section 9.02 and
(ii) the mere inclusion of an item in
the Company Disclosure Schedule as an
exception to a representation or warranty
shall not be deemed an admission by the
Company that such item represents a
material exception or fact, event or
circumstance or that such item is or would
be reasonably likely to result in a
Material Adverse Effect with respect to the
Company), the Company hereby represents and
warrants to Parent as follows:
(a) Corporate Organization. The
Company is duly organized and validly
----------------------
existing under the laws of the Commonwealth
of Pennsylvania and is duly licensed
or qualified to do business in each
jurisdiction where its ownership or leasing
of property or assets or the conduct of its
business requires it to be so
licensed or qualified. The Company has all
requisite corporate power and
authority necessary for it to own or lease
its properties and assets and to
carry on its business as now conducted. The
Company is duly registered as a bank
holding company under the BHC Act. The
Company Articles and Company Bylaws,
copies of which have been delivered or made
available to Parent, are true,
complete and correct copies of such
documents as in effect as of the date of
this Agreement.
(b) Company Capital Stock.
---------------------
(i) The authorized capital stock of the Company consists solely
of
10,000,000
shares of Company Common Stock, of which 5,150,329 shares are
outstanding as
of the date hereof, and 5,000,000 shares of Company
Preferred Stock,
of which no shares are outstanding as of the date hereof.
As of the date
hereof, 612 shares of the Company Common Stock were held in
treasury by the
Company or otherwise directly or indirectly
26
<PAGE>
owned (other
than in a fiduciary capacity) by the Company and no shares of
Company Stock
were reserved for issuance, other than 819,966 shares of
Company Common
Stock reserved for issuance pursuant to the Company Stock
Plans, including
687,455 shares reserved for issuance upon the exercise of
Company Options
outstanding as of the date hereof, in accordance with their
terms. The
outstanding shares of Company Common Stock have been duly
authorized and
validly issued and are fully paid and non-assessable, and
none of the
outstanding shares of Company Common Stock have been issued in
violation of the
preemptive rights of any Person. Except as set forth
above, as of the
date of this Agreement, there are no shares of Company
Stock reserved
for issuance, the Company does not have any Rights
outstanding with
respect to Company Stock and the Company does not have any
commitment to
authorize, issue or sell any Company Stock or Rights.
(ii) Section 5.01(b) of the Company Disclosure Schedule sets forth
as
of the date
hereof, and shall be updated to set forth as of the Effective
Date, for each
outstanding Company Option, the name of the grantee, the
date of the
grant, the type of grant, the status of the option grant as
qualified or
non-qualified under Section 422 of the Code, the number of
shares of
Company Common Stock subject to each option and award, the
vesting
schedule, the number of shares of Company Common Stock subject
to
options that are
currently exercisable and the exercise price per share.
(c) Subsidiaries; Equity
Investments.
--------------------------------
(i) (A) Section 5.01(c)(i) of the Company Disclosure Schedule
lists
the name,
jurisdiction of incorporation and record and beneficial owners
of
the outstanding shares of capital
stock for each direct or indirect
Subsidiary of
the Company, (B) the Company owns, directly or indirectly,
all the issued
and outstanding equity securities of each of its
Subsidiaries,
(C) no equity securities of any of its Subsidiaries are or
may become
required to be issued (other than to the Company or any of its
wholly-owned
Subsidiaries) by reason of any Right or otherwise, (D) there
are no
contracts, commitments, understandings or arrangements by which
any
of its
Subsidiaries is or may be bound to sell or otherwise transfer any
of
its equity
securities (other than to the Company or any of its
wholly-owned
Subsidiaries),
(E) there are no contracts, commitments, understandings, or
arrangements
relating to the Company's rights to vote or to dispose of such
securities and
(F) all the equity securities of the Company's Subsidiaries
held by the
Company or its Subsidiaries are fully paid and nonassessable
and are owned by
the Company or its Subsidiaries free and clear of any
Liens.
(ii) Each of the Company's Subsidiaries (A) has been duly
organized
and is validly
existing under the laws of the jurisdiction of its
organization,
(B) has all requisite corporate power and authority necessary
for it to own or
lease its properties and assets and to carry on its
business as now
conducted and (C) is duly licensed or qualified to do
business in each
jurisdiction where its ownership or leasing of property or
the conduct of
its business requires it to be so licensed or qualified. The
articles of
incorporation, bylaws and similar governing documents of each
of the Company's
Subsidiaries, copies of which have been delivered or made
available to
Parent, are true, complete and correct copies of such
documents as in
effect as of the date of this Agreement.
27
<PAGE>
(iii) The Company Bank is the only Subsidiary of the Company that
is
an insured
depository institution. The deposit accounts of the Company
Bank
are insured by
the FDIC to the maximum extent provided by applicable law,
and the Company
Bank has paid all deposit insurance premiums and
assessments
required by applicable laws and regulations.
(iv) Except for securities and other interests held in a
fiduciary
capacity and
beneficially owned by third parties or taken in consideration
of debts
previously contracted and for securities listed in Section
5.01(t)
of the Company
Disclosure Schedule, the Company does not own beneficially,
directly or
indirectly, or have any Right with respect to, any equity
securities or
similar interests of any Person or any interest in a
partnership or
joint venture of any kind other than its Subsidiaries and
stock in the
Federal Home Loan Bank of Pittsburgh.
(d) Authority; No Violation.
-----------------------
(i) The Company has the corporate power and authority to
execute,
deliver and
perform its obligations under this Agreement and, subject to
receipt of all
necessary consents and approvals of Governmental Authorities
and the approval
of the Company's shareholders of this Agreement, to
consummate the
transactions contemplated hereby. Subject to the approval of
this Agreement
by the shareholders of the Company, this Agreement and the
transactions
contemplated hereby have been authorized by all necessary
corporate action of the
Company and the Company Board on or prior to the
date hereof. The
Company Board has directed that this Agreement be
submitted to the
Company's shareholders for approval at a meeting of such
shareholders
and, except for the approval and adoption of this Agreement by
the affirmative
vote of the holders of a majority of the votes cast at a
meeting of the
Company's shareholders at which a quorum is present, no
other vote of
the shareholders of the Company is required by law, the
Company
Articles, the Company Bylaws or otherwise to approve this
Agreement
and the
transactions contemplated hereby. The Company has duly executed
and
delivered this
Agreement and, assuming due authorization, execution and
delivery by
Parent, this Agreement is a valid and legally binding
obligation of
the Company, enforceable in accordance with its terms (except
as
enforceability may be limited by applicable bankruptcy,
insolvency,
reorganization,
moratorium, fraudulent transfer and similar laws of general
applicability
relating to or affecting creditors' rights or by general
equity
principles).
28
<PAGE>
(ii) Subject to receipt, or the making, of the consents,
approvals,
waivers and
filings referred to in Section 5.01(e) and the expiration of
related waiting
periods, the execution, delivery and performance of this
Agreement by the
Company, and the consummation of the transactions
contemplated
hereby do not and will not (A) constitute a breach or
violation of, or
a default under, the articles of incorporation or bylaws
(or similar
governing documents) of the Company or any of its Subsidiaries,
(B) violate any
statute, code, ordinance, rule, regulation, judgment,
order, writ,
decree or injunction applicable to the Company or any of its
Subsidiaries, or
any of their respective properties or assets or (C)
violate,
conflict with, result in a breach of any provision of or the
loss
of any benefit
under, constitute a default (or an event which, with notice
or lapse of
time, or both, would constitute a default) under, result in the
termination of
or a right of termination or cancellation under, accelerate
the performance
required by, or result in the creation of any Lien upon any
of the
respective properties or assets of the Company or any of its
Subsidiaries
under, any of the terms, conditions or provisions of any note,
bond, mortgage,
indenture, deed of trust, license, lease, contract,
agreement or
other instrument or obligation to which the Company or any of
its Subsidiaries
is a party, or by which they or any of their respective
properties or
assets may be bound or affected.
(e) Consents and Approvals. No
consents or approvals of, or waivers by,
----------------------
or filings or registrations with, any
Governmental Authority or with any third
party are required to be made or obtained
by the Company or any of its
Subsidiaries in connection with the
execution, delivery or performance by the
Company of this Agreement, or to consummate
the transactions contemplated
hereby, except for (i) filings of
applications or notices with, and consents,
approvals or waivers by, as applicable, the
Federal Reserve Board, the OTS, the
Department, and the NASD, (ii) any required
filing under the HSR Act, (iii)
filings with the SEC and state securities
authorities, as applicable, in
connection with the submission of this
Agreement to the shareholders of the
Company and Parent, respectively, for
approval and the issuance of Parent Common
Stock in the Merger, (iv) the filing of
Articles of Merger with the Secretary of
State of the Commonwealth of Pennsylvania
pursuant to the PBCL, and the filing
of Articles of Combination with the OTS and
the Pennsylvania Secretary of State
with respect to the Bank Merger, (v) the
approval of this Agreement by the
holders of the outstanding shares of
Company Common Stock and by the holders of
the outstanding shares of Parent Common
Stock and (vi) as set forth in Section
5.01(e) of the Company Disclosure Schedule.
As of the date hereof, the Company
is not aware of any reason why the consents
and approvals set forth above and
referred to in Section 7.01(b) will not be
received in a timely manner and
without the imposition of a condition,
restriction or requirement of the type
described in the proviso clause in such
section.
(f) Financial Statements. The
Company has previously made available to
--------------------
Parent copies of (i) the statements of
financial condition of the Company and
its Subsidiaries as of June 30, 2004 and
2003, and the related consolidated
statements of operations, changes in
stockholders' equity and comprehensive
income, and cash flows for the fiscal years
2002 through 2004, inclusive, as
included in the Company's Annual Report on
Form 10-K for the fiscal year ended
June 30, 2004 filed with the SEC under the
Exchange Act, accompanied by the
audit report of KPMG LLP, independent
public accountants with respect to the
Company, and (ii) the unaudited statement
of financial condition of the Company
and its Subsidiaries as of September 30,
2004 and the related unaudited
consolidated statements of operations,
other comprehensive income and cash flows
for the three-month period then ended as
included in the
29
<PAGE>
Company's Quarterly Report on Form 10-Q for
the period ended September 30, 2004
filed with the SEC under the Exchange Act.
The September 30, 2004 consolidated
statement of condition of the Company
(including the related notes, where
applicable) fairly presents the
consolidated financial position of the Company
and its Subsidiaries as of the date
thereof, and the other financial statements
referred to in this Section 5.01(f)
(including the related notes, where
applicable) fairly present, and the
financial statements to be filed by the
Company with the SEC after the date of this
Agreement will fairly present
(subject, in the case of the unaudited
statements, to recurring audit
adjustments normal in nature and amount),
the results of the consolidated
operations and consolidated financial
position of the Company and its
Subsidiaries for the respective fiscal
periods or as of the respective dates
therein set forth; each of such statements
(including the related notes, where
applicable) complies, and the financial
statements to be filed by the Company
with the SEC after the date of this
Agreement will comply, with applicable
accounting requirements and with the
published rules and regulations of the SEC
with respect thereto; and each of such
statements (including the related notes,
where applicable) has been, and the
financial statements to be filed by the
Company with the SEC after the date of this
Agreement will be, prepared in
accordance with GAAP consistently applied
during the periods involved, except as
indicated in the notes thereto or, in the
case of unaudited statements, as
permitted by Form 10-Q. KPMG LLP has not
resigned or been dismissed as
independent public accountants of the
Company as a result of or in connection
with any disagreements with the Company on
a matter of accounting principles or
practices, financial statement disclosure
or auditing scope or procedure.
(g) Undisclosed Liabilities;
Corporate Records.
------------------------------------------
(i) Except for (i) those liabilities and obligations that are
fully
reflected (in a
footnote or otherwise) or reserved for in the consolidated
financial
statements of the Company included in, or are otherwise
disclosed
in, its Annual
Report on Form 10-K for the year ended June 30, 2004, as
filed with the
SEC prior to the date of this Agreement, (ii) liabilities
incurred since
June 30, 2004 in the ordinary course of business consistent
with past
practice and (iii) liabilities that would not, individually or
in
the aggregate,
have a Material Adverse Effect on the Company, the Company
and its
Subsidiaries do not have, and since June 30, 2004, the Company
and
its Subsidiaries
have not incurred (except as permitted by Section 4.01),
any liabilities
or obligations of any nature whatsoever (whether accrued,
absolute,
contingent or otherwise and whether or not required to be
reflected in the
Company's financial statements in accordance with GAAP).
(ii) The books and records of the Company and its Subsidiaries
have
been and are
being maintained in accordance with GAAP and any other
applicable legal
and accounting requirements and reflect only actual
transactions.
The minute books of the Company and each of its Subsidiaries
contain true,
complete and accurate records of all meetings and other
corporate
actions held or taken since June 30, 2001 of their respective
shareholders and
boards of directors (including committees of their
respective
boards of directors).
30
<PAGE>
(h) Absence of Certain Changes
or Events. Except as reflected in the
------------------------------------
Company's unaudited balance sheet as of
September 30, 2004, since June 30, 2004,
there has been no change or development or
combination of changes or
developments which, individually or in the
aggregate, has had or is reasonably
likely to have a Material Adverse Effect on
the Company.
(i) Disclosure Controls and
Procedures. Since not later than August 29,
----------------------------------
2002, the Company has had in place
"disclosure controls and procedures" (as
defined in Rules 13a-15(e) and 15d-15(e) of
the Exchange Act) designed and
maintained to ensure that (i) all
information (both financial and non-financial)
required to be disclosed by the Company in
the reports that it files or submits
under the Exchange Act is recorded,
processed, summarized and reported within
the time periods specified in the rules and
forms of the SEC and (ii) all such
information is accumulated and communicated
to the Company's management as
appropriate to allow timely decisions
regarding required disclosure and to make
the certifications of the Chief Executive
Officer and Chief Financial Officer of
the Company required under the Exchange Act
with respect to such reports. In
addition, the Company and its Subsidiaries
have devised and maintain a system of
internal accounting controls sufficient to
provide reasonable assurances
regarding the reliability of financial
reporting and the presentation of
financial statements for external purposes
in accordance with GAAP. The Company
has disclosed, based on its most recent
evaluation prior to the date hereof, to
the Company's auditors and the audit
committee of the Company Board, (i) any
significant weaknesses or deficiencies in
the design or operation of its
internal controls which could adversely
affect in any material respect the
Company's ability to record, process,
summarize and report financial data and
(ii) any fraud, whether or not material,
that involves management or other
employees who have a significant role in
the Company's internal controls, and
the Company has made available to Parent a
summary of any such disclosure made
by management to the Company's auditors and
the audit committee of the Company
Board since June 30, 2002. None of the
Company's or its Subsidiaries' records,
systems, controls, data or information are
recorded, stored, maintained,
operated or otherwise wholly or partly
dependent on or held by any means
(including any electronic, mechanical or
photographic process, whether
computerized or not) which (including all
means of access thereto and therefrom)
are not under the exclusive ownership and
direct control of the Company or its
Subsidiaries or accountants.
(j) SEC Reports. The Company has
previously made available to Parent a
-----------
true, correct and complete copy of each (i)
final registration statement,
prospectus, report, schedule and definitive
proxy statement filed since June 30,
2001 by the Company with the SEC pursuant
to the Securities Act or the Exchange
Act, in each case as amended or
supplemented (collectively, the "Company SEC
Reports") and (ii) communication mailed by
the Company to its shareholders since
June 30, 2001, and no such registration
statement, prospectus, report, schedule,
proxy statement or communication contained
any untrue statement of a material
fact or omitted to state any material fact
required to be stated therein or
necessary in order to make the statements
therein, in light of the circumstances
in which they were made, not misleading.
The
31
<PAGE>
Company has timely filed all Company SEC
Reports and other documents required to
be filed by it under the Securities Act and
the Exchange Act, and, as of their
respective dates, all Company SEC Reports
complied with the published rules and
regulations of the SEC with respect
thereto. No executive officer of the Company
has failed in any respect to make the
certifications required of him or her
under Section 302 or 906 of the
Sarbanes-Oxley Act of 2002 and no enforcement
action has been initiated, or to the
Knowledge of the Company is threatened,
against the Company by the SEC relating to
disclosures contained in any Company
SEC Reports.
(k) Regulatory Matters.
------------------
(i) The Company and each of its Subsidiaries have timely filed
all
reports,
registrations and statements, together with any amendments
required to be
made with respect thereto, that they were required to file
since June 30,
2001 with any Governmental Authority, and have paid all fees
and assessments
due and payable in connection therewith. Except for normal
examinations
conducted by any Governmental Authority in the regular course
of the business
of the Company and its Subsidiaries, no Governmental
Authority has
initiated any proceeding, or to the Knowledge of the Company,
investigation
into the business or operations of the Company or any of its
Subsidiaries,
since June 30, 2001. There is no unresolved violation,
criticism, or
exception by any Governmental Authority with respect to any
report or
statement relating to any examinations of the Company or any of
its
Subsidiaries. The Company Bank is "well capitalized" as defined
in
applicable laws
and regulations, and the Company Bank has a Community
Reinvestment Act
rating of "satisfactory" or better.
(ii) Neither the Company nor any of its Subsidiaries nor any of
any
of their
respective 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 supervisory letter
from, any
Governmental Authority, other than those generally applicable
to
bank holding
companies, Pennsylvania chartered banks, registered
broker-dealers
or investment advisers and their affiliates. Neither the
Company nor any
of its Subsidiaries has been advised by, or has any
Knowledge of
facts which could give rise to an advisory notice by, any
Governmental
Authority that such Governmental Authority is contemplating
issuing or
requesting (or is considering the appropriateness of issuing or
requesting) any
such order, decree, agreement, memorandum of understanding,
commitment
letter, supervisory letter or similar submission.
(l) Legal Proceedings.
-----------------
(i) Section 5.01(l)(i) of the Company Disclosure Schedule contains
a
true and correct
summary description as of the date hereof of any pending
or, to the
Company's Knowledge, threatened legal, administrative, arbitral
or other
proceedings, claims, actions or governmental or regulatory
investigations
of any nature against the Company or any of its
Subsidiaries,
including the venue, the parties thereto, the subject matter
thereof and the
amount of damages claimed or other remedies sought.
32
<PAGE>
(ii) Except as set forth in Section 5.01(l)(ii) of the Company
Disclosure
Schedule, neither the Company nor any of its Subsidiaries is a
party to any,
and there are no pending or, to the Company's Knowledge,
threatened,
legal, administrative, arbitral or other proceedings, claims,
actions or
governmental or regulatory investigations of any nature against
the Company or
any of its Subsidiaries in which, to the Knowledge of the
Company, there is a reasonable
probability of any material recovery against
or other
Material Adverse Effect on the Company.
(m) Compliance with Laws. Each
of the Company and its Subsidiaries:
--------------------
(i) is in compliance with all applicable federal, state, local
and
foreign
statutes, laws, regulations, ordinances, rules, judgments,
orders
or decrees and
all SRO rules, regulations, orders and policy statements, in
each case as
applicable thereto or to the employees conducting such
businesses,
including, without limitation, the Equal Credit Opportunity
Act, the Fair
Housing Act, the Community Reinvestment Act, the Home
Mortgage
Disclosure Act, the Bank Secrecy Act, the Sarbanes-Oxley Act of
2002, the
Uniting and Strengthening America by Providing Appropriate
Tools
Required to
Intercept and Obstruct Terrorism Act of 2001 and all other
applicable fair
lending and fair housing laws or other laws relating to
discrimination;
(ii) has all permits, licenses, authorizations, orders and
approvals
of, and has made
all filings, applications and registrations with, all
Governmental
Authorities that are required in order to permit them to own
or lease their
properties and to conduct their businesses as presently
conducted; all
such permits, licenses, certificates of authority, orders
and approvals
are in full force and effect and, to the Company's Knowledge,
no suspension or
cancellation of any of them is threatened; and
(iii) has received, since June 30, 2001, no notification or
communication
from any Governmental Authority (A) asserting that the
Company or any
of its Subsidiaries is not in compliance with any of the
statutes,
regulations or ordinances which such Governmental Authority
enforces or (B)
threatening to revoke any license, franchise, permit or
governmental
authorization (nor, to the Company's Knowledge, do any grounds
for any of the
foregoing exist).
(n) Certain Contracts;
Defaults.
---------------------------
(i) Except as set forth in Section 5.01(n)(i) of the Company
Disclosure
Schedule and documents entered into pursuant to the terms of
this Agreement
or for documents filed as exhibits to the Company's SEC
documents,
neither the Company nor any of its Subsidiaries is a party to,
bound by or
subject to any Contract as of the date hereof (A) with respect
to the
employment of any directors, officers, employees or consultants,
(B)
which would
entitle any present or former director, officer, employee or
33
<PAGE>
agent of the
Company or its Subsidiaries to indemnification from the
Company or its
Subsidiaries (other than the indemnity provisions in the
Company Bylaws
and comparable provisions in the bylaws of the Company's
Subsidiaries),
(C) which is a "material contract" (as defined in Item
601(b)(10) of
Regulation S-K of the SEC) to be performed after the date of
this Agreement
that has not been filed or incorporated by reference in the
Company SEC
Reports, (D) which materially restricts the conduct of any
business by the
Company or any of its Subsidiaries or upon consummation of
the Merger would
materially restrict the ability of the Surviving
Corporation to
engage in any business in which a savings and loan holding
company may
lawfully engage under the Home Owners' Loan Act, as amended or
(E) any
Contract, other than a Loan or a Derivative Transaction but
including data
processing, software programming and licensing contracts,
that involves
expenditures or receipts by the Company or any of its
Subsidiaries in
excess of $250,000 per year. The Company has previously
delivered or
made available to Parent true, complete and correct copies of
each such
document.
(ii) Each Contract to which the Company or any of its Subsidiaries
is
a party, by
which any of its respective assets, business or operations may
be bound or
affected, or under which it or its respective assets, business
or operations
receives benefits, is a valid and legally binding obligation
of the Company
or a Subsidiary of the Company, as applicable, and to the
Knowledge of the
Company, the other party or parties thereto, enforceable
in accordance
with its terms (except as enforceability may be limited by
applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and
similar laws of general applicability relating to or affecting
creditor's
rights or by general equity principles). Neither the Company
nor
any of its
Subsidiaries is in default under any Contract to which it is a
party, by which
its respective assets, business or operations may be bound
or affected, or
under which it or its respective assets, business or
operations
receives benefits, and there has not occurred any event that,
with the lapse
of time or the giving of notice or both, would constitute
such a
default.
(o) Brokers. Neither the Company
nor any Subsidiary of the Company nor
-------
any of their respective officers or
directors has employed any broker or finder
or incurred any liability for any broker's
fees, commissions or finder's fees in
connection with the transactions
contemplated hereby, except that the Company
has engaged, and will pay a fee or
commission to, the Company Financial Advisor
in accordance with the terms of a letter
agreement between the Company Financial
Advisor and the Company, a true, complete
and correct copy of which has been
previously delivered by the Company to
Parent.
34
<PAGE>
(p) Employee Benefit Plans.
----------------------
(i) All benefit and compensation plans, contracts, policies or
arrangements
covering current or former employees of the Company and its
Subsidiaries and
current or former directors of the Company and its
Subsidiaries,
including, but not limited to, "employee benefit plans"
within the
meaning of Section 3(3) of ERISA and deferred compensation,
stock option,
stock purchase, stock appreciation rights, stock based
incentive and
bonus plans (the "Company Benefit Plans"), are identified in
Section
5.01(p)(i) of the Company Disclosure Schedule. The Company has
delivered or
made available to Parent prior to the date of this Agreement
true, correct
and complete copies of the following documents: (A) each of
the Company
Benefit Plans, (B) all trust agreements or other funding
arrangements for
the Company Benefit Plans (including insurance Contracts)
and all
amendments thereto (all of which are disclosed in Section
5.01(p)(i) of
the Company Disclosure Schedule), (C) with respect to any
such Company
Benefit Plans or amendments, the most recent determination
letters and all
rulings, opinion letters (and any pending requests for
rulings or
letters), information letters or advisory opinions issued by
the
IRS, the United
States Department of Labor or the PBGC, (D) annual reports
or returns,
audited or unaudited financial statements, actuarial valuations
and reports and
summary annual reports prepared for any Company Benefit
Plans with
respect to the last three plan years and (E) the most recent
summary plan
descriptions and any material modifications thereto.
(ii) All Company Benefit Plans are in all material respects in
compliance with
the applicable terms of ERISA, the Code and any other
applicable laws
and regulations. Each Company Benefit Plan which is an
"employee
pension benefit plan" within the meaning of Section 3(2) of
ERISA
(a "Company
Pension Plan") and which is intended to be qualified under
Section 401(a)
of the Code has received a favorable determination letter
from the IRS
covering all changes in Tax laws prior to the Economic Growth
and Tax Relief
Reconciliation Act of 2001 and, to the Company's Knowledge,
there are no
circumstances that would reasonably be expected to result in
revocation of
any such favorable determination letter or the loss of the
qualification of
such Company Pension Plan under Section 401(a) of the
Code. Each trust
created under any Company Benefit Plan subject to ERISA
has been
determined to be exempt from Tax under Section 501(a) of the
Code
and, to the
Company's Knowledge, there are no circumstances that would
reasonably be
expected to result in revocation of such exemption.
(iii) There is no pending or, to the Company's Knowledge,
threatened
litigation
relating to the Company Benefit Plans. Neither the Company nor
any of its Subsidiaries has
engaged in a transaction with respect to any
Company Benefit
Plan or Company Pension Plan that, assuming the taxable
period of such
transaction expired as of the date hereof or the Effective
Date, would
reasonably be expected to subject the Company or any of its
Subsidiaries to
a Tax or penalty imposed by either Section 4975 of the Code
or Section
502(i) of ERISA.
35
<PAGE>
(iv) No liability under Subtitle C or D of Title IV of ERISA has
been
or is reasonably
expected to be incurred by the Company or any of its
Subsidiaries
with respect to any ongoing, frozen or terminated
"single-employer
plan" (which for purpose hereof includes the Financial
Institutions
Retirement Fund) within the meaning of Section 4001(a)(15) of
ERISA, currently
or formerly maintained by any of them, or the
single-employer
plan of any entity which is considered one employer with
the Company
under Section 4001 of ERISA or Section 414 of the Code (a
"Company ERISA
Affiliate"). Neither the Company nor any of its Subsidiaries
has incurred in
the six years prior to the date hereof, and neither expects
to incur, any
withdrawal liability with respect to a multiple employer plan
under Subtitle E
of Title IV of ERISA (regardless of whether based on
contributions of
an ERISA Affiliate). 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
Company Pension
Plan or by any Company ERISA Affiliate within the 12-month
period ending on
the date hereof or, to the Company's Knowledge, will be
required to be
filed in connection with the transactions contemplated by
this Agreement.
None of the Company, any of its Subsidiaries, or any
Company ERISA
Affiliate has ever participated in, maintained, sponsored,
contributed to
or incurred a liability (actual or contingent) with respect
to a
multiemployer plan (within the meaning of Section 4001 of
ERISA).
(v) All contributions required to be made under the terms of
any
Company Benefit
Plan have been timely made or have been reflected on the
financial
statements of the Company included in the Company SEC Reports
to
the extent
required by the terms of any such Company Benefit Plan and to
the extent
required by GAAP and there is no Lien, nor is there expected to
be a Lien, under
Section 412(n) of the Code or Section 302(f) of ERISA or
Tax under
Section 4971 of the Code imposed against any Company Benefit
Plan. Neither
any Company Pension Plan nor any single-employer plan of a
Company ERISA
Affiliate (a "Company 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, to the Knowledge of
the Company, no
ERISA Affiliate has an outstanding funding waiver. Neither
the Company nor
any of its Subsidiaries has provided, or is required to
provide,
security to any Company Pension Plan or to any single-employer
plan of a
Company ERISA Affiliate pursuant to Section 401(a)(29) of the
Code.
(vi) Except as set forth in Section 5.01(p)(vi) of the Company
Disclosure
Schedule, none of the execution of this Agreement, shareholder
approval of this
Agreement or consummation of the transactions contemplated
hereby will
(either alone or in conjunction with any other event) (A)
result in any
payment (including, without limitation, severance,
unemployment
compensation, an "excess parachute payment" (within the
meaning of
Section 280G of the Code), forgiveness of indebtedness or
otherwise)
becoming due to any director or any employee of the Company or
any of its
Subsidiaries under any Company Benefit Plan, (B) accelerate the
time of payment
or vesting or trigger any payment or funding (through a
grantor trust or
otherwise) of
36
<PAGE>
compensation or
benefits under, increase the amount payable or trigger any
other material
obligation pursuant to, any of the Company Benefit Plans
(except as
provided by Section 3.05(a)(i)), (C) result in any breach or
violation of, or
a default under, any Company Benefit Plan, (D) limit or
restrict the
ability to merge, amend or terminate any Company Benefit Plan
or (E) result in
any payment which may be nondeductible for federal income
tax purposes
pursuant to Sections 162(m) or 280G of the Code and the
regulations
issued thereunder.
(vii) Neither the Company nor any of its Subsidiaries is a
"fiduciary"
within the meaning of that term as defined under ERISA with
respect to any
"employee benefit plan" (within the meaning of Section 3(3)
of ERISA), other
than an employee benefit plan which covers solely the
employees and
independent contractors of the Company and its Subsidiaries.
(viii) Except as reflected in Section 5.01(p)(viii) of the
Company
Disclosure
Schedule, no Company Pension Plan or Company ERISA Affiliate
Plan (including
for the purpose of this subsection, the Financial
Institutions
Retirement Fund) that is subject to Title IV of ERISA has any
"Unfunded
Pension Liability." For purpose of this Agreement, Unfunded
Pension
Liability shall mean, as of any determination date, the amount,
if
any, by which
the present value of all benefit liabilities (as that term is
defined in
Section 4001(a)(16) of ERISA) of a plan subject to Title IV of
ERISA exceeds
the fair market value of all assets of such plan, all
determined using
the actuarial assumptions that would be used by the PBGC
in the event of
a termination of the plan on such determination date.
(ix) Except as reflected in Section 5.01(p)(ix) of the Company
Disclosure
Schedule, there are no pending or threatened claims, actions or
lawsuits, other
than routine claims for benefits in the ordinary course,
asserted or
instituted against (i) any Company Benefit Plan or its assets,
(ii) any Company
ERISA Affiliate with respect to any plan that is subject
to Section 412
of the Code, or (iii) any fiduciary with respect to any
Company Benefit
Plan or Company ERISA Affiliate Plan for which the Company,
its
Subsidiaries, or any Company ERISA Affiliate may be directly or
indirectly
liable, through indemnification obligations or otherwise.
(x) Except as reflected in Section 5.01(p)(x) of the Company
Disclosure
Schedule, within the last six years, neither the Company, any
Subsidiary, nor
any Company ERISA Affiliate has transferred any assets or
liabilities of a
Company Benefit Plan or Company ERISA Affiliate Plan that
was subject to
Title IV of ERISA which had, at the date of such transfer,
an Unfunded
Pension Liability or has engaged in a transaction which may be
subject to
Section 4069 of ERISA. No event has occurred which would result
in any liability
under Sections 4063, 4064, 4071 or 4243 of ERISA, and
neither the
Company, any of its Subsidiaries or any Company ERISA Affiliate
has any outstanding
liability under Title IV of ERISA with respect to any
Company Benefit
Plan or Company ERISA Affiliate Plan.
37
<PAGE>
(xi) Neither the Company, any Subsidiary, nor any Company ERISA
Affiliate has
engaged, directly or indirectly, in a non-exempt prohibited
transaction (as
defined in Section 4975 of the Code or Section 406 of
ERISA) in
connection with any employee benefit plan within the meaning of
Section 3(3) of
ERISA.
(xii) Except as reflected in Section 5.01(p)(xii) of the
Company
Disclosure
Schedule, no Company Benefit Plan that is a non-tax qualified
deferred
compensation plan has any unfunded liability.
(xiii) Neither the Parent nor its affiliates will have (i) an
obligation to
make contribution(s) to any multiemployer plan (as defined in
Section 3(37) of
ERISA), or (ii) any Withdrawal Liability within the
meaning of
Sections 4201 and 4204 of ERISA (whether imposed and not yet
paid or
calculated assuming a complete or partial withdrawal of the
Company, any
Subsidiary, or any Company ERISA Affiliate as of such date not
yet imposed)
which it would not have had if it had not entered into the
transactions described in
this Agreement.
(xiv) Each Company Benefit Plan that provides welfare benefits
has
been operated in
compliance with all requirements of Sections 601 through
609 of ERISA and
Section 4980B of the Code and regulations thereunder,
relating to the
continuation of coverage under certain circumstances in
which coverage
would otherwise cease. Neither the Company, any Subsidiary,
nor any Company
ERISA Affiliate has contributed to a nonconforming group
health plan (as
defined under Code Section 5000(c)) and no Company ERISA
Affiliate has
incurred a tax under Section 5000(a) of the Code which could
become a
liability of the Company, any Subsidiary, or any Company ERISA
Affiliate.
Except as reflected in Section 5.01(p)(xiv) of the Company
Disclosure
Schedule, neither the Company, any of its Subsidiaries nor any
Company ERISA
Affiliate maintains, sponsors or provides, or has maintained,
sponsored or
provided, post-retirement medical benefits, post-retirement
death benefits
or other post-retirement welfare benefits to its current
employees or
former employees, except as required by Section 4980B of the
Code or under
the continuation of coverage provisions of the law of any
state or
locality, and at the sole expense of the participant or the
beneficiary of
the participant.
(xv) Subject to applicable law and the provisions of this
Agreement,
the Company and
its Subsidiaries may amend or terminate any retiree health
or life benefit
under any Company Benefit Plan at any time without
incurring any
liability thereunder. The Company and its Subsidiaries have
complied with
the requirements of the Health Insurance Portability and
Accountability
Act of 1996 with respect to each Company Benefit Plan that
provides welfare
benefits. Neither the Company nor its Subsidiaries
maintain any
plan which is an "employee welfare benefit plan" (as such term
is defined under
Section 3(1) of ERISA) that has provided any "disqualified
benefit" (as
such term is defined in Section 4976(b) of the Code) with
respect to which
an excise tax could be imposed under Section 4976 of the
Code.
38
<PAGE>
(q) Labor Matters. Neither the
Company nor any of its Subsidiaries is
-------------
party to or is bound by any collective
bargaining agreement, contract or other
agreement or understanding with a labor
union or labor organization, nor is the
Company or any of its Subsidiaries the
subject of a proceeding asserting that it
has committed an unfair labor practice
(within the meaning of the National Labor
Relations Act) or seeking to compel the
Company or any of its Subsidiaries to
bargain with any labor organization as to
wages or conditions of employment, nor
is there any strike or other labor dispute
involving it or any of its
Subsidiaries pending or, to the Company's
Knowledge, threatened, nor is the
Company or any of its Subsidiaries aware of
any activity involving its employees
seeking to certify a collective bargaining
unit or engaging in other
organizational activity.
(r) Environmental Matters. (i)
The Company and its Subsidiaries are in
---------------------
compliance with applicable Environmental
Laws; (ii) to the Company's Knowledge,
no real property (including buildings or
other structures) currently or formerly
owned or operated by the Company or any of
its Subsidiaries, or any property in
which the Company or any of its
Subsidiaries has held a security interest, Lien
or a fiduciary or management role ("Company
Loan Property"), has been
contaminated with, or has had any release
of, any Hazardous Substance except in
compliance with Environmental Laws; (iii)
to the Company's Knowledge, neither
the Company nor any of its Subsidiaries
could be deemed under applicable law to
be the owner or operator of, or has
participated in the management regarding
Hazardous Substances of, any Company Loan
Property which has been contaminated
with, or has had any release of, any
Hazardous Substance except in compliance
with Environmental Laws; (iv) to the
Company's Knowledge, neither the Company
nor any of its Subsidiaries has any
liability for any Hazardous Substance
disposal or contamination on any third
party property; (v) neither the Company
nor any of its Subsidiaries has received
any notice, demand letter, claim or
request for information alleging any
violation of, or liability under, any
Environmental Law; (vi) neither the Company
nor any of its Subsidiaries is
subject to any order, decree, injunction or
other agreement with any
Governmental Authority or any third party
relating to any Environmental Law; and
(vii) to the Company's Knowledge, there are
no circumstances or conditions
(including the presence of asbestos,
underground storage tanks, lead products,
polychlorinated biphenyls, prior
manufacturing operations, dry-cleaning, or
automotive services) involving the Company
or any of its Subsidiaries, any
currently or formerly owned or operated
property, or any Company Loan Property,
that could reasonably be expected to result
in any claims, liability or
investigations against the Company or any
of its Subsidiaries, result in any
restrictions on the ownership, use, or
transfer of any property pursuant to any
Environmental Law or adversely affect the
value of any Company Loan Property.
(s) Tax Matters.
-----------
(i)(A) All Tax Returns required to be filed (taking into account
any
extensions of
time within which to file) by or with respect to the Company
and its
Subsidiaries have been timely filed, (B) all such Tax Returns
are
accurate and
complete, (C) all Taxes shown to be due on the Tax Returns
referred to in
clause (A) have been timely paid in full or have been
adequately
reserved for in accordance with GAAP, (D) the United States
39
<PAGE>
federal, state
and local income Tax Returns referred to in clause (A) have
been examined by
the IRS or the appropriate taxing authority for the
periods set
forth in Section 5.01(s) of the Company Disclosure Schedule or
the period for
assessment of the Taxes in respect of which such Tax Returns
were required to
be filed has expired, (E) all deficiencies asserted or
assessments made
as a result of examinations conducted by any taxing
authority have
been paid in full, except any such amount as is being
contested in
good faith and has been adequately reserved for in accordance
with GAAP, (F)
no material issues have been raised by the relevant taxing
authority in
connection with any audit, action, suit or proceeding which is
currently
pending with respect to any of the Tax Returns referred to in
clause (A), (G)
neither the Company nor any of its Subsidiaries has agreed
to any currently
effective waiver of any statute of limitation with respect
to the
assessment or collection of any Taxes of the Company or any of
its
Subsidiaries and
(H) there are no liens for taxes (other than taxes not yet
due and payable)
upon the assets of the Company or any of its Subsidiaries.
(ii) The Company has made available to Parent true and correct
copies
of the federal,
state and local income Tax Returns filed by the Company and
its Subsidiaries
for each of the three most recent fiscal years ended on or
before June 30,
2004.
(iii) Neither the Company nor any of its Subsidiaries is a party
to
any "listed
transaction" as defined in Treasury Regulation Section
1.6011-4(b)(2).
(iv) Neither the Company nor any of its Subsidiaries is a party
to
any Tax
allocation or sharing agreement (other than an agreement with a
group the common
parent of which is the Company or any predecessor of the
Company), is or
has been a member of an affiliated group filing
consolidated or
combined Tax Returns (other than a group the common parent
of which is or
was the Company or any predecessor of the Company) or
otherwise has
any liability for the Taxes of any Person (other than the
Company and its
Subsidiaries).
(v) No closing agreements, private letter rulings, technical
advice
memoranda or
similar agreement or rulings have been entered into or issued
by any taxing
authority with respect to the Company or any of its
Subsidiaries
within the past five years.
(vi) Neither the Company nor any of its Subsidiaries has been
required to
include in income any adjustment pursuant to Section 481 of the
Code by reason
of a voluntary change in accounting method initiated by the
Company or any
of its Subsidiaries, and the IRS has not initiated or
proposed in
writing any such adjustment or change in accounting method that
would result in
an adjustment in the taxable income of the Company or any
of its
Subsidiaries.
(vii) Neither the Company nor any of its Subsidiaries maintains
any
compensation
plans, programs or arrangements the payments under which would
not reaso
