<PAGE>
Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
OMEGA FINANCIAL CORPORATION
AND
SUN BANCORP, INC.
DATED APRIL 20, 2004
<PAGE>
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
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ARTICLE 1 TERMS OF THE
MERGER.................................................9
1.1 The
Merger..............................................................9
1.2 Articles of Incorporation,
Bylaws, Directors, Officers and Name
of the
Surviving
Corporation............................................9
1.3 Availability of
Information............................................11
1.4 Anti-dilution
Provisions...............................................11
ARTICLE 2 DESCRIPTION OF
TRANSACTION.........................................12
2.1 Terms of the
Merger....................................................12
2.2 Conversion of
Stock....................................................12
2.3 Election and Allocation
Procedures.....................................14
2.4 Election
Procedures....................................................15
2.5 Mechanics of Payment of
Consideration..................................15
2.6 Time and Place of
Closing..............................................17
2.7 Voting
Agreements......................................................17
2.8 Reservation of
Shares..................................................17
2.9 Certain Actions Relating to
Rule 16b-3.................................17
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF
SUN..............................17
3.1 Organization and
Qualification of Sun and Sun Subsidiaries.............18
3.2 Authorization, Execution and
Delivery; Agreement Not in Breach.........18
3.3 No Legal
Bar...........................................................19
3.4 Consents and
Approvals.................................................19
3.5 Licenses, Franchises and
Permits.......................................19
3.6 Charter
Documents......................................................20
3.7 Sun Financial
Statements...............................................20
3.8 Absence of Certain
Changes.............................................20
3.9
Deposits...............................................................21
3.10
Properties............................................................21
3.11 Intellectual
Property.................................................21
3.12 Condition of Fixed Assets
and Equipment...............................22
3.13 Tax
Matters...........................................................22
3.14
Litigation............................................................23
3.15 Environmental
Matters.................................................23
3.16
Insurance.............................................................24
3.17 Books and
Records.....................................................24
3.18 Capitalization of Sun and
the Sun Subsidiaries........................24
3.19 Sole
Agreement........................................................25
3.20
Disclosure............................................................25
3.21 Absence of Undisclosed
Liabilities....................................26
3.22 Allowance for Loan
Losses.............................................26
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3.23 Loan
Portfolio........................................................27
3.24 Compliance with
Laws..................................................27
3.25 Employee and Director
Benefit Plans...................................28
3.26 Labor
Relations.......................................................30
3.27 Material
Contracts....................................................30
3.28 Material Contract
Defaults............................................31
3.29 Exchange Act and NASDAQ
Listing.......................................31
3.30 Certain Regulatory
Matters............................................31
3.31 Disclosure Controls and
Procedures....................................31
3.32 Corporate
Approval....................................................32
3.33 Broker's and Finder's
Fees............................................32
3.34
Delays................................................................32
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF
OMEGA............................32
4.1 Organization and Qualification of
Omega and Subsidiaries...............32
4.2 Authorization, Execution and
Delivery; Agreement Not in Breach.........33
4.3 No Legal
Bar...........................................................34
4.4 Consents and
Approvals.................................................34
4.5 Licenses, Franchises and
Permits.......................................34
4.6 Omega Financial
Statements.............................................35
4.7 Charter
Documents......................................................35
4.8 Tax
Matters............................................................35
4.9
Litigation.............................................................36
4.10
Insurance.............................................................36
4.11 Books and
Records.....................................................36
4.12 Capitalization of Omega and
the Omega Subsidiaries....................36
4.13
Disclosure............................................................37
4.14 Absence of Undisclosed
Liabilities....................................38
4.15 Allowance for Loan
Losses.............................................38
4.16 Compliance with
Laws..................................................38
4.17 Employee Benefit
Plans................................................39
4.18 Material
Contracts....................................................39
4.19 Material Contract
Defaults............................................39
4.20 Exchange Act and NASDAQ
Listing.......................................39
4.21 Certain Regulatory
Matters............................................40
4.22 Disclosure Controls and
Procedures....................................40
4.23 Corporate
Approval....................................................40
4.24 Broker's and Finder's
Fees............................................41
4.25
Delays................................................................41
ARTICLE 5 COVENANTS OF
SUN...................................................41
5.1 Preparation of Registration
Statement and Applications for
Required
Consents......................................................41
5.2 Conduct of Business -
Affirmative Covenants............................42
5.3 Conduct of Business -
Negative Covenants...............................43
5.4 Conduct of Business -
Certain Actions..................................46
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5.5 Delivery of
Information................................................47
5.6
Notification...........................................................47
5.7 Inspections
Permitted..................................................47
ARTICLE 6 COVENANTS OF
OMEGA.................................................47
6.1 Banking Approvals and Other
Consents...................................47
6.2 Approvals and
Registrations............................................48
6.3 Employee Benefits; Directors
Deferred Compensation Plan;
Severance
Agreements...................................................48
6.4
Notification...........................................................49
6.5 Directors and Officers
Indemnification and Insurance Coverage..........50
6.6 Conduct of Omega Prior to
the Effective Time...........................50
6.7 Inspections
Permitted..................................................50
ARTICLE 7 CONDITIONS TO
CLOSING..............................................51
7.1 Conditions to the
Obligations of Omega.................................51
7.2 Conditions to the
Obligations of Sun...................................52
7.3 Conditions to Obligations of
Each Party................................54
ARTICLE 8
TERMINATION........................................................55
8.1
Termination............................................................55
8.2 Effect of
Termination..................................................56
8.3
Fees...................................................................56
ARTICLE 9 GENERAL
PROVISIONS.................................................57
9.1
Notices................................................................57
9.2 Governing
Law..........................................................58
9.3
Counterparts...........................................................58
9.4
Publicity..............................................................58
9.5 Entire Agreement; No Third
Party Beneficiaries; Assignment.............59
9.6
Severability...........................................................59
9.7 Modifications, Amendments
and Waivers..................................59
9.8
Interpretation.........................................................59
9.9 Payment of
Expenses....................................................60
9.10 Provisions Which
Survive..............................................60
9.11 No
Waiver.............................................................60
9.12 Remedies
Cumulative...................................................60
9.13
Confidentiality.......................................................60
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EXHIBITS
Form of Voting Agreement Exhibit A
Form of Opinions of Sun's Counsel Exhibit
B-1
Form of Opinions of Omega's Counsel Exhibit
B-2
McCormack Severance Agreement Exhibit C
<PAGE>
Bixler Severance Agreement Exhibit D
Miller Severance Agreement Exhibit E
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
April
20, 2004 is entered into by and between
Omega Financial Corporation ("Omega" or
the "Surviving Corporation" as the context
may require), a corporation organized
and existing under the laws of
Pennsylvania, which is registered as a bank
holding company and whose principal offices
are located at 366 Walker Drive,
State College, Pennsylvania 16804, and Sun
Bancorp, Inc. ("Sun"), a corporation
organized and existing under the laws of
the Commonwealth of Pennsylvania, which
is registered as a financial holding
company and whose principal offices are
located at 155 North 15th Street,
Lewisburg, Pennsylvania, 17837.
Omega and
Sun are sometimes referred to herein as the "Parties."
RECITALS
A.
The Board
of Directors of Sun deems it desirable and in the best
interests of Sun and its shareholders that
Sun be merged with and into Omega
(which would survive the merger as the
Surviving Corporation) on the terms and
subject to the conditions set forth in this
Agreement and in the manner provided
in this Agreement.
B.
The Board
of Directors of Omega deems it desirable and in the best
interests of Omega and its shareholders
that Sun be merged with and into Omega
on the terms and subject to the conditions
set forth in this Agreement and in
the manner provided in this Agreement.
C.
Pursuant
to this Agreement, each share of Sun Common Stock
outstanding at the Effective Time will be
converted into either (i) cash in the
amount of $23.25, or (ii) 0.664 shares of
Omega Common Stock. Holders of Sun
Common Stock will be entitled to elect
their preference with respect to each
share of Sun Common Stock held by them,
subject to pro rata allocation, such
that 20% of Sun Common Stock shall be paid
in cash, and 80% of Sun Common Stock
will be in the form of Omega Common Stock,
including the effect of cash paid in
lieu of fractional shares of Omega Common
Stock, if any.
D.
As an
inducement and condition to Omega entering into this
Agreement, each director and executive
officer of Sun is agreeing to vote all
shares of Sun Common Stock owned by them in
favor of the transactions
contemplated by this Agreement at the
meeting of Sun Shareholders at which this
Agreement is considered pursuant to a
voting agreement in the form attached
hereto as Exhibit A ("Voting
Agreement").
E.
The
Parties desire to make certain representations, warranties and
agreements in connection with the Merger
and also to prescribe certain
conditions to the Merger, all as set forth
herein.
DEFINITIONS
Except as
otherwise provided herein, as used in this Agreement, the
following terms shall have the indicated
meanings (which shall be applicable to
both the singular and plural forms of the
terms defined).
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"Acquisition Proposal" means a proposed tender offer, written
agreement,
understanding or other proposal of any
nature pursuant to which any Person or
group, other than Omega or any Omega
Subsidiary, would directly or indirectly
(i) acquire or participate in a merger,
share exchange, consolidation or any
other business combination involving Sun or
any Sun Subsidiary; (ii) acquire the
right to vote 10% or more of the
outstanding voting securities of Sun or any Sun
Subsidiary; (iii) acquire 25% or more of
the assets or earning power of Sun or
of any Sun Subsidiary; or (iv) acquire in
excess of 10% of any class of capital
stock of Sun or any Sun Subsidiary.
"Acquisition Transaction" means any of the following events:
(i)
the acquisition
by any Person, other than Omega or any Omega
Subsidiary, alone or together with such
Person's Affiliates or any group, of
beneficial ownership of 10% or more of the
outstanding shares of Sun Common
Stock or the right to vote 10% or more of
the outstanding voting securities of
Sun or any Sun Subsidiary (for purposes of
this Subsection (i), the terms
"group" and "beneficial ownership" shall be
as defined in Section 13(d) of the
Exchange Act and regulations promulgated
thereunder and as interpreted
thereunder);
(ii)
a merger,
consolidation, share exchange, business combination or any
other similar transaction involving Sun or
any Sun Subsidiary; or
(iii) any
sale, lease, exchange, mortgage, pledge, transfer or other
disposition of 25% or more of the assets or
earning power of the Sun or any Sun
Subsidiary, in a single transaction or
series of transactions.
"Affiliate" means, with respect to any Person, any other Person
that,
directly or indirectly, through one or more
intermediaries, controls, is
controlled by, or is under common control
with, such Person. For the purposes of
this definition, "control" means, when used
with respect to any Person, the
possession, directly or indirectly, of the
power to direct or cause the
direction of the management and policies of
such Person, whether through the
ownership of voting securities, by
contract, or otherwise, and the terms
"controlling" and "controlled" have
correlative meanings.
"Aggregate
Consideration" shall mean the amount that is equal to the sum
of (i) the number of Cash Election Shares
multiplied by the Cash Merger
Consideration, plus (ii) the number of
Stock Election Shares multiplied by the
dollar amount of the Stock Merger
Consideration, determined based upon the
Determination Price. The Aggregate
Consideration shall be determined after all
adjustments and pro rations required to be
made under this Agreement.
"Aggregate
Shares" shall mean the number of shares of Sun Common Stock
issued and outstanding on the Closing Date,
excluding shares for which no
consideration is payable as described in
Section 2.2(a).
"Applicable Law" means any statute, law, code, rule, or regulation,
or any
judgment, order, ordinance, writ,
injunction, or decree of, any Governmental
Authority to which a specified Person or
its property or activities is subject.
"Balance
Sheet Date" means December 31, 2003.
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"Banking
Approvals" means (a) the approval of the application filed with
the FDIC under the Bank Merger Act and (b)
any other approvals and/or Consents
required to be obtained from or made to or
with the Banking Department, the
FDIC, the FRB or the OCC.
"Banking
Department" means the Pennsylvania Department of Banking.
"Cash
Election" means the election by a Sun Shareholder to receive
the
Cash Merger Consideration for such
Shareholder's shares of Sun Common Stock.
"Cash
Election Shares" means shares of Sun Common Stock as to which a
Cash
Election has been made.
"Cash
Merger Consideration" means $23.25.
"Charter
Documents" means, with respect to a particular Person that is
not
an individual, such Person's articles or
certificate of incorporation or
formation, organization certificate, bylaws
and any other similar governing
documents, all as may be amended or amended
and restated from time to time.
"Closing"
means consummation of the Merger.
"Closing
Date" means the date of the Closing, which shall be on the
eighth
business day after the last condition
precedent pursuant to this Agreement has
been fulfilled or waived (including the
expiration of any applicable waiting
period) or such other date upon which the
Parties may mutually agree.
"Code"
means the Internal Revenue Code of 1986, as amended.
"Consent"
means any consent, non-objection after notice to, approval or
authorization of, notice to, or
designation, registration, declaration or filing
with, any Person.
"Determination Date" means the day which is eight business days
before the
Closing Date.
"Determination Price" means the mean average market price of Omega
Common
Stock for the twenty trading days
immediately preceding the Determination Date.
In calculating the average market price of
Omega Common Stock, the market price
on any trading day for which there are
trades reported on the NASDAQ National
Market shall be the last quoted trading
price on that day, and the market price
on any trading day for which no trades have
been reported on the NASDAQ National
Market shall be the average of the high bid
and low asked prices on that day as
reported by NASDAQ.
"Effective
Time" shall be the close of business on the date on which the
Merger is consummated by the filing of
Articles of Merger with the Secretary of
State of the Commonwealth of
Pennsylvania.
"Election
Form" shall mean the form mutually prepared by Omega and Sun
which shall be distributed to the Sun
Shareholders and by which the Sun
Shareholders can indicate their election to
receive the Cash Merger
Consideration or the Stock Merger
Consideration.
<PAGE>
"Election
Deadline" means 4:00 p.m. eastern standard time on the business
day immediately preceding the date of the
meeting of Sun Shareholders to approve
the transactions contemplated by this
Agreement, or such other date as may be
mutually agreed upon by Omega and Sun.
"Environmental Laws" mean all federal, state and local laws,
including
statutes, regulations, ordinances, codes,
rules and other governmental
restrictions, standards and requirements
relating to the discharge of air
pollutants, water pollutants or process
waste water or substances, as now or at
any time hereafter in effect, including,
but not limited to, the Federal Solid
Waste Disposal Act, the Federal Hazardous
Materials Transportation Act, the
Federal Clean Air Act, the Federal Clean
Water Act, the Federal Resource
Conservation and Recovery Act of 1976, the
Federal Comprehensive Environmental
Responsibility Cleanup and Liability Act of
1980, as amended ("CERCLA"),
regulations of the Environmental Protection
Agency, regulations of the Nuclear
Regulatory Agency, regulations of the
Occupational Safety and Health
Administration, and any so-called
"Superfund" or "Superlien" Laws.
"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 promulgated from
time to time thereunder.
"Exchange
Agent" means such bank, trust company, transfer agent or other
entity selected by Omega, with the consent
of Sun, not to be unreasonably
withheld.
"Expenses"
means all reasonable in amount and reasonably incurred
out-of-pocket expenses (including all
reasonable fees and reasonable expenses of
counsel, accountants, investment bankers,
experts and consultants to the
applicable Party and its Affiliates)
incurred by or on behalf of a Party to this
Agreement in connection with this Agreement
or the transactions contemplated by
this Agreement.
"FDIC"
means the Federal Deposit Insurance Corporation.
"FRB"
means the Board of Governors of the Federal Reserve System.
"GAAP"
means generally accepted accounting principles, as in effect at
the
relevant date.
"Governmental
Approvals" means all Consents of Governmental Authorities
that are necessary so that the consummation
of the Merger and the other
transactions contemplated hereby will be in
compliance with Applicable Law,
other than the Banking Approvals.
"Governmental Authority" shall mean any court or tribunal in any
domestic
jurisdiction or any federal, state,
municipal or local government or other
domestic governmental body, agency,
authority, department, commission, board,
bureau, instrumentality, arbitrator or
arbitral body, including, without
limitation, the Banking Department, the
FDIC, the FRB and the OCC.
"Intellectual Property" means (i) trademarks, service marks, trade
names,
Internet domain names, designs, logos,
slogans, and general intangibles of like
nature, together with all goodwill,
registrations and applications related to
the foregoing; (ii) patents and industrial
designs (including any continuations,
divisionals, continuations-in-part,
renewals, reissues, and
<PAGE>
applications for any of the foregoing);
(iii) copyrights (including any
registrations and applications for any of
the foregoing); (iv) Software; and (v)
technology, trade secrets and other
confidential information, know-how,
proprietary processes, formulae,
algorithms, models, and methodologies.
"knowledge" or "aware" or any term of similar import means, (i)
with
respect to Sun, the actual knowledge of
each director and officer of Sun or any
Sun Subsidiary after all due and reasonable
inquiry, and (ii) with respect to
Omega, the actual knowledge of each
director and officer of Omega or any Omega
Subsidiary after all due and reasonable
inquiry.
"Material
Adverse Effect" shall mean, with respect to a Party, an effect
that is material and adverse to (a) the
assets, properties, business, future
prospects, financial condition or results
of operations of such Party and its
Subsidiaries, taken as a whole; provided,
however, that, for purposes of this
clause (a), a Material Adverse Effect shall
not be deemed to include (i) any
change in the value of the respective
investment and loan portfolios of either
Party resulting from a change in interest
rates generally within the banking
industry, (ii) any change occurring after
the date of this Agreement in any
Applicable Law or in GAAP, which change
affects banking institutions generally,
including any changes affecting the Bank
Insurance Fund, (iii) changes in
general economic (except in the context of
determining a Material Adverse Effect
for purposes of asset quality), legal,
regulatory or political conditions
affecting banking institutions generally,
(iv) actions or omissions of a Party
(or any of its Subsidiaries) taken pursuant
to the terms of this Agreement with
the prior written consent of the other
Party in contemplation of the
transactions contemplated hereby; or (b)
the ability of such Party to consummate
the transactions contemplated hereby .
"Merger"
means the merger of Sun with and into Omega, with Omega
surviving
the merger.
"NASDAQ
Bank Index" means the NASDAQ Bank Index as currently published
by
the Nasdaq Stock Market, Inc., or, if not
then published, a comparable index as
mutually agreed upon by Omega and Sun.
"Non-Election" means the failure of a Sun Shareholder to indicate
a
preference as to the form of Per Share
Merger Consideration to be received for
its shares of Sun Common Stock.
"Non-Electing Shares" means outstanding shares of Sun Common Stock,
as to
which there is a Non-Election.
"OCC"
means the Office of Comptroller of the Currency, an agency of
the
United States Department of the
Treasury.
"Omega
Bank" means Omega Bank N.A.
"Omega
Benefit Plans" means (i) each pension, profit sharing, stock
bonus,
thrift, savings, employee stock ownership
or other plan, program or arrangement,
which constitutes an "employee pension
benefit plan" within the meaning of
Section 3(2) of ERISA, which is maintained
by Omega or any Omega Subsidiary or
to which Omega or any Omega Subsidiary
contribute, or are obligated to
contribute, for the benefit of any current
or former employee, officer,
director, consultant or agent; and (ii)
every other retirement or deferred
compensation
<PAGE>
plan, bonus or incentive compensation plan
or arrangement, stock option plan,
stock purchase plan, severance or vacation
pay arrangement, or other fringe
benefit plan, program, agreement or
arrangement through which Omega or any Omega
Subsidiary provide benefits for or on
behalf of any current or former employee,
officer, director, consultant or agent,
and, with respect to each such plan, the
amounts contributed but not yet paid to
participants or beneficiaries
thereunder, and the amount of any
contribution deficiencies with respect
thereto.
"Omega
Common Stock" means the common stock of Omega, $5.00 par value.
"Omega
Financial Statements" means the audited financial statements of
Omega for the years ended December 31,
2003, 2002 and 2001, together with all
notes to such financial statements, as
included in Omega's annual report on Form
10-K filed with the SEC for the fiscal year
ended December 31, 2003.
"Omega
Schedule" means the schedule of exceptions and other
information
prepared by Omega and delivered to Sun as
described in the introductory
paragraph of Article 4.
"Omega
Subsidiaries" means Omega Bank and the other Subsidiaries of
Omega
referenced in Section 4.1(c).
"PBCL"
means Pennsylvania Business Corporation Law.
"Person"
means an individual, partnership (general or limited),
corporation, joint venture, business trust,
limited liability company,
cooperative association or other form of
business organization, trust, estate or
any other entity.
"Per Share
Merger Consideration" means either the Cash Merger
Consideration or Stock Merger
Consideration.
"Proceeding" means any proceeding, action, claim, suit,
arbitration,
mediation, investigation or inquiry by or
before any Governmental Authority.
"Prospectus/Proxy" means the combined prospectus and proxy
statement
constituting the prospectus for the
issuance of the Omega Common Stock as the
Stock Merger Consideration pursuant to this
Agreement and also constituting the
proxy statement sent to the shareholders of
Omega and Sun to solicit their votes
on the approval of the Merger, as the same
is included in the Registration
Statement, as declared effective by the
SEC, together with any supplement or
amendment thereto included as part of any
post-effective amendment.
"Registration Statement" means the Securities Act registration
statement
on Form S-4 as filed with the SEC in order
to register the offering of the Omega
Common Stock constituting the offering of
the aggregate Stock Merger
Consideration, together with all filed
amendments to such registration
statement.
"SEC"
means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and
the
rules and regulations promulgated from time
to time thereunder.
<PAGE>
"Securities Laws" means the Securities Act and the Exchange
Act.
"Sentry
Plans" means the Sentry Trust Company 1997 Stock Incentive
Plan,
as amended, and the Sentry Trust Company
1999 Stock Incentive Plan assumed by
Sun in connection with the acquisition of
Sentry Trust Company pursuant to that
certain Agreement and Plan of
Reorganization dated as of April 23, 2003, as
amended, by and among Sun, Sun Interim
Trust Company (In Organization), Sentry
Trust Company and Patriot Federal Credit
Union.
"Shareholder Materials" means a letter of transmittal, an
instruction
sheet and a return mailing envelope sent or
made available to Sun Shareholders
who have not duly submitted the
certificates for shares of Sun Common Stock by
the Election Deadline.
"Shares"
means the shares of Omega Common Stock issued, or to be issued,
to Sun Shareholders as consideration for
the Merger pursuant to this Agreement.
"Software"
means computer programs, whether in source code or object code
form (including any and all software
implementation of algorithms, models and
methodologies), databases and compilations
(including any and all data and
collections of data), and all documentation
(including user manuals and training
materials) related to the foregoing.
"Stock
Election" means the election by a Sun Shareholder to receive
the
Stock Merger Consideration for such
Shareholder's shares of Sun Common Stock.
"Stock
Election Shares" means shares of Sun Common Stock as to which a
Stock Election has been made.
"Stock
Merger Consideration" means 0.664 shares of Omega Common Stock.
"Subsidiary" means, with respect to a Person, a corporation,
partnership,
limited liability company or other business
entity in which such Person owns,
directly or indirectly, 50% or more of any
class of equity securities or a
comparable percentage equity ownership
interest.
"SunBank"
means SunBank, a Pennsylvania state-chartered bank.
"Sun
Common Stock" means the common stock of Sun, no par value.
"Sun
Financial Statements" means the audited financial statements of
Sun
for the years ended December 31, 2003, 2002
and 2001, together with all notes to
such financial statements, as included in
Sun's annual report on Form 10-K filed
with the SEC for the fiscal year ended
December 31, 2003.
"Sun
Intellectual Property" means the Intellectual Property used in
or
held for use in the conduct of the business
of Sun or any Sun Subsidiary.
"Sun Real
Property" means the real property owned, leased, rented,
occupied or operated by Sun or any Sun
Subsidiary.
"Sun
Schedule" means the schedule of exceptions and other
information
prepared by Sun and delivered to Omega as
described in the introductory
paragraph of Article 3.
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"Sun Stock
Options" mean options or other rights to purchase shares of Sun
Common Stock granted pursuant to (i) Sun's
1998 Stock Incentive Plan, 1998
Employee Stock Purchase Plan or 1998
Independent Directors Stock Option Plan,
each as approved by shareholders of Sun on
April 23, 1998 or (ii) the Sentry
Plans.
"Sun
Shareholder" means a record holder of one or more shares of Sun
Common Stock.
"Sun
Subsidiaries" means SunBank and any other Subsidiaries of Sun,
including, without limitation, the
Subsidiaries identified on Section 3.1(c) to
the Sun Schedule.
"Superior
Proposal" means an unsolicited, bona fide proposal to enter
into
an Acquisition Transaction that the board
of directors of Sun determines in its
good faith business judgment (after
consultation with its financial advisors and
legal counsel) (i) would result in a
transaction that is more favorable to its
shareholders, from a financial point of
view, and its other stakeholders than
the transactions contemplated by this
Agreement, (ii) that the Person proposing
such Acquisition Transaction is reasonably
likely to have or obtain, any
necessary funds or customary commitments to
provide any funds necessary to
consummate such Acquisition Proposal, and
(iii) that any Consents required in
order to consummate such Acquisition
Transaction are reasonably likely to be
obtained; provided, however, that, for the
purposes of this definition, the term
"Acquisition Transaction" shall have the
meaning ascribed to it herein except
that the references therein to 10% and 25%
shall be deemed to be a reference to
50%.
"Tax"
means any federal, state, local or foreign income, gross
receipts,
license, payroll, employment, excise,
severance, stamp, occupation, premium,
windfall profits, environmental, customs
duties, capital stock, franchise,
profits withholding, social security (or
similar), unemployment, disability,
real property, personal property, sales,
use, transfer, registration, value
added, alternative or add-on minimum,
estimated, or other tax of any kind
whatsoever, including any interest,
penalty, or addition thereto, whether
disputed or not.
"Tax
Return" means any returns, declaration, report, claim for refund,
or
information return or statement relating to
Taxes, including any schedule or
attachment thereto, and including any
amendment thereof.
NOW
THEREFORE, in consideration of the foregoing premises and the
mutual
representations, warranties, covenants and
agreements herein contained and for
other good and valuable consideration, the
receipt and sufficiency of which is
hereby acknowledged, the Parties agree as
follows:
ARTICLE 1
TERMS OF THE MERGER
1.1 The
Merger. Subject to the satisfaction (or lawful waiver) of each
of
the conditions to the obligations of each
Party specified herein, at the
Effective Time, Sun shall be merged with
and into Omega, which latter
corporation shall survive the Merger and is
referred to herein in such capacity
as the "Surviving Corporation." The Merger
shall have the effects set forth here
and the provisions of the PBCL relating to
mergers of corporate entities.
<PAGE>
(a) Effects of the Merger. At the Effective Time, the separate
existence of Sun shall cease, and Omega, as
the Surviving Corporation, shall
thereupon and thereafter possess all of the
assets, rights, privileges,
appointments, powers, licenses, permits and
franchises of the two merged
corporations, whether of a public or a
private nature, and shall be subject to
all of the liabilities, restrictions,
disabilities and duties of Sun. The Merger
is intended to be treated by the Parties as
a reorganization within the meaning
of Section 368(a) of the Code.
(b) Transfer of Assets. At the Effective Time, all rights,
assets,
licenses, permits, franchises and interests
of Sun in and to every type of
property, whether real, personal, or mixed,
whether tangible or intangible, and
choses in action shall be deemed to be
vested in Omega as the Surviving
Corporation by virtue of the Merger
becoming effective and without any deed or
other instrument or act of transfer
whatsoever.
(c) Assumption of Liabilities. At the Effective Time, the
Surviving
Corporation shall become and be liable for
all debts, liabilities, obligations
and contracts of Sun whether the same shall
be matured or unmatured; whether
accrued, absolute, contingent or otherwise;
and whether or not reflected or
reserved against in the balance sheets,
other financial statements, books of
account or records of Sun.
1.2
Articles of Incorporation, Bylaws, Directors, Officers and Name of
the
Surviving Corporation.
(a) Articles of Incorporation. At and after the Effective Time,
the
Articles of Incorporation of Omega, as in
effect immediately prior to the
Effective Time, shall continue to be the
Articles of Incorporation of Omega as
the Surviving Corporation, unless and until
amended thereafter as provided by
Applicable Law and the terms of such
Articles of Incorporation.
(b) Bylaws. At and after the Effective Time, the Bylaws of Omega,
as in
effect immediately prior to the Effective
Time, shall continue to be the Bylaws
of Omega as the Surviving Corporation,
unless and until amended or repealed as
provided by Applicable Law, the Articles of
Incorporation of Omega and such
Bylaws.
(c) Directors and Officers. The directors and officers of Omega
in
office immediately prior to the Effective
Time shall continue to be directors
and officers of the Surviving Corporation,
to hold office as provided in the
Articles of Incorporation and Bylaws of the
Surviving Corporation, unless and
until their successors shall have been
elected or appointed and shall have
qualified or until they shall have been
removed in the manner provided in said
Articles of Incorporation and Bylaws;
provided, however, that the Board of
Directors of Omega shall appoint, as of the
Effective Time, three directors of
Sun, as mutually agreed by Sun and Omega,
as directors of Omega (each, a "Sun
Director"). Each Sun Director shall be
appointed to one of the three classes of
directors of the Omega Board of Directors
and shall serve the remaining term of
the class to which such Sun Director was
appointed. The Omega Board of Directors
shall recommend, subject to its fiduciary
duties, the nomination of each Sun
Director for election, by the shareholders
of Omega, for one additional term of
three years after such Sun Director's
initial term expires. If one or more Sun
Director is unable or unwilling to serve as
a member of Omega's Board of
Directors, such person shall be replaced by
another person
<PAGE>
mutually selected by Omega and Sun who was
a director of Sun immediately prior
to the Effective Time.
(d) SunBank Board of Directors; SunBank Advisory Board; Omega
Bank
Board of Directors.
(i) For a period of two years following the Effective Time,
Omega
shall offer the current directors of
SunBank either seats on the SunBank Board
of Directors if SunBank has not been merged
with Omega Bank or any other Omega
Subsidiary or, in the event that SunBank is
merged with Omega Bank or any other
Omega Subsidiary, seats on a to-be-formed
Advisory Board of SunBank (the
"Advisory Board") which shall, in either
case, address and deal with issues in
the market area served by SunBank. For a
period of one year following the
Effective Time, the members of the SunBank
Board of Directors or the Advisory
Board, as applicable, will receive board
fees (excluding any stock option
grants) for each meeting actually attended
equal to the fees for each meeting
attended payable to the members of the
SunBank Board of Directors immediately
prior to the Effective Time. Omega shall
have the right to appoint one or more
representatives to seats on the SunBank
Board of Directors and, if formed, the
Advisory Board, and/or to send one or
representatives to attend meetings
thereof. After the Effective Time, the
Board of Directors of SunBank and, if
formed, the Advisory Board, shall give
Omega at least five (5) days notice of
the date, time and place of all meetings
thereof.
(ii) In
the event that SunBank is merged with Omega Bank or any
other Omega Subsidiary within two years of
the Effective Time, the Board of
Directors of the entity surviving such
merger ("Surviving Bank") shall appoint
Robert J. McCormack (provided that he is
then employed as an executive officer
of either Omega or Omega Bank) and three
other directors of SunBank (each, a
"SunBank Director"), as mutually agreed by
Omega and the directors of SunBank
immediately prior to the effectiveness of
such merger, to serve on the Board of
Directors of Surviving Bank until the next
election of directors of Surviving
Bank. The Board of Directors of Surviving
Bank shall recommend, subject to its
fiduciary duties, the nomination of each
SunBank Director for election as a
director of Surviving Bank for three
additional terms of one year each after
such SunBank Director's initial term
expires. If one or more SunBank Director is
unable or unwilling to serve as a member of
Surviving Bank's Board of Directors,
such person shall be replaced by another
person who was a director of SunBank
immediately prior to the Effective Time, as
mutually selected by Omega and the
directors of SunBank immediately prior to
the effectiveness of the merger of
SunBank with Omega Bank (or any other Omega
Subsidiary). All directors described
in this Section 1.2(d)(ii) shall be
entitled to the same fees and benefits as
other directors of Surviving Bank, but no
director of Surviving Bank shall be
entitled to receive any directors fees
while an employee of Surviving Bank.
(e) Fees. All directors described in Sections 1.2(c) shall be
entitled
to the same fees and benefits as other
directors of Omega, but no director of
Omega shall be entitled to receive any
directors fees while an employee of
Omega.
(f) Name. The name of the Surviving Corporation following the
Merger
shall be "Omega Financial Corporation."
1.3
Availability of Information. Promptly after the execution by
the
Parties of this Agreement, each Party shall
provide to the other Party, its
officers, employees, agents, and
<PAGE>
representatives, access, on reasonable
notice and during customary business
hours, to the books, records, properties
and facilities of the Party and shall
use its best efforts to cause its officers,
employees, agents and
representatives to cooperate with any of
the reviewing Party's reasonable
requests for information.
1.4
Anti-dilution Provisions. In the event Omega changes the number
of
shares of Omega Common Stock issued and
outstanding prior to the Effective Time
as a result of a stock split, stock
dividend, recapitalization or any other
distribution to shareholders of Omega, the
Stock Merger Consideration shall be
proportionately adjusted; provided,
however, that no such adjustments shall be
made for issuances of Omega Common Stock
(a) under any benefit or compensatory
plan of Omega or any Omega Subsidiary, or
(b) as consideration in connection
with an acquisition of a controlling
interest in any Person (by merger, business
combination or otherwise), or all or a
portion of a Person's business or assets
by Omega or any Omega Subsidiary.
ARTICLE 2
DESCRIPTION OF TRANSACTION
2.1 Terms
of the Merger.
(a) Satisfaction of Conditions to Closing. After the
transactions
contemplated herein have been approved by
the shareholders of Omega and Sun and
each other condition to the obligations of
the Parties hereto, other than those
conditions which are to be satisfied by
delivery of documents by either Party to
the other Party, has been satisfied or, if
lawfully permitted, waived by the
Party entitled to the benefits thereof, the
Closing will be held on the date and
at the time of day and place referred to in
this Agreement. At the Closing, the
Parties shall deliver the certificates,
letters and opinions which constitute
conditions to effecting the Merger and each
Party will provide the other Party
with such proof or indication of
satisfaction of the conditions to the
obligations of such other Party to
consummate the Merger as such other Party may
reasonably require. If all conditions to
the obligations of each Party shall
have been satisfied or lawfully waived by
the Party entitled to the benefits
thereof, the Parties shall, at the Closing,
duly execute the Articles of Merger
and such other documents as are required to
be filed with the Secretary of State
of the Commonwealth of Pennsylvania to
effect the Merger, and promptly
thereafter Sun and Omega shall take all
steps necessary or desirable to
consummate the Merger in accordance with
all Applicable Laws. The Parties shall
thereupon take such other and further
actions as may be required by Applicable
Law or this Agreement to consummate the
transactions contemplated herein.
(b)
Effective Time. Upon the satisfaction of all conditions to
Closing
set forth herein, the Merger shall become
effective on the date and at the time
of filing of the Articles of Merger with
the Secretary of State of the
Commonwealth of Pennsylvania or at such
later date and/or time as may be agreed
upon by the Parties and set forth in the
Articles of Merger so filed.
2.2
Conversion of Stock.
<PAGE>
(a) Consideration. At the Effective Time, each share of Sun
Common
Stock then issued and outstanding (other
than shares held directly or indirectly
by Omega, excluding shares held in a
fiduciary capacity or in satisfaction of a
debt previously contracted) shall, by
virtue of the Merger and without any
action on the part of the holder thereof,
be converted into and represent the
right to receive from Omega the Cash Merger
Consideration and/or Stock Merger
Consideration of Omega constituting the Per
Share Merger Consideration;
provided, however, that any shares of Sun
Common Stock that are owned by any
trust created under Sun's Defined
Contribution Plan or any other benefit plan
and that have not been contributed or
awarded to employees or directors at the
Effective Time shall be canceled and no
payment therefor shall be made. Omega
covenants and agrees to pay the Cash Merger
Consideration and the Stock Merger
Consideration, as applicable, to Sun
Shareholders, subject to the satisfaction
of the conditions set forth in this
Agreement. As of the Effective Time, each
share of the Sun Common Stock held directly
or indirectly by Omega, excluding
shares held in a fiduciary capacity or in
satisfaction of a debt previously
contracted, shall be canceled, retired and
cease to exist, and no exchange or
payment shall be made with respect
thereto.
(b) Cash or Stock Merger Consideration. Each Sun Shareholder shall
have
the right to elect to receive the Cash
Merger Consideration or the Stock Merger
Consideration as to each share of Sun
Common Stock owned by such shareholder,
subject however to the election,
allocation, adjustment and proration procedures
set forth below.
(c) Fractional Shares. Fractional shares of Omega Common Stock
shall
not be issued and each holder of Sun Common
Stock who would otherwise be
entitled to receive any such fractional
shares (taking into account all share
amounts to which such holder is otherwise
entitled hereunder) shall receive cash
(without interest) in lieu thereof in an
amount equal to the fraction of the
share of Omega Common Stock to which such
holder would otherwise be entitled
multiplied by the Determination Price. No
Person entitled to receive a
fractional share of Omega Common Stock will
be entitled to dividends, voting
rights or any other rights of a shareholder
of Omega with respect to such
fractional share.
(d) Treatment of Options.
(i) At the Effective Time, each holder of an option
(collectively, "Sun Options") to purchase
shares of Sun Common Stock that (i) is
outstanding at the Effective Time, (ii) has
been granted pursuant to Sun's 1998
Stock Incentive Plan or 1998 Independent
Directors Stock Option Plan or the
Sentry Plans; and (iii) would otherwise
survive the Effective Time shall be
entitled to receive, in substitution for
such Sun Option, an option to acquire
shares of Omega Common Stock on the terms
set forth below (each Sun Option as
substituted, an "Omega Option").
(ii) An Omega Option shall be a stock option to acquire shares
of Omega Common Stock with the following
terms: (i) the number of shares of
Omega Common Stock which may be acquired
pursuant to such Omega Option shall be
equal to the product of the number of
shares of Sun Common Stock covered by the
corresponding Sun Option multiplied by
0.664, provided that any fractional share
of Omega Common Stock resulting from such
multiplication shall be rounded down
to the nearest whole share; (ii) the
exercise price per share of Omega Common
Stock issuable upon exercise of the Omega
Option shall be equal to the exercise
price of the corresponding Sun Option
immediately prior to the conversion
thereof to an
<PAGE>
Omega Option, divided by 0.664, provided
that such exercise price shall be
rounded down to the nearest whole cent;
(iii) the duration and other terms of
such Omega Option shall be identical to the
duration and other terms of the
corresponding Sun Option immediately prior
to the conversion thereof to an Omega
Option, except that all references to Sun
shall be deemed to be references to
Omega and its affiliates, where the context
so requires and shall remain
exercisable until the stated expiration
date of the corresponding Sun Option;
(iv) Omega shall assume such Sun Option,
whether vested or not vested, as
contemplated by the Code; and (v) to the
extent Sun Options qualify as incentive
stock options under Section 422 of the
Code, the Omega Options exchanged
therefor shall also so qualify.
(iii) On or within 15 days after the Effective Time, Omega
shall take appropriate action to reserve
for issuance and, if not previously
registered pursuant to the Securities Act,
register the number of shares of
Omega Common Stock necessary to satisfy
Omega's obligations with respect to the
issuance of Omega Common Stock pursuant to
the exercise of Omega Options.
(e) Calculation Schedule. The calculations of the respective
amounts of
cash and Omega Common Stock payable and
issuable pursuant to the terms of this
Agreement shall be calculated by the
Exchange Agent and approved by Omega and
Sun as soon as practicable and no later
than the Effective Time.
2.3
Election and Allocation Procedures.
(a) Election by Sun Shareholders. Subject to and in accordance with
the
allocation and election procedures set
forth herein, each Sun Shareholder shall,
prior to the Election Deadline, specify (i)
the number of whole shares of Sun
Common Stock held by such Shareholder as to
which such Shareholder shall desire
to receive the Cash Merger Consideration,
and (ii) the number of whole shares of
Sun Common Stock held by such Shareholder
as to which such Shareholder shall
desire to receive the Stock Merger
Consideration.
(b) Allocation of Cash and Stock. Notwithstanding anything herein
to
the contrary, and after taking into
consideration cash paid in lieu of
fractional shares, and after excluding
shares for which no consideration is
payable as described in Section 2.2(a), 80%
of the outstanding Sun Common Stock
shall be exchanged for Omega Common Stock
and all remaining outstanding Sun
Common Stock shall be converted into the
right to receive cash. Such result
shall be accomplished through the following
adjustments to the elections made by
Sun Shareholders, and by giving due
consideration to cash payments for
fractional shares:
(1) If the number of Cash Election Shares is in excess of 20%
of the Aggregate Shares, then (i)
Non-Electing Shares shall be deemed to be
Stock Election Shares, and (ii)(A) Cash
Election Shares of each Sun Shareholder
who made the Cash Election shall be reduced
pro rata by multiplying the number
of Cash Election Shares of such Sun
Shareholder by a fraction, the numerator of
which is the number of shares of Sun Common
Stock equal to 20% of the Aggregate
Shares, and the denominator of which is the
aggregate number of Cash Election
Shares of all Sun Shareholders, and (B) the
shares of such Sun Shareholder
representing the difference between such
Sun Shareholder's initial Cash Election
Shares and such Sun Shareholder's reduced
Cash Election Shares pursuant to
clause (A) shall be converted into and be
deemed to be Stock Election Shares.
<PAGE>
(2) If the number of Stock Election Shares is in excess of 80%
of the Aggregate Shares, then (i)
Non-Electing Shares shall be deemed to be Cash
Election Shares and (ii) (A) Stock Election
Shares of each Sun Shareholder shall
be reduced pro rata by multiplying the
number of Stock Election Shares of such
Sun Shareholder by a fraction, the
numerator of which is the number of shares of
Sun Common Stock equal to 80% of the
Aggregate Shares and the denominator of
which is the aggregate number of Stock
Election Shares of all Sun Shareholders,
and (B) the shares of such Sun Shareholder
representing the difference between
such Sun Shareholder's initial Stock
Election Shares and such Sun Shareholder's
reduced Stock Election Shares pursuant to
clause (A) shall be converted into and
be deemed to be Cash Election Shares.
(3) If the number of Cash Election Shares is less than 20% of
the Aggregate Shares and the number of
Stock Election Shares is less than 80% of
the Aggregate Shares, then (i) there shall
be no adjustment to the elections
made by electing Sun Shareholders, and (ii)
Non-Electing Shares of each Sun
Shareholder shall be treated as Stock
Elections Shares and/or as Cash Election
Shares in proportion to the respective
amounts by which the Cash Election Shares
and the Stock Election Shares are less than
the 20% and 80% limits,
respectively.
(c) Receipt of Payment. After taking into account the foregoing
adjustment provisions, each Cash Election
Share (including those deemed to be
Cash Election Shares) shall receive in the
Merger the Cash Merger Consideration
pursuant to Section 2.5 and each Stock
Election Share (including those deemed to
be Stock Election Shares) shall receive in
the Merger the Stock Merger
Consideration (and cash in lieu of
fractional shares) pursuant to Section 2.5.
2.4
Election Procedures.
(a) The Election Form shall be distributed to each Sun Shareholder
at
such time as Sun and Omega shall determine
and shall specify the Election
Deadline.
(b) Elections shall be made by Sun Shareholders by mailing to
the
Exchange Agent a completed Election Form.
To be effective, an Election Form must
be properly completed, signed and submitted
to the Exchange Agent accompanied by
certificates representing the shares of Sun
Common Stock as to which the
election is being made (or by an
appropriate guaranty of delivery by a
commercial bank or trust company in the
United States or a member of a
registered national security exchange or
the National Association of Securities
Dealers, Inc.), or by evidence that such
certificates have been lost, stolen or
destroyed accompanied by such security or
indemnity as shall reasonably be
requested by Omega. An Election Form and
accompanying share certificates must be
received by the Exchange Agent by the close
of business on the Election
Deadline. An election may be changed or
revoked but only by written notice
received by the Exchange Agent prior to the
Election Deadline including, in the
case of a change, a properly completed
revised Election Form.
(c) Omega, or the Exchange Agent if so designated by Omega,
shall
determine in the reasonable exercise of
discretion, whether the Election Forms
have been properly completed, signed and
submitted or changed or revoked and may
disregard immaterial defects in Election
Forms. Omega or the Exchange Agent, as
applicable, will notify the applicable Sun
Shareholders of any defect in an
Election Form by regular United States mail
or
<PAGE>
such other method of notice which can
reasonably be expected to be at least as
prompt as notice by regular United States
mail.
(d) For the purposes hereof, a Sun Shareholder who does not submit
an
effective Election Form to the Exchange
Agent prior to the Election Deadline
shall be deemed to have made a
Non-Election.
(e) In the event that this Agreement is terminated pursuant to
the
provisions hereof and any certificates for
shares have been transmitted to the
Exchange Agent pursuant to the provisions
hereof, Omega and Sun shall cause the
Exchange Agent to return such certificates
to the Person submitting the same
promptly after such termination.
2.5
Mechanics of Payment of Consideration.
(a) Payment of the Merger Consideration. Omega shall deposit with
the
Exchange Agent sufficient certificates
representing Omega Common Stock and
sufficient cash to enable the Exchange
Agent to distribute the Aggregate
Consideration as determined pursuant to
this Agreement. Within three business
days after the Effective Time, the Exchange
Agent shall distribute, to all Sun
Shareholders who have properly submitted
Election Forms together with their
share certificates or proper proofs with
respect to lost certificates, the Cash
Merger Consideration and the Stock Merger
Consideration to which each such Sun
Shareholder is entitled. Within five
business days after receiving properly
completed Shareholder Materials, as set
forth in Section 2.5(b), from any Sun
Shareholder who made a Non-Election, the
Exchange Agent shall likewise
distribute to such Sun Shareholder the Cash
Merger Consideration or Stock Merger
Consideration, or a combination of both,
which such Sun Shareholder is entitled
to receive pursuant to this Agreement.
(b) Submission Procedures for Non-Electing Shares. Within five
business
days after the Effective Time, the Exchange
Agent shall send the Shareholder
Materials to each Sun Shareholder who has
made a Non-Election. All Shareholder
Materials shall be sent by first class
United States mail to such Sun
Shareholders at the addresses set forth on
the official shareholder records of
Sun. Omega shall also make appropriate
provisions with the Exchange Agent to
enable Sun Shareholders to obtain the
Shareholder Materials from, and to deliver
the certificates formerly representing
shares of Sun Common Stock to, the
Exchange Agent in person, commencing on or
not later than the second business
day following the Effective Time. Upon
receipt of the appropriate Shareholder
Materials, together with the certificates
formerly evidencing and representing
all of the shares of Sun Common Stock which
were validly held of record by such
Sun Shareholder, the Exchange Agent shall
take prompt action to process such
certificates formerly evidencing and
representing shares of Sun Common Stock
received by it (including the prompt return
of any defective submissions with
instructions as to those actions which may
be necessary to remedy any defects)
and to mail to the Sun Shareholders in
exchange for the certificate(s)
surrendered by them, the consideration to
be issued or paid for such Sun
Shareholder's shares pursuant to the terms
hereof.
(c) Rights Appurtenant to Certificates Lost Certificates. After
the
Effective Time and until properly
surrendered to the Exchange Agent, each
outstanding certificate or certificates
which formerly evidenced and represented
Sun Common Stock shall be deemed for all
purposes to represent and evidence only
the right to receive the aggregate Cash
Merger
<PAGE>
Consideration or aggregate Stock Merger
Consideration into which such Sun Common
Stock was converted. The aggregate Cash
Merger Consideration or aggregate Stock
Merger Consideration shall not be paid to
the record holder of any Sun Common
Stock until the certificate therefor is
surrendered in the manner required. Each
Sun Shareholder will be responsible for all
federal, state and local taxes which
may be incurred by him or her on account of
his or her receipt of the
consideration to be paid in the Merger. A
Sun Shareholder whose certificate(s)
have been lost or destroyed may
nevertheless, subject to the provisions of this
Article, receive the aggregate Cash Merger
Consideration or aggregate Stock
Merger Consideration to which such Sun
Shareholder is entitled, provided that
such Sun Shareholder must first deliver to
Omega or to the Exchange Agent: (i) a
sworn statement certifying such loss or
destruction and specifying the
circumstances thereof, and (ii) a lost
instrument bond in form satisfactory to
Omega and the Exchange Agent which has been
duly executed by a corporate surety
satisfactory to Omega and the Exchange
Agent, indemnifying the Surviving
Corporation, Omega, the Exchange Agent (and
their respective successors) to
their satisfaction against any loss or
expense which any of them may incur as a
result of such lost or destroyed
certificates being presented. Any costs or
expenses which may arise from such
replacement procedure, including the premium
on the lost instrument bond, shall be paid
by the Sun Shareholder.
(d) Stock Transfer Books. At the Effective Time, the stock
transfer
books of Sun shall be closed and no
transfer of shares of Sun Common Stock shall
be made thereafter.
(e) Right to Receive Dividends on Omega Common Stock. Each Sun
Shareholder who is entitled to receive the
Stock Merger Consideration shall be
entitled, to the same extent as other
holders of Omega Common Stock, to payments
of dividends, if any, on Omega Common Stock
if the record date for such dividend
is on or after the Closing Date; provided,
however, that such dividends shall be
paid, without interest, only after the Sun
Shareholder submits his or her
certificate for Sun Common Stock pursuant
to Sections 2.4(b) or 2.5(b) or
complies with the requirements of Section
2.5(c) with respect to lost stock
certificates. All dividends not paid on the
dividend payment date pursuant to
this Section shall be paid by Omega to the
Exchange Agent, which shall remit
them to the applicable shareholder upon
satisfaction of the conditions set forth
in this Section 2.5(e).
2.6 Time
and Place of Closing. Unless this Agreement shall have been
terminated and the transactions herein
contemplated shall have been abandoned
pursuant to Section 8.1, and subject to the
satisfaction or waiver of the
conditions set forth in Article 7, the
Closing will take place at 10:00 a.m. on
the Closing Date, at Omega's corporate
offices in State College, Pennsylvania,
unless another date, time or place is
agreed to in writing by the parties
hereto.
2.7 Voting
Agreements. As a material inducement for Omega entering into
this Agreement, simultaneously with the
execution of this Agreement by the
Parties, each director and executive
officer of Sun shall enter into a Voting
Agreement.
2.8
Reservation of Shares. Omega agrees that, prior to the Effective
Time,
it will take appropriate action to reserve
a sufficient number of authorized but
unissued shares of Omega Common Stock to be
issued as Stock Merger Consideration
in accordance with this Agreement.
2.9
Certain Actions Relating to Rule 16b-3. Prior to the Effective
Time,
Omega and Sun shall take all such steps as
may be required to cause any
dispositions of shares of Sun
<PAGE>
Common Stock (including derivative
securities with respect to such shares)
resulting from the transactions
contemplated by Article 2 of this Agreement by
each individual who is subject to the
reporting requirements of Section 16(a) of
the Exchange Act with respect to Sun to be
exempt under Rule 16b-3 promulgated
under the Exchange Act.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SUN
Except as
otherwise disclosed in one or more schedules numbered to
correspond to the following Sections of
Article 3, and delivered concurrently
with this Agreement, both as of the date
hereof and as of the Effective Time,
Sun hereby represents and warrants to Omega
as follows:
3.1
Organization and Qualification of Sun and Sun Subsidiaries.
(a)
Sun is a corporation duly organized, validly existing and in
good
standing under the laws of the Commonwealth
of Pennsylvania and (i) has all
requisite corporate power and authority to
own, operate and lease its properties
and assets and to carry on its business as
it is currently being conducted; (ii)
is in good standing and is duly qualified
and licensed to conduct business in
each jurisdiction where the character of
its properties owned or held under
lease or the nature of its business is such
that a failure to be so qualified or
licensed would have, individually or in the
aggregate, a Material Adverse
Effect; and (iii) is a financial holding
company under the regulations of the
FRB.
(b) SunBank is a Pennsylvania state-chartered, non-member bank,
duly
organized, validly existing and in good
standing under the laws of the
appropriate jurisdiction in which it was
organized and engages only in
activities (and holds properties and assets
only of the types) permitted by the
laws of the Commonwealth of Pennsylvania,
the United States, the rules and
regulations promulgated by the Banking
Department and the FDIC for insured
depository institutions. SunBank's deposit
accounts are insured by the Bank
Insurance Fund or Savings Association
Insurance Fund as administered by the FDIC
to the fullest extent permitted under
Applicable Law, and all premiums and
assessments required to be paid in
connection therewith have been paid when due.
SunBank is the sole banking Subsidiary of
Sun.
(c) Section 3.1(c) of the Sun Schedule specifically identifies
each
Subsidiary of Sun and its jurisdiction of
formation. Each Sun Subsidiary (other
than SunBank) is duly organized, validly
existing and in good standing under the
laws of the appropriate jurisdiction in
which it is incorporated or organized
and (i) has all requisite corporate power
and authority to own, operate and
lease its properties and assets and to
carry on its business as it is currently
being conducted; and (ii) is in good
standing and is duly qualified and licensed
to conduct business in each jurisdiction
where the character of its properties
owned or held under lease or the nature of
its business is such that a failure
to be so qualified or licensed would have,
individually or in the aggregate, a
Material Adverse Effect.
3.2
Authorization, Execution and Delivery; Agreement Not in Breach
<PAGE>
(a) Sun has all requisite corporate power and authority to
execute
and deliver this Agreement and, subject to
the approval of Sun Shareholders and
the Banking Approvals, to consummate the
transactions contemplated hereby. The
execution and delivery of this Agreement
and the consummation of the proposed
transactions have been duly authorized by
the requisite vote of Sun's Board of
Directors and no other corporate
proceedings of the part of Sun or any Sun
Subsidiary are necessary to authorize the
execution and delivery of this
Agreement or the consummation of the
transactions contemplated hereby, except
for the approval of the holders of Sun
Common Stock entitled to vote thereon.
This Agreement and all other agreements and
instruments herein contemplated to
be executed by Sun have been (or upon
execution will have been) duly executed
and delivered by Sun and constitute (or
upon execution will constitute) legal,
valid and enforceable obligations of Sun,
subject, as to enforceability, to
applicable bankruptcy, insolvency,
receivership, conservatorship,
reorganization, moratorium or similar laws
affecting the enforcement of
creditors' rights generally and to the
application of equitable principles.
(b) The execution and delivery of this Agreement, the
consummation
of the transactions contemplated hereby,
and the fulfillment of the terms hereof
will not result in a material violation or
material breach of any of the terms
or provisions of, or constitute a material
default under (or an event which,
with the passage of time or the giving of
notice, or both, would constitute such
a default under), or conflict with, or
permit the acceleration of, any material
obligation under, any mortgage, lease,
covenant, agreement, indenture or other
instrument to which Sun or any Sun
Subsidiary is a party or by which any of them
or their respective properties or assets is
bound, the Charter Documents of Sun
or any Sun Subsidiary; or any judgment,
decree, order, regulatory letter of
understanding or award of any Governmental
Authority by which Sun or any Sun
Subsidiary, or their respective properties
or assets, is bound, or any material
Consent, permit, concession, grant,
franchise, license, law, statute, ordinance,
rule or regulation applicable to Sun or any
Sun Subsidiary or the properties or
assets of any of them; or result in the
creation of any material lien, claim,
security interest, encumbrance, charge,
restriction or right of any third party
of any kind whatsoever upon the properties
or assets of Sun or any Sun
Subsidiary; except that the approval of Sun
Shareholders and the Banking
Approvals must be obtained in order for Sun
to consummate the Merger.
3.3 No Legal Bar. Neither Sun nor any Sun Subsidiary is a party to,
or
subject to or bound by, any agreement,
judgment, order, letter of understanding,
writ, prohibition, injunction or decree of
any Governmental Authority, or any
Applicable Law which would prevent the
execution of this Agreement by Sun, the
delivery hereof to Omega or the
consummation of the transactions contemplated
hereby (except for such laws as require
that the approval of Sun Shareholders
and the Banking Approvals be obtained), and
no Proceeding is pending against Sun
or any Sun Subsidiary in which the validity
of this Agreement, any of the
transactions contemplated hereby or any
action which has been taken by either of
the Parties in connection herewith, or, in
connection with any of the
transactions contemplated hereby, is at
issue.
3.4 Consents and Approvals. Except for (a) the Banking Approvals,
(b)
the filing with the SEC and declaration of
effectiveness by the SEC of the
Registration Statement, (c) the approval of
this Agreement by the requisite vote
of the shareholders of Omega and Sun, (d)
the approval of the listing of Omega
Common Stock to be issued in the Merger on
the NASDAQ National Market, (e) such
filings and approvals as are required to be
made or obtained under the
securities or "Blue Sky" laws of various
states in connection with the issuance
of the shares of
<PAGE>
Omega Common Stock pursuant to this
Agreement and (f) such Consents as may be
set forth in Section 3.4 of the Sun
Schedule, no Consents of any Governmental
Authority or any other third Person are
necessary in connection with the
execution and delivery by Sun of this
Agreement or the consummation by Sun of
the Merger and the other transactions
contemplated hereby, except where the
failure to obtain such Consents would not
reasonably be expected to have a
Material Adverse Effect.
3.5 Licenses, Franchises and Permits. Sun and each Sun Subsidiary
holds
all licenses, franchises, permits and
authorizations necessary for the lawful
conduct of their respective businesses,
except where the failure to hold such
licenses, franchises, permits and
authorizations would not reasonably be
expected to have a Material Adverse Effect.
All of such licenses, franchises,
permits and authorizations are in full
force and effect and are transferable to
a successor to Sun or any Sun Subsidiary in
connection with or subsequent to the
Closing of the transactions contemplated
herein without any Consent, other than
the Banking Approvals, subject to the legal
right and authority of such
successor to engage in the activities
licensed, franchised, permitted or
authorized thereby and except where the
failure of such licenses, franchises,
permits and authorizations to be in full
force and effect and transferable to a
successor to Sun or a Sun Subsidiary would
not reasonably be expected to have a
Material Adverse Effect. Neither Sun nor
any Sun Subsidiary has received notice
of any Proceeding for the suspension or
revocation of any such license,
franchise, permit, or authorization and no
such Proceeding is pending or, to
Sun's knowledge, has been threatened by any
Governmental Authority.
3.6 Charter Documents. Sun has provided to Omega true, correct
and
complete copies of the Charter Documents of
Sun and each Sun Subsidiary.
3.7 Sun Financial Statements. Except as disclosed on Section 3.7 of
the
Sun Schedule, the consolidated statements
of financial condition contained in
the Sun Financial Statements fairly present
the consolidated financial condition
of Sun and the Sun Subsidiaries as of the
respective dates set forth therein,
and the related consolidated statements of
operations, changes in shareholders'
equity and cash flows in the Sun Financial
Statements fairly present the results
of the consolidated operations, changes in
shareholders' equity and cash flows
of Sun and the Sun Subsidiaries for the
respective periods or as of the
respective dates set forth therein, in each
case in conformity with GAAP
consistently applied, it being understood
that Sun's interim financial
statements are not audited, not prepared
with related notes and are subject to
normal year-end adjustments.
3.8 Absence of Certain Changes. Except as disclosed on Section 3.8
of
the Sun Schedule and provided for or
contemplated in this Agreement, since the
Balance Sheet Date there has not been:
(a) any material transaction by Sun or any Sun Subsidiary other
than
in the ordinary course of business and in
conformity with past practice;
(b) a change in the business, property, assets (including loan
portfolios), liabilities (whether absolute,
accrued, contingent or otherwise),
operations, liquidity, income, condition or
net worth of Sun or any Sun
Subsidiary that has had, or would
reasonably be expected to have, a Material
Adverse Effect;
<PAGE>
(c) any damage, destruction or loss, whether or not covered by
insurance, which has had or may have a
Material Adverse Effect;
(d) any acquisition or disposition by Sun or any Sun Subsidiary
of
any property or asset, whether real or
personal, having a fair market value,
singularly or in the aggregate, in an
amount greater than $100,000, other than
acquisitions or dispositions made in the
ordinary course of business;
(e) any mortgage, pledge or subjection to lien, charge or
encumbrance of any kind on any of the
respective properties or assets of Sun or
any Sun Subsidiary, except to secure
extensions of credit in the ordinary course
of business and in conformity with past
practice (pledges of and liens on assets
to secure Federal Home Loan Bank or Federal
Reserve Bank advances being deemed
both in the ordinary course of business and
consistent with past practice);
(f) any amendment, modification or termination of any contract
or
agreement (other than contracts or
agreements related to loans made by SunBank)
in excess of $75,000, relating to Sun or
any Sun Subsidiary, or to which any Sun
or any Sun Subsidiary is a party, which
would reasonably be expected to have a
Material Adverse Effect;
(g) any increase in, or commitment to increase, the
compensation
payable or to become payable to any
officer, director, employee or agent of Sun
or any Sun Subsidiary, or any bonus
payment, stock option award, restricted
stock award or similar arrangement made to
or with any of such officers,
directors, employees or agents, other than
routine increases made in the
ordinary course of business and consistent
with past practice and not exceeding
the lesser of five percent (5%) per annum
or $15,000 for any of them
individually;
(h) any incurring of, assumption of, or taking of, by Sun or any
Sun
Subsidiary, any property subject to, any
liability in excess of $75,000, except
for liabilities incurred or assumed or
property taken subsequent to the Balance
Sheet Date in the ordinary course of
business and in conformity with past
practice; or
(i) any material alteration in the manner of keeping the books,
accounts or records of Sun or any Sun
Subsidiary, or in the accounting policies
or practices therein reflected.
3.9 Deposits. None of the SunBank deposits (consisting of
certificates
of deposit, savings accounts, NOW accounts,
money market accounts and checking
accounts), is a brokered deposit.
3.10
Properties. Section 3.10 of the Sun Schedule contains a true
and
complete list of all material Sun Real
Property. Except as adequately reserved
against in the Sun Financial Statements or
disposed of since the Balance Sheet
Date in the ordinary course of business,
Sun and each Sun Subsidiary has good
and marketable title, free and clear of all
material liens, encumbrances,
charges, defaults, or equities of whatever
character to all of the material
properties and assets, real or personal,
reflected in the Sun Financial
Statements as being owned by Sun or any Sun
Subsidiary as of the dates thereof.
All buildings, and all fixtures, equipment,
and other property and assets that
are material to the business of Sun and the
Sun Subsidiaries on a consolidated
basis, held under leases or subleases by
Sun or any Sun Subsidiary, are held
under
<PAGE>
valid instruments enforceable in accordance
with their respective terms (except
as enforceability may be limited by
applicable bankruptcy, insolvency,
reorganization, moratorium, or other laws
affecting the enforcement of
creditors' rights generally, or by
equitable principles), and neither Sun nor
any Sun Subsidiary nor, to Sun's knowledge,
any other party thereto is in
material breach or material default
thereunder.
3.11 Intellectual Property. Section 3.11 of the Sun Schedule
contains a
true and complete list of all material Sun
Intellectual Property. Either Sun or
one of the Sun Subsidiaries own or have a
valid license to use all Sun
Intellectual Property, free and clear of
all liens, encumbrances, royalty or
other payment obligations (except for
royalties or payments with respect to
off-the-shelf Software at standard
commercial rates). Sun Intellectual Property
constitutes all of the Intellectual
Property necessary to carry on the business
of Sun and the Sun Subsidiaries as
currently conducted, except where the failure
to have such property would not reasonably
be expected to have a Material
Adverse Effect. The Sun Intellectual
Property is valid and has not been
cancelled, forfeited, expired or abandoned,
and neither Sun nor any Sun
Subsidiary has received any notice
challenging the validity or enforceability of
Sun Intellectual Property, other than as
would not reasonably be expected to
have a Material Adverse Effect. To Sun's
knowledge, the conduct of the business
of Sun and the Sun Subsidiaries does not
violate, misappropriate or infringe
upon the Intellectual Property rights of
any third Person. The consummation of
the transactions contemplated by this
Agreement will not result in the material
loss or material impairment of the right of
Sun or any Sun Subsidiary to own or
use any of the Sun Intellectual Property,
and the Surviving Company and its
Subsidiaries will have substantially the
same rights to own or use the Sun
Intellectual Property following the
consummation of such transactions as Sun and
the Sun Subsidiaries had prior to the
consummation of such transactions, except
such rights as would not reasonably be
expected to have a Material Adverse
Effect.
3.12 Condition of Fixed Assets and Equipment. Section 3.12 of the
Sun
Schedule contains a list of all material
fixed assets and equipment used in the
conduct of the business of Sun and the Sun
Subsidiaries as of the Balance Sheet
Date. Each such item of fixed assets and
equipment having a net book value in
excess of $75,000 is, to Sun's knowledge,
in good operating condition and
repair, normal wear and tear excepted.
3.13 Tax Matters.
(a) All federal, state and local Tax Returns required to be filed
by
or on behalf of Sun or any Sun Subsidiary
have been timely filed, or Sun or any
applicable Sun Subsidiary has received an
appropriate extension therefor. All
Tax Returns filed are, and the information
contained therein is, complete and
accurate in all material respects. All Tax
obligations reflected in such returns
have been timely paid. Except as described
in Section 3.13(a) of the Sun
Schedule, neither Sun nor any Sun
Subsidiary is currently the beneficiary of any
extension of time within which to file any
Tax Return. As of the date of this
Agreement, there is no audit examination,
deficiency, or refund litigation or
matter in controversy with respect to any
Taxes that might reasonably be
expected to result in a determination
materially adverse to Sun or any Sun
Subsidiary except as fully reserved for in
the Sun Financial Statements. All
Taxes, interest, additions, and penalties
due with respect to completed and
settled examinations or concluded
litigation have been paid;
<PAGE>
(b) Neither Sun nor any Sun Subsidiary has executed an extension
or
waiver of any statute of limitations on the
assessment or collection of any Tax
due that is currently in effect;
(c) Adequate provision for any federal, state or local Taxes due
or
to become due by Sun or any Sun Subsidiary
for all periods through and including
December 31, 2003, has been made and is
reflected on the December 31, 2003
financial statements included in Sun's
Report on Form 10-K for the period then
ending, and has been and will continue to
be made with respect to periods ending
after December 31, 2003 on a basis
consistent with its historic Tax accounting
practices and GAAP;
(d) Deferred taxes of Sun and each Sun Subsidiary have been and
will
be provided for in accordance with
GAAP;
(e) Neither the U.S. Internal Revenue Service nor any state,
local
or other taxing authority is now asserting
or threatening to assert against Sun
or any Sun Subsidiary any deficiency or
claim for additional Taxes, or interest
thereon or penalties in connection
therewith. All income, payroll, withholding,
property, excise, sales, use, franchise and
transfer taxes, and all other Taxes,
charges, fees, levies or other assessments,
imposed upon Sun or any Sun
Subsidiary by the United States or by any
state, municipality, subdivision or
instrumentality of the United States or by
any other taxing authority, including
all interest, penalties or additions
attributable thereto, which are due and
payable by Sun or any Sun Subsidiary,
either have been paid in full or have been
properly accrued and reflected in the Sun
Financial Statements;
(f) Except as set forth in Section 3.13(f) of the Sun Schedule,
neither Sun nor any Sun Subsidiary has made
any material payments, is obligated
to make any material payments, or is a
party to any agreement that under certain
circumstances could obligate it to make any
material payments that will not be
deductible under Section 280G of the Code;
and
(g) Neither Sun nor
any Sun Subsidiary (i) is a party to any Tax
allocation or sharing agreement, (ii) has
been a member of an affiliated group
filing a consolidated federal income Tax
Return (other than a group the common
parent of which was Sun), or (iii) has any
Tax liability for any Person (other
than Sun or any Sun Subsidiary) under
Treasury Regulations Section 1.1502-6 (or
any similar provision of state, local or
foreign law), as a transferee or
successor, by contract, or otherwise.
3.14 Litigation. There is no Proceeding pending against Sun or any
Sun
Subsidiary, or to Sun's knowledge,
threatened against or affecting Sun or any
Sun Subsidiary or any of their assets, that
may, if decided against Sun or any
Sun Subsidiary, have a Material Adverse
Effect.
3.15 Environmental Matters. To Sun's knowledge, the Sun Real
Property
is and has been in compliance with all
Environmental Laws, and there are no
conditions existing currently which would
subject Sun or any Sun Subsidiary to
damages, penalties, injunctive relief or
cleanup costs under any Environmental
Laws or assertions thereof, or which
require cleanup, removal, remedial action
or other response pursuant to Environmental
Laws by Sun or any Sun Subsidiary.
Neither Sun nor any Sun Subsidiary is a
party to any Proceeding relating to
Environmental Laws, nor are any of them
(either in their own capacity or as
trustee or fiduciary) required to clean up,
remove or take remedial or other
responsive action due to the disposal,
<PAGE>
depositing, discharge, leaking or other
release of any hazardous substances or
materials. None of the Sun Real Property
is, nor is Sun or any Sun Subsidiary,
subject to any judgment, decree, order or
citation related to or arising out of
any Environmental Laws. No Consents,
permits or licenses are required under
Environmental Laws relative to the Sun Real
Property. Neither Sun nor any Sun
Subsidiary has stored, deposited, treated,
recycled, used or disposed of any
materials (including, without limitation,
asbestos) on, under or at the Sun Real
Property (or tanks or other facilities
thereon containing such materials), which
materials, if known to be present on the
Sun Real Property or present in soils
or ground water, would require cleanup,
removal or some other remedial action
under the Environmental Laws.
3.16 Insurance. Section 3.16 of the Sun Schedule includes a
complete
list of all insurance policies (other than
title insurance policies or insurance
policies of which any Sun Subsidiary is a
beneficiary incident to the making of
individual loans) held by Sun or any Sun
Subsidiary. There are no outstanding
unresolved claims for losses under any such
insurance policies. Sun and the Sun
Subsidiaries have paid all amounts due and
payable under any insurance policies
and guaranties applicable to them and their
assets and operations; all such
insurance policies and guaranties are in
full force and effect; and Sun, the Sun
Subsidiaries and all
