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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.
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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.
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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.
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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).
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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
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