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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 16, 2000
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M&T BANK CORPORATION
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(Exact name of registrant as specified in its charter)
New York
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(State or other jurisdiction of incorporation)
001-9861 16-0968385
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(Commission File Number) (I.R.S.Employer Identification No.)
One M&T Plaza, Buffalo, New York 14203
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (716) 842-5445
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(NOT APPLICABLE)
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(Former name or former address, if changed since last report)
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Item 5. Other Events.
On May 17, 2000, M&T Bank Corporation announced that it had entered
into a definitive agreement with Keystone Financial, Inc. ("Keystone"),
Harrisburg, Pennsylvania, pursuant to which Keystone, a bank holding company,
will be acquired by M&T Bank Corporation upon the satisfaction of a number of
conditions. Upon consummation of the transaction, Keystone Financial Bank, N.A.,
Keystone's national bank subsidiary, will be merged into Manufacturers and
Traders Trust Company ("M&T Bank"), M&T Bank Corporation's principal commercial
bank subsidiary.
Keystone Financial Bank, N.A. operates 171 banking offices in 33
counties in Pennsylvania, 25 banking offices in three counties in Maryland, and
three banking offices in one county in West Virginia. At March 31, 2000,
Keystone reported approximately $7.0 billion in assets. Keystone's common stock
is registered pursuant to Section 12(g) of the Securities Exchange Act of 1934,
as amended (File No. 000-11460). Additional information concerning Keystone is
on file with the Securities and Exchange Commission.
Each share of Keystone common stock outstanding at the time the Merger
is consummated will, at the election of the holder thereof, be converted in to
either 0.05 of a share of common stock of M&T Bank Corporation (and cash in lieu
of fractional shares) or the right to receive $21.50 in cash as provided in the
Agreement and Plan of Merger, dated as of May 16, 2000, by and among Keystone,
M&T Bank Corporation, and M&T Bank Corporation's wholly owned subsidiary,
Olympia Financial Corp. ("Olympia"), providing for the merger (the "Merger") of
Keystone with and into Olympia (the "Plan of Merger"). The Plan of Merger is set
forth as Annex A to the Agreement and Plan of Reorganization (the
"Reorganization Agreement" and, together with the Plan of Merger, the "Merger
Agreements"), dated as of May 16, 2000, by and among M&T Bank Corporation,
Keystone and Olympia. A copy of the Reorganization Agreement is filed as Exhibit
2 hereto and is incorporated herein by reference. Subject to possible
adjustments set forth in the Plan of Merger, the total number of shares of
Keystone common stock to be exchanged for shares of common stock of M&T Bank
Corporation shall be 65% of the 48,930,000 shares of Keystone common stock
outstanding on May 16, 2000. Keystone shareholder elections to receive shares of
common stock of M&T Bank Corporation or cash are subject to the allocation and
proration procedures set forth in the Plan of Merger.
In addition, in connection with the Merger, M&T Bank Corporation
intends to declare a 10-for-1 split on its common stock, and to increase the
cash dividend payable on its common stock after the transaction to $2.50 per
quarter on each pre-split share.
Consummation of the transaction is subject to a number of conditions,
including regulatory approvals and the approval of M&T Bank Corporation's and
Keystone's respective stockholders. Subject to the satisfaction of all
conditions, it is anticipated that the transaction will be completed in late
2000.
Following the consummation of the transaction, Mr. Carl L. Campbell,
chairman, president and chief executive officer of Keystone, will be elected
vice chairman and a director of each of M&T Bank Corporation and M&T Bank. Four
other directors of Keystone will join Mr. Campbell on M&T Bank Corporation's and
M&T Bank's boards of directors. Mr. Robert G. Wilmers will continue as president
and chief executive officer of M&T Bank Corporation and chairman of M&T Bank.
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In connection with the execution and delivery of the definitive
agreement described above, Keystone granted M&T Bank Corporation a stock option
(the "Stock Option") to acquire up to 19.9% of the outstanding shares of
outstanding common stock of Keystone under certain conditions. A copy of the
Stock Option Agreement, dated as of May 16, 2000, by and among M&T Bank
Corporation and Keystone granting the Stock Option is filed as Exhibit 99.1
hereto and is incorporated herein by reference.
The press release and analysts presentation issued by M&T Bank
Corporation and Keystone with respect to the announcement of the transaction
described herein are filed as Exhibits 99.2 and 99.3, respectively, hereto and
incorporated herein by reference. Each of the press release and analysts
presentation contains forward-looking statements with respect to the financial
condition, results of operations and business of M&T Bank Corporation and,
assuming the consummation of the merger, a combined M&T Bank
Corporation/Keystone, including statements relating to: (a) the cost savings and
accretion to reported earnings that will be realized from the merger; (b) the
impact on revenues of the merger, and (c) the restructuring charges expected to
be incurred in connection with the merger. These forward-looking statements
involve certain risks and uncertainties. Factors that may cause actual results
to differ materially from those contemplated by such forward-looking statements
include, among others, the following possibilities: (1) expected cost savings
from the merger cannot be fully realized or realized within the expected time
frame; (2) revenues following the merger are lower than expected; (3)
competitive pressure among depository institutions increases significantly; (4)
costs or difficulties related to the integration of the business of M&T Bank
Corporation and Keystone are greater than expected; (5) changes in the interest
rate environment reduce interest margins; (6) generally economic conditions,
either nationally or in the states in which the combined company will be doing
business, are less favorable than expected; or (7) legislation or regulatory
requirements or changes adversely affect the business in which the combined
company would be engaged.
The foregoing descriptions of and references to all of the
above-mentioned agreements and documents are qualified in their entirety by
reference to the complete texts of the agreements and documents that are filed
herewith and incorporated herein by reference.
Item 7. Financial Statements and Exhibits
The following exhibits are filed herewith or incorporated herein by reference:
Exhibit No.
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2 Agreement and Plan of Reorganization dated as of May 16, 2000, by
and among M&T Bank Corporation, Olympia Financial Corp. and
Keystone Financial, Inc. (including the Plan of Merger as Annex A
thereto).
99.1 Stock Option Agreement dated as of May 16, 2000 by and between M&T
Bank Corporation and Keystone Financial, Inc.
99.2 Joint Press Release, dated May 17, 2000.
99.3 Analysts Presentation.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
M&T BANK CORPORATION
Date: May 23, 2000 By: /s/Michael P. Pinto
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Michael P. Pinto
Executive Vice President and
Chief Financial Officer
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Report Dated: May 16, 2000 Commission File Number: 001-9861
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M&T BANK CORPORATION
(Exact name of registrant as specified in its charter)
EXHIBITS
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EXHIBIT INDEX
Exhibit No.
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2 Agreement and Plan of Reorganization dated as of May 16, 2000, by
and among M&T Bank Corporation, Olympia Financial Corp. and Keystone
Financial, Inc. (including the Plan of Merger as Annex A thereto).
Filed herewith.
99.1 Stock Option Agreement dated as of May 16, 2000 by and between M&T
Bank Corporation and Keystone Financial, Inc. Filed herewith.
99.2 Joint Press Release, dated May 17, 2000. Filed herewith.
99.3 Analysts Presentation. Filed herewith.
Exhibit 2
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION ("Reorganization Agreement" or
"Agreement") dated as of May 16, 2000, by and among Keystone Financial, Inc.
("Seller"), a Pennsylvania corporation having its principal executive office at
One Keystone Plaza, Front and Market Streets, Harrisburg, Pennsylvania 17105,
M&T Bank Corporation ("Purchaser"), a New York corporation having its principal
executive office at One M&T Plaza, Buffalo, New York 14614, and Olympia
Financial Corp. ("Merger Sub"), a Delaware corporation having its registered
office at 1209 Orange Street, Wilmington, Delaware.
WITNESSETH
WHEREAS, the parties hereto desire that Seller shall be acquired by
Purchaser through the merger ("Merger") of Seller with and into Merger Sub, with
Merger Sub as the surviving corporation ("Surviving Corporation") pursuant to an
Agreement and Plan of Merger substantially in the form attached hereto as Annex
A ("Plan of Merger"); and
WHEREAS, following the consummation of the Merger, SELLER BANK ("Seller
Bank"), a banking subsidiary of Seller, which shall be a wholly-owned subsidiary
of the Surviving Corporation following the Merger, shall merge with and into
PURCHASER BANK ("Purchaser Bank"), a bank subsidiary of Purchaser ("Bank
Merger"), pursuant to an Agreement and Plan of Merger ("Bank Merger Agreement")
in a form to be specified by Purchaser; and
WHEREAS, the parties hereto desire to provide for certain undertakings,
conditions, representations, warranties and covenants in connection with the
transactions contemplated hereby;
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and covenants herein contained and intending to be
legally bound hereby, the parties hereto do hereby agree as follows:
ARTICLE 1.
DEFINITIONS
1.1 "Agreement" is defined in the preamble hereto.
1.2 "Bank Holding Company Act" shall mean the Bank Holding Company Act
of 1956, as amended.
1.3 "Banking Board" shall mean the New York State Banking Board.
1.4 "Bank Merger" is defined in the recitals hereto.
1.5 "Bank Merger Agreement" is defined in the recitals hereto.
1.6 "Cash Consideration" is defined in the Plan of Merger.
1.7 "Claim" is defined in Section 4.11(e) hereof.
1.8 "Closing Date" shall mean the date specified pursuant to Section
4.9 hereof as the date on which the parties hereto shall close the transactions
contemplated herein.
1.9 "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.10 "Commission" or "SEC" shall mean the Securities and Exchange
Commission.
1.11 "Confidentiality Agreement" is defined in Section 4.5 hereof.
1.12 "Covered Parties" is defined in Section 4.11(e) hereof.
1.13 "DPC Shares" is defined in the Plan of Merger.
1.14 "Dividend Increase" is defined in Section 4.14 hereof.
1.15 "Effective Date" shall mean the date specified pursuant to Section
4.9 hereof as the effective date of the Merger.
1.16 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
1.17 "ERISA Affiliate" is defined in Section 2.13 hereof.
1.18 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
1.19 "FDIA" shall mean the Federal Deposit Insurance Act.
1.20 "FDIC" shall mean the Federal Deposit Insurance Corporation.
1.21 "Federal Reserve Board" shall mean the Board of Governors of the
Federal Reserve System.
1.22 "Indemnified Parties" is defined in Section 4.11(d) hereof.
1.23 "Insurance Amount" is defined in Section 4.11(f) hereof.
1.24 "Intellectual Property" means domestic and foreign letters patent,
patents, patent applications, patent licenses, software licensed or owned,
know-how licenses, trade names, common law and other trademarks, service marks,
licenses of trademarks, trade names and/or service marks, trademark
registrations and applications, service mark registrations and applications and
copyright registrations and applications.
1.25 "KBW" is defined in Section 2.18 hereof.
1.26 "Material Adverse Effect" shall mean, with respect to Seller or
Purchaser, as the case may be, a material adverse effect on the business,
results of operations or financial condition of such party and any Subsidiary of
the party taken as a whole or a material adverse
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effect on such party's ability to consummate the transactions contemplated
hereby; provided, however, that in determining whether a Material Adverse Effect
has occurred there shall be excluded any effect on the referenced party the
cause of which is (i) any change in banking or similar laws, rules or
regulations of general applicability or interpretations thereof by courts or
governmental authorities, (ii) any change in generally accepted accounting
principles or regulatory accounting requirements applicable to banks or their
holding companies generally, (iii) general changes in conditions, including
interest rates, in the banking industry or in the global or United States
economy or financial markets, with respect to clause (i), (ii) or (iii), to the
extent that a change does not materially affect the referenced party to a
materially different extent than other similarly situated banking organizations,
and (iv) any action or omission of Seller or Purchaser or any Subsidiary of
either of them taken with the prior written consent of Purchaser or Seller, as
applicable, in contemplation of the Merger.
1.27 "Merger" is defined in the recitals hereto.
1.28 "Merger Consideration" is defined in the Plan of Merger.
1.29 "Merger Sub" is defined in the preamble of this Agreement.
1.30 "Merrill Lynch" is defined in Section 3.14 hereof.
1.31 "Nasdaq" shall mean the Nasdaq Stock Market.
1.32 "NYSE" shall mean the New York Stock Exchange.
1.33 "OCC" shall mean the Office of the Comptroller of Currency.
1.34 "Option Agreement" shall mean the Stock Option Agreement dated of
even date herewith between Seller and Purchaser pursuant to which Seller will
grant Purchaser the right to purchase certain shares of Seller Common Stock.
1.35 "Plan of Merger" is defined in the recitals hereto.
1.36 "Previously Disclosed" shall mean disclosed prior to the execution
hereof in (i) an SEC Document filed with the SEC subsequent to January 1, 2000
and prior to the date hereof or (ii) a letter dated of even date herewith from
the party making such disclosure and delivered to the other party prior to the
execution hereof. Any information disclosed by one party to the other for any
purpose hereunder shall be deemed to be disclosed for all purposes hereunder.
The inclusion of any matter in information Previously Disclosed shall not be
deemed an admission or otherwise to imply that any such matter is material for
purposes of this Agreement.
1.37 "Proxy Statement" shall mean the joint proxy statement/prospectus
(or similar documents) together with any supplements thereto sent to the
shareholders of Purchaser and Seller to solicit their votes in connection with
this Agreement and the Plan of Merger.
1.38 "Purchaser" is defined in the preamble of this Agreement.
1.39 "Purchaser Bank" is defined in the recitals hereof.
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1.40 "Purchaser Common Stock" is defined in Section 3.1 hereof.
1.41 "Purchaser Financial Statements" shall mean (i) the consolidated
balance sheets of Purchaser as of March 31, 2000 and as of December 31, 1999 and
1998 and the related consolidated statements of income, cash flows and changes
in shareholders' equity (including related notes, if any) for the three months
ended March 31, 2000 and each of the three years ended December 31, 1999, 1998
and 1997, respectively, as filed by Purchaser in SEC Documents and (ii) the
consolidated balance sheets of Purchaser and related consolidated statements of
income, cash flows and changes in shareholders' equity (including related notes,
if any) as filed by Purchaser in SEC Documents as of dates or with respect to
periods ended subsequent to March 31, 2000.
1.42 "Purchaser Plan" is defined in Section 3.10 hereof.
1.43 "Purchaser Preferred Stock" is defined in Section 3.1 hereof.
1.44 "Registration Statement" shall mean the registration statement
with respect to the Purchaser Common Stock to be issued in connection with the
Merger as declared effective by the Commission under the Securities Act.
1.45 "Rights" shall mean warrants, options, rights, convertible
securities and other arrangements or commitments which obligate an entity to
issue or dispose of any of its capital stock, and stock appreciation rights,
performance units and other similar stock-based rights whether they obligate the
issuer thereof to issue stock or other securities or to pay cash.
1.46 "Reorganization Agreement" is defined in the recitals hereto.
1.47 "SEC Documents" shall mean all reports and registration statements
filed, or required to be filed, by a party hereto pursuant to the Securities
Laws.
1.48 "Securities Act" shall mean the Securities Act of 1933, as
amended.
1.49 "Securities Laws" shall mean the Securities Act; the Exchange Act;
the Investment Company Act of 1940, as amended; the Investment Advisers Act of
1940, as amended; the Trust Indenture Act of 1939, as amended; and the rules and
regulations of the Commission promulgated thereunder.
1.50 "Seller" is defined in the preamble of this Agreement.
1.51 "Seller Bank" is defined in the recitals hereto.
1.52 "Seller Common Stock" is defined in Section 2.1 hereof.
1.53 "Seller Designees" is defined in Section 4.11(b) hereof.
1.54 "Seller Employees" is defined in Section 4.11(a) hereof.
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1.55 "Seller Financial Statements" shall mean (i) the consolidated
statements of condition of Seller as of March 31, 2000 and as of December 31,
1999 and 1998 and the related consolidated statements of income, cash flows and
changes in shareholders' equity (including related notes, if any) for the three
months ended March 31, 2000 and each of the three years ended December 31, 1999,
1998 and 1997, respectively, as filed by Seller in SEC Documents and (ii) the
consolidated statements of condition of Seller and related consolidated
statements of income, cash flows and changes in shareholders' equity (including
related notes, if any) as filed by Seller in SEC Documents with respect to
periods ended subsequent to March 31, 2000.
1.56 "Seller Plans" is defined in Section 2.13(a) hereof.
1.57 "Seller Preferred Stock" is defined in Section 2.1 hereof.
1.58 "Seller Stock Option Plans" is defined in the Plan of Merger.
1.59 "Settled Litigation" is defined in Section 2.15(b) hereof.
1.60 "Stock Consideration" is defined in the Plan of Merger hereof.
1.61 "Stock Split" is defined in Section 4.13 hereof.
1.62 "Subsidiary" or "Subsidiaries" shall mean with respect to any
party, any bank, corporation, partnership or other organization, whether
incorporated or unincorporated, which is consolidated with such party for
financial reporting purposes; provided, however, that "Subsidiary" or
"Subsidiaries" shall not include any subsidiary trust formed for the purpose of
issuing trust preferred or similar securities.
1.63 "Surviving Corporation" is defined in the recitals hereto.
1.64 "Takeover Laws" is defined in Section 2.28 hereof.
1.65 "Takeover Proposal" is defined in Section 4.7(b)(13) hereof.
1.66 "Tax," collectively, "Taxes" shall mean all taxes, however
denominated, including any interest, penalties, criminal sanctions or additions
to tax (including, without limitation, any underpayment penalties for
insufficient estimated tax payments) or other additional amounts that may become
payable in respect thereof (or in respect of a failure to file any Tax Return
when and as required), imposed by any federal, state, local or foreign
government or any agency or political subdivision of any such government, which
taxes shall include, without limiting the generality of the foregoing, all
income taxes, payroll and employment taxes, withholding taxes (including
withholding taxes in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder or other person or entity),
unemployment insurance taxes, social security (or similar) taxes, sales and use
taxes, excise taxes, franchise taxes, gross receipts taxes, occupation taxes,
real and personal property taxes, stamp taxes, value added taxes, transfer
taxes, profits or windfall profits taxes, licenses in the nature of taxes,
estimated taxes, severance taxes, duties (custom and others), workers'
compensation taxes, premium taxes, environmental taxes (including taxes under
Section 59A of the Code), disability taxes,
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registration taxes, alternative or add-on minimum taxes, estimated taxes, and
other fees, assessments, charges or obligations of the same or of a similar
nature.
1.67 "Tax Return," collectively, "Tax Returns" shall mean all returns,
reports, estimates, information statements or other written submissions, and any
schedules or attachments thereto, required or permitted to be filed pursuant to
the statutes, rules and regulations of any federal, state, local or foreign
government Tax authority, including but not limited to, original returns and
filings, amended returns, claims for refunds, information returns and accounting
method change requests.
1.68 "Trust Account Shares" is defined in the Plan of Merger.
ARTICLE 2.
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as Previously Disclosed, Seller hereby represents and warrants
to Purchaser and Merger Sub as follows:
2.1. Capital Structure of Seller
The authorized capital stock of Seller consists of (i) 8,000,000 shares
of preferred stock, par value $1.00 per share ("Seller Preferred Stock") none of
which is issued and outstanding and (ii) 100,000,000 shares of common stock, par
value $2.00 per share ("Seller Common Stock"), of which, as of the date hereof,
48,930,000 shares are issued and outstanding and no shares are held in treasury.
As of the date hereof, no shares of Seller Preferred Stock or Seller Common
Stock are reserved for issuance, except as Previously Disclosed and except for
9,737,070 shares of Seller Common Stock reserved for issuance pursuant to the
Option Agreement. Schedule 2.1 hereto sets forth a list of all currently
outstanding options for the purchase of Seller Common Stock, the number of
shares of Seller Common Stock subject to such options, whether such options are
vested or unvested, the vesting schedule for unvested options and the vesting or
other treatment of all unvested options in the event of a change of control of
Seller. All outstanding shares of Seller Common Stock have been duly authorized
and validly issued and are fully paid and nonassessable. Seller does not have
and is not bound by any Rights which are authorized, issued or outstanding with
respect to the capital stock of Seller except (i) for the Option Agreement, (ii)
as Previously Disclosed, and (iii) as set forth above. None of the shares of
Seller's capital stock has been issued in violation of the preemptive rights of
any person.
2.2. Organization, Standing and Authority of Seller
Seller is a duly organized corporation, validly existing and in good
standing under the laws of the Commonwealth of Pennsylvania with full corporate
power and authority to carry on its business as now conducted and is duly
licensed or qualified to do business in the states of the United States and
foreign jurisdictions where its ownership or leasing of property or the conduct
of its business requires such qualification, except where the failure to be so
licensed or qualified would not have a Material Adverse Effect on Seller. Seller
is registered as a bank holding company under the Bank Holding Company Act.
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2.3. Ownership of Seller Subsidiaries; Capital Structure of Seller
Subsidiaries
As of the date hereof, Seller does not own, directly or indirectly, 5%
or more of the outstanding capital stock or other voting securities of any
corporation, bank or other organization except the Seller Subsidiaries as
Previously Disclosed. In the letter from Seller to Purchaser delivered pursuant
to Section 1.32(ii) hereof, Seller has Previously Disclosed to Purchaser a list
of all of the Subsidiaries, including a summary description of each Subsidiary's
activities and the authority under which each Subsidiary is held by Seller or
Seller Bank, as the case may be. Except as Previously Disclosed, the outstanding
shares of capital stock or other equity interests of each Seller Subsidiary have
been duly authorized and validly issued and are fully paid and (except as
provided by applicable law) nonassessable and all such shares or equity
interests are directly or indirectly owned by Seller free and clear of all
liens, claims and encumbrances. No Seller Subsidiary has or is bound by any
Rights which are authorized, issued or outstanding with respect to the capital
stock or other equity interests of any Seller Subsidiary and, except as
Previously Disclosed, there are no agreements, understandings or commitments
relating to the right of Seller to vote or to dispose of said shares. None of
the shares of capital stock or other equity interests of any Seller Subsidiary
has been issued in violation of the preemptive rights of any person.
2.4. Organization, Standing and Authority of Seller Subsidiaries
Each Seller Subsidiary is a duly organized corporation, banking
association or other organization, validly existing and in good standing under
applicable laws. Each Seller Subsidiary (i) has full power and authority to
carry on its business as now conducted, and (ii) is duly licensed or qualified
to do business in the states of the United States and foreign jurisdictions
where its ownership or leasing of property or the conduct of its business
requires such licensing or qualification, except where failure to be so licensed
or qualified would not have a Material Adverse Effect on Seller. Each Seller
Subsidiary has all federal, state, local and foreign governmental authorizations
necessary for it to own or lease its properties and assets and to carry on its
business as it is now being conducted, except where the failure to be so
authorized would not have a Material Adverse Effect on Seller. Seller Bank is a
member in good standing of the Federal Home Loan Bank of Pittsburgh and owns the
requisite amount of shares therein and is a qualified seller and servicer for
the Federal Home Loan Mortgage Corporation.
2.5. Authorized and Effective Agreement
(a) Seller has all requisite corporate power and authority to
enter into and perform all of its obligations under this Reorganization
Agreement, the Plan of Merger and the Option Agreement. The execution and
delivery of this Reorganization Agreement, the Plan of Merger and the Option
Agreement and the consummation of the transactions contemplated hereby and
thereby have been duly and validly authorized by all necessary corporate action
in respect thereof on the part of Seller, except for the affirmative vote of the
majority of the votes cast by the holders of Seller Common Stock entitled to
vote thereon, which is the only shareholder vote required to approve the Plan of
Merger pursuant to the Pennsylvania Business Corporation Law and Seller's
Restated Articles of Incorporation, as amended, and Seller's Bylaws. The Board
of Directors of Seller has directed that this Agreement and the Plan of Merger
be submitted to Seller's stockholders for approval at a special meeting to be
held as soon as practicable. The
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Board of Directors of Seller has approved the Merger as contemplated by Section
9.2 of Seller's Articles of Incorporation.
(b) Assuming the accuracy of the representation contained in
Section 3.5(b) hereof, this Reorganization Agreement and the Plan of Merger
constitute legal, valid and binding obligations of Seller, enforceable against
it in accordance with their respective terms, subject as to enforceability, to
bankruptcy, insolvency and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
(c) Neither the execution and delivery of this Reorganization
Agreement, the Plan of Merger or the Option Agreement, nor consummation of the
transactions contemplated hereby or thereby, nor compliance by Seller with any
of the provisions hereof or thereof shall (i) conflict with or result in a
breach of any provision of the articles or certificate of incorporation or
association, charter or bylaws of Seller or any Seller Subsidiary, (ii) assuming
the consents and approvals contemplated by Section 4.3 hereof and the consents
and approvals which are Previously Disclosed are duly obtained, constitute or
result in a breach of any term, condition or provision of, or constitute a
default under, or give rise to any right of termination, cancellation or
acceleration with respect to, or result in the creation of any lien, charge or
encumbrance upon any property or asset of Seller or any Seller Subsidiary
pursuant to, any note, bond, mortgage, indenture, license, agreement or other
instrument or obligation, or (iii) assuming the consents and approvals
contemplated by Section 4.3 hereof and the consents and approvals which are
Previously Disclosed are duly obtained, violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Seller or any Seller
Subsidiary, except (in the case of clauses (ii) and (iii) above) for such
violations, rights, conflicts, breaches, creations or defaults which, either
individually or in the aggregate, would not have a Material Adverse Effect on
Seller.
(d) Other than as contemplated by Section 4.3 hereof, no
consent, approval or authorization of, or declaration, notice, filing or
registration with, any governmental or regulatory authority, or any other
person, is required to be made or obtained by Seller or any Seller Subsidiary on
or prior to the Closing Date in connection with the execution, delivery and
performance of this Agreement and the Plan of Merger or the consummation of the
transactions contemplated hereby or thereby. As of the date hereof, Seller is
not aware of any reason that the condition set forth in Section 5.1(b) of this
Agreement, including the proviso thereto, would not be satisfied.
2.6. SEC Documents; Regulatory Filings
Seller has filed all SEC Documents required by the Securities Laws and
such SEC Documents complied, as of their respective dates, in all material
respects with the Securities Laws. Seller and each Seller Subsidiary has filed
all reports required by statute or regulation to be filed with any federal or
state bank regulatory agency, except where the failure to so file would not have
a Material Adverse Effect on Seller, and such reports were prepared in
accordance with the applicable statutes, regulations and instructions in
existence as of the date of filing of such reports in all material respects.
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2.7. Financial Statements; Books and Records; Minute Books
The Seller Financial Statements filed by Seller in SEC Documents prior
to the date of this Agreement fairly present, and the Seller Financial
Statements filed by Seller after the date of this Agreement will fairly present,
the consolidated financial position of Seller and its consolidated Subsidiaries
as of the dates indicated and the consolidated income, changes in shareholders'
equity and cash flows of Seller and its consolidated Subsidiaries for the
periods then ended and each such financial statement has been or will be, as the
case may be, prepared in conformity with generally accepted accounting
principles applicable to financial institutions applied on a consistent basis
except as disclosed therein and except, in the case of unaudited statements, as
permitted by Form 10-Q. The books and records of Seller and each Seller
Subsidiary fairly reflect in all material respects the transactions to which it
is a party or by which its properties are subject or bound. Such books and
records have been properly kept and maintained and are in compliance with all
applicable legal and accounting requirements in all material respects. The
minute books of Seller and each Seller Subsidiary contain records which are
accurate in all material respects of all corporate actions of its shareholders
and Board of Directors (including committees of its Board of Directors).
2.8. Material Adverse Change
Seller has not, on a consolidated basis, suffered any change in its
financial condition, results of operations or business since December 31, 1999
which individually or in the aggregate with any other such changes would
constitute a Material Adverse Effect with respect to Seller.
2.9. Absence of Undisclosed Liabilities
Neither Seller nor any Seller Subsidiary has any liability (contingent
or otherwise), excluding contractually assumed contingencies, that is material
to Seller on a consolidated basis, or that, when combined with all similar
liabilities, would be material to Seller on a consolidated basis, except as
disclosed in the Seller Financial Statements filed with the SEC prior to the
date hereof and except for liabilities incurred in the ordinary course of
business subsequent to December 31, 1999.
2.10. Properties
Seller and the Seller Subsidiaries have good and marketable title free
and clear of all liens, encumbrances, charges, defaults or equitable interests
to all of the properties and assets, real and personal, which, individually or
in the aggregate, are material to the business of Seller and its Subsidiaries
taken as a whole, and which are reflected on the Seller Financial Statements as
of December 31, 1999 or acquired after such date, except (i) liens for taxes not
yet due and payable, (ii) pledges to secure deposits and other liens incurred in
the ordinary course of banking business, (iii) such imperfections of title,
easements and encumbrances, if any, as are not material in character, amount or
extent and (iv) dispositions and encumbrances for adequate consideration in the
ordinary course of business. All leases pursuant to which Seller or any Seller
Subsidiary, as lessee, leases real and personal property which, individually or
in the aggregate, are material to the business of Seller and its Subsidiaries
taken as a whole are valid and enforceable in accordance with their respective
terms except where the failure of such lease
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or leases to be valid and enforceable would not, individually or in the
aggregate, have a Material Adverse Effect on Seller. All tangible property used
in the business of Seller and its Subsidiaries is in good condition, reasonable
wear and tear excepted, and is usable in the ordinary course of business
consistent with Seller's past practices.
2.11. Loans
(a) Each loan reflected as an asset in the Seller Financial
Statements (i) is evidenced by notes, agreements or other evidences of
indebtedness which are true, genuine and what they purport to be, (ii) to the
extent secured, has been secured by valid liens and security interests which
have been perfected, and (iii) is the legal, valid and binding obligation of the
obligor named therein, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent conveyance and other laws of general
applicability relating to or affecting creditors' rights and to general equity
principles, in each case other than loans as to which the failure to satisfy the
foregoing standards, individually or in the aggregate, would not have a Material
Adverse Effect on Seller.
(b) The allowance for loan losses reflected on the Seller
Financial Statements, as of their respective dates, is in all material respects
consistent with the requirements of generally accepted accounting principles to
provide for reasonably anticipated losses with respect to Seller's loan
portfolio based upon information reasonably available at the time.
2.12. Tax Matters
(a) Seller and each Seller Subsidiary have timely filed
federal income tax returns for each year through December 31, 1998 and have
timely filed, or caused to be filed, all other Tax Returns required to be filed
with respect to Seller or any Seller Subsidiary, except where the failure to
file timely such federal income and other Tax Returns would not, in the
aggregate, have a Material Adverse Effect on Seller. All Taxes due by or on
behalf of Seller or any Seller Subsidiary have been paid or adequate reserves
have been established on the Seller Financial Statements for the payment of such
Taxes, except where any such failure to pay or establish adequate reserves would
not, in the aggregate, have a Material Adverse Effect on Seller. Neither Seller
nor any Seller Subsidiary will have any liability for any such Taxes in excess
of the amounts so paid or reserves or accruals so established except where such
liability would not have a Material Adverse Effect on Seller.
(b) All Tax Returns filed by Seller and each Seller Subsidiary
are complete and accurate in all material respects. Neither Seller nor any
Seller Subsidiary is delinquent in the payment of any material Tax, and, except
as Previously Disclosed, none of them has requested any extension of time within
which to file any Tax Returns which have not since been filed. Except as
Previously Disclosed or as fully settled and paid or accrued on the Seller
Financial Statements, no material audit examination, deficiency, adjustment,
refund claim or litigation with respect to Tax Returns, paid Taxes, unpaid Taxes
or Tax attributes of Seller or any Seller Subsidiary has been proposed, asserted
or assessed (tentatively or otherwise). Except as Previously Disclosed, there
are currently no agreements in effect with respect to Seller or any Seller
Subsidiary to extend the period of limitations for the assessment or collection
of any Tax.
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(c) Neither the transactions contemplated hereby nor the
termination of the employment of any employees of Seller or any Seller
Subsidiary prior to or following consummation of the transactions contemplated
hereby will result in Seller or any Seller Subsidiary (or any successor thereof)
making or being required to make any "excess parachute payment" as that term is
defined in Section 280G of the Code.
(d) Neither Seller nor any Seller Subsidiary is a party to any
agreement (other than an agreement exclusively among Seller and the Seller
Subsidiaries) providing for the allocation or sharing of, or indemnification
for, Taxes.
(e) Neither Seller nor any Seller Subsidiary is required to
include in income any adjustment in any taxable period ending after the date
hereof pursuant to Section 481(a) of the Code.
(f) Neither Seller nor any Seller Subsidiary has executed or
entered into any written agreement with any Tax authority conceding or agreeing
to any treatment of Taxes or Tax attributes, including, without limitation, an
Internal Revenue Service Form 870 or Form 870-AD, closing agreement or special
closing agreement, affecting the Seller or any Seller Subsidiary pursuant to
Section 7121 of the Code or any predecessor provision thereof or any similar
provision of state, local or foreign law, which agreement would have a material
impact on the calculation of the Taxes of Purchaser or any Purchaser Subsidiary
after the Effective Date.
(g) For purposes of this Section 2.12 and Section 2.27, (i)
references to Seller and any Seller Subsidiary shall include predecessors
thereof and (ii) "Seller Subsidiary" shall include each Subsidiary (as defined
in Article 1 hereof) of Seller, and each corporation, partnership, limited
liability company, joint venture or other entity which Seller controls directly
or indirectly (through one or more intermediaries). For purposes of the previous
sentence, "control" means the possession, direct or indirect, of the power
either (1) to vote fifty percent (50%) or more of the voting interests of a
corporation, partnership, limited liability company, joint venture or other
entity, or (2) to direct or cause the direction of the management and policies
of a corporation, partnership, limited liability company, joint venture or other
entity, whether by contract or otherwise.
2.13. Employee Benefit Plans
(a) Schedule 2.13(a) hereto sets forth a true and complete
list of each Seller Plan. For purposes of this Section 2.13, the term "Seller
Plan" means each bonus, deferred compensation, incentive compensation, stock
purchase, stock option, severance pay, medical, life or other insurance,
profit-sharing, or pension plan, program, agreement or arrangement, and each
other employee benefit plan, program, agreement or arrangement, sponsored,
maintained or contributed to or required to be contributed to by Seller or by
any trade or business, whether or not incorporated, that together with Seller
would be deemed a "single employer" under Section 414 of the Code (an "ERISA
Affiliate") for the benefit of any employee or director or former employee or
former director of Seller or any ERISA Affiliate of Seller.
(b) With respect to each of the Seller Plans, Seller has made
available to Purchaser true and complete copies of each of the following
documents: (a) the Seller Plan and
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related documents (including all amendments thereto); (b) the most recent annual
reports, financial statements, and actuarial reports, if any; (c) the most
recent summary plan description, together with each summary of material
modifications, required under ERISA with respect to such Seller Plan and all
material communications relating to each such Seller Plan; and (d) the most
recent determination letter received from the IRS with respect to each Seller
Plan that is intended to be qualified under the Code and all material
communications to or from the IRS or any other governmental or regulatory agency
or authority relating to each Seller Plan.
(c) No liability under Title IV of ERISA has been incurred by
Seller or any ERISA Affiliate of Seller that has not been satisfied in full, and
no condition exists that presents a material risk to Seller or any ERISA
Affiliate of Seller of incurring a liability under such Title, other than
liability for premium payments to the Pension Benefit Guaranty Corporation,
which premiums have been or will be paid when due.
(d) Neither Seller nor, to the knowledge of Seller, any ERISA
Affiliate of Seller, nor any of the Seller Plans, nor, to the knowledge of
Seller, any trust created thereunder, nor any trustee or administrator thereof
has engaged in a prohibited transaction (within the meaning of Section 406 of
ERISA and Section 4975 of the Code) in connection with which Seller or any ERISA
Affiliate of Seller could reasonably be expected to, either directly or
indirectly, incur any material liability or material cost.
(e) Full payment has been made, or will be made in accordance
with Section 404(a)(6) of the Code, of all amounts that Seller or any ERISA
Affiliate of Seller is required to pay under Section 412 of the Code or under
the terms of the Seller Plans.
(f) The fair market value of the assets held under each Seller
Plan that is subject to Title IV of ERISA equals or exceeds the actuarial
present value of all accrued benefits under each such Seller Plan. No reportable
event under Section 4043 of ERISA has occurred with respect to any Seller Plan
other than any reportable event occurring by reason of the transactions
contemplated by this Agreement or a reportable event for which the requirement
of notice to the PBGC has been waived.
(g) None of the Seller Plans is a "multiemployer pension
plan," as such term is defined in Section 3(37) of ERISA, a "multiple employer
welfare arrangement," as such term is defined in Section 3(40) of ERISA, or a
single employer plan that has two or more contributing sponsors, at least two of
whom are not under common control, within the meaning of Section 4063(a) of
ERISA.
(h) A favorable determination letter has been issued by the
Internal Revenue Service with respect to each of the Seller Plans that is
intended to be "qualified" within the meaning of Section 401(a) of the Code to
the effect that such plan is so qualified and, to the knowledge of Seller, no
condition exists that could adversely affect the qualified status of any such
Seller Plan. Each of the Seller Plans that is intended to satisfy the
requirements of Section 125 or 501(c)(9) of the Code satisfies such requirements
in all material respects. Each of the Seller Plans has been operated and
administered in all material respects in accordance with its terms and
applicable laws, including but not limited to ERISA and the Code.
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(i) There are no actions, suits or claims pending, or, to the
knowledge of Seller, threatened or anticipated (other than routine claims for
benefits) against any Seller Plan, the assets of any Seller Plan or against
Seller or any ERISA Affiliate of Seller with respect to any Seller Plan. There
is no judgment, decree, injunction, rule or order of any court, governmental
body, commission, agency or arbitrator outstanding against or in favor of any
Seller Plan or any fiduciary thereof (other than rules of general
applicability). There are no pending or, to the knowledge of Seller, threatened
audits, examinations or investigations by any governmental body, commission or
agency involving any Seller Plan.
(j) The consummation of the transactions contemplated by this
Agreement will not result in, and is not a precondition to, (i) any current or
former employee or director of Seller or any ERISA Affiliate of Seller becoming
entitled to severance pay, unemployment compensation or any similar payment,
(ii) any acceleration in the time of payment or vesting, or increase in the
amount, of any compensation due to any such current or former employee or
director, or (iii) any renewal or extension of the term of any agreement
regarding compensation for any such current or former employee or director.
2.14. Certain Contracts
(a) Neither Seller nor any Seller Subsidiary is a party to, or
is bound by, (i) any material contract as defined in Item 601(b)(10) of
Regulation S-K of the SEC or any other material contract or similar arrangement
whether or not made in the ordinary course of business (other than loans or loan
commitments and funding transactions in the ordinary course of business of any
Seller Subsidiary) or any agreement restricting the nature or geographic scope
of its business activities in any material respect, (ii) any agreement,
indenture or other instrument relating to the borrowing of money by Seller or
any Seller Subsidiary or the guarantee by Seller or any Seller Subsidiary of any
such obligation, other than instruments relating to transactions entered into in
the ordinary course of business, (iii) any agreement, arrangement or commitment
relating to the employment of a consultant who was formerly a director or
executive officer or the employment, election, retention in office or severance
of any present or former director or officer, or (iv) any contract, agreement or
understanding with a labor union, in each case whether written or oral.
(b) Neither Seller nor any Seller Subsidiary is in default
under any material agreement, commitment, arrangement, lease, insurance policy
or other instrument whether entered into in the ordinary course of business or
otherwise and whether written or oral, and there has not occurred any event
that, with the lapse of time or giving of notice or both, would constitute such
a default, except for such defaults which would not, individually or in the
aggregate, have a Material Adverse Effect on Seller.
2.15. Legal Proceedings
(a) There are no actions, suits or proceedings instituted,
pending or, to the knowledge of Seller or any Seller Subsidiary, threatened (or
unasserted but considered probable of assertion and which if asserted would have
at least a reasonable probability of an unfavorable outcome) against Seller or
any Seller Subsidiary or against any asset, interest or right of Seller or any
Seller Subsidiary as to which there is a reasonable probability of an
unfavorable outcome
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and which, if such an unfavorable outcome was rendered, would, individually or
in the aggregate, have a Material Adverse Effect on Seller. To the knowledge of
Seller or any Seller Subsidiary, there are no actual or threatened actions,
suits or proceedings which present a claim to restrain or prohibit the
transactions contemplated herein or to impose any material liability in
connection therewith as to which there is a reasonable probability of an
unfavorable outcome and which, if such an unfavorable outcome was rendered,
would, individually or in the aggregate, have a Material Adverse Effect on
Seller. There are no actions, suits or proceedings instituted, pending or, to
the knowledge of Seller or any Seller Subsidiary, threatened (or unasserted but
considered probable of assertion and which if asserted would be reasonably
expected to have an unfavorable outcome) against any present or, to Seller's
knowledge, former director or officer of Seller or any Seller Subsidiary, that
would reasonably be expected to give rise to a claim for indemnification and
that (i) has a reasonable probability of an unfavorable outcome and (ii) in the
event of an unfavorable outcome, would, individually or in the aggregate, have a
Material Adverse Effect on Seller.
(b) With respect to certain litigation Previously Disclosed to
Purchaser by Seller as having been the subject of settlement agreements (the
"Settled Litigation"), to Seller's knowledge, there is no remaining liability
with respect to the Settled Litigation that would have a Material Adverse Effect
on Seller.
2.16. Compliance with Laws
Except as Previously Disclosed, Seller and each Seller Subsidiary is in
compliance in all material respects with all statutes and regulations applicable
to the conduct of its business, and neither Seller nor any Seller Subsidiary has
received notification from any agency or department of federal, state or local
government (i) asserting a material violation of any such statute or regulation,
(ii) threatening to revoke any license, franchise, permit or government
authorization or (iii) restricting or in any way limiting its operations, except
for such noncompliance, violations, revocations and restrictions which would
not, individually or in the aggregate, have a Material Adverse Effect on Seller.
Neither Seller nor any Seller Subsidiary is subject to any regulatory or
supervisory cease and desist order, agreement, directive, memorandum of
understanding or commitment which would be reasonably expected to have a
Material Adverse Effect on Seller, and none of them has received any
communication requesting that they enter into any of the foregoing.
2.17. Labor Matters
With respect to their employees, neither Seller nor any Seller
Subsidiary is a party to any labor agreement with any labor organization, group
or association and has not engaged in any unfair labor practice. Since January
1, 2000 and prior to the date hereof, Seller and the Seller Subsidiaries have
not experienced any attempt by organized labor or its representatives to make
Seller or any Seller Subsidiary conform to demands of organized labor relating
to their employees or to enter into a binding agreement with organized labor
that would cover the employees of Seller or any Seller Subsidiary. To the
knowledge of Seller and the Seller Subsidiaries, there is no unfair labor
practice charge or other complaint by any employee or former employee of Seller
or any Seller Subsidiary against any of them pending before any court,
arbitrator or governmental agency arising out of Seller's or such Seller
Subsidiary's
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activities, which charge or complaint (i) has a reasonable probability of an
unfavorable outcome and (ii) in the event of an unfavorable outcome would,
individually or in the aggregate, have a Material Adverse Effect on Seller;
there is no labor strike or labor disturbance pending or, to the knowledge of
Seller and the Seller Subsidiaries, threatened against any of them; and neither
Seller nor any Seller Subsidiary has experienced a work stoppage or other
material labor difficulty since January 1, 2000.
2.18. Brokers and Finders
Neither Seller nor any Seller Subsidiary, nor any of their respective
officers, directors or employees, has employed any broker, finder or financial
advisor or incurred any liability for any fees or commissions in connection with
the transactions contemplated herein or the Plan of Merger, except for Seller's
retention of Keefe, Bruyette & Woods, Inc. ("KBW") to perform certain financial
advisory services as Previously Disclosed. Prior to the execution and delivery
of this Agreement, KBW has delivered to the Board of Directors of Seller an
opinion that the Merger Consideration is fair from a financial point of view to
the shareholders of Seller.
2.19. Insurance
Seller and the Seller Subsidiaries each currently maintains insurance
in amounts considered by Seller and any Seller Subsidiary as applicable, to be
reasonably necessary for their operations. Neither Seller nor any Seller
Subsidiary has received any notice of a material premium increase over current
rates or cancellation with respect to any of its insurance policies or bonds,
and within the last three years, neither Seller nor any Seller Subsidiary has
been refused any insurance coverage sought or applied for, and Seller has no
reason to believe that existing insurance coverage cannot be renewed as and when
the same shall expire, upon terms and conditions as favorable as those presently
in effect, other than possible increases in premiums or unavailability in
coverage that have not resulted from any extraordinary loss experience of Seller
or any Seller Subsidiary. Seller has Previously Disclosed a list of all
outstanding claims as of the date hereof by Seller or any Seller Subsidiary
under any insurance policy. The deposits of Seller Bank are insured by the FDIC
in accordance with the FDIA, and Seller Bank and its predecessors have paid all
assessments and filed all reports required by the FDIA.
2.20. Environmental Liability
Neither Seller nor any Seller Subsidiary has received any written
notice of any legal, administrative, arbitral or other proceeding, claim or
action and, to the knowledge of Seller and the Seller Subsidiaries, there is no
governmental investigation of any nature ongoing, in each case that would
reasonably be expected to result in the imposition, on Seller or any Seller
Subsidiary of any liability arising under any local, state or federal
environmental statute, regulation or ordinance including, without limitation,
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, which liability would have a Material Adverse Effect on
Seller; except as Previously Disclosed, there are no facts or circumstances
which would reasonably be expected to form the basis for any such proceeding,
claim, action or governmental investigation that would impose any such
liability; and neither Seller nor any Seller Subsidiary is subject to any
agreement, order, judgment, decree or
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memorandum by or with any court, governmental authority, regulatory agency or
third party imposing any such liability.
2.21. Administration of Trust Accounts
Each Seller Subsidiary has properly administered all common trust funds
and collective investment funds and all accounts for which it acts as a
fiduciary or agent, including but not limited to accounts for which it serves as
a trustee, agent, custodian, personal representative, guardian, conservator or
investment advisor, in accordance with the terms of the governing documents and
applicable state and federal law and regulation and common law, except where the
failure to do so would not, individually or in the aggregate, have a Material
Adverse Effect on Seller. Neither Seller, any Seller Subsidiary, nor any
director, officer or employee of Seller or any Seller Subsidiary acting on
behalf of Seller or a Seller Subsidiary, has committed any breach of trust with
respect to any such common trust fund or collective investment fund or fiduciary
or agency account, and the accountings for each such common trust fund or
collective investment fund or fiduciary or agency account are true and correct
in all material respects and accurately reflect the assets of such common trust
fund or collective investment fund or fiduciary or agency account, except for
such breaches and failures to be true, correct and accurate which would not,
individually or in the aggregate, have a Material Adverse Effect on Seller.
2.22. Intellectual Property
Except as Previously Disclosed, Seller or a Seller Subsidiary owns the
entire right, title and interest in and to, or has valid licenses with respect
to, all of the Intellectual Property necessary in all material respects to
conduct the business and operations of Seller and the Seller Subsidiaries as
presently conducted, except where the failure to do so would not, individually
or in the aggregate, have a Material Adverse Effect on Seller. The ownership,
licensing or use of Intellectual Property by Seller or its Subsidiaries does not
conflict with, infringe, misappropriate or otherwise violate the Intellectual
Property rights of any other person or entity. None of such Intellectual
Property is subject to any outstanding order, decree, judgment, stipulation,
settlement, lien, charge, encumbrance or attachment, which order, decree,
judgment, stipulation, settlement, lien, charge, encumbrance or attachment would
have a Material Adverse Effect on Seller. Except as Previously Disclosed, upon
consummation of the transactions contemplated by this Agreement Purchaser and
the Purchaser Subsidiaries will be entitled to continue to use all such
Intellectual Property without the payment of any fees, licenses or other
payments (other than ongoing payments required under license agreements for
software used by Seller or the Seller Subsidiaries in Previously Disclosed
amounts consistent with past practice).
2.23. Risk Management Instruments
All interest rate swaps, caps, floors, option agreements, futures and
forward contracts and other similar risk management arrangements to which Seller
or a Seller Subsidiary is a party, whether entered into for Seller's own
account, or for the account of one or more of the Seller Subsidiaries or their
customers, were entered into (i) in accordance with prudent business practices
and all applicable laws, rules, regulations and regulatory policies and (ii)
with counterparties believed to be financially responsible at the time; and each
of them constitutes the valid and legally binding obligation of Seller or one of
the Seller Subsidiaries, enforceable in
- 16 -
accordance with its terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
similar laws of general equity principles), and neither Seller nor any Seller
Subsidiary nor to Seller's knowledge, any other party thereto, is in breach of
any of its obligations under any such agreement or arrangement. Seller has
previously made available to Purchaser all of such agreements and arrangements
that are in effect as of the date of this Agreement.
2.24. Repurchase Agreements
With respect to all agreements pursuant to which Seller or any Seller
Subsidiary has purchased securities subject to an agreement to resell, if any,
Seller or such Seller Subsidiary, as the case may be, has a valid, perfected
first lien or security interest in or evidence of ownership in book entry form
of the government securities or other collateral securing the repurchase
agreements, and the value of such collateral equals or exceeds the amount of the
debt secured thereby.
2.25. Certain Information
When the Registration Statement or any post-effective amendment thereto
shall become effective, and at all times subsequent to such effectiveness up to
and including the time of the Seller shareholders' meeting to vote upon the
Merger, such Registration Statement and all amendments or supplements thereto,
with respect to all information set forth or incorporated by reference therein
furnished by Seller relating to Seller and the Seller Subsidiaries, (i) shall
comply in all material respects with the applicable provisions of the Securities
Laws, and (ii) shall not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements contained therein not misleading. All information concerning Seller
and its directors, officers, shareholders and any Subsidiaries included (or
submitted for inclusion) in any application and furnished by it pursuant to
Section 4.3 of this Agreement shall be true, correct and complete in all
material respects.
2.26. Year 2000
The computer software operated by Seller and any Seller Subsidiary
which is material to the conduct of the business of Seller and any Seller
Subsidiary is capable of providing uninterrupted millennium functionality to
record, store, process and present calendar dates falling on or after January 1,
2000 in substantially the same manner and with the same functionality as such
software records, stores, processes and presents such calendar dates falling on
or before December 31, 1999, and such software and Seller and any Seller
Subsidiary currently are otherwise in compliance with all relevant Regulatory
Authority guidance and requirements relating to the Year 2000 computer issues
including the statements of the Federal Financial Institutions Examination
Council, dated May 5, 1997, entitled "Year 2000 Project Management Awareness,"
and December 1997, entitled "Safety and Soundness Guidelines Concerning the Year
2000 Business Risk." The costs of the adaptations referred to in this clause
have not and will not have a Material Adverse Effect on Seller.
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2.27. Tax Treatment
As of the date of this Agreement, Seller knows of no reason relating to
it or any of the Seller Subsidiaries which would reasonably cause it to believe
that the Merger will not qualify as a reorganization under Section 368(a) of the
Code.
2.28. Takeover Laws
Seller has taken all action required to by taken by it in order to
exempt this Reorganization Agreement, the Plan of Merger and the Option
Agreement and the transactions contemplated hereby and thereby from, and this
Reorganization Agreement, the Plan of Merger and the Option Agreement and the
transactions contemplated hereby and thereby are exempt from, the requirements
of any "moratorium," "control share," "fair price," "affiliate transaction,"
"business combination," or other antitakeover laws and regulations of any state
(collectively, "Takeover Laws"), including, without limitation, the Commonwealth
of Pennsylvania.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF
PURCHASER AND MERGER SUB
Except as Previously Disclosed, Purchaser and Merger Sub hereby jointly
and severally represent and warrant to Seller as follows:
3.1. Capital Structure of Purchaser
The authorized capital stock of Purchaser consists at March 31, 2000 of
(i) 1,000,000 shares of preferred stock, par value $1.00 per share ("Purchaser
Preferred Stock"), none of which were issued and outstanding and (ii) 15,000,000
shares of common stock, par value $5.00 per share ("Purchaser Common Stock"), of
which, as of the date hereof, 7,640,239 shares were issued and outstanding and
461,300 shares were held in treasury. All outstanding shares of Purchaser
capital stock have been duly authorized and validly issued and are fully paid
and nonassessable. None of the shares of Purchaser's capital stock has been
issued in violation of the preemptive rights of any person. The shares of
Purchaser Common Stock to be issued in connection with the Merger have been duly
authorized and, when issued in accordance with the terms of this Reorganization
Agreement and the Plan of Merger, will be validly issued, fully paid,
nonassessable and free and clear of any preemptive rights.
3.2. Organization, Standing and Authority of Purchaser
Purchaser is a duly organized corporation, validly existing and in good
standing under the laws of New York, with full corporate power and authority to
carry on its business as now conducted and is duly licensed or qualified to do
business in the states of the United States and foreign jurisdictions where its
ownership or leasing of property or the conduct of its business requires such
qualification, except where the failure to be so licensed or qualified would not
have a Material Adverse Effect on Purchaser. Purchaser is registered as a bank
holding company under the Bank Holding Company Act.
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3.3. Ownership of Purchaser Subsidiaries; Capital Structure of
Purchaser Subsidiaries
Purchaser has no Subsidiary other than those disclosed in its Annual
Report on Form 10-K for the year ended December 31, 1999, Merger Sub or any
Subsidiary that is not a significant subsidiary under the SEC's Regulation S-X.
Except as Previously Disclosed, the outstanding shares of capital stock of the
Purchaser Subsidiaries have been duly authorized and validly issued and are
fully paid and (except as provided in 12 U.S.C. ss. 55 or Section 114 of the New
York Banking Law) nonassessable and all such shares are directly or indirectly
owned by Purchaser free and clear of all liens, claims and encumbrances. No
Purchaser Subsidiary has or is bound by any Rights which are authorized, issued
or outstanding with respect to the capital stock of any Purchaser Subsidiary
and, except as Previously Disclosed, there are no agreements, understandings or
commitments relating to the right of Purchaser to vote or to dispose of said
shares. None of the shares of capital stock of any Purchaser Subsidiary has been
issued in violation of the preemptive rights of any person.
3.4. Organization, Standing and Authority of Purchaser Subsidiaries
Each Purchaser Subsidiary is a duly organized corporation or banking
corporation, validly existing and in good standing under applicable laws. Each
Purchaser Subsidiary (i) has full power and authority to carry on its business
as now conducted, and (ii) is duly licensed or qualified to do business in the
states of the United States and foreign jurisdictions where its ownership or
leasing of property or the conduct of its business requires such licensing or
qualification and where failure to be licensed or qualified would have a
Material Adverse Effect on Purchaser. Each Purchaser Subsidiary has all federal,
state, local and foreign governmental authorizations necessary for it to own or
lease its properties and assets and to carry on its business as it is now being
conducted, except where the failure to be so authorized would not have a
Material Adverse Effect on Purchaser.
3.5. Authorized and Effective Agreement
(a) Each of Purchaser and Merger Sub has all requisite
corporate power and authority to enter into and perform all of its obligations
under this Reorganization Agreement and the Plan of Merger. The execution and
delivery of this Reorganization Agreement and the Plan of Merger and the
consummation of the transactions contemplated hereby and thereby have been duly
and validly authorized by all necessary corporate action in respect thereof on
the part of Purchaser and Merger Sub, except (i) that the affirmative vote of
the holders of a majority of the votes cast by the holders of Purchaser capital
stock eligible to vote thereon is required to authorize an amendment to
Purchaser's Certificate of Incorporation to increase the number of authorized
shares of Purchaser Common Stock to 150,000,000, in accordance with the
applicable provisions of the New York Business Corporation Law, and (ii) the
affirmative vote of the holders of a majority of the votes cast at a meeting of
Purchaser shareholders at which a quorum is present is required to authorize the
issuance of Purchaser Common Stock pursuant to this Reorganization Agreement and
the Plan of Merger in accordance with the rules of the NYSE. The Board of
Directors of Purchaser has directed that the issuance of Purchaser Common Stock
pursuant to this Reorganization Agreement and Plan of Merger and the increase in
the number of
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authorized shares of Purchaser Common Stock be submitted to Purchaser's
stockholders for approval at a special meeting to be held as soon as
practicable.
(b) Assuming the accuracy of the representation contained in
Section 2.5(b) hereof, this Reorganization Agreement and the Plan of Merger
constitute legal, valid and binding obligations of each of Purchaser and Merger
Sub, in each case enforceable against it in accordance with their respective
terms subject, as to enforceability, to bankruptcy, insolvency and other laws of
general applicability relating to or affecting creditors' rights and to general
equity principles.
(c) Neither the execution and delivery of this Reorganization
Agreement or the Plan of Merger, nor consummation of the transactions
contemplated hereby or thereby, nor compliance by Purchaser or Merger Sub with
any of the provisions hereof or thereof shall (i) conflict with or result in a
breach of any provision of the articles or certificate of incorporation or
association, charter or bylaws of Purchaser or any Purchaser Subsidiary, (ii)
assuming the consents and approvals contemplated by Section 4.3 hereof and the
consents and approvals which are Previously Disclosed are duly obtained,
constitute or result in a breach of any term, condition or provision of, or
constitute a default under, or give rise to any right of termination,
cancellation or acceleration with respect to, or result in the creation of any
lien, charge or encumbrance upon any property or asset of Purchaser or any
Purchaser Subsidiary pursuant to, any note, bond, mortgage, indenture, license,
agreement or other instrument or obligation, or (iii) assuming the consents and
approvals contemplated by Section 4.3 hereof and the consents and approvals
which are Previously Disclosed are duly obtained, violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Purchaser or any
Purchaser Subsidiary, except (in the case of clauses (ii) and (iii) above) for
such violations, rights, conflicts, breaches, creations or defaults which,
either individually or in the aggregate, will not have a Material Adverse Effect
on Purchaser.
(d) Except for approvals specified in Section 4.3 hereof and
except as expressly referred to in this Reorganization Agreement, no consent,
approval or authorization of, or declaration, notice, filing or registration
with, any governmental or regulatory authority, or any other person, is required
to be made or obtained by Purchaser or Merger Sub on or prior to the Closing
Date in connection with the execution, delivery and performance of this
Agreement and the Plan of Merger or the consummation of the transactions
contemplated hereby or thereby. As of the date hereof, Purchaser is not aware of
any reason that the condition set forth in Section 5.1(b) of this Agreement,
including the proviso thereto, would not be satisfied.
3.6. SEC Documents; Regulatory Filings
Purchaser has filed all SEC Documents required by the Securities Laws
and such SEC Documents complied, as of their respective dates, in all material
respects with the Securities Laws. Purchaser and each of the Purchaser
Subsidiaries has filed all reports required by statute or regulation to be filed
with any federal or state bank regulatory agency, except where the failure to so
file would not have a Material Adverse Effect on Purchaser, and such reports
were prepared in accordance with the applicable statutes, regulations and
instructions in existence as of the date of filing of such reports in all
material respects.
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3.7. Financial Statements; Books and Records; Minute Books
The Purchaser Financial Statements filed by Purchaser in SEC documents
prior to the date of this Agreement fairly present, and the Purchaser Financial
Statements filed by Purchaser in SEC Documents after the date of the Agreement
will fairly present the consolidated financial position of Purchaser and its
consolidated Subsidiaries as of the dates indicated and the consolidated results
of operations, changes in shareholders' equity and cash flows of Purchaser and
its consolidated Subsidiaries for the periods then ended and each such financial
statement has been or will be, as the case may be, prepared in conformity with
generally accepted accounting principles applicable to financial institutions
applied on a consistent basis except as disclosed therein and except in the case
of unaudited statements, as permitted by Form 10-Q. The books and records of
Purchaser and each Purchaser Subsidiary fairly reflect in all material respects
the transactions to which it is a party or by which its properties are subject
or bound. Such books and records have been properly kept and maintained and are
in compliance in all material respects with all applicable legal and accounting
requirements. The minute books of Purchaser and the Purchaser Subsidiaries
contain records which are accurate in all material respects of all corporate
actions of its shareholders and Board of Directors (including committees of its
Board of Directors).
3.8. Material Adverse Change
Purchaser has not, on a consolidated basis, suffered any change in its
financial condition, results of operations or business since December 31, 1999
which individually or in the aggregate with any other such changes would
constitute a Material Adverse Effect with respect to Purchaser.
3.9. Absence of Undisclosed Liabilities
Neither Purchaser nor any Purchaser Subsidiary has any liability
(contingent or otherwise), excluding contractually assumed contingencies, that
is material to Purchaser on a consolidated basis, or that, when combined with
all similar liabilities, would be material to Purchaser on a consolidated basis,
except as Previously Disclosed, as disclosed in the Purchaser Financial
Statements filed with the SEC prior to the date hereof and except for
liabilities incurred in the ordinary course of business subsequent to December
31, 1999.
3.10. Employee Benefit Plans
Each of the Purchaser Plans complies in all material respects with the
requirements of applicable law, including ERISA and the Code. For purposes of
this Agreement, the term "Purchaser Plan" means each bonus, incentive
compensation, severance pay, medical or other insurance program, retirement
plan, or other employee benefit plan program, agreement or arrangement
sponsored, maintained or contributed to by Purchaser or any trade or business,
whether or not incorporated, that together with Purchaser or any of the
Purchaser Subsidiaries would be deemed a "single employer" under Section 414 of
the Code (an "ERISA Affiliate") or under which Purchaser or any ERISA Affiliate
has any liability or obligation. No liability under Title IV of ERISA has been
incurred by Purchaser or any ERISA Affiliate that has not been satisfied in
full, and no condition exists that presents a material risk to Purchaser or any
ERISA
- 21 -
Affiliate of incurring any such liability. Full payment has been made, or will
be made in accordance with Section 404(a)(6) of the Code of all amounts that
Purchaser or any ERISA Affiliate is required to pay under Section 412 of the
Code or under the terms of the Purchaser Plans, and no accumulated funding
deficiency (within the meaning of Section 412 of the Code) exists with respect
to any Purchaser Plan.
3.11. Legal Proceedings
There are no actions, suits or proceedings instituted, pending or, to
the knowledge of Purchaser and Merger Sub, threatened (or unasserted but
considered probable of assertion and which if asserted would have at least a
reasonable probability of an unfavorable outcome) against Purchaser, Merger Sub
or any Purchaser Subsidiary or against any asset, interest or right of Purchaser
or any Purchaser Subsidiary as to which there is a reasonable probability of an
unfavorable outcome and which, if such an unfavorable outcome was rendered,
would, individually or in the aggregate, have a Material Adverse Effect on
Purchaser. There are no actual or threatened actions, suits or proceedings which
present a claim to restrain or prohibit the transactions contemplated herein or
to impose any material liability in connection therewith as to which there is a
reasonable probability of an unfavorable outcome and which, if such an
unfavorable outcome was rendered, would, individually or in the aggregate, have
a Material Adverse Effect on Purchaser.
3.12. Compliance with Laws
Except as Previously Disclosed, each of Purchaser and the Purchaser
Subsidiaries is in compliance in all material respects with all statutes and
regulations applicable to the conduct of its business, and none of them has
received notification from any agency or department of federal, state or local
government (i) asserting a material violation of any such statute or regulation,
(ii) threatening to revoke any license, franchise, permit or government
authorization or (iii) restricting or in any way limiting its operations, except
for such noncompliance, violations, revocations and restrictions which would
not, individually or in the aggregate, have a Material Adverse Effect on
Purchaser. None of Purchaser or any Purchaser Subsidiary is subject to any
regulatory or supervisory cease and desist order, agreement, directive,
memorandum of understanding or commitment which could be reasonably anticipated
to have a Material Adverse Effect on Purchaser, and none of them has received
any communication requesting that they enter into any of the foregoing.
3.13. Tax Matters
(a) Purchaser and each Purchaser Subsidiary have timely filed
federal income tax returns for each year through December 31, 1998 and have
timely filed, or caused to be filed, all other Tax Returns required to be filed
with respect to Purchaser or any Purchaser Subsidiary, except where the failure
to file timely such federal income and other Tax Returns would not, in the
aggregate, have a Material Adverse Effect on Purchaser. All Taxes due by or on
behalf of Purchaser or any Purchaser Subsidiary have been paid or adequate
reserves have been established on the Purchaser Financial Statements for the
payment of such Taxes, except where any such failure to pay or establish
adequate reserves would not, in the aggregate, have a Material Adverse Effect on
Purchaser. Neither Purchaser nor any Purchaser Subsidiary will have any material
- 22 -
liability for any such Taxes in excess of the amounts so paid or reserves or
accruals so established except where such liability would not have a Material
Adverse Effect on Purchaser.
(b) All Tax Returns filed by Purchaser and each Purchaser
Subsidiary are complete and accurate in all material respects. Neither Purchaser
nor any Purchaser Subsidiary is delinquent in the payment of any material Tax,
and, except as Previously Disclosed, none of them has requested any extension of
time within which to file any Tax Returns which have not since been filed.
Except as Previously Disclosed or as fully settled and paid or accrued on the
Purchaser Financial Statements, no material audit examination, deficiency,
adjustment, refund claim or litigation with respect to Tax Returns, paid Taxes,
unpaid Taxes or Tax attributes of Purchaser or any Purchaser Subsidiary has been
proposed, asserted or assessed (tentatively or otherwise).
(c) Neither Purchaser nor any Purchaser Subsidiary is required
to include in income any adjustment in any taxable period ending after the date
hereof pursuant to Section 481(a) of the Code other than any adjustment for
which it already has made an accrual.
(d) For purposes of this Section 3.13 and Section 3.19, (i)
references to Purchaser and any Purchaser Subsidiary shall include predecessors
thereof and (ii) "Purchaser Subsidiary" shall include each Subsidiary (as
defined in Article 1 hereof) of Purchaser, and each corporation, partnership,
limited liability company, joint venture or other entity which Purchaser
controls directly or indirectly (through one or more intermediaries). For
purposes of the previous sentence, "control" means the possession, direct or
indirect, of the power either (1) to vote fifty percent (50%) or more of the
voting interests of a corporation, partnership, limited liability company, joint
venture or other entity, or (2) to direct or cause the direction of the
management and policies of a corporation, partnership, limited liability
company, joint venture or other entity, whether by contract or otherwise.
3.14. Brokers and Finders
Neither Purchaser nor any Purchaser Subsidiary, nor any of their
respective officers, directors or employees, has employed any broker, finder or
financial advisor or incurred any liability for any fees or commissions in
connection with the transactions contemplated herein or the Plan of Merger,
except for Purchaser's retention of Merrill Lynch & Co. ("Merrill Lynch") to
perform certain financial advisory services as Previously Disclosed. Prior to
the execution and delivery of this Agreement, Merrill Lynch has delivered to the
Board of Directors of Purchaser an opinion that the Merger is fair from a
financial point of view to the shareholders of Purchaser.
3.15. Insurance
Purchaser and the Purchaser Subsidiaries each currently maintains
insurance in amounts considered by Purchaser and any Purchaser Subsidiary as
applicable, to be reasonably necessary for their operations. Neither Purchaser
nor any Purchaser Subsidiary has received any notice of a material premium
increase or cancellation with respect to any of its insurance policies or bonds,
and within the last three years, neither Purchaser nor any Purchaser Subsidiary
has been refused any insurance coverage sought or applied for, and Purchaser has
no reason to believe that existing insurance coverage cannot be renewed as and
when the same shall expire, upon terms and conditions as favorable as those
presently in effect, other than possible increases in
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premiums or unavailability in coverage that have not resulted from any
extraordinary loss experience of Purchaser or any Purchaser Subsidiary.
3.16. Environmental Liability
Neither Purchaser nor any Purchaser Subsidiary has received any written
notice of any legal, administrative, arbitral or other proceeding, claim or
action and, to the knowledge of Purchaser and the Purchaser Subsidiaries, there
is no governmental investigation of any nature ongoing, in each case that could
reasonably be expected to result in the imposition, on Purchaser or any
Purchaser Subsidiary of any liability arising under any local, state or federal
environmental statute, regulation or ordinance including, without limitation,
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, which liability would have a Material Adverse Effect on
Purchaser; except as Previously Disclosed, there are no facts or circumstances
which could reasonably be expected to form the basis for any such proceeding,
claim, action or governmental investigation that would impose any such
liability; and neither Purchaser nor any Purchaser Subsidiary is subject to any
agreement, order, judgment, decree or memorandum by or with any court,
governmental authority, regulatory agency or third party imposing any such
liability.
3.17. Certain Information
When the Registration Statement or any post-effective amendment thereto
shall become effective, and at all times subsequent to such effectiveness up to
and including the time of the Seller shareholders' meeting to vote upon the
Merger, such Registration Statement and all amendments or supplements thereto,
with respect to all information set forth or incorporated by reference therein
furnished by Purchaser relating to Purchaser and the Purchaser Subsidiaries, (i)
shall comply in all material respects with the applicable provisions of the
Securities Laws, and (ii) shall not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements contained therein not misleading. All information
concerning Purchaser and its directors, officers, shareholders and any
Subsidiaries included (or submitted for inclusion) in any application and
furnished by it pursuant to Section 4.3 of this Agreement shall be true, correct
and complete in all material respects.
3.18. Year 2000
The computer software operated by Purchaser or any Purchaser Subsidiary
which is material to the conduct of Purchaser's or any Purchaser Subsidiary's
business is capable of providing uninterrupted millennium functionality to
record, store, process and present calendar dates falling on or after January 1,
2000 in substantially the same manner and with the same functionality as such
software records, stores, processes and presents such calendar dates falling on
or before December 31, 1999, and such software and Purchaser or any Purchaser
Subsidiary currently are otherwise in compliance with all relevant Regulatory
Authority guidance and requirements relating to the Year 2000 computer issues
including the statements of the Federal Financial Institutions Examination
Council, dated May 5, 1997, entitled "Year 2000 Project Management Awareness,"
and December 1997, entitled "Safety and Soundness Guidelines
- 24 -
Concerning the Year 2000 Business Risk." The costs of the adaptations referred
to in this clause will not have a Material Adverse Effect on Purchaser.
3.19. Tax Treatment
As of the date of this Agreement, Purchaser knows of no reason relating
to it or any of the Purchaser Subsidiaries which would reasonably cause it to
believe that the Merger will not qualify as a reorganization under Section
368(a) of the Code.
3.20. Merger Consideration
Purchaser will have, at the Effective Time, unissued shares of Common
Stock and shares of Common Stock held in its treasury that are not reserved for
any other purpose sufficient to provide the Stock Consideration and also will
have available to it at the Effective Time funds sufficient to provide the Cash
Consideration.
ARTICLE 4.
COVENANTS
4.1. Shareholders' Meeting
Seller and Purchaser shall submit this Reorganization Agreement and the
Plan of Merger and, in the case of Purchaser, the issuance of Purchaser Common
Stock thereunder and the amendment to its Certificate of Incorporation to
increase the number of authorized shares of Purchaser Common Stock, to their
respective shareholders for approval at special meetings to be held as soon as
practicable. Subject to the fiduciary duties of the respective boards of
directors of Seller and Purchaser as determined after consultation with counsel,
the boards of directors of Seller and Purchaser shall recommend that the
shareholders of the respective companies vote in favor of such approval.
4.2. Proxy Statement; Registration Statement
As promptly as practicable after the date hereof, Purchaser and Seller
shall cooperate in the preparation of the Proxy Statement to be mailed to the
shareholders of Seller and Purchaser in connection with this Agreement and the
transactions contemplated hereby and to be filed by Purchaser as part of the
Registration Statement. Purchaser will advise Seller, promptly after it receives
notice thereof, of the time when the Registration Statement or any
post-effective amendment thereto has become effective or any supplement or
amendment has been filed, of the issuance of any stop order, of the suspension
of qualification of the Purchaser Common Stock issuable in connection with the
Merger for offering or sale in any jurisdiction, or the initiation or threat of
any proceeding for any such purpose, or of any request by the SEC for the
amendment or supplement of the Registration Statement or for additional
information. Purchaser shall take all actions necessary to register or qualify
the shares of Purchaser Common Stock to be issued in the Merger pursuant to all
applicable state "blue sky" or securities laws and shall maintain such
registrations or qualifications in effect for all purposes hereof. Purchaser
shall apply for, and shall use reasonable best efforts to obtain, approval to
list the shares of Purchaser Common Stock to be issued in the Merger on the
NYSE, subject to official notice of issuance, prior to the Effective Date.
- 25 -
4.3. Applications
As promptly as practicable after the date hereof, and after a
reasonable opportunity for review by counsel to Seller, Purchaser shall submit
any requisite applications for prior approval of, and notices with respect to,
the transactions contemplated herein, in the Plan of Merger and in the Bank
Merger Agreement, to (i) the Federal Reserve Board pursuant to Sections 3 and 4
of the Bank Holding Company Act and the Bank Merger Act, (ii) the New York
Banking Board pursuant to Section 142 of the New York Banking Law, (iii) the OCC
pursuant to 12 C.F.R. ss. 5.33(g)(3), and (iv) the Pennsylvania Department of
Banking pursuant to Sections 115 and 1603 of the Pennsylvania Banking Code, and
the regulations promulgated thereunder, and each of the parties hereto shall,
and they shall cause their respective subsidiaries to, submit any applications,
notices or other filings to any other state or federal government agency,
department or body the approval of which is required for consummation of the
Merger and the Bank Merger. Seller and Purchaser each represents and warrants to
the other that all information concerning it and its directors, officers,
shareholders and subsidiaries included (or submitted for inclusion) in any such
application and furnished by it shall be true, correct and complete in all
material respects.
4.4. Best Efforts
(a) Subject to the terms and conditions of this Agreement,
Purchaser, Merger Sub, and Seller shall each use its reasonable best efforts in
good faith, and each of them shall cause its Subsidiaries to use their
reasonable best efforts in good faith, to (i) furnish such information as may be
required in connection with the preparation of the documents referred to in
Sections 4.2 and 4.3 above, and (ii) take or cause to be taken all action
necessary or desirable on its part so as to permit consummation of the Merger at
the earliest possible date, including, without limitation, (1) obtaining the
consent or approval of each individual, partnership, corporation, association or
other business or professional entity whose consent or approval is required for
consummation of the transactions contemplated hereby, provided that neither
Seller nor any Seller Subsidiary shall agree to make any payments or
modifications to agreements in connection therewith without the prior written
consent of Purchaser, which consent shall not be unreasonably withheld and (2)
requesting the delivery of appropriate opinions, consents and letters from its
counsel and independent auditors. Subject to the terms and conditions of this
Agreement, no party hereto shall take or fail to take, or cause or permit its
Subsidiaries to take or fail to take, or to the best of its ability permit to be
taken or omitted to be taken by any third persons, any action that would
substantially impair the prospects of completing the Merger pursuant to this
Reorganization Agreement and the Plan of Merger, that would materially delay
such completion, or that would adversely affect the qualification of the Merger
as a reorganization within the meaning of Section 368(a) of the Code; provided
that nothing herein contained shall preclude Purchaser from exercising its
rights under the Option Agreement. In the event that either party has taken any
action, whether before, on or after the date hereof, that would adversely affect
such qualification, each party shall take such action as the other party may
reasonably request to cure such effect to the extent curable without a Material
Adverse Effect on either of the parties.
(b) Seller shall give prompt notice to Purchaser, and
Purchaser shall give prompt notice to Seller, of (i) the occurrence, or failure
to occur, of any event which occurrence or failure would be reasonably likely to
cause any representation or warranty contained in this Agreement to be untrue or
inaccurate at any time from the date hereof to the Closing Date such
- 26 -
that the condition set forth in Section 5.2(a) or 5.3(a), as applicable, would
not be met if such failure to be true or accurate were to occur or be continuing
on the Closing Date, and (ii) any material failure of Seller or Purchaser, as
the case may be, to comply with or satisfy any covenant, condition or agreement
to be complied with or satisfied by it hereunder, and each party shall use all
reasonable best efforts to remedy such failure.
(c) From the date of this Agreement through the Effective
Date, to the extent permitted by law, Seller shall, and shall cause the Seller
Subsidiaries to, provide such assistance to Purchaser as shall be reasonably
necessary to assist Purchaser in converting and transferring as soon as
practicable after the Effective Date all information concerning the loans,
deposits and other assets and liabilities of Seller and the Seller Subsidiaries
into Purchaser's own data processing system, with a view to facilitating the
integration of Purchaser's and Seller's systems and otherwise combining
Purchaser's and Seller's operations upon consummation of the Merger. After
execution of this Agreement, to the extent permitted by law, Seller shall
provide Purchaser with computer file instructions with respect to the
information in its data processing system regarding the assets and liabilities
of Seller and the Seller Subsidiaries, together with operational procedures
designed to implement the transfer of such information to Purchaser, with a view
to facilitating the integration of Purchaser's and Seller's systems and
otherwise combining Purchaser's and Seller's operations upon consummation of the
Merger. After execution of this Agreement, Seller and Purchaser shall each
designate an individual to serve as liaison concerning the transfer of data
processing information and other similar operational matters and to consult as
to whether and when Seller will proceed with its pending data processing
conversion.
(d) Each party shall provide and shall request its auditors to
provide the other party with such historical financial information regarding it
(and related audit reports and consents) as the other party may reasonably
request for disclosure purposes under the Securities Laws.
4.5. Investigation and Confidentiality
Seller and Purchaser each will keep the other advised of all material
developments relevant to its business and to consummation of the transactions
contemplated herein and in the Plan of Merger. Purchaser and Seller each may
make or cause to be made such investigation of the financial and legal condition
of the other as such party reasonably deems necessary or advisable in connection
with the transactions contemplated herein and in the Plan of Merger, provided,
however, that such investigation shall be reasonably related to such
transactions and shall not interfere unnecessarily with normal operations.
Purchaser and Seller agree to furnish the other and the other's advisors with
such financial data and other information with respect to its business and
properties as such other party shall from time to time reasonably request. No
investigation pursuant to this Section 4.5 shall affect or be deemed to modify
any representation or warranty made by, or the conditions to the obligations to
consummate the Merger of, any party hereto. Each party hereto shall hold all
information furnished by the other party or any of such party's Subsidiaries or
representatives pursuant to this Agreement in confidence to the extent required
by, and in accordance with, the provisions of the confidentiality agreement,
dated April 25, 2000, between Seller and Purchaser (the "Confidentiality
Agreement").
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4.6. Press Releases
Seller and Purchaser shall agree with each other as to the form and
substance of any press release related to this Reorganization Agreement and the
Plan of Merger or the transactions contemplated hereby or thereby, and shall
consult each other as to the form and substance of other public disclosures
related thereto, provided, however, that nothing contained herein shall prohibit
any party, following notification to the other parties, from making any
disclosure which is required by applicable law or NYSE or Nasdaq rules. The
initial press release related to this Reorganization Agreement and the Plan of
Merger and the transactions contemplated hereby and thereby will disclose
Purchaser's intention to effect the Stock Split and the Dividend Increase.
4.7. Actions Pending the Merger
(a) Prior to the Closing Date, and except as otherwise
provided for by this Reorganization Agreement, the Plan of Merger, the Option
Agreement, or consented to or approved by the other party hereto, each of
Purchaser and Seller shall, and shall cause each of its Subsidiaries to, use its
reasonable best efforts to preserve its properties, business and relationships
with customers, employees and other persons.
(b) Seller shall not, and shall not permit any of the Seller
Subsidiaries to, except with the prior written consent of Purchaser and except
as Previously Disclosed or expressly contemplated or permitted by this
Agreement, the Plan of Merger, or the Option Agreement:
(1) carry on its business other than in the usual,
regular and ordinary course in substantially the same manner as heretofore
conducted;
(2) in the case of Seller only, declare, set aside,
make or pay any dividend or other distribution in respect of its capital stock
other than its regular quarterly cash dividends on Seller Common Stock in
amounts not in excess of $0.29 per share;
(3) issue any shares of its capital stock or permit
any treasury shares to become outstanding other than pursuant to the Option
Agreement or Rights outstanding at the date hereof;
(4) incur any additional debt obligation or other
obligation for borrowed money other than in the ordinary course of business
consistent with past practice;
(5) issue, grant or authorize any Rights or effect
any recapitalization, reclassification, stock dividend, stock split or like
change in capitalization, or redeem, repurchase or otherwise acquire any shares
of its capital stock except for Trust Account Shares and DPC Shares, and except
for shares to be used to fulfill Seller's obligations under the Seller Employee
Stock Purchase Plan and the Seller 401(k) Stock Purchase Plan or shares
repurchased or acquired in connection with the exercise of options outstanding
under the Seller Stock Option Plans; provided, however, that in order to fulfill
such obligations, Seller shall acquire the necessary shares of Seller Common
Stock solely through open market purchases;
(6) amend its articles or certificate of
incorporation or association or bylaws; impose, or suffer the imposition, on any
share of stock of any Seller Subsidiary held by
- 28 -
Seller of any lien, charge or encumbrance, or permit any such lien, charge or
encumbrance to exist except, in each case, for liens, charges and encumbrances
which have been Previously Disclosed;
(7) merge with any other corporation, savings
association or bank or permit any other corporation, savings association or bank
to merge into it or consolidate with any other corporation, savings association
or bank; acquire control over any other firm, bank, corporation, savings
association or organization or create any Subsidiary;
(8) waive or release any material right or cancel or
compromise any material debt or claim;
(9) liquidate or sell or dispose of any material
assets or acquire any material assets; except as Previously Disclosed, make any
capital expenditure in excess of $250,000 in any instance or $1,500,000 in the
aggregate; or, except as Previously Disclosed, establish new branches or other
similar facilities, close existing branches or similar facilities or enter into
or modify any leases or other contracts relating thereto;
(10) increase the rate of compensation of, pay or
agree to pay any bonus to, or provide any other employee benefit or incentive
to, any of its directors, officers or employees except in a manner consistent
with past practice or as required by law or contractual obligation in effect as
of the date hereof;
(11) change its lending, investment, asset/liability
management or other material banking policies in any material respect except as
may be required by changes in applicable law;
(12) change its methods of accounting in effect at
December 31, 1999, except as required by changes in generally accepted
accounting principles concurred in by its independent certified public
accountants, or change any of its methods of reporting income, deductions or
other items for federal income tax purposes from those employed in the
preparation of its federal income tax returns for the year ended December 31,
1999, except as required by applicable law;
(13) authorize or permit any of its officers,
directors, employees or agents to directly or indirectly solicit, initiate or
encourage any inquiries relating to, or the making of any proposal which
constitutes, a "Takeover Proposal" (as defined below), or, except to the extent
legally required for the discharge of the fiduciary duties of its Board of
Directors, recommend or endorse any Takeover Proposal, or participate in any
discussions or negotiations, or provide third parties with any nonpublic
information, relating to any such inquiry or proposal or otherwise facilitate
any effort or attempt to make or implement a Takeover Proposal; provided,
however, that Seller may communicate information about any such Takeover
Proposal to its stockholders if, in the judgment of Seller's Board of Directors,
after consultation with outside counsel, such communication is necessary in
order to comply with its fiduciary duties to Seller's shareholders required
under applicable law. Seller will take all actions necessary or advisable to
inform the appropriate individuals or entities referred to in the first sentence
hereof of the obligations undertaken herein. Seller will notify Purchaser
immediately if any such inquiries or Takeover Proposals are received by, any
such information is requested from, or any such negotiations or
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discussions are sought to be initiated or continued with, Seller, and Seller
will promptly inform Purchaser in writing of all of the relevant details with
respect to the foregoing. As used in this Agreement, "Takeover Proposal" shall
mean any tender or exchange offer, proposal for a merger, consolidation or other
business combination involving Seller or any Seller Subsidiary or any proposal
or offer to acquire in any manner a substantial equity interest in, or a
substantial portion of the assets of, Seller or any Seller Subsidiary other than
the transactions contemplated or permitted by this Agreement, the Plan of Merger
and the Option Agreement; or
(14) agree to do any of the foregoing.
(c) Purchaser shall not, and shall not permit any of the
Purchaser Subsidiaries to, except with the prior written consent of Seller or as
expressly contemplated or permitted by this Agreement, the Plan of Merger or the
Option Agreement, carry on its business other than in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted.
4.8. Certain Policies
Prior to the Effective Date, Seller shall, consistent with generally
accepted accounting principles and on a basis mutually satisfactory to it and
Purchaser, modify and change its loan, litigation and real estate valuation
policies and practices (including loan classifications and levels of reserves)
so as to be applied on a basis that is consistent with that of Purchaser;
provided, however, that Seller shall not be obligated to take any such action
pursuant to this Section 4.8 unless and until (i) Purchaser irrevocably
acknowledges to Seller in writing any that all conditions to its obligation to
consummate the Merger have been satisfied and (ii) Purchaser irrevocably waives
in writing any and all rights that it may have to terminate this Agreement and
Plan of Merger.
4.9. Closing; Articles of Merger
The transactions contemplated by this Reorganization Agreement and the
Plan of Merger shall be consummated at a closing to be held at the offices of
the law firm of Arnold & Porter, 399 Park Avenue, New York, New York on the
first business day following satisfaction of the conditions to consummation of
the Merger set forth in Article 5 hereof (other than such conditions relating to
the actions to be taken at the Closing) or such later date during such month in
which such business day shall occur (or, if such business day shall occur within
ten (10) business days prior to the end of such month, during the next following
month) as may be mutually specified by Purchaser and Seller. In connection with
such Closing, Merger Sub and Seller shall execute a certificate of merger and
shall cause such certificate to be delivered to (i) the Delaware Secretary of
State in accordance with Section 251(c) of the Delaware General Corporation Law,
and (ii) the Pennsylvania Secretary of State in accordance with Section 1927 of
the Pennsylvania Business Corporation Law. The Merger shall be effective at the
time and on the date specified in such certificate of merger.
4.10. Affiliates
Seller and Purchaser shall cooperate and use their best efforts to
identify those persons who may be deemed to be "affiliates" of Seller within the
meaning of Rule 145 promulgated by the Commission under the Securities Act.
Seller shall use its best efforts to cause each person so
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identified to deliver to Purchaser, no later than 30 days prior to the Effective
Date, a written Affiliate Agreement in a form to be agreed upon by Purchaser and
Seller.
4.11. Seller Employees; Directors and Management; Indemnification
(a) On and after the Effective Date (or as soon thereafter as
may be practicable), all persons who are employed by Seller and/or any of the
Seller Subsidiaries on such date ("Seller Employees") shall be employed on terms
and conditions (including benefits) that in the aggregate are no less favorable
(as determined by Purchaser in its reasonable discretion after consultation with
Seller) with respect to their employment by Purchaser and its Subsidiaries after
the Effective Date than those generally afforded to other similarly situated
employees of Purchaser or its Subsidiaries, subject to the terms and conditions
under which those employee benefits are made available to such employees and
provided that (i) for purposes of (A) determining eligibility for and vesting of
such employee benefits (and not for pension benefit accrual purposes), (B)
determining levels of short-term disability benefits, vacation benefits and
severance benefits under any severance pay arrangement (to the extent any such
arrangement applies to employees generally and gives credit for length of
service with Purchaser or a Purchaser Subsidiary), and (C) if applicable,
satisfying any waiting periods concerning "preexisting conditions," service with
Seller or a Seller Subsidiary or any predecessor thereto prior to the Effective
Date shall be treated as service with an "employer" to the same extent as if
such persons had been employees of Purchaser, and (ii) copayments and expenses
paid by the Seller Employees prior to the Effective Date under the Seller Plans
that provide medical benefits shall be treated as if paid under Purchaser's
employee benefit plans that provide medical benefits for purposes of determining
satisfaction of copayment and deductible requirements under such Purchaser
plans, and provided, further, that this Section 4.11(a) shall not be construed
(A) to limit the ability of Purchaser and its Subsidiaries to terminate the
employment of any employee at any time for any reason or to review employee
benefits programs from time to time and to make such changes as they deem
appropriate or (B) to require Purchaser or its Subsidiaries to provide employees
or former employees of Seller or any of its Subsidiaries with post-retirement
medical benefits more favorable than those provided to new hires at Purchaser.
Purchaser agrees to honor, or to cause the appropriate Purchaser Subsidiary to
honor, in accordance with their terms all employment, severance and employee
benefit plans, contracts, agreements and arrangements, and understandings
Previously Disclosed, provided, however, that the foregoing shall not prevent
Purchaser from amending or terminating any such plan, contract, or agreement in
accordance with its terms and applicable law. The continued coverage of the
Seller Employees under the employee benefit plans maintained by Seller and/or
any Seller Subsidiary immediately prior to the Effective Date (the "Seller
Plans") during a transition period of no more than 6 months shall be deemed to
provide the Seller Employees with benefits that are no less favorable than those
offered to other employees of Purchaser and any Purchaser Subsidiary; provided,
that after the Effective Date there is no material reduction in the benefits
provided under the Seller Plans. No provision of this Section 4.11(a) shall
create any third party beneficiary rights in any employee or former employee of
Seller (including any beneficiary or dependent thereof) in respect of continued
employment (or resumed employment) or any other matter.
(b) Prior to the Effective Date, Seller shall take all actions
that may be requested by Purchaser in writing upon advance notice of not less
than 45 days with respect to (i) causing
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one or more Seller Plans to terminate as of the Effective Date or for benefit
accrual and entitlements to cease as of the Effective Date, (ii) causing the
continuation on and after the Effective Date of any contract, arrangement or
insurance policy relating to any Seller Plan for such period as may be requested
by Purchaser, or (iii) cooperating with Purchaser to facilitate the merger of
any Seller Plan into any Purchaser Plan on or following the Effective Date.
Except for a purchase period commencing on July 1, 2000, Seller shall not
authorize the commencement of any new purchase period under any Seller Stock
Purchase Plan between the date hereof and the termination of this Reorganization
Agreement and shall not extend any purchase period that is in effect on the date
hereof beyond its originally scheduled date of termination. Any purchase period
that would otherwise continue past the Effective Date shall be terminated
effective immediately prior to the Effective Date.
(c) Purchaser and Purchaser's Board of Directors shall, prior
to the Effective Date, take all requisite action to, as of the Effective Date,
(i) elect as directors of Purchaser Messrs. Carl L. Campbell and four other
individuals designated by Mr. Campbell who are reasonably acceptable to
Purchaser (Mr. Campbell and such four other individuals collectively, the
"Seller Designees") and to elect Mr. Campbell as Vice Chairman of Purchaser and
(ii) cause Purchaser Bank's Board of Directors to take all requisite action to
elect the Seller Designees as directors of Purchaser Bank and to elect Mr.
Campbell as Vice Chairman of Purchaser Bank. For a period of at least one year
following the Effective Date, Mr. Campbell shall additionally serve as Chairman
of Purchaser's Pennsylvania Division.
(d) In the event of any threatened or actual claim, action,
suit, proceeding or investigation, whether civil, criminal or administrative,
including, without limitation, any such claim, action, suit, proceeding or
investigation in which any person who is now, or has been at any time prior to
the date of this Agreement, or who becomes prior to the Effective Date, a
director or officer of Seller (the "Indemnified Parties") is, or is threatened
to be, made a party based in whole or in part on, or arising in whole or in part
out of, or pertaining to (i) the fact that he is or was a director, officer or
employee of Seller, or any Seller Subsidiary or any of their respective
predecessors or (ii) this Agreement, the Plan of Merger, the Option Agreement or
any of the transactions contemplated hereby or thereby, whether in any case
asserted or arising before or after the Effective Date, the parties hereto agree
to cooperate and use their best efforts to defend against and respond thereto.
On and after the Effective Date, Purchaser shall indemnify and hold harmless, as
and to the fullest extent permitted by law, each such Indemnified Party against
any losses, claims, damages, liabilities, costs, expenses (including reasonable
attorney's fees and expenses in advance of the final disposition of any claim,
suit, proceeding or investigation to each Indemnified Party to the fullest
extent permitted by law upon receipt of any undertaking required by applicable
law), judgments, fines and amounts paid in settlement in connection with any
such threatened or actual claim, action, suit, proceeding or investigation, and
in the event of any such threatened or actual claim, action, suit, proceeding or
investigation (whether asserted or arising before or after the Effective Date),
the Indemnified Parties may retain counsel reasonably satisfactory to them after
consultation with Purchaser; provided, however, that (1) Purchaser shall have
the right to assume the defense thereof and upon such assumption Purchaser shall
not be liable to any Indemnified Party for any legal expenses of other counsel
or any other expenses subsequently incurred by any Indemnified Party in
connection with the defense thereof, except that if Purchaser elects not to
assume such defense or counsel for the Indemnified Parties reasonably advises
the Indemnified Parties that there are
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issues which raise conflicts of interest between Purchaser and the Indemnified
Parties, the Indemnified Parties may retain counsel reasonably satisfactory to
them after notification, and Purchaser shall pay the reasonable fees and
expenses of such counsel for the Indemnified Parties, (2) Purchaser shall be
obligated pursuant to this paragraph to pay for only one firm of counsel for all
Indemnified Parties, (3) Purchaser shall not be liable for any settlement
effected without its prior written consent (which consent shall not be
unreasonably withheld), and (4) Purchaser shall have no obligation hereunder to
any Indemnified Party when and if a court of competent jurisdiction shall
ultimately determine, and such determination shall have become final and
nonappealable, that indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable law. Any Indemnified Party
wishing to claim Indemnification under this Section 4.11(d), upon learning of
any such claim, action, suit, proceeding or investigation, shall promptly notify
Purchaser thereof, provided that the failure of any Indemnified Party to so
notify Purchaser shall not relieve it of its obligations hereunder except (and
only) to the extent that such failure materially prejudices Purchaser.
(e) Purchaser agrees that all rights to indemnification and
all limitations on liability existing in favor of the directors, officers and
employees of Seller and any Seller Subsidiary (the "Covered Parties") as
provided in their respective Certificates of Incorporation, Bylaws or similar
governing documents as in effect as of the date of this Agreement with respect
to matters occurring prior to the Effective Date shall survive the Merger and
shall continue in full force and effect, and shall be honored by such entities
or their respective successors as if they were the indemnifying party
thereunder, without any amendment thereto, for a period of six years from the
Effective Date; provided, however, that all rights to indemnification in respect
of any claim asserted or made within such period ("Claim") shall continue until
the final disposition of such Claim; provided, further, however, that nothing
contained in this Section 4.11(e) shall be deemed to preclude the liquidation,
consolidation or merger of Seller or any Seller Subsidiary, in which case all of
such rights to indemnification and limitations on liability shall be deemed to
so survive and continue as an obligation of Purchaser or the successor to Seller
or the Seller Subsidiary notwithstanding any such liquidation, consolidation or
merger.
(f) Purchaser, from and after the Effective Date will use its
reasonable best efforts directly or indirectly to cause the persons who served
as directors or officers of Seller on or before the Effective Date to be covered
by Seller's existing directors' and officers' liability insurance policy
(provided that Purchaser may substitute therefor policies of at least the same
coverage and amounts containing terms and conditions which are not less
advantageous than such policy) but in no event shall any insured person be
entitled under this Section 4.11(f) to insurance coverage more favorable than
that provided to him or her in such capacities as of the date hereof with
respect to acts or omissions resulting from their service as such on or prior to
the Effective Date. Such insurance coverage, if reasonably available at a
reasonable cost relative to the coverage obtained, shall commence on the
Effective Date and will be provided for a period of no less than four years
after the Effective Date; provided, however, that in no event shall Purchaser be
required to expend more than 200% of the current amount expended by Seller (the
"Insurance Amount") to maintain or procure insurance coverage pursuant hereto
and, provided, further, that the Insurance Amount shall be deemed reasonable for
purposes of this Section 4.11(f). Seller agrees to renew any such existing
insurance or to purchase any "discovery period" insurance provided for
thereunder at Purchaser's request.
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(g) In the event Purchaser or any of its successors or assigns
(i) consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) transfers or conveys all or substantially all of its properties and
assets to any person, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of Purchaser
assume the obligations set forth in this section.
(h) The provisions of Section 4.11(d), (e), (f) and (g) are
intended to be for the benefit of, and shall be enforceable by, each Indemnified
Party and their respective heirs and representatives.
(i) The parties agree to take the further actions Previously
Disclosed by Seller.
4.12. Seller Subsidiaries
Seller undertakes and agrees that, if so requested by Purchaser, it
shall take all necessary action to facilitate the merger of Seller Subsidiaries
with Subsidiaries of Purchaser or the dissolution of such Seller Subsidiaries
effective at or after the Effective Date; provided however, that in no event
shall the Closing be delayed in order to facilitate any such merger or
dissolution and provided, further, however, that Seller shall not be required to
take any action that could adversely affect the qualification of the Merger as a
reorganization within the meaning of Section 368(a) of the Code.
4.13. Stock Split
Management of Purchaser shall recommend to Purchaser's Board of
Directors that it approve, and shall use best efforts to effect, a 10-for-1
split in the number of outstanding shares of Purchaser Common Stock in the form
of a stock dividend or stock split (the "Stock Split"), such approval to be
contingent upon the consummation of the Merger and to become effective prior to
the Merger on the Effective Date.
4.14. Dividends
After the date of this Agreement, each of Purchaser and Seller shall
coordinate with the other the declaration of any dividends in respect of
Purchaser Common Stock and Seller Common Stock and the record dates and payment
dates relating thereto, it being the intention of the parties hereto that
holders of Purchaser Common Stock or Seller Common Stock shall not receive two
dividends, or fail to receive one dividend, for any single calendar quarter with
respect to their shares of Purchaser Common Stock and/or Seller Common Stock and
any shares of Purchaser Common Stock any such holder receives in exchange
therefor in the Merger. In connection with the first quarterly dividend paid in
respect of Purchaser Common Stock after the Effective Date, the Management of
Purchaser shall recommend to the Purchaser Board that it approves and shall use
best efforts to effect an increase in the amount of Purchaser's regular
quarterly cash dividend to not less than $0.25 per share of Purchaser Common
Stock (the "Dividend Increase") after giving effect to the Stock Split. In
connection with approving this Reorganization Agreement and the transactions
contemplated hereby, Purchaser's Board of Directors has considered the Dividend
Increase and has agreed that, in the event that the
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transactions contemplated hereby and by the Plan of Merger are consummated and,
subject to the coordination of dividends provisions of the first sentence of
this Section 4.14 and to applicable law, the Dividend Increase will be
implemented no later than the first regular quarterly dividend declared after
the Effective Date.
4.15. Advisory Boards
Promptly following the Effective Date, Purchaser shall cause those
regional boards of directors of Seller for Seller's Regions One through Five to
become regional Advisory Boards of Purchaser Bank and shall cause the members of
such boards of directors as of the Effective Date, other than such members as
become directors of Purchaser pursuant to Section 4.11(d) hereof, to be
appointed or elected for a period of not less than twenty-four months after the
Effective Date as members such Advisory Boards, the function of which is to
advise Purchaser Bank on deposit and lending activities in Seller Bank's former
market area. In addition, Purchaser shall cause any person who is a member of
Seller's or Seller's Bank's Board of Directors on the Effective Date and is
neither a member of a regional board of directors of Seller nor an individual
who becomes a director of Purchaser pursuant to Section 4.11(d) hereof, to be
appointed or elected to one of the regional Advisory Boards of Purchaser Bank as
mutually agreed prior to the Effective Date by Purchaser and Seller. Each such
advisory director shall be paid for such service the greater of (i) the fees for
such service according to a fee schedule to be established by Purchaser or (ii)
directors' fees Previously Disclosed by Seller in connection with this Section
4.15; provided, however, that notwithstanding anything else in this Section
4.15, if a member has failed to attend at least 25% of the meetings called
within a year, such member will be paid pursuant to clause (i) of this sentence;
and no attendance fees shall be paid for meetings not actually attended; and
Purchaser Bank shall have no obligation to continue the services of any advisory
director who acts in a manner detrimental to Purchaser Bank. In the event that
Purchaser terminates, suspends or disbands one or more of the Advisory Boards,
fails to require or request the attendance of a member with respect to at least
10 meetings of any Advisory Board and/or committee thereof within a single year
or removes a member of an Advisory Board other than because such member acted in
a manner detrimental to Purchaser Bank, in each case prior to the end of the
24-month period contemplated by the first sentence of this Section 4.15 and
subject to the proviso of the preceding sentence, any member affected by any
such action or failure shall nonetheless be paid the full fees (assuming at
least 10 meetings annually had been held) pursuant to clause (i) of the
preceding sentence or the amount contemplated by clause (ii) thereof, which ever
is greater, with respect to such 24-month period.
4.16. Section 16
Seller shall, reasonably promptly following the date hereof, provide to
Purchaser a list of (a) the directors and officers (as such terms are used under
Section 16 of the Exchange Act and the rules and regulations of the SEC
thereunder) of Seller, (b) the number of shares of Purchaser Common Stock and
options thereon expected to be received pursuant to the Merger, as appropriate,
by each such officer or director on the Effective Date on account of shares of
Seller Common Stock, and options thereon, reasonably expected to be held by such
directors and officers immediately prior to the Effective Date and (c) a
description of the material terms of such options. Prior to the Effective Date,
(a) the Seller Board of Directors shall take such actions consistent with the
SEC's interpretive guidance to approve the disposition of Seller Common
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Stock, and options thereon, by each director and officer of Seller for purposes
of Rule 16b-3(e) such that the deemed "sale" of such Seller Common Stock and
options thereon by such persons pursuant to the Merger shall be exempt from
liability pursuant to Section 16(b) of the Exchange Act, and (b) the Purchaser
Board of Directors shall take such action consistent with the SEC's interpretive
guidance to approve the acquisition of Purchaser Common Stock by each director
and officer of Purchaser for purposes of Rule 16b-3(d) under the Exchange Act
such that the deemed "purchase" of such Purchaser Common Stock, and options
thereon, by such persons pursuant to the Merger shall be exempt from liability
pursuant to Section 16(b) of the Exchange Act.
4.17. Takeover Laws
No party hereto shall take any action that would cause the transactions
contemplated by this Reorganization Agreement, the Plan of Merger or the Option
Agreement to be subject to the requirements imposed by any Takeover Law, and
each of them shall take all necessary steps within its control to exempt (or
ensure the continued exemption of) the transactions contemplated by this
Reorganization Agreement, the Plan of Merger and the Option Agreement from, or
if necessary challenge the validity or applicability of, any applicable Takeover
Law, as now or hereafter in effect.
ARTICLE 5.
CONDITIONS PRECEDENT
5.1. Conditions Precedent to Obligations of Purchaser, Merger Sub and
Seller
The respective obligations of the parties to effect the Merger shall be
subject to satisfaction or waiver of the following conditions at or prior to the
Closing Date:
(a) All corporate action necessary to authorize the execution,
delivery and performance of this Reorganization Agreement and the Plan of Merger
and consummation of the transactions contemplated hereby and thereby, including
without limitation the stockholder approvals contemplated by Sections 2.5 and
3.5 hereof, shall have been duly and validly taken;
(b) The parties hereto shall have received all regulatory
approvals required or mutually deemed necessary in connection with the
transactions contemplated by this Reorganization Agreement, the Plan of Merger
and the Bank Merger Agreement, all notice periods and waiting periods required
after the granting of any such approvals shall have passed and all conditions
contained in any such approval required to have been satisfied prior to
consummation of such transactions shall have been satisfied, provided, however,
that no such approval shall have imposed any condition or requirement that, in
the reasonable good faith opinion of the Board of Directors of Purchaser or
Seller so materially and adversely affects the anticipated economic benefits to
Purchaser or Seller, respectively, of the transactions contemplated by this
Agreement as to render consummation of such transactions inadvisable;
(c) The Registration Statement (including any post-effective
amendment thereto) shall be effective under the Securities Act, and no
proceeding shall be pending, or to the knowledge of Purchaser, threatened by the
Commission to suspend the effectiveness of such Registration Statement, and
Purchaser shall have received all state securities or "Blue Sky"
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permits or other authorizations, or confirmations as to the availability of an
exemption from registration requirements as may be necessary;
(d) To the extent that any lease, license, loan, financing
agreement or other contract or agreement to which Seller or any Seller
Subsidiary is a party requires the consent of or waiver from the other party
thereto as a result of the transactions contemplated by this Agreement, such
consent or waiver shall have been obtained, unless the failure to obtain such
consents or waivers, individually or in the aggregate, would not have a Material
Adverse Effect on Seller;
(e) None of the parties hereto shall be subject to any order,
decree or injunction of a court or agency of competent jurisdiction which
enjoins or prohibits the consummation of the transactions contemplated by this
Reorganization Agreement and the Plan of Merger;
(f) The shares of Purchaser Common Stock that may be issued in
the Merger which shall have been approved for listing on the NYSE, subject to
official notice of issuance; and
(g) Purchaser shall have received an opinion of Arnold &
Porter, and Seller shall have received an opinion of Wachtell, Lipton, Rosen &
Katz, in each case in form and substance reasonably satisfactory to Purchaser
and Seller, as the case may be, dated as of the Effective Date, substantially to
the effect that, on the basis of facts, representations and assumptions set
forth or referred to in such opinion, the Merger will be treated for federal
income tax purposes as a reorganization or part of a reorganization within the
meaning of Section 368(a) of the Code, and that:
(i) Seller, Purchaser and Merger Sub will each be a
party to such reorganization within the meaning of Section 368(b) of the Code;
(ii) No gain or loss will be recognized by Purchaser,
Merger Sub or Seller as a result of the Merger (except for amounts resulting
from any required change in accounting methods, any income and deferred gain
recognized pursuant to Treasury regulations issued under Section 1502 of the
Code, or other exceptions as set forth in such opinion);
(iii) No gain or loss will be recognized by Seller
shareholders with respect to shares of Purchaser Common Stock received in
exchange for all of their shares of Seller Common Stock;
(iv) The gain, if any, realized by Seller
shareholders who receive Purchaser Common Stock and cash (other than cash in
lieu of a fractional share interest of Purchaser Common Stock) in exchange for
their shares of Seller Common Stock, will be recognized by each such
shareholder, but in an amount not in excess of the amount of cash received. If
the exchange has the effect of the distribution of a dividend, then the amount
of the gain recognized shall be treated as a dividend. No loss will be
recognized by such Seller shareholders on the exchange;
(v) Each Seller shareholder's aggregate tax basis in
any shares of Purchaser Common Stock received in the transaction will be the
same as the aggregate tax basis of
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the shares of Seller Common Stock such shareholder surrendered in the exchange
therefor, decreased by the amount of any cash received by the shareholder and
increased by the amount any income or gain recognized by the shareholder in the
exchange; and
(vi) Each Seller shareholder's holding period in any
shares of Purchaser Common Stock received in the transaction will, in each
instance, include the period during which the shares of Seller Common Stock
surrendered in exchange therefor were held, provided that such shares of Seller
Common Stock were held as capital assets by the shareholder on the Effective
Date.
In rendering the opinion described in this subsection (g), Arnold &
Porter and Wachtell, Lipton, Rosen & Katz, as applicable, may rely on
representations and facts as provided by Purchaser and Seller, including,
without limitation, the representations set forth in Revenue Procedure 86-42,
1986-2 C.B. 722.
5.2. Conditions Precedent to Obligations of Seller
The obligations of Seller to effect the Merger shall be subject to
satisfaction of the following additional conditions at or prior to the Closing
Date unless waived by Seller pursuant to Section 6.4 hereof:
(a) The representations and warranties of Purchaser and Merger
Sub set forth in Article 3 hereof shall be true and correct in all material
respects as of the date of this Reorganization Agreement and as of the Closing
Date as though made on and as of the Closing Date (or on the date when made in
the case of any representation and warranty which specifically relates to an
earlier date), except as otherwise contemplated by this Reorganization Agreement
or consented to in writing by Seller; provided, however, that (i) in determining
whether or not the condition contained in this paragraph (a) shall be satisfied,
no effect shall be given to any exceptions in such representations and
warranties relating to materiality or Material Adverse Effect and (ii) the
condition contained in this paragraph (a) shall be deemed to be satisfied unless
the failure of such representations and warranties to be so true and correct
constitute, individually or in the aggregate, a Material Adverse Effect on
Purchaser;
(b) Purchaser and Merger Sub shall have in all material
respects performed all obligations and complied with all covenants required by
this Reorganization Agreement and the Plan of Merger to be performed or complied
with at or prior to the Closing Date;
(c) Each of Purchaser and Merger Sub shall have delivered to
Seller a certificate, dated the Closing Date and signed by its respective
Chairman, CEO, Executive Vice President or Senior Vice President to the effect
that the conditions set forth in paragraphs (a) and (b) of this section have
been satisfied; and
(d) The Stock Split shall have become effective.
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5.3. Conditions Precedent to Obligations of Purchaser and Merger Sub
The respective obligations of Purchaser and Merger Sub to effect the
Merger shall be subject to satisfaction of the following additional conditions
at or prior to the Closing Date unless waived by Purchaser pursuant to Section
6.4 hereof:
(a) The representations and warranties of Seller set forth in
Article 2 hereof shall be true and correct in all material respects as of the
date of this Reorganization Agreement and as of the Closing Date as though made
on and as of the Closing Date (or on the date when made in the case of any
representation and warranty which specifically relates to an earlier date),
except as otherwise contemplated by this Reorganization Agreement or consented
to in writing by Purchaser; provided, however, that (i) in determining whether
or not the condition contained in this paragraph (a) shall be satisfied, no
effect shall be given to any exceptions in such representations and warranties
relating to materiality or Material Adverse Effect and (ii) the condition
contained in this paragraph (a) shall be deemed to be satisfied unless the
failure of such representations and warranties to be so true and correct
constitute, individually or in the aggregate, a Material Adverse Effect on
Seller;
(b) Seller shall have in all material respects performed all
obligations and complied with all covenants required by this Reorganization
Agreement and the Plan of Merger to be performed or complied with at or prior to
the Closing Date;
(c) Seller shall have delivered to Purchaser and Merger Sub a
certificate, dated the Closing Date and signed by its Chairman, President and
Chief Executive Officer or any Executive Vice President to the effect that the
conditions set forth in paragraphs (a) and (b) of this section have been
satisfied; and
(d) Dissenters' rights shall not have been exercised with
respect to more than 15% of the outstanding shares of Seller Common Stock.
ARTICLE 6.
TERMINATION, WAIVER AND AMENDMENT
6.1. Termination
This Reorganization Agreement and the Plan of Merger may be terminated,
either before or after approval by the shareholders of Seller or Purchaser:
(a) At any time on or prior to the Effective Date, by the
mutual consent in writing of the parties hereto;
(b) At any time on or prior to the Closing Date, by Purchaser
in writing, if Seller has, or by Seller in writing, if Purchaser or Merger Sub
has, in any material respect, breached (i) any covenant or agreement contained
herein or in the Plan of Merger or (ii) any representation or warranty contained
herein, and in either case if (x) such breach has not been cured by the earlier
of 30 days after the date on which written notice of such breach is given to the
party committing such breach or the Closing Date and (y) such breach would
entitle the non-breaching party not to consummate the transactions contemplated
hereby under Article V hereof;
- 39 -
(c) At any time, by any party hereto in writing, if the
applications for prior approval referred to in Section 4.3 hereof have been
finally denied, and the time period for appeals and requests for reconsideration
has run, or if any governmental entity of competent jurisdiction shall have
issued a final nonappealable order enjoining or otherwise prohibiting the
Merger;
(d) At any time, by any party hereto in writing, if the
shareholders of Seller do not approve the transactions contemplated herein at
the special meetings duly called for that purpose; or
(e) By any party hereto in writing, if the Closing Date has
not occurred by the close of business on January 31, 2001 unless the failure of
the Closing to occur by such date shall be due to the failure of the party
seeking to terminate this Agreement to perform or observe the covenants and
agreements set forth herein.
6.2. Effect of Termination
In the event this Reorganization Agreement and the Plan of Merger is
terminated pursuant to Section 6.1 hereof, this Agreement and the Plan of Merger
shall become void and have no effect, except that (i) the provisions relating to
confidentiality and expenses set forth in Sections 4.5 and 7.1 hereof,
respectively, shall survive any such termination and (ii) a termination pursuant
to Section 6.1(b)(i) or (b)(ii) shall not relieve the breaching party from
liability for an uncured willful breach of such covenant or agreement or
representation or warranty giving rise to such termination.
6.3. Survival of Representations, Warranties and Covenants
All representations, warranties and covenants in this Reorganization
Agreement and the Plan of Merger or in any instrument delivered pursuant hereto
or thereto shall expire on, and be terminated and extinguished at, the Effective
Date other than covenants that by their terms are to survive or be performed
after the Effective Date; provided, that no such representations, warranties or
covenants shall be deemed to be terminated or extinguished so as to deprive
Purchaser, Merger Sub or Seller (or any director, officer or controlling person
thereof) of any defense in law or equity which otherwise would be available
against the claims of any person, including, without limitation, any shareholder
or former shareholder of either Purchaser or Seller, the aforesaid
representations, warranties and covenants being material inducements to the
consummation by Purchaser, Merger Sub and Seller of the transactions
contemplated herein.
6.4. Waiver
Except where not permitted by law, Purchaser and Seller, respectively,
by written instrument signed by an executive officer of such party, may at any
time (whether before or after approval of this Reorganization Agreement and the
Plan of Merger by the shareholders of Purchaser and Seller) extend the time for
the performance of any of the obligations or other acts of Seller, on the one
hand, or Purchaser or Merger Sub, on the other hand, and may waive (i) any
inaccuracies of such parties in the representations or warranties contained in
this Agreement, the Plan of Merger or any document delivered pursuant hereto or
thereto, (ii) compliance with any of the covenants, undertakings or agreements
of such parties, or satisfaction of any of the conditions
- 40 -
precedent to its obligations, contained herein or in the Plan of Merger or (iii)
the performance by such parties of any of its obligations set out herein or
therein; provided, however, that no such waiver, or amendment or supplement
contemplated by Section 6.5, executed after approval of this Reorganization
Agreement and the Plan of Merger by the shareholders of Purchaser or Seller
shall, without the further approval thereof, change the amount or kind of Merger
Consideration.
6.5. Amendment or Supplement
This Reorganization Agreement and the Plan of Merger may be amended or
supplemented at any time only by mutual agreement of the parties hereto or
thereto. Any such amendment or supplement must be in writing and approved by
their respective boards of directors and/or officers authorized thereby and
shall be subject to the proviso in Section 6.4 hereto.
ARTICLE 7.
MISCELLANEOUS
7.1. Expenses
Each party hereto shall bear and pay all costs and expenses incurred by
it in connection with the transactions contemplated in this Reorganization
Agreement, including fees and expenses of its own financial consultants,
accountants and counsel, except that Purchaser and Seller each shall bear and
pay 50% of all printing and mailing costs and filing fees associated with the
Registration Statement and the Proxy Statement.
7.2. Entire Agreement
This Reorganization Agreement, the Plan of Merger and the Option
Agreement contain the entire agreement between the parties with respect to the
transactions contemplated hereunder and thereunder and supersede all prior
arrangements or understandings with respect thereto, written or oral, other than
documents referred to herein or therein and the Confidentiality Agreements.
Notwithstanding any provision of any of the aforementioned agreements, the
parties agree that Purchaser may purchase Seller Common Stock in open market or
negotiated transactions prior to the Effective Date, not to exceed 5% of the
outstanding Seller Common Stock and subject to any applicable legal
restrictions. The terms and conditions of this Reorganization Agreement and the
Plan of Merger shall inure to the benefit of and be binding upon the parties
hereto and thereto and their respective successors. Except as specifically set
forth herein, or in the Plan of Merger, nothing in this Reorganization Agreement
or the Plan of Merger, expressed or implied, is intended to confer upon any
party, other than the parties hereto and thereto, and their respective
successors, any rights, remedies, obligations or liabilities. This
Reorganization Agreement and the Plan of Merger, taken together, shall
constitute a plan of reorganization within the meaning of Section 368 of the
Code.
7.3. No Assignment
No party hereto may assign any of its rights or obligations under this
Reorganization Agreement to any other person.
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7.4. Alternative Structure
Notwithstanding any provision of this Reorganization Agreement to the
contrary, Purchaser may, with the written consent of Seller, which shall not be
unreasonably withheld, elect, subject to the filing of all necessary
applications and the receipt of all required regulatory approvals, to modify the
structure of the acquisition of Seller and the Seller Subsidiaries set forth
herein, provided, that (i) the federal income tax consequences of any
transactions created by such modification shall not be other than those set
forth in Section 5.1(g) hereof, (ii) the consideration to be paid to the holders
of the Seller Common Stock is not thereby changed in kind or reduced in amount
as a result of such modification and (iii) such modification will not materially
delay or jeopardize the consummation of the transactions contemplated by the
Reorganization Agreement and the Plan of Merger.
7.5. Notices
All notices or other communications which are required or permitted
hereunder shall be in writing and sufficient if delivered personally or sent by
facsimile transmission or overnight express or by registered or certified mail,
postage prepaid, addressed as follows:
If to Seller:
Keystone Financial, Inc.
One Keystone Plaza
Front and Market Streets
Harrisburg, PA 17105
Attn: Ben G. Rooke
Facsimile No: (717) 231-5759
With a required copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attn: Edward D. Herlihy, Esq.
Facsimile No: (212) 403-2000
If to Purchaser or Merger Sub:
M&T Bank Corporation
One M&T Plaza
Buffalo, NY 14240
Attn: Michael Pinto,
Executive Vice President and Chief Financial Officer
Facsimile No: (716) 842-5177
- 42 -
With a required copy to:
M&T Bank Corporation
One M&T Plaza
Buffalo, NY 14240
Attn: Richard A. Lammert, Esquire
Senior Vice President and General Counsel
Facsimile No: (716) 842-5177
and to:
Arnold & Porter
555 Twelfth Street, N.W.
Washington, D.C. 20004
Attn: Steven Kaplan, Esquire
Facsimile No: (202) 942-5999
7.6. Captions
The captions contained in this Reorganization Agreement are for
reference purposes only and are not part of this Reorganization Agreement.
7.7. Counterparts
This Reorganization Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
7.8. Governing Law
This Reorganization Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to agreements made
and entirely to be performed within such jurisdiction, except to the extent
federal law may be applicable.
[Remainder of this page left intentionally blank.]
- 43 -
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have caused this Reorganization Agreement to be executed in counterparts
by their duly authorized officers and their corporate seal to be hereunto
affixed and attested by their officers thereunto duly authorized, all as of the
day and year first above written.
Attest M&T BANK CORPORATION
/s/ Michael S. Piemonte By /s/ Gary S. Paul
- ----------------------------- ---------------------------------
Michael S. Piemonte Gary S. Paul
Asst. Corporate Secretary Senior Vice President
(SEAL)
Attest OLYMPIA FINANCIAL CORP.
/s/ Michael S. Piemonte By /s/ Gary S. Paul
- ----------------------------- ---------------------------------
Michael S. Piemonte Gary S. Paul
Asst. Corporate Secretary Treasurer and Assistant Secretary
(SEAL)
Attest KEYSTONE FINANCIAL, INC.
/s/ Ben G. Rooke By /s/ Carl L. Campbell
- ----------------------------- ---------------------------------
Carl L. Campbell
Secretary Chairman, President and CEO
(SEAL)
Annex A
AGREEMENT AND PLAN OF MERGER OF
KEYSTONE FINANCIAL, INC.
WITH AND INTO OLYMPIA FINANCIAL CORP.
AGREEMENT AND PLAN OF MERGER ("Plan of Merger") dated as of May 16,
2000 by and between Keystone Financial, Inc. ("Seller"), a Pennsylvania
corporation having its principal executive office at One Keystone Plaza, Front
and Market Streets, Harrisburg, Pennsylvania 17105, and Olympia Financial Corp.
("Merger Sub"), a Delaware corporation having its principal executive office at
1209 Orange Street, Wilmington, Delaware, and joined in by M&T Bank Corporation
("Purchaser"), a New York corporation having its principal executive office at
One M&T Plaza, Buffalo, New York 14614.
WITNESSETH
WHEREAS, the respective Boards of Directors of Seller, Merger Sub and
Purchaser deem the merger of Seller with and into Merger Sub, under and pursuant
to the terms and conditions herein set forth or referred to, desirable and in
the best interests of the respective corporations and their respective
shareholders, and the respective Boards of Directors of Seller, Merger Sub and
Purchaser have adopted resolutions approving this Plan of Merger and an
Agreement and Plan of Reorganization dated of even date herewith
("Reorganization Agreement"); and
WHEREAS, the parties hereto desire that Seller shall be acquired by
Purchaser through the merger of Seller with and into Merger Sub, with Merger Sub
as the surviving corporation, subject to the terms and conditions of this Plan
of Merger and the Reorganization Agreement; and
WHEREAS, the parties hereto intend that the Merger shall qualify as a
reorganization under Section 368(a) of the Internal Revenue Code of 1986, as
amended ("the Code").
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the parties hereto do hereby agree as follows:
ARTICLE 1.
MERGER
Subject to the terms and conditions of this Plan of Merger, at the
Effective Time (as hereinafter defined), Seller shall be merged with and into
Merger Sub, pursuant to the provisions of, and with the effect provided in the
Pennsylvania Business Corporation Law and the Delaware General Corporation Law
(said transaction being hereinafter referred to as the "Merger"). At the
Effective Time, the separate existence of Seller shall cease and Merger Sub, as
the surviving entity, shall continue unaffected and unimpaired by the Merger.
(Merger Sub as existing at and after the Effective Time being hereinafter
sometimes referred to as the "Surviving Corporation").
ARTICLE 2.
CERTIFICATE OF INCORPORATION AND BY-LAWS
Subject to Section 4.11(e) of the Reorganization Agreement, the
Certificate of Incorporation and the Bylaws of Merger Sub in effect immediately
prior to the Effective Time shall be the Certificate of Incorporation and the
Bylaws of the Surviving Corporation, in each case until amended in accordance
with applicable law.
ARTICLE 3.
BOARD OF DIRECTORS
The directors and officers of Merger Sub immediately prior to the
Effective Time shall be the directors and officers of the Surviving Corporation,
each to hold office in accordance with the Certificate of Incorporation and
Bylaws of the Surviving Corporation.
ARTICLE 4.
CAPITAL
At the Effective Time, all of the shares of capital stock of Merger Sub
issued and outstanding immediately prior to the Effective Time shall remain
outstanding and unchanged by virtue of the Merger and shall constitute all of
the issued and outstanding shares of capital stock of the Surviving Corporation.
ARTICLE 5.
CONVERSION AND EXCHANGE OF SELLER
SHARES; FRACTIONAL SHARE INTERESTS
1. At the Effective Time, each share of the common stock of Seller, par
value $2.00 per share ("Seller Common Stock"), issued and outstanding
immediately prior to the Effective Time (except as provided in Section 2 of this
Article 5, and subject to Sections 5 and 7 of this Article 5), shall, by virtue
of the Merger, automatically and without any action on the part of the holder
thereof, become and be converted into, at the election of the holder as provided
in and subject to the limitations set forth in this Article 5, either (i) the
right to receive $21.50 in cash without interest (the "Cash Consideration") or
(ii) 0.05 of a share (before giving effect to the Stock Split as defined in the
Reorganization Agreement) (the "Exchange Ratio") of common stock, par value
$5.00 per share, of Purchaser ("Purchaser Common Stock") (the "Stock
Consideration"). The Cash Consideration and the Stock Consideration are
sometimes referred to herein collectively as the "Merger Consideration."
2. (a) At the Effective Time, all shares of Seller Common Stock held in
the treasury of Seller or owned beneficially by any Subsidiary of Seller other
than in a fiduciary capacity ("Trust Account Shares") or in connection with a
debt previously contracted ("DPC Shares") and all shares of Seller Common Stock
owned by Purchaser or owned beneficially by any subsidiary of
- 2 -
Purchaser other than Trust Account Shares and DPC Shares shall be canceled and
no cash, stock or other property shall be delivered in exchange therefor.
(b) Notwithstanding any other provision contained in this Plan of
Merger, no shares of Seller Common Stock that are issued and outstanding as of
the Effective Time and that are held by a stockholder who has properly exercised
his appraisal rights (any such shares being referred to herein as "Dissenting
Shares") under applicable law shall be converted into the right to receive the
Merger Consideration as provided in Section 1 of this Article 5 unless and until
the holder shall have failed to perfect, or shall have effectively withdrawn or
lost, his right to dissent from the Merger under applicable law and to receive
such consideration as may be determined to be due with respect to such
Dissenting Shares pursuant to and subject to the requirements of applicable law.
If any such holder shall have so failed to perfect or effectively withdrawn or
lost such right prior to the Election Deadline (as defined herein), each of such
holder's shares of Seller Common Stock shall thereupon be deemed to be
Non-Election Shares (as defined herein) for all purposes under this Article 5.
If any holder of Dissenting Shares shall have so failed to perfect or
effectively withdrawn or lost such holder's right to dissent from the Merger
after the Election Deadline, each of such holder's shares of Seller Common Stock
shall thereupon be deemed to have been converted into and to have become, as of
the Effective Time, the right to receive the Stock Consideration or the Cash
Consideration or a combination thereof as determined by Purchaser in its sole
discretion.
3. (a) An election form (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 the certificates theretofore
representing Seller Common Stock ("Certificates") shall pass, only upon proper
delivery of such Certificates to a bank or trust company designated by Purchaser
and reasonably satisfactory to Seller (the "Exchange Agent") in such form as
Seller and Purchaser shall mutually agree shall be mailed on the Mailing Date
(as defined below) to each holder of record of shares of Seller Common Stock
(other than holders of Dissenting Shares or shares of Seller Common Stock to be
cancelled as provided in Section 2(a) of this Article 5) as of a record date
which shall be the same date as the record date for eligibility to vote on the
Merger. The "Mailing Date" shall be the date on which proxy materials relating
to the Merger are mailed to holders of shares of Seller Common Stock.
(b) Each Election Form shall entitle the holder of shares of Seller
Common Stock (or the beneficial owner through appropriate and customary
documentation and instructions) 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 or to indicate that such
holder has no preference as to the receipt of the Cash Consideration or the
Stock Consideration (a "Non-Election"). Holders of record of shares of Seller
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 Seller Common Stock held by that Representative for a
particular beneficial owner. Shares of Seller Common Stock as to which a Cash
Election has been made are referred to herein as "Cash Election Shares." Shares
of Seller Common Stock as to which a Stock Election has been made are referred
to herein as "Stock Election Shares." Shares of Seller Common Stock as to which
no election or a Non-Election has been made are
- 3 -
referred to as "Non-Election Shares." The aggregate number of shares of Seller
Common Stock with respect to which a Stock Election has been made is referred to
herein as the "Stock Election Number."
(c) To be effective, 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 the Mailing Date (or such other time and date as
Seller and Purchaser may mutually agree) (the "Election Deadline"). An election
shall have been properly made only if the Exchange Agent shall have actually
received a properly completed Election Form by the Election Deadline. An
Election Form shall be deemed properly completed only if accompanied by one or
more Certificates (or customary affidavits and, if required by Purchaser
pursuant to Section 8 of this Article 5, indemnification regarding the loss or
destruction of such Certificates or the guaranteed delivery of such
Certificates) representing all shares of Seller Common Stock covered by such
Election Form, together with duly executed transmittal materials included with
the Election Form. Any Seller stockholder may at any time prior to the Election
Deadline change his or her election by written notice received by the Exchange
Agent prior to the Election Deadline accompanied by a properly completed and
signed revised Election Form. Any Seller stockholder may, at any time prior to
the Election Deadline, revoke his or her election by written notice received by
the Exchange Agent prior to the Election Deadline or by withdrawal prior to the
Election Deadline of his or her Certificates, or of the guarantee of delivery of
such Certificates, previously deposited with the Exchange Agent. All elections
shall be revoked automatically if the Exchange Agent is notified in writing by
Purchaser and Seller that this Plan of Merger has been terminated. If a
stockholder either (i) does not submit a properly completed Election Form by the
Election Deadline, or (ii) revokes its Election Form and does not thereafter
duly deliver a properly completed Election Form to the Exchange Agent prior to
the Election Deadline, the shares of Seller Common Stock held by such
stockholder shall be designated "Non-Election Shares." Purchaser shall cause the
Certificates representing Seller Common Stock described in (ii) to be promptly
returned without charge to the person submitting the Election Form upon written
request to that effect from the person who submitted the Election Form. Subject
to the terms of this Plan of Merger 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.
(d) Notwithstanding any other provision contained in this Plan of
Merger, 65% of the total number of shares of Seller Common Stock outstanding on
the date hereof, less the aggregate number of shares of Seller Common Stock
acquired by Purchaser pursuant to the Reorganization Agreement or Seller prior
to the Effective Time (the "Stock Conversion Number") shall be converted into
the Stock Consideration and the remaining outstanding shares of Seller Common
Stock shall be converted into the Cash Consideration (in each case, excluding
(x) shares of Seller Common Stock to be cancelled as provided in Section 2(a) of
this Article 5 and (y) Dissenting Shares (the shares remaining outstanding after
such exclusion constituting, for purposes of this Agreement the "Outstanding
Seller Shares"); provided, however, that for federal income tax purposes, it is
intended that the Merger will qualify as a reorganization under the provisions
of Section 368(a) of the Code and, notwithstanding anything to the contrary
contained herein, in order that the Merger will not fail to satisfy continuity
of interest requirements under
- 4 -
applicable federal income tax principles relating to reorganizations under
Section 368(a) of the Code, as reasonably determined by Arnold & Porter and
Wachtell, Lipton, Rosen & Katz, Purchaser shall increase the number of
outstanding Seller shares that will be converted into the Stock Consideration
and reduce the number of outstanding Seller shares that will be converted into
the right to receive the Cash Consideration.
(e) Within five (5) business days after the later to occur of the
Election Deadline or the Effective Time, Purchaser shall cause the Exchange
Agent to effect the allocation among holders of Seller 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,
subject to Section 7 of this Article 5, 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;
(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, subject to Section 7 of Article 5, 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, subject to Section 7 of this Article 5, 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
- 5 -
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.
For purposes of this Section 3(e), if Purchaser is obligated to
increase the number of Outstanding Seller Shares to be converted into shares of
Purchaser Common Stock as a result of the application of the last clause of
Section 3(d) above, then the higher number shall be substituted for the Stock
Conversion Number in the calculations set forth in this Section 3(e).
(f) All of the shares of Seller Common Stock converted into and
exchangeable for the Merger Consideration pursuant to this Article 5 shall no
longer be outstanding and shall automatically be cancelled and cease to exist as
of the Effective Time. Each Certificate previously representing any such shares
of Seller Common Stock shall thereafter represent the right to receive the
Merger Consideration pursuant to this Article 5, as allocated among the holders
of Seller Common Stock in accordance with this Section 3.
(g) At the Effective Time, Purchaser shall deposit, or shall cause to
be deposited, with the Exchange Agent, for exchange in accordance with this
Section 3, certificates representing the aggregate number of shares of Purchaser
Common Stock into which the outstanding shares of Seller Common Stock shall be
converted pursuant to this Article 5, and cash in the amount of the aggregate
Cash Consideration and the aggregate amount of cash to be paid in lieu of
fractional shares. As soon as practicable after the Effective Time, the Exchange
Agent shall mail to all holders of record of Seller Common Stock who did not
previously submit completed Election Forms letters of transmittal specifying the
procedures for the delivery of such holders' certificates to the Exchange Agent
and describing the Merger Consideration such holders will receive therefor. Also
as soon as practicable after the Effective Time (with allowance for the mailing
of the letters of transmittal described in the preceding sentence), the Exchange
Agent shall distribute to holders of shares of Seller Common Stock, upon
surrender to the Exchange Agent (to the extent not previously surrendered with
an Election Form) of one or more Certificates for cancellation, (i) a
certificate representing that number of whole shares of Purchaser Common Stock,
if any, that such holder has the right to receive pursuant to this Plan of
Merger, and (ii) a check for an amount equal to the cash, if any, which such
holder has the right to receive pursuant to this Plan of Merger (including any
cash in lieu of any fractional shares of Purchaser Common Stock to which such
holder is entitled pursuant to Section 7 hereof and any dividends or other
distributions to which such holder is entitled pursuant to the provisions set
forth below). In no event shall the holder of any such surrendered Certificates
be entitled to receive interest on any of the Cash Consideration or cash in lieu
of fractional share interests to be received in the Merger. If a check is to be
issued in the name of a person other than the person in whose name the
Certificates surrendered for exchange therefor are registered, it shall be a
condition of the exchange that the person requesting such exchange shall pay to
the Exchange Agent any transfer taxes required by reason of issuance of such
check to a person other than the registered holder of the Certificates
surrendered, or shall establish to the reasonable satisfaction of the Exchange
Agent that such tax has been paid or is not applicable. No dividends or other
distributions declared after the Effective Time with respect to Purchaser Common
Stock shall be paid to the holder of any unsurrendered
- 6 -
Certificate until the holder thereof shall surrender such Certificate in
accordance with this Article 5. After the surrender of a Certificate in
accordance with this Article 5, 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 Purchaser Common
Stock, if any, represented by such Certificate. Certificates surrendered for
exchange by any person who is an "affiliate" of Seller for purposes of Rule
145(c) under the Securities Act of 1933, as amended, shall not be exchanged for
certificates representing shares of Purchaser Common Stock until Purchaser has
received the written agreement of such person contemplated by Section 4.10 of
the Reorganization Agreement. If any certificate for shares of Purchaser Common
Stock is to be issued in a name other than that in which a Certificate
surrendered for exchange is issued, the Certificate so surrendered shall be
properly endorsed and otherwise in proper form for transfer and the person
requesting such exchange shall affix any requisite stock transfer tax stamps to
the Certificate surrendered or provide funds for their purchase or establish to
the reasonable satisfaction of Purchaser or its agent that such taxes have been
paid or are not payable.
4. At the Effective Time, the stock transfer books of Seller shall be
closed and no transfer of Seller Common Stock shall thereafter be made or
recognized. If, after the Effective Time, Certificates representing such shares
are presented for transfer to the Exchange Agent, they shall be cancelled and
exchanged for the Merger Consideration as provided in this Article 5. Any other
provision of this Plan of Merger notwithstanding, neither Purchaser or its agent
nor any party to the Merger shall be liable to a holder of Seller Common Stock
for any amount paid or properly delivered in good faith to a public official
pursuant to any applicable abandoned property, escheat or similar law.
5. In the event that prior to the Effective Time, the outstanding
shares of Purchaser Common Stock shall have been increased, decreased or changed
into or exchanged for a different number or kind of shares or securities by
reorganization, recapitalization, reclassification, stock dividend, stock split
or other like changes in Purchaser's capitalization including, without
limitation, the Stock Split, then an appropriate and proportionate adjustment
shall be made to the Stock Consideration (including the Exchange Ratio) and the
formulas contained in Section 6 of this Article 5.
6. At the Effective Time, each option to acquire Seller Common Stock
(each a "Seller Option") granted under 1997 Stock Incentive Plan; the 1992 Stock
Incentive Plan; the 1988 Stock Incentive Plan; the 1995 Employee Stock Purchase
Plan; the 1995 Non-Employee Directors' Stock Option Plan; the 1990 Non-Employee
Directors' Stock Option Plan; the Financial Trust Corp. Stock Option Plan of
1992; the Financial Trust Corp. Non-Employee Director Stock Option Plan of 1994;
the Amended and Restated Nonqualified Stock Option Agreement with Donald E.
Stone (WM Bancorp, Inc. options); the Elmwood Bancorp, Inc. Key Employee Stock
Compensation Program; and the Mainline Bancshares, Inc. Stock Option Agreement
(collectively, the "Seller Stock Option Plans") which is outstanding immediately
prior to the Effective Time, whether vested or unvested, will be assumed by
Purchaser. Each Seller Option so assumed by Purchaser shall continue to have,
and be subject to, the same terms and conditions set forth in the Seller Stock
Option Plan (and any agreement) under which it was granted and as in existence
immediately prior to the Effective Time, except that (i) such Seller Option
shall be exercisable (when vested) for that number of whole shares of Purchaser
Common Stock equal to the product of the number of shares of Seller Common Stock
covered by the Seller Option multiplied by the Exchange Ratio, provided
- 7 -
that any fractional shares of Purchaser Common Stock resulting from such
multiplication shall be rounded down to the nearest share; and (ii) the exercise
price per share of Purchaser Common Stock shall be equal to the exercise price
per share of Seller Common Stock of such Seller Option divided by the Exchange
Ratio, provided that such exercise price shall be rounded up to the nearest
cent. Notwithstanding the foregoing, the adjustment provided herein will comply
with the adjustment provisions in the Seller Stock Option Plans and with respect
to any Seller Options that are "incentive stock options" (as defined in Section
422 of the Code) shall be and is intended to be effected in a manner which is
consistent with Section 424(a) of the Code. At the Effective Time, each
outstanding equity-based right or award under the Seller Stock Option Plans or
other equity-based plans (the "Equity-Based Rights") shall be assumed by
Purchaser and be subject to the terms and conditions of the applicable Seller
Stock Option Plan or equity-based plan and the applicable award agreement under
which it was granted. Each Equity-Based Right so assumed shall be converted into
a right to received the number of shares of Purchaser Common Stock or a payment
with a value equal to, as applicable, the product of (i) the number of shares of
Seller Common Stock subject to such Equity-Based Right and (ii) the Exchange
Ratio.
7. Notwithstanding any other provision hereof, each holder of shares of
Seller Common Stock who would otherwise have been entitled to receive pursuant
to this Article 5 a fraction of a share of Purchaser Common Stock (after taking
into account all Certificates delivered by such holder) shall receive, in lieu
thereof, cash in an amount equal to such fraction of a share of Purchaser Common
Stock multiplied by the market value (as defined below) of Purchaser Common
Stock. The "market value" of Purchaser Common Stock shall be the closing price
of the Purchaser Common Stock on the New York Stock Exchange -- Composite
Transactions List (as reported by The Wall Street Journal or, if not reported
therein, another comparable authoritative source) for the trading day
immediately preceding the date on which the Effective Time occurs. No such
holder shall be entitled to dividends, voting rights or any other shareholder
right in respect of such fractional share.
8. In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by Purchaser,
the posting by such person of a bond in such amount as Purchaser may reasonably
direct as indemnity against any claim that may be made against it with respect
to such Certificate, the Exchange Agent will issue in exchange for such lost,
stolen or destroyed Certificate the shares of Purchaser Common Stock
constituting the Stock Consideration and cash in lieu of fractional shares
and/or the cash constituting the Cash Consideration deliverable in respect
thereof pursuant to this Plan of Merger.
ARTICLE 6.
EFFECTIVE TIME OF THE MERGER
A certificate or articles of merger evidencing the transactions
contemplated herein shall be delivered to the Pennsylvania Department of State
and the Delaware Secretary of State for filing as provided in the Reorganization
Agreement. The Merger shall be effective at the time and on the date specified
in such certificate or articles of merger (such date and time being herein
referred to as the "Effective Time").
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ARTICLE 7.
CONDITIONS PRECEDENT
The obligations of Purchaser, Merger Sub and Seller to effect the
Merger as herein provided shall be subject to satisfaction, unless duly waived,
of the conditions to the obligations of such person set forth in Article 5 of
the Reorganization Agreement.
ARTICLE 8.
TERMINATION
Anything contained in the Plan of Merger to the contrary
notwithstanding, and notwithstanding adoption hereof by the shareholders of
Seller or Merger Sub, this Plan of Merger may be terminated and the Merger
abandoned as provided in the Reorganization Agreement.
ARTICLE 9.
MISCELLANEOUS
1. This Plan of Merger may be amended or supplemented at any time prior
to the Effective Time by mutual agreement of Merger Sub, Purchaser and Seller.
Any such amendment or supplement must be in writing and approved by their
respective Boards of Directors and/or by officers authorized thereby and shall
be subject to the proviso in Section 6.4 of the Reorganization Agreement.
2. Any notice or other communication required or permitted under this
Plan of Merger shall be given, and shall be effective, in accordance with the
provisions of the Reorganization Agreement.
3. The headings of the several Articles herein are inserted for
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Plan of Merger.
4. This Plan of Merger shall be governed by and construed in accordance
with the laws of Pennsylvania and Delaware applicable to the internal affairs of
Seller and Merger Sub.
5. This Plan of Merger, taken together with the Reorganization
Agreement, shall constitute a plan of reorganization within the meaning of
Section 368 of the Code.
[Remainder of this page left intentionally blank.]
- 9 -
IN WITNESS WHEREOF, the parties hereto, intending to be
legally bound hereby, have caused this Plan of Merger to be executed in
counterparts by their duly authorized officers and attested by their officers
thereunto duly authorized, all as of the day and year first above written.
Attest M&T BANK CORPORATION
/s/ Michael S. Piemonte By /s/ Gary S. Paul
- ----------------------------- ---------------------------------
Michael S. Piemonte Gary S. Paul
Asst. Corporate Secretary Senior Vice President
Attest OLYMPIA FINANCIAL CORP.
/s/ Michael S. Piemonte By /s/ Gary S. Paul
- ----------------------------- ---------------------------------
Michael S. Piemonte Gary S. Paul
Asst. Corporate Secretary Treasurer and Assistant Secretary
Attest KEYSTONE FINANCIAL, INC.
/s/ Ben G. Rooke By /s/ Carl L. Campbell
- ----------------------------- ---------------------------------
Secretary Carl L. Campbell
Chairman, President and CEO
- 10 -
Exhibit 99.1
STOCK OPTION AGREEMENT
THE TRANSFER OF THIS AGREEMENT IS SUBJECT TO
CERTAIN PROVISIONS CONTAINED HEREIN AND TO
RESALE RESTRICTIONS UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
STOCK OPTION AGREEMENT, dated May 16, 2000, Keystone Financial, Inc., a
Pennsylvania corporation ("Issuer"), and M&T Bank Corporation, a New York
corporation ("Grantee").
W I T N E S S E T H:
WHEREAS, Grantee, Issuer and Olympia Financial Corp., a Delaware
corporation and a wholly owned subsidiary of Grantee ("Merger Sub") have entered
into an Agreement and Plan of Reorganization of even date herewith (the
"Reorganization Agreement"), which agreement has been executed by the parties
hereto immediately prior to this Stock Option Agreement (the "Agreement"), and
will enter into an Agreement and Plan of Merger to be dated as of the date of
this Agreement (the "Plan of Merger," and, together with the Reorganization
Agreement, the "Merger Agreements"); and
WHEREAS, as a condition to Grantee's entering into the Merger
Agreements and in consideration therefor, Issuer has agreed to grant Grantee the
Option (as hereinafter defined);
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Merger Agreements, the
parties hereto agree as follows:
1. (a) Issuer hereby grants to Grantee an unconditional,
irrevocable option (the "Option") to purchase, subject to the terms hereof, up
to 9,730,070 fully paid and nonassessable shares of Issuer's Common Stock, par
value $2.00 per share ("Common Stock"), at a price of $15.125 per share (the
"Option Price"); provided, however, that in no event shall the number of shares
of Common Stock for which this Option is exercisable exceed 19.9% of the
Issuer's issued and outstanding shares of Common Stock without giving effect to
any shares subject to or issued pursuant to the Option. The number of shares of
Common Stock that may be received upon the exercise of the Option and the Option
Price are subject to adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock
are either (i) issued or otherwise become outstanding after the date of this
Agreement (other than pursuant to this Agreement or as permitted under the terms
of the Merger Agreements) or (ii) redeemed, repurchased, retired or otherwise
cease to be outstanding after the date of the Agreement, the number of shares of
Common Stock subject to the Option shall be increased or decreased, as
appropriate, so that, after such issuance, such
number equals 19.9% of the number of shares of Common Stock then issued and
outstanding without giving effect to any shares subject or issued pursuant to
the Option. Nothing contained in this Section 1(b) or elsewhere in this
Agreement shall be deemed to authorize Issuer or Grantee to breach any provision
of the Merger Agreements.
2. (a) The Holder (as hereinafter defined) may exercise the
Option, in whole or part, and from time to time, if, but only if, both an
Initial Triggering Event (as hereinafter defined) and a Subsequent Triggering
Event (as hereinafter defined) shall have occurred prior to the occurrence of an
Exercise Termination Event (as hereinafter defined), provided, however, that the
Holder shall have sent the written notice of such exercise (as provided in
subsection (e) of this Section 2) within six months following such Subsequent
Triggering Event; provided, further, however, that if the Option cannot be
exercised on any day because of any injunction, order or similar restraint
issued by a court of competent jurisdiction, the period during which the Option
may be exercised shall be extended so that the Option shall expire no earlier
than on the 10th business day after such injunction, order or restraint shall
have been dissolved or when such injunction, order or restraint shall have
become permanent and no longer subject to appeal, as the case may be. Each of
the following shall be an "Exercise Termination Event": (i) the Effective Time
(as defined in the Plan of Merger) of the Merger; (ii) termination of the Merger
Agreements in accordance with the provisions thereof if such termination occurs
prior to the occurrence of an Initial Triggering Event except a termination by
Grantee pursuant to Section 6.1(b)(i) of the Reorganization Agreement (unless
the breach by Issuer giving rise to such right of termination is
non-volitional); or (iii) the passage of twelve months after termination of the
Merger Agreements if such termination follows the occurrence of an Initial
Triggering Event or is a termination by Grantee pursuant to Section 6.1(b)(i) of
the Reorganization Agreement (unless the breach by Issuer giving rise to such
right of termination is non-volitional). The term "Holder" shall mean the holder
or holders of the Option. Notwithstanding anything to the contrary contained
herein, the Option may not be exercised (nor may Grantee's rights under Section
10 hereof be exercised) at any time when Grantee shall be in willful breach of
any of its covenants or agreements contained in the Merger Agreements under
circumstances that would entitle Issuer to terminate the Merger Agreements
(without regard to any grace period provided for in Section 6.1(b)(x) of the
Reorganization Agreement).
(b) The term "Initial Triggering Event" shall mean any of the
following events or transactions occurring after the date hereof:
(i) Issuer or any of its Subsidiaries (each an
"Issuer Subsidiary"), without having received Grantee's prior written consent,
shall have entered into an agreement to engage in an Acquisition Transaction (as
hereinafter defined) with any person (the term "person" for purposes of this
Agreement having the meaning assigned thereto in Sections 3(a)(9) and 13(d)(3)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
rules and regulations thereunder) other than Grantee or any of its Subsidiaries
(each a "Grantee Subsidiary"). For purposes of this Agreement, "Acquisition
Transaction" shall mean (w) a merger or consolidation, or any
- 2 -
similar transaction, involving Issuer or any Significant Subsidiary (as defined
in Rule 1-02 of Regulation S-X promulgated by the Securities and Exchange
Commission (the "SEC")) of Issuer, (x) a purchase, lease or other acquisition or
assumption of all or a substantial portion of the assets or deposits of Issuer
or any Significant Subsidiary of Issuer, (y) a purchase or other acquisition
(including by way of merger, consolidation, share exchange or otherwise) of
securities representing 10% or more of the voting power of Issuer, or (z) any
substantially similar transaction; provided, however, that in no event shall any
merger, consolidation, purchase or similar transaction involving only the Issuer
and one or more of its Subsidiaries or involving only two or more of such
Subsidiaries, be deemed to be an Acquisition Transaction; provided that any such
transaction is not entered into in violation of the terms of the Merger
Agreements;
(ii) Issuer or any of its Subsidiaries, without
having received Grantee's prior written consent, shall have authorized,
recommended, proposed, or publicly announced its intention to authorize,
recommend or propose to engage in an Acquisition Transaction with any person
other than Grantee or a Subsidiary of Grantee;
(iii) Any person (other than Grantee or any
Subsidiary of Grantee) shall have acquired beneficial ownership or the right to
acquire beneficial ownership of 10% or more of the outstanding shares of Common
Stock (the term "beneficial ownership" for purposes of this Agreement having the
meaning assigned thereto in Section 13(d) of the Exchange Act, and the rules and
regulations thereunder) or any person other than Grantee or any Subsidiary of
Grantee shall have commenced (as such term is defined under the rules and
regulations of the SEC), or shall have filed or publicly disseminated a
registration statement or similar disclosure statement with respect to, a tender
offer or exchange offer to purchase any shares of Issuer Common Stock such that,
upon consummation of such offer, such person would beneficially own, directly or
indirectly, 10% or more of the then outstanding shares of Issuer Common Stock
(such an offer being referred to herein as a "Tender Offer" or an "Exchange
Offer," respectively);
(iv) (A) the holders of Issuer Common Stock shall not
have approved the Merger Agreements and the transactions contemplated thereby,
at the meeting of such stockholders held for the purpose of voting on such
agreement, (B) such meeting shall not have been held or shall have been
cancelled prior to termination of the Merger Agreements, or (C) the Board of
Directors of Issuer shall have publicly withdrawn or modified, or publicly
announced its intent to withdraw or modify, in any manner adverse to Grantee,
its recommendation that the stockholders of Issuer approve the transactions
contemplated by the Merger Agreements, in each case after it shall have been
publicly announced that any person other than Grantee or any Subsidiary of
Grantee shall have (x) made, or disclosed an intention to make, a proposal to
engage in an Acquisition Transaction, (y) commenced a Tender Offer, or filed or
publicly disseminated a registration statement or similar disclosure statement
with respect to an Exchange Offer, or (z) filed an application (or given a
notice), whether in draft or final form, under any federal or state banking laws
seeking regulatory approval to engage in an Acquisition Transaction; or
- 3 -
(v) After an overture is made by a third party to
Issuer or its stockholders to engage in an Acquisition Transaction, Issuer shall
have breached any covenant or obligation contained in the Reorganization
Agreement and such breach (x) would entitle Grantee to terminate the Merger
Agreements and (y) shall not have been cured prior to the Notice Date (as
defined below).
(c) The term "Subsequent Triggering Event" shall mean either
of the following events or transactions occurring after the date hereof:
(i) The acquisition by any person of beneficial
ownership of 25% or more of the then outstanding shares of Common Stock; or
(ii) The occurrence of the Initial Triggering Event
described in paragraph (i) of subsection (b) of this Section 2, except that the
percentage referred to in clause (y) shall be 25%.
(d) Issuer shall notify Grantee promptly in writing of the
occurrence of any Initial Triggering Event or Subsequent Triggering Event of
which it has notice (together, a "Triggering Event"), it being understood that
the giving of such notice by Issuer shall not be a condition to the right of the
Holder to exercise the Option.
(e) In the event the Holder is entitled to and wishes to
exercise the Option, it shall send to Issuer a written notice (the date of which
being herein referred to as the "Notice Date") specifying (i) the total number
of shares it will purchase pursuant to such exercise and (ii) a place and date
not earlier than three business days nor later than 60 business days from the
Notice Date for the closing of such purchase (the "Closing Date"); provided,
that if prior notification to or approval of the Federal Reserve Board or any
other regulatory agency is required in connection with such purchase, the Holder
shall promptly file the required notice or application for approval and shall
expeditiously process the same and the period of time that otherwise would run
pursuant to this sentence shall run instead from the date on which any required
notification periods have expired or been terminated or such approvals have been
obtained and any requisite waiting period or periods shall have passed. Any
exercise of the Option shall be deemed to occur on the Notice Date relating
thereto.
(f) At the closing referred to in subsection (e) of this
Section 2, the Holder shall pay to Issuer the aggregate purchase price for the
shares of Common Stock purchased pursuant to the exercise of the Option in
immediately available funds by wire transfer to a bank account designated by
Issuer; provided, that failure or refusal of Issuer to designate such a bank
account shall not preclude the Holder from exercising the Option.
(g) At such closing, simultaneously with the delivery of
immediately available funds as provided in subsection (f) of this Section 2,
Issuer shall deliver to the Holder a certificate or certificates representing
the number of shares of Common Stock purchased by the Holder and, if the Option
should be exercised in part only, a new Option
- 4 -
evidencing the rights of the Holder thereof to purchase the balance of the
shares purchasable hereunder, and the Holder shall deliver to Issuer a copy of
this Agreement and a letter agreeing that the Holder will not offer to sell or
otherwise dispose of such shares in violation of applicable law or the
provisions of this Agreement.
(h) Certificates for Common Stock delivered at a closing
hereunder may be endorsed with a restrictive legend that shall read
substantially as follows:
"THE TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO CERTAIN PROVISIONS OF AN AGREEMENT BETWEEN THE
REGISTERED HOLDER HEREOF AND ISSUER AND TO RESALE RESTRICTIONS
ARISING UNDER THE SECURITIES ACT OF 1933, AS AMENDED. A COPY
OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF ISSUER
AND WILL BE PROVIDED TO THE HOLDER HEREOF WITHOUT CHARGE UPON
RECEIPT BY ISSUER OF A WRITTEN REQUEST THEREFOR."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "Securities Act"), in the above
legend shall be removed by delivery of substitute certificate(s) without such
reference if the Holder shall have delivered to Issuer a copy of a letter from
the staff of the SEC, or an opinion of counsel, in form and substance reasonably
satisfactory to Issuer, to the effect that such legend is not required for
purposes of the Securities Act; (ii) the reference to the provisions to this
Agreement in the above legend shall be removed by delivery of substitute
certificate(s) without such reference if the shares have been sold or
transferred in compliance with the provisions of this Agreement and under
circumstances that do not require the retention of such reference; and (iii) the
legend shall be removed in its entirety if the conditions in the preceding
clauses (i) and (ii) are both satisfied. In addition, such certificates shall
bear any other legend as may be required by law.
(i) Upon the giving by the Holder to Issuer of the written
notice of exercise of the Option provided for under subsection (e) of this
Section 2 and the tender of the applicable purchase price in immediately
available funds, the Holder shall be deemed to be the holder of record of the
shares of Common Stock issuable upon such exercise, notwithstanding that the
stock transfer books of Issuer shall then be closed or that certificates
representing such shares of Common Stock shall not then be actually delivered to
the Holder. Issuer shall pay all expenses, and any and all United States
federal, state and local taxes and other charges that may be payable in
connection with the preparation, issue and delivery of stock certificates under
this Section 2 in the name of the Holder or its assignee, transferee or
designee.
3. Issuer agrees: (i) that it shall at all times maintain,
free from preemptive rights, sufficient authorized but unissued or treasury
shares of Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to
- 5 -
purchase Common Stock; (ii) that it will not, by charter amendment or through
reorganization, consolidation, merger, dissolution or sale of assets, or by any
other voluntary act, avoid or seek to avoid the observance or performance of any
of the covenants, stipulations or conditions to be observed or performed
hereunder by Issuer; (iii) promptly to take all action as may from time to time
be required (including (x) complying with all premerger notification, reporting
and waiting period requirements specified in 15 U.S.C. ss. 18a and regulations
promulgated thereunder and (y) in the event, under federal or state banking law,
prior approval of or notice to the Federal Reserve Board or any other federal or
state regulatory authority is necessary before the Option may be exercised,
cooperating fully with the Holder in preparing such applications or notices and
providing such information to the Federal Reserve Board or such other federal or
state regulatory authority as they may require) in order to permit the Holder to
exercise the Option and Issuer duly and effectively to issue shares of Common
Stock pursuant hereto; and (iv) promptly to take all action provided herein to
protect the rights of the Holder against dilution.
4. This Agreement (and the Option granted hereby) are
exchangeable, without expense, at the option of the Holder, upon presentation
and surrender of this Agreement at the principal office of Issuer, for other
Agreements providing for Options of different denominations entitling the holder
thereof to purchase, on the same terms and subject to the same conditions as are
set forth herein, in the aggregate the same number of shares of Common Stock
purchasable hereunder. The terms "Agreement" and "Option" as used herein include
any Stock Option Agreements and related Options for which this Agreement (and
the Option granted hereby) may be exchanged. Upon receipt by Issuer of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, whether or not the
Agreement so lost, stolen, destroyed or mutilated shall at any time be
enforceable by anyone.
5. In addition to the adjustment in the number of shares of
Common Stock that are purchasable upon exercise of the Option pursuant to
Section 1 of this Agreement, the number of shares of Common Stock purchasable
upon the exercise of the Option and the Option Price shall be subject to
adjustment from time to time as provided in this Section 5. In the event of any
change in, or distributions in respect of, the Common Stock by reason of stock
dividends, split-ups, mergers, recapitalizations, combinations, subdivisions,
conversions, exchanges of shares, distributions on or in respect of the Common
Stock that would be prohibited under the terms of the Merger Agreement, or the
like, the type and number of shares of Common Stock purchasable upon exercise
hereof and the Option Price shall be appropriately adjusted in such manner as
shall fully preserve the economic benefits provided hereunder and proper
provision shall be made in any agreement governing any such transaction to
provide for such proper adjustment and the full satisfaction of the Issuer's
obligations hereunder.
- 6 -
6. Upon the occurrence of a Subsequent Triggering Event that
occurs prior to an Exercise Termination Event, Issuer shall, at the request of
Grantee delivered within six months of such Subsequent Triggering Event (whether
on its own behalf or on behalf of any subsequent holder of this Option (or part
thereof) or any of the shares of Common Stock issued pursuant hereto), promptly
prepare, file and keep current a registration statement under the Securities Act
covering this Option and any shares issued and issuable pursuant to this Option
and shall use its reasonable best efforts to cause such registration statement
to become effective and remain current in order to permit the sale or other
disposition of this Option and any shares of Common Stock issued upon total or
partial exercise of this Option ("Option Shares") in accordance with any plan of
disposition requested by Grantee. Issuer will use its reasonable best efforts to
cause such registration statement first to become effective and then to remain
effective for such period not in excess of 180 days from the day such
registration statement first becomes effective or such shorter time as may be
reasonably necessary to effect such sales or other dispositions. Grantee shall
have the right to demand two such registrations. The foregoing notwithstanding,
if, at the time of any request by Grantee for registration of the Option or
Option Shares as provided above, Issuer is in registration with respect to an
underwritten public offering of shares of Common Stock, and if in the good faith
judgment of the managing underwriter or managing underwriters, or, if none, the
sole underwriter or underwriters, of such offering the inclusion of the Holder's
Option or Option Shares would interfere with the successful marketing of the
shares of Common Stock offered by Issuer, the number of Option Shares otherwise
to be covered in the registration statement contemplated hereby may be reduced;
and provided, however, that after any such required reduction the number of
Option Shares to be included in such offering for the account of the Holder or
Holders shall constitute at least 25% of the total number of shares to be sold
by the Holder or Holders and Issuer in the aggregate; and provided, further,
however, that if such reduction occurs, then the Issuer shall file a
registration statement for the balance as promptly as practicable and no
reduction shall thereafter occur. Each such Holder shall provide all information
reasonably requested by Issuer for inclusion in any registration statement to be
filed hereunder. If requested by any such Holder in connection with such
registration, Issuer shall become a party to any underwriting agreement relating
to the sale of such shares, but only to the extent of obligating itself in
respect of representations, warranties, indemnities and other agreements
customarily included in secondary offering underwriting agreements for the
Issuer. Upon receiving any request under this Section 6 from Grantee, Issuer
agrees to send a copy thereof to any other person known to Issuer to be entitled
to registration rights under this Section 6, in each case by promptly mailing
the same, postage prepaid, to the address of record of the persons entitled to
receive such copies. Notwithstanding anything to the contrary contained herein,
in no event shall Issuer be obligated to effect more than two registrations
pursuant to this Section 6 by reason of the fact that there shall be more than
one Holder as a result of any assignment or division of this Agreement.
7. The periods for exercise of certain rights under Sections
2, 6, 10 and 12 shall be extended: (i) to the extent necessary to obtain all
regulatory approvals for the exercise of such rights, and for the expiration of
all statutory waiting periods; and (ii)
- 7 -
to the extent necessary to avoid liability under Section 16(b) of the Exchange
Act by reason of such exercise.
8. Issuer hereby represents and warrants to Grantee as
follows:
(a) Issuer has full corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of Issuer and no other corporate proceedings on the part of
Issuer are necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by Issuer.
(b) Issuer has taken all necessary corporate action to
authorize and reserve and to permit it to issue, and at all times from the date
hereof through the termination of this Agreement in accordance with its terms
will have reserved for issuance upon the exercise of the Option, that number of
shares of Common Stock equal to the maximum number of shares of Common Stock at
any time and from time to time issuable hereunder, and all such shares, upon
issuance pursuant hereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrance and security interests and not subject to any preemptive rights.
9. Grantee hereby represents and warrants to Issuer that:
(a) Grantee has all requisite corporate power and authority to
enter into this Agreement and, subject to any approvals or consents referred to
herein, to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Grantee. This Agreement has been duly executed and delivered by Grantee.
(b) The Option is not being, and any shares of Common Stock or
other securities acquired by Grantee upon exercise of the Option will not be,
acquired with a view to the public distribution thereof and will not be
transferred or otherwise disposed of except in a transaction registered or
exempt from registration under the Securities Act.
10. Neither of the parties hereto may assign any of its rights
or obligations under this Agreement or the Option created hereunder to any other
person, without the express written consent of the other party, except that in
the event a Subsequent Triggering Event shall have occurred prior to an Exercise
Termination Event, Grantee, subject to the express provisions hereof, may assign
in whole or in part its rights and obligations hereunder within six months
following such Subsequent Triggering Event (or such later period as provided in
Section 7); provided, however, that until the date fifteen days following the
date on which the Federal Reserve Board approves an application by Grantee to
acquire the shares of Common Stock subject to the Option
- 8 -
(proof of which approval shall be furnished promptly to Issuer), Grantee may not
assign its rights under the Option except in (i) a widely dispersed public
distribution, (ii) a private placement in which no one party acquires the right
to purchase in excess of 2% of the voting shares of Issuer, (iii) an assignment
to a single party (e.g., a broker or investment banker) for the purpose of
conducting a widely dispersed public distribution on Grantee's behalf, or (iv)
any other manner approved by the Federal Reserve Board.
11. Each of Grantee and Issuer will use its best efforts to
make all filings with, and to obtain consents of, all third parties and
governmental authorities necessary to the consummation of the transactions
contemplated by this Agreement, including without limitation making application
to list the shares of Common Stock issuable hereunder on the Nasdaq National
Market upon official notice of issuance and applying to the Federal Reserve
Board, for approval to acquire the shares issuable hereunder, but Grantee shall
not be obligated to apply to state banking authorities for approval to acquire
the shares of Common Stock issuable hereunder until such time, if ever, as it
deems appropriate to do so.
12. (a) Upon the occurrence of a Subsequent Triggering Event
that occurs prior to an Exercise Termination Event, (i) at the request of any
Holder, delivered within thirty days following such occurrence (or such later
period as provided in Section 7) but in any event prior to an Exercise
Termination Event, Issuer shall repurchase the Option from the Holder at a price
(the "Option Repurchase Price") equal to the amount by which (A) the
market/offer price (as defined below) exceeds (B) the Option Price, multiplied
by the number of shares for which this Option may then be exercised, plus, to
the extent not previously reimbursed, Grantee's reasonable out-of-pocket
expenses incurred in connection with the transactions contemplated by, and the
enforcement of Grantee's rights under, the Merger Agreements, including without
limitation legal, accounting and investment banking fees (the "Grantee's
Out-of-Pocket Expenses"), and (ii) at the request of any owner of Option Shares
from time to time (the "Owner"), delivered within thirty days following such
occurrence (or such later period as provided in Section 7), Issuer shall
repurchase such number of the Option Shares from such Owner as the Owner shall
designate at a price per share ("Option Share Repurchase Price") equal to the
greater of (A) the market/offer price and (B) the average option price per share
paid by the Owner for the Option Shares so designated, plus, to the extent not
previously reimbursed, Grantee's Out-of-Pocket Expenses. The term "market/offer
price" shall mean the highest of (w) the price per share of the Common Stock at
which a tender offer or exchange offer therefor has been made, (x) the price per
share of the Common Stock to be paid by any Person, other than Grantee or a
subsidiary of Grantee, pursuant to an agreement with Issuer, (y) the highest
closing price for shares of Common Stock within the six month period immediately
preceding the required repurchase of Options or Option Shares, as the case may
be, or (z) in the event of a sale of all or substantially all of Issuer's
assets, the sum of the price paid in such sale for such assets and the current
market value of the remaining assets of Issuer as determined by a nationally
recognized investment banking firm selected by a majority in the interest of the
Holders or the Owners, as the case may be, and reasonably acceptable to Issuer,
divided by the number of shares of Common Stock of Issuer outstanding at the
time of
- 9 -
such sale. In determining the market/offer price, the value of consideration
other than cash shall be determined by a nationally recognized investment
banking firm selected by a majority in interest of the Holders or the Owners, as
the case may be, and reasonably acceptable to Issuer.
(b) Each Holder and Owner, as the case may be, may exercise
its right to require Issuer to repurchase the Option and any Option Shares
pursuant to this Section 12 by surrendering for such purpose to Issuer, at its
principal office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that such Holder
or Owner elects to require Issuer to repurchase this Option and/or Option Shares
in accordance with the provisions of this Section 12. As promptly as
practicable, and in any event within ten business days after the surrender of
the Option and/or certificates representing Option Shares and the receipt of
such notice or notices relating thereto, Issuer shall deliver or cause to be
delivered to each Holder the Option Repurchase Price and/or to each Owner the
Option Share Repurchase Price therefor or the portion thereof that Issuer is not
then prohibited under applicable law and regulation from so delivering.
(c) To the extent that Issuer is prohibited under applicable
law or regulation, or as a consequence of administrative policy, or as a result
of a written agreement or other binding obligation with a governmental or
regulatory body or agency, from repurchasing the Option and/or the Option Shares
in full, Issuer shall immediately so notify each Holder and/or each Owner and
thereafter deliver or cause to be delivered, from time to time, to such Holder
and/or Owner, as appropriate, the portion of the Option Repurchase Price and the
Option Share Repurchase Price, respectively, that it is no longer prohibited
from delivering, within ten business days after the date on which Issuer is no
longer so prohibited; provided, however, that if Issuer at any time after
delivery of a notice of repurchase pursuant to paragraph (b) of this Section 12
is prohibited under applicable law or regulation, or as a consequence of
administrative policy, from delivering to any Holder and/or Owner, as
appropriate, the Option Repurchase Price and the Option Share Repurchase Price,
respectively, in part or in full (and Issuer hereby undertakes to use its best
efforts to receive any required regulatory and legal approvals and to file any
required notices as promptly as practicable in order to accomplish such
repurchase), such Holder or Owner may revoke its notice of repurchase of the
Option or the Option Shares either in whole or to the extent of the prohibition,
whereupon Issuer shall promptly (i) deliver to such Holder and/or Owner, as
appropriate, that portion of the Option Purchase Price or the Option Share
Repurchase Price that Issuer is not prohibited from delivering; and (ii)
deliver, as appropriate, either (A) to such Holder, a new Stock Option Agreement
evidencing the right of such Holder to purchase that number of shares of Common
Stock obtained by multiplying the number of shares of Common Stock for which the
surrendered Stock Option Agreement was exercisable at the time of delivery of
the notice of repurchase by a fraction, the numerator of which is the Option
Repurchase Price less the portion thereof theretofore delivered to the Holder
and the denominator of which is the Option Repurchase Price, or (B) to such
Owner, a certificate for the Option Shares it is then so prohibited from
repurchasing.
- 10 -
13. The parties hereto acknowledge that damages would be an
inadequate remedy for a breach of this Agreement by either party hereto and that
the obligations of the parties hereto shall be enforceable by either party
hereto through injunctive or other equitable relief.
14. If any term, provision, covenant or restriction contained
in this Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that the Holder is not permitted to acquire the full number of shares of Common
Stock provided in Section 1(a) hereof (as adjusted pursuant to Section 1(b) or 5
hereof), it is the express intention of Issuer to allow the Holder to acquire
such lesser number of shares as may be permissible, without any amendment or
modification hereof.
15. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in person, by cable, telegram, telecopy or telex, or by registered or certified
mail (postage prepaid, return receipt requested) at the respective addresses of
the parties set forth in the Reorganization Agreement.
16. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
17. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
18. Except as otherwise expressly provided herein, each of the
parties hereto shall bear and pay all costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated hereunder, including
fees and expenses of its own financial consultants, investment bankers,
accountants and counsel.
19. Except as otherwise expressly provided herein or in the
Merger Agreements, this Agreement contains the entire agreement between the
parties with respect to the transactions contemplated hereunder and supersedes
all prior arrangements or understandings with respect thereof, written or oral.
The terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and permitted
assigns. Nothing in this Agreement, expressed or implied, is intended to confer
upon any party, other than the parties hereto, and their respective successors
and permitted assigns, any rights, remedies, obligations or liabilities under or
by reason of this Agreement, except as expressly provided herein.
- 11 -
20. Capitalized terms used in this Agreement and not defined
herein shall have the meanings assigned thereto in the Merger Agreement.
- 12 -
IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed on its behalf by its officers thereunto duly
authorized, all as of the date first above written.
KEYSTONE FINANCIAL, INC.
By /s/ Carl L. Campbell
------------------------------------
Carl L. Campbell
Chairman, President and CEO
M&T BANK CORPORATION
By /s/ Gary S. Paul
------------------------------------
Gary S. Paul
Senior Vice President
- 13 -
Exhibit 99.2
Contact: M&T Bank Corporation For Immediate Release
Michael Zabel (716) 842-5385 Wednesday, May 17, 2000
Tara Ellis (716) 842-5385
Keystone Financial, Inc.
Jacquelyn Basso (717) 231-5723
Elizabeth Braungard (717) 231-5732
KEYSTONE FINANCIAL, INC. TO MERGE WITH M&T BANK CORPORATION
HARRISBURG, PA (May 17, 2000) --- M&T Bank Corporation ("M&T") (NYSE:MTB), a
$22.8 billion bank holding company headquartered in Buffalo, New York and
Harrisburg, Pennsylvania-based Keystone Financial, Inc. ("Keystone")
(NASDAQ:KSTN) with $7.0 billion in assets announced jointly today that Keystone
will merge into M&T.
Giving M&T its most significant presence outside New York State to date, the
merger will create a banking franchise with 450 branches and nearly 1,000 ATMs
in four states: New York, Pennsylvania, Maryland and West Virginia.
The combined company will become Pennsylvania's fifth largest retail deposit
holder, with a network of 171 branches in 33 counties throughout the central
part of the state. Headquartered in Harrisburg, Keystone currently operates in
Altoona, State College, Pottsville, Williamsport, suburban Philadelphia and
other Pennsylvania communities. An additional 25 branches are located in
Cumberland, Hagerstown and Frederick, Maryland and the Keyser area of West
Virginia.
M&T is upstate New York's largest retail deposit holder with 272 branches in New
York and northeastern Pennsylvania. Keystone's merger with M&T will create the
29th largest independent bank holding company in the United States with $29.8
billion in pro forma assets.
"M&T Bank has grown successfully because we work hard to understand our
customers' personal and professional needs - and then to provide high quality
financial products and services that meet those needs. As we expand further into
Pennsylvania and beyond, we
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M&T BANK
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remain committed to establishing that same kind of relationship with our new
customers - just as we are committed to the well-being of the communities we
serve," Robert G. Wilmers, M&T Bank chairman and CEO, said.
"With this merger, Keystone joins forces with a financial services institution
long-known for quality, consistency and success. Together, we will create an
even stronger institution that will benefit our customers and communities," Carl
L. Campbell, Keystone Financial, Inc. chairman and CEO, said.
The merged institution will provide customers with a full range of financial
products and services, including 24-hour internet banking and telephone banking
services, an extensive ATM network, a wide array of investment and insurance
products and a full line of mortgage products.
Both M&T and Keystone are leading SBA lenders in their respective states, and
the new company will offer a complete lineup of commercial banking products and
services to small- and medium-sized businesses.
Officials at both companies noted that, because there is very little overlap
between the two retail branch networks, the merger will result in few branch
consolidations. The companies expect to retain nearly all of Keystone's current
front-line employees who interact with customers.
Merger Terms
Under terms of the merger agreement, Keystone shareholders will have the option
of receiving 0.050 shares of M&T common stock or $21.50 in cash in exchange for
each outstanding share of Keystone common stock, subject to the requirement
that, in total, 65% of the 48,930,000 shares of Keystone stock currently
outstanding are exchanged for
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M&T stock and the remainder for cash.
Based on the current number of shares of Keystone common stock currently
outstanding and assuming 31,804,500 shares of Keystone common stock are
exchanged for 1,590,225 shares of M&T common stock, the merger has an indicated
value of $1 billion, making it M&T's largest merger ever.
Simultaneously with the completion of the merger, M&T will effect a 10-for-1
split on its common stock, with the 0.05 exchange ratio being adjusted to 0.5 to
reflect the split. M&T also intends to double the cash dividend on its common
stock in connection with the closing of the merger to the equivalent of $2.50
per quarter on each pre-split share.
The transaction has been approved by the boards of directors of both companies,
and is subject to receiving various regulatory approvals and approvals of each
company's stockholders, among other conditions. It is anticipated that the
transaction will be completed in the fourth quarter of 2000. In conjunction with
this process, the annual meeting Keystone scheduled for May 25, 2000 has been
postponed indefinitely. Special shareholders meetings of both companies will be
scheduled to vote on the merger.
Following the merger, Mr. Campbell will become a vice chairman of M&T Bank
Corporation and its principal banking subsidiary, M&T Bank, and a member of the
M&T and M&T Bank boards of directors. Mr. Campbell also will serve as chairman
of M&T's Pennsylvania operations. Four other directors of Keystone also will
join the M&T Bank Corporation and M&T Bank boards of directors. Mr. Wilmers will
continue as president and CEO of M&T Bank Corporation and chairman and CEO of
M&T Bank.
M&T Bank Profile
Since 1983, when Mr. Wilmers became chairman and CEO of M&T Bank Corporation
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M&T Bank
4-4-4-4-4
(formerly First Empire State Corporation), M&T has grown from less than $2
billion in assets to $22.8 billion as of March 31, 2000.
M&T also has grown through 14 mergers and acquisitions conducted during the
1990's, including its 1998 acquisition of ONBANCorp's 59 branches in New York
and 19 in Pennsylvania.
Although M&T's steady growth has vaulted it into the upper ranks of American
banking organizations, it has not fundamentally altered the way it conducts
business - M&T remains committed to operating as a "community bank." A
conservative managerial approach - one that stresses in-depth market and
customer knowledge, local decision-making, consistent lending decisions and
support for local initiatives - defines M&T's operating philosophy.
As a community bank, M&T recognizes that its success is uniquely dependent on
the well-being of the communities in which it operates. By all measures, M&T
provides significant support for its regional markets and impacts favorably on
the economic and social well-being of its neighbors.
M&T Bank has earned the highest possible ratings from both the Federal Reserve
Bank of New York and the New York State Banking Department since 1988 for
meeting the credit needs of the communities it serves. M&T also has been
consistently recognized for exceptional commitment to entrepreneurs and small
business owners. And, M&T receives high marks for its level of community support
and volunteer efforts.
This press release contains forward-looking statements with respect to the
anticipated effects of the merger. The following factors, among others, could
cause the actual results
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M&T Bank
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of the merger to differ materially from M&T's expectations: the ability to
timely and fully realize the expected cost savings and revenues; competition;
changes in economic conditions, interest rates and financial markets; and
changes in legislation or regulatory requirements. M&T does not assume any duty
to update forward-looking statements.
Information regarding the identity of the persons who, under SEC rules, be
deemed to be participants in the solicitation of shareholders of M&T and
Keystone in connection with the merger, and their interest in the solicitation,
is set forth in filings made by M&T and Keystone on the date of this press
release with the SEC.
M&T and Keystone will be filing a joint proxy statement/prospectus and other
relevant documents concerning the transaction with the SEC. Investors are urged
to read the joint proxy statement/prospectus when it becomes available and any
other relevant documents filed with the SEC because they will contain important
information. Investors will be able to obtain these documents free of charge at
the SEC's web site (www.sec.gov). In addition, documents filed with the SEC by
M&T may be obtained free of charge by contacting M&T Bank Corporation at One M&T
Plaza, Buffalo, New York 14203, Attention: Investor Relations, (716) 842-5445.
Documents filed with the SEC by Keystone will be available free of charge by
contacting Keystone Financial, Inc., P.O. Box 708, Altoona, Pennsylvania, 16603,
Attention: Shareholder Relations, (717) 233-1555.
Investors should read the joint proxy/prospectus carefully when it becomes
available before making any voting or investing decisions.
#####
For Release: Immediate, Wednesday, May 17, 2000
Media Contact: Keystone Financial, Inc.
Jacquelyn Basso (717-231- 5723)
Elizabeth Braungard (717-231-5732)
M&T Bank Corporation
Michael Piemonte (716-842-5887)
KEYSTONE FINANCIAL AND M&T BANK CORPORATION ANNOUNCE
MERGER M&T Bank Corporation to pay $1 billion in stock and cash
HARRISBURG, PENNSYLVANIA and BUFFALO, NEW YORK (May 17, 2000) - Keystone
Financial, Inc. ("Keystone") (NASDAQ: KSTN), Harrisburg, Pennsylvania and M&T
Bank Corporation ("M&T") (NYSE: MTB), Buffalo, New York, today jointly announced
that they have entered into a definitive agreement for a merger between the two
companies.
The merger will create a strong northeast banking franchise with 424 branches in
New York and Pennsylvania and 25 in northern Maryland and West Virginia. The
enlarged franchise would make M&T the 29th largest independent banking company
in the United States with proforma combined assets of approximately $29.8
billion as of March 31, 2000. Keystone's banking subsidiary, Keystone Financial
Bank, N.A., will be merged into Manufacturers and Traders Trust Company ("M&T
Bank"), M&T's principal commercial banking subsidiary.
Carl L. Campbell, chairman, president and chief executive officer of Keystone,
said, "With this merger, Keystone joins forces with a financial services
institution long-known for quality, consistency and success. Together, we will
create an even stronger institution that will benefit the stockholders,
customers and the community."
Robert G. Wilmers, president and chief executive officer of M&T, said, "M&T Bank
has grown successfully across New York State and northeastern Pennsylvania
because we provide high quality financial products and services to our customers
through relationships that enable us to understand their personal and business
needs. Our partnership with Keystone gives M&T a well-established foundation
from which to broaden our geographic reach and expand our combined businesses.
As we expand our presence in Pennsylvania and enter the Maryland and West
Virginia markets, we remain committed to providing that same high quality
service to our new customers and, we will be committed to the well-being of the
communities we serve."
Following the merger, Mr. Campbell will be elected vice chairman of the board of
directors of M&T and vice chairman of M&T Bank. Four other directors of Keystone
will join Mr. Campbell on M&T's and M&T Bank's board of directors. Mr. Wilmers
will continue as president and chief executive officer of M&T and chairman and
chief executive officer of M&T Bank.
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KEYSTONE FINANCIAL AND M&T BANK CORPORATION Page 2.
Because the franchises do not overlap, no branch consolidations between Keystone
and M&T are anticipated as a result of the merger.
Simultaneous with the completion of the merger, M&T intends to declare a
10-for-1 split on its common stock. M&T also intends to double the cash dividend
on its common stock after the closing of the merger to the equivalent of $2.50
per quarter on each pre-split share.
Under the terms of the proposed merger, stockholders of Keystone may elect to
receive .05 of a pre-split share of M&T common stock or $21.50 in cash in
exchange for each outstanding share of Keystone common stock, although 65% of
the 48,930,000 shares of Keystone common stock currently outstanding must be
exchanged for shares of M&T common stock. The selection of the method of payment
by Keystone's stockholders will be subject to allocation and proration if the
election for common stock would be more or less than this 65%. The merger is
expected to be tax-free to Keystone stockholders except to the extent they
receive cash, and will be accounted for as a purchase.
Based on the current number of shares of Keystone common stock currently
outstanding and the closing price of M&T common stock on May 15, 2000, the
merger has an indicated value of $1 billion. On the same basis, the pro forma
market capitalization of M&T would be approximately $3.8 billion following the
merger
Keystone also granted M&T a stock option to acquire up to 19.9 percent of the
shares of common stock of Keystone under certain circumstances.
The transaction has been approved by the board of directors of both companies,
and is subject to a number of conditions, including various regulatory approvals
and approvals of each company's stockholders. The doubling of the quarterly cash
dividend on M&T's common stock and the 10-for-1 common stock split are subject
to the approval of M&T's board of directors at the time the cash and stock
dividends are declared. It is anticipated that the merger will be completed in
late 2000.
This press release contains forward-looking statements with respect to the
anticipated effects of the merger. The following factors, among others, could
cause the actual results of the merger to differ materially from M&T's
expectations: the ability to timely and fully realize expected cost savings and
revenues; competition; changes in economic conditions, interest rates and
financial markets; and changes in legislation or regulatory requirements. M&T
does not assume any duty to update forward-looking statements.
ADDITIONAL INFORMATION
Information regarding the identity of the persons who may, under SEC rules, be
deemed to be participants in the solicitation of shareholders of M&T and
Keystone in connection with the merger, and their interests in the solicitation,
is set forth in a Schedule 14A filed on the date of this press release with the
SEC.
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KEYSTONE FINANCIAL AND M&T BANK CORPORATION Page 3.
M&T and Keystone will be filing a joint proxy statement/prospectus and other
relevant documents concerning the transaction with the SEC. Investors are urged
to read the joint proxy statement/prospectus when it becomes available and any
other relevant documents filed with the SEC because they will contain important
information. Investors will be able to obtain the documents free of charge at
the SEC's web site (www.sec.gov). In addition, documents filed with the SEC by
M&T may be obtained free of charge by contacting M&T Bank Corporation at One M&T
Plaza, Buffalo, New York 14203, Attention: Investor Relations, (716) 842-5445.
Documents filed with the SEC by Keystone will be available free of charge by
contacting Keystone Financial, Inc., P.O. Box 708, Altoona, Pennsylvania, 16603,
Attention: Shareholder Relations (717) 233-1555.
Investors should read the joint proxy statement/prospectus carefully when it
becomes available before making any voting or investment decisions.
#####
FOR ANALYSTS: To participate in an analyst presentation at 10:30 a.m., EDT,
Wednesday, May 17, dial toll-free 1-888-603-9742, Code #11111. The presentation
can be played back until June 16, 2000 by calling 1-888-433-2207.
Exhibit 99.3
[M&T BANK LOGO]
Acquisition of Keystone Financial, Inc.
A Logical and Attractive Franchise Extension
Investor Presentation
May 17, 2000
- --------------------------------------------------------------------------------
M&T Management Conference Call Information
- --------------------------------------------------------------------------------
The senior management team of M&T will present an overview of the Keystone
transaction and respond to investor questions via conference call on May 17,
2000 at 10:30 am eastern standard time. Please call in at least 10 minutes prior
to the start of the call. ----------------------------------------
- -------------------------
A taped playback of the call will be available through June 16, 2000
Dial-In Number: (888) 603-9742
Pass Code: 11111
Play-Back Number: (888) 433-2207*
- -------------------------------------------------
* Will not become available until one hour after the conference call is
completed.
Keystone
M&T Bank ------------------------------------------------------------- Financial
- --------------------------------------------------------------------------------
Forward Looking Information
- --------------------------------------------------------------------------------
This presentation contains forward looking statements with respect to the
financial condition, results of operations and business of M&T Bank Corporation
("M&T") and Keystone Financial, Inc. ("Keystone") and assuming the consummation
of the transaction, a combined M&T and Keystone, including statements relating
to: (i) the cost savings and revenue enhancements and accretion to reported and
cash earnings that will be realized from the merger; and (ii) the restructuring
charges expected to be incurred in connection with the merger. These forward
looking statements involve certain risks and uncertainties. Factors that may
cause actual results to differ materially from those contemplated by such
forward looking statements include, among other things, the following
possibilities: (i) expected cost savings from the merger cannot be fully
realized or realized within the expected time; (ii) revenues following the
merger are lower than expected; (iii) competitive pressure among depository
institutions increase significantly; (iv) the integration of the business of M&T
and Keystone costs more, takes longer or is less successful than expected; (v)
the cost of additional capital is more than expected; (vi) changes in the
interest rate environment reduces interest margins; (vii) general economic
conditions, either nationally or in the states in which the combined company
will be doing business, are less favorable than expected; (viii) legislation or
regulatory requirements or changes adversely affect the business in which the
combined company will be engaged; and (ix) changes may occur in the securities
market. Neither M&T nor Keystone assume any obligation to update forward looking
statements.
Keystone
M&T Bank ------------------------------------------------------------- Financial
- --------------------------------------------------------------------------------
Transaction Summary
- --------------------------------------------------------------------------------
Transaction: Acquisition of Keystone by M&T
Transaction Value: $21.01 per Keystone share/(a)
Approximately $1.03 billion in aggregate value
M&T Stock Split: 10-for-1
Consideration/Election Procedure: Cash/stock election procedure subject to proration such that 35% of total
Keystone shares receive cash and 65% receive M&T common stock
Pricing Mechanism: Exchange ratio of 0.05x (pre-split) on the stock consideration and cash
consideration of $21.50 per share are both fixed
Collars / Walk-Aways: None
M&T Dividend: 100% increase to $10.00 per share (pre-split)
Accounting Treatment: Purchase accounting (goodwill amortized over 20 years straight-line; core
deposit intangible amortized over 7 years accelerated)
- ---------------------------------------
(a) Based on M&Ts closing price of $415.00 on May 16, 2000.
Keystone
M&T Bank ------------------------------------------------------------- Financial
1
- --------------------------------------------------------------------------------
Transaction Summary
- --------------------------------------------------------------------------------
Synergies: $43 million pre-tax (approximately 20% of Keystone's total non-interest
expense)
Restructuring Charge: Estimated at $52 million after-tax ($75 million pre-tax)
Management: Robert G. Wilmers - President & CEO
Robert J. Bennett - Chairman
Jorge G. Pereira - Vice Chairman
Carl L. Campbell - Vice Chairman
Board of Directors: 5 Board seats granted to Keystone out of a pro forma total of 26 M&T Board
seats
Due Diligence: Comprehensive due diligence completed, including credit file reviews
Approvals: Shareholders of M&T and Keystone
Normal regulatory approvals
Expected Closing: Fourth quarter 2000
Pro Forma Ownership: 20% M&T Insiders
5% Warren Buffett
Keystone
M&T Bank ------------------------------------------------------------- Financial
2
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Strategic Rationale
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Management Interests Remain Aligned with Shareholder Interests
- --------------------------------------------------------------------------------
[PIE CHARTS ILLUSTRATING EXISTING AND PROFORMA
OWNERSHIP OF M&T BANK CORPORATION STOCK]
Keystone
M&T Bank ------------------------------------------------------------- Financial
3
- --------------------------------------------------------------------------------
A Logical Franchise Extension
- --------------------------------------------------------------------------------
o Logical geographic extension of M&T's strong New York franchise
/ / Already #1 in deposit market share in Upstate New York, pro forma M&T
would also rank #1 in Central Pennsylvania
- Combined geographic area of Upstate New York and Central
Pennsylvania would rank as the 10th largest U.S. state in terms
of total deposits
/ / Ability to leverage M&T's proven New York super-community banking
strategy across Keystone's franchise
/ / Familiarity with these markets
- Existing M&T presence through the ONBANCorp acquisition
- Similar demographics
- M&T has proven that it can generate top-tier performance and
growth in these markets
/ / Increases scale of banking franchise
/ / Complementary business models
- New small business and middle market lending opportunities for
M&T
- Enhances M&T's Trust and Investment Services business, adding
$3.3 billion in assets under management, including $1.2 billion
in mutual funds
Keystone
M&T Bank ------------------------------------------------------------- Financial
4
- --------------------------------------------------------------------------------
Low Level of Operational Risk
- --------------------------------------------------------------------------------
o Proven integration experience at M&T under the current management team
o History of delivering and even exceeding on projections at M&T:
/ / Exceeded the EPS projection made at announcement in the ONBANCorp
transaction by 4%
/ / One of only 6 banks to do so out of 27 total banks who have announced
deals greater than $850 million in value since 1995
/ / In the 17 quarters since 1995, M&T has exceeded the consensus First
Call quarterly estimates by an average of 2% per quarter
o Only the third largest deal announced by M&T on a relative basis
o Integration will be facilitated by KSTN's 1999 consolidation of its banks
under a single charter
o Minimal business disruption expected given no branch overlap
Keystone
M&T Bank ------------------------------------------------------------- Financial
5
- --------------------------------------------------------------------------------
Financially Attractive with Straightforward, Conservative Assumptions
- --------------------------------------------------------------------------------
o Had the deal been accounted for as a pooling, it would have been
accretive in the first full year
o As structured, the transaction is accretive to cash EPS in the first
full year
o Favorably priced relative to comparable transactions
o Generates an internal rate of return ("IRR") well in excess of M&T's
cost of equity capital
o Financing mix is shareholder focused:
/ / Blended cost of capital has been minimized
/ / Cash flow per share is significantly improved compared to a
pooling deal
o No revenue enhancements have been assumed, but opportunities have been
identified
Keystone
M&T Bank ------------------------------------------------------------- Financial
6
- --------------------------------------------------------------------------------
Favorably Priced Relative to Comparable Transactions
- --------------------------------------------------------------------------------
Implied Comparable MTB/KSTN
MTB/KSTN Transactions Multiples as a % of
Multiples Average (a) Comparable Avg.
--------- ----------- ---------------
Price as a Multiple of:
LTM Cash EPS 11.9x/(b) 17.3x 69%
Forward Cash EPS 10.8/(c) 15.2 71
LTM GAAP EPS 12.5/(b) 18.9 66
Forward GAAP EPS 11.3/(c) 16.3 69
Book Value 1.84/(b) 2.69 69
Tangible Book Value 2.04/(b) 3.08 66
Tangible Book Premium to Deposits 10.4%/(b) 26.1% 40
Premium to Market - 1 Day Prior to Announcement 33.4 29.4 114
Premium to Market - 30 Day Average Price 31.5 27.9 113
- -------------------------------------------------
(a) Comparable transactions include billion dollar plus traditional bank
acquisitions announced since January 1, 1999; seven deals in total.
(b) Based on financial results for the 12 month period ended March 31, 2000.
(c) Based on First Call quarterly estimates as of May 16, 2000 for the next
four quarters through March 31, 2001.
Keystone
M&T Bank ------------------------------------------------------------- Financial
7
- --------------------------------------------------------------------------------
Consistent with M&T's Geographic Strategy - "The Highway Franchise"
- --------------------------------------------------------------------------------
[MAP ILLUSTRATING BRANCH LOCATIONS]
- ---------------------------------------
Sources: SNL Securities, L.P. & MapInfo.
Keystone
M&T Bank ------------------------------------------------------------- Financial
8
- --------------------------------------------------------------------------------
Pro Forma M&T: #1 in Upstate New York and #1 in Central Pennsylvania
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Deposit Share - Upstate NY/(a)
- --------------------------------------------------------------------------------
Deposits
Rank Institution ($MM) % Share
---------- -------------------------------------- ------------ -----------
--------------------------------------------------------------------------
1 Current M&T Bank $12,277 16.11%
--------------------------------------------------------------------------
2 HSBC Holdings, Plc 11,460 15.04
3 KeyCorp 6,716 8.81
4 FleetBoston Financial 6,714 8.81
5 Charter One Financial 5,219 6.85
6 Chase Manhattan Corp. 3,126 4.10
7 Trustco Bank Corp of NY 1,904 2.50
8 BSB Bancorp Inc. 1,827 2.40
9 Community Bank System Inc. 1,372 1.80
10 Premier National 1,226 1.61
11 Niagara Bancorp Inc. (Mhc) 1,167 1.53
12 Citigroup Inc. 1,031 1.35
- --------------------------------------------------------------------------------
Deposit Share - Central PA/(b)
- --------------------------------------------------------------------------------
Deposits
Rank Institution ($MM) % Share
---------- -------------------------------------- ------------ -----------
-------------------------------------------------------------------------
- Pro Forma M&T Bank $4,222 9.11%
-------------------------------------------------------------------------
1 Allfirst 4,117 8.89
2 Keystone 3,512 7.58
3 PNC Financial 3,113 6.72
4 Fulton Financial 2,768 5.97
5 First Union 2,472 5.34
6 Harris Financial 2,271 4.90
7 Mellon Financial 2,057 4.44
8 Susquehanna 1,613 3.48
9 Sovereign Bancorp 1,498 3.23
10 Northwest Bancorp 1,258 2.72
16 Current M&T Bank 710 1.53
- ---------------------------------------
Source: SNL Securities, L.P.
(a) Includes only NY counties north of Westchester, excluding New York, Queens,
Nassau, Suffolk, Bronx, Richmond, Rockland, Kings and Westchester
(b) Includes only PA counties east of Jefferson / Indiana counties and west of
Carbon / Lehigh counties (i.e., excludes counties surrounding Pittsburgh
and Philadelphia).
Keystone
M&T Bank ------------------------------------------------------------- Financial
9
- --------------------------------------------------------------------------------
Enhanced Financial Scale Creating a Leading Northeast Bank
- --------------------------------------------------------------------------------
($ in millions)
Pro Forma Rank Among Rank Among
Combined ($) U.S. Banks(a) Northeast Banks(b)
------------ ------------- ------------------
1999 Net Income(c) $349.3 #32 #5
1999 Net Income with full synergies(c) 377.5 30 5
Market Capitalization(d) 3.9 31 5
Assets 29.8 29 5
Net Loans 21.9 27 5
Deposits 20.2 29 5
Common Equity 2.4 28 5
- ---------------------------------------
* Source: SNL Securities, L.P. Balance sheet results as of March 31, 2000.
(a) Includes all independent U.S. commercial banks.
(b) Includes banks headquartered in NY, PA, MA, CT, ME, VT, DE, MD, RI, NH and
NJ. Excludes money center banks.
(c) Excludes nonrecurring charges.
(d) Based on pro forma shares outstanding and M&T's price of $415.00 as of May
16, 2000. No market value attributed to expected synergies.
Keystone
M&T Bank ------------------------------------------------------------- Financial
10
- --------------------------------------------------------------------------------
Merger Integration Experience at M&T
- --------------------------------------------------------------------------------
Deposits Deposits Acquired/
Announce Acquired Current Rank M&T Deposits
Date Target ($MM) Primary City in Target City at Announcement
-------- ------------------------- -------- ---------------------- -------------- ---------------
- -----------------------------------------------------------------------------------------------------------------------------
- Keystone $5,052 NM NM 33.3%
- -----------------------------------------------------------------------------------------------------------------------------
6/4/99 Chase Branches $634 Binghamton #2 4.3%
12/9/98 FNB Rochester 498 Rochester 2 3.3
10/28/97 ONBANCorp Inc. 4,025 Syracuse 1 35.9
4/1/94 Ithaca Bancorp 339 Ithaca 2 4.6
2/24/92 Central Trust and 1,312 Rochester, Binghamton 2 17.6
Endicott Trust
5/31/91 GoldDome 2,100 GoldDome 1 33.8
9/28/90 Empire of America 1,300 Buffalo 1 21.0
1/26/90 Monroe Savings 486 Rochester 2 7.8
East New York Savings
Mid-Atlantic Banks
Keystone
M&T Bank ------------------------------------------------------------- Financial
11
- --------------------------------------------------------------------------------
Financial Impact
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Baseline "Street" Assumptions
- --------------------------------------------------------------------------------
("Street Estimates Utilized for Both Companies -- Does not Constitute Management
Forecasts*)
o M&T Stand-Alone "Street" Assumptions:
// 2001 First Call consensus estimate of $40.32 per share (fd)
// 2001 implied First Call aggregate net income of $311 million
// EPS grown at a rate of 10.5% annually after 2001 (I/B/E/S)
// Continue to deploy excess capital to maximize shareholder returns
o Keystone Stand-Alone "Street" Assumptions:
// 2001 First Call consensus estimate of $1.83 per share (fd)
// 2001 implied First Call aggregate net income of $89 million
// EPS grown at a rate of 8.5% annually after 2001 (I/B/E/S)
- -------------------------------------------------
* "Street" estimates include First Call and I/B/E/S sources. First Call and
I/B/E/S are recognized data services that monitor and publish compilations of
earnings estimates by select research analysts regarding companies of
interest to institutional investors.
Keystone
M&T Bank ------------------------------------------------------------- Financial
12
- --------------------------------------------------------------------------------
Pro Forma Impact Based on "Street" Estimates
- --------------------------------------------------------------------------------
($ in Millions, except per Share Amounts)
2001 2002 2003
------ ------ ------
M&T Earnings $311.1 $337.8 $366.6
Keystone Earnings 89.4 97.0 105.2
------ ------ ------
Combined Earnings $400.6 $434.9 $471.8
Cost Savings (after-tax) $14.1 $28.2 $29.3
Net Cost of Financing (23.5) (22.5) (22.6)
Amortization Add-back for KSTN 4.1 4.1 4.1
New Intangible Amortization (41.2) (39.0) (36.6)
------ ------ ------
Pro Forma Earnings $354.1 $405.7 $446.1
====== ====== ======
------------------------------------------------------------------------------
Pro Forma CASH EPS $46.92 $53.29 $58.77
Pro Forma GAAP EPS $37.61 $44.03 $49.56
------------------------------------------------------------------------------
Average Shares Outstanding (fd) 9.4 9.2 9.0
------------------------------------------------------------------------------
Cash EPS Accretion / (Dilution) 1.3% 5.2% 6.0%
GAAP EPS Accretion / (Dilution) (6.7)% (1.2%) 0.7%
------------------------------------------------------------------------------
- -------------------------------------------------
* Based on "Street" estimates for both companies and does not constitute
Management forecasts. Excludes estimated merger related charges.
Keystone
M&T Bank ------------------------------------------------------------- Financial
13
- --------------------------------------------------------------------------------
Strong Pro Forma Financial Position
- --------------------------------------------------------------------------------
($ in Millions)
At March 31, 2000
----------------------------
M&T Keystone Pro Forma(a)
------- -------- ------------
Balance Sheet Items:
Total Assets $22,762 $7,012 $30,221
Total Gross Loans 17,703 4,533 22,236
Total Deposits 15,151 5,053 20,203
Intangibles 638 53 1,203
Equity 1,832 556 2,646
Reserves for Loans Losses 319 61 379
Capital Securities 310 0 490
Capital Ratios:
Equity/Assets 8.1% 7.9% 8.8%
Tang. Common Equity/Assets 5.4 7.2 5.0
Asset Quality Ratios:
NPAs/Loans + REO 0.43% 0.86% 0.52%
Loan Loss Reserve/NPLs 475.7 168.9 368.5
Loan Loss Reserve/Loans 1.8 1.3 1.7
- -------------------------------------------------
(a) At 12/31/00, includes impact of restructuring charges and other purchase
accounting adjustments.
Keystone
M&T Bank ------------------------------------------------------------- Financial
14
- --------------------------------------------------------------------------------
Rapid Generation of Deployable Capital
- --------------------------------------------------------------------------------
- ---------------------------------------------
Tangible Common Equity Ratio
- ---------------------------------------------
o Current M&T (3/31/00): 5.40%
o Pro Forma (12/31/00): 5.00%
o Targeted Pro Forma Ratio: 5.40%
- ---------------------------------------------
Pro Forma Cumulative Deployable Capital ($ millions)(a)
-------------------------------------------------------
PF 12/31/01 $88
PF 12/31/02 $311
PF 12/31/03 $536
- -------------------------------------------------
(a) Represents the cumulative tangible capital at each period end in excess of
the amount required to produce a 5.40% tangible common equity ratio.
Keystone
M&T Bank ------------------------------------------------------------- Financial
15
- --------------------------------------------------------------------------------
Expected Synergies
- --------------------------------------------------------------------------------
($ in Millions, pre-tax)
o 50% of the synergies are expected to be achieved in 2001 and 100% in
2002
KSTN Estimated %
Expenses(a) Savings Savings
----------- ------- -------
Corporate Overhead $76 $25 33%
Business Line Consolidation 73 4 6
Facilities 43 6 15
Technology and Operations 24 8 33
----------- ------- -------
Total $216 $43 20%
=========== ======= =======
--------------------------------------------------------------------------------
Implied Marginal Efficiency Ratio for KSTN: 48%
--------------------------------------------------------------------------------
o While no revenue enhancements have been assumed, specific
opportunities have been identified
- -------------------------------------------------
(a) Represents Q1'00 Keystone expenses annualized.
Keystone
M&T Bank ------------------------------------------------------------- Financial
16
- --------------------------------------------------------------------------------
Estimated Merger Related Charges
- --------------------------------------------------------------------------------
($ in Millions)
Pre-Tax After-Tax
Total Total
----- -----
Human Resources Related $29 $20
Conversion Costs 23 15
Facilities and Equipment 16 10
Deal Costs 7 7
--- ---
Total $75 $52
=== ===
Keystone
M&T Bank ------------------------------------------------------------- Financial
17
- --------------------------------------------------------------------------------
Summary
- --------------------------------------------------------------------------------
o Transaction makes strategic and financial sense with manageable
execution risk:
/ / Logical geographic expansion into familiar markets
/ / Creates the #1 bank in Central Pennsylvania
/ / Immediately accretive to cash EPS
/ / Attractive IRR
/ / Similar cultures and community banking operating models
/ / Complementary business lines
/ / Effective use of excess capital
Keystone
M&T Bank ------------------------------------------------------------- Financial
18
- --------------------------------------------------------------------------------
History of Consistently Superior Shareholder Returns
- --------------------------------------------------------------------------------
----------------------------------------
Total Stock Appreciation Since 1990:
------------------------------------
M&T = 568%
S&P Regional Bank Index = 287%
----------------------------------------
S&P Reg'l Bank
Index M&T
----- ---
S&P Banks
Index M&T
---- ---
1/1/90 100% 100%
2/1/90 103% 99%
3/1/90 98% 102%
4/1/90 94% 101%
5/1/90 104% 102%
6/1/90 96% 97%
7/1/90 89% 91%
8/1/90 78% 84%
9/1/90 66% 77%
10/1/90 59% 74%
11/1/90 71% 82%
12/1/90 74% 85%
1/1/91 81% 86%
2/1/91 91% 98%
3/1/91 97% 110%
4/1/91 104% 120%
5/1/91 111% 131%
6/1/91 103% 136%
7/1/91 112% 147%
8/1/91 120% 151%
9/1/91 117% 149%
10/1/91 118% 145%
11/1/91 110% 136%
12/1/91 125% 155%
1/1/92 128% 164%
2/1/92 138% 200%
3/1/92 133% 188%
4/1/92 140% 200%
5/1/92 142% 201%
6/1/92 142% 197%
7/1/92 140% 205%
8/1/92 133% 201%
9/1/92 132% 208%
10/1/92 136% 210%
11/1/92 151% 220%
12/1/92 156% 209%
1/1/93 160% 215%
2/1/93 165% 219%
3/1/93 175% 233%
4/1/93 166% 235%
5/1/93 163% 222%
6/1/93 174% 213%
7/1/93 171% 227%
8/1/93 169% 216%
9/1/93 174% 219%
10/1/93 159% 224%
11/1/93 155% 217%
12/1/93 162% 219%
1/1/94 166% 223%
2/1/94 160% 211%
3/1/94 159% 217%
4/1/94 167% 217%
5/1/94 175% 233%
6/1/94 170% 244%
7/1/94 172% 252%
8/1/94 176% 245%
9/1/94 163% 236%
10/1/94 161% 234%
11/1/94 148% 226%
12/1/94 148% 212%
1/1/95 158% 229%
2/1/95 167% 258%
3/1/95 167% 266%
4/1/95 169% 250%
5/1/95 186% 258%
6/1/95 183% 267%
7/1/95 188% 275%
8/1/95 197% 285%
9/1/95 207% 296%
10/1/95 207% 306%
11/1/95 223% 324%
12/1/95 224% 339%
1/1/96 227% 350%
2/1/96 236% 375%
3/1/96 241% 383%
4/1/96 237% 370%
5/1/96 240% 367%
6/1/96 238% 375%
7/1/96 238% 388%
8/1/96 252% 396%
9/1/96 267% 388%
10/1/96 287% 400%
11/1/96 314% 437%
12/1/96 296% 448%
1/1/97 320% 464%
2/1/97 337% 503%
3/1/97 314% 498%
4/1/97 330% 501%
5/1/97 340% 500%
6/1/97 356% 525%
7/1/97 393% 559%
8/1/97 370% 569%
9/1/97 397% 646%
10/1/97 391% 637%
11/1/97 415% 657%
12/1/97 435% 724%
1/1/98 416% 710%
2/1/98 448% 735%
3/1/98 476% 778%
4/1/98 479% 794%
5/1/98 460% 791%
6/1/98 471% 862%
7/1/98 461% 828%
8/1/98 361% 638%
9/1/98 401% 718%
10/1/98 435% 776%
11/1/98 448% 776%
12/1/98 470% 808%
1/1/99 449% 778%
2/1/99 452% 740%
3/1/99 446% 746%
4/1/99 491% 870%
5/1/99 468% 820%
6/1/99 480% 856%
7/1/99 446% 840%
8/1/99 423% 722%
9/1/99 405% 714%
10/1/99 466% 771%
11/1/99 435% 732%
12/1/99 394% 645%
1/1/00 381% 640%
2/1/00 320% 574%
3/1/00 387% 695%
4/1/00 354% 684%
5/1/00 387% 668%
- -------------------------------------------------
Source: FactSet Datasystems
Keystone
M&T Bank ------------------------------------------------------------- Financial
19
