Fulton Financial Corporation is a Pennsylvania business corporation and a registered financial holding company that maintains its headquarters in Lancaster, Pennsylvania. As a financial holding company, Fulton engages in general commercial and retail banking and trust business, and also in related financial businesses, through its 1924 directly-held bank and nonbank subsidiaries. Fulton’s bank subsidiaries currently operate 125207 banking offices in Pennsylvania, 19 banking offices in Maryland, 12 banking offices in Delaware, New Jersey and 37 banking offices in New Jersey.Virginia. As of December 31, 2002,June 30, 2004, Fulton had consolidated total assets of approximately $8.4$10.6 billion.
Fulton Bank, a Pennsylvania bank and trust company which is not a member of the Federal Reserve System;
Lebanon Valley Farmers Bank, a Pennsylvania bank and trust company which is a member of the Federal Reserve System;
Swineford National Bank, a national banking association which is a member of the Federal Reserve System;
Lafayette Ambassador Bank, a Pennsylvania bank and trust company which is a member of the Federal Reserve System;
FNB Bank, National Association, a national banking association which is a member of the Federal Reserve System;
Hagerstown Trust Company, a Maryland trust company which is not a member of the Federal Reserve System;
Delaware National Bank, a national banking association which is a member of the Federal Reserve System;
The Peoples Bank of Elkton, a Maryland bank which is not a member of the Federal Reserve System; and
Skylands Community Bank, a New Jersey bank which is not a member of the Federal Reserve System;
Fulton Reinsurance Company, LTD, which engages in the business of reinsuring credit life, accident and health insurance that is directly related to extensions of credit by Fulton’s bank subsidiaries;
Fulton Financial Advisors, National Association, a limited purpose national banking association with trust powers;
Approval of the merger agreement requires the affirmative vote of the holders of at least 66 2/3%a majority of Premier’sFirst Washington’s outstanding common stock. The directors and executive officers of PremierFirst Washington and their affiliates together own about 44.77%45.19% of Premier’sFirst Washington’s outstanding common stock as of MarchDecember 31, 2003. The directors and executive officers of PremierFirst Washington have signed voting agreements with Fulton pursuant to which they have agreed to vote their shares in favor of the merger.
The merger does not require the approval of Fulton’s shareholders.
the continuing effectiveness of the registration statement filed with the SEC.
if any condition precedent to a party’s obligations under the merger agreement is unsatisfied on September 30, 2003,unable to be satisfied by April 15, 2005, through no fault of the other party, provided that this date may be extended until December 31, 2003, if closing has not occurred because regulatory approval has not then been received;its own; or
if the other party has materially breached a representation, warranty or covenant and has not cured such breach within thirty days of receiving written notice of the breach; or
Fulton will continue as the surviving corporation after the merger. The Boardsboards of Directorsdirectors and executive officers of Fulton and its subsidiaries will not change as a result of the merger, except that:
The warrant agreement and warrant are attached to this document as Exhibit B.
Following the merger, Fulton will indemnify, and provide liability insurance to, officers and directors of Premier.First Washington; and
This document contains and incorporates some “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding intent, belief or current expectations about matters including statements as to “beliefs,” “expectations,” “anticipations,” “intentions” or similar words. Forward-looking statements are also statements that are not statements of historical fact. Forward-looking statements are subject to risks, uncertainties and assumptions. These include, by their nature:
changes in federal and state banking laws and regulations which could impact operations;
other external developments which could materially affect the business and operations of Fulton and Premier;First Washington;
If one or more of these risks or uncertainties occurs or if the underlying assumptions prove incorrect, actual results, performance or achievements in 20032004 and beyond could differ materially from those expressed in, or implied by, the forward-looking statements.
A vote for approval of the merger agreement is a vote for approval of the merger of PremierFirst Washington into Fulton and for the exchange of PremierFirst Washington common stock for Fulton common stock. If the merger is completed, PremierFirst Washington common stock will be cancelled and you will receive 1.341.35 shares (subject to adjustment for stock splits, stock dividends and similar matters) of Fulton common stock in exchange for each share of PremierFirst Washington common stock that you hold. Fulton will pay cash in lieu of issuing any fractional share interests to you.
If your shares are held in the name of a bank, broker or other holder of record, you will receive instructions from the holder of record that you must follow in order for your shares to be voted. Also, please note that if the holder of record of your shares is a broker, bank or other nominee and you wish to vote in person at the annualspecial meeting, you must bring a letter from the broker, bank or other nominee confirming that you are the beneficial owner of the shares.
Any shareholder executing a proxy may revoke it at any time before it is voted by:
A quorum, consisting of the holders of a majority of the issued and outstanding shares of PremierFirst Washington common stock, must be present in person or by proxy before any action may be taken at the annualspecial meeting. Abstentions will be treated as shares that are present for purposes of determining the presence of a quorum but will not be counted in the voting on a proposal.
merger. The directors and executive officers of Fulton prior to the merger will continue, in their respective capacities, as the directors and executive officers of Fulton after the merger, except that Fulton will appoint to its Boardboard of Directorsdirectors one current director of Premier.First Washington.
Fulton will adjust the number of shares of Fulton common stock issuable in exchange for shares of PremierFirst Washington common stock to take into account any stock splits, stock dividends, reclassifications or other similar events that may occur involving Fulton common stock or First Washington common stock prior to closing.
On the effective date of the merger, each outstanding option to purchase shares of PremierFirst Washington common stock will automatically convert into an option to purchase Fulton common stock. The number of shares of Fulton common stock issuable upon exercise will equal the number of shares of PremierFirst Washington common stock subject to the option multiplied by 1.34,1.35, rounded to the nearest whole share. The exercise price for a whole share of Fulton common stock will equal the stated exercise price of the option divided by 1.34. Shares issuable upon the exercise of such options to acquire Fulton common stock will remain subject to the terms of the plans and grant agreements of Premier under which Premier issued the options.
The effective date of the merger will occur within thirty days following the receipt of all regulatory and shareholder approvals. Fulton and PremierFirst Washington may also mutually agree on a different date. Fulton and PremierFirst Washington presently expect that the effective date of the merger will occur no later than the third quarter of 2003.on or before April 15, 2005.
receipt of all required regulatory approvals, including the expiration or termination of any notice and waiting periods;
the absence of any action, suit or proceeding, pending or threatened, which seeks to modify, enjoin or prohibit or otherwise adversely and materially affect the transaction contemplated by the merger agreement;
the absence of any material and adverse change in the condition, assets, liabilities, business or operations or future prospects of either party;
the accuracy in all material respects as of the date of the merger agreement and as of the effective date of the merger of the representations and warranties of the other party, except as to any representation or warranty which specifically relates to an earlier date and except as otherwise contemplated by the merger agreement;
other conditions customary for similar transactions, such as the receipt of officer certificates and legal opinions.
Except for the requirements of shareholder approval, regulatory approvals and the absence of any legal action preventing the merger, each of the conditions described above may be waived in the manner and to the extent described in “Amendment; Waivers” on page 39.35. As of the date of this document, Fulton’s counsel has delivered the required tax opinion.
The merger agreement contains customary representations and warranties relating to:
the consistency of financial statements with generally accepted accounting principles;
retirement and other employee plans and matters relating to the Employee Retirement Income Security Act of 1974;
the consistency of the allowance for loan losses with generally accepted accounting principles and all applicable regulatory criteria; and
the lack of any regulatory agency proceeding or investigation into the business or operations of PremierFirst Washington or any of its subsidiaries; and
Under the merger agreement, between the date the merger agreement was signed and the date the merger occurs, PremierFirst Washington and its subsidiaries agreed, among other things, except as disclosed to or consented to by Fulton, to:
use all reasonable efforts to carry on their respective businesses in the ordinary course;
use all reasonable efforts to preserve their respective business organizations, to retain the services of their present officers and employees and to maintain their relationships with customers, suppliers and others with whom they have business dealings; and
not declare, set aside or pay any dividend or other distribution on its capital stock, except as otherwise specifically set forth in the merger agreement (see “Dividends” on page 35)28);
The following is a brief summary of the material provisions of the warrant agreement, and we qualify this discussion by reference to the full warrant agreement and warrant. A complete copyComplete copies of the warrant agreement and warrant isare included as Exhibit B to this document, and isare incorporated in this document by reference. Fulton and PremierFirst Washington urge you to read itthem carefully.
The warrant is exercisable only upon the occurrence of one of the following events:
if a person or group, other than Fulton, enters into an agreement or letter of intent with PremierFirst Washington to merge or consolidate with Premier,First Washington, to acquire all or substantially all of the assets or liabilities of PremierFirst Washington or one of its subsidiaries, or to acquire beneficial ownership of 25% or more of the voting power of PremierFirst Washington or one of its subsidiaries;
if a person or group, other than Fulton, commences a tender offer or exchange offer and within six months consummates a merger with or acquisition of PremierFirst Washington or 25% of the voting power of PremierFirst Washington or one of its subsidiaries; or
If the warrant becomes exercisable, Fulton may exercise the warrant by presenting the warrant to PremierFirst Washington along with:
a certificate specifying the events which have occurred which cause the warrant to be exercisable.
termination of the merger agreement in accordance with its terms (other than a termination by Fulton caused by Premier’sFirst Washington’s Board taking action), except that if one of the events described above which causes the warrant to be exercisable occurs prior to termination of the merger agreement, the warrant shall not terminate until twelve months after such event; or
if the warrant has not previously been exercised, twelve months after the occurrence of one of the events described above which causes the warrant to be exercisable; or
the shares obtained upon such exercise. In the case of a repurchase of shares obtained upon exercise of the warrant, the redemption price per share is to be equal to the highest of: (i) 110% of the exercise price, (ii) the highest price paid or agreed to be paid for any share of common stock by an acquiring person (defined as any person who or which is the beneficial owner of 25% or more of the PremierFirst Washington common stock) during the one year period immediately preceding the date of redemption, and (iii) in the event of a sale of all or substantially all of Premier’sFirst Washington’s assets: (x) the sum of the price paid in such sale for such assets and the current market value of the remaining assets of PremierFirst Washington as determined by a recognized investment banking firm selected by Fulton and reasonably acceptable to Premier,First Washington, divided by (y) the number of shares of PremierFirst Washington common stock then outstanding. If the price paid consists in whole or in part of securities or assets other than cash, the value of such securities or assets shall be their then current market value as determined by a recognized investment banking firm selected by Fulton and reasonably acceptable to Premier.First Washington.
In the case of a repurchase of the warrant, the redemption price is to be equal to the product obtained by multiplying: (i) the number of shares of PremierFirst Washington common stock represented by the portion of the warrant that Fulton is requiring PremierFirst Washington to repurchase, times (ii) the excess of the redemption price over the exercise price.
Subject to any applicable legal restrictions, at any time prior to completion of the merger, Fulton and PremierFirst Washington may:
amend the merger agreement, except that any amendment relating to the consideration to be received by the PremierFirst Washington shareholders in exchange for their shares must be approved by the PremierFirst Washington shareholders;
extend the time for the performance of any of the obligations or other acts of Fulton and PremierFirst Washington required in the merger agreement; or
waive any term or condition in the merger agreement to the extent permitted by law.
80% of the ratio of the Nasdaq Bank Index over the same ten-day period compared to the Index on June 14, 2004, times the price of Fulton
common stock has also declined 20% more than the decline (if any) in the average NASDAQ Bank Index for the same period as compared to the NASDAQ Bank Index on January 15, 2003. Neither party would owe the other any penalty or fee as a result of termination of the merger agreement. The market price termination provisions will be based on an average of the closing bid and asked prices for the Fulton common stock for the ten (10) consecutive trading days immediately preceding the date which is two (2) business days prior to the closing date of the merger. Specifically, the index comparison is calculated as follows:eighty percent of the last sale price for Fulton common stock on January 15, 2003, (which was $18.64) times
the average NASDAQ Bank Index for the 10 business day period described below, divided by the NASDAQ Bank Index on January 15, 2003.June 14, 2004.
We anticipate that the merger will close in the third quarter of 2003.on or before April 15, 2005. Neither PremierFirst Washington nor Fulton can predict whether the market price of Fulton’s common stock will increase, decrease or remain stable between the date of this document and the enddate of the period in which the average closing market price is determined.closing.
In the event that either Fulton or PremierFirst Washington terminates the merger agreement, neither Fulton nor PremierFirst Washington will have any continuing liability or obligation other than the obligation dealing with confidentiality and any liabilities resulting from a breach by the other of a material term or condition of the merger agreement. However, if the merger terminates under certain circumstances, described above, Fulton will have the right to exercise the warrant.
Management And Operations After The Merger
The Board of Directors and executive officers of Fulton and its subsidiaries will not change as a result of the merger, except as follows:
Fulton will appoint to its Board of Directors one current director of Premier to serve until Fulton’s 2004 annual meeting and will nominate him at that meeting to serve for a 3-year term;
Premier Bank’s current directors will remain as directors of Premier Bank.First Washington. The current PremierFirst Washington director who will serve as a Fulton director is ClarkAbraham S. Frame.Opatut.
First Washington State Bank’s current directors will remain as directors of First Washington State Bank.
In addition, Fulton agreed, for a period of three years, to
preserve the business structure of PremierFirst Washington State Bank as a PennsylvaniaNew Jersey commercial bank (provided that Fulton may cause Premier Bank’s branch offices located in Northampton County, Pennsylvania to be transferred to another bank subsidiary of Fulton);bank; and
preserve and use the present name of PremierFirst Washington State Bank.
Employment; Severance
Upon completion of the merger, Fulton will use its bestgood faith efforts to continue the employment of persons who were full-timethe present employees of PremierFirst Washington or PremierFirst Washington State Bank. Where that is not possible for whatever reason, Fulton will make severance payments to affected persons.
Employees with written employment agreements will receive any severance payments they are entitled to under such agreements if their employment terminates. If the employment of employees without written agreements is involuntarily terminated, without cause,other than for unsatisfactory performance, within one yearsix months of the effective date of the merger, severance benefits will consist of three month’s salary (at thenbe paid pursuant to First Washington’s current levels) or one week’s salary plus one week’s salary for each year of service with Premier up to a maximum of twenty-six weeks’ salary.
severance policy. In the event the employment of employees without written agreements is involuntarily terminated, without cause, after one year,following the six month anniversary of the effective date of the merger, severance payments will be made in accordance with Fulton’s then existing severance policy. Any such person will be given full credit for each year of service as a Premier employee.
Employee Benefits
The employee benefits provided to former PremierFirst Washington employees that continue to be employed after the merger’s effective date will be substantially equivalent to the employee benefits, in the aggregate, provided by PremierFirst
Washington prior to the merger for at least three years after the effective date of the merger, or until Fulton or its subsidiaries can no longer satisfy the applicable qualified retirement plan discrimination testing under the Internal Revenue Code. Each PremierFirst Washington employee who becomes an employee of Fulton or of a Fulton subsidiary will be entitled to full credit for each year of service with PremierFirst Washington for purposes of determining eligibility for vesting in Fulton’s employee benefit plans, programs and policies.
Regulatory Approvals
Fulton and PremierFirst Washington must obtain regulatory approvals before the merger can be completed, but we cannot assure you that these regulatory approvals will be obtained or when they will be obtained.
It is a condition to completion of the merger that Fulton and PremierFirst Washington receive all necessary regulatory approvals to the merger, without the imposition by any regulator of any condition or requirements that would so materially and adversely impact the economic or business benefits of the merger that, had such condition or requirement been known,merger. Fulton and Premier would not, in the exercise of reasonable judgment, have entered into the merger transaction. Fulton and PremierFirst Washington cannot assure you that the regulatory approvals of the merger will not contain terms, conditions or requirements which would have such an impact.
Fulton and PremierFirst Washington are not aware of any material governmental approvals or actions that are required to complete the merger, except as described below. If any other approval or action is required, the parties expect that they will seek such approval or action.
The merger is subject to the prior approval of the Board of Governors of the Federal Reserve System pursuant to the Bank Holding Company Act of 1956, as amended.1956. Under this law, the Federal Reserve Board generally may not approve any proposed transaction:
That would result in a monopoly or that would further a combination or conspiracy to monopolize banking in the United States, or
That could substantially lessen competition in any section of the country, that would tend to create a monopoly in any section of the country, or that would be in restraint of trade, unless the Federal Reserve Board finds that the public interest in meeting the convenience and needs of the community served clearly outweighs the anti-competitive effects of the proposed transaction.
The Federal Reserve Board is also required to consider the financial and managerial resources and future prospects of the bank holding companies and banks concerned, as well as the convenience and needs of the community to be served. Consideration of financial resources generally focuses on capital adequacy. Consideration of convenience and needs includes the parties’ performance under the Community Reinvestment Act of 1977.
The merger may not be completed until the 30th day following the date of the Federal Reserve Board approval, although the Federal Reserve Board may reduce that period to 15 days. During this period, the United States Department of Justice has the opportunity to challenge the transaction on antitrust grounds. The commencement of any antitrust action would stay the effectiveness of the Federal Reserve Board’s approval, unless a court of competent jurisdiction specifically ordered otherwise.
Fulton filed notice of the proposed merger with the Federal Reserve Bank of Philadelphia on April 1, 2003,September 27, 2004, seeking prior approval of the merger from the Federal Reserve Bank, pursuant to authority delegated to it by the Federal Reserve Board. As of the date of this document, the Federal Reserve Bank has not yet approved or disapproved the merger.
The merger is also subject to the prior approval of the PennsylvaniaNew Jersey Department of Banking and Insurance under the provisions of the PennsylvaniaNew Jersey Banking CodeAct of 1965,1948, as amended. Fulton filed notice seeking approval of the proposed merger with the Department of Banking on April 1, 2003. As of the date of this document, the New Jersey Department of Banking and Insurance has not yet approved or disapproved the merger.
Material Contracts
There have been no other material contracts or other transactions between PremierFirst Washington and Fulton since signing the merger agreement, nor have there been any material contracts, arrangements, relationships or transactions between PremierFirst Washington and Fulton during the past five years, other than in connection with the merger agreement and as described in this document.
Material Federal Income Tax Consequences
To complete the merger, Fulton and PremierFirst Washington must receive an opinion of Barley, Snyder, Senft & Cohen, LLC, counsel to Fulton, that the merger will qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code, and that Fulton and PremierFirst Washington will each be a party to the reorganization within the meaning of Section 368(b) of the Code. Barley Snyder has provided this opinion and has consented to its inclusion in the registration statement.
In the opinion of Barley, Snyder, Senft & Cohen, LLC, the material federal income tax consequences of the merger will be as follows:
Fulton and PremierFirst Washington will not recognize gain or loss in the merger;
Premier’sFirst Washington’s shareholders will not recognize any gain or loss upon receipt of Fulton common stock in exchange for PremierFirst Washington common stock, except that shareholders who receive cash proceeds for fractional share interests will recognize gain or loss equal to the difference between such proceeds and the tax basis allocated to their fractional share interests, and such gain or loss will constitute capital gain or loss if the shareholders held their PremierFirst Washington common stock as a capital asset at the effective date of the merger;
the tax basis of shares of Fulton common stock Premier’sreceived by First Washington’s shareholders receive in the merger will be the same as the tax basis of their shares of PremierFirst Washington common stock less any basis that would be allocable to a fractional share of Fulton common stock for which cash is received; and
the holding period of the Fulton common stock that Premier’sFirst Washington’s shareholders receive in the merger will include the holding period of their shares of PremierFirst Washington common stock, provided that they hold their PremierFirst Washington common stock as a capital asset at the time of the merger.
This is not a complete description of all the federal income tax consequences of the merger and, in particular, does not address tax considerations that may affect the treatment of shareholders who acquired their PremierFirst Washington common stock pursuant to the exercise of employee stock options or otherwise as compensation, or shareholders which are exempt organizations or who are not citizens or residents of the United States. Each shareholder’s individual circumstances may affect the tax consequences of the merger to such shareholder. In addition, this discussion does not address the tax consequences of the merger under applicable state, local, or foreign laws. Accordingly, you should consult a tax advisor to discuss the specific tax consequences of the merger to you.
Accounting Treatment
Fulton will account for the acquisition using the purchase method of accounting. Purchase accounting requires Fulton to allocate the total purchase price of the acquisition to the assets acquired and liabilities assumed, based on their respective fair values at the acquisition date, with any remaining unallocated acquisition cost being recorded as goodwill. Resulting goodwill balances are then subject to an impairment review on at least an annual basis. The results of First Washington’s operations will be included in Fulton’s financial statements prospectively from the date of the acquisition.
The total purchase price is estimated to be approximately $125.6 million, which includes the cost of Fulton stock to be issued, First Washington options to be converted and certain acquisition related costs. The total purchase price will be allocated to the net assets acquired as of the merger effective date, based on fair market values at that date. Fulton expects to record a core deposit intangible asset and goodwill as a result of the acquisition accounting.
The Selected Historical and Pro Forma Combined Per Share Data in this document has been prepared based on First Washington’s net assets and the fair market values of those net assets as calculated by First Washington as of June 30, 2004. In addition, the core deposit intangible was estimated to be $9.7 million, representing 5% of demand and savings deposits, and was assumed to be amortized over 8 years using an accelerated method. These assumptions resulted in goodwill of approximately $85.3 million. The actual amounts to be recorded by Fulton to reflect the purchase are dependent on various factors, including but not limited to, the interest rate environment and final valuations for loans and deposits and other assets and liabilities, including the core deposit intangible, and may differ materially from the estimates provided herein.
NASDAQ ListingQuotation
The obligation of PremierFirst Washington and Fulton to complete the merger is subject to the condition that Fulton common stock to be issued in the merger be authorized for quotation on the National Market tierSystem of the NASDAQNasdaq Stock Market.
Expenses
Fulton and PremierFirst Washington will each pay all their own costs and expenses, including fees and expenses of financial consultants, accountants and legal counsel, except that Fulton will pay for the cost of printing and mailing this document.
Resale Of Fulton Common Stock
The Fulton common stock issued in the merger will be freely transferable under the Securities Act of 1933 except for shares issued to any PremierFirst Washington shareholder who is an “affiliate” of PremierFirst Washington or Fulton for purposes of SEC Rule 145. This document does not cover resale of Fulton common stock received by any affiliate of PremierFirst Washington or Fulton. Each director and executive officer of PremierFirst Washington will enter into an agreement with Fulton providing that, as an affiliate, he or she will not transfer any Fulton common stock received in the merger except in compliance with the securities laws.
Dissenters’ Rights
PremierFirst Washington shareholders are not entitled to dissenters right under Subchapter D of Chapter 15Section 14A:11-1(1)(a)(i)(B) of the PennsylvaniaNew Jersey Business Corporation Law of 1988.Act with respect to the proposed merger with Fulton.
Dividend Reinvestment Plan
Fulton currently maintains a shareholder dividend reinvestment plan. This plan provides shareholders of Fulton with a simple and convenient method of investing cash dividends, as well as voluntary cash payments, in additional shares of Fulton common stock without payment of any brokerage commission or service charge. Fulton expects to continue to offer this plan after the effective date of the merger, and shareholders of PremierFirst Washington who become shareholders of Fulton will be eligible to participate in the plan.
Redemption of Preferred Stock
Premier’s Series A 9.25% Non-Cumulative Perpetual Preferred Stock is governed by the Statement of Rights, Designations and Preferences amending Premier’s Articles of Incorporation. All outstanding shares of Premier’s Series A Preferred Stock will be redeemed as of or prior to the effective time of the merger in accordance with its redemption terms. The Statement of Rights provides that the Series A Preferred Stock may not be redeemed prior to June 14, 2007 except in the event of a change of control of Premier. The merger of Premier with Fulton constitutes a change of control. If the Series A Preferred Stock is redeemed prior to June 13, 2003, each share of Series A Preferred Stock will be redeemed at $25.625 per share. If the Series A Preferred Stock is redeemed after June 13, 2003, each share of Series A Preferred Stock will be redeemed at $25.50 per share. The aggregate payment of the redemption price to each holder of Series A preferred stock will be rounded down to the nearest whole cent. Premier will send a notice of redemption to each Series A preferred shareholder not less than 30 days prior to the date set for redemption. The notice will describe the redemption procedure in detail.
Financial Interests Of Certain PersonsManagement in the Merger
When you are considering the recommendation of Premier’s boardFirst Washington’s Board of directorsDirectors with respect to approving the merger agreement and the merger, you should be aware that PremierFirst Washington directors and executive officers have interests in the merger as individuals which are in addition to, or different from, their interests as shareholders of Premier.First Washington. The PremierFirst Washington board of directors was aware of these factors and considered them, among other matters, in approving the merger agreement and the merger. These interests are described below.
Share Ownership and Stock Options
As of the record date, the directors and executive officers of PremierFirst Washington own approximately 1,442,6321,678,164 shares of PremierFirst Washington common stock, and hold options to purchase approximately 222,170587,251 shares of PremierFirst Washington common stock. On the effective date of the merger, each option will convert into an option to acquire Fulton common stock. The number of shares of Fulton common stock issuable upon the exercise of the converted option will equal the number of shares of PremierFirst Washington common stock covered by the option multiplied by 1.34,1.35, and the exercise price for a whole share of Fulton common stock will be the stated exercise price of the option divided by 1.34.1.35. Shares issuable upon the exercise of options to acquire Fulton common stock will be issuable in accordance with the terms of the respective plans and grant agreements of PremierFirst Washington under which PremierFirst Washington issued the options.
Change of Control AgreementsEmployment Agreement
UnderIn connection with the merger agreement, Fulton agreed to honor various contractual obligations which have beenFirst Washington State Bank and Mr. Schneider entered into by Premier and/or its subsidiaries and some of their executive officers, including change of control agreements between Premier, Premier Bank and each of Messrs. Soffronoff, Ginley and Sickel. These agreements generally provide that, in the event that a change of control of Premier or Premier Bank occurs, Premier or Premier Bank shall pay to the executive a lump sum cash severance payment equal to two times the executive’s current annual direct salary if the executive leaves or is terminated following the change of control within certain time frames. However, as part of the merger agreement, Messrs. Soffronoff and Ginley agreed to waive their change of control payments and instead acceptedan employment agreements with Premier Bank that became effective on the date of the merger. These new agreements are described below.
Assuming that his employment by Premier and Premier Bank was terminated following consummation of the merger in the third quarter of 2003 and that Fulton did not offer Mr. Sickel a position having equivalent responsibilities, authority, compensation and benefits as he received immediately prior to the change of control, the amount of the cash severance that would be payable to Mr. Sickel under his change of control agreement with Premier and Premier Bank is $358,000.
Employment Agreements
Messrs. Frame, Ginley and Soffronoff entered into employment agreements with Premier Bank whichagreement. The Agreement will become effective on, and areis contingent upon, the effectiveness of the merger. EachThe agreement provides that the respective officer shallMr. Schneider will be employed for a period of three years from the effective date of the merger. Under their respective agreements, Messrs. Frame, Soffronoff and Ginley areMr. Schneider is entitled to an annual salary of $160,000, $240,000
and $235,000, respectively,$314,600 under the Agreement and will also be entitled to benefits comparable to those offered by PremierFirst Washington State Bank on January 16, 2003,June 14, 2004, including pension, profit sharing,retirement, medical and disability benefit programs and other PremierFirst Washington employee benefit plansplans. In addition, Mr. Schneider will receive a signing bonus upon commencement of the term of the employment agreement and Fulton’sa retention bonus programs.on the first anniversary of the commencement of the term.
For each of Messrs. Frame, Soffronoff and Ginley, inIn the event his employment wasis terminated “without cause” as defined in the agreement, PremierFirst Washington State Bank has agreed to pay him the salary and benefits described above for the remaining term of the agreement. Each of them is also entitled to receive two times his salary in the event of a change in control, as defined in the agreement, of Premier Bank or of Fulton. The agreement also provides that for the longer of one yearsix months after the termination of his employment or the period of time by which any payment he is to receive is measured,(other than without cause), the executive will not compete with Premier Bank.
These employment agreements with Premier Bank replace the Change in Control Agreements that each of Messers. Soffronoff and Ginley had previously entered into with Premier and PremierFirst Washington State Bank.
Indemnification and Insurance
The merger agreement provides that Fulton shall indemnify and hold harmless each present and former director, officer and employee of PremierFirst Washington or a PremierFirst Washington subsidiary, determined as of the effective time of the merger, against any costs or expenses, judgments, fines, losses, claims, damages or liabilities incurred in connection with any claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative, arising out of matters existing or occurring at or prior to the effective time of the merger, whether asserted or claimed prior to or after the effective time of the merger, arising in whole or in part out of, or pertaining to (i) the fact that he or she was a director, officer or employee of PremierFirst Washington or any of its subsidiaries, or is or was serving at the request of PremierFirst Washington or PremierFirst Washington State Bank as a director, officer or employee of an affiliate, or (ii) the merger agreement or any of the transactions contemplated thereby, to the fullest extent permitted by law.
In addition, the merger agreement provides that Fulton shall maintain Premier’stail coverage for First Washington’s existing directors’ and officers’ liability insurance policy for acts or omissions occurring prior to the effective time of the merger for the benefit of persons who are currently covered by such insurance policy for a period of foursix years following the effective time of the merger. Fulton may, however, substitute new policies in lieu of Premier’sFirst Washington’s existing policies if the new policies provide at least the same coverage and amounts containing terms and conditions which are substantially no less advantageous.
Currently, all of Premier and Premier Bank’s insurance policies are purchased through Richard B. Ryon Insurance, an agency in which director Richard F. Ryon is a partner.
Directors Fees
Each of Premier’sFirst Washington’s current directors will serve in one or more of the following capacities after the effective date of the merger:
One PremierFirst Washington director, ClarkAbraham S. Frame,Opatut, will serve as director of Fulton; and
All PremierFirst Washington State Bank directors will continue to serve as directors of PremierFirst Washington State Bank.
As such, each non-employee director will be entitled to receive fees for his or her service in such capacity equal to the fees received by him or her as of the date of the merger agreement from PremierFirst Washington for a period of three years. In addition, the Chairman and Vice Chairman of First Washington State Bank’s board will continue to receive the same compensation for such service as he now receives during such three year period.
Other than as set forth above, no director or executive officer of PremierFirst Washington has any direct or indirect material interest in the merger, except insofar as ownership of PremierFirst Washington common stock might be deemed such an interest. See “Security Ownership of Certain Beneficial Owners and Management,” beginning on page 61.
INFORMATION ABOUT FULTON FINANCIAL
General
As permitted by the rules of the SEC, financial and other information relating to Fulton that is not included in or delivered with this document, including information relating to Fulton’s directors and executive officers, is incorporated herein by reference. See “WHERE YOU CAN FIND MORE INFORMATION” on page 6851 and “INCORPORATION BY REFERENCE” on page 68.51.
Market Price Of And Dividends On Fulton Common Stock And Related Shareholder Matters
The Fulton common stock trades on the NASDAQ National Market under the symbol “FULT”. As of DecemberJuly 31, 2002,2004, Fulton had 17,25119,125 shareholders of record. The table below shows for the periods indicated the amount of dividends paid per share and the quarterly ranges of high and low sales prices for Fulton common stock as reported by the NASDAQ National Market. Stock price information does not necessarily reflect mark-ups, mark-downs or commissions. Per share amounts have been retroactively adjusted to reflect the effect of stock dividends declared.
| | Price Range Per Share
| | Per Share Dividend
| | | | | | | | | |
| | | Price Range Per Share
| | Per Share Dividend
|
| | | High
| | Low
| |
2004 | | | | | | | |
First Quarter | | | $ | 21.70 | | $ | 19.86 | | $ | 0.152 |
Second Quarter | | | $ | 21.64 | | $ | 19.14 | | $ | 0.165 |
Third Quarter | | | $ | 21.90 | | $ | 20.00 | | $ | 0.165 |
| | High
| | Low
| | Per Share Dividend
| |
2003 | | | | | | | | | | | |
First Quarter | | $ | 19.10 | | $ | 17.52 | | $ | 0.150 | | $ | 17.32 | | $ | 15.90 | | $ | 0.136 |
Second Quarter (through ,2003) | | | | | | | |
Second Quarter | | | $ | 20.00 | | $ | 17.01 | | $ | 0.152 |
Third Quarter | | | $ | 20.48 | | $ | 18.33 | | $ | 0.152 |
Fourth Quarter | | | $ | 20.95 | | $ | 18.81 | | $ | 0.152 |
| 2002 | | | | | | | | | | | | |
First Quarter | | $ | 20.24 | | $ | 17.00 | | $ | 0.136 | | $ | 18.36 | | $ | 15.34 | | $ | 0.124 |
Second Quarter | | | 20.29 | | | 18.40 | | | 0.150 | | $ | 18.49 | | $ | 16.53 | | $ | 0.136 |
Third Quarter | | | 19.50 | | | 16.85 | | | 0.150 | | $ | 17.77 | | $ | 15.15 | | $ | 0.136 |
Fourth Quarter | | | 19.12 | | | 16.92 | | | 0.150 | | $ | 17.34 | | $ | 15.34 | | $ | 0.136 |
| 2001 | | | | | | | |
First Quarter | | $ | 17.57 | | $ | 15.47 | | $ | 0.122 | |
Second Quarter | | | 17.95 | | | 14.62 | | | 0.136 | |
Third Quarter | | | 18.40 | | | 16.64 | | | 0.136 | |
Fourth Quarter | | | 17.92 | | | 16.69 | | | 0.136 | |
For certain limitations on the ability of Fulton’s subsidiaries to pay dividends to Fulton, see Fulton’s Annual Report on Form 10-K for the year ended December 31, 2002,2003, which is incorporated herein by reference. See “WHERE YOU CAN FIND MORE INFORMATION” on page 68.51.
On January 15, 2003,June 14, 2004, the last full trading day prior to public announcement of the proposed merger, the high, low and last sales price of Fulton common stock were as follows:
High:
| | $19.00
|
Low:
| | $18.62
|
Last Sales price:
| | $18.64
|
| | | |
High: | | $ | 20.25 |
Low: | | $ | 19.80 |
Last Sales price: | | $ | 19.81 |
On, 2003, October 1, 2004, the most recent practicable date prior to the printing of this document, the high, low and last sales price of Fulton common stock waswere as follows:
| | | |
High: | | $ | 21.55 |
Low: | | $ | 21.31 |
Last Sales price: | | $ | 21.52 |
You should obtain current market quotations prior to making any decisions about the merger.
Indemnification
The Bylaws of Fulton provide for indemnification of its directors, officers, employees and agents to the fullest extent permitted under the laws of the Commonwealth of Pennsylvania, provided that the person seeking indemnification acted in good faith, in a manner he or she reasonably believed to be in the best interests of Fulton, and without willful misconduct or recklessness. Fulton has purchased insurance to indemnify its directors, officers, employees and agents under certain circumstances.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling Fulton pursuant to the foregoing provisions of Fulton’s Bylaws, Fulton has been informed that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act of 1933 Act and is therefore unenforceable.
Description Of Fulton Financial Common Stock
General
The authorized capital of Fulton consists exclusively of 400 million shares of common stock, par value $2.50 per share, and 10 million shares of preferred stock, without par value. As of December 31, 2002,September 30, 2004, there were issued and outstanding approximately 101,106,248 million121,003,103 shares of Fulton common stock, which shares were held by 17,25119,053 owners of record, and there were 2,802,7804,473,443 shares issuable upon the exercise of options. No shares of preferred stock have been issued by Fulton. Fulton’s common stock is listed for quotation on the NASDAQ National Market System under the symbol “FULT”. The holders of Fulton common stock are entitled to one vote per share on all matters submitted to a vote of the shareholders and may not cumulate their votes for the election of directors. Each share of Fulton common stock is entitled to participate on an equal pro rata basis in dividends and other distributions. The holders of Fulton common stock do not have preemptive rights to subscribe for additional shares that may be issued by Fulton, and no share is entitled in any manner to any preference over any other share. Fulton Financial Advisors, N.A. serves as the transfer agent for Fulton.
The holders of Fulton common stock are entitled to receive dividends when, as and if declared by the Boardboard of Directorsdirectors out of funds legally available. Fulton has in the past paid quarterly cash dividends to its shareholders on or about the 15th day of January, April, July and October of each year. The ability of Fulton to pay dividends to its shareholders is dependent primarily upon the earnings and financial condition of Fulton’s subsidiary banks. Funds for the payment of dividends on Fulton common stock are expected for the foreseeable future to be obtained primarily from dividends paid to Fulton by its bank subsidiaries, which dividends are subject to certain statutory limitations, described below:
| | | | |
Pennsylvania State Chartered Banks | | Fulton Bank, Lebanon Valley Farmers Bank, and Lafayette Ambassador Bank, and Premier Bank | | may pay dividends only out of accumulated net earnings and may not declare or pay any dividend requiring a reduction of the statutorily required surplus of the institution |
| | |
National Banks | | Swineford National Bank, FNB Bank, N.A., Delaware National Bank, and Fulton Financial Advisors, N.A. | | the approval of the Office of the Comptroller of the Currency is required under federal law if the total of all dividends declared during any calendar year would exceed the net profits (as defined) of the bank for the year, combined with its retained net profits (as defined) for the two preceding calendar years |
| | |
Maryland Commercial Banks | | Hagerstown Trust Company and The Peoples Bank of Elkton | | may only declare a cash dividend from their undivided profits or (with the prior approval of the Maryland Bank Commissioner) from its surplus in excess of 100% of its required capital stock, in each case after providing for due or accrued expenses, losses, interest and taxes. In addition, if Hagerstown’s or Peoples’ surplus becomes less than 100% of its required capital stock, Hagerstown or Peoples may not declare or pay any cash dividends that exceed 90% of its net earnings until its surplus becomes 100% of its required capital stock |
| | |
New Jersey Banks | | The Bank and Skylands Community Bank | | may not declare or pay any dividends which would impair their capital stock or reduce their surplus to a level of less than 50% of their capital stock or if the surplus is currently less than 50% of the capital stock, the payment of such dividends would not reduce the surplus of the bank |
| | |
Virginia Bank | | Resource Bank | | may only declare or pay any dividends up to the amount of retained earnings |
In addition to the foregoing statutory restrictions on dividends, state banking regulations (with respect to state-chartered banks), the FDIC (with respect to state-chartered banks that are not members of the Federal Reserve System, such as Fulton Bank, Skylands Community Bank, Hagerstown Trust Company, The Bank and The Peoples Bank of Elkton), the FRB (with respect to state-chartered banks that are members of the Federal Reserve System, such as Lebanon Valley Farmers Bank, and Lafayette Ambassador Bank, Premier Bank and Resource Bank), and the OCC (with respect to national banks such as Swineford National Bank, FNB Bank, N.A., Delaware National Bank, and Fulton Financial Advisors, N.A.), also have adopted minimum capital standards and have broad authority to prohibit a bank from engaging in unsafe or unsound banking practices. The payment of a dividend by a bank could, depending upon the financial condition of the bank involved and other factors, be deemed to impair its capital or to be as such an unsafe or unsound practice.
Dividend Reinvestment Plan
The holders of Fulton common stock may elect to participate in the Fulton Financial Corporation Dividend Reinvestment Plan, which is a plan administered by Fulton Financial Advisors, N.A. as the plan agent. Under the dividend reinvestment plan, dividends payable to participating shareholders are paid to the plan agent and are used to purchase, on behalf of the participating shareholders, additional shares of Fulton common stock. Participating shareholders may make additional voluntary cash payments, which are also used by the plan agent to purchase, on behalf of such shareholders, additional shares of Fulton common stock. Shares of Fulton common stock held for the account of participating shareholders are voted by the plan agent in accordance with the instructions of each participating shareholder as set forth in his or her proxy.
Securities Laws
Fulton, as a business corporation, is subject to the registration and prospectus delivery requirements of the Securities Act of 1933 and is also subject to similar requirements under state securities laws. Fulton common stock is registered with the Securities and Exchange Commission under Section 12(g) of the Securities Exchange Act of 1934, and Fulton is subject to the periodic reporting, proxy solicitation and insider trading requirements of the 1934 Act. The executive officers, directors and ten percent shareholders of Fulton are subject to certain restrictions affecting their right to buy and sell shares of Fulton common stock owned beneficially by them. Specifically, each such person is subject to the beneficial ownership reporting requirements and to the short-swing profit recapture provisions of Section 16 of the 1934 Act and may sell shares of Fulton common stock only: (i) in compliance with the provisions of SEC Rule 144, (ii) in compliance with the provisions of another applicable exemption from the registration requirements of the 1933 Act, or (iii) pursuant to an effective registration statement filed with the SEC under the 1933 Act.
Antitakeover Provisions
The Articles of Incorporation and Bylaws of Fulton include certain provisions which may be considered to be “antitakeover” in nature because they may have the effect of discouraging or making more difficult the acquisition of control over Fulton by means of a hostile tender offer, exchange offer, proxy contest or similar transaction. These
provisions are intended to protect the shareholders of Fulton (including the present shareholders of Premier,First Washington, who will become shareholders of Fulton following the merger) by providing a measure of assurance that Fulton’s shareholders will be treated fairly in the event of an unsolicited takeover bid and by preventing a successful takeover bidder from exercising its voting control to the detriment of the other shareholders. However, the antitakeover provisions set forth in the Articles of Incorporation and Bylaws of Fulton, taken as a whole, may discourage a hostile tender offer, exchange offer, proxy solicitation or similar transaction relating to Fulton common stock. To the extent that these provisions actually discourage such a transaction, holders of Fulton common stock may not have an opportunity to dispose of part or all of their stock at a higher price than that prevailing in the market. In addition, these provisions make it more difficult to remove, and thereby may serve to entrench, incumbent directors and officers of Fulton, even if their removal would be regarded by some shareholders as desirable.
The provisions in the Articles of Incorporation of Fulton which may be considered to be “antitakeover” in nature include the following:
a provision that provides for substantial amounts of authorized but unissued capital stock, including a class of preferred stock whose rights and privileges may be determined prior to issuance by Fulton’s Board of Directors;
a provision that does not permit shareholders to cumulate their votes for the election of directors;
a provision that requires a greater than majority shareholder vote in order to approve certain business combinations and other extraordinary corporate transactions;
a provision that establishes criteria to be applied by the Board of Directors in evaluating an acquisition proposal;
a provision that requires a greater than majority shareholder vote in order for the shareholders to remove a director from office without cause;
a provision that prohibits the taking of any action by the shareholders without a meeting and eliminates the right of shareholders to call an annuala special meeting;
a provision that limits the right of the shareholders to amend the Bylaws; and
a provision that requires, under certain circumstances, a greater than majority shareholder vote in order to amend the Articles of Incorporation.
The provisions of the Bylaws of Fulton which may be considered to be “antitakeover” in nature include the following:
a provision that limits the permissible number of directors;
a provision that establishes a Board of Directors divided into three classes, with members of each class elected for a three-year term that is staggered with the terms of the members of the other two classes; and
a provision that requires advance written notice as a precondition to the nomination of any person for election to the Board of Directors, other than in the case of nominations made by existing management.
As a Pennsylvania business corporation and a corporation whose common shares are registered under the Securities Exchange Act of 1934, Fulton is subject to, and may take advantage of the protections of, the antitakeover provisions of the Pennsylvania Business Corporation Law of 1988, as amended. These antitakeover provisions, which are designed to discourage the acquisition of control over a targeted Pennsylvania business corporation, include:
a provision whereby the directors of the corporation, in determining what is in the best interests of the corporation, may consider factors other than the economic interests of the shareholders, such as the effect of any action upon other constituencies, including employees, suppliers, customers, creditors and the community in which the corporation is located;
a provision that permits shareholders to demand that a controlling person pay to them the fair value of their shares in cash upon a change in control;
a provision that restricts certain business combinations unless there is prior approval by the directors or a supermajority of the shareholders;
a provision permitting a corporation to adopt a shareholders rights plan;
a provision denying the right to vote to a person who acquires a specified percentage of stock ownership unless those voting rights are restored by a vote of disinterested shareholders; and
a provision requiring a person who acquires “control shares”, which are described in the previous sentence, to disgorge to the corporation all profits from the sale of equity securities within eighteen months thereafter.
Corporations may elect to “opt out” of any or all of these antitakeover provisions of the Pennsylvania corporate law. Fulton has not elected to opt out of any of the protections provided by the antitakeover statutes.
On April 27, 1999, Fulton extended the term of its Shareholder Rights Plan, originally adopted in June of 1989, by ten years. The plan is intended to discourage unfair or financially inadequate takeover proposals and abusive takeover practices and to encourage third parties who may in the future be interested in acquiring Fulton to negotiate with Fulton’s Board of Directors. The plan may have the effect of discouraging or making more difficult the acquisition of Fulton by means of a hostile tender offer, exchange offer or similar transaction. The plan is similar to shareholder rights plans which have been adopted by other bank holding companies and business corporations and contains “flip-in” rights (allowing certain shareholders to purchase Fulton’s common stock equal to two times the right’s exercise price) and “flip-over” rights (allowing rights holders to acquire shares of the acquirer’s stock at a substantial discount) which are typically included in plans of this kind. Each share of Fulton common stock, including all shares that will be issued to Premier’sFirst Washington’s shareholders in the Merger,merger, will also represent one right pursuant to the terms of the plan, which right will initially, and until it becomes exercisable, trade with and be represented by the Fulton common stock certificates to be received by the shareholders of Premier.First Washington.
The management of Fulton does not presently contemplate recommending to the shareholders the adoption of any additional antitakeover provisions.
INFORMATION ABOUT PREMIERFIRST WASHINGTON
A copy of Premier’s annual report on Form 10-K accompanies this document. As permitted by the rules of the SEC, financial and other information relating to Premier that is not included in or delivered with this document,First Washington, including information relating to Premier’sFirst Washington’s directors and executive officers, is incorporated herein by reference. See “WHERE YOU CAN FIND MORE INFORMATION” on page 6651 and “INCORPORATION BY REFERENCE” on page 68.51. A copy of First Washington’s 10-KSB for the year ended December 31, 2003, as filed with the SEC, and of its 10-QSB for the quarter ended June 30, 2004, as filed with the SEC, are enclosed herewith and are incorporated herein by reference.
General
PremierFirst Washington is a Pennsylvania businessNew Jersey corporation and a registered financialbank holding company headquartered in Doylestown, Bucks County, Pennsylvania. Premier was incorporated on July 15, 1997 and reorganized on November 17, 1997 asWindsor, New Jersey. First Washington is the one-bank holding company of Premier Bank. Premier’s primary business is the operation of its wholly-owned subsidiary, Premier Bank. In December 2000, Premier becamefor First Washington State Bank, a registered financial holding company.
Premier Bank was organized in 1990 as a PennsylvaniaNew Jersey state chartered banking institution and began operations on April 24, 1992. Premiercommercial bank. The bank is a community-orientedfull service commercial bank, providing a wide range of business and consumer financial services provider whose business primarily consistsin Mercer, Monmouth and Ocean Counties in New Jersey. The bank operates through its main office located in Windsor, New Jersey, and fifteen branch offices located in the Borough of
Allentown, the Townships of East Windsor, Ewing, Freehold, Hamilton, Jackson, Lakewood, Lawrenceville, Marlboro, Plumsted, West Windsor and Whiting, New Jersey. First Washington State Bank has the following wholly-owned subsidiaries:attracting retail deposits from the general public and small to mid-sized businesses and originating commercial and consumer loans in its market area. Premier bank’s deposit products include checking, savings and money market accounts as well as certificates of deposit. Premier bank offers numerous credit products but specializes in lending to small to mid-sized commercial businesses and professionals. Premier bank offers a full array of lending products including loans secured by
Windsor Realty Holdings, Inc., which has owned or leased real estate and other assets, working capital lines and other commercial loans. Other credit products include residential mortgage loans, home equity loans and lines of credit, personal lines of credit and other consumer loans. Premierwhere First Washington State Bank also offers other services such as internet banking, telephone banking, cash management services, automated teller services and safe deposit boxes. Premier bank is a memberhas or may in the future have operations;
FWS Holdings, Inc., which owns all of the Federal Reserve System,stock of Windsor Financial, Inc., a Delaware corporation and its deposits are insured by the Federal Deposit Insurance Corporation’s Bank Insurance Fund to the fullest extent provided by law.manager of First Washington State Bank’s bond portfolio; and
Windsor Title Holdings, Inc., which offers title insurance through a 50% partnership with Windsor Title Agency, L.P.
Premier owns 100% of the common securities of PBI Capital Trust, a Delaware statutory business trust formed for the sole purpose of issuing $10 million in trust preferred securities, and Premier Capital Trust II, a Delaware statutory business trust formed for the sole purpose of issuing $15 million in trust preferred securities. Premier has a 1% membership interest in, and Premier Bank has a 99% membership interest in, each of Lenders Abstract, LLC, a provider of title insurance policies, and Premier Bank Insurance Services, LLC, a provider of long term health care insurance policies.
PremierFirst Washington had approximately $610$474.4 million in assets and $456$409.3 million in deposits at December 31, 2002.June 30, 2004. On December 31, 2002, PremierJune 30, 2004, First Washington State Bank employed 78128 full-time and 3665 part-time employees throughout its branch offices. Premier Bank operates seven community banking offices in Bucks, Northampton and Montgomery counties.
Market Price Of And Dividends On PremierFirst Washington Common Stock And Related Shareholder Matters
The PremierFirst Washington common stock trades on the American Stock ExchangeNASDAQ SmallCap Market under the symbol “PPA”“FWFC”. As of March 31, 2003,September 30, 2004, there were 3,417,5154,253,741 shares of PremierFirst Washington common stock issued and outstanding, held by approximately 957554 shareholders of record. The following table sets forth the high and low closing sale prices for shares of PremierFirst Washington common stock for the periods indicated as reported on the American Stock ExchangeNASDAQ SmallCap Market and the cash dividends paid per share for such periods. Such prices do not necessarily reflect mark-ups, mark-downs or commissions. Per share amounts have been retroactively adjusted to reflect the effect of stock dividends and stock splits.
| | Price Range Per Share
| | Per Share Dividend
| | | | | | | | | |
| | | Price Range Per Share
| | Per Share Dividend
|
| | | High
| | Low
| |
2004 | | | | | | | |
First Quarter | | | $ | 24.16 | | $ | 18.40 | | $ | 0.00 |
Second Quarter | | | $ | 27.12 | | $ | 19.50 | | $ | 0.00 |
Third Quarter | | | $ | 29.46 | | $ | 25.95 | | $ | 0.11 |
| | High
| | Low
| | Per Share Dividend
| |
2003 | | | | | | | | | | | |
First Quarter | | $ | 25.09 | | $ | 14.25 | | | | $ | 11.43 | | $ | 10.66 | | $ | 0.00 |
Second Quarter (through ___, 2003 | | | | | | | |
Second Quarter | | | $ | 15.24 | | $ | 11.31 | | $ | 0.00 |
Third Quarter | | | $ | 20.57 | | $ | 15.24 | | $ | 0.00 |
Fourth Quarter | | | $ | 20.00 | | $ | 16.50 | | $ | 0.00 |
| 2002 | | | | | | | | | | | | |
First Quarter | | $ | 9.74 | | $ | 8.75 | | $ | 0.00 | | $ | 11.54 | | $ | 9.32 | | $ | 0.00 |
Second Quarter | | | 12.25 | | | 9.15 | | | 0.00 | | $ | 13.20 | | $ | 10.72 | | $ | 0.00 |
Third Quarter | | | 13.44 | | | 11.00 | | | 0.00 | | $ | 13.20 | | $ | 9.40 | | $ | 0.00 |
Fourth Quarter | | | 14.50 | | | 12.30 | | | 0.00 | | $ | 10.39 | | $ | 9.01 | | $ | 0.00 |
| 2001 | | | | | | | |
First Quarter | | $ | 7.00 | | $ | 6.25 | | $ | 0.00 | |
Second Quarter | | | 8.80 | | | 7.15 | | | 0.00 | |
Third Quarter | | | 9.90 | | | 8.50 | | | 0.00 | |
Fourth Quarter | | | 10.21 | | | 9.35 | | | 0.00 | |
First Washington has historically not paid cash dividends, but has declared annual stock dividends or stock splits. The market prices above are adjusted to account for (i) a 10 percent stock dividend paid on October 25, 2002, (ii) a 5 percent stock dividend paid on October 24, 2003, and (iii) a 5 for 4 stock split paid March 1, 2004.
The merger agreement restricts Premier’sFirst Washington’s ability to pay a regular quarterly cash dividend as described under the heading “THE MERGER — Dividends”—on page 35.28.
On January 15, 2003,June 14, 2004, the last full trading day prior to public announcement of the proposed merger, the high, low and last sales price of PremierFirst Washington common stock were as follows:
High:
| | $17.99
|
Low:
| | $17.75
|
Last Sales Price
| | $17.85
|
| | | |
High: | | $ | 22.00 |
Low: | | $ | 20.25 |
Last Sales Price: | | $ | 20.75 |
On, 2003,October 1, 2004, the most recent practicable date prior to the printing of this document, the high, low and last sales price of PremierFirst Washington common stock were as follows:
| | |
High: | | $
| 28.52 |
Low: | | $
| 28.30 |
Last Sales PricePrice: | | $
| 28.46 |
You should obtain current market quotations prior to making any decisions as to the merger.
Premier’sFirst Washington’s ability to continue to pay dividends may be dependent upon its receipt of dividends from PremierFirst Washington State Bank. See Premier’s Annual Report on Form 10-K for the year ended December 31, 2002, which is incorporated herein by reference. See “WHERE YOU CAN FIND MORE INFORMATION” on page 66 and “INCORPORATION BY REFERENCE” on page 68.
Board Of Directors And Executive Officers
Governance
The Board of Directors is empowered by Premier’s articles of incorporation and bylaws to oversee all of Premier’s and its subsidiaries’ business, property, and affairs. The Board performs this function through meetings and by delegating certain responsibilities to the committees described below. Premier, as a company listed on the American Stock Exchange, is also subject to the AMEX’s rules and regulations.
During 2002, Premier’s Board of Directors held 14 meetings and Premier Bank’s Board of Directors held 14 meetings. In addition to Board meetings, Premier Bank maintains five standing committees that meet periodically throughout the year. Each director, except Messrs. Mackell, Perrucci, Rich, Schatz and Stein, attended at least 75% of the combined total number of Premier’s and Premier Bank’s board meetings and the committees of which he or she was a member.
Directors and Executive Officers of Premier and Premier Bank
The following table sets forth selected information about Premier’s and Premier Bank’s directors and executive officers as of December 31, 2002. The officers are elected annually by the Board of Directors, and each holds office at the discretion of the Board.
Name
| | Position
| | Positions Held Since
Corporation/Bank
| | Age as of
March 31, 2003
|
Clark S. Frame
| | Chairman of the Board
Class 3 Director
| | 1997/1992
1997/1992
| | 52
|
Barry J. Miles, Sr.
| | Vice Chairman of the Board
Class 3 Director
| | 1997/1992
1997/1992
| | 53
|
John C. Soffronoff
| | President
Chief Executive Officer
Class 3 Director
| | 1997/1992
1997/1992
1997/1992
| | 56
|
Bruce E. Sickel
| | Treasurer
Senior Vice President
Chief Financial Officer
Class 1 Director
| | 1997/1992
1997/1992
1997/1992
1997/1992
| | 43
|
Name
| | Position
| | Positions Held Since
Corporation/Bank
| | Age as of
March 31, 2003
|
John J. Ginley
| | Secretary
Senior Vice President
Chief Loan Officer
Class 2 Director
| | 1997/1992
1997/1992
1997/1992
1999/1999
| | 60
|
Daniel E. Cohen
| | Class 1 Director
| | 1997/1992
| | 59
|
Dr. Thomas E. Mackell
| | Class 2 Director
| | 1997/1992
| | 57
|
Dr. Daniel A. Nesi
| | Class 3 Director
| | 1997/1992
| | 65
|
Neil W. Norton
| | Class 2 Director
| | 1997/1992
| | 57
|
Thomas M. O’Mara
| | Class 3 Director
| | 1997/1992
| | 50
|
Michael J. Perrucci
| | Class 1 Director
| | 1997/1992
| | 49
|
Brian R. Rich
| | Class 1 Director
| | 1997/1993
| | 43
|
Ezio U. Rossi
| | Class 1 Director
| | 1997/1994
| | 73
|
Richard F. Ryon
| | Class 3 Director
| | 1997/1993
| | 52
|
Gerald Schatz
| | Class 1 Director
| | 1997/1992
| | 68
|
Irving N. Stein
| | Class 2 Director
| | 1997/1992
| | 53
|
HelenBeth Garofalo Vilcek
| | Class 2 Director
| | 1997/1992
| | 45
|
John A. Zebrowski
| | Class 1 Director
| | 1997/1992
| | 61
|
Committees and Meetings of Premier’s and the Bank’s Boards of Directors
Premier Bancorp, Inc.’s Board of Directors has, at present, no standing committees, except the Audit Committee, which jointly serves Premier and Premier Bank. Premier does not maintain a nominating or compensation committee. A shareholder who intends to nominate an individual for consideration by the Board of Directors as a nominee for director should submit a written nomination to Premier’s President in accordance with Article IV, Section 2 of Premier’s bylaws. All shareholder notifications must be made in writing and delivered or mailed to Premier’s President not less than 14 nor more than 50 days in advance of a shareholders’ meeting called for the election of directors, subject to certain other exceptions.
During 2002, Premier Bank’s Board of Directors maintained the following five standing committees: Executive, Audit/Compliance, Compensation, Loan, and Investment/ALCO. The function and composition of each of these committees is described below.
Executive:
| | This committee meets on an as-needed basis to take action on issues between regular Board of Director meetings. This committee did not meet in 2002. Mr. Clark S. Frame serves as Chairman of this committee. The other members of the committee are Daniel E. Cohen, Barry J. Miles, Sr., Daniel A. Nesi, Thomas M. O’Mara, Brian R. Rich, Richard F. Ryon and Ezio U. Rossi.
|
|
Audit/Comp:
| | This committee jointly serves Premier and Premier Bank. The Audit Committee oversees the accounting and tax functions of Premier, recommends to the Board the engagement of independent auditors for the year, reviews with management and the auditors the plan and scope of the audit engagement, reviews the annual financial statements of Premier and any recommended changes or modifications to control procedures and accounting practices and policies, and monitors with management and the auditors Premier’s system of internal controls and its accounting and reporting practices. The committee also provides oversight for Premier Bank’s regulatory compliance program. This committee met 4 times in 2002. Mr. Neil W. Norton serves as Chairman of this committee. The other members of the committee are Barry J. Miles, Sr., Michael J. Perrucci, HelenBeth Garofalo Vilcek and John A. Zebrowski.
|
|
Compensation:
| | This committee addresses issues affecting the executive officers. The committee met 4 times in 2002. Mr. Richard F. Ryon serves as Chairman of this committee. The other
|
| | members of the committee are Thomas E. Mackell, Neil W. Norton, Michael J. Perrucci, HelenBeth Garofalo Vilcek and John A. Zebrowski.
|
|
Loan:
| | This committee reviews and approves loans in accordance with Premier Bank’s established loan policy, as it exists from time to time. This committee met 41 times in 2002. Mr. Clark S. Frame serves as Chairman of this committee. The other members of the committee are Daniel E. Cohen, John J. Ginley, Edward A. Grosik*, Suzanne M. Hartshorne*, Barry J. Miles, Sr., Dr. Daniel A. Nesi and John C. Soffronoff.
|
|
Investment/
Alco:
| | This committee reviews Premier Bank’s operating results, its interest rate sensitivity, investment portfolio and performance versus the annual budget. This committee met 3 times in 2002. Mr. Bruce E. Sickel serves as Chairman of this committee. The other members of the committee are Clark S. Frame, John J. Ginley, Dr. Thomas E. Mackell, Thomas M. O’Mara, Ezio U. Rossi, Richard F. Ryon, Gerald Schatz, John C. Soffronoff and Irving N. Stein.
|
Compensation of the Board of Directors
In 2002, directors earned $300 for each Board or committee meeting attended. Directors earned a total of $103,200 for meetings attended in 2002, which was paid in February, 2003. In 2002, directors also received a $3,000 retainer, which totaled $48,000 for all directors, and was paid in February, 2002.
Audit Committee Report to Shareholders
Pursuant to rules adopted by the SEC designed to improve disclosures related to the functioning of corporate audit committees and to enhance the reliability and credibility of financial statements of public companies, Premier’s Audit Committee submits the following report:
The Board of Directors’ Audit Committee is responsible for providing independent, objective oversight of Premier’s accounting functions and internal controls. The Audit Committee is composed of five directors, each of whom is “independent” as defined in Section 121 of the AMEX Company Guide. The Audit Committee operates under a written charter approved by the Board of Directors on June 8, 2000, and as amended on March 8, 2001.
Management is responsible for Premier’s internal controls and financial reporting process. The independent accountants are responsible for performing an independent audit of Premier’s financial statements in accordance with the generally accepted auditing standards and to issue a report thereon. The Audit Committee’s responsibility is to monitor and oversee these processes.
In connection with these responsibilities, the Audit Committee met with management and the independent accountants to review and discuss the December 31, 2002 financial statements. The Audit Committee also discussed with the independent accountants the matters required by Statement on Auditing Standards No. 61 (Communication with Audit Committees). The Audit Committee also received written disclosures from the independent accountants required by Independence Discussions with Audit Committees, and the Audit Committee discussed with the independent accountants that firm’s independence.
Based upon the Audit Committee’s discussions with management and the independent accountants, and the Audit Committee’s review of the representations of management and the independent accountants, the Audit Committee recommended that the Board of Directors include the audited consolidated financial statements in Premier’s Annual Report on Form 10-K for the year ended December 31, 2002, filed with the Securities and Exchange Commission on March 24, 2003.
This report of the Audit Committee shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that Premier specifically incorporates this information by reference, and shall not otherwise be deemed filed under the Acts.
The foregoing report has been furnished by the members of the Audit Committee.
Members of the Audit Committee
Neil W. Norton, Chairman
Barry J. Miles, Sr.
Michael J. Perrucci
HelenBeth Garofalo Vilcek
John A. Zebrowski
Independent Accountant
KPMG LLP was Premier’s independent auditors for the fiscal year ended December 31, 2002. Premier’s Board of Directors has reappointed KPMG LLP to continue as independent auditors for the fiscal year ending December 31, 2003. Representatives of KPMG LLP are expected to attend the annual meeting. They will be given an opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions from shareholders present at the annual meeting.
Audit and Non-Audit Fees
The following table presents fees for professional audit services rendered by KPMG LLP for the audit of Premier’s annual financial statements for 2002, and fees billed for other services rendered by KPMG LLP.
Audit fees, excluding audit related
| | $ 78,584
|
Financial information systems design and implementation
| | $ 0
|
All Other Fees:
| | |
Audit related fees(1)
| | $136,839
|
Other non-audit services(2)
| | $ 24,025
|
Total all other fees
| | $160,864
|
1 | | Audit related fees consisted principally of reviews of registration statements, issuances of consents and agreed upon procedures performed relating to a preferred stock offering. |
2 | | Other non-audit fees consisted of tax compliance services. |
Consideration of Non-Audit Services Provided by the Independent Accountant
The Audit Committee considered whether, and determined that, the services provided under other non-audit services are compatible with maintaining the auditor’s independence.
Executive Compensation
The following table summarizes the annual compensation awarded, paid to, or earned by, each of the named executive officers during the last three fiscal years.
Summary Compensation Table
| | | | Annual Compensation
| | Long Term Compensation Payouts
|
Name and Principal Position
| | Year
| | Salary ($)1
| | Bonus ($)
| | All Other Compensation ($)
|
Clark S. Frame Chairman of Premier and of Premier Bank | | 2002 | | 100,000 | | 45,000 | | 10,1622 |
John C. Soffronoff President and Chief Executive Officer of Premier and of Premier Bank | | 2002 2001 2000 | | 168,000 139,523 133,010 | | 45,000 32,000 15,000 | | 18,6103 13,2253 13,9083 |
Bruce E. Sickel Treasurer of Premier and Senior Vice President and Chief Financial Officer of Premier Bank | | 2002 2001 2000 | | 145,000 121,984 116,282 | | 45,000 32,000 15,000 | | 8,6154 9,0544 8,0584 |
John J. Ginley Secretary of Premier and Senior Vice President and Chief Loan Officer of Premier Bank | | 2002 2001 2000 | | 167,823 155,250 147,992 | | 45,000 32,000 15,000 | | 9,6435 9,6025 9,2325 |
1 | | Salary adjustments were made on January 1 of each year. |
2 | | Includes bank contributions to the 401(k) Plan on behalf of Mr. Frame of $1,572; the payment of club dues in the amount of $3,790; and a car allowance for Mr. Frame of $4,800. |
3 | | Includes bank contributions to the 401(k) Plan on behalf of Mr. Soffronoff of $6,000, $4,780 and $5,183 for 2002, 2001 and 2000, respectively; the payment of club dues in the amount of $7,810, $3,645 and $3,925 for 2002, 2001 and 2000 respectively; and a car allowance for Mr. Soffronoff, valued at $4,800 for each of 2002, 2001 and 2000. |
4 | | Includes bank contributions to the 401(k) Plan on behalf of Mr. Sickel of $3,815, $4,254and $3,258 for 2002, 2001 and 2000, respectively; and a car allowance for Mr. Sickel, valued at $4,800 for each of 2002, 2001 and 2000. |
5 | | Includes bank contributions to the 401(k) Plan on behalf of Mr. Ginley of $4,843, $4,802 and $4,432 for 2002, 2001 and 2000, respectively; and a car allowance for Mr. Ginley, valued at $4,800 for each of 2002, 2001 and 2000. |
Exercises of Stock Options in Fiscal Year 2002 and Fiscal Year-End Option Values
The following table sets forth certain information relating to stock options held by the executives named in the Summary Compensation Table.
Aggregated Option/Sar Exercises In Last Fiscal Year
And Fy-End Option/Sar Values
Name
| | Shares Acquired On Exercise (#)
| | Value Realized ($)(1)
| | Number of Securities Underlying Unexercised Options/SARsat FY-End (#) Exercisable/Unexercisable
| | Value of Unexercised In-The-Money Options/SARs at FY-End ($)(2) Exercisable/Unexercisable
|
Clark S. Frame | | — | | — | | 19,019/0 | | 170,649/0 |
John C. Soffronoff | | 7,160 | | 66,164 | | 34,965/0 | | 329,303/0 |
Bruce E. Sickel | | — | | — | | 34,440/0 | | 327,193/0 |
John J. Ginley | | — | | — | | 28,665/0 | | 267,941/0 |
(1) | | Based on the fair market value of the corporation’s common stock on exercise date. |
(2) | | The fair market value of the corporation’s common stock on December 31, 2002, was approximately $14.50 per share. |
Equity Compensation Plan Information
The following table summarizes our equity compensation plan information as of December 31, 2002. Information is included for the equity compensation plans approved by Premier’s shareholders. Premier does not maintain any equity compensation plans not approved by Premier’s shareholders.
Plan Category
| | Number of shares to be issued upon exercise of outstanding options, warrants and rights (a)
| | Weighted-average exercise price of outstanding options, warrants and rights (b)
| | Number of shares available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
|
Equity compensation plans approved by Premier Bancorp, Inc. shareholders(1) | | 303,748 | | $5.98 | | 8,326 |
Equity compensation plans not approved by Premier Bancorp, Inc. shareholders | | 0 | | $ 0 | | 0 |
(1) | | Premier maintains an Incentive Stock Option Plan. The plan was approved by Premier’s shareholders. Please see the description of this plan below. |
Change of Control Agreements
In March 1998, Premier, Premier Bank and executives John C. Soffronoff, John J. Ginley and Bruce E. Sickel entered into change of control agreements. The agreements define certain severance benefits Premier and Premier Bank will pay to the named executives in the event of a change of control. The benefits were granted in order to recognize the past and present service of the executives and to provide incentive for their continued valued service. The agreements continue until such time as either party gives the other written notice of termination of employment with, or without, cause. The agreements are not intended to affect the employment status of the executives in the absence of a change of control.
In the event of a change of control, the executives are entitled to receive a lump sum payment equal to two times their respective current annual direct salary at the earliest of four specified events. If, at the end of six months after the date of the change of control, none of the specified events have occurred, the executives shall no longer be entitled to the payments upon termination. The proposed transaction as described in this proxy statement/prospectus constitutes a change of control and thus, the executives will be entitled to certain payments. However, as part of the Agreement and Plan of Merger, John C. Soffronoff and John J. Ginley have agreed to waive their change of control payments and have instead entered into new employment contracts with Premier Bank. Bruce E. Sickel will receive his change of control payment. Please see the section entitled “Interests of Certain Persons in the Merger” on page 43 for further information.
Incentive Stock Option Plan
Premier maintains the Premier Bancorp, Inc. 1995 Incentive Stock Option Plan which it assumed in 1997 in connection with the bank’s reorganization into a holding company structure. Premier Bank’s shareholders approved the plan at the 1995 annual meeting in order to advance the development, growth and financial condition of Premier Bank. The bank originally reserved 100,000 shares under the plan, or 315,000 shares as of December 31, 2002, as adjusted for all stock dividends and splits. The plan provides for awards of qualified stock options and non-qualified stock options to officers and directors and is administered by the full Board of Directors. In 2002, Premier did not grant any qualified stock options or any non-qualified stock options under the plan.
Common Stock Purchase Options
In connection with the organization of Premier Bank in 1992, certain incorporators, directors and officers were issued common stock purchase options to purchase shares of the bank (which option obligations were assumed in 1997 by Premier pursuant to the reorganization and formation of the holding company). The options were exercisable for ten years after the date of grant. In April 1992, 105,122 common stock purchase options were issued (which figure has been adjusted to 486,497 to reflect all stock splits and dividends). All outstanding options were exercised prior to April 23, 2002.
401(k) Plan
Premier Bank maintains a 401(k) tax deferred retirement savings plan for employees. The plan has two features: an elective deferral feature and a savings plus feature. To be eligible to become a member of the plan, an employee must have completed at least six months service and attained age 21. All employee contributions vest immediately. Employer contributions vest equally over a three year period. The plan is subject to certain terms and restrictions imposed by the Internal Revenue Code of 1986, as amended, and the Employee Retirement Income Security Act.
An eligible employee may choose the elective deferral feature of the plan by entering into an agreement with Premier Bank to defer current total compensation by up to 15% (unless otherwise limited by the 401(k) administrators). In 2002, Premier Bank matched this deferred compensation with a discretionary match which is currently set at 50%, up to 6% of the employee’s salary. The amount of the match, if any, is determined by Premier Bank each year.
During 2002, Premier Bank made a contribution of $102,058 to the plan. The amounts allocated to the four most highly compensated officers in 2002 were as follows (these amounts do not include the employee’s individual contribution): Mr. Frame, $1,572; Mr. Soffronoff $6,000; Mr. Sickel $3,815; and Mr. Ginley $4,843.
Compensation Committee Report on Executive Compensation
Premier’s Board of Directors governs Premier and its subsidiaries. In fulfilling its fiduciary duties, the Board of Directors endeavors to act in the best interests of Premier’s shareholders, customers, and the communities served by Premier and its subsidiaries. To accomplish Premier’s strategic goals and objectives, the Board of Directors engages competent persons, who undertake to accomplish these objectives with integrity and cost-effectiveness. The Board of Directors fulfills part of its strategic mission through the compensation of these individuals. Premier’s officers and directors are not compensated separately from Premier Bank.
The Board of Directors seeks to offer competitive compensation opportunities to all employees based on the individual’s contribution and personal performance. Premier Bank’s compensation committee administers the compensation program. The committee seeks to establish a fair compensation policy to govern the executive officers’ base salaries and incentive plans to attract and motivate competent, dedicated, and ambitious managers, whose efforts will enhance Premier Bank’s products and services and will result in improved profitability, increased dividends to the shareholders, and subsequent appreciation in the market value of Premier’s shares.
The Board reviews and annually approves the compensation of Premier Bank’s executives, including the Chairman, President, Chief Financial Officer, and Chief Lending Officer. As a guideline in determining base salaries, the committee uses information from the Executive Compensation review published by SNL Financial. Premier Bank uses a Northeast and Mid-Atlantic region peer group for banks in the range of $250-$500 million and $500-$1 billion range because of common industry issues and competition for the same executive talent group. This peer group may include some but not all of the financial institutions contained in Premier’s Performance Graph on page 64.
The Board of Directors does not deem Section 162(m) of the Internal Revenue Code to be applicable to Premier Bank at this time. The Board of Directors intends to monitor the future application of Section 162(m) to the compensation paid to its executive officers; and in the event that this section becomes applicable, the Board intends to amend its compensation policies to preserve the deductibility of the compensation payable under the policies.
Chief Executive Officer Compensation.The Board of Directors and compensation committee determined that the Chief Executive Officer’s 2002 base salary compensation of $168,000 was appropriate in light of the following 2001 Premier accomplishments: the continued growth in assets, deposits and loans, the continued successful completion of the annual business plan and record earnings.
No direct correlation exists between the Chief Executive Officer’s compensation, the Chief Executive Officer’s increase in compensation, and any of the above criteria, nor does the committee give any specific weight to any of the above individual criteria. The committee subjectively determines the increase in the Chief Executive Officer’s compensation based on a review of all relevant information.
Executive Officers’ Compensation.The Board of Directors increased the compensation of Premier Bank’s executive officers by approximately 17% over 2002 compensation, effective January 1, 2003. The Board determined these increases based on its subjective analysis of the individual’s contribution to the bank’s strategic goals and objectives. In determining whether the strategic goals have been achieved, the Board considers numerous factors, including the following: Premier’s performance as measured by earnings, revenues, return on equity, market share, total assets and non-performing loans. Although the Board measured the performance and increases in compensation in light of these factors, no direct correlation exists between any specific criteria and an employee’s compensation, nor does the Board, in its analysis, attribute specific weight to any such criteria. The Board makes a subjective determination after review of all relevant information, including the above.
General labor market conditions, the individual’s specific responsibilities and the individual’s contributions to Premier’s success influence total compensation opportunities available to the employees. The Board reviews individuals annually and strives to offer compensation that is competitive with that offered by employers of comparable size in the industry. Through its compensation policy, Premier strives to meet its strategic goals and objectives to its constituencies and provide compensation that is fair and meaningful to its executive officers.
In addition to base salary, the bank’s executive officers may participate in annual and long-term incentive plans, including the bank’s 401(k) plan.
The foregoing report has been furnished by the members of the Compensation Committee:
Members of the Compensation Committee
Richard F. Ryon, Chairman
Thomas E. Mackell
Neil W. Norton
Michael J. Perrucci
HelenBeth Garofalo Vilcek
John A. Zebrowski
Election Of Directors
Qualification and Nomination of Directors
Article IV, Section 1 of Premier’s bylaws authorizes the number of directors to be not less than 5 nor more than 25. The bylaws provide for three classes of directors with staggered three year terms of office. The Board of Directors may, from time to time, fix the number of directors and their respective classifications. The number of Board members is currently 18. The Board of Directors nominated the five persons named below to serve as Class 2 Directors until the 2006 annual meeting of shareholders or until their earlier death, resignation, or removal from office. All of the nominees are presently members of the Board of Directors and all have consented to serve another term as a director if re-elected. Pursuant to Premier’s bylaws, vacancies on the Board of Directors, including vacancies resulting from an increase in the number of directors, may be filled by a majority of the Board of Directors then in office. The Board of Directors may select someone to fill a vacancy until the expiration of the term of the class of directors to which he or she was appointed.
In accordance with Premier’s bylaws, the Board of Directors is divided into three classes, as nearly equal in number as possible, known as Class 1, 2 and 3, whose terms expire at successive annual meetings. Therefore, the bylaws provide for a classified Board with staggered three year terms of office. Currently, Class 1 consists of seven directors, Class 2 consists of five directors, and Class 3 consists of six directors. Shareholders will elect five Class 2 Directors at the annual meeting to serve for three year terms that expire at Premier’s 2006 annual meeting. In the interim between annual meetings, the Board has the authority under the bylaws to increase or decrease the size of the Board and to fill vacancies.
The proxy holders intend to vote all proxies for the election of each of the five nominees named below, unless you indicate that your vote should be withheld from any or all of them. Each nominee elected as a director will continue in office until his or her successor has been duly elected and qualified, or until his or her death, resignation or retirement.
The Board of Directors proposes the following nominees for election as Class 2 Directors at the annual meeting:
John J. Ginley
Dr. Thomas E. Mackell
Neil W. Norton
Irving N. Stein
HelenBeth Garofalo Vilcek
The Board of Directors recommends that shareholders voteFORthe proposal to elect the five nominees listed above as Class 2 Directors.
Information as to Nominees and Directors
Set forth below, as of March 31, 2003, is the principal occupation and certain other information regarding the nominees and other directors whose terms of office will continue after the annual meeting. You will find information about their share ownership on page 61.
Class 1 Directors (to serve until 2005)
|
Daniel E. Cohen
| | Mr. Cohen, age 59, has served as a member of Premier’s Board of Directors since 1997 and of Premier Bank since 1992. Mr. Cohen is a partner in the law firm of Laub, Seidel, Cohen & Hof, L.L.C. located in Easton, Pennsylvania.
|
|
Michael J. Perrucci
| | Mr. Perrucci, age 49, has served as a member of Premier’s Board of Directors since 1997 and of Premier Bank since 1992. Mr. Perrucci is a partner in the law firm of Fishbein, Badillo, Wagner, Harding located in Phillipsburg, New Jersey.
|
|
Brian R. Rich
| | Mr. Rich, age 43, has served as a member of Premier’s Board of Directors since 1997 and of Premier Bank since 1993. Mr. Rich is the President of Jack Rich, Inc., a fuel oil and energy company located in Gilberton, Pennsylvania. Mr. Rich has been a director of Schuylkill Energy Resources, located in Shenandoah, Pennsylvania since 1989.
|
|
Ezio U. Rossi
| | Mr. Rossi, age 73, has served as a member of Premier’s Board of Directors since 1997 and of Premier Bank since 1994. Mr. Rossi was the former owner of Arctic Foods, Inc., a frozen food company located in Washington, New Jersey. He is currently retired.
|
|
Gerald Schatz
| | Mr. Schatz, age 68, has served as a member of Premier’s Board of Directors since 1997 and of Premier Bank since 1992. Mr. Schatz is Chairman of Wordsworth Academy, Play and Learn Centers and Wyncote Academy, a child care and development company located in Fort Washington, Pennsylvania.
|
|
Bruce E. Sickel
| | Mr. Sickel, age 43, has served as a member of Premier’s Board of Directors since 1997 and of Premier Bank since 1992. He is a Senior Vice President, the Chief Financial Officer and Treasurer of Premier and the bank.
|
|
John A. Zebrowski
| | Mr. Zebrowski, age 61, has served as a member of Premier’s Board of Directors since 1997 and of Premier Bank since 1992. Mr. Zebrowski is the President of J. A. Z. Associates, a plastic resin dealer located in Doylestown, Pennsylvania.
|
Class 2 Directors (to serve until 2003)
and Nominees (to serve until 2006)
|
John J. Ginley
| | Mr. Ginley, age 60, has served as a member of Premier’s and Premier Bank’s Board of Directors since December 1999. Mr. Ginley is a Senior Vice President, Chief Loan Officer and Secretary of Premier and of Premier Bank.
|
|
Dr. Thomas E. Mackell
| | Dr. Mackell, age 57, has served as a member of Premier’s Board of Directors since 1997 and of Premier Bank since 1992. Dr. Mackell is a surgeon with his medical offices located in Doylestown, Pennsylvania.
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|
Neil W. Norton
| | Mr. Norton, age 57, has served as a member of Premier’s Board of Directors since 1997 and of Premier Bank since 1992. Mr. Norton is the President of Norton Oil Company, a home heating oil company located in Phillipsburg, New Jersey.
|
|
Irving N. Stein
| | Mr. Stein, age 53, has served as a member of Premier’s Board of Directors since 1997 and of Premier Bank since 1992. Mr. Stein is the Vice President of Keystone Motors, Inc., a car dealership located in Doylestown and Berwyn, Pennsylvania.
|
|
HelenBeth
Garofalo Vilcek
| | Ms. Garofalo Vilcek, age 45, has served as a member of Premier’s Board of Directors since 1997 and of Premier Bank since 1992. Ms. Garofalo Vilcek is a real estate broker located in Bangor, Pennsylvania.
|
Class 3 Directors (to serve until 2004)
|
Clark S. Frame
| | Mr. Frame, age 52, has served as a member of Premier’s Board of Directors since 1997 and of Premier Bank since 1992. Mr. Frame serves as Chairman of the Board of Premier and of Premier Bank.
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|
Barry J. Miles, Sr.
| | Mr. Miles, age 53, has served as a member of Premier’s Board of Directors since 1997 and of Premier Bank since 1992. Mr. Miles serves as Vice Chairman of the Board of Premier and of Premier Bank. Mr. Miles is a realtor in Easton, Pennsylvania.
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Dr. Daniel A. Nesi
| | Dr. Nesi, age 65, has served as a member of Premier’s Board of Directors since 1997 and of Premier Bank since 1992. Dr. Nesi is a surgeon with his medical offices located in Doylestown, Pennsylvania.
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Thomas M. O’Mara
| | Mr. O’Mara, age 50, has served as a member of Premier’s Board of Directors since 1997 and of Premier Bank since 1992. Mr. O’Mara is the owner of Master Gardener, a textiles company located in Yardley, Pennsylvania and Spartenberg, South Carolina.
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Richard F. Ryon
| | Mr. Ryon, age 52, has served as a member of Premier’s Board of Directors since 1997 and of Premier Bank since 1993. Mr. Ryon is a partner in Richard B. Ryon Insurance, an insurance agency located in Pottsville, Pennsylvania.
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|
John C. Soffronoff
| | Mr. Soffronoff, age 56, has served as a member of Premier’s Board of Directors since 1997 and of Premier Bank since 1992. Mr. Soffronoff is the President and Chief Executive Officer of Premier and of Premier Bank.
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Security Ownership Of Certain Beneficial Owners And Management
Principal Shareholders
The following table sets forth, as of March 31, 2003, the name and address of each person who owns of record or who is known by the Board of Directors to be the beneficial owner of more than 5% of Premier’s outstanding common stock, the number of shares beneficially owned by such person and the percentage of Premier’s outstanding common stock so owned.
Name and Address
| | Shares Beneficially Owned
| | Percent of Outstanding Common Stock Beneficially Owned
|
Clark S. Frame c/o Premier Bancorp, Inc. 379 N. Main Street Doylestown, PA 18901 | | 194,862 | | 5.35% |
Share Ownership by the Directors and Executive Officers
The following table sets forth the beneficial ownership of shares of Premier’s common stock, as well as all other Premier stock-based holdings, by the current directors and the executive officers and the directors and executive officers as a group, as of March 31, 2003. Unless otherwise indicated, all shares are held individually.
Name of Individual or Identity of Group
| | Amount and Nature of Beneficial Ownership(1)
| | | Percentage of Class
| |
Daniel E. Cohen | | 98,629 | (2) | | 2.71 | % |
Clark S. Frame | | 194,862 | (3) | | 5.35 | % |
John J. Ginley | | 72,116 | (4) | | 1.98 | % |
Dr. Thomas E. Mackell(20) | | 76,320 | (5) | | 2.10 | % |
Barry J. Miles, Sr. | | 60,174 | (6) | | 1.65 | % |
Dr. Daniel A. Nesi | | 127,877 | (7) | | 3.51 | % |
Neil W. Norton | | 43,722 | (8) | | 1.20 | % |
Thomas M. O’Mara(20) | | 59,154 | (9) | | 1.63 | % |
Michael J. Perrucci | | 56,113 | (10) | | 1.54 | % |
Brian R. Rich | | 110,936 | (11) | | 3.05 | % |
Ezio U. Rossi | | 136,481 | | | 3.75 | % |
Richard F. Ryon | | 109,197 | (12) | | 3.00 | % |
Gerald Schatz | | 123,871 | (13) | | 3.40 | % |
Bruce E. Sickel | | ,058 | (14) | | 1.62 | % |
John C. Soffronoff | | 60,075 | (15) | | 1.65 | % |
Irving N. Stein | | 77,136 | (16) | | 2.12 | % |
HelenBeth Garofalo Vilcek | | 47,207 | (17) | | 1.30 | % |
John A. Zebrowski | | 116,449 | (18) | | 3.20 | % |
All Officers and Directors as a Group (18 persons in total) | | 1,629,377 | (19) | | 44.77 | % |
(1) | | The securities “beneficially owned” by an individual are determined in accordance with the definition of “beneficial ownership” set forth in the General Rules and Regulations of the Securities and Exchange Commission and may include securities owned by or for the individual’s spouse and minor children and any other relative who has the same home, as well as securities over which the individual has or shares voting or investment power, or has the right to acquire beneficial ownership within 60 days after March 31, 2003. Beneficial ownership may be disclaimed as to certain of the securities. |
(2) | | Includes 33,368 shares held jointly with Mr. Cohen’s spouse; 31,878 in Laub, Seidel, Cohen & Hof profit sharing plan f/b/o Daniel Cohen; 18,191 shares held solely by Mr. Cohen’s spouse; and 15,192 exercisable stock options. |
(3) | | Includes 16,900 shares held individually; 100,458 shares held jointly with Mr. Frame’s spouse; 12,600 shares held as custodian for minor sons; 14,700 shares held as Trustee of Clark C. Frame Trust; 10,395 shares held as Trustee of CCF Trust for John M. Frame; 10,395 shares held as Trustee of CCF Trust for Martha Jackson; 10,395 shares held as Trustee of CCF Trust for David C. Frame; and 19,019 exercisable stock options. |
(4) | | Includes 28,665 shares held solely by Mr. Ginley; and 43,451 shares held jointly with Mr. Ginley’s spouse. |
(5) | | Includes 39,966 shares held individually; 8,662 shares held jointly with Dr. Mackell’s spouse; 18,375 held by Thomas E. Mackell, M.D. Ltd. Profit Sharing Plan; and 9,317 exercisable stock options. |
(6) | | Includes 22,585 shares held individually; 32,760 shares held jointly with Mr. Miles’ spouse; and 4,829 exercisable stock options. |
(7) | | Includes 69,466 shares held individually; 37,720 shares held as Trustee for Daniel A. Nesi, M.D. Assoc.; 2,484 shares held as custodian for Paolo Sierra; 2,604 shares held as custodian for Diego Sierra; and 15,603 exercisable
|
stock options.
(8) | | Includes 31,359 shares held individually; 2,358 shares held jointly with Mr. Norton’s spouse; 105 shares held as custodian for a minor son; and 9,900 exercisable stock options. |
(9) | | Includes 1,386 shares held individually; 45,946 shares held jointly with Mr. O’Mara’s spouse; 1,386 shares held in Mr. O’Mara’s spouse’s IRA; and 10,436 exercisable stock options. |
(10) | | Includes 35,000 shares held individually; 6,000 shares held by Mr. Perrucci’s son; 6,000 shares held by Mr. Perrucci’s daughter; and 9,113 exercisable stock option. |
(11) | | Includes 65,810 shares held individually; 9,712 shares held by Morca Steam Heat Co.; 17,325 shares held by Waste Management & Processors, Inc.; 8,662 shares held by B-D Mining Co.; and 9,427 exercisable stock options. |
(12) | | Includes 50,083 shares held individually; 49,938 shares held as partner of Ryon & Co.; and 9,176 exercisable stock options. |
(13) | | Includes 9,791 exercisable stock options. |
(14) | | Includes 14,242 shares held individually; 6,912 shares held jointly with Mr. Sickel’s spouse; 3,464 shares held as Custodian for his children; and 34,440 exercisable stock options. |
(15) | | Includes 26,957 shares held individually; 28,768 shares held jointly with Mr. Soffronoff’s spouse; 2,820 shares held in Mr. Soffronoff’s spouse’s IRA; and 1,890 exercisable stock options. |
(16) | | Includes 61,206 shares held individually; 1,574 shares held jointly with Mr. Stein’s spouse; 5,196 shares held by Mr. Stein as custodian for his sons pursuant to the Uniform Gift to Minors Act; and 9,160 exercisable stock options. |
(17) | | Includes 32,876 shares held individually; 4,605 shares held in Ms. Garofalo Vilcek’s spouse’s IRA; and 9,726 exercisable stock options. |
(18) | | Includes 9,726 exercisable stock options. |
(19) | | Percentages assume that all options exercisable within 60 days of March 31, 2003 have been exercised. Therefore, on a pro forma basis, 3,639,685 shares would be outstanding. |
(20) | | Directors Mackell and O’Mara are brothers-in-law. |
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires that Premier’s officers and directors, and persons who own more than 10% of the registered class of Premier’s equity securities, file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers, directors, and greater than 10% shareholders are required by SEC regulation to furnish Premier with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of Forms 3, 4 and 5 and amendments thereto received by it, or written representations from the reporting persons that no Forms 5 were required for those persons, Premier believes that during the period from January 1, 2002, through December 31, 2002, its officers and directors complied with all applicable filing requirements, except for Director HelenBeth Garofalo Vilcek, who inadvertently filed one Form 4 late to report two transactions.
Performance Graph
The Stock Price Performance Graph below shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement/prospectus into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, except to the extent we specifically incorporate this information by reference, and shall not otherwise be deemed filed under the Acts.
The graph compares Premier’s stock performance from January 1, 2000, through December 31, 2002, against the performance of the S&P 500 Total Return Index and the SNL AMEX Bank Index for the same period. The graph shows the cumulative investment return to shareholders, based on the assumption that a $100 investment was made on December 31, 1999, in each of the corporation’s common stock, the S&P 500 Total Return Index and the SNL AMEX Bank Index, and that all dividends were reinvested in such securities over the past three fiscal years. Shareholder return shown on the graph below is not necessarily indicative of future performance.
![LOGO](https://capedge.com/proxy/S-4/0000931763-03-000852/g69241chart.jpg)
Annual Report
A copy of Premier’s annual report on Form 10-K for its fiscal year ended December 31, 2002, is enclosed with this proxy statement/prospectus. A representative of KPMG LLP, the independent auditors who examined the financial statements in the annual report, will attend the meeting. The representative will have the opportunity to make a statement, if he desires to do so, and will be available to respond to any appropriate shareholder questions concerning the annual report. Premier specifically incorporates the following sections of its annual report on Form10-K, as filed with the SEC on March 24, 2003, into this proxy statement/prospectus: Item 1, Description of Business; Item 6, Selected Financial Data; Item 8, Financial Statements and Supplementary Data; Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations; and Item 7A, Quantitative and Qualitative Disclosures About Market Risk.
ADJOURNMENT
In the event that PremierFirst Washington does not have sufficient votes for a quorum or to approve the merger agreement at the annualspecial meeting, PremierFirst Washington intends to adjourn the special meeting to permit further solicitation of proxies. The Board of Directors of PremierFirst Washington recommends that shareholders vote their proxies in favor of the adjournment proposal so that their proxies may be used to vote for an adjournment if necessary. The proxy holders will vote properly executed proxies in favor of the adjournment proposal unless the proxies indicate otherwise. If PremierFirst Washington adjourns the annualspecial meeting, PremierFirst Washington will not give notice of the time and place of the adjourned special meeting other than by an announcement of such time and place at the annualspecial meeting.
COMPARISON OF SHAREHOLDER RIGHTS
If Fulton and PremierFirst Washington complete the merger, shareholders of PremierFirst Washington automatically will become shareholders of Fulton, and their rights as shareholders will be determined by the Pennsylvania Business Corporation Law of 1988, and by Fulton’s Articles of Incorporation and Bylaws. The following is a summary of material differences between the rights of holders of Fulton common stock and the rights of holders of PremierFirst Washington common stock. These differences arise from differing provisions of the Articles of Incorporation and Bylaws of Fulton and PremierFirst Washington, differences in New Jersey and Pennsylvania corporate law and from the existence of Fulton’s Shareholder Rights Plan.
The most significant differences are:
Fulton has adopted a Shareholder Rights Plan, which provides Fulton’s shareholders with certain stock-related rights in the event of a hostile takeover but may have the effect of discouraging such a takeover, while PremierFirst Washington has not adopted any such plan;plan.
Fulton’s Amended and Restated Articles of Incorporation provides that holders of not less than 85% of its then outstanding voting power may remove directors without cause, while First Washington directors may not be removed without cause.
Fulton’s Bylaws may be amended by its Board of Directors or by holders of not less than 85% of its then outstanding voting power, while First Washington’s Bylaws may be amended by a majority of its Board of Directors or by the approval of a majority of the votes entitled to be cast by its shareholders.
Fulton’s Amended and Restated Articles of Incorporation denies shareholders the right to take action without a shareholder’s meeting, while First Washington’s Bylaws permit its shareholders to take an action without a shareholder’s meeting if a written consent is signed by all of its holders of outstanding stock entitled to vote at such meeting.
Fulton’s Amended and Restated Articles of Incorporation provides that approval of not less than 85% of the then outstanding voting power of its capital stock is required for a business combination between Fulton and an interested shareholder of Fulton unless approved by Fulton’s board, in which case approval of only 2/3 of the then outstanding voting power is required, while the Certificate of Incorporation of First Washington, as amended, provides that all business combinations in which First Washington is a party are subject to the approval of at least 2/3 of votes entitled to be cast at a shareholders meeting unless approved in advance by First Washington’s board, in which case approval of only a majority of the votes entitled to be cast is required.
A comparison of PremierFirst Washington common stock and Fulton common stock and the rights of their respective holders follows:
| | | Premier
| | Fulton Financial
| | FIRST WASHINGTON
| | FULTON
|
Title | | Common Stock, $0.33 par value per share | | Common Stock, $2.50 par value per share | | Common Stock, no par value | | Common Stock, $2.50 par value per share |
| Shares Authorized | | 30,000,000 | | 400,000,000 | | 10,000,000 | | 400,000,000 |
| Shares Issued & Outstanding | | 3,417,515 as of March 31, 2003 | | 100,627,380 as of March 31, 2003 | | 4,253,741 shares, as ofSeptember 30, 2004 | | 121,003,103 shares, as ofSeptember 30, 2004 |
| Preemptive Rights | | No | | No | | No | | No |
| Classification of Board of Directors | | Board of Directors divided into three classes with three year terms; approximately one-third of directors elected each year. | | Board of Directors divided into three classes with three year terms; approximately one-third of directors elected each year. | | Board of Directors divided into three classes with three year terms; approximately one-third of directors elected each year | | Board of Directors divided into three classes with three year terms; approximately one-third of directors elected each year |
| Voting: Election of Directors | | | Non-cumulative | | Non-cumulative |
| Voting: Other Matters | | | One vote for each share owned of record | | One vote for each share owned of record |
| | | | |
| | PremierFIRST WASHINGTON
| | Fulton FinancialFULTON
|
Voting: Election of Directors
| | |
Shareholder Rights Plan | | Cumulative No | | Non-cumulative Yes |
| | |
Voting: Other Matters Dissenters’ Rights | | One voteDependant upon market for each share owned of record. target and acquirer’s stock. | | One vote for each share owned of record. Not generally available |
| | |
Shareholder RightsDividend Reinvestment Plan
| | No | | Yes |
| | |
Dissenters’ Rights Market | | Not generally available
| | Not generally available
|
|
Dividend Reinvestment Plan
| | No
| | Yes
|
|
Market
| | Listed on the American Stock Exchange
| | Listed for quotation on NASDAQthe Nasdaq SmallCap Market | | Listed for quotation on Nasdaq National Market |
| | |
Registered under 1934 Act | | Yes | | Yes |
| | |
Limitation of Liability of Directors for Monetary Damages | | Yes | | Yes |
| | |
Indemnification of Directors, Officers and Employees | | Yes | | Yes |
| | |
Approval Required for Restricted Transactions with 10% or more Beneficial Owners | | No Under New Jersey law, a New Jersey corporation may not engage in a business combination with an “interested shareholder” for five years after the time the interested shareholder acquired his or its stake in the company, unless the transaction has been approved by the company’s Board of Directors prior to the time the interested shareholder acquires his or its shares. Subsequent to the five year period, a business combination between a New Jersey corporation and an interested shareholder which was not approved by the company’s board prior to the time the interested shareholder acquired his shares, must either (i) be approved by a vote of 2/3 of the company’s shares not beneficially owned by the interested shareholder or (ii) satisfy certain “fair price” requirements. | | 85% affirmative shareholder vote; reduced to 66-66 2/3% if certain conditions are met |
| | |
Approval of Major Transactions | | Affirmative vote2/3 of holdersvotes entitled to be cast at shareholders meeting to approve any business combination, provided that if such action has been approved by a majority of 66 2/3%the Board of outstanding shares Directors, a majority of the votes entitled to be cast is required | | 2/3 of votes cast at shareholders meeting |
| | | | |
| | FIRST WASHINGTON
| | FULTON
|
| | |
Amendment of Articles of Incorporation | | AffirmativeMajority affirmative shareholder vote of 66 2/3% of outstanding shares
| | Provisions regarding required vote for business combinations and other major transactions, removal of directors, amendment of articles and certain other provisions require either: (i) affirmative vote of holders of 85% of voting power; or (ii) approval of a majority of directors and continuing directors and affirmative vote of 66-66 2/3 of holders of voting power; otherwise:for other matters: (i) majority of directors and affirmative vote of holders of a majority of voting power or (ii) affirmative vote of holders of 85% of voting power.power |
| | |
Qualification of Directors | | Must be a shareholder; 2/3 of the number of directors must be Pennsylvania residents
| | No special ownership requirements |
| | Premier
| | Fulton Financial
No special ownership requirements |
| | |
Authorized Class of Preferred Stock
| | Yes. 20,000,0001,000,000 shares, with or without par value which can be issued under terms and conditions to be determined by the Board of Directors. 552,000 shares of Series A, Preferred Stock, no par value, issued and outstanding as of March 31, 2003 Directors | | Yes. 10,000,000 shares, without par value which can be issued under terms and conditions to be determined by the Board of Directors |
| | |
Right of Shareholders to call an Annual meeting Meeting | | Yes. If the Board of Directors does not call and hold an annual meeting during the calendar year No | | No |
| | |
Right of Shareholders to call a Special Meeting | | Yes. ByNo, provided that a special meeting may be called by the holdersSuperior Court of New Jersey upon application by shareholders holding not less than 1/5 10% of all sharescapital stock entitled to vote at such meeting. | | No |
| | |
Shareholder Inspection Rights | | General, by statute | | General |
| | |
Right of Shareholders to act by Written Consent | | Yes | | No |
EXPERTS
The consolidated financial statements of Fulton Financial Corporation and subsidiaries as of and for the yearyears ended December 31, 2002 and 2003, included in Fulton’s Annual Report on Form 10-K for the year ended December 31, 2002,2003, have been audited by KPMG LLP, independent accountants, as indicated in their report with respect thereto, and are incorporated by reference herein in reliance upon the authority of said firm as experts in giving said report. The financial statements of Fulton for the years ended December 31, 2001 and 2000 were audited by other auditors who have ceased operations. Those auditors’ report, dated January 22, 2002, on those financial statements was unqualified and included an explanatory note that they did not audit the financial statements of Drovers Bancshares Corporation, a company acquired during 2001 in a transaction accounted for as a pooling of interest.
The consolidated financial statements of Premier Bancorp, Inc. as of December 31, 2002First Washington FinancialCorp incorporated by reference in this prospectus and 2001 and for each of the yearselsewhere in the three year period ended December 31, 2002, included in Premier’s Annual Report on Form 10-K for the year ended December 31, 2002,registration statement have been audited by KPMGGrant Thornton LLP, independent registered public accountants, as indicated in their reportreports with respect thereto, and are incorporated by referenceincluded herein in reliance upon the authority of said firm as experts in giving said reports.experts.
LEGAL MATTERS
Barley, Snyder, Senft & Cohen, LLC will pass on the validity of the Fulton common stock issued in the merger, and certain federal income tax consequences of the merger.
Shumaker Williams, P.C., Harrisburg, Pennsylvania,Windels, Marx, Lane & Mittendorf, LLP has acted as special counsel to PremierFirst Washington in connection with the merger.
OTHER MATTERS
The Board of Directors knows of no matters other than those described in this proxy statement or referred to in the accompanying Noticenotice of annualspecial meeting of Shareholdersshareholders that may be presented at the annualspecial meeting. However, if any other matter should be properly presented for consideration and voting at the annualspecial meeting or any adjournments of the special meeting, the proxy holders will vote the proxies in their discretion in the manner they determine to be in the corporation’sFirst Washington’s best interest.
SHAREHOLDER PROPOSALS
Because PremierFirst Washington and Fulton anticipate that the merger will be completed no later than the third quarter of 2003, PremierApril 15, 2005, First Washington does not anticipate holding a 20042005 annual meeting of PremierFirst Washington shareholders. In the event the merger is not completed, and such a meeting is held, any shareholder who, in accordance with and subject to the provisions of the proxy rules of the Securities and Exchange Commission, wishes to submit a proposal for inclusion in Premier’s proxy statement for its 2004 annual meeting of Shareholders should have delivered the written proposal to the President of Premier at its principal executive offices, 379 North Main Street, Doylestown, Pennsylvania 18901, by December 12, 2003. If a shareholder proposal is submitted to the corporation after that date, it is considered untimely and, although the proposal may be considered at the annual meeting, it may not be included in the corporation’s 2004 proxy statement. Article IV, Section 2 of the corporation’s bylaws requires that a shareholder deliver a notice of nomination for election to the Board of Directors to the President not less than 14 or more than 50 days in advance of a shareholders’ meeting called for the election of directors.
WHERE YOU CAN FIND MORE INFORMATION
Fulton and PremierFirst Washington are subject to the informational requirements of the Securities Exchange Act of 1934, and file reports, proxy statements and other information with the Securities and Exchange Commission. You may read and copy any reports, proxy statements and other information that Fulton and/or Premier filesFirst Washington file at the Securities and Exchange Commission’s public reference rooms at:
at 450 Fifth Street, N.W., Washington, D.C. 20549
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661
20549. You may call the Securities and Exchange Commission at 1-800-SEC-0330 for further information on the public reference rooms.room. Fulton’s and Premier’sFirst Washington’s Securities and Exchange Commission filings are also available on the Securities and Exchange Commission’s Internet site at http://www.sec.gov. You can also inspect reports, proxy statements and other information concerning Fulton or First Washington at the offices of the National Association of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006, or concerning Premier at the offices of The American Stock Exchange, 86 Trinity Place, New York, NY 10006.20006. Additionally, Premier’sFirst Washington’s Internet site iswww.premierbankonline.comwww.fwsb.com. Fulton’s Internet site iswww.fult.com.
Fulton filed a Registration Statement on Form S-4 (No.) 333-119164) to register with the Securities and Exchange Commission the Fulton common stock issuable to PremierFirst Washington shareholders in the merger. This document is a part of that Registration Statement and constitutes a prospectus of Fulton in addition to being a proxy statement of PremierFirst Washington for the annualspecial meeting. As allowed by Securities and Exchange Commission rules, this document does not contain all the information you can find in the Registration Statement or the exhibits to the Registration Statement.
INCORPORATION BY REFERENCE
Some of the information that you may want to consider in deciding how to vote with respect to the merger is not physically included in this document, but rather is “incorporated by reference” to documents that have been filed by Fulton and PremierFirst Washington with the Securities and Exchange Commission. As permitted by the SEC, the following documents are incorporated by reference in this document.
Documents filed by Fulton (SEC File No. 0-10587):
Annual Report on Form 10-K filed March 27, 2003,15, 2004, for the year ended December 31, 2002.2003;
Current Reports on Form 8-K filed: April 1, 2004, April 12, 2004, April 22, 2004, May 7, 2004, June 2, 2004, June 15, 2004, July 20, 2004, July 27, 2004, September 13, 2004 and September 14, 2004;
Quarterly Report on Form 8-K10-Q for the quarter ended March 31, 2004, filed January 16, 2003.on May 10, 2004.
CurrentQuarterly Report on Form 8-K10-Q for the quarter ended June 30, 2004, filed February 4, 2003.on August 9, 2004.
The description of Fulton common stock contained in Fulton’s registration statement on Form 8-A, dated July 3, 1989, and any amendment or reports filed for purposes of updating such description.
Documents filed by PremierFirst Washington (SEC File No. 1-15513)0-32949):
Annual Report on Form 10-K10-KSB filed March 24, 2003,26, 2004, and amended March 30, 2004, for the year ended December 31, 2002.2003, as amended.
Current Reports on Form 8-K filed: January 30, 2004, April 27, 2004, June 17, 2004, August 2, 2004, August 4, 2004.
Quarterly Report on Form 8-K10-QSB, filed January 21, 2003.May 14, 2004, for the quarter ended March 31, 2004.
Quarterly Report on Form 10-QSB, filed August 13, 2004, for the quarter ended June 30, 2004.
The description of PremierFirst Washington common stock contained in Premier’s registration statementon a Registration Statement on Form S-4,SB-2, filed August 22, 1997 and amended on September 9, 1997,April 11, 2001, and any amendment or reports filed for purposes of updating such description.
All documents filed by Fulton and PremierFirst Washington pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, after the date of this document and prior to the annualdate of the special meeting are also are incorporated by reference into this document and will be deemed to be a part hereof from the date of filing of such documents.
Any statement contained in a document that is incorporated by reference will be deemed to be modified or superseded for all purposes to the extent that a statement contained herein (or in any other document that is subsequently filed with the Securities and Exchange Commission and incorporated by reference) modifies or is contrary to that previous statement.
We may have sent you some of the documents incorporated by reference, but you can obtain any of them through us or the Securities and Exchange Commission. Documents incorporated by reference are available from Fulton and/or PremierFirst Washington without charge, excluding all exhibits unless we have specifically incorporated by reference an exhibit in this document. PremierFirst Washington shareholders may obtain documents incorporated by reference in this document, with respect to Fulton, by requesting them in writing or by telephone from: Fulton Financial Corporation, One Penn Square, Lancaster, PA 17604, Attention: George R. Barr, Jr. (telephone number (717) 291-2411), and with respect to Premier,First Washington, by requesting them in writing or by telephone from: Premier Bancorp, Inc., 379 NorthFirst Washington FinancialCorp, US Route 130 and Main Street, Doylestown, PA 18901,Windsor, NJ 08561, Attention: John J. Ginley,Nora Rauscher, Assistant Corporate Secretary (telephone number (215) 345-5100)(609) 426-1000). In order to ensure timely delivery of such documents, any request should be made by May 2, 2003.October 29, 2004.
All information contained or incorporated by reference in this document relating to Fulton and its subsidiaries has been supplied by Fulton. All information contained or incorporated by reference in this document relating to PremierFirst Washington and its subsidiaries has been supplied by Premier.First Washington.
Exhibit “A”
Agreement and Plan of Merger
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
PREMIER BANCORP, INC.
AND
FULTON FINANCIAL CORPORATION
JANUARY 16, 2003
TABLE OF CONTENTS
ARTICLE I—THE MERGER
| | 1
|
|
Section 1.1 Merger
| | 1
|
Section 1.2 Name
| | 2
|
Section 1.3 Articles of Incorporation
| | 2
|
Section 1.4 Bylaws
| | 2
|
Section 1.5 Directors and Officers
| | 2
|
|
ARTICLE II—CONVERSION OF SHARES AND EXCHANGE OF STOCK CERTIFICATES
| | 2
|
|
Section 2.1 Conversion of Shares
| | 2
|
Section 2.2 Exchange of Stock Certificates
| | 3
|
Section 2.3 Treatment of Outstanding Premier Options.
| | 5
|
Section 2.4 Reservation of Shares
| | 6
|
Section 2.5 Taking Necessary Action
| | 6
|
Section 2.6 Press Releases, Etc
| | 6
|
Section 2.7 Fulton Common Stock
| | 6
|
Section 2.8 No Dissenters’ Rights
| | 6
|
Section 2.9 Premier Preferred Stock
| | 6
|
Section 2.10 Certain Actions
| | 7
|
|
ARTICLE III—REPRESENTATIONS AND WARRANTIES OF PREMIER
| | 7
|
|
Section 3.1 Authority
| | 7
|
Section 3.2 Organization and Standing
| | 7
|
Section 3.3 Subsidiaries
| | 8
|
Section 3.4 Capitalization
| | 8
|
Section 3.5 Charter, Bylaws and Minute Books
| | 8
|
Section 3.6 Financial Statements
| | 9
|
Section 3.7 Absence of Undisclosed Liabilities
| | 9
|
Section 3.8 Absence of Changes
| | 9
|
Section 3.9 Dividends, Distributions and Stock Purchases
| | 10
|
Section 3.10 Taxes
| | 10
|
Section 3.11 Title to and Condition of Assets
| | 10
|
Section 3.12 Contracts.
| | 11
|
Section 3.13 Litigation and Governmental Directives
| | 12
|
Section 3.14 Compliance with Laws; Governmental Authorizations
| | 13
|
Section 3.15 Insurance
| | 13
|
Section 3.16 Financial Institutions Bonds
| | 13
|
Section 3.17 Labor Relations and Employment Agreements
| | 13
|
Section 3.18 Employee Benefit Plans
| | 14
|
Section 3.19 Related Party Transactions
| | 14
|
Section 3.20 No Finder
| | 15
|
Section 3.21 Complete and Accurate Disclosure
| | 15
|
Section 3.22 Environmental Matters
| | 15
|
Section 3.23 Proxy Statement/Prospectus
| | 16
|
Section 3.24 SEC Filings
| | 16
|
Section 3.25 Reports
| | 16
|
Section 3.26 Loan Portfolio of Premier Bank.
| | 17
|
Section 3.27 Investment Portfolio
| | 17
|
Section 3.28 Regulatory Examinations.
| | 17
|
Section 3.29 Regulatory Agreements
| | 18
|
Section 3.30 Beneficial Ownership of Fulton Common Stock
| | 18
|
Section 3.31 Fairness Opinion
| | 18
|
|
ARTICLE IV—REPRESENTATIONS AND WARRANTIES OF FULTON
| | 18
|
|
Section 4.1 Authority
| | 18
|
Section 4.2 Organization and Standing
| | 18
|
Section 4.3 Capitalization
| | 18
|
Section 4.4 Articles of Incorporation and Bylaws
| | 19
|
Section 4.5 Subsidiaries
| | 19
|
Section 4.6 Financial Statements
| | 19
|
Section 4.7 Absence of Undisclosed Liabilities
| | 20
|
Section 4.8 Absence of Changes; Dividends, Etc.
| | 20
|
Section 4.9 Litigation and Governmental Directives
| | 20
|
Section 4.10 Compliance with Laws; Governmental Authorizations
| | 20
|
Section 4.11 Complete and Accurate Disclosure
| | 21
|
Section 4.12 Labor Relations
| | 21
|
Section 4.13 Employee Benefits Plans
| | 21
|
Section 4.14 Environmental Matters
| | 22
|
Section 4.15 SEC Filings
| | 22
|
Section 4.16 Proxy Statement/Prospectus
| | 22
|
Section 4.17 Regulatory Approvals
| | 22
|
Section 4.18 No Finder
| | 22
|
Section 4.19 Taxes
| | 22
|
Section 4.20 Title to and Condition of Assets
| | 23
|
Section 4.21 Contracts
| | 23
|
Section 4.22 Insurance
| | 23
|
Section 4.23 Reports
| | 23
|
|
ARTICLE V—COVENANTS OF PREMIER
| | 24
|
|
Section 5.1 Conduct of Business
| | 24
|
Section 5.2 Best Efforts
| | 27
|
Section 5.3 Access to Properties and Records
| | 27
|
Section 5.4 Subsequent Financial Statements
| | 27
|
Section 5.5 Update Schedules
| | 27
|
Section 5.6 Notice
| | 28
|
Section 5.7 No Solicitation.
| | 28
|
Section 5.8 Affiliate Letters
| | 30
|
ii
Section 5.9 No Purchases or Sales of Fulton Common Stock During Price Determination Period
| | 31
|
Section 5.10 Dividends
| | 31
|
|
ARTICLE VI—COVENANTS OF FULTON
| | 31
|
Section 6.1 Best Efforts
| | 31
|
Section 6.2 Access to Properties and Records
| | 32
|
Section 6.3 Subsequent Financial Statements
| | 33
|
Section 6.4 Update Schedules
| | 33
|
Section 6.5 Notice
| | 33
|
Section 6.6 No Purchase or Sales of Fulton Common Stock During Price Determination Period
| | 33
|
Section 6.7 Assumption of Premier Debentures
| | 33
|
Section 6.8 Employment Arrangements
| | 34
|
Section 6.9 Insurance; Indemnification
| | 34
|
Section 6.10 Appointment of Fulton Director
| | 35
|
Section 6.11 Continuation of Premier Bank’s Structure, Name and Directors
| | 36
|
|
ARTICLE VII—CONDITIONS PRECEDENT
| | 36
|
Section 7.1 Common Conditions
| | 36
|
Section 7.2 Conditions Precedent to Obligations of Fulton
| | 39
|
Section 7.3 Conditions Precedent to the Obligations of Premier
| | 42
|
|
ARTICLE VIII—TERMINATION, AMENDMENT AND WAIVER
| | 43
|
Section 8.1 Termination
| | 43
|
Section 8.2 Effect of Termination
| | 45
|
Section 8.3 Amendment
| | 45
|
Section 8.4 Waiver
| | 46
|
|
ARTICLE IX—CLOSING AND EFFECTIVE TIME
| | 46
|
Section 9.1 Closing
| | 46
|
Section 9.2 Effective Time
| | 46
|
|
ARTICLE X—NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES
| | 46
|
Section 10.1 No Survival
| | 46
|
|
ARTICLE XI—GENERAL PROVISIONS
| | 46
|
Section 11.1 Expenses
| | 46
|
Section 11.2 Other Mergers and Acquisitions
| | 47
|
Section 11.3 Notices
| | 47
|
Section 11.4 Counterparts
| | 48
|
Section 11.5 Governing Law
| | 48
|
Section 11.6 Parties in Interest
| | 48
|
Section 11.7 Disclosure Schedules
| | 48
|
iii
Section 11.8 Entire Agreement
| | 48
|
iv
INDEX OF SCHEDULES
|
Schedule 2.3
| | Premier Options
|
|
Schedule 3.7
| | Undisclosed Liabilities
|
|
Schedule 3.8
| | Changes
|
|
Schedule 3.9
| | Dividends, Distributions and Stock Purchases
|
|
Schedule 3.10
| | Taxes
|
|
Schedule 3.11
| | Title to and Condition of Assets
|
|
Schedule 3.12
| | Contracts
|
|
Schedule 3.13
| | Litigation and Governmental Directives
|
|
Schedule 3.14
| | Compliance with Laws; Governmental Authorizations
|
|
Schedule 3.15
| | Insurance
|
|
Schedule 3.16
| | Financial Institutions Bonds
|
|
Schedule 3.17
| | Labor Relations and Employment Agreements
|
|
Schedule 3.18
| | Employee Benefit Plans
|
|
Schedule 3.19
| | Related Party Transactions
|
|
Schedule 3.20
| | Finders
|
|
Schedule 3.22
| | Environmental Matters
|
|
Schedule 3.26
| | Loan Portfolio
|
|
Schedule 3.27
| | Investment Portfolio
|
|
Schedule 3.29
| | Regulatory Agreements
|
|
Schedule 4.5
| | Subsidiaries
|
|
Schedule 4.7
| | Undisclosed Liabilities
|
|
Schedule 4.8
| | Dividends, Distributions and Stock Purchases
|
|
Schedule 4.9
| | Litigation and Governmental Directives
|
|
Schedule 4.10
| | Compliance with Laws; Governmental Authorizations
|
|
Schedule 4.14
| | Environmental Matters
|
|
Schedule 4.19
| | Taxes
|
|
Schedule 5.1 (xxi)
| | Pending and Contemplated Applications
|
|
Schedule 6.11
| | Current Premier Directors Fees
|
v
INDEX OF EXHIBITS
|
Exhibit A
| | Form of Warrant Agreement
|
|
Exhibit B
| | Form of Warrant
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Exhibit C
| | Form of Voting Agreement
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Exhibit D
| | Form of Employment Agreements
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Exhibit E
| | Form of Opinion of Premier’s Counsel
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Exhibit F
| | Form of Opinion of Fulton’s Counsel
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vi
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER made
THIS AGREEMENT AND PLAN OF MERGER (the “Agreement”), dated as of the 16th day of January, 2003,June 14, 2004, is by and between FULTON FINANCIAL CORPORATION,Fulton Financial Corporation, a Pennsylvania business corporation having its administrative headquarters at One Penn Square, P. O. Box 4887, Lancaster, Pennsylvania 17604 (“FultonParent”), and PREMIER BANCORP, INC.,First Washington FinancialCorp, a Pennsylvania businessNew Jersey corporation having its administrative headquarters at 379 North Main Street, Doylestown, Pennsylvania 18901 (“Premier”)
BACKGROUND:
Fulton is a financial holding company registered under the Bank Holding Company Act of 1956, as amended (the “BHC ActCompany”). Premier is a financial holding company registered underParent and the BHC Act which is the parent of Premier Bank. In addition to Premier Bank, Premier has four directly-owned subsidiaries: PBI Capital Trust, Premier Capital Trust II, Lenders Abstract, LLC and Premier Bank Insurance Services, LLC. Premier Bank and all of such subsidiariesCompany are sometimes collectively referred to herein as the “Premier SubsidiariesConstituent Corporations”. FultonDefined terms are described in Section 9.11.
RECITALS
A. Parent desires to acquire the Company and Premier wish to merge with each other, resulting in Premier Bank becoming a subsidiarythe Company’s Board of Fulton. Subject toDirectors has determined, based upon the terms and conditions hereinafter set forth, that the acquisition is in the best interests of this Agreement, the foregoing transactionCompany and its shareholders. The acquisition will be accomplished by means of a merger(i) merging the Company with and into Parent with Parent as the surviving corporation (the “Merger”) and (ii) the Company’s shareholders receiving the Aggregate Merger Consideration hereinafter set forth. The Boards of Directors of each of the Company and Parent have duly adopted and approved this Agreement and the Board of Directors of the Company has directed that it be submitted to the Company’s shareholders for approval.
B. The parties desire to make certain representations, warranties and agreements in which (i) Premier will be mergedconnection with and into Fulton, (ii) Fulton will survive the Merger and (iii) all ofalso to prescribe certain conditions to the outstanding shares of the common stock of Premier, $0.33 par value per share (“Premier Common Stock”), will be converted into shares of the common stock of Fulton, par value $2.50 per share (“Fulton Common Stock”).Merger.
SimultaneouslyC. In connection with the execution of this Agreement, the parties are enteringto enter into a Warrant Agreement in substantially the form ofExhibit A attached hereto (the “Warrant Agreement”), which provides for the delivery by Premierthe Company of a warrant in substantially the form ofExhibit B attached hereto (the “Warrant”) entitling FultonParent to purchase shares of the PremierCompany Common Stock in certain circumstances. In addition, Premierthe Company has obtained voting agreements in the form ofExhibit C attached hereto, from the directors and executive officers listed onExhibit C, who have agreed to vote shares of voting capital stock beneficially owned by them in Premierthe Company in favor of this Agreement, the Merger and, to the extent required, all transactions incident thereto (collectively, the “Voting Agreements”).
WITNESSETH:
NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties and agreements contained herein, and intending to be legally bound hereby, the parties hereby agree as follows:
ARTICLE I—I. THE MERGER
1.1The Merger.Subject to the terms and conditions of this Agreement, Premier shall merge with and into Fulton in accordance with the following:
New Jersey Business Corporation Act (the “Section 1.1 MergerBCA. At the Effective Time (as defined in Section 9.2 herein) (i) Premier shall merge with”) and into Fulton pursuant to the provisions of the Pennsylvania Business
Corporation LawAct of 1988, as amended (the “BCL”), whereuponat the separate existence of PremierEffective Time (as defined in Section 1.2 hereof), the Company shall ceasemerge with and Fultoninto Parent. Parent shall be the surviving corporation (hereinafter sometimes referred to ascalled the “Surviving Corporation”), in the Merger, and (ii)shall continue its corporate existence under the Premier Common Stock will be converted into Fulton Common Stock pursuant tolaws of the provisionsCommonwealth of Article II hereof.
Section 1.2 Name.Pennsylvania. The name of the Surviving
Corporation shall continue to be “FultonFulton Financial Corporation”Corporation. Upon consummation of the Merger, the separate corporate existence of the Company shall terminate.
1.2Closing, Closing Date, Determination Date and Effective Time. Unless a different date, time and/or place are agreed to by the parties hereto, the closing of the Merger (the “Closing”) shall take place at 10:00 a.m., at the offices of Barley, Snyder, Senft & Cohen, LLC, 126 East King Street, Lancaster, Pennsylvania 17602, on a date determined by Parent on at least five business days notice (the “Closing Notice”) given to the Company, which date (the “Closing Date”) shall be not more than twenty (20) business days following the receipt of all necessary regulatory, governmental and shareholder approvals and consents and the expiration of all statutory waiting periods in respect thereof and the satisfaction or waiver of all of the conditions to the consummation of the Merger specified in Article VII hereof (other than the delivery of certificates, opinions and other instruments and documents to be delivered at the Closing); provided, however, that Parent may defer the Closing Date to a date no later than January 31, 2005 (assuming the Determination Date would require a Closing Date before such date) to provide for adequate due diligence in connection with Parent’s “internal control report” obligations under Rule 13a-15 of the Exchange Act. In the Closing Notice, Parent shall specify the “Determination Date”, which date shall be the first date on which all bank regulatory approvals (and waivers, if applicable) necessary for consummation of the Merger have been received (disregarding any waiting period) and either party has notified the other in writing that all such approvals (and waivers, if applicable) have been received. Simultaneous with or immediately following the Closing, Parent and the Company shall cause to be filed (i) a certificate of merger, in form and substance reasonably satisfactory to Parent and the Company and consistent with the terms of this Agreement, with the Department of the Treasury of the State of New Jersey (the “Certificate of Merger”) and (ii) articles of merger, in form and substance reasonably satisfactory to Parent and the Company and consistent with the terms of this Agreement, with the Department of State of the Commonwealth of Pennsylvania (the “Articles of Merger”). The addressCertificate of Merger and Articles of Merger shall specify the “Effective Time” of the principal officeMerger, which Effective Time shall be a date and time following the Closing agreed to by Parent and the Company (which date and time the parties currently anticipate will be 12:01 a.m. on the Closing Date). In the event the parties fail to specify the date and time in the Certificate of Merger and Articles of Merger, the Merger shall become effective upon (and the “Effective Time” shall be) the time of the Surviving Corporation will be One Penn Square, P.O. Box 4887, Lancaster, Pennsylvania 17604.filing of the Certificate of Merger and the Articles of Merger.
1.3Section 1.3 ArticlesEffect of Incorporationthe Merger. The Articles of Incorporation of At the Effective Time, the Surviving Corporation shall be considered the Articlessame business and corporate entity as each of IncorporationParent and the Company and, thereupon and thereafter, all the property, rights, privileges, powers and franchises of Fulton aseach of Parent and the Company shall vest in effect at the Effective Time.
Section 1.4 Bylaws. The Bylaws ofSurviving Corporation and the Surviving Corporation shall be subject to and be deemed to have assumed all of the Bylawsdebts, liabilities, obligations and duties of Fultoneach of Parent and the Company and shall have succeeded to all of each of their relationships, as fully and to the same extent as if such property, rights, privileges, powers, franchises, debts, liabilities, obligations, duties and relationships had been originally acquired, incurred or entered into by the Surviving Corporation. In addition, any reference to either of Parent and the Company in any
contract or document, whether executed or taking effect atbefore or after the Effective Time.Time, shall be considered a reference to the Surviving Corporation if not inconsistent with the other provisions of the contract or document; and any pending action or other judicial proceeding to which either of Parent or the Company is a party shall not be deemed to have abated or to have discontinued by reason of the Merger, but may be prosecuted to final judgment, order or decree in the same manner as if the Merger had not been made; or the Surviving Corporation may be substituted as a party to such action or proceeding, and any judgment, order or decree may be rendered for or against it that might have been rendered for or against either of Parent or the Company if the Merger had not occurred.
1.4Conversion of Company Common Stock.
Section 1.5 Directors and Officers. The directors and officers of the Surviving Corporation shall be the directors and officers of Fulton in office at the Effective Time. Each of such directors and officers shall serve until such time as his successor is duly elected and has qualified.
ARTICLE II—CONVERSION OF SHARES AND EXCHANGE OF STOCK CERTIFICATES
Section 2.1 Conversion of Shares.(a) At the Effective Time, (as defined in Section 9.2 herein) the shares of Premier Common Stock then outstanding shall be converted into shares of Fulton Common Stock, as follows:
(a)General. Subjectsubject to the other provisions of Sections 2.1(b), 2.1(c)this Section 1.4 and 2.1(d) herein,Section 2.2(e), each share of Premierthe Company’s common stock, no par value per share (“Company Common Stock”), issued and outstanding immediately beforeprior to the Effective Time shall, at the Effective Time, be converted into and become without any action on the part of the holder thereof, and Fulton shall issue, 1.34 (such number, as it may be adjusted under Section 2.1(b) herein, the “Conversion Ratio”)(other than (i) shares of FultonCompany Common Stock held in the Company’s treasury and the corresponding number(ii) shares of rights associated therewith pursuant to the Rights Agreement dated June 20, 1989, as amended and restated as of April 27, 1999, between Fulton and Fulton Bank (the “Fulton Rights Agreement”). Each share of PremierCompany Common Stock to be converted into Fulton Common Stock pursuant to thisheld directly or indirectly by Parent or the Company or any of their respective Subsidiaries (as defined below) (except for Trust Account Shares and DPC Shares, as such terms are defined in Section 2.11.4(b) hereof), shall by virtue of the Mergerthis Agreement and without any action on the part of the holdersCompany, Parent or the holder thereof, cease to be outstanding and shall be converted into and become the right to receive 1.35 shares of common stock, $2.50 par value, of Parent (“Parent Common Stock”), together with the number of Parent Rights (as defined in Section 4.2) associated therewith (such shares, the “Per Share Stock Consideration” and the ratio of such number to one, the “Exchange Ratio”).
(b) At the Effective Time, (i) all shares of Company Common Stock that are owned by the Company as treasury stock and (ii) all shares of Company Common Stock that are owned directly or indirectly by Parent or the Company or any of their respective Subsidiaries (other than shares of Company Common Stock (x) held directly or indirectly in trust accounts, managed accounts and the like or otherwise held in a fiduciary capacity for the benefit of third parties or any shares held in any employee plan disclosed on Section 3.11 of the Disclosure Schedule (any such shares, and shares of Parent Common Stock which are similarly held, whether held directly or indirectly by Parent or the Company, as the case may be, being referred to herein as “Trust Account Shares”) and (y) held by Parent or the Company or any of their respective Subsidiaries in respect of a debt previously contracted (any such shares of Company Common Stock, and shares of Parent Common Stock which are similarly held, being referred to herein as “DPC Shares”)), shall be canceled and each holdershall cease to exist and no stock of share certificates evidencingParent or other consideration shall be delivered in exchange therefor. All shares of PremierParent Common Stock converted into Fultonthat are owned by the Company or any of its Subsidiaries (other than Trust Account Shares and DPC Shares) shall become treasury stock of Parent.
(c) On and after the Effective Time, holders of certificates which immediately prior to the Effective Time represented outstanding shares of Company Common Stock pursuant to this Section 2.1(the “Certificates”) shall thereafter cease to have any rights with respect toas shareholders of the shares represented thereby,
Company, except the right to receive the FultonPer Share Stock Consideration for each such share held by them. The consideration which any holder of Company Common Stock therefor, without interest thereon, uponis entitled to receive pursuant to this Article I is referred to herein as the surrender“Merger Consideration”. The consideration which all of the share certificates evidencingCompany shareholders are entitled to receive pursuant to this Article I is referred to herein as the Premier Common Stock in accordance with Section 2.2 hereof.“Aggregate Merger Consideration”.
(b)Antidilution Provision. In(d) Notwithstanding any provision herein to the event that Fulton shall at any time before the Effective Time: (i) issue a dividend in shares of Fulton Common Stock, (ii) combine the outstanding shares of Fulton Common Stock into a smaller number of shares, or (iii)
subdivide the outstanding shares of Fulton Common Stock into a greater number of shares, then the Conversion Ratio shall be proportionately adjusted (calculated to four decimal places), so that each Premier shareholder shall receive at the Effective Time, in exchange for his shares of Premier Common Stock, the number of shares of Fulton Common Stock as would then have been owned by himcontrary, if, the Effective Time had occurred before the record date of such event (For example, if Fulton were to declare a five percent (5%) stock dividend afterbetween the date of this Agreement and if the record date for that stock dividend were to occur before the Effective Time, the Conversion Ratio wouldshares of Parent Common Stock shall be adjusted from 1.34changed into a different number or class of shares by reason of any reclassification, recapitalization, split-up, combination, exchange of shares or readjustment, or a stock dividend declared thereon with a record date within said period, appropriate adjustments shall be made to 1.407 shares).the Exchange Ratio.
(c)1.5Exchange Agent. The Company and Parent hereby appoint Fulton Financial Advisors, National Association (or such other transfer agent as Parent shall designate in good faith) as the exchange agent (the “Exchange Agent”) for purposes of effecting the conversion of Company Common Stock hereunder.
1.6Stock Options. All options which may be exercised for issuance of Company Common Stock (whether or not vested) (each, a “Company Stock Option” and collectively the “Company Stock Options”) are described in the Company Disclosure Schedule and are issued and outstanding pursuant to the Company’s Amended and Restated 1997 Stock Option Plan, 1999 Stock Option Plan and 2003 Stock Option Plan (each, a “Company Stock Option Plan” and collectively, the “Company Stock Option Plans”) and the agreements pursuant to which such Company Stock Options were granted (each, an “Option Grant Agreement”). True and complete copies of the Company Stock Option Plans and all Option Grant Agreements relating to outstanding Company Stock Options have been delivered to Parent. At the Effective Time, each Company Stock Option that (i) is outstanding at the Effective Time, and (ii) would otherwise survive the Effective Time in the absence of the transactions contemplated by this Agreement (“Old Stock Options”), shall be assumed by Parent through the grant of an option to acquire shares of Parent Common Stock on the terms set forth below (each Old Stock Option, as assumed, a “Parent Stock Option”). All Old Stock Options shall automatically be converted as of the Effective Time, into Parent New Options which shall be identical to the Old Stock Options in all material respects, except that (i) upon exercise of the Parent Options, the optionholder will receive Parent Common Stock rather than Company Common Stock, (ii) the number of shares of Parent Common Stock covered by each Parent Option shall equal the number of shares of Company Common Stock covered by the corresponding Old Stock Option multiplied by the Exchange Ratio, (iii) the exercise price of each Parent Option shall equal the exercise price applicable to the corresponding Old Stock Option divided by the Exchange Ratio and (iv) the committee that administers the plan by which such Parent Options are governed shall be a committee established by the Board of Directors of Parent. In all other material respects, the Parent Options shall be governed by the terms of the Company Stock Option Plan at and after the Effective Time. Promptly after the Effective Time, Parent shall use its reasonable best efforts to register the shares issuable upon exercise of the Parent Options
under the Securities Act of 1933, and to keep such registration in effect until such time as all New Stock Options have been exercised. In connection with the foregoing, (i) the foregoing is intended to effect an assumption of the Old Stock Options by Parent under Section 424(a) of the Code and (ii) neither a Parent Stock Option nor the assumption of Old Stock Option shall give the holder of an Old Stock Option additional benefits which he did not have under such an Old Stock Option within the meaning of Section 424(a)(1) of the Code. Subject to issuance of the Parent Stock Options and the foregoing, the Company Stock Option Plans and all options or other rights to acquire Company Common Stock issued thereunder shall terminate at the Effective Time. Parent shall not issue or pay for any fractional shares otherwise issuable upon exercise of a Parent Stock Option. Prior to the Effective Time (to the extent required as determined by Parent or the Company under applicable law, the terms of the Company Stock Option Plans or otherwise), Parent shall receive agreements from each holder of an Old Stock Option that does not elect to exercise such Old Stock Option immediately prior to the Effective Time and have the Company Common Stock acquired as a result of such exercise converted into Parent Common Stock pursuant to Section 2.1 of this Agreement, pursuant to which each such holder agrees to accept a Parent Stock Option in substitution for the Old Stock Option, as of the Effective Time.
1.7Parent Common Stock. Except for shares of Parent Common Stock owned by the Company or any of its Subsidiaries (other than Trust Account Shares and DPC Shares), which shall be converted into treasury stock of Parent as contemplated by Section 1.4, the shares of Parent Common Stock issued and outstanding immediately prior to the Effective Time shall be unaffected by the Merger and such shares shall remain issued and outstanding. The holders of the shares of Parent Common Stock outstanding immediately prior to the Effective Time shall, immediately after the Effective Time, continue to hold a majority of the outstanding shares of Parent Common Stock.
1.8Articles of Incorporation. At the Effective Time, the Articles of Incorporation of Parent, as in effect immediately prior to the Effective Time, shall be the Articles of Incorporation of the Surviving Corporation until thereafter amended in accordance with applicable law.
1.9By-Laws. At the Effective Time, the By-Laws of Parent, as in effect immediately prior to the Effective Time, shall be the By-Laws of the Surviving Corporation until thereafter amended in accordance with applicable law.
1.10Directors and Officers of the Surviving Corporation. The directors of Parent immediately prior to the Effective Time, shall be the directors of the Surviving Corporation, each to hold office in accordance with the Articles of Incorporation and By-Laws of the Surviving Corporation until their respective successors are duly elected or appointed and qualified. Parent shall, on or promptly after the Effective Time (but no later than Parent’s next Board of Directors meeting following the Effective Time), appoint to Parent’s Board of Directors Abraham Opatut (or one of the Company’s other current directors designated, subject to the reasonable approval of Parent, by vote of the Company’s Board of Directors prior to the Effective Date) to serve as a director of Parent. Such director shall stand for election at Parent’s 2005 annual meeting, at which
time, subject to the exercise by Parent’s Board of Directors of its fiduciary duties, Parent shall nominate and recommend for election such director for an additional term of three (3) years. Parent has a mandatory retirement policy for directors who attain age 70; however, Parent would “grandfather” the present director of the Company appointed as set forth above from the application of such policy for a three year period after the Effective Date unless such director would have otherwise been obligated to retire from the Board of the Company under any policy it currently has in effect. The officers of Parent immediately prior to the Effective Time shall be the officers of the Surviving Corporation, each to hold office in accordance with the Articles of Incorporation and By-Laws of the Surviving Corporation until their respective successors are duly elected or appointed and qualified.
1.11Tax Consequences. It is intended that the Merger shall constitute a reorganization within the meaning of Section 368(a) of the Code and that this Agreement shall constitute a “plan of reorganization” for purposes of Section 368 of the Code.
1.12Withholding Rights. Parent shall be entitled to deduct and withhold, or cause the Exchange Agent to deduct and withhold, from funds provided by the holder or from the consideration otherwise payable pursuant to this Agreement to any holder of Company Common Stock, the minimum amounts (if any) that Parent is required to deduct and withhold with respect to the making of such payment under the Code, or any provision of Tax law. To the extent that amounts are so withheld by Parent, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of Company Common Stock in respect of which such deduction and withholding was made by Parent.
1.13No FractionalRight of Dissent. Pursuant to Section 14A:11-1(1)(a)(i)(B) of the New Jersey Business Corporation Act, the shareholders of the Company shall not be entitled to exercise dissenters’ rights.
ARTICLE II. EXCHANGE OF SHARES
2.1Parent to Deposit Shares. At or prior to the Effective Time, Parent shall deposit, or shall cause to be deposited, with the Exchange Agent, for the benefit of the holders of Certificates, for exchange in accordance with this Article II, certificates representing shares of Parent Common Stock in an amount sufficient to cover the Aggregate Merger Consideration (such certificates for shares of Parent Common Stock, together with any dividends or distributions with respect thereto, being hereinafter referred to as the “Exchange Fund”) to be issued pursuant to Section 1.4 and paid pursuant to Section 2.2(a) in exchange for outstanding shares of Company Common Stock.
2.2Exchange of Shares.
(a) As soon as practicable after the Effective Time, the Exchange Agent shall mail to each holder of record of a Certificate or Certificates a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates to the Exchange Agent) and instructions for use in effecting the surrender of the Certificates in exchange for the Merger Consideration into which the shares of Company Common Stock represented by such Certificate or Certificates shall have been converted pursuant to this Agreement. The Company shall have the right to review both the letter of transmittal and the instructions prior to the Effective Time and provide reasonable comments thereon. After the Effective Time, upon surrender of a Certificate for exchange and cancellation to the Exchange Agent, together with such letter of transmittal, duly executed, the holder of such Certificate shall be entitled to receive in exchange therefor the Merger Consideration to which such holder of Company Common Stock shall have become entitled pursuant to the provisions of Article I, and the Certificate so surrendered shall forthwith be canceled. No interest will be paid or accrued on any cash constituting Merger Consideration (including cash to be paid in lieu of fractional shares) or on any unpaid dividends or distributions, if any, payable to holders of Certificates.
(b) No dividends or other distributions declared after the Effective Time with respect to Parent Common Stock and payable to the holders of record thereof shall be paid to the holder of any unsurrendered Certificate until the holder thereof shall surrender such Certificate in accordance with this Article II. After the surrender of a Certificate in accordance with this Article II, the record holder thereof shall be entitled to receive any such dividends or other distributions, without any interest thereon, which theretofore had become payable with respect to shares of Parent Common Stock, if any, represented by such Certificate.
(c) If any certificate representing shares of Parent Common Stock is to be issued in a name other than that in which the Certificate surrendered in exchange therefor is registered, it shall be a condition of the issuance thereof that the Certificate so surrendered shall be properly endorsed (or accompanied by an appropriate instrument of transfer) and otherwise in proper form for transfer, and that the person requesting such exchange shall pay to the Exchange Agent in advance any transfer or other Taxes required by reason of the issuance of a certificate representing shares of Parent Common Stock in any name other than that of the registered holder of the Certificate surrendered, or required for any other reason, or shall establish to the satisfaction of the Exchange Agent that such Tax has been paid or is not payable.
(d) After the Effective Time, there shall be no transfers on the stock transfer books of the Company of the shares of Company Common Stock which were issued and outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates representing such shares are presented for transfer to the Exchange Agent, they shall be canceled and exchanged for Merger Consideration as determined in accordance with Article I and this Article II.
(e) No fractional shares of FultonParent Common Stock shall be issued in connection with the Merger. In lieu of the issuance of any fractional share to which he would otherwise be entitled, each former shareholder of Premierthe Company shall receive in cash an amount equal to the fair market value of his fractional interest, which fair market value shall be determined by multiplying such fraction by the Closing Market Price (as defined in Section 2.1(e) herein).
(d)Cancelled Premier Shares. Notwithstanding the provisions of Section 2.1(a) herein, the following shares of Premier Common Stock shall not be converted into Fulton Common Stock, and shall be cancelled, at the Effective Time: (i) shares of Premier Common Stock then owned by Fulton or any direct or indirect subsidiary of Fulton (except for trust account shares or shares acquired in connection with debts previously contracted); and (ii) shares of Premier Common Stock owned by Premier or any direct or indirect subsidiary of Premier (except for trust account shares or shares acquired in connection with debts previously contracted).
(e)Closing Market Price.Price. For purposes of this Agreement, the “Closing Market Price” shall be the average of the per share closing price for FultonParent Common Stock, calculated to two decimal places, for the ten (10) consecutive trading days immediately preceding the date which is two (2) business days before the Effective Date (as such term is defined in Section 9.2 herein),Time, as reported on the National Market System of the National Association of Securities Dealers Automated Quotation System (“NASDAQ”), the foregoing period of ten (10) trading days being hereinafter sometimes referred to as the “Price Determination Period.Period.” (For example, if July 1, 2003January 14, 2005 were to be the Effective Date, then the Price Determination Period would be June 13, 16, 17, 18, 19, 20, 23, 24, 25December 30 and 26, 2003)31, 2004 and January 3, 4, 5, 6, 7, 10, 11 and 12, 2005). In the event that NASDAQ shall fail to report a closing price for FultonParent Common Stock for any trading day during the Price Determination Period, the closing price for that day shall be equal to the average of the closing bid and asked prices as quoted: (i) by F. J. Morrissey & Company, Inc. and by Ryan, Beck & Co.; or (ii) in the event that both of these firms are not then making a market in FultonParent Common Stock, by two brokerage firms then making a market in FultonParent Common Stock to be selected by FultonParent and approved by Premier.the Company.
Section 2.2 Exchange of Stock Certificates. Premier Common Stock certificates shall be exchanged for Fulton Common Stock certificates in accordance with the following procedures:
(a)Exchange Agent. The transfer agent of Fulton shall act as exchange agent (the “Exchange Agent”) to receive Premier Common Stock certificates from the holders thereof and to exchange such stock certificates for Fulton Common Stock certificates and (if applicable) to pay cash for fractional shares of Fulton Common Stock pursuant to Section 2.1(c) herein. Fulton shall cause the Exchange Agent on or promptly, but no later than three (3) business days after receipt of a final shareholder list following the Effective Date, to mail to each former shareholder of Premier a notice specifying the procedures to be followed in surrendering such shareholder’s Premier Common Stock certificates.
(b)Surrender of Certificates. As promptly as possible after receipt(f) Any portion of the Exchange Agent’s notice, each former shareholderFund that remains unclaimed by the shareholders of Premier shall surrender his Premier Common Stock certificates to the Exchange Agent;provided, that if any former shareholder of PremierCompany for six months after the Effective Time shall be unablepaid to surrender his Premier Common Stock certificates due to loss or mutilation thereof, he may make a constructive surrender by following procedures comparable to those customarily used by Fulton for issuing replacement certificates to FultonParent. Any shareholders whose Fulton Common Stock certificatesof the Company who have been lost or mutilated. Upon receiving a proper actual or constructive surrender of Premier Common Stock certificates from a former Premier shareholder, the Exchange Agent shall issue to such shareholder, in exchange therefor, a Fulton Common Stock certificate representing the whole number of shares of Fulton Common Stock into which such shareholder’s shares of Premier Common Stock have been converted in accordancenot theretofore complied with this Article II together with a check inshall thereafter look only to Parent for payment of the amountshares of anyParent Common Stock, cash to which such shareholder is entitled, pursuant to Section 2.1(c) herein, in lieu of fractional shares and unpaid dividends and distributions on the issuanceParent Common Stock deliverable in respect of each share of Company Common Stock such shareholder holds as determined pursuant to this Agreement, in each case, without any interest thereon. If outstanding Certificates are not surrendered or the payment for them is not claimed prior to the date on which such payments would otherwise escheat to or become the property of any governmental unit or agency, the unclaimed items shall, to the extent permitted by abandoned property laws, escheat laws and any other applicable law, become the property of Parent (and to the extent not in its possession shall be paid over to it), free and clear of all claims or interest of any person previously entitled to such claims. Notwithstanding the foregoing, none of Parent, the Company, the Exchange Agent or any other person shall be liable to any former holder of shares of Company Common Stock for any amount properly delivered to a public official pursuant to applicable abandoned property, escheat or similar laws.
(g) 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 Parent, the posting by such person of a bond in such amount as Parent may 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 cash and/or shares of Parent Common Stock
and cash in lieu of fractional share.shares deliverable in respect thereof pursuant to this Agreement.
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
(c)Dividend Withholding. Dividends, if any, payable by Fulton after the Effective Time to any former shareholder of Premier who has not priorReferences herein to the payment“Company Disclosure Schedule” shall mean all of the disclosure schedules required by this Article III, dated as of the date surrendered his Premier Common Stock certificates may, at the option of Fulton, be withheld. Any dividends so withheld shall be paid, without interest, to such former shareholder of Premier upon proper surrender of his Premier Common Stock certificates.
(d)Failure to Surrender Certificates. All Premier Common Stock certificates must be actually or constructively (ashereof and referenced in (b) above) surrendered to the Exchange Agent within two (2) years after the Effective Date. In the event that any former shareholderspecific sections and subsections of Premier shall not have properly surrendered his Premier Common Stock certificates within two (2) years after the Effective Date, the sharesArticle III of Fulton Common Stock that would otherwisethis Agreement, which have been issued to him may, atdelivered on the option of Fulton, be sold and the net proceeds of such sale, together with the cash (if any) to which he is entitled in lieu of the issuance of a fractional share and any previously accrued dividends, shall be helddate hereof by the Exchange AgentCompany to Parent. Except as set forth in a noninterest bearing account for his benefit. Fromthe Company Disclosure Schedule, the Company hereby represents and after any such sale, the sole right of such former shareholder of Premier shall be the rightwarrants to collect such net proceeds, cash and accumulated dividends. Subject to all applicable laws of escheat, such net proceeds, cash and accumulated dividends shall be paid to such former shareholder of Premier, without interest, upon proper actual or constructive surrender of his Premier Common Stock certificates.
(e)Expenses. All costs and expenses associated with the foregoing surrender and exchange procedure shall be borne by Fulton.Parent as follows:
3.1Section 2.3 Treatment of Outstanding Premier Options.Corporate Organization.
(a) AtThe Company is a corporation duly organized, validly existing and in good standing under the Effective Time,laws of the State of New Jersey. The Company has the corporate power and authority to own or lease all of its properties and assets and to carry on its business as it is now being conducted, and is duly licensed or qualified to do business in each holderjurisdiction in which the nature of an option (collectively, “Premier Options”)the business conducted by it or the character or location of the properties and assets owned or leased by it makes such licensing or qualification necessary, except where the failure to purchase shares of Premier Common Stock that (i) is outstanding at the Effective Time, (ii) has been granted pursuant to the Premier Bancorp, Inc. 1995 Incentive Stock Option Plan (collectively, the “Premier Stock Option Plan”)be so licensed or otherwise granted by the Premier Board of Directors and evidenced by stock option agreements butqualified would not pursuant to any Premier Stock Option Plan; and (iii) would otherwise survive the Effective Time shall be entitled to receive, in substitution for such Premier Option, an option to acquire shares of Fulton Common Stockhave a Material Adverse Effect on the terms set forth below (each Premier OptionCompany. The Company is registered as substituted, a “Fulton Stock Option”).
(b) A Fulton Stock Option shall be a stock option to acquire sharesbank holding company under the Bank Holding Company Act of Fulton Common Stock with the following terms: (i) the number of shares of Fulton Common Stock which may be acquired pursuant to such Fulton Stock Option shall be equal to the product of the number of shares of Premier Common Stock covered by the Premier Option multiplied by the Conversion Ratio, provided that any fractional share of Fulton Common Stock resulting from such multiplication shall be rounded to the nearest whole share; (ii) the exercise price per share of Fulton Common Stock shall be equal to the exercise price per share of Premier Common Stock of such Premier Option, divided by the Conversion Ratio, provided that such exercise price shall be rounded to the nearest whole cent; (iii) the duration and other terms of such Fulton Stock Option shall be identical to the duration and other terms of such Premier Option, except that all references to Premier shall be deemed to be references to Fulton and its affiliates, where the context so requires and shall remain exercisable until the stated expiration date of the corresponding Premier Option; (iv) Fulton shall assume such Premier stock option, whether vested or not vested, as contemplated by Section 424(a) of the Internal Revenue Code of 1986,1956, as amended (the “CodeBHCA”);. The Certificate of Incorporation and (v) to the extent Premier Options qualify as incentive stock options under Section 422By-laws of the Code, the Fulton Stock Options exchanged therefor shall also so qualify. SubjectCompany, copies of which have previously been made available to the Fulton Stock OptionsParent’s counsel, are true and the foregoing, the Premier Stock Option Plans and all options or other rights to acquire Premier Common Stock issued thereunder shall terminate at the Effective Time. Fulton shall not issue or pay for any fractional shares otherwise issuable upon exercisecorrect copies of a Fulton Stock Option.
(c) Prior to the Effective Time, Fulton shall take appropriate action to reserve for issuance and, if not previously registered pursuant to the Securities Act of 1933,such documents as amended (the “1933 Act”), register the number of shares of Fulton Common Stock necessary to satisfy Fulton’s obligations with respect to the issuance of Fulton Common Stock pursuant to the exercise of Fulton Stock Options and under Section 2.3.
(d) Prior to the Effective Time (to the extent required as determined by Fulton or Premier under applicable law, the terms of the Premier Stock Option Plan or otherwise),
Fulton shall receive agreements from each holder of a Premier Option, pursuant to which each such holder agrees to accept a Fulton Stock Option in substitution for the Premier Option, as of the Effective Time.
(e)Schedule 2.3 sets forth a listing of each Premier Optioneffect as of the date of this Agreement. As used in this Agreement, (copiesthe term “Material Adverse Effect” means, with respect to Parent or the Company, as the case may be, a material adverse effect on (i) the business, results of operations or financial condition of such party and its Subsidiaries taken as a whole, other than any such effect attributable to or resulting from (x) any change in banking or similar laws, rules or regulations of general applicability or interpretations thereof by courts or governmental authorities, (y) any change in generally accepted accounting principles (“GAAP”) or regulatory accounting principles applicable to commercial banks or their holding companies generally or (z) any action or omission of the Company or Parent or any Subsidiary of either of them taken with the prior written consent of Parent (in the case of acts or omissions of the Company and its Subsidiaries) or the Company (in the case of acts or omissions of Parent and its Subsidiaries) or (ii) the ability of such party and its Subsidiaries to consummate the transactions contemplated hereby.
(b) Company Bank is a state-chartered, non-member commercial banking corporation duly organized and validly existing under the laws of the State of New Jersey. The deposit accounts of the Company Bank are insured by the Federal Deposit Insurance Corporation (the “FDIC”) through the Bank Insurance Fund to the fullest extent permitted by law, and all premiums and assessments required to be paid in connection therewith have been paid when due. Each of the Company’s other Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization. Each of the Company’s Subsidiaries has
the corporate power and authority to own or lease all of its properties and assets and to carry on its business as it is now being conducted and is duly licensed or qualified to do business in each jurisdiction in which the nature of the business conducted by it or the character or the location of the properties and assets owned or leased by it makes such licensing or qualification necessary. The certificate of incorporation, by-laws and similar governing documents of each Subsidiary of the Company, copies of which have previously been providedmade available to Fulton), including the optionee, date of grant, shares of Premier Common Stock subject to such Option, the exercise priceParent’s counsel, are true and correct copies of such Option, expiration date, classificationdocuments as an incentive stock option or a nonqualified stock option, vesting schedule and any special features thereof.
Section 2.4 Reservation of Shares. Fulton agrees that (i) prior to the Effective Time it will take appropriate action to reserve a sufficient number of authorized but unissued shares of Fulton Common Stock to be issued in accordance with this Agreement, and (ii) at the Effective Time, Fulton will issue shares of Fulton Common Stock to the extent set forth in, and in accordance with, this Agreement.
Section 2.5 Taking Necessary Action. Fulton and Premier shall take all such actions as may be reasonably necessary or appropriate in order to effectuate the transactions contemplated hereby including, without limitation, providing information necessary for preparation of any filings needed to obtain the regulatory approvals required to consummate the Merger. In case at any time after the Effective Time any further action is necessary or desirable to carry out the purposes of this Agreement and to vest Fulton with full title to all properties, assets, rights, approvals, immunities and franchises of Premier, the officers and directors of Premier, at the expense of Fulton, shall take all such necessary action.
Section 2.6 Press Releases, Etc. Fulton and Premier agree that all press releases or other public communications relating to this Agreement or the transactions contemplated hereby will require mutual approval by Fulton and Premier, unless counsel has advised any such party that such release or other public communication must immediately be issued and the issuing party has not been able, despite its good faith efforts, to obtain such approval.
Section 2.7 Fulton Common Stock. Each share of Fulton Common Stock that is issued and outstanding immediately before the Effective Time shall, on and after the Effective Time, remain issued and outstanding as one (1) share of Fulton Common Stock, and each holder thereof shall retain his rights therein. The holders of the shares of Fulton Common Stock outstanding immediately prior to the Effective Time shall, immediately after the Effective Time, continue to hold a majority of the outstanding shares of Fulton Common Stock.
Section 2.8 No Dissenters’ Rights. Pursuant to Section 1571(b)(1)(i) of the BCL, the shareholders of Premier shall not be entitled to exercise dissenters’ rights under the provisions of Subchapter D of Chapter 15 of the BCL.
Section 2.9 Premier Preferred Stock. The outstanding shares of Premier’s Series A 9.25% Non-Cumulative Perpetual Preferred Stock (the “Premier Preferred Stock”) shall not be converted into Fulton Common Stock as part of the Merger. As set forth in Section 7.2(e) herein, all of the outstanding shares of the Premier Preferred Stock shall be redeemed as of or
prior to the Effective Time in accordance with Sections 7 and 8 of the terms of the Premier Preferred Stock.
Section 2.10 Certain Actions. Prior to the Effective Time, Fulton and Premier shall take all such steps as may be required to cause any dispositions of shares of Premier Common Stock (including derivative securities with respect to such shares) resulting from the transactions contemplated by Article II of this Agreement by each individual who is subject to the reporting requirements of Section 16(a) of the Securities Exchange Act of 1934, as amended (the “1934 Act”), with respect to Premier to be exempt under Rule 16b-3 promulgated under the Exchange Act, such steps to be taken in accordance with the No-Action Letter dated January 12, 1999 issued by the SEC to Skadden, Arps, Slate, Meagher & Flom LLP.
ARTICLE III—REPRESENTATIONS AND WARRANTIES OF PREMIER
Premier represents and warrants to Fulton,effect as of the date of this Agreement,Agreement.
(c) The minute books of the Company and each of its Subsidiaries contain true and correct records of all meetings and other corporate actions held or taken by their respective shareholders and Boards of Directors (including committees of their respective Boards of Directors). Copies of such minute books have been made available to Parent’s counsel.
(d) Except as follows:set forth in Section 3.1(d) of the Company Disclosure Schedule, the Company and its Subsidiaries do not own or control, directly or indirectly, any equity interest in any corporation, company, association, partnership, joint venture or other entity except for shares of the Federal Home Loan Bank of New York and shares held by the Company Bank in a fiduciary or custodial capacity in the normal course of its business (which, except as disclosed in Section 3.1(d) of the Company Disclosure Schedule, do not in the aggregate constitute more than 5% of the voting shares or interests in any such corporation, company, association, partnership, joint ventures or other entity) and except that which the Company Bank holds pursuant to satisfaction of obligations due to the Company Bank and which are disclosed in Section 3.1(d) of the Company Disclosure Schedule. The Company and its Subsidiaries own no real estate, except real estate used for their banking premises or acquired pursuant to satisfaction of obligations due to the Company Bank. All such real estate is listed on Section 3.1(d) of the Company Disclosure Schedule.
3.2Capitalization.
(a) Subject to Section 3.1 Authority3.2(a) of the Company Disclosure Schedule, the authorized capital stock of the Company consists and at Closing will consist solely of 10,000,000 shares of Company Common Stock. As of the date hereof, there were 4,238,888 shares of Company Common Stock outstanding and no shares of Company Common Stock held by the Company as treasury stock. As of the date hereof, there were no shares of Company Common Stock reserved for issuance upon exercise of outstanding stock options or otherwise except for 721,785 shares of Company Common Stock reserved for issuance pursuant to the Company Stock Option Plans and described in Section 3.2(a) of the Company Disclosure Schedule. All of the issued and outstanding shares of Company Common Stock have been duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights, with no personal liability attaching to the ownership thereof, subject to Section 3.2(a) of the Company Disclosure Schedule. Except as referred to above or reflected in Section 3.2(a) of the Company Disclosure Schedule, the Company does not have and is not bound by any outstanding subscriptions, options, warrants, calls, commitments or agreements of any character
calling for the purchase or issuance of any shares of Company Common Stock or any other equity security of the Company or any securities representing the right to purchase or otherwise receive any shares of Company Common Stock or any other equity security of the Company. The names of the optionees, the date of each option to purchase Company Common Stock granted, the number of shares subject to each such option, the expiration date of each such option, the price at which each such option may be exercised under the Company Stock Option Plan and the type of option are set forth in Section 3.2(a) of the Company Disclosure Schedule.
(b) The authorized capital stock of the Company Bank consists of 10 million shares of common stock, $5.00 par value per share of which 4,239,886 shares as of the date hereof are issued and outstanding (none of which is held in the treasury of the Company Bank) (the “Company Bank Shares”). All of the issued and outstanding Company Bank Shares have been duly authorized and validly issued and all such shares are fully paid and nonassessable. As of the date hereof, there are no outstanding options, warrants, commitments or other rights or instruments to purchase or acquire any shares of capital stock of Company Bank, or any securities or rights convertible into or exchangeable for shares of capital stock of Company Bank.
(c) Section 3.2(c) of the Company Disclosure Schedule sets forth a true and correct list of all of the Subsidiaries of the Company. Except as set forth in Section 3.2(c) of the Company Disclosure Schedule, the Company owns, directly or indirectly, all of the issued and outstanding shares of the capital stock of each of such Subsidiaries, free and clear of all liens, charges, encumbrances and security interests whatsoever, and all of such shares are duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights, with no personal liability attaching to the ownership thereof. No Subsidiary of the Company has or is bound by any outstanding subscriptions, options, warrants, calls, commitments or agreements of any character calling for the purchase or issuance of any shares of capital stock or any other equity security of such Subsidiary or any securities representing the right to purchase or otherwise receive any shares of capital stock or any other equity security of such Subsidiary. Assuming compliance by Parent with Section 1.6, at the Effective Time, there will not be any outstanding subscriptions, options, warrants, calls, commitments or agreements of any character by which the Company or any of its Subsidiaries will be bound calling for the purchase or issuance of any shares of the capital stock of the Company or any of its Subsidiaries and there will be no agreements or understandings with respect to voting of any such shares binding on the Company or any of its Subsidiaries.
3.3Authority; No Violation.
(a) The Company has full corporate power and authority to execute and deliver this Agreement, the Warrant Agreement and the Warrant and, subject to (x) the parties’ obtaining (i) all bank regulatory approvals required to effectuate the Merger and (ii) the other approvals listed in Section 3.4 and (y) the approval of the Company’s shareholders as contemplated herein, to consummate the transactions contemplated hereby. The execution and delivery of this Agreement, the Warrant Agreement and the Warrant and the performanceconsummation of the transactions contemplated herein and thereinhereby have been authorizedduly
and validly approved by the Board of Directors of Premier (its Board of Directors), at a meeting duly called and held, by a vote of at least a majority of the members of theCompany. The Board of Directors of the Board of Directors (i) approved the Merger and this Agreement, and (ii)Company has directed that the Agreement be submitted for consideration by its shareholders with the recommendation of the Board of Directors that the shareholders of Premier approve this Agreement and the transactions contemplated thereby,hereby be submitted to the Company’s shareholders for approval at a meeting of such shareholders and, except for the approvaladoption of this Agreement by itsthe requisite vote of the Company’s shareholders, Premier has taken allno other corporate actionproceedings on the part of the Company or the Company Bank are necessary on its part to authorizeapprove this Agreement, the Warrant Agreement and the Warrant and the performance ofto consummate the transactions contemplated herein and therein.hereby. This Agreement, the Warrant Agreement and the Warrant have been duly and validly executed and delivered by Premierthe Company and assuming(assuming due authorization, execution and delivery by Fulton, constitute valid and binding obligations of Premier, enforceable in accordance with their respective terms, except to the extent enforcement is limited by bankruptcy, insolvency and other similar laws affecting creditor’s rights and the laws, regulations and rules affecting financial institutions. The execution, delivery and performance ofParent) this Agreement, the Warrant Agreement and the Warrant constitute valid and binding obligations of the Company, enforceable against the Company in accordance with its terms, except as enforcement may be limited by general principles of equity, whether applied in a court of law or a court of equity, and by bankruptcy, insolvency and similar laws affecting creditors’ rights and remedies generally.
(b) Neither the execution and delivery of this Agreement, the Warrant Agreement or the Warrant by the Company, nor the consummation by the Company of the transactions contemplated hereby, nor compliance by the Company with any of the terms or provisions hereof, will not constitute a violation or breach(i) violate any provision of or default under (i) the ArticlesCertificate of Incorporation or BylawsBy-Laws of Premier,the Company or the certificate of incorporation, by-laws or similar governing documents of any of its Subsidiaries, or (ii) assuming that the Articlesconsents and approvals referred to in Section 3.4 hereof are duly obtained and, except as set forth in Section 3.3(b) of Incorporation or Bylaws of Premier Bank, (iii)the Company Disclosure Schedule, (x) violate any statute, code, ordinance, rule, regulation, judgment, order, writ, decree or directiveinjunction applicable to the Company or any of its Subsidiaries, or any of their respective properties or assets, or (y) violate, conflict with, result in a breach of any governmental authorityprovision of or court applicable to Premierthe loss of any benefit under, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of or a right of termination or cancellation under, accelerate the performance required by, or result in the creation of any lien, pledge, security interest, charge or other encumbrance upon any of the respective properties or assets of the Company or any Premier Subsidiary, subject toof its Subsidiaries under, any of the receiptterms, conditions or provisions of all required governmental approvals, or (iv) any agreement, contract, memorandumnote, bond, mortgage, indenture, deed of understanding, indenturetrust, license, lease, agreement or other instrument or obligation to which Premierthe Company or any Premier Subsidiaryof its Subsidiaries is a party, or by which Premier or any Premier Subsidiarythey or any of their respective properties are bound.or assets may be bound or affected.
3.4Section 3.2 OrganizationConsents and StandingApprovals. Premier is a business corporation that is duly organized, validly existing Except for (a) the filing of applications and in good standing undernotices, as applicable, with the lawsBoard of the Commonwealth of Pennsylvania. Premier is a financial holding company under the BHC Act, and has full power and lawful authority to own and hold its properties and to carry on its business as presently conducted. Premier Bank is a banking corporation that is duly organized, validly existing and in
good standing under the laws of the Commonwealth of Pennsylvania. Premier Bank is an insured bank under the provisions of the Federal Deposit Insurance Act, as amended (the “FDI Act”), and is a memberGovernors of the Federal Reserve System. Premier Bank has full powerSystem (“FRB”) and lawful authority to ownthe Department of Banking and hold its properties and to carry on its business as presently conducted. EachInsurance of the Premier Subsidiaries currently conducting operations other than Premier Bank is an entity or business trust that is duly organized, validly existingState of New Jersey and in good standing under the laws of its state of incorporation or formation. Each of the Premier Subsidiaries currently conducting operations has full power and lawful authority to own and hold its properties and to carry on its business as presently conducted.
Section 3.3 Subsidiaries. Premier Bank is a wholly-owned subsidiary of Premier. Premier owns 100% of the common securities of PBI Capital Trust and Premier Capital Trust II. Premier has a 1% membership interest in each of Lenders Abstract, LLC and Premier Bank Insurance Services, LLC. Premier Bank has a 99% membership interest in each of these limited liability companies Except for the Premier Subsidiaries, Premier owns no subsidiaries, directly or indirectly.
Section 3.4 Capitalization. The authorized capital of Premier consists exclusively of 30,000,000 shares of Premier Common Stock and 20,000,000 shares of the Premier Preferred Stock. As of the date of this Agreement, there are 552,000 shares of Premier Preferred Stock outstanding, 3,452,273 shares of Premier Common Stock validly issued, fully paid and non-assessable, and 109,858 shares are held as treasury shares. In addition, 303,748 shares of Premier Common Stock are reserved for issuance upon the exercise of Premier Options and 835,000 shares of Premier Common Stock will be reserved for issuance upon exercise of the Warrant. Except for the Premier Options and the Warrant, there are no outstanding obligations, options or rights of any kind entitling other persons to acquire shares of Premier Common Stock and there are no outstanding securities or other instruments of any kind that are convertible into shares of Premier Common Stock. The authorized capital of Premier Bank consists exclusively of shares of common stock (the “Premier Bank Common Stock”). All of the outstanding shares of Premier Bank Common Stock are owned beneficially and of record by Premier and are validly issued, outstanding and fully-paid and non-assessable. There are no outstanding obligations, options or rights of any kind entitling other persons to acquire shares of Premier Bank Common Stock, and there are no outstanding securities or instruments of any kind that are convertible into shares of Premier Bank Common Stock. All outstanding shares of the capital stock of the other Premier Subsidiaries are owned beneficially and of record by Premier or Premier Bank, as appropriate, except that, in the case of PBI Capital Trust and Premier Capital Trust II, Premier owns 100% of the common securities and the purchasers thereof own the capital securities issued by each said Trust. There are no outstanding obligations, options or rights of any kind entitling other persons to acquire sharesapproval of such subsidiaries,applications and there are no outstanding securities or instruments of any kind that are convertible into shares of such subsidiaries. The Common Stock of Premier Banknotices, (b) the other Premier Subsidiaries is sometimes collectively referred to herein as the “Premier Subsidiaries Common Stock”.
Section 3.5 Charter, Bylaws and Minute Books. The copies of the Articles of Incorporation and Bylaws (or, with respect to PBI Capital Trust and Premier Capital Trust II,
their trust declarations) of Premier and the Premier Subsidiaries that have been delivered to Fulton are true, correct and complete. Except as previously disclosed to Fulton in writing, the minute books of Premier and the Premier Subsidiaries that have been made available to Fulton for inspection are true, correct and complete in all material respects and accurately record the actions taken by the Boards of Directors and shareholders of Premier and the Premier Subsidiaries at the meetings documented in such minutes, excluding information related to the transactions contemplated by this Agreement and to any other merger, consolidation, share exchange or sale, exchange or other disposition of all, or substantially all, of Premier’s property or assets.
Section 3.6 Financial Statements. Premier has delivered to Fulton the following financial statements: Consolidated Balance Sheets at December 31, 2001 and 2000 and Consolidated Statements of Income, Statements of Stockholders’ Equity, and Consolidated Statements of Cash Flows of Premier for the years ended December 31, 1999, 2000 and 2001, audited by KPMG LLP, and set forth in the 2001 Annual Report to Premier’s shareholders and unaudited Consolidated Balance Sheets of Premier at September 30, 2002 and unaudited Consolidated Statements of Income for the nine-month periods ended September 30, 2002 and 2001, unaudited Consolidated Statements of Stockholders’ Equity for the nine-month periods ended September 30, 2002 and 2001 and unaudited Consolidated Statements of Cash Flows for the nine-month periods ended September 30, 2002 and 2001, as filedfiling with the Securities and Exchange Commission (the “SEC”) of a proxy statement in a Quarterly Reportdefinitive form relating to the meeting of the Company’s shareholders to be held in connection with this Agreement and the transactions contemplated hereby (the “Proxy Statement”) and the filing and declaration of effectiveness of the registration statement on Form 10-QS-4 (the aforementioned Consolidated“S-4”) in which the Proxy Statement will be included as a prospectus, (c) the approval of Condition as of September 30, 2002 being hereinafter referred to asthis Agreement and the “Premier Balance Sheet”). EachMerger by the requisite vote of the foregoing financial statements fairly present the consolidated financial condition, assets and liabilities, and results of operations of Premier at their respective dates and for the respective periods then ended and has been prepared in accordance with generally accepted accounting principles consistently applied, except as otherwise noted in a footnote thereto and except for the omissionshareholders of the notes fromCompany, (d) the financial statements applicablefiling of the Certificate of Merger with the Department of the Treasury of the State of New Jersey
pursuant to any interim period.
Section 3.7 Absencethe BCA and of Undisclosed Liabilities. Except as disclosed inSchedule 3.7, or as reflected, noted or adequately reserved againstthe Articles of Merger with the Department of State of the Commonwealth of Pennsylvania pursuant to the BCL, (e) approval of the listing of the Parent Common Stock to be issued in the Premier Balance Sheet, at September 30, 2002, Premier had no material liabilities (whether accrued, absolute, contingent or otherwise) which wereMerger on NASDAQ, (f) such filings as shall be required to be reflected, notedmade with any applicable state securities bureaus or reserved againstcommissions, (g) such consents, authorizations, approvals or exemptions under the Environmental Laws (as defined in the Premier Balance Sheet under generally accepted accounting principles. Except as disclosed inSchedule 3.7, PremierSection 3.17) and the Premier Subsidiaries have not incurred, since September 30, 2002, any such liability, other than liabilities of the same nature as those set forth in the Premier Balance Sheet, all of which have been reasonably incurred in the Ordinary Course of Business. For purposes of this Agreement, the term “Ordinary Course of Business” shall mean the ordinary course of business consistentnotices and filings with Premier’s and the Premier Subsidiaries’ customary business practices.
Section 3.8 Absence of Changes. Since September 30, 2002, Premier and the Premier Subsidiaries have each conducted their businesses in the Ordinary Course of Business and, except as disclosed inSchedule 3.8, neither Premier nor the Premier Subsidiaries have undergone any changes in its condition (financial or otherwise), assets, liabilities, business or
operations, other than changes in the Ordinary Course of Business, which have not been, in the aggregate, materially adverse as to Premier and the Premier Subsidiaries on a consolidated basis.
Section 3.9 Dividends, Distributions and Stock Purchases. Since September 30, 2002, Premier has not declared, set aside, made or paid any dividend or other distribution in respect of the Premier Common Stock, or purchased, issued or sold any shares of Premier Common Stock or the Premier Subsidiaries Common Stock. Since the issuance of the outstanding shares of the Premier Preferred Stock, regular quarterly dividends of $0.578125 per share have been paid (the most recent such dividend was declared on January 6, 2003, payable on January 31, 2003 to shareholders of record on January 16, 2003).
Section 3.10 Taxes. Premier and Premier Bank have filed all federal, state, county, municipal and foreign tax returns, reports and declarations which are required to be filed by them or either of them as of September 30, 2002. Except as disclosed inSchedule 3.10: (i) Premier and Premier Bank have paid all taxes, penalties and interest which have become due pursuant thereto or which became due pursuant to federal, state, county, municipal or foreign tax laws applicable to the periods covered by the foregoing tax returns, (ii) neither Premier nor the Premier Subsidiaries have received any notice of deficiency or assessment of additional taxes, and no tax audits are in process; and (iii) the Internal Revenue Service (the “IRS”) has not commenced or given notice of an intentionthe Pension Benefit Guaranty Corporation (the “PBGC”) with respect to commence any examination or auditemployee benefit plans as are described in Section 3.4 of the federal income tax returnsCompany Disclosure Schedule and (h) such other filings, authorizations or approvals as may be set forth in Section 3.4 of Premierthe Company Disclosure Schedule, no consents or Premier Bank forapprovals of or filings or registrations with any year throughcourt, administrative agency or commission or other governmental authority or instrumentality (each a “Governmental Entity”) or with any third party are necessary in connection with (1) the execution and includingdelivery by the year ended December 31, 2002. Except as disclosed inSchedule 3.10, neither Premier norCompany of this Agreement and (2) the Premier Subsidiaries have granted any waiverconsummation by the Company of any statute of limitations or otherwise agreed to any extension of a period for the assessment of any federal, state, county, municipal or foreign income tax. Except as disclosed inSchedule 3.10,Merger and the accruals and reserves reflected in the Premier Balance Sheet are adequate to cover all taxes (including interest and penalties, if any, thereon) that are payable or accrued as a result of Premier’s consolidated operations for all periods prior to the date of such Balance Sheet.other transactions contemplated hereby.
3.5Section 3.11 TitleReports. The Company and each of its Subsidiaries have timely filed all reports, registrations and statements, together with any amendments required to be made with respect thereto, that they were required to file since December 31, 1998 with (i) the FRB, (ii) the Department of Banking and ConditionInsurance of Assets. Except as disclosed inSchedule 3.11, Premierthe State of New Jersey, (iii) the FDIC and (iv) any other Governmental Entity that regulates the Company or any of its Subsidiaries (collectively with the FRB, the Department of Banking and Insurance of the State of New Jersey and the Premier SubsidiariesFDIC, the “Company Regulatory Agencies”), and have goodpaid all fees and marketable title to all material consolidated realassessments due and personal properties and assets reflectedpayable in connection therewith. Except for normal examinations conducted by the Company Regulatory Agencies in the Premier Balance Sheet or acquired subsequent to September 30, 2002, (other than property and assets disposed of in the Ordinary Course of Business), free and clear of all liens or encumbrances of any kind whatsoever; provided, however, that the representations and warranties contained in this sentence do not cover liens or encumbrances that: (i) are reflected in the Premier Balance Sheet or inSchedule 3.11; (ii) represent liens of current taxes not yet due or which, if due, may be paid without penalty, or which are being contested in good faith by appropriate proceedings; and (iii) represent such imperfections of title, liens, encumbrances, zoning requirements and easements, if any, as are not substantial in character, amount or extent and do not materially detract from the value, or interfere with the present use,regular course of the propertiesbusiness of the Company and assets subject thereto. The material structuresits Subsidiaries, and other improvements to real estate, furniture, fixtures and equipment reflectedexcept as set forth in Section 3.5 of the Premier Balance SheetCompany Disclosure Schedule, no Company Regulatory Agency has initiated any proceeding or, acquired subsequent to September 30, 2002: (A) are in good operating condition and repair (ordinary wear and tear excepted), and (B) comply in all material respects with all applicable laws, ordinances and regulations, including without limitation all
building codes, zoning ordinances and other similar laws, except where any noncompliance would not materially detract from the value, or interfere with the present use, of such structures, improvements, furniture, fixtures and equipment. Premier and the Premier Subsidiaries own or have the right to use all real and personal properties and assets that are material to the conductknowledge of their respective businesses as presently conducted.the Company, investigation into the business or operations of the Company or any of its Subsidiaries since December 31, 1998. There is no unresolved violation, criticism, or exception by any Company Regulatory Agency with respect to any report or statement relating to any examinations of the Company or any of its Subsidiaries.
3.6Section 3.12 Contracts.Financial Statements.
(a) Each written or oral contract entered intoThe Company has previously made available to Parent copies of (a) the consolidated statements of financial condition of the Company and its Subsidiaries as of December 31, 2002 and 2003, and the related consolidated statements of income, changes in shareholders’ equity and cash flows for the fiscal years ended December 31, 2001, 2002 and 2003, in each case accompanied by Premier or the Premieraudit report of Grant Thornton, LLP (the “Accounting Firm”), independent public accountants with respect to the Company, (b) the notes related thereto, (c) the unaudited consolidated statement of financial condition of the Company and its Subsidiaries (other than contractsas of March 31, 2004 and the related unaudited consolidated statements of income and cash flows for the three (3) months ended March 31, 2004 and 2003 and (d) the notes related thereto (collectively, the “Company Financial Statements”). The Accounting Firm is independent with customers reasonably entered intorespect to the Company and its Subsidiaries to the extent required by Premier or Regulation S-X of
the Premier SubsidiariesSEC. The consolidated statements of financial condition of the Company (including the related notes, where applicable) included within the Company Financial Statements fairly present, and the consolidated statements of financial condition of the Company (including the related notes, where applicable) to be included in the Ordinary CourseS-4 to be filed with the SEC pursuant to this Agreement will fairly present, the consolidated financial position of Business) which involves aggregate payments or receiptsthe Company and its Subsidiaries as of the dates thereof, and the consolidated statements of income, changes in excessshareholders’ equity and cash flows (including the related notes, where applicable) included within the Company Financial Statements fairly present, and the consolidated statements of $50,000 per year,income, changes in shareholders’ equity and cash flows of the Company (including the related notes, where applicable) to be included in the S-4 to be filed with the SEC pursuant to this Agreement will fairly present, the consolidated statements of income, changes in shareholders’ equity and cash flows of the Company and its Subsidiaries for the respective fiscal periods therein set forth; each of the Company’s consolidated financial statements (including the related notes, where applicable) to be included in the S-4 to be filed with the SEC pursuant to this Agreement will comply, with accounting requirements applicable to financial statements to be included in the S-4 and with the published rules and regulations of the SEC with respect thereto, including without limitation every employment contract, employee benefit plan, agreement, lease, license, indenture, mortgageRegulation S-X; and other commitment to which either Premier oreach of the Premier Subsidiaries are a party or by which Premier orCompany Financial Statements (including the Premier Subsidiaries or anyrelated notes, where applicable) has been, and each of their properties may be bound (collectively referred to herein as “Material Contracts”) is identified inSchedule 3.12. Except as disclosed inSchedule 3.12, all Material Contracts are enforceable against Premier orsuch consolidated financial statements (including the Premier Subsidiaries, as the case may be, and Premier or the Premier Subsidiaries have in all material respects performed all obligations requiredrelated notes, where applicable) to be performed by themincluded in the S-4 to date and are not in default in any material respect and Premier is not aware of any default by a third party under a Material Contract.Schedule 3.12 identifies all Material Contracts which requirebe filed with the consent or approval of third partiesSEC pursuant to the execution and delivery of this Agreement or towill be, prepared in accordance with GAAP consistently applied during the consummation of the transactions contemplated herein.
(b) Except for the Warrant Agreement and as set forth inSchedule 3.12, as of the date of this Agreement, neither Premier nor the Premier Subsidiaries is a party to, or bound by, any oral or written:
(i) “material contract” as such term is defined in Item 601(b)(10) of Regulation S-K promulgated by the SEC;
(ii) consulting agreement not terminable on thirty (30) days or less notice involving the payment of more than $20,000 per annum,periods involved, except, in the case of unaudited statements, as permitted by the SEC with respect to financial statements included on Form 10-Q. The books and records of the Company and its Subsidiaries have been, and are being, maintained in accordance with GAAP and any such agreement;other applicable legal and accounting requirements.
(iii) agreement with(b) Except as and to the extent reflected, disclosed or reserved against in the Company Financial Statements (including the notes thereto), as of December 31, 2003, neither the Company nor any officer or other key employee the benefits of which areits Subsidiaries had any liabilities, whether absolute, accrued, contingent or otherwise, material to the terms of which are materially altered, upon the occurrence of a transactionfinancial condition of the natureCompany and its Subsidiaries on a consolidated basis which were required to be so disclosed under GAAP. Since December 31, 2003, neither the Company nor any of its Subsidiaries have incurred any liabilities except in the ordinary course of business consistent with past practice, except as specifically contemplated by this Agreement;Agreement.
(c) To the extent required, the Company and the Company Bank have in place “disclosure controls and procedures” as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), to allow the Company’s management to make timely decisions regarding required disclosures and to make the certifications of the Chief Executive Officer and Chief Financial Officer of the Company required under the Exchange Act. Since March 31, 2004, there has not been any material change in the internal controls utilized by the Company to assure that its consolidated financial statements conform with GAAP. Without limiting the generality of the foregoing, the Company’s disclosures and controls are designed and maintained to ensure that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with GAAP and to maintain accountability for assets, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, (iv) agreementthe recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any officer providingdifferences, (v) all information (both financial and non-financial) required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and (vi) all such information is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure and to make the certifications of the Chief Executive Officer and Chief Financial Officer of the Company required under the Exchange Act with respect to such reports. None of the Company’s or any termCompany Subsidiary’s records, systems, controls, data or information are recorded, stored, maintained, operated or otherwise wholly or partly dependent on or held by any means (including any electronic, mechanical or photographic process, whether computerized or not) which (including all means of employmentaccess thereto and therefrom) are not under the exclusive ownership and direct control of the Company or compensation guarantee extending for a period longer than one yearthe Company Subsidiaries or for a payment in excess of $25,000;accountants.
(v) agreement or plan, including3.7Broker’s and Other Fees.Neither the Company nor any stock option plan, stock appreciation rights plan, employee stock ownership plan, restricted stock plan or
stock purchase plan,Subsidiary of the Company nor any of the benefits of which will be increased,their respective officers or the vesting of the benefits of which will be accelerated, by the occurrence ofdirectors has employed any broker or finder or incurred any liability for any broker’s fees, commissions or finder’s fees in connection with any of the transactions contemplated by this Agreement, except that the Company has engaged, and will pay a fee or commission to, Advest, Inc. (the “Advisory Firm”) in accordance with the valueterms of anya letter agreement between the Advisory Firm and the Company, a true and correct copy of which has been previously made available by the Company to Parent’s counsel. Other than fees payable to its attorneys and accountants (the names and terms of retention of which are set forth in Section 3.7 of the benefits of which will be calculated onCompany Disclosure Schedule) and the basis of any offees payable to the Advisory Firm (as set forth in the above-mentioned letter agreement), there are no fees payable by the Company to its financial advisors, attorneys or accountants, in connection with this Agreement or the transactions contemplated hereby or which would be triggered by this Agreement;consummation of the Merger or the termination of the services of such advisors, attorneys or accountants by the Company or any of its Subsidiaries.
(vi) agreement containing covenants that limit its ability to compete in any line3.8Absence of businessCertain Changes or with any person, or that involve any restriction on the geographic area in which, or method by which, it may carry on its business (other than as may be required by law or any regulatory agency);Events.
(vii) agreement, contract or understanding, other than this Agreement, and the Warrant Agreement, regarding the capital stock of Premier and/or Premier Bank or committing to dispose of some or all(a) Except as set forth in Section 3.8(a) of the capital stock or substantially allCompany Disclosure Schedule, since December 31, 2003, the Company and its Subsidiaries have carried on their respective businesses in the ordinary course consistent with their past practices.
(b) Except as set forth in Section 3.8(b) of the assetsCompany Disclosure Schedule, since December 31, 2003, neither the Company nor any of Premier and/its Subsidiaries has (i) increased the wages, salaries, compensation, pension, or Premier Bank;other benefits or perquisites payable to any current or former officer, employee, or director from the amount thereof in effect as of December 31, 2003, granted any severance or termination pay, entered into any contract to make or grant any severance or termination pay, or paid any bonus (except for salary increases and bonus payments made in the ordinary course of business
(viii)consistent with past practices following the date hereof), (ii) suffered any strike, work stoppage, slow-down, or other labor disturbance, (iii) been a party to a collective bargaining agreement, contract or other agreement or understanding with a labor union or labor organization;organization, (iv) had any union organizing activities or (v) entered into, or amended, any employment, deferred compensation, consulting, severance, termination or indemnification agreement with any such current or former officer, employee or director.
(c) Except as set forth in Section 3.8(c) of the Company Disclosure Schedule or as expressly contemplated by this Agreement, neither the Company nor any of its Subsidiaries has taken or permitted any of the actions set forth in Section 5.1 between December 31, 2003 and the date hereof and, during that period, the Company and its Subsidiaries have conducted their business only in the ordinary course of business, consistent with past practice.
(d) Except for liabilities incurred in connection with this Agreement or the transactions contemplated hereby, except as expressly permitted under that Agreement, and except as set forth in Section 3.8(d) of the Company Disclosure Schedule, since December 31, 2003, there has not been:
(i) any act, omission or other event which has had a Material Adverse Effect on the Company, including, but not limited to, any Material Adverse Effect arising from or relating to fraudulent or unauthorized activity,
(ii) any issuance of Company Stock Options or restricted shares of Company Common Stock (in any event, identifying in Section 3.8(d) of the Company Disclosure Schedule the issue date, exercise price and vesting schedule, as applicable, for issuances since December 31, 2003),
(iii) any declaration, setting aside or payment of any dividend or other distribution (whether in cash, stock or property) with respect to any of the Company’s capital stock,
(iv) any split, combination or reclassification of any of the Company’s capital stock or any issuance or the authorization of any issuance of any other securities in respect of, in lieu of or in substitution for shares of the Company’s capital stock, except for issuances of Company Common Stock upon the exercise of Company Stock Options awarded prior to the date hereof in accordance with their present terms,
(v) (A) any granting by the Company or any of its Subsidiaries to any current or former director, executive officer or other employee of any increase in compensation, bonus or other benefits, except for increases to then current employees who are not directors or executive officers that were made in the ordinary course of business consistent with past practice, (B) any granting by the Company or any of its Subsidiaries to any such current or former director, executive officer or employee of any increase in severance or termination pay, or (C) any entry by the Company or any of its Subsidiaries into, or any amendment
of, any employment, deferred compensation, consulting, severance, termination or indemnification agreement with any such current or former director, executive officer or any employee,
(vi) except insofar as may have been required by a change in GAAP or regulatory accounting principles, any change in accounting methods, principles or practices by the Company or its Subsidiaries affecting their assets, liabilities or business, including, without limitation, any reserving, renewal or residual method, or estimate of practice or policy,
(vii) any Tax election or change in any Tax election, amendment to any Tax Return (as defined in Section 3.10(d)), closing agreement with respect to Taxes, or settlement or compromise of any income Tax liability by the Company or its Subsidiaries,
(viii) any material change in investment policies or practices, or
(ix) deferred compensation planany agreement or arrangement.commitment (contingent or otherwise) to do any of the foregoing.
(c) Neither Premier3.9Legal Proceedings.
(a) Except as set forth in Section 3.9(a) of the Company Disclosure Schedule, neither the Company nor Premier Bank is in default under or in violationany of any provision of any note, bond, indenture, mortgage, deed of trust, loan agreement, lease or Material Contract to which itits Subsidiaries is a party to any, and there are no pending or, to whichthe Company’s knowledge, threatened, legal, administrative, arbitral or other proceedings, claims, actions or governmental or regulatory investigations of any material nature against the Company or any of its respective propertiesSubsidiaries or challenging the validity or propriety of the transactions contemplated by this Agreement.
(b) Except as set forth in Section 3.9(b) of the Company Disclosure Schedule, there is no injunction, order, judgment, decree, or regulatory restriction imposed upon the Company, any of its Subsidiaries or the assets is subject, other thanof the Company or any of its Subsidiaries.
3.10Taxes.
(a) Except where a failure to file Tax Returns, a failure of any such defaultsTax Return to be complete and accurate in any respect or violations as could not reasonably be expected,the failure to pay any Tax, individually or in the aggregate, would not be material to the results of operations or financial condition of the Company and its Subsidiaries on a consolidated basis, (i) the Company and each of its Subsidiaries have duly filed all Tax Returns required to be filed by any of them; (ii) all such filed Tax Returns are complete and accurate in all respects, and (iii) the Company and each of its Subsidiaries have duly and timely paid all Taxes (as defined below) that are required to be paid by any of them or that the Company or any of its Subsidiaries are obligated to withhold from amounts owing to any employee, creditor or third party, except with respect to matters contested in good faith in appropriate proceedings and disclosed to Parent in writing. The Company and its Subsidiaries have established on a consolidated basis as of March 31, 2004, on their books and records,
reserves in accordance with GAAP consistently applied that are adequate, in the opinion of management of the Company, for the payment of all Taxes not yet due and payable, incurred in respect of the Company or any of its Subsidiaries through such date. Neither the Company nor any of its Subsidiaries has waived any statute of limitations with respect to any material and adverse change on it.
Section 3.13 Litigation and Governmental Directives.Taxes or, to the extent related to such Taxes, agreed to any extension of time with respect to a Tax assessment or deficiency, in each case to the extent such waiver or agreement is currently in effect. Except as disclosedset forth in Section 3.10(a) of the Company Disclosure Schedule, 3.13, (i)the Tax Returns of the Company and its Subsidiaries which have been examined by the IRS or the appropriate state, local or foreign Tax authority have been resolved and either no deficiencies were asserted as a result of such examinations or any asserted deficiencies have been paid in full and reflected in the Company Financial Statements. Except as set forth in Section 3.10(a) of the Company Disclosure Schedule, there isare no litigation, investigation or proceeding pending or, to the Knowledge (as that term is defined below)knowledge of Premierthe Company, threatened actions, Tax audits, Tax examinations or other audits or examinations by any Governmental Entity responsible for the Premier Subsidiaries, threatened, that involves Premiercollection or imposition of Taxes with respect to the PremierCompany or any of its Subsidiaries, or any pending judicial Tax proceedings or any other Tax disputes, assessments or claims. The Company has made available to Parent true and correct copies of their properties and that, if determined adversely, would materially and adversely affect the condition (financial or otherwise), assets, liabilities, business, operations or future prospects of Premier or the Premier Subsidiaries; (ii) there are no outstanding orders, writs, injunctions, judgments, decrees, regulations, directives, consent agreements or memoranda of understanding issued by anyUnited States federal, state, local and foreign income Tax Returns filed by the Company and its Subsidiaries for taxable years ended after December 31, 2000 and before the date hereof.
(b) Except as set forth in Section 3.10(b) of the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries (i) has requested any extension of time within which to file any Tax Return which Tax Return has not since been filed, (ii) is a party to any agreement providing for the allocation or local courtsharing of Taxes or governmental agency or authority or arbitration tribunal issued against or with the consent of Premier or the Premier Subsidiaries that materially and adversely affect the condition (financial or otherwise), assets, liabilities, business, operations or future prospects of Premier or the Premier Subsidiaries or that inotherwise has any manner restrict the right of Premier or the Premier Subsidiaries to carry on their businesses as presently conducted taken as a whole; and (iii) neither Premier nor the Premier Subsidiaries are awareliability for Taxes of any factperson other than the Company and its Subsidiaries, (iii) is required to include in income any adjustment pursuant to Section 481(a) of the Code, by reason of a change in accounting method or condition presently existingotherwise, (iv) has filed a consent pursuant to Section 341(f) of the Code or agreed to have section 341(f) (2) of the Code apply, (v) has issued or assumed any obligation under Section 279 of the Code, any high yield discount obligation as described in Section 163(f)(1) of the Code or any registration-required obligation within the meaning of Section 163(f)(2) of the Code that might give riseis not in registered form, (vi) is or has been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code, (vii) is or has been a member of an affiliated group (within the meaning of Section 1504(a) of the Code) filing consolidated United States federal income Tax Returns (other than such a group the common parent of which is or was the Company), or (viii) has been a party to any litigation, investigation or proceeding which, if determined adversely to either Premier ordistribution occurring during the Premier Subsidiaries, would materially and adversely affect the consolidated condition (financial or otherwise), assets, liabilities, business, operations or future prospects of Premier or the Premier Subsidiaries or would restrict in any manner the right of Premier or the Premier Subsidiaries to carry on their businesses as presently
conducted taken as a whole. All litigation (except for bankruptcy proceedings in which Premier or the Premier Subsidiaries have filed proofs of claim) in which Premier or the Premier Subsidiaries are involved as a plaintiff (other than routine collection and foreclosure suits initiated in the Ordinary Course of Business)last three years in which the amount soughtparties to such distribution treated the distribution as one to which Section 355 of the Code (or any similar provision of state, local or foreign law) applied.
(c) Except as set forth in Section 3.10(c) of the Company Disclosure Schedule, no officer, director, employee or agent (or former officer, director, employee or agent) of the Company or any of its Subsidiaries is entitled to now, or will or may be recovered is greater than $50,000 is identified inSchedule 3.13. Inentitled to as a consequence of this Agreement or the terms “KnowledgeMerger, any payment or benefit from the Company or any of Premierits Subsidiaries or Premier Bank” and “Knowledgefrom Parent or any of Premier and the Premierits Subsidiaries” shall mean the actual knowledge
which if paid or provided would constitute an “excess parachute payment”, as defined in Section 280G of the officers of Premier.Code or regulations promulgated thereunder.
Section 3.14 Compliance with Laws; Governmental Authorizations. Except as disclosed inSchedule 3.14 or where noncompliance would not have a material and adverse effect upon the condition (financial or otherwise), assets, liabilities, business, operations or future prospects of Premier or the Premier Subsidiaries: (i) Premier and the Premier Subsidiaries are in compliance with all statutes, laws, ordinances, rules, regulations, judgments, orders, decrees, directives, consent agreements, memoranda of understanding, permits, concessions, grants, franchises, licenses, and other governmental authorizations or approvals applicable to Premier or the Premier Subsidiaries or to any of their properties; and (ii) all material permits, concessions, grants, franchises, licenses and other governmental authorizations and approvals necessary for the conduct of the business of Premier or the Premier Subsidiaries as presently conducted have been duly obtained and are in full force and effect, and there are no proceedings pending or threatened which may result in the revocation, cancellation, suspension or materially adverse modification of any thereof.
Section 3.15 Insurance. All policies of insurance relating to Premier’s and Premier Subsidiaries’ operations (except for title insurance policies), including without limitation all financial institutions bonds, held by or on behalf of Premier or the Premier Subsidiaries are listed inSchedule 3.15. All such policies of insurance are in full force and effect, and no notices of cancellation have been received in connection therewith.
Section 3.16 Financial Institutions Bonds. Since January 1, 1999, Premier Bank or its predecessors have continuously maintained in full force and effect one or more financial institutions bonds listed inSchedule 3.16 insuring Premier Bank against acts of dishonesty by each of its employees. No claim has been made under any such bond and Premier Bank is not aware of any fact or condition presently existing which might form the basis of a claim under any such bond. Premier Bank has received no notice that its present financial institutions bond or bonds will not be renewed by its carrier on substantially the same terms as those now in effect.
Section 3.17 Labor Relations and Employment Agreements. Neither Premier nor any of the Premier Subsidiaries are a party to or bound by any collective bargaining agreement. Premier and the Premier Subsidiaries enjoy good working relationships with their employees, and there are no labor disputes pending, or to the Knowledge of Premier or Premier Bank threatened, that might materially and adversely affect the condition (financial or otherwise), assets, liabilities, business, operations or prospects of Premier or the Premier Subsidiaries. Except as disclosed inSchedule 3.17, neither Premier nor the Premier Subsidiaries have any employment contract, change of control agreement or policy, severance agreement, deferred compensation agreement, consulting agreement or similar obligation (including the amendments referred to below, an “Employment Obligation”) with any director, officer, employee, agent or
consultant; provided however, that, as of the date of this Agreement (and effective as of the Effective Time), each of Clark S. Frame, John C. Soffronoff and John J. Ginley has executed an employment agreement with Premier Bank so as to, among other things, consent to certain respective changes in their duties, powers and functions following the Merger and waiving any right to obtain “change of control” or severance payments as a result of the Merger, such agreements to be substantially in the form ofExhibit D attached hereto.(d) For the purposes of this Agreement, Messrs. Frame, Soffronoff(i) the term “Taxes” shall include any of the following imposed by or payable to any Governmental Entity: any income, gross receipts, license, payroll, employment, excise, severance, stamp, business, occupation, premium, windfall profits, environmental (including taxes under Section 59A of the Code), capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, or value added tax, any alternative or add-on minimum tax, any estimated tax, and Ginley,any levy, impost, duty, assessment or withholding, in each case including any interest, penalty, or addition thereto, whether or not disputed and (ii) the term “Tax Return” shall mean any return, declaration, report, claim for refund, information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof, to be referred to herein asfiled (whether on a mandatory or elective basis) with any Governmental Entity responsible for the “collection or imposition of Taxes.
Contract Employees3.11Employee Benefits.”.
(a) Except as disclosed inSchedule 3.17, as Section 3.11(a) of the Effective Time (as defined in Section 9.2 herein), neither Premier nor the Premier Subsidiary will have any liability for employee termination rights arising out of any Employment Obligation and neither the execution nor the consummation of this Agreement shall, by itself, entitle any employee of Premier or the Premier Subsidiaries to any “change of control” payments or benefits. Except as set forth onCompany Disclosure Schedule, 3.17, no payment that is owed or may become due to any director, officer, employee, or agent of Premier or an Premier Subsidiary will be non-deductible to Premier or an Premier Subsidiary or subject to tax under IRC § 280G or § 4999; nor will Premier or an Premier Subsidiary be required to “gross up” or otherwise compensate any such person becausenone of the imposition ofCompany, its Subsidiaries or any excise tax on a paymentERISA Affiliate maintains, administers or has an obligation to such person.
Section 3.18 Employee Benefit Plans. All employee benefit plans, contracts or arrangementscontribute to which Premier or the Premier Subsidiaries are a party or by which Premier or the Premier Subsidiaries are bound, including without limitation all pension, retirement, deferred compensation, savings, incentive, bonus, profit sharing, stock purchase, stock option, life insurance, death or survivor’s benefit, health insurance, sickness, disability, medical, surgical, hospital, severance, layoff or vacation plans, contracts or arrangements (collectively the “Premier Benefit Plans”), but not including the Employment Obligations described in Section 3.17, are identified inSchedule 3.18. Each of the Premier Benefit Plans which is anany “employee pension benefit plan” as defined in Section, within the meaning of section 3(2) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) (the “Company Pension Plans”), “employee welfare benefit plan”, within the meaning of Section 3(l) of ERISA (the “Company Welfare Plans”), stock option plan, stock purchase plan, stock appreciation rights plan, deferred compensation plan, severance plan, bonus plan, employment agreement or other similar plan, policy, program or arrangement, whether written or unwritten (collectively with the Company Pension Plans and the Company Welfare Plans, the “Company Benefit Plans”). Neither the Company nor any of its ERISA Affiliates has ever had an obligation to contribute to any “multiemployer plan”, within the meaning of sections 3(37) and 4001(a) (3) of ERISA. As used herein, “ERISA Affiliate” means any entity required to be aggregated with the Company under Section 414(b), (c), (m) or (o) of the Code or Section 4001 of ERISA.
(b) The Company has delivered to Parent a complete and accurate copy of each of the following with respect to each of the Company Benefit Plans: (i) plan document (together with any and all amendments thereto), summary plan description, and summary of material modifications (if not available, a detailed description of the foregoing); (ii) trust agreement, insurance contract or other funding instruments if any; (iii) most recent IRS determination letter, if any; (iv) three most recent actuarial reports, if any; (v) three most recent financial statements, including the attorney’s response to an auditor’s request for information, if any; and (vi) three most recent annual reports on Form 5500, including any schedules and attachments thereto.
(c) Except as set forth in Section 3.11(c) of the Company Disclosure Schedule, at December 31, 2003, the fair value of plan assets of each of the Company
Pension Plans equals or exceeds the present value of the projected benefit obligations of each such Plan being herein called a “Premierplan based upon actuarial methods, tables and assumptions satisfactory to Parent.
(d) During the last five years, the PBGC has not asserted any claim for liability against the Company or any of its Subsidiaries or any ERISA affiliates which has not been paid in full.
(e) All premiums (and interest charges and penalties for late payment, if applicable) due to the PBGC with respect to each Company Pension Plan”) have been paid. All contributions required to be made to each Company Pension Plan under the terms thereof, ERISA or other applicable law have been timely made, and all amounts properly accrued to date as liabilities of the Company and its Subsidiaries which have not been paid have been properly recorded on the books of the Company and its Subsidiaries.
(f) No event has occurred, whether by action or failure to act, and no condition exists with respect to any Company Benefit Plan that has subjected or could subject the Company, any of its Subsidiaries or any ERISA Affiliate to any tax, fine, penalty or other liability under the Code or ERISA.
(g) Except as disclosed in Section 3.11(g) of the Company Disclosure Schedule, each of the Company Benefit Plans has been operated in compliance in all material respects with the provisions of ERISA, the Code, all regulations, rulings and announcements promulgated or issued thereunder, and all other applicable governmental laws and regulations. Furthermore, except as disclosed in Section 3.11(g) of the Company Disclosure Schedule, the IRS has issued a favorable determination letter with respect to each of the Company Benefit Plans that is exempt from taxintended to be qualified under Sections 401 and 501Section 401(a) of the Code and, has been maintained and operatedexcept as disclosed in material compliance with all applicable provisionsSection 3.11(g) of the CodeCompany Disclosure Schedule, nothing has occurred, whether by action or failure to act, which would cause the loss of such qualification and no condition exists that would subject Company or Parent to any tax under Section 4971, 4972, 4977 or 4974 or to a fine under Section 502(c) of ERISA. No “prohibited transaction” (as such term is defined
(h) Except as disclosed in Section 3.11(h) of the Company Disclosure Schedule, no non-exempt prohibited transaction, within the meaning of Section 4975 of the Code or in ERISA) and not otherwise exempt under406 of ERISA, or the Code has occurred with respect to any of the Company Benefit Plans. None of the Company, any of its Subsidiaries, or any plan fiduciary of any Company Benefit Plan has engaged in, or has any liability in respect of, the Premier Pension Plans.any transaction in violation of Section 404 of ERISA.
(i) There have been no material breaches“reportable events”, within the meaning of fiduciary duty by any fiduciary under orSection 4043(b) of ERISA, with respect to any of the PremierCompany Pension Plans orPlans.
(j) No “accumulated funding deficiency”, within the meaning of Section 412 of the Code and Section 302 of ERISA, has been incurred with respect to any other Premier Benefit Plan which is an employee welfare benefit planof the Company Pension Plans.
(k) Except as defineddisclosed in ERISA, andSection 3.11(k) of the Company Disclosure Schedule, there are no claim is pending, or, to the Knowledgebest knowledge of Premier,the Company, threatened with respect to any Premier Benefit Plan otheror anticipated claims, actions or suits (other than routine claims for benefits made inbenefits) by, on behalf of or against any of the Ordinary Course of Business. Neither Premier nor the Premier Subsidiaries have incurred any material penalty imposed by the Code or by ERISA with respect to the Premier PensionCompany Benefit Plans or any other Premier Benefit Plan. Theretrusts related thereto, whether by action or failure to act, and Company has not been any auditno knowledge of any Premierfacts which could give rise to any such claims, actions or suits. None of the Company Benefit PlanPlans is the subject of any pending or any threatened investigation or audit by the Internal Revenue Service, the Department of Labor or the IRS.PBGC. No assets of the Company are subject to any lien under Section 412 of the Code and no event has occurred or condition exists that could give rise to any such lien.
(l) Except as disclosed in Section 3.11(l) of the Company Disclosure Schedule, no Company Pension Plan or Company Welfare Plan provides medical benefits, death benefits or other non-pension benefits (whether or not insured) beyond an employee’s retirement or other termination of service, other than (i) coverage mandated by law, or (ii) death benefits under any Company Pension Plan.
(m) Except as disclosed in Section 3.11(m) of the Company Disclosure Schedule, (i) there are no welfare benefit funds (within the meaning of Section 419 of the Code) related to a Company Welfare Plan, and (ii) any Company Welfare Plan that is a group health plan (within the meaning of Section 4980B(g)(2) of the Code) complies, and in each and every case has complied, with all of the applicable requirements of Section 4980B of the Code, ERISA, Title XXII of the Public Health Service Act and the Social Security Act.
(n) Except with respect to customary health, life and disability benefits or as disclosed in Section 3.11(n) of the Company Disclosure Schedule, there are no unfunded benefits obligations which are not accounted for by reserves shown in the Company Financial Statements and established under GAAP, or otherwise noted on the Company Financial Statements.
(o) With respect to each Company Benefit Plan that is funded wholly or partially through an insurance policy, there will be no liability of the Company or any of its Subsidiaries as of the Effective Time under any such insurance policy or ancillary agreement with respect to such insurance policy in the nature of a retroactive rate adjustment, loss sharing arrangement or other actual or contingent liability arising wholly or partially out of events occurring prior to the Effective Time.
(p) Except as disclosed in Section 3.11(p) of the Company Disclosure Schedule, the consummation of the transactions contemplated by this Agreement will not (i) entitle any current or former employee of the Company or any of its Subsidiaries to severance pay, bonus, unemployment compensation or any similar payment, or (ii) accelerate the time of payment, vesting, or increase the amount, of any bonus or any compensation due to any current employee or former employee under any Company Benefit Plan.
(q) Neither the Company nor any of its Subsidiaries or ERISA Affiliates has announced to employees, former employees or directors an intention to create, or has otherwise created, a legally binding commitment to adopt any additional Company Benefit Plans which are intended to cover employees or former employees of the Company, any of the Company’s Subsidiaries or any ERISA Affiliates, or to amend or modify any existing Company Benefit Plan which covers or has covered employees or former employees of the Company, any of the Company’s Subsidiaries or any ERISA Affiliate.
(r) No Company Pension Plan subject to Title IV of the Code has been terminated, and no filing of or notice of intent to terminate or initiation by the PBGC to terminate has occurred. In addition, there has not been, nor is there likely to be, a partial termination of any Company Pension Plan within the meaning of Section 411(d)(3) of the Code.
(s) With respect to the Company Benefit Plans, no event has occurred, whether by action or failure to act, and, to the knowledge of the Company, there exists no condition or set of circumstances in connection with which the Company, any Subsidiary of the Company, Parent or any ERISA Affiliate would be subject to any liability (other than a liability to pay benefits thereunder) under the terms of such Company Benefit Plans, ERISA, the Code or any other applicable law which has had, or would reasonably be expected to have, a Material Adverse Effect on the Company.
3.12Company Information.
(a) The information relating to the Company and the Company Bank to be contained in the Proxy Statement, as of the date the Proxy Statement is mailed to shareholders of the Company, and up to and including the date of the meeting of shareholders of the Company to which such Proxy Statement relates, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
(b) The information relating to the Company and its Subsidiaries to be contained in the Company’s applications to the FRB and the Department of Banking and Insurance of the State of New Jersey will be accurate in all material respects.
3.13Compliance with Applicable Law.
(a)General. Except as set forth in Section 3.19 Related Party Transactions3.13(a) of the Company Disclosure Schedule, each of the Company and each of its Subsidiaries hold all material licenses, franchises, permits and authorizations necessary for the lawful conduct of its business under and pursuant to each such item, and each of the Company and each of its Subsidiaries has complied with and is not in default in any respect under any, applicable law, statute, order, rule, regulation, policy and/or guideline of any federal, state or local governmental authority relating to the Company or its Subsidiaries and except as disclosed in Section 3.13(a) of the Company Disclosure Schedule, the Company and its
Subsidiaries have not received notice of violation of, and do not know of any such violations of, any of the above.
(b)CRA. Without limiting the foregoing, the Company and its Subsidiaries have complied in all material respects with the Community Reinvestment Act (“CRA”) and the Company has no reason to believe that any person or group would object successfully to the consummation of the Merger due to the CRA performance of or rating of the Company or its Subsidiaries. All Subsidiaries of the Company that are subject to the CRA have a CRA rating of at least “satisfactory.” Except as listed in Section 3.13(b) of the Company Disclosure Schedule, since January 1, 2001, no person or group has adversely commented in writing to the Company or its Subsidiaries in a manner requiring recording in a file of CRA communications upon the CRA performance of the Company and its Subsidiaries.
3.14Certain Contracts.
(a) Except as disclosed in Section 3.14(a) of the Company Disclosure Schedule 3.19,(i) neither Premierthe Company nor any of its Subsidiaries is a party to or bound by any contract or understanding (whether written or oral) with respect to the Premieremployment or termination of any present or former officers, employees, directors or consultants. The Company has delivered to Parent true and correct copies of all employment agreements and termination agreements with officers, employees, directors, or consultants to which the Company or any of its Subsidiaries is a party or is bound.
(b) Except as disclosed in Section 3.14(b) of the Company Disclosure Schedule, (i) as of the date of this Agreement, neither the Company nor any of its Subsidiaries is a party to or bound by any commitment, agreement or other instrument which is material to the results of operations or financial condition of the Company and its Subsidiaries on a consolidated basis, (ii) no commitment, agreement or other instrument to which the Company or any of its Subsidiaries is a party or by which any of them is bound limits the freedom of the Company or any of its Subsidiaries to compete in any line of business or with any person, and (iii) neither the Company nor any of its Subsidiaries is a party to any collective bargaining agreement. For purposes of subparagraph (i) above, any contract with a remaining term of greater than one (1) year or involving the payment of more than $25,000 (other than contracts relating to banking transactions in the ordinary course of business consistent with past practice) shall be deemed material.
(c) Except as disclosed in Section 3.14(c) of the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries, nor to the best knowledge of the Company, any other party thereto, is in default in any material respect under any material lease, contract, mortgage, promissory note, deed of trust, loan or other commitment (except those under which the Company will be the creditor) or arrangement to which the Company is a party.
(d) Except as set forth in Section 3.14(d) of the Company Disclosure Schedule, neither the entering into of this Agreement nor the consummation of the
transactions contemplated hereunder will cause the Company or Parent to become obligated to make any payment of any kind to any party, including but not limited to, any termination fee, breakup fee or reimbursement fee, pursuant to any agreement or understanding between the Company and such party, other than the payments contemplated by this Agreement.
(e) Except as set forth in Section 3.14(e) of the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries is a party to or bound by any contract (whether written or oral) (i) with respect to the services of any directors, consultants or other independent contractors, (ii) which, upon the consummation of the transactions contemplated by this Agreement, will (either alone or upon the occurrence of any additional acts or events) result in any payment or benefits (whether of severance pay or otherwise) becoming due, or the acceleration or vesting of any rights to any payment or benefits, from Parent, the Company, the Surviving Corporation or any of their respective Subsidiaries to any director, officer, consultant or independent contractor thereof.
(f) Except as set forth in Section 3.14(f) of the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries is a party to or bound by any contract (whether written or oral) which (i) is a consulting agreement (including data processing, software programming and licensing contracts) not terminable on 30 days or less notice involving the payment of more than $25,000 per annum, or (v) which materially restricts the conduct of any line of business by the Company or any of its Subsidiaries.
(g) Section 3.14(g) of the Company Disclosure Schedule contains a schedule showing the good faith estimated present value as of December 31, 2003 of the monetary amounts payable (including any Tax indemnification payments in respect of income and/or excise Taxes) and identifying the in-kind benefits due under any plan other than a Tax-qualified plan for each director of the Company and each officer of the Company with the position of vice president or higher, specifying the assumptions in such schedule.
(h) As of the date of this Agreement (and effective as of the Effective Time), C. Herbert Schneider (the “Contract Employee”) has executed an employment agreement with the Company in the form ofExhibit D (the “Employment Agreement”). Under the Employment Agreement, among other things, the Contract Employee has consented to certain changes in his duties, powers and functions following the Merger and to waive any right to obtain “change of control” or severance payments (including under the current Change in Control Agreement between the Company and the Contract Employee) as a result of the Merger.
Each contract, arrangement, commitment or understanding of the type described in this Section 3.14, whether or not set forth in Section 3.14 of the Company Disclosure Schedule, is referred to herein as a “Company Contract”. The Company has previously delivered or made available to Parent’s counsel true and correct copies of each Company Contract.
3.15Agreements with Regulatory Agencies. Except as set forth in Section 3.15 of the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries is subject to any cease-and-desist or other order issued by, or is a party to any written agreement, consent agreement or memorandum of understanding with, or is a party to any commitment letter or similar undertaking to, or is subject to any order or directive by, or is a recipient of any extraordinary supervisory letter from, or has adopted any board resolutions at the request of (each, whether or not set forth on Section 3.15 of the Company Disclosure Schedule, a “Regulatory Agreement”), any Governmental Entity that restricts the conduct of its business or that in any manner relates to its capital adequacy, its credit policies, its management or its business, nor has the Company or any of its Subsidiaries been advised by any Governmental Entity that it is considering issuing or requesting any Regulatory Agreement.
3.16Properties and Insurance.
(a) Each of the Company and its Subsidiaries has good and marketable title free and clear of all liens, encumbrances, mortgages, pledges, charges, defaults or equitable interests to all of the properties and assets, real and personal, tangible or intangible, which are reflected on the consolidated statement of financial condition of the Company as of December 31, 2003 or acquired after such date, except (i) liens for taxes not yet due and payable or contested in good faith by appropriate proceedings, (ii) pledges to secure deposits and other liens incurred in the ordinary course of business consistent with past practice, (iii) such imperfections of title, easements and encumbrances, if any, as do not interfere with the use of the respective property as such property is used on the date of this Agreement, (iv) for dispositions and encumbrances of, or on, such properties or assets in the ordinary course of business consistent with prior practice and which do not detract materially from the value thereof and (v) mechanics’, materialmen’s, workmen’s, repairmen’s, warehousemen’s, carrier’s and other similar liens and encumbrances arising in the ordinary course of business consistent with prior practice and which do not detract materially from the value thereof. All leases pursuant to which the Company or any Subsidiary of the Company, as lessee, leases real or personal property are valid and enforceable in accordance with their respective terms and neither the Company nor any of its Subsidiaries nor, to the knowledge of the Company, any other party thereto, is in default thereunder in any material respect. All material tangible properties of the Company and each of its Subsidiaries are in good state of maintenance and repair, reasonable wear and tear excepted, conform in all material respects with all applicable ordinances, regulations and zoning laws and are considered by the Company to be adequate for the current business of the Company and its Subsidiaries.
(b) Section 3.16(b) of the Company Disclosure Schedule sets forth a correct legal description, street address and Tax parcel identification number of all real property owned by the Company or any of its Subsidiaries. The Company has furnished to Parent’s counsel copies of all deeds, surveys and title policies relating to such real property and copies of all instruments, agreements and other documents evidencing, creating or constituting liens or other encumbrances on such real property.
(c) Section 3.16(c) of the Company Disclosure Schedule sets forth a correct legal description, street address and Tax parcel identification number of all real property leased by the Company or any of its Subsidiaries. The Company has furnished to Parent’s counsel copies of all leases relating to such real property. The Company and its Subsidiaries have not leased or sub-leased any contract, extensionreal property to any third-parties.
(d) The business operations and all insurable properties and assets of credit,the Company and the Company Subsidiaries are insured for their benefit against all risks which, in accordance with industry standards, should be insured against, in each case under policies or bonds issued by insurers of recognized responsibility, in such amounts with such deductibles and against such risks and losses as are, in accordance with industry standards, in the reasonable judgment of the management of the Company adequate for the business arrangementengaged in by the Company and the Company Subsidiaries. The Company and the Company Subsidiaries have not received any notice of cancellation or notice of a material amendment of any such insurance policy or bond and are not in default under any such policy or bond, no coverage thereunder is being disputed and all material claims thereunder have been filed in a timely fashion. Section 3.16(d) of the Company Disclosure Schedule sets forth a complete and accurate list of all primary and excess insurance coverage held by the Company and/or the Company Subsidiaries currently or at any time during the past three years. Copies of all insurance policies reflected on such list have been provided to Parent.
3.17Environmental Matters. Except as set forth in Section 3.17 of the Company Disclosure Schedule:
(a) Each of the Company and its Subsidiaries, each of the Participation Facilities (as hereinafter defined) and, to the knowledge of the Company, the Loan Properties (as hereinafter defined), are in compliance in all material respects with all applicable Environmental Laws (as hereinafter defined), including common law, regulations and ordinances, and with all applicable decrees, orders and contractual obligations relating to any Environmental Matters, pollution or the discharge of, or exposure to, Hazardous Materials (as hereinafter defined) in the environment or workplace.
(b) There is no suit, claim, action or proceeding, pending or, to the knowledge of the Company, threatened, before any Governmental Entity or other relationshipforum in which the Company, any of its Subsidiaries, any Participation Facility or any Loan Property, has been or, with respect to threatened proceedings, may be, named as a defendant (x) for alleged noncompliance (including by any predecessor) with any Environmental Laws, or (y) relating to the release, threatened release or exposure to any Hazardous Materials whether or not occurring at or on a site owned, leased or operated by the Company or any of its Subsidiaries, any Participation Facility or any Loan Property;
(c) During the period of (x) the Company’s or any of its Subsidiaries’ ownership or operation of any kindof their respective current or former properties, (y) the Company’s or any of its Subsidiaries’ participation in the management of any
Participation Facility, or (z) the Company’s or any of its Subsidiaries’ interest in a Loan Property, there has been no release of Hazardous Materials in, on, under or affecting any such property. To the knowledge of the Company, prior to the period of (x) the Company’s or any of its Subsidiaries’ ownership or operation of any of their respective current or former properties, (y) the Company’s or any of its Subsidiaries’ participation in the management of any Participation Facility, or (z) the Company’s or any of its Subsidiaries’ interest in a Loan Property, there was no release of Hazardous Materials in, on, under or affecting any such property, Participation Facility or Loan Property.
(d) The following definitions apply for purposes of this Section 3.17: (w) “Hazardous Materials” means any chemicals, pollutants, contaminants, wastes, toxic substances, petroleum or other substances or materials regulated under any Environmental Law, (w) “Loan Property” means any property in which the Company or any of its Subsidiaries holds a security interest, and, where required by the context, said term means the owner or operator of such property; (x) “Participation Facility” means any facility in which the Company or any of its Subsidiaries participates in the management and, where required by the context, said term means the owner or operator of such property; (y) “Environmental Laws” means any and all applicable common law, statutes and regulations, of the United States and New Jersey dealing with Environmental Matters, including without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. §9601 et seq., (“CERCLA”), the Hazardous Material Transportation Act, 49 U.S.C. §1801et seq., the Solid Waste Disposal Act including the Resource Conservation and Recovery Act of 1976, 42 U.S.C. §6901et seq. (“RCRA”), the Clean Water Act, 33 U.S.C. §1251et seq., the Clean Air Act, 42 U.S.C. §7401et seq., the Toxic Substances Control Act, 15 U.S.C. §2601et seq., the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. §136et seq., the Emergency Planning and Right-To-Know Act of 1986, 42 U.S.C. §11001et seq., the New Jersey Spill Compensation and Control Act, N.J.S.A. 58:10A-23.11,et seq.(“Spill Act”); the New Jersey Water Pollution Control Act, N.J.S.A. 58: 10A-1et seq.; the New Jersey Air Pollution Control Act, N.J.S.A. 26:2C-1,et seq. as in effect and amended, and all other applicable federal, state, municipal, county and local laws and ordinances, and the rules and regulations promulgated thereunder, and any applicable provisions of common law and civil law providing for any remedy or right of recovery or right of injunctive relief with respect to Environmental Matters, as these laws, ordinances, rules and regulations were in the past or are in effect; and (z) “Environmental Matters” means all matters, conditions, liabilities, obligations, damages, losses, claims, requirements, prohibitions, and restrictions arising out of or relating to the environment, safety, or sanitation, or the production, storage, handling, use, emission, release, discharge, dispersal, or disposal of any substance, product or waste which is hazardous or toxic or which is regulated by any Environmental Law whatsoever.
3.18Opinion. Prior to the execution of this Agreement, the Company has received an opinion from the Advisory Firm to the effect that as of the date thereof and based upon and subject to the matters set forth therein, the Per Share Merger Consideration is fair to the shareholders of the Company from a financial point of view. A copy of such opinion has been provided to Parent’s counsel.
3.19Indemnification. Except as provided in the Company Contracts or the Certificate of Incorporation or by-laws of the Company, neither the Company nor any of its Subsidiaries is a party to any indemnification agreement with any of its present or former directors, officers, employees, agents or other persons who serve or served in any other capacity with any other enterprise at the request of the Company (a “Covered Person”), and, to the best knowledge of the Company, there are no claims for which any Covered Person would be entitled to indemnification under the Certificate of Incorporation or by-laws of the Company or any Subsidiary of the Company, applicable law or regulation or any indemnification agreement.
3.20Loan Portfolio.
(a) With respect to each loan owned by the Company or its Subsidiaries in whole or in part (each, a “Loan”):
(i) the note and the related security documents are each legal, valid and binding obligations of the maker or obligor thereof, enforceable against such maker or obligor in accordance with their terms, except as enforcement may be limited by general principles of equity whether applied in a court of law or a court of equity and by bankruptcy, insolvency and similar laws affecting creditors’ rights and remedies generally;
(ii) neither the Company nor any of its Subsidiaries nor any prior holder of a Loan has modified the note or any of the related security documents in any material respect or satisfied, canceled or subordinated the note or any of the related security documents except as otherwise disclosed by documents in the applicable Loan file;
(iii) the Company or a Subsidiary is the sole holder of legal and beneficial title to each Loan (or the Company’s applicable participation interest, as applicable), except as otherwise referenced on the books and records of the Company;
(iv) the note and the related security documents, copies of which are included in the Loan files, are true and correct copies of the documents they purport to be and have not been suspended, amended, modified, canceled or otherwise changed except as otherwise disclosed by documents in the applicable Loan file;
(v) there is no pending or threatened condemnation proceeding or similar proceeding affecting the property which serves as security for a Loan, except as otherwise referenced on the books and records of the Company;
(vi) there is no pending or threatened litigation or proceeding relating to the property which serves as security for a Loan; and
(vii) with respect to a Loan held in the form of a participation, the participation documentation is legal, valid, binding and enforceable, except as
enforcement may be limited by general principles of equity whether applied in a court of law or a court of equity and by bankruptcy, insolvency and similar laws affecting creditors’ rights and remedies generally.
(b) Except as set forth in Section 3.20(b) of the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries is a party to any written or oral (i) loan agreement, note or borrowing arrangement (including, without limitation, leases, credit enhancements, commitments, guarantees and interest- bearing assets) (collectively, “Loans”), under the terms of which the obligor was, as of December 31, 2003, over 90 days delinquent in payment of principal or interest or in default of any other provision, or (ii) Loan with any director, executive officer or five percent or greater shareholder of the Company or any of its Subsidiaries, or to the knowledge of the Company, any person, corporation or enterprise controlling, controlled by or under common control with any of the following persons: (i) any executive officer or director (including any person who has served in such capacity since January
1, 1999)foregoing. Section 3.20(b) of Premierthe Company Disclosure Schedule sets forth (a) all of the Loans of the Company or any of the Premier Subsidiaries; (ii) any shareholder owning five percent (5%) or moreits Subsidiaries that as of the outstanding Premier Common Stock;date of the Company Bank’s most recent bank examination, were classified by any bank examiner (whether regulatory or internal) as “Other Loans Specially Mentioned”, “Special Mention”, “Substandard”, “Doubtful”, “Loss”, “Classified”, “Criticized”, “Credit Risk Assets”, “Concerned Loans”, “Watch List” or words of similar import, together with the principal amount of and accrued and unpaid interest on each such Loan and the identity of the borrower thereunder, (b) by category of Loan (i.e., commercial, consumer, etc.), all of the other Loans of the Company and its Subsidiaries that as of December 31, 2003, were classified as such, together with the aggregate principal amount of and accrued and unpaid interest on such Loans by category and (iii) any “associate” (as defined in Rule 405 under the 1933 Act)each asset of the foregoing persons or any businessCompany that as of December 31, 2003, was classified as “Other Real Estate Owned” and the book value thereof.
(c) As of December 31, 2003, the allowance for loan losses in which anythe Company Financial Statements was adequate pursuant to GAAP (consistently applied), and the methodology used to compute such allowance complies in all material respects with GAAP (consistently applied) and all applicable policies of the foregoing persons is an officer, director, employee or five percent (5%) or greater equity owner. Each such contract or extensionCompany Regulatory Agencies. As of credit disclosed inSchedule 3.19, except as otherwise specifically described therein, has been madeDecember 31, 2003, the reserve for OREO properties (or if no reserve, the carrying value of OREO properties) in the Ordinary CourseCompany Financial Statements was adequate pursuant to GAAP (consistently applied), and the methodology used to compute the reserve for OREO properties (or if no reserve, the carrying value of Business on substantiallyOREO properties) complies in all material respects with GAAP (consistently applied) and all applicable policies of the same terms, including interest rates and collateral,Company Regulatory Agencies.
3.21Reorganization. The Company has no reason to believe that the Merger will fail to qualify as those prevailing ata reorganization under Section 368(a) of the time for comparable arms’ length transactions with other persons that do not involve more than a normal risk of collectability or present other unfavorable features.Code.
3.22Section 3.20 No FinderInvestment Securities; Borrowings; Deposits. Except as disclosed inSchedule 3.20, neither Premier nor any of the Premier Subsidiaries have paid or become obligated to pay any fee or commission of any kind whatsoever to any investment banker, broker, finder, financial advisor or other intermediary for, on account of or in connection with the transactions contemplated in this Agreement.
(a) Except for investments in Federal Home Loan Bank Stock and pledges to secure Federal Home Loan Bank borrowings and reverse repurchase agreements entered into in arms-length transactions pursuant to normal commercial terms and conditions and entered into in the ordinary course of business consistent with past
practice and restrictions that exist for securities to be classified as “held to maturity,” none of the investment securities held by the Company or any of its Subsidiaries is subject to any restriction (contractual or statutory) that would materially impair the ability of the entity holding such investment freely to dispose of such investment at any time.
(b) Neither the Company nor any Subsidiary is a party to or has agreed to enter into an exchange-traded or over the-counter equity, interest rate, foreign exchange or other swap, forward, future, option, cap, floor or collar or any other contract that is not included on the face of the Company Financial Statements and is a derivative contract (including various combinations thereof) (each, a “Derivatives Contract”) or owns securities that (A) are referred to generically as “structured notes,” “high risk mortgage derivatives,” “capped floating rate notes” or “capped floating rate mortgage derivatives” or (B) are likely to have changes in value as a result of interest or exchange rate changes that significantly exceed normal changes in value attributable to interest or exchange rate changes, except for those Derivatives Contracts and other instruments legally purchased or entered into in the ordinary course of business, consistent with past practice, consistent with regulatory requirements and listed (as of the date hereof) in Section 3.21 Complete3.23(b) of the Company Disclosure Schedule.
(c) Set forth in Section 3.22(c) of the Company Disclosure Schedule is a true and Accuratecorrect list of the borrowed funds (excluding deposit accounts) of the Company and its Subsidiaries as of the date set forth in such schedule.
(d) None of the deposits of the Company or any of its Subsidiaries is a “brokered” deposit.
3.23 Disclosure. Neither this Agreement (insofar as it relates to Premier, the PremierCompany, the Company Subsidiaries, the Premier Common Stock, the Premier Preferred Stock, the Premier Subsidiaries’Company Common Stock, and the involvement of Premierthe Company and the PremierCompany Subsidiaries in the transactions contemplated hereby) nor any financial statement, schedule (including without limitation its Schedules to this Agreement), certificate, or other statement or document delivered by Premierthe Company or the PremierCompany Subsidiaries to FultonParent in connection herewith contains any statement which, at the time and in light of the circumstances under which it is made, is false or misleading with respect to any material fact or omits to state any material fact necessary to make the statements contained herein or therein not false or misleading.
3.24SEC FilingsSection 3.22 Environmental Matters.. Except as disclosed inSchedule 3.22, neither Premier nor any of the Premier Subsidiaries The Company has any material liability relating to any environmental contaminant, pollutant, toxic or hazardous waste or other similar substance has been generated, used, stored, processed, disposed of or discharged onto any of the real estate now or previously owned or acquired (including without limitation any real estate acquired by means of foreclosure or exercise of any other creditor’s right) or leased by Premier or any of the Premier Subsidiariesfiled all forms, reports and which isdocuments required to be reflected, noted or adequately reserved against in Premier’s consolidated financial statements under generally accepted accounting principles. In particular, without limitingfiled by the generality ofCompany with the foregoing sentence, except as disclosed inSchedule 3.22, neither Premier nor any ofSEC since January 1, 2001 (collectively, the Premier Subsidiaries have used or incorporated:“Company SEC Reports”). The Company SEC Reports (i) any materials containing asbestos in any building or other structure or improvement located on any of the real estate now or previously owned or acquired (including without limitation any real estate acquired by means of foreclosure or exercise of any other creditor’s right) or leased by Premier or any of the Premier Subsidiaries; (ii) any electrical transformers, fluorescent light fixtures with ballasts or other equipment containing PCB’s on any of the real estate now or previously owned or acquired (including without limitation any real estate acquired by means of foreclosure or exercise of any other creditor’s right) or leased by Premier or any of the Premier Subsidiaries; or (iii) any underground storage tanks for the storage of gasoline, petroleum products or other toxic or hazardous wastes or similar substances located on any of the real estate now or previously owned or acquired (including without limitation any real estate acquired by
means of foreclosure or exercise of any other creditor’s right) or leased by Premier or any of the Premier Subsidiaries.
Section 3.23 Proxy Statement/Prospectus. Atat the time the Proxy Statement/Prospectus (as defined in Section 6.1(b) herein) is mailed to the shareholders of Premier and at all times subsequent to such mailing, up to and including the Effective Time, the Proxy Statement/Prospectus (including any pre - - and post-effective amendments and supplements thereto), with respect to all information relating to Premier, the Premier Subsidiaries, Premier Common Stock, the Premier Subsidiaries Common Stock and all actions taken and statements made by Premier and the Premier Preferred Stock Subsidiaries in connection with the transactions contemplated herein (except for information provided by Fulton to Premier or the Premier Subsidiaries) will: (i) complythey were filed, complied in all material respects with the applicable provisionsrequirements of the Securities Act of 1933, Act,as amended, and the Securities Exchange Act of 1934, Act andas amended, as the applicable rules and regulations of the SEC thereunder; andcase may be, (ii) did not contain any statement which, at the time andthey were filed (or if amended or superseded by filing prior to the date of this Agreement, then on the date of such filing) contain any untrue statement of a material fact or omit to state a material fact required to be stated in such Company’s SEC Reports or necessary in order to make statements in the Company’s SEC Reports, in light of the circumstances under which they were made, not misleading.
3.25Related Party Transactions.Except as disclosed in Section 3.25 of the Disclosure Schedule, neither the Company nor any of the Company Subsidiaries have any contract, extension of credit, business arrangement or other relationship of any kind with any of the following persons: (i) any executive officer or director (including any person who has served in such capacity since January 1, 1998) of the Company or any of the Company Subsidiaries; (ii) any shareholder owning five percent (5%) or more of the outstanding Company Common Stock; and (iii) any “associate” (as defined in Rule 405 under the 1933 Act) of the foregoing persons or any business in which any of the foregoing persons is an officer, director, employee or five percent (5%) or greater equity owner. Each such contract or extension of credit disclosed in Schedule 3.19, except as otherwise specifically described therein, has been made in the ordinary course of business on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable arms’ length transactions with other persons that do not involve more than a normal risk of collectability or present other unfavorable features.
3.26Vote Required. Assuming that a quorum is present at the Company Shareholders’ Meeting, approval by a majority of the outstanding shares entitled to cast votes at such meeting shall be sufficient to constitute approval by the Company’s shareholders of the Merger.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PARENT
References herein to the “Parent Disclosure Schedule” shall mean all of the disclosure schedules required by this Article IV, dated as of the date hereof and referenced to the specific sections and subsections of Article IV of this Agreement, which have been delivered on the date hereof by Parent to the Company. Except as set forth in the Parent Disclosure Schedule, Parent hereby represents and warrants to the Company as follows:
4.1Corporate Organization. Parent is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Pennsylvania. Parent has the corporate power and authority to own or lease all of its properties and assets and to carry on its business as it is now being conducted, and is duly licensed or qualified to do business in each jurisdiction in which the nature of the business conducted by it or the character or location of the properties and assets owned or leased by it makes such licensing or qualification necessary. Parent is registered as a financial holding company under theBHCA. The Articles of Incorporation and By-laws of Parent, copies of which have previously been made available to the Company, are true and correct copies of such documents as in effect as of the date of this Agreement.
4.2Capitalization.
(a) The authorized capital stock of Parent consists solely of 400,000,000 shares of Parent Common Stock and 10,000,000 shares of preferred stock without par value (the “Parent Preferred Stock”) . As of June 11, 2004, there were 121,986,270 shares of Parent Common Stock outstanding and 6,515,980 shares of Parent Common Stock held by Parent as treasury stock. No shares of Parent Preferred Stock have been
issued as of the date of this Agreement, and Parent has no present intention to issue any shares of Parent Preferred Stock. As of June 11, 2004, there were (i) 17,927,877 shares of Parent Common Stock reserved for issuance under Parent Option Plans of which 3,802,166 shares were issuable upon the exercise of outstanding stock options Parent Option Plans and the Parent Employee Stock Purchase Plan and (ii) there were outstanding 132,304,416 rights (“Parent Rights”) representing the right under certain circumstances to purchase shares of Parent Common Stock pursuant to the terms of the Rights Agreement dated June 20, 1989, as amended and restated as of April 29, 1999, between FFC and Fulton Bank, and (iii) 887,984 shares of Parent Common Stock reserved from time to time for issuance pursuant to Parent’s Employee Stock Purchase and Dividend Reinvestment Plans. All shares of Parent Common Stock that are issued in the Merger shall include purchase Rights under the Parent Rights Agreement unless, prior to the Effective Date, all Rights issued under said Agreement shall have been redeemed by Parent without a Distribution Date having occurred under such Agreement. The shares of Parent Common Stock to be issued pursuant to the Merger will be duly authorized and validly issued and, at the Effective Time, all such shares will be fully paid, nonassessable and free of preemptive rights, with no personal liability attaching to the ownership thereof.
(b) Except as set forth in Section 4.2(b) of the Parent Disclosure Schedule, Parent owns, directly or indirectly, all of the issued and outstanding shares of the capital stock of each of its Subsidiaries, free and clear of all liens, charges, encumbrances and security interests whatsoever, and all of such shares are duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights, with no personal liability attaching to the ownership thereof. As of the date of this Agreement, no Subsidiary of Parent has or is falsebound by any outstanding subscriptions, options, warrants, calls, commitments or misleadingagreements of any character with any party that is not a direct or indirect Subsidiary of Parent calling for the purchase or issuance of any shares of capital stock or any other equity security of such Subsidiary or any securities representing the right to purchase or otherwise receive any shares of capital stock or any other equity security of such Subsidiary.
4.3Authority; No Violation.
(a) Parent has full corporate power and authority to execute and deliver this Agreement and, subject to the parties’ obtaining (i) all bank regulatory approvals required to effectuate the Merger and (ii) the other approvals listed in Section 4.4, 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 approved by the Board of Directors of Parent. No other corporate proceedings on the part of Parent are necessary to approve this Agreement and to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Parent and (assuming due authorization, execution and delivery by the Company) this Agreement constitutes a valid and binding obligation of Parent, enforceable against Parent in accordance with its terms, except as enforcement may be limited by general principles of equity whether applied in a court of law or a
court of equity and by bankruptcy, insolvency and similar laws affecting creditors’ rights and remedies generally.
(b) Neither the execution and delivery of this Agreement by Parent, nor the consummation by Parent of the transactions contemplated hereby, nor compliance by Parent with any of the terms or provisions hereof, will (i) violate any provision of the Articles of Incorporation or By-Laws of Parent or the certificate of incorporation, by-laws or similar governing documents of any of its Subsidiaries, or (ii) assuming that the consents and approvals referred to in Section 4.4 hereof are duly obtained and except as set forth in Section 4.3(b) of the Parent Disclosure Schedule, (x) violate any statute, code, ordinance, rule, regulation, judgment, order, writ, decree or injunction applicable to Parent or any of its Subsidiaries, or any of their respective properties or assets, or (y) violate, conflict with, result in a breach of any provision of or the loss of any benefit under, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of or a right of termination or cancellation under, accelerate the performance required by, or result in the creation of any lien, pledge, security interest, charge or other encumbrance upon any of the respective properties or assets of Parent or any of its Subsidiaries under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which Parent or any of its Subsidiaries is a party, or by which they or any of their respective properties or assets may be bound or affected.
4.4Consents and Approvals. Except for (a) the filing of applications and notices, as applicable, with the FRB, and the Department of Banking and Insurance of the State of New Jersey and approval of such applications and notices, (b) the filing with the SEC of the Proxy Statement and the filing and declaration of effectiveness of the S-4, (c) the filing of the Certificate of Merger with the Department of the Treasury of the State of New Jersey pursuant to the BCA and the filing of Articles of Merger with the Department of State of the Commonwealth of Pennsylvania, (d) approval of the listing of the Parent Common Stock to be issued in the Merger on NASDAQ, (e) such filings as shall be required to be made with any applicable state securities bureaus or commissions, (f) such consents, authorizations, approvals or exemptions under the Environmental Laws and (g) such other filings, authorizations or approvals as may be set forth in Section 4.4 of the Parent Disclosure Schedule, no consents or approvals of or filings or registrations with any Governmental Entity or with any third party are necessary in connection with (1) the execution and delivery by Parent of this Agreement and (2) the consummation by Parent of the Merger and the other transactions contemplated hereby.
4.5Reports. Parent and each of its Subsidiaries have timely filed all reports, registrations and statements, together with any amendments required to be made with respect thereto, that they were required to file since January 1, 2001 with (i) the FRB, (ii) the Office of the Comptroller of the Currency (the “OCC”), (iii) the FDIC, (iv) state banking regulators in Pennsylvania, New Jersey, Delaware, Maryland and Virginia and (v) any other Governmental Entity that regulates Parent or any of its Subsidiaries (collectively with the FRB, the Department and the FDIC, the “Parent’s Regulatory Agencies”), and have paid all fees and assessments due and payable in connection
therewith. Except for normal examinations conducted by the Parent’s Regulatory Agencies in the regular course of the business of Parent and its Subsidiaries, and except as set forth in Section 4.5 of the Parent Disclosure Schedule, no Parent’s Regulatory Agency has initiated any proceeding or, to the knowledge of Parent, investigation into the business or operations of Parent or any of its Subsidiaries since January 1, 2001. There is no unresolved violation, criticism, or exception by any Parent’s Regulatory Agency with respect to any material fact,report or omitsstatement relating to state any material fact that is requiredexaminations of Parent or any of its Subsidiaries.
4.6Financial Statements. Parent has previously made available to be stated therein or necessarythe Company copies of (a) the consolidated balance sheets of Parent and its Subsidiaries as of December 31, 2002 and 2003, and the related consolidated statements of income, consolidated changes in order (A) to makeshareholders’ equity and cash flows for the statements therein not false or misleading, or (B) to correct any statementfiscal years ended December 31, 2001, 2002 and 2003, in an earlier communicationeach case accompanied by the applicable audit report (audited by Arthur Andersen LLP for the year 2001 and KPMG LLP for the years 2002 and 2003) with respect to the Proxy Statement/Prospectus whichCompany, (b) the notes related thereto, (c) the unaudited consolidated balance sheet of the Company and its Subsidiaries as of March 31, 2004 and the related unaudited consolidated statements of income and cash flows for the three months ended March, 2004 and 2003 and (d) the notes related thereto (the “Parent Financial Statements”). KPMG LLP is independent with respect to the Parent and its Subsidiaries to the extent required by Regulation S-X of the SEC. The consolidated balance sheets of the Parent (including the related notes, where applicable) included within the Parent Financial Statements fairly present, and the consolidated statements of financial condition of the Parent (including the related notes, where applicable) to be incorporated by reference in the S-4 will fairly present, the consolidated financial position of the Parent and its Subsidiaries as of the dates thereof, and the consolidated statements of income, changes in shareholders’ equity and cash flows (including the related notes, where applicable) included within the Parent Financial Statements fairly present, and the consolidated statements of income, changes in shareholders’ equity and cash flows of Parent (including the related notes, where applicable) to be incorporated by reference in the S-4 will fairly present, the results of the consolidated operations and consolidated financial position of the Parent and its Subsidiaries for the respective fiscal periods therein set forth; each of the Parent Financial Statements (including the related notes, where applicable) complies, and each of such consolidated financial statements (including the related notes, where applicable) to be incorporated by reference in the S-4 will comply, with accounting requirements applicable to financial statements to be included in the S-4 and with the published rules and regulations of the SEC with respect thereto, including without limitation Regulation S-X; and each of the Parent Financial Statements (including the related notes, where applicable) has become false or misleading.been, and each of such consolidated financial statements (including the related notes, where applicable) to be incorporated by reference in the S-4 will be, prepared in accordance with GAAP consistently applied during the periods involved, except, in the case of unaudited statements, as permitted by the SEC with respect to financial statements included on Form 10-Q. The books and records of the Parent and its Subsidiaries have been, and are being, maintained in accordance with GAAP and any other applicable legal and accounting requirements.
4.7Section 3.24 SEC FilingsReports. No With respect to each (a) final registration statement, offering circular,prospectus, report, schedule and definitive proxy statement schedule or report filed and not withdrawnsince January 1, 2001 by Premier or Premier BankParent with the SEC pursuant to the Securities Act of 1933 (the “Securities Act”) or the Federal Reserve BoardExchange Act (the “FRBParent Reports”), as applicable, under the 1933 Act or the 1934 Act, on the date of effectiveness (in the case of any and (b) communication mailed by Parent to its shareholders since January 1, 2001, no such registration statement, prospectus, report, schedule, proxy statement or offering circular) or on the date of filing (in the case of any report or schedule) or on the date of mailing (in the case of any proxy statement),communication contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances in which they were made, not misleading, except that information as of a later date shall be deemed to modify information as of an earlier date. Parent has timely filed all Parent Reports and other documents required to be filed by it under the Securities Act and the Exchange Act, and, as of their respective dates, all Parent Reports complied in all material respects with the published rules and regulations of the SEC with respect thereto.
4.8Absence of Certain Changes or Events. Except as disclosed in any Parent Report filed with the SEC prior to the date of this Agreement, since December 31, 2003, there has been no change or development or combination of changes or developments which, individually or in the aggregate, has had a Material Adverse Effect on Parent.
4.9Legal Proceedings.
(a) Except as disclosed in any Parent Report filed with the SEC prior to the date of this Agreement or as may be set forth in Section 4.9 of the Parent Disclosure Schedule, neither Parent nor any of its Subsidiaries is a party to any, and there are no pending or, to Parent’s knowledge, threatened, legal, administrative, arbitral or other proceedings, claims, actions or governmental or regulatory investigations of any material nature against Parent or any of its Subsidiaries or challenging the validity or propriety of the transactions contemplated by this Agreement.
(b) Except as set forth in Section 4.9(b) of the Parent Disclosure Schedule, there is no injunction, order, judgment, decree, or regulatory restriction imposed upon Parent, any of its Subsidiaries or the assets of Parent or any of its Subsidiaries.
4.10Parent Information.
(a) The information relating to Parent to be contained in the Proxy Statement, as of the date the Proxy Statement is mailed to shareholders of the Company, and up to and including the date of the meeting of shareholders of the Company to which such Proxy Statement relates, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
Section 3.25 Reports. Premier and Premier Bank have filed The Proxy Statement (except for such portions thereof that relate only to the Company or any of its Subsidiaries) will comply in all material reports, registrations and statements that are required to be filedrespects with the FRB,provisions of the Federal Deposit Insurance Company (“FDIC”),Exchange Act and the Pennsylvania Department of Banking (the “Department”)rules and any other applicable federal, state or local governmental or regulatory authoritiesregulations thereunder and such reports, registrations and statements referred to in this Section 3.25 were, as of their respective dates, in compliancethe S-4 will comply in all material respects with all provisions of the statutes, rules and regulations enforced or promulgated by the governmental or regulatory authority with which they were filed; provided, however, that the failure to file any such report, registration, or statement or the failure of any report, registration or statement to comply with the applicable regulatory standard shall not be deemed to be a breach of the foregoing representation unless such failure has or may have a material adverse impact on Premier and the Premier Subsidiaries on a consolidated basis. Premier has furnished Fulton with, or made available to Fulton, copies of all such filings made in the last three fiscal years and in the period from January 1, 2002 through the date of this Agreement. Premier is required to file reports with the SEC pursuant to Section 12 of the 1934 Act, and, except as set forth onSchedule 3.25, Premier has made all appropriate filings under the 1934Securities Act and the rules and regulations promulgated thereunder; provided, however, that the failurethereunder.
(b) The information relating to make any such filing shall not be deemedParent and its Subsidiaries to be a breachcontained in the Parent’s applications to the FRB and the Department of Banking and Insurance of the foregoing representation
unless such failure has or may have aState of New Jersey will be accurate in all material adverse impact on Premier and the Premier Subsidiaries on a consolidated basis. The Premier Common Stock is traded on the American Stock Exchange (“AMEX”) under the symbol “PPA” and the Premier Preferred Stock is traded on the AMEX under the symbol “PPA.Pr.A.”respects.
4.11Section 3.26 Loan Portfolio of Premier Bank.
(a) Attached hereto asSchedule 3.26 is a list of (i) all outstanding commercial relationships, i.e. commercial loans, commercial loan commitments and commercial letters of credit, of Premier Bank in excess of $1,500,000, (ii) all loans of Premier Bank classified by Premier Bank or any regulatory authority as “Monitor,” “Substandard,” “Doubtful” or “Loss,” (iii) all commercial and mortgage loans of Premier Bank classified as “non-accrual,” and (iv) all commercial loans of Premier Bank classified as “in substance foreclosed.”
(b) Premier Bank has adequately reserved for or charged off loans in accordanceCompliance with applicable regulatory requirements, generally accepted accounting principles and current written policies of Premier Bank.
(c) Premier Bank does not engage in so-called “subprime lending.”
Applicable LawSection 3.27 Investment Portfolio.. Attached hereto asSchedule 3.27 is a list of all securities held by Premier and the Premier Subsidiaries for investment, showing the holder, principal amount, book value and market value of each security as of a recent date, and of all short-term investments held by it as of September 30, 2002. These securities are free and clear of all liens, pledges and encumbrances, except as shown onSchedule 3.27. Except as set forth onin Section 4.11 of the Parent Disclosure Schedule, 3.27, the investment portfolioeach of Premier Parent and each of its Subsidiaries hold all material licenses, franchises, permits and authorizations necessary for the lawful conduct of its business under and pursuant to each such item, and each of Parent and each of its Subsidiaries has complied with and is not in default in any respect under any, applicable law, statute, order, rule, regulation, policy and/or guideline of any federal, state or local governmental authority relating to Parent or its Subsidiaries and except as disclosed in Section 4.11 of the PremierParent Disclosure Schedule, Parent and its Subsidiaries doeshave not includereceived notice of violation of, and do not know of any financial derivatives.such violations of, any of the above.
4.12Section 3.28 Regulatory Examinations.Ownership of Company Common Stock; Affiliates and Associates.
(a) Except for normal examinations conductedOther than as contemplated by a regulatory agency in the Ordinary Course of Business, no regulatory agency has initiated any proceeding or investigation into the business or operations of Premier or any of the Premier Subsidiaries. Except as otherwise disclosed in Section 3.29,this Agreement, neither PremierParent nor any of its affiliates or associates (as such terms are defined under the Premier Subsidiaries have received any objection from any regulatory agency to Premier’sExchange Act) beneficially owns, directly or any of the Premier Subsidiaries’ response to any violation, criticismindirectly, or exception with respect to any report or statement relating to any examinations of Premier and any of the Premier Subsidiaries which would have a materially adverse effect on Premier and any of the Premier Subsidiaries on a consolidated basis.
(b) Neither Premier nor any of the Premier Subsidiaries are required to divest any assets currently held by it or discontinue any activity currently conducted as a result of the Federal Deposit Insurance Corporation Improvement Act of 1991, any regulations promulgated thereunder, or otherwise which would have a materially adverse effect on Premier and any of the Premier Subsidiaries on a consolidated basis.
Section 3.29 Regulatory Agreements. Except as set forth onSchedule 3.29, on the date hereof, neither Premier nor Premier Bank is a party to any assistance agreement, directive, commitment letter, supervisory agreementarrangement or letter, memorandumunderstanding for the purpose of understanding, consent order, cease and desist order,acquiring, holding, voting or conditiondisposing of, any regulatory order, decree or similar directiveshares of capital stock of the Company (other than Trust Account Shares and DPC Shares).
4.13Agreements with or by the FDIC, the Federal Reserve, the Department orRegulatory Agencies. Neither Parent nor any other financial services regulatory agency having jurisdiction over Premier or Premier Bankof its Subsidiaries is subject to any Regulatory Agreement with any Governmental Entity that relates torestricts the conduct of theits business of Premier or Premier Bank,that in any manner relates to its capital adequacy, its credit policies, its management or its business, nor has PremierParent or Premier Bankany of its Subsidiaries been advised by any such regulatory agency or other governmental entityGovernmental Entity that it is considering issuing or requesting any such agreement, order or decree.
Section 3.30 Beneficial Ownership of Fulton Common Stock. Premier and the Premier Subsidiaries do not, and prior to the Effective Time, Premier and the Premier Subsidiaries will not, own beneficially (within the meaning of SEC Rule 13-d-3(d)(1)) more than five percent (5%) of the outstanding shares of Fulton Common Stock.
Section 3.31 Fairness Opinion. Premier’s Board of Directors has received a written opinion from Boenning & Scattergood, Inc., to be updated in writing prior to the publication of the Proxy Statement/Prospectus (a copy of such updating written opinion being provided simultaneously to Fulton at the time of receipt), to the effect that the Conversion Ratio, at the time of execution of this Agreement and the mailing of the Proxy materials, is fair to Premier’s shareholders from a financial point of view.
ARTICLE IV—REPRESENTATIONS AND WARRANTIES OF FULTON
Fulton represents and warrants to Premier, as of the date of this Agreement and as of the date of the Closing, as follows:
Section 4.1 Authority. The execution and delivery of this Agreement and the consummation of the transactions contemplated herein have been authorized by the Board of Directors of Fulton, and no other corporate action on the part of Fulton is necessary to authorize this Agreement or the consummation by Fulton of the transactions contemplated herein. This Agreement has been duly executed and delivered by Fulton and, assuming due authorization, execution and delivery by Premier, constitutes a valid and binding obligation of Fulton. The execution, delivery and consummation of this Agreement will not constitute a violation or breach of or default under the Articles of Incorporation or Bylaws of Fulton or any statute, rule, regulation, order, decree, directive, agreement, indenture or other instrument to which Fulton is a party or by which Fulton or any of its properties are bound.
Section 4.2 Organization and Standing. Fulton is a business corporation that is duly organized, validly existing and in good standing under the laws of the Commonwealth of Pennsylvania. Fulton is a registered financial holding company under the BHC Act and has full power and lawful authority to own and hold its properties and to carry on its business as presently conducted.
Section 4.3 Capitalization. The authorized capital of Fulton consists exclusively of 400,000,000 shares of Fulton Common Stock and 10,000,000 shares of preferred stock without
par value (the “Fulton Preferred Stock”). As of the date of this Agreement, there were 104,027,373 shares of Fulton Common Stock validly issued, fully paid and non-assessable and 2,837,958 shares are held as treasury shares. No shares of Fulton Preferred Stock have been issued as of the date of this Agreement, and Fulton has no present intention to issue any shares of Fulton Preferred Stock. As of the date of this Agreement, there are no outstanding obligations, options or rights of any kind entitling other persons to acquire shares of Fulton Common Stock or shares of Fulton Preferred Stock and there are no outstanding securities or other instruments of any kind convertible into shares of Fulton Common Stock or into shares of Fulton Preferred Stock, except as follows: (i) 2,820,919 shares of Fulton Common Stock were issuable upon the exercise of outstanding stock options granted under the Fulton Incentive Stock Option Plan and the Fulton Employee Stock Purchase Plan and (ii) there were outstanding 106,848,292 Rights representing the right under certain circumstances to purchase shares of Fulton Common Stock pursuant to the terms of a Fulton Rights Agreement and (iii) 2,329,021 shares of Fulton Common Stock reserved from time to time for issuance pursuant to Fulton’s Employee Stock Purchase and Dividend Reinvestment Plans. All shares of Fulton Common Stock that are issued in the Merger shall include purchase Rights under the Fulton Shareholder Rights Agreement unless, prior to the Effective Date, all Rights issued under said Agreement shall have been redeemed by Fulton without a Distribution Date having occurred under suchRegulatory Agreement.
4.14Reorganization. Parent has no reason to believe that the Merger will fail to qualify as a reorganization under Section 4.4 Articles of Incorporation and Bylaws. The copies368(a) of the Articles of Incorporation, as amended, and of the Bylaws, as amended, of Fulton that have been delivered to Premier are true, correct and complete.Code.
4.15Section 4.5 SubsidiariesDisclosure.Schedule 4.5 contains a list of all subsidiaries (“Subsidiaries”) which Fulton owns, directly or indirectly. Except as otherwise disclosed onSchedule 4.5: (i) Fulton owns, directly or indirectly, all of the outstanding shares of capital stock of each Subsidiary, and (ii) as of the date of this Agreement: (A) there are no outstanding obligations, options or rights of any kind entitling persons (other than Fulton or any Subsidiary) to acquire shares of capital stock of any Subsidiary, and (B) there are no outstanding securities or other instruments of any kind held by persons (other than Fulton or any Subsidiary) that are convertible into shares of capital stock of any Subsidiary. Each Subsidiary is duly organized, validly existing and in good standing under the laws of the jurisdiction pursuant to which it is incorporated. Each Subsidiary has full power and lawful authority to own and hold its properties and to carry on its business as presently conducted. Each Subsidiary which is a banking institution is an insured bank under the provisions of the FDI Act.
Section 4.6 Financial Statements. Fulton has delivered to Premier the following financial statements: Consolidated Balance Sheets at December 31, 2001 and 2000 and Consolidated Statements of Income, Consolidated Statements of Shareholders’ Equity, and Consolidated Statements of Cash Flows for the years ended December 31, 2001, 2000 and 1999, audited by Arthur Andersen LLP for the years 1999, 2000 and 2001 and set forth in the Annual Report to the shareholders of Fulton for the year ended December 31, 2001, and unaudited Consolidated Balance Sheets as of September 30, 2002, unaudited Consolidated Statements of Income for the nine-month periods ended September 30, 2002 and 2001, and unaudited Consolidated Statements of Cash Flows for the nine-months ended September 30, 2002 and
2001 as filed with the SEC in a Quarterly Report on Form 10-Q (the Consolidated Balance Sheet as of September 30, 2002 being hereinafter referred to as the “Fulton Balance Sheet”). Each of the foregoing financial statements fairly presents the consolidated financial position, assets, liabilities and results of operations of Fulton at their respective dates and for the respective periods then ended and has been prepared in accordance with generally accepted accounting principles consistently applied, except as otherwise noted in a footnote thereto.
Section 4.7 Absence of Undisclosed Liabilities. Except as disclosed inSchedule 4.7 or as reflected, noted or adequately reserved against in the Fulton Balance Sheet, at September 30, 2002 Fulton had no material liabilities (whether accrued, absolute, contingent or otherwise) which were required to be reflected, noted or reserved against in the Fulton Balance Sheet under generally accepted accounting principles. Except as described inSchedule 4.7, since September 30, 2002 Fulton has not incurred any such liability other than liabilities of the same nature as those set forth in the Fulton Balance Sheet, all of which have been reasonably incurred in the ordinary course of business.
Section 4.8 Absence of Changes; Dividends, Etc. Since September 30, 2002 (a) there has not been any material and adverse change in the condition (financial or otherwise), assets, liabilities, business, operations or future prospects of Fulton and the Fulton Subsidiaries on a consolidated basis and (b) except as disclosed inSchedule 4.8, Fulton has not declared, set aside, made or paid any dividend or other distribution in respect of the Fulton Common Stock, or purchased, issued or sold any shares of Fulton Common Stock or the Fulton Subsidiaries Common Stock.
Section 4.9 Litigation and Governmental Directives. Except as disclosed inSchedule 4.9: (i) there is no litigation, investigation or proceeding pending, or to the Knowledge of Fulton threatened, that involves Fulton or any Fulton Subsidiary or its properties and that, if determined adversely to Fulton or the Fulton Subsidiary, would materially and adversely affect the condition (financial or otherwise), assets, liabilities, business, operations or future prospects of Fulton; (ii) there are no outstanding orders, writs, injunctions, judgments, decrees, regulations, directives, consent agreements or memoranda of understanding issued by any federal, state or local court or governmental agency or authority or of any arbitration tribunal against Fulton which materially and adversely affect the condition (financial or otherwise), assets, liabilities, business, operations or future prospects of Fulton or restrict in any manner the right of Fulton to carry on its business as presently conducted; and (iii) Fulton is not aware of any fact or condition presently existing that might give rise to any litigation, investigation or proceeding which, if determined adversely to Fulton, would materially and adversely affect the condition (financial or otherwise), assets, liabilities, business, operations or future prospects of Fulton or restrict in any manner the right of Fulton to carry on its business as presently conducted.
Section 4.10 Compliance with Laws; Governmental Authorizations. Except as disclosed inSchedule 4.10 or where noncompliance would not have a material and adverse effect upon the condition (financial or otherwise), assets, liabilities, business, operations or future prospects of Fulton: (i) Fulton and each of its Subsidiaries are in compliance with all statutes, laws, ordinances, rules, regulations, judgments, orders, decrees, directives, consent agreements, memoranda of understanding, permits, concessions, grants, franchises, licenses, and other
governmental authorizations or approvals applicable to their respective operations and properties; and (ii) all permits, concessions, grants, franchises, licenses and other governmental authorizations and approvals necessary for the conduct of the respective businesses of Fulton and each of its Subsidiaries as presently conducted have been duly obtained and are in full force and effect, and there are no proceedings pending or threatened which may result in the revocation, cancellation, suspension or materially adverse modification of any thereof.
Section 4.11 Complete and Accurate Disclosure. Neither this Agreement (insofar as it relates to Fulton, FultonParent, Parent Common Stock, and the involvement of FultonParent in the transactions contemplated hereby) nor any financial statement, schedule (including, without limitation, its Schedules to this Agreement), certificate or other statement or document delivered by FultonParent to Premierthe Company in connection herewith contains any statement which, at the time and under the circumstances under which it is made, is false or misleading with respect to any material fact or omits to state any material fact necessary to make the statements contained herein or therein not false or misleading. In particular, without
4.16Loan Loss Provision.As of December 31, 2003, the allowance for loan losses in the Parent Financial Statements was adequate pursuant to GAAP (consistently applied), and the methodology used to compute such allowance complies in all material respects with GAAP (consistently applied) and all applicable policies of the Company Regulatory Agencies. As of December 31, 2003, the reserve for OREO properties (or if
no reserve, the carrying value of OREO properties) in the Company Financial Statements was adequate pursuant to GAAP (consistently applied), and the methodology used to compute the reserve for OREO properties (or if no reserve, the carrying value of OREO properties) complies in all material respects with GAAP (consistently applied) and all applicable policies of the all applicable regulatory agencies.
4.17Accounting, Regulatory Matters. Parent has not agreed to take any action, has no knowledge of any fact and has not agreed to any circumstance that would materially impede or delay receipt of any consent or approval from any Governmental Entity, including matters relating to the Community Reinvestment Act.
ARTICLE V. COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1Covenants of the Company. Except as expressly provided in this Agreement, during the period from the date of this Agreement to the Effective Time, the Company shall cause each of its Subsidiaries to conduct its business in the ordinary and usual course consistent with past practices and prudent banking practice; (ii) maintain and preserve intact its business organization, properties, leases, employees and advantageous business relationships and retain the services of its officers and key employees, (iii) take no action which would adversely affect or delay the ability of the Company or Parent to perform its covenants and agreements on a timely basis under this Agreement, and (iv) take no action which would adversely affect or delay the ability of the Company or Parent to obtain any necessary approvals, consents or waivers of any governmental authority or third-party required for the transactions contemplated hereby or which would reasonably be expected to result in any such approvals, consents or waivers containing any material condition or restriction. Without limiting the generality of the foregoing, sentence, the information provided and the representations made by Fulton to Premier in connection with the Registration Statement (as definedexcept as set forth in Section 6.1(b)), both at the time such information and representations are provided and made and at the time5.1 of the Closing, will be trueCompany Disclosure Schedule or as otherwise specifically provided by this Agreement or as consented to in writing by Parent, the Company shall not, and accurate in all material respects and willshall not contain any false or misleading statement with respect to any material fact or omit to state any material fact required to be stated therein or necessary in order (i) to make the statements made not false or misleading, or (ii) to correct any statement contained in an earlier communication with respect to such information or representations which has become false or misleading.
Section 4.12 Labor Relations. Neither Fulton norpermit any of its Subsidiaries is a party to or bound by any collective bargaining agreement. Fulton and each of its Subsidiaries enjoy good working relationships with their employees, and there are no labor disputes pending, or to the knowledge of Fulton or any Subsidiary threatened, that might materially and adversely affect the condition (financial or otherwise), assets, liabilities, business, operations or prospects of Fulton.to:
Section 4.13 Employee Benefits Plans. Fulton’s contributory profit-sharing plan, defined benefits pension plan and 401(k) plan (hereinafter collectively referred to as(a) solely in the “Fulton Pension Plans”) are exempt from tax under Sections 401 and 501case of the Code, have been maintainedCompany, declare or pay any dividends on, or make other distributions in respect of, any of its capital stock; provided, however, that, between the date of this Agreement and operatedthe Effective Date, the Company may declare a dividend of up to (i) $.11 per share on the Company Common Stock to be paid on each of (A) September 30, 2004, provided that the Effective Date does not occur (or is not expected to occur) on or before the record date for the dividend on Parent Common Stock scheduled to be paid on or about October 15, 2004; (B) December 31, 2004, provided that the Effective Date does not occur (or is not expected to occur) on or before the record date for the dividend on the Parent Common Stock scheduled to be paid on or about January 14, 2005; and (ii) $.22 per share on the Company Common Stock to be paid on March 31, 2005 and on each quarter end thereafter until either the Effective Date occurs or this Agreement is terminated, provided that the Effective Date does not occur (or is not expected to occur) on or before the record date for the dividend on the Parent Common Stock scheduled to be paid on or about April 15, 2005 and thereafter on or before the record date for each subsequent quarterly dividend on the Parent Common Stock (it being the intent of Parent and the Company that the Company be permitted to pay a dividend on the Company Common Stock on the dates indicated in compliance with all applicable provisionssubsections (i) and (ii) above only
if the shareholders of the CodeCompany, upon becoming shareholders of Parent, would not be entitled to receive a dividend on the Parent Common Stock on the payment dates indicated in such subsections);
(b) (i) repurchase, redeem or otherwise acquire (except for the acquisition of Trust Account Shares and ERISA, are not subject to any accumulated funding deficiency within the meaning of ERISA and the regulations promulgated thereunder, and do not have any outstanding liability to the Pension Benefit Guaranty Corporation (the “PBGC”). No “prohibited transaction” or “reportable event” (asDPC Shares, as such terms are defined in Section 1.4(b) hereof) any shares of the Code or ERISA) has occurred with respect tocapital stock of the Fulton Pension PlansCompany or any other employee benefit plan to which FultonSubsidiary of the Company, or any securities convertible into or exercisable for any shares of the capital stock of the Company or any Subsidiary of the Company, (ii) split, combine or reclassify any shares of its subsidiaries are a partycapital stock or by which Fultonissue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, or (iii) issue, deliver or sell, or authorize or propose the issuance, delivery or sale of, any shares of its capital stock or any of its subsidiaries are bound (each hereinafter called a “Fulton Benefit Plan”). There have been no breaches of fiduciary duty by any fiduciary undersecurities convertible into or with respect to the Fulton Pension Plansexercisable for, or any other Fulton Benefit Plan, and no claim is pendingrights, warrants or threatenedoptions to acquire, any such shares, or enter into any agreement with respect to any Fulton Benefit Plan other than claims for benefits made in the Ordinary Course of Business. Neither Fulton or any of its subsidiaries have incurred any liability for any tax imposed by Section 4975 of the Code or for any penalty imposed by the Code or by
ERISA with respect to the Fulton Pension Plans or any other Fulton Benefit Plan. There has not been any audit of any Fulton Benefit Plan by the Department of Labor, the IRS or the PBGC since 1990.
Section 4.14 Environmental Matters. Except as disclosedforegoing, except, inSchedule 4.14, Fulton has no material liability relating to any environmental contaminant, pollutant, toxic or hazardous waste or other similar substance that has been used, generated, stored, processed, disposed of or discharged onto any of the real estate now or previously owned or acquired (including without limitation real estate acquired by means of foreclosure or other exercise of any creditor’s right) or leased by Fulton and which is required to be reflected, noted or adequately reserved against in Fulton’s consolidated financial statements under generally accepted accounting principles.
Section 4.15 SEC Filings. No registration statement, offering circular, proxy statement, schedule or report filed and not withdrawn by Fulton with the SEC under the 1933 Act or the 1934 Act, on the date of effectiveness (in the case of any registration statement or offering circular) or onclauses (ii) and (iii), for the dateissuance of filing (in the case of any report or schedule) or on the date of mailing (in the case of any proxy statement), contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.
Section 4.16 Proxy Statement/Prospectus. At the time the Proxy Statement/Prospectus (as defined in Section 6.1(b)) is mailed to the shareholders of Premier and at all times subsequent to such mailing, up to and including the Effective Time, the Proxy Statement/Prospectus (including any pre- and post-effective amendments and supplements thereto), with respect to all information relating to Fulton, Fultona total of 577,428 shares of Company Common Stock and actions taken and statements made by Fulton in connection withupon the transactions contemplated herein (other than information provided by Premier or Premier Bank to Fulton), will: (i) comply in all material respects with applicable provisionsexercise of Company Stock Options granted under the 1933 Act and 1934 Act and the pertinent rules and regulations thereunder; and (ii) not contain any statement which, at the time and in light of the circumstances under which it is made, is false or misleading with respect to any material fact, or omits to state any material fact that is required to be stated therein or necessary in order (A) to make the statements therein not false or misleading, or (B) to correct any statement in an earlier communication with respect to the Proxy Statement/Prospectus which has become false or misleading.
Section 4.17 Regulatory Approvals. Fulton is not aware of any reason why any of the required regulatory approvals to be obtained in connection with the Merger should not be granted by such regulatory authorities or why such regulatory approvals should be conditioned on any requirement which would be a significant impediment to Fulton’s ability to carry on its business.
Section 4.18 No Finder. Fulton has not paid or become obligated to pay any fee or commission of any kind whatsoever to any broker, finder, advisor or other intermediary for, on account of, or in connection with the transactions contemplated in this Agreement.
Section 4.19 Taxes. Fulton has filed, or has received extension for filing, all federal, state, county, municipal and foreign tax returns, reports and declarations which are required to be
filed by it as of September 30, 2002. Except as disclosed inSchedule 4.19, (i) Fulton has paid all taxes, penalties and interest which have become due pursuant thereto or which became due pursuant to federal, state, county, municipal or foreign tax laws applicable to the periods covered by the foregoing tax returns, and (ii) Fulton has not received any notice of deficiency or assessment of additional taxes. Except as disclosed inSchedule 4.19, the accruals and reserves reflected in the Fulton Balance Sheet are adequate to cover all material taxes (including interest and penalties, if any, thereon) that are payable or accrued as a result of Fulton’s consolidated operations for all periodsCompany Stock Option Plan prior to the date of such Balance Sheet.
Section 4.20 Title to and Condition of Assets. Fulton has good and marketable title to all material consolidated real and personal properties and assets reflected in the Fulton Balance Sheet or acquired subsequent to September 30, 2002 (other than property and assets disposed of in the Ordinary Course of Business), free and clear of all liens or encumbrances of any kind whatsoever; provided, however, that the representations and warranties contained in this sentence do not cover liens or encumbrances that: (i) are reflected in the Fulton Balance Sheet; (ii) represent liens of current taxes not yet due or which, if due, may be paid without penalty, or which are being contested in good faith by appropriate proceedings; and (iii) represent such imperfections of title, liens, encumbrances, zoning requirements and easements, if any, as are not substantial in character, amount or extent and do not materially detract from the value, or interfere with the present or proposed use, of the properties and assets subject thereto.
Section 4.21 Contracts. All Fulton Material Contracts are enforceable against Fulton, and Fulton has in all material respects performed all obligations required to be performed by it to date and is not in default in any material respect. “Fulton Material Contracts” shall be defined as each written or oral contract entered into by Fulton or any Fulton Subsidiary (other than contracts with customers reasonably entered into by Fulton in the Ordinary Course of Business) which involves aggregate payments or receipts in excess of $100,000 per year, including without limitation every employment contract, employee benefit plan, agreement, lease, license, indenture, mortgage and other commitment to which either Fulton or Fulton Subsidiaries are a party or by which Fulton or any of the Fulton Subsidiaries or any of their properties may be bound.
Section 4.22 Insurance. All policies of insurance covering operations of Fulton which are, in the aggregate, material (except for title insurance policies), including without limitation all financial institutions bonds, held by or on behalf of Fulton are in full force and effect, and no notices of cancellation have been received in connection therewith.
Section 4.23 Reports. Fulton and the Fulton Subsidiaries has filed all material reports, registrations and statements that are required to be filed with the FRB, the FDIC, the Department, and any other applicable federal, state or local governmental or regulatory authorities and such reports, registrations and statements referred to in this Section 4.23 were, as of their respective dates, in compliance in all material respects with all of the statutes, rules and regulations enforced or promulgated by the governmental or regulatory authority with which they were filed; provided, however, that the failure to filehereof, any such report, registration or statement or the failure of any report, registration or statementexercise to comply with the applicable regulatory standard shall not be deemed to be a breach of the foregoing representation unless
such failure has or may have a material adverse impact on Fulton and the Fulton Subsidiaries on a consolidated basis. Fulton has furnished Premier with, or made available to Premier, copies of all such filings made in the last three fiscal years and in the period from January 1, 2003 to the date of this Agreement. Fulton is required to file reports with the SEC pursuant to Section 12 of the 1934 Act, and Fulton has made all appropriate filings under the 1934 Act and the rules and regulations promulgated thereunder; provided, however, that the failure to make any such filing shall not be deemed to be a breach of the foregoing representation unless such failure has or may have a material adverse impact on Fulton and the Fulton subsidiaries. The Fulton Common Stock is traded on NASDAQ under the symbol “FULT.”
ARTICLE V—COVENANTS OF PREMIER
From the date of this Agreement until the Effective Time, Premier covenants and agrees to do, and shall cause the Premier Subsidiaries to do, the following:
Section 5.1 Conduct of Business. Except as otherwise consented to by Fulton in writing, Premier and the Premier Subsidiaries shall:
(i) use all reasonable efforts to carry on their respective businesses in, and only in, the Ordinary Course of Business;
(ii) use all reasonable efforts to preserve their present business organizations, to retain the services of their present officers and employees, and to maintain their relationships with customers, suppliers and others having business dealings with Premier or any of the Premier Subsidiaries;
(iii) maintain all of their structures, equipment and other real property and tangible personal property in good repair, order and condition, except for ordinary wear and tear and damage by unavoidable casualty;
(iv) use all reasonable efforts to preserve or collect all material claims and causes of action belonging to Premier or any of the Premier Subsidiaries;
(v) keep in full force and effect all insurance policies now carried by Premier or any of the Premier Subsidiaries;
(vi) perform in all material respects each of their obligations under all Material Contracts (as defined inSection 3.12 herein) to which Premier or any of the Premier Subsidiaries are a party or by which any of them may be bound or which relate to or affect their properties, assets and business;
(vii) maintain their books of account and other records in the Ordinary Course of Business;
(viii) comply in all material respects with all statutes, laws, ordinances, rules and regulations, decrees, orders, consent agreements, memoranda of
understanding and other federal, state, and local governmental directives applicable to Premier or any of the Premier Subsidiaries and to the conduct of their businesses;
(ix) not amend Premier’s or any of the Premier Subsidiaries’ Articles of Incorporation or Bylaws except in accordance with the present terms hereof or to the extent necessary to consummate the transactions contemplated by this Agreement;of such options;
(x) not enter into(c) amend the Certificate of Incorporation, By-laws or assume any Material Contract, incur any material liabilityother similar governing documents of Company or obligation, or make any material commitment, except in the Ordinary Course of Business;Company Bank;
(xi) not enter into or assume any material contract, incur any material liability or obligation, make any material acquisition or disposition of any properties or assets (except for acquisitions or dispositions of properties or assets in accordance with any Material Contract disclosed onSchedule 3.12 or which do not exceed, in any case, $200,000), or subject any of their properties or assets to any material lien, claim, charge, or encumbrance of any kind whatsoever, except for loan and investment activity engaged in the Ordinary Course of Business and consistent with past practice;
(xii) not knowingly take or permit to be taken any action which would constitute or cause a material breach of any representation, warranty or covenant(d) Other than as set forth in this Agreement as of or subsequent to the date of this Agreement or asSection 5.1(d) of the Effective Date;
(xiii) except as permitted in Section 5.10 herein, not declare, set aside or pay any dividend or make any other distribution in respect of Premier Common Stock or of Premier Preferred Stock;
(xiv) not authorize, purchase, redeem, issue (except upon the exercise of outstanding options under the Premier Stock Option Plans) or sell (or grant options or rights to purchase or sell) any shares of Premier Common Stock or any other equity or debt securities of Premier (other than the Warrant or the Premier Common Stock issuable under the Warrant);
(xv) not increase the rate of compensation of, pay a bonus or severance compensation to, establish or amend any Premier Benefit Plan, except as required by law (as defined in Section 3.18 herein) for, or enter into or amend any Employment Obligation (as defined in Section 3.17 herein), severance or “change in control” agreement or arrangement with any officer, director, employee or consultant of Premier or any of the Premier Subsidiaries, except that Premier and the Premier Subsidiaries may grant reasonable salary increases and bonuses to their officers and employees in the Ordinary Course of Business to the extent consistent with past practice or their current policy disclosed in writing to Fulton, and are consistent, in magnitude and otherwise, with the current policy disclosed
in writing to Fulton of Premier and the Premier Subsidiaries (provided, however, that no Contract Employees nor Bruce Sickel shall receive a salary increase or bonus);
(xvi) not enter into any related party transaction of the kind contemplated in Section 3.19 herein;
(xvii) in determining the additions to loan loss reserves and the loan write-offs, writedowns and other adjustments that reasonably should be made by Premier Bank and classifying, valuing and retaining its investment portfolio, during the fiscal year ending December 31, 2003 and thereafter, Premier and the Premier Subsidiaries shall consult with Fulton and shall act in accordance with generally accepted accounting principles;
(xviii) file with appropriate federal, state, local and other governmental agencies all tax returns and other material reports required to be filed, pay in full or make adequate provisions for the payment of all taxes, interest, penalties, assessments or deficiencies shown to be due on tax returns or by any taxing authorities and report all information on such returns truthfully, accurately and completely;
(xix) not renew any existing contract for services, goods, equipment or the like or enter into, amend in any material respect or terminate any contract or agreement (including without limitation any settlement agreement with respect to litigation) involving an amount in excess of $10,000 or for a term of one year or more;
(xx) except as permitted by (xi) above, notDisclosure Schedule, make any capital expenditures other than those which (i) are made in the Ordinary Courseordinary course of Businessbusiness consistent with past practice or asare necessary to maintain existing assets in good repair;repair and (ii) in any event are in an amount of no more than $50,000 in the aggregate;
(xxi) not make application for the opening(e) enter into any new line of business or closing ofoffer any new products or open or close any, branches or automated banking facility other than as disclosed onSchedule 5.1(xxi);services;
(xxii) not make(f) acquire or agree to acquire, by merging or consolidating with, or by purchasing a substantial equity interest in or a substantial portion of the assets of, or by any equity investmentother manner, any business or commitment to make such an investment in real estateany corporation, partnership, association or other business organization or division thereof or otherwise acquire any assets, which would be material, individually or in the aggregate, to the Company and its Subsidiaries taken as a whole (it being understood that for purposes of this clause “f”, any real estate development project,assumption of another financial institution’s liabilities shall be conclusively deemed to be material), other than in connection with foreclosures, settlements in lieu of foreclosure or troubled loan or debt restructuringrestructurings in the Ordinary Courseordinary course of Businessbusiness consistent with customary banking practice;past practices;
(xxiii) not(g) take any other action similarthat is intended or may reasonably be expected to result in any of the conditions to the foregoing which would have the effect of frustrating the purposes of this Agreement or the Merger or cause the Merger not to qualify as a tax-free reorganization under Section 368 of the Code; and
(xxiv) following receipt of both shareholder and regulatory approval of the Merger and upon agreement as to the Effective Date by Fulton and Premier, conform its practices to the standards used by Fulton, with respect to its investment and loan portfolios and loan loss reserve; provided, however, (A) in taking such actions, Premier shall not be required to breach any existing contractual obligations and (B) any such actions taken at the request of Fulton shall be subject to the provisions of subparagraph (a) of Section 7.2(f) herein.
Section 5.2 Best Efforts. Premier and the Premier Subsidiaries shall cooperate with Fulton and shall use their best efforts to do or cause to be done all things necessary or appropriate on its part in order to fulfill the conditions precedent set forth in Article VII not being satisfied;
(h) change its methods of accounting in effect at December 31, 2003, except as required by changes in GAAP or regulatory accounting principles as concurred with in writing by the Company’s independent auditors;
(i) (i) except as set forth in Section 6.6, as required by applicable law or as required to maintain qualification pursuant to the Code, adopt, amend, or terminate any Company Benefit Plan or any agreement, arrangement, plan, trust, other funding arrangement or policy between the Company or any Subsidiary of the Company and one or more of its current or former directors, officers, employees or independent contractors, change any trustee or custodian of the assets of any plan or transfer plan assets among trustees or custodians, (ii) except for normal salary increases in the ordinary course of business consistent with past practice or except as required by applicable law, increase or accelerate payment of in any manner the compensation or fringe benefits of any director, officer or employee or pay any bonus or benefit not required by any Plan or agreement as in effect as of the date hereof or (iii) grant or award any stock options, stock appreciation rights, restricted stock, restricted stock units or performance units or shares under the Company Stock Option Plan, or any other plan;
(j) other than activities in the ordinary course of business consistent with past practice, sell, lease, encumber, assign or otherwise dispose of, or agree to sell, lease, encumber, assign or otherwise dispose of, any of its material assets, properties or other rights or agreements except as otherwise specifically contemplated by this Agreement;
(k) other than in the ordinary course of business consistent with past practice, incur any indebtedness for borrowed money or assume, guarantee, endorse or otherwise as an accommodation become responsible for the obligations of any other individual, corporation or other entity;
(l) file any application to relocate or terminate the operations of any banking office of it or any of its Subsidiaries;
(m) create, renew, amend or terminate or give notice of a proposed renewal, amendment or termination of, any material contract, agreement or lease for goods, services or office space to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries or their respective properties is bound, other than the renewal in the ordinary course of business of any lease the term of which expires prior to the Closing Date;
(n) other than in the ordinary course of business consistent with past practice, in individual amounts not to exceed $50,000, and other than investments for the Company’s portfolio made in accordance with Section 5.1(o), make any investment either by purchase of stock or securities, contributions to capital, property transfers or purchase of any property or assets of any other individual, corporation or other entity;
(o) make any investment in any debt security, including mortgage-backed and mortgage related securities, other than US government and US government agency securities with final maturities not greater than five years or mortgage-backed or
mortgage related securities which would not be considered “high risk” securities and which have an average life, as of purchase date, of not more than five years, in each case which are purchased in the ordinary course of business consistent with past practice;
(p) settle any claim, action or proceeding involving any liability of the Company or any of its Subsidiaries for money damages in excess of $100,000 or involving any material restrictions upon the operations of the Company or any of its Subsidiaries;
(q) except in the ordinary course of business consistent with past practice and in amounts less than $100,000, waive or release any material right or collateral or cancel or compromise any extension of credit or other debt or claim;
(r) originate, purchase, extend or grant any loan in principal amount in excess of $5.0 million, or engage or participate in any lending activities, including modifications to any loans existing on the date hereof, other than in the ordinary course of business consistent with past practices; provided however, Company Bank shall consult with Fulton Bank with respect to origination, purchase or extension of all loans with principal amount in excess of $5.0 million;
(s) incur any additional borrowings beyond those set forth in Section 5.1(s) of the Company Disclosure Schedule other than short-term (with a final maturity of two years or less) Federal Home Loan Bank borrowings and reverse repurchase agreements in the ordinary course of business consistent with past practice, or pledge any of its assets to secure any borrowings other than as required pursuant to the terms of borrowings of the Company or any Subsidiary in effect at the date hereof or in connection with borrowings or reverse repurchase agreements permitted hereunder (it being understood that deposits shall not be deemed to be borrowings within the meaning of this sub-section);
(t) make any investment or commitment to invest in real estate or in any real estate development project, other than real estate acquired in satisfaction of defaulted mortgage loans;
(u) establish or make any commitment relating to the establishment of any new branch or other office facilities other than those for which all regulatory approvals have been obtained; with respect to any such new branch or other office facility for which regulatory approval has been received, make any capital expenditures that in the aggregate would exceed $500,000;
(v) nominate for election to the Board of Directors of the Company any person who is not a member of the Board of Directors of the Company as of the date hereof;
(w) make any material Tax election or file any claim for a material income Tax refund;
(x) take any other action outside of the ordinary course of business; or
(y) agree to do any of the foregoing.
5.2Covenants of Parent. Except as expressly provided in this Agreement, during the period from the date of this Agreement to the Effective Time, the Parent shall use commercially reasonably efforts to, and shall cause its Subsidiaries to consummateuse commercially reasonable efforts to, (i) maintain and preserve intact its business organization, properties, leases, employees and advantageous business relationships and retain the services of its officers and key employees, (ii) take no action which would adversely affect or delay the ability of the Company or Parent to perform it covenants and agreements on a timely basis under this Agreement, and (iii) take no action which would adversely affect or delay the ability of the Company or Parent to obtain any necessary approvals, consents or waivers of any governmental authority required for the transactions contemplated by this Agreement, including the Merger. In particular, withouthereby or which would reasonably be expected to result in any such approvals, consents or waivers containing any material condition or restriction. Without limiting the generality of the foregoing, sentence, Premier and the Premier Subsidiaries shall: (i) cooperate with Fultonexcept as set forth in the preparation of all required applications for regulatory approvalSection 5.2 of the transactions contemplatedParent Disclosure Schedule or as otherwise specifically provided by this Agreement or consented to in writing by the Company, Parent shall not, and shall not permit any of its Subsidiaries to:
(a) take any action that is intended or may reasonably be expected to result in the preparationany of the Registration Statement (as defined in Section 6.1(b)); and (ii) cooperate with Fulton in making Premier’s and the Premier Subsidiaries’ employees reasonably available for training by Fulton at Premier’s and the Premier Subsidiaries’ facilities priorconditions to the Effective Time, to the extent that such training is deemed reasonably necessary by Fulton to ensure that Premier’s and the Premier Subsidiaries’ facilities will be properly operatedMerger set forth in Article VII not being satisfied;
(b) change its methods of accounting in effect at December 31, 2003, except in accordance with Fulton’s policies after the Merger.changes in GAAP or regulatory accounting principles as concurred with by Parent’s independent auditors; or
Section 5.3 Access(c) agree to Properties and Records. Premier and the Premier Subsidiaries shall give to Fulton and its authorized employees and representatives (including without limitation its counsel, accountants, economic and environmental consultants and other designated representatives) such access during normal business hours to all properties, books, contracts, documents and records of Premier and the Premier Subsidiaries as Fulton may reasonably request, subject to the obligation of Fulton and its authorized employees and representatives to maintain the confidentiality of all nonpublic information concerning Premier and the Premier Subsidiaries obtained by reason of such access and subject to applicable law.
Section 5.4 Subsequent Financial Statements. Between the date of signing of this Agreement and the Effective Time, Premier and the Premier Subsidiaries shall promptly prepare and deliver to Fulton as soon as practicable all internal monthly and quarterly financial statements, all quarterly and annual reports to shareholders and all reports to regulatory authorities prepared by or for either Premier ordo any of the Premier Subsidiaries (including, without limitation, delivery of Premier’s audited annual financial statements for 2002 as soon as they are available) (which additional financial statements and reports are hereinafter collectively referred to as the “Additional Premier Financial Statements”). The representations and warranties set forth in Sections 3.6, 3.7 and 3.8 shall apply to the Additional Premier Financial Statements.foregoing.
Section 5.5 Update Schedules. Premier or any of the Premier Subsidiaries shall promptly disclose to Fulton in writing any material change, addition, deletion or other modification to the information set forth in its Schedules hereto.
Section 5.6 Notice. Premier or any of the Premier Subsidiaries shall promptly notify Fulton in writing of any actions, claims, investigations, proceedings or other developments which, if pending or in existence on the date of this Agreement, would have been required to be disclosed to Fulton in order to ensure the accuracy of the representations and warrantiesNothing set forth in this Agreement shall be construed: (i) to preclude Parent from acquiring, or which otherwise could materially and adversely affectto limit in any way the condition (financialright of Parent to acquire, prior to or otherwise),following the Effective Time, the stock or assets liabilities, business operationsof any other financial services institution or future prospectsother corporation or entity, whether by issuance or exchange of PremierParent Common Stock or otherwise; (ii) to preclude Parent from issuing, or to limit in any way the right of Parent to issue, prior to or following the Effective Time, Parent Common Stock, Parent Preferred Stock or any of the Premier Subsidiariesother equity or restrictdebt securities; or (iii) to preclude Parent from taking, or to limit in any manner their abilityway the right of Parent to carry on their respective businesses as presently conducted.take, any other action not expressly and specifically prohibited by the terms of this Agreement.
5.3Section 5.7 No Solicitation..
(a) PremierThe Company and the PremierCompany Subsidiaries shall not, and shall not authorize or permit any of their officers, directors or employees or any investment banker, financial advisor or attorney to initiate or encourage (including by way of furnishing non-public information), or take any other action to facilitate, any inquiries or the making of any proposal that constitutes, or may reasonably be expected to lead to, an Acquisition Proposal, provided, however, that if, at any time the Board of Directors of Premierthe Company determines in good faith, after consultation with outside counsel, that failure to
do so would be reasonably likely to constitute a breach of its fiduciary duties under applicable law, Premier,the Company, in response to a written Acquisition Proposal that (i) was unsolicited or that did not otherwise result from a breach of this Section, and (ii) is reasonably likely to lead to a Superior Proposal, may (x) furnish non-public information with respect to Premierthe Company or the PremierCompany Subsidiaries to the person who made such Acquisition Proposal pursuant to a customary confidentiality agreement and (y) participate in negotiations regarding such Acquisition Proposal. Without limiting the foregoing, it is understood that any violation of the restrictions set forth in the preceding sentence by any director or officer of Premierthe Company or any of the PremierCompany Subsidiaries or any investment banker, financial advisor, attorney, accountant, or other representative of Premierthe Company or any of the PremierCompany Subsidiaries, whether or not acting on behalf of Premierthe Company or any of its subsidiaries, shall be deemed to be a breach of this Section by Premier.the Company.
(b) PremierThe Company shall call a meeting of its shareholders to be held as promptly as practicable for the purpose of voting upon this Agreement and shall take, in good faith, all actions which are necessary or appropriate on its part in order to secure the approval of this Agreement by its shareholders at the meeting, including recommending the approval of this Agreement by Premier’sthe Company’s shareholders; provided, however, that Premier’sthe Company’s Board of Directors shall not be required to take any action otherwise required by this sentence that it has determined in good faith, after consultation with outside counsel, would be reasonably likely to constitute a breach of its fiduciary duties under applicable law.
(c) The Board of Directors of Premierthe Company shall not (1) fail to recommend this Agreement, withdraw or modify, or propose to withdraw or modify, in a manner adverse to Fulton,Parent, its approval or recommendation of this Agreement or the Merger unless there is an Acquisition Proposal outstanding, (2) approve or recommend, or propose to approve or recommend, an Acquisition Proposal or (3) cause Premierthe Company to enter into any letter of
intent, agreement in principle, acquisition agreement or other agreement with respect to an Acquisition Proposal unless (x) the Board of Directors of Premierthe Company shall have determined in good faith, after consultation with outside counsel, that failure to do so would be reasonably likely to constitute a breach of its fiduciary duties under applicable law and (y) the applicable Acquisition Proposal is a Superior Proposal.
(d) Nothing contained in this Section shall prohibit Premierthe Company from at any time taking and disclosing to its shareholders a position contemplated by Rule 14e-2(a) promulgated under the Securities Exchange1934 Act, of 1934, as amended, provided, however, that neither Premierthe Company nor its Board of Directors shall, except as permitted by paragraph (b) or (c) of this section, propose to approve or recommend, an Acquisition Proposal.
(e) PremierThe Company shall promptly (but in any event within one day) advise FultonParent orally and in writing of any Acquisition Proposal or any inquiry regarding the making of an Acquisition Proposal including any request for information, the material terms and conditions of such request, Acquisition Proposal or inquiry and the identity of the person making such request, Acquisition Proposal or inquiry. PremierThe Company will, to
the extent reasonably practicable, keep FultonParent fully informed of the status and details (including amendments or proposed amendments) of any such request, Acquisition Proposal or inquiry.
(i) In the event the Board of Directors of Premierthe Company takes any of the actions set forth in clauses (1), (2) and/or (3) of Section 5.7(c)5.3(c) in compliance with the standards in (x) and (y) therein, such action shall allow termination of this Agreement by FultonParent under Section 8.1(b)(iii)8.1(g) herein which shall be treated in the same manner as termination under Section 8.1(a)8.1(e) herein and shall allow exercise of the Warrant. In the event the Board of Directors of Premierthe Company takes any of the actions set forth in clauses (1), (2) and/or (3) of Section 5.7(c)5.3(c) without compliance with the standards in (x) and (y) therein, such action shall constitute a breach allowing termination of this Agreement by FultonParent under Section 8.1(c)(iii)8.1(g) herein which shall be treated in the same manner as termination by FultonParent under Section 8.1(b)(i)8.1(e) herein and shall allow exercise of the Warrant.
(ii) This Agreement may be terminated by Premierthe Company prior to the shareholders meeting of Premierthe Company if (A) the Board of Directors of Premierthe Company shall have determined in good faith after consultation with outside counsel that failure to do so would be reasonably likely to constitute a breach of its fiduciary duties to Premier’sthe Company’s shareholders under applicable law, (B) it is not in breach of its obligations under this Section 5.75.3 in any material respect and has complied with, and continues to comply with, all requirements and procedures of this Section 5.75.3 in all material respects and the Board of Directors of the Company has authorized, subject to complying with the terms of this Agreement, Premierthe Company to enter into a binding written agreement for a transaction that constitutes a Superior Proposal and Premierthe Company notifies FultonParent in writing that it intends to enter into such agreement, attaching the most current version of such agreement to such notice; (C) FultonParent does not make, within five (5) business days after receipt of Premier’sthe Company’s written notice of its intention to enter
into a binding agreement for a Superior Proposal, any offer that the Board of Directors of the Company reasonably and in good faith determines, after consultation with its financial and legal advisors, is at least as favorable to the shareholders of Premierthe Company as the Superior Proposal and during such period Premierthe Company reasonably considers and discusses in good faith all proposals submitted by FultonParent and, without limiting the foregoing, meets with, and causes its financial and legal advisors to meet with, FultonParent and its advisors from time to time as required by FultonParent to consider and discuss in good faith Fulton’sParent’s proposals, and (D) prior to Premier’sthe Company’s termination pursuant to this Section 5.7(e)5.3(e)(ii), Premierthe Company confirms in writing that such termination allows exercise of the Warrant. PremierThe Company agrees (x) that it will not enter into a binding agreement referred to in clause (B) above until at least the five (5) business days after FultonParent has received the notice to FultonParent required by clause (B)(C) and (y) to notify FultonParent promptly if its intention to enter into a binding agreement referred to in its notice to FultonParent shall change at any time after giving such notice.
(f) For the purpose of this Section 5.7:5.3:
(i) “Acquisition Proposal” shall mean a written proposal or written offer (other than by another party hereto) for a tender or exchange offer for securities of Premierthe Company or any of the PremierCompany Subsidiaries, or a merger, consolidation or other business combination involving an acquisition of Premierthe Company or any of the PremierCompany Subsidiaries or any proposal to acquire in any manner a substantial equity interest in or a substantial portion of the assets of Premierthe Company or any of the PremierCompany Subsidiaries.
(ii) A “Superior Proposal” shall be an Acquisition Proposal that the Board of Directors of Premierthe Company believes in good faith (after consultation with its financial advisor) is reasonably capable of being completed, taking into account all relevant legal, financial, regulatory and other aspects of the Acquisition Proposal and the source of its financing, on the terms proposed and, believes in good faith (after consultation with its financial advisor and after taking into account the strategic benefits anticipated to be derived from the Merger and the long-term prospects of Premier and the Premier Subsidiaries as a combined company)advisor), would, if consummated, result in a transaction more favorable to the shareholders of Premierthe Company from a financial point of view, than the transactions contemplated by this Agreement and believes in good faith (after consultation with its financial advisor) that the person making such Acquisition Proposal has, or is reasonably likely to have or obtain, any necessary funds or customary commitments to provide any funds necessary to consummate such Acquisition Proposal.
ARTICLE VI. ADDITIONAL AGREEMENTS
6.1Section 5.8 Affiliate LettersRegulatory Matters.. Premier
(a) Parent shall promptly prepare and file with the SEC the S-4, in which the Proxy Statement will be included as a prospectus. The Company shall cooperate with Parent in the preparation of the Proxy Statement to be included within the S-4. Each of the Company and Parent shall use its reasonable best efforts to deliver or causehave the S-4 declared effective under the Securities Act as promptly as practicable after such filing, and the Company shall thereafter mail the Proxy Statement to be delivered to Fulton, at or beforeits shareholders. With the Closing, a letter from each of the officers and directors of Premier (andCompany’s cooperation, Parent shall also use its reasonable best efforts to obtain all necessary state securities law or “Blue Sky” permits and deliver such a letter from each shareholder of Premier) who may be deemedapprovals required to be an “affiliate” (as that term is defined for purposes of Rules
145 and 405 promulgatedcarry out the transactions contemplated by the SEC under the 1933 Act) of Premier, in form and substance satisfactory to Fulton, under the terms of which each such officer, director or shareholder acknowledges and agrees to abide by all limitations imposed by the 1933 Act and by all rules, regulations and releases promulgated thereunder by the SEC with respect to the sale or other disposition of the shares of Fulton Common Stock to be received by such person pursuant to this Agreement.
Section 5.9 No Purchases or Sales of Fulton Common Stock During Price Determination Period. Premier(b) The parties hereto shall cooperate with each other and the Premier Subsidiaries shall not, and shall use their reasonable best efforts to ensure that their executive officerspromptly prepare and directors do not,file all necessary documentation, to effect all applications, notices, petitions and shall use their best effortsfilings, and to ensure that each shareholderobtain as promptly as practicable all permits, consents, approvals and authorizations of Premier who may be deemed an “affiliate” (as defined in SEC Rules 145all third parties and 405) of Premier does not, purchase or sell on NASDAQ, or submit a bid to purchase or an offer to sell on NASDAQ, directly or indirectly, any shares of Fulton Common Stock or any options, rights or other securities convertible into shares of Fulton Common Stock during the Price Determination Period.
Section 5.10 Dividends. Between the date of this Agreement and the Effective Date, Premier shall only declare and pay cash dividends as provided in this Section 5.10. Premier shall only pay (a) quarterly cash dividends on its Common Stock in an amount not in excess of $0.05 per share during each of the first and second calendar quarters of 2003, maintaining the same record and payment dates as Fulton; provided, however, that if the Effective Date has not occurred on or before June 30, 2003, Premier may, for each calendar quarter thereafter until the Effective Date (using the same record and payment dates as referenced above), pay a cash dividend in such amount as would have been received by Premier’s Shareholders had the Effective Date occurred on July 16, 2003 taking into account any adjustments required by Section 2.1(b), and (b) its regular quarterly cash dividends on its Preferred Stock in accordance with its terms. With respect to dividends on the Premier Common Stock, it is the intent of Fulton and Premier that Premier be permitted to pay a dividend on the Premier Common Stock on the dates indicated only if the shareholders of Premier, upon becoming shareholders of Fulton, would not be entitled to receive a dividend on the Fulton Common Stock on the applicable payment dates. Fulton shall provide Premier with prompt written notice of the declaration of a dividend on the Fulton Common Stock.
ARTICLE VI—COVENANTS OF FULTON
From the date of this Agreement until the Effective Time, or until such later date as may be expressly stipulated in any Section of this Article VI, Fulton covenants and agrees to do the following:
Section 6.1 Best Efforts. Fulton shall cooperate with Premier and the Premier Subsidiaries and shall use its best efforts to do or cause to be done all thingsGovernmental Entities which are necessary or appropriate on its part in order to fulfill the conditions precedent set forth in Article VII of this Agreement andadvisable to consummate the transactions contemplated by this Agreement including(including without limitation the Merger.Merger). The Company and Parent shall have the right to review in advance, and to the extent practicable each will consult the other on, in each case subject to applicable laws relating to the exchange of information, all the information relating to the Company or Parent, as the case may be, and any of their respective Subsidiaries, which appears in any filing made with, or written materials submitted to, any third party or any Governmental Entity in connection with the transactions contemplated by this Agreement. In particular, without limiting the generality ofexercising the foregoing sentence, Fulton agrees to do the following:
right, each of
(a)Applications for Regulatory Approval. Fultonthe parties hereto shall act reasonably and as promptly prepareas practicable. The parties hereto agree that they will consult with each other with respect to the obtaining of all permits, consents, approvals and file, with the cooperationauthorizations of all third parties and assistance of (and after review by) Premier and its counsel and accountants, all required applications for regulatory approval ofGovernmental Entities necessary or advisable to consummate the transactions contemplated by this Agreement including without limitation applications for approval underand each party will keep the BHC Act,other apprised of the Pennsylvania Banking Codestatus of 1965, as amendedmatters relating to completion of the transactions contemplated herein.
(c) Parent and the Federal Deposit Insurance Act,Company shall, upon request, furnish each other with all information concerning themselves, their Subsidiaries, directors, officers and shareholders and such other matters as amended.
(b)Registration Statement. Fulton shall promptly prepare,may be reasonably necessary or advisable in connection with the cooperationProxy Statement, the S-4 and assistanceany other statement, filing, notice or application made by or on behalf of (and after review by) Premier and its counsel and accountants, and fileParent, the Company or any of their respective Subsidiaries to any Governmental Entity in connection with the SEC a registration statement (the “Registration Statement”) forMerger and the purpose of registeringother transactions contemplated by this Agreement. Parent agrees promptly to advise the shares of Fulton Common Stock to be issued to shareholders of Premier under the provisions of this Agreement and a proxy statement and prospectus which is prepared as a part thereof (the “Proxy Statement/Prospectus”) for the purpose of registering the shares of Fulton’s Common Stock to be issuedCompany if at any time prior to the shareholders of Premier, and the soliciting of the proxies of Premier’s shareholders in favor of the Merger, under the provisions of this Agreement. Fulton may rely upon all information provided to it by Premier and Premier Bank in this connection and Fulton shall not be liable for any untrue statement of a material fact or any omission to state a material fact in the Registration Statement, or in the Proxy Statement/Prospectus, if such statement is made by Fulton in reliance uponCompany Shareholders’ Meeting any information provided by Parent for the Proxy Statement becomes incorrect or incomplete in any material respect and promptly to Fulton by Premier or the Premier Subsidiaries or by any of their officers, agents or representatives. Fulton shall provide a draft of the Registration Statement to Premier and its counsel for comment and review at least ten (10) business days in advance of the anticipated filing date.
(c)State Securities Laws. Fulton,Company with the cooperation and assistance of Premier and its counsel and accountants,information needed to correct such inaccuracy or omission. Parent shall promptly take allfurnish the Company with such actionssupplemental information as may be necessary or appropriate in order to cause the Proxy Statement, insofar as it relates to Parent and the Parent Subsidiaries, to comply with all applicable securities lawslegal requirements. The Company agrees promptly to advise Parent if at any time prior to the Company Shareholders’ Meeting any information provided by the Company for the Proxy Statement becomes incorrect or incomplete in any material respect and promptly to provide Parent with the information needed to correct such inaccuracy or omission. The Company shall promptly furnish Parent with such supplemental information as may be necessary in order to cause the Proxy Statement, insofar as it relates to Company and the Company Subsidiaries, to comply with all applicable legal requirements.
(d) Parent and the Company shall promptly furnish each other with copies of written communications received by Parent or the Company, as the case may be, or any of their respective Subsidiaries, affiliates or associates (as such terms are defined in Rule 12b-2 under the Exchange Act as in effect on the date of this Agreement) from, or delivered by any of the foregoing to, any Governmental Entity in respect of the transactions contemplated hereby.
6.2Access to Information.
(a) The Company shall permit, and shall cause each of the Company’s Subsidiaries to permit, Parent and its representatives, and Parent shall permit, and shall cause each of Parent’s Subsidiaries to permit, the Company and its representatives, reasonable access to their respective properties, and shall disclose and make available to Parent and its representatives, or the Company and its representatives, as the case may be, all books, papers and records relating to its assets, stock ownership, properties, operations, obligations and liabilities, including, but not limited to, all books of account (including the general ledger), Tax records, minute books of directors’ and shareholders’ meetings (excluding information related to the Merger), organizational documents,
Bylaws, material contracts and agreements, filings with any regulatory authority, accountants’ work papers, litigation files, plans affecting employees, and any other business activities or prospects in which Parent and its representatives or the Company and its representatives may have a reasonable interest, all to the extent reasonably requested by the party seeking such access. Neither party shall be required to provide access to or to disclose information where such access or disclosure would violate or prejudice the rights of any state having jurisdiction overcustomer, would contravene any law, rule, regulation, order or judgment or would waive any privilege. The parties will use their reasonable best efforts to obtain waivers of any such restriction (other than waivers of the attorney-client privilege) and in any event make appropriate substitute disclosure arrangements under circumstances in which the restrictions of the preceding sentence apply.
(b) During the period from the date of this Agreement to the Effective Time, each of the Company and Parent will cause one or more of its designated representatives to confer with representatives of the other party on a monthly or more frequent basis regarding its business, operations, properties, assets and financial condition and matters relating to the completion of the transactions contemplated herein. On a monthly basis, the Company agrees to provide Parent with internally prepared consolidated profit and loss statements no later than 15 days after the close of each calendar month. As soon as reasonably available, but in no event more than 30 days after the end of each fiscal quarter (other than the last fiscal quarter of each fiscal year), the Company will deliver to Parent and Parent will deliver to the Company their respective consolidated quarterly financial statements. As soon as reasonably available, but in no event more than 90 days after the end of each calendar year, the Company will deliver to Parent and Parent will deliver to the Company their respective consolidated annual financial statements. The Company shall engage a proxy solicitor reasonably acceptable to Parent to assist the Company in obtaining the approval of the Company’s shareholders of this Agreement and the transactions contemplated hereby.
(c) The Company shall have continuing access through the Effective Time to both the Company’s books and records and internal audit team for the purpose of ongoing assessment of internal controls and shall cause its outside auditors to provide any documentation regarding the Company’s internal control to Parent and cause its auditors to be available for discussions with Parent’s representatives regarding the Company’s systems of internal controls.
(d) All information furnished pursuant to Sections 6.2(a), 6.2(b) and 6.2(c) shall be subject to, and each of the Company and Parent shall hold all such information in confidence in accordance with, the provisions of the Confidentiality Agreement.
(e) No investigation by either of the parties or their respective representatives shall affect the representations, warranties, covenants or agreements of the other set forth herein.
6.3Shareholders’ Meetings. The Company shall take all steps necessary to duly call, give notice of, convene and hold a meeting of its shareholders to be held as
soon as is reasonably practicable after the date on which the S-4 becomes effective for the purpose of voting upon the approval and adoption of this Agreement and the consummation of the transactions contemplated hereby (the “Company Shareholders’ Meeting”). The Company will, through its Board of Directors, except to the extent legally required for the discharge by the Board of Directors of its fiduciary duties as advised by such Board’s legal counsel and the provisions of Section 5.3, recommend to its shareholders approval of this Agreement and the transactions contemplated hereby and such other matters as may be submitted to its shareholders in connection with this Agreement.
6.4Legal Conditions to Merger. Each of Parent and the Company shall, and shall cause its Subsidiaries to, use their reasonable best efforts (a) to take, or cause to be taken, all actions necessary, proper or advisable to comply promptly with all legal requirements which may be imposed on such party or its Subsidiaries with respect to the Merger and, subject to the conditions set forth in Article VII hereof, to consummate the transactions contemplated by this Agreement.Agreement and (b) to obtain (and to cooperate with the other party to obtain) any consent, authorization, order or approval of, or any exemption by, any Governmental Entity and any other third party which is required to be obtained by the Company or Parent or any of their respective Subsidiaries in connection with the Merger and the other transactions contemplated by this Agreement, and to comply with the terms and conditions of such consent, authorization, order or approval.
(d)6.5StockNASDAQ Listing. Fulton, with the cooperation and assistance of Premier and its counsel and accountants, Parent shall promptly take all such actions as may be necessary or appropriate in order to listcause the shares of FultonParent Common Stock to be issued in the Merger to be approved for listing for quotation on NASDAQ.
(e)Adopt Amendments. Fulton shall not adopt any amendmentsNASDAQ, subject to its charter or bylaws or other organizational documents that would alter the termsofficial notice of Fulton’s Common Stock or could reasonably be expected to have a material adverse effect on the ability of Fulton to perform its obligations under this Agreement.
(f)Tax Treatment. Fulton shall take no action which would have the effect of causing the Merger not to qualifyissuance, as a tax-free reorganization under Section 368 of the Code.Effective Time.
6.6Section 6.2 Access to Properties and Records. Fulton shall give to Premier and to its authorized employees and representatives (including without limitation Premier’s counsel, accountants, economic and environmental consultants and other designated representatives) such
access during normal business hours to all properties, books, contracts, documents and records of Fulton as Premier may reasonably request, subject to the obligation of Premier and its authorized employees and representatives to maintain the confidentiality of all nonpublic information concerning Fulton obtained by reason of such access.
Section 6.3 Subsequent Financial Statements. Between the date of signing of this Agreement and the Effective Time, Fulton shall promptly prepare and deliver to Premier as soon as practicable each Quarterly Report to Fulton’s shareholders and any Annual Report to Fulton’s shareholders normally prepared by Fulton. The representations and warranties set forth in Sections 4.6, 4.7 and 4.8 herein shall apply to the financial statements (hereinafter collectively referred to as the “Additional Fulton Financial Statements”) set forth in the foregoing Quarterly Reports and any Annual Report to Fulton’s shareholders.
Section 6.4 Update Schedules. Fulton shall promptly disclose to Premier in writing any change, addition, deletion or other modification to the information set forth in its Schedules to this Agreement.
Section 6.5 Notice. Fulton shall promptly notify Premier in writing of any actions, claims, investigations or other developments which, if pending or in existence on the date of this Agreement, would have been required to be disclosed to Premier in order to ensure the accuracy of the representations and warranties set forth in this Agreement or which otherwise could materially and adversely affect the condition (financial or otherwise), assets, liabilities, business, operations or future prospects of Fulton or restrict in any manner the right of Fulton to carry on its business as presently conducted.
Section 6.6 No Purchase or Sales of Fulton Common Stock During Price Determination Period. Neither Fulton nor any Subsidiary of Fulton, nor any executive officer or director of Fulton or any Subsidiary of Fulton, nor any shareholder of Fulton who may be deemed to be an “affiliate” (as that term is defined for purposes of Rules 145 and 405 promulgated by the SEC under the 1933 Act) of Fulton, shall purchase or sell on NASDAQ, or submit a bid to purchase or an offer to sell on NASDAQ, directly or indirectly, any shares of Fulton Common Stock or any options, rights or other securities convertible into shares of Fulton Common Stock during the Price Determination Period; provided, however, that Fulton may purchase shares of Fulton Common Stock in the ordinary course of business during the Price Determination Period for the benefit of Fulton’sEmployee Benefit Plans or Fulton’s Dividend Reinvestment Plan.
Section 6.7 Assumption of Premier DebenturesPlans; Existing Agreements. Fulton agrees that, effective with the Effective Date, it shall assume Premier’s 8.57% Junior Subordinated Deferrable Interest Debentures due August 15, 2028 and Variable Rate Junior Subordinated Deferrable Interest Debentures due November 30, 2032 and all of Premier’s obligations under the related Indentures, and shall take all actions necessary or appropriated in accordance therewith, including, if requested by the trustee, execution of a supplemental indenture and other appropriate documents or certificates.
Section 6.8 Employment Arrangements.
(a) From and after the Effective Time, (i) Fulton, Premier Bank or another subsidiary of Fulton (any such parties employing employees of Premier or a Premier subsidiary, the “Fulton Employers”) shall: (A) satisfy each of the Employment Obligations (as defined in Section 3.17 herein), and (B) use its good faith efforts to retain each present employee of Premier and the Premier Subsidiaries in such employee’s current position and salary compensation (or, if offered to, and accepted by, an employee, a position for which the employee is qualified with the Fulton Employers at a compensation commensurate with the position), (ii) in the event that the Fulton Employers shall continue to employ officers or employees of Premier and the Premier Subsidiaries as of the Effective Time, the Fulton Employers shall employ such persons on the Effective Time who are not Contract Employees (as that term is defined in Section 3.17 herein) as “at will” employees, and (iii) in the event the Fulton Employers are not willing to employ, or terminate the employment (other than as a result of unsatisfactory performance of their respective duties) of any officers or employees of Premier or the Premier Subsidiaries who are not Contract Employees and who do not receive any payment as a result of a Change of Control Agreement with Premier or Premier Bank, the Fulton Employers shall pay severance benefits to such employees (other than Contract Employees) as follows: (A) in the event employment is terminated on or prior to the date which is one year after the Effective Date, the greater of (I) three months’ salary or (II) one week’s salary and one week’s salary for each year of service with Premier or an Premier Subsidiary, thereafter, up to a maximum of 26 weeks’ salary; or (B) in the event employment is terminated thereafter, in accordance with the then existing severance policy of Fulton or its successor.
(b) The FultonParent Employers shall be obligated to provide employee benefits to each person who is an employee of the Company or a Company Subsidiary, on the Effective Time and continues to be employed that are substantially equivalent, in the aggregate, to the benefits under the PremierCompany Benefit Plans prior to the Effective Time, until the earlier of: (A) at least three (3) years after the Effective Date, or (B) the date that the FultonParent Employers can no longer satisfy the applicable qualified retirement plan discrimination testing under the Code. For vestingThereafter, it is the Parent’s intention, over time and eligibility purposes for employee benefits, undersubject to Company Bank’s earnings, to allow participation by Company Bank’s employees in the Parent Benefit Plans the Parent Employers generally make available to their employees, as such Parent Benefit Plans may change from time to time.
(b) With respect to each FultonParent Benefit Plan, and/orother than an employee pension plan as such term is defined in Section 3(2) of ERISA, for purposes of determining eligibility to participate, service with the Company (or predecessor employers to the extent that the Company provides past service credit) shall be treated as service with Parent without application of any employee benefit plan established by Fultonpreexisting condition limitations. Each Parent Benefit Plan shall waive pre-existing condition limitations to the same extent waived under the applicable Company Benefit Plan.
(c) With regard to those certain employees listed in Section 6.6(c) of the Disclosure Schedule hereto, the Parent agrees to provide insurance benefits at the same deductible, contribution and co-payment levels as such employees received prior to the Effective Time.
6.7Indemnification.
(a) For a period commencing as of the Effective Time and ending six years after the Effective Date, employeesTime, Parent shall indemnify, defend and hold harmless each person who is now, or who becomes prior to the Effective Time, a director or officer of the PremierCompany or the Company Bank or who serves or has served at the request of the Company or the Company Bank as a director or officer with any other person (collectively, the “Indemnitees”) against any and all claims, damages, liabilities, losses, costs, charges, expenses (including, subject to the provisions of this Section 6.7, reasonable costs of investigation and the reasonable fees and disbursements of legal counsel and other advisers and experts as incurred), judgments, fines, penalties and amounts paid in settlement, asserted against, incurred by or imposed upon any Indemnitee by reason of the fact that he or she is or was a director or officer of the Company or serves or has served at the request of the Company as a director or officer with any other person, in connection with, arising out of or relating to (i) any threatened, pending or completed claim, action, suit or proceeding (whether civil, criminal, administrative or investigative), including, without limitation, any and all claims, actions, suits, proceedings or investigations by or on behalf of or in the right of or against the Company or any of its affiliates, or by any former or present shareholder of the Company (each a “Claim” and collectively, “Claims”), including, without limitation, any Claim which is based upon, arises out of or in any way relates to the Merger, the Proxy Statement, this Agreement, any of the transactions contemplated by this Agreement, the Indemnitee’s service as a member of the Board of Directors of the Company or its Subsidiaries or of any committee thereof, the events leading up to the execution of this Agreement, any statement, recommendation or solicitation made in connection therewith or related thereto and any breach of any duty in connection with any of the foregoing, or (ii) the enforcement of the obligations of Parent set forth in this Section 6.7, in each case to the fullest extent which the Company would have been permitted under any applicable law and its Certificate of Incorporation or Bylaws had the Merger not occurred (and Parent shall receive creditalso advance expenses as incurred due to (i) or (ii) above to the fullest extent so permitted). Notwithstanding the foregoing, Parent shall not provide any indemnification or advance any expenses with respect to any Claim which relates to a personal benefit improperly paid or provided, or alleged to have been improperly paid or provided, to the Indemnitee, but Parent shall reimburse the Indemnitee for yearscosts incurred by the Indemnitee with respect to such Claim when and if a court of servicecompetent jurisdiction shall ultimately determine, and such determination shall have become final and nonappealable, that the Indemnitee was not improperly paid or provided with the Premier Subsidiaries.
Section 6.9 Insurance; Indemnification.personal benefit alleged in the Claim.
(a)Any Indemnitee wishing to claim indemnification under this Section 6.7 shall promptly notify Parent upon learning of any Claim, but the failure to so notify shall not relieve Parent of any liability it may have to such Indemnitee except to the extent that
such failure prejudices Parent. In the event of any Claim as to which indemnification under this Section 6.7 is applicable, (x) Parent shall have the right to assume the defense thereof and Parent shall not be liable to such Indemnitees for any legal expenses of other counsel or any other expenses subsequently incurred by such Indemnitee in connection with the defense thereof, except that if Parent elects not to assume such defense, or counsel for the Indemnitees advises that there are issues which raise conflicts of interest between Parent and the Indemnitees, the Indemnitees may retain counsel satisfactory to them, and Parent shall pay the reasonable fees and expenses of such counsel for the Indemnitees as statements therefor are received; provided, however, that Parent shall be obligated pursuant to this Section 6.7 to pay for only one firm of counsel for all Indemnitees in any jurisdiction with respect to a matter unless the use of one counsel for multiple Indemnitees would present such counsel with a conflict of interest that is not waived, and (y) the Indemnitees will cooperate in the defense of any such matter. Parent shall not be liable for the settlement of any claim, action or proceeding hereunder unless such settlement is effected with its prior written consent. Notwithstanding anything to the contrary in this Section 6.7, Parent shall not have any obligation hereunder to any Indemnitee when and if a court of competent jurisdiction shall ultimately determine, and such determination shall have become final and nonappealable, that the indemnification of such Indemnitee in the manner contemplated hereby is prohibited by applicable law or public policy.
(b) For four (4)six (6) years after the Effective Date, FultonParent shall (and Premier Bankthe Company shall cooperate in these efforts) obtain and maintain “tail” coverage relating to Premier’sthe Company’s existing directors and officers liability insurance policy (provided that such insurance shall be in such amount and with terms and conditions no less favorable tothan the Directordirector and Officer Liability Policyofficer liability policy of Premierthe Company as of the date of this Agreement and carry such premium (not to exceed the greater of (i) 150% of the current premium for Premier’sCompany’s existing directors and officers liability insurance policy or (ii) the applicable percentage increase payable by Parent during such period for its directors and officers liability insurance policy) and that FultonParent may substitute therefor policies of
at least the same coverage and amounts containing terms and conditions which are substantially no less advantageous) with respect to claims arising from facts or circumstances which occur prior to the Effective Date (other thanTime (including facts or circumstances relating to this Agreement and the transactions contemplated hereby)herein to the extent coverage therefor is available) and covering persons who are covered by such insurance immediately prior to the Effective Date.Time.
(c) In the event Parent 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 Parent assume the obligations set forth in this Section 6.7.
(d) The provisions of this Section 6.7 are intended to be for the benefit of, and shall be enforceable by, each Indemnified Party and his or her heirs and representatives.
6.8Additional Arrangements. If, at any time after the Effective Time, the Surviving Corporation considers or is advised that any deeds, bills of sale, assignments, assurances or any other actions or things are necessary or desirable to vest, perfect or confirm of record or otherwise in the Surviving Corporation its right, title or interest in, to or under any of the rights, properties or assets of either of the Constituent Corporations acquired or to be acquired by the Surviving Corporation as a result of, or in connection with, the Merger or otherwise to carry out the purposes of this Agreement, the officers and directors of the Surviving Corporation shall be authorized to execute and deliver, in the name and on behalf of each of the Constituent Corporations or otherwise, all such deeds, bills of sale, assignments and assurances and to take and do, in the name and on behalf of each of the Constituent Corporations or otherwise, all such other actions and things as may be necessary or desirable to vest, perfect or confirm any and all right, title and interest in, to and under such rights, properties or assets in the Surviving Corporation or otherwise to carry out the purposes of this Agreement.
6.9Notification of Certain Matters. Each party shall give prompt notice to the others of (a) any event, condition, change, occurrence, act or omission which causes any of its representations hereunder to cease to be true in all material respects (or, with respect to any such representation which is qualified as to materiality, causes such representation to cease to be true in all respects); and (b) Fromany event, condition, change, occurrence, act or omission which individually or in the aggregate has, or which, so far as reasonably can be foreseen at the time of its occurrence, is reasonably likely to have, a Material Adverse Effect on such party. Each of the Company and afterthe Parent shall give prompt notice to the other party of any notice or other communication from any third party alleging that the consent of such third party is or may be required in connection with the transactions contemplated by this Agreement.
6.10Certain Matters, Certain Revaluations, Changes and Adjustments. Notwithstanding that the Company believes that it and its Subsidiaries have established all reserves and taken all provisions for possible loan losses required by GAAP and applicable laws, rules and regulations, the Company recognizes that Parent may have adopted different loan, accrual and reserve policies (including loan classifications and levels of reserves for possible loan losses). At or before the Effective Date, FultonTime, upon the request of Parent and Parent’s written confirmation that all conditions precedent under Section 7.1 and 7.2 (other than the delivery of customary closing documents) have been satisfied or waived, and in order to formulate the plan of integration for the Merger, the Company shall, indemnify, defendconsistent with GAAP, modify and hold harmless each person who is now, or has been at any timechange its loan, litigation and real estate valuation policies and practices (including loan classifications and levels of reserves) so as to be applied consistently on a mutually satisfactory basis with those of Parent and establish such accruals and reserves as shall be necessary to reflect Merger-related expenses and costs incurred by the Company and its Subsidiaries, provided, however, that the Company shall not be required to take such action prior to receipt of shareholder and regulatory approvals; and provided further, however, that no accrual or reserve made by the Company or any Company Subsidiary pursuant to this Section 6.10 or any litigation or regulatory proceeding arising out of any such accrual or reserve, shall constitute or be deemed to be a breach, violation of or failure to satisfy any representation, warranty, covenant, condition or other provision of this Agreement or
otherwise be considered in determining whether any such breach, violation or failure to satisfy shall have occurred.
6.11Other Policies. Between the date hereof,of this Agreement and the Effective Time, the Company shall cooperate with Parent to reasonably conform the policies and procedures of the Company and its Subsidiaries regarding applicable regulatory matters to those of Parent and its Subsidiaries, as Parent may reasonably identify to the Company from time to time, provided, however, that implementation of such conforming actions may at the Company’s discretion be delayed until the time period following satisfaction of the conditions set forth in Section 6.10.
6.12Other Transactions. The Company acknowledges that Parent may be in the process of acquiring other banks and financial institutions or who becomesin offering securities to the public and that in connection with such transactions, information concerning the Company and its Subsidiaries may be required to be included in the registration statements, if any, for the sale of securities of Parent or in SEC reports in connection with such transactions. Parent shall provide the Company and its counsel with copies of such registration statements at the time of filing. The Company agrees to provide Parent with any information, certificates, documents or other materials about the Company and its Subsidiaries as are reasonably necessary to be included in such SEC reports or registration statements, including registration statements which may be filed by Parent prior to the Effective Date, an officer, employeeTime. The Company shall use its reasonable efforts to cause its attorneys and accountants to provide Parent and any underwriters for Parent with any consents, comfort letters, opinion letters, reports or directorinformation which are necessary to complete the registration statements and applications for any such acquisition or issuance of Premiersecurities. Parent shall not file with the SEC any registration statement or a Premier Subsidiary (the “Indemnified Parties”) against all losses, claims, damages, costs, expenses (including reasonable attorneys’ fees), liabilitiesamendment thereto or judgments or amounts that are paidsupplement thereof containing information regarding the Company unless the Company shall have consented in settlement (which settlement shall require the prior written consent of Fulton,writing to such filing, which consent shall not be unreasonably withheld)delayed or withheld.
6.13Failure to Fulfill Conditions. In the event that Parent or the Company determines that a material condition to its obligation to consummate the transactions contemplated hereby cannot be fulfilled on or prior to the Cut-off Date (as defined in Section 8.1(c)) and that it will not waive that condition, it will promptly notify the other party. The Company and Parent will promptly inform the other of any facts applicable to the Company or Parent, respectively, or their respective directors or officers or Subsidiaries, that would be likely to prevent or materially delay approval of the Merger by any Governmental Entity or which would otherwise prevent or materially delay completion of the Merger. Any information so provided shall be retained by the receiving party in accordance with the terms of the confidentiality agreement heretofore executed by the parties hereto.
6.14Transaction Expenses of the Company.
(a) The Company shall cause its and its Subsidiaries’ professionals to render monthly invoices within 30 days after the end of each month. The Company shall advise Parent monthly of all out-of-pocket expenses which the Company and its
Subsidiaries have incurred in connection with the transactions contemplated hereby. The Company shall not, and shall cause each of its Subsidiaries not to, pay fees and expenses to its accountants or attorneys on any claim, action, suit, proceeding or investigation (a “Claim”)basis different than the basis on which such professionals would be paid in which an Indemnified Party is, or is threatenedthe absence of any business combination.
(b) The Company, in reasonable consultation with Parent and at Parent’s expense, shall make all arrangements with respect to be made, a party or a witness based in whole or in part outthe printing and mailing of the factProxy Statement.
6.15Pre-Closing Delivery of Financial Statements. Prior to the Closing, the Company shall deliver to Parent such consolidated financial statements of the Company as Parent shall reasonably request in order to enable Parent to comply with its reporting obligations under the Exchange Act, together with an executed report of the Company’s outside auditors with respect to all such financial statements that have been audited. Such report shall be in form and substance satisfactory to the Parent.The financial statements delivered pursuant to this Section 6.16 shall be prepared in accordance with GAAP and shall conform to all provisions of the SEC’s Regulation S-X, such that such person is or was a director, officer or employeefinancial statements are suitable for filing by the Parent with the SEC in response to Items 2 and 7 of Premier or a Premier Subsidiary if such Claim pertainsthe SEC’s Current Report on Form 8-K.Immediately prior to any matter of fact arising, existing or occurringthe Closing, the Company shall cause its outside auditors to deliver to the Parent an executed consent, in form and substance satisfactory to the Parent and suitable for filing by the Parent with the SEC, which consent shall authorize the Parent to file with the SEC the report referred to in this Section 6.16 and all other reports delivered by the Company hereunder.
6.16ISRA. The Company, at its sole cost and expense, shall obtain, prior to the Effective Date (including, without limitation,Time, either (i) a written determination (based upon an affidavit from the MergerCompany that is approved by the Parent prior to its submission to the New Jersey Department of Environmental Protection (“NJDEP”)) from the NJDEP that the transactions contemplated by, or the properties subject to, this Agreement are not subject to the requirements of ISRA, or (ii) a Remediation Agreement (in form and othersubstance satisfactory to Parent) issued by the NJDEP pursuant to ISRA authorizing the consummation of the transactions contemplated by this Agreement) regardless of whether such Claim is asserted or claimedAgreement prior to at,the issuance of any “Negative Declaration,” “No Further Action Letter” or afterapproval of any “Remedial Action Workplan,” as such terms are defined under ISRA, or (iii) a “Negative Declaration” or approvals of any “Remedial Action Workplan” (in either case in form and substance satisfactory to the Parent) with respect to each property in New Jersey which the Company or any of its Subsidiaries owns or operates, in each case to the extent that such property renders the provisions of ISRA applicable to the transactions contemplated by this Agreement. The Company will obtain and maintain a “Remediation Funding Source” in form and amount approvable by the NJDEP as required in furtherance of the Company’s obligations under this covenant.
6.17Post-Closing Operation of the Company Bank. After the Effective Date (the “Indemnified Liabilities”) toTime, the full extent permitted under applicable law as toBoard of Directors of the date hereof or amendedCompany Bank immediately prior to the Effective Date and underTime shall continue to be the ArticlesBoard of Incorporation or Bylaws of Premier or a Premier Subsidiary as in effect asDirectors of the date hereof (and Fulton shall pay expenses in advance of the full disposition of any such action or proceeding to each of the Indemnified Parties to the full extent permitted by applicable law and Fulton’s Articles of Incorporation and Bylaws). Any Indemnified Party wishing to claim indemnification under this provision, upon learning of any claim, shall notify Fulton (but the failure to so notify Fulton shall not relieve Fulton from any liability which Fulton may have under this section except to the extent Fulton is materially prejudiced thereby). In the defense of any action covered by this Section 6.10(b), Fulton shall have the right to direct the defense of such action and retain counsel of its choice; provided, however, that, notwithstanding the foregoing, the Indemnified Parties as a group may retain a single law firm to represent them with respect to each matter under this section if there is, under applicable standards of professional conduct, a conflict on any significant issue between the positions of Fulton and the Indemnified Parties (the Indemnified Parties may also retain more than one law firm if there is, under applicable standards of professional conduct, a conflict of any significant issues between the positions of two or more Indemnified Parties). Fulton shall have an obligation to advance funds to satisfy an obligation of Fulton or any successor to Fulton under this Section 6.10(b) to the same extent that Fulton would be obligated to advance funds under the indemnification provisions of its Articles of Incorporation and/or Bylaws.
Section 6.10 Appointment of Fulton Director. Fulton shall, on or promptlyCompany Bank immediately after the Effective Date (but no later than Fulton’s next BoardTime, the chairman of Directors meeting following the Effective Date), appoint to Fulton’s Boardboard of Directors Clark S. Frame (or one of Premier’s other
current directors designated, subject to the reasonable approval of Fulton, by vote of Premier’s Board of DirectorsCompany Bank immediately prior to the Effective Date)Time shall continue to serve as a directorbe the chairman of Fulton. Such director shall stand for election at Fulton’s 2004 annual meeting, at which time Fulton shall nominate and recommend for election such director for an additional termthe board of three (3) years. Fulton has a mandatory retirement policy for directors who attain age 70; however, Fulton would “grandfather” the present director of Premier appointed as set forth above from the application of such policy for a three year periodCompany Bank immediately after the Effective Date unless such director would have otherwise been obligatedTime, and the chief executive officer of the Company Bank immediately prior to retire fromthe
Effective Time shall continue to be the Boardchief executive officer of Premier under any policy it currently has in effect.
Section 6.11 Continuation of Premier Bank’s Structure, Name and Directors.
(a) For a period of three (3) yearsthe Company Bank immediately after the Effective Date, Fulton shall (subject toTime. In addition, the rightcertificate of Fultonincorporation and the Premier Bank Continuing Directors to terminate such obligations under this Section 6.11(a) under subsections (b) and (c) below) (i) preserve the business structureby-laws of PremierCompany Bank as a Pennsylvania commercial bank (provided that Fulton may cause Premier Bank’s branch offices located in Northampton County, Pennsylvania to be transferred to another bank subsidiary of Fulton); (ii) preserve and use the present name of Premier Bank, and (iii) continue in office the present directors of Premier Bank who indicate their desire to serve the “Premier Bank Continuing Directors”),provided, that (A) for such three year period, each non-employee Premier Bank Continuing Director shall continue to receive director’s fees from Premier Bank on the same basis asexistence immediately prior to the Effective Date andTime shall continue to receive such other incidental benefits as he or she was receiving from Premierbe the certificate of incorporation and by-laws of the Company Bank priorimmediately after the Effective Time. Subject to the Effective Date (the current fees and benefits being set forth onSchedule 6.11 andnext sentence, Parent, as shareholder, agrees to remain unchanged throughvote in favor of the re-election of the Directors of the Company Bank for three successive full one year terms at each of the next three annual meetings of the shareholders of the Company Bank after the Effective Date);Time, provided that, in the event an individual PremierCompany Bank Continuing Director ceases to act as a director or as a member of any committee thereof, the foregoing obligation provided for below to maintain existing fees and benefits shall not apply to successors in such positions and (B) after such three-year period, each PremierCompany Bank Continuing Director shall be subject to Fulton’sParent’s mandatory retirement rules for directors and shall receive the standard fee paid to directors of subsidiary banks of Fulton.
(b) Fulton shall haveParent. It is intended that Parent will not terminate the right to terminate its obligations under subsection (a)separate corporate existence of this Section 6.11the Company Bank as a resultsubsidiary of (i) regulatory requirements, (ii)Parent for a period of three years following the Effective Time (the “Transition Period”), unless required to do so by law or governmental authorities, safe and sound banking practices, or as enunciateda result of the fiduciary obligations of Parent’s Board of Directors. During the Transition Period, each non-employee member of the Board of Directors of the Company Bank shall continue to receive the same compensation for service on the Board of Directors of the Company Bank as they received prior to the Effective Time, the Chairman of the Board of the Company Bank shall continue to receive the same compensation for such service as he received prior to the Effective Time, and the Vice Chairman of the Board of the Board of the Company Bank shall continue to receive the same compensation for such service as he received prior to the Effective Time . Parent has no present intention to remove any of the Company Bank’s directors or its chairman of the board during the Transition Period, provided that the Company Bank is managed in a manner consistent with Parent’s overall business strategies, as such strategies may develop from time to time. However, nothing herein shall be construed to limit the right of Parent to remove and/or replace any or all of the officers of the Company Bank at any time following the Effective Time, to amend the certificate of incorporation and by-laws of the Company Bank at any time following the Effective Time or otherwise to exercise the rights and prerogatives of Parent as a shareholder of the Company Bank at any time following the Effective Time, except that the Parent shall not terminate the separate corporate existence of the Company Bank prior to the end of the Transition Period unless required to do so by banklaw or governmental authorities, safe and sound banking practices or as a result of the fiduciary obligations of Parent’s Board of Directors and will not seek to remove or fail to reelect any of the Directors of the Company Bank during the Transition Period other than for cause or for conduct which harms the business, regulatory agencies,status or (iii)reputation of the exerciseCompany Bank, Parent or its other Subsidiaries. For purposes hereof, “cause” shall mean a Director’s willful misconduct as a Director, breach of their fiduciary duties by Fulton’s directors.
(c)duty involving personal profit, or willful violation of any law, rule or regulation (other than traffic violations or similar minor offenses). Notwithstanding anything herein to the contrary, the PremierCompany Bank Continuing Directors, in their exercise of their fiduciary duty as to the best interests of Premier Company
Bank and Fulton,Parent, may, by a majority vote of such directors, modify or waive any or all of the foregoing provisions in subsection (a) of this Section 6.11.6.18.
6.18Tax Treatment. Neither Parent nor the Company shall, or shall cause any of their respective Subsidiaries to, take any action inconsistent with the treatment of the Merger as a “reorganization” under Section 368(a) of the Code.
6.19Insurance Policies. Parent shall pay the annual premiums on those certain life insurance policies payable to the Directors of the Company Bank and listed on Schedule 6.19 (the “Insurance Policies”) for a period of five (5) years from and after the Effective Time. For a period of thirty (30) days following the fifth anniversary of the Effective Date, each such Director shall have the option to purchase the policy applicable to him in exchange for payment of the then current book value of such policy. In the event a director does not exercise such option, the Company Bank shall remain the owner of the applicable Insurance Policy and may take such action, including retention of the Insurance Policy, as it deems appropriate, or surrender of the Insurance Policy in exchange for the cash surrender value thereof.
6.20Payment of Retention Bonuses.Provided that each proposed recipient remains an employee of the Company or the Company Bank from the date hereof through the later of (a) the Effective Time or (b) a date, chosen by Parent, not to exceed the earlier of thirty days after completion of data processing conversion or six months after the Effective Time (the “Eligibility Date”) (provided that such recipient shall remain eligible if his or her employment is terminated prior thereto without cause), the Company shall pay to each individual employee listed on Section 6.20 of the Company Disclosure Schedule hereof the bonus compensation provided for such employee on such schedule on the earlier of (i) termination of such employee’s employment by Company Bank or (ii) the Eligibility Date.
6.21Employee Severance. From and after the Effective Time, (i) Parent, Company or another subsidiary of Parent (any such parties employing employees of Company or a Company Subsidiary, the “Parent Employers”) shall: (A) satisfy the Employment Agreement, and (B) use its good faith efforts to retain each present employee of the Company and the Company Subsidiaries in such employee’s current position and salary compensation (or, if offered to, and accepted by, an employee, a position for which the employee is qualified with the Parent Employers at a compensation commensurate with the position), (ii) in the event that the Parent Employers shall continue to employ officers or employees of the Company and the Company Subsidiaries as of the Effective Time, the Parent Employers shall employ such persons on the Effective Time (other than the Contract Employee) as “at-will” employees, and (iii) in the event the Parent Employers are not willing to employ, or terminate the employment (other than for cause as defined in the Company’s severance policy) of, any officers or employees of the Company or the Company Subsidiaries (other than the Contract Employee), the Parent Employers shall pay severance benefits to such employees (other than to the Contract Employee) as follows: (A) in the event employment is terminated on or prior to the date which is one year after the Effective Date the amount provided for in the Company’s severance policy included in the
Disclosure Schedule; or (B) in the event employment is terminated thereafter, in accordance with the then existing severance policy of Parent or its successor.
ARTICLE VII—VII. CONDITIONS PRECEDENT
7.1Section 7.1 Common Conditions to Each Party’s Obligations Under this Agreement..The The respective obligations of the partieseach party under this Agreement to consummate this Agreementthe Merger shall be subject to the satisfaction, of eachor, where permissible under applicable law, waiver at or prior to the Effective Time of the following common conditions priorconditions:
to or as(a)Approval of Shareholders; SEC Registration; Blue Sky Laws. This Agreement and the Closing, except to the extent that any such conditiontransactions contemplated hereby shall have been waived in accordance withapproved by the provisionsrequisite vote of Section 8.4 herein:
(a)Shareholder Approval: This Agreementthe shareholders of the Company. The S-4 shall have been duly authorized, approved and adopteddeclared effective by the shareholders of Premier in accordance with applicable law, AMEX rulesSEC and regulations,shall not be subject to a stop order or any threatened stop order, and the Articlesissuance of Incorporation of Premier.the Parent Common Stock shall have been qualified in every state where such qualification is required under the applicable state securities laws.
(b)Regulatory ApprovalsFilings: The. All necessary approvals and consents (including without limitation any required approval of each federalthe Department of Banking and state regulatory authority having jurisdiction overInsurance of the State of New Jersey, the FRB, the SEC and (if necessary) the Department of Environmental Protection of the State of New Jersey) of Governmental Entities required to consummate the transactions contemplated by this Agreement (including the Merger), including without limitation, the Federal Reserve Board, the Department and the Federal Deposit Insurance Corporation,hereby shall have been obtained without the imposition of any term or condition which would, in Parent’s reasonable judgment, impair, in any material respect, the value of the Merger to Parent. All conditions required to be satisfied prior to the Effective Time by the terms of such approvals and consents shall have been satisfied; and all applicablestatutory waiting and notice periods in respect thereof shall have expired, subject to no termsexpired.
(c)Suits and Proceedings. No order, judgment or conditions whichdecree shall be outstanding against a party hereto or a third party that would (i) require or could reasonably be expected to require (A) any divestiture by Fultonhave the effect of a portionpreventing completion of the business of Fulton,Merger; no suit, action or other proceeding shall be pending or threatened by any subsidiary of FultonGovernmental Entity seeking to restrain or (B)prohibit the Merger; and no suit, action or other proceeding shall be pending before any divestiture by Premiercourt or the Premier Subsidiaries of a portion of their businesses which Fulton in its good faith judgment believes will have a significant adverse impact on the businessGovernmental Entity seeking to restrain or prospects of Premier or the Premier Subsidiaries, as the case may be, or (ii) impose any condition upon Fulton or Premier Bank, or their other subsidiaries, taken as a whole, which in Fulton’s good faith judgment (x) would be materially burdensome to Fulton and its subsidiaries taken as a whole, (y) would significantly increase the costs incurred or that will be incurred by Fulton as a result of consummatingprohibit the Merger or (z) would prevent Fulton from obtainingobtain other substantial monetary or other relief against one or more parties hereto in connection with this Agreement and which Parent or the Company determines in good faith, based upon the advice of their respective counsel, makes it inadvisable to proceed with the Merger because any material benefit contemplated by itsuch suit, action or proceeding has a significant potential to be attainedresolved in such a way as a resultto deprive the party electing not to proceed of any of the material benefits to it of the Merger.
(c)Stock Listing. The shares of Fulton Common Stock to be issued in the Merger shall have been authorized for listing on NASDAQ.
(d)Tax Opinion. Each of Fulton Parent and PremierCompany shall each have received an opinion, dated as of Fulton’s counsel,the Effective Time, of Barley, Snyder, Senft & Cohen, LLC, reasonably acceptablesatisfactory in form and substance to Fultonthe Company and Premier, addressedits counsel and to FultonParent, based upon representation letters reasonably required by such counsel, dated on or about the date of such opinion, and Premier, with respect to federal tax laws or regulations,such other facts, representations and customary limitations as such counsel may reasonably deem relevant, to the effect that: (i) the
(i) The
Merger will constitutebe treated for federal income Tax purposes as a reorganization withinqualifying under the meaningprovisions of Section 368(a)(1)(A) of the Code and Fulton and Premier will each be a “party to a reorganization” within the meaning of Section 368(b)(1) of the Code;
(ii) Nono gain or loss willshall be recognized by Fulton or Premier by reasonupon the exchange of the Merger;
(iii) The bases of the assets of Premier in the hands of Fulton will be the same as the bases of such assets in the hands of Premier immediately prior to the Merger;
(iv) The holding period of the assets of Premier in the hands of Fulton will include the period during which such assets were held by Premier prior to the Merger;
(v) A holder of PremierCompany Common Stock who receives shares of Fultonsolely for Parent Common Stock in exchange for his Premier Common Stock pursuant to the reorganization (exceptStock; (iii) with respect to cash received in lieu of fractional shares of Fultonexchange for Company Common Stock, deemed issued as described below) will not recognizegain, if any, gain or loss uponrealized by the exchange.
(vi) A holder of Premier Common Stock who receives cash in lieu of a fractional share of Fulton Common Stock will be treated as if he received a fractional share of Fulton Common Stock pursuant to the reorganization which Fulton then redeemed for cash. The holder of Premier Common Stock will recognize capital gain or lossrecipient on the constructive redemption of the fractional shareexchange shall be recognized, but in an amount equal to the difference between the cash received and the adjusted basisnot in excess of the fractional share.
(vii) The tax basisamount of the Fultonsuch cash; (iv) with respect to Parent Common Stock to be received by the shareholders of Premier pursuant to the terms of this Agreement will include the holding period of the Premierin exchange for Company Common Stock surrendered in exchange therefor, provided that such Premier Common Stock is held as a capital interest at the Effective Time.
(viii) The holding period of the shares of Fulton Common Stock to be received by the shareholders of Premier will include the period during which they held the shares of Premier Common Stock surrendered, provided the shares of Premier Common Stock arewas held as a capital asset on the date of the exchange, such gain shall be treated as capital gain (long-term or short-term, depending on the shareholders’ respective holding periods for their Company Common Stock), except in the case of any such shareholder as to which the exchange has the effect of a dividend within the meaning of Section 356(a)(2) of the Code; (v) the basis of any Parent Common Stock received in exchange for Company Common Stock shall equal the basis of the recipient’s Company Common Stock surrendered on the exchange, reduced by the amount of cash received on the exchange, and increased by the amount of the gain recognized, if any, on the exchange (whether characterized as dividend or capital gain income); and (vi) the holding period for any Parent Common Stock received in exchange for Company Common Stock will include the period during which the Company Common Stock surrendered on the exchange was held, provided such stock was held as a capital asset on the date of the exchange. In connection therewith, each of Parent and the Company shall deliver to Barley, Snyder, Senft & Cohen, LLC representation letters, in each case in form and substance reasonably satisfactory to Barley, Snyder, Senft & Cohen, LLC .
(e)Registration StatementListing of Shares:. The Registration Statement (as defined in Section 6.1(b), including any amendments thereto) shall have been declared effective by the SEC; the information contained thereinshares of Parent Common Stock which shall be true, complete and correct in all material respects as of the date of mailing of the Proxy Statement/Prospectus (as defined in Section 6.1(b))issued to the shareholders of Premier; regulatory clearance for the offering contemplated byCompany upon consummation of the Registration Statement (the “Offering”)Merger shall have been received from each federal and state regulatory authority having jurisdiction overauthorized for listing for quotation on the Offering; and no stop order shall have been issued and no proceedings shall have been instituted or threatened by any federal or state regulatory authorityNASDAQ, subject to suspend or terminate the effectivenessofficial notice of the Registration Statement or the Offering.issuance.
(f)7.2No Suits: No action, suit or proceeding shall be pending or threatened before any federal, state or local court or governmental authority or before any arbitration tribunal which seeks to modify, enjoin or prohibit or otherwise adversely and materially affect the transactions contemplated by this Agreement;provided,however, that if Fulton agrees to defend and indemnify Premier and Premier Bank and their respective officers and directors with regard to any such action, suit or proceeding pending or threatened against them or any of them, then such pending or threatened action, suit or proceeding shall not be deemed to constitute the failure of a condition precedentConditions to the obligation of Premier to consummate this Agreement.
Section 7.2 Conditions Precedent to Obligations of FultonParent Under this Agreement.. The obligations of Fulton to consummateParent under this Agreement shall be further subject to the satisfaction of eachor waiver, at or prior to the Effective Time, of the following conditions prior to or as of the Closing, except to the extent that any such condition shall have been waived by Fulton in accordance with the provisions of Section 8.4 herein:conditions:
(a)Accuracy of Representations and WarrantiesWarranties; Performance of Obligations of the Company: All. Except for those representations and warranties which are made as of a particular date, the representations and warranties of Premier as set forththe Company contained in this Agreement all of the information contained in Schedules hereto and all Premier Closing Documents (as defined in Section 7.2(j)) shall be true and correct in all material respects (except with respect to those representations and warranties which are qualified as to materiality, which shall be true in all respects) on the Closing Date as though made on and as of the Closing Date. The representations and warranties of the Company contained in this Agreement which are made as if made on suchof a particular date (or on the date to which it relates in the case of any representation or warranty which expressly relates to an earlier date).
(b)Covenants Performed: Premier shall have performed or compliedbe true and correct in all material respects (except with eachrespect to those representations and warranties which are qualified as to materiality, which shall be true in all respects) as of such date. The Company shall have performed in all material respects the agreements, covenants required by this Agreementand obligations to be performed by it prior to the Closing Date.
(b)Certificates. The Company shall have furnished Parent with such certificates of its officers or complied with by it.other documents to evidence fulfillment of the conditions set forth in this Section 7.2 as Parent may reasonably request.
(c)Accountant’s Letter. If requested by Parent, the Company shall have caused to be delivered to the Parent “cold comfort” letters or letters of procedures from the Company’s independent certified public accountants, dated (i) the date of the mailing of the Proxy Statement to the Company’s shareholders and (ii) a date not earlier than five business days preceding the date of the Closing and addressed to the Parent, concerning such matters as are customarily covered in transactions of the type contemplated hereby;
(d)Third Party Consents. All consents, waivers and approvals of any third parties (other than Governmental Entities) which are necessary to permit the consummation of the Merger and the other transactions contemplated hereby shall have been obtained or made except for those the failure to obtain would not have a Material Adverse Effect (i) on the Company and its Subsidiaries taken as a whole or (ii) on the Parent and its Subsidiaries taken as a whole. None of the approvals or waivers referred to in this Section 7.2(d) shall contain any term or condition which would have a Material Adverse Effect on the Surviving Corporation and its Subsidiaries, taken as a whole, after giving effect to the Merger.
(e)Opinion of Counsel for Premierthe Company: Fulton. Parent shall have received an opinion, dated the Effective Time, from Shumaker Williams P.C.,Windels, Marx, Lane & Mittendorf, LLP, special counsel to Premier,the Company, in substantially the form ofExhibit CE hereto. In rendering any such opinion, such special counsel may require and, to the extent they deem necessary or appropriate may rely upon, opinions of other counsel and upon representations made in certificates of officers of Premier, Fulton,the Company, Parent, affiliates of the foregoing, and others.
(d)(f)Affiliate Agreements:. Shareholders of Premierthe Company who are or will be affiliates of Premierthe Company or FultonParent for the purposes of Accounting Series Release No. 135 and the 1933 Act shall have entered into agreements with Fulton,Parent, in form and substance satisfactory to Fulton,Parent, reasonably necessary to assure compliance with Rule 145 under the 1933 Act.
(e)(g)PremierStock Options:. As may be required by Section 2.31.6 herein, all holders of PremierStock Options who have not exercised such options shall have delivered documentation reasonably satisfactory to Fulton substitutingParent with respect to the Fulton Stockassumption by Parent of the Company Options for the Premier Stock Options.as set forth in Section 1.6.
(f)(h)No Material Adverse Change: Fulton. Parent (together with its accountants, if the advice of such accountants is deemed necessary or desirable by Fulton)Parent) shall have established to its reasonable satisfaction that, since the date of this Agreement, there shall not have been any material and adverse change in the condition (financial or otherwise), assets, liabilities, business, results of operations or future prospects of the Company and the Company Subsidiaries on a consolidated basis taken as a whole. In particular, without limiting the generality of the foregoing sentence, the financial statements of the
Company shall indicate that the consolidated financial condition, assets, liabilities and results of operations of Company as of the respective dates reported therein do not vary adversely in any material respect from the consolidated financial condition, assets, liabilities and results of operations presented in the Company Financial Statements. For purposes of this Section 7.2(h), a material and adverse change shall mean an event, change, or occurrence which, individually or together with any other event, change, or occurrence, has a Material Adverse Effect on (i) the financial position, business, results of operations or future prospects of the Company or (ii) the ability of the Company to perform its obligations under this Agreement.
(i)Employment Agreement. The Employment Agreement shall remain in full force and effect.
7.3Conditions to Obligations of the Company Under this Agreement. The obligation of the Company to effect the Merger is also subject to the satisfaction or waiver by the Company at or prior to the Effective Time of the following conditions:
(a)Representations and Warranties; Performance of Obligations of Parent. Except for those representations and warranties which are made as of a particular date, the representations and warranties of Parent contained in this Agreement shall be true and correct in all material respects (except with respect to those representations and warranties which are qualified as to materiality, which shall be true in all respects) on the Closing Date as though made on and as of the Closing Date. The representations and warranties of Parent contained in this Agreement which are made as of a particular date shall be true and correct in all material respects (except with respect to those representations and warranties which are qualified as to materiality, which shall be true in all respects) as of such date. Parent shall have performed in all material respects the agreements, covenants and obligations to be performed by it prior to the Closing Date.
(b)Certificates. Parent shall have furnished the Company with such certificates of its officers or other documents to evidence fulfillment of the conditions set forth in this Section 7.3 as the Company may reasonably request.
(c)Opinion of Counsel for Parent. The Company shall have received an opinion from Barley, Snyder, Senft & Cohen, LLC, counsel to Parent, dated the Effective Time, in substantially the form of Exhibit F hereto. In rendering any such opinion, such counsel may require and, to the extent they deem necessary or appropriate may rely upon, opinions of other counsel and upon representations made in certificates of officers of Parent, the Company, affiliates of the foregoing, and others.
(d)Parent Options. Parent Stock Options shall have been substituted for the Stock Options which have not been exercised pursuant to Section 1.6 herein. Agreements evidencing the assumption of the Company Options pursuant to Section 1.6 shall have been delivered.
(e)No Material Adverse Change. The Company (together with its accountants, if the advice of such accountants is deemed necessary or desirable by the Company) shall have established to its reasonable satisfaction that, since the date of this Agreement, there shall not have been any material and adverse change in the condition (financial or otherwise), assets, liabilities, business, or results of operations or future prospects of Premier and the Premier Subsidiaries on a consolidated basis taken as a whole.Parent. In particular, without limiting the generality of the foregoing sentence, the Additional Premier Financial Statements (as defined in Section 5.4)financial statements of Parent shall indicate that the consolidated financial condition, assets, liabilities and results of operations of PremierParent as of the respective dates reported therein do not vary adversely in any material respect from the consolidated financial condition, assets, liabilities and results of operations presented in the Premier Balance Sheet. For purposes of this Section 7.2(f), a material and adverse change shall mean an event, change, or occurrence which, individually or together with any other event, change, or occurrence, has a material adverse impact on (i) the financial position, business or results
of operations or future prospects of Premier or (ii) the ability of Premier to perform its obligations under this Agreement, provided that “material and adverse change” shall not be deemed to include the impact of (a) changes in banking and similar laws of general applicability or interpretations thereof by courts or governmental authorities, (b) changes in GAAP or regulatory accounting principles generally applicable to banks and their holding companies, (c) actions or omissions of Premier taken at the direction or behest of Fulton with the prior written consent of Fulton, including any action or actions, individually or in the aggregate, taken by Premier or the Premier Subsidiaries, (d) changes in economic conditions generally affecting financial institutions including changes in the general level of interest rates, and (e) the direct effects of compliance with this Agreement and of satisfying or causing to be satisfied the conditions set forth in this Article VII on the operating performance of Premier, including reasonable expenses incurred by Premier in consummating the transactions contemplated by the Agreement. At the Closing, Premier shall deliver to Fulton a certificate confirming the absence of a material adverse change described herein and a certificate (from appropriate officers of Premier and/or Premier’s transfer agent) as to the issued and outstanding shares of Premier Common Stock and Premier Preferred Stock, shares issuable under outstanding stock options granted under Premier’s Stock Option Plan and any outstanding obligations, options or rights of any kind entitling persons to purchase or sell any shares of Premier Common Stock or Premier Preferred Stock and any outstanding securities or other instruments of any kind that are convertible into such shares..
(g)Accountants’ Letter. Subject to the requirements of Statement of Auditing Standards No. 72 of the American Institute of Certified Public Accountants, KPMG LLP, or such other accounting firm as is acceptable to Fulton, shall have furnished to Fulton an “agreed upon procedures” letter, dated the Effective Date, in form and substance satisfactory to Fulton to the effect that:
(i) In their opinion, the consolidated financial statements of Premier examined by them and included in the Registration Statement comply as to form in all material respects with the applicable accounting requirements of the 1933 Act and the published rules and regulations thereunder; and
(ii) On the basis of limited procedures, not constituting an audit, including a limited review of the unaudited financial statements referred to below, a limited review of the latest available unaudited consolidated interim financial statements of Premier, inspection of the minute books of Premier and the Premier Subsidiaries since December 31, 2001, inquiries of officials of Premier and the Premier Subsidiaries responsible for financial and accounting matters and such other inquiries and procedures as may be specified in such letter, nothing came to their attention that caused them to believe that:
(A) any unaudited Consolidated Balance Sheets, Consolidated Statements of Income, Consolidated Statements of Shareholders’ Equity and Consolidated Statements of Cash Flows of Premier included in the Registration Statement are not in conformity with generally accepted
accounting principles applied on a basis substantially consistent with that of the audited financial statements covered by their report included in the Registration Statement;
(B) as of a specified date not more than five days prior to the date of delivery of such letter, there have been any changes in the consolidated shareholders’ equity of Premier as compared with amounts shown in the balance sheet as of December 31, 2002 included in the Registration Statement, except in each case for such changes, increases or decreases which the Registration Statement discloses have occurred or may occur and except for such changes, decreases or increases as aforesaid which are immaterial; and
(C) for the period from January 1, 2003 to such specified date, there were any decreases in the consolidated total net interest income, consolidated net interest income after provision for loan losses, consolidated other income, consolidated net income or net income per share amounts of Premier as compared with the comparable period of the preceding year, except in each case for decreases which the Registration Statement discloses have occurred or may occur, and except for such decreases which are immaterial.
(h)Federal and State Securities and Antitrust Laws: Fulton and its counsel shall have determined to their satisfaction that, as of the Closing, all applicable securities and antitrust laws of the federal government and of any state government having jurisdiction over the transactions contemplated by this Agreement shall have been complied with.
(i)Environmental Matters: No environmental problem of the kind contemplated in Section 3.22 and not disclosed inSchedule 3.22 shall have been discovered which would, or which potentially could, materially and adversely affect the condition (financial or otherwise), assets, liabilities, business, operations or future prospects of either Premier or Premier Bank.
(j)Closing Documents: Premier shall have delivered to Fulton: (i) a certificate signed by Premier’s President and Chief Executive Officer and by its Secretary (or other officers reasonably acceptable to Fulton) verifying that, to their knowledge, all of the representations and warranties of Premier set forth in this Agreement are true and correct in all material respects as of the Closing and that Premier has performed in all material respects each of the covenants required to be performed by it under this Agreement; (ii) all consents and authorizations of landlords and other persons that are necessary to permit this Agreement to be consummated without violation of any lease or other agreement to which Premier or Premier Bank is a party or by which they or any of their properties are bound; and (iii) such other certificates and documents as Fulton and its counsel may reasonably request (all of the foregoing certificates and other documents being herein referred to as the “Premier Closing Documents”).
(k)Redemption of Premier Preferred Stock. All of the outstanding shares of the Premier Preferred Stock shall be redeemed as set forth in Section 2.9.
Section 7.3 Conditions Precedent to the Obligations of Premier. The obligation of Premier to consummate this Agreement shall be subject to the satisfaction of each of the following conditions prior to or as of the Closing, except to the extent that any such condition shall have been waived by Premier in accordance with the provisions of Section 8.4 herein:
(a)Accuracy of Representations and Warranties: All of the representations and warranties of Fulton as set forth in this Agreement, all of the information contained in its Schedules hereto and all Fulton Closing Documents (as defined in Section 7.3(g) of this Agreement) shall be true and correct in all material respects as of the Closing as if made on such date (or on the date to which it relates in the case of any representation or warranty which expressly relates to an earlier date).
(b)Covenants Performed: Fulton shall have performed or complied in all material respects with each of the covenants required by this Agreement to be performed or complied with by Fulton.
(c)Opinion of Counsel for Fulton: Premier shall have received an opinion from Barley, Snyder, Senft & Cohen, LLC, counsel to Fulton, dated the Effective Time, in substantially the form ofExhibit F hereto. In rendering any such opinion, such counsel may require and, to the extent they deem necessary or appropriate may rely upon, opinions of other counsel and upon representations made in certificates of officers of Fulton, Premier, affiliates of the foregoing, and others.
(d)Fulton Options: Fulton Stock Options shall have been substituted for the Premier Options pursuant to Section 2.3 herein. The Fulton Stock Option agreements shall have been delivered and the Registration Statement for the purpose of registering the shares necessary to satisfy Fulton’s obligation with respect to the issuance of Fulton Common Stock pursuant to the exercise of the Fulton Stock Options shall have been declared effective.
(e)No Material Adverse Change: Premier (together with its accountants, if the advice of such accountants is deemed necessary or desirable by Premier) shall have established to its reasonable satisfaction that, since the date of this Agreement, there shall not have been any material and adverse change in the condition (financial or otherwise), assets, liabilities, business or operations or future prospects of Fulton. In particular, without limiting the generality of the foregoing sentence, the Additional FultonParent Financial Statements (as defined in Section 6.3) shall indicate that the consolidated financial condition, assets, liabilities and results of operations of Fulton as of the respective dates reported therein do not vary adversely in any material respect from the consolidated financial condition, assets, liabilities and results of operations presented in the Fulton Balance Sheet.Statements. For purposes of this Section 7.3(e), a material and adverse change shall mean an event, change, or occurrence which, individually or together with any other event, change, or occurrence, has a material adverse impactMaterial Adverse Effect on (i) the financial position,
business, or results of operations or future prospects of FultonParent or (ii) the ability of FultonParent to perform its obligations under this Agreement, provided that “material and adverse change” shall not be deemed to include the impact of (a) changes in banking and similar laws of general applicability or interpretations thereof by courts or governmental authorities, (b) changes in GAAP or regulatory accounting principles generally applicable to banks and their holding companies, (c) changes in economic conditions generally affecting financial institutions including changes in the general level of interest rates, and (d) the direct effects of compliance with this Agreement and of satisfying or causing to be satisfied the conditions set forth in this Article VII on the operating performance of Fulton, including reasonable expenses incurred by Fulton in consummating the transactions contemplated by the Agreement. At the Closing, Fulton shall deliver to Premier a certificate confirming the absence of a material adverse change described herein and a certificate (from appropriate officers of Fulton and/or Fulton’s transfer agent) as to the issued and outstanding shares of Fulton Common Stock, shares of Fulton Common Stock reserved for issuance upon the exercise of stock options, under Fulton’s Employee Stock Purchase Plan, under Fulton’s Dividend Reinvestment Plan and under Fulton’s Shareholders Rights Plan, any outstanding obligations, options or rights of any kind entitling persons to purchase or sell any shares of Fulton’s Common Stock and any outstanding securities or other instruments of any kind that are convertible into such shares.
(f)Fairness Opinion: Premier. The Company shall have obtained from Boenning & Scattergood,Advest, Inc., or from another independent financial advisor selected by the Board of Directors of Premier,the Company, an opinion dated within five (5) days of the Proxy Statement/ProspectusStatement to be furnished to the Board of Directors of Premierthe Company stating that the Conversion Ratio contemplated by this Agreement is fair to the shareholders of Premierthe Company from a financial point of view.
(g)Closing Documents: Fulton shall have delivered to Premier: (i) a certificate signed by Fulton’s Chairman and Chief Executive Officer (or other officer reasonably acceptable to Premier) verifying that, to their knowledge, all of the representations and warranties of Fulton set forth in this Agreement are true and correct in all material respects as of the Closing and that Fulton has performed in all material respects each of the covenants required to be performed by Fulton; and (ii) such other certificates and documents as Premier and its counsel may reasonably request (all of the foregoing certificates and documents being herein referred to as the “Fulton Closing Documents”).ARTICLE VIII. TERMINATION AND AMENDMENT
ARTICLE VIII—TERMINATION, AMENDMENT AND WAIVER
8.1Section 8.1 Termination. This Agreement may be terminated at any time beforeprior to the Effective Time, (whetherwhether before or after approval of the authorization, approval and adoption of this Agreementmatters presented in connection with the Merger by the shareholders of Premier) as follows:the Company:
(a)Mutual Consent: This Agreement may be terminated by mutual consent of the partiesCompany and Parent;
(b) by either Parent or the Company upon the affirmative vote of a majority of each of the Boards of Directors of Premier and Fulton, followed by written notices givennotice to the other party.party (i) 60 days after the date on which any request or application for a required regulatory approval shall have been denied or withdrawn at the request or recommendation of the Governmental Entity which must grant such approval, unless within the 60-day period following such denial or withdrawal a petition for rehearing or an amended application has been filed with the applicable Governmental Entity, provided, however, that no party shall have the right to terminate this Agreement pursuant to this Section 8.1(b)(i) if such denial or request or recommendation for withdrawal shall be due to the failure of the party seeking to terminate this Agreement to perform or observe the covenants and agreements of such party set forth herein or (ii) if any Governmental Entity of competent jurisdiction shall have issued a final nonappealable order enjoining or otherwise prohibiting the Merger;
(c) by either Parent or the Company, if the Merger shall not have been consummated on or before April 15, 2005 (the “Cut-off Date”), 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 of such party set forth herein;
(b)Unilateral Action
(d) by Fulton: This Agreement may be terminated unilaterally byeither Parent or the affirmative voteCompany if the approval of the Boardshareholders of Directorsthe Company required for the consummation of Fulton, followedthe Merger shall not have been obtained by written notice given promptlyreason of the failure to Premier, if: (i) there has beenobtain the required vote at a duly held meeting of such shareholders or at any adjournment or postponement thereof;
(e) by either Parent or the Company (provided that the terminating party is not then in material breach by Premier of any representation, warranty, covenant or material failure to comply withother agreement contained herein), if there shall have been a breach of any covenantof the representations or warranties set forth in this Agreement on the part of the other party (determined as of the date hereof or, in the case of representations and warranties made as of a particular date, as of the date as of which such representation or warranty is made), which breach is not cured within thirty days following written notice to the party committing such breach, hasor which breach, by its nature, cannot be cured prior to the Closing; provided, however, that neither party shall have the right to terminate this Agreement pursuant to this Section 8.1(e) unless the breach of representation or warranty, together with all other such breaches, would entitle the party receiving such representation not to consummate the transactions contemplated hereby under the standards set forth in Section 7.2(a) (in the case of a breach of representation or warranty by the Company) or the standards set forth in Section 7.3(a) (in the case of a breach of representation or warranty by Parent);
(f) by either Parent or the Company (provided that the terminating party is not then in material breach of any representation, warranty, covenant or other agreement contained herein), if there shall have been a material breach of any of the covenants or agreements set forth in this Agreement on the part of the other party hereto, which breach shall not have been cured within thirty (30) days afterfollowing receipt by the breaching party of written notice of such breach has been givenfrom the other party hereto, or which breach, by Fultonits nature, cannot be cured prior to Premier; (ii) any condition precedent to Fulton’s obligations as set forth in Article VII of this Agreement remains unsatisfied, through no fault of Fulton, on September 30, 2003; provided, that such date may be extended until December 31, 2003the Closing;
(g) by PremierParent, if by written notice to Fulton (given not later than September 15, 2003) if the Closing shall not have occurred because of failure to obtain approval from one or more regulatory authorities whose approval is required in connection with this Agreement; or (iii) Fulton’sParent’s Board of Directors makes an election provided for in Section 5.7(e)5.3(e)(i) herein.herein;
(c)Unilateral Action By Premier: This Agreement may be terminated unilaterally(h) by the affirmative vote of a majority of the Board of Directors of Premier, followed by written notice given promptly to Fulton, if: (i) there has been a material breach by Fulton of any representation, warranty or material failure to comply with any covenant set forth in this Agreement and such breach has not been cured within thirty (30) days after written notice of such breach has been given by Premier to Fulton; (ii) any condition precedent to Premier’s obligations as set forth in Article VII of this Agreement remains unsatisfied, through no fault of Premier, on September 30, 2003; provided, that such date may be extended until December 31, 2003 by Fulton by written notice to Premier (given not later than September 15, 2003)Company, if the Closing shall not have occurred because of failure to obtain approval from one or more regulatory authorities whose approval is required in connection with this Agreement; or (iii) Premier’sCompany’s Board of Directors makes an election provided for in, and subject to the conditions of, Section 5.7(e)5.3(e)(ii) herein.herein;
(i) by Parent if the conditions set forth in Sections 7.1 and 7.2 are not satisfied and are not capable of being satisfied by the Cut-off Date;
(j) by the Company if the conditions set forth in Sections 7.1 and 7.3 are not satisfied and are not capable of being satisfied by the Cut-off Date; or
(d)Market Price(A) (k)Subject to the provisions of Fulton Common Stock. Premiersubparagraph (B) below, the Company shall have the right to terminate this Agreement, through a resolution adopted by its Board of Directors, if the Closing Market Price isboth less than (A) $11.18, i.e., ..60 multiplied by the Starting Priceboth (I) $18.00 (the “Floor
Price”) and (B)(II) the amount per share equal to (x) the Starting Price multiplied by (y) .80 multiplied by (z) the quotient of the Average NASDAQ Bank Index for the Price Determination Period (the numerator) over the NASDAQ Bank Index on the Pre-Announcement Date (the denominator). Thus, for example, assuming
(B) In the Average NASDAQ Bank Index forevent the Price Determination Period reflects a decline of 30% fromconditions in (A) above allowing the Starting Date, (A) would be $11.18 and (b) would be $10.44 ($18.64 x .80 x .70)Company to terminate the Agreement are satisfied and the Closing Market Price would be requiredCompany makes such election, Parent, through a resolution adopted by its Board of Directors, shall have the option to be $10.44 or lower for Premiercause the Company to amend this Agreement (and, upon such amendment, the Company shall not have the right to terminate this Agreement underAgreement) to increase the Exchange Ratio to a level, calculated to four decimal places, equal to the Conversion Ratio multiplied by the quotient of the Floor Price (the numerator) over the Closing Market Price (the denominator). For example, if the Closing Market Price is $17.00 and the Floor Price is $18.00, Parent would have the option to increase the Exchange Ratio to 1.4294 (1.35 x 18.00/$17.00) in lieu of terminating this Section 8.1(d).Agreement.
(i)(ii) For purposes of this Section 8.1(d),(A) “Pre-Announcement Date” shall mean January 15, 2003,June 10, 2004, i.e., the businesstrading day immediately preceding the date of this Agreement, and (B) “Starting Price” shall mean $18.64,$20.22, i.e., the last
sale price for FultonParent Common Stock on the Pre-Announcement Date as reported on NASDAQ.
(ii)(iii) The Starting Price, the Closing Market Price, the Floor Price and the other amounts above shall be appropriately adjusted for an event described in Section 2.1(b)1.4(d) herein.
8.2Section 8.2 Effect of Termination.Termination.
(a)Effect. In the event of a permitted termination of this Agreement underby either Parent or the Company as provided in Section 8.1, herein, thethis Agreement shall forthwith become null and void and the transactions contemplated herein shall thereupon be abandoned,have no effect except that the provisions relating to limited liability(i) Sections 8.1, 8.2, 8.5 and confidentiality set forth in Sections 8.2(b) and 8.2(c) hereinArticle IX shall survive such termination.
(b)Limited Liability. Subject to the terms of the Warrant Agreement and the Warrant, theany termination of this Agreement and (ii) subject to Section 8.2(b), in accordance with the terms of Section 8.1 herein shall create no liability onevent that such termination is effected pursuant to Sections 8.1(e) or 8.1(f), the part of eithernon-defaulting party may pursue any remedy available at law or on the part of either party’s directors, officers, shareholders, agents or representatives, except that if this Agreement is terminated by Fulton by reason of a material breach by Premier, or if this Agreement is terminated by Premier by reason of a material breach by Fulton,in equity to enforce its rights and such breach involves an intentional, willful or grossly negligent misrepresentation or breach of covenant, the breaching party (i.e., Fulton or Premier) shall be liable topaid by the nonbreachingdefaulting party for all damages, costs and expenses, reasonablyincluding without limitation legal, accounting, investment banking and printing expenses, incurred or suffered by the nonbreachingnon-defaulting party in connection withherewith or in the preparation, execution and attempted consummation of this Agreement, including the reasonable feesenforcement of its counsel, accountants, consultants and other advisors and representatives. In no event shall either party’s directors, officers, shareholders, agents or representatives have any personal liability for any misrepresentation or breach in connection with this Agreement.rights hereunder.
(c)8.3ConfidentialityAmendment. In the event of a termination of this Agreement, neither Fulton nor Premier nor Premier Bank shall use or disclose Subject to any other person any confidential information obtained by it during the course of its investigation of the other party or parties, except as may be necessary in order to establish the liability of the other party or parties for breach as contemplated under Section 8.2(b) herein.
Section 8.3 Amendment. To the extent permitted bycompliance with applicable law, this Agreement may be amended by the parties hereto at any time before the Effective Time (whether before or after approval of the authorization,matters presented in connection with the Merger by the shareholders of the Company; provided, however, that after any approval and adoption of the transactions contemplated by this Agreement by the Company’s shareholders, there may not be, without further approval of Premier), but only by a written instrument duly authorized, executed and delivered by Fulton and by Premier; provided, however, that, except as set forth in Section 8.1(d) hereinsuch
shareholders, any amendment toof this Agreement which reduces the provisionsamount or changes the form of Section 2.1 herein relating to the consideration to be receiveddelivered to the Company’s shareholders hereunder other than as contemplated by the former shareholdersthis Agreement. This Agreement may not be amended except by an instrument in writing signed on behalf of Premier in exchange for their shares of Premier Common Stock shall not take effect until such amendment has been approved, adopted or ratified by the shareholders of Premier in accordance with applicable provisionseach of the BCL.parties hereto.
8.4Extension; WaiverSection 8.4 Waiver.. Any term or condition At any time prior to the Effective Time, each of this Agreementthe parties hereto may, be waived, to the extent permitted by applicable federallegally allowed, (a) extend the time for the performance of any of the obligations or other acts of the other party hereto, (b) waive any inaccuracies in the representations and state law, bywarranties of the other party contained herein or parties entitledin any document delivered pursuant hereto and (c) waive compliance with any of the agreements or conditions of the other party contained herein. Any agreement on the part of a party hereto to the benefit thereof at any time before the Effective Time (whether beforesuch extension or after the authorization, approval and adoption of this Agreement by the shareholders of Premier) bywaiver shall be valid only if set forth in a written instrument duly authorized, executed and delivered bysigned on behalf of such party, but such extension or parties.waiver or failure to insist on strict compliance with an obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure.
ARTICLE IX—CLOSING AND EFFECTIVE TIMEIX. GENERAL PROVISIONS
9.1Interpretation. When a reference is made in this Agreement to Sections, Exhibits or Schedules, such reference shall be to a Section 9.1of or Exhibit or Schedule to this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”. The phrases “the date of this Agreement”, “the date hereof” and terms of similar import, unless the context otherwise requires, shall be deemed to refer to June 14, 2004. A matter shall be deemed to be within the “knowledge” of an entity if such matter is within the actual knowledge of any person who is as of the date hereof, or who becomes between the date hereof and the Closing,. Provided that all conditions precedent set forth in Article VII an executive officer of such entity. No provision of this Agreement shall have been satisfiedbe construed to require the Company, Parent or shall have been waived in accordance with Section 8.4any of this Agreement, the parties shall hold a closing (the “Closing”) at the offices of Fulton at One Penn Square, Lancaster, Pennsylvania, within thirty (30) days after the receipt of all required regulatory and shareholder approvals and after the expiration of alltheir respective Subsidiaries or affiliates to take any action that would violate any applicable waiting periods on a date to be agreed upon by the parties, at which time the parties shall deliver the Premier Closing Documents, the Fulton Closing Documents, the opinions of counsel required by Sections 7.1(d), 7.2(c) and 7.3(c) herein, and such other documents and instruments as may be necessarylaw, rule or appropriate to effectuate the purposes of this Agreement.regulation.
9.2Nonsurvival of Representations, Warranties and AgreementsSection 9.2 Effective Time.. Immediately following None of the Closing,representations, warranties, covenants and provided thatagreements in this Agreement has not been terminated or abandonedin any instrument delivered pursuant to Article VIII hereof, Fulton and Premier will cause Articles of Merger (the “Articles of Merger”) to be delivered and properly filed with the Department of State of the Commonwealth of Pennsylvania (the “Department of State”). The Mergerthis Agreement shall become effective on 11:59 p.m. on the day on which the Closing occurs and Articles of Merger are filed with the Department of State or such later date and time as may be specified in the Articles of Merger (the “Effective Time”). The “Effective Date” when used herein means the day on whichsurvive the Effective Time, occurs.
ARTICLE X—NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES
Section 10.1 No Survival. The representationsexcept for those covenants and warranties of Premieragreements contained herein and of Fulton set forth in this Agreement shall expire and be terminated on the Effective Time by consummation of this Agreement, and no such representation or warranty shall thereafter survive. Except with respect to the agreements of the partiestherein which by their terms are intended to be performed eitherapply in whole or in part after the Effective Time, the agreements of the parties set forth in this Agreement shall not survive the Effective Time, and shall be terminated and extinguished at the Effective Time, and from and after the Effective Time none of the parties hereto shall have any liability to the other on account of any breach of such agreements.Time.
ARTICLE XI—GENERAL PROVISIONS
9.3Section 11.1 Expenses. Except as otherwise provided in Section 8.2(b) herein, each party shall pay its own8.5, all costs and expenses incurred in connection with this Agreement and the consummation of the transactions contemplated herein. For purposes of this Section 11.1 herein, the cost of printing the Proxy Statement/Prospectushereby shall be deemed to be an expense of Fulton.
Section 11.2 Other Mergers and Acquisitions. Subject to the right of Premier to refuse to consummate this Agreement pursuant to Section 8.1(c)(i) herein by reason of a material breach by Fulton of the warranty and representation set forth in Section 4.7 herein, nothing set forth in this Agreement shall be construed: (i) to preclude Fulton from acquiring, or to limit in any way the right of Fulton to acquire, prior to or following the Effective Time, the stock or assets of any other financial services institution or other corporation or entity, whether by issuance or exchange of Fulton Common Stock or otherwise; (ii) to preclude Fulton from issuing, or to limit in any way the right of Fulton to issue, prior to or following the Effective Time, Fulton Common Stock, Fulton Preferred Stock or any other equity or debt securities; or (iii) to preclude Fulton from taking, or to limit in any way the right of Fulton to take, any other action not expressly and specifically prohibitedpaid by the terms of this Agreement.party incurring such costs and expenses.
9.4NoticesSection 11.3 Notices.. All notices claims, requests, demands and other communications which are required or permitted to be given under this Agreementhereunder shall be in writing and shall be deemed to have been duly deliveredgiven if delivered in person, transmitted by telegraph or facsimile machine (but only if receipt is acknowledged in writing)personally, telecopied (with confirmation), or mailed by registered or certified mail return(return receipt requested,requested) or delivered by an express
courier (with confirmation) to the parties at the following addresses (or at such other address for a party as follows:shall be specified by like notice):
(a) if to Parent, to:
Rufus A. Fulton, Jr., Chairman and Chief Executive Officer
Fulton Financial Corporation
One Penn Square
P.O. Box 4887Lancaster, PA 17604
Lancaster, Pennsylvania 17604Attn: Rufus A. Fulton
Chairman and Chief Executive Officer
Withwith a copy (which shall not constitute notice) to:
Paul G. Mattaini, Esquire
Barley, Snyder, Senft & Cohen, LLC
126 East King Street
Lancaster, PennsylvaniaPA 17602
Attn: Paul G. Mattaini, Esquire
John C. Soffronoff, President and Chief Executive Officer
Premier Bancorp, Inc.
379 North(b) if to the Company, to:
First Washington FinancialCorp
Route 130 and Main Street
Doylestown, Pennsylvania 18901Windsor, New Jersey 08561
Attn: C. Herbert Schneider, President
Withwith a copy (which shall not constitute notice) to:
Nicholas Bybel, Jr., EsquireWindels, Marx, Lane & Mittendorf, LLP
Shumaker Williams P.C.120 Albany Street
3425 Simpson Ferry RoadNew Brunswick, New Jersey 08901
Camp Hill, Pennsylvania 17011Attn: Robert Schwartz, Esq.
9.5Counterparts; FacsimileSection 11.4 Counterparts.. This Agreement may be executed simultaneously in several counterparts, eachall of which shall be deemed an original, but all such counterparts together shall be deemed to beconsidered one and the same instrument.agreement and shall become effective when counterparts have been signed by both of the parties and delivered to both of the parties, it being understood that all parties need not sign the same counterpart. Execution and delivery of this Agreement or any agreement contemplated hereby by facsimile transmission shall constitute execution and delivery of this Agreement or such agreement for all purposes, with the same force and effect as execution and delivery of an original manually signed copy hereof.
9.6Entire Agreement. This Agreement (including the documents, the disclosure schedules and the instruments referred to herein), together with the Confidentiality Agreement, the Warrant Agreement and the Warrant constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof.
Section 11.5 9.7Governing Law. This Agreement shall be deemed to have been made in, and shall be governed by and construed in accordance with the substantive laws of the Commonwealth of Pennsylvania.Pennsylvania, without regard to any applicable conflicts of law.
9.8Section 11.6 PartiesSeverability. Any term or provision of this Agreement which is invalid or unenforceable in Interest. Thisany jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, the provision shall be binding upon and inureinterpreted to be only so broad as is enforceable.
9.9Publicity. Except as otherwise required by law or the benefitrules of NASDAQ, so long as this Agreement is in effect, neither Parent nor the Company shall, or shall permit any of its Subsidiaries to, issue or cause the publication of any press release or other public announcement with respect to, or otherwise make any public statement concerning, the transactions contemplated by this Agreement without the consent of the partiesother party, which consent shall not be unreasonably withheld.
9.10Assignment; No Third Party Beneficiaries. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any party hereto and their respective successors, assigns and legal representatives; provided, however, that neither party may assign its rights(whether by operation of law or delegate its duties under this Agreementotherwise) without the prior written consent of the other party. Other thanparty hereto. Subject to the rightpreceding sentence, this Agreement will be binding upon, inure to receive the consideration payablebenefit of and be enforceable by the parties and their respective successors and assigns. Except as a result of the Merger pursuant to Article II hereof,otherwise expressly provided in Section 6.7, this Agreement (including the documents and instruments referred to herein) is not intended to and shall not confer upon any person other personthan the parties hereto any rights benefits or remedies of any nature whatsoever under or by reason of this Agreement.hereunder.
9.11Section 11.7 Disclosure SchedulesDefinitions. The inclusion
(a) For purposes of a given item in a disclosure schedule annexed to this Agreement, the following terms shall not be deemed a conclusion or admission that such item (or any other item) is material or is a material and adverse change. Information disclosed for one section shall constitute disclosure for other sections whether or not specifically referenced.have the following meanings:
“Code” means the Internal Revenue Code of 1986, as amended.
“Company Bank” means First Washington Bank, a Subsidiary of the Company.
“Person” or “person”, except where the context clearly indicates a reference solely to an individual, means an individual, corporation, partnership, limited liability company, trust, association, Governmental Entity or other entity.
“Subsidiary”, when used with respect to any party, means any corporation, partnership or other organization, whether incorporated or unincorporated, which is consolidated with such party for financial reporting purposes.
(b) The following terms are defined in the following sections of this Agreement:
| | |
Accounting Firm | | 3.6(a) |
Acquisition Proposal | | 5.3(f) |
Advisory Firm | | 3.7 |
Aggregate Merger Consideration | | 1.4(c) |
Aggregate Merger Consideration | | 1.4(c) |
Agreement | | Lead-in |
Articles of Merger | | 1.2 |
BCA | | 1.1 |
BCL | | 1.1 |
BHCA | | 3.1(a) |
Blue Sky | | 6.1(a) |
Ceiling Price | | 8.1(k)(ii) |
CERCLA | | 3.17(d) |
Certificate of Merger | | 1.2 |
Certificates | | 1.4(c) |
Claim | | 6.7 |
Claims | | 6.7 |
Classified | | 3.20(b) |
Closing | | 1.2 |
Closing Date | | 1.2 |
Closing Market Price | | 2.2(e) |
Closing Notice | | 1.2 |
Company | | Lead-in |
Company Bank Shares | | 3.2(b) |
Company Benefit Plans | | 3.11(a) |
Company Common Stock | | 1.4(a) |
Company Contract | | 3.14(h) |
Company Disclosure Schedule | | Article III - Lead-in |
Company Financial Statements | | 3.6(a) |
Company Pension Plans | | 3.11(a) |
Company Regulatory Agencies | | 3.5 |
Company SEC Reports | | 3.24 |
Company Shareholders’ Meeting | | 6.3 |
Company Stock Option | | 1.6 |
Company Stock Option Plan | | 1.6 |
Company Welfare Plans | | 3.11(a) |
Concerned Loans | | 3.20(b) |
Constituent Corporations | | Lead-in |
Contract Employee | | 3.14(h) |
Covered Person | | 3.19 |
CRA | | 3.13(b) |
Credit Risk Assets | | 3.20(b) |
Criticized | | 3.20(b) |
Cut-off Date | | 8.1(c) |
Derivatives Contract | | 3.22(b) |
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Determination Date | | 1.2 |
Doubtful | | 3.20(b) |
DPC Shares | | 1.4(b) |
Effective Time | | 1.2 |
Eligibility Date | | 6.20 |
Employment Agreement | | 3.14(h) |
Environmental Laws | | 3.17(d) |
Environmental Matters | | 3.17(d) |
ERISA | | 3.11(a) |
ERISA Affiliate | | 3.11(a) |
Exchange Act | | 3.6(c) |
Exchange Agent | | 1.5 |
Exchange Fund | | 2.1 |
Exchange Ratio | | 1.4(a) |
FDIC | | 3.1(b) |
Floor Price | | 8.1(k)(i)(A) |
FRB | | 3.4 |
GAAP | | 3.1(a) |
Governmental Entity | | 3.4 |
Hazardous Materials | | 3.17(d) |
Indemnitees | | 6.7(a) |
Insurance Policies | | 6.17 |
Interested stockholder | | 4.12(b) |
IRS | | 3.4 |
Knowledge | | 9.1 |
Loan | | 3.20(a) |
Loan Property | | 3.17(d) |
Loans | | 3.20(b) |
Loss | | 3.20(b) |
Material Adverse Effect | | 3.1(a) |
Merger | | Recitals A |
Merger Consideration | | 1.4(c) |
NASDAQ | | 2.2(e) |
Negative Declaration | | 6.16 |
NJDEP | | 6.16 |
No Further Action Letter | | 6.16 |
OCC | | 4.5 |
Old Stock Options | | 1.6 |
Option Grant Agreement | | 1.6 |
Other Loans Specially Mentioned | | 3.20(b) |
Other Real Estate Owned | | 3.20(b) |
Parent | | Lead-in |
Parent Common Stock | | 1.4(a) |
Parent Disclosure Schedule | | Article IV - Lead-in |
Parent Employers | | 6.21(a) |
| | |
Parent Financial Statements | | 4.6 |
Parent Preferred Stock | | 4.2(a) |
Parent Reports | | 4.7 |
Parent Rights | | 4.2(a) |
Parent’s Regulatory Agencies | | 4.5 |
Parent Stock Option | | 1.6 |
Participation Facility | | 3.17(d) |
PBGC | | 3.4 |
Per Share Stock Consideration | | 1.4(a)(i) |
Pre-Announcement Date | | 8.1(k)(iii) |
Price Determination Period | | 2.2(e) |
Proxy Statement | | 3.4 |
RCRA | | 3.17(d) |
Regulatory Agreement | | 3.15 |
Remedial Action Workplan | | 6.19 |
Remediation Funding Source | | 6.19 |
S-4 | | 3.4 |
SEC | | 3.4 |
Securities Act | | 4.7 |
Special Mention | | 3.20(b) |
Spill Act | | 3.17(d) |
Starting Date | | 8.1(k)(iii) |
Stock Option | | 1.6 |
Stock Options | | 1.6 |
Substandard | | 3.20(b) |
Superior Proposal | | 5.3 |
Surviving Corporation | | 1.1 |
Taxes | | 3.10(d) |
Tax Returns | | 3.10(d) |
Transition Period | | 6.17 |
Trust Account Shares | | 1.4(b) |
Watch List | | 3.20(b) |
Voting Agreement | | Recitals |
Warrant | | Recitals |
Warrant Agreement | | Recitals |
9.12Section 11.8 Entire AgreementLegal Proceedings; Specific Performance; No Jury Trial. This Agreement, together with
(a) The parties hereto hereby irrevocably submit to the Warrantjurisdiction of the courts of the Commonwealth of Pennsylvania and the Federal courts of the United States of America located in the Commonwealth of Pennsylvania solely in respect of the interpretation and enforcement of the provisions of this Agreement and of the Warrant being executeddocuments referred to in this Agreement, and in respect of the transactions contemplated hereby, and hereby waive, and agree not to assert, as a defense in any action, suit or proceeding for the interpretation or enforcement hereof or of any such document, that it is not subject
thereto or that such action, suit or proceeding may not be brought or is not maintainable in said courts or that the venue thereof may not be appropriate or that this Agreement or any such document may not be enforced in or by the parties on the date hereof, sets forth the entire understandingsuch courts, and agreement of the parties hereto irrevocably agree that all claims with respect to such action or proceeding shall be heard and supersedesdetermined in such a Pennsylvania State or Federal court. The parties hereto hereby consent to and grant any such court jurisdiction over the person of such parties and all prior agreements, arrangements and understandings, whether oral or written, relating toover the subject matter hereofof such dispute and agree that mailing of process or other papers in connection with any such action or proceeding in the manner provided in Section 9.4 or in such other manner as may be permitted by applicable law, shall be valid and sufficient service thereof.
(b) The parties hereto agree that irreparable damage would occur and that the parties would not have any adequate remedy at law in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in any Federal court located in the State of New Jersey or in New Jersey state court, this being in addition to any other remedy to which they are entitled at law or in equity.
(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH SUCH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.12.
Signature Page Follows
IN WITNESS WHEREOF, Parent and the partiesCompany have caused this Agreement to be executed by their respective officers thereunto duly authorized officers all as of the day and yeardate first above written.
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FULTON FINANCIAL CORPORATION |
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By | | FULTON FINANCIAL CORPORATION/s/ R. Scott Smith,Jr.
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Name: | | R. Scott Smith, Jr. |
Title: | | President & COO |
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By:FIRST WASHINGTON FINANCIALCORP
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By | | /s/ C. Herbert Schneider |
Name: | | /s/ R. SCOTT SMITH, JR.
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| | R. Scott Smith, Jr.
President and Chief Operating OfficerC. Herbert Schneider
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Attest:Title:
| | /s/ GEORGE R. BARR, JR.
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| | George R. Barr, Jr.
Secretary
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PREMIER BANCORP, INC.
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By:
| | /s/ JOHN C. SOFFRONOFF
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| | John C. Soffronoff
President and Chief Executive Officer |
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Attest:
| | /S/ JOHN J. GINLEY
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| | John J. Ginley
Secretary& CEO
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Exhibit “B”
Warrant Agreement
and
Warrant
WARRANT AGREEMENT
THIS WARRANT AGREEMENT is made as of January 16, 2003,June 15, 2004 by and betweenFULTON FINANCIAL CORPORATION, Fulton Financial Corporation, a Pennsylvania corporation (“(FULTON“Fulton””) andPREMIER BANCORP, INC., First Washington FinancialCorp, a PennsylvaniaNew Jersey corporation (“(PREMIER“First Washington””).
W I T N E S S E T H:
WHEREAS, Fulton and Premier are enteringFirst Washington have entered into an Agreement and Plan of Merger on the date hereofdated June 14, 2004 (the“Merger AgreementAgreement””) (capitalized terms used herein which are not otherwise defined herein shall have the meanings ascribed to them in the Merger Agreement); and
WHEREAS, it is a condition to execution ofin connection with Fulton’s entry into the Merger Agreement that Premierand in consideration of such entry, First Washington has agreed to issue to Fulton, on the terms and conditions set forth herein, a warrant entitling Fulton to purchase up to an aggregate of 835,000850,000 shares of Premier’sFirst Washington’s common stock, $0.33no par value per share (the“Common StockStock””); and
WHEREAS, Premier wishes to issue to Fulton the warrant described below in connection with the Merger Agreement.
NOW, THEREFORE, in consideration of the execution of the Merger Agreement and the premises herein contained, and intending to be legally bound, Fulton and PremierFirst Washington agree as follows:
1.Issuance of Warrant. Concurrently with the execution of this Agreement, PremierFirst Washington shall issue to Fulton a warrant in the form attached asSchedule 1 Exhibit A hereto (the“Warrant,Warrant””, which term as used herein shall include any warrant or warrants issued upon transfer or exchange of the original Warrant) to purchase up to 835,000850,000 shares of Common Stock, (but in any event not to exceed 19.99% of the outstanding Common Stock taking into consideration shares of Common Stock issuable upon exercise of the Warrant but excluding any other unissued shares of such corporation which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion or option rights, or otherwise), subject to adjustment as provided in this Agreement and in the Warrant. The Warrant shall be exercisable at a purchase price of $17.85$21.00 per share, i.e., the last sale price of the Common Stock on January 15, 2003, as reported by AMEX, subject to adjustment as provided in the Warrant (the“Exercise PricePrice””). So long as the Warrant is outstanding and unexercised, PremierFirst Washington shall at all times maintain and reserve, free from preemptive rights, such number of authorized but unissued shares of the Common Stock as may be necessary so that the Warrant may be exercised, without any additional authorization of the Common Stock, after giving effect to all other options, warrants, convertible securities and other rights to acquire shares of the Common Stock. PremierFirst Washington represents and warrants that it has duly authorized the execution and delivery of the Warrant and this Agreement and the issuance of the Common Stock upon exercise of the Warrant. PremierFirst Washington covenants that the shares of the Common Stock issuable upon exercise of the Warrant shall be, when so issued, duly authorized, validly issued, fully paid and nonassessable and subject to no preemptive rights. The Warrant and the shares of the Common Stock to be issued upon exercise of the Warrant are hereinafter collectively referred to, from time to time, as the“SecuritiesSecurities.”.” So long as the Warrant is owned by Fulton, the Warrant will in no event be exercised for more than that number of shares of the Common Stock equal to 835,000850,000 (subject to adjustment as provided in the Warrant) less the number of shares of Common Stock at the time owned by Fulton.
2.Assignment, Transfer, or Exercise of Warrant.
(a) Subject to paragraph 2(b) below, Fulton will not sell, assign, transfer or exercise the Warrant, in whole or in part, without the prior written consent of PremierFirst Washington except upon or after the occurrence of any of the following prior to termination of the Warrant under Section 9 therein:following: (i) a breach by Premier of any representation,
warranty, or covenant set forth in the Merger Agreement andby First Washington which would permit a termination of the Merger Agreement by Fulton pursuant to Section 8.1(b)(i) which occurs following a bona fide proposal from any financially capable person (other than Fulton) to engage8.1(e) thereof following: (A) the occurrence of an event described in subparagraphs (iii) or (iv) below or (B) an Acquisition Transaction;offer or filing described in subparagraph (v) below; (ii) the failure of Premier’sFirst Washington’s shareholders to approve the Merger Agreement at a meeting called for such purpose if at the time of such meeting there has been an announcement by any financially capable Person (other than Fulton) of a bona fidean offer or proposal to acquire 25% or more of the Common Stock (before giving effect an Acquisition Transactionto any exercise of the Warrant), or to acquire, merge or consolidate with First Washington, or to purchase all or substantially all of First Washington’s assets (including, without limitation, any shares of any subsidiary of First Washington or all or substantially all of any such subsidiary’s assets) and, within ten business days after such announcement, the Board of Directors of First Washington either fails to recommend against acceptance of such offer by First Washington’s shareholders or proposal has not been publicly withdrawn prior to mailing of the notice of the Premier shareholder meeting;takes no position with respect thereto; (iii) the acquisition by any Person of Beneficial Ownership of 25% or more of the Common Stock (before giving effect to any exercise of the Warrant); (iv)(A) any Person (other than Fulton) shall have commenced a tender or exchange offer, or shall have filed an application with an appropriate bank regulatory authority with respect to an Acquisition
Transactiona publicly announced offer, to purchase or acquire securities of First Washington such that, upon consummation of such offer, such Person would have Beneficial Ownership of 25% or more of the Common Stock (before giving effect to any exercise of the Warrant) and, (B) within six (6)12 months from such offer or filing, such person consummates an Acquisition Transaction;acquisition described in subparagraph (iii) above; (v) PremierFirst Washington shall have entered into an agreement, letter of intent, or other understanding with any Person (other than Fulton) providing for such Person (A) to engageacquire, merge, consolidate or enter into a statutory share exchange with First Washington or to purchase all or substantially all of First Washington’s assets (including without limitation any shares of any subsidiary of First Washington or all or substantially all of any such subsidiary’s assets), or (B) to negotiate with First Washington with respect to any of the events or transactions mentioned in an Acquisition Transaction; and/the preceding clause (A); or (vi) termination, or attempted termination, of the Merger Agreement by FultonFirst Washington under Section 8.1(b)(iii) or termination8.1(h) of the Merger Agreement by Premier under Section 8.1(c)(iii).Agreement. As used in this Paragraph 2, the terms “Beneficial Ownership”“Beneficial Ownership” and “Person”“Person” shall have the respective meanings set forth in Paragraph 7(f). For purposes of this Agreement, “Acquisition Transaction” shall mean (x) a merger or consolidation or statutory share exchange or any similar transaction involving Premier or a Premier Subsidiary, (y) a purchase, lease or other acquisition of all or substantially all of the assets of Premier or a Premier Subsidiary or (z) a purchase or other acquisition of beneficial ownership of securities representing 25% or more of the voting power of Premier or a Premier Subsidiary.
(b) Notwithstanding the foregoing, Premier shall not be obligated to issue Shares upon exercise of theThe Warrant (i) in the absence of any required governmental or regulatory approval or consent necessary for Premier to issue the Shares or for Fulton to exercise the Warrant or prior to the expiration or termination of any waiting period required by law or (ii) so long as any injunction or other order, decree or ruling issued by any federal or state court of competent jurisdiction is in effect that prohibits the sale or delivery of the Shares. Any sale, assignment or transfer of the Warrant, in whole or in part, or any sale, assignment or transfer of the Shares by Fulton, other than a sale to a directly-owned subsidiary of Fulton, shall be subject to the right of first refusal of Premier (or any assignee or assignees of Premier) at a price equal to the written offer price that Fulton receives from a third party (other than a directly-owned subsidiary of Fulton) and intends to accept. The right of first refusal shall terminate 15 days after notice of Fulton’s intention to sell has been delivered to Premier. If an offer is made for a consideration that, in whole or in part, consists of other than cash, the value of the non-cash portion of the consideration shall be determined by a recognized investment banking firm selected jointly by Fulton and Premier, and the determination shall in no event be made later than the fifth day after notice of Fulton’s intention to sell has been delivered to Premier. In the event of the failure or refusal of Premier to purchase the Warrant or all the Shares covered by Fulton’s notice to sell, Fulton may, within 30 days from the date of the notice, unless additional time is needed to give notification to or to obtain approval from any governmental or regulatory authority and, if so required, within five days after the date on which the required notification period has expired or been terminated or the approval has been obtained and any requisite waiting periodaccordance with respect thereto has passed, sell all, but not less than all, of the portion of the Warrant or the Shares covered by the notice to the proposed transferee at no less than the price specified and on terms no more favorable to the buyer than those set forth in the notice.its terms.
3.Registration Rights. If, at any time within one yeartwo years after the Warrant may be exercised or sold, PremierFirst Washington shall receive a written request therefor from Fulton, PremierFirst Washington shall prepare and file a shelf registration statement (the“Registration StatementStatement””) under the Securities Act of 1933, as amended (the“Securities ActAct””), covering the Warrant (provided that no such registration shall be required with respect to the Warrant following the termination of the Warrant in accordance with its terms) and/or the Common Stock issued or issuable upon exercise of the Warrant (the “Securities “Securities””), and shall use its best efforts to cause the Registration Statement to become effective and remain current for such period not in excess of 180 days from the day such registration statement first becomes effective as may be reasonably necessary to affect such sale or other disposition. Without the prior written consent of Fulton, neither PremierFirst Washington nor any other holder of securities of PremierFirst Washington may include such securities in the Registration Statement. The foregoing notwithstanding, if, at the time of any request by Fulton for registration of Common Stock as provided above, Premier is in registration with respect to an underwritten public offering by Premier 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 offer and sale of the Common Stock covered by this Warrant Agreement would interfere with the successful marketing of the shares of Common Stock offered by Premier, the number of shares of Common Stock otherwise to be covered in the registration statement contemplated hereby may be reduced;provided, however, that after any such required reduction, the number of shares of Common Stock to be included in such offering for the account of Fulton shall constitute at least 25% of the total number of shares to be sold by Fulton and Premier in the aggregate; andprovided further, however, that if such reduction occurs, then Premier shall file a registration statement for the balance as promptly as practicable thereafter as to which no reduction pursuant to this Section 3 shall be permitted or occur and Fulton shall thereafter be entitled to one additional registration and the one (1) year period referred to in the first sentence of this section shall be increased to two (2) years. Fulton shall provide all information reasonably requested by Premier for inclusion in any registration statement to be filed hereunder. If requested by Fulton in connection with such registration, Premier 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 to representations, warranties, indemnities and other agreements customarily included in such underwriting agreements for Premier.
4.Duties of PremierFirst Washington upon Registration. If and whenever PremierFirst Washington is required by the provisions of Paragraph 3 of this Agreement to effect the registration of any of the Securities under the Securities Act, PremierFirst Washington shall:
(a) prepare and file with the Securities and Exchange Commission (the“SECSEC””) such amendments to the Registration Statement and supplements to the prospectus contained therein as may be necessary to keep the Registration Statement effective and current;
(b) furnish to Fulton and to the underwriters of the Securities being registered such reasonable number of copies of the Registration Statement, the preliminary prospectus and final prospectus contained therein, and such other documents as Fulton or such underwriters may reasonably request in order to facilitate the public offering of the Securities;
(c) use its best efforts to register or qualify the Securities covered by the Registration Statement under the state securities or blue sky laws of such jurisdictions as Fulton or such underwriters may reasonably request;
(d) notify Fulton, promptly after PremierFirst Washington shall receive notice thereof, of the time when the Registration Statement has become effective or any supplement or amendment to any prospectus forming a part of the Registration Statement has been filed;
(e) notify Fulton promptly of any request by the SEC for the amending or supplementing of the Registration Statement or the prospectus contained therein, or for additional information;
(f) prepare and file with the SEC, promptly upon the request of Fulton, any amendments or supplements to the Registration Statement or the prospectus contained therein which, in the opinion of counsel for Fulton, are required under the Securities Act or the rules and regulations promulgated by the SEC thereunder in connection with the public offering of the Securities;
(g) prepare and promptly file with the SEC such amendments of or supplements to the Registration Statement or the prospectus contained therein as may be necessary to correct any statements or omissions if, at the time when a prospectus relating to such Securities is required to be delivered under the Securities Act, any event shall have occurred as the result of which such prospectus as then in effect would include an untrue statement of a material fact or would omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading;
(h) advise Fulton, promptly after PremierFirst Washington shall receive notice or obtain knowledge of the issuance of any stop order by the SEC suspending the effectiveness of the Registration Statement, or the initiation or threatening of any proceeding for that
purpose, and promptly use its best efforts to prevent the issuance of any stop order or to obtain its withdrawal if such stop order should be issued; and
(i) at the request of Fulton, furnish on the date or dates provided for in the underwriting agreement: (i) an opinion or opinions of counsel for PremierFirst Washington for the purposes of such registration, addressed to the underwriters and to Fulton, covering such matters as such underwriters and Fulton may reasonably request and as are customarily covered by issuer’s counsel at that time; and (ii) a letter or letters from the independent accountants for Premier,First Washington, addressed to the underwriters and to Fulton, covering such matters as such underwriters or Fulton may reasonably request, in which letters such accountants shall state (without limiting the generality of the foregoing) that they are independent accountants within the meaning of the Securities Act and that, in the opinion of such accountants, the financial statements and other financial data of PremierFirst Washington included in the Registration Statement or any amendment or supplement thereto comply in all material respects with the applicable accounting requirements of the Securities Act.
5.Expenses of Registration. With respect to the registration requested pursuant to Paragraph 3 of this Agreement, (a) PremierFirst Washington shall bear all registration, filing and AMEXNASD fees, printing and engraving expenses, fees and disbursements of its counsel and accountants and all legal fees and disbursements and other expenses of PremierFirst Washington to comply with state securities or blue sky laws of any jurisdictions in which the Securities to be offered are to be registered or qualified; and (b) Fulton shall bear all fees and disbursements of its counsel and accountants, underwriting discounts and commissions, transfer taxes for Fulton and any other expenses incurred by Fulton.
6.Indemnification. In connection with any Registration Statement or any amendment or supplement thereto:
(a) PremierFirst Washington shall indemnify and hold harmless Fulton, any underwriter (as defined in the Securities Act) for Fulton, and each person, if any, who controls Fulton or such underwriter (within the meaning of the Securities Act) from and against any and all loss, damage, liability, cost or expense to which Fulton or any such underwriter or controlling person may become subject under the Securities Act or otherwise, insofar as such loss, damage, liability, cost or expense arises out of or is caused by any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, any prospectus or preliminary prospectus contained therein or any amendment or supplement thereto, or arises out of or is based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading;provided,,however,, that PremierFirst Washington will not be liable in any such case to the extent that any such loss, damage, liability, cost or expense arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished by Fulton, such underwriter or such controlling person in writing specifically for use in the preparation thereof.
(b) Fulton shall indemnify and hold harmless Premier,First Washington, any underwriter (as defined in the Securities Act), and each person, if any, who controls PremierFirst Washington or such underwriter (within the meaning of the Securities Act) from and against any and all loss, damage, liability, cost or expense to which PremierFirst Washington or any such underwriter or controlling person may become subject under the Securities Act or otherwise, insofar as such loss, damage, liability, cost or expense arises out of or is caused by any untrue or alleged untrue statement of any material fact contained in the Registration Statement, any prospectus or preliminary prospectus contained therein or any amendment or supplement thereto, or arises out of or is based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances in which they were made, not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was so made in reliance upon and in conformity with written information furnished by Fulton specifically for use in the preparation thereof.
(c) Promptly after receipt by any party which is entitled to be indemnified, pursuant to the provisions of subparagraph (a) or (b) of this Paragraph 6, of any claim in writing or of notice of the commencement of any action involving the subject matter of the foregoing indemnity provisions, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party pursuant to the provisions of subparagraph (a) or (b) of this Paragraph 6, promptly notify the indemnifying party of the receipt of such claim or notice of the commencement of such action, but the omission to so notify the indemnifying party will not relieve it from any liability which it may otherwise have to any indemnified party hereunder. In case any such action is brought against any indemnified party and it notifies the indemnifying party of the commencement thereof, the indemnifying party shall have the right to participate in and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party;provided,,however,, that if the defendants in any action include both the indemnified party or parties and the indemnifying party and there is a conflict of interest which would prevent counsel for the indemnifying party from also representing any indemnified party, such indemnified party shall have the right to select separate counsel to participate in the defense of such indemnified party. After notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party, pursuant to the provisions of subparagraph (a) or (b) of this Paragraph 6, for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof, other than reasonable costs of investigation, unless (i) such indemnified party shall have employed separate counsel in accordance with the provisions of the preceding sentence, (ii) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after the notice of the commencement of the action, or (iii) the indemnifying party has authorized the employment of counsel for the indemnified party at the expense of the indemnifying party.
(d) If recovery is not available under the foregoing indemnification provisions, for any reason other than as specified therein, any party entitled to indemnification by the terms thereof shall be entitled to obtain contribution with respect to its liabilities and expenses, except to the extent that contribution is not permitted under Section 11(f) of the Securities Act. In determining the amount of contribution to which the respective parties are entitled there shall be considered the parties’ relative knowledge and access to information concerning the matter with respect to which the claim was asserted, the opportunity to correct and/or prevent any statement or omission, and any other equitable considerations appropriate under the circumstances. Fulton and PremierFirst Washington agree that it would not be equitable if the amount of such contribution were determined by pro rata or per capita allocation even if the underwriters and Fulton as a group were considered a single entity for such purpose.
7.Redemption and Repurchase Rights.
(a) From and after the date on which any event described in Paragraph 2 of this Agreement occurs, the Holder as defined in the Warrant (which shall include a former Holder), who has exercised the Warrant in whole or in part shall have the right to require PremierFirst Washington to purchaseredeem some or all of the shares of Common Stock for which the Warrant was exercised at a redemption price per share (the“Redemption PricePrice””) equal to the highest of: (i) 110% of the Exercise Price, (ii) the highest price paid or agreed to be paid for any share of Common Stock by an Acquiring Person (as defined below) during the one year period immediately preceding the date of redemption, and (iii) in the event of a sale of all or substantially all of Premier’sFirst Washington’s assets or all or substantially all of a subsidiary of Premier’sFulton’s assets: (x) the sum of the price paid in such sale for such assets and the current market value of the remaining assets of PremierFirst Washington as determined by a recognized investment banking firm selected by such Holder, and reasonably acceptable to Premier, divided by (y) the number of shares of Common Stock then outstanding. If the price paid consists in whole or in part of securities or assets other than cash, the value of such securities or assets shall be their then current market value as determined by a recognized investment banking firm selected by the Holder and reasonably acceptable to Premier.First Washington.
(b) From and after the date on which any event described in Paragraph 2 of this Agreement occurs, the Holder as defined in the Warrant (which shall include a former Holder), shall have the right to require PremierFirst Washington to repurchase all or any portion of the Warrant at a price (the“Warrant Repurchase PricePrice””) equal to the product obtained by multiplying: (i) the number of shares of Common Stock represented by the portion of the Warrant that the Holder is requiring PremierFirst Washington to repurchase, times (ii) the excess of the Redemption Price over the Exercise Price.
(c) The Holder’s right, pursuant to this Paragraph 7, to require PremierFirst Washington to repurchase a portion or all of the Warrant, and/or to require PremierFirst Washington to purchaseredeem some or all of the shares of Common Stock for which the Warrant was exercised, shall expire on the close of business on the 180th60th day following the occurrence of any event described in Paragraph 2.
(d) The Holder may exercise its right, pursuant to this Paragraph 7, to require PremierFirst Washington to repurchase all or a portion of the Warrant, and/or to require PremierFirst Washington to purchaseredeem some or all of the shares of Common Stock for which the Warrant was exercised, by surrendering for such purpose to Premier,First Washington, at its principal office within the time period specified in the preceding subparagraph, the Warrant and/or a certificate or certificates representing the number of shares to be purchasedredeemed accompanied by a written notice stating that it elects to require PremierFirst Washington to repurchase the Warrant or a portion thereof and/or to purchaseredeem all or a specified number of such shares in accordance with the provisions of this Paragraph 7. As promptly as practicable, and in any event within five business days after the surrender of the Warrant and/or such certificates and the receipt of such notice relating thereto, PremierFirst Washington shall deliver or cause to be delivered to the Holder: (i) the applicable Redemption Price (in immediately available funds) for the shares of Common Stock which it is not then prohibited under applicable law or regulation from purchasing,redeeming, and/or (ii) the applicable Warrant Repurchase Price, and/or (iii) if the Holder has given PremierFirst Washington notice that less than the whole Warrant is to be repurchased and/or less than the full number of shares of Common Stock evidenced by the surrendered certificate or certificates are to be purchased,redeemed, a new certificate or certificates, of like tenor, for the number of shares of Common Stock evidenced by such surrendered certificate or certificates less the number shares of Common Stock purchasedredeemed and/or a new Warrant reflecting the fact that only a portion of the Warrant was repurchased.
(e) To the extent that PremierFirst Washington is prohibited under applicable law or regulation, or as a result of administrative or judicial action, from repurchasing the Warrant and/or purchasingredeeming the Common Stock as to which the Holder has given notice of repurchase and/or redemption, PremierFirst Washington shall immediately so notify the Holder and thereafter deliver or cause to be delivered, from time to time to the Holder, the portion of the Warrant Repurchase Price and/or the Redemption Price which it is no longer prohibited from delivering, within five business days after the date on which PremierFirst Washington is no longer so prohibited;provided,,however,, that to the extent that PremierFirst Washington is at the time and after the expiration of 25 months, so prohibited from delivering the Warrant Repurchase Price and/or the Redemption Price, in full (and PremierFirst Washington hereby undertakes to use its best efforts to obtain all required regulatory and legal approvals as promptly as practicable), PremierFirst Washington shall deliver to the Holder a new Warrant (expiring one year after delivery) evidencing the right of the Holder to purchase that number of shares of Common Stock representing the portion of the Warrant which PremierFirst Washington is then so prohibited from repurchasing, and/or PremierFirst Washington shall deliver to the Holder a certificate for the shares of Common Stock which PremierFirst Washington is then so prohibited from purchasing,redeeming, and PremierFirst Washington shall have no further obligation to repurchase such new Warrant or purchaseredeem such Common Stock;andprovidedfurther,, that upon receipt of such notice and until five days thereafter the Holder may revoke its notice of repurchase of the Warrant and/or redemption of Common Stock by written notice to PremierFirst Washington at its principal office stating that the Holder elects to revoke its election to exercise its right to require PremierFirst Washington to repurchase the Warrant and/or purchaseredeem the Common Stock, whereupon PremierFirst Washington will promptly redeliver to the Holder the Warrant and/or the certificates representing shares of Common
Common Stock surrendered to PremierFirst Washington for purposes of such repurchase and/or redemption, and PremierFirst Washington shall have no further obligation to repurchase such Warrant and/or purchaseredeem such Common Stock.
(f) As used in this Agreement the following terms have the meanings indicated:
(1) “Acquiring Person”“Acquiring Person” shall mean any “Person”“Person” (hereinafter defined) who or which is the “Beneficial Owner”“Beneficial Owner” (hereinafter defined) of 25% or more of the Common Stock;
(2) A “Person”“Person” shall mean any individual, firm, corporation or other entity and shall also include any syndicate or group deemed to be a “Person”“Person” by operation of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended;
(3) A Person shall be a “Beneficial Owner,”“Beneficial Owner”, and shall have “Beneficial“Beneficial Ownership,,” of all securities:
(i) which such Person or any of its Affiliates (as hereinafter defined) beneficially owns, directly or indirectly; and
(ii) which such Person or any of its Affiliates or Associates has (1) the right to acquire (whether such right is exercisable immediately or only after the passage of time or otherwise) pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise, or (2) the right to vote pursuant to any proxy, power of attorney, voting trust, agreement, arrangement or understanding; and
(4) “Affiliate”“Affiliate” and “Associate”“Associate” shall have the respective meanings ascribed to such terms in Rule 12b-2 of the regulations promulgated by the SEC under the Securities and Exchange Act of 1934, as amended.
8.Remedies. Without limiting the foregoing or any remedies available to Fulton, it is specifically acknowledged that Fulton would not have an adequate remedy at law for any breach of this Warrant Agreement and shall be entitled to specific performance of Premier’sFirst Washington’s obligations under, and injunctive relief against any actual or threatened violation of the obligations of any Person subject to, this Agreement.
9.Miscellaneous.
(a) The representations, warranties, and covenants of PremierFirst Washington set forth in the Merger Agreement are hereby incorporated by reference in and made a part of this Agreement, as if set forth in full herein.
(b) This Agreement, the Warrant and the Merger Agreement set forth the entire understanding and agreement of the parties hereto and supersede any and all prior
agreements, arrangements and understandings, whether written or oral, relating to the subject matter hereof and thereof. No amendment, supplement, modification, waiver, or termination of this Agreement shall be valid and binding unless executed in writing by both parties.
(c) This Agreement shall be deemed to have been made in, and shall be governed by and interpreted in accordance with the substantive laws of, the Commonwealth of Pennsylvania.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed by their duly authorized officers as of the day and year first above written.
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FULTON FINANCIAL CORPORATION |
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By: | | /s/ CHARLES J. NUGENT Rufus A. Fulton, Jr.
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| | Charles J. Nugent,Rufus A. Fulton, Jr.,
SeniorPresident and Chief Executive Vice PresidentOfficer
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Attest: | | /s/ George R. Barr |
| | George R. Barr, Secretary |
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Attest: FIRST WASHINGTON FINANCIALCORP |
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By: | | /s/ GEORGE R. BARR, JR.
George R. Barr, Jr.,
SecretaryC. Herbert Schneider
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PREMIER BANCORP, INC.
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By: Attest: | | /s/ JOHN C. SOFFRONOFF
John C. Soffronoff,
President and
Chief Executive Officer
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Attest:
| | /s/ JOHN J. GINLEY
John J. Ginley,
SecretaryNora Rauscher
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WARRANT
to Purchase up to 835,000850,000 Shares of the
Common Stock, $0.33No Par Value,
of
of
PREMIER BANCORP, INC.FIRST WASHINGTON FINANCIALCORP.
This is to certify that, for value received, Fulton Financial Corporation (FULTON FINANCIAL CORPORATION“Fulton”(“FULTON”) or any permitted transferee (Fulton or such transferee being hereinafter called the“HolderHolder””) is entitled to purchase, subject to the provisions of this Warrant, and the related Warrant Agreement, each made this day January 16, 2003 (the “Warrant Agreement”), by and between Fulton andPREMIER BANCORP, INC.,from First Washington FinancialCorp, a PennsylvaniaNew Jersey corporation (“(PREMIER“First Washington””), at any time on or after the date hereof, an aggregate of up to 835,000 (equal but in any event not to approximately exceed 19.99% of the outstanding Common Stock (defined below) taking into consideration shares of Common Stock issuable upon exercise of this Warrant but excluding any other unissued shares of Premier which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion or option rights, or otherwise)850,000 fully paid and non-assessable shares of common stock, $0.33no par value (the“Common StockStock””), of PremierFirst Washington at a price per share equal to $17.85,$21.00, subject to adjustment as herein provided (the“Exercise PricePrice””).
1.Exercise of Warrant. Subject to the provisions hereof and the limitations set forth in Paragraph 2 of thea Warrant Agreement of even date herewith by and between Fulton and First Washington (the“Warrant Agreement”), which Warrant Agreement was entered into in connection with thepursuant to an Agreement and Plan of Merger Agreement of even datedated June 14, 2004 between Fulton and PremierFirst Washington (the“Merger AgreementAgreement””), this Warrant may be exercised in whole or in part or sold, assigned or transferred at any time or from time to time on or after the date hereof. This Warrant shall be exercised by presentation and surrender hereof to PremierFirst Washington at the principal office of Premier,First Washington, accompanied by (i) a written notice of exercise, (ii) payment to Premier,First Washington, for the account of Premier,First Washington, of the Exercise Price for the number of shares of Common Stock specified in such notice, and (iii) a certificate of the Holder specifying the event or events which have occurred and entitle the Holder to exercise this Warrant. The Exercise Price for the number of shares of Common Stock specified in the notice shall be payable in immediately available funds.
Upon such presentation and surrender, PremierFirst Washington shall issue promptly (and within one business day if requested by the Holder) to the Holder or its assignee, transferee or designee the number of shares of Common Stock to which the Holder is entitled hereunder. PremierFirst Washington covenants and warrants that such shares of Common Stock, when so issued, will be duly authorized, validly issued, fully paid and non-assessable, and free and clear of all liens and encumbrances.
If this Warrant should be exercised in part only, PremierFirst Washington shall, upon surrender of this Warrant for cancellation, execute and deliver a new Warrant evidencing the rights of the Holder thereof to purchase the balance of the shares of Common Stock issuable hereunder. Upon receipt by PremierFirst Washington of this Warrant, for exercise, in proper form for exercise, and subject to the limitations set forth in paragraph 2 of the Warrant Agreement, 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 PremierFirst Washington may then be closed or that certificates representing such shares of Common Stock shall not then be actually delivered to the Holder. PremierFirst Washington 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 pursuant to this Paragraph 1 in the name of the Holder or its assignee, transferee or designee.
2.Reservation of Shares; Preservation of Rights of Holder.
PremierFirst Washington shall at all times while this Warrant is outstanding and unexercised, maintain and reserve, free from preemptive rights, such number of authorized but unissued shares of Common Stock as may be necessary so that this Warrant may be exercised without any additional authorization of Common Stock after giving effect to all other options, warrants, convertible securities and other rights to acquire shares of Common Stock at the time outstanding. PremierFirst Washington further agrees that (i) it will not, by charter amendment or through reorganization, consolidation, merger, dissolution or sale of assets, or by any other voluntary act or omission, avoid or seek to avoid the observance or performance of any of the covenants, stipulations or conditions to be observed or performed hereunder or under the Warrant Agreement by Premier,First Washington, (ii) it will promptly take all action (including (A) complying with all pre-merger notification, reporting and waiting period requirements specified in 15 U.S.C. §18a and the regulations promulgated thereunder and (B) in the event that, under Section 3 of the Bank Holding Company Act of 1956, as amended (12 U.S.C. §1842(a)(3)), or the Change in Bank Control Act of 1978, as amended (12 U.S.C. §1817(j)), prior approval of the Board of Governors of the Federal
Reserve System (the“BoardBoard””) is necessary before this Warrant may be exercised, cooperating fully with the Holder in preparing any and all such applications and providing such information to the Board as the Board may require) in order to permit the Holder to exercise this Warrant and PremierFirst Washington duly and effectively to issue shares of its Common Stock hereunder, and (iii) it will promptly take all action necessary to protect the rights of the Holder against dilution as provided herein.
3.Fractional Shares. PremierFirst Washington shall not be required to issue fractional shares of Common Stock upon exercise of this Warrant but shall pay for any fractional shares in cash or by check at the Exercise Price.
4.Exchange or Loss of Warrant. This Warrant is exchangeable, without expense, at the option of the Holder, upon presentation and surrender hereof at the principal office of PremierFirst Washington for other warrants of different denominations entitling the Holder to purchase in the aggregate the same number of shares of Common Stock issuable hereunder. The term “Warrant”“Warrant” as used herein includes any warrants for which this Warrant may be exchanged. Upon receipt by PremierFirst Washington of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft or destruction) of reasonably satisfactory indemnification, and upon surrender and cancellation of this Warrant, if mutilated, PremierFirst Washington will execute and deliver a new Warrant of like tenor and date.
5.Repurchase. The Holder shall have the right to require PremierFirst Washington to repurchase all or any shares of Common Stock for which this Warrant was exercised or all or any portion of this Warrant under the terms and subject to the conditions of Paragraph 7 of the Warrant Agreement.
6.Adjustment. The number of shares of Common Stock issuable upon the exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time as provided in this Paragraph 6.
(A)Stock Dividends, etc.
(1)Stock Dividends. In case PremierFirst Washington shall pay or make a dividend or other distribution on any class of capital stock of PremierFirst Washington in Common Stock, the number of shares of Common Stock issuable upon exercise of this Warrant shall be increased by multiplying such number of shares by a fraction of which the denominator shall be the number of shares of Common Stock outstanding at the close of business on the day immediately preceding the date of such distribution and the numerator shall be the sum of such number of shares and the total number of shares of Common Stock constituting such dividend or other distribution, such increase to become effective immediately after the opening of business on the day following such distribution.
(2)Subdivisions. In case outstanding shares of Common Stock shall be subdivided into a greater number of shares of Common Stock, the number of shares of Common Stock issuable upon exercise of this Warrant at the opening of business on the day following the day upon which such subdivision becomes effective shall be proportionately increased, and, conversely, in case outstanding shares of Common Stock shall each be combined into a smaller number of shares of Common Stock, the number of shares of Common Stock issuable upon exercise of this Warrant at the opening of business on the day following the day upon which such combination becomes effective shall be proportionately decreased, such increase or decrease, as the case may be, to become effective immediately after the opening of business on the day following the date upon which such subdivision or combination becomes effective.
(3)Reclassifications. The reclassification of Common Stock into securities (other than Common Stock) and/or cash and/or other consideration shall be deemed to involve a subdivision or combination, as the case may be, of the number of shares of Common Stock outstanding immediately prior to such reclassification into the number or amount of securities and/or cash and/or other consideration outstanding immediately thereafter and the effective date of such reclassification shall be deemed to be “the day upon which such subdivision becomes effective,” or “the day upon which such combination becomes effective,” as the case may be, within the meaning of clause (2) above.
(4)Optional Adjustments. PremierFirst Washington may make such increases in the number of shares of Common Stock issuable upon exercise of this Warrant, in addition to those required by this subparagraph (A), as shall be determined by its Board of Directors to be advisable in order to avoid taxation so far as practicable of any dividend of stock or stock rights or any event treated as such for federal income tax purposes to the recipients.
(5)Adjustment to Exercise Price. Whenever the number of shares of Common Stock issuable upon exercise of this Warrant is adjusted as provided in this Paragraph 6(A), the Exercise Price shall be adjusted
by a fraction in which the numerator is equal to the number of shares of Common Stock issuable prior to the adjustment and the denominator is equal to the number of shares of Common Stock issuable after the adjustment.
(B)Certain Sales of Common Stock.
(1)Adjustment to Shares Issuable. If and whenever PremierFirst Washington sells or otherwise issues (other than under circumstances in which Paragraph 6(A) applies or pursuant to options to purchase Common Stock that are outstanding on the date hereof or subsequently issued pursuant to Premier stock option or stock purchase plans (including the dividend reinvestment plan in effect on the date hereof),applies) any shares of Common Stock, the number of shares of Common Stock issuable upon exercise of this Warrant shall be increased by multiplying such number of shares by a fraction, the denominator of which shall be the number shares of Common Stock outstanding at the close of business on the day immediately preceding the date of such sale or issuance and the numerator of which shall be the sum of such number of shares and the total number of shares constituting such sale or other issuance, such increase to become effective immediately after the opening of business on the day following such sale or issuance.
(2)Adjustment to Exercise Price. If and whenever PremierFirst Washington sells or otherwise issues any shares of Common Stock (excluding any stock dividend or other issuance not for consideration to which Paragraph 6(A) applies or pursuant to options to purchase Common Stock that are outstanding on the date hereof or subsequently issued pursuant to Premier stock option or stock purchase plans (including the dividend reinvestment plan) in effect on the date hereof),applies) for a consideration per share which is less than the Exercise Price at the time of such sale or other issuance, then in each such case the Exercise Price shall be forthwith changed (but only if a reduction would result) to the price (calculated to the nearest cent) determined by dividing: (i) an amount equal to the sum of (aa) the number of shares of Common Stock outstanding immediately prior to such issue or sale, multiplied by the then effective Exercise Price, plus (bb) the total consideration, if any, received and deemed received by PremierFirst Washington upon such issue or sale, by (ii) the total number of shares of Common Stock outstanding immediately after such issue or sale.
(C) Definition.Definition. For purposes of this Paragraph 6, the term“Common StockStock”” shall include (1) any shares of PremierFirst Washington of any class or series which has no preference or priority in the payment of dividends or in the distribution of assets upon any voluntary or involuntary liquidation, dissolution or winding up of PremierFirst Washington and which is not subject to redemption by Premier,First Washington, and (2) any rights or options to subscribe for or to purchase shares of Common Stock or any stock or securities convertible into or exchangeable for shares of Common Stock (such convertible or exchangeable stock or securities being hereinafter called “Convertible Securities”“Convertible Securities”), whether or not such rights or options or the right to convert or exchange any such Convertible Securities are immediately exercisable. For purposes of any adjustments made under Paragraph 6(A) or 6(B) as a result of the distribution, sale or other issuance of rights or options or Convertible Securities, the number of Shares of Common Stock
outstanding after or as a result of the occurrence of events described in Paragraph 6(A)(1) or 6(B)(1) shall be calculated by assuming that all such rights, options or Convertible Securities have been exercised for the maximum number of shares issuable thereunder. If an adjustment is made at any time because of the subsequent issuance of any right or option described in clause (2) of the first sentence of this Section (B), no adjustment shall be made when shares are subsequently issued; provided further, that no adjustment shall be made for issuances pursuant to options to purchase Common Stock that are outstanding on the date hereof or subsequent issuances of Common Stock pursuant to Premier stock option or stock purchase plans (including the dividend reinvestment plan) in effect on the date hereof.
7.Notice.
(A) Whenever the number of shares of Common Stock for which this Warrant is exercisable is adjusted as provided in Paragraph 6, PremierFirst Washington shall promptly compute such adjustment and mail to the Holder a certificate, signed by the principal financial officer of Premier,First Washington, setting forth the number of shares of Common Stock for which this Warrant is exercisable as a result of such adjustment having become effective.
(B) Upon the occurrence of any event which results in the Holder having the right to require PremierFirst Washington to repurchase shares of Common Stock for which this Warrant was exercised or this Warrant, as provided in Paragraph 7 of the Warrant Agreement, PremierFirst Washington shall promptly notify the Holder of such event; and PremierFirst Washington shall promptly compute the Redemption Price or the Warrant Repurchase Price and furnish to the Holder a certificate, signed by the principal financial officer of Premier,First Washington, setting forth the Redemption Price or the Warrant Repurchase Price as applicable, and the basis and computation thereof.
8.Rights of the Holder.
(A) Without limiting the foregoing or any remedies available to the Holder, it is specifically acknowledged that the Holder would not have an adequate remedy at law for any breach of the provisions of this Warrant and shall be entitled to specific performance of Premier’sFirst Washington’s obligations under, and injunctive relief against
any actual or threatened violation of the obligations of any Person (as defined in Paragraph 7 of the Warrant Agreement) subject to, this Warrant.
(B) The Holder shall not, by virtue of its status as Holder, be entitled to any rights of a shareholder in Premier.First Washington.
9.Termination. This Warrant and allthe rights conferred hereby and under the Warrant Agreement shall terminate and be of no further force and effect (i) upon the Effective Time of the Merger provided for in the Merger Agreement, (ii) upon a valid termination of the Merger Agreement (except a termination pursuant to Section 8.1(b)(iii)8.1(e) by Fulton, Section 8.1(g) or Section 8.1(h) of the Merger Agreement) unless an event described in Paragraph 2 of the Warrant Agreement (including the occurrence of an event described in paragraph (iv)(A) therein) occurs prior to such termination in which case this Warrant and the rights conferred hereby, shall not terminate until 12 months after the occurrence of such event, or (iii) to the extent this Warrant has not previously been exercised, 12 months after the occurrence of an event described in Paragraph 2 of the Warrant Agreement (unless termination of the Merger Agreement in accordance with its terms (other than under Section 8.1(b)(iii)8.1(e) by Fulton, Section 8.1(g) or Section 8.1(h) thereof) occurs prior to the occurrence of such event, in which case (ii) above shall apply); except, however, that this Warrant and the Warrant Agreement shall expire and be of no further force and effect as of 5:00 p.m. on December 31, 2004..
10.Governing Law. This Warrant shall be deemed to have been delivered in, and shall be governed by and interpreted in accordance with the substantive laws of, the Commonwealth
of Pennsylvania.Pennsylvania, except to the extent that New Jersey law governs certain aspects of this Warrant as it relates to First Washington. In the event of any inconsistency between this Warrant and the terms of the Warrant Agreement, the terms of the Warrant Agreement shall govern.
[SIGNATURE PAGE FOLLOWS]Signature Page Follows]
Dated: January 16, 2003June 15, 2004
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PFREMIERIRST BWANCORPASHINGTON, I FNCINANCIAL.CORP |
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By: | | /s/ C. Herbert Schneider |
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Attest: | | /s/ Nora Rauscher |
Exhibit “C”
Opinion of Advest, Inc.
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![LOGO](https://capedge.com/proxy/S-4A/0001193125-04-168062/g70588image002.jpg) | | INVESTMENT BANKING |
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One Rockefeller Plaza | | Tel. 212 484 3870 |
New York, NY 10020 | | Fax 212 484 3892 |
October 4, 2004
Board of Directors
First Washington FinancialCorp
Route 130 and Main Street
Windsor, New Jersey 08561
Members of the Board:
First Washington FinancialCorp (the “Company”) and Fulton Financial Corporation (“Fulton”) have entered into an Agreement and Plan of Merger dated as of June 14, 2004 (the “Agreement”), pursuant to which the Company will be merged with and into Fulton (the “Merger”). The Agreement provides that each share of Company common stock issued and outstanding immediately prior to the Effective Time will be converted into the right to receive 1.35 shares of Fulton Common Stock, subject to adjustment under certain circumstances (the “Merger Consideration”).
Simultaneously with the execution of the Agreement, the Company and Fulton have also entered into a Warrant Agreement (the “Warrant”) which entitles Fulton to purchase 850,000 shares of Company common stock at a price of $21.00 per share. The Warrant is exercisable only under certain circumstances which are described in detail in the Warrant.
The terms and conditions of the proposed transactions are described in further detail in the Agreement. The Agreement is expected to be considered by the shareholders of the Company at a shareholders’ meeting and the Merger consummated shortly after the receipt of shareholder, State and Federal regulatory approvals.
You have asked us whether, in our opinion, the Merger Consideration is fair, from a financial point of view, to the shareholders of the Company.
In arriving at the opinion set forth below, we have, among other things: reviewed the Agreement and the Warrant; reviewed the Annual Reports on Form 10-K of the Company and Fulton for the years ended December 31, 2003, 2002 and 2001; reviewed the Quarterly Reports on Form 10-Q of the Company and Fulton for the three and six month periods ended March 31, 2004 and June 30, 2004; reviewed the Annual Report to Shareholders of the Company and Fulton for the period ended December 31, 2003; reviewed certain financial analyses and forecasts of the Company and Fulton which were prepared by the respective managements of the Company and Fulton; reviewed comparative financial and operating data on the banking industry and certain institutions which we deemed to be comparable to each of the Company and Fulton; reviewed the historical market prices and trading activity for the common stock of each of the Company and Fulton; reviewed the pro forma financial impact of the Merger; reviewed certain bank mergers and acquisitions on a regional and nationwide basis for institutions which we deemed to be comparable to the Company and compared the proposed consideration with the consideration paid in such other mergers and acquisitions; considered the value of the two $0.11
dividends that will be paid to the shareholders of the Company in connection with the Merger; conducted limited discussions with members of senior management of each of the Company and Fulton concerning the financial condition, business and prospects of each respective company; and reviewed such other financial studies and analyses and performed such other investigations and took into account such other matters as we deemed necessary.
In performing our review and preparing this opinion, we have assumed and relied upon the accuracy and completeness of all financial and other information made available to us for purposes of this opinion, and we have not independently verified such information nor have we undertaken an independent evaluation of the assets and liabilities of the Company or Fulton. With respect to financial projections reviewed with management, we have assumed that they have been reasonably prepared on bases reflecting the best currently available estimates and judgments of the respective managements and we express no opinion as to those financial projections or the assumptions on which they are based. We have also assumed in all respects material to our analysis that all of the representations and warranties contained in the Agreement and all related agreements are true and correct, that each party to such agreements will perform all of the covenants required to be performed by such party, and that the conditions precedent in the Agreement are not waived. We have also assumed for purposes of this opinion that there has been no material change in the financial condition of the Company or Fulton from that reflected in the Quarterly Report as filed on Form 10-Q for the period ended June 30, 2004. Advest has been retained by the Board of Directors of the Company to act as financial advisor to the Company with respect to this transaction and will receive a fee for its services including a fee for this opinion.
This opinion is necessarily based upon circumstances and conditions as they exist and can be evaluated by us as of the date of this letter. Our opinion is directed to the Board of Directors of the Company and does not constitute a recommendation of any kind to any shareholder of the Company as to how such shareholder should vote at the shareholders’ meeting to be held in connection with the Merger. We understand and consent that this opinion will be included in proxy materials mailed to shareholders of the Company. Any other use or publication of all or part of this opinion maybe made only with the advance written consent of Advest.
In reliance upon and subject to the foregoing, it is our opinion that, as of the date hereof, the Merger Consideration is fair, from a financial point of view, to the shareholders of the Company.
| | |
Very truly yours, |
|
ADVEST, INC. |
| |
By: | | /s/ JMOHNICHAEL C. ST. MOFFRONOFF AYES
John C. Soffronoff,
President and
Chief Executive Officer
|
|
Attest:
| | /s/ JOHN J. GINLEY
John J. Ginley,
Secretary Michael T. Mayes |
| | Senior Managing Director and Head of Investment Banking |
MTM:gc
Exhibit “C”Part II
Opinion of Boenning & Scattergood
[To Come]
Part II Information Not Required In Prospectus
Item 20. Indemnification of Directors and Officers.
Pennsylvania law provides that a Pennsylvania corporation may indemnify directors, officers, employees and agents of the corporation against liabilities they may incur in such capacities for any action taken or any failure to act, whether or not the corporation would have the power to indemnify the person under any provision of law, unless such action or failure to act is determined by a court to have constituted recklessness or willful misconduct. Pennsylvania law also permits the adoption of a bylaw amendment, approved by shareholders, providing for the elimination of a director’s liability for monetary damages for any action taken or any failure to take any action unless (1) the director has breached or failed to perform the duties of his office and (2) the breach or failure to perform constitutes self-dealing, willful misconduct or recklessness.
The bylaws of Fulton Financial provide for (1) indemnification of directors, officers, employees and agents of the registrant and its subsidiaries and (2) the elimination of a director’s liability for monetary damages, to the fullest extent permitted by Pennsylvania law.
Directors and officers are also insured against certain liabilities for their actions, as such, by an insurance policy obtained by Fulton Financial.
Item 21. Exhibits and Financial Statement Schedules.
(a) Exhibits.
See Exhibit Index
No.
| (b) | Title
| | Page
|
|
2
| | Agreement and Plan of Merger dated January 16, 2003, between Fulton Financial Corporation and Premier Bancorp, Inc. (Furnished as Exhibit A to the document which is included in Part I of the Registration Statement.)
| | A-1
|
|
3
| | Articles of Incorporation, as amended and restated, and Bylaws of Fulton Financial Corporation, as amended (Incorporated by reference from Exhibit 3 of the Fulton Financial Corporation Quarterly Report on Form 10-Q for the quarter ended March 31, 1999.)
| | |
|
4
| | Rights Agreement dated April 27, 1999 between Fulton Financial Corporation and Fulton Bank (Incorporated by reference to Fulton Financial Corporation’s Form 8-K, Exhibit 4, filed May 6, 1999.)
| | |
|
5.1
| | Opinion of Barley, Snyder, Senft & Cohen, LLC regarding legality
| | |
|
8
| | Opinion of Barley, Snyder, Senft & Cohen, LLC regarding tax matters
| | |
|
13
| | Annual Report on Form 10-K for Fulton Financial Corporation for the year ending December 31, 2002 (Incorporated by reference in the document which is included in Part I of this Registration Statement.)
| | |
|
21
| | Subsidiaries of Registrant (Incorporated by reference to Fulton Financial Corporation’s Annual Report on Form 10-K for the year ended December 31, 2002.)
| | |
|
23.1
| | Consent of Barley, Snyder, Senft & Cohen, LLC (Included as part of Exhibit 5.1 and Exhibit 8.)
| | |
|
23.2
| | Consent of Boenning & Scattergood, Inc.
| | Statement Schedules. |
|
23.3
| | Consent of KPMG LLP
| | |
|
23.4
| | Consent of KPMG LLP
| | |
|
23.5
| | Consent of Stambaugh Ness, PC
| | |
|
24
| | Power of Attorney (Included in the signature page)
| | |
|
99.1
| | Form of Proxy
| | |
|
99.2
| | Letter to shareholders of Premier Bancorp, Inc.
| | |
|
99.3
| | Notice of Annual Meeting of Shareholders of Premier Bancorp, Inc.
| | |
(b) Financial Statement Schedules.
None required.
Item 22. Undertakings.
(a) The undersigned registrant hereby undertakes:
| (a) | The undersigned registrant hereby undertakes: |
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any fact or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement;
(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.
PROVIDED, HOWEVER, that paragraphs (1)(i) and (1)(ii) do not apply if the information to be included in a post-effective amendment by these paragraphs is contained in periodic reports filed by registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(c) The undersigned registrant hereby undertakes to deliver or cause to be delivered with the prospectus, to each person to whom the prospectus is sent or given, the latest annual report to security holders that is incorporated by reference in the prospectus and furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of 1934; and, where interim financial information required to be presented by Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or cause to be delivered to each person to whom the prospectus is sent or given, the latest quarterly report that is specifically incorporated by reference in the prospectus to provide such interim financial information.
(d) (1) The undersigned registrant hereby undertakes as follows: that prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other Items of the applicable form.
(2) The registrant undertakes that every prospectus (i) that is filed pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet the requirements of section 10(a)(3) of the Act and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(e) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the bylaws of the registrant, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
(f) The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.
(g) The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this amendment number one to this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Lancaster, Commonwealth of Pennsylvania, on April 2, 2003.October 6, 2004.
| | |
FULTON FINANCIAL CORPORATIONFULTON FINANCIAL CORPORATION
|
| |
By: | | /s/ RUFUSRufus A. FULTON, JR. Fulton, Jr.
|
| | Rufus A. Fulton, Jr., Chairman and Chief Executive Officer |
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated. KNOWN ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints George R. Barr, Jr. and Charles J. Nugent and each of them, his true and lawful attorney-in-fact, as agent with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacity,amendment number one to sign any or all amendments to this Registration Statement and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto such attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully and to all intents and purposes as they might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
| | | | |
SIGNATURE
| | CAPACITY
| | DATE
|
| | |
/s/ JEFFREYJeffrey G. ALBERTSON Albertson*
Jeffrey A.G. Albertson | | Director | | DirectorOctober 6, 2004
|
| | |
/s/ Donald M. Bowman, Jr.*
Donald M. Bowman, Jr. | | Director | | April 2, 2003October 6, 2004
|
|
/s/ DONALD M. BOWMAN, JR.
Donald W. Bowman, Jr.
| | Director
| | April 2, 20032
|
|
/s/ BETH ANNBeth Ann L. CHIVINSKI Chivinski*
Beth Ann L. Chivinski | | SeniorExecutive Vice President and Controller (Principal Accounting Officer)
| | October 6, 2004 |
| | |
/s/ Craig A. Dally*
Craig A. Dally | | Director | | April 2, 2003October 6, 2004
|
| | | | |
/s/ Clark S. Frame*
Clark S. Frame | | Director | | October 6, 2004 |
| | |
/s/ HAROLD D. CHUBB Patrick J. Freer*
Harold D. ChubbPatrick J. Freer
| | Director | | April 2, 2003October 6, 2004
|
|
/s/ WILLIAM H. CLARK, JR.
William H. Clark, Jr.
| | Director
| | April 2, 2003
|
|
/s/ CRAIG A. DALLY
Craig A. Dally
| | Director
| | April 2, 2003
|
|
/s/ FREDERICK B. FICHTHORN
Frederick B. Fichthorn
| | Director
| | April 2, 2003
|
|
/s/ PATRICK J. FREER
Patrick J. Freer
| | Director
| | April 2, 2003
|
|
/s/ RUFUS A. FULTON, JR.
Rufus A. Fulton, Jr.*
Rufus A. Fulton, Jr. | | Chairman of the Board, Chief Executive Officer, and Director
(Principal (Principal Executive Officer) | | October 6, 2004 |
| | |
/s/ Eugene H. Gardner*
Eugene H. Gardner | | Director | | April 2, 2003October 6, 2004
|
| | |
/s/ Charles V. Henry, III*
Charles V. Henry, III | | Director | | October 6, 2004 |
| | |
/s/ J. Robert Hess*
J. Robert Hess | | Director | | October 6, 2004 |
| | |
/s/ George W. Hodges*
George W. Hodges | | Director | | October 6, 2004 |
| | |
/s/ Carolyn R. Holleran*
Carolyn R. Holleran | | Director | | October 6, 2004 |
| | |
/s/ Clyde W. Horst*
Clyde W. Horst | | Director | | October 6, 2004 |
| | |
/s/ Thomas W. Hunt*
Thomas W. Hunt | | Director | | October 6, 2004 |
| | | | |
| | |
SIGNATURE/s/ Donald W. Lesher, Jr.*
Donald W. Lesher, Jr. | | Director | | CAPACITYOctober 6, 2004
|
| | |
/s/ Joseph J. Mowad, M.D.*
Joseph J. Mowad, M.D. | | Director | | DATEOctober 6, 2004
|
| | |
/s/ EUGENE H. GARDNER Charles J. Nugent*
Eugene H. GardnerCharles J. Nugent
| | Director
| | April 2, 2003
|
|
/s/ ROBERT D. GARNER
Robert D. Garner
| | Director
| | April 2, 2003
|
|
/s/ J. ROBERT HESS
J. Robert Hess
| | Director
| | April 2, 2003
|
|
/s/ GEORGE W. HODGES
George W. Hodges
| | Director
| | April 2, 2003
|
|
/s/ CAROLYN R. HOLLERAN
Carolyn R. Holleran
| | Director
| | April 2, 2003
|
|
/s/ CLYDE W. HORST
Clyde W. Horst
| | Director
| | April 2, 2003
|
|
/s/ SAMUEL H. JONES, JR.
Samuel H. Jones, Jr.
| | Director
| | April 2, 2003
|
|
/s/ DONALD W. LESHER, JR.
Donald W. Lesher, Jr.
| | Director
| | April 2, 2003
|
|
/s/ JOSEPH J. MOWAD, M.D.
Joseph J. Mowad, M.D.
| | Director
| | April 2, 2003
|
|
/s/ CHARLES J. NUGENT
Charles J. Nugent
| | Senior Executive Vice President and Chief Financial Officer (Principal Financial Officer) | | October 6, 2004 |
| | |
/s/ Mary Ann Russell*
Mary Ann Russell | | Director | | April 2, 2003October 6, 2004
|
| | |
/s/ MARY ANN RUSSELL John O. Shirk*
Mary Ann RussellJohn O. Shirk
| | Director | | April 2, 2003October 6, 2004
|
|
/s/ JOHN O. SHIRK
John O. Shirk
| | Director
| | April 2, 2003
|
|
/s/ R. SCOTT SMITH, JR.
R. Scott Smith, Jr.*
R. Scott Smith, Jr. | | President, Chief Operating Officer and Director | | October 6, 2004 |
| | |
/s/ Gary A. Stewart*
Gary A. Stewart | | Director | | April 2, 2003October 6, 2004
|
| | |
|
/s/ JAMES K. SPERRY * /s/ George R. Barr
James K. Sperry
|
By: | | DirectorGeorge R. Barr, Jr.
| | April 2, 2003
|
|
/s/ KENNETH G. STOUDT
Kenneth G. Stoudt
| | Director
| | April 2, 2003attorney-in-fact
|
Index of Exhibits
| | | | |
No.
| | Title
| | Page
|
2 | | Agreement and Plan of Merger, dated January 16, 2003,June 14, 2004, between Fulton Financial Corporation and Premier Bancorp, Inc.First Washington FinancialCorp (Furnished as Exhibit A to the document which is included in Part I of the Registration Statement.) | | A-1 |
| | |
3 | | Articles of Incorporation, as amended and restated, and Bylaws of Fulton Financial Corporation, as amended (Incorporated by reference from Exhibit 3 of the Fulton Financial Corporation Quarterly Report on Form 10-Q for the quarter ended March 31, 1999.) | | |
| | |
4 | | Rights Agreement, dated April 27, 1999, between Fulton Financial Corporation and Fulton Bank (Incorporated by reference to Fulton Financial Corporation’s Form 8-K, Exhibit 4, filed May 6, 1999.) | | |
| | |
5.1 | | Opinion of Barley, Snyder, Senft & Cohen, LLC regarding legality | | |
| | |
8 | | Opinion of Barley, Snyder, Senft & Cohen, LLC regarding tax matters | | |
| | |
13 | | Annual Report on Form 10-K for Fulton Financial Corporation for the year ending December 31, 20022003 (Incorporated by reference in the document which is included in Part I of this Registration Statement.) | | |
| | |
21 | | Subsidiaries of Registrant (Incorporated by reference to Fulton Financial Corporation’s Annual Report on Form 10-K for the year ended December 31, 2002.2003.) | | |
| | |
23.1 | | Consent of Barley, Snyder, Senft & Cohen, LLC (Included as part of Exhibit 5.1 and Exhibit 8.) | | |
| | |
23.2 | | Consent of Boenning & Scattergood,Advest, Inc. | | |
| | |
23.3 | | Consent of KPMG LLP | | |
| | |
23.4 | | Consent of KPMGGrant Thornton LLP | | |
| | |
23.5 *24 | | ConsentPower of Stambaugh Ness, PC Attorney | | |
| | |
24 99.1 | | PowerForm of Attorney (Included in the signature page) Proxy | | |
| | |
99.1 99.2 | | FormLetter to shareholders of Proxy First Washington FinancialCorp | | |
| | |
99.2 99.3 | | Letter to shareholders of Premier Bancorp, Inc.
| | |
|
99.3
| | Notice of AnnualSpecial Meeting of ShareholderShareholders of Premier Bancorp, Inc. First Washington FinancialCorp | | |