Schedule 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ PRELIMINARY PROXY STATEMENT / / CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY
(AS PERMITTED BY RULE 14a-6(e) (2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Prestige Bancorp, Inc.
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- -------------------------------------------------------------------------------
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
/ / No fee required.
/x/ Fee computed on table below per Exchange Act Rules 14a-6(i) (1) and 0-11.
(1) Title of each class of securities to which transaction applies:
Common Stock
(2) Aggregate number of securities to which transaction applies:
1,059,371 shares and 96,876 options.
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined): Each of the 1,059,371 issued and outstanding
shares of Common Stock will, upon consummation of the merger,
be converted into the right to receive $13.75 in cash for an
aggregate consideration of $14,566,351. With respect to 96,876
options to purchase Registrant's common stock, payment will be
equal to the difference between the option exercise price of
each option and $13.75. Based on the various exercise prices
of the different options currently outstanding, the aggregate
consideration to be received in exchange for the cancellation
of such options shall be equal to $170,239.
(4) Proposed maximum aggregate value of transaction
($14,566,351+$170,239): $14,736,590.
(5) Total fee paid: $ 1355.76 .
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
-----------------------------------
(2) Form, schedule or registration statement no.:
-------------
(3) Filing party:
---------------------------------------------
(4) Date filed:
-----------------------------------------------
PRESTIGE BANCORP, INC.
710 Old Clairton Road, Pittsburgh, PA
15236-4300 - 412-655-1190 - (Fax) 412-655-2114
April 26, 2002
Dear Stockholder:
It is my pleasure to invite you to attend the Annual Meeting of
Stockholders of Prestige Bancorp, Inc. The meeting will be held at Salvatore's,
5001 Curry Road, South Baldwin, Pennsylvania 15236, on Thursday, May 30, 2002 at
10:30 A.M., local time. The Notice of Annual Meeting and Proxy Statement
accompanying this letter describe the business to be transacted at the meeting,
which includes the election of two directors to the company's Board of Directors
and the approval of a merger between the company and Northwest Merger
Subsidiary, Inc., a subsidiary of Northwest Bancorp, Inc.
If the merger is completed, you will be entitled to receive a cash payment
of $13.75 for each share of Prestige stock that you own. Upon completion of the
merger, you will not own any stock or other interest in Prestige Bancorp, Inc.
nor will you receive, as a result of the merger, any stock of Northwest Merger
Subsidiary, Inc. or its parent holding company, Northwest Bancorp, Inc.
Your exchange of shares of Prestige stock for cash generally will cause you
to recognize taxable gain or loss for federal, and possibly state and local
income tax purposes. You should consult your personal tax advisor for a full
understanding of the tax consequences of the merger to you.
Completion of the merger is subject to certain conditions, including
receipt of various regulatory approvals and adoption of the merger agreement by
the affirmative vote of a majority of the shares of common stock voting on the
merger. As of April 16, 2002, directors and executive officers of Prestige
Bancorp, Inc. beneficially owned 20.91% of the shares of Prestige stock. We
expect all of the shares held by our directors and executive officers will be
voted in favor of the merger.
We urge you to read the attached proxy statement carefully. It describes
the merger agreement in detail and includes a copy of the merger agreement as
Appendix A.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND
RECOMMENDS THAT YOU VOTE "FOR" ADOPTION OF THE MERGER AGREEMENT BECAUSE THE
BOARD BELIEVES IT TO BE IN THE BEST INTERESTS OF OUR STOCKHOLDERS.
The Board of Directors also recommends a vote "FOR" each of the director
nominees endorsed by the Board of Directors of the company.
It is very important that your shares be voted at the meeting regardless of
the number you own or whether you are able to attend the meeting in person. We
urge you to mark, sign and date your proxy card today and return it in the
envelope provided, even if you plan to attend the meeting. This will not prevent
you from voting in person, but will ensure that your vote for management's
recommendations is counted if you are unable to attend.
On behalf of the Board of Directors and employees of the company and
Prestige Bank, we thank you for your prompt attention to this matter and your
continued interest and support. We look forward to seeing you at the meeting.
Sincerely,
/s/ Mark R. Schoen
Mark R. Schoen
Chairman of the Board, President
and Chief Executive Officer
PRESTIGE BANCORP, INC.
710 OLD CLAIRTON ROAD
PLEASANT HILLS, PENNSYLVANIA 15236
412-655-1190
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 30, 2002
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Prestige
Bancorp, Inc. will be held at Salvatore's, 5001 Curry Road, South Baldwin,
Pennsylvania 15236, on Thursday, May 30, 2002 at 10:30 A.M., local time, for the
following purposes:
I. The adoption of the Agreement and Plan of Merger, dated February 7,
2002, by and among Northwest Bancorp, MHC, Northwest Bancorp, Inc.,
Northwest Merger Subsidiary, Inc., Northwest Savings Bank Prestige
Bancorp, Inc. and Prestige Bank. Under the terms of the merger
agreement, the company will be merged with a wholly-owned subsidiary of
Northwest Bancorp, Inc., and the surviving corporation will be merged
into Northwest Bancorp, Inc. Prestige Bank will merge into Northwest
Savings. You will be entitled to receive $13.75 in cash for each share
of Prestige common stock that you own. A copy of the merger agreement
is included as Appendix A to the accompanying proxy statement;
II. The election of two directors of the company;
III. The potential adjournment of the meeting if necessary to solicit
additional proxies; and
IV. To transact such other business as may properly come before the meeting
or any adjournment thereof. Management is not aware of any other such
business.
Stockholders of record at the close of business on April 16, 2002 are
entitled to vote at the meeting and any adjournment thereof. On behalf of the
Board of Directors, we urge you to sign, date and return the enclosed proxy card
as soon as possible even if you plan to attend the meeting.
By Order of the Board of Directors
/s/ Victoria A. Brown
Victoria A. Brown
Secretary
April 26, 2002
YOU CAN HELP THE COMPANY AVOID THE EXPENSE OF FURTHER REQUESTS FOR PROXIES
BY PROMPTLY RETURNING THE ENCLOSED PROXY. IF YOU ARE UNABLE TO ATTEND THE
MEETING, PLEASE MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY SO THAT THE
NECESSARY QUORUM MAY BE REPRESENTED AT THE MEETING. THE ENCLOSED ENVELOPE
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
PRESTIGE BANCORP, INC.
710 OLD CLAIRTON ROAD
PLEASANT HILLS, PENNSYLVANIA 15236
412-655-1190
---------------------------------------------------
PROXY STATEMENT
---------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
MAY 30, 2002
TABLE OF CONTENTS
<Table>
<Caption>
PAGE
----
QUESTIONS AND ANSWERS ABOUT VOTING PROCEDURES OF THE
MEETING................................................... 3
SUMMARY TERM SHEET.......................................... 3
SELECTED CONSOLIDATED FINANCIAL AND OTHER INFORMATION ABOUT
PRESTIGE.................................................. 6
WHERE YOU CAN FIND MORE INFORMATION......................... 7
THE MEETING................................................. 7
VOTING AND REVOCATION OF PROXIES............................ 8
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF............. 8
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE..... 9
PROPOSAL I -- THE MERGER.................................... 9
General................................................... 9
Background of the Merger.................................. 10
Our Reasons for the Merger; Recommendation of Your Board
of Directors........................................... 11
Opinion of Prestige's Financial Advisor................... 12
Procedures for Completing the Merger...................... 15
The Merger Agreement...................................... 17
Approvals Needed to Complete the Merger................... 22
Waiver and Amendment of the Merger Agreement; Alternative
Structure.............................................. 23
Termination of the Merger Agreement....................... 24
Interests of Directors and Officers in the Merger that are
Different from Your Interests.......................... 25
Protection of Directors, Officers and Employees Against
Claims................................................. 26
You Do Not Have Dissenters' Rights of Appraisal........... 26
Federal Income Tax Consequences of the Merger to You...... 26
Accounting Treatment of the Merger........................ 27
Who Pays for What......................................... 27
CERTAIN RELATED AGREEMENTS.................................. 27
Plan of Liquidation or Merger............................. 27
Bank Merger Agreement..................................... 27
Voting Agreement.......................................... 27
</Table>
<Table>
<Caption>
PAGE
----
PROPOSAL II -- ELECTION OF DIRECTORS........................ 27
Information With Respect to Nominees for Directors and
Continuing Directors................................... 27
Director and Executive Officer Biographical Information... 30
Committees and Meetings of the Board of Directors of the
Company................................................ 31
Directors' Compensation................................... 32
Executive Compensation.................................... 33
Benefits.................................................. 35
Compensation Committee Interlocks and Insider
Participation.......................................... 37
Report of the Board of Directors on Executive
Compensation........................................... 38
Performance Graph......................................... 39
Transactions With Certain Related Persons................. 39
PROPOSAL III -- ADJOURNMENT OF THE MEETING.................. 40
FINANCIAL INFORMATION-ANNUAL REPORT......................... 41
OTHER MATTERS............................................... 41
STOCKHOLDER PROPOSALS....................................... 42
Appendix A -- Agreement and Plan of Merger (excluding the
exhibits thereto)......................................... A-1
Appendix B -- Opinion of Our Financial Advisor.............. B-1
</Table>
2
QUESTIONS AND ANSWERS
ABOUT VOTING PROCEDURES OF THE MEETING
Q: WHAT DO I NEED TO DO NOW?
A: After you have carefully read this proxy statement, indicate on your proxy
form how you want your shares to be voted. Then sign, date and mail your
proxy form in the enclosed prepaid return envelope as soon as possible. This
will enable your shares to be represented and voted at the meeting.
Q: WHY IS MY VOTE IMPORTANT?
A: The merger agreement must be adopted by a majority of the shares of Prestige
common stock present at the meeting, either in person or by proxy. A quorum
(a majority of the outstanding shares) must be present in person or by proxy
for the vote to count. If you do not return your proxy form or vote in
person at the meeting, it will not count toward a quorum. If a quorum is not
present, the merger cannot be approved.
Q: IF MY SHARES ARE HELD IN STREET NAME BY MY BROKER, WILL MY BROKER
AUTOMATICALLY VOTE MY SHARES ON THE MERGER FOR ME?
A: No. Your broker will not be able to vote your shares on the merger without
instructions from you. You should instruct your broker to vote your shares,
following the directions your broker provides.
Q: CAN I ATTEND THE MEETING AND VOTE MY SHARES IN PERSON?
A: Yes. All stockholders are invited to attend the meeting. Stockholders of
record can vote in person at the meeting. If your shares are held in street
name, then you are not the stockholder of record and you must ask your
broker or other nominee how you can vote at the meeting.
Q: CAN I CHANGE MY VOTE?
A: Yes. If you have not voted through your broker or other nominee, there are
three ways you can change your vote after you have sent in your proxy form.
- First, you may send a written notice to the person to whom you submitted
your proxy stating that you would like to revoke your proxy.
- Second, you may complete and submit a new proxy form. Any earlier proxies
will be revoked automatically.
- Third, you may attend the meeting and vote in person. Any earlier proxy
will be revoked. However, simply attending the meeting without voting in
person will not revoke your proxy.
If you have instructed a broker or other nominee to vote your shares, you
must follow directions you receive from your broker or other nominee to
change your vote.
Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A: No. You should not send in your stock certificates at this time.
Instructions for surrendering your Prestige stock certificates in exchange
for $13.75 per share in cash will be sent to you after we complete the
merger.
Q: WHOM SHOULD I CALL WITH QUESTIONS?
A: You should call Victoria A. Brown, Secretary of the Company, at (412)
655-1190.
SUMMARY TERM SHEET
This summary term sheet highlights selected information about the merger
from this proxy statement. It does not contain all the information that may be
important to you. We urge you to read carefully the entire document and the
other documents to which we refer, including the merger agreement, to fully
understand the merger.
When the merger is completed, each Prestige stockholder will be entitled to
receive $13.75 in cash for each share of Prestige common stock held, other than
certain shares covered by restricted stock awards. For example, if you own 50
shares of Prestige common stock, you will be entitled to receive $687.50 upon
the surrender of your certificate for those shares (see page 9).
3
Our reasons for the merger (see pages 11-12).
Our Board of Directors believes that the merger is in the best interests of
Prestige and Prestige's stockholders and recommends that stockholders vote "FOR"
the adoption of the merger agreement. The merger will enable our stockholders to
realize significant value for their shares in Prestige. In reaching its decision
to approve the merger agreement, our Board considered various factors which are
discussed in detail in this proxy statement.
Some material terms of the merger agreement.
- Prestige is a single savings and loan holding company. Its wholly owned
subsidiary is Prestige Bank, a Federal Savings Bank, ("Prestige Bank" or
the "Savings Bank"). As currently structured, Prestige will first merge
with a newly formed, wholly owned subsidiary of Northwest Bancorp, Inc.,
and will become a subsidiary of Northwest Bancorp, Inc. Prestige will
then be merged into Northwest Bancorp, Inc. (see pages 9 and 10).
- Prestige Bank will subsequently merge into Northwest Savings Bank, with
Northwest Savings Bank as the surviving bank (see page 10).
- The merger cannot occur unless our stockholders adopt the merger
agreement by the affirmative vote of a majority of the shares of Prestige
common stock present and voting on the proposal, in person or by proxy,
and we receive approvals from banking regulators (see pages 17 and 22).
- If the merger is not completed on or before October 1, 2002, the merger
may be terminated by either Prestige or Northwest unless the failure to
close is due to a breach of the party seeking to terminate (see page 24).
- The members of the Board of Directors of Prestige may continue to act as
an advisory board for at least one year after the merger (see pages
25-26).
- In connection with the merger, Prestige directors entered into a voting
agreement with Northwest Bancorp, Inc. to cause all of their shares of
Prestige common stock to be voted in favor of the adoption of the merger
agreement (see page 27).
- We have agreed not to solicit or encourage a competing transaction to
acquire us or Prestige Bank, except where failure to do so would cause
our Board to breach its fiduciary duties (see pages 18-19).
- If the merger isn't completed we will be required to pay Northwest
Bancorp, Inc. a liquidated damages fee of $1.0 million upon the
occurrence of certain events (see page 24).
- We and Prestige Bank have agreed to conduct our business according to
particular requirements until the merger (see pages 18-21).
- The completion of the merger depends on a number of conditions being
satisfied or waived (see page 17).
The merger will be taxable to our stockholders (see page 26).
Our stockholders will recognize gain or loss for federal, and possibly
state and local income tax purposes, on the exchange of their Prestige shares
for cash. You will recognize gain or loss equal to the difference between the
amount of cash you receive and your tax basis in your Prestige shares. You
should determine the actual tax consequences of the merger to you. They will
depend on your specific situation and factors not within our control. You should
consult your personal tax advisor for a full understanding of the merger's
specific tax consequences to you.
Our Board of Directors recommends stockholder approval (see pages 11-12).
Our Board of Directors believes that the merger is in the best interests of
Prestige and our stockholders and has unanimously approved the merger agreement.
Our Board recommends that Prestige stockholders vote "FOR" adoption of the
merger agreement.
4
Our financial advisor says the merger consideration is fair from a financial
point of view to our stockholders (see pages 12-15).
Our financial advisor, Finpro, Inc., has given our Board of Directors a
written opinion dated February 7, 2002, that states the cash consideration to be
paid to our stockholders is fair from a financial point of view. That opinion
has been updated to March 8, 2002. A copy of the updated opinion is attached to
this proxy statement as Appendix B. You should read it completely to understand
the assumptions made, matters considered and limitations on the review performed
by our financial advisor in issuing its opinion. We have agreed to pay Finpro a
fee equal to 1.00% of the total merger consideration. The fee is estimated to
amount to approximately $150,000. Of this amount, $5,000 has been paid.
The merger will only occur after all the conditions to its completion have
been satisfied or waived. The merger is expected to be completed during the
third quarter of year 2002 (see page ).
You have no dissenter's rights (see page 26).
Financial interests of Prestige's Officers and Directors in the merger (see
pages 25-26).
Our directors and executive officers have interests in the merger as
individuals in addition to, or different from, their interests as stockholders,
such as receiving severance payments, indemnification and insurance coverage,
and other benefits.
- Mark Schoen, President and CEO of the Company and CEO of Prestige Bank,
Patricia White, Executive Vice President and Treasurer of the Company and
President and Treasurer of Prestige Bank, and James Hein, Chief Financial
Officer of the Company and Prestige Bank, will be entitled to receive
severance payments. The full amount of these payments, together with
other benefits they will receive in connection with the merger, will not
be excess parachute payments under the Internal Revenue Code. The
payments are approximately $240,000 to Mr. Schoen, $175,000 to Ms. White
and $170,000 to Mr. Hein, excluding payments for stock options,
restricted stock awards and excise taxes.
- Two other management employees of Prestige Bank are entitled to severance
payments agreed to by Northwest Bancorp, Inc. The aggregate payments due
under their severance agreements is estimated to be approximately
$121,000.
- Northwest has agreed to appoint all of the members of the Board of
Directors of Prestige and Prestige Bank to an advisory Board of
Directors, and they would continue to receive directors' compensation at
the level currently provided for a period of one year from the date of
the merger.
- Northwest has agreed to indemnify Prestige and Prestige subsidiaries'
officers and directors for events that occurred before the merger and to
provide directors' and officers' insurance coverage for a period of three
years after the merger.
Our Board of Directors was aware of these interests and considered them in
its decision to approve the merger agreement.
5
SELECTED CONSOLIDATED FINANCIAL AND OTHER
INFORMATION ABOUT PRESTIGE
The following tables set forth selected historical consolidated financial
and other data about Prestige at the dates and for the periods shown. All share
data below have been adjusted for stock dividends of 15%, 5% and 12% approved by
Prestige Bancorp's Board of Directors in 1998, 1999, and 2001, respectively. The
historical consolidated financial data for the three months ended March 31, 2002
are derived from unaudited consolidated financial statements. However, in the
opinion of management, all adjustments consisting of normal recurring accruals,
necessary for a fair presentation at March 31, 2002 have been made. Operating
results for the three months ended March 31, 2002 are not necessarily indicative
of the results that may be expected for any other interim period or for the
entire year ended December 31, 2002. The financial information for each of the
five years in the period ended December 31, 2001 of Prestige is based on, and
qualified in its entirety by, our consolidated financial statements, including
the notes thereto, which have been filed previously with the SEC and which are
included in the Annual Report accompanying this Proxy Statement. See "Where You
Can Find More Information."
<Table>
<Caption>
AT MARCH 31 AT DECEMBER 31
------------------- -----------------------------------------
2002 2001 2000 1999 1998 1997
-------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
Selected Consolidated Financial
Condition Data:
Total Assets.................. $ $194,785 $201,775 $200,572 $177,374 $143,263
Cash and cash equivalents..... 15,722 5,871 5,198 10,153 2,213
Loans receivable, net......... 137,500 153,417 150,962 123,917 96,181
Investment securities......... 13,728 21,737 23,808 22,929 28,228
Mortgage-backed securities.... 17,490 9,418 11,538 12,457 10,531
Securities available for
sale........................ 25,046 8,911 10,985 9,907 11,018
Deposits...................... 124,451 121,793 120,491 109,698 91,156
Borrowings.................... 55,800 66,300 62,977 50,977 34,677
Stockholders' equity.......... 11,757 11,550 14,953 14,760 15,630
Real estate owned............. 271 176 207 205 --
Nonperforming loans........... 2,308 5,691 1,127 698 611
</Table>
<Table>
<Caption>
FOR THE THREE
MONTHS ENDED FOR THE YEAR
MARCH 31 ENDED DECEMBER 31
----------------- ----------------------------------------------
2002 2001 2001 2000 1999 1998 1997
-------- ------ ------- ------- ------- ------- ------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
Selected Operating Data:
Interest income................ $ $3,523 $12,897 $14,837 $13,194 $11,672 $9,371
Interest expense............... 2,263 8,478 9,016 7,532 6,685 5,240
-------- ------ ------- ------- ------- ------- ------
Net interest income............ 1,260 4,419 5,821 5,662 4,987 4,131
Provision for loan losses...... 90 285 6,383 438 209 104
-------- ------ ------- ------- ------- ------- ------
Net interest income (loss)
after provision for loan
losses...................... 1,170 4,134 (562) 5,224 4,778 4,027
Noninterest income............. 239 950 921 870 534 373
Noninterest expense............ 1,353 5,026 5,204 4,715 4,096 3,123
-------- ------ ------- ------- ------- ------- ------
Income (loss) before income
taxes....................... 56 58 (4,845) 1,379 1,216 1,277
Income tax expense (benefit)... 23 25 (1,881) 528 473 493
-------- ------ ------- ------- ------- ------- ------
Net income (loss).............. $ $ 33 $ 33 $(2,964) $ 851 $ 743 $ 784
Basic earnings (loss) per
share....................... $ $ .03 $ .03 $ (3.01) $ .83 $ .67 $ .68
Diluted earnings (loss) per
share....................... $ $ .03 $ .03 $ (3.01) $ .83 $ .66 $ .68
</Table>
6
<Table>
<Caption>
FOR THE THREE
MONTHS ENDED FOR THE YEAR
MARCH 31 ENDED DECEMBER 31
----------------- ------------------------------------------------
2002 2001 2001 2000 1999 1998 1997
-------- ------ ------ --------- ------- ------- -------
Selected Operating Ratios and
Other Data:
Yield on average interest
earning assets......... 7.20% 6.67% 7.37% 7.22% 7.26% 7.21%
Net interest rate
spread................. 2.34 2.07 2.60 2.82 2.76 2.74
Net interest income after
provision for loan
losses to noninterest
expense................ 86.47 82.25 (10.80) 110.80 116.65 128.95
Noninterest expense as a
percent of average
assets................. 2.71 2.53 2.53 2.51 2.47 2.33
Return on average
assets................. .07 .02 (1.44) .45 .45 .59
Return on average
equity................. 1.13 .28 (20.76) 5.70 4.79 5.13
Efficiency ratio......... 96.03 98.86 1,449.58 77.37 77.11 70.97
Dividend payout ratio.... N/A N/A N/A 27.77 25.78 13.04
Book value per share..... $ $11.01 $11.10 $ 10.90 $ 13.48 $ 13.21 $ 12.63
Asset Quality Ratios:
Nonperforming loans as a
percent of total loans... 4.18% 1.66% 3.63% .74% .56% .63%
Nonperforming assets as a
percent of total
assets................... 3.23 1.33 2.91 .67 .51 .43
Allowance for loan losses as
a percent of total
loans.................... 2.23 .84 2.16 .64 .45 .42
Allowance for loan losses as
a percent of
nonperforming loans...... 53.42 50.56 59.52 87.22 81.81 65.96
Charged-offs to average
loans.................... .05 1.76 2.49 .02 .04 .01
</Table>
WHERE YOU CAN FIND MORE INFORMATION
See our Annual Report, accompanying this Proxy Statement for our financial
statements and certain additional information about the Company. As a public
company, we are obligated to file annual, quarterly and current reports, proxy
statements and other information with the SEC. You may read and copy any
reports, statements or other information that we file at the SEC's public
reference rooms in Washington, D.C. and New York, New York. Please call the SEC
at 1-800-SEC-0330 for further information on the public reference rooms. In
addition, our public filings are available to the public from commercial
document retrieval services and on the Internet World Wide Website maintained by
the SEC at "http://www.sec.gov."
THE MEETING
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Prestige Bancorp, Inc. to be used at the
meeting of stockholders of the Company which will be held at Salvatore's, 5001
Curry Road, South Baldwin, Pennsylvania 15236, on May 30, 2002, 10:30 A.M.,
local time. The accompanying Notice of Meeting, Proxy Card and this Proxy
Statement are being first mailed to the Company's stockholders on or about April
26, 2002. The address of the principal executive office of the Company is 710
Old Clairton Road, Pleasant Hills, Pennsylvania 15236.
At the Meeting, the stockholders will consider and vote upon the (i) the
approval of the Merger between Prestige and Northwest Merger Subsidiary, Inc., a
subsidiary of Northwest Bancorp, Inc., (ii) the election of two (2) directors
and (iii) the possible adjournment of the meeting if insufficient proxies are
received. The Board of Directors knows of no additional matters that will be
presented for consideration at the Meeting. Execution of a
7
proxy confers on the designated proxy holder discretionary authority to vote the
shares represented by the proxy in accordance with the holder's best judgment on
such other business, if any, that may properly come before the meeting or any
adjournment, unless the proxy is revoked, or the stockholder who executed the
proxy attends the meeting and votes in person.
VOTING AND REVOCATION OF PROXIES
Stockholders who execute proxies retain the right to revoke them at any
time. Unless so revoked, the shares represented by such proxies will be voted at
the meeting and all adjournments thereof. Proxies may be revoked by written
notice to the Secretary of the Company at the address above or by the filing of
a later dated proxy prior to a vote being taken on a particular proposal at the
meeting. A proxy will not be voted if the stockholder attends the meeting and
votes in person. Proxies solicited by the Board of Directors of the Company will
be voted in accordance with the directions given therein. WHERE NO INSTRUCTIONS
ARE INDICATED, PROXIES WILL BE VOTED "FOR" THE MERGER OF THE COMPANY WITH
NORTHWEST SUBSIDIARY, "FOR" THE NOMINEES FOR DIRECTORS RECOMMENDED BY THE BOARD
AND IDENTIFIED BELOW AND "FOR" ADJOURNMENT OF THE MEETING, IF INSUFFICIENT
PROXIES ARE OBTAINED. The proxy confers discretionary authority on the persons
named in the proxy to vote for the election of any substitute person as a
Director where the nominee is unable to serve, or will not serve, and matters
incident to the conduct of the meeting and other matters that properly come
before the meeting.
The Board of Directors has endorsed the nomination of Martin Dowling and
Mark Schoen for election to new three-year terms as Directors of the Company as
more fully described below. If the merger with Northwest takes place, their term
of office will end on the date of the merger.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Stockholders of record as of the close of business on April 16, 2002 (the
Voting Record Date), are entitled to one vote for each share of common stock of
the Company then held. As of April 16, 2002, the Company had 1,059,371 shares of
its common stock outstanding.
The presence in person or by proxy of at least a majority of the
outstanding shares of the Common stock entitled to vote is necessary to
constitute a quorum at the meeting. In the event there are not sufficient votes
for a quorum or to ratify any proposals at the time of the meeting, the meeting
may be adjourned in order to permit further solicitation of proxies (see
Proposal III).
As to the election of directors as set forth in Proposal II, the proxy card
being provided by the Board of Directors enables a stockholder to vote for the
election of the nominees proposed by the Board of Directors, or to withhold
authority to vote for one or more of the nominees being proposed by the Board of
Directors. Under the Company's Bylaws, directors are elected by a plurality of
votes cast by the shares entitled to vote in the election at a meeting at which
a quorum is present.
As to the approval of the Company's merger with Northwest's subsidiary, and
the grant of authority to adjourn the meeting if necessary as set forth in
Proposals I and III and all other matters that may properly come before the
Meeting, a stockholder may, by checking the appropriate box: (i) vote "FOR" the
item, (ii) vote "AGAINST" the item, or (iii) "ABSTAIN" with respect to the item.
Unless otherwise required by law, all matters shall be determined by a majority
of votes cast affirmatively or negatively on the proposal without regard to (a)
Broker Non-Votes, or (b) proxies marked "ABSTAIN" as to that matter.
Persons and groups owning 5% or more of the Company's Common stock are
required to file certain reports with the Securities and Exchange Commission
("SEC") regarding such ownership pursuant to the Securities Exchange Act of
1934, as amended (the "1934 Act"). As of April 1, 2002, management knows of no
person who beneficially owns 5% or more of the Common stock of the Company other
than those individuals and the entity shown on the table immediately below. The
following table sets forth as of April 1, 2002 certain
8
information as to the Common stock beneficially owned by the Prestige Bancorp
Employee Stock Ownership Plan (the "ESOP") and each other 5% or greater
stockholder of the Company.
<Table>
<Caption>
5% OR BETTER BENEFICIAL OWNERSHIP
- -------------------------------------------------------------------------------------------------
AMOUNT AND NATURE OF PERCENT OF SHARES OF
BENEFICIAL OWNERSHIP OF COMMON STOCK
COMMON STOCK AS OF OUTSTANDING AS OF
NAME AND ADDRESS OF BENEFICIAL OWNER APRIL 1, 2002 APRIL 1, 2002
- ------------------------------------ ----------------------- --------------------
Morris Propp..................................... 100,985(1) 9.53%
366 Eagle Drive
Jupiter, FL 33477
Prestige Bancorp Employee Stock Ownership Plan... 100,613 9.50%
710 Old Clairton Road
Pleasant Hills, PA 15236
Jeffrey L. Gendell............................... 82,036(2) 7.74%
Tontine Financial Partners, L.P., et al
200 Park Avenue, Suite 3900
New York, NY 10166
John A. Stiver................................... 76,364(3) 7.20%
710 Old Clairton Road
Pleasant Hills, PA 15236
</Table>
- ---------------
(1) Based on a Schedule 13D filed on May 31, 2000 on behalf of Morris Propp and
Melvin Heller.
(2) Based on a Schedule 13D filed on January 2, 2001 on behalf of Tontine
Financial Partners, L.P., Tontine Management, L.L.C. and Jeffrey L.
Gendell.
(3) Based on materials supporting Form 8-K filed May, 2001. This figure
includes 846 shares of Common stock of the Company covered by vested
options to purchase Common stock of the Company held by Mr. Stiver.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Common stock of the Company is registered pursuant to Section 12(g) of
the 1934 Act. The officers and directors of the Company and beneficial owners of
greater than 10% of the Common stock ("10% beneficial owners") are required to
file reports on Forms 3, 4 and 5 with the SEC disclosing changes in beneficial
ownership of the Common stock. Based on the Company's review of such ownership
reports, no officer, director or 10% beneficial owner of the Company failed to
file such ownership reports on a timely basis for the fiscal year ended December
31, 2001.
PROPOSAL I--THE MERGER
The information in this proxy statement concerning the terms of the merger
is qualified in its entirety by reference to the full text of the merger
agreement, which is attached as Appendix A and incorporated by reference herein.
All stockholders are urged to read the merger agreement in its entirety, as well
as the opinion of our financial advisor attached as Appendix B.
GENERAL
As soon as possible after the conditions to consummation of the merger
described below have been satisfied or waived, and unless the merger agreement
has been terminated, Prestige and a subsidiary of Northwest Bancorp, Inc. will
merge in accordance with Pennsylvania law. Prestige will be the surviving
corporation of the merger and will become a subsidiary of Northwest Bancorp,
Inc. After the merger, Prestige will be liquidated or merged into Northwest
Bancorp, Inc. Immediately after the merger/liquidation is completed, Prestige
Bank will merge with and into Northwest Savings Bank. Northwest Savings Bank and
Northwest Bancorp, Inc. will be the surviving bank and bank holding company,
respectively.
9
Upon completion of the merger of Northwest Subsidiary with and into
Prestige, our stockholders will be entitled to receive $13.75 in cash for each
share of Prestige common stock they hold and will cease to be stockholders of
Prestige. Our directors and the directors of Prestige Bank are permitted to
continue as an advisory board for one year after the closing.
The Companies:
Prestige Bancorp, Inc.
710 Old Clairton Road
Pleasant Hills, Pennsylvania 15236
Prestige is a Pennsylvania corporation and the parent savings and loan
holding company of Prestige Bank, a Federal Savings Bank. Prestige Bank is
headquartered in Pleasant Hills, Pennsylvania and operates four branch offices
located in Allegheny County in southwestern Pennsylvania.
Northwest Bancorp, Inc.
301 Second Avenue
Warren, Pennsylvania 16365
Northwest Savings Bank is a Pennsylvania-chartered savings bank which is
headquartered in Warren, Pennsylvania. Northwest Savings Bank operates 118
branch offices located throughout Central and Western Pennsylvania and eastern
Ohio. Northwest Bancorp, Inc. is the parent company of Northwest Savings Bank.
Northwest Bancorp, MHC, which is also a party to the Merger Agreement, is a
federal mutual holding company which owns a majority of the shares of Northwest
Bancorp, Inc.
BACKGROUND OF THE MERGER
Over the last several years, the financial services industry has become
increasingly competitive and has undergone industry-wide consolidation. The
market in which Northwest and Prestige operate has been affected by this trend,
experiencing a period of acquisition and consolidation that has affected many of
the banks and thrift institutions. In response to these developments, the board
of each of Northwest and Prestige has, on an ongoing basis, considered strategic
options for increasing stockholder value, including potential acquisitions of
other institutions.
After exploring alternative means of enhancing shareholder value on a short
and long-term basis, the Board of Directors of Prestige Bancorp, Inc. retained
FinPro, on October 4, 2001, to conduct discovery for a potential sale of the
Bank through a confidential bidding process. Additionally FinPro met with the
Board to review a list of potential acquirers prepared by FinPro and previously
discussed with particular members of Prestige Bancorp's executive staff. In
order to maintain an organized process and to limit the impact on the operations
of Prestige Bank, the Board limited the list of potential acquirers to
approximately nine, all of which were located in Western Pennsylvania and which
were deemed by the Board, and FinPro, to be the most likely candidates to
consummate a potential deal.
During the weeks ended October 8, 2001 and October 15, 2001, FinPro
assisted Prestige in compiling a confidential investor memorandum to distribute
to potential acquirers. FinPro contacted the selected potential acquirers to
ascertain interest on a "no name" basis during the weeks of October 15, 2001 and
October 22, 2001. All selected potential acquirers expressed interest. After the
selected potential acquirers signed confidentiality agreements, FinPro disclosed
that Prestige was the seller. At that time, process letters and confidential
investor memoranda were sent to the potential acquirers with instructions that
indications of interest were due November 7, 2001.
The interested parties consisted of a mixture of commercial banks, public
thrifts, a mutual thrift and a mutual holding company. From examination of
public financial statements and disclosures, all participants had sufficient
capital, and asset size to complete the deal.
On November 7, 2001, FinPro received five indications of interest that
complied with the deadline request. FinPro spoke with the five potential
acquirers that submitted an indication of interest in order to clarify the terms
and to discuss alternative pricing and consideration scenarios.
10
FinPro reviewed the expressions of interest and ranked them according to
the benefits offered to shareholders, customers and employees. When ranking the
expressions of interest, FinPro considered among other things the overall price
per share to be paid and the ability of the bidder to complete the merger
without contingencies. FinPro continued negotiations with three of the five
institutions and allowed each of them to conduct due diligence on Prestige. Due
diligence was conducted in late November 2001.
Final and best bids were then requested from the three remaining
institutions. Shortly thereafter two of the three institutions submitted final
bids while one institution declined to bid after due diligence but still
maintained interest. FinPro reviewed the final bids and ranked them according to
the benefits offered to shareholders. The ranking of the expressions of interest
were presented to the Board on December 3, 2001.
Northwest was selected by the Prestige Board of Directors and was notified
by FinPro and Prestige's CEO. Immediately after this process, counsel for both
Prestige and Northwest began drafting a definitive agreement. Additionally,
Northwest and Prestige conducted additional and concurrent due diligence during
the week of December 17, 2001. The drafting and negotiation of the definitive
agreement continued through much of January 2002. On February 5, 2002, FinPro
met with the Board and their legal counsel and reviewed the bid process and
presented an oral fairness opinion, which concluded that the consideration
offered by Northwest was fair from a financial point of view to Prestige's
shareholders. At that time, Prestige's legal counsel reviewed the terms of the
definitive agreement with the Board and discussion followed. The Board agreed to
adjourn the meeting and scheduled another board meeting for February 7, 2002.
During the meeting on February 7, 2002 discussion continued, FinPro presented a
written fairness opinion and a Board resolution was unanimously approved and the
definitive agreement was signed.
OUR REASONS FOR THE MERGER; RECOMMENDATION OF YOUR BOARD OF DIRECTORS
Our Board of Directors believes that the terms of the merger agreement,
which are the product of arm's length negotiations between representatives of
Northwest Bancorp and Prestige, are in the best interests of our stockholders.
In the course of reaching its determination, our Board of Directors considered
the following factors:
- information concerning our financial condition, results of operations,
capital levels, asset quality and prospects,
- industry and economic conditions,
- our assessment of Northwest Bancorp's ability to pay the aggregate merger
consideration,
- the opinion of our financial advisor as to the fairness of the merger
consideration from a financial point of view to the holders of our common
stock,
- the general structure of the transaction and the compatibility of
management and business philosophy,
- the greater resources and product offerings that the resulting bank can
offer to the customers of Prestige after the merger,
- the impact of the merger on the depositors, employees, customers and
communities served by us through expanded commercial, consumer and retail
banking products and services,
- the ability of Northwest Bank after the merger to compete in relevant
banking and non-banking markets, and
- our strategic alternatives to the merger, including the continued
operation of Prestige Bank as an independent financial institution.
In addition, it is anticipated that the merger may enhance the Bank's
ability to be removed from an OTS Supervisory Agreement currently in place
which, among other things, restricts the Bank's ability to make commercial
loans.
In making its determination, our Board of Directors did not ascribe any
relative or specific weights to the factors which it considered. The foregoing
discussion of the factors considered by our Board is not intended to be
exhaustive, but it does include the material factors considered by our Board.
11
Our Board of Directors believes that the merger is in the best interests of
Prestige and our stockholders. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT OUR STOCKHOLDERS VOTE "FOR" THE ADOPTION OF THE MERGER AGREEMENT.
OPINION OF PRESTIGE'S FINANCIAL ADVISOR
We retained FinPro, Inc., a financial consulting firm, on the basis of its
experience, to render a written opinion to us as to the fairness, from a
financial point of view, of the per share price to be paid for the outstanding
shares of Prestige common stock, as set forth in the merger agreement. We placed
no limitations on FinPro with respect to the investigation made, or procedures
followed by FinPro in rendering its opinion.
FinPro has been in the business of consulting for the bank and thrift
industry for fourteen years, including the appraisal and valuation of bank and
thrift institutions and their securities in connection with mergers,
acquisitions and other securities transactions. FinPro has knowledge of and
experience with the Pennsylvania bank and thrift market and financial
organizations operating in that market. FinPro reviewed the negotiated terms of
the merger agreement.
On February 7, 2002, in connection with its consideration of the merger
agreement, FinPro issued an opinion to the Board of Directors of Prestige that
the proposed cash consideration of the merger, $13.75 per share as provided in
the merger agreement, is fair and equitable, from a financial point of view, to
Prestige and its shareholders. The analysis presented in the opinion was
subsequently updated and confirmed in writing. A copy of the updated written
opinion is attached as Appendix B to this proxy statement and should be read in
its entirety by Prestige shareholders. FinPro's written opinion does not
constitute an endorsement of the merger or a recommendation to any shareholder
as to how such shareholder should vote at the special meeting.
In rendering its opinion, FinPro reviewed certain publicly available
information concerning Prestige and Northwest, including each party's
audited financial statements and annual reports. FinPro considered many
factors in making its evaluation. In arriving at its opinion regarding the
fairness of the per share price, FinPro reviewed, among other things: (i)
the Agreement and the exhibits thereto; (ii) changes in the market for bank
and thrift stocks; (iii) the performance of Prestige's and Northwest's
common stock; (iv) trends and changes in the financial condition of
Prestige and Northwest; (v) the most recent annual report to shareholders
of Prestige and Northwest; (vi) quarterly reports on Form 10-Q of Prestige
and Northwest; (vii) the budget of Prestige; (viii) the most recent audit
letter to Prestige and Northwest; and (ix) other market data, studies and
analyses that were considered appropriate.
In addition, FinPro discussed with the management of Prestige its operating
performance and future prospects, primarily with respect to the current level of
Prestige's earnings and future expected operating results, giving weight to
FinPro's assessment of the future of the thrift industry and Prestige's
performance within the
12
industry. FinPro compared the results of operation of Prestige with the results
of operation of all publicly traded thrift institutions and a selected
Comparable Trading Group.
<Table>
<Caption>
- ----------------------------------------------------------------------------------------
FOR THE LAST TWELVE MONTHS
---------------------------------------
COMPARABLE ALL
TRADING PUBLICLY
GROUP TRADED THRIFT
PRESTIGE MEDIAN MEDIAN
-------- ---------- -------------
BALANCE SHEET:
Assets ($000's)........................... 197,845 173,570 479,484
ASSET GROWTH................................. -5.91% 1.97% 5.86%
LOANS TO ASSETS........................... 73.92% 67.60% 69.01%
Deposits to Assets...................... 65.06% 74.03% 67.25%
Borrowing to Assets..................... 28.20% 16.75% 19.80%
Tangible Equity to Tangible Assets...... 6.11% 8.39% 9.03%
ASSET QUALITY:
NONPERFORMING LOANS TO LOANS.............. 4.50% 1.12% 0.45%
Nonperforming Assets to Assets.......... 3.46% 0.74% 0.38%
Reserves to Nonperforming Loans......... 50.75% 89.03% 136.35%
Reserves to Loans....................... 2.28% 0.99% 0.89%
INCOME STATEMENT AND PROFITABILITY:
RETURN ON AVE. ASSETS..................... -1.02% 0.25% 0.80%
Return on Ave. Equity................... -16.92% 2.98% 8.01%
Yield on Earning Assets................. 6.97% 7.32% 7.37%
Cost of Funds........................... 4.77% 5.01% 4.71%
Net Interest Margin..................... 2.44% 2.66% 3.14%
Noninterest Income to Ave. Assets....... 0.44% 0.43% 0.51%
Noninterest Expense to Ave. Assets...... 2.67% 3.09% 2.31%
Efficiency Ratio........................ 94.23% 84.15% 62.78%
DIVIDENDS:
Current Dividend Yield.................... 0.00% 2.61% 2.41%
LTM Dividend Payout Ratio................. NM 48.48% 33.01%
MARKET PRICING AT MARCH 8, 2002
Price to LTM EPS.......................... NM 29.76x 14.28x
Price to LTM Core EPS..................... NM 24.30x 14.52x
Price to Book Value....................... 118.16% 81.33% 111.10%
Price to Tangible Book Value.............. 118.16% 81.62% 116.65%
- ----------------------------------------------------------------------------------------
</Table>
Source: The SNL DataSource, data is for the last twelve months
updated through March 8, 2002 unless otherwise noted.
THE COMPARABLE TRADING GROUP IS COMPOSED OF: BROADWAY FINANCIAL CORPORATION
(BYFC), FIDELITY FEDERAL BANCORP (FFED), INDEPENDENCE FEDERAL SAVINGS BANK
(IFSB), LEXINGTON B&L FINANCIAL CORP. (LXMO), MYSTIC FINANCIAL, INC. (MYST),
NORTH BANCSHARES, INC. (NBSI), PITTSBURGH FINANCIAL CORP. (PHFC), AND SOUTHFIRST
BANCSHARES, INC. (SZB).
Many variables affect the value of financial institutions, not the least of
which is the uncertainty of future events, so that the relative importance of
the different valuation variables differs in different situations, with the
result that appraisal theorists argue about which variables are the most
appropriate ones on which to focus.
13
However, most appraisers agree that the primary financial variables to be
considered are earnings, equity, dividends or dividend-paying capacity, asset
quality and cash flow. In addition, in most instances, if not all, value is
further tempered by non-financial factors such as marketability, voting rights
or block size, history of past sales of the entity's stock and special ownership
or management considerations.
FinPro analyzed the total deal price on a cash equivalent fair market value
basis using the standard evaluation techniques (as discussed below) including,
but not limited to, comparable sales multiples and the net present value of
dividends and terminal value based on certain assumptions of projected growth,
earnings and dividends.
MARKET VALUE
Market value is generally defined as the price, established on an
"arms-length" basis, at which knowledgeable, unrelated buyers and sellers would
agree to transfer shares. The market value is frequently used to determine the
price of a minority block of stock when both the quantity and the quality of the
"comparable" data are deemed sufficient. However, the relative thinness of the
specific market for the stock of the thrift institution being appraised may
result in the need to review alternative markets for comparative pricing
purposes. The "hypothetical" market value for a small thrift with a thin market
for its stock is normally determined by comparison to the median price to
earnings, price to equity and dividend yield of local or regional
publicly-traded thrift institutions, adjusting for significant differences in
financial performance criteria and for any lack of marketability or liquidity.
The market value in connection with the evaluation of control of a thrift is
determined by the previous sales of thrifts. In valuing a business enterprise,
when sufficient comparable trade data is available, the market value deserves
similar emphasis as the investment value as discussed below.
FinPro maintains substantial files concerning the prices paid for thrift
institutions nationwide. The database includes transactions involving
Pennsylvania thrift institutions and thrift institutions in the Mid-Atlantic
region of the United States over the last five years. The database provides
comparable pricing and financial performance data for thrift institutions sold
or acquired. Organized by different peer groups, the data present averages of
financial performance and purchase price levels, thereby facilitating a valid
comparative purchase price analysis. In analyzing the transaction value of
Prestige, FinPro has considered the market approach and has evaluated price to
earnings, price to equity, price to tangible equity and franchise premium to
core deposits for a defined comparable group.
SELECT MERGER MULTIPLES
During FinPro's analysis of recent merger multiples in relationship to the
proposed transaction, FinPro placed a heavy reliance on the "Comparable Group"
multiples. The "Comparable Group" was composed of all fully converted thrift
institutions that announced sales between January 1, 2000 and March 8, 2002 with
a deal value between $10 million and $50 million where the target institution
had a return on average equity less than 5.00%. The following table illustrates
the maximum, minimum and median multiples of the "Comparable Group".
<Table>
<Caption>
- ----------------------------------------------------------------------------------------
PRICE TO PRICE TO FRANCHISE
PRICE TO TANGIBLE LTM PREMIUM TO
BOOK BOOK EARNINGS CORE DEPOSITS
- ----------------------------------------------------------------------------------------
Maximum............................ 147.15% 147.15% 57.83x 10.02%
Minimum............................ 91.68% 91.68% 22.11x 0.85%
Median............................. 108.12% 108.12% 31.38x 4.01%
Prestige Acquisition Multiples..... 120.61% 120.61% NM 2.30%
- ----------------------------------------------------------------------------------------
</Table>
Source: SNL Securities, FinPro Calculations
The financial performance characteristics of the selected thrift
organizations vary, sometimes substantially, from those of Prestige. As such,
this analysis is not a simple mathematical formula, but rather a series of
considerations and judgements, regarding the financial performance and value of
each of the companies.
14
INVESTMENT VALUE
The investment value is sometimes referred to as the income value or
earnings value. One investment value method frequently used estimates the
present value of an enterprise's future earnings or cash flow. Another popular
investment value method is to determine the level of current annual benefits
(earnings, cash flow, dividends, etc.), and then capitalize one or more of the
benefit types using an appropriate capitalization rate such as an earnings or
dividend yield. Yet another method of calculating investment value is a cash
flow analysis of the ability of a thrift to service acquisition debt obligations
(at a certain price level) while providing sufficient earnings for reasonable
dividends and capital adequacy requirements. In connection with the cash flow
analysis, the return on investment that would accrue to a prospective buyer at
the transaction value is calculated. The investment value method, which was
analyzed in connection with this transaction, was the net present value of
dividends stream and terminal value, which is discussed below.
NET PRESENT VALUE OF DIVIDENDS STREAM AND TERMINAL VALUE
The investment of earnings value of any banking institution's stock is an
estimate of present value of the future benefits, usually earnings, cash flow or
dividends, which will accrue to the stock. FinPro calculated a net present value
of dividends stream and terminal value through 2006 under a number of
iterations. Earnings for 2002 and 2003 were based on Prestige's budget and a
budget scenario assuming that the OTS would lift the restriction on originating
commercial loans. The annual earnings growth rates for years 2004 to 2006 ranged
from 10.00% to 20.00%, with dividends beginning in 2004 assuming a 25% payout
ratio. The terminal value was approximated using an acquisition price to
earnings multiple of 31.38x, which resulted in acquisition price to book
multiples ranging from 97.19% to 146.41%. Discount rates between 8.00% and
12.00% were utilized. Based on these assumptions, FinPro's calculation of the
net present value of the dividends stream and terminal value per share ranged
between $6.87 and $13.03. FinPro's computations were based on an analysis of the
thrift industry, the economic and competitive situations currently existing in
Prestige's market area and its current financial condition.
CONCLUSION
When the market value and investment value methods are subjectively
weighed, using the appraiser's experience and judgment, it is FinPro's opinion
that the proposed merger consideration is fair from a financial point of view to
the holders of Prestige's common stock.
In rendering its opinion, FinPro did not independently verify the asset
quality and financial condition of Prestige or Northwest, but instead relied
upon the data provided by or on behalf of Prestige and Northwest to be true and
accurate in all material respects.
Prior to being retained as Prestige's financial advisor, FinPro has
provided financial advisory and consulting services to Prestige. The
revenues derived from these services are insignificant when compared to the
firm's total gross revenues.
FinPro acted as Prestige's financial advisor in connection with the merger.
Finpro received a cash fee of $5,000 in October, 2001, and will receive a fee
equal to 1.00% of the aggregate deal value, or approximately $150 thousand, a
portion of which is contingent upon consummation of the merger. In addition,
FinPro will be reimbursed for reasonable expenses related to the merger and
Prestige has indemnified FinPro in connection with any matter related to the
merger.
PROCEDURES FOR COMPLETING THE MERGER
You will receive cash for your shares of Prestige stock.
Upon completion of the merger, each outstanding share of Prestige common
stock (other than treasury shares) shall be converted into and represent the
right to receive $13.75 in cash without any interest thereon. The aggregate
amount of the cash payment represents the merger consideration. The merger
consideration to be paid in connection with the merger is expected to be
approximately $14.7 million, including payment for the
15
cancellation of all Prestige stock options and unvested restricted shares,
assuming all such options and unvested restricted shares are cancelled.
Treatment of Options and Restricted Shares
At the effective time of the merger, each vested stock option to purchase
Prestige common stock issued pursuant to the Prestige Stock Option Plan that has
not been exercised before the merger is completed will be canceled and the
holder of the unexercised stock option will be entitled to receive a cash
payment equal to $13.75 less the exercise price per share of the stock option,
multiplied by the number of shares of Prestige common stock subject to the stock
option, less any required tax withholding. Vesting will also be accelerated for
recipients of restricted stock awards under the Management Recognition and
Retention Plan, and they will be entitled to receive a cash payment equal to
$13.75 for each previously unvested share.
Procedure for Surrendering Your Certificates
At or prior to the effective time of the merger, or at such other time or
times as the bank or trust company that will serve as exchange agent may
otherwise request, Northwest Bancorp, Inc. will deliver to the exchange agent an
amount of cash equal to the aggregate merger consideration. The exchange agent
receiving the deposit will act as paying agent for the benefit of the holders of
certificates of Prestige common stock in exchange for the merger consideration.
Each holder of Prestige common stock (other than unvested restricted shares) who
surrenders his or her Prestige shares to the exchange agent will be entitled to
receive a cash payment of $13.75 per share of Prestige common stock upon
acceptance of the shares by the exchange agent.
No later than five business days after the effective time of the merger, a
letter of transmittal will be mailed by the exchange agent to Prestige
stockholders. The letter of transmittal will contain instructions for
surrendering your certificates of Prestige common stock.
YOU SHOULD NOT RETURN YOUR PRESTIGE COMMON STOCK CERTIFICATES WITH THE
ENCLOSED PROXY, AND YOU SHOULD NOT SEND YOUR STOCK CERTIFICATES TO THE EXCHANGE
AGENT UNTIL YOU RECEIVE THE LETTER OF TRANSMITTAL.
If a certificate for Prestige common stock has been lost, stolen or
destroyed, the exchange agent is not obligated to deliver payment until the
holder of the shares delivers:
- an appropriate affidavit by the person claiming the loss, theft or
destruction of his or her certificate,
- an indemnity agreement, and
- if required by the exchange agent or Northwest Bancorp, Inc., a bond.
After twelve months following the effective time of the merger, the
exchange agent will deliver to Northwest Bancorp, Inc. any funds not claimed by
former Prestige stockholders. Thereafter, the payment obligation for any
certificate representing Prestige common stock which has not been satisfied will
become the responsibility of Northwest Bancorp, Inc..
If certificates for Prestige common stock are not surrendered prior to the
date on which such payments would otherwise escheat to or become the property of
any governmental agency, the unclaimed amounts will become the property of
Northwest Bancorp, Inc. to the extent permitted by applicable law, free and
clear of all claims or interest of any person previously entitled to such
property. None of Northwest Bancorp, Inc., Prestige, the exchange agent or any
other party to the merger will be liable to any former holder of Prestige common
stock for any amount properly delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
16
THE MERGER AGREEMENT
Representations and Warranties Made by Us, Prestige Bank and Northwest
The merger agreement contains representations and warranties made by us,
Northwest Bancorp, Inc. and Northwest Savings Bank which are customary for this
type of merger transaction, including, among others, representations and
warranties concerning:
- the organization and registration Prestige, Prestige Bank, Northwest
Bancorp, Northwest MHC and Northwest Savings Bank,
- the due authorization, execution, delivery and performance of the merger
agreement,
- the accuracy of the financial statements of Northwest and us,
- compliance of Northwest and us with applicable law,
- governmental approvals required for the consummation of the merger,
- the absence of legal actions, facts or circumstances that would
materially impede or delay consummation of the merger, and
- the absence of any required consents, except as specifically described.
We made certain additional representations and warranties (which are also
customary), among others, regarding our capitalization, our subsidiaries, the
absence of certain interim events, the absence of any broker's and finder's fees
other than that owed to Finpro, other material agreements, litigation matters,
employee and officer benefit plans, environmental matters, the adequacy of
insurance coverage, the status of our loan and investment portfolios, the
absence of certain defaults, the value of real estate loans and investments, tax
matters, the absence of derivative contracts, real estate and other assets owned
or leased by us, the accuracy of our SEC filings, related party transactions,
termination benefits, the absence of brokered deposits, the inapplicability of
certain anti-takeover laws, the absence of post-closing registration
obligations, the absence of dissenter's rights and the receipt of a fairness
opinion from Prestige's financial advisor regarding the merger, the material
interests of certain persons in the merger and the accuracy of our disclosures.
Northwest Bancorp and Northwest Savings Bank has represented that it will
have the funds sufficient to pay the merger consideration required of it under
the merger agreement.
Some of the representations and warranties made by us are qualified by
materiality. The representations, warranties, agreements and covenants in the
merger agreement will expire when the merger takes place, except for agreements
and covenants that by their terms are to be performed after the merger. If the
merger agreement is terminated, there will be no liability on the part of either
us or Northwest Bancorp and Northwest Savings Bank other than the possible
payment of liquidated damages as discussed below under "Termination of the
Merger Agreement."
Conditions to the Merger
The respective obligations of Prestige Bancorp, Prestige Bank, Northwest
Bancorp and Northwest Savings Bank to effect the merger are subject to the
satisfaction or waiver of the following conditions specified in the merger
agreement:
- the delivery of certified resolutions indicating that the party has
obtained all applicable corporate approvals,
- the receipt of all required regulatory and third party approvals,
consents or waivers,
- the absence of any statute, rule, regulation, injunction or other order
which prohibits, restricts or makes illegal the completion of the merger
transactions,
- the absence of any order, decree or injunction of a court or agency of
competent jurisdiction which prevents the completion of the merger
transactions,
17
- the accuracy of the other party's representations and warranties in all
material respects,
- the performance by the other party of its obligations contained in the
merger agreement in all material respects, and
- the receipt of certain officers' certificates.
Prestige Bancorp and Prestige Bank's obligation to effect the merger also
is subject to the approval of the merger by our stockholders. Northwest Bancorp
and Northwest Bank's obligation to complete the merger is also subject to their
receipt of an appropriate tax opinion from their counsel and the absence of any
material adverse change in Prestige Bancorp.
There can be no assurance that the conditions to consummation of the merger
will be satisfied or waived. The merger will become effective when the
certificate of merger is filed with the Secretary of State of the Commonwealth
of Pennsylvania. It is currently anticipated that the effective time of the
merger will occur during the third quarter of 2002.
We have agreed that from the date of the merger agreement until the
completion of the merger we will:
- generally conduct business in the ordinary course,
- use reasonable good faith efforts, to (i) preserve the organization, (ii)
maintain good relationships with customers and employees, and (iii)
preserve our goodwill.
Covenants and Agreements
We have agreed that we will not, without Northwest's consent:
- amend any provision of our basic corporate documents;
- suffer the imposition of a lien on any share of stock ;
- waive or release any material right or cancel or compromise any material
debt or claim;
- make any changes in our stock;
- pay dividends;
- change compensation levels except for normal increases in the ordinary
course of business;
- hire any new employees without consulting with Northwest Bancorp prior to
such hiring;
- add or change any employee benefit plans or increase payments to the
plans;
- merge with any other corporation;
- sell or lien any substantial assets out of the ordinary course of
business or buy a substantial part of another; business, or agree to, or
grant an option to any such transaction;
- add or relocate branches, except for the planned relocation of our Bethel
Park branch;
- borrow money except in the ordinary course of business;
- change bank policies;
- acquire any new loan participation or servicing rights;
- make any new loan, or increase any loan, in excess of $300,000;
- make a loan or increase a loan if our exposure to any one borrower or
affiliated borrowers would exceed $750,000;
- renew or extend any lease;
- make capital expenditures over $10,000 individually or $50,000 in the
aggregate;
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- generally, purchase any security not rated "A" or higher or with a
remaining term of more than five (5) years;
- make a new loan to an officer or director;
- materially change the pricing of our deposit or loan accounts;
- enter into any arrangement not in the ordinary course of business;
- change our method of accounting;
- enter into any hedging, futures or other derivative or high risk
investments;
- discharge any lien or pay any obligation other than when due or in the
ordinary course of business;
- take any action that would cause any of our representations in the merger
agreement not to be true as of the merger or that could delay the merger;
- acquire real property (other than foreclosing on residential property)
without obtaining a phase one environmental report;
- settle any claim involving in excess of $50,000 or which involves a
precedent which could be material to us;
- agree to do any of the above.
We will give Northwest Bancorp and its representatives reasonable access to
our properties and records and will make our representatives available. The
records would be kept confidential and each party will destroy any records
obtained from the other if the merger doesn't take place.
Northwest Bancorp and Northwest Savings Bank will prepare all applications
for all necessary regulatory approvals and will use their best efforts to obtain
as promptly as practicable after the date hereof all regulatory approvals
necessary or advisable to consummate the transactions contemplated by this
Agreement. We will furnish Northwest Bancorp with all appropriate accurate
information when needed for the applications. The parties will cooperate and
consult on such applications and will share copies of all application materials.
We will use our best efforts to obtain shareholder approval to complete the
merger; Northwest Bancorp and we will take all action desirable to permit
completion of the mergers including (A) obtaining required consents, and (B)
requesting the delivery of appropriate opinions from counsel and auditors.
We are required to prepare, file, and mail this proxy statement (subject to
Northwest's review) and make sure it conforms to legal requirements. Northwest
is required to cooperate in its preparation. All of the information supplied by
Northwest relating to Northwest for the proxy statement should be sufficiently
true and correct so as not to cause the information to be misleading.
After the merger, Northwest Bancorp and Northwest Savings Bank will
indemnify each present and former director and/or officer of Prestige Bancorp
and Prestige Bank as of the date of the merger -- the indemnified
parties -- against all losses, expenses, and liabilities in connection with any
claim arising out of matters existing at or prior to the merger if the claim is
based in whole or in part on the fact that such indemnified party was a director
or officer of Prestige Bancorp or Prestige Bank, to the fullest extent to which
directors and officers can be indemnified under Pennsylvania law and the
articles and bylaws of Prestige. Northwest will also advance the expenses of
defending such claims to the extent permissible under law and Prestige Bancorp's
articles and bylaws if the indemnified party agrees to repay such advances if it
is subsequently determined that indemnification is not permitted under the
circumstances. The agreement sets forth appropriate indemnification procedures.
Northwest Bancorp will maintain in effect for three (3) years from the
merger, the directors' and officers' liability insurance policy currently
maintained by Prestige Bancorp, or similar substitute coverage, with respect to
matters occurring prior to the merger.
Prestige has also agreed that, after the date of the merger agreement and
until it terminates, neither Prestige, nor any of our employees or
representatives will, directly or indirectly, initiate, solicit or encourage any
inquiries,
19
or have any discussions, concerning (or that may lead to) an alternate
acquisition proposal. Prestige will not authorize anyone to take on such action
on its behalf, and we will notify Northwest of all inquiries and proposals that
are received. However, our board of directors may furnish information to, or
have discussions with, anyone that makes an unsolicited alternate acquisition
proposal before our shareholder meeting if the board of directors receives an
opinion from its financial advisor that the proposal may be superior to the
merger and the board concludes, based on the advice of independent legal
counsel, that such action is necessary for the board of directors to comply with
its fiduciary duty under applicable law. We agree to notify Northwest Bancorp of
the alternate offer and receive from such person a confidentiality agreement.
Our board of directors may also notify its shareholders of a proposed tender
offer if it is required by SEC rules governing tender offers, or our board may
withhold its recommendation to shareholders because there exists a superior
proposal, if the board receives advice of legal counsel that such action is
necessary for the board to meet its fiduciary duties. An alternative acquisition
proposal means a proposal for any merger or similar transaction, or any transfer
of 20% or more of our assets or a tender offer for 20% or more of our stock.
From the date of the merger agreement through the date of the merger,
Northwest Bancorp and Northwest Savings Bank each will use its best efforts to
preserve its business organizations and the goodwill of its customers and
employees, and neither will amend its charter or to be inconsistent with the
consummation of the merger, or take any action that would result in any of
making their representations and warranties untrue or adversely affect the
receipt of the required regulatory approvals or adversely affect the
consummation of the merger.
We will generally provide copies of minutes of our corporate meetings to
Northwest, unless it concerns matters under this agreement which the board deems
should be kept secret from Northwest (such as a discussion of a potential breach
by Northwest).
We also agree that from and after the date of the merger agreement:
- Company directors shall each agree to vote their shares for the merger;
- We may retain a proxy solicitor in connection with the solicitation of
shareholder approvals of the merger agreement;
- We will use our best efforts to extend contracts if requested by
Northwest;
- We will permit a representative of Northwest to attend any meeting of our
board of directors (other than confidential discussions);
- We will provide monthly reports on troubled loans;
- We will cooperate in conforming our accounting procedures to those of
Northwest to effect a smooth transition, but material accounting changes
will be made only after all conditions to the merger have been satisfied;
- Our board of directors agrees to recommend approval of the merger to the
Prestige Bancorp shareholders (subject to the exercise of their fiduciary
duty in the face of a superior offer, as discussed above); and
- We will take all steps necessary to have a meeting of shareholders for
the approval of the merger within three (3) months of the merger
agreement or as soon thereafter as is practicable.
After the date of the merger agreement, we agree, and Northwest Bancorp
agrees, that we will each:
- Cooperate with the other in preparing and filing all other documents
necessary to obtain any approvals, consents, waivers and authorizations
required to complete the merger;
- Cooperate in preparing and distributing any press release or other
communications related to the merger;
- Meet on a regular basis to discuss and plan for the conversion of our
data processing systems to those used by Northwest, but we would not be
obligated to take any such action prior to the merger and no conversion
shall take place prior to the merger without our consent. If we take, at
the request of Northwest any action to facilitate the conversion that
results in the imposition of any termination charges, Northwest will
indemnify us, and pay us the costs of reversing any conversion process,
if the merger is not
20
consummated for any reason other than a breach of the merger agreement by
Prestige, or a termination due to a superior offer;
- Maintain reasonable insurance levels, maintain appropriate books and
records, provide copies of our SEC filings to each other, and file
returns for, and pay, all taxes;
- Advise each other of any material adverse change or any event that would
be likely to cause a material breach of our representations or
agreements; and
- Keep our disclosure schedules updated.
We have given Northwest a good faith estimate of our fees and expenses for
counsel, accountants, investment bankers and other professionals in preparation
for the merger. And we will notify Northwest if we expect to exceed our budget.
We will request prompt monthly invoices from our professional advisors and will
notify Northwest Bancorp monthly of all of our out-of-pocket expenses. Prior to
the merger, we will give Northwest a statement for all professional services
through the merger.
Employee Benefit Plans/Severance
The agreement provides generally that Prestige's Compensation and Benefit
Plans may continue to be maintained separately, consolidated, or terminated by
Northwest subject to the following restrictions.
- If any plan is terminated or consolidated, employees of Prestige who
continue as employees of Northwest after the Merger will be eligible to
participate in any Northwest employee plan of similar character
immediately upon such consolidation or termination. Continuing employees
shall receive credit for service with Prestige for purposes of
determining eligibility and vesting (but not for purposes of accruing or
computing benefits) in any similar existing Northwest benefit plan,
except that continuing employees shall be treated as new employees under
the Northwest Employee Stock Ownership Plan and Northwest's annual
holiday bonus program. Continuing employees will participate in new
Northwest benefit plans, subject to any pre-existing conditions or
exclusions to which any such persons are subject under Prestige's
existing plans.
- The continuing employees' years of service with Prestige or Prestige Bank
shall also apply to satisfy any waiting periods, actively-at-work
requirements and evidence of insurability requirements.
- If Northwest terminates or consolidates any Prestige health, disability
or life insurance plan, Northwest shall as soon as practicable make
available to continuing employees and their dependents employer-provided
health, disability or life insurance coverage on the same basis as it
provides such coverage to employees of Northwest, without a lapse in
coverage.
- Terminated Prestige employees have COBRA coverage.
- Continuing Employees who become covered under a Northwest health plan
shall be required to satisfy the deductible limitations of the Northwest
health plan for the plan year in which the coverage commences, without
offset for deductibles satisfied under the Prestige health plan.
- Any pre-existing condition or exclusion in the Northwest health plans
shall not apply to continuing employees or their covered dependents who
had earlier satisfied such pre-existing condition or exclusion under a
Prestige health plan.
- Northwest may enroll Prestige's continuing employee's into Northwest's
401(k) plans, or, in the alternative, keep Prestige's existing plan
operating for continuing employees. If the old plan is continued,
Northwest will maintain a contribution level equal to the level of
contribution provided to the Northwest 401(k) plan.
- The Prestige Bank Employee Stock Ownership Plan (the "Prestige Bank
ESOP") will be terminated as of the Merger and all shares held by the
Prestige Bank ESOP will be converted into the right to receive the $13.75
per share payment, all outstanding Prestige ESOP indebtedness will be
repaid from the proceeds
21
of the Merger for the unallocated shares of Prestige common stock, and
the remaining balance shall be allocated to Prestige Bank employees, as
provided for in the Prestige Bank ESOP.
- Northwest agrees to provide severance benefits to Mr. Schoen, Ms. White,
Mr. Hein, and certain other employees as described under "Interests of
Certain Officers and Directors" on Page 25 of this Proxy Statement.
- If any former employee of Prestige is actually terminated by Northwest
within six (6) months of the Merger (other than the five (5) employees
receiving the benefits referred to above) he or she will receive two (2)
weeks salary for each year of service with a minimum of eight (8) weeks
of salary, and will receive health benefit coverage substantially similar
to the coverage received by such person immediately prior to termination
of employment for a period of six months following termination of
employment or until enrolled in another health plan, whichever is first.
- Each person on the Board of Directors of Prestige Bancorp or Prestige
Bank may be an advisory director for Northwest after the Merger for the
first year after the Merger. The chairman of the Prestige Board will
receive $1,000 per month, all former outside directors will each receive
$800 per month and all inside directors shall receive $500 per month.
After one year, fees paid to former directors of Prestige will be
modified to conform to Northwest advisory board fees.
- Prior to the merger, Prestige will be permitted to grant forty-three (43)
shares of restricted stock under its Restricted Stock Plan. Prior to the
merger, Prestige will terminate its Stock Option Plan and Restricted
Stock Option Plan, effective as of the Merger.
- At the Merger, each option issued under the Prestige Stock Option Plan,
regardless of whether such option is vested or exercisable, will be
converted into the right to receive from Northwest a cash payment equal
to $13.75 minus the option exercise price. There are 96,876 such options
outstanding. Total payment will equal approximately $170,240.
- Each share of restricted stock under the Prestige Restricted Stock Plan
will automatically vest and the holder will be entitled to $13.75 for
each share. There are a total of 11,268 shares of such restricted stock.
- The Merger will not affect the right of any continuing employee to use
his or her 2002 unused vacation accrued as of the Merger or to be paid
accrued but unused vacation pay if the employee is terminated during
2002.
APPROVALS NEEDED TO COMPLETE THE MERGER
In addition to the approval of the merger agreement by our stockholders,
completion of the merger and the transactions contemplated by the merger
agreement are subject to the prior approval of the Office of Thrift Supervision,
the Federal Deposit Insurance Corporation and the Commonwealth of Pennsylvania
Banking Department. The required applications for these approvals have been
filed and are currently pending. In reviewing applications under the Home Owners
Loan Act and the Bank Merger Act, the OTS and the FDIC must consider, among
other factors, the financial and managerial resources and future prospects of
the existing and resulting institutions and the convenience and needs of the
communities to be served. In addition, the OTS and the FDIC may not approve a
transaction if it will result in a monopoly or otherwise be anti-competitive.
Under the Community Reinvestment Act of 1977, the OTS and the FDIC must
take into account the record of performance of Prestige Bank and Northwest
Savings Bank in meeting the credit needs of the entire community, including low-
and moderate-income neighborhoods, served by each institution. As part of the
review process, the banking agencies frequently receive comments and protests
from community groups and others. Prestige Bank and Northwest Savings Bank both
received a "satisfactory" rating during their last Community Reinvestment Act
examinations.
The Pennsylvania Department of Banking also must approve the merger under
its regulations. The applications to the Pennsylvania Department of Banking will
be substantially the same as the applications to the OTS and the FDIC.
22
In addition, a period of up to 30 days must expire following approval by
the FDIC, within which period the United States Department of Justice may file
objections to the merger under the federal anti-trust laws. Although we believe
that the likelihood of such action by the Department of Justice is remote in
this merger, there can be no assurance that the Department of Justice will not
initiate such proceeding. If such proceeding is instituted or challenge is made,
we cannot ensure a favorable result.
We are not aware of any other regulatory approvals required for completion
of the merger, except as described above. Should any other approvals be
required, it is presently contemplated that such approvals would be sought.
There can be no assurance that any other approvals, if required, will be
obtained.
The approval of any application merely implies the satisfaction of
regulatory criteria for approval, which does not include review of the merger
from the standpoint of the adequacy of the consideration to be received by
Prestige stockholders. Furthermore, regulatory approvals do not constitute an
endorsement or recommendation of the merger.
There can be no assurances that the requisite regulatory approvals will be
received in a timely manner, in which event the consummation of the merger may
be delayed. If the merger is not consummated on or before October 1, 2002, the
merger agreement may be terminated by either Northwest or us.
It is a condition to the consummation of the merger that the regulatory
approvals be obtained without any conditions or requirements that are unduly
burdensome or would materially reduce the value of the merger transactions to
Northwest. No assurance can be provided that any such approvals will not contain
terms, conditions or requirements which fail to satisfy this condition of the
merger.
WAIVER AND AMENDMENT OF THE MERGER AGREEMENT; ALTERNATIVE STRUCTURE
By written approval of its Board of Directors, each party to the merger
agreement may extend the time for the performance of any of the obligations or
acts of the other party and may waive:
- any inaccuracies in the representations and warranties contained in the
merger agreement or any document delivered pursuant to the merger
agreement,
- compliance with any covenant, undertaking or agreement,
- to the extent permitted by law, satisfaction of any condition of the
merger agreement, or
- the performance by the other party of any of its obligations under the
merger agreement.
The merger agreement may be amended at any time by mutual agreement of the
parties as approved by their Boards; provided, however, that after our
stockholders have adopted the merger agreement no amendment can modify the form
or decrease the amount of the merger consideration or otherwise materially
adversely affect our stockholders without their approval.
Northwest may at any time modify the structure of the acquisition of
Prestige provided that:
- there are no adverse tax consequences to Prestige's shareholders;
- the change will not increase the liabilities and/or duties of Prestige;
- the $13.75 per share to be paid to our stockholders is not reduced and
the form of the consideration is not changed or delayed; and
- the change in the structure of the merger will not materially delay or
jeopardize receipt of the required regulatory approvals of the merger or
the tax opinion.
23
TERMINATION OF THE MERGER AGREEMENT
The merger agreement may be terminated in writing prior to the effective
time of the merger by the mutual consent of the Boards of Northwest and Prestige
or by the Boards of Prestige or Northwest if:
- the other party has materially breached any of its covenants or
agreements and warranties and the breach has not been cured within 30
days after the giving of written notice,
- any governmental entity of competent jurisdiction issues a nonappealable
order prohibiting the completion of the merger transactions or if any
application for regulatory approval is denied or withdrawn at the request
or recommendation of the regulatory authority, provided that the denial
or request or recommendation for withdrawal is not due to a breach of any
provision of the merger agreement by the party seeking to terminate,
- our stockholders fail to adopt the merger agreement,
- the merger is not consummated by October 1, 2002, provided that the party
seeking to terminate is not then in breach of any of its covenants,
agreements or representations and warranties,
- the representations and warranties of the other party are not materially
true and correct as of the date of the merger agreement, or are not
materially true and correct as of the effective date of the merger, or
- any other condition of the closing cannot be satisfied and is not waived.
The merger agreement may be terminated by the Board of Northwest if our
Board of Directors has received a superior proposal and fails to recommend, or
fails to continue its recommendation, that our stockholders adopt the merger
agreement or if our Board modifies, withdraws or changes in any manner adverse
to Northwest its recommendation for adoption of the merger agreement.
The merger agreement may be terminated by our Board if we have received an
offer that is superior to the Northwest offer and Northwest has not timely
matched the superior offer, and our Board has determined to accept the superior
offer and simultaneously with the termination of the merger agreement we enter
into an acquisition agreement with respect to the superior offer (subject to
shareholder approval).
In the event that the merger agreement is terminated, the merger agreement
will become void and have no effect, except for:
- provisions relating to confidential information,
- provisions relating to press releases,
- provisions regarding the payment of $1.0 million in liquidated damages
under certain specific circumstances.
A liquidated damages fee in the amount of $1.0 million is payable to
Northwest by Prestige following the occurrence of:
- either party's termination of this agreement as a result of our receipt
of a superior offer from a third party and our resulting acceptance
thereof or the resulting withdrawal of our recommendation of the
Northwest merger agreement, or
- our termination of the merger agreement for any reason prior to the date
of the meeting of stockholders to vote on the merger, unless Northwest
has materially breached any of its covenants, agreements or
representations and warranties and the breach is not timely cured, or
unless any government entity issues a nonappealable order prohibiting the
merger or regulatory approval is denied or withdrawn at the request of
the regulatory authority; provided that the denial or withdrawal is not
due to a breach of the merger agreement by us, or
- our entering into an agreement with a third party relating to an
alternative proposal to acquire us or Prestige Bank or the consummation
of such an agreement within one (1) year after (1) the termination of the
merger agreement by Northwest due to our material breach of any of our
covenants, agreements or
24
representations and warranties and the breach is not timely cured; (2)
the failure of our stockholders to adopt the merger agreement after the
receipt of a competing acquisition proposal; or (3) October 1, 2002 if a
meeting of our stockholders has not been held to vote on the adoption of
the merger agreement, or
- Northwest's termination of the agreement as a result of our willful
breach of any provision of the merger agreement.
A liquidated damages fee in the amount of $1.0 million is payable to
Prestige by Northwest if Northwest Bancorp willfully breaches the merger
agreement.
If demand is made to pay liquidated damages and such damages are timely
paid, then the paying party is not liable for any other damages under the merger
agreement.
INTERESTS OF DIRECTORS AND OFFICERS IN THE MERGER THAT ARE DIFFERENT FROM YOUR
INTERESTS
Some members of our management and Board of Directors may have interests in
the merger that are in addition to or different from the interests of our
stockholders. Our Board was aware of these interests and considered them in
approving the merger agreement.
PRESTIGE STOCK OPTIONS
As of April 16, 2002, directors and executive officers held options to
purchase in the aggregate 52,278 shares of Prestige common stock under our stock
option plan. Under the terms of the merger agreement, each director and
executive officer of Prestige will receive payment for their stock options as
described earlier in this proxy statement. The aggregate value of the payout for
these stock options will be approximately $84,180.
PRESTIGE RESTRICTED STOCK AWARDS
As of April 16, 2002, an aggregate of 8,496 unvested shares of our common
stock have been awarded to our directors and executive officers pursuant to the
Prestige management recognition plan. Under the terms of the Merger Agreement,
each director and executive officer of Prestige and Prestige Bank will receive
payment for their restricted shares as described earlier in this proxy
statement. The aggregate value of the payment for these unvested restricted
shares will be approximately $116,820.
PRESTIGE EMPLOYEE STOCK OWNERSHIP PLAN
As of April 16, 2002, our ESOP held 65,988 shares of our common stock which
had not yet been allocated to participants and which were pledged as collateral
for the remaining $574,280 loan to the ESOP. The ESOP will be terminated on or
about the completion of the merger, at which time the loan will be repaid with
the cash received by the ESOP in the merger. Based on the number of unallocated
shares and the current loan balance, the ESOP will have approximately $333,055
of cash after repayment of the ESOP loan, which cash will be allocated to the
participants in accordance with the terms of the ESOP and distributed to
participants in the ESOP following receipt of a favorable determination letter
from the Internal Revenue Service.
SEVERANCE ARRANGEMENTS
Mark Schoen, CEO and President of the Company and CEO of Prestige Bank,
Patricia White, Executive Vice President and Treasurer of the Company and
President and Treasurer of Prestige Bank, and James Hein, Chief Financial
Officer of the Company and Prestige Bank, will receive severance benefits. The
full amount of these payments, together with other benefits they will receive in
connection with the merger, will not render such payments excess parachute
payments under the Internal Revenue Code. The severance payments are
approximately $240,000 to Mr. Schoen, $175,000 to Ms. White and $170,000 to Mr.
Hein, excluding payments for stock options, restricted stock awards and excise
taxes. These payments are subject to the authority of the OTS and the FDIC to
object to such payments.
25
Two other management employees of Prestige Bank also have been offered
severance payments beyond the standard package from Northwest. Their aggregate
severance payments are estimated to total approximately $121,000.
Each person on the Board of Directors of the Company and Prestige Bank will
be offered a seat on an advisory board of directors for Northwest after the
Merger for the first year after the Merger. The chairman of the Prestige Board
will receive $1,000 per month for services as an advisory director, all former
outside directors of Prestige Bancorp will each receive $800 per month and all
other inside directors shall receive $500 per month. After one year, fees paid
to former directors of Prestige will be modified to conform to Northwest
advisory board fees.
PROTECTION OF DIRECTORS, OFFICERS AND EMPLOYEES AGAINST CLAIMS
In the merger agreement, Northwest has agreed to indemnify Prestige and our
subsidiaries' directors and officers after the completion of the merger to the
fullest extent permitted under law and our or our subsidiaries' articles of
incorporation or bylaws. Northwest also has agreed to maintain, for a period of
three years after the effective time of the merger, our and our subsidiaries'
current directors' and officers' liability insurance policies, provided that
Northwest may substitute insurance policies of at least the same coverage and
amount containing terms and conditions which are substantially no less
advantageous or containing terms and conditions consistent with Northwest's
current insurance policies, or Northwest may purchase single limit tail coverage
for the three-year period.
YOU DO NOT HAVE DISSENTERS' RIGHTS OF APPRAISAL
Under Pennsylvania law, if you do not wish to accept the cash payment
provided for in the merger agreement, you do not have the right to dissent from
the merger and to have an appraisal of the fair value of your shares conducted.
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER TO YOU
The exchange of our common stock for cash pursuant to the terms of the
merger agreement will be a taxable transaction for federal income tax purposes
under the Internal Revenue Code, and may also be a taxable transaction under
state, local and other tax laws. A stockholder of Prestige will recognize gain
or loss equal to the difference between the amount of cash received by the
stockholder pursuant to the merger and the tax basis in the Prestige common
stock exchanged by such stockholder pursuant to the merger. Gain or loss must be
determined separately for each block of Prestige common stock surrendered
pursuant to the merger. For purposes of federal tax law, a block consists of
shares of Prestige common stock acquired by the stockholder at the same time and
price.
Gain or loss recognized by the stockholder exchanging his or her Prestige
common stock pursuant to the merger will be capital gain or loss if such
Prestige common stock is a capital asset in the hands of the stockholder. If the
Prestige common stock has been held for more than one year, the gain or loss
will be long-term. Capital gains recognized by an exchanging individual
stockholder generally will be subject to federal income tax at capital gain
rates applicable to the stockholder (up to a maximum of 38.6% for short-term
capital gains and 20% for long-term capital gains), and capital gains recognized
by an exchanging corporate stockholder generally will be subject to federal
income tax which is generally at a rate of 35%.
Neither Northwest nor Prestige has requested or will request a ruling from
the Internal Revenue Service as to any of the tax effects to Prestige's
stockholders of the transactions discussed in this proxy statement, and no
opinion of counsel has been or will be rendered to Prestige's stockholders with
respect to any of the tax effects of the merger to stockholders.
The federal income tax discussion set forth above is based upon current law
and is intended for general information only. You are urged to consult your tax
advisor concerning the specific tax consequences of the merger to you, including
the applicability and effect of state, local or other tax laws and of any
proposed changes in those tax laws and the Internal Revenue Code.
26
ACCOUNTING TREATMENT OF THE MERGER
The merger will be accounted for under the purchase method of accounting.
Under this method of accounting, Northwest and Prestige will be treated as one
company as of the date of the merger, and Northwest will record the fair market
value of Prestige's assets less liabilities on its consolidated financial
statements. Acquisition costs in excess of the fair values of the net assets
acquired, if any, will be recorded as an intangible asset. The reported
consolidated income of Northwest will include our operations after the
completion of the merger.
WHO PAYS FOR WHAT
Except as otherwise described above concerning the payment of liquidated
damages under certain circumstances, all out-of-pocket costs and expenses
incurred in connection with the merger (including, but not limited to, counsel
fees) will be paid by the party incurring such costs and expenses.
CERTAIN RELATED AGREEMENTS
PLAN OF LIQUIDATION OR MERGER
In connection with the merger, Prestige Bancorp and Northwest Bancorp will
enter into a plan of liquidation or merger under which Prestige Bancorp
immediately after the completion of the merger will be liquidated into, or
merged into, Northwest Bancorp.
BANK MERGER AGREEMENT
In connection with the merger, Prestige Bank and Northwest Savings Bank
will enter into a bank merger agreement under which Prestige Bank and Northwest
Savings Bank will merge, with Northwest Savings Bank being the surviving bank.
The bank merger agreement provides that it may be terminated by mutual consent
of the parties at any time and will be terminated automatically if the merger
agreement is terminated.
VOTING AGREEMENT
As an inducement for Northwest and Northwest Bank to enter into the merger
agreement, the directors of Prestige entered into a voting agreement with
Northwest and Northwest Bank. Pursuant to the voting agreement, our directors
agreed to vote all of their shares of Prestige common stock owned, controlled or
for which they possess voting power in favor of the adoption of the merger
agreement.
PROPOSAL II--ELECTION OF DIRECTORS
The Company's Bylaws require that Directors be divided into three classes,
as nearly equal in number as possible, each class to serve for a three-year
period, with approximately one-third of the Directors elected each year. The
Board of Directors currently consists of seven members. Two Directors will be
elected at this Meeting to serve for three-year terms or until their successors
are elected and qualified. Of course, if the merger with Northwest is completed,
the terms of all directors will be terminated at the completion of the merger,
except for their continuance as advisory board members as described under
"Proposal I", above.
INFORMATION WITH RESPECT TO NOMINEES FOR DIRECTORS, CONTINUING DIRECTORS AND
EXECUTIVE OFFICERS
Martin W. Dowling and Mark R. Schoen have been nominated by the Board of
Directors of the Company to serve as Directors for three-year terms commencing
on the date of the Meeting. Mr. Schoen and Mr. Dowling are currently members of
the Board of Directors.
The Board of Directors will consider nominees for Directors from
stockholders, and such nominees, if properly presented to the Company in
accordance with the terms of the Company's Articles of Incorporation, will be
placed on the ballot at the annual meeting. A stockholder of the Company may
submit a nomination for the Board of Directors no later than the close of
business on the sixtieth (60th) day preceding the anniversary date of
27
the immediately preceding Annual Meeting of the stockholders of the Company. Any
such nomination must conform to the requirements of the Articles of
Incorporation of the Company. However, the Board of Directors determines whether
or not to recommend any stockholder nominees. No such nominations were received.
It is intended that the persons named in the proxies solicited by the Board of
Directors will vote for the election of the named nominees endorsed by the Board
of Directors of the Company. Each of the nominees of the Board of Directors has
consented to serve as a Director if elected. If the nominees are unable to
serve, the shares represented by all valid proxies will be voted for the
election of such substitute as the Board of Directors may recommend, or the size
of the Board of Directors may be reduced to eliminate the vacancy. At this time,
the Board of Directors knows of no reason why the nominees might be unavailable
to serve. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF
MR. SCHOEN AND MR. DOWLING.
The following tables set forth the nominees and the Directors continuing in
office, their respective names, ages, the year each became a Director of the
Company (or the Savings Bank, in the event such individual served as a Director
of the Savings Bank prior to the Conversion), the expiration date of their
current term as a Director, and the number and percentage of shares of the
common stock beneficially owned. The second table also sets forth the number of
shares beneficially owned and aggregate percentage of beneficial ownership by
the Directors and Executive Officers as a group.
BOARD OF DIRECTORS NOMINEES FOR TERM TO EXPIRE IN 2005
AND BENEFICIAL OWNERSHIP OF COMMON STOCK
<Table>
<Caption>
PERCENT OF
CURRENT SHARES OF SHARES OF
TERM COMMON STOCK COMMON
DIRECTOR TO BENEFICIALLY STOCK
NAME AGE(1) SINCE(2) EXPIRE OWNED(3) OUTSTANDING
---- ------ -------- ------- ------------ -----------
Martin W. Dowling............................ 75 1992 2002 10,593(4) *
Mark R. Schoen(5)............................ 48 1994 2002 9,247(6) *
</Table>
INFORMATION ON DIRECTORS CONTINUING IN OFFICE AND EXECUTIVE OFFICERS AND
BENEFICIAL OWNERSHIP OF COMMON STOCK
<Table>
<Caption>
PERCENT OF
CURRENT SHARES OF SHARES OF
TERM COMMON STOCK COMMON
DIRECTOR TO BENEFICIALLY STOCK
NAME AGE(1) SINCE(2) EXPIRE OWNED(3) OUTSTANDING
---- ------ -------- ------- ------------ -----------
Charles P. McCullough........................ 47 1995 2003 10,336(7) *
James A. Nania............................... 54 2001 2003 649(8) *
James M. Hein, CFO........................... 38 N/A N/A 29,499(9) 2.76%
Patricia A. White............................ 56 1989 2004 47,852(10) 4.43%
Michael R. Macosko........................... 50 1992 2004 20,144(11) 1.90%
Morris Propp................................. 57 2001 2004 100,985(12) 9.53%
All Directors, Nominees and Executive
Officers As a Group (8 Persons)............ -- -- -- 229,305(13) 20.91%
</Table>
- ---------------
* Does not exceed 1% of the Company's voting securities.
(1) As of April 1, 2002.
(2) Prior to the Conversion on June 27, 1996, the Savings Bank was a federal
chartered mutual savings bank. The Company is a holding company that was
created as part of the Conversion. As part of the Conversion, the
then-directors of the Savings Bank were selected as Directors of the
Company.
(3) Beneficial ownership as of April 1, 2002.
28
(4) This figure also includes 589 shares of common stock awarded to Mr.
Dowling, but not yet vested, currently held by the Management Recognition
and Retention Plan and Trust over which shares Mr. Dowling possesses the
power to direct the exercise of voting rights. This figure does not include
81 shares of common stock of the Company covered by vested options to
purchase common stock of the Company held by Mr. Dowling because the
exercise price of such options was greater than the market price on April
1, 2002. This figure does include 1,580 shares which may be acquired upon
the exercise of vested stock options whose exercise price was below the
market price on April 1, 2002.
(5) Mark R. Schoen and Patricia A. White are also executive officers of the
Company. Mr. Schoen is Chief Executive Officer and President of the Company
and Chief Executive Officer of the Savings Bank. Mrs. White is Executive
Vice-President and Treasurer of the Company and President and Treasurer of
the Savings Bank.
(6) This figure includes 702 shares of common stock held by Mr. Schoen or Mrs.
Schoen as custodian for minor children. This figure does not include shares
of common stock of the Company owned by the ESOP for which Mr. Schoen acts
as a co-trustee. This figure does not include shares of common stock of the
Company held in the Management Recognition and Retention Plan and Trust,
for which Mr. Schoen acts as co-trustee, which are not allocated to Mr.
Schoen. This figure also includes 534 shares of common stock awarded to Mr.
Schoen, but not yet vested, currently held by the Management Recognition
and Retention Plan and Trust over which shares Mr. Schoen possesses the
power to direct the exercise of voting rights. This figure does not include
81 shares of common stock of the Company covered by vested options to
purchase common stock of the Company held by Mr. Schoen because the
exercise price of such options was greater than the market price on April
1, 2002. This figure does include 1,252 shares which may be acquired upon
the exercise of vested stock options whose exercise price is below such
market price.
(7) This figure includes 1,963 shares of common stock held individually by Mrs.
McCullough through an IRA account. This figure also includes 507 shares of
common stock awarded to Mr. McCullough, but not yet vested, currently held
by the Management Recognition and Retention Plan and Trust over which
shares Mr. McCullough possesses the power to direct the exercise of voting
rights. This figure does not include 81 shares of common stock of the
Company covered by vested options to purchase common stock of the Company
held by Mr. McCullough because the exercise price of such options was
greater than the market price on April 1, 2002. This figure does include
1,257 shares which may be acquired upon the exercise of vested stock
options whose exercise price was below such market price.
(8) On February 21, 2001, the Board of Directors appointed Mr. Nania to serve
the remainder of Mr. Hein's unexpired term until 2003. The 649 shares
common stock awarded to Mr. Nania, but not vested, are currently held by
the Management Recognition and Retention Plan and Trust over which shares
he possesses the power to direct the exercise of voting rights.
(9) This figure also includes 1,756 shares of common stock awarded to Mr. Hein,
but not yet vested currently held by the Management Recognition and
Retention Plan and Trust over which shares Mr. Hein possesses the power to
direct the exercise of voting rights. This figure also includes 2,668
shares of common stock allocated to the account of Mr. Hein established
under the terms of the ESOP over which shares Mr. Hein possesses the power
to direct the exercise of voting rights. This figure does not include
shares of common stock of the Company owned by the ESOP for which Mr. Hein
acts as co-trustee. This figure does not include shares of common stock of
the Company held in the Management Recognition and Retention Plan and
Trust, for which Mr. Hein acts as co-trustee, which are not allocated to
Mr. Hein. This includes 9,822 shares of common stock of the Company covered
by vested options to purchase common stock of the Company held by Mr. Hein.
(10) This figure also includes 2,026 shares of common stock awarded to Mrs.
White, but not yet vested currently held by the Management Recognition and
Retention Plan and Trust over which shares Mrs. White possesses the power
to direct the exercise of voting rights. This figure also includes 2,805
shares of common stock allocated to the account of Mrs. White established
under the terms of the ESOP over which shares Mrs. White possesses the
power to direct the exercise of voting rights. This figure includes 21,436
shares of common stock of the Company covered by vested options to purchase
common stock of the Company held by Mrs. White.
29
(11) This figure includes 616 shares of common stock awarded to Mr. Macosko, but
not yet vested, currently held by the Management Recognition and Retention
Plan and Trust over which shares Mr. Macosko possesses the power to direct
the exercise of voting rights. This figure does not include 81 shares of
common stock of the Company covered by vested options to purchase common
stock of the Company held by Mr. Macosko because the exercise price of such
options was greater than the market price on April 1, 2002. This figure
does include 1,689 shares which may be acquired upon the exercise of vested
stock options whose exercise price was below such market price.
(12) This figure is based on a Schedule 13D collectively filed on May 31, 2000
on behalf of Morris Propp and Melvin Heller. This figure includes 521
shares common stock awarded to Mr. Propp, but not vested, which are
currently held by the Management Recognition and Retention Plan and Trust
over which shares he possesses the power to direct the exercise of voting
rights.
(13) This figure includes additional shares of common stock described in the
above footnotes with respect to each Director and Executive Officer. This
figure also includes 2,665 shares of common stock held by Directors in a
fiduciary capacity (other than related to the ESOP or the Management
Retention and Recognition Plan and Trust) for another person or held by or
for the benefit of family members of executive officers or directors. This
figure includes unvested awards of 8,496 shares of common stock which have
been granted to directors and executive officers of the Company and the
Savings Bank under the Management Recognition and Retention Plan and Trust
over which shares the named individuals possess the power to direct the
exercise of voting rights and which such shares have been acquired by and
held in the Management Recognition and Retention Plan and Trust. This
figure also includes 5,473 shares of common stock owned by the ESOP which
are allocated to executive officers over which such executive officers have
the power to direct the exercise of voting rights. This figure includes
37,036 exercisable stock option shares. Vested options of this group to
purchase an additional 324 shares of common stock were outstanding on April
1, 2002, but such shares were not included in this figure because the
exercise price of such options was greater than the market price on April
1, 2002.
DIRECTOR AND EXECUTIVE OFFICER BIOGRAPHICAL INFORMATION
Set forth below are the directors and executive officers of the Company and
the Savings Bank together with information concerning the principal occupations
during the last five years for such directors and executive officers.
GEORGE BRIKIS was elected a Director of the Savings Bank in 2001 for a
three-year term. Since 2000, he has been President of Brikis Financial Services,
which specializes in corporate finance and commercial banking. From 1998 to
2000, Mr. Brikis served as CFO of American Metals and Coal International in
Greenwich, CT. Mr. Brikis also has over 17 years corporate banking experience
where he served as Executive Vice President at PNC Bank.
MARTIN W. DOWLING has been a Director of the Company since its formation in
1996 and a Director of the Savings Bank since 1992. Mr. Dowling is a director of
Jefferson Hills Real Estate, Inc. and president of Dowling Properties, Inc. He
is also president of Town Hall Estates, Inc., a real estate development
business. Mr. Dowling also serves as an advisory committee member of Jefferson
Hospital and other healthcare-related organizations.
JAMES M. HEIN was elected a Director of the Company by the Shareholders on
April 26, 2000. On January 19, 2000, Mr. Hein was elected as a Director of the
Savings Bank and appointed Chief Financial Officer of the Company. Mr. Hein is
the Chief Financial Officer of the Savings Bank and has performed as such since
January 1996. Prior to that time, Mr. Hein acted as the Controller of the
Savings Bank. In connection with the formation of the Company and the Conversion
of the Savings Bank, Mr. Hein was appointed the Controller of the Company. On
February 21, 2001, Mr. Hein resigned as a Director of the Company, and James A.
Nania was elected by the remaining Directors of the Company to serve the
unexpired term of Mr. Hein.
MICHAEL R. MACOSKO has been a Director of the Company since its formation
in 1996 and a Director of the Savings Bank since 1992. Mr. Macosko is a
pharmacist with Eckerd Drug, Inc. and has performed as such since 1995 with
Eckerd Drug, Inc. and its predecessor Thrift Drug, Inc.
30
CHARLES P. MCCULLOUGH has been a Director of the Company since its
formation in 1996 and a Director of the Savings Bank since 1995. Mr. McCullough
is an attorney and a shareholder with Tucker Arensberg, P.C., and has performed
as an attorney at Tucker Arensberg, P.C. since November of 1995.
JOHN MEEGAN was elected a Director of the Savings Bank in 2001 for a
three-year term. He has been employed by Parker/Hunter, Inc. since 1993 and
serves as Chief Financial Officer. Mr. Meegan is also a CPA and has over 20
years experience in finance and accounting.
JAMES A. NANIA was elected a Director of the Company, effective March 1,
2001, to serve the remainder of Mr. Hein's term which expires in 2003. Mr. Nania
was elected a Director of the Savings Bank on January 17, 2001 for a three-year
term. He became Senior Vice President and Chief Financial Officer with Hallmark
Health System in Melrose, MA in December 2001. Previously, he was employed by
the South Hills Health System since 1986 and has performed as the Executive Vice
President and Chief Financial Officer of South Hills Health System.
MORRIS PROPP was elected a Director of the Company at the 2001 Annual
Shareholders Meeting for a three-year term. He is a private investor.
MARK R. SCHOEN has been a Director of the Company since its formation in
1996 and a Director of the Savings Bank since 1994. Mr. Schoen was named
Chairman of the Company on November 15, 2000, and CEO of the Company on November
30, 2000 and President of the Company on February 21, 2001. He was elected
Chairman of the Savings Bank on September 20, 2000 and the CEO of the Savings
Bank on October 18, 2000. He commenced employment as the Savings Bank's CEO on
December 29, 2000. Previously, Mr. Schoen was Projects Executive at
e-Profile/Sanchez Corp., a provider of integrated, end-to-end operations and
technology solutions to enable top-tier financial institutions to offer
financial products and services. Mr. Schoen was also a senior manager of
investment products and technology for SEI Investments, a company servicing the
mutual fund industry, in 1999 and 2000. In 1998, Mr. Schoen was senior manager
of Strategic Business Development with Pilgrim Baxter & Associates. He had been
employed by Federated Investors from 1992-1998 as Director of Business
Development for Financial Services and as AVP of Business and Technical Product
Administration. At Mellon Bank from 1991-1992, Mr. Schoen was AVP of Product and
Technical Services. He was also employed by NCR Corporation from 1979-1991.
PATRICIA A. WHITE has been a Director of the Company since its formation in
1996 and a Director of the Savings Bank since 1989. On January 19, 2000, Mrs.
White was elected Executive Vice President and Treasurer of the Company, and
President and Treasurer of the Savings Bank. Prior to that time, she held the
positions with the Savings Bank of Executive Vice President since 1989 and
Corporate Secretary since 1986. Her main duties include oversight of the
marketing, compliance, security and residential and consumer loan origination
areas of the Savings Bank. In connection with the formation of the Company and
the Conversion, Mrs. White was also appointed Corporate Secretary of the
Company. Her appointment as the Corporate Secretary of the Company and the
Savings Bank concluded on January 18, 2000.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS OF THE COMPANY
The Board of Directors of the Company meets on a monthly basis. Special
meetings of the Board of Directors may be called by the Chairman of the Board or
a majority of the Directors of the Company. During the fiscal year ending
December 31, 2001, the Board of Directors met 13 times. No Director of the
Company attended fewer than 85% of the total number of board meetings or
committee meetings during this period. The Board of Directors of the Company has
established the following committees:
Compensation Committee. The Compensation Committee consists of three
external Directors of the Company. For the fiscal year 2001, Michael R. Macosko
was the chairman of the Compensation Committee. The Compensation Committee sets
the level of compensation of the executive officers of the Company and the
Savings Bank (other than compensation in the form of stock option and stock
compensation awards). The Compensation Committee met twice in 2001.
Nominating Committee. The Nominating Committee did not meet in 2002. On
February 20, 2002, the Prestige Board of Directors nominated Mr. Dowling and
Schoen to serve as Directors for three-year terms
31
commending on the date of the Meeting. The Company's Bylaws provides for the
possibility of shareholder nominations for directorships. Such nominations must
be made by timely written notice to the Secretary of the Company and contain all
information relating to the nominee which is required to be disclosed by the
Company's Bylaws and by the Securities and Exchange Act of 1934. For additional
information, see "Information With Respect to Nominees for Directors, Continuing
Directors and Executive Officers" under "PROPOSAL II - ELECTION OF DIRECTORS."
Audit Committee. The Audit Committee consists of Messrs. Nania (Chairman),
Dowling and Macosko. The Committee recommends engagement of the external
auditors of the Company and the Savings Bank and reviews the audit reports of
the external auditors and of the internal auditor of the Savings Bank and the
Company. Additionally, the Committee reviews the Company's financial statements,
internal controls, processes and policies. This Committee functions for both the
Company and the Savings Bank. In accordance with new National Association of
Securities Dealers standards on audit committee independence, all members of the
Company's Audit Committee are independent. In addition, the Audit Committee
Charter was adopted in May 2000 and was attached as an appendix to last year's
proxy statement. The Audit Committee met five times during 2001.
Report of the Audit Committee. The Audit Committee has reviewed and
discussed the audited financial statements with management. The Audit Committee
has discussed with the independent auditors the matters required to be discussed
by Statement on Auditing Standards No. 61 "Communication with Audit Committees,"
as amended. The Audit Committee has received the written disclosures and the
letter from the independent auditors required by Independence Standards Board
Standard No. 1, "Independence Discussions with Audit Committees" and has
discussed with the independent auditors their independence.
The Audit Committee received the following information concerning the fees
of the independent accountants for the year ended December 31, 2001, and have
considered whether the provisions of these services is compatible with
maintaining the independence of the independent auditors:
<Table>
- - Audit Fees (including review of 10-Qs)............ $104,700
- - Financial Information Systems Design and
Implementation Fees............................... 0
- - All other Fees.................................... $ 6,100
</Table>
Based on the foregoing, the Audit Committee recommended to the Board of
Directors that the consolidated audited financial statements be included in the
Company's Annual Report on Form 10-K year for the fiscal year ended December 31,
2001.
James A. Nania, Chairman
Martin W. Dowling
Michael R. Macosko
DIRECTORS' COMPENSATION
There is no separate Board of Directors' fee for the meetings of the Board
of Directors of the Company. Currently, external Directors of the Savings Bank
are paid $800 per meeting and internal Directors of the Savings Bank are paid
$500 per meeting. External Directors of the Company or the Savings Bank also
receive $250 for each committee meeting attended for the Company or the Savings
Bank. In addition, the Savings Bank and the Company each pays its Chairman of
the Board a chairman's fee of $500 per month. The aggregate amount of fees paid
to the Directors of the Company and the Savings Bank for the year ended December
31, 2001 for all board and committee meetings of the Company and the Savings
Bank was $99,600.
The Board of Directors of the Company adopted a Stock Option Plan and a
Management Recognition and Retention Plan for the fiscal years ending December
31, 1997 and thereafter. Under these plans the non-employee directors are
awarded stock options and stock on a formula basis. See "PROPOSAL II -ELECTION
OF DIRECTORS -- Benefits -- Stock Option Plan and Management Recognition and
Retention Plan."
32
EXECUTIVE COMPENSATION
The following table sets forth a summary of the compensation paid by the
Company and the Savings Bank for services rendered in all capacities during the
year ended December 31, 2001 to the Chief Executive Officer of the Company and
Savings Bank and President of the Company. No other executive officer of the
Company or the Savings Bank received an annual salary plus bonuses during the
fiscal year in an amount exceeding $100,000.
SUMMARY COMPENSATION TABLE
<Table>
<Caption>
LONG TERM
COMPENSATION
AWARDS(1)
-----------------------
SECURITIES
OTHER RESTRICTED UNDERLYING
ANNUAL STOCK OPTIONS/ ALL OTHER
NAME AND PRINCIPAL POSITION YEAR(2) SALARY BONUS COMPENSATION AWARD(S) SARS(#)(3) COMPENSATION
--------------------------- ------- -------- ----- ------------ ---------- ---------- ------------
Mark R. Schoen................ 2001 $120,230 $-- 21,000(4) $-- --(5) $17,500(6)
Chairman of the Board and 2000 $ 0(7) $-- $-- --(5) $25,282(8)
Chief Executive Officer of the
Company and Savings Bank and
President of the Company
</Table>
- ---------------
(1) The Company adopted a Stock Option Plan and a Management Recognition and
Retention Plan at the 1997 Annual Meeting.
(2) All compensation was paid by the Savings Bank. In 2001 and 2000, the Company
reimbursed the Savings Bank for services rendered by Bank employees on
behalf of the Company under a reimbursement agreement.
(3) No stock appreciation rights ("SARs") were granted. This column is the then
current number of shares of common stock which can be purchased upon the
exercise of vested stock options.
(4) Includes $3,000 in travel expenses and $18,000 in tuition reimbursement for
attending an executive masters program at the University of Pennsylvania.
(5) Mr. Schoen has received no stock appreciation rights or options since his
appointment as Chairman of the Board, Chief Executive Officer and President
of the Company and Chairman of the Board and Chief Executive Officer of the
Savings Bank. He does hold options to purchase 1,981 shares of common stock
of the Company (1,333 of which are vested) which were awarded to him under
the formula method described below prior to such appointment for service as
a Director. See "Benefits -- Stock Option Plan."
(6) Mr. Schoen received $5,500 from a monthly $500 inside board member fee for
the Savings Bank, $5,500 from a monthly fee as Savings Bank chairman, and
$3,500 from a monthly $500 fee for Company chairman. Mr. Schoen waived
further payment as Company chairman in July of 2001 and waived his future
Bank chairman and director fees in November. Mr. Schoen received $3,000 from
a $250 monthly travel allowance in 2001.
(7) Mr. Schoen's employment commenced on December 29, 2000, but on such date the
last pay period for the Savings Bank and the Company for fiscal year 2000
had closed. The first pay drawn by Mr. Schoen was received on January 12,
2001.
(8) Mr. Schoen received board meeting fees and committee meeting fees of $7,550
prior to the time he was appointed Chairman of the Board of the Savings Bank
and board meeting fees and committee meeting fees of $7,000 after he was
appointed Chairman of the Board of the Savings Bank. In addition Mr. Schoen
received aggregate fees as Chairman of the Boards of the Company and of the
Savings Bank for the months of September, October, November and December of
2000 of $3,000. Mr. Schoen received reimbursement for travel and moving
expenses during calendar year 2000 in the amount of $7,732.
Option/SAR Grants
There were no stock options granted to executive officers in 2001. In
addition, no shares were acquired as the result of exercising vested options by
either executive officers or directors in 2001.
33
AGGREGATED OPTION/SAR EXERCISED IN 2001/DECEMBER 31, 2001 OPTION/SAR VALUES
<Table>
<Caption>
NUMBER OF VALUE OF
SECURITIES UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FY-END(#) FY-END
SHARES --------------- ---------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED UNEXERCISABLE UNEXERCISABLE
---- ----------- -------- --------------- ---------------
Mark R. Schoen(1)........................ -- -- 1,333/648 $11/46
Chairman of the Board and Chief Executive
Officer of the Company and the Savings
Bank and President of the Company
</Table>
- ---------------
(1) Mr. Schoen holds options to purchase 1,981 shares of common stock of the
Company (1,333 of which are vested) which were awarded to him under the
formula method described below prior to such appointment for service as a
Director prior to his executive appointment. See "Benefits -- Stock Option
Plan."
EMPLOYMENT AGREEMENT
In conjunction with the retention of Mr. Schoen as Chief Executive Officer
of the company and the savings bank and president of the company, the employers
have each entered into two-year employment agreements with Mr. Schoen which end,
December 28, 2002. The terms of the agreement provide for the compensation set
forth in the compensation table and as otherwise described below.
Mr. Schoen's employment agreements are terminable with or without cause by
the Employers. Mr. Schoen shall have no right to compensation or other benefits
pursuant to the employment agreements for any period after voluntary termination
or termination by the Employers for cause, disability, retirement or death;
provided, however, that for the remaining term of the employment agreements, Mr.
Schoen may be entitled to supplemental disability benefits upon termination of
employment due to disability. If Mr. Schoen's employment agreements are
terminated by the Employers without cause, or for other than the disability,
retirement or death of Mr. Schoen, Mr. Schoen, or in the event of his death, his
beneficiary or estate, will be entitled to the continuation of the base salary
and certain fringe benefits that Mr. Schoen was receiving at the time of such
termination for the remaining term of the agreements. In the event Mr. Schoen's
employment is terminated by one of the Employers but remains employed by the
other Employer, Mr. Schoen shall have no claim against the former Employer. Mr.
Shoen's employment agreements have been amended to provide that in the event of
a change in control of the company, he shall receive an amount not to exceed
twenty-four months base salary (i.e. no more than $240,000) as severance.
Each of Mr. Schoen's employment agreements provides that in the event that
any of the payments to be made thereunder or otherwise upon termination of
employment are deemed to constitute "excess parachute payments" within the
meaning of Section 280G of the Internal Revenue Code, then such payments and
benefits received thereunder shall be reduced to then extent needed to avoid
being designated as excess parachute payments. Excess parachute payments
generally are payments in excess of three times the average annual compensation
from the employer during the most recent five taxable years. Under the terms of
the Supervisory Agreement between Prestige Bank and the OTS, any "parachute
payment" is subject to approval by the OTS and Federal Deposit Insurance
Corporation. Any severance payments due to Mr. Schoen under the merger agreement
are subject to the same limitation.
Under the terms of the merger agreement with Northwest, described under
Proposal I hereof, if the merger takes place Mr. Schoen has agreed to release
the Company and Northwest from any and all obligations under his employment
agreement in exchange for the $240,000 severance payment described under
Proposal I. Management has been advised that such payments would not be
considered to be excess parachute payments.
34
BENEFITS
DEFINED BENEFIT PLAN AND TRUST
On May 16, 2001, the Board of Directors' of the Savings Bank ratified the
action of one of its committees that terminated its noncontributory defined
benefit pension plan and the curtailment of pension benefits to all eligible
employees. Termination notices were given to employees April 30, 2001 and
benefit accruals were frozen as of May 15, 2001. During the quarter ended June
30, 2001, the Bank recognized a pre-tax curtailment gain of approximately
$479,000. A settlement loss of approximately $334,000 was recorded during the
quarter ended December 31, 2001. Settlement distributions to participants
totaled approximately $1,025,000 while the Bank had a reversion of cash from the
pension plan settlement of approximately $246,000. From this reversion of
$246,000, the Bank paid excise taxes of approximately $49,000. Mr. Schoen did
not receive any distribution from the plan termination.
STOCK OPTION PLAN
The shareholders of the Company, at the recommendation of the Board of
Directors, adopted a 1997 Stock Option Plan for the Company and its subsidiaries
at the Annual Meeting of the Company held on April 23, 1997. The Stock Option
Plan provides for the grant of incentive stock options and non-incentive or
compensatory stock options; the incentive stock options and the non-incentive
stock options are referred to herein collectively as "stock options"). The
Company may award incentive stock options and/or non-incentive stock options to
acquire shares of common stock from time to time to officers and key employees
(excluding non-employee directors) of, and other persons providing services to,
the Company, the Savings Bank and certain affiliates participating in the Stock
Option Plan (collectively the "Employees"). Incentive stock options may only be
granted to Employees. Non-employee directors of the Company or the Savings Bank
participating in the Stock Option Plan are not eligible to receive discretionary
incentive stock options, but may only receive non-incentive stock options
awarded pursuant to a formula system. No recipient of a stock option shall have
any rights of a stockholder of the Company, including, without limitation,
voting and dividend rights, until shares of common stock are issued to him and
he becomes the record owner of such shares.
The Stock Option Plan is administered and interpreted by the Board of
Directors of the Company. The Board of Directors of the Company has the option
to appoint an advisory committee of two or more non-employee directors of the
Company to make recommendations concerning the level of the discretionary stock
options and other administrative issues that arise during the operation of the
Stock Option Plan. Under the Stock Option Plan, the Board of Directors of the
Company determines which Employees will be granted options, whether such options
will be incentive stock options or non-incentive stock options, the number of
shares subject to each option, the exercise price (which must be at least fair
market value at the time of the grant of the option), and whether such options
may be exercised by delivering other shares of common stock and when such
options become exercisable. Each non-incentive stock option and incentive stock
option will be evidenced by a stock option agreement. Incentive stock options
are further restricted by the terms of the Internal Revenue Code.
Under the Stock Option Plan, non-employee directors of the Company and the
Savings Bank participating in the Stock Option Plan have received and will
receive non-incentive stock options on a formula basis. Subject to availability
of shares of common stock allocated to formula awards, (i) each new non-employee
director of the Company or the Savings Bank participating in the Stock Option
Plan, will receive non-incentive stock options for 1,000 shares of common stock
upon election to the Board of Directors of the Company or the Savings Bank, and
(ii) following the annual meeting of the stockholders, each non-employee
director of the Company or the Savings Bank participating in the Stock Option
Plan will receive non-incentive stock options for 100 shares of common stock in
consideration for serving as a director, the chairperson of the Board of
Directors of the Company shall be awarded additional non-incentive stock options
for 100 shares of common stock. Any person serving in the capacity of a
non-employee director for more than one corporation participating in the Stock
Option Plan (i.e. a person serving as a non-employee director of the Company and
the Savings Bank) will be limited to receiving formula awards under the Stock
Option Plan with respect to the one directorship that provides the formula award
offering the greatest number of shares of common stock, and will be prohibited
from receiving formula awards with respect to any other directorship.
35
The per share exercise price of options will be at least equal to the fair
market value of a share of common stock on the date the option is granted. All
options become vested and exercisable, subject to certain exceptions, at a rate
and subject to such limitations as may be determined by the Board at the time of
the grant, which vesting rate will be no greater than 20% per year beginning one
year from the date of the grant of the stock option. Under certain
circumstances, the stock options may be revoked for misconduct.
A total of 130,239 (adjusted for stock dividends) shares of common stock
was reserved for issuance pursuant to the Stock Option Plan, which was 10% of
the common stock issued in connection with the 1996 conversion of the Savings
Bank from a mutual form to a stock form. A total of 18,233 (adjusted for stock
dividends) shares of common stock were reserved for purposes of making
non-incentive stock option formula awards to non-employee directors under the
Stock Option Plan, and all formula awards are subject to the availability of
shares of common stock from such reserves, including forfeitures. As of December
31, 2001, the Company has granted unexercised and outstanding stock options to
directors, officers and employees of the Company and the Savings Bank to
purchase an aggregate of 132,338 (adjusted for stock dividends) shares of common
stock at exercise prices ranging from $7.81 per share to $18.39 per share. This
figure has been reduced as result of forfeitures. Shares of common stock needed
to satisfy exercises of options may be acquired through open market purchases,
or may be satisfied through the use of authorized but unissued common stock. The
current policy of the Board of Trustees is to use treasury stock or to acquire
common stock in the open market to satisfy any exercised options.
Under the terms of the merger agreement and prior to the merger effective
date, Prestige shall take all actions necessary to terminate the Stock Option
Plan. Each person who becomes entitled to a cash payment in cancellation of an
option award shall be required to enter into an agreement and release in
complete and full satisfaction of all liabilities and obligations of Prestige
Bancorp or Prestige Bank under such award and consideration of such cash
payment.
MANAGEMENT RECOGNITION AND RETENTION PLAN AND TRUST
The shareholders of the Company, at the recommendation of the Board of
Directors, adopted a Management Recognition and Retention Plan and Trust for the
Company and its subsidiaries (the "Recognition Plan") at the Annual Meeting of
the Company held on April 23, 1997. Officers and key employees of the Company
and the Savings Bank, as well as non-employee directors of the Company and the
Savings Bank, are eligible to receive benefits under the Recognition Plan.(1)
The Recognition Plan is administered and interpreted by the Board of
Directors of the Company. The Board of Directors of the Company has the option
to appoint an advisory committee of two or more non-employee directors of the
Company to make recommendations concerning the award of common stock under the
Recognition Plan and other administrative issues that arise. The Board of
Directors of the Company has chosen Mark R. Schoen and James M. Hein as Trustees
for the Recognition Plan.
Awards under the Recognition Plan to officers and key employees are at the
complete discretion of the Board of Directors of the Company. Non-employee
directors of the Company and the Savings Bank have received, and will receive,
awards of common stock on a formula basis. Under the formula applicable to
non-employee directors on the date of the adoption of the Recognition Plan, each
non-employee director of the Company and each non-employee director of the
Savings Bank serving as a Director of the Company or the Savings Bank
immediately after the adoption of the Recognition Plan was granted in 1997 an
award of 1,000 shares of common stock plus 100 additional shares of common stock
for each full year of service as a non-employee director of the Savings Bank.
Subject to the availability of shares of common stock allocated to formula
awards, (i) each new non-employee director of the Company or the Savings Bank
participating in the Recognition Plan will receive an award of 1,000 shares of
common stock upon election to the Board of Directors of the Company or the
Savings Bank, and (ii) following the annual meeting of the stockholders, each
non-employee director of the Company or the Savings Bank participating in the
Recognition Plan will receive an award of common stock of 100 shares in
consideration for serving as a director, and the chairperson of the Board of
Directors of the Company shall be
- ---------------
1Under the terms of the Recognition Plan, affiliates of the Company may
participate in the Recognition Plan. At this time there are no eligible
affiliates of the Company except for the Savings Bank.
36
awarded an additional 100 shares of common stock. Any person serving in the
capacity of a non-employee director for more than one corporation participating
in the Recognition Plan (i.e. a person serving as a non-employee director of the
Company and the Savings Bank) will be limited to receiving formula awards under
the Recognition Plan with respect the one directorship that provides the formula
award offering the greatest number of shares, and will be prohibited from
receiving awards with respect to any other directorship.
Shares of common stock granted under the Recognition Plan will be in the
form of restricted stock to be earned and distributed, subject to certain
exceptions, over a five-year period at a rate of 20% per year, beginning one
year from the date of the grant of the award. Under certain circumstances, the
awards may be revoked for misconduct.
Until shares awarded to a recipient under the Recognition Plan have been
earned and distributed, they may not be sold, pledged or otherwise disposed of
and are required to be held in the Recognition Plan Trust. Under the terms of
the Recognition Plan, all shares which have been awarded, but not yet been
earned and distributed, are required to be voted by the Trustees in accordance
with the directions of the recipients, and if no direction is provided by the
recipient, the shares will not be voted by the Trustees. The Trustees will vote
unawarded shares in the same proportion as they receive instructions from
recipients with respect to the awarded shares which have not yet been earned and
distributed. In the event that a tender offer is made, the Trustees shall tender
shares held by the Trustees which have not been earned and distributed in the
same proportion in which a recipient tenders shares which have been earned and
distributed. Any cash dividends or stock dividends, declared in respect of each
share held by the Recognition Plan Trust, to the extent such dividends are
attributable to vested and nonforfeitable shares will be paid by the Recognition
Plan Trust as soon as practicable after the Recognition Plan Trust's receipt
thereof to the recipient on whose behalf such share is then held by the
Recognition Plan Trust. To the extent such dividends are attributable to shares
that are not vested and nonforfeitable, such dividends will be retained in the
Recognition Plan's Trust and paid, as soon as practical after the shares become
vested and non-forfeitable, to the recipient on whose behalf the shares are held
in the Recognition Plan's Trust; provided that if such shares so held are
forfeited, such retained dividends will be allocated to the Plan Share Reserve
(as defined in the Recognition Plan).
A total of 52,095 shares of common stock (adjusted for stock dividends) has
been reserved for issuance pursuant to the Recognition Plan, which is 4% of the
common stock issued in connection with the 1996 conversion of the Savings Bank
from a mutual to a stock form. A total of 13,022 (adjusted for stock dividends)
shares of common stock was reserved for purposes of making formula awards under
the Recognition Plan, and all formula awards are subject to the availability of
shares of common stock from such reserves, including forfeitures. This figure
has been reduced as a result of forfeitures. Shares in the Recognition Plan were
acquired through open market purchases. The Company has available sufficient
shares of common stock to satisfy the awards outstanding as they vest. The
Company granted outstanding shares of common stock to directors, officers and
employees of the Company and the Savings Bank under the Recognition Plan in an
aggregate of 52,922 (adjusted for stock dividends) shares of common stock. This
figure has been reduced as result of forfeitures.
Voting rights with respect to the held shares of the Recognition Plan Trust
have been allocated among the beneficiaries of such Trust pro rata in accordance
with the ratio of the awarded shares of a beneficiary to the total number of the
awarded shares. The merger agreement provides that the Recognition Plans be
terminated upon the merger. See page 21 of Proposal I, above.
Effect of Proposed Merger on Plans
See pages under "Proposal I", above for a description of the possible
changes to the above-described plans in the event of the merger of the Company
with Northwest.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The compensation of the executive officers of the Company and the Savings
Bank is set annually by the Compensation Committee of the Company. Salaries of
the executive officers of the Savings Bank cover the services provided for both
the Savings Bank and the Company. There is no separate salary for service as an
officer of the Company. However, during 2001 the OTS required that the Company
and the Savings Bank,
37
implement a reimbursement program whereby the Savings Bank is reimbursed by the
Company for services rendered to the Company by Savings Bank employees. The
Compensation Committee of the Company consists entirely of external Directors.
For calendar year 2001, the Compensation Committee met twice. This Committee
consisted of Michael R. Macosko (chairman), Martin W. Dowling and Charles P.
McCullough. Each of these gentlemen participated in establishing executive
compensation for the officers of the Company and the Savings Bank. No raises in
executive compensation were recommended for fiscal year 2002. The Boards of
Directors of the Company and the Savings Bank concurred with this
recommendation.
REPORT OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
Salaried Executive Officers. The salaried executive officers of the
Company and the Savings Bank consist of Mr. Mark. R. Schoen (Chief Executive
Officer and President of the Company and Chief Executive Officer of the Savings
Bank), Mrs. Patricia A. White (Executive Vice President and Treasurer of the
Company and President and Treasurer of the Savings Bank) and Mr. James M. Hein
(Chief Financial Officer of the Company and the Savings Bank). The salaries of
Messrs. Schoen and Hein and Mrs. White are set at the Savings Bank level. No
separate salary is paid for service as an officer of the Company. However, the
Company and the Savings Bank have entered into a reimbursement agreement whereby
the Company reimburses the Savings Bank for such work performed by such officers
on matters of the Company.
Mr. Schoen, Chairman and Chief Executive Officer of both the Company and
the Savings Bank and President of the Company, became a full-time employee on
December 29, 2000 and received an annual base salary of $120,000 beginning
January 1, 2001. Mr. Schoen also receives travel expenses of $250 per month and
reimbursement for educational expenses, including tuition, for the executive
masters program he attends at the University of Pennsylvania. For calendar year
2001, such accrued educational expenses were $18,000. Mr. Schoen is paid a
monthly Chairman fee of $500 by both the Company and the Savings Bank. As an
internal Savings Bank Director, Mr. Schoen receives $500 per Savings Bank Board
Meeting, but he does not receive any committee fees.
Report of Compensation Committee. The Compensation Committee meets
annually to review compensation paid to senior management. The Compensation
Committee reviews various published surveys of compensation paid to employees
performing similar duties for depository institutions and their holding
companies, with a particular focus on the level of compensation paid by
comparable institutions in and around the Savings Bank market area, including
institutions with total assets of $200 million. Although the Compensation
Committee does not specifically set compensation levels for executive officers
based on whether particular financial goals have been achieved by the Savings
Bank, the Compensation Committee does consider the overall profitability of the
Savings Bank when making these decisions. With respect to each particular
employee, his or her particular contributions to the Savings Bank over the past
year are also evaluated. The Compensation Committee formulates a recommendation
on compensation and presents such recommendation to the Board of Directors of
the Savings Bank. The executive officers of the Company and the Savings Bank
abstain from board discussions with respect to executive compensation. No raises
in executive compensation were recommended for fiscal year 2002. The Board of
Directors of the Company and the Savings Bank concurred with this
recommendation.
Michael R. Macosko, Chairman
Martin W. Dowling
Charles P. McCullough
38
PERFORMANCE GRAPH
The following is a graph comparing the Company's cumulative total
shareholder returns with the performance of the NASDAQ Stock Market index (US
Companies), the NASDAQ Financial Stocks index and the stock index for thrift
institutions with less than $250 million in assets maintained by SNL Securities
LP, in which group the Company is included. For each of the Company and each
such index the graph begins January 1, 1997 and ends on December 31, 2001.
PRESTIGE BANCORP, INC.
TOTAL RETURN PERFORMANCE
<Table>
<Caption>
NASDAQ FINANCIAL
PRESTIGE BANCORP, INC. NASDAQ - TOTAL US* INDEX* SNL
---------------------- ------------------ ---------------- ---
12/31/96 100 100 100 100
12/31/97 149.24 122.48 152.93 153.85
12/31/98 110.74 172.68 148.57 125.03
12/31/99 102.28 320.89 147.58 117.43
12/31/00 73.56 193.01 159.4 124.69
12/31/01 96.74 153.15 175.34 168.61
</Table>
The Company made no cash dividend payments in 2001. On May 16, 2001, a 12%
stock dividend was announced for shareholders of record June 1, 2001. There can
be no assurance that the Company's stock performance will continue into the
future with the same or similar trend. The Company does not make or endorse any
predictions as to future stock performance.
TRANSACTIONS WITH CERTAIN RELATED PERSONS
Federal law requires that all loans or extensions of credit to executive
officers and directors must be made in the ordinary course of business and on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with the general public and
must not involve more than the normal risk of repayment or present other
unfavorable features. The Savings Bank's policy provides that all loans made by
the Savings Bank to its directors and officers are made in the ordinary course
of business, are made on substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable transactions with
other persons and do not involve more than the normal risk of collectability or
present other unfavorable features.
The Board of Directors approved a mortgage on the personal residence of
Company and Savings Bank CEO Mr. Schoen for $191,000 at a rate of 5.875% for a
term of 15 years which was sold on the secondary market. The Board of Directors
believes that the terms of this loan are comparable to terms available to third
party borrowers of the Savings Bank.
The Board of Directors approved a mortgage on the personal residence of
Company and Savings Bank Director Mr. McCullough for $85,000 at a rate of 5.875%
for a term of 15 years which was sold on the secondary
39
market. The Board of Directors believes that the terms of this loan are
comparable to terms available to third party borrowers of the Savings Bank.
The Board of Directors approved a line of credit of $178,000 for Company
and Savings Bank Director Mr. Macosko secured by a first lien mortgage on the
personal residence of Mr. Macosko. The outstanding balance under this line of
credit bears interest at a variable rate based on the prime rate. All
outstandings under this line of credit shall be due and payable, if not
previously paid, on August 1, 2015. The outstanding principal balance of this
line of credit on December 31, 2001 was $7,502. The Board of Directors believes
that the terms of this loan are comparable to terms available to third party
borrowers of the Savings Bank.
Charles P. McCullough, a Director of the Company and Savings Bank, is an
attorney and a shareholder with the law firm of Tucker Arensberg, P.C., which
has been retained by the Savings Bank and the Company with respect to certain
legal matters on an ongoing basis. The Company and the Savings Bank expect this
relationship to continue.
George Brikis became a Director of the Savings Bank on January 17, 2001.
Mr. Brikis is a financial consultant and the owner of Brikis Financial Services
Co., which has been retained by the Savings Bank with respect to certain
financial matters on an ongoing basis. The Company and the Savings Bank expect
this relationship to continue. Mr. Brikis commenced his consulting work for the
Savings Bank on October 16, 2000 and received payments of $16,265 for work in
2000. Mr. Brikis received consulting fees of $113,707 for 2001. He will receive
fees based on negotiated hourly rates per project for interim commercial loan
consulting in 2002.
John Meegan became a Director of the Savings Bank on January 17, 2001. Mr.
Meegan has been employed at Parker Hunter, Inc. since 1993 and currently serves
as Chief Financial Officer. This disclosure is noted on PRBC stock/dividend
distributions from Parker/Hunter, Inc.
The Savings Bank retained media services from a company owned by the
brother of one of the Savings Bank's officers. The total costs for such services
in 2001, 2000 and 1999 were $45,366, $50,347 and $42,740, respectively.
At December 31, 2001, no other directors or executive officers or their
affiliates, had aggregate loan balances in excess of $60,000. Other than Mr.
McCullough or Mr. Brikis, no such individual, or his or her affiliate, had
engaged in any transaction during the year ending December 31, 2001, and is not
a party to a present or proposed transaction, with the Company or the Savings
Bank with a value in excess of $60,000. The aggregate amount of loans to
insiders at December 31, 2001 was $7,502.
PROPOSAL III--ADJOURNMENT OF THE MEETING
Each proxy solicited requests authority to vote for an adjournment of the
meeting, if an adjournment is deemed to be necessary. Prestige may seek an
adjournment of the meeting so that we can solicit additional votes in favor of
the merger agreement if the merger proposal has not received the requisite vote
of stockholders at the meeting and has not received the negative votes of the
holders of a majority of Prestige's stock. If Prestige desires to adjourn the
meeting, it will request a motion that the meeting be adjourned for up to 29
days with respect to the merger proposal (and solely with respect to the merger
proposal, provided that a quorum is present at the meeting), and no vote will be
taken on the merger proposal at the originally scheduled meeting. Each proxy
solicited, if properly signed and returned to Prestige and not revoked prior to
its use, will be voted on any motion for adjournment in accordance with the
instructions contained therein. If no contrary instructions are given, each
proxy received will be voted in favor of any motion to adjourn the meeting.
Unless revoked prior to its use, any proxy solicited for the meeting will
continue to be valid for any adjourned meeting, and will be voted in accordance
with instructions contained therein, and if no contrary instructions are given,
for the proposal in question.
Any adjournment will permit Prestige to solicit additional proxies and will
permit a greater expression of stockholders' views with respect to the merger
proposal. The adjournment would be disadvantageous to stockholders who are
against the merger agreement because an adjournment will give Prestige
additional time to solicit favorable votes and thus increase the chances of
passing the merger proposal.
40
If a quorum is not present at the meeting, no proposal will be acted upon
and the Prestige Board of Directors will adjourn the meeting to a later date to
solicit additional proxies on each of the proposals being submitted to
stockholders.
An adjournment for up to 29 days will not require either the setting of a
new record date or notice of the adjourned meeting as in the case of an original
meeting. Prestige has no reason to believe that an adjournment of the special
meeting will be necessary at this time.
BECAUSE THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
PROPOSED MERGER AGREEMENT, THE BOARD OF DIRECTORS ALSO RECOMMENDS THAT
STOCKHOLDERS VOTE "FOR" THE POSSIBLE ADJOURNMENT OF THE SPECIAL MEETING ON THE
MERGER PROPOSAL. Approval of the proposal to adjourn the special meeting on the
merger proposal requires the approval of a majority of the votes cast on the
adjournment proposal.
FINANCIAL INFORMATION--ANNUAL REPORT
The audited financial statements of the Company for its fiscal year ended
December 31, 2001, prepared in conformity with accounting principles generally
accepted in the United States, are included in the Company's 2001 Annual Report
to Stockholders which accompanies this Proxy Statement. These audited financial
statements are incorporated herein by reference. Any stockholder who has not
received a copy of the Company's 2001 Annual Report to Stockholders may obtain a
copy by writing to the Secretary of the Company.
STOCKHOLDERS MAY RECEIVE WITHOUT CHARGE A COPY OF THE COMPANY'S ANNUAL
REPORT OR THE FORM 10-K FILED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER
THE 1934 ACT FOR THE YEAR ENDED DECEMBER 31, 2001, BY WRITING TO THE SECRETARY
OF THE COMPANY. UPON WRITTEN REQUEST TO THE SECRETARY, THE COMPANY WILL FURNISH
AT NO COST TO ANY STOCKHOLDER COPIES OF THE EXHIBITS TO THE ANNUAL REPORT OR THE
FORM 10-K.
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
meeting other than those matters described above in this Proxy Statement.
However, if any other matters should properly come before the Meeting, it is
intended that proxies in the accompanying form will be voted in respect thereof
in accordance with the judgment of the person or persons voting such proxies.
MISCELLANEOUS
The cost of soliciting proxies on behalf of the Board of Directors will be
borne by the Company. The Company will reimburse brokerage firms and other
custodians, nominees and fiduciaries for reasonable expenses incurred by them in
sending proxy materials to the beneficial owners of common stock. In addition to
solicitations by mail, directors, officers and regular employees of the Company
may solicit proxies personally or by telegraph or telephone without additional
compensation.
41
STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the Company's proxy materials for
next year's Annual Meeting of Stockholders (in the event that the merger with
Northwest does not take place for any reason), any stockholder proposal to take
action at such meeting must be received at the Company's executive offices at
710 Old Clairton Road, Pleasant Hills, Pennsylvania 15236, no later than March
31, 2003. Any such proposals shall be subject to the terms of the Articles of
Incorporation of the Company, requirements of the proxy rules adopted under the
1934 Act and applicable law.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Victoria A. Brown
Victoria A. Brown
Secretary
Pleasant Hills, Pennsylvania
April 26, 2002
42
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
NORTHWEST BANCORP, MHC
NORTHWEST BANCORP, INC.
NORTHWEST MERGER SUBSIDIARY, INC.
NORTHWEST SAVINGS BANK
AND
PRESTIGE BANCORP, INC.
AND
PRESTIGE BANK, A FEDERAL SAVINGS BANK
DATED AS OF FEBRUARY 7, 2002
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
<Table>
<Caption>
PAGE
----
ARTICLE I
CERTAIN DEFINITIONS
Section 1.01 Definitions.................................... A-2
ARTICLE II
THE MERGER AND RELATED MATTERS
Section 2.01 Effects of Merger; Surviving Corporation....... A-8
Section 2.02 Conversion of Shares........................... A-9
Section 2.03 Exchange Procedures............................ A-9
Section 2.04 Stock Options.................................. A-10
Section 2.05 Restricted Stock............................... A-11
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
PRESTIGE BANCORP AND PRESTIGE BANK
Section 3.01 Organization................................... A-11
Section 3.02 Capitalization................................. A-12
Section 3.03 Authority; No Violation........................ A-13
Section 3.04 Consents....................................... A-14
Section 3.05 Financial Statements........................... A-14
Section 3.06 Taxes.......................................... A-15
Section 3.07 No Material Adverse Effect..................... A-15
Section 3.08 Material Contracts; Leases; Defaults........... A-15
Section 3.09 Ownership of Property; Insurance Coverage...... A-17
Section 3.10 Legal Proceedings.............................. A-17
Section 3.11 Compliance With Applicable Law................. A-18
Section 3.12 Employee Benefit Plans......................... A-19
Section 3.13 Brokers, Finders and Financial Advisors........ A-21
Section 3.14 Environmental Matters.......................... A-21
Section 3.15 Loan Portfolio................................. A-23
Section 3.16 Securities Documents........................... A-25
Section 3.17 Related Party Transactions..................... A-25
Section 3.18 Schedule of Termination Benefits............... A-25
Section 3.19 Deposits....................................... A-25
Section 3.20 Antitakeover Provisions Inapplicable........... A-25
Section 3.21 Registration Obligations....................... A-26
Section 3.22 Risk Management Instruments.................... A-26
Section 3.23 Fairness Opinion............................... A-26
Section 3.24 Dissenters' Rights............................. A-26
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF NORTHWEST SAVINGS BANK
AND NORTHWEST BANCORP
Section 4.01 Organization................................... A-27
Section 4.02 Authority; No Violation........................ A-27
Section 4.03 Consents....................................... A-28
Section 4.04 Financial Statements........................... A-29
</Table>
i
<Table>
<Caption>
PAGE
----
Section 4.05 Compliance With Applicable Law................. A-29
Section 4.06 Financing...................................... A-30
Section 4.07 Regulatory Approvals........................... A-30
Section 4.08 Tax Opinion.................................... A-30
Section 4.09 Legal Proceedings.............................. A-30
ARTICLE V
COVENANTS OF THE PARTIES
Section 5.01 Conduct of Prestige Bancorp's Business......... A-30
Section 5.02 Access; Confidentiality........................ A-34
Section 5.03 Regulatory Matters and Consents................ A-35
Section 5.04 Taking of Necessary Action..................... A-36
Section 5.05 Certain Agreements............................. A-37
Section 5.06 No Other Bids and Related Matters.............. A-38
Section 5.07 Duty to Advise; Duty to Update Prestige
Bancorp's Disclosure Schedules............................ A-39
Section 5.08 Conduct of Northwest Bancorp's Business........ A-39
Section 5.09 Board and Committee Minutes.................... A-40
Section 5.10 Undertakings by Prestige Bancorp and Northwest
Bancorp................................................... A-40
Section 5.11 Employee and Termination Benefits; Directors
and Management............................................ A-43
Section 5.12 Duty to Advise; Duty to Update Northwest
Bancorp's Disclosure Schedules............................ A-46
Section 5.13 Bank and Related Merger Transactions........... A-47
ARTICLE VI
CONDITIONS
Section 6.01 Conditions to Prestige Bancorp's Obligations
under this Agreement...................................... A-47
Section 6.02 Conditions to Northwest Bancorp's Obligations
under this Agreement...................................... A-48
ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT
Section 7.01 Termination.................................... A-49
Section 7.02 Effect of Termination.......................... A-51
ARTICLE VIII
MISCELLANEOUS
Section 8.01 Expenses....................................... A-51
Section 8.02 Non-Survival of Representations and
Warranties................................................ A-52
Section 8.03 Amendment, Extension and Waiver................ A-52
Section 8.04 Entire Agreement............................... A-53
Section 8.05 No Assignment.................................. A-53
Section 8.06 Notices........................................ A-53
Section 8.07 Captions....................................... A-54
Section 8.08 Counterparts................................... A-54
Section 8.09 Severability................................... A-54
Section 8.10 Governing Law.................................. A-54
Section 8.11 Specific Performance........................... A-54
</Table>
EXHIBITS:
Exhibit A Form of Plan of Merger
Exhibit B Form of Prestige Bancorp Voting Agreement
Exhibit C Form of Opinion of Counsel
ii
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of February
7, 2002, is by and among Northwest Bancorp, MHC, a Federal mutual holding
company ("Northwest MHC"), Northwest Bancorp, Inc., a Federal corporation
("Northwest Bancorp"), Northwest Merger Subsidiary, Inc., a wholly owned
subsidiary of Northwest Bancorp incorporated under the laws of the Commonwealth
of Pennsylvania ("Northwest Merger Subsidiary"), Northwest Savings Bank, a
Pennsylvania savings bank, and Prestige Bancorp, Inc., a Pennsylvania
corporation ("Prestige Bancorp") and Prestige Bank, a Federal Savings Bank
("Prestige Bank"). Each of Northwest Bancorp, Northwest Merger Subsidiary,
Northwest Savings Bank, Prestige Bancorp and Prestige Bank is sometimes
individually referred to herein as a "party," and all of them are sometimes
collectively referred to herein as the "parties."
RECITALS
WHEREAS, Northwest MHC, a registered savings and loan holding company, with
principal offices in Warren, Pennsylvania, owns a majority of the issued and
outstanding capital stock of Northwest Bancorp, with principal offices in
Warren, Pennsylvania;
WHEREAS, Northwest Bancorp, a registered savings and loan holding company,
with principal offices in Warren, Pennsylvania, owns all of the issued and
outstanding capital stock of Northwest Savings Bank and Northwest Merger
Subsidiary, both with principal offices in Warren, Pennsylvania;
WHEREAS, Prestige Bancorp, a registered savings and loan holding company,
with principal offices in Pleasant Hills, Pennsylvania, owns all of the issued
and outstanding capital stock of Prestige Bank, with principal offices in
Pleasant Hills, Pennsylvania;
WHEREAS, the Board of Directors of Prestige Bancorp deems it advisable and
in the best interests of Prestige Bancorp shareholders and the Board of
Directors of Northwest Bancorp deems it advisable and in the best interests of
Northwest Bancorp shareholders to consummate the business combination
transaction contemplated herein whereby: (i) Northwest Merger Subsidiary,
subject to the terms and conditions set forth herein, shall merge with and into
Prestige Bancorp, with Prestige Bancorp as the surviving entity (the "Merger"),
(ii) Prestige Bancorp shall merge with or liquidate into Northwest Bancorp, with
Northwest Bancorp as the surviving entity (the "Company Merger"), with the
result that Prestige Bank shall be a wholly-owned subsidiary of Northwest
Bancorp, and (iii) Prestige Bank shall merge with and into Northwest Savings
Bank, with Northwest Savings Bank as the surviving entity (the "Bank Merger")
(the Merger, Company Merger and the Bank Merger are sometimes collectively
referred to as the "Mergers"); and
WHEREAS, the parties hereto desire to provide for certain undertakings,
conditions, representations, warranties and covenants in connection with the
Merger, and the other transactions contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and covenants herein contained and intending to be
legally bound hereby, the parties hereto do hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.01 Definitions. Except as otherwise provided herein, as used in
this Agreement, the following terms shall have the indicated meanings (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):
"Affiliate" means, with respect to any Person, any Person who
directly, or indirectly, through one or more intermediaries, controls, or
is controlled by, or is under common control with, such Person and, without
limiting the generality of the foregoing, includes any executive officer or
director of such Person and any Affiliate of such executive officer or
director.
"Agreement" means this agreement, and any amendment or supplement
hereto, which constitutes a "plan of merger" between Northwest Bancorp,
Northwest Merger Subsidiary and Prestige Bancorp.
"Applications" means the applications for all Regulatory Approvals
that are required by the transactions contemplated hereby.
"Bank Merger" means the merger of Prestige Bank with and into
Northwest Savings Bank, with Northwest Savings Bank as the surviving
institution.
"Business Day" means any day other than a Saturday, Sunday or Federal
holiday.
"Closing Date" means the Business Day determined by Northwest Bancorp,
in its sole discretion, upon five (5) days prior written notice to Prestige
Bancorp, but in no event later than fifteen (15) Business Days after the
last condition precedent (other than the delivery of certificates or other
instruments and documents to be delivered at closing) pursuant to this
Agreement has been fulfilled or waived (including the expiration of any
applicable waiting period), or such other date as to which Northwest
Bancorp and Prestige Bancorp shall mutually agree.
"Closing Expense Statement" has the meaning given to that term in
Section 5.10(c) of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Merger" means the merger or liquidation of Prestige Bancorp,
as a wholly owned subsidiary of Northwest Bancorp, with and into Northwest
Bancorp, with Northwest Bancorp being the surviving corporation.
"Compensation and Benefit Plans" means any bonus, incentive, deferred
compensation, pension, retirement, profit-sharing, thrift, savings,
employee stock ownership, stock bonus, stock purchase, restricted stock,
stock option, stock appreciation, phantom stock, severance, welfare and
fringe benefit plans, employment, severance and change in control
agreements and all other benefit practices, policies and arrangements
maintained by Prestige Bancorp or Prestige Bank in which any employee or
former employee, consultant or former consultant or director or former
director of Prestige Bancorp or Prestige Bank participates or to which any
such employee, consultant or director is a party or is otherwise entitled
to receive benefits other than plans and programs involving immaterial
obligations.
"Department" means the Pennsylvania Department of Banking.
"Disclosure Schedule" means any of the Northwest Bancorp Disclosure
Schedules or the Prestige Bancorp Disclosure Schedules.
"DOL" means the U.S. Department of Labor.
"Environmental Law" means any Federal or state law, statute, rule,
regulation, code, order, judgment, decree, injunction, common law or
agreement with any Federal or state Regulatory Authority relating to (i)
the protection, preservation or restoration of the environment (including
air, water vapor, surface water, groundwater, drinking water supply,
surface land, subsurface land, plant and animal life or any other natural
resource), (ii) human health or safety relating to the presence of
Hazardous Material, or (iii) exposure to, or the use, storage, recycling,
treatment, generation, transportation, processing, handling, labeling,
production, release or disposal of, Hazardous Material, in each case as
amended and now in effect.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated from time to time thereunder.
"Exchange Agent" means American Stock Transfer & Trust Company, the
transfer agent for Northwest Bancorp, or such other entity selected by
Northwest Bancorp and agreed to by Prestige Bancorp.
"FDIA" means the Federal Deposit Insurance Act, as amended.
"FDIC" means the Federal Deposit Insurance Corporation.
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"FHLB" means a Federal Home Loan Bank.
"FRB" means the Board of Governors of the Federal Reserve System.
"GAAP" means generally accepted accounting principles as in effect at
the relevant date and consistently applied.
"Hazardous Material" means any substance (whether solid, liquid or
gas) which is listed, defined, designated or classified as hazardous,
toxic, radioactive or dangerous, or otherwise regulated, under any
Environmental Law, whether by type or by quantity, including any substance
containing any such substance as a component. Hazardous Material includes,
without limitation, any toxic waste, pollutant, contaminant, hazardous
substance, toxic substance, hazardous waste, special waste, industrial
substance, oil or petroleum, or any derivative or by-product thereof,
radon, radioactive material, asbestos, asbestos-containing material, urea
formaldehyde foam insulation, lead and polychlorinated biphenyl.
"HOLA" means the Home Owners' Loan Act, as amended.
"IRS" means the Internal Revenue Service.
"Knowledge" as used with respect to a Person (including references to
such Person being aware of a particular matter) means those facts that are
known, or reasonably should have been known, by the senior officers and
directors of such Person, and includes any facts, matters or circumstances
set forth in any written notice from any Regulatory Authority or any other
material written notice received by that Person.
"Loan Property" shall have the meaning given to such term in Section
3.14(b) of this Agreement.
"Material Adverse Effect" shall mean, with respect to a Person, any
adverse effect on its assets, financial condition or results of operations
which is material to its assets, financial condition or results of
operations on a consolidated basis, except for any such effect caused by
(i) any change in the value of such Person's assets resulting from a change
in interest rates generally, (ii) any change or combination of changes
occurring after the date hereof in any federal or state law, rule or
regulation or in GAAP, which change(s) or affect(s) financial institutions
generally, (iii) compliance with this Agreement, (iv) any facts or
circumstances existing on the date hereof and identified in a Disclosure
Schedule attached to this Agreement on the date hereof or (v) expenses
incurred in connection with this Agreement and the transactions
contemplated thereby.
"Merger" means the merger of Northwest Merger Subsidiary with and into
Prestige Bancorp, with Prestige Bancorp as the surviving corporation.
"Merger Effective Date" means that date upon which the articles of
merger as to the Merger are accepted for filing by the Office of the
Pennsylvania Secretary of State, or such other date as otherwise stated in
such filed articles of merger, in accordance with Pennsylvania law. The
Merger Effective Date shall be the same date as the Closing Date.
"Merger Consideration" has the meaning given to that term in Section
2.02(i) of this Agreement.
"Northwest Bancorp Disclosure Schedules" means the Disclosure
Schedules delivered by Northwest Bancorp to Prestige Bancorp pursuant to
Article IV of this Agreement.
"Northwest Bancorp Financials" means (i) the audited consolidated
financial statements of Northwest Bancorp as of June 30, 2001 and 2000 and
for the three years ended June 30, 2001, including the notes thereto and
(ii) the unaudited interim consolidated financial statements of Northwest
Bancorp as of each calendar quarter thereafter.
"Northwest Bancorp Regulatory Reports" means the Thrift Financial
Reports of Northwest Savings Bank and accompanying schedules, as filed with
the OTS, for each calendar quarter beginning with the quarter ended June
30, 2001, through the Closing Date, and all Annual, Quarterly and Current
Reports filed on Form H-(b)11 with the OTS by Northwest Bancorp from June
30, 2001 through the Closing Date.
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"Northwest Bancorp Subsidiary" means any corporation, limited
liability company, limited liability partnership or partnership (whether
general or limited), 50% or more of the capital stock or other equity
ownership interest of which is owned, either directly or indirectly, by
Northwest Bancorp or Northwest Savings Bank, except any corporation limited
liability company, limited liability partnership or partnership (whether
general or limited), the stock or other equity ownership interest of which
is held as security by Northwest Savings Bank in the ordinary course of its
lending activities.
"OTS" means the Office of Thrift Supervision.
"PBCA" means the Pennsylvania Business Corporations Act, as from time
to time amended, and any successor thereto.
"Participation Facility" shall have the meaning given to such term in
Section 3.14(b) of this Agreement.
"Pension Plan" has the meaning given to that term in Section 3.12 of
this Agreement.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, trust or "group" (as that
term is defined in Section 13(d)(3) of the Exchange Act).
"Prestige Bancorp Common Stock" shall have the meaning given to such
term in Section 3.02(a).
"Prestige Bancorp Disclosure Schedules" means the Disclosure Schedules
delivered by Prestige Bancorp to Northwest Bancorp pursuant to Article III
of this Agreement.
"Prestige Bancorp ESOP" means the Prestige Bancorp Employee Stock
Ownership Plan and Trust.
"Prestige Bancorp Financials" means (i) the audited consolidated
financial statements of Prestige Bancorp as of December 31, 2000 and 1999
and for the three years ended December 31, 2000, including the notes
thereto included in Securities Documents filed by Prestige Bancorp, and
(ii) the unaudited interim consolidated financial statements of Prestige
Bancorp as of each calendar quarter thereafter included in Securities
Documents filed by Prestige Bancorp.
"Prestige Bancorp Option" means issued and outstanding options granted
by Prestige Bancorp to purchase shares of Prestige Bancorp Common Stock
pursuant to the Prestige Bancorp Stock Option Plan.
"Prestige Bancorp Regulatory Reports" means the Thrift Financial
Reports of Prestige Bank and accompanying schedules, as filed with the OTS,
for each appropriate calendar quarter beginning with the quarter ended
December 31, 2000, through the Closing Date, and all Annual, Quarterly and
Current Reports filed with the OTS by Prestige Bancorp from December 31,
2000 through the Closing Date.
"Prestige Bancorp Subsidiary" means any corporation, limited liability
company, limited liability partnership or partnership (whether general or
limited), 50% or more of the capital stock or other equity ownership
interest of which is owned, either directly or indirectly, by Prestige
Bancorp or Prestige Bank, except any corporation limited liability company,
limited liability partnership or partnership (whether general or limited),
the stock or other equity ownership interest of which is held as security
by Prestige Bank in the ordinary course of its lending activities.
"Prestige Bancorp Restricted Stock Plan" means the Prestige Bancorp
Recognition and Retention Plan and Trust dated as of March 20, 1997, as
amended from time to time.
"Prestige Bancorp Stock Option Plan" means the Prestige Bancorp 1997
Stock Option Plan dated as of March 20, 1997, as amended from time to time.
"Proxy Statement" means the proxy statement, together with any
supplements thereto, to be transmitted to holders of Prestige Bancorp
Common Stock in connection with the transactions contemplated by this
Agreement.
"Regulatory Agreement" has the meaning given to that term in Section
3.11(c) of this Agreement.
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"Regulatory Approvals" means all consents, waivers, approvals,
nonobjections and clearances required to be obtained from or issued by the
OTS, the FRB, the FDIC, the Department, the SEC or the respective staffs
thereof in order to complete the transactions contemplated hereby,
including any required approval of the OTS under the Supervisory Agreement.
"Regulatory Authority" means any agency or department of any federal,
state or local government, including without limitation the OTS, the FRB,
the FDIC, the Department, the SEC or the respective staffs thereof.
"Rights" means warrants, options, rights, convertible securities and
other capital stock equivalents that obligate an entity to issue its
securities or to make payments of cash in lieu of issuing such securities
or in respect to such securities.
"SAIF" means the Savings Association Insurance Fund of the FDIC.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated from time to time thereunder.
"Securities Documents" means all registration statements, schedules,
statements, forms, reports, proxy material, and other documents required to
be filed under the Securities Laws.
"Securities Laws" means the Securities Act and the Exchange Act.
"Subsidiary" means any corporation, limited liability company, limited
liability partnership or partnership, whether general or limited), 50% or
more of the capital stock or other equity ownership interest of which is
owned, either directly or indirectly, by another entity, except any
corporation the stock or other equity ownership interest of which is held
as security by either Northwest Savings Bank or Prestige Bank, as the case
may be, in the ordinary course of its lending activities.
"Supervisory Agreement" means that certain Supervisory Agreement dated
as of September 20, 2000, by and among the OTS, Prestige Bank and the
directors of Prestige Bank.
"Surviving Corporation" has the meaning given to that term in Section
2.01(a)(i) of this Agreement.
ARTICLE II
THE MERGER AND RELATED MATTERS
Section 2.01. Effects of Merger; Surviving Corporation.
(a) As of the Merger Effective Date, the following shall occur:
(i) Northwest Merger Subsidiary shall merge with and into Prestige
Bancorp; the separate existence of Northwest Merger Subsidiary shall cease;
Prestige Bancorp shall be the surviving corporation in the Merger (the
"Surviving Corporation") and a wholly owned subsidiary of Northwest
Bancorp; and all of the property (real, personal and mixed), rights, powers
and duties and obligations of Northwest Merger Subsidiary shall be taken
and deemed to be transferred to and vested in Prestige Bancorp, as the
Surviving Corporation in the Merger, without further act or deed; all in
accordance with the PBCA.
(ii) the Articles of Incorporation of the Surviving Corporation shall
be amended and restated to read in their entirety as the Articles of
Incorporation of Northwest Merger Subsidiary, in effect immediately prior
to the Merger Effective Date; and the Bylaws of the Surviving Corporation
shall be amended and restated to read in their entirety as the Bylaws of
Northwest Merger Subsidiary, in effect immediately prior to the Merger
Effective Date, until thereafter altered, amended or repealed in accordance
with applicable law.
(iii) the directors of Northwest Merger Subsidiary duly elected and
holding office immediately prior to the Merger Effective Date shall be the
directors of the Surviving Corporation, each to hold office until his or
her successor is elected and qualified or otherwise in accordance with the
Articles of Incorporation and Bylaws of the Surviving Corporation.
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(iv) the officers of Northwest Merger Subsidiary duly elected and
holding office immediately prior to the Merger Effective Date shall be the
officers of the Surviving Corporation, each to hold office until his or her
successor is elected and qualified or otherwise in accordance with the
Articles of Incorporation and the Bylaws of the Surviving Corporation.
(b) Notwithstanding any provision of this Agreement to the contrary,
Northwest Bancorp may elect, subject to the filing of all Applications and the
receipt of all Regulatory Approvals, to modify the structure of the transactions
contemplated hereby, and the parties shall enter into such alternative
transactions, so long as (i) there are no adverse tax consequences to any of the
shareholders of Prestige Bancorp as a result of such modification, (ii) the
Merger Consideration is not thereby changed in kind or reduced in amount or
delayed in payment following the Merger Effective Date because of such
modification, (iii) such modification will not materially increase the
obligations, liabilities or duties of Prestige Bancorp or Prestige Bank prior to
the Merger Effective Date, and (iv) such modification will not be likely to
delay or jeopardize receipt of any Regulatory Approvals or of the tax opinion
required under Sections 6.02(h).
Section 2.02. Conversion of Shares. At the Merger Effective Date, by
virtue of the Merger and without any action on the part of Prestige Bancorp or
the holders of shares of Prestige Bancorp Common Stock:
(i) Each outstanding share of Prestige Bancorp Common Stock issued and
outstanding at the Merger Effective Date, except as provided in clauses
(ii) and (iii) of this Section, shall cease to be outstanding, and shall be
converted into the right to receive $13.75 in cash (the "Merger
Consideration").
(ii) Any shares of Prestige Bancorp Common Stock which are owned or
held by any party hereto or any of their respective Subsidiaries (other
than in a fiduciary capacity or in connection with debts previously
contracted) at the Merger Effective Date shall be deemed cancelled and the
certificates for such shares shall be deemed retired, such shares shall not
be converted into the Merger Consideration, and no cash or shares of
capital stock of Northwest Bancorp shall be issued or exchanged therefor.
(iii) Each share of Northwest Merger Subsidiary common stock issued
and outstanding immediately before the Merger Effective Date shall be
converted into and become an outstanding share of common stock of the
Surviving Corporation.
(iv) The holders of certificates (immediately prior to the Merger)
representing shares of Prestige Bancorp Common Stock (any such certificate
being hereinafter referred to as a "Certificate") shall cease to have any
rights as shareholders of Prestige Bancorp, except such rights, if any, as
they may have pursuant to applicable law and this Agreement.
Section 2.03. Exchange Procedures.
(a) As promptly as practicable after the Merger Effective Date, and in any
event within five (5) Business Days thereafter, the Exchange Agent shall mail to
each holder of record of outstanding shares of Prestige Bancorp Common Stock a
letter of transmittal in form and substance reasonably acceptable to Prestige
Bancorp ("Letter of Transmittal") containing instructions for the surrender of
the Certificate(s) held by such holder for payment therefore. Upon a holder's
surrender of the Certificate(s) to the Exchange Agent in accordance with the
instructions set forth in the Letter of Transmittal, such holder shall promptly
receive in exchange therefor the Merger Consideration, without interest thereon.
Approval of this Agreement by the shareholders of Prestige Bancorp shall
constitute authorization for Northwest Bancorp to designate and appoint the
Exchange Agent. Neither Northwest Bancorp nor the Exchange Agent shall be
obligated to deliver the Merger Consideration to a former shareholder of
Prestige Bancorp until such former shareholder surrenders his Certificate(s).
(b) If payment of the Merger Consideration is to be made to a Person other
than the Person in whose name a Certificate surrendered in exchange therefore is
registered, it shall be a condition of payment 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 payment shall pay any transfer or other taxes required by
reason of the payment to a Person other than 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.
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(c) Contemporaneously with or prior to the Merger, Northwest Bancorp and/or
Northwest Savings Bank shall deposit or cause to be deposited, in trust with the
Exchange Agent, an amount of cash equal to the aggregate Merger Consideration
that the Prestige Bancorp shareholders shall be entitled to receive on the
Merger Effective Date pursuant to Section 2.02 hereof.
(d) The payment of the Merger Consideration upon the exchange of Prestige
Bancorp Common Stock in accordance with the terms and conditions hereof shall
constitute full satisfaction of all rights pertaining to such Prestige Bancorp
Common Stock.
(e) Promptly following the date which is twelve (12) months after the
Merger Effective Date, the Exchange Agent shall deliver to Northwest Bancorp all
cash, Certificates and other documents in its possession relating to the
transactions described in this Agreement, and the Exchange Agent's duties shall
terminate. Thereafter, each holder of a Certificate formerly representing shares
of Prestige Bancorp Common Stock may surrender such Certificate to Northwest
Bancorp and (subject to applicable abandoned property, escheat and similar laws)
receive in consideration therefore the Merger Consideration multiplied by the
number of shares of Prestige Bancorp Common Stock formerly represented by such
Certificate, without any interest or dividends thereon.
(f) As of the close of business on the Merger Effective Date, there shall
be no transfers on the stock transfer books of Prestige Bancorp of the shares of
Prestige Bancorp Common Stock which are outstanding immediately prior to the
Merger Effective Date, and the stock transfer books of Prestige Bancorp shall be
closed with respect to such shares. If, after the Merger Effective Date,
Certificates representing such shares are presented for transfer to the Exchange
Agent, they shall be canceled and exchanged for the Merger Consideration as
provided in this Article II.
(g) In the event any Certificate for Prestige Bancorp Common Stock shall
have been lost, stolen or destroyed, the Exchange Agent (or Northwest Bancorp,
if the Exchange Agent's duties hereunder have been discharged) shall deliver
(except as otherwise provided in Section 2.02(iii)) in exchange for such lost,
stolen or destroyed certificate, upon the making of an affidavit of the fact by
the holder thereof, the cash to be paid in the Merger as provided for herein;
provided, however, that Northwest Bancorp may, in its sole discretion and as a
condition precedent to the delivery thereof, require the owner of such lost,
stolen or destroyed Certificate to deliver a bond in such reasonable sum as
Northwest Bancorp may determine as indemnity against any claim that may be made
against Prestige Bancorp, Northwest Bancorp or any other party with respect to
the Certificate alleged to have been lost, stolen or destroyed.
Section 2.04. Stock Options. Prestige Bancorp Disclosure Schedule 2.04
attached hereto sets forth all of the outstanding Prestige Bancorp Options
(whether vested or unvested) and the exercise price for each such Prestige
Bancorp Option. At the Merger Effective Date, each Prestige Bancorp Option,
whether or not such option is exercisable as of the Merger Effective Date,
shall, by reason of the Merger, cease to be outstanding and be converted into
the right to receive in cash an amount equal to (i) the difference (if a
positive number) between (A) the Merger Consideration and (B) the exercise price
of each such Prestige Bancorp Option multiplied by (ii) the number of shares of
Prestige Bancorp Common Stock subject to the Prestige Bancorp Option.
Section 2.05. Restricted Stock. Prestige Bancorp Disclosure Schedule 2.05
attached hereto sets forth all of the outstanding unvested awards under the
Prestige Bancorp Restricted Stock Plan. At the Merger Effective Date, each
unvested share of restricted stock awarded pursuant to the Prestige Bancorp
Restricted Stock Plan shall automatically vest and the holder thereof shall be
entitled to receive the Merger Consideration.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PRESTIGE BANCORP AND PRESTIGE BANK
Prestige Bancorp and Prestige Bank represent and warrant to Northwest
Bancorp and Northwest Savings Bank that the statements contained in this Article
III are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
Article III), except as set forth in the Prestige Bancorp Disclosure Schedules
delivered by Prestige Bancorp to Northwest Bancorp on the date hereof, and
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except as to any representation or warranty which specifically relates to an
earlier date. Prestige Bancorp and Prestige Bank have made a good faith effort
to ensure that the disclosure on each schedule of the Prestige Bancorp
Disclosure Schedules corresponds to the section reference herein. However, for
purposes of the Prestige Bancorp Disclosure Schedules, any item disclosed on any
schedule therein is deemed to be fully disclosed with respect to all schedules
under which such item may be relevant.
Section 3.01 Organization.
(a) Prestige Bancorp is a corporation duly organized, validly existing and
in good standing under the PBCA, and is duly registered as a savings and loan
holding company under the HOLA. Prestige Bancorp has full corporate power and
authority to carry on its business as now conducted and is duly licensed or
qualified to do business in the states of the United States and foreign
jurisdictions where its ownership or leasing of property or the conduct of its
business requires such qualification, except where the failure to be so licensed
or qualified would not have a Material Adverse Effect on Prestige Bancorp.
(b) Prestige Bank is a Federal savings bank organized, validly existing and
in good standing under the laws of the United States. Prestige Bank and Prestige
Insurance Services, LLP ("Prestige Insurance Services") are the only
Subsidiaries of Prestige Bancorp. The deposits of Prestige Bank are insured by
the FDIC through the SAIF to the fullest extent permitted by law, and all
premiums and assessments required to be paid in connection therewith have been
paid by Prestige Bank when due. Prestige Bank has no Subsidiary.
(c) Prestige Bank is a member in good standing of the FHLB of Pittsburgh
and owns the requisite amount of stock therein.
(d) The respective minute books of Prestige Bancorp and Prestige Bank
accurately records, in all material respects, all material corporate actions of
their respective shareholders and boards of directors (including committees)
through the date of this Agreement.
(e) Prior to the date of this Agreement, Prestige Bancorp and each Prestige
Bancorp Subsidiary has made available to Northwest Bancorp true and correct
copies of their respective articles of incorporation or charter, and bylaws,
each of which is attached hereto as Prestige Bancorp Disclosure Schedule
3.01(e).
Section 3.02 Capitalization.
(a) The authorized capital stock of Prestige Bancorp consists of 10,000,000
shares of common stock, par value $1.00 per share ("Prestige Bancorp Common
Stock"), of which 1,059,371 shares are outstanding, validly issued, fully paid
and nonassessable and free of preemptive rights, and 5,000,000 shares of
preferred stock, par value $1.00 per share ("Prestige Bancorp Preferred Stock"),
none of which are outstanding. There are 242,140 shares of Prestige Bancorp
Common Stock held by Prestige Bancorp as treasury stock. Neither Prestige
Bancorp nor Prestige Bank has or is bound by any Rights or other agreements of
any character relating to the purchase, sale or issuance or voting of, or right
to receive dividends or other distributions on any shares of Prestige Bancorp
Common Stock, or any other security of Prestige Bancorp or any securities
representing the right to vote, purchase or otherwise receive any shares of
Prestige Bancorp Common Stock or any other security of Prestige Bancorp, other
than shares issuable under the Prestige Bancorp Stock Option Plan (the number of
which is set forth in Prestige Bancorp Disclosure Schedule 2.04, and which are
not considered outstanding), shares issuable under or held pursuant to the
Prestige Bancorp Restricted Stock Plan (the number of which is identified in
Prestige Bancorp Disclosure Schedule 2.05 and which are considered outstanding),
and shares held pursuant to the ESOP (which are considered outstanding).
Prestige Bancorp Disclosure Schedule 3.02(a) sets forth (i) the name of each
holder of unvested awards under the Prestige Bancorp Restricted Stock Plan and
each holder of awards (whether vested or unvested) of Stock Options under the
Prestige Bancorp Stock Option Plan, the number of shares each such individual
may acquire pursuant to the exercise of Prestige Bancorp Stock Options, the
number of shares of restricted stock held by each such individual under the
Prestige Bancorp Restricted Stock Plan, the vesting dates, and the exercise
price relating to the Prestige Bancorp Stock Options, and (ii) the name of each
participant under the Prestige Bancorp ESOP, the number of shares of Prestige
Bancorp Common Stock allocated to each such participant and the unallocated
shares of Prestige Bancorp Common Stock held by the Prestige Bancorp ESOP.
Except as set forth in Prestige Bancorp Disclosure Schedule 3.02(a), there are
no shares
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of restricted stock of Prestige Bancorp outstanding, or authorized to be issued
pursuant to any Compensation and Benefit Plan of Prestige Bancorp.
(b) Prestige Bancorp owns all of the capital stock of Prestige Bank, free
and clear of any lien or encumbrance. Except for Prestige Bank and Prestige
Insurance Services, Prestige Bancorp does not possess, directly or indirectly,
any material equity interest in any corporate entity, except for equity
interests held in the investment portfolios of Prestige Bancorp, equity
interests held by Prestige Bank in a fiduciary capacity, and equity interests
held in connection with the lending activities of Prestige Bank, including stock
in the FHLB of Pittsburgh.
(c) To Prestige Bancorp's Knowledge (based solely upon filings made by
Persons pursuant to Section 13(d) of the Exchange Act), other than as set forth
in Prestige Bancorp Disclosure Schedule 3.02(c), no Person is the beneficial
owner (as defined in Section 13(d) of the Exchange Act) of 5% or more of the
outstanding shares of Prestige Bancorp Common Stock.
Section 3.03 Authority; No Violation.
(a) Prestige Bancorp and Prestige Bank each has full corporate power and
authority to execute and deliver this Agreement and, subject to a favorable vote
of the Prestige Bancorp shareholders and receipt of all Regulatory Approvals, to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Prestige Bancorp and Prestige Bank and the completion by
Prestige Bancorp and Prestige Bank of the transactions contemplated hereby, up
to and including the Merger, have been duly and validly approved by the Boards
of Directors of Prestige Bancorp and Prestige Bank, and, except for approval of
the shareholders of Prestige Bancorp, no other corporate proceedings on the part
of Prestige Bancorp or Prestige Bank are necessary to complete the transactions
contemplated hereby, up to and including the Merger. Subject to any required OTS
nonobjection pursuant to the Supervisory Agreement, this Agreement has been duly
and validly executed and delivered by Prestige Bancorp and Prestige Bank, and
the Bank Merger has been duly and validly approved by the Board of Directors of
Prestige Bank, and by Prestige Bancorp in its capacity as sole shareholder of
Prestige Bank, and subject to approval by the shareholders of Prestige Bancorp
and receipt of the Regulatory Approvals, constitutes the valid and binding
obligations of Prestige Bancorp and Prestige Bank, enforceable against Prestige
Bancorp and Prestige Bank in accordance with its terms, subject to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights generally,
and as to Prestige Bank, the conservatorship or receivership provisions of the
FDIA, and subject, as to enforceability, to general principles of equity.
(b) (A) Subject to any required OTS nonobjection pursuant to the
Supervisory Agreement, the execution and delivery of this Agreement by Prestige
Bancorp and Prestige Bank, (B) subject to receipt of all Regulatory Approvals
and the compliance by Prestige Bancorp and Northwest Bancorp with any conditions
contained therein, and subject to the receipt of the approval of shareholders of
Prestige Bancorp, the effectiveness of this Agreement and the consummation of
the transactions contemplated hereby, and (C) compliance by Prestige Bancorp and
Prestige Bank with all of the terms, conditions or provisions hereof will not
(i) conflict with or result in a breach of any provision of the articles of
incorporation or bylaws of Prestige Bancorp or the charter and bylaws of
Prestige Bank; (ii) violate any statute, code, ordinance, rule, regulation,
judgment, order, writ, decree or injunction applicable to Prestige Bancorp or
Prestige Bank or any of their respective properties or assets; or (iii) violate,
conflict with, result in a breach of any provisions of, 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, accelerate the performance
required by, or result in a right of termination or acceleration or the creation
of any lien, security interest, charge or other encumbrance upon any of the
properties or assets of Prestige Bancorp or Prestige Bank under any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other investment or obligation to which
Prestige Bancorp or Prestige Bank is a party, or by which they or any of their
respective properties or assets may be bound or affected, except for such
violations, conflicts, breaches or defaults described in clause (ii) or (iii)
hereof which, either individually or in the aggregate, will not have a Material
Adverse Effect on Prestige Bancorp and Prestige Bank taken as a whole.
Section 3.04 Consents. Except for the receipt of the Regulatory Approvals
and compliance with any conditions contained therein, the approval of this
Agreement by the shareholders of Prestige Bancorp and
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Prestige Bank, the filing of articles of merger with the Office of the
Pennsylvania Secretary of State pursuant to the PBCA, and the filing of articles
of combination with the OTS, no consents or approvals of, or filings or
registrations with, any public body or authority are necessary, and no consents
or approvals of any Persons are necessary, or will be, in connection with (a)
the execution and delivery of this Agreement by Prestige Bancorp and Prestige
Bank, and (b) the completion by Prestige Bancorp and Prestige Bank of the
transactions contemplated hereby. Prestige Bancorp and Prestige Bank have no
reason to believe that (i) any Regulatory Approvals will not be received or that
(ii) any public body or authority, the consent or approval of which is not
required or to which a filing is not required, will object to the completion of
the transactions contemplated by this Agreement.
Section 3.05 Financial Statements.
(a) Prestige Bancorp has previously made available to Northwest Bancorp the
Prestige Bancorp Regulatory Reports. The Prestige Bancorp Regulatory Reports
have been prepared in all material respects in accordance with applicable
regulatory accounting principles and practices throughout the periods covered by
such statements, and fairly present in all material respects, the consolidated
financial position, results of operations and changes in shareholders' equity of
Prestige Bancorp as of and for the periods ended on the dates thereof, in
accordance with applicable regulatory accounting principles applied on a
consistent basis.
(b) Prestige Bancorp has previously made available to Northwest Bancorp the
Prestige Bancorp Financials. The Prestige Bancorp Financials have been prepared
in accordance with GAAP, and (including the related notes where applicable)
fairly present in each case in all material respects (subject in the case of the
unaudited interim statements to normal year-end adjustments), the consolidated
financial position, results of operations and cash flows of Prestige Bancorp and
Prestige Bank on a consolidated basis as of and for the respective periods
ending on the dates thereof, in accordance with GAAP applied on a consistent
basis during the periods involved, except as indicated in the notes thereto, or
in the case of unaudited statements, as permitted by Form 10-Q.
(c) At the date of each balance sheet included in the Prestige Bancorp
Financials or the Prestige Bancorp Regulatory Reports, Prestige Bancorp did not
have any liabilities, obligations or loss contingencies of any nature (whether
absolute, accrued, contingent or otherwise) of a type required to be reflected
in such Prestige Bancorp Financials or Prestige Bancorp Regulatory Reports or in
the footnotes thereto which are not fully reflected or reserved against therein
or fully disclosed in a footnote thereto, except for liabilities, obligations
and loss contingencies which are not material individually or in the aggregate
or which are incurred in the ordinary course of business, consistent with past
practice, and except for liabilities, obligations and loss contingencies which
are within the subject matter of a specific representation and warranty herein
and subject, in the case of any unaudited statements, to normal, recurring audit
adjustments and the absence of footnotes.
Section 3.06 Taxes. Prestige Bancorp and Prestige Bank are members of the
same affiliated group within the meaning of Code Section 1504(a). Prestige
Bancorp has duly filed all federal, state and material local tax returns
required to be filed by or with respect to Prestige Bancorp and Prestige Bank on
or prior to the Merger Effective Date (all such returns being accurate and
correct in all material respects) and has duly paid or made provisions for the
payment of all material federal, state and local taxes which have been incurred
by or are due or claimed to be due from Prestige Bancorp and Prestige Bank by
any taxing authority or pursuant to any written tax sharing agreement on or
prior to the Merger Effective Date other than taxes or other charges which (i)
are not delinquent, (ii) are being contested in good faith, or (iii) have not
yet been fully determined. As of the date of this Agreement, there is no audit
examination, deficiency assessment, tax investigation or refund litigation with
respect to any taxes of Prestige Bancorp or any of its Subsidiaries, and no
claim has been made by any authority in a jurisdiction where Prestige Bancorp or
any of its Subsidiaries do not file tax returns that Prestige Bancorp or any
such Subsidiary is subject to taxation in that jurisdiction. Prestige Bancorp
and its Subsidiaries have not executed an extension or waiver of any statute of
limitations on the assessment or collection of any material tax due that is
currently in effect. Prestige Bancorp and each of its Subsidiaries has withheld
and paid all taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
shareholder or other third party, and Prestige Bancorp and each of its
Subsidiaries has timely complied with all applicable information reporting
requirements under Part III, Subchapter A of Chapter 61 of the Code and similar
applicable state and local information reporting requirements.
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Section 3.07. No Material Adverse Effect. Except as disclosed in the
Securities Documents and other documents or releases set forth on Prestige
Bancorp Disclosure Schedule 3.07, Prestige Bancorp has not suffered any Material
Adverse Effect since December 31, 2000.
Section 3.08. Material Contracts; Leases; Defaults.
(a) Except as set forth in Prestige Bancorp Disclosure Schedule 3.08(a),
and except for this Agreement, and those agreements and other documents filed as
exhibits to Prestige Bancorp's Securities Documents, neither Prestige Bancorp
nor Prestige Bank is a party to, bound by or subject to (i) agreement, contract,
arrangement, commitment or understanding (whether written or oral) that is a
"material contract" within the meaning of Item 601(b)(10) of the SEC's
Regulation S-K (ii) any collective bargaining agreement with any labor union
relating to employees of Prestige Bancorp or Prestige Bank; (iii) any agreement
which by its terms limits the payment of dividends by Prestige Bancorp or
Prestige Bank; (iv) any instrument evidencing or related to material
indebtedness for borrowed money whether directly or indirectly, by way of
purchase money obligation, conditional sale, lease purchase, guaranty or
otherwise, in respect of which Prestige Bancorp or Prestige Bank is an obligor
to any Person, which instrument evidences or relates to indebtedness other than
deposits, repurchase agreements, FHLB of Pittsburgh advances, bankers'
acceptances, "treasury tax and loan" accounts established in the ordinary course
of business and transactions in "federal funds" or which contains financial
covenants or other restrictions (other than those relating to the payment of
principal and interest when due) which would be applicable on or after the
Merger Effective Date to Northwest Bancorp or any Northwest Bancorp Subsidiary;
(v) any contract (other than this Agreement) limiting the freedom, in any
material respect, of Prestige Bancorp or Prestige Bank to engage in any type of
banking or bank-related business which Prestige Bancorp or Prestige Bank is
permitted to engage in under applicable law as of the date of this Agreement or
(vi) any agreement, contract, arrangement, commitment or understanding (whether
written or oral) that restricts or limits in any material way the conduct of
business by Prestige Bancorp or Prestige Bank (it being understood that any
non-compete or similar provision shall be deemed material).
(b) Each real estate lease that may require the consent of the lessor or
its agent resulting from the Company Merger or the Bank Merger by virtue of a
prohibition or restriction relating to assignment, by operation of law or
otherwise, or change in control, is listed in Prestige Bancorp Disclosure
Schedule 3.08(b)(1) identifying the section of the lease that contains such
prohibition or restriction. Except as set forth in Prestige Bancorp Disclosure
Schedule 3.08(b)(2), neither Prestige Bancorp nor Prestige Bank is in default in
any material respect under any material contract, agreement, commitment,
arrangement, lease, insurance policy or other instrument to which it is a party,
by which its assets, business, or operations may be bound or affected, or under
which it or its assets, business, or operations receive benefits, and there has
not occurred any event that, with the lapse of time or the giving of notice or
both, would constitute such a default.
(c) True and correct copies of "material contracts," agreements,
instruments, contracts, arrangements, commitments, leases or understandings
identified in Prestige Bancorp Disclosure Schedule 3.08(a) and 3.08(b)(1) have
been made available to Northwest Bancorp on or before the date hereof, and are
in full force and effect on the date hereof and neither Prestige Bancorp nor
Prestige Bank (nor, to the Knowledge of Prestige Bancorp or any Prestige Bancorp
Subsidiary), any other party to any such "material contract," agreement,
instrument, contract, arrangement, commitment, lease or understanding) has
materially breached any provision of, or is in default in any respect under any
term of, any such "material contract," agreement, instrument, contract,
arrangement, commitment, lease or understanding. No party to any such "material
contract," agreement, instrument, contract, arrangement, commitment, lease or
understanding will have the right to terminate any or all of the provisions of
any such "material contract," agreement, instrument, contract, arrangement,
commitment, lease or understanding as a result of the execution of, and the
transactions contemplated by, this Agreement, or require the payment of an early
termination fee or penalty. No such "material contract," agreement, instrument,
contract, arrangement, commitment, lease or understanding to which Prestige
Bancorp or Prestige Bank is a party or under which Prestige Bancorp or Prestige
Bank may be liable contains provisions which permit an independent contractor to
terminate it without cause and after such termination without cause continue to
accrue future benefits thereunder.
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Section 3.09. Ownership of Property; Insurance Coverage.
(a) Except as set forth in Prestige Bancorp Disclosure Schedule 3.09(a),
Prestige Bancorp and the Prestige Bank each has good and, as to real property,
marketable title to all material assets and properties owned by Prestige Bancorp
or Prestige Bank in the conduct of their business, whether such assets and
properties are real or personal, tangible or intangible, including assets and
property reflected in the balance sheets contained in the Prestige Bancorp
Regulatory Reports and in the Prestige Bancorp Financials or acquired subsequent
thereto (except to the extent that such assets and properties have been disposed
of in the ordinary course of business, since the date of such balance sheets),
subject to no material liens, mortgages, security interests or pledges, or to
the Knowledge of Prestige Bancorp, material and adverse encumbrances, except (i)
those items which secure liabilities for public or statutory obligations or any
discount with, borrowing from or other obligations to FHLB of Pittsburgh,
inter-bank credit facilities, or any transaction by Prestige Bank acting in a
fiduciary capacity, and (ii) statutory liens for amounts not yet delinquent or
which are being contested in good faith. Prestige Bancorp and Prestige Bank, as
lessee, have the right under valid and subsisting leases of real and personal
properties used by Prestige Bancorp and Prestige Bank in the conduct of their
business to occupy or use all such properties as presently occupied and used by
each of them. Such existing leases and commitments to lease constitute or will
constitute operating leases for both tax and financial accounting purposes and
the lease expense and minimum rental commitments with respect to such leases and
lease commitments are as disclosed in the notes to the Prestige Bancorp
Financials.
(b) With respect to all material agreements pursuant to which Prestige
Bancorp or Prestige Bank has purchased securities subject to an agreement to
resell, if any, Prestige Bancorp or Prestige Bank has a lien or security
interest (which to Prestige Bancorp's Knowledge is a valid, perfected first
lien) in the securities or other collateral securing the repurchase agreement,
and the value of such collateral equals or exceeds the amount of the debt
secured thereby.
(c) Prestige Bancorp and Prestige Bank each currently maintains insurance
considered by Prestige Bancorp to be reasonable for their respective operations.
Prestige Bancorp has not received notice from any insurance carrier that (i)
such insurance will be canceled or that coverage thereunder will be reduced or
eliminated, or (ii) premium costs with respect to such policies of insurance
will be substantially increased. Except as set forth in Prestige Bancorp
Disclosure Schedule 3.09(c), there are presently no material claims pending
under such policies of insurance and no notices have been given by Prestige
Bancorp under such policies. All such insurance is valid and enforceable and in
full force and effect, and within the last three (3) years Prestige Bancorp has
received each type of insurance coverage for which it has applied and during
such periods has not been denied indemnification for any material claims
submitted under any of its insurance policies. Prestige Bancorp Disclosure
Schedule 3.09(c) identifies all policies of insurance maintained by Prestige
Bancorp and Prestige Bank.
Section 3.10. Legal Proceedings. Except as set forth in Prestige Bancorp
Disclosure Schedule 3.10, neither Prestige Bancorp nor Prestige Bank is a party
to any, and there are no pending or, to the Knowledge of either Prestige Bancorp
or Prestige Bank, threatened legal, administrative, arbitration or other
proceedings, claims (whether asserted or unasserted), actions or governmental
investigations or inquiries of any nature (i) against Prestige Bancorp or
Prestige Bank (other than routine bank regulatory examinations), (ii) to which
Prestige Bancorp's or Prestige Bank's assets are or may be subject, (iii)
challenging the validity or propriety of any of the transactions contemplated by
this Agreement, or (iv) which could adversely affect the ability of Prestige
Bancorp or Prestige Bank to perform under this Agreement, except for any
proceedings, claims, actions, investigations or inquiries referred to in clauses
(i) or (ii) which, if adversely determined, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect on Prestige
Bancorp and Prestige Bank, taken as a whole.
Section 3.11 Compliance With Applicable Law.
(a) Except as set forth in Prestige Bancorp Disclosure Schedule 3.11(a),
since January 1, 1997, Prestige Bancorp and Prestige Bank each was, and is, in
substantial compliance with all applicable federal, state, local and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders or decrees
applicable to it, its properties, assets and deposits, its business, and its
conduct of business and its relationship with its employees, including,
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without limitation, the Equal Credit Opportunity Act, the Fair Housing Act, the
Community Reinvestment Act of 1977, the Home Mortgage Disclosure Act and all
other applicable fair lending laws and other laws relating to discriminatory
business practices.
(b) Except as set forth in Prestige Bancorp Disclosure Schedule 3.11(b),
Prestige Bancorp and Prestige Bank each has all material permits, licenses,
authorizations, orders and approvals of, and has made all filings, applications
and registrations with, all Regulatory Authorities that are required in order to
permit it to own or lease its properties and to conduct its business as
presently conducted; all such permits, licenses, certificates of authority,
orders and approvals are in full force and effect and, to the Knowledge of
Prestige Bancorp and Prestige Bank, no suspension or cancellation of any such
permit, license, certificate, order or approval is threatened or will result
from the consummation of the transactions contemplated by this Agreement.
(c) Other than as set forth in Prestige Bancorp Disclosure Schedule
3.11(c), neither Prestige Bancorp nor Prestige Bank has received any
notification or communication from any Regulatory Authority (i) asserting that
Prestige Bancorp or Prestige Bank is not in material compliance with any of the
statutes, regulations or ordinances that such Regulatory Authority enforces;
(ii) threatening to revoke any license, franchise, permit or governmental
authorization that is material to Prestige Bancorp or Prestige Bank; (iii)
requiring or threatening to require Prestige Bancorp or Prestige Bank, or
indicating that Prestige Bancorp or Prestige Bank may be required, to enter into
a cease and desist order, agreement or memorandum of understanding or any other
agreement with any federal or state governmental agency or authority that is
charged with the supervision or regulation of banks or engages in the insurance
of bank deposits restricting or limiting, or purporting to restrict or limit, in
any material respect the operations of Prestige Bancorp or Prestige Bank,
including without limitation any restriction on the payment of dividends; or
(iv) directing, restricting or limiting, or purporting to direct, restrict or
limit, in any manner the operations of Prestige Bancorp or Prestige Bank,
including without limitation any restriction on the payment of dividends (any
such notice, communication, memorandum, agreement or order described in this
sentence is hereinafter referred to as a "Regulatory Agreement"). Other than as
set forth in Prestige Bancorp Disclosure Schedule 3.11(c), neither Prestige
Bancorp nor Prestige Bank has consented to or entered into any currently
effective Regulatory Agreement. The most recent regulatory rating given to
Prestige Bank as to compliance with the Community Reinvestment Act ("CRA") is
satisfactory or better.
Section 3.12 Employee Benefit Plans.
(a) Prestige Bancorp Disclosure Schedule 3.12 includes a list of all
existing Compensation and Benefit Plans. Each Compensation and Benefit Plan that
is an "employee pension benefit plan" (as defined in Section 3(2) of ERISA) (a
"Pension Plan") and which is intended to be qualified under Section 401(a) of
the IRC (an "Prestige Bancorp or Prestige Bank Qualified Plan") has received a
favorable determination letter from the IRS or was a prototype document that has
received a favorable letter from the IRS, and Prestige Bancorp and Prestige Bank
have no Knowledge of any circumstances likely to result in revocation of any
such favorable determination letter. There has been no announcement or
commitment by Prestige Bancorp, Prestige Bank or any of its Subsidiaries to
create an additional Compensation and Benefit Plan, or to amend any Compensation
and Benefit Plan, except for amendments required by applicable law to maintain
its qualified status or otherwise, which do not materially increase the cost of
such Compensation and Benefit Plan.
(b) Each Compensation and Benefit Plan has been operated and administered
in all material respects in accordance with its terms and with applicable law,
including, but not limited to, ERISA, the Code, the Securities Act, the Exchange
Act, the Age Discrimination in Employment Act, and any regulations or rules
promulgated thereunder, and all material filings, disclosures and notices
required by ERISA, the Code, the Securities Act, the Exchange Act, the Age
Discrimination in Employment Act and any other applicable law have been timely
made. Except as set forth in Prestige Bancorp Disclosure Schedule3.10(a), there
is no material pending, or to the Knowledge of Prestige Bancorp threatened,
litigation, administrative action, suit or claim relating to any of the
Compensation and Benefit Plans (other than routine claims for benefits). Neither
Prestige Bancorp nor Prestige Bank has engaged in a transaction, or omitted to
take any action, with respect to any Compensation and Benefit Plan that would
reasonably be expected to subject Prestige Bancorp or Prestige Bank to a tax or
penalty imposed by either Section 4975 of the Code or Section 502 of ERISA,
assuming for purposes of Section 4975 of the Code
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that the taxable period of any such transaction expired as of the date hereof
and subsequently expires as of the day next preceding the Merger Effective Date.
(c) No liability under Title IV of ERISA has been incurred by Prestige
Bancorp or Prestige Bank or any of its Subsidiaries with respect to any
Compensation and Benefit Plan which is subject to Title IV of ERISA, or with
respect to any "single-employer plan" (as defined in Section 4001(a) of ERISA)
("Prestige Bancorp or Prestige Bank Pension Plan") currently or formerly
maintained by Prestige Bancorp or Prestige Bank or any entity which is
considered one employer with Prestige Bancorp or Prestige Bank under Section
4001(b)(1) of ERISA or Section 414 of the IRC (an "ERISA Affiliate") since the
effective date of ERISA that has not been satisfied in full, and no condition
exists that presents a material risk to Prestige Bancorp or Prestige Bank or any
ERISA Affiliate of incurring a liability under such Title. No Prestige Bancorp
or Prestige Bank Pension Plan had an "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived, as of the last day of
the end of the most recent plan year ending prior to the date hereof; the fair
market value of the assets of each Prestige Bancorp or Prestige Bank Pension
Plan exceeds the present value of the "benefit liabilities" (as defined in
Section 4001(a)(16) of ERISA) under such Prestige Bancorp or Prestige Bank
Pension Plan as of the end of the most recent plan year with respect to the
respective Prestige Bancorp or Prestige Bank Pension Plan ending prior to the
date hereof, calculated on the basis of the actuarial assumptions used in the
most recent actuarial valuation for such Prestige Bancorp or Prestige Bank
Pension Plan as of the date hereof; there is not currently pending with the PBGC
any filing with respect to any reportable event under Section 4043 of ERISA nor
has any reportable event occurred as to which a filing is required and has not
been made (other than as might be required with respect to this Agreement and
the transactions contemplated thereby). Neither Prestige Bancorp or Prestige
Bank nor any ERISA Affiliate has contributed to any "multiemployer plan," as
defined in Section 3(37) of ERISA, on or after September 26, 1980. Except as set
forth in Prestige Bancorp's Disclosure Schedule 3.12, neither Prestige Bancorp
or Prestige Bank, nor any ERISA Affiliate, nor any Compensation and Benefit
Plan, including any Prestige Bancorp or Prestige Bank Pension Plan, nor any
trust created thereunder, nor any trustee or administrator thereof has engaged
in a transaction in connection with which Prestige Bancorp or Prestige Bank, any
ERISA Affiliate, and any Compensation and Benefit Plan, including any Prestige
Bancorp or Prestige Bank Pension Plan any such trust or any trustee or
administrator thereof, could reasonably be expected to be subject to either a
civil liability or penalty pursuant to Section 409, 502(i) or 502(l) of ERISA or
a tax imposed pursuant to Chapter 43 of the IRC.
(d) All material contributions required to be made under the terms of any
Compensation and Benefit Plan or ERISA Affiliate Plan or any employee benefit
arrangements to which Prestige Bancorp or Prestige Bank is a party or a sponsor
have been timely made, and all anticipated contributions and funding obligations
are accrued monthly on Prestige Bancorp's consolidated financial statements to
the extent required and in accordance with GAAP. Prestige Bancorp and its
Subsidiaries have expensed and accrued as a liability the present value of
future benefits under each applicable Compensation and Benefit Plan in
accordance with applicable laws and GAAP consistently applied. None of Prestige
Bancorp, Prestige Bank nor any ERISA Affiliate (x) has provided, or would
reasonably be expected to be required to provide, security to any Pension Plan
or to any ERISA Affiliate Plan pursuant to Section 401(a)(29) of the Code, or
(y) has taken any action, or omitted to take any action, that has resulted, or
would reasonably be expected to result, in the imposition of a Lien under
Section 412(n) of the Code or pursuant to ERISA.
(e) Neither Prestige Bancorp nor Prestige Bank has any obligations to
provide retiree health, life insurance, disability insurance, or other retiree
death benefits under any Compensation and Benefit Plan, other than benefits
mandated by Section 4980B of the Code. There has been no communication to
employees by Prestige Bancorp or Prestige Bank that would reasonably be expected
to promise or guarantee such employees retiree health, life insurance,
disability insurance, or other retiree death benefits.
(f) Prestige Bancorp and Prestige Bank do not maintain any Compensation and
Benefit Plans covering employees who are not United States residents.
(g) With respect to each Compensation and Benefit Plan, if applicable,
Prestige Bancorp has provided or made available to Northwest Bancorp copies of
the: (A) trust instruments and insurance contracts; (B) most recent Form 5500
filed with the IRS; (C) most recent actuarial report and financial statement;
(D) the most recent
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summary plan description; (E) most recent determination letter issued by the
IRS; (F) any Form 5310 or Form 5330 filed with the IRS; and (G) most recent
nondiscrimination tests performed under ERISA and the Code (including 401(k) and
401(m) tests).
(h) Except as set forth in Prestige Bancorp Disclosure Schedules 3.02(a),
3.12, 3.18, and 5.11(e), the consummation of the Merger will not, directly or
indirectly (including, without limitation, as a result of any termination of
employment or service at any time prior to or following the Merger Effective
Date) (A) entitle any employee, consultant or director to any payment or benefit
(including severance pay, change in control benefit, or similar compensation) or
any increase in compensation, (B) result in the vesting or acceleration of any
benefits under any Compensation and Benefit Plan or (C) result in any material
increase in benefits payable under any Compensation and Benefit Plan.
(i) Neither Prestige Bancorp nor Prestige Bank maintains any compensation
plans, programs or arrangements under which any payment is reasonably likely to
become non-deductible, in whole or in part, for tax reporting purposes as a
result of the limitations under Section 162(m) of the Code and the regulations
issued thereunder.
(j) Except as set forth in Prestige Bancorp Disclosure Schedule 3.12, the
consummation of the Merger will not, directly or indirectly (including without
limitation, as a result of any termination of employment or service at any time
prior to or following the Merger Effective Date), entitle any current or former
employee, director or independent contractor of Prestige Bancorp or Prestige
Bank to any actual or deemed payment (or benefit) which would constitute a
"parachute payment" (as such term is defined in Section 280G of the Code).
(k) Except as set forth in Prestige Bancorp Disclosure Schedule 3.02(a) or
3.12, there are no stock appreciation or similar rights, earned dividends or
dividend equivalents, or shares of restricted stock, outstanding under any of
the Compensation and Benefit Plan or otherwise as of the date hereof and none
will be granted, awarded, or credited after the date hereof, other than as set
forth in Section 5.11(g) hereof.
Section 3.13. Brokers, Finders and Financial Advisors. Except for the
engagement of FinPro, Inc. ("FinPro") in connection with the transactions
contemplated by this agreement, neither Prestige Bancorp nor Prestige Bank, nor
any of their respective officers, directors, employees or agents, has employed
any broker, finder or financial advisor in connection with the transactions
contemplated by this Agreement, or incurred any liability or commitment for any
fees or commissions to any such Person in connection with the transactions
contemplated by this Agreement, which has not been reflected in the Prestige
Bancorp Financials.
Section 3.14. Environmental Matters.
(a) With respect to Prestige Bancorp and Prestige Bank:
(i) Except as set forth in Prestige Bancorp Disclosure Schedule 3.14,
each of Prestige Bancorp and Prestige Bank, the Participation Facilities,
and, to Prestige Bancorp's Knowledge, the Loan Properties are, and have
been, in material compliance with, and are not liable under, any
Environmental Laws;
(ii) There is no suit, claim, action, demand, executive or
administrative order, directive, investigation or proceeding pending or, to
Prestige Bancorp's Knowledge, threatened, before any court, governmental
agency or board or other forum against it or Prestige Bank or any
Participation Facility (x) for alleged noncompliance (including by any
predecessor) with, or liability under, any Environmental Law or (y)
relating to the presence of or release (as defined herein) into the
environment of any Hazardous Material (as defined herein), whether or not
occurring at or on a site owned, leased or operated by it or Prestige Bank
or any Participation Facility;
(iii) There is no suit, claim, action, demand, executive or
administrative order, directive, investigation or proceeding pending or, to
Prestige Bancorp's Knowledge threatened, before any court, governmental
agency or board or other forum relating to or against any Loan Property (or
Prestige Bancorp or Prestige Bank in respect of such Loan Property) (x)
relating to alleged noncompliance (including by any predecessor) with, or
liability under, any Environmental Law or (y) relating to the presence of
or release into the
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environment of any Hazardous Material, whether or not occurring at or on a
site owned, leased or operated by a Loan Property;
(iv) Except as set forth in Prestige Bancorp Disclosure Schedule 3.14,
to Prestige Bancorp's Knowledge, the properties currently owned or operated
by Prestige Bancorp or Prestige Bank (including, without limitation, soil,
groundwater or surface water on, under or adjacent to the properties, and
buildings thereon) are not contaminated with and do not otherwise contain
any Hazardous Material other than as permitted under applicable
Environmental Law;
(v) Neither Prestige Bancorp nor Prestige Bank has received any
notice, demand letter, executive or administrative order, directive or
request for information from any federal, state, local or foreign
governmental entity or any other Person indicating that it may be in
violation of, or liable under, any Environmental Law;
(vi) To Prestige Bancorp's Knowledge, there are no underground storage
tanks on, in or under any properties owned or operated by Prestige Bancorp
or Prestige Bank or any Participation Facility, and no underground storage
tanks have been closed or removed from any properties owned or operated by
Prestige Bancorp or Prestige Bank or any Participation Facility; and
(vii) Except as set forth in Prestige Bancorp Disclosure Schedule
3.14, to Prestige Bancorp's Knowledge, during the period of (s) Prestige
Bancorp's or Prestige Bank's ownership or operation of any of their
respective current properties or (t) Prestige Bancorp's or Prestige Bank's
participation in the management of any Participation Facility, there has
been no contamination by or release of Hazardous Materials in, on, under or
affecting such properties. To Prestige Bancorp's Knowledge, prior to the
period of (x) Prestige Bancorp's or Prestige Bank's ownership or operation
of any of their respective current properties or (y) Prestige Bancorp's or
Prestige Bank's participation in the management of any Participation
Facility, there was no contamination by or release of Hazardous Material
in, on, under or affecting such properties.
(b) "Loan Property" means any property in which the applicable party (or a
Subsidiary of it) holds a security interest, and, where required by the context,
includes the owner or operator of such property, but only with respect to such
property. "Participation Facility" means any facility in which the applicable
party (or a Subsidiary of it) participates in the management (including all
property held as trustee or in any other fiduciary capacity) and, where required
by the context, includes the owner or operator of such property, but only with
respect to such property.
Section 3.15. Loan Portfolio.
(a) The allowances for possible losses reflected in the consolidated
balance sheets contained in the Prestige Bancorp Financials as of and for the
period ending September 30, 2001 were adequate under GAAP, and the allowances
for possible losses shown on the consolidated balance sheets contained in the
Prestige Bancorp Financials as of and for periods ending after September 30,
2001 will be adequate as of the dates thereof under GAAP.
(b) Prestige Bancorp Disclosure Schedule 3.15(b) sets forth a listing, as
of the last Business Day prior to the date of this Agreement, by account, of:
(A) all loans (including loan participations) of Prestige Bancorp or Prestige
Bank that have been accelerated during the past twelve (12) months; (B) all loan
commitments or lines of credit of Prestige Bancorp or Prestige Bank that have
been terminated by Prestige Bancorp or Prestige Bank during the past twelve (12)
months by reason of a default or adverse developments in the condition of the
borrower or other events or circumstances affecting the credit of the borrower;
(C) all loans, lines of credit and loan commitments as to which Prestige Bancorp
or Prestige Bank has given written notice of its intent to terminate during the
past twelve (12) months; (D) with respect to all commercial loans (including
commercial real estate loans), all notification letters and other written
communications from Prestige Bancorp or Prestige Bank to any of their respective
borrowers, customers or other parties during the past twelve (12) months wherein
Prestige Bancorp or Prestige Bank has requested or demanded that actions be
taken to correct existing defaults or facts or circumstances which may become
defaults; (E) each borrower, customer or other party which has notified
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Prestige Bancorp or Prestige Bank during the past twelve (12) months of, or has
asserted against Prestige Bancorp or Prestige Bank, in each case in writing, any
"lender liability" or similar claim, and, to the Knowledge of Prestige Bancorp,
each borrower, customer or other party which has given Prestige Bancorp or
Prestige Bank any oral notification of, or orally asserted to or against
Prestige Bancorp or Prestige Bank, any such claim; (F) all loans, (1) that are
contractually past due 90 days or more in the payment of principal and/or
interest, (2) that are on non-accrual status, (3) that as of the date of this
Agreement are classified as "Other Loans Specially Mentioned", "Special
Mention", "Substandard", "Doubtful", "Loss", "Classified", "Criticized", "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 obligor
thereunder, (4) where a reasonable doubt exists as to the timely future
collectibility of principal and/or interest, whether or not interest is still
accruing or the loans are less than 90 days past due, (5) where the interest
rate terms have been reduced and/or the maturity dates have been extended
subsequent to the agreement under which the loan was originally created due to
concerns regarding the borrower's ability to pay in accordance with such initial
terms, or (6) where a specific reserve allocation exists in connection
therewith, and (G) all assets classified by Prestige Bancorp or Prestige Bank as
real estate acquired through foreclosure or in lieu of foreclosure, including
in-substance foreclosures, and all other assets currently held that were
acquired through foreclosure or in lieu of foreclosure.
(c) To the Knowledge of Prestige Bancorp and Prestige Bank, all loans
receivable (including discounts) and accrued interest entered on the books of
Prestige Bancorp and Prestige Bank arose out of bona fide arm's-length
transactions, were made for good and valuable consideration in the ordinary
course of Prestige Bancorp's or Prestige Bank's respective business, and the
notes or other evidences of indebtedness with respect to such loans (including
discounts) are to the Knowledge of Prestige Bancorp true and genuine and are
what they purport to be. Except as set forth in Prestige Bancorp Disclosure
Schedule 3.15, to the Knowledge of Prestige Bancorp, the loans, discounts and
the accrued interest reflected on the books of Prestige Bancorp and Prestige
Bank are subject to no defenses, set-offs or counterclaims (including, without
limitation, those afforded by usury or truth-in-lending laws), except as may be
provided by bankruptcy, insolvency or similar laws affecting creditors' rights
generally or by general principles of equity. All such loans are owned by
Prestige Bancorp or Prestige Bank free and clear of any Liens, except for Liens
for taxes, assessments, or similar charges, incurred in the ordinary course of
business and which are not yet due and payable, and Liens in favor of the FHLB
of Pittsburgh to secure advances of the FHLB of Pittsburgh to Prestige Bank. To
the Knowledge of Prestige Bancorp and Prestige Bank, after discussions with
representatives of the United States Department of Agriculture (the "USDA") in
the ordinary course of business concerning the administration of the loans and
loan participations hereinafter described, (i) all guarantees of the USDA of the
loans (including loan participations) of Prestige Bank are currently in full
force and effect, (ii) Prestige Bank has received no notice of dishonor,
compromise or discount from the USDA concerning such loans and loan
participations, and (iii) Prestige Bank has fulfilled all of its material
obligations and has undertaken all necessary and material steps to preserve its
rights under such guarantees. It is expressly understood that any breach of the
representations and warranties contained in the last sentence of this Section
3.15(c), shall not authorize Northwest Bancorp to pursue a remedy for a willful
breach under Section 8.01(b)(i) hereof.
(d) To the Knowledge of Prestige Bancorp and Prestige Bank, the notes and
other evidences of indebtedness evidencing the loans described in Section
3.15(c) above, and all pledges, mortgages, deeds of trust and other collateral
documents or security instruments relating thereto are, in all material
respects, valid, true and genuine, and what they purport to be.
(e) No representation or warranty set in this Section 3.15 shall be deemed
to be breached unless such breach, individually or in the aggregate, has had or
is reasonably likely to have a Material Adverse Effect on Prestige Bancorp and
Prestige Bank taken as a whole.
Section 3.16. Securities Documents. Prestige Bancorp has made available to
Northwest Bancorp copies of its (i) annual reports on Form 10-K for the years
ended December 31, 2000, 1999 and 1998, (ii) quarterly reports on Form 10-Q for
the quarters ended March 31, 2001, June 30, 2001 and September 30, 2001 and
(iii) proxy materials used or for use in connection with its meetings of
shareholders held in 2001, 2000 and 1999. Such
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reports and such proxy materials complied, at the time filed with the SEC, in
all material respects, with the Securities Laws.
Section 3.17. Related Party Transactions. Except as described in Prestige
Bancorp's Proxy Statement distributed in connection with the 2001 annual meeting
of shareholders or as otherwise set forth in Prestige Bancorp Disclosure
Schedule 3.17, neither Prestige Bancorp nor Prestige Bank is a party to any
transaction (including any loan or other credit accommodation) with any
Affiliate of Prestige Bancorp. All such transactions (a) were made in the
ordinary course of business, (b) were made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other Persons, and (c) did not involve more than
the normal risk of collectability or present other unfavorable features. No loan
or credit accommodation to any Affiliate of Prestige Bancorp or Prestige Bank is
presently in default or, during the three (3) year period prior to the date of
this Agreement, has been in default or has been restructured, modified or
extended. Neither Prestige Bancorp nor Prestige Bank has been notified that
principal and interest with respect to any such loan or other credit
accommodation will not be paid when due or that the loan grade classification
accorded such loan or credit accommodation by Prestige Bancorp is inappropriate.
Section 3.18. Schedule of Termination Benefits. Prestige Bancorp
Disclosure Schedules 3.02(a), 3.18 and 5.11(e) include schedules and/or
descriptions of all termination benefits and related payments that would or will
be payable to the individuals identified thereon, excluding any Prestige Bancorp
Options granted to such individuals, under any and all employment agreements,
special termination agreements, change in control agreements, supplemental
executive retirement plans, deferred bonus plans, deferred compensation plans,
salary continuation plans, or any compensation arrangement, or other pension
benefit or welfare benefit plan maintained by Prestige Bancorp or Prestige Bank
for the benefit of officers or directors of Prestige Bancorp or Prestige Bank
(the "Benefits Schedule"), assuming their employment or service is terminated as
of July 1, 2002 and the Closing Date occurs prior to such termination. No other
individuals are entitled to benefits under any such plans.
Section 3.19. Deposits. None of the deposits of Prestige Bancorp or
Prestige Bank is a "brokered deposit" as defined in 12 CFR Section 337.6(a)(2).
Section 3.20. Antitakeover Provisions Inapplicable. Except as set forth in
Prestige Bancorp Disclosure Schedule 3.20, the transactions contemplated by this
Agreement are not subject to the requirements of any "moratorium," "control
share," "fair price," "affiliate transactions," "business combination" or other
antitakeover laws and regulations of any state, including the provisions
Subchapters E, F, G, H, I and J of Chapter 25 of the PBCA and the Takeover
Disclosure Law of the Commonwealth of Pennsylvania. The shareholder voting
restrictions contained in Article 6 of Prestige Bancorp's articles of
incorporation do not apply to the Merger. The affirmative vote of a majority of
the issued and outstanding shares of Prestige Bancorp Common Stock is required
to approve this Agreement under Prestige Bancorp's articles of incorporation and
the PBCA.
Section 3.21. Registration Obligations. Neither Prestige Bancorp nor
Prestige Bank is under any obligation, contingent or otherwise, that will
survive the Merger Effective Date by reason of any agreement to register any
transaction involving any of its securities under the Securities Act.
Section 3.22. Risk Management Instruments. All material interest rate
swaps, caps, floors, option agreements, futures and forward contracts and other
similar risk management arrangements, whether entered into for the account of
Prestige Bancorp or Prestige Bank or their customers (all of which are set forth
in Prestige Disclosure Schedule 3.22) were entered into in accordance with
prudent business practices and in all material respects in compliance with all
applicable laws, rules, regulations and regulatory policies and with
counterparties believed to be financially responsible at the time; and each of
them constitutes the valid and legally binding obligation of Prestige Bancorp or
Prestige Bank, enforceable in accordance with its terms (except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors' rights or by general equity
principles), and is in full force and effect. Neither Prestige Bancorp, Prestige
Bank, nor to the Knowledge of Prestige Bancorp any other party thereto, is in
breach of any of its obligations under any such agreement or arrangement in any
material respect.
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Section 3.23. Fairness Opinion. Prestige Bancorp has received a written
opinion from FinPro dated as of the date of this Agreement, to the effect that,
subject to the terms, conditions and qualifications set forth therein, as of the
date thereof, the Merger Consideration to be received by the shareholders of
Prestige Bancorp pursuant to this Agreement is fair to such shareholders from a
financial point of view.
Section 3.24. Dissenters' Rights. The transactions contemplated by this
Agreement shall not give rise to dissenters' rights under the PBCA or
Pennsylvania law or regulations, and the holders of shares of Prestige Bancorp
Common Stock shall not have the right to dissent and obtain payment of the fair
value of his shares under the PBCA.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF NORTHWEST SAVINGS BANK
AND NORTHWEST BANCORP
Northwest Bancorp and Northwest Savings Bank represent and warrant to
Prestige Bancorp and Prestige Bank that the statements contained in this Article
IV are correct and complete as of the date of this Agreement and will be correct
and complete as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement throughout this
Article IV), except as set forth in the Northwest Bancorp Disclosure Schedules
delivered by Northwest Bancorp to Prestige Bancorp on the date hereof and except
as to any representation or warranty which specifically relates to an earlier
date. Northwest Bancorp and Northwest Savings Bank have made a good faith effort
to ensure that the disclosure on each schedule of the Northwest Bancorp
Disclosure Schedules corresponds to the Section referenced herein. However, for
purposes of the Northwest Bancorp Disclosure Schedules, any item disclosed on
any schedule therein is deemed to be fully disclosed with respect to all
schedules under which such item may be relevant.
Section 4.01. Organization.
(a) Northwest Bancorp and Northwest MHC are corporations duly organized,
validly existing and in good standing under the laws of the United States, and
are duly registered as savings association holding companies under the HOLA.
Northwest Bancorp has full corporate power and authority to carry on its
business as now conducted and is duly licensed or qualified to do business in
the states of the United States and foreign jurisdictions where its ownership or
leasing of property or the conduct of its business requires such qualification,
except where the failure to be so licensed or qualified would not have a
Material Adverse Effect on Northwest Bancorp.
(b) Northwest Savings Bank is a stock savings bank duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Pennsylvania. The deposits of Northwest Savings Bank are insured by the FDIC to
the fullest extent permitted by law, and all premiums and assessments required
to be paid in connection therewith have been paid when due by Northwest Savings
Bank. Each other Northwest Bancorp Subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization.
(c) Northwest Savings Bank is a member in good standing of the FHLB of
Pittsburgh and owns the requisite amount of stock therein.
(d) Prior to the date of this Agreement, Northwest Bancorp has delivered to
Prestige Bancorp true and correct copies of the charter and bylaws of Northwest
Bancorp and Northwest MHC, and Northwest Savings Bank has delivered to Prestige
Bancorp true and correct copies of its articles of incorporation and bylaws.
(e) Northwest Merger Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Pennsylvania, with its principal executive offices in Warren, Pennsylvania.
Northwest Merger Subsidiary is a wholly owned subsidiary of Northwest Bancorp.
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Section 4.02. Authority; No Violation.
(a) Northwest MHC, Northwest Bancorp, Northwest Savings Bank and Northwest
Merger Subsidiary have full corporate power and authority to execute and deliver
this Agreement and Northwest Bancorp, Northwest Savings Bank and Northwest
Merger Subsidiary have full corporate power and authority to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Northwest Bancorp, Northwest Savings Bank and Northwest Merger Subsidiary and
the completion by Northwest Bancorp, Northwest Savings Bank and Northwest Merger
Subsidiary of the transactions contemplated hereby have been duly and validly
approved by the Boards of Directors of Northwest MHC, Northwest Bancorp,
Northwest Savings Bank and Northwest Merger Subsidiary and no other corporate
proceedings on the part of Northwest Bancorp, Northwest Savings Bank or
Northwest Merger Subsidiary are necessary to complete the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Northwest Bancorp, Northwest Savings Bank and Northwest Merger
Subsidiary and, subject to receipt of the Regulatory Approvals, constitutes the
valid and binding obligation of Northwest Bancorp, Northwest Savings Bank and
Northwest Merger Subsidiary, enforceable against Northwest Bancorp, Northwest
Savings Bank and Northwest Merger Subsidiary in accordance with its terms,
subject to applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally, and as to Northwest Savings Bank, the
conservatorship or receivership provisions of the FDIA, and subject, as to
enforceability, to general principles of equity.
(b) (A) The execution and delivery of this Agreement by Northwest Bancorp,
Northwest Savings Bank and Northwest Merger Subsidiary, (B) subject to receipt
of approvals from the Regulatory Authorities referred to in Section 4.03 hereof
and Prestige Bancorp's and Northwest Bancorp's and Northwest Merger Subsidiary's
compliance with any conditions contained therein, the consummation of the
transactions contemplated hereby, and (C) compliance by Northwest Bancorp,
Northwest Savings Bank and Northwest Merger Subsidiary with any of the terms or
provisions hereof, will not (i) conflict with or result in a breach of any
provision of the charter or bylaws of Northwest Bancorp, or the articles of
incorporation or bylaws of any Northwest Bancorp Subsidiary; (ii) violate any
statute, code, ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to Northwest Bancorp or any Northwest Bancorp Subsidiary
or any of their respective properties or assets; or (iii) violate, conflict
with, result in a breach of any provisions of, 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, accelerate the performance required by, or
result in a right of termination or acceleration or the creation of any lien,
security interest, charge or other encumbrance upon any of the properties or
assets of Northwest Bancorp, Northwest Merger Subsidiary or Northwest Savings
Bank under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
investment or obligation to which Northwest Bancorp, Northwest Merger Subsidiary
or Northwest Savings Bank is a party, or by which they or any of their
respective properties or assets may be bound or affected, except for such
violations, conflicts, breaches or defaults described in clause (ii) or (iii)
hereof which, either individually or in the aggregate, will not have a Material
Adverse Effect on Northwest Bancorp.
Section 4.03. Consents. Except for the receipt of the Regulatory Approvals
and compliance with any conditions contained therein, the approval of this
Agreement by the shareholders of Prestige Bancorp, the filing of articles of
merger with the Office of the Pennsylvania Secretary of State pursuant to the
PBCA, and the filing of articles of combination with the OTS, no consents or
approvals of, or filings or registrations with, any public body or authority are
necessary, and no consents or approvals of any Persons are necessary, or will
be, in connection with (a) the execution and delivery of this Agreement by
Northwest Bancorp, Northwest Savings Bank and Northwest Merger Subsidiary, and
(b) the completion by Northwest Bancorp, Northwest Savings Bank and Northwest
Merger Subsidiary of the transactions contemplated hereby. Northwest Bancorp has
no reason to believe that (i) any Regulatory Approvals will not be received or
will be received with conditions, limitations or restrictions unacceptable to it
or that would adversely impact the ability of Northwest Savings Bank and
Northwest Bancorp to complete the transactions contemplated by this Agreement or
that (ii) any public body or authority, the consent or approval of which is not
required or to which a filing is not required, will object to the completion of
the transactions contemplated by this Agreement.
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Section 4.04. Financial Statements. Northwest Bancorp has made available
to Prestige Bancorp the Northwest Bancorp Financials. Except as set forth in
Northwest Bancorp Disclosure Schedule 4.04, the Northwest Bancorp Financials
have been prepared in accordance with GAAP and practices applied on a consistent
basis throughout the periods covered by such statements, and (including the
related notes where applicable) fairly present the consolidated financial
position, results of operations and cash flows of Northwest Bancorp and the
Northwest Bancorp Subsidiaries as of and for the respective periods ending on
the dates thereof, in accordance with GAAP applied on a consistent basis during
the periods involved, except as indicated in the notes thereto.
Section 4.05. Compliance With Applicable Law.
(a) Each of Northwest Bancorp and each Northwest Bancorp Subsidiary is in
substantial compliance with all applicable federal, state, local and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders or decrees
applicable to it, its properties, assets and deposits, its business, its conduct
of business and its relationship with its employees, including, without
limitation, the Equal Credit Opportunity Act, the Fair Housing Act, the
Community Reinvestment Act of 1977, the Home Mortgage Disclosure Act and all
other applicable fair lending laws and other laws relating to discriminatory
business practices.
(b) Each of Northwest Bancorp and each Northwest Bancorp Subsidiary has all
material permits, licenses, authorizations, orders and approvals of, and has
made all filings, applications and registrations with, all Regulatory
Authorities that are required in order to permit it to own or lease its
properties and to conduct its business as presently conducted; all such permits,
licenses, certificates of authority, orders and approvals are in full force and
effect and, to the best Knowledge of Northwest Bancorp, no suspension or
cancellation of any such permit, license, certificate, order or approval is
threatened or will result from the consummation of the transactions contemplated
by this Agreement.
(c) Neither Northwest Bancorp nor any Northwest Bancorp Subsidiary has
received any notification or communication from any Regulatory Authority (i)
asserting that Northwest Bancorp or any Northwest Bancorp Subsidiary is not in
material compliance with any of the statutes, regulations or ordinances which
such Regulatory Authority enforces; (ii) threatening to revoke any license,
franchise, permit or governmental authorization which is material to Northwest
Bancorp or any Northwest Bancorp Subsidiary; (iii) requiring or threatening to
require Northwest Bancorp or any Northwest Bancorp Subsidiary, or indicating
that Northwest Bancorp or any Northwest Bancorp Subsidiary may be required, to
enter into a cease and desist order, agreement or memorandum of understanding or
any other agreement with any federal or state governmental agency or authority
which is charged with the supervision or regulation of banks or engages in the
insurance of bank deposits restricting or limiting, or purporting to restrict or
limit, in any material respect the operations of Northwest Bancorp or any
Northwest Bancorp Subsidiary, including without limitation any restriction on
the payment of dividends; or (iv) directing, restricting or limiting, or
purporting to direct, restrict or limit, in any manner the operations of
Northwest Bancorp or any Northwest Bancorp Subsidiary, including without
limitation any restriction on the payment of dividends (any such notice,
communication, memorandum, agreement or order described in this sentence is
hereinafter referred to as a "Regulatory Agreement"). Neither Northwest Bancorp
nor any Northwest Bancorp Subsidiary has consented to or entered into any
currently effective Regulatory Agreement. The most recent regulatory rating
given to Northwest Savings Bank as to compliance with the CRA is satisfactory or
better.
Section 4.06. Financing. As of the Merger Effective Date and giving effect
to the Mergers, Northwest Bancorp and Northwest Savings Bank together will have
funds that are sufficient and available to meet their obligations under this
Agreement.
Section 4.07. Regulatory Approvals. Northwest Bancorp and Northwest
Savings Bank are not aware of any reason that they cannot obtain the Regulatory
Approvals, and neither Northwest Bancorp nor Northwest Savings Bank has received
any advice or information from any Regulatory Authority indicating that any such
approval will be denied or are doubtful.
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Section 4.08. Tax Opinion. Northwest Bancorp and Northwest Savings Bank
are not aware of any reason that they cannot obtain the tax opinion referenced
in Section 6.02(h).
Section 4.09. Legal Proceedings. Neither Northwest Bancorp nor Northwest
Savings Bank is a party to any, and there are no pending or threatened legal,
administrative, arbitration or other proceedings, claims (whether asserted or
unasserted), actions or governmental investigations or inquiries of any nature
that could materially adversely affect the ability of Northwest Bancorp or
Northwest Savings Bank to perform under this Agreement.
ARTICLE V
COVENANTS OF THE PARTIES
Section 5.01. Conduct of Prestige Bancorp's Business.
(a) From the date of this Agreement to the Closing Date, Prestige Bancorp
and Prestige Bank each will conduct its business and engage in transactions,
including extensions of credit, only in the ordinary course and consistent with
past practice and policies, except as otherwise required or contemplated by this
Agreement or with the written consent of Northwest Bancorp. Prestige Bancorp and
Prestige Bank will use their reasonable good faith efforts, to (i) preserve
their business organizations intact, (ii) maintain good relationships with
employees, and (iii) preserve for themselves the goodwill of their customers and
others with whom business relationships exist. From the date hereof to the
Closing Date, except as otherwise consented to or approved by Northwest Bancorp
in writing (which approval will not be unreasonably delayed or withheld) or as
contemplated or required by this Agreement, Prestige Bancorp will not, and
Prestige Bancorp will not permit Prestige Bank to:
(i) amend any provision of its articles of incorporation, charter or
other chartering documents or bylaws, impose, or suffer the imposition, on
any share of stock held by Prestige Bancorp in Prestige Bank of any
material lien, charge or encumbrance or permit any such lien to exist, or
waive or release any material right or cancel or compromise any material
debt or claim;
(ii) change the number of shares of its authorized capital stock or
issue or grant any Right, option, warrant, call, commitment, subscription,
right to purchase or agreement of any character relating to its authorized
or issued capital stock, or any securities convertible into shares of such
capital stock, or split, combine or reclassify any shares of its capital
stock, redeem or otherwise acquire any shares of such capital stock, or
sell or issue any shares of capital stock (except pursuant to the exercise
of Prestige Bancorp Options);
(iii) declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect
of its capital stock, except that Prestige Bank may pay cash dividends to
Prestige Bancorp;
(iv) grant or agree to pay any bonus, severance or termination to, or
enter into, extend or amend any employment agreement, severance agreement
and/or supplemental executive agreement with, or increase in any manner the
compensation or fringe benefits of, any employee, officer or director,
except (i) as set forth in Prestige Bancorp Disclosure Schedules 3.12 or
3.18, (ii) for normal increases in the ordinary course of business
consistent with past practice (it being understood that any salary increase
of 4% or less shall be deemed an increase in the ordinary course of
business consistent with past practice), and (iii) as otherwise provided in
Section 5.11 hereof, or hire any new employee without consulting with
Northwest Bancorp prior to such hiring;
(v) enter into or, except as may be required by law to maintain the
qualified status thereof or otherwise required by law, modify any pension,
retirement, stock option, stock purchase, stock appreciation right, stock
grant, savings, profit sharing, deferred compensation, supplemental
retirement, consulting, bonus, group insurance or other employee benefit,
incentive or welfare contract, plan or arrangement, or any trust agreement
related thereto, in respect of any of its directors, officers or employees,
or former directors, officers or employees, except as set forth in Prestige
Bancorp Disclosure Schedule 5.01(a)(v); or make any
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contributions to any defined contribution or defined benefit plan not in
the ordinary course of business consistent with past practice;
(vi) merge or consolidate with any other corporation; sell or lease
all or any substantial portion of its assets or business; make any
acquisition of all or any substantial portion of the business or assets of
any other Person, firm, association, corporation or business organization
other than in connection with foreclosures, settlements in lieu of
foreclosure, troubled loan or debt restructuring, or the collection of any
loan or credit arrangement between Prestige Bancorp, or Prestige Bank, and
any other Person; enter into a purchase and assumption transaction with
respect to deposits and liabilities; permit the revocation or surrender of
its certificate of authority to maintain, or file an application for the
relocation of, any existing branch office, or file an application for a
certificate of authority to establish a new branch office except as set
forth in Prestige Bancorp Disclosure Schedule 5.01(a)(vi);
(vii) sell or otherwise dispose of the capital stock of Prestige Bank,
or sell or otherwise dispose of any asset other than in the ordinary course
of business consistent with past practice; subject any asset to a lien,
pledge, security interest or other encumbrance (other than in connection
with deposits, the collections and/or processing of checks, drafts, notes,
instruments or letters of credit, Liens granted to the FHLB of Pittsburgh
to secure advance to Prestige Bank from the FHLB of Pittsburgh, repurchase
agreements, bankers acceptances, "treasury tax and loan" accounts
established in the ordinary course of business and transactions in "federal
funds" and the satisfaction of legal requirements in the exercise of trust
powers) other than in the ordinary course of business consistent with past
practice; incur any liability or indebtedness for borrowed money (or
guarantee any indebtedness for borrowed money), except in the ordinary
course of business consistent with past practice;
(viii) make any change in policies with regard to: the extension of
credit, or the establishment of reserves with respect to the possible loss
thereon or the charge off of losses incurred thereon; investments;
asset/liability management; or other material banking policies in any
material respect except as may be required by changes in applicable law or
regulations, or GAAP;
(ix) acquire any new loan participation or loan servicing rights;
(x) except for any commitments disclosed on the Prestige Bancorp
Disclosure Schedule 5.01(a)(x): make any new loan or other credit facility
commitment (including without limitation, lines of credit and letters of
credit) in excess of $300,000; or increase, compromise, extend, renew or
modify any existing loan or commitment outstanding in excess of $300,000;
or make any new loan or other credit facility commitment (including without
limitation, lines of credit and letters of credit) in any amount if
thereafter the exposure to any one borrower or group of affiliated
borrowers (including obligors under loan participations) in the aggregate
would exceed $750,000;
(xi) except for automatically renewing leases or as set forth in
Prestige Bancorp Disclosure Schedule 5.01(a)(xi), renew or extend any
lease, or by any act, or omission to act, allow any lease to renew or be
extended;
(xii) make any capital expenditures in excess of $10,000 individually
or $50,000 in the aggregate, other than pursuant to binding commitments
existing on the date hereof;
(xiii) except for the execution of, and as otherwise provided for,
contemplated in, or permitted by, this Agreement, the Schedules, and the
Exhibits hereto, take any action that would give rise to a right of payment
to any individual under any employment agreement, or take any action that
would give rise to a right of payment to any individual under any
Compensation and Benefit Plan;
(xiv) Except as set forth in Prestige Bancorp Disclosure Schedule
5.01(a)(xiv), purchase any security for its investment portfolio not rated
"A" or higher by either Standard & Poor's Corporation or Moody's Investor
Services, Inc, or with a remaining term to maturity of more than five (5)
years;
(xv) engage in any new loan transaction with an officer or director;
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(xvi) materially change the pricing strategies of Prestige Bank with
respect to its deposit or loan accounts;
(xvii) enter into any agreement, arrangement or commitment not made in
the ordinary course of business;
(xviii) change its method of accounting in effect prior to the Merger
Effective Date, except as required by changes in laws or regulations, by
Regulatory Authorities having jurisdiction over Prestige Bancorp or
Prestige Bank, or by GAAP concurred in by Prestige Bancorp's independent
certified public accountants;
(xix) enter into any futures contract, option, interest rate caps,
interest rate floors, interest rate exchange agreement or other agreement
or take any other action for purposes of hedging the exposure of its
interest-earning assets and interest-bearing liabilities to changes in
market rates of interest;
(xx) invest in "high risk" mortgage derivative investments as defined
by the Federal Financial Institutions Examination Council;
(xxi) discharge or satisfy any lien or encumbrance or pay any material
obligation or liability (absolute or contingent) other than at scheduled
maturity or in the ordinary course of business;
(xxii) enter or agree to enter into any agreement or arrangement
granting any preferential right to purchase any of its assets or rights or
requiring the consent of any party to the transfer and assignment of any
such assets or rights;
(xxiii) take any action that would result in any of the
representations or warranties of Prestige Bancorp or Prestige Bank
contained in this Agreement not to be true and correct in any material
respect as of the Merger Effective Date or that could reasonably result in
a material delay in consummation of the transactions contemplated hereby;
(xxiv) foreclose upon or otherwise take title to or possession or
control of any real property without first obtaining a phase one
environmental report thereon indicating that there is no apparent violation
of or liability under the Environmental Laws, provided, however, that it
shall not be required to obtain such a report with respect to one- to
four-family, non-agricultural residential property of five (5) acres or
less to be foreclosed upon unless it has reason to believe that such
property might be in violation of or require remediation under
Environmental Laws;
(xxv) except in the ordinary course of business consistent with past
practice and involving an amount not in excess of $50,000, settle any
claim, action or proceeding; provided that no settlement shall be made if
it involves a precedent for other similar claims, which in the aggregate,
could be material to Prestige Bancorp and Prestige Bank, taken as a whole;
or
(xxvi) agree to do any of the foregoing.
Except as otherwise set forth above in this Section 5.01, for purposes of
this Section 5.01, unless provided for in a business plan, budget or similar
document delivered to Northwest Bancorp prior to the date of this Agreement, it
shall not be considered in the ordinary course of business for Prestige Bancorp
or Prestige Bank to do any of the following: (i) make any sale, assignment,
transfer, pledge, hypothecation or other disposition of any assets having a book
or market value, whichever is greater, in the aggregate in excess of $100,000,
other than (w) pledges of, or Liens on, assets to secure government deposits,
advances made to Prestige Bank by FHLB of Pittsburgh, the payment of taxes,
assessments, or similar charges which are not yet due and payable, the payment
of deposits, repurchase agreements, bankers acceptances, "treasury tax and loan"
accounts consistent with past practices, or the collection and/or processing of
checks, drafts or letters of credit consistent with customary banking practices,
or to exercise trust powers, (x) sales of assets received in satisfaction of
debts previously contracted in the ordinary course of banking business, or (y)
issuance of loans, sales of previously purchased government guaranteed loans, or
transactions in the investment securities portfolio by Prestige Bancorp or a
Prestige Bank or repurchase agreements made, in each case, in the ordinary
course of banking business; or (ii) undertake or enter any lease, contract or
other commitment for its account, other than in the ordinary course of providing
credit to customers as part of its banking business, involving a payment by
Prestige Bancorp or
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Prestige Bank of more than $10,000 annually, or containing a material financial
commitment and extending beyond twelve (12) months from the date hereof.
Section 5.02. Access; Confidentiality.
(a) Each of Prestige Bancorp and Prestige Bank shall permit Northwest
Bancorp and its representatives reasonable access to its properties, and shall
disclose and make available to them all books, papers and records relating to
the assets, properties, operations, obligations and liabilities of Prestige
Bancorp and Prestige Bank, including, but not limited to, all books of account
(including the general ledger), tax records, minute books of meetings of boards
of directors (and any committees thereof) (other than minutes of any
confidential discussion of this Agreement and the transactions contemplated
hereby), and shareholders, 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 Northwest Bancorp may have a reasonable interest (provided
that Prestige Bancorp shall not be required to provide access to any information
that would violate its, or Prestige Bank's, attorney-client privilege or would
violate applicable law, regulation, or confidentiality agreement identified in
Prestige Bancorp Disclosure Schedule 5.02(a)). Prestige Bancorp and Prestige
Bank shall make their respective officers, employees and agents and authorized
representatives (including counsel and independent public accountants) available
to confer with Northwest Bancorp and its representatives. In addition, from the
date of this Agreement through the Closing Date, Prestige Bancorp and Prestige
Bank shall permit employees of Northwest Bancorp reasonable access to
information relating to problem loans, loan restructurings and loan workouts of
Prestige Bancorp and Prestige Bank. The parties will hold all such information
delivered in confidence to the extent required by, and in accordance with, the
provisions of confidentiality set forth in a letter agreement, dated October 9,
2001, between Prestige Bancorp and Northwest Bancorp (the "Confidentiality
Agreement").
(b) Northwest Bancorp agrees to conduct such investigations and discussions
hereunder in a manner so as not to interfere unreasonably with normal operations
and customer and employee relationships of Prestige Bancorp and Prestige Bank.
(c) If the transactions contemplated by this Agreement shall not be
consummated, Prestige Bancorp and Northwest Bancorp will each destroy or return
all documents and records obtained from the other party or its representatives,
during the course of its investigation and will cause all information with
respect to the other party obtained pursuant to this Agreement or preliminarily
thereto to be kept confidential, except to the extent such information becomes
public through no fault of the party to whom the information was provided or any
of its representatives or agents and except to the extent disclosure of any such
information is legally required. Prestige Bancorp and Northwest Bancorp shall
each give prompt written notice to the other party of any contemplated
disclosure where such disclosure is so legally required.
Section 5.03. Regulatory Matters and Consents.
(a) Northwest Bancorp and Northwest Savings Bank will prepare all
Applications, make all filings, and pay all filing fees for all Regulatory
Approvals necessary or advisable to consummate the transactions contemplated by
this Agreement; and Northwest Bancorp and Northwest Savings Bank will and use
their best efforts to obtain as promptly as practicable after the date hereof,
all Regulatory Approvals necessary or advisable to consummate the transactions
contemplated by this Agreement. The information supplied, or to be supplied, by
Northwest Bancorp or Northwest Savings Bank for inclusion in the Applications
will, at the time such documents are filed with any Regulatory Authority, be
accurate in all material aspects.
(b) Prestige Bancorp will furnish Northwest Bancorp with all information
concerning Prestige Bancorp and Prestige Bank as may be necessary or advisable
in connection with any Application or filing made by or on behalf of Northwest
Bancorp to any Regulatory Authority in connection with the transactions
contemplated by this Agreement. The information supplied, or to be supplied, by
Prestige Bancorp for inclusion in the Applications will, at the time such
documents are filed with any Regulatory Authority, be accurate in all material
respects.
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(c) Northwest Bancorp and Prestige Bancorp will promptly furnish each other
with copies of all material written communications to, or received by them from
any Regulatory Authority, and notice of material oral communications with the
Regulatory Authorities, in respect of the transactions contemplated hereby,
except information that is filed by either party that is designated as
confidential.
(d) The parties hereto agree that they will consult with each other with
respect to the obtaining of all Regulatory Approvals and other necessary
permits, consents, approvals and authorizations of Regulatory Authorities.
Northwest Bancorp will furnish Prestige Bancorp with (i) copies of all
Applications prior to filing with any Regulatory Authority and provide Prestige
Bancorp a reasonable opportunity to provide changes to such Applications, (ii)
copies of all Applications filed by Northwest Bancorp and (iii) copies of all
Regulatory Reports filed by Northwest Bancorp after the date hereof.
(e) Prestige Bancorp and Prestige Bank, and Northwest Bancorp, will
cooperate with each other in the foregoing matters and will furnish the
responsible party with all information concerning it as may be necessary or
advisable in connection with any Application or filing (including the Proxy
Statement and any report filed with the SEC) made by or on behalf of Northwest
Bancorp or Prestige Bancorp to any Regulatory Authority in connection with the
transactions contemplated by this Agreement, and such information will be
accurate and complete in all material respects. In connection therewith, each
party will provide certificates and other documents reasonably requested by the
other.
Section 5.04. Taking of Necessary Action.
(a) Northwest Bancorp and Prestige Bancorp shall each use its best efforts
in good faith, and each of them shall cause its Subsidiaries to use their best
efforts in good faith, to (i) obtain any necessary shareholder approval of their
respective shareholders to complete the Merger, (ii) furnish such information as
may be required in connection with the preparation of the documents referred to
in Section 5.03 of this Agreement, and (iii) take or cause to be taken all
action necessary or desirable on its part using its best efforts so as to permit
completion of the Mergers and the other transactions contemplated by this
Agreement, including, without limitation, (A) obtaining the consent or approval
of each Person whose consent or approval is required or desirable for
consummation of the transactions contemplated hereby (including assignment of
leases without any change in terms), provided that neither Prestige Bancorp nor
Prestige Bank shall agree to make any payments or modifications to agreements in
connection therewith without the prior written consent of Northwest Bancorp, and
(B) requesting the delivery of appropriate opinions, consents and letters from
its counsel and independent auditors. No party hereto shall take, or cause, or
to the best of its ability permit to be taken, any action that would
substantially impair the prospects of completing the Merger pursuant to this
Agreement; provided that nothing herein contained shall preclude Northwest
Bancorp or Prestige Bancorp from exercising its rights under this Agreement.
(b) Prestige Bancorp shall prepare, subject to the review and consent of
Northwest Bancorp with respect to matters relating to Northwest Bancorp and the
transactions contemplated by this Agreement, a Proxy Statement to be filed by
Prestige Bancorp with the SEC and to be mailed to the shareholders of Prestige
Bancorp in connection with the meeting of its shareholders and transactions
contemplated hereby, which Proxy Statement shall conform to all applicable legal
requirements. The parties shall cooperate with each other with respect to the
preparation of the Proxy Statement. Prestige Bancorp shall, as promptly as
practicable following the preparation thereof, file the Proxy Statement with the
SEC and Prestige Bancorp shall use all reasonable efforts to have the Proxy
Statement mailed to shareholders as promptly as practicable after such filing.
Prestige Bancorp will promptly advise Northwest Bancorp of the time when the
Proxy Statement has been filed and mailed, or of any comments from the SEC or
any request by the SEC for additional information. The information to be
supplied by Northwest Bancorp for inclusion in the Proxy Statement will not, at
the time the Proxy Statement is mailed to Prestige Bancorp shareholders, contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein not misleading.
Section 5.05. Certain Agreements.
(a) From and after the Merger Effective Date, Northwest Bancorp and
Northwest Savings Bank, jointly and severally shall to the fullest extent
permitted under applicable law, agree to indemnify, defend and hold harmless
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each present and former director and/or officer of Prestige Bancorp and Prestige
Bank as of the Merger Effective Date (the "Indemnified Parties") against all
losses, claims, damages, costs, expenses (including reasonable attorneys' fees
and expenses), liabilities, judgments or amounts paid in settlement (with the
approval of Northwest Bancorp, which approval shall not be unreasonably
withheld) or in connection with any claim, action, suit, proceeding or
investigation arising out of matters existing or occurring at or prior to the
Merger Effective Date (a "Claim") in which an Indemnified Party is, or is
threatened to be made, a party or a witness based in whole or in part on, or
arising in whole or in part out of, the fact that such Indemnified Party is or
was a director or officer of Prestige Bancorp or Prestige Bank, regardless of
whether such Claim is asserted or claimed prior to, at or after the Merger
Effective Date, to the fullest extent to which directors and officers of
Prestige Bancorp are entitled under the PBCA, Prestige Bancorp's articles of
incorporation and bylaws, or other applicable law as in effect on the date
hereof (and Northwest Bancorp shall pay expenses in advance of the final
disposition of any such action or proceeding to each Indemnified Party to the
extent permissible to a Pennsylvania corporation under the PBCA and Prestige
Bancorp's articles of incorporation and bylaws as in effect on the date hereof;
provided, that the Indemnified Party to whom expenses are advanced provides an
undertaking to repay such expenses if it is ultimately determined that such
Indemnified Party is not entitled to indemnification). All rights to
indemnification in respect of a Claim shall continue until the final disposition
of such Claim. No indemnification shall be required under this Section 5.05(a)
if prohibited by applicable law.
(b) Any Indemnified Party wishing to claim indemnification under Section
5.05(a), upon learning of any Claim, shall promptly notify Northwest Bancorp,
but the failure to so notify shall not relieve Northwest Bancorp of any
liability it may have to such Indemnified Party except to the extent that such
failure materially prejudices Northwest Bancorp. In the event of any Claim, (1)
Northwest Bancorp shall have the right to assume the defense thereof (with
counsel reasonably satisfactory to the Indemnified Party) and shall not be
liable to such Indemnified Party for any legal expenses of other legal counsel
or any other expenses subsequently incurred by such Indemnified Party in
connection with the defense thereof, except that, if Northwest Bancorp elects
not to assume such defense or counsel for the Indemnified Party advises that
there are issues which raise conflicts of interest between Northwest Bancorp and
the Indemnified Party, the Indemnified Party may retain counsel satisfactory to
him, and Northwest Bancorp shall pay all reasonable fees and expenses of such
counsel for the Indemnified Party promptly as statements therefore are received,
provided further that Northwest Bancorp shall in all Claims be obligated
pursuant to this Section 5.05(b) to pay for only one firm of counsel for all
Indemnified Parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same allegations or
circumstances, (2) the Indemnified Party will cooperate in the defense of any
such Claim and (3) Northwest Bancorp shall not be liable for any settlement
effected without its prior written consent (which consent shall not unreasonably
be withheld).
(c) In the event Northwest Bancorp or any of is successors or assigns (1)
consolidates with or merges into any other Person and shall not continue or
survive such consolidation or merger, or (2) 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 Northwest Bancorp assume the obligations set forth in
this Section 5.05.
(d) Northwest Bancorp shall maintain in effect for three (3) years from the
Merger Effective Date, the current directors' and officers' liability insurance
policy maintained by Prestige Bancorp (provided that Northwest Bancorp may
substitute therefor policies of at least the same coverage containing terms and
conditions which are not materially less favorable) with respect to matters
occurring at or prior to the Merger Effective Date. In connection with the
foregoing, Prestige Bancorp agrees to provide such insurer or substitute insurer
with such representations as such insurer may reasonably request with respect to
the reporting of any prior claims.
(e) The provisions of this Section 5.05 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Party and his or her heirs and
representatives.
Section 5.06. No Other Bids and Related Matters. From and after the date
hereof until the termination of this Agreement, neither Prestige Bancorp, nor
Prestige Bank, nor any of their respective officers, directors, employees,
representatives, agents or affiliates (including, without limitation, any
investment banker, attorney or accountant retained by Prestige Bancorp or
Prestige Bank), will, directly or indirectly, initiate, solicit or
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knowingly encourage (including by way of furnishing non-public information or
assistance), or facilitate knowingly, any inquiries or the making of any
proposal that constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal (as defined below), or enter into or maintain or continue
discussions or negotiate with any Person in furtherance of such inquiries or to
obtain an Acquisition Proposal or agree to or endorse any Acquisition Proposal,
or authorize or permit any of its officers, directors, employees, investment
bankers, financial advisors, attorneys, accountants or other representatives to
take any such action, and Prestige Bancorp shall notify Northwest Bancorp orally
(within one Business Day) and in writing (as promptly as practicable) of all of
the relevant details relating to all inquiries and proposals that it or Prestige
Bank or any such officer, director employee, investment banker, financial
advisor, attorney, accountant or other representative may receive relating to
any of such matters. Provided, however, that nothing contained in this Section
5.06 shall prohibit the Board of Directors of Prestige Bancorp from (i)
furnishing information to, or entering into discussions or negotiations with any
Person that makes an unsolicited written, bona fide proposal, to acquire
Prestige Bancorp or Prestige Bank pursuant to a merger, consolidation, share
exchange, business combination, tender or exchange offer or other similar
transaction, if, and only to the extent that, (A) the Board of Directors of
Prestige Bancorp receives a written opinion from its independent financial
advisor that such proposal may be superior to the Merger from a financial
point-of-view to Prestige Bancorp's shareholders, (B) the Board of Directors of
Prestige Bancorp, after consultation with and based upon the advice of
independent legal counsel, determines in good faith that such action is
necessary for the Board of Directors of Prestige Bancorp to comply with its
fiduciary duties to shareholders under applicable law (such proposal that
satisfies (A) and (B) being referred to herein as a "Superior Proposal"), (C)
prior to furnishing such information to, or entering into discussions or
negotiations with, such person or entity, Prestige Bancorp (x) provides
reasonable notice to Northwest Bancorp to the effect that it is furnishing
information to, or entering into discussions or negotiations with, such person
or entity (identifying such person or entity) and (y) receives from such person
or entity an executed confidentiality agreement substantially identical in all
material respects to the Confidentiality Agreement, and (D) the Prestige Bancorp
meeting of shareholders convened to approve this Agreement has not occurred,
(ii) complying with Rule 14e-2 promulgated under the Exchange Act with regard to
a tender or exchange offer, or (iii) prior to the Prestige Bancorp Special
Meeting of Shareholders convened to approve this Agreement, failing to make or
withdrawing or modifying its recommendation to shareholders, because there
exists a Superior Proposal and based upon the advice of independent legal
counsel, determined in good faith that such action is necessary for such Board
of Directors to comply with its fiduciary duties under applicable law. For
purposes of this Agreement, "Acquisition Proposal" shall mean any of the
following (other than the transactions contemplated hereunder) involving
Prestige Bancorp or any of its subsidiaries: (i) any merger, consolidation,
share excha nge, business combination, or other similar transactions; (ii) any
sale, lease, exchange, mortgage, pledge, transfer or other disposition of 20% or
more of the assets of Prestige Bancorp, taken as a whole, in a single
transaction or series of transactions; (iii) any tender offer or exchange offer
for 20% or more of the outstanding shares of capital stock of Prestige Bancorp
or the filing of a registration statement under the Securities Act in connection
therewith; or (iv) any public announcement of a proposal, plan or intention to
do any of the foregoing or any agreement to engage in any of the foregoing.
Section 5.07. Duty to Advise; Duty to Update Prestige Bancorp's Disclosure
Schedules. Prestige Bancorp shall promptly advise Northwest Bancorp in writing
of any change or event having a Material Adverse Effect on it or on Prestige
Bank or that it believes would or would be reasonably likely to cause or
constitute a material breach of any of its representations, warranties or
covenants set forth herein. Prestige Bancorp shall update Prestige Bancorp's
Disclosure Schedules as promptly as practicable after the occurrence of an event
or fact that, if such event or fact had occurred prior to the date of this
Agreement, would have been disclosed in the Prestige Bancorp Disclosure
Schedules. The delivery of such updated Schedule shall not relieve Prestige
Bancorp from any breach or violation of this Agreement and shall not have any
effect for the purposes of determining the satisfaction of the condition set
forth in Section 6.02(c) hereof.
Section 5.08. Conduct of Northwest Bancorp's and Northwest Savings Bank's
Business. From the date of this Agreement to the Closing Date, Northwest
Bancorp and Northwest Savings Bank each will use its best efforts to (x)
preserve its business organizations intact, (y) maintain good relationships with
its employees, and (z) preserve for itself the goodwill of its customers. From
the date of this Agreement to the Merger Effective
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Date, neither Northwest Bancorp nor Northwest Savings Bank will (i) amend its
charter or bylaws in any manner inconsistent with the prompt and timely
consummation of the transactions contemplated by this Agreement; (ii) take any
action that would result in any of the representations and warranties of
Northwest Bancorp or Northwest Savings Bank set forth in this Agreement becoming
untrue as of any date after the date hereof or in any of the conditions set
forth in Article VI hereof not being satisfied, except in each case as may be
required by applicable law; (iii) take any action which would or is reasonably
likely to adversely effect or materially delay the receipt of the Regulatory
Approvals or other necessary approvals; (iv) take action which would or is
reasonably likely to materially and adversely affect Northwest Bancorp's or
Northwest Savings Bank's ability to perform its covenants and agreements under
this Agreement; (v) take any action that would result in any of the conditions
to the Merger not being satisfied; or (vi) agree to do any of the foregoing.
Section 5.09. Board and Committee Minutes. Prestige Bancorp and Prestige
Bank shall each provide to Northwest Bancorp, within thirty (30) days after any
meeting of their respective Board of Directors, or any committee thereof, or any
senior management committee, a copy of the minutes of such meeting, except for
information relating to the transactions contemplated by this agreement and
deemed confidential by the Board of Directors or subject to the attorney-client
privilege, except that with respect to any meeting held within thirty (30) days
of the Closing Date, such minutes shall be provided to each party prior to the
Closing Date.
Section 5.10. Undertakings by Prestige Bancorp and Northwest Bancorp.
(a) From and after the date of this Agreement:
(i) Voting by Directors. Simultaneous with the execution of this
Agreement, Prestige Bancorp's directors shall each enter into the agreement
set forth as Exhibit B to this Agreement;
(ii) Proxy Solicitor. Prestige Bancorp may retain a proxy solicitor
in connection with the solicitation of shareholder approval of this
Agreement;
(iii) Outside Service Bureau Contracts. If requested to do so by
Northwest Bancorp, Prestige Bancorp shall use its best efforts to obtain an
extension of any contract with an outside service bureau or other vendor of
services to Prestige Bancorp, on terms and conditions mutually acceptable
to Prestige Bancorp and Northwest Bancorp;
(iv) Board Meetings. Prestige Bancorp and Prestige Bank shall permit
a representative of Northwest Bancorp to attend any meeting of Prestige
Bancorp and/or Prestige Bank's Board of Directors or the Executive
Committees thereof (provided that neither Prestige Bancorp nor Prestige
Bank shall be required to permit the Northwest Bancorp representative to
remain present during any confidential discussion);
(v) List of Nonperforming Assets. Prestige Bancorp shall provide
Northwest Bancorp, within ten (10) days of the end of each calendar month,
a written list of nonperforming assets (the term "nonperforming assets,"
for purposes of this Section 5.10(a)(v), means (i) loans that are "Troubled
debt restructurings" as defined in Statement of Financial Accounting
Standards No. 15, "Accounting by Debtors and Creditors for Troubled Debt
Restructuring," (ii) loans on nonaccrual, (iii) real estate owned, (iv) all
loans ninety (90) days or more past due as of the end of such month and
(iv) impaired loans;
(vi) Reserves and Merger Related Costs. On or before the Merger
Effective Date, and at the request of Northwest Bancorp, Prestige Bancorp
shall establish such additional accruals and reserves as may be necessary
to conform the accounting reserve practices and methods (including credit
loss practices and methods) of Prestige Bancorp to those of Northwest
Bancorp (as such practices and methods are to be applied to Prestige
Bancorp from and after the Merger Effective Date) and Northwest Bancorp's
plans with respect to the conduct of the business of Prestige Bancorp
following the Merger Effective Date and otherwise to reflect Merger related
expenses and costs incurred by Prestige Bancorp; provided, however, that
Prestige Bancorp shall not be required to take any such action unless
Northwest Bancorp agrees in writing that all conditions to closing set
forth in Section 6.02 have been satisfied or waived (except for the
expiration of any applicable waiting periods); prior to the delivery by
Northwest Bancorp of the writing referred to in the preceding clause,
Prestige Bancorp shall provide Northwest Bancorp a written statement,
certified without personal liability by the chief executive officer of
Prestige Bancorp and dated the date of such
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writing, that the representation made in Section 3.15 hereof is true as of
such date or, alternatively, setting forth in detail the circumstances that
prevent such representation from being true as of such date; and no accrual
or reserve made by Prestige Bancorp or Prestige Bank pursuant to this
Section 5.10(a)(vi), or any litigation or regulatory proceeding arising out
of any such accrual or reserve, shall constitute or be deemed to be a
breach or the occurrence of a Material Adverse Effect with respect to
Prestige Bancorp or Prestige Bank or violation of any representation,
warranty, covenant, condition or other provision of this Agreement or to
constitute a termination event within the meaning of Section 7.01(b)
hereof. No action shall be required to be taken by Prestige Bancorp
pursuant to this Section 5.10(vi) if, in the opinion of Prestige Bancorp's
independent auditors, such action would contravene GAAP;
(vii) Shareholders' Meeting. Prestige Bancorp shall submit this
Agreement to its shareholders for approval at a special meeting to be held
as soon as practicable, and, subject to the next sentence, its Boards of
Director shall recommend approval of this Agreement to the Prestige Bancorp
shareholders. The Board of Directors of Prestige Bancorp may fail to make
such a recommendation, or withdraw, modify or change any such
recommendation only in connection with a Superior Proposal, as set forth in
Section 5.06 of this Agreement, and only if such Board of Directors, after
having consulted with and considered the advice of outside counsel to such
Board, has determined that the making of such recommendation, or the
failure so to withdraw, modify or change its recommendation, would
constitute a breach of the fiduciary duties of such directors under
Pennsylvania law. Prestige Bancorp shall take all steps necessary in order
to hold a special meeting of shareholders for the purpose of approving this
Agreement within three (3) months of the date of this Agreement, or as soon
thereafter as is practicable. The Proxy Statement will not, at the time it
is mailed to Prestige Bancorp shareholders, contain any untrue statement of
a material fact or omit to state any material fact necessary in order to
make the statements therein not misleading; except that Prestige Bancorp
assumes no responsibility for any statement of a material fact, or failure
to state a material fact necessary in order to make the statements therein
not misleading, concerning Northwest Bancorp or Northwest Savings Bank that
is included in the Proxy Statement and that is provided in writing by
Northwest Bancorp or Northwest Savings Bank; and
(b) From and after the date of this Agreement, Northwest Bancorp and
Prestige Bancorp shall each:
(i) Filings and Approvals. Cooperate with the other in the
preparation and filing, as soon as practicable, of (A) the Applications,
(B) the Proxy Statement, (C) all other documents necessary to obtain any
other approvals, consents, waivers and authorizations required to effect
the completion of the Merger and the other transactions contemplated by
this Agreement, and (D) all other documents contemplated by this Agreement;
(ii) Public Announcements. Cooperate and cause their respective
officers, directors, employees and agents to cooperate in good faith,
consistent with their respective legal obligations, in the preparation and
distribution of, and agree upon the form and substance of, any press
release related to this Agreement and the transactions contemplated hereby,
and any other public disclosures related thereto, including without
limitation communications to shareholders, internal announcements and
customer disclosures, but nothing contained herein shall prohibit any party
from making any disclosure that its counsel deems necessary, provided that
the disclosing party notifies the other party reasonably in advance of the
timing and contents of such disclosure;
(iii) Systems Conversions. Prestige Bancorp and Northwest Bancorp
shall meet on a regular basis to discuss and plan for the conversion of
Prestige Bank and Prestige Bancorp's data processing and related electronic
informational systems to those used by Northwest Savings Bank and Northwest
Bancorp, which planning shall include, but not be limited to, discussion of
the possible termination by Prestige Bancorp of third-party service
provider arrangements effective at the Merger Effective Date or at a date
thereafter, non-renewal of personal property leases and software licenses
used by Prestige Bancorp in connection with its systems operations,
retention of outside consultants and additional employees to assist with
the conversion, and outsourcing, as appropriate, of proprietary or
self-provided system services, it being understood that Prestige Bancorp
shall not be obligated to take any such action prior to the Merger
Effective Date and, unless Prestige Bancorp otherwise agrees, no conversion
shall take place prior to the Merger Effective Date.
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In the event that Prestige Bancorp takes, at the request of Northwest
Bancorp, any action relative to third parties to facilitate the conversion
that results in the imposition of any termination fees or charges,
Northwest Bancorp shall indemnify Prestige Bancorp for any such fee and
charges, and the costs of reversing the conversion process, if the Merger
is not consummated for any reason other than a breach of this Agreement by
Prestige Bancorp, or a termination of this Agreement under Section
7.01(c)(iv) or (d)(iv).
(iv) Maintenance of Insurance. Maintain, and cause their respective
Subsidiaries to maintain, insurance in such amounts as are reasonable to
cover such risks as are customary in relation to the character and location
of its properties and the nature of its business;
(v) Maintenance of Books and Records. Maintain, and cause their
respective Subsidiaries to maintain, books of account and records in
accordance with GAAP applied on a basis consistent with those principles
used in preparing the financial statements heretofore delivered;
(vi) Delivery of Securities Documents. Deliver to the other, copies
of all Securities Documents and Regulatory Reports simultaneously with the
filing thereof; and
(vii) Taxes. File all federal, state, and local tax returns required
to be filed by them or their respective Subsidiaries on or before the date
such returns are due (including any extensions) and pay all taxes shown to
be due on such returns on or before the date such payment is due, except
those being contested in good faith.
(c) Prestige Bancorp Disclosure Schedule 5.10(c) sets forth a good faith
estimate of Prestige Bancorp's budget of Merger-related expenses (the "Budget")
to be incurred and payable by Prestige Bancorp in connection with this Agreement
and the transactions contemplated hereby, including the fee and expenses of
counsel, accountants, investment bankers and other professionals. Prestige
Bancorp shall promptly notify Northwest Bancorp if or when it determines that it
expects to exceed its Budget. Promptly, but in any event within 30 days, after
the execution of this Agreement, Prestige Bancorp shall ask all of its attorneys
and other professionals to render current and correct invoices for all unbilled
time and disbursements. Prestige Bancorp shall accrue and/or pay all of such
amounts as soon as possible. Prestige Bancorp shall request that its
professionals render monthly invoices within 30 days after the end of each
month. Prestige Bancorp shall notify Northwest Bancorp monthly of all
out-of-pocket expenses, which Prestige Bancorp has incurred in connection with
this Agreement. No later than three (3) business days prior to the Closing Date,
Prestige Bancorp shall provide Northwest Bancorp with a statement of all
Merger-related expenses incurred and payable, and to be incurred and payable,
including the fees and expenses of counsel, accountants, investment bankers and
other professionals, and all costs and expenses associated with any legal
proceedings relating to this Agreement and the transactions contemplated
hereunder, through the merger Effective Date (the "Closing Expense Statement").
Section 5.11. Employee and Termination Benefits; Directors and Management.
(a) Employee Benefits. Except as set forth in Prestige Bancorp Disclosure
Schedule 3.08 and as otherwise provided in this Section 5.11 of this Agreement,
as of or after the Merger Effective Date, and at Northwest Bancorp's election
and subject to the requirements of the Code, the Compensation and Benefit Plans
may continue to be maintained separately, consolidated, or terminated. If
requested by Northwest Bancorp in writing not later than ten (10) days before
the Merger Effective Date and provided that Northwest Bancorp has indicated in
writing that the conditions to its obligations set forth in Section 6.02 hereof
have been satisfied or waived, Prestige Bancorp shall take such steps within its
power to effectuate a termination of any Compensation and Benefit Plan as of the
Merger Effective Date, provided that the Compensation and Benefit Plan can be
terminated within such period. In the event of a consolidation of any or all of
such plans or in the event of termination of any Prestige Bancorp Compensation
and Benefit Plan, except as otherwise set forth in this Section 5.11, employees
of Prestige Bancorp or Prestige Bank who continue as employees of Northwest
Bancorp or Northwest Savings Bank after the Merger Effective Date ("Continuing
Employees") shall be eligible to participate in any Northwest Savings Bank
employee plan of similar character immediately upon such consolidation or as of
the first entry date coincident with or immediately following such termination.
Continuing Employees shall receive credit for service with Prestige Bancorp or
Prestige Bank for purposes of determining eligibility and vesting but not for
purposes of accruing or computing benefits under (i) any similar existing
Northwest Bancorp benefit plan except that Continuing Employees shall be treated
as new employees under the Northwest Savings Bank Employee
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Stock Ownership Plan and Northwest Savings Bank's annual holiday bonus program,
or (ii) any new Northwest Bancorp benefit plan in which Continuing Employees or
their dependents would be eligible to enroll, subject to any pre-existing
conditions or other exclusions to which such person were subject under the
Compensation and Benefit Plans. Such service shall also apply for purposes of
satisfying any waiting periods, actively-at-work requirements and evidence of
insurability requirements. Continuing Employees shall have no rights in
Northwest Savings Bank's terminated post-retirement health benefit plan.
(b) In the event of the termination of any Prestige Bancorp or Prestige
Bank health, disability or life insurance plan, or the consolidation of any
Prestige Bancorp or Prestige Bank health, disability or life insurance plan with
any Northwest Bancorp or Northwest Savings Bank health, disability or life
insurance plan, Northwest Bancorp shall as soon as practicable make available to
Continuing Employees and their dependents employer-provided health, disability
or life insurance coverage on the same basis as it provides such coverage to
employees of Northwest Bancorp or Northwest Savings Bank. Unless a Continuing
Employee affirmatively terminates coverage under a Prestige Bancorp or Prestige
Bank health, disability or life insurance plan prior to the time that such
Continuing Employee becomes eligible to participate in the Northwest Bancorp or
Northwest Savings Bank health, disability or life insurance plan, no coverage of
any of the Continuing Employees or their dependents shall terminate under any of
the Prestige Bancorp or Prestige Bank health, disability or life insurance plans
prior to the time such Continuing Employees and their dependents become eligible
to participate in such plans, programs and benefits common to all employees of
Northwest Bancorp or Northwest Savings Bank and their dependents. Terminated
Prestige Bancorp and Prestige Bank employees and qualified beneficiaries will
have the right to continue coverage under group health plans of Northwest
Bancorp and/or Northwest Bancorp Subsidiaries in accordance with Code Section
4980B(f). Continuing Employees who become covered under a Northwest Bancorp or
Northwest Savings Bank health plan shall be required to satisfy the deductible
limitations of the Northwest Bancorp or Northwest Savings Bank health plan for
the plan year in which the coverage commences, without offset for deductibles
satisfied under the Prestige Bancorp or Prestige Bank health plan. In the event
of any termination of any Prestige Bancorp or Prestige Bank health plan, or
consolidation of any Prestige Bancorp or Prestige Bank health plan with any
health plan of Northwest Bancorp and/or Northwest Bancorp subsidiaries, any
pre-existing condition, limitation or exclusion in the health plan of Northwest
Bancorp and/or Northwest Bancorp subsidiaries shall not apply to Continuing
Employees or their covered dependents who have satisfied such pre-existing
condition exclusion waiting period under a Prestige Bancorp or Prestige Bank
health plan with respect to such pre-existing condition on the Merger Effective
Date and who then change that coverage to the health plan of Northwest Bancorp
and/or Northwest Bancorp subsidiaries at the time such Continuing Employee is
first given the option to enroll in such health plan.
(c) If, after the Merger Effective Date, Northwest Savings Bank continues
in effect the 401(k) plan previously maintained by Prestige Bank, Northwest
Savings Bank shall not be required to cause employees who are covered by such
plan to participate in any other 401(k) plan with respect to any period for
which Northwest Savings Bank makes contributions to such Prestige Bank 401(k)
plan provided that Northwest Bancorp and/or Northwest Savings Bank shall
maintain a contribution equal to the same level of contribution as provided in
the Northwest Savings Bank 401(k) plan. Nothing in this Section 5.11 shall be
construed to require any duplication of benefits.
(d) The Prestige Bank Employee Stock Ownership Plan (the "Prestige Bank
ESOP") shall be terminated as of the Merger Effective Date (all shares held by
the Prestige Bank ESOP shall be converted into the right to receive the Merger
Consideration), all outstanding Prestige Bank ESOP indebtedness shall be repaid
from the proceeds of the Merger Consideration for the unallocated shares of
Prestige Bancorp Common Stock, and the remaining balance shall be allocated to
Prestige Bank employees, as provided for in the Prestige Bank ESOP, subject to
the Code, ERISA, and rules and regulations promulgated thereunder. In connection
with the termination of the Prestige Bank ESOP, Prestige Bank shall promptly
apply to the IRS for a favorable determination letter on the tax-qualified
status of the Prestige Bank ESOP on termination and any amendments made to the
Prestige Bank ESOP in connection with its termination or otherwise, if such
amendments have not previously received a favorable determination letter from
the IRS with respect to their qualification under Code Section 401(a). Any and
all distributions from the Prestige Bank ESOP after its termination shall be
made consistent with the aforementioned determination letter.
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(e) Northwest Bancorp shall honor the employment, change of control and
severance contracts or plans as set forth in Prestige Bancorp Disclosure
Schedule 5.11(e), and each of the persons identified in Prestige Bancorp
Disclosure Schedule 5.11(e) shall execute a termination and release agreement,
substantially in the form set forth in Prestige Bancorp Disclosure Schedule
5.11(e), releasing rights under such existing employment, change of control and
severance contracts or plans in consideration of the cash payment and benefits
identified in Prestige Bancorp Disclosure Schedule 5.11(e); provided that
notwithstanding anything contained therein or in this Agreement, no payment
shall be made under any employment, change of control and severance contract or
plan that would constitute a "parachute payment" (as such term is defined in
Section 280G of the Code). After the Merger Effective Date, any former employee
of Prestige Bancorp or Prestige Bank whose employment is actually terminated by
Northwest Bancorp within six (6) months of the Merger Effective Date, other than
the five (5) employees identified in Prestige Bancorp Disclosure Schedule
5.11(e), shall receive two (2) weeks salary for each year of service with a
minimum of eight (8) weeks of salary, and shall receive health benefit coverage
substantially similar to the coverage received by such person immediately prior
to termination of employment for a period of six months following termination of
employment or until enrolled in another health plan, whichever is first,
provided that any coverage period required under Code Section 4980B(f) shall run
concurrently with the period that health benefit coverage is provided to such
person(s) under this Section 5.11(e).
(f) Each person who serves on the Board of Directors of Prestige Bancorp or
Prestige Bank both on the date of this agreement and immediately prior to the
Merger Effective Date shall be offered a position as an advisory director on
Northwest Savings Bank's South Hills Advisory Board immediately following the
Merger Effective Date. For service on such advisory board for the first year
following the Merger Effective Date, the former chairman of the Prestige Bancorp
Board of Directors shall receive $1000 per month, all former outside directors
of Prestige Bancorp or Prestige Bank shall each receive $800 per month and all
other former directors of Prestige Bancorp or Prestige Bank shall each receive
$500 per month, provided that no former director shall receive fees for service
during the first year following the Merger Effective Date that exceed the rate
at which director fees are paid on the date hereof. After one year, fees paid to
former directors of Prestige Bancorp or Prestige Bank shall be modified to
conform to Northwest Savings Bank's advisory board fee schedule.
(g) After the effective date of this Agreement and prior to the Merger
Effective Date, Prestige Bancorp shall be permitted to grant awards of
forty-three (43) shares of restricted stock under the Prestige Bancorp
Restricted Stock Plan. Prior to the Merger Effective Date, Prestige Bancorp
shall take all actions necessary to terminate the Prestige Bancorp Stock Option
Plan and Prestige Bancorp Restricted Stock Plan, effective as of the Merger
Effective Date. Each person who becomes entitled to a cash payment in
cancellation of an option award shall be required to enter into an agreement and
release in complete and full satisfaction of all liabilities and obligations of
Prestige Bancorp or Prestige Bank under such award and consideration of such
cash payment. Each recipient of a restricted stock award for which vesting is
accelerated in connection with the Merger shall be required to enter into an
agreement and release acknowledging that, upon payment of the Merger
Consideration attributable to such shares, such person's rights under such award
shall be satisfied in full and the award terminate.
(h) Prestige Bancorp Disclosure Schedule 3.12 sets forth the accrued
vacation pay for employees as of the date of this Agreement that has been
accrued and expensed during 2001 based on hours worked during 2001, and the rate
of accrual of vacation pay during 2002. Upon Northwest Savings Bank's actual
termination prior to December 31, 2002 of any Prestige Bank employee identified
in Schedule 3.12 for whom vacation pay was accrued and expensed based on 2001
employment with Prestige Bank or for whom vacation pay was accrued during 2002
prior to the Merger Effective Date, such employee shall be entitled to payment
of any such accrued and expensed vacation pay. Any retained employee will be
entitled to any such unused vacation during 2002.
Section 5.12. Duty to Advise; Duty to Update Northwest Bancorp's Disclosure
Schedules. Northwest Bancorp shall promptly advise Prestige Bancorp of any
change or event having a Material Adverse Effect on it or on any Northwest
Bancorp Subsidiary or that it believes would or would be reasonably likely to
cause or constitute a material breach of any of its representations, warranties
or covenants set forth herein. Northwest Bancorp shall update the Northwest
Bancorp Disclosure Schedules as promptly as practicable after the occurrence of
an event or fact that, if such event or fact had occurred prior to the date of
this Agreement, would have been disclosed in the Northwest Bancorp Disclosure
Schedule. The delivery of such updated Schedules shall
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not relieve Northwest Bancorp from any breach or violation of this Agreement and
shall not have any effect for the purposes of determining the satisfaction of
the condition set forth in Section 6.01(c) hereof.
Section 5.13. Bank and Related Merger Transactions.
(a) As soon as practicable following the Merger Effective Date, Northwest
Bancorp shall, and it shall cause Prestige Bancorp (as the Surviving Corporation
in the Merger) to, effect the Company Merger by executing a merger agreement and
filing articles of merger or a certificate of complete liquidation with the
Office of the Pennsylvania Secretary of State pursuant to the PBCA, and articles
of combination with the OTS. The Company Merger shall become effective at the
time (the "Subsequent Effective Time") specified in the articles of merger or
certificate of complete liquidation and/or articles of combination. As a result
of the Company Merger, the separate corporate existence of Prestige Bancorp
shall cease and Northwest Bancorp shall be the surviving corporation and
continue its corporate existence under the laws of the United States.
(b) As soon as practicable after consummation of the Company Merger,
Northwest Savings Bank and Prestige Bank shall take all actions necessary and
appropriate, including entering into an appropriate merger agreement in the form
attached to this Agreement as Exhibit A (the "Bank Merger Agreement"), to cause
Prestige Bank to effect the Bank Merger in accordance with applicable laws and
regulations and the terms of the Bank Merger Agreement. As a result of the Bank
Merger, the separate corporate existence of Prestige Bank shall cease and
Northwest Savings Bank shall be the surviving corporation and continue its
corporate existence under the laws of the Commonwealth of Pennsylvania.
ARTICLE VI
CONDITIONS
Section 6.01. Conditions to Prestige Bancorp's Obligations under this
Agreement. The obligations of Prestige Bancorp and Prestige Bank hereunder
shall be subject to satisfaction as of or prior to the Merger Effective Date of
each of the following conditions, unless waived by Prestige Bancorp pursuant to
Section 8.03 hereof:
(a) Corporate Proceedings. All action required to be taken by, or on
the part of, Northwest Bancorp, Northwest Savings Bank and Northwest Merger
Subsidiary to authorize the execution, delivery and performance of this
Agreement, and the consummation of the Merger, shall have been duly and
validly taken by Northwest Bancorp, Northwest Savings Bank and Northwest
Merger Subsidiary, and Prestige Bancorp shall have received certified
copies of the resolutions evidencing such authorizations;
(b) Covenants. The obligations and covenants of Northwest Bancorp,
Northwest Savings Bank and Northwest Merger Subsidiary required by this
Agreement to be performed by Northwest Bancorp, Northwest Savings Bank and
Northwest Merger Subsidiary as of or prior to the Merger Effective Date
shall have been duly performed and complied with in all material respects;
(c) Representations and Warranties. Each of the representations and
warranties of Northwest Bancorp and Northwest Savings Bank in this
Agreement that is qualified as to materiality shall be true and correct,
and each such representation or warranty that is not so qualified shall be
true and correct in all material respects, in each case as of the date of
this Agreement, and (except to the extent such representations and
warranties speak as of an earlier date) as of the Merger Effective Date;
(d) Approvals of Regulatory Authorities. Northwest Bancorp shall have
received all Regulatory Approvals and other approvals necessary to effect
the Merger; and all notice and waiting periods required thereunder shall
have expired or been terminated;
(e) No Injunction. There shall not be in effect any order, decree or
injunction of a court or agency of competent jurisdiction that enjoins or
prohibits consummation of the transactions contemplated hereby;
(f) Officer's Certificate. Northwest Bancorp shall have delivered to
Prestige Bancorp a certificate, dated the Closing Date and signed, without
personal liability, by its president, to the effect that the
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conditions set forth in subsections (a) through (e) of this Section 6.01
have been satisfied, to the Knowledge of the officer executing the same;
and
(g) Approval of Prestige Bancorp's Shareholders. This Agreement shall
have been approved by the shareholders of Prestige Bancorp by such vote as
is required under the PBCA, Prestige Bancorp's certificate of incorporation
and bylaws, and under Nasdaq requirements applicable to it.
Section 6.02. Conditions to Northwest Bancorp's Obligations under this
Agreement. The obligations of Northwest Bancorp and Northwest Savings Bank
hereunder shall be subject to satisfaction as of or prior to the Merger
Effective Date of each of the following conditions, unless waived by Northwest
Bancorp pursuant to Section 8.03 hereof:
(a) Corporate Proceedings. All action required to be taken by, or on
the part of, Prestige Bancorp and Prestige Bank to authorize the execution,
delivery and performance of this Agreement, and the consummation of the
Merger, shall have been duly and validly taken by Prestige Bancorp and
Prestige Bank, and Northwest Bancorp shall have received certified copies
of the resolutions evidencing such authorizations;
(b) Covenants. The obligations and covenants of Prestige Bancorp and
Prestige Bank required by this Agreement to be performed as of or prior to
the Merger Effective Date shall have been duly performed and complied with
in all material respects;
(c) Representations and Warranties. Each of the representations and
warranties of Prestige Bancorp and Prestige Bank in this Agreement which is
qualified as to materiality shall be true and correct, and each such
representation or warranty that is not so qualified shall be true and
correct in all material respects, in each case as of the date of this
Agreement, and (except to the extent such representations and warranties
speak as of an earlier date) as of the Merger Effective Date;
(d) Approvals of Regulatory Authorities. Northwest Bancorp and
Northwest Savings Bank shall have received all Regulatory Approvals and
other approvals necessary to effect the Merger (without the imposition of
any condition that is in Northwest Bancorp's reasonable judgment unduly
burdensome, excluding standard conditions that are normally imposed by the
Regulatory Authorities in bank merger transactions); and all notice and
waiting periods required thereunder shall have expired or been terminated;
(e) No Injunction. There shall not be in effect any order, decree or
injunction of a court or agency of competent jurisdiction that enjoins or
prohibits consummation of the transactions contemplated hereby;
(f) No Material Adverse Effect. Except as set forth in Prestige
Bancorp Disclosure Schedule 3.07, since December 31, 2000, there shall not
have occurred any Material Adverse Effect with respect to Prestige Bancorp;
and
(g) Officer's Certificate. Prestige Bancorp shall have delivered to
Northwest Bancorp a certificate, dated the Closing Date and signed, without
personal liability, by its chairman of the board or president, to the
effect that the conditions set forth in subsections (a) through (f) (but
excluding (d)) of this Section 6.02 have been satisfied, to the Knowledge
of the officer executing the same.
(h) Tax Opinion. Northwest Bancorp shall have received an opinion or
opinions of Luse Lehman Gorman Pomerenk & Schick, P.C., counsel to
Northwest Bancorp, substantially to the effect set forth on Exhibit C.
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ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT
Section 7.01 Termination. This Agreement may be terminated at any time
prior to the Merger Effective Date, whether before or after approval of the
shareholders of Prestige Bancorp referred to in Section 5.10(a)(vii) hereof:
(a) by mutual written consent of the parties authorized by their
respective boards of directors;
(b) by Northwest Bancorp or Prestige Bancorp (i) if the Merger
Effective Date shall not have occurred on or prior to October 1, 2002, (ii)
if a vote of the shareholders of Prestige Bancorp is taken and such
shareholders fail to approve this Agreement at the special meeting of
shareholders (or any adjournment thereof) of Prestige Bancorp contemplated
by Section 5.10(a)(vii) hereof, or (iii) any Regulatory Authority formally
disapproves the issuance of any Regulatory Approval or other necessary
approval, unless in the case of clause (ii) of this Section 7.01(b) such
failure is due to the failure of the party seeking to terminate this
Agreement to perform or observe its agreements set forth herein to be
performed or observed by such party on or before such special meeting of
shareholders, and in the case of clause (i) of this Section 7.01(b), the
right to terminate shall not be available to any party whose failure to
perform an obligation under this Agreement has been the cause of, or
resulted in, the failure of the Merger and the other transactions
contemplated hereby to be consummated by October 1, 2002.
(c) by Northwest Bancorp if (i) at the time of such termination any of
the representations and warranties of Prestige Bancorp or Prestige Bank
contained in this Agreement shall not be true and correct to the extent
that the condition set forth in Section 6.02(b) or (c) hereof cannot be
satisfied, (ii) there shall have been any material breach of any covenant,
agreement or obligation of Prestige Bancorp or Prestige Bank hereunder and
such breach shall have not been remedied by Prestige Bancorp, Prestige Bank
or any other Person within thirty (30) days after receipt by Prestige
Bancorp of notice in writing from Northwest Bancorp specifying the nature
of such breach and requesting that it be remedied, (iii) any Regulatory
Authority approves the transactions contemplated but with conditions
attached such that the requirements of Section 6.02(d) are not satisfied,
(iv) Prestige Bancorp has received a Superior Proposal, and in accordance
with Section 5.06 of this Agreement, the Board of Directors of Prestige
Bancorp has entered into an acquisition agreement with respect to the
Superior Proposal or withdraws its recommendation of this Agreement, fails
to make such recommendation or modifies or qualifies its recommendation in
a manner adverse to Northwest Bancorp, or (v) any event occurs such that a
condition set forth in Sections 6.02 hereof which must be fulfilled before
Northwest Bancorp is obligated to consummate the Merger cannot be fulfilled
and non-fulfillment is not waived by Northwest Bancorp.
(d) by Prestige Bancorp if (i) at the time of such termination any of
the representations and warranties of Northwest Bancorp and Northwest
Savings Bank contained in this Agreement shall not be true and correct to
the extent that the condition set forth in Section 6.01(b) and/or (c)
hereof cannot be satisfied, (ii) there shall have been any material breach
of any covenant, agreement or obligation of Northwest Bancorp or Northwest
Savings Bank hereunder and such breach shall not have been remedied by
Northwest Bancorp, Northwest Savings Bank or any other Person within thirty
(30) days after receipt by Northwest Bancorp of notice in writing from
Prestige Bancorp specifying the nature of such breach and requesting that
it be remedied, (iii) any event occurs such that a condition set forth in
Sections 6.01 hereof which must be fulfilled before Prestige Bancorp is
obligated to consummate the Merger cannot be fulfilled and non-fulfillment
is not waived by Prestige Bancorp, or (iv) Prestige Bancorp has received a
Superior Proposal, and in accordance with Section 5.06 of this Agreement,
the Board of Directors of Prestige Bancorp has made a determination to
accept such Superior Proposal subject to approval thereof by the Prestige
Bancorp's shareholders, and simultaneously with the termination of this
Agreement pursuant to this Section 7.01(d)(iv) Prestige Bancorp enters into
an acquisition agreement with respect to the Superior Proposal, provided
that Prestige Bancorp shall not terminate this Agreement pursuant to this
Section 7.01(d)(iv) and enter in a definitive agreement with respect to the
Superior Proposal until the expiration of five (5) business days following
Northwest Bancorp's receipt of written notice advising Northwest Bancorp
that Prestige Bancorp has received a Superior Proposal, specifying the
material terms and conditions of such Superior Proposal
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(and including a copy thereof with all accompanying documentation, if in
writing) identifying the person making the Superior Proposal and stating
whether Prestige Bancorp intends to enter into a definitive agreement with
respect to the Superior Proposal. After providing such notice, Prestige
Bancorp shall provide a reasonable opportunity to Northwest Bancorp during
the five-day period to make such adjustments in the terms and conditions of
this Agreement as would enable Prestige Bancorp to proceed with the Merger
on such adjusted terms.
Section 7.02. Effect of Termination. Except as otherwise provided in
Section 8.01 of this Agreement, if this Agreement is terminated pursuant to
Section 7.01 hereof, this Agreement shall forthwith become void (other than
Section 5.02 and Section 8.01 hereof, which shall remain in full force and
effect), and there shall be no further liability on the part of Northwest
Bancorp or Prestige Bancorp to the other.
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Expenses.
(a) Except as otherwise provided in paragraphs (b) and (c) below, each
party hereto shall bear and pay all costs and expenses incurred by it in
connection with the transactions contemplated by this Agreement, including fees
and expenses of its own financial advisors, consultants, accountants and
counsel, and other costs and expenses ("Costs and Expenses").
(b) As an inducement to Northwest Bancorp to enter into this Agreement, to
incur the costs and expenses related hereto and to consummate the transactions
contemplated hereby, Prestige Bancorp hereby agrees to pay Northwest Bancorp,
and Northwest Bancorp shall be entitled to payment of, a fee of $1.0 million
(the "Northwest Fee"), within five (5) Business Days after written demand for
payment is made by Northwest Bancorp, following the occurrence of any of the
events set forth below:
(i) Northwest Bancorp terminates this Agreement pursuant to Section
7.01(c)(i) or (c)(ii) as a result of either a willful breach of any
representation or warranty by Prestige Bancorp or the willful failure of
Prestige Bancorp to perform or observe its covenants, agreements or
obligations set forth herein to be performed on or prior to the Merger
Effective Date;
(ii) Prestige Bancorp terminates this Agreement pursuant to Section
7.01(d)(iv) or Northwest Bancorp terminates this Agreement pursuant to
Section 7.01(c)(iv); or
(iii) the entering into a definitive agreement by Prestige Bancorp or
Prestige Bank relating to a Superior Proposal or the consummation of a
Superior Proposal involving Prestige Bancorp or Prestige Bank within twelve
(12) months after the occurrence of any of the following: (i) the
termination of the Agreement by Northwest Bancorp pursuant to Section
7.01(c)(ii) following a material willful breach of the Agreement by
Prestige Bancorp; (ii) the failure of the shareholders of Prestige Bancorp
to approve this Agreement after the occurrence of an Acquisition Proposal,
or (iii) October 1, 2002 if prior thereto the Prestige Bancorp shareholders
have not adopted this Agreement.
If demand for payment of the Northwest Fee is made pursuant to this Section
8.01(b) and payment is timely made, then none of Northwest MHC, Northwest
Bancorp or Northwest Savings Bank will have any other rights or claims against
Prestige Bancorp, Prestige Bank, and their respective officers, directors,
attorneys and financial advisors under this Agreement, it being agreed that the
acceptance of the Northwest Fee under this Section 8.01(b) will constitute the
sole and exclusive remedy of Northwest MHC, Northwest Bancorp and Northwest
Savings Bank against Prestige Bancorp, Prestige Bank, and their respective
officers, directors, attorneys and financial advisors.
(c) As a condition of and inducement to Prestige Bancorp to enter into this
Agreement and to incur the costs and expenses related to this Agreement and to
consummate the transactions contemplated hereby, Northwest Bancorp hereby agrees
to pay Prestige Bancorp, and Prestige Bancorp shall be entitled to payment of a
fee of $1.0 million (the "Prestige Fee"), within five (5) Business Days after
written demand for payment is made by
A-37
Prestige Bancorp, if Prestige Bancorp terminates this Agreement pursuant to
Section 7.01(d)(i) or (d)(ii) as a result of either a willful breach of any
representation or warranty by Northwest Bancorp or the willful failure of
Northwest Bancorp to perform its covenants, agreements or obligations herein to
be performed on or prior to the Merger Effective Date.
If demand for payment of the Prestige Fee is made pursuant to this Section
8.01(c) and payment is timely made, then neither Prestige Bancorp nor Prestige
Bank will have any other rights or claims against Northwest MHC, Northwest
Bancorp, or Northwest Savings Bank, and their respective officers, directors,
attorneys and financial advisors under this Agreement, it being agreed that the
acceptance of the Prestige Fee under this Section 8.01(c) will constitute the
sole and exclusive remedy of Prestige Bancorp and Prestige Bank against
Northwest MHC, Northwest Bancorp and Northwest Savings Bank, and their
respective officers, directors, attorneys and financial advisors.
Section 8.02. Non-Survival of Representations and Warranties. All
representations, warranties and, except to the extent specifically provided
otherwise herein, agreements and covenants, other than those agreements in
Article II and covenants set forth in Sections 5.02(a), 5.05 and 5.11, which
will survive the Merger, shall terminate on the Merger Effective Date.
Section 8.03. Amendment, Extension and Waiver. Subject to applicable law,
at any time prior to the consummation of the transactions contemplated by this
Agreement, the parties may (a) amend this Agreement, (b) extend the time for the
performance of any of the obligations or other acts of either party hereto, (c)
waive any inaccuracies in the representations and warranties contained herein or
in any document delivered pursuant hereto, or (d) waive compliance with any of
the agreements or conditions contained in Articles V and VI hereof or otherwise;
provided, however, that after any approval of the transactions contemplated by
this Agreement by Prestige Bancorp's shareholders, there may not be, without
further approval of such shareholders, any amendment of this Agreement which
reduces the amount or changes the form of the consideration to be delivered to
Prestige Bancorp shareholders hereunder other than as contemplated by this
Agreement. This Agreement may not be amended except by an instrument in writing
authorized by the respective Boards of Directors and signed, by duly authorized
officers, on behalf of the parties hereto. Any agreement on the part of a party
hereto to any extension or waiver shall be valid only if set forth in an
instrument in writing signed by a duly authorized officer on behalf of such
party, but such waiver or failure to insist on strict compliance with such
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.
Section 8.04. Entire Agreement. This Agreement, including the documents
and other writings referred to herein or delivered pursuant hereto, contains the
entire agreement and understanding of the parties with respect to its subject
matter. This Agreement supersedes all prior arrangements and understandings
between the parties, both written and oral with respect to its subject matter.
This Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors; provided, however, that nothing in this
Agreement, expressed or implied, is intended to confer upon any Person, other
than the parties hereto and their respective successors, any rights, remedies,
obligations or liabilities other than pursuant to Article II and Sections
5.02(a), 5.05 and 5.11(e).
Section 8.05. No Assignment. Neither party hereto may assign any of its
rights or obligations hereunder to any other person, without the prior written
consent of the other party hereto.
Section 8.06. Notices. All notices or other communications hereunder shall
be in writing and shall be deemed given if delivered personally, or mailed by
prepaid registered or certified mail (return receipt requested), addressed as
follows:
(a) If to Northwest Bancorp, Inc. to:
Northwest Bancorp, Inc.
301 Second Avenue
Warren, PA 16365
A-38
Attention: William J. Wagner
President and Chief Executive Officer
with a copy to:
Luse Lehman Gorman Pomerenk & Schick, PC
5335 Wisconsin Avenue, NW
Washington, DC 20015
Attention: Eric Luse, Esq.
Kenneth R. Lehman, Esq.
(b) If to Prestige Bancorp, to:
Prestige Bancorp, Inc.
710 Old Clairton Road
Pleasant Hills, PA 15236
Attn: Mark R. Schoen
President and Chief Executive Officer
with a copy to:
Tucker Arensberg, P.C.
Suite 1500
One PPG Place
Pittsburgh, PA 15222
Attn: Daniel J. Perry, Esq.
Section 8.07. Captions. The captions contained in this Agreement are for
reference purposes only and are not part of this Agreement.
Section 8.08. Counterparts. This Agreement may be executed in any number
of counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
Section 8.09. Severability. If any provision of this Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the application
of such provisions to other persons or circumstances shall not be affected
thereby and shall be enforced to the greatest extent permitted by law.
Section 8.10. Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic internal law (including the law of
conflicts of law) of the Commonwealth of Pennsylvania, except to the extent
federal law and regulations applicable to financial institutions shall be
controlling.
Section 8.11. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that the provisions contained in
this Agreement were not performed in accordance with its specific terms or was
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 thereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
A-39
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers as of the day and year first above written.
NORTHWEST BANCORP, INC.
By: /s/ WILLIAM J. WAGNER
------------------------------------
William J. Wagner
President and Chief Executive
Officer
NORTHWEST MERGER SUBSIDIARY, INC.
By: /s/ WILLIAM J. WAGNER
------------------------------------
William J. Wagner
President and Chief Executive
Officer
NORTHWEST SAVINGS BANK
By: /s/ WILLIAM J. WAGNER
------------------------------------
William J. Wagner
President and Chief Executive
Officer
NORTHWEST BANCORP, MHC
By: /s/ WILLIAM J. WAGNER
------------------------------------
William J. Wagner
President and Chief Executive
Officer
PRESTIGE BANCORP, INC.
By: /s/ MARK R. SCHOEN
------------------------------------
Mark R. Schoen
President and Chief Executive
Officer
PRESTIGE BANK, A FEDERAL SAVINGS BANK
By: /s/ MARK R. SCHOEN
------------------------------------
Mark R. Schoen
Chief Executive Officer
A-40
[EXHIBITS TO THE AGREEMENT AND PLAN OF MERGER HAVE BEEN DELETED.
FOR COPIES, PLEASE CONTACT THE COMPANY AT 412-655-1190.]
A-41
APPENDIX B
March 8, 2002
Board of Directors
Prestige Bancorp, Inc.
Prestige Bank, a Federal Savings Bank
710 Old Clairton Road
Pleasant Hills, PA 15236
Members of the Board:
Prestige Bancorp, Inc. ("Prestige") has requested our written opinion, as
an independent financial advisor to Prestige and its wholly owned subsidiary
Prestige Bank, a Federal Savings Bank (the "Bank"), Pleasant Hills, Pennsylvania
as to the fairness, from a financial point of view to the common shareholders of
Prestige, of the merger consideration proposed in the Agreement and Plan of
Merger dated February 7, 2002 (the "Agreement"), pursuant to which Prestige will
be acquired by Northwest Bancorp, Inc. ("Northwest"), Warren, Pennsylvania.
Pursuant to the Agreement and discussions with management, 100% of the
issued and outstanding shares of Prestige common stock will be acquired for
$13.75 per share in cash (the "Merger Consideration") by Northwest. The Merger
Consideration may be taxable to Prestige shareholders.
This letter is directed to the Board of Directors of Prestige and the Bank
in its consideration of the Agreement, and does not constitute a recommendation
to any shareholder of Prestige to vote for or against the Agreement or to take
any other action.
FinPro, Inc. ("FinPro") provides investment-banking services to the bank
and thrift industry, including appraisals and valuations of bank and thrift
institutions and their securities in connection with mergers, acquisitions,
public offerings and other securities transactions. FinPro has knowledge of and
experience with the Pennsylvania bank and thrift market and financial
institutions operating in that market. The Prestige Board chose FinPro because
of its expertise, experience and familiarity with the bank and thrift
industries.
In connection with its opinion, FinPro reviewed and considered, among other
things:
(i)the Agreement and the exhibits thereto;
(ii)
changes in the market for bank and thrift stocks;
(iii)
the performance of Prestige's and Northwest's common stock;
(iv)
trends and changes in the financial condition of Prestige and Northwest;
(v)the most recent annual report to shareholders of Prestige and Northwest;
(vi)
quarterly reports on Form 10-Q of Prestige and Northwest;
(vii)
the budget of Prestige; and
(viii)
the most recent audit letter to Prestige and Northwest.
In rendering its opinion, FinPro did not independently verify the financial
data provided by or on behalf of Prestige and Northwest, but instead relied upon
and assumed the accuracy and completeness of the data provided.
We have also had discussions with the management of Prestige and Northwest
regarding their respective financial results and have analyzed the most current
financial data available for Prestige and Northwest. We also considered such
other information, financial studies, analyses and investigations, and economic
and market criteria which we deemed relevant.
We have considered certain financial data of Prestige and have compared
that data with similar data for other financial institutions and their holding
companies which have recently merged or been acquired. Furthermore, we have
considered the financial terms of these business combinations involving said
financial institutions and their holding companies.
B-1
In reaching our opinion, we took into consideration the financial benefits
of the proposed transaction to Prestige shareholders. Based on all factors that
we deem relevant and assuming the accuracy and completeness of the information
and data provided to us by Prestige and Northwest, it is our opinion as of this
date, that the proposed Merger Consideration is fair and equitable to Prestige
shareholders from a financial point of view.
FinPro understands that this opinion may be included in its entirety in a
communication by Prestige or its Board of Directors to the shareholders of
Prestige and may be included in its entirety in regulatory filings by Prestige
and Northwest. Except as described above, this opinion may not be summarized,
excerpted from or otherwise publicly referred to without FinPro's prior written
consent.
Prestige retained FinPro to act as independent financial advisor, to render
general financial advisory services and also to specifically advise Prestige in
connection with its merger and acquisition activities. Pursuant to its
engagement, Prestige will pay FinPro a fee equal to 1.00% of the transaction
value plus reasonable expenses. In addition, Prestige has indemnified FinPro in
connection with any matter related to the merger.
Prior to being retained as Prestige's financial advisor, FinPro had
provided consulting services to Prestige. The revenues derived from these
services are insignificant when compared to the firm's total gross revenues.
Respectfully submitted,
FinPro, Inc.
Liberty Corner, New Jersey
B-2
PLEASE MARK VOTES REVOCABLE PROXY
[X] AS IN THIS EXAMPLE PRESTIGE BANCORP,INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS ON MAY 30, 2002
KNOW ALL PERSONS BY THESE PRESENT that the undersigned shareholder of
Prestige Bancorp, Inc. (the "Company"), hereby appoints Mark R. Schoen and
Patricia A. White, or any of them, true and lawful attorneys with power of
substitution of each, to vote all shares of the Company which the undersigned
would be entitled to vote if personally present at the Annual Meeting of
Shareholders of the Company to be held on May 30, 2002 at Salvatore's, 5001
Curry Road, South Baldwin, Pennsylvania, at 10:30 A.M. (local time) and at any
adjournment thereof.
The undersigned hereby revokes any proxy heretofore given with respect to such
shares. Discretionary authority is hereby conferred as to all other matters as
may properly come before the Annual Meeting.
FOR AGAINST ABSTAIN
1. The adoption of the Agreement and Plan of [ ] [ ] [ ]
Merger, dated February 7, 2002, by and
between Northwest Bancorp, Inc.,
Northwest Bancorp, MHC, Northwest
Merger Subsidiary, Inc., Northwest
Savings Bank and Prestige Bancorp, Inc.
WITH- FOR ALL
FOR HOLD EXCEPT
2. Election of Directors for Terms Expiring [ ] [ ] [ ]
2005 (except as marked to the contrary
below):
MARTIN W. DOWLING AND MARK R. SCHOEN
(Each Nominee is Supported by the Board of Directors.)
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
"FOR ALL EXCEPT" AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.
FOR AGAINST ABSTAIN
3. Postponement of meeting if necessary to [ ] [ ] [ ]
solicit more proxies.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE
COMPANY. The above proposals have been put forth by the Board of Directors
of the Company. The attorneys named will vote the shares represented by
this proxy in accordance with the choices made on this card. IF NO CHOICE
IS INDICATED FOR A PROPOSAL,THIS PROXY WILL BE VOTED AFFIRMATIVELY ON SUCH
PROPOSAL.
PRESTIGE BANCORP, INC. (THE "COMPANY") ANNUAL MEETING TO BE HELD ON
MAY 30, 2002 AT 10:30 A.M. LOCAL TIME FOR THE SHAREHOLDERS OF THE COMPANY
AS OF APRIL 16, 2002.
Please be sure to sign and date Date
this Proxy in the box below. _____________________________
______________________________________________________________________
Stockholder sign above Co-holder (if any) sign above
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DETACH ABOVE CARD, SIGN, DATE AND MAIL IN POSTAGE PAID ENVELOPE PROVIDED.
PRESTIGE BANCORP,INC.
710 Old Clairton Road
Pleasant Hills,PA 15236
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The above signed acknowledges that (s)he has received a Proxy Statement
and Annual Report of the Company prior to signing this Proxy.
Please sign EXACTLY as your name(s) appear(s) hereon. When signing as
attorney, executor, administrator, guardian, trustee, custodian, etc. please
give full title as such. If a corporation or partnership, please sign the full
name by an authorized officer or partner. If stock is owned jointly, all parties
must sign.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
- --------------------------------------------------------------------------------
IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED
BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.
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