AGREEMENT
THIS AGREEMENT, dated as of July 23, 2000 ("Agreement"), is
made by and between NATIONAL PENN BANCSHARES, INC., a Pennsylvania
corporation ("NPB"), and COMMUNITY INDEPENDENT BANK, INC., a
Pennsylvania corporation ("CIB").
BACKGROUND
1. NPB and CIB desire for CIB to merge with and into NPB, with NPB
surviving such merger, in accordance with the applicable laws of the
Commonwealth of Pennsylvania and this Agreement.
2. As a condition and inducement to NPB to enter into this Agreement,
(a) the directors and certain officers of CIB are concurrently executing Letter
Agreements with NPB in the form attached hereto as Exhibit 1, and (b) CIB is
concurrently granting to NPB an option to acquire up to 19.9% of CIB's common
stock (the "NPB Option") pursuant to a Stock Option Agreement which is
concurrently being executed between CIB and NPB, in the form attached hereto as
Exhibit 2.
3. NPB and CIB desire to provide the terms and conditions
governing the transactions contemplated herein.
AGREEMENT
NOW THEREFORE, in consideration of the premises and of the mutual
covenants, agreements, representations and warranties herein contained, the
parties, intending to be legally bound hereby, agree as follows:
ARTICLE I
GENERAL
1.01 Definitions. 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 corporation, any person that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such corporation and, without
limiting the generality of the foregoing, includes any executive officer,
director or 10% equity owner of such corporation.
Agreement means this agreement, which constitutes a "plan of merger"
between NPB and CIB, including any amendment or supplement hereto.
Application means an application for regulatory approval which is
required by the transactions contemplated hereby.
Articles of Merger mean the articles of merger to be executed by NPB
and CIB and to be filed in the PDS, in accordance with the applicable laws of
the Commonwealth of Pennsylvania.
Bank Merger means the merger of BBank with and into NPBank, with NPBank
surviving such merger, contemplated by Section 1.03 of this Agreement.
Bank Plan of Merger has the meaning given to that term in Section 1.03
of this Agreement.
BBank means Bernville Bank, N.A., a national banking association, all
the outstanding capital stock of which is owned by CIB.
BCL means the Pennsylvania Business Corporation Law of 1988, as
amended.
BHC Act means the Bank Holding Company Act of 1956, as amended.
CIB means Community Independent Bank, Inc., a Pennsylvania corporation.
CIB Benefit Plan has the meaning given to that term in Section 2.12 of
this Agreement.
CIB Certificate has the meaning given to such term in Section
1.02(g)(i) of this Agreement.
CIB Common Stock has the meaning given to that term in Section 2.02(a)
of this Agreement.
CIB Disclosure Schedule means, collectively, the disclosure schedules
delivered by CIB to NPB at or prior to the execution and delivery of this
Agreement.
CIB Financials means (i) the audited consolidated financial statements
of CIB as of December 31, 1999 and 1998 and for each of the three years in the
period ended December 31, 1999, and (ii) the unaudited interim consolidated
financial statements of CIB for each calendar quarter after December 31, 1999,
including the quarter ended March 31, 2000.
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CIB Nominee has the meaning given to that term in Section 1.02(d)(i) of
this Agreement.
CIB NPBank Nominee has the meaning given to that term in Section
4.07(c)(iii) of this Agreement.
CIB Shareholders Meeting means the meeting of the holders of CIB Common
Stock concerning the Merger pursuant to the Prospectus/Proxy Statement.
CIB Stock Option Plans means each stock option plan maintained by CIB
immediately prior to the Effective Date.
Closing Date means the date on which the last condition precedent
provided in this Agreement (other than those conditions which are to be
fulfilled at the Closing) has been fulfilled or waived, or as soon as
practicable thereafter.
Confidentiality Agreement means the confidentiality agreement dated
July 13, 2000, between NPB and CIB.
CRA means the Community Reinvestment Act of 1977, as amended, and the
rules and regulations promulgated from time to time thereunder.
Determination Date means the trading day thirty-one days prior to the
CIB Shareholders Meeting.
Determination Period has the meaning given to such term in Section
1.02(e)(ii)(D) of this Agreement.
Division has the meaning given to that term in Section 4.07(c)(iv)(A)
of this Agreement.
Division Board has the meaning given to that term in Section
4.07(c)(iv)(B) of this Agreement.
Effective Date means the date upon which the Articles of Merger shall
be filed in the PDS and shall be the same as the Closing Date.
Environmental Law means any federal, state or local law, statute,
ordinance, rule, regulation, code, license, permit, authorization, approval,
consent, order, judgment, decree, injunction or agreement with any Regulatory
Authority relating to (i) the protection, preservation or restoration of the
environment, including, without limitation, air, water vapor, surface water,
groundwater, drinking water supply, surface soil, subsurface soil, plant and
animal life or any other natural resource, and/or (ii) the use, storage,
recycling, treatment, generation, transportation, processing, handling,
labeling, production, release or disposal of any substance presently listed,
defined, designated or classified
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as hazardous, toxic, radioactive or dangerous, or otherwise regulated, whether
by type or by quantity, including any material containing any such substance as
a component.
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 has the meaning given to such term in Section 1.02(g)(v)
of this Agreement.
Exchange Ratio means the exchange ratio set forth in Section
1.02(e)(ii)(A), as it may be adjusted pursuant to Section 1.02(h).
FDIC means the Federal Deposit Insurance Corporation.
FRB means the Federal Reserve Board.
IRC means the Internal Revenue Code of 1986, as amended.
IRS means the Internal Revenue Service.
Knowledge of CIB means the knowledge of CIB's officers and directors.
Knowledge of NPB means the knowledge of NPB's officers and directors.
Material Adverse Effect means a material adverse effect on (a) the
business, financial condition or results of operations of CIB on a consolidated
basis (when such term is used in Article 2 hereof or otherwise with respect to
CIB) or NPB on a consolidated basis (when such term is used in Article 3 hereof
or otherwise with respect to NPB) other than, in each case, any change,
circumstance or effect relating to (i) the economy or financial markets in
general, (ii) the banking industry and not specifically related to CIB or NPB,
or (iii) any action or omission of a party taken with the prior written consent
of the other party to this Agreement, or (b) the ability of such party to
consummate the transactions contemplated by this Agreement.
Merger means the merger of CIB with and into NPB, contemplated by this
Agreement.
Merger Consideration has the meaning given to such term in Section
1.02(g)(i) of this Agreement.
NASD means the National Association of Securities Dealers, Inc.
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Nasdaq means the National Market tier of The Nasdaq Stock Market
operated by the NASD.
NPB means National Penn Bancshares, Inc., a Pennsylvania corporation.
NPB Certificate has the meaning given to such term in Section
1.02(g)(ii) of this Agreement.
NPB Common Stock means the shares of common stock, without par value,
of NPB.
NPB Disclosure Schedule means, collectively, the disclosure schedules
delivered by NPB to CIB at or prior to the execution and delivery of this
Agreement.
NPB Financials means (i) the audited consolidated financial statements
of NPB as of December 31, 1999 and 1998 and for each of the three years in the
period ended December 31, 1999, and (ii) the unaudited interim consolidated
financial statements of NPB for each calendar quarter after December 31, 1999,
including the quarter ending March 31, 2000.
NPB Market Value has the meaning given to such term in Section
1.02(e)(ii)(D) of this Agreement.
NPB Option means the option granted to NPB to acquire certain shares of
CIB Common Stock referred to in the Background of this Agreement.
NPBank means National Penn Bank, a national banking association, all
the outstanding capital stock of which is owned by NPB.
OCC means the Office of the Comptroller of the Currency.
PDB means the Department of Banking of the Commonwealth of
Pennsylvania.
PDS means the Department of State of the Commonwealth of Pennsylvania.
Prospectus/Proxy Statement means the prospectus/proxy statement,
together with any supplements thereto, to be sent to holders of CIB Common Stock
in connection with the transactions contemplated by this Agreement.
Registration Statement means the registration statement on Form S-4,
including any pre-effective or post-effective amendments or supplements thereto,
as filed with the SEC under the Securities Act with respect to the NPB Common
Stock to be issued in connection with the transactions contemplated by this
Agreement.
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Regulatory Agreement has the meaning given to that term in Sections
2.11(d) and 3.10(d) of this Agreement.
Regulatory Authority means any agency or department of any federal,
state or local government or of any self-regulatory organization, including
without limitation the SEC, the FRB, the FDIC, the PDB, the OCC, the NASD, and
the respective staffs thereof.
Rights means warrants, options, rights, convertible securities and
other capital stock equivalents which obligate an entity to issue its
securities.
Rights Agreement means the rights agreement dated August 23, 1989, as
amended August 21, 1999, between NPB and National Penn Bank, as Rights Agent.
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 and the
rules and regulations promulgated from time to time thereunder.
Subsidiary means any corporation, 50% or more of the capital stock of
which is owned, either directly or indirectly, by another entity, except any
corporation the stock of which is held in the ordinary course of the lending
activities of a bank.
1.02 The Merger.
(a) Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") will take place on the Closing Date at a time and
place to be agreed upon by the parties hereto; provided, in any case, that all
conditions to closing set forth in Article V of this Agreement (other than the
delivery of certificates, opinions, and other instruments and documents to be
delivered at the Closing) have been satisfied or waived at or prior to the
Closing Date.
(b) The Merger. Subject to the terms and conditions of this Agreement
and in accordance with the BCL, on the Effective Date:
(i) CIB shall merge with and into NPB;
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(ii) the separate existence of CIB shall cease;
(iii) NPB shall be the surviving corporation in the
Merger; and
(iv) all of the property (real, personal and mixed), rights,
powers, duties, obligations and liabilities of CIB shall be taken and deemed to
be transferred to and vested in NPB, as the surviving corporation in the Merger,
without further act or deed;
all in accordance with the applicable laws of the Commonwealth of
Pennsylvania.
(c) NPB's Articles of Incorporation and Bylaws. On and after the
Effective Date, the articles of incorporation and bylaws of NPB, as in effect
immediately prior to the Effective Date, shall automatically be and remain the
articles of incorporation and bylaws of NPB, as the surviving corporation in the
Merger, until thereafter altered, amended or repealed.
(d) NPB's Board of Directors and Officers.
(i) On and after the Effective Date, (A) the directors of NPB
duly elected and holding office immediately prior to the Effective Date, and (B)
one person (the "CIB Nominee") selected by CIB's Board of Directors (consistent
with the 60 years age limitation contained in NPB's Bylaws) and approved by NPB
(which approval will not be unreasonably withheld) shall be the directors of
NPB, as the surviving corporation in the Merger, each to hold office until his
successor is elected and qualified or otherwise in accordance with applicable
law, the articles of incorporation and bylaws of NPB. NPB shall designate the
CIB Nominee as a Class III director with a term of office through April 2002 and
NPB agrees to re-nominate the CIB Nominee for at least one full three-year term
thereafter.
(ii) If the CIB Nominee, or any successor, resigns, dies or is
otherwise removed from NPB's Board of Directors prior to the end of the Class
III term ending April 2005, the former CIB directors then serving on the
Division Board, by a plurality vote, shall have the right to select (consistent
with the 60 years age limitation contained in NPB's Bylaws) the successor to
such CIB Nominee, or any successor, subject to approval of such person by NPB
(which approval will not be unreasonably withheld), and NPB shall take all
reasonable steps to elect such successor to the NPB Board of Directors.
(iii) On and after the Effective Date, the officers of NPB
duly elected and holding office immediately prior to the Effective Date shall be
the officers of NPB, as the surviving corporation in the Merger, each to hold
office until his or her
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successor is elected and qualified or otherwise in accordance with applicable
law, the articles of incorporation and bylaws of NPB.
(e) Conversion of Shares.
(i) NPB Common Stock.
(A) Outstanding Shares. Each share of NPB Common
Stock issued and outstanding immediately prior to the Effective Date shall, on
and after the Effective Date, continue to be issued and outstanding as an
identical share of NPB Common Stock.
(B) Treasury Stock. Each share of NPB Common Stock
issued and held in the treasury of NPB immediately prior to the Effective Date,
if any, shall, on and after the Effective Date, continue to be issued and held
in the treasury of NPB.
(ii) CIB Common Stock.
(A) Conversion. Subject to Sections 1.02(e)(ii)(B)
and 1.02(e)(ii)(C) hereof with respect to treasury stock and fractional shares,
each share of CIB Common Stock issued and outstanding immediately prior to the
Effective Date shall, on the Effective Date, by reason of the Merger and without
any action on the part of the holder thereof, cease to be outstanding and be
converted into the right to receive, subject to adjustment as provided in
Section 1.02(h) hereof, nine-tenths (9/10) share of NPB Common Stock, including
the associated rights to purchase securities pursuant to the Rights Agreement.
(B) Treasury Stock. Each share of CIB Common Stock
issued and held in the treasury of CIB immediately prior to the Effective Date,
if any, shall be cancelled on the Effective Date, and no cash, stock or other
property shall be delivered in exchange therefor.
(C) Fractional Shares. No fractional shares of NPB
Common Stock and no scrip or certificates therefor shall be issued in connection
with the Merger. Any former holder of CIB Common Stock who would otherwise be
entitled to receive a fraction of a share of NPB Common Stock shall receive, in
lieu thereof, cash in an amount equal to such fraction of a share multiplied by
NPB Market Value (as defined in subsection (e)(ii)(D) below).
(D) Market Value of NPB Common Stock. For purposes of
this Agreement, the market value of a share of NPB Common Stock ("NPB Market
Value") shall be deemed to be the average of the closing sale price of a share
of NPB Common Stock, as reported on The Nasdaq Stock Market, National Market
tier, as published in the Wall Street Journal, for the twenty trading days (the
"Determination Period") ending on the Determination Date. Notwithstanding any
other provision of this Agreement, however, the
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Determination Period shall not begin prior to the ten days after the date of
this Agreement.
(f) Stock Options.
(i) On the Effective Date, each option (a "CIB Option") to
purchase one or more shares of CIB Common Stock issued by CIB and outstanding on
the Effective Date, whether or not such option is exercisable on the Effective
Date, shall, by virtue of the Merger, cease to be outstanding and be converted
into an option to purchase the number of shares of NPB Common Stock which the
optionholder would have been entitled to receive in the Merger had such option
been exercised in full immediately prior to the Effective Date, at an exercise
price per share of NPB Common Stock equal to the per share exercise price of the
CIB Option divided by the Exchange Ratio, and having other terms and conditions
identical to those of the option exchanged (including forfeiture, acceleration
and expiration date provisions). The adjustment provided herein with respect to
any options which are "incentive stock options", as defined in Section 422 of
the IRC, shall be and is intended to be effected in a manner which is consistent
with Section 424(a) of the IRC.
(ii) As soon as practicable after the Effective Date, NPB
shall deliver to the holders of CIB Options appropriate notices setting forth
such holders' rights pursuant to the CIB Stock Option Plans, and the agreements
evidencing the grants of such CIB Options shall continue in effect on the same
terms and conditions (subject to the adjustments required by this Section
1.02(f) after giving effect to the Merger and the terms of the CIB Stock Option
Plans). NPB shall comply with the terms of the CIB Stock Option Plans and shall
take such reasonable steps as are necessary or required by, and subject to the
provisions of, such CIB Stock Option Plans, to have the CIB Options, if any,
which qualified as "incentive stock options" prior to the Effective Date,
continue to qualify as "incentive stock options" after the Effective Date.
(iii) NPB shall take all corporate action necessary to reserve
for issuance a sufficient number of shares of NPB Common Stock for delivery upon
exercise of CIB Options in accordance with this Agreement. Promptly after the
Effective Date, NPB shall file a registration statement on Form S-3 or Form S-8,
as the case may be (or any successor other appropriate forms), with respect to
the shares of NPB Common Stock subject to such options and shall use
commercially reasonable efforts to maintain the effectiveness of such
registration statement or registration statements (and maintain the current
status of the prospectus or prospectuses contained thereon) for so long as such
options remain outstanding. With respect to those individuals who, subsequent to
the Merger, will be subject to the reporting requirements under Section 16(a) of
the Exchange Act, where applicable, NPB shall administer the CIB
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Stock Option Plans in a manner consistent with the exemptions provided by Rule
16b-3 promulgated under the Exchange Act.
(g) Surrender and Exchange of CIB Stock Certificates.
(i) Each holder of shares of CIB Common Stock who surrenders
to NPB the certificate or certificates representing such shares (each, a "CIB
Certificate") shall be entitled to receive in exchange therefor, as soon as
practicable after the Effective Date, a certificate for the number of whole
shares of NPB Common Stock into which such holder's shares of CIB Common Stock
have been converted by the Merger, together with a check for cash in lieu of any
fractional share in accordance with Section 1.02(e)(ii)(C) hereof (the "Merger
Consideration").
(ii) Each certificate for shares of NPB Common Stock (each, an
"NPB Certificate") issued in exchange for CIB Certificates pursuant to Section
1.02(g)(i) hereof shall be dated the Effective Date and be entitled to dividends
and all other rights and privileges pertaining to such shares of stock from the
Effective Date. Until surrendered, each CIB Certificate shall, from and after
the Effective Date, evidence solely the right to receive NPB Certificates
pursuant to Section 1.02(g)(i) hereof and a check for cash in lieu of any
fractional share in accordance with Section 1.02(e)(ii)(C) hereof. If a CIB
Certificate is exchanged on a date following one or more record dates for the
payment of dividends or any other distribution on shares of NPB Common Stock,
NPB shall pay to such shareholder cash in an amount equal to dividends payable
on such shares of NPB Common Stock and pay or deliver any other distribution to
which such shareholder is entitled. No interest shall accrue or be payable in
respect of dividends or any other distribution otherwise payable under this
Section 1.02(g)(ii) upon surrender of CIB Certificates. Notwithstanding the
foregoing, no party hereto shall be liable to any holder of CIB Common Stock for
any amount paid in good faith to a public official or agency pursuant to any
applicable abandoned property, escheat or similar law. Until such time as CIB
Certificates are surrendered to NPB for exchange, NPB shall have the right to
withhold dividends or any other distributions on the shares of NPB Common Stock
issuable to such shareholder.
(iii) Each CIB Certificate delivered for exchange under this
Section 1.02(g) must be endorsed in blank by the registered holder thereof or
accompanied by a power of attorney to transfer such shares endorsed in blank by
such holder.
(iv) Upon the Effective Date, the stock transfer books for CIB
Common Stock will be closed and no further transfers of CIB Common Stock will
thereafter be made or recognized. All CIB Certificates surrendered pursuant to
this Section 1.02(g) will be cancelled.
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(v) As soon as reasonably practicable after the Effective
Date, NPB shall cause NPBank or another institutional entity selected by NPB, as
exchange agent (the "Exchange Agent"), to mail to each holder of a CIB
Certificate:
(A) a letter of transmittal which shall specify that
delivery shall be effected, and risk of loss and title to the CIB Certificates
shall pass, only upon delivery of the CIB Certificates to the Exchange Agent,
and which letter shall be in customary form and have such other provisions as
NPB reasonably may specify; and
(B) instructions for effecting the surrender of such
CIB Certificates in exchange for the applicable Merger Consideration.
Upon surrender of a CIB Certificate to the Exchange Agent together with such
letter of transmittal, duly executed and completed in accordance with the
instructions thereto, and such other documents as reasonably may be required by
the Exchange Agent, the holder of such CIB Certificate shall be entitled to
receive in exchange therefor:
(X) one or more shares of NPB Common Stock
representing, in the aggregate, the whole number of shares that such holder has
the right to receive pursuant to Section 1.02(e) (after taking into account all
shares of CIB Common Stock then held by such holder); and
(Y) a check in the amount equal to the cash that such
holder has the right to receive pursuant to the provisions of this Section 1.02,
including cash in lieu of any fractional shares and dividends and other
distributions pursuant to Section 1.02(g)(ii).
In the event of a transfer of ownership of CIB Common Stock which is not
registered in the transfer records of CIB, one or more NPB Certificates
evidencing, in the aggregate, the proper number of shares of NPB Common Stock, a
check in the proper amount of cash in lieu of any fractional shares and any
dividends or other distributions to which such holder is entitled pursuant to
Section 1.02(g)(ii), may be issued with respect to such CIB Common Stock to such
a transferee if the CIB Certificate representing such shares of CIB Common Stock
is presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and to evidence that any applicable stock
transfer taxes have been paid.
(h) Anti-Dilution Provisions. If NPB shall, at any time
before the Effective Date:
(i) issue a dividend in shares of NPB Common Stock;
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(ii) combine the outstanding shares of NPB Common Stock
into a smaller number of shares;
(iii) split or subdivide the outstanding shares of NPB
Common Stock; or
(iv) reclassify the shares of NPB Common Stock;
then, in any such event, the number of shares of NPB Common Stock to be
delivered to CIB shareholders who are entitled to receive shares of NPB Common
Stock in exchange for shares of CIB Common Stock shall be adjusted so that each
CIB shareholder shall be entitled to receive such number of shares of NPB Common
Stock as such shareholder would have been entitled to receive if the Effective
Date had occurred prior to the happening of such event. (By way of illustration,
if NPB shall declare a stock dividend of 7% payable with respect to a record
date on or prior to the Effective Date, the exchange ratio set forth in Section
1.02(e)(ii)(A) hereof shall be adjusted upward by 7%.)
1.03 Bank Merger. NPB and CIB shall each use their best efforts to
cause BBank to merge with and into NPBank, with NPBank surviving such merger
(the "Bank Merger") as soon as practicable after the Effective Date.
Concurrently with the execution of this Agreement, NPB shall cause NPBank to
execute, and CIB shall cause BBank to execute, the Bank Plan of Merger attached
hereto as Exhibit 3 (the "Bank Plan of Merger"). The Bank Merger shall not be
effected prior to the Effective Date.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF CIB
CIB hereby represents and warrants to NPB as follows:
2.01 Organization.
(a) CIB is a corporation duly incorporated, validly existing and in
good standing under the laws of the Commonwealth of Pennsylvania. CIB is a bank
holding company duly registered under the BHC Act. CIB has the corporate power
and authority to carry on its businesses and operations as now being conducted
and to own and operate the properties and assets now owned and being operated by
it. CIB is duly licensed, registered or qualified to do business in each
jurisdiction in which the nature of the business conducted by it or the
character or location of the properties and assets owned or leased by it makes
such licensing, registration or qualification necessary, except where the
failure to be so licensed, registered or qualified would not have a Material
Adverse Effect, and all such licenses, registrations and qualifications are in
full force and effect in all material respects.
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(b) BBank is a national banking association duly organized, validly
existing and in good standing under the laws of the United States of America.
BBank has the corporate power and authority to carry on its business and
operations as now being conducted and to own and operate the properties and
assets now owned and being operated by it. BBank is duly licensed, registered or
qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing, registration or qualification
necessary, except where the failure to be so licensed, registered or qualified
would not have a Material Adverse Effect, and all such licenses, registrations
and qualifications are in full force and effect in all material respects.
(c) BBank is a commercial bank, the deposits of which are insured by
the Bank Insurance Fund of the FDIC to the extent provided in the Federal
Deposit Insurance Act.
(d) CIB has no Subsidiaries other than BBank and those identified in
CIB Disclosure Schedule 2.01(d).
(e) The respective minute books of CIB and each CIB Subsidiary
accurately record, in all material respects, all material corporate actions of
their respective shareholders and boards of directors, including committees, in
each case in accordance with normal business practice of CIB and the CIB
Subsidiary.
(f) CIB has delivered to NPB true and correct copies of the articles of
incorporation and bylaws of CIB, the articles of association and bylaws of
BBank, and the articles of incorporation and bylaws of each other CIB
Subsidiary, each as in effect on the date hereof.
2.02 Capitalization.
(a) The authorized capital stock of CIB consists of (i) 5,000,000
shares of common stock, par value $5 per share ("CIB Common Stock"), of which at
the date hereof 700,327 shares are validly issued and outstanding, fully paid
and nonassessable, and free of preemptive rights, and none are held as treasury
shares, and (ii) 1,000,000 shares of preferred stock, par value $5 per share, of
which at the date hereof none are issued. Except for the NPB Option and this
Agreement, CIB has not issued nor is CIB bound by any subscription, option,
warrant, call, commitment, agreement or other Right of any character relating to
the purchase, sale, or issuance of, or right to receive dividends or other
distributions on, any shares of CIB Common Stock or any other security of CIB or
any securities representing the right to vote, purchase or otherwise receive any
shares of CIB Common Stock or any other security of CIB, except (i) for CIB
Options for 22,600 shares of
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CIB Common Stock issued and outstanding under the CIB Stock Option Plans, or
(ii) pursuant to CIB's Dividend Reinvestment Plan.
(b) CIB owns, directly or indirectly, all of the capital stock of BBank
and the other CIB Subsidiaries, free and clear of any liens, security interests,
pledges, charges, encumbrances, agreements and restrictions of any kind or
nature. Except for the Bank Plan of Merger, there are no subscriptions, options,
warrants, calls, commitments, agreements or other Rights outstanding with
respect to the capital stock of BBank or any other CIB Subsidiary. Except for
the CIB Subsidiaries, CIB does not possess, directly or indirectly, any material
equity interest in any corporation, except for equity interests in BBank's
investment portfolio, equity interests held by BBank in a fiduciary capacity,
and equity interests held in connection with BBank's commercial loan activities.
(c) To the Knowledge of CIB, except as set forth on CIB Disclosure
Schedule 2.02(c), no person or group is the beneficial owner of 5% or more of
the outstanding shares of CIB Common Stock (the terms "person", "group" and
"beneficial owner" are as defined in Section 13(d) of the Exchange Act, and the
rules and regulations thereunder).
2.03 Authority; No Violation.
(a) CIB has full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by CIB and the consummation by CIB of
the transactions contemplated hereby have been duly and validly approved by the
Board of Directors of CIB and, except for approval by the shareholders of CIB as
required by the BCL, no other corporate proceedings on the part of CIB are
necessary to consummate the Merger. This Agreement has been duly and validly
executed and delivered by CIB and, subject to approval by the shareholders of
CIB and subject to the required approvals of Regulatory Authorities described in
Section 3.04 hereof, constitutes the valid and binding obligation of CIB,
enforceable against CIB in accordance with its terms, subject to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights generally
and subject, as to enforceability, to general principles of equity.
(b) (i) The execution and delivery of this Agreement by CIB, (ii)
subject to receipt of approvals from the CIB shareholders and the Regulatory
Authorities referred to in Section 3.04 hereof and CIB's and NPB's compliance
with any conditions contained therein, the consummation of the Merger, and (iii)
compliance by CIB or any CIB Subsidiary with any of the terms or provisions
hereof, do not and will not:
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(A) conflict with or result in a breach of any
provision of the respective articles of incorporation or association or bylaws
of CIB or any CIB Subsidiary;
(B) violate any statute, rule, regulation, judgment,
order, writ, decree or injunction applicable to CIB or any CIB Subsidiary or any
of their respective properties or assets; or
(C) 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,
or acceleration of, 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 CIB or any
CIB Subsidiary under any of the terms or conditions of any note, bond, mortgage,
indenture, license, lease, agreement, commitment or other instrument or
obligation to which CIB or any CIB Subsidiary is a party, or by which they or
any of their respective properties or assets may be bound or affected,
excluding from clauses (B) and (C) hereof, any items which, in the aggregate,
would not have a Material Adverse Effect.
2.04 Consents. No consents or approvals of, or filings or registrations
with, any public body or authority are necessary, and no consents or approvals
of any third parties are necessary, in connection with the execution and
delivery of this Agreement by CIB or the Bank Plan of Merger by BBank or,
subject to the consents, approvals, filings and registrations from or with the
Regulatory Authorities referred to in Section 3.04 hereof and compliance with
any conditions contained therein and subject to the approval of this Agreement
by the shareholders of CIB as required under the BCL, the consummation by CIB of
the transactions contemplated hereby or by BBank of the Bank Merger.
2.05 Financial Statements.
(a) CIB has delivered to NPB the CIB Financials, except those
pertaining to quarterly periods commencing after March 31, 2000, which it will
deliver to NPB within 45 days after the end of the respective quarter. The
delivered CIB Financials fairly present, in all material respects, the
consolidated financial position, results of operations and cash flows of CIB as
of and for the periods ended on the dates thereof, in accordance with generally
accepted accounting principles, except in each case as noted therein and, in the
case of interim period financial statements, subject to normal year-end
adjustments and footnotes thereto.
(b) To the Knowledge of CIB, CIB did not have any liabilities
or obligations of any nature, whether absolute, accrued, contingent
15
or otherwise, which are not fully reflected or reserved against in the balance
sheets included in the CIB Financials at the date of such balance sheets which
would have been required to be reflected therein in accordance with generally
accepted accounting principles or disclosed in a footnote thereto, except for
liabilities and obligations which were incurred in the ordinary course of
business consistent with past practice, and except for liabilities and
obligations which are within the subject matter of a specific representation and
warranty herein or which otherwise have not had a Material Adverse Effect.
2.06 No Material Adverse Change. Neither CIB nor any CIB Subsidiary has
suffered any adverse change in their respective assets, business, financial
condition or results of operations since December 31, 1999 which change has had
a Material Adverse Effect, it being understood that (a) the expenses incurred by
CIB in connection with this Agreement and the Merger, including, without
limitation, the engagement of legal and financial advisors, and (b) any increase
in non-performing assets or potential problem loans (as those terms are defined
in SEC guidelines) through the date of this Agreement, shall not constitute a
Material Adverse Effect.
2.07 Taxes.
(a) CIB and the CIB Subsidiaries are members of the same affiliated
group within the meaning of IRC Section 1504(a). CIB has filed, and will file,
in correct form all federal, state and local tax returns required to be filed
by, or with respect to, CIB and the CIB Subsidiaries on or prior to the Closing
Date, except to the extent that any failure to file or any inaccuracies would
not, individually or in the aggregate, have a Material Adverse Effect, and has
paid or will pay, or made or will make, provisions for the payment of all
federal, state and local taxes which are shown on such returns to be due for the
periods covered thereby from CIB or any CIB Subsidiary to any applicable taxing
authority, on or prior to the Closing Date, other than taxes which (i) are not
delinquent or are being contested in good faith, (ii) have not been finally
determined, or (iii) the failure to pay would not, individually or in the
aggregate, have a Material Adverse Effect.
(b) No consent pursuant to IRC Section 341(f) has been filed, or will
be filed prior to the Closing Date, by or with respect to CIB or any CIB
Subsidiary.
(c) To the Knowledge of CIB, there are no material disputes pending, or
claims asserted in writing, for taxes or assessments upon CIB or any CIB
Subsidiary, nor has CIB or any CIB Subsidiary been requested in writing to give
any currently effective waivers extending the statutory period of limitation
applicable to any federal, state, county or local income tax return for any
period.
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(d) Proper and accurate amounts have been withheld by CIB and each CIB
Subsidiary from their employees for all prior periods in compliance in all
material respects with the tax withholding provisions of applicable federal,
state and local laws, except where failure to do so is not reasonably likely to
have a Material Adverse Effect.
2.08 Contracts.
(a) Except as described in CIB Disclosure Schedule 2.08(a) or 2.12,
neither CIB nor any CIB Subsidiary is a party to or subject to:
(i) any employment, consulting, severance, "change-in-
control" or termination contract or arrangement with any officer, director,
employee, independent contractor, agent or other person, except for "at will"
arrangements;
(ii) any plan, arrangement or contract providing for bonuses,
pensions, options, deferred compensation, retirement payments, profit sharing or
similar arrangements for or with any officer, director, employee, independent
contractor, agent or other person;
(iii) any collective bargaining agreement with any labor
union relating to employees;
(iv) any agreement which by its terms limits the payment
of dividends by CIB or any CIB Subsidiary;
(v) except in the ordinary course of business, any material
instrument evidencing or related to 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 CIB or any CIB
Subsidiary is an obligor to any person, other than deposits, repurchase
agreements, bankers acceptances and "treasury tax and loan" accounts established
in the ordinary course of business, instruments relating to transactions entered
into in the customary course of the banking business of BBank, 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 Closing Date;
(vi) any contract, other than this Agreement, which restricts
or prohibits it from engaging in any type of business permissible under
applicable law;
(vii) any contract, plan or arrangement which provides for
payments or benefits in certain circumstances which, together with other
payments or benefits payable to any participant therein or party thereto, might
render any portion of any such payments or
17
benefits subject to disallowance of deduction therefor as a result of the
application of Section 280G of the IRC; or
(viii) except in the ordinary course of business, any
lease for real property.
(b) (i) All the contracts, plans, arrangements and instruments listed
in CIB Disclosure Schedule 2.08(a) or 2.12 are in full force and effect on the
date hereof, and neither CIB, any CIB Subsidiary nor, to the Knowledge of CIB,
any other party to any such contract, plan, arrangement or instrument, has
breached any provision of, or is in default under any term of, any such
contract, plan, arrangement or instrument the breach of which or default under
which will have a Material Adverse Effect, and no party to any such contract,
plan, arrangement or instrument will have the right to terminate any or all of
the provisions thereof as a result of the transactions contemplated by this
Agreement, the termination of which will have a Material Adverse Effect.
(ii) Except as otherwise described in CIB Disclosure Schedule
2.08(a) or 2.12, no plan, employment agreement, termination agreement or similar
agreement or arrangement to which CIB or any CIB Subsidiary is a party or by
which CIB or any CIB Subsidiary may be bound:
(A) contains provisions which permit an employee or
an independent contractor to terminate it without cause and continue to accrue
future benefits thereunder;
(B) provides for acceleration in the vesting of
benefits thereunder upon the occurrence of a change in ownership or control or
merger or other acquisition of CIB or any CIB Subsidiary; or
(C) requires CIB or any CIB Subsidiary to provide a
benefit in the form of CIB Common Stock or determined by reference to the value
of CIB Common Stock.
2.09 Ownership of Property; Insurance Coverage.
(a) CIB and each CIB Subsidiary has, and will have as to property
acquired after the date hereof, good, and as to real property, marketable, title
to all material assets and properties owned by CIB or such CIB Subsidiary,
whether real or personal, tangible or intangible, including securities, assets
and properties reflected in the balance sheets contained in the CIB Financials
or acquired subsequent thereto (except to the extent that such securities are
held in any fiduciary or agency capacity and except to the extent that such
assets and properties have been disposed of for fair value, in the ordinary
course of business, or have been disposed of as obsolete since the date of such
balance sheets),
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subject to no encumbrances, liens, mortgages, security interests or pledges,
except:
(i) those items that secure liabilities for borrowed money and
that are described in CIB Disclosure Schedule 2.09(a) or permitted under Article
IV hereof;
(ii) statutory liens for amounts not yet delinquent or which
are being contested in good faith;
(iii) liens for current taxes not yet due and payable;
(iv) pledges to secure deposits and other liens incurred in
the ordinary course of banking business;
(v) such imperfections of title, easements and encumbrances,
if any, as are not material in character, amount or extent; and
(vi) dispositions and encumbrances for adequate consideration
in the ordinary course of business.
CIB and each CIB Subsidiary have the right under leases of material properties
used by CIB or such CIB Subsidiary in the conduct of their respective businesses
to occupy and use all such properties in all material respects as presently
occupied and used by them.
(b) With respect to all agreements pursuant to which CIB or any CIB
Subsidiary has purchased securities subject to an agreement to resell, if any,
CIB or such CIB Subsidiary has a valid, perfected first lien or security
interest 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, except to the extent that any failure to obtain such a
lien or maintain such collateral would not, individually or in the aggregate,
have a Material Adverse Effect.
(c) CIB and each CIB Subsidiary maintain insurance in amounts
considered by CIB to be reasonable for their respective operations, and such
insurance is similar in scope and coverage in all material respects to that
maintained by other businesses similarly situated. Neither CIB nor any CIB
Subsidiary has received notice from any insurance carrier that:
(i) such insurance will be cancelled or that coverage
thereunder will be reduced or eliminated; or
(ii) premium costs with respect to such insurance will be
substantially increased;
except to the extent such cancellation, reduction, elimination or increase would
not have a Material Adverse Effect.
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(d) CIB and each CIB Subsidiary maintains such fidelity bonds and
errors and omissions insurance as may be customary or required under applicable
laws or regulations.
2.10 Legal Proceedings. Neither CIB nor any CIB Subsidiary is a party
to any, and there are no pending or, to the Knowledge of CIB, threatened, legal,
administrative, arbitration or other proceedings, claims, actions, customer
complaints, or governmental investigations or inquiries of any nature:
(a) against CIB or any CIB Subsidiary;
(b) to which the assets of CIB or any CIB Subsidiary are subject;
(c) challenging the validity or propriety of any of the transactions
contemplated by this Agreement; or
(d) which could materially adversely affect the ability of CIB, BBank
or any other CIB Subsidiary to perform their respective obligations under this
Agreement and the Bank Plan of Merger;
except for any proceedings, claims, actions, investigations, or inquiries
referred to in clauses (a) or (b) which, individually or in the aggregate, would
not have a Material Adverse Effect.
2.11 Compliance with Applicable Law.
(a) CIB and each CIB Subsidiary hold all licenses, franchises, permits
and authorizations necessary for the lawful conduct of their respective
businesses under, and have complied in all material respects with, applicable
laws, statutes, orders, rules or regulations of any Regulatory Authority
relating to them, other than where such failure to hold or such noncompliance
will neither result in a limitation in any material respect on the conduct of
its businesses nor otherwise have a Material Adverse Effect.
(b) CIB and each CIB Subsidiary have filed all reports, registrations
and statements, together with any amendments required to be made with respect
thereto, that they were required to file with any Regulatory Authority, and have
filed all other reports and statements required to be filed by them, including
without limitation any report or statement required to be filed pursuant to the
laws, rules or regulations of the United States, any state or any Regulatory
Authority, and have paid all fees and assessments due and payable in connection
therewith, except where the failure to file such report, registration or
statement or to pay such fees and assessments, either individually or in the
aggregate, would not have a Material Adverse Effect.
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(c) No Regulatory Authority has initiated any proceeding or, to the
Knowledge of CIB, investigation into the business or operations of CIB or any
CIB Subsidiary, except where any such proceedings or investigations will not,
individually or in the aggregate, have a Material Adverse Effect, or such
proceedings or investigations have been terminated or otherwise resolved.
(d) Neither CIB nor any CIB Subsidiary has received any notification or
communication from any Regulatory Authority:
(i) asserting that CIB or any CIB Subsidiary is not in
substantial compliance with any of the statutes, regulations or ordinances which
such Regulatory Authority enforces, unless such assertion has been waived,
withdrawn or otherwise resolved;
(ii) threatening to revoke any license, franchise, permit or
governmental authorization which is material to CIB or any CIB Subsidiary;
(iii) requiring or threatening to require CIB or any CIB
Subsidiary, or indicating that CIB or any CIB Subsidiary may be required, to
enter into a cease and desist order, agreement or memorandum of understanding or
any other agreement restricting or limiting, or purporting to restrict or limit,
in any manner the operations of CIB or any CIB 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 CIB or any CIB
Subsidiary (any such notice, communication, memorandum, agreement or order
described in this sentence herein referred to as a "Regulatory Agreement");
in each case except as heretofore disclosed to NPB.
(e) Neither CIB nor any CIB Subsidiary has received, consented to, or
entered into any Regulatory Agreement, except as heretofore disclosed to NPB.
(f) To the Knowledge of CIB, there is no unresolved violation,
criticism, or exception by any Regulatory Authority with respect to any
Regulatory Agreement which if resolved in a manner adverse to CIB or any CIB
Subsidiary would have a Material Adverse Effect.
(g) There is no injunction, order, judgment or decree imposed upon CIB
or any CIB Subsidiary or the assets of CIB or any CIB Subsidiary which has had,
or, to the Knowledge of CIB, would have, a Material Adverse Effect.
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2.12 ERISA.
(a) CIB has delivered to NPB true and complete copies of any employee
pension benefit plans within the meaning of ERISA Section 3(2), profit sharing
plans, stock purchase plans, deferred compensation and supplemental income
plans, supplemental executive retirement plans, annual incentive plans, group
insurance plans, and all other employee welfare benefit plans within the meaning
of ERISA Section 3(1) (including vacation pay, sick leave, short-term
disability, long-term disability, and medical plans) and all other material
employee benefit plans, policies, agreements and arrangements, all of which are
set forth in CIB Disclosure Schedule 2.12, currently maintained or contributed
to for the benefit of the employees or former employees (including retired
employees) and any beneficiaries thereof or directors or former directors of CIB
or any CIB Subsidiary (collectively, the "CIB Benefit Plans"), together with:
(i) the most recent actuarial (if any) and financial reports
relating to those CIB Benefit Plans which constitute "qualified plans" under IRC
Section 401(a);
(ii) the most recent Form 5500 (if any) relating to such CIB
Benefit Plans filed by them, respectively, with the IRS; and
(iii) the most recent IRS determination letter which pertain
to any such CIB Benefit Plans.
(b) Neither CIB nor any CIB Subsidiary, and no pension plan (within the
meaning of ERISA Section 3(2)) maintained by CIB or any CIB Subsidiary, has
incurred any liability to the Pension Benefit Guaranty Corporation or to the IRS
with respect to any pension plan qualified under IRC Section 401(a), except
liabilities to the Pension Benefit Guaranty Corporation pursuant to ERISA
Section 4007, all of which have been fully paid, nor has any reportable event
under ERISA Section 4043(b) (with respect to which the 30 day notice requirement
has not been waived) occurred with respect to any such pension plan.
(c) Neither CIB nor any CIB Subsidiary has incurred any liability under
ERISA Section 4201 for a complete or partial withdrawal from a multi-employer
plan.
(d) Each CIB Benefit Plan has been maintained, operated and
administered in compliance in all respects with its terms and related documents
or agreements and the applicable provisions of all laws, including ERISA and the
IRC, except where any such non- compliance would not have a Material Adverse
Effect.
(e) As of the date hereof, there is no existing, or, to the Knowledge
of CIB, contemplated, audit of its employee benefit plans by the IRS or the U.S.
Department of Labor.
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(f) With respect to any services which CIB or any CIB Subsidiary may
provide as a sponsor, fiduciary, trustee or otherwise for any plan, program, or
assignment subject to ERISA (other than any CIB Benefit Plan), CIB and each CIB
Subsidiary:
(i) have correctly computed all contributions, payments or
other amounts for which it is responsible;
(ii) have not engaged in any prohibited transactions (as
defined in ERISA Section 406 for which an exemption does not exist); and
(iii) have not incurred any liability to any beneficiary
or sponsor of any ERISA plan as a result of any negligence in the
performance of its duties;
except where any such action or inaction would not have a Material Adverse
Effect.
2.13 Brokers and Finders. Neither CIB, any CIB Subsidiary, nor any of
their respective officers, directors, employees, independent contractors or
agents, has employed any broker, finder, investment banker or financial advisor,
or incurred any liability for any fees or commissions to any such person, in
connection with the transactions contemplated by this Agreement, except for
Janney Montgomery Scott, Inc. ("JMS"), whose engagement letter with CIB is
included in CIB Disclosure Schedule 2.13.
2.14 Environmental Matters.
(a) Except as set forth on CIB Disclosure Schedule 2.14, to the
Knowledge of CIB, neither CIB nor any CIB Subsidiary, nor any property owned or
operated by CIB or any CIB Subsidiary, has been or is in violation of or liable
under any Environmental Law, except for such violations or liabilities that,
individually or in the aggregate, would not have a Material Adverse Effect.
Except as set forth on CIB Disclosure Schedule 2.14, there are no actions, suits
or proceedings, or demands, claims or notices, including without limitation
notices, demand letters or requests for information from any Regulatory
Authority, instituted or pending, or to the Knowledge of CIB, threatened, or any
investigation pending, relating to the liability of CIB or any CIB Subsidiary
with respect to any property owned or operated by CIB or any CIB Subsidiary
under any Environmental Law, except as to any such actions or other matters
which would not result in a Material Adverse Effect.
(b) Except as set forth on CIB Disclosure Schedule 2.14, no property,
now or formerly owned or operated by CIB or any CIB Subsidiary or on which CIB
or any CIB Subsidiary holds or held a mortgage or other security interest or has
foreclosed or taken a deed in lieu of foreclosure, has been listed or proposed
for listing on the National Priority List under the Comprehensive
23
Environmental Response Compensation and Liability Act of 1980, as amended
("CERCLA"), on the Comprehensive Environmental Response Compensation and
Liabilities Information System, or any similar state list, or which is the
subject of federal, state or local enforcement actions or other investigations
which may lead to claims against CIB or any CIB Subsidiary for response costs,
remedial work, investigation, damage to natural resources or for personal injury
or property damage claim, including, but not limited to, claims under CERCLA,
which would have a Material Adverse Effect.
2.15 Business of CIB. Since December 31, 1999, neither CIB nor any CIB
Subsidiary has, in any material respect:
(a) increased the wages, salaries, compensation, pension or other
employee benefits payable to any executive officer, employee or director, except
as is permitted in Section 4.01(d);
(b) eliminated employee benefits;
(c) deferred routine maintenance of real property or leased premises;
(d) eliminated a reserve where the liability related to such reserve
has remained;
(e) failed to depreciate capital assets in accordance with past
practice or to eliminate capital assets which are no longer used in its
business; or
(f) had extraordinary reduction or deferral of ordinary or necessary
expenses.
2.16 CRA Compliance. CIB and BBank are in material compliance with the
applicable provisions of the CRA, and, as of the date hereof, BBank has received
a CRA rating of "satisfactory" or better from the OCC. To the Knowledge of CIB,
there is no fact or circumstance or set of facts or circumstances which would
cause CIB or BBank to fail to comply with such provisions in a manner which
would have a Material Adverse Effect.
2.17 Bank Merger.
(a) BBank has full corporate power and authority to execute and deliver
the Bank Plan of Merger and to consummate the Bank Merger. The execution and
delivery of the Bank Plan of Merger by BBank and the consummation by BBank of
the Bank Merger have been duly and validly approved by the Board of Directors of
BBank and by CIB as sole shareholder of BBank, and no other corporate
proceedings on the part of BBank are necessary to consummate the Bank Merger.
The Bank Plan of Merger, upon its execution and delivery by BBank concurrently
with the execution and delivery of
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this Agreement, will constitute the valid and binding obligation of BBank,
enforceable against BBank in accordance with its terms, subject to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights generally
and subject, as to enforceability, to general principles of equity.
(b) The execution and delivery of the Bank Plan of Merger and the
consummation of the Bank Merger will not:
(i) conflict with or result in a breach of any provision of
the respective articles of incorporation or association or bylaws of CIB or
BBank;
(ii) violate any statute, rule, regulation, judgment, order,
writ, decree or injunction applicable to CIB or BBank 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,
or acceleration of 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 respective properties or assets of
CIB or BBank under, any of the terms or conditions of any note, bond, mortgage,
indenture, license, lease, agreement, commitment or other instrument or
obligation to which CIB or BBank is a party, or by which they or any of their
respective properties or assets may be bound or affected;
excluding from clauses (ii) and (iii) any such items which, in the aggregate,
would not have a Material Adverse Effect.
2.18 Information to be Supplied.
(a) The information supplied by CIB for inclusion in the Registration
Statement (including the Prospectus/Proxy Statement) will not, at the time the
Registration Statement is declared effective pursuant to the Securities Act, and
as of the date the Prospectus/Proxy Statement is mailed to shareholders of CIB,
and up to and including the date of the CIB Shareholders Meeting, contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in the light of the circumstances
in which they were made, not misleading.
(b) The information supplied by CIB for inclusion in the Applications
will, at the time each such document is filed with any Regulatory Authority and
up to and including the dates of any required regulatory approvals or consents,
as such Applications may be amended by subsequent filings, be accurate in all
material respects.
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2.19 Related Party Transactions.
(a) Except as set forth on CIB Disclosure Schedule 2.19, or as is
disclosed in the footnotes to the CIB Financials, as of the date hereof, neither
CIB nor any CIB Subsidiary is a party to any transaction (including any loan or
other credit accommodation but excluding deposits in the ordinary course of
business) with any Affiliate of CIB or any CIB Subsidiary, and all such
transactions were made on substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable transactions with
other "persons" (as defined in Section 13(d) of the Exchange Act, and the rules
and regulations thereunder), except with respect to variations in such terms as
would not, individually or in the aggregate, have a Material Adverse Effect.
(b) Except as set forth in CIB Disclosure Schedule 2.19, as of the date
hereof, no loan or credit accommodation to any Affiliate of CIB or any CIB
Subsidiary is presently in default or, during the three-year period prior to the
date of this Agreement, has been in material default or has been restructured,
modified or extended in any manner which would have a Material Adverse Effect.
To the Knowledge of CIB, as of the date hereof, principal and interest with
respect to any such loan or other credit accommodation will be paid when due and
the loan grade classification accorded such loan or credit accommodation is
appropriate.
2.20 Loans. All loans reflected as assets in the CIB Financials are
evidenced by notes, agreements or other evidences of indebtedness which are
true, genuine and correct, and to the extent secured, are secured by valid liens
and security interests which have been perfected, excluding loans as to which
the failure to satisfy the foregoing standards would not have a Material Adverse
Effect.
2.21 Accounting for the Merger; Reorganization. As of the date hereof,
CIB does not have any reason to believe that the Merger will fail to qualify for
"pooling of interests" accounting treatment under generally accepted accounting
principles, or as a "reorganization" under Section 368(a) of the IRC.
2.22 Fairness Opinion. CIB has received an oral opinion from JMS to the
effect that, as of the date hereof, the consideration to be received by
shareholders of CIB pursuant to this Agreement is fair, from a financial point
of view, to such shareholders.
2.23 Year 2000 Compliance. All software, hardware, embedded microchips
and other processing capabilities utilized by and material to the operations of
CIB or any CIB Subsidiary are able to interpret, process, manage and manipulate
data involving all calendar dates correctly, including single century formulas
and multi-century formulas, all leap years, and all dates on or after
26
January 1, 2000, including February 29, 2000. All computer systems of CIB or any
CIB Subsidiary function correctly for purposes of date and time calculations.
2.24 Securities Documents. CIB has delivered to NPB copies of:
(a) CIB's annual reports on SEC Form 10-KSB for the years ended
December 31, 1999 and 1998;
(b) CIB's quarterly report on SEC Form 10-QSB for the quarter ended
March 31, 2000;
(c) all other reports, registration statements and filings of CIB filed
with the SEC since January 1, 2000; and
(d) CIB's proxy materials used in connection with its meetings of
shareholders held in 2000 and 1999.
Such reports and proxy materials complied, in all material respects, and all
future SEC reports, filings, and proxy materials will comply, in all material
respects, with the rules and regulations of the SEC to the extent applicable
thereto, and all such SEC reports, filings and proxy materials did not and will
not, at the time of their filing, contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances in which they
were made, not misleading.
2.25 Quality of Representations. To the Knowledge of CIB, no
representation made by CIB in this Agreement contains any untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF NPB
NPB hereby represents and warrants to CIB as follows:
3.01 Organization.
(a) NPB is a corporation duly incorporated, validly existing and in
good standing under the laws of the Commonwealth of Pennsylvania. NPB is a bank
holding company duly registered under the BHC Act. NPB has the corporate power
and authority to carry on its businesses and operations as now being conducted
and to own and operate the properties and assets now owned and being operated by
it. NPB is duly licensed, registered or qualified to do business in each
jurisdiction in which the nature of the business conducted
27
by it or the character or location of the properties and assets owned or leased
by it makes such licensing, registration or qualification necessary, except
where the failure to be so licensed, registered or qualified would not have a
Material Adverse Effect, and all such licenses, registrations and qualifications
are in full force and effect in all material respects.
(b) NPBank is a national banking association duly organized, validly
existing and in good standing under the laws of the United States of America.
NPBank has the corporate power and authority to carry on its business and
operations as now being conducted and to own and operate the properties and
assets now owned and being operated by it. NPBank is duly licensed, registered
or qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing, registration or qualification
necessary, except where the failure to be so licensed, registered or qualified
would not have a Material Adverse Effect, and all such licenses, registrations
and qualifications are in full force and effect in all material respects.
(c) The respective minute books of NPB and each NPB Subsidiary
accurately record, in all material respects, all material corporate actions of
their respective shareholders and boards of directors, including committees, in
each case in accordance with normal business practice of NPB and the NPB
Subsidiary.
(d) NPB has delivered to CIB true and correct copies of the respective
articles of incorporation, articles of association and bylaws of NPB and NPBank,
as in effect on the date hereof.
3.02 Capitalization.
(a) The authorized capital stock of NPB consists of (i) 62,500,000
shares of common stock, without par value ("NPB Common Stock"), of which at the
date hereof 17,661,609 shares are validly issued and outstanding, fully paid and
nonassessable, and free of preemptive rights, and 182,163 are held as treasury
shares, and (ii) 1,000,000 shares of preferred stock, without par value, of
which at the date hereof none are issued. NPB has not issued nor is NPB bound by
any subscription, option, warrant, call, commitment, agreement or other Right of
any character relating to the purchase, sale, or issuance of, or right to
receive dividends or other distributions on, any shares of NPB Common Stock or
any other security of NPB or any securities representing the right to vote,
purchase or otherwise receive any shares of NPB Common Stock or any other
security of NPB, except (i) for options to acquire shares of NPB Common Stock
issued under NPB's various stock option plans, (ii) pursuant to NPB's employee
stock purchase plan,
28
dividend reinvestment plan and directors' fee plan, and (iii) pursuant to the
Rights Agreement.
(b) NPB owns, directly or indirectly, all of the capital stock of
NPBank and the other NPB Subsidiaries, free and clear of any liens, security
interests, pledges, charges, encumbrances, agreements and restrictions of any
kind or nature. There are no subscriptions, options, warrants, calls,
commitments, agreements or other Rights outstanding with respect to the capital
stock of NPBank or any other NPB Subsidiary. Except for the NPB Subsidiaries,
NPB does not possess, directly or indirectly, any material equity interest in
any corporation, except for equity interests in the investment portfolios of
NPB's Subsidiaries, equity interests held by NPB's Subsidiaries in a fiduciary
capacity, and equity interests held in connection with the commercial loan
activities of NPB's Subsidiaries.
3.03 Authority; No Violation.
(a) NPB has full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by NPB and the consummation by NPB of
the transactions contemplated hereby have been duly and validly approved by the
Board of Directors of NPB and no other corporate proceedings on the part of NPB
are necessary to consummate the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by NPB and, subject to receipt
of the required approvals of Regulatory Authorities described in Section 3.04
hereof, constitutes the valid and binding obligation of NPB, enforceable against
NPB in accordance with its terms, subject to applicable bankruptcy, insolvency
and similar laws affecting creditors' rights generally and subject, as to
enforceability, to general principles of equity.
(b) (i) The execution and delivery of this Agreement by NPB, (ii)
subject to receipt of approvals from the Regulatory Authorities referred to in
Section 3.04 hereof and NPB's and CIB's compliance with any conditions contained
therein, the consummation of the Merger, and (iii) compliance by NPB or any NPB
Subsidiary with any of the terms or provisions hereof, does not and will not:
(A) conflict with or result in a breach of any
provision of the respective articles of incorporation, articles of association
or bylaws of NPB or any NPB Subsidiary;
(B) violate any statute, rule, regulation, judgment,
order, writ, decree or injunction applicable to NPB or any NPB Subsidiary or any
of their respective properties or assets; or
29
(C) 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, or acceleration of 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 NPB or any
NPB Subsidiary under, any of the terms or conditions of any note, bond,
mortgage, indenture, license, lease, agreement, commitment or other instrument
or obligation to which NPB or any NPB Subsidiary is a party, or by which they or
any of their respective properties or assets may be bound or affected,
excluding from clauses (B) and (C) any such items which, in the aggregate, would
not have a Material Adverse Effect.
3.04 Consents. Except for consents and approvals of, or filings with,
the SEC, the FRB, the PDB, the NASD, the OCC, and state securities or "blue sky"
authorities, no consents or approvals of, or filings or registrations with, any
public body or authority are necessary in connection with the execution and
delivery of this Agreement by NPB and the Bank Plan of Merger by NPBank or the
consummation of the Merger.
3.05 Financial Statements.
(a) NPB has delivered to CIB the NPB Financials, except those
pertaining to quarterly periods commencing after March 31, 2000, which it will
deliver to CIB within 45 days after the end of the respective quarter. The
delivered NPB Financials fairly present, in all material respects, the
consolidated financial position, results of operations and cash flows of NPB as
of and for the periods ended on the dates thereof, in accordance with generally
accepted accounting principles, except in each case as noted therein and, in the
case of interim period financial statements, subject to normal year-end
adjustments and footnotes thereto.
(b) To the Knowledge of NPB, NPB did not have any liabilities or
obligations of any nature, whether absolute, accrued, contingent or otherwise,
which are not fully reflected or reserved against in the balance sheets included
in the NPB Financials at the date of such balance sheets which would have been
required to be reflected therein in accordance with generally accepted
accounting principles or disclosed in a footnote thereto, except for liabilities
and obligations which were incurred in the ordinary course of business
consistent with past practice, and except for liabilities and obligations which
are within the subject matter of a specific representation and warranty herein
or which otherwise have not had a Material Adverse Effect.
3.06 No Material Adverse Change. Neither NPB nor any NPB Subsidiary has
suffered any adverse change in their respective
30
assets, business, financial condition or results of operations since December
31, 1999 which change has had a Material Adverse Effect.
3.07 Taxes.
(a) NPB and the NPB Subsidiaries are members of the same affiliated
group within the meaning of IRC Section 1504(a). NPB has filed, and will file,
in correct form all federal, state and local tax returns required to be filed
by, or with respect to, NPB and the NPB Subsidiaries on or prior to the Closing
Date, except to the extent that any failure to file or any inaccuracies would
not, individually or in the aggregate, have a Material Adverse Effect, and has
paid or will pay, or made or will make, provisions for the payment of all
federal, state and local taxes which are shown on such returns to be due for the
periods covered thereby from NPB or any NPB Subsidiary to any applicable taxing
authority, on or prior to the Closing Date, other than taxes which (i) are not
delinquent or are being contested in good faith, (ii) have not been finally
determined, or (iii) the failure to pay would not, individually or in the
aggregate, have a Material Adverse Effect.
(b) To the Knowledge of NPB, there are no material disputes pending, or
claims asserted in writing, for taxes or assessments upon NPB or any NPB
Subsidiary, nor has NPB or any NPB Subsidiary been requested in writing to give
any currently effective waivers extending the statutory period of limitation
applicable to any federal, state, county or local income tax return for any
period.
(c) Proper and accurate amounts have been withheld by NPB and each NPB
Subsidiary from their employees for all prior periods in compliance in all
material respects with the tax withholding provisions of applicable federal,
state and local laws, except where failure to do so is not reasonably likely to
have a Material Adverse Effect.
3.08 Ownership of Property; Insurance Coverage.
(a) NPB and each NPB Subsidiary has, and will have as to property
acquired after the date hereof, good, and as to real property, marketable, title
to all material assets and properties owned by NPB or such NPB Subsidiary,
whether real or personal, tangible or intangible, including securities, assets
and properties reflected in the balance sheets contained in the NPB Financials
or acquired subsequent thereto (except to the extent that such securities are
held in any fiduciary or agency capacity and except to the extent that such
assets and properties have been disposed of for fair value, in the ordinary
course of business, or have been disposed of as obsolete since the date of such
balance sheets), subject to no encumbrances, liens, mortgages, security
interests or pledges, except:
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(i) those items that secure liabilities for borrowed money and
that are described in NPB Disclosure Schedule 3.08(a) or permitted under Article
IV hereof;
(ii) statutory liens for amounts not yet delinquent or which
are being contested in good faith;
(iii) liens for current taxes not yet due and payable;
(iv) pledges to secure deposits and other liens incurred in
the ordinary course of banking business;
(v) such imperfections of title, easements and encumbrances,
if any, as are not material in character, amount or extent; and
(vi) dispositions and encumbrances for adequate
consideration in the ordinary course of business.
NPB and each NPB Subsidiary have the right under leases of material properties
used by NPB or such NPB Subsidiary in the conduct of their respective businesses
to occupy and use all such properties in all material respects as presently
occupied and used by them.
(b) With respect to all agreements pursuant to which NPB or any NPB
Subsidiary has purchased securities subject to an agreement to resell, if any,
NPB or such NPB Subsidiary has a valid, perfected first lien or security
interest 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, except to the extent that any failure to obtain such a
lien or maintain such collateral would not, individually or in the aggregate,
have a Material Adverse Effect.
(c) NPB and each NPB Subsidiary maintain insurance in amounts
considered by NPB to be reasonable for their respective operations, and such
insurance is similar in scope and coverage in all material respects to that
maintained by other businesses similarly situated. Neither NPB nor any NPB
Subsidiary has received notice from any insurance carrier that:
(i) such insurance will be cancelled or that coverage
thereunder will be reduced or eliminated; or
(ii) premium costs with respect to such insurance will be
substantially increased;
except to the extent such cancellation, reduction, elimination or increase would
not have a Material Adverse Effect.
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(d) NPB and each NPB Subsidiary maintain such fidelity bonds and errors
and omissions insurance as may be customary or required under applicable laws or
regulations.
3.09 Legal Proceedings. Neither NPB nor any NPB Subsidiary is a party
to any, and there are no pending or, to the Knowledge of NPB, threatened, legal,
administrative, arbitration or other proceedings, claims, actions, customer
complaints, or governmental investigations or inquiries of any nature:
(a) against NPB or any NPB Subsidiary;
(b) to which the assets of NPB or any NPB Subsidiary are subject;
(c) challenging the validity or propriety of any of the transactions
contemplated by this Agreement; or
(d) which could materially adversely affect the ability of NPB, NPBank
or any other NPB Subsidiary to perform their respective obligations under this
Agreement and the Bank Plan of Merger;
except for any proceedings, claims, actions, investigations, or inquiries
referred to in clauses (a) or (b) which, individually or in the aggregate, would
not have a Material Adverse Effect.
3.10 Compliance with Applicable Law.
(a) NPB and each NPB Subsidiary hold all licenses, franchises, permits
and authorizations necessary for the lawful conduct of their respective
businesses under, and have complied in all material respects with, applicable
laws, statutes, orders, rules or regulations of any Regulatory Authority
relating to them, other than where such failure to hold or such noncompliance
will neither result in a limitation in any material respect on the conduct of
their respective businesses nor otherwise have a Material Adverse Effect.
(b) NPB and each NPB Subsidiary have filed all reports, registrations
and statements, together with any amendments required to be made with respect
thereto, that they were required to file with any Regulatory Authority, and have
filed all other reports and statements required to be filed by them, including
without limitation any report or statement required to be filed pursuant to the
laws, rules or regulations of the United States, any state or any Regulatory
Authority, and have paid all fees and assessments due and payable in connection
therewith, except where the failure to file such report, registration or
statement or to pay such fees and assessments, either individually or in the
aggregate, would not have a Material Adverse Effect.
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(c) No Regulatory Authority has initiated any proceeding or, to the
Knowledge of NPB, investigation into the businesses or operations of NPB or any
of its Subsidiaries, except where any such proceedings or investigations will
not, individually or in the aggregate, have a Material Adverse Effect, or such
proceedings or investigations have been terminated or otherwise resolved.
(d) Neither NPB nor any NPB Subsidiary has received any notification or
communication from any Regulatory Authority:
(i) asserting that NPB or any NPB Subsidiary is not in
substantial compliance with any of the statutes, regulations or ordinances which
such Regulatory Authority enforces, unless such assertion has been waived,
withdrawn or otherwise resolved;
(ii) threatening to revoke any license, franchise, permit
or governmental authorization which is material to NPB or any NPB
Subsidiary;
(iii) requiring or threatening to require NPB or any NPB
Subsidiary, or indicating that NPB or any NPB Subsidiary may be required, to
enter into a cease and desist order, agreement or memorandum of understanding or
any other agreement restricting or limiting, or purporting to restrict or limit,
in any manner the operations of NPB or any NPB 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 NPB or any NPB
Subsidiary (any such notice, communication, memorandum, agreement or order
described in this sentence herein referred to as a "Regulatory Agreement");
in each case except as would not have a Material Adverse Effect.
(e) Neither NPB nor any NPB Subsidiary has received, consented to, or
entered into any Regulatory Agreement which would have, individually or in the
aggregate, a Material Adverse Effect.
(f) To the Knowledge of NPB, there is no unresolved violation,
criticism, or exception by any Regulatory Authority with respect to any
Regulatory Agreement which if resolved in a manner adverse to NPB or any NPB
Subsidiary would have a Material Adverse Effect.
(g) There is no injunction, order, judgment or decree imposed upon NPB
or any NPB Subsidiary or the assets of NPB or any NPB Subsidiary which has had,
or, to the Knowledge of NPB, would have, a Material Adverse Effect.
34
3.11 ERISA.
(a) NPB has delivered to CIB true and complete copies of any employee
pension benefit plans within the meaning of ERISA Section 3(2), profit sharing
plans, stock purchase plans, deferred compensation and supplemental income
plans, supplemental executive retirement plans, annual incentive plans, group
insurance plans, and all other employee welfare benefit plans within the meaning
of ERISA Section 3(1) (including vacation pay, sick leave, short-term
disability, long-term disability, and medical plans) and all other material
employee benefit plans, policies, agreements and arrangements, all of which are
set forth in NPB Disclosure Schedule 3.11, currently maintained or contributed
to for the benefit of the employees or former employees (including retired
employees) and any beneficiaries thereof or directors or former directors of NPB
or any NPB Subsidiary (collectively, the "NPB Benefit Plans"), together with:
(i) the most recent actuarial (if any) and financial reports
relating to those NPB Benefit Plans which constitute "qualified plans" under IRC
Section 401(a);
(ii) the most recent Form 5500 (if any) relating to such NPB
Benefit Plans filed by them, respectively, with the IRS; and
(iii) the most recent IRS determination letters which pertain
to any such NPB Benefit Plans.
(b) Neither NPB nor any NPB Subsidiary, and no pension plan (within the
meaning of ERISA Section 3(2)) maintained by NPB or any NPB Subsidiary, has
incurred any liability to the Pension Benefit Guaranty Corporation or to the IRS
with respect to any pension plan qualified under IRC Section 401(a), except
liabilities to the Pension Benefit Guaranty Corporation pursuant to ERISA
Section 4007, all of which have been fully paid, nor has any reportable event
under ERISA Section 4043(b) (with respect to which the 30 day notice requirement
has not been waived) occurred with respect to any such pension plan.
(c) Neither NPB nor any NPB Subsidiary has incurred any liability under
ERISA Section 4201 for a complete or partial withdrawal from a multi-employer
plan.
(d) Each NPB Benefit Plan has been maintained, operated and
administered in compliance in all respects with its terms and related documents
or agreements and the applicable provisions of all laws, including ERISA and the
IRC, except where any such non- compliance would not have a Material Adverse
Effect.
(e) As of the date hereof, there is no existing, or, to the
Knowledge of NPB, contemplated, audit of its employee benefit plans
by the IRS or the U.S. Department of Labor.
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(f) With respect to any services which NPB or any NPB Subsidiary may
provide as a sponsor, fiduciary, trustee or otherwise for any plan, program, or
assignment subject to ERISA (other than any NPB Benefit Plan), NPB and each NPB
Subsidiary:
(i) have correctly computed all contributions, payments or
other amounts for which it is responsible;
(ii) have not engaged in any prohibited transactions (as
defined in ERISA Section 406 for which an exemption does not exist); and
(iii) have not incurred any liability to any beneficiary or
sponsor of any ERISA plan as a result of any negligence in the performance of
its duties;
except where any such action or inaction would not have a Material Adverse
Effect.
3.12 Brokers and Finders. Neither NPB, any NPB Subsidiary, nor any of
their respective officers, directors, employees, independent contractors or
agents, has employed any broker, finder, investment banker or financial advisor,
or incurred any liability for any fees or commissions to any such person, in
connection with the transactions contemplated by this Agreement.
3.13 Environmental Matters.
(a) Except as set forth on NPB Disclosure Schedule 3.13, to the
Knowledge of NPB, neither NPB, any NPB Subsidiary, nor any property owned or
operated by NPB or any NPB Subsidiary, has been or is in violation of or liable
under any Environmental Law, except for such violations or liabilities that,
individually or in the aggregate, would not have a Material Adverse Effect.
Except as set forth on NPB Disclosure Schedule 3.13, there are no actions, suits
or proceedings, or demands, claims or notices, including without limitation
notices, demand letters or requests for information from any Regulatory
Authority, instituted or pending, or to the Knowledge of NPB, threatened, or any
investigation pending, relating to the liability of NPB or any NPB Subsidiary
with respect to any property owned or operated by NPB or any NPB Subsidiary
under any Environmental Law, except as to any such actions or other matters
which would not result in a Material Adverse Effect.
(b) Except as set forth on NPB Disclosure Schedule 3.13, no property,
now or formerly owned or operated by NPB or any NPB Subsidiary or on which NPB
or any NPB Subsidiary holds or held a mortgage or other security interest or has
foreclosed or taken a deed in lieu or foreclosure, has been listed or proposed
for listing on the National Priority List under CERCLA on the Comprehensive
Environmental Response Compensation and Liabilities Information System, or any
similar state list, or which is the
36
subject of federal, state or local enforcement actions or other investigations
which may lead to claims against NPB or any NPB Subsidiary for response costs,
remedial work, investigation, damage to natural resources or for personal injury
or property damage claim, including, but not limited to, claims under CERCLA,
which would have a Material Adverse Effect.
3.14 Business of NPB. Since December 31, 1999, neither NPB nor any NPB
Subsidiary has, in any material respect:
(a) increased the wages, salaries, compensation, pension or other
employee benefits payable to any executive officer, employee or director;
(b) eliminated employee benefits;
(c) deferred routine maintenance of real property or leased premises;
(d) eliminated a reserve where the liability related to such reserve
has remained;
(e) failed to depreciate capital assets in accordance with past
practice or to eliminate capital assets which are no longer used in its
business; or
(f) had extraordinary reduction or deferral of ordinary or necessary
expenses.
3.15 CRA Compliance. NPB and NPBank are in material compliance with the
applicable provisions of the CRA, and, as of the date hereof, NPBank has
received a CRA rating of "satisfactory" or better from the OCC. To the Knowledge
of NPB, there is no fact or circumstance or set of facts or circumstances which
would cause NPBank to fail to comply with such provisions in a manner which
would have a Material Adverse Effect.
3.16 Bank Merger.
(a) NPBank has full corporate power and authority to execute and
deliver the Bank Plan of Merger and to consummate the Bank Merger. The execution
and delivery of the Bank Plan of Merger by NPBank and the consummation by NPBank
of the Bank Merger have been duly and validly approved by the Board of Directors
of NPBank and by NPB as sole shareholder of NPBank, and no other corporate
proceedings on the part of NPBank are necessary to consummate the Bank Merger.
The Bank Plan of Merger, upon its execution and delivery by NPBank concurrently
with the execution and delivery of this Agreement, will constitute the valid and
binding obligation of NPBank, enforceable against NPBank in accordance with its
terms, subject to applicable bankruptcy, insolvency and similar laws
37
affecting creditors' rights generally and subject, as to enforceability, to
general principles of equity.
(b) The execution and delivery of the Bank Plan of Merger and the
consummation of the Bank Merger will not:
(i) conflict with or result in a breach of any provision of
the respective articles of incorporation or association or bylaws of NPB or
NPBank;
(ii) violate any statute, rule, regulation, judgment, order,
writ, decree or injunction applicable to NPB or NPBank 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,
or acceleration of 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 respective properties or assets of
NPB or NPBank under, any of the terms or conditions of any note, bond, mortgage,
indenture, license, lease, agreement, commitment or other instrument or
obligation to which NPB or NPBank is a party, or by which they or any of their
respective properties or assets may be bound or affected;
excluding from clauses (ii) and (iii) any such items which, in the aggregate,
would not have a Material Adverse Effect.
3.17 Information to be Supplied.
(a) The information supplied by NPB for inclusion in the Registration
Statement (including the Prospectus/Proxy Statement) will not, at the time the
Registration Statement is declared effective pursuant to the Securities Act, and
as of the date the Prospectus/Proxy Statement is mailed to shareholders of CIB,
and up to and including the date of the CIB Shareholders Meeting, contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in the light of the circumstances
in which they were made, not misleading.
(b) The information supplied by NPB for inclusion in the Applications
will, at the time each such document is filed with any Regulatory Authority and
up to and including the dates of any required regulatory approvals or consents,
as such Applications may be amended by subsequent filings, be accurate in all
material respects.
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3.18 Related Party Transactions.
(a) Except as set forth on NPB Disclosure Schedule 3.18 or in the
footnotes to the NPB Financials, as of the date hereof, neither NPB nor any NPB
Subsidiary is a party to any transaction (including any loan or other credit
accommodation but excluding deposits in the ordinary course of business) with
any Affiliate of NPB or any NPB Subsidiary, and all such transactions were made
on substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with other "persons"
(as defined in Section 13(d) of the Exchange Act, and the rules and regulations
thereunder), except with respect to variations in such terms as would not,
individually or in the aggregate, have a Material Adverse Effect.
(b) Except as set forth in NPB Disclosure Schedule 3.18, as of the date
hereof, no loan or credit accommodation to any Affiliate of NPB or any NPB
Subsidiary is presently in default or, during the three-year period prior to the
date of this Agreement, has been in material default or has been restructured,
modified or extended in any manner which would have a Material Adverse Effect.
To the Knowledge of NPB, as of the date hereof, principal and interest with
respect to any such loan or other credit accommodation will be paid when due and
the loan grade classification accorded such loan or credit accommodation is
appropriate.
3.19 Loans. All loans reflected as assets in the NPB Financials are
evidenced by notes, agreements or other evidences of indebtedness which are
true, genuine and correct, and to the extent secured, are secured by valid liens
and security interests which have been perfected, excluding loans as to which
the failure to satisfy the foregoing standards would not have a Material Adverse
Effect.
3.20 Accounting for the Merger; Reorganization. As of the date hereof,
NPB does not have any reason to believe that the Merger will fail to qualify for
"pooling of interests" accounting treatment under generally accepted accounting
principles, or as a "reorganization" under Section 368(a) of the IRC.
3.21 Year 2000 Compliance. All software, hardware, embedded microchips
and other processing capabilities utilized by and material to the operations of
NPB or any NPB Subsidiary are able to interpret, process, manage and manipulate
data involving all calendar dates correctly, including single century formulas
and multi-century formulas, all leap years, and all dates on or after January 1,
2000, including February 29, 2000. All computer systems of NPB or any NPB
Subsidiary function correctly for purposes of date and time calculations.
39
3.22 NPB Common Stock. The shares of NPB Common Stock to be issued and
delivered to CIB shareholders in accordance with this Agreement, when so issued
and delivered, will be validly authorized and issued and fully paid and
non-assessable, and no shareholder of NPB shall have any preemptive right with
respect thereto.
3.23 Securities Documents. NPB has delivered to CIB copies of:
(a) NPB's annual reports on SEC Form 10-K for the years ended December
31, 1999 and 1998;
(b) NPB's quarterly report on SEC Form 10-Q for the quarter ended March
31, 2000;
(c) all other reports, registration statements and filings of NPB filed
with the SEC since January 1, 2000; and
(d) NPB's proxy materials used in connection with its meetings of
shareholders held in 2000 and 1999.
Such reports and proxy materials complied, in all material respects, and all
future SEC reports, filings, and proxy materials will comply, in all material
respects, with the rules and regulations of the SEC to the extent applicable
thereto, and all such SEC reports, filings and proxy materials did not and will
not, at the time of their filing, contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances in which they
were made, not misleading.
3.24 Quality of Representations. To the Knowledge of NPB, no
representation made by NPB in this Agreement contains any untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
ARTICLE IV
COVENANTS OF THE PARTIES
4.01 Conduct of CIB's Business. Through the Closing Date, CIB shall,
and shall cause each CIB Subsidiary to, in all material respects, conduct its
businesses and engage in transactions only in the ordinary course and consistent
with past practice, except as otherwise required by this Agreement or with the
written consent of NPB. CIB shall, and shall cause each CIB Subsidiary to, use
its reasonable good faith efforts to preserve its business organization intact,
maintain good relationships with employees, and preserve the good will of
customers of CIB or the CIB Subsidiaries and others with whom business
relationships exist. Through the Closing
40
Date, except as otherwise consented to in writing by NPB (such consent shall not
be unreasonably withheld) or as permitted by this Agreement, CIB shall not, and
CIB shall not permit any CIB Subsidiary to:
(a) change any provision of its articles of incorporation or
association or of its bylaws;
(b) change the number of authorized or issued shares of its capital
stock; repurchase any shares of capital stock; issue or grant any option,
warrant, call, commitment, subscription, Right or agreement of any character
relating to its authorized or issued capital stock or any securities convertible
into shares of capital stock; declare, set aside or pay any dividend or other
distribution in respect of capital stock; or redeem or otherwise acquire any
shares of capital stock; except that (i) CIB may issue up to an aggregate of
22,600 shares of CIB Common Stock upon the valid exercise of any CIB Options
issued and outstanding on the date hereof, and (ii) CIB may pay its regular
quarterly cash dividend of $.07 per share of CIB Common Stock;
(c) grant any severance or termination pay, other than pursuant to
policies or agreements of CIB or any CIB Subsidiary in effect on the date
hereof, to, or enter into or amend any employment, consulting, severance,
"change-in-control" or termination contract or arrangement with, any officer,
director, employee, independent contractor, agent or other person associated
with CIB or any CIB Subsidiary;
(d) except for (i) routine periodic pay increases, merit pay increases
and pay-raises in connection with promotions, all in accordance with past
practice, and (ii) retention bonuses on account of the Merger to be granted in
good faith reasonable amounts not to exceed $50,000 in the aggregate and to be
payable to designated persons not earlier than 30 days after the operational
merger of BBank and NPBank, increase the rate of compensation of, or pay any
bonus to, any director, officer, employee, independent contractor, agent or
other person associated with CIB or any CIB Subsidiary; or grant job promotions
other than in accordance with past practice;
(e) merge or consolidate with any other corporation; sell or lease all
or any substantial portion of its assets or businesses; make any acquisition of
all or any substantial portion of the business or assets of any other person,
firm, association, corporation or business organization; enter into a purchase
and assumption transaction with respect to deposits, loans or liabilities;
permit BBank to relocate or surrender its certificate of authority to maintain,
or file an application for the relocation of, any existing branch office; or
permit BBank to file an application for a certificate of authority to establish
a new branch office;
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(f) sell or otherwise dispose of any material 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 the
ordinary course of business consistent with past practice; modify in any
material manner the manner in which it has heretofore conducted its business or
enter into any new line of business; incur any indebtedness for borrowed money,
except in the ordinary course of business, consistent with past practice;
(g) take any action which would result in any of the conditions set
forth in Article V hereof not being satisfied;
(h) change any method, practice or principle of accounting, except as
required by changes in generally accepted accounting principles concurred in by
its independent certified public accountants; or change any assumption
underlying, or any method of calculation of, depreciation of any type of asset
or establishment of any reserve;
(i) waive, release, grant or transfer any rights of material value or
modify or change in any material respect any existing agreement to which it is a
party, other than in the ordinary course of business, consistent with past
practice;
(j) implement any pension, retirement, profit sharing, bonus, welfare
benefit or similar plan or arrangement that was not in effect on the date of
this Agreement, or amend any existing plan or arrangement except as required by
law;
(k) amend or otherwise modify its underwriting and other lending
guidelines and policies in effect as of the date hereof or otherwise fail to
conduct its lending activities in the ordinary course of business consistent
with past practice;
(l) enter into, renew, extend or modify any other transaction with any
Affiliate, other than deposit and loan transactions in the ordinary course of
business and which are in compliance with the requirements of applicable laws
and regulations;
(m) enter into any interest rate swap, floor or cap or similar
commitment, agreement or arrangement;
(n) take any action that would give rise to a right of payment to any
individual under any employment agreement except in the ordinary course of
business consistent with past practice;
(o) purchase any security for its investment portfolio (i) rated less
than "AAA" by either Standard & Poor's Corporation or Moody's Investor Services,
Inc., or (ii) with a remaining maturity more than five (5) years;
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(p) make any capital expenditure of $50,000 or more; or undertake or
enter into any lease, contract or other commitment for its account, other than
in the ordinary course of business, involving an unbudgeted expenditure of more
than $25,000, or extending beyond twelve (12) months from the date hereof;
(q) take any action that would preclude the Merger from qualifying for
"pooling of interests" accounting treatment under generally accepted accounting
principles or as a "reorganization" within the meaning of Section 368 of the
IRC;
(r) terminate any in-house back office, support, processing or other
operational activities or services, including without limitation accounting,
loan processing and deposit services; or substitute any contract or arrangement
with any person or entity for the provision of such activities or services; or
(s) agree to do any of the foregoing.
4.02 Access; Confidentiality.
(a) Through the Closing Date, CIB and NPB shall each afford to the
other, including its authorized agents and representatives, reasonable access to
its and its Subsidiaries' businesses, properties, assets, books and records and
personnel, at reasonable hours and after reasonable notice; and the officers of
CIB and NPB shall each furnish the other party making such investigation,
including its authorized agents and representatives, with such financial and
operating data and other information with respect to such businesses,
properties, assets, books and records and personnel as the party making such
investigation, or its authorized agents and representatives, shall from time to
time reasonably request.
(b) NPB and CIB each agree that it, and its authorized agents and
representatives, will conduct such investigation and discussions hereunder in a
confidential manner and otherwise in a manner so as not to interfere
unreasonably with the other party's normal operations and customer and employee
relationships. Neither CIB nor NPB, nor any of their respective Subsidiaries,
shall be required to provide access to or disclose information where such access
or disclosure would violate or prejudice the rights of customers, jeopardize
attorney-client privilege or similar privilege with respect to such information
or contravene any law, rule, regulation, decree, order, fiduciary duty or
agreement entered into prior to the date hereof.
(c) All information furnished to NPB or CIB by the other in connection
with the transactions contemplated by this Agreement, whether prior to the date
of this Agreement or subsequent hereto, shall be held in confidence to the
extent required by, and in
43
accordance with, the confidentiality agreement dated July 13, 2000 between NPB
and CIB (the "Confidentiality Agreement").
4.03 Regulatory Matters. Through the Closing Date:
(a) NPB and CIB shall cooperate with one another in the preparation of
the Registration Statement (including the Prospectus/Proxy Statement) and all
Applications and the making of all filings for, and shall use their reasonable
best efforts to obtain, as promptly as practicable, all necessary permits,
consents, approvals, waivers and authorizations of all Regulatory Authorities
necessary or advisable to consummate the transactions contemplated by this
Agreement. NPB and CIB shall each give the other reasonable time to review any
Application to be filed by it prior to the filing of such Application with the
relevant Regulatory Authority, and each shall consult one another with respect
to the substance and status of such filings.
(b) CIB and NPB shall each promptly furnish the other with copies of
written communications to, or received by them from, any Regulatory Authority in
respect of the transactions contemplated hereby.
(c) CIB and NPB shall each cooperate with the other in the foregoing
matters and shall furnish the other with all information concerning itself as
may be necessary or advisable in connection with any Application or filing,
including the Registration Statement and any report filed with the SEC, made by
or on behalf of such party to or with any Regulatory Authority in connection
with the transactions contemplated by this Agreement, and in each such case,
such information shall be accurate and complete in all material respects. In
connection therewith, CIB and NPB shall use their reasonable good faith efforts
to provide each other certificates, "comfort" letters and other documents
reasonably requested by the other.
4.04 Taking of Necessary Actions. Through the Closing Date, in addition
to the specific agreements contained herein, each party hereto shall use
reasonable best efforts to take, or cause to be taken by each of its
Subsidiaries, all actions, and to do, or cause to be done by each of its
Subsidiaries, all things necessary, proper or advisable under applicable laws
and regulations to consummate and make effective the transactions contemplated
by this Agreement including, if necessary, appealing any adverse ruling in
respect of any Application.
4.05 No Solicitation. CIB shall not, nor shall it authorize or permit
any of its officers, directors or employees or any investment banker, financial
advisor, attorney, accountant or other representative retained by it to:
44
(a) initiate, solicit, encourage (including by way of furnishing
information), or take any other action to facilitate, any inquiries or the
making of any proposal which constitutes any Acquisition Proposal (as defined
herein);
(b) enter into or maintain or continue discussions or negotiate with
any person in furtherance of an Acquisition Proposal; or
(c) agree to or endorse any Acquisition Proposal.
CIB shall (unless it believes, based upon written advice of its counsel, such
notification would violate the CIB Board of Directors' fiduciary duties) notify
NPB as promptly as practicable, in reasonable detail, as to any inquiries and
proposals which it or any of its representatives or agents may receive;
provided, however, that, notwithstanding anything to the contrary contained in
this Agreement:
(i) CIB may furnish or cause to be furnished confidential and
non-public information concerning CIB and its businesses, properties or assets
to a third party;
(ii) CIB may engage in discussions or negotiations with a
third party;
(iii) following receipt of an Acquisition Proposal, CIB may
take and disclose to its shareholders a position with respect to such
Acquisition Proposal; and/or
(iv) following receipt of an Acquisition Proposal, the CIB
Board of Directors may withdraw or modify its recommendation of the Merger;
but in respect of the foregoing clauses (i) through (iv) only if the CIB Board
of Directors shall conclude in good faith after consultation with its legal and
financial advisors, and based upon written advice of its counsel, that failure
to do so would result in a breach by such directors of their fiduciary duties to
CIB's shareholders.
As used herein, the term "Acquisition Proposal" means the public announcement of
a bona fide proposal (including a written communication that is or becomes the
subject of public disclosure) for: (x) any merger, consolidation or acquisition
of all or substantially all the assets or liabilities of CIB, BBank, any CIB
Subsidiary, or any other business combination involving CIB, BBank or any CIB
Subsidiary; or (y) a transaction involving the transfer of beneficial ownership
of securities representing, or the right to acquire beneficial ownership or to
vote securities representing, 10% or more of the then outstanding shares of CIB
Common Stock, the
45
then outstanding shares of common stock of BBank, or the then outstanding shares
of common stock of any CIB Subsidiary.
4.06 Update of Disclosure Schedules. Through the Closing Date, CIB
shall update the CIB Disclosure Schedule, and NPB shall update the NPB
Disclosure Schedule, as promptly as practicable after the occurrence of any
event which, if such event had occurred prior to the date hereof, would have
been disclosed on such schedule.
4.07 Other Undertakings by NPB and CIB.
(a) Undertakings of CIB.
(i) Shareholder Approval. CIB shall submit this Agreement to
its shareholders for approval at the CIB Shareholders Meeting with the
recommendation of its Board of Directors to such shareholders to approve this
Agreement. The CIB Shareholders Meeting may, in CIB's sole discretion, be held
after all consents of any Regulatory Authorities to the Merger have been
obtained. In the event that any such consent has not been obtained prior to the
date established in the Prospectus/Proxy Statement for such meeting, such
meeting may be postponed or adjourned at the sole discretion of CIB.
(ii) Phase I Environmental Audit. CIB shall permit NPB, if NPB
elects to do so, at its own cost and expense, to cause a "phase I environmental
audit" to be performed at any physical location owned or occupied by CIB or any
CIB Subsidiary.
(iii) Updated Fairness Opinion. CIB shall use its reasonable
best efforts to obtain an updated written opinion from JMS to the effect that
the consideration to be received by shareholders of CIB pursuant to this
Agreement is fair, from a financial point of view, to such shareholders, dated
not more than ten days prior to the date of mailing of the Prospectus/Proxy
Statement to the shareholders of CIB, for inclusion in such Prospectus/Proxy
Statement.
(iv) Dividend Reinvestment Plan. Within ten days after the
date of this Agreement, CIB shall suspend, effective the date of this Agreement
and through the earlier of the Closing Date or the termination of this
Agreement, the operation of CIB's Dividend Reinvestment Plan.
(b) Undertakings of NPB and CIB.
(i) Filings and Approvals. NPB and CIB shall each cooperate
with the other in the preparation and filing, as soon as practicable, of:
(A) the Applications;
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(B) the Registration Statement (including the
Prospectus/Proxy Statement) and related filings, if any, under
state securities laws relating to the Merger; and
(C) all other documents necessary to obtain any
other approvals and consents required to effect consummation of the transactions
contemplated by this Agreement.
(ii) Public Announcements. NPB and CIB shall agree upon the
form and substance of any press release related to this Agreement and the
transactions contemplated hereby, but nothing contained herein shall prohibit
either party, following notification to the other party, from making any
disclosure which its counsel deems necessary under applicable law.
(iii) Maintenance of Insurance. NPB and CIB shall each
maintain insurance in such amounts as NPB or CIB, as the insured, believes are
reasonable to cover such risks as are customary in relation to the character and
location of its and its Subsidiaries' properties and the nature of its and its
Subsidiaries' businesses.
(iv) Maintenance of Books and Records. NPB and CIB shall each
maintain books of account and records on a basis consistent with past practice.
(v) Taxes. NPB and CIB shall each file all federal, state, and
local tax returns required to be filed by it 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 dates such payments are due, except those being
contested in good faith.
(vi) Delivery of Financial Statements. NPB and CIB shall each
deliver to the other, as soon as practicable after the end of each month and
after the end of each calendar quarter prior to the Effective Date, commencing
with the month ended July 31, 2000 and the quarter ended June 30, 2000, an
unaudited consolidated balance sheet as of such date and related unaudited
consolidated statements of income and cash flows for the periods then ended,
which financial statements shall fairly present, in all material respects, its
consolidated financial condition, results of operations and cash flows for the
periods then ended in accordance with generally accepted accounting principles,
except as noted therein and subject to year-end audit adjustments and footnotes.
(vii) Delivery of SEC Documents. NPB and CIB shall each
deliver to the other copies of all reports filed with the SEC under the Exchange
Act promptly upon the filing thereof.
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(c) Undertakings of NPB.
(i) Employees, Severance Policy.
(A) NPB will endeavor to continue the employment of
all current employees of CIB or any CIB Subsidiary in positions that will
contribute to the successful performance of the combined organization. Where
there is a coincidence of responsibilities, NPB will try to reassign the
affected individual to a needed position that utilizes the skills and abilities
of the individual. If that is impracticable or if NPB elects to eliminate a
position, NPB will make severance payments to the displaced employee as set
forth in this Section 4.07(c)(i). NPB will also make severance payments to an
employee who declines a position that requires re- location more than 40 miles
from his current place of employment.
(B) Subject to the following minimum and maximum
benefits, NPB will grant an eligible employee one week of severance pay (at his
then current pay rate) for each year of an employee's service with CIB or any
CIB Subsidiary prior to the employment termination date. The minimum benefit
shall be four weeks' salary for full-time exempt and nonexempt employees, which
will be pro- rated for part-time employees. The maximum severance benefit will
be 26 weeks' salary.
(C) All employees of CIB or of any CIB Subsidiary on
the date hereof will be eligible for severance benefits set forth in this
Section 4.07(c)(i), except that:
(1) No employee of CIB or of any CIB
Subsidiary who shall receive any payments or benefits pursuant to any "change in
control" agreement or similar plan or right shall be eligible for any severance
benefits; and
(2) No employee of CIB or of any CIB
Subsidiary with an operating systems conversion support role of any kind shall
be eligible for any severance benefits unless such employee continues in
employment for 30 days following the actual consolidation and conversion of
BBank's operating systems with and into NPBank's operating systems, which, as of
the date hereof, is scheduled to be completed not later than June 30, 2001.
(D) Persons eligible for severance benefits will
remain eligible for such benefits in the event of any termination of employment,
other than for "cause", within six months of the Effective Date. Any person
whose employment with NPB is terminated by NPB without "cause" after six months
from the Effective Date shall receive such severance benefit from NPB as is
provided for in NPB's general severance policy for such terminations (with full
credit being given for each year of service with CIB or any CIB Subsidiary).
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(E) For purposes of this Section 4.07(c)(i), "cause"
means the employer's good faith reasonable belief that the employee (1)
committed fraud, theft or embezzlement; (2) falsified corporate records; (3)
disseminated confidential information concerning customers, NPB, any NPB
Subsidiary or any of its or their employees; (4) had documented unsatisfactory
job performance under NPB's dismissal policy; or (5) violated NPB's Code of
Conduct. The foregoing definition of "cause" is the definition of "cause" used
by NPB and its Subsidiaries in the ordinary course of its business.
(ii) Employee Benefits.
(A) As of the Effective Date, each employee of CIB or
of any CIB Subsidiary who becomes an employee of NPB or of any NPB Subsidiary
shall be entitled to full credit for each year of service with CIB or the CIB
Subsidiary for purposes of determining eligibility for participation and
vesting, but not benefit accrual, in NPB's, or as appropriate, the NPB
Subsidiary's, employee benefit plans, programs and policies.
(B) The employee benefits provided to former
employees of CIB or a CIB Subsidiary after the Effective Date shall be
substantially similar to the employee benefits, in the aggregate, provided by
NPB or its Subsidiaries to their similarly situated employees. The medical,
dental and life insurance plans, programs or policies, if any, that become
applicable to former employees of CIB or any CIB Subsidiary shall not contain
any exclusion or limitation with respect to any pre-existing condition of any
such employees or their dependents.
(C) Subject to the foregoing, after the Effective
Date, NPB or any NPB Subsidiary may discontinue, amend or convert to an NPB or
an NPB Subsidiary plan any particular benefit or welfare plan of CIB or any CIB
Subsidiary, subject to such plan's provisions and applicable law.
(iii) Election of NPBank Directors.
(A) Upon consummation of the Merger and subject to
compliance with all applicable legal requirements, NPB shall cause NPBank to
elect the CIB Nominee (selected pursuant to Section 1.02(d)(i) hereof) and one
other person selected by CIB's Board of Directors (consistent with the 60 years
age limitation contained in NPBank's Bylaws) and approved by NPB (which approval
will not be unreasonably withheld) (each, a "CIB NPBank Nominee") as directors
of NPBank, effective the Effective Date, to hold office until their successors
are elected and qualified or otherwise in accordance with applicable law, the
articles of association and bylaws of NPBank; and NPB and NPBank shall take all
steps necessary to insure that each CIB NPBank Nominee is re-elected to NPBank's
Board of Directors for each of the five years following the Effective Date
49
if such person is in office as director of NPBank on the annual
election dates.
(B) If either CIB NPBank Nominee, or any successor,
resigns, dies or is otherwise removed from NPBank's Board of Directors prior to
the end of the fifth one-year term, the former CIB directors then serving on the
Division Board, by a plurality vote, shall have the right to select (consistent
with the 60 years age limitation contained in NPBank's Bylaws) the successor to
such CIB NPBank Nominee, or any successor, subject to approval of such person by
NPB (which approval will not be unreasonably withheld), and NPB shall take all
reasonable steps to elect such successor to the NPBank Board of Directors.
(iv) Banking Division, Division Board.
(A) Upon consummation of the Bank Merger and subject
to compliance with all applicable legal requirements, NPB shall cause NPBank to
combine the assets, branches and operations of BBank with those of NPBank in
Berks County, to create the Berks County Division (the "Division"). The BBank
branches located in Bernville and Shartlesville shall each be operated under a
local identity sign, "Bernville Bank, Division of National Penn Bank".
(B) Upon consummation of the Bank Merger, and subject
to compliance with all applicable legal requirements, NPB shall cause NPBank to
establish the "Berks County Division Board of Directors" (the "Division Board").
The Division Board shall initially consist of the members of CIB's Board of
Directors immediately preceding the Effective Date and various NPB and NPBank
executive officers and other persons as selected by NPB. The Division Board will
have authority to add additional members from time to time. NPB anticipates that
the Division Board will emphasize sales, marketing and expansion relating to the
Division.
(C) Non-employee members of the Division Board who
are former directors of CIB shall receive annual cash compensation for service
on the Division Board, in a combination of an annual fee and Division Board
attendance fees, in an aggregate amount not less than the aggregate amount of
directors' fees paid in cash to them by CIB or any CIB Subsidiary in the year
preceding the Effective Date. Other persons who may be selected for service as
non-employee members of the Division Board shall be compensated in accordance
with NPB's standard compensation arrangements for divisional board members,
which is partially fixed and partially incentive-based compensation. The former
CIB directors shall have the option of electing to receive such NPB standard
compensation. Employee members of the Division Board shall not be separately
compensated for serving on such Board. The Division Board shall have
indemnification and insurance coverage no less favorable than members of
NPBank's other divisional advisory boards.
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(D) NPB shall operate the Division, and maintain the
Division Board at the foregoing compensation level, for a period of at least
five years after the Effective Date, except that this covenant shall expire if
and when NPB shall be acquired or otherwise sold and thereafter the members of
NPB's Board of Directors do not constitute at least 50% of the members of the
surviving corporation's board of directors.
(v) Indemnification, Insurance.
(A) NPB shall indemnify, defend, and hold harmless
the directors, officers, employees and agents of CIB (each, an "Indemnified
Party") against all losses, expenses (including reasonable attorneys' fees),
claims, damages or liabilities and amounts paid in settlement arising out of
actions or omissions or alleged acts or omissions (collectively, "Prior Acts")
occurring at or prior to the Effective Date (including the transactions
contemplated by this Agreement) to the fullest extent permitted by the BCL,
including provisions relating to advances of expenses incurred in the defense of
any proceeding to the fullest extent permitted by the BCL upon receipt of any
undertaking required by the BCL. Without limiting the foregoing, in a case (if
any) in which a determination by NPB is required to effectuate any
indemnification, NPB shall direct, at the election of the Indemnified Party,
that the determination shall be made by independent counsel mutually agreed upon
between NPB and the Indemnified Party.
(B) NPB shall, and it shall cause NPBank to, keep in
effect provisions in its articles of incorporation or association and bylaws
providing for exculpation of director and officer liability and its
indemnification of the Indemnified Parties to the fullest extent permitted by
the BCL, which provisions shall not be amended except as required by applicable
law or except to make changes permitted by law that would enlarge the
Indemnified Parties' right to indemnification.
(C) NPB shall use its reasonable best efforts (and
CIB shall cooperate and assist prior to the Effective Date in these efforts), at
no expense to the beneficiaries, to:
(1) maintain directors' and officers'
liability insurance ("D&O Insurance") for the Indemnified Parties with respect
to matters occurring at or prior to the Effective Date, issued by a carrier
assigned a claims-paying ability rating by A.M. Best & Co. of "A (Excellent)" or
higher; or
(2) obtain coverage for Prior Acts for the
Indemnified Parties under the directors' and officers' liability insurance
policy currently maintained by NPB;
51
in either case, providing at least the same coverage as the D&O Insurance
currently maintained by CIB and containing terms and conditions which are no
less favorable to the beneficiaries, for a period of at least six (6) years from
the Effective Date; provided, that NPB shall not be obligated to make premium
payments for such six-year period in respect of the D&O Insurance which exceed,
for the portion related to CIB's directors and officers, 150 percent of the
annual premium payments ($6,812) at the date hereof) of CIB's current policy in
effect as of the date of this Agreement (the "Maximum Amount"). If the amount of
the premiums necessary to maintain or procure such insurance coverage exceeds
the Maximum Amount, NPB shall use its reasonable best efforts to maintain the
most advantageous policies of directors' and officers' liability insurance
obtainable for a premium equal to the Maximum Amount.
(D) If any claim is made against present or former
directors, officers or employees of CIB or any CIB Subsidiary who are covered or
potentially covered by insurance, neither NPB nor any NPB Subsidiary shall do
anything that would forfeit, jeopardize, restrict or limit the insurance
coverage available for that claim until the final disposition thereof.
(E) If NPB or any of its successors or assigns shall
consolidate with or merge into any other person and shall not be the continuing
or surviving person of such consolidation or merger or shall transfer all or
substantially all of its assets to any person, then and in each case, proper
provision shall be made so that the successors and assigns of NPB shall assume
the obligations set forth in this Section 4.07(c)(v).
(F) The provisions of this Section 4.07(c)(v) are
intended to be for the benefit of and shall be enforceable by, each Indemnified
Party, his or her heirs and representatives.
(G) NPB shall pay all expenses, including reasonable
attorneys' fees, that may be incurred by any Indemnified Party in enforcing the
indemnity and other obligations provided for in this Section 4.07(c)(v).
(vi) Pooling of Interests; Reorganization. Through the Closing
Date, NPB shall not take any action which would preclude the Merger from
qualifying for "pooling of interests" accounting treatment under generally
accepted accounting principles or as a "reorganization" within the meaning of
Section 368 of the IRC.
(vii) Conduct of NPB's Business. Through the Closing Date, NPB
shall use its reasonable good faith efforts to preserve its business
organization intact, maintain good relationships with employees, and preserve
the good will of customers of NPB and others with whom business relationships
exist.
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ARTICLE V
CONDITIONS
5.01 Conditions to CIB's Obligations under this Agreement. The
obligations of CIB hereunder shall be subject to satisfaction at or prior to the
Closing Date of each of the following conditions, unless waived by CIB pursuant
to Section 7.03 hereof:
(a) Corporate Proceedings. All action required to be taken by, or on
the part of, NPB and NPBank to authorize the execution, delivery and performance
of this Agreement and the Bank Plan of Merger, respectively, and the
consummation of the transactions contemplated by this Agreement, shall have been
duly and validly taken by NPB and NPBank, respectively; and CIB shall have
received certified copies of the resolutions evidencing such authorizations.
(b) Covenants; Representations. The obligations of NPB and NPBank
required by this Agreement to be performed by NPB or NPBank at or prior to the
Closing Date shall have been duly performed and complied with in all material
respects; and the representations and warranties of NPB set forth in this
Agreement shall be true and correct in all material respects, as of the date of
this Agreement, and as of the Closing Date as though made on and as of the
Closing Date, except as to any representation or warranty which specifically
relates to an earlier date and except as to any representation or warranty to
the extent the breach of such representation or warranty does not have a
Material Adverse Effect.
(c) Approvals of Regulatory Authorities. Procurement by CIB and NPB of
all requisite approvals and consents of Regulatory Authorities and the
expiration of the statutory waiting period or periods relating thereto for the
Merger; provided, however, that no such approval or consent shall have imposed
any condition or requirement (other than conditions or requirements previously
disclosed) which would so materially and adversely impact the economic or
business benefits to CIB or NPB of the transactions contemplated by this
Agreement that, had such condition or requirement been known, such party would
not, in its reasonable judgment, have entered into this Agreement.
(d) No Injunction. There shall not be in effect any order, decree or
injunction of a court or agency of competent jurisdiction which enjoins or
prohibits consummation of the transactions contemplated by this Agreement.
(e) Officer's Certificate. NPB shall have delivered to CIB a
certificate, dated the Closing Date and signed, without personal liability, by
its Chairman or President, to the effect that the conditions set forth in
Section 5.01(a) through (d) have been satisfied.
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(f) Registration Statement. The Registration Statement shall be
effective under the Securities Act, and no proceedings shall be pending or
threatened by the SEC to suspend the effectiveness of the Registration
Statement; and all approvals, if any, deemed necessary by NPB's counsel from
state securities or "blue sky" authorities with respect to the transactions
contemplated by this Agreement shall have been obtained.
(g) Tax Opinion or Letter. CIB shall have received an opinion of Rhoads
& Sinon LLP, special counsel to CIB, or a letter from Beard & Company, Inc.,
CIB's independent certified public accountants, dated the Closing Date, to the
effect that (1) the Merger constitutes a reorganization under Section 368(a) of
the IRC, and (2) no gain or loss will be recognized by shareholders of CIB who
receive shares of NPB Common Stock in exchange for their shares of CIB Common
Stock, except that gain or loss may be recognized as to cash received in lieu of
fractional share interests; in rendering their opinion, such counsel or
accountants may require and rely upon representations and agreements, including
those contained in certificates of officers of CIB, NPB and others.
(h) Approval by CIB's Shareholders. This Agreement shall have been
approved by the shareholders of CIB by such vote as is required by the articles
of incorporation and bylaws of CIB and by the BCL.
(i) Pooling of Interests. CIB shall have received a letter from Beard &
Company, Inc., CIB's independent certified public accountants, and from Grant
Thornton LLP, NPB's independent certified public accountants, dated the Closing
Date, to the effect that the Merger shall be accounted for on a "pooling of
interests" basis under generally accepted accounting principles.
(j) Other Documents. CIB shall have received such other certificates,
documents or instruments from NPB or its officers or others as CIB shall have
reasonably requested in connection with accounting or income tax treatment of
the Merger or related securities law compliance.
(k) Nasdaq Listing. The NPB Common Stock shall continue to be
authorized for quotation on Nasdaq.
(l) Rights Agreement. No event shall have occurred which shall result
in the grant, issuance or triggering of any right or entitlement or the
obligation to grant or issue any interest in NPB Common Stock or enable or allow
any right or other interest associated with the Rights Agreement to be
exercised, distributed or triggered, and no other event shall have occurred
under the Rights Agreement which would materially adversely affect any current
or future right or interest of any holders of CIB Common Stock.
54
5.02 Conditions to NPB's Obligations under this Agreement. The
obligations of NPB hereunder shall be subject to satisfaction at or prior to the
Closing Date of each of the following conditions, unless waived by NPB pursuant
to Section 7.03 hereof:
(a) Corporate Proceedings. All action required to be taken by, or on
the part of, CIB and BBank to authorize the execution, delivery and performance
of this Agreement and the Bank Plan of Merger, respectively, and the
consummation of the transactions contemplated by this Agreement, shall have been
duly and validly taken by CIB and BBank, respectively; and NPB shall have
received certified copies of the resolutions evidencing such authorizations.
(b) Covenants; Representations. The obligations of CIB and BBank
required by this Agreement to be performed by CIB or BBank at or prior to the
Closing Date shall have been duly performed and complied with in all material
respects; and the representations and warranties of CIB set forth in this
Agreement shall be true and correct in all material respects, as of the date of
this Agreement, and as of the Closing Date as though made on and as of the
Closing Date, except as to any representation or warranty which specifically
relates to an earlier date and except as to any representation or warranty to
the extent the breach of such representation or warranty does not have a
Material Adverse Effect.
(c) Approvals of Regulatory Authorities. Procurement by NPB and CIB of
all requisite approvals and consents of Regulatory Authorities and the
expiration of the statutory waiting period or periods relating thereto for the
Merger; provided, however, that no such approval or consent shall have imposed
any condition or requirement (other than conditions or requirements previously
disclosed) which would so materially and adversely impact the economic or
business benefits to NPB or CIB of the transactions contemplated by this
Agreement that, had such condition or requirement been known, such party would
not, in its reasonable judgment, have entered into this Agreement.
(d) No Injunction. There shall not be in effect any order, decree or
injunction of a court or agency of competent jurisdiction which enjoins or
prohibits consummation of the transactions contemplated by this Agreement.
(e) Officer's Certificate. CIB shall have delivered to NPB a
certificate, dated the Closing Date and signed, without personal liability, by
its Chairman or President, to the effect that the conditions set forth in
Sections 5.01(a) through (d) have been satisfied.
(f) Registration Statement. The Registration Statement shall be
effective under the Securities Act, and no proceedings shall be pending or
threatened by the SEC to suspend the effectiveness of the Registration
Statement; and all approvals, if any, deemed
55
necessary by NPB's counsel from state securities or "blue sky" authorities with
respect to the transactions contemplated by this Agreement shall have been
obtained.
(g) Tax Opinion or Letter. NPB shall have received an opinion of
Ellsworth, Carlton & Waldman, P.C., special counsel to NPB, or a letter from
Grant Thornton LLP, NPB's independent certified public accountants, dated the
Closing Date, to the effect that (1) the Merger constitutes a reorganization
under Section 368(a) of the IRC, and (2) no gain or loss will be recognized by
shareholders of CIB who receive shares of NPB Common Stock in exchange for their
shares of CIB Common Stock, except that gain or loss may be recognized as to
cash received in lieu of fractional share interests; in rendering their opinion,
such counsel or accountants may require and rely upon representations and
agreements, including those contained in certificates of officers of CIB, NPB
and others.
(h) Approval by CIB's Shareholders. This Agreement shall have been
approved by the shareholders of CIB by such vote as is required under the
articles of incorporation and bylaws of CIB and by the BCL.
(i) Pooling of Interests. NPB shall have received a letter from Grant
Thornton LLP, NPB's independent certified public accountants, and Beard &
Company, Inc., CIB's independent certified public accountants, dated the Closing
Date, to the effect that the Merger shall be accounted for on a "pooling of
interests" basis under generally accepted accounting principles.
(j) Other Documents. NPB shall have received such other certificates,
documents or instruments from CIB or its officers or others as NPB shall have
reasonably requested in connection with accounting or income tax treatment of
the Merger or related securities law compliance.
(k) Phase I Environmental Audit Results. The results of any Phase I
environmental audit conducted pursuant to Section 4.07(a)(ii) hereof shall not
result in a Material Adverse Effect.
ARTICLE VI
TERMINATION, WAIVER AND AMENDMENT
6.01 Termination. This Agreement may be terminated on or at any time
prior to the Closing Date:
(a) By the mutual written consent of the parties hereto;
(b) By NPB or CIB:
56
(i) If there shall have been any breach of any representation,
warranty or obligation of the other party hereto (subject to the same standards
as set forth in Sections 5.01(b) or 5.02(b), as the case may be) and such breach
cannot be, or shall not have been, remedied within 30 days after receipt by such
party of written notice specifying the nature of such breach and requesting that
it be remedied;
(ii) If the Closing Date shall not have occurred prior to
March 15, 2001 (except that if the Closing Date shall not have occurred by such
date because of a breach of this Agreement by a party hereto, such breaching
party shall not be entitled to terminate this Agreement in accordance with this
provision);
(iii) If any Regulatory Authority whose approval or consent is
required for consummation of the Merger shall issue a definitive written denial
of such approval or consent and the time period for appeals and requests for
reconsideration has run; or
(iv) If the shareholder vote contemplated by this
Agreement is not obtained at the CIB Shareholders Meeting.
(c) By CIB, at any time during the ten-day period following the
Determination Date, if both of the following conditions occur on the
Determination Date:
(i) the NPB Market Value shall be less than $17.00 per
share; and
(ii) (A) the quotient obtained by dividing the NPB Market
Value by $21.875 per share shall be less than (B) the quotient obtained by
dividing the Average Index Price by the Index Price on the Starting Date and
subtracting 0.15 from the quotient in this clause (ii)(B);
subject, however, to the following: If CIB shall elect to terminate this
Agreement pursuant to this Section 6.01(c), it shall give written notice thereof
to NPB (provided that such notice of election to terminate may be withdrawn at
any time within the aforementioned ten-day period). During the five-day period
commencing with its receipt of such notice, NPB shall have the option to elect
to increase the Exchange Ratio to ninety-five hundredths (95/100) share of NPB
Common Stock in exchange for each share of CIB Common Stock and the Closing Date
shall be postponed by the minimum amount of time necessary, if any, to
accommodate NPB's election of such option (i.e., up to a five-day period). If
NPB so elects within such five-day period, it shall give prompt written notice
to CIB of such election, whereupon no termination shall have occurred pursuant
to this Section 6.01(c) and this Agreement shall remain in effect in accordance
with its terms (except as the Exchange Ratio shall have been so modified).
57
For purposes of this Section 6.01(c), the following terms have the
meanings indicated.
"Index Group" means the bank or thrift holding companies listed below,
the common stocks of all of which shall be publicly traded and as to which there
shall not have been, since the Starting Date and before the Determination Date,
any public announcement of a proposal for such company to be acquired or for
such company to acquire another company or companies in transactions with a
value exceeding 25% of the acquiror's market capitalization. The bank or thrift
holding companies are as follows: (1) Susquehanna Bancshares, Inc.; (2) Fulton
Financial Corporation; (3) Commerce Bancorp, Inc.; (4) BT Financial Corporation;
(5) Hudson United Bancorp; (6) Wilmington Trust Corporation; and (7)
Harleysville National Corporation.
"Index Price" on a given date means the average of the closing sale
prices of the common stocks of the companies comprising the Index Group.
"Average Index Price" means the average of the Index Prices for the
twenty trading days ending on the Determination Date.
"Starting Date" means July 21, 2000.
If any company belonging to the Index Group declares or effects a stock
dividend, reclassification, recapitalization, split-up, combination, exchange of
shares, or similar transaction between the Starting Date and the Determination
Date, the prices for the common stock of such company shall be appropriately
adjusted for the purposes of applying this Section 6.01(c).
6.02 Effect of Termination. If this Agreement is terminated pursuant to
Section 6.01 hereof or otherwise, this Agreement shall forthwith become void,
other than Sections 4.02(c) and 7.01 hereof which shall remain in full force and
effect, and there shall be no further liability on the part of NPB or CIB to the
other, except for any liability of NPB or CIB under such sections of this
Agreement and except for any liability arising out of a willful breach of this
Agreement giving rise to such termination.
ARTICLE VII
MISCELLANEOUS
7.01 Expenses. Each party hereto shall bear and pay all costs and
expenses incurred by it in connection with the transactions contemplated hereby,
including fees and expenses of its own financial consultants, accountants and
counsel.
58
7.02 Non-Survival of Representations and Warranties; Disclosure
Schedules. All representations, warranties and, except to the extent
specifically provided otherwise herein, agreements and covenants shall terminate
on the Closing Date.
7.03 Amendment, Extension and Waiver. Subject to applicable law, at any
time prior to the Closing Date, 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) to the extent permitted by law, waive compliance with any of the
agreements or conditions contained in Articles IV and V hereof or otherwise.
This Agreement may not be amended except by an instrument in writing signed, by
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.
7.04 Entire Agreement. This Agreement, including the documents 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 other than the
Confidentiality Agreement. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and its successors; provided, however, that
nothing in this Agreement, expressed or implied, is intended to confer upon any
party, other than the parties hereto and their respective successors, any
rights, remedies, obligations or liabilities, and provided, further, that the
CIB Nominee may enforce Section 1.02(d); the CIB NPBank Nominees may enforce
Section 4.07(c)(iii); and any Indemnified Party may enforce Section 4.07(c)(v).
7.05 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.
59
7.06 Notices. All notices or other communications hereunder shall be in
writing and shall be deemed given upon delivery if delivered personally, two
business days after mailing if mailed by prepaid registered or certified mail,
return receipt requested, or upon confirmation of good transmission if sent by
telecopy, addressed as follows:
(a) If to NPB, to:
National Penn Bancshares, Inc.
Philadelphia and Reading Avenues
P.O. Box 547
Boyertown, Pennsylvania 19512-0547
Attention: Wayne R. Weidner, President
Telecopy No.: 610-369-6236
with a copy to:
H. Anderson Ellsworth
Jay W. Waldman
Ellsworth, Carlton & Waldman, P.C.
1105 Berkshire Boulevard
Suite 320
Wyomissing, Pennsylvania 19610
Telecopy No.: 610-371-9510
(b) If to CIB, to:
Community Independent Bank, Inc.
201 North Main Street
Bernville, Pennsylvania 19506
Attention: Frederick P. Krott, Chairman
Telecopy No.: 610-488-0952
with a copy to:
Charles J. Ferry
Rhoads & Sinon LLP
One South Market Square, 12th Floor
P.O. Box 1146
Harrisburg, PA 17108-1146
Telecopy No.: 717-231-6669
7.07 Disclosure Schedules. Information contained on either the CIB
Disclosure Schedule or the NPB Disclosure Schedule shall be deemed to cover the
express disclosure requirement contained in a
60
representation or warranty of this Agreement and any other representation or
warranty of this Agreement of such party where it is readily apparent it applies
to such provision. The mere inclusion of an item in a Disclosure Schedule as an
exception to a representation or warranty shall not be deemed an admission by a
party that such item represents a material exception or fact, event or
circumstance or that such item is or could result in a Material Adverse Effect.
7.08 Captions. The captions contained in this Agreement are for
reference purposes only and are not part of this Agreement.
7.09 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.
7.10 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.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
61
7.11 Governing Law. This Agreement shall be governed by and construed
in accordance with the domestic internal law of the Commonwealth of
Pennsylvania.
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.
NATIONAL PENN BANCSHARES, INC.
(Corporate Seal) By:/s/ Wayne R. Weidner
----------------------------
Name: Wayne R. Weidner
Title: President
Attest:/s/ Sandra L. Spayd
---------------------------
Name: Sandra L. Spayd
Title: Secretary
COMMUNITY INDEPENDENT BANK, INC.
(Corporate Seal) By:/s/ Frederick P. Krott
---------------------------
Name: Frederick P. Krott
Title: Chairman
Attest:/s/ Karl D. Gerhart
---------------------------
Name: Karl D. Gerhart
Title: President and CEO
62
July 23, 2000
National Penn Bancshares, Inc.
Philadelphia and Reading Avenues
Boyertown, Pennsylvania 19512
Ladies and Gentlemen:
National Penn Bancshares, Inc. ("NPB") and Community Independent Bank,
Inc. ("CIB") are considering execution of an Agreement dated July 23, 2000 (the
"Agreement").
Pursuant to the proposed Agreement, and subject to the terms and
conditions set forth therein, (a) NPB will acquire CIB by a merger of CIB with
and into NPB, (b) shareholders of CIB will receive shares of NPB common stock in
exchange for their shares of CIB common stock owned on the closing date, and (c)
optionholders of CIB will receive stock options exercisable for common stock of
NPB in exchange for options exercisable for common stock of CIB outstanding on
the closing date (the foregoing, collectively, the "Merger").
NPB has required as a condition to its execution and delivery to CIB of
the Agreement, that the undersigned, being a director of CIB, execute and
deliver to NPB this Letter Agreement.
The undersigned, in order to induce NPB to execute the Agreement, and
intending to be legally bound hereby, irrevocably agrees and represents as
follows:
1. The undersigned agrees to vote or cause to be voted for approval of
the Merger all shares of CIB common stock over which the undersigned exercises
sole voting power.
2. Through the record date for the meeting of CIB shareholders to vote
upon the Merger and for the period and to the extent provided in Paragraph 6
hereof, the undersigned agrees not to offer, sell, transfer or otherwise dispose
of, or to permit the offer, sale, transfer or other disposition of, any shares
of CIB common stock over which the undersigned exercises sole voting power.
3. The undersigned has sole voting power over the number of shares of
CIB common stock, and holds stock options for the number of shares of CIB common
stock, if any, set forth below opposite the signature line for the undersigned.
NPB recognizes that with respect to any such shares which have been pledged to a
third party, the undersigned will not be able to control the voting or
disposition of such shares in the event of a default.
National Penn Bancshares, Inc.
July 23, 2000
Page 2
4. The undersigned agrees not to offer, sell, transfer or otherwise
dispose of any shares of NPB common stock received pursuant to the Merger,
except:
(a) at such time as a registration statement under the
Securities Act of 1933, as amended ("Securities Act"), covering sales of such
NPB common stock is effective and a prospectus is made available under the
Securities Act;
(b) within the limits, and in accordance with the applicable
provisions of, Rule 145 under the Securities Act ("Rule 145"); or
(c) in a transaction which, in the opinion of counsel
satisfactory to NPB or as described in a "no-action" or interpretive letter from
the staff of the Securities and Exchange Commission ("SEC"), is not required to
be registered under the Securities Act;
and the undersigned acknowledges and agrees that NPB is under no obligation to
register the sale, transfer or other disposition of NPB common stock by the
undersigned or on behalf of the undersigned, or to take any other action
necessary to make an exemption from registration available.
5. NPB shall take all steps necessary to ensure that NPB is in
compliance with all those requirements of Rule 145 with which NPB must comply in
order for the resale provisions of Rule 145(d) to be available to the
undersigned.
6. Notwithstanding the foregoing, the undersigned agrees not to sell,
or in any other way reduce the risk of the undersigned relative to, any shares
of common stock of CIB or of common stock of NPB, during the period commencing
thirty (30) days prior to the effective date of the Merger and ending on the
date on which financial results covering at least thirty (30) days of
post-Merger combined operations of NPB and CIB have been published within the
meaning of Section 201.01 of the SEC's Codification of Financial Reporting
Policies; provided, however, that excluded from the foregoing undertaking shall
be such sales, pledges, transfers or other dispositions of shares of CIB common
stock or shares of NPB common stock which, in NPB's reasonable judgment, are
individually and in the aggregate de minimis within the meaning of Topic 2-E of
the Staff Accounting Bulletin Series of the SEC.
7. The undersigned agrees that neither CIB nor NPB shall be bound by
any attempted sale of any shares of CIB common stock or NPB common stock,
respectively, and CIB's and NPB's transfer agents
National Penn Bancshares, Inc.
July 23, 2000
Page 3
shall be given appropriate stop transfer orders and shall not be required to
register any such attempted sale, unless the sale has been effected in
compliance with the terms of this Letter Agreement; and the undersigned further
agrees that the certificates representing shares of NPB common stock owned by
the undersigned may be endorsed with restrictive legends consistent with the
terms of this Letter Agreement.
8. The undersigned represents that he has no plan or intention to
offer, sell, exchange, or otherwise dispose of any shares of common stock of NPB
prior to expiration of the time period referred to in subparagraph 6 hereof.
9. The undersigned agrees, if he is an optionholder, to exchange his
options to acquire shares of common stock of CIB for options to acquire such
number of shares of common stock of NPB as he would have acquired if he had
exercised such options immediately prior to consummation of the Merger, and
otherwise on the same terms and conditions as the exchanged CIB options (unless
the undersigned shall have exercised any such option prior to the Merger).
10. The undersigned represents that he has the capacity to enter into
this Letter Agreement and that it is a valid and binding obligation enforceable
against the undersigned in accordance with its terms, subject to bankruptcy,
insolvency and other laws affecting creditors' rights and general equitable
principles.
The parties hereto acknowledge that this Letter Agreement is being
executed by the undersigned in his capacity solely as a shareholder of CIB, and
not in any other capacity (including as a director of CIB), and nothing herein
contained shall derogate from the undersigned's ability to act in such other
capacity, including the exercise of fiduciary duty, even if in conflict with the
foregoing.
This Letter Agreement may be executed in two or more counterparts, each
of which shall be deemed to constitute an original, but all of which together
shall constitute one and the same Letter.
This Letter Agreement shall be effective upon acceptance by NPB.
This Letter Agreement shall terminate concurrently with, and
automatically upon, any termination of the Agreement in accordance with its
terms, except that any such termination shall be without
National Penn Bancshares, Inc.
July 23, 2000
Page 4
prejudice to NPB's rights arising out of any willful breach or any covenant or
representation contained herein.
Very truly yours,
Number of Shares,
and Shares Subject
to Stock Options,
Held:
Name:
Accepted:
- --------
NATIONAL PENN BANCSHARES, INC.
By:___________________________
Name:
Title:
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Stock Option Agreement") dated as of July
23, 2000, is by and between NATIONAL PENN BANCSHARES, INC., a Pennsylvania
corporation ("NPB"), and COMMUNITY INDEPENDENT BANK, INC., a Pennsylvania
corporation ("CIB").
BACKGROUND
1. NPB and CIB desire to enter into an Agreement, dated as of July 23,
2000 (the "Agreement"), providing, among other things, for the acquisition by
NPB of CIB through the merger of CIB with and into NPB, with NPB surviving the
merger (the "Merger").
2. As a condition and inducement to NPB to enter into the Agreement,
CIB is granting to NPB an option to purchase up to that number of shares of
common stock, par value $5.00 per share (the "Common Stock"), of CIB as shall
equal 19.9% of shares of Common Stock of CIB issued and outstanding as of the
date hereof, on the terms and conditions hereinafter set forth.
3. By resolution of the Board of Directors of CIB, the Board of
Directors of CIB has explicitly authorized and determined that it is in the best
interests of CIB, pursuant to Sections 8(A) and 9(A) of CIB's Amended and
Restated Articles of Incorporation ("Amended Articles"), that the provisions of
Articles 8, 9 and 10 of CIB's Amended Articles shall not apply to NPB if NPB
purchases any shares of CIB Common Stock by reason of the exercise of the option
to purchase shares of CIB Common Stock set forth in this Stock Option Agreement,
nor shall such provisions apply to any other Person (as defined in Article 15 of
the Amended Articles) who purchases any such shares from NPB. By resolution of
the Board of Directors of CIB, the Board of Directors of CIB has also explicitly
authorized and determined that no conditions, other than those conditions
imposed by this Stock Option Agreement, shall be imposed on NPB's ability to
vote or hold any shares of CIB Common Stock purchased by NPB by reason of the
exercise of the option to purchase shares of CIB Common Stock set forth in this
Stock Option Agreement, nor shall any conditions be imposed upon any other
Person (as defined in Article 15 of the Amended Articles) who purchases any such
shares from NPB.
AGREEMENT
NOW THEREFORE, in consideration of the premises and of the mutual
covenants, agreements and representations herein contained, the parties,
intending to be legally bound hereby, agree as follows:
1
1. Grant of Option. CIB hereby grants to NPB, on the terms and
conditions set forth herein, the option to purchase (the "Option") up to 139,200
shares of Common Stock of CIB (as adjusted as set forth herein, the "Option
Shares") at a price per share (as adjusted as set forth herein, the "Option
Price") equal to $10.00, provided, however, that in no event shall the aggregate
number of Option Shares for which the Option is exercisable exceed 19.9% of the
issued and outstanding shares of CIB Common Stock without giving effect to any
shares subject to or issued pursuant to the Option.
2. Exercise of Option.
(a) Provided that:
(i) NPB shall not be, on the date of exercise, in
material breach of the agreements or covenants contained in
the Agreement or this Stock Option Agreement; and
(ii) no preliminary or permanent injunction or other
order against the delivery of shares covered by the Option issued by
any court of competent jurisdiction in the United States shall be in
effect on the date of exercise;
upon or after the occurrence of a Triggering Event (defined below) NPB may
exercise the Option, in whole or in part, at any time or one or more times, from
time to time;
provided that the Option shall terminate and be of no further force and effect
upon the earliest to occur of:
(A) the Effective Date of the Merger, as
provided in the Agreement;
(B) termination of the Agreement in
accordance with the terms thereof prior to the occurrence of a
Triggering Event or a Preliminary Triggering Event (defined
below), other than a termination of the Agreement by NPB
pursuant to Section 6.01(b)(i) as a result of a willful breach
of the Agreement by CIB (such a termination by NPB is
hereinafter referred to as a "Default Termination");
(C) 12 months after the termination of the
Agreement by NPB pursuant to a Default Termination; and
(D) 12 months after termination of the
Agreement (other than pursuant to a Default Termination)
following the occurrence of a Triggering Event or a
Preliminary Triggering Event; and
2
provided, further, that any purchase of shares upon exercise of the Option shall
be subject to compliance with applicable securities and banking laws. The rights
set forth in Section 3 hereof shall terminate when the right to exercise the
Option terminates (other than as a result of a complete exercise of the Option)
as set forth above.
(b) As used herein, the term "Triggering Event" means
the occurrence of either of the following events:
(i) a person or group (as those terms are defined or
used in Section 13(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the rules and regulations
thereunder), other than NPB or an affiliate of NPB, acquires beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act) of
25% or more of the then outstanding shares of Common Stock (excluding
any shares eligible to be reported on Schedule 13G of the Securities
and Exchange Commission ("SEC")); or
(ii) a person or group, other than NPB or an
affiliate of NPB, enters into an agreement or letter of intent or
memorandum of understanding with CIB pursuant to which such person or
group or any affiliate of such person or group would:
(A) merge or consolidate, or enter into any
similar transaction, with CIB;
(B) acquire all or substantially all of the
assets or liabilities of CIB or all or substantially all
of the assets or liabilities of Bernville Bank, N.A., a
wholly-owned subsidiary of CIB ("BBank"); or
(C) acquire beneficial ownership of
securities representing, or the right to acquire beneficial
ownership or to vote securities representing, 25% or more of
the then outstanding shares of Common Stock (excluding any
shares eligible to be reported on Schedule 13G of the SEC) or
the then outstanding shares of common stock of BBank; or
CIB shall have authorized, recommended or publicly proposed, or
publicly announced an intention to authorize, recommend or propose,
such an agreement or letter of intent or memorandum of understanding.
(c) As used herein, the term "Preliminary Triggering
Event" means the occurrence of any of the following events:
(i) a person or group (as those terms are defined
or used in Section 13(d) of the Exchange Act and the rules and
3
regulations thereunder), other than NPB or an affiliate of NPB,
acquires beneficial ownership (within the meaning of Rule 13d-3 under
the Exchange Act) of 10% or more of the then outstanding shares of
Common Stock (excluding any shares eligible to be reported on Schedule
13G of the SEC);
(ii) a person or group, other than NPB or an
affiliate of NPB, publicly announces a bona fide proposal (including a
written communication that is or becomes the subject of public
disclosure) for:
(A) any merger, consolidation or acquisition
of all or substantially all the assets or liabilities of CIB,
BBank, or any other business combination involving CIB or
BBank; or
(B) a transaction involving the transfer of
beneficial ownership of securities representing, or the right
to acquire beneficial ownership or to vote securities
representing, 10% or more of the then outstanding shares of
Common Stock or the then outstanding shares of common stock of
BBank, (collectively, a "Proposal");
and thereafter, if such Proposal has not been Publicly Withdrawn
(defined below) at least 30 days prior to the meeting of shareholders
of CIB called to vote on the Merger, CIB's shareholders fail to approve
the Merger by the vote required by applicable law at the meeting of
shareholders called for such purpose or such meeting has been
cancelled;
(iii) the Board of Directors of CIB shall:
(A) fail to recommend the Merger;
(B) recommend a Proposal; or
(C) have withdrawn or modified in a manner
adverse to NPB the recommendation of the Board of Directors of
CIB with respect to the Agreement and thereafter CIB's
shareholders fail to approve the Merger by the vote required
by applicable law at the meeting of shareholders called for
such purpose or such meeting is not scheduled or has been
cancelled; or
(iv) a person or group, other than NPB or an
affiliate of NPB, makes a bona fide Proposal and thereafter, but before
such Proposal has been Publicly Withdrawn, CIB shall have breached any
representation, warranty, covenant or obligation contained in the
Agreement and such breach would entitle NPB to terminate the Agreement
under Section 6.01(b)(i) of the Agreement (without regard to the cure
period
4
provided for therein unless such cure is promptly effected without
jeopardizing consummation of the Merger pursuant to the Agreement).
If more than one of the transactions giving rise to a Triggering Event
or a Preliminary Triggering Event under this Section 2 is undertaken or
effected, then all such transactions shall give rise only to one Triggering
Event or Preliminary Triggering Event, as applicable, which Triggering Event or
Preliminary Triggering Event shall be deemed continuing for all purposes
hereunder until all such transactions are abandoned.
For purposes of this Section 2, "Publicly Withdrawn" shall mean an
unconditional bona fide withdrawal of the Proposal coupled with a public
announcement of no further interest in pursuing such Proposal or in acquiring
any controlling influence over CIB or in soliciting or inducing any other person
(other than NPB or an affiliate of NPB) to do so.
Notwithstanding the foregoing, the obligation of CIB to issue Option
Shares upon exercise of the Option shall be deferred (but shall not terminate):
(i) until the receipt of all required governmental or
regulatory approvals or consents necessary for CIB to issue the Option
Shares or NPB to exercise the Option, or until the expiration or
termination of any waiting period required by law, or
(ii) so long as any injunction or other order, decree or
ruling issued by any federal or state court of competent jurisdiction
is in effect which prohibits the sale or delivery of the Option Shares,
and, in each case, notwithstanding any other provision, the Option
shall not expire or otherwise terminate.
CIB shall notify NPB promptly in writing of the occurrence of any
Triggering Event or Preliminary Triggering Event known to it, it being
understood that the giving of such notice by CIB shall not be a condition to the
right of NPB to exercise the Option. CIB will not take any action which would
have the effect of preventing or disabling CIB from delivering the Option Shares
to NPB upon exercise of the Option or otherwise performing its obligations under
this Stock Option Agreement, except to the extent required by applicable
securities and banking laws and regulations. In the event NPB wishes to exercise
the Option, NPB shall send a written notice to CIB (the date of which is
hereinafter referred to as the "Notice Date") specifying the total number of
Option Shares it wishes to purchase and a place and date between two and ten
business days inclusive from the Notice Date for the closing of such a purchase
(a "Closing"); provided, however, that a Closing shall not occur prior to two
days after the later of receipt of any
5
necessary regulatory approvals or the expiration of any legally required notice
or waiting period, if any.
3. Repurchase of Option by CIB.
(a) Subject to the last sentence of Section 2(a), at the
request of NPB at any time commencing upon the first occurrence of a Repurchase
Event (defined below) and ending 12 months immediately thereafter, CIB shall
repurchase from NPB (x) the Option and (y) all shares of Common Stock purchased
by NPB pursuant hereto with respect to which NPB then has beneficial ownership.
The date on which NPB exercises its rights under this Section 3 is referred to
as the "Request Date". Such repurchase shall be at an aggregate price (the
"Section 3 Repurchase Consideration") equal to the sum of:
(i) the aggregate Option Price paid by NPB for any
shares of Common Stock acquired pursuant to the Option with respect to
which NPB then has beneficial ownership;
(ii) the excess, if any, of:
(A) the Applicable Price (defined below) for
each share of Common Stock over:
(B) the Option Price (subject to adjustment
pursuant to Section 6);
multiplied by the number of shares of Common Stock with
respect to which the Option has not been exercised; and
(iii) the excess, if any, of the Applicable Price
over the Option Price (subject to adjustment pursuant to Section 6)
paid (or, in the case of Option Shares with respect to which the Option
has been exercised, but the Closing has not occurred, payable) by NPB
for each share of Common Stock with respect to which the Option has
been exercised and with respect to which NPB then has beneficial
ownership, multiplied by the number of such shares.
(b) (i) If NPB exercises it rights under this Section 3, CIB
shall, within ten (10) business days after the Request Date, pay the Section 3
Repurchase Consideration to NPB in immediately available funds, and
contemporaneously with such payment, NPB shall surrender to CIB the Option and
the certificate evidencing the shares of Common Stock purchased under the Option
with respect to which NPB then has beneficial ownership, and NPB shall warrant
that it has sole record and beneficial ownership of such shares, and that the
same are then free and clear of all liens, claims, charges and encumbrances of
any kind whatsoever.
6
(ii) Notwithstanding Section 3(b)((i), to the extent
that prior notification to or approval of any banking agency or department of
any federal or state government, including without limitation the OCC, the FRB,
or the respective staffs thereof (the "Regulatory Authority"), is required in
connection with the payment of all or any portion of the Section 3 Repurchase
Consideration, NPB shall have the ongoing option to revoke its request for
repurchase pursuant to Section 3, in whole or in part, or to require that CIB
deliver from time to time that portion of the Section 3 Repurchase Consideration
that it is not then so prohibited from paying and promptly file the required
notice or application for approval and expeditiously process the same. Each
party shall cooperate with the other in the filing of any such notice or
application and the obtaining of any such approval. In any such case, the ten
(10) business day period of time that would otherwise run pursuant to Section
3(b)(i) for the payment of the portion of the Section 3 Repurchase Consideration
shall run instead from the date on which, as the case may be, any required
notification period has expired or been terminated or such approval has been
obtained and, in either event, any requisite waiting period shall have passed.
(iii) If any Regulatory Authority disapproves of any
part of CIB's proposed repurchase pursuant to this Section 3, CIB shall promptly
give notice of such fact to NPB. If any Regulatory Authority prohibits the
repurchase pursuant to this Section 3, CIB shall promptly give notice of such
fact to NPB. If any Regulatory Authority prohibits the repurchase in part but
not in whole, then NPB shall have the right (x) to revoke the repurchase
request, or (y) to the extent permitted by such Regulatory Authority, to
determine whether the repurchase should apply to the Option and/or Option Shares
and to what extent to each, and NPB shall thereupon have the right to exercise
the Option as to the number of Option Shares for which the Option was
exercisable at the Request Date less the sum of the number of shares covered by
the Option in respect of which payment has been made pursuant to Section
3(a)(ii) and the number of shares covered by the portion of the Option (if any)
that has been repurchased. NPB shall notify CIB of its determination under the
preceding sentence within five (5) business days of receipt of notice of
disapproval of the repurchase.
(c) For purposes of this Agreement, the "Applicable
Price" means the highest of:
(i) the highest price per share of Common Stock
paid for any such share by the person or group described in
Section 3(d)(i);
(ii) the price per share of Common Stock received by
a holder of Common Stock in connection with any merger or other
business combination transaction described in Section 3(d)(ii), (iii)
or (iv); or
7
(iii) the highest closing sales price per share of
Common Stock quoted on the American Stock Exchange during the 15
business days preceding the Request Date;
provided, however, that in the event of a sale of less than all of CIB's assets,
the Applicable Price shall be the sum of the price paid in such sale for such
assets and the current market value of the remaining assets of CIB as determined
by a nationally- recognized investment banking firm selected by NPB, divided by
the number of shares of Common Stock outstanding at the time of such sale. If
the consideration to be offered, paid or received pursuant to either of clauses
(i) or (ii) shall be other than in cash, the value of such consideration shall
be determined in good faith by an independent nationally-recognized investment
banking firm selected by NPB and reasonably acceptable to CIB, which
determination shall be conclusive for all purposes of this Agreement.
(d) As used herein, a "Repurchase Event" shall occur if:
(i) any person or group (as those terms are defined
or used in Section 13(d) of the Exchange Act and the rules and
regulations thereunder), other than NPB or an affiliate of NPB,
acquires beneficial ownership (within the meaning of Rule 13d-3 under
the Exchange Act) of, or the right to acquire beneficial ownership of,
25% or more of the then-outstanding shares of Common Stock;
(ii) CIB shall have merged or consolidated with any
person, other than NPB or an affiliate of NPB, and shall not be the
surviving or continuing corporation of such merger or consolidation;
(iii) any person, other than NPB or an affiliate of
NPB, shall have merged into CIB and CIB shall be the surviving
corporation, but, in connection with such merger, the then-outstanding
shares of Common Stock have been changed into or exchanged for stock or
other securities of CIB or any other person or cash or any other
property or the outstanding shares of Common Stock immediately prior to
such merger shall after such merger represent less than 50% of the
outstanding shares and share equivalents of the surviving corporation;
or
(iv) CIB shall have sold or otherwise transferred
more than 25% of its consolidated assets to any person, other than NPB
or an affiliate of NPB.
4. Payment and Delivery of Certificates. At any Closing
hereunder:
8
(a) NPB will make payment to CIB of the aggregate price for
the Option Shares so purchased by wire transfer of immediately available funds
to an account designated by CIB;
(b) CIB will deliver to NPB a stock certificate or
certificates representing the number of Option Shares so purchased, registered
in the name of NPB or its designee, in such denominations as were specified by
NPB in its notice of exercise; and
(c) NPB will pay any transfer or other taxes required by
reason of the issuance of the Option Shares so purchased.
A legend will be placed on each stock certificate evidencing Option
Shares issued pursuant to this Stock Option Agreement, which legend will read
substantially as follows:
"The shares of stock evidenced by this certificate have not
been the subject of a registration statement filed under the Securities
Act of 1933, as amended (the "Act"), and declared effective by the
Securities and Exchange Commission. These shares may not be sold,
transferred or otherwise disposed of prior to such time unless
Community Independent Bank, Inc. receives an opinion of counsel
acceptable to it stating that an exemption from the registration
provisions of the Act is available for such transfer."
5. Registration Rights.
(a) Upon or after the occurrence of a Triggering Event and
upon receipt of a written request from NPB, CIB shall prepare and file as soon
as practicable a registration statement under the Securities Act of 1933 (the
"Securities Act") with the SEC covering such number of Option Shares as NPB
shall specify in its request, and CIB shall use its best efforts to cause such
registration statement to be declared effective in order to permit the sale or
other disposition of the Option Shares; provided that:
(i) NPB shall in no event have the right to have
more than one such registration statement become effective;
(ii) CIB shall not be required to prepare and file
any such registration statement in connection with any proposed sale
with respect to which counsel to CIB delivers to CIB and to NPB its
opinion to the effect that no such filing is required under applicable
laws and regulations with respect to such sale or disposition; and
(iii) CIB may delay any registration of Option Shares
for a period not exceeding 90 days in the event that CIB shall in good
faith determine that any such registration would adversely affect an
offering or contemplated offering of
9
securities by CIB. NPB shall provide all information reasonably
requested by CIB for inclusion in any registration statement to be
filed hereunder.
In connection with such filing, CIB shall use its reasonable best efforts to
cause to be delivered to NPB such certificates, opinions, accountant's letters
and other documents as NPB shall reasonably request and as are customarily
provided in connection with the registration of securities under the Securities
Act. CIB shall provide to NPB such number of copies of the preliminary
prospectus and final prospectus and any amendments and supplements thereto as
NPB may reasonably request.
(b) All reasonable expenses incurred by CIB in complying with
the provisions of this Section 5, including, without limitation, all
registration and filing fees, reasonable printing expenses, reasonable fees and
disbursements of counsel for CIB and blue sky fees and expenses, shall be paid
by CIB. Underwriting discounts and commissions to brokers and dealers relating
to the Option Shares, fees and disbursements of counsel to NPB and any other
expenses incurred by NPB in connection with such filing shall be borne by NPB.
(c) In connection with any filing under this Section 5, CIB
shall indemnify and hold NPB harmless against any losses, claims, damages or
liabilities, joint or several, to which NPB may become subject, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any preliminary or final registration statement or
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading; and
CIB will reimburse NPB for any legal or other expense reasonably incurred by NPB
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that CIB will not be liable in any case
to the extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such preliminary or final registration statement or
such amendment or supplement thereto in reliance upon and in conformity with
written information furnished by or on behalf of NPB specifically for use in the
preparation of such preliminary or final registration statement or such
amendment or supplement thereto.
(d) NPB will indemnify and hold harmless CIB to the same
extent as set forth in the immediately preceding sentence but only with
reference to written information furnished by or on behalf of NPB for use in the
preparation of such preliminary or final registration statement or such
amendment or supplement thereto; and
10
NPB will reimburse CIB for any legal or other expense reasonably incurred by CIB
in connection with investigating or defending any such loss, claim, damage,
liability or action.
(e) Notwithstanding any provision of Sections 5(c) or 5(d), no
indemnifying party shall be liable for any settlement effected without its prior
written consent.
6. Adjustment Upon Changes in Capitalization. In the event of any
change in the Common Stock by reason of stock dividends, split-ups,
recapitalizations, combinations, conversions, divisions, exchanges of shares or
the like, then the number and kind of Option Shares and the Option Price shall
be appropriately adjusted.
7. Filings and Consents. Each of NPB and CIB will use its reasonable
best efforts to make all filings with, and to obtain consents of, all third
parties and governmental authorities necessary to the consummation of the
transactions contemplated by this Stock Option Agreement. Within 10 days from
the date hereof, NPB shall file a report of beneficial ownership on Form 13D
with the SEC under the Exchange Act which discloses the rights of NPB hereunder.
8. Representations and Warranties of CIB. CIB hereby
represents and warrants to NPB as follows:
(a) Due Authorization. CIB has full corporate power and
authority to execute, deliver and perform this Stock Option Agreement and all
corporate action necessary for execution, delivery and performance of this Stock
Option Agreement has been duly taken by CIB. This Stock Option Agreement
constitutes a legal, valid and binding obligation of CIB, enforceable against
CIB in accordance with its terms (except as may be limited by applicable
bankruptcy, insolvency and similar laws affecting creditors' rights generally
and subject, as to enforceability, to general principles of equity).
(b) Authorized Shares. CIB has taken all necessary
corporate action to authorize and reserve for issuance all shares
of Common Stock that may be issued pursuant to any exercise of the
Option.
9. Representations and Warranties of NPB. NPB hereby represents and
warrants to CIB that NPB has full corporate power and authority to execute,
deliver and perform this Stock Option Agreement and all corporate action
necessary for execution, delivery and performance of this Stock Option Agreement
has been duly taken by NPB. This Stock Option Agreement constitutes a legal,
valid and binding obligation of NPB, enforceable against NPB in accordance with
its terms (except as may be limited by applicable bankruptcy, insolvency and
similar laws affecting
11
creditors' rights generally and subject, as to enforceability, to
general principles of equity).
10. Specific Performance. The parties hereto acknowledge that damages
would be an inadequate remedy for a breach of this Stock Option Agreement and
that the obligations of the parties hereto shall be specifically enforceable.
11. Entire Agreement. This Stock Option Agreement and the Agreement
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersede all other prior agreements and understandings, both
written and oral, among the parties or any of them with respect to the subject
matter hereof.
12. Assignment or Transfer. NPB may not sell, assign or otherwise
transfer its rights and obligations hereunder, in whole or in part, to any
person or group of persons other than to an NPB subsidiary. NPB represents that
it is acquiring the Option for NPB's own account and not with a view to, or for
sale in connection with, any distribution of the Option or the Option Shares.
NPB is aware that neither the Option nor the Option Shares is the subject of a
registration statement filed with, and declared effective by, the SEC pursuant
to Section 5 of the Securities Act, but instead each is being offered in
reliance upon the exemption from the registration requirement provided by
Section 4(2) of the Securities Act and the representations and warranties made
by NPB in connection therewith.
13. Amendment of Stock Option Agreement. By mutual consent of the
parties hereto, this Stock Option Agreement may be amended in writing at any
time, for the purpose of facilitating performance hereunder or to comply with
any applicable regulation of any governmental authority or any applicable order
of any court or for any other purpose.
14. Validity. The invalidity or unenforceability of any provision of
this Stock Option Agreement shall not affect the validity or enforceability of
any other provisions of this Stock Option Agreement, which shall remain in full
force and effect.
15. Notices. All notices or other communications hereunder shall be in
writing and shall be deemed given upon delivery if delivered personally, two
business days after mailing if mailed by prepaid registered or certified mail,
return receipt requested, or upon confirmation of good transmission if sent by
telecopy, addressed as follows:
12
(a) If to NPB, to:
National Penn Bancshares, Inc.
Philadelphia and Reading Avenues
P.O. Box 547
Boyertown, Pennsylvania 19512-0547
Attention: Wayne R. Weidner, President
Telecopy No.: 610-369-6349
with a copy to:
H. Anderson Ellsworth
Jay W. Waldman
Ellsworth, Carlton & Waldman, P.C.
1105 Berkshire Boulevard
Suite 320
Wyomissing, Pennsylvania 19610
Telecopy No.: 610-371-9510
(b) If to CIB, to:
Community Independent Bank, Inc.
201 North Main Street
Bernville, Pennsylvania 19506
Attention: Frederick P. Krott, Chairman
Telecopy No.: 610-488-0952
with a copy to:
Charles J. Ferry
Rhoads & Sinon LLP
One South Market Square, 12th Floor
P.O. Box 1146
Harrisburg, PA 17108-1146
Telecopy No.: 717-231-6669
16. Governing Law. This Stock Option Agreement shall be governed by and
construed in accordance with the domestic internal law (but not the law of
conflicts of law) of the Commonwealth of Pennsylvania.
17. Captions. The captions in this Stock Option Agreement are inserted
for convenience and reference purposes, and shall not limit or otherwise affect
any of the terms or provisions hereof.
18. Waivers and Extensions. The parties hereto may, by mutual consent,
extend the time for performance of any of the
13
obligations or acts of either party hereto. Each party may waive (i) compliance
with any of the covenants of the other party contained in this Stock Option
Agreement and/or (ii) the other party's performance of any of its obligations
set forth in this Stock Option Agreement.
19. Parties in Interest. This Stock Option Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and, nothing in this
Stock Option Agreement, express or implied, is intended to confer upon any other
person any rights or remedies of any nature whatsoever under or by reason of
this Stock Option Agreement.
20. Counterparts. This Stock Option Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
21. Expenses. Except as otherwise provided herein, all costs and
expenses incurred by the parties hereto in connection with the transactions
contemplated by this Stock Option Agreement or the Option shall be paid by the
party incurring such cost or expense.
22. Defined Terms. Capitalized terms which are used but not defined
herein shall have the meanings ascribed to such terms in the Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Stock Option
Agreement to be executed by their duly authorized officers and have caused their
corporate seal to be affixed hereunto and to be duly attested, all as of the day
and year first above written.
NATIONAL PENN BANCSHARES, INC.
(Corporate Seal) By:/s/ Wayne R. Weidner
---------------------------
Name: Wayne R. Weidner
Title: President
Attest:/s/ Sandra L. Spayd
---------------------------
Name: Sandra L. Spayd
Title: Secretary
COMMUNITY INDEPENDENT BANK, INC.
(Corporate Seal) By:/s/ Frederick P. Krott
---------------------------
Name: Frederick P. Krott
Title: Chairman
Attest:/s/ Karl D. Gerhart
---------------------------
Name: Karl D. Gerhart
Title: President and CEO
14
BANK PLAN OF MERGER
THIS BANK PLAN OF MERGER ("Bank Plan of Merger") dated July 23, 2000,
is by and between NATIONAL PENN BANK, a national banking association ("NPBank"),
and BERNVILLE BANK, N.A., a national banking association ("BBank").
BACKGROUND
1. NPBank is a wholly-owned subsidiary of National Penn Bancshares,
Inc., a Pennsylvania corporation ("NPB").
2. BBank is a wholly-owned subsidiary of Community Independent Bank,
Inc., a Pennsylvania corporation ("CIB").
3. NPB and CIB have executed an Agreement dated July 23, 2000 (the
"Agreement"). The Agreement provides for the merger of BBank with and into
NPBank, with NPBank surviving such merger, but only after closing of the
"Merger" provided for in the Agreement. After closing of the "Merger", NPBank
and BBank will each be direct wholly-owned subsidiaries of NPB. This Bank Plan
of Merger is being executed by NPBank and BBank pursuant to the Agreement.
AGREEMENT
In consideration of the premises and of the mutual covenants and
agreements herein contained, and in accordance with the applicable laws and
regulations of the United States of America, NPBank and BBank, intending to be
legally bound hereby, agree:
ARTICLE I
MERGER
Subject to the terms and conditions of this Bank Plan of Merger, and in
accordance with the applicable laws and regulations of the United States of
America, on the Effective Date (as that term is defined in Article V hereof):
(a) BBank shall merge with and into NPBank, under the charter of
NPBank;
(b) the separate existence of BBank shall cease; and
(c) NPBank shall be the surviving bank.
1
Such transaction is referred to herein as the "Bank Merger", and NPBank, as the
surviving bank in the Bank Merger, is referred to herein as the "Surviving
Bank".
ARTICLE II
NAME AND BUSINESS OF ASSOCIATION
The name of the Surviving Bank shall be National Penn Bank. The
business of the Surviving Bank shall be that of a national banking association.
This business shall be conducted by the Surviving Bank at its main office which
shall be located at Reading and Philadelphia Avenues, Boyertown, Pennsylvania
19512, and its legally established branches and other facilities.
ARTICLE III
ARTICLES OF ASSOCIATION AND BYLAWS
3.1 Articles of Association. On and after the Effective Date, the
articles of association of the Surviving Bank shall read in their entirety as
set forth on Schedule 3.1 attached hereto and made a part hereof, until changed
in accordance with applicable law, such articles of association, and the
Surviving Bank's bylaws.
3.2 Bylaws. On and after the Effective Date, the bylaws of NPBank, as
in effect immediately prior to the Effective Date, shall automatically be and
remain the bylaws of the Surviving Bank, until changed in accordance with
applicable law, the Surviving Bank's articles of association, and such bylaws.
ARTICLE IV
BOARD OF DIRECTORS AND OFFICERS
4.1 Board of Directors.
(a) On and after the Effective Date, (1) the directors of NPBank duly
elected and holding office immediately prior to the Effective Date and (2) two
persons (each a "CIB NPBank Nominee") selected by CIB's Board of Directors
(consistent with the 60 years age limitation contained in NPBank's Bylaws) and
approved by NPB (which approval will not be unreasonably withheld) shall be the
directors of the Surviving Bank, each to hold office until his or her successor
is elected and qualified or otherwise in accordance with applicable law, the
articles of association and bylaws of the Surviving Bank; provided, however,
that with respect to the CIB NPBank Nominees, NPB and NPBank shall take all
steps necessary to ensure that such persons are re-elected to NPBank's Board of
2
Directors for each of the five years following the Effective Date if such
persons are in office as directors of NPBank on the annual election dates.
(b) If either CIB NPBank Nominee, or any successor, resigns, dies or is
otherwise removed from NPBank's Board of Directors prior to the end of the fifth
one-year term, the former CIB directors then serving on the Division Board (as
defined in the Agreement), by a plurality vote, shall have the right to select
(consistent with the 60 years age limitation contained in NPBank's Bylaws) the
successor to such CIB NPBank Nominee, or any successor, subject to approval of
such person by NPB (which approval will not be unreasonably withheld), and NPB
shall take all reasonable steps to elect such successor to the NPBank Board of
Directors.
4.2 Officers. On and after the Effective Date, the officers of NPBank
duly elected and holding office immediately prior to the Effective Date shall be
the officers of the Surviving Bank, each to hold office until his or her
successor is elected and qualified or otherwise in accordance with applicable
law, the articles of association and bylaws of the Surviving Bank.
ARTICLE V
CONVERSION OF SHARES
5.1 NPBank Capital Stock. Each share of NPBank capital stock issued and
outstanding immediately prior to the Effective Date shall, on and after the
Effective Date, continue to be issued and outstanding as a share of identical
capital stock of the Surviving Bank.
5.2 BBank Capital Stock. Each share of BBank capital stock issued and
outstanding immediately prior to the Effective Date shall, on the Effective
Date, be cancelled, and no cash, stock or other property shall be delivered in
exchange therefor.
ARTICLE VI
EFFECTIVE DATE OF THE MERGER
The Bank Merger shall be effective at the time specified in a merger
approval to be issued by the Office of the Comptroller of the Currency of the
United States of America (the "Effective Date").
3
ARTICLE VII
EFFECT OF THE MERGER
On the Effective Date: the separate existence of BBank shall cease; and
all of the property (real, personal and mixed), rights, powers, duties and
obligations of NPBank and BBank shall be taken and deemed to be transferred to
and vested in the Surviving Bank, without further act or deed, as provided by
applicable laws and regulations.
ARTICLE VIII
CONDITIONS PRECEDENT
The obligations of NPBank and BBank to effect the Bank Merger shall be
subject to closing of the "Merger" provided for in the Agreement.
ARTICLE IX
TERMINATION
This Bank Plan of Merger shall terminate automatically upon any
termination of the Agreement in accordance with its terms; provided, however,
that any such termination of this Bank Plan of Merger shall not relieve any
party hereto from liability on account of a breach by such party of any of the
terms hereof or thereof.
ARTICLE X
AMENDMENT
This Bank Plan of Merger may be amended at any time prior to
consummation of the Bank Merger, but only by an instrument in writing signed by
duly authorized officers on behalf of the parties hereto.
ARTICLE XI
MISCELLANEOUS
11.1 Extensions; Waivers. Each party, by a written instrument signed by
a duly authorized officer, may extend the time for the performance of any of the
obligations or other acts of the other party hereto and may waive compliance
with any of the covenants, or performance of any of the obligations, of the
other party contained in this Bank Plan of Merger.
4
11.2 Notices. Any notice or other communication required or permitted
under this Bank Plan of Merger shall be given, and shall be effective, in
accordance with the provisions of Section 7.06 of the Agreement.
11.3 Captions. The headings of the several Articles herein are intended
for convenience of reference only and are not intended to be part of, or to
affect the meaning or interpretation of, this Bank Plan of Merger.
11.4 Counterparts. For the convenience of the parties hereto, this Bank
Plan of Merger may be executed in several counterparts, each of which shall be
deemed the original, but all of which together shall constitute one and the same
instrument.
11.5 Governing Law. This Bank Plan of Merger shall be governed by and
construed in accordance with the laws of the United States of America and, in
the absence of controlling Federal law, in accordance with the laws of the
Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, National Penn Bank and Bernville Bank, N.A., have
caused this Bank Plan of Merger to be executed by their duly authorized officers
and their corporate seals to be hereunto affixed on the date first written
above, each pursuant to a resolution of its board of directors, acting by a
majority.
NATIONAL PENN BANK
(Corporate Seal) By:/s/ Wayne R. Weidner
---------------------------
Name: Wayne R. Weidner
Title: President
Attest:/s/ Sandra L. Spayd
---------------------------
Name: Sandra L. Spayd
Title: Secretary
BERNVILLE BANK, N.A.
(Corporate Seal) By:/s/ Frederick P. Krott
---------------------------
Name: Frederick P. Krott
Title: Chairman
Attest:/s/ Karl D. Gerhart
---------------------------
Name: Karl D. Gerhart
Title: President and CEO
5
COMMONWEALTH OF PENNSYLVANIA :
:ss.
COUNTY OF BERKS :
On this 23rd day of July, 2000, before me, a notary public for this
state and county, personally came Wayne R. Weidner, as President, and Sandra L.
Spayd, as Secretary, of NATIONAL PENN BANK, and each, in his/her capacity,
acknowledged this instrument to be the act and deed of the association and the
seal affixed to it to be its seal.
WITNESS my official seal and signature this day and year.
/s/ Deborah M. Johnson
(Seal of Notary) Notary Public
My commission expires 7/14/01
---------
COMMONWEALTH OF PENNSYLVANIA :
:ss.
COUNTY OF BERKS :
On this 23rd day of July, 2000, before me, a notary public for this
state and county, personally came Karl Gerhart, as President, and Frederick P.
Krott, as Chairman of the Board, of BERNVILLE BANK, N.A. and each, in his/her
capacity, acknowledged this instrument to be the act and deed of the association
and the seal affixed to it to be its seal.
WITNESS my official seal and signature this day and year.
/s/ Tamara D. Galan
(Seal of Notary) Notary Public
My commission expires 6/30/03
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